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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

or

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to

Commission File Number: 001-40373

 

 

ENDEAVOR GROUP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   83-3340169

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

9601 Wilshire Boulevard, 3rd Floor

Beverly Hills, CA 90210

(Address of principal executive offices) (Zip Code)

(310) 285-9000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Class A Common Stock, par value $0.00001 per share    EDR    The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☐ No  ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒ No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Non-accelerated filer  
Accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐ No  ☒

As of May 12, 2021, there were 259,498,002 shares of the registrant’s Class A common stock outstanding, 188,450,111 shares of the registrant’s Class X common stock outstanding and 238,154,302 shares of the registrant’s Class Y common stock outstanding.

 

 

 


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TABLE OF CONTENTS

Part I – FINANCIAL INFORMATION

 

     Page  

Item 1. Financial Statements (unaudited)

     6  

Endeavor Group Holdings, Inc.

     6  

Balance Sheets as of March 31, 2021 and December 31, 2020

     6  

Notes to the Financial Statements

     7  

Endeavor Operating Company, LLC

     9  

Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020

     9  

Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020

     10  

Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020

     11  

Consolidated Statements of Redeemable Interests and Members’ Equity for the Three Months Ended March 31, 2021 and 2020

     12  

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020

     13  

Notes to Consolidated Financial Statements

     14  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     32  

Item 3. Quantitative and Qualitative Disclosures about Market Risk

     46  

Item 4. Controls and Procedures

     46  
Part II – OTHER INFORMATION   

Item 1. Legal Proceedings

     47  

Item 1A. Risk Factors

     47  

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     75  

Item 6. Exhibits

     76  


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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of present and historical facts contained in this Quarterly Report, including without limitation, statements regarding our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, future events or expected performance, are forward-looking statements.

Without limiting the foregoing, you can generally identify forward-looking statements by the use of forward-looking terminology, including the terms “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “target,” “predict,” “potential,” “contemplate,” or, in each case, their negative, or other variations or comparable terminology and expressions. The forward-looking statements in this Quarterly Report are only predictions and are based on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions, including, but not limited to:

 

   

the impact of the COVID-19 global pandemic on our business, financial condition, liquidity and results of operations;

 

   

changes in public and consumer tastes and preferences and industry trends;

 

   

the effect of factors beyond our control, such as adverse economic conditions, on our operations;

 

   

our ability to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies;

 

   

our reliance on our professional reputation and brand name;

 

   

our dependence on the relationships of our management, agents, and other key personnel with clients across many content categories;

 

   

our ability to identify, sign, and retain clients;

 

   

our ability to identify, recruit, and retain qualified and experienced agents and managers;

 

   

our ability to avoid or manage conflicts of interest arising from our client and business relationships;

 

   

the loss or diminished performance of members of our executive management and other key employees;

 

   

our dependence on key relationships with television and cable networks, satellite providers, digital streaming partners, corporate sponsors, and other distribution partners;

 

   

our ability to effectively manage the integration of and recognize economic benefits from businesses acquired, our operations at our current size, and any future growth;

 

   

the conduct of our operations through joint ventures and other investments with third parties;

 

   

immigration restrictions and related factors;

 

   

failure in technology, including at live events, or security breaches of our information systems;

 

   

the unauthorized disclosure of sensitive or confidential client or customer information;

 

   

our substantial indebtedness;

 

   

our ability to protect our trademarks and other intellectual property rights, including our brand image and reputation, and the possibility that others may allege that we infringe upon their intellectual property rights;

 

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the risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to both domestic and international markets;

 

   

fluctuations in foreign currency exchange rates;

 

   

litigation and other proceedings to the extent uninsured or underinsured;

 

   

our ability to comply with the U.S. and foreign governmental regulations to which we are subject;

 

   

our compliance with certain franchise and licensing requirements of unions and guilds and dependence on unionized labor;

 

   

our control by Messrs. Emanuel and Whitesell, the Executive Holdcos, and the Silver Lake Equityholders;

 

   

risk related to our organization and structure;

 

   

risks related to tax matters;

 

   

risks related to our Class A common stock;

 

   

other important factors that could cause actual results, performance or achievements to differ materially from those contemplated that are found in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Part II, Item 1A., “Risk Factors” in this Quarterly Report and in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our final prospectus filed with the Securities and Exchange Commission (the “SEC”) on Form 424(b)(4) on April 30, 2021 (the “Prospectus”) in connection with our initial public offering (the “IPO”).

These risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Even if our results of operations, financial condition and liquidity and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods.

You should read this Quarterly Report and the documents that we reference herein completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we have no obligation to update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

 

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RISK FACTOR SUMMARY

Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report. You should carefully consider these risks and uncertainties when investing in our common stock. Principal risks and uncertainties affecting our business include the following:

 

   

the impact of the COVID-19 global pandemic could continue to materially and adversely affect our business, financial condition and results of operations;

 

   

changes in public and consumer tastes and preferences and industry trends could reduce demand for our services and content offerings and adversely affect our business;

 

   

our ability to generate revenue from discretionary and corporate spending on entertainment and sports events, such as corporate sponsorships and advertising, is subject to many factors, including many that are beyond our control, such as general macroeconomic conditions;

 

   

we may not be able to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies;

 

   

because our success depends substantially on our ability to maintain a professional reputation, adverse publicity concerning us, one of our businesses, our clients, or our key personnel could adversely affect our business;

 

   

we depend on the relationships of our agents, managers, and other key personnel with clients across many categories, including television, film, professional sports, fashion, music, literature, theater, digital, sponsorship and licensing;

 

   

our success depends, in part, on our continuing ability to identify, recruit, and retain qualified and experienced agents and managers. If we fail to recruit and retain suitable agents or if our relationships with our agents change or deteriorate, it could adversely affect our business;

 

   

our failure to identify, sign, and retain clients could adversely affect our business;

 

   

our business involves potential internal conflicts of interest and includes our client representation businesses representing both talent and content rights holders and distributors while our content businesses produce content, which may create a conflict of interest;

 

   

the markets in which we operate are highly competitive, both within the United States and internationally;

 

   

we depend on the continued service of the members of our executive management and other key employees, as well as management of acquired businesses, the loss or diminished performance of whom could adversely affect our business;

 

   

we depend on key relationships with television and cable networks, satellite providers, digital streaming partners and other distribution partners, as well as corporate sponsors;

 

   

we may be unable to protect our trademarks and other intellectual property rights, and others may allege that we infringe upon their intellectual property rights ;

 

   

we are subject to extensive U.S. and foreign governmental regulations, and our failure to comply with these regulations could adversely affect our business

 

   

we are signatory to certain franchise agreements of unions and guilds and are subject to certain licensing requirements of the states in which we operate. We are also signatories to certain collective bargaining agreements and depend upon unionized labor for the provision of some of our services. Our clients are also members of certain unions and guilds that are signatories to collective bargaining agreements. Any expiration, termination, revocation or non-renewal of these franchises, collective bargaining agreements, or licenses and any work stoppages or labor disturbances could adversely affect our business;

 

   

we have a substantial amount of indebtedness, which could adversely affect our business;

 

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we are a holding company and our principal asset is our indirect equity interests in Endeavor Operating Company and, accordingly, we are dependent upon distributions from Endeavor Operating Company to pay taxes and other expenses

 

   

we are required to pay certain of our pre-IPO investors, including certain Other UFC Holders, for certain tax benefits we may claim (or are deemed to realize) in the future, and the amounts we may pay could be significant; and

 

   

we are controlled by Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders, whose interests in our business may be different than yours, and our board of directors has delegated significant authority to an Executive Committee and to Messrs. Emanuel and Whitesell.

 

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DEFINITIONS

As used in this Quarterly Report, unless we state otherwise or the context otherwise requires:

 

   

“we,” “us,” “our,” “Endeavor,” the “Company,” and similar references refer (a) after giving effect to the reorganization transactions, to Endeavor Group Holdings and its consolidated subsidiaries, and (b) prior to giving effect to the reorganization transactions, to Endeavor Operating Company and its consolidated subsidiaries.

 

   

“Endeavor Catch-Up Profits Units” refer to the Endeavor Full Catch-Up Profits Units and the Endeavor Partial Catch-Up Profits Units.

 

   

“Endeavor Full Catch-Up Profits Units” refer to the Endeavor Profits Units that are designated as “catchup” units. Endeavor Full Catch-Up Profits Units have a per unit hurdle price and are entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Full Catch-Up Profits Units will be converted into Endeavor Operating Company Units.

 

   

“Endeavor Group Holdings” refers to Endeavor Group Holdings, Inc. (“EGH”).

 

   

“Endeavor Manager” refers to Endeavor Manager, LLC, a Delaware limited liability company and a direct subsidiary of Endeavor Group Holdings following the reorganization transactions.

 

   

“Endeavor Manager Units” refers to the common interest units in Endeavor Manager.

 

   

“Endeavor Operating Company” refers to Endeavor Operating Company, LLC, a Delaware limited liability company and a direct subsidiary of Endeavor Manager’s and indirect subsidiary of ours following the reorganization transactions (“EOC”).

 

   

“Endeavor Operating Company Units” refers to all of the existing equity interests in Endeavor Operating Company (other than the Endeavor Profits Units) that will be reclassified into Endeavor Operating Company’s non-voting common interest units upon the consummation of the reorganization transactions.

 

   

“Endeavor Partial Catch-Up Profits Units” refer to the Endeavor Profits Units that are designated as “catchup” units. Endeavor Partial Catch-Up Profits Units have a per unit hurdle price and are entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Partial Catch-Up Profits Units will be converted into Endeavor Profits Units (without any such preference) with a reduced per unit hurdle price to take into account such prior preference.

 

   

“Endeavor Phantom Units” refers to the phantom units outstanding, which, subject to certain conditions and limitations, entitle the holder to cash equal to the value of a number of Endeavor Manager Units, Endeavor Operating Company Units, or Endeavor Profits Units, or of equity settled to the equivalent number of Endeavor Manager Units, Endeavor Operating Company Units, or Endeavor Profits Units.

 

   

“Endeavor Profits Units” refers to the profits units of Endeavor Operating Company and that are economically similar to stock options (other than with respect to Endeavor Full Catch-up Profits Units which, upon achievement of a price per share that would have fully satisfied their preference on distributions, will be economically similar to Endeavor Operating Company Units). Each Endeavor Profits Unit (other than Endeavor Full Catch-Up Profits Units) has a per unit hurdle price, which is economically similar to the exercise price of a stock option.

 

   

“Executive Holdcos” refers to Endeavor Executive Holdco, LLC, Endeavor Executive PIU Holdco, LLC, and Endeavor Executive II Holdco, LLC, each a management holding company, the equity owners of which include current and former senior officers, employees, or other service providers of Endeavor Operating Company, and which are controlled by Messrs. Emanuel and Whitesell.

 

   

“reorganization transactions” refers to the internal reorganization completed in connection with our May 2021 initial public offering, following which Endeavor Group Holdings manages and operates the business and control the strategic decisions and day-to-day operations of Endeavor Operating Company through Endeavor Manager and includes the operations of Endeavor Operating Company in its consolidated financial statements.

 

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ENDEAVOR GROUP HOLDINGS, INC.

BALANCE SHEETS

(Unaudited)

 

     March 31,     December 31,  
     2021     2020  
ASSETS     

Current Assets:

    

Cash

   $ 24,445     $ 25,095  

Other current assets

     650       —    
  

 

 

   

 

 

 

Total assets

   $ 25,095     $ 25,095  
  

 

 

   

 

 

 
LIABILITIES     

Current Liabilities:

    

Related party payable

   $ 20,745     $ 20,745  
  

 

 

   

 

 

 

Total liabilities

     20,745       20,745  
  

 

 

   

 

 

 
SHAREHOLDER’S EQUITY     

Shareholder’s Equity:

    

Common stock, $0.01 par value, 10,000 shares authorized, 1,000 shares issued and outstanding

     10       10  

Additional paid in capital

     4,990       4,990  

Accumulated deficit

     (650     (650
  

 

 

   

 

 

 

Total shareholder’s equity

     4,350       4,350  
  

 

 

   

 

 

 

Total liabilities and shareholder’s equity

   $ 25,095     $ 25,095  
  

 

 

   

 

 

 

See accompanying notes to financial statements

 

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ENDEAVOR GROUP HOLDINGS, INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

1.

ORGANIZATION

Endeavor Group Holdings, Inc. (“the Company” or “EGH”) was incorporated as a Delaware corporation in January 2019. The Company was formed for the purpose of completing certain reorganization transactions in order to carry on the business of Endeavor Operating Company, LLC (“EOC”) and conducting an initial public offering (“IPO”).

 

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The balance sheets have been prepared in accordance with accounting principles generally accepted in the United States of America. Separate Statements of Operations, Shareholder’s Equity and Cash Flows have not been presented because the Company has not engaged in any business or other activities other than the incorporation fees and the initial issuance of common stock.

 

3.

SHAREHOLDER’S EQUITY

In January 2019, the Company issued 1,000 common shares to EOC for $5,000.

 

4.

SUBSEQUENT EVENTS

On May 3, 2021, the Company closed an IPO of 24,495,000 shares of Class A common stock at a public offering price of $24.00 per share, which included 3,195,000 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. This option to purchase additional shares of Class A common stock closed on May 12, 2021.

Prior to the closing of the IPO, a series of reorganization transactions (the “Reorganization Transactions”) was completed:

 

   

The Company’s certificate of incorporation was amended and restated to, among other things, provide for the following common stock:

 

Class of Common Stock

   Par Value      Votes    Economic Rights

Class A common stock

   $ 0.00001      1    Yes

Class B common stock

   $ 0.00001      None    Yes

Class C common stock

   $ 0.00001      None    Yes

Class X common stock

   $ 0.00001      1    None

Class Y common stock

   $ 0.00001      20    None

Voting shares of our common stock will generally vote together as a single class on all matters submitted to a vote of our stockholders;

 

   

Endeavor Manager became the sole managing member of EOC and EGH became the sole managing member of Endeavor Manager;

 

   

Endeavor Manager issued to equityholders of certain management holding companies common interest units in Endeavor Manager along with paired shares of our Class X common stock as consideration for the acquisition of Endeavor Operating Company Units held by such management holding companies;

 

   

For certain pre-IPO investors, the Company issued shares of our Class A common stock, Class Y common stock and rights to receive payments under a tax receivable agreement and for certain other pre-IPO investors, the Company issued shares of our Class A common stock as consideration for the acquisition of Endeavor Operating Company Units held by such pre-IPO investors;

 

   

For holders of Endeavor Operating Company Units which remained outstanding following the IPO, the Company issued paired shares of our Class X common stock and, in certain instances, Class Y common stock, in each case equal to the number of Endeavor Operating Company Units held and in exchange for the payment of the aggregate par value of the Class X common stock and Class Y common stock received; and

 

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Certain Endeavor Profits Units, Endeavor Full Catch-Up Profits Units and Endeavor Partial Catch-Up Profits Units remain outstanding.

Subsequent to the closing of the IPO, several new and current investors purchased in the aggregate 75,584,747 shares of Class A common stock at a price per share of $24.00 (the “Private Placement”). Of these shares, 57,378,497 were purchased from EGH and 18,206,250 were purchased from an existing investor. EGH is required to, within 60 days following the closing of the IPO, register these shares of Class A common stock on a Form S-1 registration statement. Net proceeds received by the Company from the IPO and the Private Placement, after deducting underwriting discounts and commissions but before deducting offering expenses was approximately $1,901.5 million.

Subsequent to the closing of the IPO and the Private Placement, through a series of transactions, the Company acquired the equity interests of the minority unitholders of Zuffa Parent, LLC (“Zuffa”), which owns and operates the Ultimate Fighting Championship (the “UFC Buyout”). This resulted in EOC directly or indirectly owning 100% of the equity interests of Zuffa. In consideration of the minority unitholders’ equity interests of Zuffa, (a) we issued to certain of such unitholders shares of Class A common stock, Endeavor Operating Company Units, Endeavor Manager Units, shares of Class X common stock and/or shares of Class Y common stock, and (b) we used $835.7 million of the net proceeds from this offering and the concurrent private placements to purchase Endeavor Operating Company Units (or equity interests of Zuffa) from certain of such holders. In addition, some of those minority unitholders sold their equity interests of the Company to the private placement investors in the concurrent private placement.

Remaining net proceeds after the UFC Buyout were contributed to Endeavor Manager in exchange for Endeavor Manager Units. Endeavor Manager then in turn contributed such net proceeds to Endeavor Operating Company in exchange for Endeavor Operating Company Units.

Upon the IPO, the 2021 Incentive Award Plan became effective with an initial reserve of 21,700,000 shares of Class A common stock. In addition, the following significant equity-based compensation items occurred: (i) 9,400,353 restricted stock units and stock options were granted to certain directors, employees and other service providers under the 2021 Incentive Award Plan; (ii) modification of certain pre-IPO equity-based awards were made primarily to remove certain forfeiture and discretionary call terms; (iii) the third Zuffa equity value threshold was achieved under the Zuffa future incentive award and the Company granted 520,834 restricted stock units to our Chief Executive Officer (“CEO”); (iv) our CEO was granted 2,333,334 time-vested restricted stock units as well as a performance-based award with a metric based on the increase in our share price; and (v) our Executive Chairman was granted a performance-based award with a metric based on the increase in our share price. The Company is currently assessing the accounting treatment for these items and will record the necessary equity-based compensation charges in the three months ended June 30, 2021, which in the aggregate is expected to be material.

 

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ENDEAVOR OPERATING COMPANY, LLC

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

     March 31,
2021
    December 31,
2020
 
ASSETS     

Current Assets:

    

Cash and cash equivalents

   $ 880,880     $ 1,008,485  

Restricted cash

     167,219       181,848  

Accounts receivable (net of allowance for doubtful accounts of $67,623 and $67,975, respectively)

     519,478       445,778  

Deferred costs

     195,038       234,634  

Other current assets

     189,108       194,463  
  

 

 

   

 

 

 

Total current assets

     1,951,723       2,065,208  

Property and equipment, net

     604,920       613,139  

Operating lease right-of-use assets

     374,473       386,911  

Intangible assets, net

     1,550,160       1,595,468  

Goodwill

     4,181,616       4,181,179  

Investments

     225,065       251,078  

Other assets

     719,778       540,651  
  

 

 

   

 

 

 

Total assets

   $ 9,607,735     $ 9,633,634  
  

 

 

   

 

 

 
LIABILITIES, REDEEMABLE INTERESTS AND MEMBERS’ EQUITY     

Current Liabilities:

    

Accounts payable

   $ 497,218     $ 554,260  

Accrued liabilities

     371,002       322,749  

Current portion of long-term debt

     103,213       212,971  

Current portion of operating lease liabilities

     58,700       58,971  

Deferred revenue

     660,269       606,530  

Deposits received on behalf of clients

     162,893       176,572  

Other current liabilities

     64,199       65,025  
  

 

 

   

 

 

 

Total current liabilities

     1,917,494       1,997,078  
  

 

 

   

 

 

 

Long-term debt

     5,768,324       5,712,834  

Long-term operating lease liabilities

     382,246       395,331  

Other long-term liabilities

     365,386       373,642  
  

 

 

   

 

 

 

Total liabilities

     8,433,450       8,478,885  
  

 

 

   

 

 

 

Commitments and contingencies (Note 17)

    

Redeemable non-controlling interests

     168,773       168,254  

Redeemable equity

     22,519       22,519  

Members’ Equity:

    

Members’ capital

     447,320       468,633  

Accumulated other comprehensive loss

     (174,234     (190,786
  

 

 

   

 

 

 

Total Endeavor Operating Company, LLC members’ equity

     273,086       277,847  

Nonredeemable non-controlling interests

     709,907       686,129  
  

 

 

   

 

 

 

Total members’ equity

     982,993       963,976  
  

 

 

   

 

 

 

Total liabilities, redeemable interests and members’ equity

   $ 9,607,735     $ 9,633,634  
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements

 

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ENDEAVOR OPERATING COMPANY, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)

 

     Three Months Ended March 31,  
     2021     2020  

Revenue

   $ 1,069,582     $ 1,190,397  

Operating expenses:

    

Direct operating costs

     546,392       681,284  

Selling, general and administrative expenses

     381,113       388,971  

Insurance recoveries

     (19,657     (17,119

Depreciation and amortization

     67,236       80,447  

Impairment charges

     —         3,050  
  

 

 

   

 

 

 

Total operating expenses

     975,084       1,136,633  
  

 

 

   

 

 

 

Operating income

     94,498       53,764  

Other (expense) income:

    

Interest expense, net

     (68,351     (69,984

Other (expense) income, net

     (3,215     25,357  
  

 

 

   

 

 

 

Income before income taxes and equity losses of affiliates

     22,932       9,137  

Provision for income taxes

     5,085       48,604  
  

 

 

   

 

 

 

Income (loss) before equity losses of affiliates

     17,847       (39,467

Equity losses of affiliates, net of tax

     (15,471     (11,794
  

 

 

   

 

 

 

Net income (loss)

     2,376       (51,261

Net income attributable to non-controlling interests

     27,246       3,695  
  

 

 

   

 

 

 

Net loss attributable to Endeavor Operating Company, LLC

   $ (24,870   $ (54,956
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements

 

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ENDEAVOR OPERATING COMPANY, LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

     Three Months Ended March 31,  
              2021                       2020           

Net income (loss)

   $ 2,376     $ (51,261

Other comprehensive income (loss), net of tax:

    

Change in unrealized gains/losses on cash flow hedges:

    

Unrealized losses on forward foreign exchange contracts

     (1,358     (3,112

Unrealized gains (losses) on interest rate swaps

     15,076       (79,999

Reclassification of losses to net income (loss) for interest rate swaps

     7,384       1,429  

Foreign currency translation adjustments

     (4,550     (14,482

Reclassification of loss to net income (loss) for business divestiture

     —         4,231  
  

 

 

   

 

 

 

Total comprehensive income (loss), net of tax

     18,928       (143,194

Less: Comprehensive income attributable to non-controlling interests

     27,246       3,695  
  

 

 

   

 

 

 

Comprehensive loss attributable to Endeavor Operating Company, LLC

   $ (8,318   $ (146,889
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements

 

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ENDEAVOR OPERATING COMPANY, LLC

CONSOLIDATED STATEMENTS OF REDEEMABLE

INTERESTS AND MEMBERS’ EQUITY

(In thousands)

(Unaudited)

 

     Three Months Ended March 31, 2021  
     Redeemable
Non-controlling
Interests
    Redeemable
Equity
     Members’
Capital
    Accumulated
Other
Comprehensive
(Loss) Income
    Total Endeavor
Operating
Company, LLC
Members’ Equity
    Nonredeemable
Non-controlling
Interests
    Total
Members’
Equity
 

Balance at January 1, 2021

   $ 168,254     $ 22,519      $ 468,633     $ (190,786   $ 277,847     $ 686,129     $ 963,976  

Comprehensive (loss) income

     (2,098     —          (24,870     16,552       (8,318     29,344       21,026  

Equity-based compensation expense

     —         —          3,444       —         3,444       6,006       9,450  

Distributions

     —         —          (718     —         (718     (8,124     (8,842

Accretion of redeemable non-controlling interests

     (271     —          271       —         271       —         271  

Establishment of non-controlling interests

     2,888       —          560       —         560       (3,448     (2,888
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at March 31, 2021

   $ 168,773     $ 22,519      $ 447,320     $ (174,234   $ 273,086     $ 709,907     $ 982,993  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Three Months Ended March 31, 2020  
     Redeemable
Non-controlling
Interests
    Redeemable
Equity
     Members’
Capital
    Accumulated
Other
Comprehensive
(Loss) Income
    Total Endeavor
Operating
Company, LLC
Members’ Equity
    Nonredeemable
Non-controlling
Interests
    Total
Members’
Equity
 

Balance at January 1, 2020

   $ 136,809     $ 43,693      $ 1,038,678     $ (125,404   $ 913,274     $ 774,309     $ 1,687,583  

Cumulative transition adjustment of ASU 2016-13 adoption

     —         —          (1,803     —         (1,803     —         (1,803

Comprehensive income (loss)

     2,104       —          (54,956     (91,933     (146,889     1,591       (145,298

Equity-based compensation expense

     —         —          3,827       —         3,827       2,936       6,763  

Contributions

     —         —          26,476       —         26,476       —         26,476  

Distributions

     —         —          (2,218     —         (2,218     (109,940     (112,158

Accretion of redeemable non-controlling interests

     (6,349     —          6,349       —         6,349       —         6,349  

Redemption of units

     —         —          (147     —         (147     —         (147

Acquisition of non-controlling interests

     65,204       —          —         —         —         5,635       5,635  

Business deconsolidation

     —         —          —         —         —         (1,747     (1,747
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at March 31, 2020

   $ 197,768     $ 43,693      $ 1,016,206     $ (217,337   $ 798,869     $ 672,784     $ 1,471,653  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated financial statements

 

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ENDEAVOR OPERATING COMPANY, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Three Months Ended March 31,  
     2021     2020  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income (loss)

   $ 2,376     $ (51,261

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation and amortization

     67,236       80,447  

Amortization and write-off of original issue discount and deferred financing cost

     7,139       4,716  

Amortization of content costs

     10,730       15,904  

Impairment charges

     —         3,050  

(Gain) loss on sale/disposal and impairment of assets

     (2,539     37  

Gain on business acquisition and deconsolidation

     —         (30,999

Equity-based compensation expense

     16,491       7,771  

Change in fair value of contingent liabilities

     4,572       (11

Change in fair value of equity investments with and without readily determinable fair value

     (5,205     2,809  

Change in fair value of financial instruments

     16,482       (6,768

Equity losses from affiliates

     15,471       11,794  

Net (benefit) provision for allowance for doubtful accounts

     (352     9,124  

Net gain on foreign currency transactions

     (2,966     (477

Distributions from affiliates

     1,202       931  

Income taxes

     (4,782     37,968  

Other, net

     88       152  

Changes in operating assets and liabilities - net of acquisitions:

    

(Increase)/decrease in receivables

     (76,788     79,630  

Decrease/(increase) in other current assets

     12,578       (46,842

Increase in other assets

     (189,401     (106,552

Decrease in deferred costs

     41,390       103,056  

Increase/(decrease) in deferred revenue

     51,170       (100,048

(Decrease)/increase in accounts payable and accrued liabilities

     (19,196     89,599  

Decrease in other liabilities

     (16,526     (11,508
  

 

 

   

 

 

 

Net cash (used in) provided by operating activities

     (70,830     92,522  
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Acquisitions, net of cash acquired

     (425     (306,746

Purchases of property and equipment

     (9,313     (25,574

Proceeds from sale of assets

     16,513       —    

Investments in affiliates

     (954     (16,739

Other, net

     1,789       (2,720
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     7,610       (351,779
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Proceeds from borrowings

     132,982       661,258  

Payments on borrowings

     (193,669     (272,234

Distributions

     (5,173     (62,781

Redemption of units

     (7,177     (5,056

Payments of contingent consideration related to acquisitions

     (1,778     (2,320

Other, net

     (3,028     (4,983
  

 

 

   

 

 

 

Net cash (used in) provided by financing activities

     (77,843     313,884  
  

 

 

   

 

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

     (1,171     (6,022
  

 

 

   

 

 

 

(Decrease) increase in cash, cash equivalents and restricted cash

     (142,234     48,605  

Cash, cash equivalents and restricted cash at beginning of year

     1,190,333       886,073  
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 1,048,099     $ 934,678  
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements

 

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ENDEAVOR OPERATING COMPANY, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1.

DESCRIPTION OF BUSINESS

Business and Organization

Endeavor Operating Company, LLC (d.b.a. Endeavor) and its subsidiaries (collectively the “Company” or “EOC”) is a global entertainment, sports and content company.

Prior to the IPO, the Company was owned by WME Holdco, LLC (which is referred to as “Holdco” herein and is principally owned by executive employees of the Company), affiliates of Silver Lake (which are collectively referred to as “Silver Lake” herein), and other investors and executive employees of the Company.

 

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting interim financial information and should be read in conjunction with the Company’s consolidated financial statements and accompanying footnotes in our prospectus dated April 28, 2021, filed with the SEC on April 30, 2021 pursuant to Rule 424(b) of the Securities Act of 1933, as amended (referred to herein as the “Prospectus”). Certain information and note disclosures normally included in annual financial statements have been condensed or omitted from these interim financial statements. The interim consolidated financial statements as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 are unaudited; however, in the opinion of management, such interim consolidated financial statements reflect all adjustments, consisting solely of normal and recurring adjustments, necessary for a fair statement of its financial position, results of operations and cash flows for the interim periods presented.

During the fourth quarter of 2020, the Company concluded there was a revision required to the presentation of Zuffa Parent, LLC’s (“Zuffa”) distributions to Silver Lake and the related issuances of common stock units and the convertible promissory note by the Company in the consolidated statements of cash flows for the first three quarters of 2020. Such distributions and related issuances are described in Note 12. The Company originally reported these distributions and the related issuances as financing cash flows rather than correctly presenting them as non-cash financing activities in the supplemental cash flow disclosures. These items had no impact on the reported amount of net cash provided by financing activities for these periods. The Company has revised its statement of consolidated cash flows and the supplemental cash flow disclosures for the three months ended March 31, 2020 to present these distributions and related issuances as non-cash activities and will prospectively revise, in connection with future filings, its statement of cash flows and supplemental cash flow disclosures for the six months ended June 30, 2020 and nine months ended September 30, 2020.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying disclosures.

Significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, allowance for doubtful accounts, content cost amortization and impairment, the fair value of acquired assets and liabilities associated with acquisitions, the fair value of the Company’s reporting units and the assessment of goodwill, other intangible assets and long-lived assets for impairment, consolidation, investments, redeemable non-controlling interests, the fair value of equity-based compensation, income taxes and contingencies.

Management evaluates these estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and as such, these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company’s control could be material and would be reflected in the Company’s consolidated financial statements in future periods.

 

3.

RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In January 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging

 

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Table of Contents

(Topic 815): Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 (“ASU 2020-01”). ASU 2020-01 clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the fair value measurement alternative. This ASU is effective for annual and interim reporting periods beginning after December 15, 2020. The Company adopted this new guidance on January 1, 2021 with no material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The update removes certain exceptions to the general principles in Topic 740 and simplifies accounting for income taxes in certain areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for annual and interim reporting periods beginning after December 15, 2020. The Company adopted this new guidance on January 1, 2021 with no material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU addresses issues identified as a result of the complexity associated with applying U.S. generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of this update on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for applying U.S. generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. Adoption of the expedients and exceptions is permitted upon issuance of this update through December 31, 2022. The Company is currently evaluating the effect of this update on its consolidated financial statements.

 

4.

IMPACT OF THE GLOBAL COVID-19 PANDEMIC

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The COVID-19 pandemic has rapidly changed market and economic conditions globally and has significantly impacted the entertainment and sports industries. The COVID-19 pandemic resulted in various governmental restrictions, including government-mandated stay-at-home orders, travel restrictions and limitations on social or public gatherings, and began to have a significant adverse impact on the Company’s business and operations beginning in March 2020. In particular, this led to a lack of live ticketed events as well as the postponement or cancellation of live sporting events and other in-person events, including concerts, fashion shows, public appearances, and experiential marketing events. In addition, many entertainment productions, including film and television shows, were put on hiatus.    

While activity has resumed in certain of our businesses and restrictions have been lessened or lifted, restrictions impacting certain of our businesses remain in effect in locations where we are operating and could in the future be reduced or increased, or removed or reinstated. The Company’s events, experiences and experiential marketing businesses primarily generate their revenue from live events and many events remain cancelled, and where live events are able to take place, the Company expects attendance to be at significantly reduced levels. Overall, the Company expects a recovery in 2021 to be gradual due to general uncertainty surrounding COVID-19.

In response to the COVID-19 pandemic, the Company implemented cost savings initiatives across the Company starting in the second quarter of 2020, including salary reductions, hiring freezes, furloughs, reduced work arrangements, and reductions of its workforce. In addition, the Company reduced marketing spend, cancelled internal company events, eliminated costs for consultants, reduced travel and entertainment expenses, and reduced other operating expenses, capital expenditures and acquisition activity.

The full magnitude the pandemic will have on the Company’s financial condition, liquidity and future results is uncertain and will depend on the duration of the pandemic, as well as the effectiveness of mass vaccinations and other public health efforts to mitigate the impact. Accordingly, the Company’s estimates regarding the magnitude and length of time that these disruptions will continue to impact its results of operations, cash flows and financial condition may change in the future, and such changes could be material. Additionally, changes to estimates related to the COVID-19 disruptions could result in other impacts, including but not limited to, additional goodwill, indefinite lived intangibles, long-lived assets and equity-method investment impairment charges, and increased valuation allowances for deferred tax assets. Such changes will be recognized in the period in which they occur.

 

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Table of Contents

Liquidity

The ongoing COVID-19 pandemic has had a significant impact on the Company’s cash flows from operations. The Company’s primary need for liquidity is to fund working capital requirements, debt service obligations, acquisitions and capital expenditures. As of March 31, 2021, the Company reduced its outstanding borrowings under the Revolving Credit Facility such that the quarterly covenant test was not applicable. In April 2021, the Company received a waiver from the financial covenant for the test periods ending June 30, 2021, September 30, 2021 and December 31, 2021. As of March 31, 2021, cash and cash equivalents totaled $880.9 million, including cash held at non-wholly owned consolidated subsidiaries where cash distributions may be subject to restriction under applicable operating agreements or debt agreements and, due to such restrictions, may not be readily available to service obligations outside of those subsidiaries. These balances primarily consist of Zuffa ($346 million), Endeavor China ($93 million) and OLE ($29 million) as of March 31, 2021. Subsequent to March 31, 2021, the Zuffa operating agreement was amended to remove certain covenants restricting distributions and other payments.

After considering the impact of COVID-19, the effects of the Company’s related cost saving initiatives and the proceeds received from the initial public offering and private placements, the Company believes that existing cash, cash generated from operations and available capacity for borrowings under its credit facilities will satisfy working capital requirements, capital expenditures, and debt service requirements for at least the succeeding year.

 

5.

ACQUISITIONS AND DECONSOLIDATION

2020 ACQUISITIONS

On Location Events, LLC

In January 2020, the Company acquired On Location Events, LLC, dba On Location Experiences (“OLE”) for total consideration of $441.1 million consisting of cash consideration of $366.4 million; rollover equity, representing 13.5% of the equity interest of OLE, valued at $65.2 million and a contingent premium payment, as discussed below, valued at $9.5 million. The rollover equity is held by 32 Equity, LLC (“32 Equity”), the strategic investment firm affiliated with the National Football League (“NFL”). OLE is party to a Commercial License Agreement (“CLA”) with NFL Properties, LLC, an affiliate of the NFL, which provides OLE with the right to operate as the official hospitality partner of the NFL.

As part of the acquisition, the Company entered into an Amended and Restated Limited Liability Company Agreement of OLE’s parent entity, Endeavor OLE Parent, LLC (“OLE Parent”), with 32 Equity. The terms of the agreement provide 32 Equity with certain call rights to acquire additional common units in OLE Parent and liquidity rights. At any time on or prior to April 1, 2022, 32 Equity has the right to purchase that amount of additional common units of OLE Parent from the Company that would result in 32 Equity having an aggregate ownership percentage interest in OLE Parent of 32%, at a price per unit equal to the original acquisition price of its rollover equity. Between April 1, 2022 and April 1, 2024, 32 Equity has an additional right to purchase that amount of additional common units of OLE Parent from the Company that would result in 32 Equity having an aggregate percentage interest in OLE Parent equal to 44.9% at a price per unit equal to the greater of the original acquisition price of its rollover equity and an amount based on a 15x EBITDA multiple of OLE Parent. The agreement also provides 32 Equity with certain rights to put its common units in OLE Parent to the Company upon a termination of the CLA or its option on or after January 2, 2025 (the “Lockup Period”). The Company also has certain call rights to require 32 Equity to sell its common units in OLE Parent to the Company upon a termination of the CLA in the event aforementioned put rights are not exercised. The put/call price is an amount equal to fair market value and the exercise of these put/call rights may give rise to an obligation of the Company to make a premium payment to 32 Equity in certain circumstances. At any time following the Lockup Period, 32 Equity will be entitled to a $41.0 million premium payment from the Company if both (i) 32 Equity or the Company exercise the put/call rights described above or there is a sale or IPO of OLE Parent and (ii) certain performance metrics based on average OLE gross profit or NFL related business gross profit are achieved. The $41.0 million premium payment will also be payable if, prior to January 2, 2026, a sale or IPO of OLE Parent occurs or if 32 Equity exercises its put rights following a termination of the CLA due to an OLE event of default (in which case the $41.0 million premium payment may be subject to proration).

On Location Experiences is a premium experiential hospitality business that serves iconic rights holders with extensive experience in ticketing, curated hospitality, live event production and travel management in the worlds of sports and entertainment. Operations include Anthony Travel, CID Entertainment, Future Beat, Kreate Inc., PrimeSport and Steve Furgal’s International Tennis Tours. OLE is included in the Events, Experiences & Rights segment.

The Company incurred $13.7 million of transaction related costs in connection with the acquisition. These costs were expensed as incurred and included in selling, general and administrative expenses in the consolidated statement of operations.

The goodwill for the OLE acquisition was assigned to the Events, Experiences & Rights segment. Goodwill is primarily attributable to the go-to-market synergies that are expected to arise as a result of the acquisition and other intangible assets that do not qualify for separate recognition. The goodwill is partially deductible for tax purposes. The weighted average life of finite-lived intangible assets acquired is 10.7 years.

 

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Table of Contents

Allocation of Purchase Price

The acquisition was accounted for as a business combination and the fair values of the assets acquired and the liabilities assumed in the business combination are as follows (in thousands):

 

Cash and cash equivalents

   $ 45,230  

Restricted cash

     86  

Accounts receivable

     10,316  

Deferred costs

     99,184  

Other current assets

     53,893  

Property and equipment

     4,361  

Operating lease right-of-use assets

     3,509  

Other assets

     74,193  

Intangible assets:

  

Trade names

     75,400  

Customer and client relationships

     198,819  

Goodwill

     387,542  

Accounts payable and accrued expenses

     (55,927

Other current liabilities

     (28,224

Deferred revenue

     (175,790

Debt

     (217,969

Operating lease liabilities

     (3,509

Other long-term liabilities

     (24,377

Non-redeemable non-controlling interest

     (5,635
  

 

 

 

Net assets acquired

   $ 441,102  
  

 

 

 

Other 2020 Acquisition

On March 20, 2020, the Company acquired the remaining 50% of the membership interests of PIMGSA LLP for a total transaction price of $37.0 million, which is to be paid on various dates and amounts. Prior to the acquisition, the Company owned a 50% membership interest of PIMGSA LLP and was accounted for under the equity method. PIMGSA LLP trades under the name FC Diez Media and provides a complete and global sports media service, sponsorship and digital agency, formed exclusively to serve the South American Football Confederation. The Company recorded $8.6 million and $46.4 million of goodwill and a finite-lived contract based intangible asset, respectively. The finite-lived intangible asset has a useful life of 2 years. The Company also recognized a gain of $27.1 million for the difference between the carrying value and fair value of the previously held membership interest. The gain was included in other (expense) income, net in the consolidated statement of operations.

2020 DECONSOLIDATION

In 2011, the Company and Asian Tour Limited (“AT”) formed a venture, Asian Tour Media Pte Ltd. LTD (“ATM”), for the commercial exploitation of certain Asian Tour events. As of December 31, 2019, ATM was a consolidated subsidiary of the Company as the Company had control over ATM’s operating decisions. The shareholders’ agreement included a provision whereby, if certain financial conditions were met as of December 31, 2019, a change in the corporate governance structure would be implemented as of January 1, 2020. Such financial conditions were met as of December 31, 2019, resulting in a change in the corporate governance such that the Company no longer maintains control over the operating decisions of ATM. The Company determined that the 50% ownership interest would be accounted for under the equity method as of January 1, 2020. On January 1, 2020, the Company derecognized all the assets and liabilities of ATM and recognized an $8.1 million gain for the difference between the carrying value of the assets and liabilities and fair value of the Company’s 50% ownership interest. The gain was included in other (expense) income, net in the consolidated statement of operations.

 

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Table of Contents
6.

SUPPLEMENTARY DATA

Content Costs

The following table presents the Company’s unamortized content costs, including the components of content costs predominantly monetized on a title-by-title basis and as a film group (in thousands):

 

     March 31,
2021
     December 31,
2020
 

Licensed program rights, net of accumulated amortization

   $ 20,217      $ 19,793  

Produced programming:

     

Released, net of accumulated amortization

     4,626        4,806  

In production

     480,278        314,214  

In development

     47,356        37,392  
  

 

 

    

 

 

 

Total content costs

   $ 552,477      $ 376,205  
  

 

 

    

 

 

 

Content cost monetized on a title-by-title basis

   $ 534,069      $ 358,207  

Content cost monetized as a film group

     18,408        17,998  
  

 

 

    

 

 

 

Total content costs

   $ 552,477      $ 376,205  
  

 

 

    

 

 

 

Amortization of content costs was $10.7 million and $15.9 million for the three months ended March 31, 2021 and 2020, respectively. Of the $10.7 million for the three months ended March 31, 2021, $8.6 million was monetized on a title-by-title basis and $2.1 million was monetized as a film group. Of the $15.9 million for the three months ended March 31, 2020, $14.2 million was monetized on a title-by-title basis and $1.7 million was monetized as a film group.

Accrued Liabilities

The following is a summary of accrued liabilities (in thousands):

 

     March 31,
2021
     December 31,
2020
 

Accrued operating expenses

   $ 187,684      $ 155,142  

Payroll, bonuses and benefits

     114,993        100,630  

Other

     68,325        66,977  
  

 

 

    

 

 

 

Total accrued liabilities

   $ 371,002      $ 322,749  
  

 

 

    

 

 

 

Allowance for Doubtful Accounts

The changes in the allowance for doubtful accounts are as follows (in thousands):

 

     Balance at
Beginning
of Year
     Additions/Charged
(Credited) to Costs

and Expenses
     Deductions      Foreign
Exchange
     Balance at
End of
Period
 

Three months ended March 31, 2021

   $ 67,975      $ 1,002      $ (1,365 )     $ 11      $ 67,623  

 

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Table of Contents

Supplemental Cash Flow

The Company’s supplemental cash flow information is as follows (in thousands):

 

     Three Months Ended March 31,  
     2021      2020  

Supplemental information:

     

Cash paid for interest

   $ 41,726      $ 71,959  

Cash payments for income taxes

     7,709        15,420  

Non-cash investing and financing activities:

     

Capital expenditures included in accounts payable and accrued liabilities

   $ 5,924      $ 6,569  

Contingent consideration provided in connection with acquisitions

     —          9,947  

Accretion of redeemable non-controlling interests

     (271      (6,349

Establishment of non-controlling interests

     2,888        —    

Accrued distributions

     3,733        7,251  

Issuance of Class A Common Units

     —          26,476  

Issuance of promissory note

     —          15,885  

 

7.

GOODWILL AND INTANGIBLE ASSETS

Goodwill

The changes in the carrying value of goodwill are as follows (in thousands):

 

     Owned Sports
Properties
     Events,
Experiences &
Rights
     Representation      Total  

Balance — December 31, 2020

   $ 2,674,038      $ 1,011,217      $ 495,924      $ 4,181,179  

Foreign currency translation

     —          448        (11      437  
  

 

 

    

 

 

    

 

 

    

 

 

 

Balance —March 31, 2021

   $ 2,674,038      $ 1,011,665      $ 495,913      $ 4,181,616  
  

 

 

    

 

 

    

 

 

    

 

 

 

Intangible Assets

The following table summarizes information relating to the Company’s identifiable intangible assets as of March 31, 2021 (in thousands):

 

     Weighted Average
Estimated Useful Life
(in years)
     Gross
Amount
     Accumulated
Amortization
     Carrying
Value
 

Amortized:

           

Trade names

     17.5      $ 970,879      $ (247,272    $ 723,607  

Customer and client relationships

     6.7        1,315,913        (934,509      381,404  

Internally developed technology

     4.4        61,616        (48,849      12,767  

Other

     4.3        45,346        (44,545      801  
     

 

 

    

 

 

    

 

 

 
        2,393,754        (1,275,175      1,118,579  
     

 

 

    

 

 

    

 

 

 

Indefinite-lived:

           

Trade names

        342,376        —          342,376  

Owned events

        89,205        —          89,205  
     

 

 

    

 

 

    

 

 

 

Total intangible assets

      $ 2,825,335      $ (1,275,175    $ 1,550,160  
     

 

 

    

 

 

    

 

 

 

 

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The following table summarizes information relating to the Company’s identifiable intangible assets as of December 31, 2020 (in thousands):

 

     Weighted Average
Estimated Useful Life
(in years)
     Gross
Amount
     Accumulated
Amortization
     Carrying
Value
 

Amortized:

           

Trade names

     17.5      $ 970,595      $ (232,158    $ 738,437  

Customer and client relationships

     6.7        1,317,083        (907,889      409,194  

Internally developed technology

     4.4        61,539        (46,126      15,413  

Other

     4.3        45,317        (44,251      1,066  
     

 

 

    

 

 

    

 

 

 
        2,394,534        (1,230,424      1,164,110  
     

 

 

    

 

 

    

 

 

 

lndefinite-lived:

           

Trade names

        341,272        —          341,272  

Owned events

        90,086        —          90,086  
     

 

 

    

 

 

    

 

 

 

Total intangible assets

      $ 2,825,892      $ (1,230,424    $ 1,595,468  
     

 

 

    

 

 

    

 

 

 

Intangible asset amortization expense was $45.7 million and $60.0 million for the three months ended March 31, 2021 and 2020, respectively. The Company recorded an impairment charge of $3.1 million in the three months ended March 31, 2020.

 

8.

INVESTMENTS

The following is a summary of the Company’s investments (in thousands):

 

     March 31,
2021
     December 31,
2020
 

Equity method investments

   $ 161,702      $ 177,663  

Equity investments without readily determinable fair values

     62,487        66,378  

Equity investments with readily determinable fair values

     876        7,037  
  

 

 

    

 

 

 

Total investments

   $   225,065      $ 251,078  
  

 

 

    

 

 

 

Equity Method Investments

As of March 31, 2021 and December 31, 2020, the Company held various investments in non-marketable equity instruments of private companies. As of March 31, 2021, the Company’s equity method investments are primarily comprised of Learfield IMG College and Sports News Television Limited. The Company’s ownership of its equity method investments ranges from 5% to 50% as of March 31, 2021. For the three months ended March 31, 2020, the Company recorded total other-than-temporary impairment charges of $5.9 million for one of its equity method investments, which has been recorded in equity losses of affiliates in the consolidated statement of operations.

Equity Investments without Readily Determinable Fair Values

As of March 31, 2021 and December 31, 2020, the Company held various investments in non-marketable equity instruments of private companies. For the three months ended March 31, 2021, the Company sold three investments for net proceeds of $4.8 million and recorded related gains of $2.6 million. For the three months ended March 31, 2020, the Company recorded an impairment of $2.3 million for two of its equity investments without readily determinable fair values. These impairment charges have been recorded in other (expense) income, net in the consolidated statements of operations.

Equity Investments with Readily Determinable Fair Values

As of March 31, 2021, the Company has two investments in publicly traded companies. During the three months ended March 31, 2021, the Company sold two investments in publicly traded companies for total net proceeds of $11.5 million. As of March 31, 2021 and December 31, 2020, the Company’s equity investments with readily determinable fair values were valued at $0.9 million and $7.0 million, respectively. The Company recorded gains (losses) of $5.2 million and $(0.5) million for the three months ended March 31, 2021 and 2020, respectively, due to the change in fair value in other (expense) income, net in the consolidated statements of operations. See Note 10 for additional information regarding fair value measurements for these equity investments.

 

9.

FINANCIAL INSTRUMENTS

The Company enters into forward foreign exchange contracts to hedge its foreign currency exposures on future production expenses denominated in various foreign currencies (i.e., cash flow hedges). The Company also enters into forward foreign exchange contracts that economically hedge certain of its foreign currency risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. In addition, the Company enters into interest rate swaps to hedge certain of its interest rate risks on its debt. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions.

 

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Table of Contents

As of March 31, 2021, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 12 months from March 31, 2021) (in thousands except for exchange rates):

 

Foreign Currency

   Foreign
Currency
Amount
            US Dollar
Amount
     Weighted Average
Exchange Rate Per
$1 USD
 

British Pound Sterling

     £ 38,639        in exchange for      $ 53,075        £ 0.73  

Euro

     € 19,000        in exchange for      $ 22,474        € 0.85  

Canadian Dollar

     C$ 127,760        in exchange for      $ 101,384        C$ 1.26  

Swedish Krona

     kr 9,000        in exchange for      $ 1,066        kr 8.45  

Japanese Yen

     JP¥ 1,843,408        in exchange for      $ 17,550        JP¥ 105.08  

Australian Dollar

     AUD$ 14,300        in exchange for      $ 10,639        AUD$ 1.34  

Singapore Dollar

     S$ 3,250        in exchange for      $ 2,433        S$ 1.34  

Chinese Yuan Renminbi

     CN¥ 138,483        in exchange for      $ 21,241        CN¥ 6.52  

For forward foreign exchange contracts designated as cash flow hedges, the Company recognized net losses in accumulated other comprehensive loss of $1.4 million and $3.1 million for the three months ended March 31, 2021 and 2020, respectively. The Company did not reclassify any gains or losses into net income (loss) for the three months ended March 31, 2021 and 2020.

For forward foreign exchange contracts not designated as cash flow hedges, the Company recorded a net (loss) gain of $(0.2) million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively in other (expense) income, net in the consolidated statements of operations.

In certain circumstances, the Company enters into contracts that are settled in currencies other than the functional or local currencies of the contracting parties. Accordingly, these contracts consist of the underlying operational contract and an embedded foreign currency derivative element. Hedge accounting is not applied to the embedded foreign currency derivative element. The Company recorded a net (loss) gain of $(11.4) million and $2.1 million for the three months ended March 31, 2021 and 2020, respectively, in other (expense) income, net in the consolidated statements of operations.

In addition, the Company has entered into interest rate swaps for portions of its 2014 Credit Facilities and other variable interest bearing debt and has designated them cash flow hedges. For the three months ended March 31, 2021 and 2020, the Company recorded gains (losses) of $15.1 million and $(80.0) million in accumulated other comprehensive loss and reclassified losses of $7.4 million and $1.4 million into net income (loss), respectively.

 

10.

FAIR VALUE MEASUREMENTS

The fair value hierarchy is composed of the following three categories:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurements.

 

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The following tables present, for each of the fair value hierarchy levels, the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands):

 

     Fair Value Measurements as of
March 31, 2021
 
     Level I      Level II      Level III      Total  

Assets:

           

Investments in equity securities with readily determinable fair values

   $ 876      $ —        $ —        $ 876  

Forward foreign exchange contracts

     —          263        —          263  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 876      $ 263      $ —        $ 1,139  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Contingent consideration

   $ —        $ —        $ 11,566      $ 11,566  

Interest rate swaps

     —          85,373        —          85,373  

Forward foreign exchange contracts

     —          15,209        —          15,209  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —        $ 100,582      $ 11,566      $ 112,148  
  

 

 

    

 

 

    

 

 

    

 

 

 
     Fair Value Measurements as of
December 31, 2020
 
     Level I      Level II      Level III      Total  

Assets:

           

Investments in equity securities with readily determinable fair values

   $ 7,037      $ —        $ —        $ 7,037  

Forward foreign exchange contracts

     —          1,794        —          1,794  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 7,037      $ 1,794      $ —        $ 8,831  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Contingent consideration

   $ —        $ —        $ 9,026      $ 9,026  

Interest rate swaps

     —          107,909        —          107,909  

Forward foreign exchange contracts

     —          5,023        —          5,023  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —        $ 112,932      $ 9,026      $ 121,958  
  

 

 

    

 

 

    

 

 

    

 

 

 

There have been no transfers of assets or liabilities between the fair value measurement classifications during the three months ended March 31, 2021.

Investments in Equity Securities with Readily Determinable Fair Values

The estimated fair value of the Company’s equity securities with readily determinable fair values is based on observable inputs in an active market, which is a Level 1 measurement within the fair value hierarchy.

Contingent Consideration

The Company has recorded contingent consideration liabilities in connection with its acquisitions. Contingent consideration is included in current liabilities and other long-term liabilities in the consolidated balance sheets. Changes in fair value are recognized in selling, general and administrative expenses. The estimated fair value of the contingent consideration is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

The changes in the fair value of contingent consideration were as follows (in thousands):

 

     Three Months
Ended March 31,
2021
 

Balance at December 31, 2020

   $ 9,026  

Payments

     (2,032

Change in fair value

     4,572  
  

 

 

 

Balance at March 31, 2021

   $ 11,566  
  

 

 

 

Foreign Currency Derivatives

The Company classifies its foreign currency derivatives within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (Note 9). As of March 31, 2021 and December 31, 2020, the Company had $0.3 million and $1.8 million in other current assets, $6.0 million and $4.3 million in other current liabilities and $9.2 million and $0.7 million in other long-term liabilities, respectively, recorded in the consolidated balance sheets related to the Company’s foreign currency derivatives.

Interest Rate Swaps

The Company classifies its interest rate swaps within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (Note 9). The fair value of the swaps was $85.4 million and $107.9 million as of March 31, 2021 and December 31, 2020, respectively, and was included in other long-term liabilities in the consolidated balance sheets.

 

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Table of Contents
11.

DEBT

The following is a summary of outstanding debt (in thousands):

 

     March 31,
2021
     December 31,
2020
 

2014 Credit Facilities:

     

First Lien Term Loan (due May 2025)

   $ 3,066,047      $ 3,074,230  

Revolving Credit Facility (due May 2023)

     69,057        163,057  

Zuffa Credit Facilities:

     

Zuffa First Lien Term Loan (due April 2026)

     2,440,946        2,447,064  

Other debt (2.47%-l4.50% Notes due at various dates through 2030)

     386,916        339,519  
  

 

 

    

 

 

 

Total principal

     5,962,966        6,023,870  

Unamortized discount

     (37,990      (40,982

Unamortized issuance costs

     (53,439      (57,083
  

 

 

    

 

 

 

Total debt

     5,871,537        5,925,805  

Less: current portion

     (103,213      (212,971
  

 

 

    

 

 

 

Total long-term debt

   $ 5,768,324      $ 5,712,834  
  

 

 

    

 

 

 

2014 Credit Facilities

In March 2021, the Company reduced its outstanding borrowings under the 2014 Credit Facilities such that the quarterly covenant test was not applicable as the Company did not utilize greater than thirty-five percent of the borrowing capacity as of March 31, 2021. In April 2021, the Company received a waiver from the financial covenant for the test periods ending June 30, 2021, September 30, 2021 and December 31, 2021. The financial debt covenants did not apply as of December 31, 2020, as the Company amended the 2014 Credit Facilities receiving a waiver from the financial covenant for the test periods ended June 30, 2020, September 30, 2020 and December 31, 2020. Also, in April 2021, the Revolving Credit Facility maturity date was extended from May 2023 to May 2024.

The Company had outstanding letters of credit under the 2014 Credit Facilities totaling $25.0 million and $24.8 million as of March 31, 2021 and December 31, 2020, respectively.

Zuffa Credit Facilities

In January 2021, the Company completed a refinancing of the Zuffa First Lien Term Loan and the Term Loan Add-on into a single term loan (the “New First Lien Term Loan”), which reduced the annual interest rate margin by 25 basis points to 3.00% for LIBOR loans and reduced the LIBOR floor by 25 basis points to 0.75%. The annual interest rate margin applicable to the New First Lien Term Loan is subject to a 25 basis point step-down to 2.75% for LIBOR loans if the First Lien Leverage Ratio is below 3.5-to-1. With the exception of the interest rate margin and the LIBOR floor, the New First Lien Term Loan has similar terms and conditions as the Zuffa First Lien Term Loan and Term Loan Add-on.

The financial debt covenants of the Zuffa Credit Facilities did not apply as of March 31, 2021 and December 31, 2020, as Zuffa did not utilize greater than thirty-five percent of the borrowing capacity.

Zuffa had no letters of credit outstanding under the Zuffa Credit Facilities as of March 31, 2021 and one letter of credit of $10.0 million as of December 31, 2020.

Other Debt

OLE Revolver

The OLE revolving credit agreement contains a financial covenant that requires OLE to maintain a First Lien Leverage Ratio of Consolidated First Lien Debt to Consolidated EBITDA, as defined in the credit agreement, of no more than 3-to-1. The Company is only required to meet the First Lien Leverage Ratio if the sum of outstanding borrowings on the Revolving Credit Facility plus outstanding letters of credit exceeding $2.0 million that are not cash collateralized exceeds forty percent of the total Revolving Commitments as measured on a quarterly basis, as defined in the credit agreement. As of March 31, 2021, the Company was in compliance with the financial debt covenants.

 

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Table of Contents

OLE had no letters of credit outstanding under the revolving credit agreement as of March 31, 2021 and December 31, 2020.

Receivables Purchase Agreement

As of March 31, 2021 and December 31, 2020, the debt outstanding under these arrangements was $67.7 million and $83.7 million, respectively.

Endeavor Content Capital Facility

In February 2021, the Company increased its capacity under its Content Capital Facility from $200.0 million to $325.0 million. As of March 31, 2021 and December 31, 2020, Endeavor Content Capital had $220.5 million and $153.9 million of borrowings outstanding, respectively, and no outstanding letters of credit under the Content Capital Facility.

Zuffa Secured Commercial Loans

As of March 31, 2021 and December 31, 2020, Zuffa was in compliance with its financial debt covenant under the Zuffa Secured Commercial Loans.

2014 Credit Facilities and Zuffa Credit Facilities

The 2014 Credit Facilities and the Zuffa Credit Facilities restrict the ability of certain subsidiaries of the Company to make distributions and other payments to the Company. These restrictions do include exceptions for, among other things, (1) amounts necessary to make tax payments, (2) a limited annual amount for employee equity repurchases, (3) distributions required to maintain parent entities, (4) other specific allowable situations and (5) a general restricted payment basket. As of March 31, 2021, Endeavor Operating Company, LLC held cash of $62.1 million; liabilities for redemption of units and future incentive awards of $50.0 million and $13.4 million, respectively; and liabilities and redeemable equity for unit put rights of $28.4 million. As of December 31, 2020, Endeavor Operating Company, LLC held cash of $63.3 million; liabilities for redemption of units and future incentive awards of $53.9 million and $11.9 million, respectively; and liabilities and redeemable equity for unit put rights of $28.4 million. Otherwise, Endeavor Operating Company, LLC has no material separate cash flows, assets or liabilities other than the investments in its subsidiaries. All its business operations are conducted through its operating subsidiaries; it has no material independent operations. Endeavor Operating Company, LLC has no other material commitments or guarantees. As a result of the restrictions described above, substantially all of the subsidiaries’ net assets are effectively restricted in their ability to be transferred to Endeavor Operating Company, LLC.

As of March 31, 2021 and December 31, 2020, the Company’s First Lien Term Loan under the 2014 Credit Facilities and Zuffa’s First Lien Term Loan under its Credit Facilities had an estimated fair value of $5.3 billion. The estimated fair values of the Company’s First Lien Term Loan under the 2014 Credit Facilities and Zuffa’s First Lien Term Loan under its Credit Facilities are based on quoted market values for the debt. Since the First Lien Term Loan under the 2014 Credit Facilities and Zuffa’s First Lien Term Loan under its Credit Facilities do not trade on a daily basis in an active market, fair value estimates are based on market observable inputs based on quoted market prices and borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 under the fair value hierarchy.

 

12.

MEMBERS’ EQUITY

Common Units

The Company had 2,149,218,614 Class A Common Units issued and outstanding as of each of March 31, 2021 and December 31, 2020. The Class A Common Units are held by Holdco, Silver Lake, and other investors. The Class A Common Units have no par value assigned to them.

During the three months ended March 31, 2020, the Company issued 8,766,738 Class A Common Units to Silver Lake as part of the Zuffa distribution discussed below.

Profits Units

The Company had 313,827,410 and 314,123,415 Profits Units issued and outstanding as of March 31, 2021 and December 31, 2020, respectively. Other than certain Profits Units held by key executives, Profits Units are not entitled to participate in operating distributions unless otherwise elected by the Board. Certain Profits Units are designated as Catch-Up Profits Units and are entitled to certain “catch up” distributions once the distribution threshold applicable to such Catch-Up Profits Units has been met. All Profits Units have no par value assigned to them.

 

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Table of Contents

Non-controlling Interests

In January 2020, the Board of Zuffa approved the payment of a distribution in the amount of $300.0 million to Zuffa common unit and profits unit holders. During the three months ended March 31, 2020, Zuffa authorized a total of $201.9 million, of which $195.2 million was paid and $6.7 million was deferred as of March 31, 2020. In lieu of cash, the Company issued 8,766,738 Class A Common Units at fair value to Silver Lake for $26.5 million and issued a convertible promissory note to Silver Lake for $15.9 million. This resulted in the Company retaining $135.0 million of the $195.2 million distribution paid during the three months ended March 31, 2020. The remaining portion of the distribution was authorized and paid during the remainder of 2020.

 

13.

REDEEMABLE NON-CONTROLLING INTERESTS

OLE

In connection with the acquisition of OLE (Note 5), the Company entered into an Amended and Restated Limited Liability Company Agreement of OLE Parent with 32 Equity. The terms of the agreement provide 32 Equity with certain rights to put its common units in OLE Parent to the Company upon a termination of the CLA or at its option at any time following the Lockup Period. The Company also has certain call rights to require 32 Equity to sell its common units in OLE Parent to the Company upon a termination of the CLA in the event aforementioned put rights are not exercised. The put/call price is an amount equal to fair market value and the exercise of these put/call rights may give rise to an obligation of the Company to make a premium payment to 32 Equity in certain circumstances. At any time following the Lockup Period, 32 Equity will be entitled to a $41.0 million premium payment from the Company if both (i) 32 Equity or the Company exercise the put/call rights described above or there is a sale or IPO of OLE Parent and (ii) certain performance metrics based on average OLE gross profit or NFL related business gross profit are achieved. The $41.0 million premium payment will also be payable if, prior to January 2, 2026, a sale or IPO of OLE Parent occurs or if 32 Equity exercises its put rights following a termination of the CLA due to an OLE event of default (in which case the $41.0 million premium payment may be subject to proration). The $41.0 million premium payment was recognized as a separate unit of account from the non-controlling interest. The non-controlling interest was recognized at acquisition based on fair value of $65.2 million. During the three months ended March 31, 2021, the redeemable non-controlling interest was adjusted for certain net assets that were contributed during the period. As of March 31, 2021 and December 31, 2020, the estimated redemption value was below the carrying value of $45.3 million and $45.0 million, respectively.

China

In June 2016, the Company received a contribution of $75.0 million from third parties in a newly formed subsidiary of the Company that was formed to expand the Company’s existing business in China. Costs incurred for this contribution were $6.9 million and were recognized as a reduction of the proceeds. This contribution gave the non-controlling interests holders approximately 34% ownership of the subsidiary. The holders of the non-controlling interests have the right to put their investment to the Company at any time after June 1, 2023 for fair market value. As of March 31, 2021 and December 31, 2020, the estimated redemption value was equal to and below the carrying value of $87.4 million and $91.4 million, respectively.

In March 2018, the Company entered into an agreement for an additional contribution in its existing subsidiary in China. The total additional contribution was $125.0 million, of which $12.5 million was the Company’s funding obligation and $112.5 million was the existing non-controlling interests’ funding obligation. In January 2021, this agreement and the underlying funding obligation were terminated.

Zuffa

In July 2018, the Company received a contribution of $9.7 million from third parties (the “Russia Co-Investors”) in a newly formed subsidiary of the Company (the “Russia Subsidiary”) that was formed to expand the Company’s existing business in Russia and certain other countries in the Commonwealth of Independent States. The terms of this contribution provide the Russia Co-Investors with a put option to sell their ownership in the Russia Subsidiary five years and nine months after the consummation of the contribution. The purchase price of the put option is the greater of the total investment amount, defined as the Russia Co-Investors’ cash contributions less cash distributions, or fair value. As of March 31, 2021 and December 31, 2020, the estimated redemption value was $9.7 million.

Frieze

In connection with the acquisition of Frieze in 2016, the terms of the agreement provide the sellers with a put option to sell their remaining 30% interest after fiscal year 2020. The Company also has a call option to buy the remaining 30% interest after fiscal year 2020 or upon termination of employment of the sellers who continued to be employees of Frieze after the acquisition. The price of the put and call option is equal to Frieze’s prior year’s EBITDA multiplied by 7.5. As of March 31, 2021 and December 31, 2020, the estimated redemption value was below the carrying value of $22.9 million and $22.2 million, respectively.

 

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Table of Contents
14.

INCOME TAXES

The Company is a LLC, which is treated as a partnership for U.S. federal income tax purposes and is therefore not subject to U.S. corporate income taxes. The Company’s U.S. and foreign corporate subsidiaries are subject to entity-level taxes. The Company also is subject to entity-level income taxes in certain U.S. state and local jurisdictions.

In accordance with Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, each interim period is considered integral to the annual period and tax expense is generally determined using an estimate of the annual effective income tax rate (“AETR”). The Company would record income tax expense each quarter using the estimated AETR to provide for income taxes on a current year-to-date basis, adjusted for discrete items, if any, that are noted in the relevant period. In accordance with the authoritative guidance for accounting for income taxes in interim periods, the Company computed its income tax provision for the three months ended March 31, 2021 based upon the AETR. Utilizing the AETR in 2020 would not have provided a reliable estimate of the tax provision based on the forecasted impact of COVID-19 on the Company’s operations and overall economy. Therefore, in accordance with the authoritative guidance for accounting for income taxes in interim periods, the Company computed its income tax provision for the three months ended March 31, 2020 based upon the actual effective tax rate for that period.

The provision for income taxes for the three months ended March 31, 2021 and 2020 is $5.1 million and $48.6 million, respectively, based on pretax income from continuing operations of $22.9 million and $9.1 million, respectively. The tax provision for the three months ended March 31, 2020 includes charges of $32.3 million related to acquisitions and subsequent tax restructuring. The effective tax rate is 22.2% and 531.9% for the three months ended March 31, 2021 and 2020, respectively. The effective tax rate between the periods differs primarily as a result of the aforementioned acquisitions and subsequent tax restructuring in the three months ended March 31, 2020. Any tax balances reflected on the March 31, 2021 balance sheet would be adjusted accordingly to reflect the actual financial results for the year ending December 31, 2021.

The Company’s effective tax rate differs from the U.S. federal statutory rate primarily due to partnership income not subject to income tax, state and local income taxes, withholding taxes in foreign jurisdictions that are not based on net income and income subject to tax in foreign jurisdictions which differ from the U.S. federal statutory income tax rate and the relative amount of income earned in those jurisdictions.

As of March 31, 2021 and December 31, 2020, the Company had unrecognized tax benefits of $36.4 million and $34.4 million, respectively, for which we are unable to make a reasonable and reliable estimate of the period in which these liabilities will be settled with the respective tax authorities.

 

15.

REVENUE

The following table presents the Company’s revenue disaggregated by primary revenue sources for the three months ended March 31, 2021 and 2020 (in thousands):

 

     Three Months Ended March 31, 2021  
     Owned Sports
Properties
     Events,
Experiences &
Rights
     Representation      Total  

Media rights

   $ 177,653      $ 323,126      $ —        $ 500,779  

Media production, distribution and content

     2,187        84,713        58,923        145,823  

Events and performance

     103,641        131,771        —          235,412  

Talent representation and licensing

     —          —          146,745        146,745  

Marketing

     —          —          43,241        43,241  

Eliminations

     —          —          —          (2,418
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 283,481      $ 539,610      $ 248,909      $ 1,069,582  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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     Three Months Ended March 31, 2020  
     Owned Sports
Properties
     Events,
Experiences &
Rights
     Representation      Total  

Media rights

   $ 122,814      $ 216,649      $ —        $ 339,463  

Media production, distribution and content

     2,136        75,898        69,741        147,775  

Events and performance

     107,217        376,229        —          483,446  

Talent representation and licensing

     —         
—  
 
     147,977        147,977  

Marketing

    
—  
 
     —          75,016        75,016  

Eliminations

     —          —          —          (3,280
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 232,167      $ 668,776      $ 292,734      $ 1,190,397  
  

 

 

    

 

 

    

 

 

    

 

 

 

In the three months ended March 31, 2021 and 2020, there was revenue recognized of $13.1 million and $13.6 million, respectively, from performance obligations satisfied in prior periods.

Remaining Performance Obligations

The following table presents the aggregate amount of transaction price allocated to remaining performance obligations for contracts greater than one year with unsatisfied or partially satisfied performance obligations as of March 31, 2021 (in thousands). The transaction price related to these future obligations does not include any variable consideration.

 

     Years Ending
December 31,
 

Remainder of 2021

   $ 1,364,986  

2022

     1,390,232  

2023

     1,221,096  

2024

     952,052  

2025

     886,359  

Thereafter

     538,440  
  

 

 

 
   $ 6,353,165  
  

 

 

 

Contract Liabilities

The Company records deferred revenue when cash payments are received or due in advance of its performance. The Company’s deferred revenue balance primarily relates to advance payments received related to advertising and sponsorship agreements, event advanced ticket sales and performance tuition. Deferred revenue is included in the current liabilities section and in other long-term liabilities in the consolidated balance sheets.

The following table presents the Company’s contract liabilities as of March 31, 2021 and December 31, 2020 (in thousands):

 

Description

   December 31,
2020
     Additions      Deductions      Foreign
Exchange
     March 31,
2021
 

Deferred revenue - current

   $ 606,530      $ 436,449      $ (384,859    $ 2,149      $ 660,269  

Deferred revenue - noncurrent

   $ 19,437      $ 2,503      $ 1,257      $ —        $ 23,197  

 

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16.

SEGMENT INFORMATION

As of March 31, 2021, the Company has three reportable segments: Owned Sports Properties, Events, Experiences & Rights, and Representation. The Company also reports the results for the “Corporate” group. The profitability measure employed by the Company’s chief operating decision maker for allocating resources and assessing operating performance is Adjusted EBITDA. Segment information is presented consistently with the basis for the year ended December 31, 2020. Summarized financial information for the Company’s reportable segments is shown in the following tables (in thousands):

Revenue

 

     Three Months Ended March 31,  
     2021      2020  

Owned Sports Properties

   $ 283,481      $ 232,167  

Events, Experiences & Rights

     539,610        668,776  

Representation

     248,909        292,734  

Eliminations

     (2,418      (3,280
  

 

 

    

 

 

 

Total consolidated revenue

   $ 1,069,582      $ 1,190,397  
  

 

 

    

 

 

 

Reconciliation of segment profitability

 

     Three Months Ended March 31,  
     2021      2020  

Owned Sports Properties

   $ 145,549      $ 102,294  

Events, Experiences & Rights

     39,050        69,123  

Representation

     61,483        68,613  

Corporate

     (46,616      (54,492
  

 

 

    

 

 

 

Adjusted EBITDA

     199,466        185,538  

Reconciling items:

     

Equity (income) losses of affiliates

     (3,334      38  

Interest expense, net

     (68,351      (69,984

Depreciation and amortization

     (67,236      (80,447

Equity-based compensation expense

     (16,491      (7,771

Merger, acquisition and earn-out costs

     (10,985      (10,162

Certain legal costs

     (3,952      (2,802

Restructuring, severance and impairment

     (407      (16,942

Fair value adjustment - equity investments

     7,799        (2,809

COVID-19 related costs

               (9,507

Other

     (13,577      23,985  
  

 

 

    

 

 

 

Income before income taxes and equity losses of affiliates

   $ 22,932      $ 9,137  
  

 

 

    

 

 

 

 

17.

COMMITMENTS AND CONTINGENCIES

Claims and Litigation

The Company is involved in legal proceedings, claims and governmental investigations arising in the normal course of business. The types of allegations that arise in connection with such legal proceedings vary in nature, but can include contract, employment, tax and intellectual property matters. The Company evaluates all cases and records liabilities for losses from legal proceedings when the Company determines that it is probable that the outcome will be unfavorable and the amount, or potential range, of loss can be reasonably estimated. While any outcome related to litigation or such governmental proceedings cannot be predicted with certainty, management believes that the outcome of these matters, except as otherwise may be discussed below, individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

An employee of the Company is one of several individuals and entities named in a complaint by India’s Director of Enforcement (“DE”), initially filed in January 2015, alleging violations of the Foreign Exchange Management Act (“FEMA”). The complaint alleges that the employee participated as an advisor in a series of transactions in 2009 that were completed by and on behalf of a client, the Board of Control for Cricket in India (the “BCCI”), and that contravened two provisions of FEMA. The subject transactions were pursued under the direction and control of one of the BCCI’s board members. The Company is not alleged to have possessed any funds improperly or to have made or received any of the payments that are alleged to have violated FEMA. The Company is cooperating with the DE’s investigation which, at present, is in its early stages.

 

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In July 2017, the Italian Competition Authority (“ICA”) issued a decision opening an investigation into alleged breaches of competition law in Italy, involving inter alia IMG, and relating to bidding for certain media rights of the Serie A and Serie B football leagues. In April 2018, the European Commission conducted on-site inspections at a number of companies that are involved with sports media rights, including the Company. The inspections were part of an ongoing investigation into the sector and into potential violations of certain antitrust laws that may have taken place within it. The Company investigated these ICA matters, as well as other regulatory compliance matters. In May 2019, the ICA completed its investigation and fined the Company approximately EUR 0.3 million. As part of its decision, the ICA acknowledged the Company’s cooperation and ongoing compliance efforts since the investigation commenced. In July 2019, three football clubs and in June 2020, the Serie A football league (Lega Nazionale Professionisti Serie A or “Lega Nazionale”, and together with the three clubs, the “Plaintiffs”) each filed separate claims against IMG and certain other unrelated parties in the Court of Milan, Italy, alleging that IMG engaged in anti-competitive practices with regard to bidding for certain media rights of the Serie A and Serie B football leagues. The Plaintiffs seek damages from all defendants in amounts totalling EUR 554.6 million in the aggregate relating to the three football clubs and EUR 1,592.2 million relating to Lega Nazionale, along with attorneys’ fees and costs (the “Damages Claims”). Since December 2020, four additional football clubs have each filed requests to intervene in the Lega Nazionale proceedings and individually seek to claim amounts in the aggregate totalling EUR 251.5 million. Ten other clubs also filed requests to intervene in support of Lega Nazionale’s claim or alternatively to individually claim in the amount of EUR 92.1 million, in the case of one club, and unspecified amounts (to be quantified as a percentage of the total amount sought by Lega Nazionale) in the other nine cases. Collectively, the interventions of these 14 clubs are the “Interventions”. The Company intends to defend against the Damages Claims, Interventions and any related claims, and management believes that the Company has meritorious defenses to these claims, including the absence of standing of the clubs, and the absence of actual damage. The Company may also be subject to regulatory and other claims and actions with respect to these ICA and other regulatory matters. Any judgment entered against the Company or settlement entered into, including with respect to claims or actions brought by other parties, could materially and adversely impact the Company’s business, financial condition and results of operations.

Zuffa has five related class-action lawsuits filed against it in the United States District Court for the Northern District of California (the “District Court”) between December 2014 and March 2015 by a total of eleven former UFC fighters. The complaints in the five lawsuits are substantially identical. Each alleges that Zuffa violated Section 2 of the Sherman Act by monopolizing the alleged market for the promotion of elite professional MMA bouts and monopolizing the alleged market for elite professional MMA Fighters’ services. Plaintiffs claim that Zuffa’s alleged conduct injured them by artificially depressing the compensation they received for their services and their intellectual property rights, and they seek treble damages under the antitrust laws, as well as attorneys’ fees and costs, and injunctive relief. On December 14, 2020, the District Court orally indicated its intention to grant Plaintiffs’ motion to certify the Bout Class (comprised of fighters who participated in bouts from December 16, 2010 to June 30, 2017) and to deny Plaintiffs’ motion to certify the Identity Class (a purported class based upon the alleged expropriation and exploitation of fighter identities). The Company is awaiting the official written order from the judge and assuming he rules as previously indicated, then the Company will seek an appeal of this decision. Management believes that the Company has meritorious defenses against the allegations and intends to defend itself vigorously.

In February 2021, the Company signed a new franchise agreement and side letter (the “Franchise Agreements”) directly with the Writer’s Guild of America East and the Writer’s Guild of America West (collectively, the “WGA”). These Franchise Agreements include terms that, among other things, prohibit the Company from (a) negotiating packaging deals after June 30, 2022 and (b) having more than a 20% non-controlling ownership or other financial interest in, or being owned or affiliated with any individual or entity that has more than a 20% non-controlling ownership or other financial interest in, any entity or individual engaged in the production or distribution of works written by WGA members under a WGA collective bargaining agreement. The Franchise Agreements provide for a transition period for the Company to come into compliance with certain of its provisions. During the term of the Franchise Agreements, until the Company is in compliance, the Franchise Agreements require that the Company place into escrow (i) an amount equal to Endeavor Content’s after-tax gross profits from the production of works written by WGA members under a WGA collective bargaining agreement and (ii) an amount equal to the Company’s after tax writer commissions and package fees received in connection with such Endeavor Content productions.

 

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18.

RELATED PARTY TRANSACTIONS

The Company has the following related party transactions as of March 31, 2021 and December 31, 2020 and for the three months ended March 31, 2021 and 2020 (in thousands):

 

     March 31,
2021
     December 31,
2020
 

Other current assets

   $ 5,660      $ 5,572  

Other assets

     4,670        1,400  

Accounts payable

     31        1,356  

Other current liabilities

     2,479        969  

 

     Three Months Ended March 31,  
     2021      2020  

Revenue

   $ 7,000      $ 2,085  

Direct operating costs

     2,133        2,052  

Selling, general and administrative expenses

     1,126        8,816  

Other income, net

     875        875  

As of March 31, 2021, the Company has an equity-method investment in Euroleague, a related party. For the three months ended March 31, 2021 and 2020, the Company recognized revenue of $2.2 million and $(2.4) million, respectively, for a management fee to compensate it for representation and technical services it provides to Euroleague in relation to the distribution of media rights. This revenue is included in the Owned Sports Properties segment. Also, for the three months ended March 31, 2021 and 2020, the Company recognized revenue of $2.6 million and $1.9 million, respectively, for production services provided to Euroleague as well as direct operating costs of $1.8 million and $1.4 million, respectively, for the procurement of a license for gaming rights from Euroleague, which are included in the Events, Experiences & Rights segment. As of March 31, 2021 and December 31, 2020, the Company had a receivable of $3.0 million and $0.7 million, respectively, and a payable of $0.1 million and $1.0 million, respectively.

 

19.

SUBSEQUENT EVENTS

In June 2021, the Company acquired the path-to-college business of Reigning Champs, LLC for total preliminary consideration of $200 million in cash. Considering the proximity of the closing of the acquisition, additional disclosures required under ASC Topic 805, Business Combinations, will be provided in the Company’s next quarterly interim financial statements.

The Company routinely enters into purchase or guarantee arrangements for event, media or other representation rights as well as for advancements for content production or overhead costs with various organizations. Subsequent to March 31, 2021, the Company has entered into certain new arrangements increasing its purchase/guarantee agreements by $1.3 billion, which will be due in 2021 through 2028.

On May 3, 2021, Endeavor Group Holdings, Inc. (“EGH”) closed an initial public offering (“IPO”) of 24,495,000 shares of Class A common stock at a public offering price of $24.00 per share, which included 3,195,000 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. This option to purchase additional shares of Class A common stock was closed on May 12, 2021.

Prior to the closing of the IPO, a series of reorganization transactions (the “Reorganization Transactions”) was completed:

 

   

EGH’s certificate of incorporation was amended and restated to, among other things, provide for the following common stock:

 

Class of Common Stock

   Par Value      Votes    Economic Rights

Class A common stock

   $ 0.00001      1    Yes

Class B common stock

   $ 0.00001      None    Yes

Class C common stock

   $ 0.00001      None    Yes

Class X common stock

   $ 0.00001      1    None

Class Y common stock

   $ 0.00001      20    None

 

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  Voting shares of EGH’s common stock will generally vote together as a single class on all matters submitted to a vote of our stockholders;

 

   

Endeavor Manager became the sole managing member of EOC and EGH became the sole managing member of Endeavor Manager;

 

   

Endeavor Manager issued to equityholders of certain management holding companies common interest units in Endeavor Manager along with paired shares of its Class X common stock as consideration for the acquisition of Endeavor Operating Company Units held by such management holding companies;

 

   

For certain pre-IPO investors, EGH issued shares of its Class A common stock, Class Y common stock and rights to receive payments under a tax receivable agreement and for certain other pre-IPO investors, EGH issued shares of its Class A common stock as consideration for the acquisition of Endeavor Operating Company Units held by such pre-IPO investors;

 

   

For holders of Endeavor Operating Company Units which remained outstanding following the IPO, EGH issued paired shares of its Class X common stock and, in certain instances, Class Y common stock, in each case equal to the number of Endeavor Operating Company Units held and in exchange for the payment of the aggregate par value of the Class X common stock and Class Y common stock received; and

 

   

Certain Endeavor Profits Units, Endeavor Full Catch-Up Profits Units and Endeavor Partial Catch-Up Profits Units remain outstanding.

Subsequent to the closing of the IPO, several new and current investors purchased in the aggregate 75,584,747 shares of Class A common stock at a price per share of $24.00 (the “Private Placement”). Of these shares, 57,378,497 were purchased from EGH and 18,206,250 were purchased from an existing investor. EGH is required to, within 60 days following the closing of the IPO, register these shares of Class A common stock on a Form S-1 registration statement. Net proceeds received by EGH from the IPO and the Private Placement, after deducting underwriting discounts and commissions but before deducting offering expenses was approximately $1,901.5 million.

Subsequent to the closing of the IPO and the Private Placement, through a series of transactions, EOC acquired the equity interests of the minority unitholders of Zuffa, which owns and operates the Ultimate Fighting Championship (the “UFC Buyout”). This resulted in EOC directly or indirectly owning 100% of the equity interests of Zuffa. In consideration of the minority unitholders’ equity interests of Zuffa, (a) EGH and its subsidiaries issued to certain of such unitholders shares of Class A common stock, Endeavor Operating Company Units, Endeavor Manager Units, shares of Class X common stock and/or shares of Class Y common stock, and (b) EGH used $835.7 million of the net proceeds from this offering and the concurrent private placements to purchase Endeavor Operating Company Units (or equity interests of Zuffa) from certain of such holders. In addition, some of those minority unitholders sold their equity interests of EGH to the private placement investors in the concurrent private placement.

Remaining net proceeds after the UFC Buyout were contributed to Endeavor Manager in exchange for Endeavor Manager Units. Endeavor Manager then in turn contributed such net proceeds to Endeavor Operating Company in exchange for Endeavor Operating Company Units.

Upon the IPO, the 2021 Incentive Award Plan became effective with an initial reserve of 21,700,000 shares of Class A common stock. In addition, the following significant equity-based compensation items occurred: (i) 9,400,353 restricted stock units and stock options of EGH were granted to certain directors, employees and other service providers under the 2021 Incentive Award Plan; (ii) modification of certain pre-IPO equity-based awards were made primarily to remove certain forfeiture and discretionary call terms; (iii) the third Zuffa equity value threshold was achieved under the Zuffa future incentive award and EGH granted 520,834 restricted stock units to our Chief Executive Officer (“CEO”); (iv) our CEO was granted 2,333,334 time-vested restricted stock units as well as a performance-based award with a metric based on the increase in our share price; and (v) our Executive Chairman was granted a performance-based award with a metric based on the increase in our share price. The Company is currently assessing the accounting treatment for these items and will record the necessary equity-based compensation charges in the three months ended June 30, 2021, which in the aggregate is expected to be material.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report and with our audited financial statements and related notes included in the Prospectus. The historical financial data discussed below reflects our historical results of operations and financial position and relate to periods prior to the reorganization transactions. As a result, the following discussion does not reflect the significant impact that such events will have on us.

BUSINESS OVERVIEW

Endeavor is a premium intellectual property, content, events, and experiences company. We own and operate premium sports properties, including the UFC, produce and distribute sports and entertainment content, own and manage exclusive live events and experiences, and represent top sports and entertainment talent, as well as blue chip corporate clients. Founded as a client representation business, we expanded organically and through strategic mergers and acquisitions, investing in new capabilities, including sports operations and advisory, events and experiences management, media production and distribution, brand licensing, and experiential marketing. The addition of these new capabilities and insights transformed our business into an integrated global platform anchored by owned and managed premium intellectual property.

Segments

We operate our business in three segments: (i) Owned Sports Properties; (ii) Events, Experiences & Rights; and (iii) Representation.

Owned Sports Properties

Our Owned Sports Properties segment is comprised of a unique portfolio of scarce sports properties, including UFC, PBR and Euroleague, that generate significant growth through innovative rights deals and exclusive live events.

Through the UFC, the world’s premier professional MMA organization, we produce more than 40 live events annually which are broadcast in over 160 countries and territories to approximately one billion TV households. UFC was founded in 1993 and has grown in popularity after hosting more than 500 events and reaching a global audience through an increasing array of broadcast license agreements and our owned FIGHT PASS streaming platform. The value of our content is demonstrated by our licensing arrangements with ESPN and other international broadcasters and our increasing consumer engagement is reflected by the growth of FIGHT PASS subscribers and overall follower growth and engagement across our social channels.

PBR is the world’s premier bull riding circuit with more than 500 bull riders from the United States, Australia, Brazil, Canada, and Mexico, competing in more than 200 bull riding events each year pre-pandemic. PBR is one of America’s fastest growing sports with annual attendance for its premier series quadrupling since its inception in 1995.

We have an up to 20-year partnership with Euroleague, which could extend into 2036, to manage and capitalize on all of the commercial business of the league, including media rights, sponsorship, content production, licensing, digital distribution, events staging, and hospitality, for which we receive a management fee. Euroleague is one of the most popular indoor sports leagues in the world, averaging attendance of over 8,500 per game in the 2019-2020 season.

Events, Experiences & Rights

In our Events, Experiences & Rights segment, we own, operate, and provide services to a diverse portfolio of over 800 live events annually, including sporting events covering 20 sports across 25 countries, international fashion weeks, art fairs and music, culinary and lifestyle festivals. We own and operate many of these events, including the Miami Open, HSBC Champions, Frieze Art Fair, New York Fashion Week, and Hyde Park Winter Wonderland, and we have a strategic partnership with the PGA-sanctioned Asian Tour. We also operate other events on behalf of third parties, including the AIG Women’s British Open and Fortnite World Cup. Through On Location, we are a leader in historically providing more than 900 premium experiences per year for sporting and music events such as the Super Bowl, Ryder Cup, NCAA Final Four and Coachella.

We are one of the largest independent global distributors of sports video programming and data. We sell media rights globally on behalf of more than 150 clients such as the International Olympic Committee (“IOC”), the NFL, and National Hockey League (“NHL”), as well as for our owned assets and channels. We also provide league advisory services given the array of experience we have to offer. Through IMG ARENA, we work with more than 470 leading sportsbook brands worldwide to deliver live streaming video and data feeds for more than 45,000 sports events annually, as well as for on-demand virtual sports products including our own UFC Event Centre. We also leverage the technology derived from IMG ARENA to provide streaming video solutions to our clients and our owned assets via Endeavor Streaming.

 

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Additionally, we own and operate IMG Academy, a leading academic and sports training institution located in Florida.

Representation

Our Representation segment provides services to more than 7,000 talent and corporate clients and includes our content division, Endeavor Content. Our Representation business deploys a subset of our integrated capabilities on behalf of our clients.

Through our client representation and management businesses, including the WME talent agency and IMG Models, we represent a diverse group of talent across entertainment, sports, and fashion, including actors, directors, writers, athletes, models, musicians, and other artists, in a variety of mediums, such as film, television, books, and live events. Through our 160over90 business, we provide brand strategy, marketing, advertising, public relations, analytics, digital, activation, and experiential services to many of the world’s largest brands. Through IMG Licensing, we provide IP licensing services to a large portfolio of entertainment, sports, and consumer product brands, including representing these clients in the licensing of their logos, trade names and trademarks. Endeavor Content provides a premium alternative to traditional content studios, offering a range of services including content development, production, financing, sales, and advisory services for creators.

Components of Our Operating Results

Revenue

In our Owned Sports Properties segment, we primarily generate revenue via media rights fees, pay-per-view, sponsorships, ticket sales, subscriptions, and license fees. In our Events, Experiences & Rights segment, we primarily generate revenue from media rights sales, production service and studio fees, sponsorships, ticket and premium experience sales, subscriptions, streaming fees, tuition, profit sharing, and commissions. In our Representation segment, we generate revenue primarily through commissions, packaging fees, marketing and consulting fees, production fees, and content licensing fees.

Direct Operating Costs

Our direct operating costs primarily include third-party expenses associated with the production of events and experiences, content production costs, operation of our training and education facilities, and fees for media rights, including required payments related to sales agency contracts when minimum sales guarantees are not met.

Selling, General and Administrative

Our selling, general and administrative expenses primarily include personnel costs as well as rent, professional service costs and other overhead required to support our operations and corporate structure.

Provision for Income Taxes

Endeavor Operating Company is a limited liability company, which is treated as a partnership for U.S. federal income tax purposes and is therefore not subject to U.S. corporate income taxes. Endeavor Operating Company’s U.S. and foreign corporate subsidiaries are subject to entity-level taxes. Endeavor Operating Company is also subject to entity-level income taxes in certain U.S. state and local jurisdictions.

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The COVID-19 pandemic has rapidly changed market and economic conditions globally, including significantly impacting the entertainment and sports industries as well as our business, results of operations, financial position and cash flows.

The COVID-19 pandemic resulted in various governmental restrictions and began to have a significant adverse impact on our business and operations beginning in March 2020, including the lack of ticketed PBR and UFC events and the early cancellation of the 2019-2020 Euroleague season adversely impacting our Owned Sports Properties segment; the postponement or cancellation of live sporting events and other in-person events adversely impacting our Events, Experiences & Rights segment; and stoppages of entertainment productions, including film, television shows and music events, as well as reduced corporate spending on marketing, experiential and activation, adversely impacting our Representation segment. Furthermore, following the merger of our IMG College business with Learfield, the operating results of the merged business have been weaker than anticipated driven by lower than expected sales and have been further impacted by COVID-19 as a result of the delay, cancellation of or shortened college football season

 

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and the prohibition of fans by many teams, which has resulted in impairment charges at Learfield IMG College adversely impacting our equity earnings. We also recognized goodwill and intangible asset impairment charges primarily at our Events, Experiences & Rights segment, driven by lower projections as a result of the impact of COVID-19 and restructuring in certain of our businesses. In the future, any further impact to our business as a result of COVID-19 could result in additional impairments of goodwill, intangibles, long-term investments and long-lived assets.

In response to the COVID-19 pandemic, we implemented cost-savings initiatives across the organization in 2020, including salary reductions, hiring freezes, furloughs, reduced work arrangements, and reductions of our workforce, eliminating costs for consultants, reducing travel and expenses, reducing our marketing spend, cancelling internal company events, and reducing other operating expenses, capital expenditures, and acquisition activity. We believe the actions we have taken and continue to implement will enhance our financial flexibility and provide us the ability to scale up quickly as the impact of the COVID-19 pandemic subsides.

While activity has resumed in certain of our businesses and restrictions have been lessened or lifted, restrictions impacting certain of our businesses remain in effect in locations where we are operating and could in the future be reduced or increased, or removed or reinstated. As a result of this and numerous other uncertainties, including the duration of the pandemic, the effectiveness of mass vaccinations and other public health efforts to mitigate the impact of the pandemic, additional postponements or cancellations of live sporting events and other in-person events, and changes in consumer preferences towards our business and the industries in which we operate, we are unable to accurately predict the full impact of COVID-19 on our business, results of operations, financial position and cash flows, but acknowledge that its impact on our business and results of operations may be material. The ongoing pandemic has had a significant impact on our cash flows from operations. We expect that recovery will continue to be gradual and that the wider impact on revenue and cash flows will vary, but will generally depend on the factors listed above and the general uncertainty surrounding COVID-19. As an example, for those live events that resume, attendance may continue at significantly reduced levels throughout 2021, and any resumption may bring increased costs to comply with new health and safety guidelines. After considering the impact of COVID-19, the effects of the Company’s related cost saving initiatives and the proceeds received from the initial public offering and private placements, the Company believes that existing cash, cash generated from operations and available capacity for borrowings under its credit facilities will satisfy working capital requirements, capital expenditures, and debt service requirements for at least the succeeding year.

RESULTS OF OPERATIONS

The following is a discussion of our consolidated results of operations for the three months ended March 31, 2021 and 2020. This information is derived from our accompanying consolidated financial statements prepared in accordance with GAAP.

 

     Three Months Ended March 31,  
(in thousands)    2021      2020  

Revenue

   $ 1,069,582      $ 1,190,397  

Operating expenses:

     

Direct operating costs

     546,392        681,284  

Selling, general and administrative expenses

     381,113        388,971  

Insurance recoveries

     (19,657      (17,119

Depreciation and amortization

     67,236        80,447  

Impairment charges

     —          3,050  
  

 

 

    

 

 

 

Total operating expenses

     975,084        1,136,633  
  

 

 

    

 

 

 

Operating income

     94,498        53,764  

Other (expense) income:

     

Interest expense, net

     (68,351      (69,984

Other (expense) income, net

     (3,215      25,357  
  

 

 

    

 

 

 

Income before income taxes and equity losses of affiliates

     22,932        9,137  

Provision for income taxes

     5,085        48,604  
  

 

 

    

 

 

 

Income (loss) before equity losses of affiliates

     17,847        (39,467

Equity losses of affiliates, net of tax

     (15,471      (11,794
  

 

 

    

 

 

 

Net income (loss)

     2,376        (51,261

Net income attributable to non-controlling interests

     27,246        3,695  
  

 

 

    

 

 

 

Net loss attributable to Endeavor Operating Company, LLC

     $ (24,870)        $(54,956
  

 

 

    

 

 

 

 

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Revenue

Revenue decreased $120.8 million, or 10.1%, to $1,069.6 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

 

   

Owned Sports Properties increased by $51.3 million, or 22.1%. The increase was primarily driven by an increase in media rights fees and event related revenue due to the increase in the number of events held at UFC.

 

   

Events, Experiences & Rights decreased by $129.2 million, or 19.3%. The decline was primarily attributable to cancellations, postponements and capacity restrictions of live sport events and other in-person events partially offset by an increase in media rights fees primarily driven by the delay of the 2020 soccer season in Europe, which resulted in modified schedules for most leagues moving matches into 2021, all resulting from COVID-19.

 

   

Representation decreased by $43.8 million, or 15.0%. The decline was primarily driven by the impact of COVID-19 on corporate spending on marketing and experiential activations as well as a reduction at Endeavor Content due to fewer content deliveries in the three months ended March 31, 2021.

Direct operating costs

Direct operating costs decreased $134.9 million, or 19.8%, to $546.4 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. The decrease was primarily attributable to approximately $226 million of reduced event costs resulting from the postponement, cancellation and capacity restrictions of sports and live events due to COVID-19. This decrease was partially offset by an increase of approximately $108 million in media rights costs related to the COVID-19 delay of the 2020 soccer season in Europe, which resulted in modified schedules for most leagues moving matches into 2021.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased $7.9 million, or 2.0%, to $381.1 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. The decrease was principally due to lower cost of personnel, reduced travel and other operating expenses resulting from the ongoing impact of our 2020 COVID-19 related cost savings initiatives.

Insurance recoveries

We maintain events cancellation insurance policies for a significant number of our events. For the three months ended March 31, 2021 and 2020, we recognized $19.7 million and $17.1 million of insurance recoveries, respectively, which primarily related to cancelled events in our Events, Experiences & Rights segment due to COVID-19.

Depreciation and amortization

Depreciation and amortization decreased $13.2 million, or 16.4%, to $67.2 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. The decrease was primarily driven by certain UFC intangible assets becoming fully amortized in August 2020.

Impairment charges

For the three months ended March 31, 2020, we recorded $3.1 million of intangible asset impairment charges primarily in our Events, Experiences & Rights and Representation segments.

Interest expense, net

Interest expense, net decreased $1.6 million to $68.4 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020, principally due to the decline in interest rates and the repricing of the UFC Credit Facilities offset by an increase in our indebtedness.

 

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Other (expense) income, net

Other income (expense), net changed from income of $25.4 million for the three months ended March 31, 2020 to expense of $3.2 million for the three months ended March 31, 2021. The expense for the three months ended March 31, 2021 included an $11.4 million loss due to the change in the fair value of embedded foreign currency derivatives partially offset by $7.8 million of gains from changes in fair value of equity investments. The income for the three months ended March 31, 2020 primarily included a $27.1 million gain recognized for the acquisition of the remaining 50% membership interests of FC Diez Media and a $8.1 million gain related to the deconsolidation of Asian Tour Media partially offset by $8.1 million related to foreign currency transaction losses and $2.3 million related to the write off of certain investments.

Provision for income taxes

The provision for income taxes decreased $43.5 million to $5.1 million for the three months ended March 31, 2021. The change was primarily due to tax expense of $32.3 million related to acquisitions and subsequent tax restructuring during the three months ended March 31, 2020 as compared to March 31, 2021.

Equity losses of affiliates, net of tax

Equity losses of affiliates increased $3.7 million to $15.5 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. Equity losses for the three months ended March 31, 2021 is primarily due to the losses related to our investment in Learfield IMG College. Equity losses for the three months ended March 31, 2020 is primarily due to the losses related to our investment in Learfield IMG College and the impairment of one of our investments offset by income from our investment in FC Diez Media prior to the acquisition of the remaining 50% membership interests.

Net income attributable to non-controlling interests

Net income attributable to non-controlling interests increased $23.6 million to $27.2 million for the three months ended March 31, 2021 compared to the three months ended March 31, 2020. The increase was primarily driven by the increase in the net income attributable to the UFC.

SEGMENT RESULTS OF OPERATIONS

We classify our business into three reporting segments: Owned Sports Properties; Events, Experiences & Rights; and Representation. Our Chief Operating Decision Maker evaluates the performance of our segments based on segment Revenue and segment Adjusted EBITDA. Management believes segment Adjusted EBITDA is indicative of operational performance and ongoing profitability and is used to evaluate the operating performance of our segments and for planning and forecasting purposes, including the allocation of resources and capital.

Segment operating results reflect earnings before corporate and unallocated shared expenses. Segment operating results include allocations of certain costs, including facilities, technology, and other shared services costs, which are allocated based on metrics designed to correlate with consumption. These allocations are agreed-upon amounts between the businesses and may differ from amounts that would be negotiated in arm’s length transactions.

The following tables display Revenue and Adjusted EBITDA for each of our segments:

 

     Three Months Ended March 31,  
(in thousands)    2021     2020  

Revenue:

    

Owned Sports Properties

   $ 283,481     $ 232,167  

Events, Experiences & Rights

     539,610       668,776  

Representation

     248,909       292,734  

Eliminations

     (2,418     (3,280
  

 

 

   

 

 

 

Total Revenue

   $ 1,069,582     $ 1,190,397  
  

 

 

   

 

 

 

Adjusted EBITDA:

    

Owned Sports Properties

   $ 145,549     $ 102,294  

Events, Experiences & Rights

     39,050       69,123  

Representation

     61,483       68,613  

Corporate

     (46,616     (54,492

 

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Owned Sports Properties

The following table sets forth our Owned Sports Properties segment results for the three months ended March 31, 2021 and 2020:

 

     Three Months Ended March 31,  
(in thousands)    2021      2020  

Revenue

   $ 283,481      $ 232,167  

Direct operating costs

   $ 92,216      $ 90,458  

Selling, general and administrative expenses

   $ 47,712      $ 39,441  

Adjusted EBITDA

   $ 145,549      $ 102,294  

Adjusted EBITDA margin

     51.3%        44.1%  

Revenue for the three months ended March 31, 2021 increased $51.3 million, or 22.1%, to $283.5 million, compared to the three months ended March 31, 2020. The increase was driven primarily by an increase in media rights fees and event related revenue due to the increase in the number of events held at UFC. This increase was partially offset by a reduced number of events and lack of ticket sales at PBR due to COVID-19.

Direct operating costs for the three months ended March 31, 2021 increased $1.8 million, or 1.9%, to $92.2 million, compared to the three months ended March 31, 2020. The increase was attributable to an increase in the number of UFC events held in the three months ended March 31, 2021 partially offset by savings from holding events at the UFC APEX facility and a reduced number of PBR events.

Selling, general and administrative expenses for the three months ended March 31, 2021 increased $8.3 million, or 21.0%, to $47.7 million, compared to the three months ended March 31, 2020. The increase was primarily attributable to an increase in travel expenses related to UFC’s Fight Island 3.0.

Adjusted EBITDA for the three months ended March 31, 2021 increased $43.3 million, or 42.3%, to $145.5 million, compared to the three months ended March 31, 2020. The increase in Adjusted EBITDA was primarily driven by increased revenue at UFC slightly offset by the increase in selling, general and administrative expenses.

Events, Experiences & Rights

The following table sets forth our Events, Experiences & Rights segment results for three months ended March 31, 2021 and 2020:

 

     Three Months Ended March 31,  
(in thousands)    2021      2020  

Revenue

   $ 539,610      $ 668,776  

Direct operating costs

   $ 421,536      $ 513,750  

Selling, general and administrative expenses

   $ 100,271      $ 110,871  

Adjusted EBITDA

   $ 39,050      $ 69,123  

Adjusted EBITDA margin

     7.2%        10.3%  

Revenue for the three months ended March 31, 2021 decreased $129.2 million, or 19.3%, to $539.6 million, compared to the three months ended March 31, 2020. Event and performance revenues decreased $244.5 million attributable to the 2021 cancellations of Hyde Park Winter Wonderland, Frieze LA and Rio Open among others and restrictions around the NFL Playoffs, Super Bowl and Bowl Games in 2021 partially offset by the Miami Open taking place in 2021 but cancelled in 2020 all due to COVID-19. These declines were partially offset by an increase in media rights fees of $106.5 million primarily driven by the COVID-19 delay of the 2020 soccer season in Europe, which resulted in modified schedules for most leagues moving matches into 2021.

Direct operating costs for the three months ended March 31, 2021 decreased $92.2 million, or 17.9%, to $421.5 million, compared to the three months ended March 31, 2020. The decrease was driven by a reduction in live event costs of $206.9 million due to COVID-19 related event cancellations, delays and restrictions partially offset by an increase in media rights expenses of $108 million due to the increase in number of matches in 2021.

Selling, general and administrative expenses for the three months ended March 31, 2021 decreased $10.6 million, or 9.6%, to $100.3 million, compared to the three months ended March 31, 2020. The decrease was primarily driven by reduced cost of personnel, travel and other operating expenses resulting from our 2020 COVID-19 related cost savings initiatives.

 

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Adjusted EBITDA for the three months ended March 31, 2021 decreased $30.1 million, or 43.5%, to $39.1 million, compared to the three months ended March 31, 2020. The decrease in Adjusted EBITDA was primarily driven by the reduction in revenue partially offset by the decrease in related direct operating costs, reduced selling, general and administrative expenses and an increase in insurance recoveries related to cancelled events.

Representation

The following table sets forth our Representation segment results for three months ended March 31, 2021 and 2020:

 

     Three Months Ended March 31,  
     2021      2020  
(in thousands)              

Revenue

   $ 248,909      $ 292,734  

Direct operating costs

   $ 35,058      $ 68,898  

Selling, general and administrative expenses

   $ 152,159      $ 155,226  

Adjusted EBITDA

   $ 61,483      $ 68,613  

Adjusted EBITDA margin

     24.7%        23.4%  

Revenue for the three months ended March 31, 2021 decreased $43.8 million, or 15.0%, to $248.9 million, compared to the three months ended March 31, 2020. The decrease was primarily attributable to the impact of COVID-19 on corporate spending on marketing and experiential activations as well as a reduction at Endeavor Content due to fewer content deliveries in the three months ended March 31, 2021.

Direct operating costs for the three months ended March 31, 2021 decreased $33.8 million, or 49.1%, to $35.1 million, compared to the three months ended March 31, 2020. The decrease was primarily attributable to the above mentioned impact of COVID-19 on experiential activations and reduced content deliveries.

Selling, general and administrative expenses for the three months ended March 31, 2021 decreased $3.1 million, or 2.0%, to $152.2 million, compared to the three months ended March 31, 2020. The decrease was primarily driven by reduced cost of personnel, travel and other operating expenses.

Adjusted EBITDA for the three months ended March 31, 2021 decreased $7.1 million, or 10.4%, to $61.5 million, compared to the three months ended March 31, 2020. The decrease in Adjusted EBITDA was driven by the decline in revenue partially offset by the decline in direct operating costs and selling, general and administrative expenses.

Corporate

Corporate primarily consists of overhead, personnel costs, and costs associated with corporate initiatives that are not fully allocated to the operating divisions. Such expenses include compensation and other benefits for corporate office employees, rent, professional fees related to internal control compliance and monitoring, financial statement audits and legal, information technology, and insurance that is managed through our corporate office.

The following table sets forth our results for Corporate for the three months ended March 31, 2021 and 2020:

 

     Three Months Ended March 31,  
     2021      2020  
(in thousands)              

Adjusted EBITDA

   $ (46,616    $ (54,492

Adjusted EBITDA for the three months ended March 31, 2021 improved $7.9 million, or 14.5%, to $(46.6) million, compared to the three months ended March 31, 2020. The decrease in expenses was primarily due to reduced cost of personnel, travel, and professional fees.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA is a non-GAAP financial measure and is defined as net income (loss), excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger, acquisition and earn-out costs, certain legal costs, restructuring, severance and impairment charges, certain non-cash fair value adjustments, certain equity earnings, COVID-19 related expenses, and certain other items when applicable. Adjusted EBITDA margin is a non-GAAP financial measure defined as Adjusted EBITDA divided by Revenue.

 

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Management believes that Adjusted EBITDA is useful to investors as it eliminates the significant level of non-cash depreciation and amortization expense that results from our capital investments and intangible assets recognized in business combinations, and improves comparability by eliminating the significant level of interest expense associated with our debt facilities, as well as income taxes, which may not be comparable with other companies based on our tax structure.

Adjusted EBITDA and Adjusted EBITDA margin are used as the primary bases to evaluate our consolidated operating performance.

Adjusted Net Income is a non-GAAP financial measure and is defined as net income (loss) attributable to Endeavor Operating Company adjusted to exclude our share (excluding those relating to non-controlling interests) of the adjustments used to calculate Adjusted EBITDA, other than income taxes, net interest expense and depreciation, on an after tax basis, the release of tax valuation allowances and other tax items.

Adjusted Net Income adjusts income or loss attributable to the Company for items that are not considered to be reflective of our operating performance. Management believes that such non-GAAP information is useful to investors and analysts as it provides a better understanding of the performance of our operations for the periods presented and, accordingly, facilitates the development of future projections and earnings growth prospects.

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

 

   

they do not reflect every cash expenditure, future requirements for capital expenditures, or contractual commitments;

 

   

Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

 

   

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income do not reflect any cash requirement for such replacements or improvements; and

 

   

they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

We compensate for these limitations by using Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance.

Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income should not be considered substitutes for the reported results prepared in accordance with GAAP and should not be considered in isolation or as alternatives to net (loss) income as indicators of our financial performance, as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. Although we use Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income as financial measures to assess the performance of our business, such use is limited because it does not include certain material costs necessary to operate our business. Our presentation of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income should not be construed as indications that our future results will be unaffected by unusual or nonrecurring items. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures reported by other companies. Set forth below are reconciliations of our most directly comparable financial measures calculated in accordance with GAAP to these non-GAAP financial measures on a consolidated basis.

Adjusted EBITDA

 

     Three Months Ended March 31,  
(in thousands)    2021     2020  

Net income (loss)

   $ 2,376     $ (51,261

Provision for income taxes

     5,085       48,604  

Interest expense, net

     68,351       69,984  

Depreciation and amortization

     67,236       80,447  

Equity-based compensation expense (1)

     16,491       7,771  

Merger, acquisition and earn-out costs(2)

     10,985       10,162  

Certain legal costs(3)

     3,952       2,802  

Restructuring, severance and impairment (4)

     407       16,942  

Fair value adjustment - equity investments (5)

     (7,799     2,809  

Equity method losses - Learfield IMG College (6)

     18,805       11,756  

COVID-19 related costs (7)

     —         210  

Other (8)

     13,577       (23,985
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 199,466     $ 176,241  
  

 

 

   

 

 

 

Net income (loss) margin

     0.2     (4.3 )% 

Adjusted EBITDA margin

     18.6     14.8

 

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Adjusted Net Income

 

     Three Months Ended March 31,  
(in thousands)    2021      2020  

Net income (loss)

   $ 2,376      $ (51,261

Net income attributable to non-controlling interests

     (27,246      (3,695
  

 

 

    

 

 

 

Net loss attributable to Endeavor Operating Company, LLC

     (24,870      (54,956

Amortization

     45,728        59,964  

Equity-based compensation expense(1)

     16,491        7,771  

Merger, acquisition and cam-out costs(2)

     10,985        10,162  

Certain legal costs (3)

     3,952        2,802  

Restructuring, severance and impairment(4)

     407        16,942  

Fair value adjustment - equity investments (5)

     (7,799      2,809  

Equity method losses - Learfield IMG College (6)

     18,805        11,756  

COVID-19 related costs (7)

     —          210  

Other (8)

     13,577        (23,985

Tax effects of adjustments (9)

     (6,319      1,366  

Adjustments allocated to non-controlling interests (10)

     (12,847      (23,365

Valuation allowance and other tax items(11)

     —          32,338  
  

 

 

    

 

 

 

Adjusted Net Income

   $ 58,110      $ 43,814  
  

 

 

    

 

 

 

 

  (1)

Equity-based compensation represents primarily non-cash compensation expense associated with our equity-based compensation plans.

The increase for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 was primarily due to new awards granted subsequent to March 31, 2020 and expense related to our future incentive awards. Equity-based compensation was recognized in all segments and Corporate for the three months ended March 31, 2021 and 2020.

  (2)

Includes (i) certain costs of professional advisors related to mergers, acquisitions, dispositions or joint ventures and (ii) fair value adjustments for contingent consideration liabilities related to acquired businesses and compensation expense for deferred consideration associated with selling shareholders that are required to remain our employees.

Such costs for the three months ended March 31, 2021 primarily related to fair value adjustments for contingent consideration liabilities related to acquired businesses and acquisition earn-out adjustments of approximately $7 million, which primarily related to our Events, Experiences & Rights and Representation segments. Professional advisor costs were approximately $4 million and primarily related to our Events, Experiences & Rights segment.

Such costs for the three months ended March 31, 2020 primarily related to acquisition earn-out adjustments of approximately $6 million, primarily related to our Representation segment. Professional advisor costs were approximately $4 million primarily related to our Events, Experiences & Rights segment.

  (3)

Includes costs related to certain litigation or regulatory matters in each of our segments and Corporate.

  (4)

Includes certain costs related to our restructuring activities and non-cash impairment charges.

Such costs for the three months ended March 31, 2021 primarily related to severance related to the cessation of operations of certain events in our Events, Experiences & Rights segment.

Such costs for the three months ended March 31, 2020 included approximately $10 million related to the impairment of certain other assets and investments, approximately $3 million related to the impairment of intangible assets and approximately $4 million for severance and restructuring expenses, in each case primarily related to COVID-19, and primarily related to our Owned Sports Properties and Events, Experiences & Rights segments.

  (5)

Includes the net change in fair value for certain equity investments with and without readily determinable fair values, based on observable price changes.

 

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  (6)

Relates to equity method losses, including impairment charges, from our investment in Learfield IMG College following the merger of our IMG College business with Learfield in December 2018.

  (7)

Includes COVID-19 related costs that are non-recurring and incremental costs that would have otherwise not been incurred. Such adjustment in 2020 does not include the write-off of $9.3 million of deferred event costs, net of insurance recoveries, which is adjusted in our Events, Experiences & Rights segment profitability measure.

  (8)

For the three months ended March 31, 2021, other costs were comprised primarily of a loss of approximately $11 million related to non-cash fair value adjustments of embedded foreign currency derivatives, which related primarily to our Events, Experiences & Rights segment and approximately $2 million related to transaction costs associated with the repricing of the UFC Credit Facilities in our Owned Sports Properties segment.

For the three months ended March 31, 2020, other costs were comprised primarily of a gain of approximately $27 million related to the consolidation of a previously held equity interest in FC Diez Media, a gain of approximately $8 million associated with the deconsolidation of Asian Tour Media Pte. Ltd., a gain of approximately $2 million related to non-cash fair value adjustments of embedded foreign currency derivatives and an approximately $3 million increase related to purchase price adjustments to deferred revenue and ticket inventory at On Location, all of which related primarily to our Events, Experiences & Rights segment, and losses of approximately $8 million on foreign exchange transactions, which related to all of our segments and Corporate.

  (9)

Reflects the U.S. and non-U.S. tax impacts with respect to each adjustment noted above, as applicable.

  (10)

Reflects the share of the adjustments noted above that are allocated to our non-controlling interests, net of tax.

  (11)

Such items for the three months ended March 31, 2020 relate to a $32.3 million tax expense recorded as a result of acquisitions and subsequent tax restructurings.

LIQUIDITY AND CAPITAL RESOURCES

Historical liquidity and capital resources

Sources and uses of cash

Cash flows from operations have historically funded our day-to-day operations, revenue-generating activities, and routine capital expenditures, as well as serviced our long-term debt. Our other principal use of cash has been the acquisition of businesses, which have been funded primarily through equity contributions from our pre-IPO institutional investors and the issuance of long-term debt.

Debt facilities

As of March 31, 2021, we had an aggregate of $5.6 billion outstanding indebtedness under our first lien credit agreement entered into by certain of our subsidiaries in May 2014 in connection with the acquisition of IMG (as amended, restated, modified and/or supplemented from time to time, the “Credit Facilities”). We have UFC Holdings, LLC’s term loan and revolving credit facilities (the “UFC Credit Facilities” and, collectively with the Credit Facilities, the “Senior Credit Facilities”). We have available borrowing capacity of approximately $311 million under the Senior Credit Facilities, consisting primarily of availability under the UFC Credit Facilities.

Credit Facilities

As of March 31 2021, we have borrowed an aggregate of $3.1 billion of term loans under the Credit Facilities. The loans bear interest at a variable interest rate equal to either, at our option, adjusted LIBOR or the Alternate Base Rate (the “ABR”) plus, in each case, an applicable margin. LIBOR term loans accrue interest at a rate equal to adjusted LIBOR plus 2.75%, with a LIBOR floor of 0.00%. ABR term loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.00%, plus (ii) 1.75%. The term loans under the Credit Facilities include 1% principal amortization payable in equal quarterly installments and mature on May 18, 2025.

In May 2020, we issued a separate tranche of term loans, which accrue interest at a rate equal to adjusted LIBOR plus 8.50%, with a LIBOR floor of 1.00%.

 

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On May 20, 2019, we executed $1.5 billion in interest rate hedges to swap a portion of our debt from floating interest expense to fixed. The LIBOR portion of the facility has been fixed at a coupon of 2.12% for five years commencing from June 2019 until June 2024. As of March 31, 2021, approximately 49% of our Term Loans is hedged. See Note 11, “Debt”, to our unaudited consolidated financial statements for Endeavor Operating Company, LLC included elsewhere in this Quarterly Report for further detail on the Credit Facilities.

As of March 31, 2021, we have the option to borrow incremental term loans in an aggregate amount equal to at least $290.0 million, subject to market demand, and may be able to borrow additional funds depending on our First Lien Leverage Ratio (as defined under the Credit Facilities). The credit agreement governing our Credit Facilities includes certain mandatory prepayment provisions relating to, among other things, the incurrence of additional debt.

The Credit Facilities also include a revolving credit facility which has $200.0 million of capacity with letter of credit and swingline loan sub-limits of up to $75.0 million and $20.0 million, respectively. Revolving credit facility borrowings under the Credit Facilities bear interest at a variable interest rate equal to either, at our option, adjusted LIBOR or the ABR plus, in each case, an applicable margin. LIBOR revolving loans accrue interest at a rate equal to adjusted LIBOR plus 2.00-2.50%, depending on the First Lien Leverage Ratio, with a LIBOR floor of 0.00%. ABR revolving loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.00%, plus (ii) 1.00-1.50%, depending on the First Lien Leverage Ratio. We pay Letter of Credit fees of 0.125% and a commitment fee of 0.25-0.50%, based on our First Lien Leverage Ratio. As of March 31, 2021, we had $69.1 million outstanding under this revolving credit facility and outstanding letters of credit of $25.0 million. The revolving facility matures on May 18, 2023.

The revolving facility under the Credit Facilities is subject to a financial covenant if greater than 35% of the borrowing capacity of the revolving credit facility is utilized (excluding cash collateralized letters of credit and non-cash collateralized letters of credit of up to $50.0 million) at the end of each quarter. For the financial covenant test period ended March 31, 2021, we repaid $94 million under the revolving credit facility such that the quarterly covenant test was not applicable. Subsequently, we drew $94 million under the revolving credit facility in April 2021. In April 2021, we entered into an amendment to the credit agreement governing the Credit Facilities to, among other things, waive the financial covenant for the test periods ending June 30, 2021, September 30, 2021 and December 31, 2021. In addition, following the successful completion of our initial public offering in April 2021, the maturity date of the revolving facility was extended to May 18, 2024.

The Credit Facilities contain certain restrictive covenants around indebtedness, liens, fundamental changes, guarantees, investments, asset sales, and transactions with affiliates.

The borrower’s obligations under the Credit Facilities are guaranteed by certain of our indirect wholly-owned domestic restricted subsidiaries, subject to certain exceptions. All obligations under the Credit Facilities and the related guarantees are secured by a perfected first priority lien on substantially all of the borrower’s and the guarantors’ tangible and intangible assets, in each case, subject to permitted liens and certain exceptions.

UFC Credit Facilities

As of March 31, 2021, we have borrowed an aggregate of $2.4 billion of first lien term loans under the UFC Credit Facilities. Following a repricing under the UFC Credit Facilities in January 2021, borrowings under the UFC Credit Facilities bear interest at a variable interest rate equal to either, at our option, adjusted LIBOR or the ABR plus, in each case, an applicable margin. LIBOR term loans accrue interest at a rate equal to an adjusted LIBOR plus 2.75%-3.00%, depending on the First Lien Leverage Ratio, in each case with a LIBOR floor of 0.75%. ABR term loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.75%, plus (ii) 1.75%-2.00%. The term loans under the UFC Credit Facilities include 1% principal amortization payable in equal quarterly installments and mature on April 29, 2026. See Note 11, “Debt,” to our unaudited consolidated financial statements for Endeavor Operating Company, LLC included elsewhere in this Quarterly Report for further detail on the UFC Credit Facilities.

As of March 31, 2021, we have the option to borrow incremental loans in an aggregate amount equal to at least $455.0 million, subject to market demand, and may be able to borrow additional funds depending on our First Lien Leverage Ratio (as defined under the UFC Credit Facilities). The credit agreement governing the UFC Credit Facilities includes certain mandatory prepayment provisions relating to, among other things, the incurrence of additional debt.

 

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The UFC Credit Facilities also include a revolving credit facility, which had $205.0 million of total borrowing capacity and letter of credit and swingline loan sub-limits of up to $40.0 million and $15.0 million, respectively. Revolving credit facility borrowings under the UFC Credit Facilities bear interest at a variable interest rate equal to either, at our option, adjusted LIBOR or ABR plus, in each case, an applicable margin. LIBOR revolving loans accrue interest at a rate equal to an adjusted LIBOR plus 3.50-4.00%, depending on the First Lien Leverage Ratio, in each case with a LIBOR floor of 0.00%. ABR revolving loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.00%, plus (ii) 2.50-3.00%, depending on the First Lien Leverage Ratio. We pay a commitment fee on the revolving credit facility under the UFC Credit Facilities of 0.25-0.50%, based on the First Lien Leverage Ratio and Letter of Credit fees of 0.125%. As of March 31, 2021, we have no borrowings outstanding under this revolving credit facility and no outstanding letters of credit. The revolving facility under the UFC Credit Facilities matures on April 29, 2024.

The revolving facility under the UFC Credit Facilities is subject to a financial covenant if greater than 35% of the borrowing capacity of the revolving credit facility (excluding cash collateralized letters of credit and non-cash collateralized letters of credit of up to $10.0 million) is utilized at the end of any fiscal quarter. This covenant was not tested on March 31, 2021, as we had no borrowings outstanding under this revolving credit facility.

The UFC Credit Facilities contain certain restrictive covenants around indebtedness, liens, fundamental changes, guarantees, investments, asset sales and transactions with affiliates.

The borrower’s obligations under the UFC Credit Facilities are guaranteed by certain of UFC Parent’s indirect wholly-owned domestic restricted subsidiaries, subject to certain exceptions. All obligations under the UFC Credit Facilities and the related guarantees are secured by a perfected first priority lien on substantially all of the borrower’s and the guarantors’ tangible and intangible assets, in each case, subject to permitted liens and certain exceptions.

Restrictions on dividends

Both the Credit Facilities and the UFC Credit Facilities contain restrictions on our ability to make distributions and other payments from the respective credit groups and which therefore limit our ability to receive cash from our operating units to make dividends to the holders of Class A common stock. These restrictions on dividends include exceptions for, among other things, (1) amounts necessary to make tax payments, (2) a limited annual amount for employee equity repurchases, (3) distributions required to maintain the parent entities, (4) other specific allowable situations and (5) a general restricted payment basket, as defined in each of the Credit Facilities and the UFC Credit Facilities. Subsequent to March 31, 2021, the UFC LLC Agreement was amended to remove certain covenants restricting distributions and other payments.

Other debt

As of March 31, 2021, we had certain other revolving line of credit facilities and long-term debt liabilities, primarily related to Endeavor Content and On Location, with total committed amounts of $365.0 million, of which $250.1 million was outstanding and $8.6 million was available for borrowing based on the supporting asset base. Such facilities have maturity dates in 2025, bearing interest at rates ranging from 1.75% to 2.75%.

Other debt includes our Endeavor Content facility (the “Endeavor Content Facility,” which is an asset-based facility (“ABL”) used to fund television and film production). As of March 31, 2021, our Endeavor Content Facility had total capacity of $325.0 million, and we had $220.5 million borrowed. Our ability to borrow under the facility depends on there being sufficient borrowing base capacity, which in turn depends on the number and size of productions we are engaged in and the value of future receipts for the productions. The amounts borrowed under the facility will increase if we enter into additional productions, or decrease if we reduce our production activity. The Endeavor Content Facility matures on March 31, 2025.

Other debt also includes our On Location revolving credit agreement, which has $20.0 million of total borrowing capacity and letter of credit and swingline loan sub-limits of up to $3.0 million each (the “OL Credit Facility”). As of March 31, 2021, we had $19.6 million outstanding under the OL Credit Facility and no letters of credit outstanding. The OL Credit Facility matures on February 27, 2025.

Both the Endeavor Content Facility and the OL Credit Facility contain restrictions that are substantially similar to those in the Credit Facilities and the UFC Credit Facilities.

 

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Cash Flows Overview

Three months ended March 31, 2021 and 2020

 

     Three Months Ended March 31,  
(in thousands)    2021      2020  

Net income, adjusted for non-cash items

   $ 125,943      $ 85,187  

Changes in working capital

     13,264        78,541  

Changes in non-current assets and liabilities

     (210,037      (71,206
  

 

 

    

 

 

 

Net cash (used in) provided by operating activities

   $ (70,830    $ 92,522  

Net cash provided by (used in) investing activities

   $ 7,610      $ (351,779

Net cash (used in) provided by financing activities

   $ (77,843    $ 313,884  

Operating activities changed from $92.5 million of cash provided in the three months ended March 31, 2020 to $70.8 million of cash used in the three months ended March 31, 2021. Cash used in the three months ended March 31, 2021 primarily represents an increase in other assets of $189.4 million from additional investments in Endeavor Content film assets and an increase in accounts receivable of $76.8 million. Cash provided in the three months ended March 31, 2020 primarily represents an increase in accounts payable and accrued liabilities of $89.6 million and a decrease in deferred costs of $103.1 million due to the adverse impact from COVID-19 resulting in changes to the timing of payments from modified event and media rights schedules.

Investing activities changed from $351.8 million of cash used in the three months ended March 31, 2020 to $7.6 million of cash provided in the three months ended March 31, 2021. Cash provided in the three months ended March 31, 2021 primarily reflects proceeds received from sale of assets of $16.5 million offset by capital expenditures of $9.3 million. Cash used in the three months ended March 31, 2020 primarily reflects payments for acquisitions of businesses, primarily On Location, of $306.7 million, capital expenditures of $25.6 million and investments in non-controlled affiliates of $16.7 million.

Financing activities changed from $313.9 million of cash provided in the three months ended March 31, 2020 to $77.8 million of cash used in the three months ended March 31, 2021. Cash used in the three months ended March 31, 2021 primarily reflects net payments on debt of $60.7 million, redemption of certain of our equity interests of $7.2 million and distributions of $5.2 million. Cash provided in the three months ended March 31, 2020 primarily reflects net proceeds from debt of $389.0 million offset by distributions of $62.8 million primarily made by UFC and redemption of certain of our equity interests of $5.1 million.

Future sources and uses of liquidity

Our sources of liquidity are (1) cash on hand, which includes proceeds received from our initial public offering and the private placements completed in May 2021, (2) cash flows from operations, and (3) available borrowings under our Senior Credit Facilities (which borrowings would be subject to certain restrictive covenants contained therein). Based on our current expectations, we believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments, including long-term debt service for at least the next 12 months. However, the ongoing COVID-19 pandemic has had and continues to have a significant impact on cash flows from operations. We expect that the impact of COVID-19 on revenue and cash flows will vary, but will generally depend on the duration of the pandemic, the extent and effectiveness of mass vaccinations, additional actions that may be taken by governmental authorities, changes in consumer preferences towards our business and the industries in which we operate and additional postponements or cancellation of live sporting events and other in person events.

Our cash and cash equivalents consist primarily of cash on deposit with banks and liquid investments in money market funds. As of March 31, 2021, cash and cash equivalents totaled $880.9 million, including cash held at non-wholly owned consolidated subsidiaries where cash distributions may be subject to restriction under applicable operating agreements or debt agreements and, due to such restrictions, may not be readily available to service obligations outside of those subsidiaries. These balances primarily consist of UFC ($346 million), Endeavor China ($93 million) and On Location ($29 million) as of March 31, 2021. Subsequent to March 31, 2021, the UFC LLC Agreement was amended to remove certain covenants restricting distributions and other payments.

We expect that our primary liquidity needs will be cash to (1) provide capital to facilitate organic growth of our business, (2) fund future acquisitions and settle acquisition earn-outs from prior acquisitions, (3) pay operating expenses, including cash compensation to our employees, (4) fund capital expenditures, (5) pay interest and principal when due on our Senior Credit Facilities, (6) make payments under the tax receivable agreement, (7) pay income taxes, (8) repurchase employee equity (9) make distributions to members and stockholders, (10) the UFC Buyout and (11) an expected reduction of debt by up to $600 million during the third quarter of 2021.

 

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We expect to refinance the Senior Credit Facilities prior to the maturity of the outstanding loans, with the first maturity for outstanding term loans under the Senior Credit Facilities occurring in 2025. We currently anticipate being able to secure funding for such refinancing at favorable terms, however our ability to do so may be impacted by many factors, including our growth and other factors specific to our business as well as macro-economic factors beyond our control, including as a result of COVID-19. See “Risk Factors—Risks Related to Our Business—We cannot be certain that additional financing will be available on reasonable terms when required, or at all.”

Tax distributions by Endeavor Operating Company

Other than as described below, we expect to retain all our future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends for the foreseeable future.

Subject to funds being legally available, we expect that Endeavor Operating Company will make distributions to each of its members, including the Endeavor Profits Units holders and Endeavor Manager, in amounts sufficient to pay applicable taxes attributable to each member’s allocable share of taxable income of Endeavor Operating Company. Tax distributions made in respect of Endeavor Operating Company Units (but not Endeavor Profits Units) will generally be made pro rata in respect of such Units, as described in the Endeavor Operating Company Agreement. However, in certain situations, tax distributions made to Endeavor Manager may be reduced (relative to those tax distributions made to the other members of Endeavor Operating Company) to reflect the income tax rates to which Endeavor Manager and Endeavor Group Holdings are subject and certain other factors. Non pro-rata tax distributions may be paid to holders of Endeavor Profit Units. In addition, prior to the initial public offering, Endeavor Operating Company paid a distribution to its members in respect of taxable income estimated to be allocable to such members for periods prior to the initial public offering, and Endeavor Operating Company may fund additional distributions payable to such members (or their successors) following the initial public offering to the extent such estimates of taxable income were understated.

Tax Receivable Agreement

Generally, we are required under the tax receivable agreement to make payments to the Post-IPO TRA Holders that are generally equal to 85% of the applicable cash tax savings, if any, in U.S. federal, state and local income tax or franchise tax that we realize or are deemed to realize (determined by using certain assumptions) as a result of favorable tax attributes that will be available to us as a result of certain transactions contemplated in connection with this offering, exchanges of Endeavor Operating Company Units for Class A common stock or cash and payments made under the tax receivable agreement. We will generally be entitled to retain the remaining 15% of these cash tax savings. Payments will be due only after we have filed our U.S. federal and state income tax returns. The first payment would be due after the filing of our tax return for the year ending December 31, 2021, which is due April 15, 2022, but the due date can be extended until October 15, 2022. Payments under the tax receivable agreement will bear interest from the due date of the tax return reflecting the applicable tax benefits. We currently expect to fund these payments from cash flows from operations generated by our subsidiaries as well as from excess tax distributions that we receive from our subsidiaries.

Under the tax receivable agreement, as a result of certain types of transactions or occurrences, including a transaction resulting in a change of control or a material breach of our obligations under the tax receivable agreement, we may also be required to make payments to the Post-IPO TRA Holders in amounts equal to the present value of future payments we are obligated to make under the tax receivable agreement. If the payments under the tax receivable agreement are accelerated, we may be required to raise additional debt or equity to fund such payments. To the extent that we are unable to make payments under the tax receivable agreement as a result of having insufficient funds (including because our credit agreements restrict the ability of our subsidiaries to make distributions to us) such payments will generally be deferred and will accrue interest until paid. For a full description of the tax receivable agreement, see “Risk Factors—Risks Related to Our Organization and Structure—We will be required to pay certain of our pre-IPO investors, including certain Other UFC Holders, for certain tax benefits we may claim (or are deemed to realize) in the future, and the amounts we may pay could be significant.”

Critical Accounting Estimates

For a description of our policies regarding our critical accounting estimates, see “Critical Accounting Policies and Estimates” in the Prospectus. During the three months ended March 31, 2021, there were no significant changes in our critical accounting policies and estimates or the application or the results of the application of those policies to our consolidated financial statements from those previously disclosed.

 

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Recent Accounting Standards

See Note 3 to the unaudited consolidated financial statements for Endeavor Operating Company, LLC included elsewhere in this Quarterly Report for further information on certain accounting standards that have been recently adopted or that have not yet been required to be implemented and may be applicable to our future operations.

Off-Balance Sheet Arrangements

We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any activities that expose us to any liability that is not reflected in our combined financial statements except for those described under “Contractual Obligations, Commitments and Contingencies” below.

Contractual Obligations, Commitments and Contingencies

As described in Note 19 to the unaudited consolidated financial statements for Endeavor Operating Company, LLC, subsequent to March 31, 2021, we entered into new arrangements increasing our purchase/guarantee agreements by $1.3 billion, which will be due in 2021 through 2028. There have been no other material changes to our contractual obligations disclosed in the Prospectus.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest rate risk

Our exposure to changes in interest rates relates primarily to the floating interest component on our long-term debt. The Senior Credit Facilities bear interest at floating rates and we regularly monitor and manage interest rate risks. $1.5 billion of our Senior Credit Facilities have been swapped to fixed rates. For the remainder, holding debt levels constant, a 1% increase in the effective interest rates would have increased our interest expense by $41 million for the three months ended March 31, 2021.

Certain tenors of LIBOR will be eliminated at the end of 2021 and June 2023. Our loans are benchmarked off tenors, including 1 month and 3 month LIBOR, expiring in June 2023. Our Credit Agreement includes fallback language for the new standard benchmark rate that will be offered, Secured Overnight Financing Rate “SOFR”. We cannot quantify the impact of LIBOR’s replacement benchmark rate at this time.

Foreign currency risk

We have operations in several countries outside of the United States, and certain of our operations are conducted in foreign currencies, principally the British Pound and the Euro. The value of these currencies fluctuates relative to the U.S. dollar. These changes could adversely affect the U.S. dollar equivalent of our non-U.S. dollar revenue and operating costs and expenses and reduce international demand for our content and services, all of which could negatively affect our business, financial condition and results of operations in a given period or in specific territories.

Holding other variables constant (such as interest rates and debt levels), if the U.S. dollar appreciated by 10% against the foreign currencies used by our operations in the three months ended March 31, 2021, revenues would have decreased by approximately $38.2 million and operating income would have improved by approximately $3.1 million.

We regularly review our foreign exchange exposures that may have a material impact on our business and from time to time use foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of potential adverse fluctuations in foreign currency exchange rates arising from these exposures. We do not enter into foreign exchange contracts or other derivatives for speculative purposes.

Item 4. Control Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

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Evaluation of Disclosure Controls and Procedures

The Company’s management has evaluated, with the participation of the chief executive officer and the chief financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report. Based on this evaluation, the chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2021.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. For a description of our legal proceedings, see Note 17 to Endeavor Operating Company, LLC’s unaudited consolidated financial statements elsewhere in this Quarterly Report.

Item 1A. Risk Factors

Investing in our Class A common stock involves substantial risks. You should carefully consider the following factors, together with all of the other information included in this Quarterly Report, including under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the unaudited consolidated financial statements and the related notes included elsewhere in this Quarterly Report before investing in our Class A common stock. Any of the risk factors we describe below could adversely affect our business, financial condition or results of operations. The market price of our Class A common stock could decline if one or more of these risks or uncertainties develop into actual events, causing you to lose all or part of your investment. We cannot assure you that any of the events discussed below will not occur. While we believe these risks and uncertainties are especially important for you to consider, we may face other risks and uncertainties that could adversely affect our business. Please also see “Forward-Looking Statements” for more information.

Risks Related to Our Business

The impact of the COVID-19 global pandemic could continue to materially and adversely affect our business, financial condition and results of operations.

In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world implemented measures to reduce the spread of COVID-19. Numerous state and local jurisdictions, including in markets where we operate, imposed “shelter-in-place” orders, quarantines, travel restrictions, executive orders and similar government orders and restrictions for their residents to control the spread of COVID-19. Such orders or restrictions resulted in work stoppages, slowdowns and delays, travel restrictions and cancellation of events, among other effects.

These measures began to have a significant adverse impact on our business and operations beginning in March 2020, including in the following ways: the inability to hold live ticketed PBR and UFC events and the early cancellation of the 2019-2020 Euroleague season adversely impacted our Owned Sports Properties segment; the postponement or cancellation of live sporting events and other in-person events adversely impacted our Events, Experiences & Rights segment; stoppages of entertainment productions, including film, television shows, and music events, as well as reduced corporate spending on marketing, experiential and activation, adversely impacted our Representation segment.

 

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While activity has resumed in certain of our businesses and restrictions have been lessened or lifted in some cases, restrictions impacting certain of our businesses remain in effect in locations where we are operating and could in the future be reduced or increased, or removed or reinstated. As a result of this and numerous other uncertainties, including the duration of the pandemic, the effectiveness of mass vaccinations and other public health efforts to mitigate the impact of the pandemic, additional postponements or cancellations of live sporting events and other in-person events, and changes in consumer preferences towards our business and the industries in which we operate, we are unable to accurately predict the full impact of COVID-19 on our business, results of operations, financial position and cash flows; however, its impact may be significant. The ongoing pandemic has had a significant impact on our cash flows from operations. We expect that any recovery will continue to be gradual and that the wider impact on revenue and cash flows will vary, but will generally depend on the factors listed above and the general uncertainty surrounding COVID-19.

As an example, for those live events that resume, attendance may continue at significantly reduced levels throughout 2021, and any resumption may bring increased costs to comply with new health and safety guidelines. Given the ongoing uncertainty, we have taken several steps to preserve capital and increase liquidity. See Part I., Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Impact of the COVID-19 Pandemic.” We cannot assure you that such measures and our cash flows from operations, cash and cash equivalents, or cash available under our Senior Credit Facilities (as defined below) will be sufficient to meet our working capital requirements and commitments, including long-term debt service, in the foreseeable future.

We will continue to assess the situation, including abiding by any government-imposed restrictions, market by market. We are unable to accurately predict the ultimate impact that COVID-19 will have on our operations going forward due to the aforementioned uncertainties. We may be unable to accurately predict the impact, operating costs and effectiveness of continuing to adapt certain aspects of our business or restarting certain of our businesses that have not been fully operational during this period, or the future ways in which we will need to adapt our businesses to further changes or consumer behaviors arising out of the pandemic. In addition, any broader global deterioration in economic conditions, which may have an adverse impact on discretionary consumer spending, could also impact our business. For instance, consumer spending may be negatively impacted by general macroeconomic conditions, including a rise in unemployment and decreased consumer confidence resulting from the pandemic. Changing consumer behaviors as a result of COVID-19 may also have a material impact on our revenue for the foreseeable future.

In the past, governments have taken unprecedented actions in an attempt to address and rectify these extreme market and economic conditions by providing liquidity and stability to financial markets. If these actions are not successful, the return of adverse economic conditions may cause a material impact on our ability to raise additional capital, if needed, on a timely basis and on acceptable terms, or at all.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those relating to our liquidity, indebtedness, and our ability to comply with the covenants contained in the agreements that govern our indebtedness.

Changes in public and consumer tastes and preferences and industry trends could reduce demand for our services and content offerings and adversely affect our business.

Our ability to generate revenues is highly sensitive to rapidly changing consumer preferences and industry trends, as well as the popularity of the talent, brands, and owners of IP we represent, and the assets we own. Our success depends on our ability to offer premium content through popular channels of distribution that meet the changing preferences of the broad consumer market and respond to competition from an expanding array of choices facilitated by technological developments in the delivery of content. Our operations and revenues are affected by consumer tastes and entertainment trends, including the market demand for the distribution rights to live sports events, which are unpredictable and may be affected by changes in the social and political climate, or global issues such as the COVID-19 pandemic. Changes in consumers’ tastes or a change in the perceptions of our brands and business partners, whether as a result of the social and political climate or otherwise, could adversely affect our operating results. Our failure to avoid a negative perception among consumers or anticipate and respond to changes in consumer preferences, including in the form of content creation or distribution, could result in reduced demand for our services and content offerings or those of our clients and owned assets across our platform, which could have an adverse effect on our business, financial condition and results of operations.

Consumer tastes change frequently and it is a challenge to anticipate what offerings will be successful at any point in time. We may invest in our content and owned assets, including in the creation of original content, before learning the extent to which it will achieve popularity with consumers. For example, as of December 31, 2020 we have committed to spending approximately $2.2 billion in guaranteed payments for media, event, or other representation rights and similar expenses, regardless of our ability to profit from these rights. Subsequent to December 31, 2020, we have entered into certain new arrangements increasing our purchase/guarantee agreements by $1.3 billion, which will be due in 2021 through 2028. Specifically, our results of operations have been negatively impacted due to the costs associated with acquired media rights to major soccer events in excess of revenue, which will continue to adversely impact our results of operations for the term of certain of these contracts, two of which expire in 2021 and the last in 2027. A lack of popularity of these, our other content offerings, or our owned assets, as well as labor disputes, unavailability of a star performer, equipment shortages, cost overruns, disputes with production teams, or adverse weather conditions, could have an adverse effect on our business, financial condition and results of operations.

 

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Our ability to generate revenue from discretionary and corporate spending on entertainment and sports events, such as corporate sponsorships and advertising, is subject to many factors, including many that are beyond our control, such as general macroeconomic conditions.

Our business depends on discretionary consumer and corporate spending. Many factors related to corporate spending and discretionary consumer spending, including economic conditions affecting disposable consumer income such as unemployment levels, fuel prices, interest rates, changes in tax rates, and tax laws that impact companies or individuals and inflation can significantly impact our operating results. While consumer and corporate spending may decline at any time for reasons beyond our control, the risks associated with our businesses become more acute in periods of a slowing economy or recession, which may be accompanied by reductions in corporate sponsorship and advertising and decreases in attendance at live entertainment and sports events, among other things. There can be no assurance that consumer and corporate spending will not be adversely impacted by current economic conditions, or by any future deterioration in economic conditions, thereby possibly impacting our operating results and growth. A prolonged period of reduced consumer or corporate spending, such as those during the COVID-19 pandemic, could have an adverse effect on our business, financial condition, and results of operations.

We may not be able to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies.

We must successfully adapt to and manage technological advances in our industry, including the emergence of alternative distribution platforms. If we are unable to adopt or are late in adopting technological changes and innovations that other entertainment providers offer, it may lead to a loss of consumers viewing our content, a reduction in revenues from attendance at our live events, a loss of ticket sales, or lower ticket fees. It may also lead to a reduction in our clients’ ability to monetize new platforms. Our ability to effectively generate revenue from new distribution platforms and viewing technologies will affect our ability to maintain and grow our business. Emerging forms of content distribution may provide different economic models and compete with current distribution methods (such as television, film, and pay-per-view (“PPV”)) in ways that are not entirely predictable, which could reduce consumer demand for our content offerings. We must also adapt to changing consumer behavior driven by advances that allow for time shifting and on-demand viewing, such as digital video recorders and video-on-demand, as well as internet-based and broadband content delivery and mobile devices. If we fail to adapt our distribution methods and content to emerging technologies and new distribution platforms, while also effectively preventing digital piracy, our ability to generate revenue from our targeted audiences may decline and could result in an adverse effect on our business, financial condition, and results of operations.

Because our success depends substantially on our ability to maintain a professional reputation, adverse publicity concerning us, one of our businesses, our clients, or our key personnel could adversely affect our business.

Our professional reputation is essential to our continued success and any decrease in the quality of our reputation could impair our ability to, among other things, recruit and retain qualified and experienced agents, managers, and other key personnel, retain or attract agency clients or customers, or enter into multimedia, licensing, and sponsorship engagements. Our overall reputation may be negatively impacted by a number of factors, including negative publicity concerning us, members of our management or our agents, managers, and other key personnel. In addition, we are dependent for a portion of our revenues on the relationships between content providers and the clients and key brands, such as sports leagues and federations, that we represent, many of whom are significant public personalities with large social media followings whose actions generate significant publicity and public interest. Any adverse publicity relating to such individuals or entities that we employ or represent, or to our company, including from reported or actual incidents or allegations of illegal or improper conduct, such as harassment, discrimination, or other misconduct, could result in significant media attention, even if not directly relating to or involving Endeavor, and could have a negative impact on our professional reputation. This could result in termination of licensing or other contractual relationships, or our employees’ ability to attract new customer or client relationships, or the loss or termination of such employees’ services, all of which could adversely affect our business, financial condition, and results of operations. Our professional reputation could also be impacted by adverse publicity relating to one or more of our owned or majority owned brands, events, or businesses.

 

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We depend on the relationships of our agents, managers, and other key personnel with clients across many categories, including television, film, professional sports, fashion, music, literature, theater, digital, sponsorship and licensing.

We depend upon relationships that our agents, managers, and other key personnel have developed with clients across many content categories, including, among others, television, film, professional sports, fashion, music, literature, theater, digital, sponsorship, and licensing. The relationships that our agents, managers, and other key personnel have developed with studios, brands, and other key business contacts help us to secure access to sponsorships, endorsements, professional contracts, productions, events, and other opportunities for our clients. Due to the importance of those industry contacts to us, a substantial deterioration in these relationships, or substantial loss of agents, managers, or other key personnel who maintain these relationships, could adversely affect our business. In particular, our client management business is dependent upon the highly personalized relationships between our agent and manager teams and their respective clients. A substantial deterioration in the team managing a client may result in a deterioration in our relationship with, or the loss of, the clients represented by that agent or manager. The substantial loss of multiple agents or managers and their associated clients could have an adverse effect on our business, financial condition, and results of operations. Most of our agents, managers, and other key personnel are not party to long-term contracts and, in any event, can leave our employment with little or no notice. We can give no assurance that all or any of these individuals will remain with us or will retain their associations with key business contacts.

Our success depends, in part, on our continuing ability to identify, recruit, and retain qualified and experienced agents and managers. If we fail to recruit and retain suitable agents or if our relationships with our agents change or deteriorate, it could adversely affect our business.

Our success depends, in part, upon our continuing ability to identify, recruit, and retain qualified and experienced agents and managers. There is great competition for qualified and experienced agents and managers in the entertainment and sports industry, and we cannot assure you that we will be able to continue to hire or retain a sufficient number of qualified persons to meet our requirements, or that we will be able to do so under terms that are economically attractive to us. Any failure to retain certain agents and managers could lead to the loss of sponsorship, multimedia, and licensing agreements, and other engagements and have an adverse effect on our business, financial condition, and results of operations.

Our failure to identify, sign, and retain clients could adversely affect our business.

We derive substantial revenue from the engagements, sponsorships, licensing rights, and distribution agreements entered into by the clients with whom we work. We depend on identifying, signing, and retaining as clients those artists, athletes, models, and businesses whose identities or brands are in high demand by the public and, as a result, are deemed to be favorable candidates for engagements. Our competitive position is dependent on our continuing ability to attract, develop, and retain clients whose work is likely to achieve a high degree of value and recognition as well as our ability to provide such clients with sponsorships, endorsements, professional contracts, productions, events, and other opportunities. Our failure to attract and retain these clients, an increase in the costs required to attract and retain such clients, or an untimely loss or retirement of these clients could adversely affect our financial results and growth prospects. We have not entered into written agreements with many of the clients we represent. These clients may decide to discontinue their relationship with us at any time and without notice. In addition, the clients with whom we have entered into written contracts may choose not to renew their contracts with us on reasonable terms or at all or they may breach or seek to terminate these contracts. If any of our clients decide to discontinue their relationships with us, whether they are under a contract or not, we may be unable to recoup costs expended to develop and promote them and our financial results may be adversely affected. Further, the loss of such clients could lead other of our clients to terminate their relationships with us.

We derive substantial revenue from the sale of multimedia rights, licensing rights, and sponsorships. A significant proportion of this revenue is dependent on our commercial agreements with entertainment and sports events. Our failure to renew or replace these key commercial agreements on similar or better terms could have an adverse effect on our business, financial condition and results of operations.

Our business involves potential internal conflicts of interest and includes our client representation businesses representing both talent and content rights holders and distributors while our content businesses produce content, which may create a conflict of interest.

Increasingly, we must manage actual and potential internal conflicts of interest in our business due to the breadth and scale of our platform. Different parts of our business may have actual or potential conflicts of interest with each other, including our client representation, media production, events production, sponsorship, and content development businesses. Although we attempt to manage these conflicts appropriately, any failure to adequately address or manage internal conflicts of interest could adversely affect our reputation, and the willingness of clients and third parties to work with us may be affected if we fail, or appear to fail, to deal appropriately with actual or perceived internal conflicts of interest, which could have an adverse effect on our business, financial condition, and results of operations.

 

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The markets in which we operate are highly competitive, both within the United States and internationally.

We face competition from a variety of other domestic and foreign companies. We face competition from alternative providers of the content, services, and events we and our clients offer and from other forms of entertainment and leisure activities in a rapidly changing and increasingly fragmented environment. Any increased competition, which may not be foreseeable, or our failure to adequately address any competitive factors, could result in reduced demand for our content, live events, clients, or key brands, which could have an adverse effect on our business, financial condition, and results of operations.

We depend on the continued service of the members of our executive management and other key employees, as well as management of acquired businesses, the loss or diminished performance of whom could adversely affect our business.

Our performance is substantially dependent on the performance of the members of our executive management and other key employees, as well as management of acquired businesses. We seek to acquire businesses that have strong management teams and often rely on these individuals to conduct day-to-day operations and pursue growth. Although we have entered into employment and severance protection agreements with certain members of our senior management team and we typically seek to sign employment agreements with the management of acquired businesses, we cannot be sure that any member of our senior management or management of the acquired businesses will remain with us or that they will not compete with us in the future. The loss of any member of our senior management team could impair our ability to execute our business plan and growth strategy, have a negative impact on our revenues and the effective working relationships that our executive management have developed, and cause employee morale problems and the loss of additional key employees, agents, managers, and clients.

We depend on key relationships with television and cable networks, satellite providers, digital streaming partners and other distribution partners, as well as corporate sponsors.

A key component of our success is our relationships with television and cable networks, satellite providers, digital streaming and other distribution partners, as well as corporate sponsors. We are dependent on maintaining these existing relationships and expanding upon them to ensure we have a robust network with whom we can work to arrange multimedia rights sales and sponsorship engagements, including distribution of our owned, operated, or represented events. Our television programming for our owned, operated, and represented events is distributed by television and cable networks, satellite providers, PPV, digital streaming, and other media. Because a portion of our revenues are generated, directly and indirectly, from this distribution, any failure to maintain or renew arrangements with distributors and platforms, the failure of distributors or platforms to continue to provide services to us, or the failure to enter into new distribution opportunities on terms favorable to us could adversely affect our business. We regularly engage in negotiations relating to substantial agreements covering the distribution of our television programming by carriers located in the United States and abroad. We have an important relationship with ESPN as they are the exclusive domestic home to all UFC events. We have agreements with multiple PPV providers globally and distribute a portion of our owned, operated, or represented events through PPV, including certain events that are sold exclusively through PPV. Any adverse change in these relationships or agreements or a deterioration in the perceived value of our clients, sponsorships, or these distribution channels could have an adverse effect on our business, financial condition and results of operations.

Owning and managing certain events for which we sell media and sponsorship rights, ticketing and hospitality exposes us to greater financial risk. If the live events that we own and manage are not financially successful, our business could be adversely affected.

We act as a principal by owning and managing certain live events for which we sell media and sponsorship rights, ticketing and hospitality, such as UFC’s events, the Miami Open, the Miss Universe competition, the Professional Bull Riders’ events, and On Location’s experiences. Organizing and operating a live event involves significant financial risk as we bear all or most event costs, including a significant amount of up-front costs. In addition, we typically book our live events many months in advance of holding the event and often agree to pay a fixed guaranteed amount prior to receiving any related revenue. Accordingly, if a planned event fails to occur or there is any disruption in our ability to live stream or otherwise distribute, whether as a result of technical difficulties or otherwise, we could lose a substantial amount of these up-front costs, fail to generate the anticipated revenue, and be forced to issue refunds for media and sponsorship rights, advertising fees, and ticket sales. If we are forced to postpone a planned event, we would incur substantial additional costs in order to stage the event on a new date, may have reduced attendance and revenue, and may have to refund fees. We could be compelled to cancel or postpone all or part of an event for many

 

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reasons, including poor weather, issues with obtaining permits or government regulation, performers failing to participate, as well as operational challenges caused by extraordinary incidents, such as terrorist or other security incidents, mass-casualty incidents, natural disasters, public health concerns including pandemics, or similar events. Such incidents have been shown to cause a nationwide disruption of commercial and leisure activities. We often have cancellation insurance policies in place to cover a portion of our losses if we are compelled to cancel an event, but our coverage may not be sufficient and is subject to deductibles. If the live events that we own and manage are not financially successful, we could suffer an adverse effect on our business, financial condition and results of operations.

Our recent acquisitions have caused us to grow rapidly, and we will need to continue to make changes to operate at our current size and scale. We may face difficulty in further integrating the operations of the businesses acquired in our recent transactions, and we may never realize the anticipated benefits and cost synergies from all of these transactions. If we are unable to manage our current operations or any future growth effectively, our business could be adversely affected.

Our recent acquisitions have caused us to grow rapidly, and we may need to continue to make changes to operate at our current size and scale. If we fail to realize the anticipated benefits and cost synergies from our recent acquisitions, or if we experience any unanticipated or unidentified effects in connection with these transactions, including write-offs of goodwill, accelerated amortization expenses of other intangible assets, or any unanticipated disruptions with important third-party relationships, our business, financial condition, and results of operations could be adversely affected. Moreover, our recent acquisitions involve risks and uncertainties including, without limitation, those associated with the integration of operations, financial reporting, technologies and personnel, and the potential loss of key employees, agents, managers, clients, customers, or strategic partners. Because the integration of the businesses acquired in our recent transactions have and will require significant time and resources, and we may not be able to manage the process successfully, these acquisitions may not be accretive to our earnings and they may negatively impact our results of operations. If our operations continue to grow, we will be required, among other things, to upgrade our management information systems and other processes and to obtain more space for our expanding administrative support and other headquarters personnel. Our continued growth could strain our resources and we could experience operating difficulties, including difficulties in hiring, training, and managing an increasing number of employees. These difficulties could result in the erosion of our brand image and reputation and could have an adverse effect on our business, financial condition, and operating results.

We may be unsuccessful in our strategic acquisitions, investments and commercial agreements, and we may pursue acquisitions, investments or commercial agreements for their strategic value in spite of the risk of lack of profitability.

We face significant uncertainty in connection with acquisitions, investments, and commercial agreements. To the extent we choose to pursue certain commercial, investment, or acquisition strategies, we may be unable to identify suitable targets for these deals, or to make these deals on favorable terms. If we identify suitable acquisition candidates, investments, or commercial partners, our ability to realize a return on the resources expended pursuing such deals, and to successfully implement or enter into them will depend on a variety of factors, including our ability to obtain financing on acceptable terms, requisite governmental approvals, as well as the factors discussed below. Additionally, we may decide to make or enter into acquisitions, investments, or commercial agreements with the understanding that such acquisitions, investments, or commercial agreements will not be profitable, but may be of strategic value to us. Our current and future acquisitions, investments, including existing investments accounted for under the equity method, or commercial agreements may also require that we make additional capital investments in the future, which would divert resources from other areas of our business. We cannot provide assurances that the anticipated strategic benefits of these deals will be realized in the long-term or at all.

We may fail to identify or assess the magnitude of certain liabilities, shortcomings, or other circumstances prior to acquiring a company, making an investment or entering into a commercial agreement and, as such, may not obtain sufficient warranties, indemnities, insurance, or other protections. This could result in unexpected litigation or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes, a loss of anticipated tax benefits, or other adverse effects on our business, operating results, or financial condition. Additionally, some warranties and indemnities may give rise to unexpected and significant liabilities. Future acquisitions and commercial arrangements that we may pursue could result in dilutive issuances of equity securities and the incurrence of further debt.

Our compliance with regulations may limit our operations and future acquisitions.

We are also subject to laws and regulations, including those relating to antitrust, that could significantly affect our ability to expand our business through acquisitions or joint ventures. For example, the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice with respect to our domestic acquisitions and joint ventures, and the European Commission, the antitrust regulator of the European

 

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Union (the “E.U.”), with respect to our European acquisitions and joint ventures, have the authority to challenge our acquisitions and joint ventures on antitrust grounds before or after the acquisitions or joint ventures are completed. State agencies, as well as comparable authorities in other countries, may also have standing to challenge these acquisitions and joint ventures under state or federal antitrust law. Our failure to comply with all applicable laws and regulations could result in, among other things, regulatory actions or legal proceedings against us, the imposition of fines, penalties, or judgments against us, or significant limitations on our activities. Multiple or repeated failures by us to comply with these laws and regulations could result in increased fines, actions or legal proceedings against us. Gaming authorities may levy fines against us or seize certain of our assets if we violate gaming regulations. In addition, the regulatory environment in which we operate is subject to change. New or revised requirements imposed by governmental regulatory authorities could have adverse effects on us, including increased costs of compliance. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and regulations by these governmental authorities.

Our business and operations are subject to a variety of regulatory requirements in the United States and abroad, including, among other things, with respect to labor, tax, import and export, anti-corruption, data privacy and protection and communications monitoring and interception. Compliance with these regulatory requirements may be onerous and expensive, especially where these requirements are inconsistent from jurisdiction to jurisdiction or where the jurisdictional reach of certain requirements is not clearly defined or seeks to reach across national borders. Regulatory requirements in one jurisdiction may make it difficult or impossible to do business in another jurisdiction. We may also be unsuccessful in obtaining permits, licenses or other authorizations required to operate our business. While we have implemented policies and procedures designed to achieve compliance with these laws and regulations, we cannot be sure that we or our personnel will not violate applicable laws and regulations or our policies regarding the same.

We and certain of our affiliates, major stockholders (generally persons and entities beneficially owning a specified percentage (typically 5% or more) of our equity securities), directors, officers, and key employees are also subject to extensive background investigations and suitability standards in our businesses. Our failure, or the failure of any of our major stockholders, directors, officers, key employees, products, or technology, to obtain or retain a required license or approval in one jurisdiction could negatively impact our ability (or the ability of any of our major stockholders, directors, officers, key employees, products, or technology) to obtain or retain required licenses and approvals in other jurisdictions.

We share control in joint venture projects, other investments, and strategic alliances, which limits our ability to manage third-party risks associated with these projects.

We participate in a number of joint ventures, other non-controlling investments, and strategic alliances and may enter into additional joint ventures, investments, and strategic alliances in the future. In these joint ventures, investments, and strategic alliances, we often have shared control over the operation of the assets and businesses. As a result, such investments and strategic alliances may involve risks such as the possibility that a partner in an investment might become bankrupt, be unable to meet its capital contribution obligations, have economic or business interests or goals that are inconsistent with our business interests or goals, or take actions that are contrary to our instructions or to applicable laws and regulations. In addition, we may be unable to take action without the approval of our partners, or our partners could take binding actions without our consent. Consequently, actions by a partner or other third party could expose us to claims for damages, financial penalties, additional capital contributions, and reputational harm, any of which could have an adverse effect on our business, financial condition, and results of operations.

Preparing our financial statements requires us to have access to information regarding the results of operations, financial position, and cash flows of our joint ventures and other investments. Any deficiencies in their internal controls over financial reporting may affect our ability to report our financial results accurately or prevent or detect fraud. Such deficiencies also could result in restatements of, or other adjustments to, our previously reported or announced operating results, which could diminish investor confidence and reduce the market price for our Class A common stock. Additionally, if our joint ventures and other investments are unable to provide this information for any meaningful period or fail to meet expected deadlines, we may be unable to satisfy our financial reporting obligations or timely file our periodic reports.

Our key personnel may be adversely impacted by immigration restrictions and related factors.

Our ability to retain our key personnel is impacted, at least in part, by the fact that a portion of our key personnel in the United States is comprised of foreign nationals who are not United States citizens. In order to be legally allowed to work in the United States, these individuals generally hold immigrant visas (which may or may not be tied to their employment with us) or green cards, the latter of which makes them permanent residents in the United States.

 

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The ability of these foreign nationals to remain and work in the United States is impacted by a variety of laws and regulations, as well as the processing procedures of various government agencies. Changes in applicable laws, regulations, or procedures could adversely affect our ability to hire or retain these key personnel and could affect our costs of doing business and our ability to deliver services to our clients. In addition, if the laws, rules or procedures governing the ability of foreign nationals to work in the United States were to change or if the number of visas available for foreign nationals permitted to work in the United States were to be reduced, our business could be adversely affected, if, for example, we were unable to retain an employee who is a foreign national.

Corresponding issues apply with respect to our key personnel working in countries outside of the United States relating to citizenship and work authorizations. Similar changes in applicable laws, regulations or procedures in those countries could adversely affect our ability to hire or retain key personnel internationally.

The business of our agents and managers and the clients we represent is international in nature and may require them to frequently travel or live abroad. The ability of our key personnel and talent to travel internationally for their work is impacted by a variety of laws and regulations, policy considerations of foreign governments, the processing procedures of various government agencies and geopolitical actions, including war and terrorism, or natural disasters including earthquakes, hurricanes, floods, fires, as well as pandemics, such as the COVID-19 pandemic. In addition, our productions and live events internationally subject us to the numerous risks involved in foreign travel and operations and also subject us to local norms and regulations, including regulations requiring us to obtain visas for our key personnel and, in some cases, hired talent. Actions by the clients we represent that are out of our control may also result in certain countries barring them from travelling internationally, which could adversely affect our business. If our key personnel and talent were prevented from conducting their work internationally for any reason, it could have an adverse effect on our business, financial condition, and results of operations.

We rely on technology, such as our information systems, to conduct our business. Failure to protect our technology against breakdowns and security breaches could adversely affect our business.

We rely on technology, such as our information systems, content distribution systems, ticketing systems, and payment processing systems, to conduct our business. This technology is vulnerable to service interruptions and security breaches from inadvertent or intentional actions by our employees, partners, and vendors, or from attacks by malicious third parties. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives and expertise, including organized criminal groups, “hacktivists,” nation states, and others. The techniques used to breach security safeguards evolve rapidly, and they may be difficult to detect for an extended period of time, and the measures we take to safeguard our technology may not adequately prevent such incidents.

While we have taken steps to protect our confidential and personal information and that of our clients and other business relationships and have invested in information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches in our systems or the unauthorized or inadvertent wrongful use or disclosure of such confidential information. Such incidents could adversely affect our business operations, reputation, and client relationships. Any such breach would require us to expend significant resources to mitigate the breach of security and to address matters related to any such breach, including the payment of fines. Although we maintain an insurance policy that covers data security, privacy liability, and cyber-attacks, our insurance may not be adequate to cover losses arising from breaches or attacks on our systems. We also may be required to notify regulators about any actual or perceived personal data breach as well as the individuals who are affected by the incident within strict time periods.

Furthermore, we have a large number of operating entities throughout the world and, therefore, operate on a largely decentralized basis. We are also in the process of integrating the technology of our acquired companies. The resulting size and diversity of our technology systems, as well as the systems of third-party vendors with whom we contract, increase the vulnerability of such systems to breakdowns and security breaches. In addition, we rely on technology at live events, the failure or unavailability of which, for any significant period of time, could affect our business, our reputation and the success of our live events. We also rely on technology to provide our digital offerings, live streaming, and virtual events, which may be vulnerable to hacking, denial of service attacks, human error and other unanticipated problems or events that could result in interruptions in our service and to unauthorized access to, or alteration of, the content and data contained on our systems and those of our third-party vendors. Any significant interruption or failure of the technology upon which we rely, or any significant breach of security, could result in decreased performance and increased operating costs, adversely affecting our business, financial condition, and results of operations.

In addition, our use of social media presents the potential for further vulnerabilities. For instance, we may be subject to boycotts, spam, spyware, ransomware, phishing and social engineering, viruses, worms, malware, DDOS attacks, password attacks, man-in-the-middle attacks,

 

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cybersquatting, impersonation of employees or officers, abuse of comments and message boards, fake reviews, doxing, and swatting. While we have internal policies in place to protect against these vulnerabilities, we can make no assurances that we will not be adversely affected should one of these events occur. Additionally, there is an increased risk that we may experience cybersecurity-related events such as COVID-19-themed phishing attacks and other security challenges as a result of most of our employees and our service providers working remotely from non-corporate-managed networks during the ongoing COVID-19 pandemic and potentially beyond.

Unauthorized disclosure of sensitive or confidential client or customer information could harm our business and standing with our clients and customers.

The protection of our client, customer, employee, and other company data is critical to us. We collect, store, transmit, and use personal information relating to, among others, our clients, IMG Academy students, employees, consumers, and event participants. We also collect certain data through our 160over90 marketing ventures and our Endeavor Content offerings, which may include a range of talent and production information and data provided to us by our clients. During the COVID-19 pandemic, we also have been collecting certain COVID-related health and wellness information about our employees and others. We rely on commercially available systems, software, tools, and monitoring to provide security for processing, transmission, and storage of confidential client and customer information. Our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, payment card terminal tampering, computer viruses, misplaced, lost or stolen data, programming or human errors, or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of client or customer information, whether by us or our third-party service providers, could damage our reputation, result in the loss of clients and customers, expose us to risk of litigation and liability or regulatory investigations or actions, disrupt our operations, and harm our business. In addition, as a result of recent security breaches, the media and public scrutiny of information security and privacy has become more intense. As a result, we may incur significant costs to change our business practices or modify our service offerings in connection with the protection of personally identifiable information.

Regulatory action for alleged privacy violations could result in significant fines.

Regulators may impose significant fines for privacy and data protection violations. Our business operations involve the collection, transfer, use, disclosure, security, and disposal of personal or sensitive information in various locations around the world, including the E.U. As a result, our business is subject to complex and evolving U.S. and international laws and regulations regarding privacy and data protection. Many of these laws and regulations are subject to change and uncertain interpretation and could result in claims, changes to our business practices, penalties, increased cost of operations, or otherwise harm our business. For example, the European Union’s General Data Protection Regulation (“GDPR”) creates requirements for in-scope businesses regarding personal data, broadly defined as information relating to an identifiable person. Non-compliance with the GDPR carries significant monetary penalties of up to the higher of 4% of a company’s worldwide total revenue or €20 million. However, there can be no assurances that we will be successful in our efforts to comply with the GDPR or other privacy and data protection laws and regulations, or that violations will not occur, particularly given the complexity of both these laws and our business, as well as the uncertainties that accompany new laws. In addition, in June 2018, California passed the California Consumer Privacy Act of 2018 (the “CCPA”), which became operational on January 1, 2020 and imposes significant data privacy and potential statutory damages related to data protection for the data of California residents. The effects of this legislation potentially are far-reaching and may require us to modify our data processing practices and policies and to incur significant costs and expenses in an effort to comply. Further, on November 3, 2020, the California Privacy Rights Act (the “CPRA”) was voted into law by California residents. The CPRA significantly amends the CCPA, and imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. It also creates a new California data protection agency specifically tasked to enforce the law, which would likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security. The substantive requirements for businesses subject to the CPRA will go into effect on January 1, 2023, and become enforceable on July 1, 2023. Similar laws have been proposed in other states and at the federal level. Other international laws are also in place or pending, and such laws may have potentially conflicting requirements that would make compliance challenging.

We may be unable to protect our trademarks and other intellectual property rights, and others may allege that we infringe upon their intellectual property rights.

We have invested significant resources in brands associated with our business such as “Endeavor,” “WME,” “William Morris Endeavor,” “IMG” and “UFC” in an attempt to obtain and protect our public recognition. These brands are essential to our success and competitive position. We have also invested significant resources in the premium content that we produce.

 

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Our trademarks and other intellectual property rights are critical to our success and our competitive position. Our intellectual property rights may be challenged and invalidated by third parties and may not be strong enough to provide meaningful commercial competitive advantage. If we fail to maintain our intellectual property, our competitors might be able to enter the market, which would harm our business. Further, policing unauthorized use and other violations of our intellectual property is difficult, particularly given our global scope, so we are susceptible to others infringing, diluting or misappropriating our intellectual property rights. If we are unable to maintain and protect our intellectual property rights adequately, we may lose an important advantage in the markets in which we compete. In particular, the laws of certain foreign countries do not protect intellectual property rights in the same manner as do the laws of the United States and, accordingly, our intellectual property is at greater risk in those countries even where we take steps to protect such intellectual property. While we believe we have taken, and take in the ordinary course of business, appropriate available legal steps to reasonably protect our intellectual property, we cannot predict whether these steps will be adequate to prevent infringement or misappropriation of these rights.

From time to time, in the ordinary course of our business, we become involved in opposition and cancellation proceedings with respect to some of our intellectual property or third-party intellectual property. Any opposition and cancellation proceedings or other litigation or dispute involving the scope or enforceability of our intellectual property rights or any allegation that we infringe, misappropriate or dilute upon the intellectual property rights of others, regardless of the merit of these claims, could be costly and time-consuming. If any infringement or other intellectual property claim made against us by any third party is successful, if we are required to indemnify a third party with respect to a claim, or if we are required to, or decide to, cease use of a brand, rebrand or obtain non-infringing intellectual property (such as through a license), it could result in harm to our competitive position and could adversely affect our business and financial condition.

Through new and existing legal and illegal distribution channels, consumers have increasing options to access entertainment video. Piracy, in particular, threatens to damage our business. Furthermore, in light of the compelling consumer proposition, piracy services are subject to rapid global growth. The success of our streaming video solutions (e.g. FIGHT PASS) is directly threatened by the availability and use of pirated alternatives. The value that streaming services are willing to pay for content that we develop may be reduced if piracy prevents these services from realizing adequate revenues on these acquisitions.

Lastly, in the event of a bankruptcy, our intellectual property licenses could be affected in numerous ways. There is a concern that a bankruptcy can result in us losing intellectual property rights. Although some protections are granted via the United States Bankruptcy Code, the United States Bankruptcy Code definition of intellectual property only includes trade secrets, patents and patent applications, copyrights, and mask works and does not include trademarks. Because we rely heavily on the licensing of trademarks, we are at risk of losing rights in the event of a bankruptcy.

As a result of our operations in international markets, we are subject to risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to such markets.

We provide services in various jurisdictions abroad through a number of brands and businesses that we own and operate, as well as through joint ventures, and we expect to continue to expand our international presence. We face, and expect to continue to face, additional risks in the case of our existing and future international operations, including:

 

   

political instability, adverse changes in diplomatic relations and unfavorable economic conditions in the markets in which we have international operations or into which we may expand;

 

   

more restrictive or otherwise unfavorable government regulation of the entertainment and sports industry, which could result in increased compliance costs or otherwise restrict the manner in which we provide services and the amount of related fees charged for such services;

 

   

limitations on the enforcement of intellectual property rights;

 

   

enhanced difficulties of integrating any foreign acquisitions;

 

   

limitations on the ability of foreign subsidiaries to repatriate profits or otherwise remit earnings;

 

   

adverse tax consequences;

 

   

less sophisticated legal systems in some foreign countries, which could impair our ability to enforce our contractual rights in those countries;

 

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limitations on technology infrastructure;

 

   

variability in venue security standards and accepted practices; and

 

   

difficulties in managing operations due to distance, language and cultural differences, including issues associated with (i) business practices and customs that are common in certain foreign countries but might be prohibited by U.S. law and our internal policies and procedures and (ii) management and operational systems and infrastructures, including internal financial control and reporting systems and functions, staffing and managing of foreign operations, which we might not be able to do effectively or on a cost—efficient basis.

If our goodwill or intangible assets become impaired, we may be required to record an additional significant charge to earnings.

We review our goodwill for impairment annually as of October 1 and at any time upon the occurrence of certain events or substantive changes in circumstances that indicate the carrying amount of goodwill may not be recoverable. If such goodwill or intangible assets are deemed to be impaired, an impairment loss equal to the amount by which the carrying amount exceeds the fair value of the assets would be recognized. Adverse impacts to our business, including as a result of COVID-19, could result in additional impairments and additional significant charges to earnings. For additional information, see Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Impact of the COVID-19 Pandemic.”

Participants and spectators in connection with our live entertainment and sports events are subject to potential injuries and accidents, which could subject us to personal injury or other claims and increase our expenses, as well as reduce attendance at our live entertainment and sports events, causing a decrease in our revenue.

There are inherent risks to participants and spectators involved with producing, attending, or participating in live entertainment and sports events. Injuries and accidents have occurred and may occur from time to time in the future, which could subject us to substantial claims and liabilities for injuries. Incidents in connection with our entertainment and sports events at any of our venues or venues that we rent could also result in claims, reducing operating income or reducing attendance at our events, causing a decrease in our revenues. There can be no assurance that the insurance we maintain will be adequate to cover any potential losses. The physical nature of many of our live sports events exposes the athletes that participate to the risk of serious injury or death. These injuries could include concussions, and many sports leagues and organizations have been sued by athletes over alleged long-term neurocognitive impairment arising from concussions. Although the participants in certain of our live sports events, as independent contractors, are responsible for maintaining their own health, disability and life insurance, we may seek coverage under our accident insurance policies, if available, or our general liability insurance policies, for injuries that athletes incur while competing. To the extent such injuries are not covered by our policies, we may self-insure medical costs for athletes for such injuries. Liability to us resulting from any death or serious injury, including concussions, sustained by athletes while competing, to the extent not covered by our insurance, could adversely affect our business, financial condition, and operating results.

We are subject to extensive U.S. and foreign governmental regulations, and our failure to comply with these regulations could adversely affect our business.

Our operations are subject to federal, state and local laws, statutes, rules, regulations, policies, and procedures in the United States and around the world, which are subject to change at any time, governing matters such as:

 

   

licensing laws for talent agencies, such as California’s Talent Agencies Act and the New York General Business Law;

 

   

licensing laws for athlete agents;

 

   

licensing laws for the promotion and operation of MMA events;

 

   

licensing laws for the supply of sports betting data, gaming software, and other products to gambling operators;

 

   

licensing, permitting and zoning requirements for operation of our offices, locations, venues, and other facilities;

 

   

health, safety, and sanitation requirements;

 

   

the service of food and alcoholic beverages;

 

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the welfare and protection of animals;

 

   

working conditions, labor, minimum wage and hour, citizenship, immigration, visas, harassment and discrimination, and other labor and employment laws and regulations;

 

   

human rights and human trafficking, including compliance with the U.K. Modern Slavery Act and similar current and future legislation;

 

   

our employment of youth workers and compliance with child labor laws;

 

   

compliance with the U.S. Americans with Disabilities Act of 1990 and the U.K.’s Disability Discrimination Act 1995;

 

   

compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K. Bribery Act 2010 (the “Bribery Act”) and similar regulations in other countries, which prohibit U.S. companies and their intermediaries from engaging in bribery or other prohibited payments to foreign officials and require companies to keep books and records that accurately and fairly reflect the transactions of the company and to maintain an adequate system of internal accounting controls;

 

   

compliance with applicable antitrust and fair competition laws;

 

   

compliance with international trade controls, including applicable import/export regulations, and sanctions and international embargoes that may limit or restrict our ability to do business with specific individuals or entities or in specific countries or territories;

 

   

compliance with anti-money laundering and countering terrorist financing rules, currency control regulations, and statutes prohibiting tax evasion and the aiding or abetting of tax evasion;

 

   

marketing activities;

 

   

environmental protection regulations;

 

   

compliance with current and future privacy and data protection laws imposing requirements for the processing and protection of personal or sensitive information, including the GDPR and the E.U. e-Privacy Regulation;

 

   

compliance with cybersecurity laws imposing country-specific requirements relating to information systems and network design, security, operations, and use;

 

   

tax laws; and

 

   

imposition by foreign countries of trade restrictions, restrictions on the manner in which content is currently licensed and distributed, ownership restrictions, or currency exchange controls.

Noncompliance with these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, reputational harm, adverse media coverage, and other collateral consequences. Multiple or repeated failures by us to comply with these laws and regulations could result in increased fines or proceedings against us. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our business, results of operations, and financial condition. While we attempt to conduct our business and operations in a manner that we believe to be in compliance with such laws and regulations, there can be no assurance that a law or regulation will not be interpreted or enforced in a manner contrary to our current understanding. In addition, the promulgation of new laws, rules, and regulations could restrict or unfavorably impact our business, which could decrease demand for our services, reduce revenue, increase costs, or subject us to additional liabilities. For example, some legislatures have proposed laws in the past that would impose potential liability on us and other promoters and producers of live events for incidents that occur at our events, particularly relating to drugs and alcohol or the spread of the COVID-19 virus.

 

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In the United States and certain foreign jurisdictions, we may have direct and indirect interactions with government agencies and state-affiliated entities in the ordinary course of our business. In particular, athletic commissions and other applicable regulatory agencies require us to obtain licenses for promoters, medical clearances, licenses for athletes, or permits for events in order for us to promote and conduct our live events and productions. In the event that we fail to comply with the regulations of a particular jurisdiction, whether through our acts or omissions or those of third parties, we may be prohibited from promoting and conducting our live events and productions in that jurisdiction. The inability to present our live events and productions in jurisdictions could lead to a decline in various revenue streams in such jurisdictions, which could have an adverse effect on our business, financial condition, and results of operations.

We operate in a number of countries which are considered to be at a heightened risk for corruption. Additionally, we operate in industry segments, such as sports marketing, that have been the subject of past anti-corruption enforcement efforts. As a global company, a risk exists that our employees, contractors, agents, or managers could engage in business practices prohibited by applicable U.S. laws and regulations, such as the FCPA, as well as the laws and regulations of other countries prohibiting corrupt payments to government officials and others, such as the U.K. Bribery Act. There can be no guarantee that our compliance programs will prevent corrupt business practices by one or more of our employees, contractors, agents, managers, or vendors, or that regulators in the U.S. or in other markets will view our program as adequate should any such issue arise.

We are also required to comply with economic sanctions laws imposed by the United States or by other jurisdictions where we do business, which may restrict our transactions in certain markets, and with certain customers, business partners, and other persons and entities. As a result, we are not permitted to, directly or indirectly (including through a third-party intermediary), procure goods, services, or technology from, or engage in transactions with, individuals and entities subject to sanctions. While we believe we have been in compliance with sanctions requirements, there can be no guarantee that we will remain in compliance. Any violation of anti-corruption or sanctions laws could result in fines, civil and criminal sanctions against us or our employees, prohibitions on the conduct of our business (e.g., debarment from doing business with International Development Banks and similar organizations), and damage to our reputation, which could have an adverse effect on our business, financial condition, and results of operations.

In addition, following a national referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union on January 31, 2020 and entered into a transition period that expired on December 31, 2020. The United Kingdom will continue its ongoing and complex negotiations with the European Union relating to the future trading relationship between the parties. Significant political and economic uncertainty remains about whether the terms of the relationship will differ materially from the terms before withdrawal. The developments, or the perception that any of them could occur, may result in increased legal and regulatory complexities, potential higher costs of conducting business in Europe as well as less demand for concerts and other live entertainment in the United Kingdom and the E.U. Brexit has also contributed to significant volatility and uncertainty in global stock markets and currency exchange rates, and such volatility could continue to occur as the negotiation process progresses.

We are signatory to certain franchise agreements of unions and guilds and are subject to certain licensing requirements of the states in which we operate. We are also signatories to certain collective bargaining agreements and depend upon unionized labor for the provision of some of our services. Our clients are also members of certain unions and guilds that are signatories to collective bargaining agreements. Any expiration, termination, revocation or non-renewal of these franchises, collective bargaining agreements, or licenses and any work stoppages or labor disturbances could adversely affect our business.

Certain of our business, clients, or employees at some of the locations in which we operate are subject to collective bargaining and/or franchise agreements. These collective bargaining and/or franchise agreements regularly expire and require negotiation in the ordinary course of business. Upon the expiration of any of these collective bargaining and/or franchise agreements, however, we, the trade associations with which we are affiliated, and/or our clients’ unions may be unable to negotiate new collective bargaining and/or franchise agreements on satisfactory terms or at all. Our operations may be interrupted as a result of labor disputes or difficulties and delays in the process of renegotiating. Certain of such unions and guilds have in the past gone on strike, and in the future may do so again. In addition, our operations at one or more of our facilities may also be interrupted as a result of labor disputes by outside unions attempting to unionize one or more groups of employees (even if not employed by us) at a venue even though we do not currently have unionized labor at that venue. There have also been efforts to unionize the MMA athletes that participate in UFC’s events. A work stoppage at one or more of our operated venues or at our promoted events could have an adverse effect on our business, financial condition and results of operations. We cannot predict the effect that a potential work stoppage would have on our business.

 

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We are party to certain collective bargaining agreements that require contributions to various multiemployer pension, health, and welfare plans that cover unionized employees. Required contributions to these plans could unexpectedly increase during the term of a collective bargaining agreement due to the Employee Retirement Income Security Act of 1974, as amended, which requires additional contributions to be made when a pension fund enters into critical status, which may occur for reasons that are beyond our control. In addition, we may be required by law to fulfill our pension withdrawal liability with respect to any multiemployer pension plans from which we may withdraw or partially withdraw. Our potential withdrawal liability will increase if a multiemployer pension plan in which we participate has significant underfunded liabilities. Any unplanned multiemployer pension liabilities could have an adverse effect on our business, financial condition, and results of operations.

Our talent agency business is and was signatory, through a trade association, The Association of Talent Agents (“ATA”), to certain franchise agreements with the unions and guilds that represent certain of its clients (for example, with the Directors Guild of America). The agency is also subject to licensing and other requirements of certain states in which we operate. Our ability to maintain, renew, or operate without such licenses and franchises is not guaranteed. For example, the Writer’s Guild of America East and the Writer’s Guild of America West (collectively, the “WGA”), terminated its previous 1976 franchise agreement, the Artists’ Manager Basic Agreement, with the ATA, effective April 6, 2019 and while the parties were attempting to negotiate a new franchise agreement, the WGA instructed its members to terminate writing representation services. Furthermore, the WGA and certain writers filed a lawsuit in state court in California against WME and other talent agencies alleging, among other things, breach of fiduciary duty and unfair competition under California law (the “State Court Action”). In addition, on June 24, 2019, WME filed a lawsuit in federal court in California against the WGA alleging violations of Section 1 of the Sherman Act (the “Federal Court Action”). In August 2019, the WGA voluntarily dismissed the State Court Action and instead refiled its claims as counterclaims in the Federal Court Action. The WGA claims included breach of fiduciary duty, unfair competition, violations of Section 1 of the Sherman Act, violations of the California Cartwright Act and RICO, among others. The case was resolved and dismissed with prejudice upon WME signing a new franchise agreement and side letter directly with the WGA on February 5, 2021 (the “Franchise Agreements”).

The Franchise Agreements include terms that prohibit WME from (a) negotiating packaging deals after June 30, 2022 and (b) having more than a 20% non-controlling ownership or other financial interest in, or being owned or affiliated with any individual or entity that has more than a 20% non-controlling ownership or other financial interest in, any entity or individual engaged in the production or distribution of works written by WGA members under a WGA collective bargaining agreement (any such entity or individual, a “Restricted Production Entity” and the restrictions set forth in clause (b), the “Restricted Production Entity Limit”). The Franchise Agreements provide for a transition period (the “Transition Period”) for WME to come into compliance with certain of its provisions, including the Restricted Production Entity Limit. During the term of the Franchise Agreements, until we are in compliance, the Franchise Agreements require that we place into escrow (i) Endeavor Content’s after-tax gross profits from the production of works written by WGA members under a WGA collective bargaining agreement and (ii) WME’s after-tax writer commissions and package fees received in connection with such Endeavor Content productions.

Given Endeavor’s current ownership of certain Restricted Production Entities exceeds 20% (including with respect to certain portions of the Endeavor Content business), we will need to reduce our ownership in those Restricted Production Entities to 20% or less by the end of the Transition Period in order to come into compliance and not be in violation of the Franchise Agreements. The potential consequences of any failure to comply may include, among other things, failure to access such escrowed funds during the term until we are in compliance, WGA’s termination of the Franchise Agreements, and, as a result, WGA member clients’ termination of WME as their agency for writing representation services.

Furthermore, the Restricted Production Entity Limit set forth in the Franchise Agreements applies to WME, its agents, employees, partners, principals and shareholders, other than a de minimis holder of general stock (defined as a shareholder that (i) does not hold more than 5% of Endeavor and (ii) does not have voting or other control of the operation or management of Endeavor (a “De Minimis Shareholder”)). We do not have control over who acquires our shares in the public markets, and cannot limit the percentage of our shares held by any given shareholder. In the event that a shareholder of the Company (other than a De Minimis Shareholder) acquires a greater than 20% ownership or other financial interest in a Restricted Production Entity, we would also be in violation of the Franchise Agreements and the potential consequences set forth above would similarly apply.

The outcome of any similar disputes with unions or guilds that represent our clients, including the commercial landscape that will exist in the future with our clients after such disputes, could have an adverse effect on our business. As with the WGA dispute, any revocation, non-renewal or termination of our or our clients’ franchises or licenses, including but not limited to the Franchise Agreements, including the limitation on our client representation business’ ability to generate new future packaging revenues or its ability to affiliate with other Endeavor companies that produce content, or any disputed application of, or unexpected change in franchise or licensing requirements (whether applicable to us, our clients or otherwise), could have an adverse effect on our business, financial condition, and results of operations.

 

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We cannot be certain that additional financing will be available on reasonable terms when required, or at all.

From time to time, we may need additional financing, whether in connection with our capital improvements, acquisitions, or otherwise. Our ability to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition of the capital markets and other factors. For example, if borrowings available under our first lien credit agreement entered into by certain of our subsidiaries in May 2014 in connection with the acquisition of IMG (as amended, restated, modified and/or supplemented from time to time, the “Credit Facilities”) and UFC Holdings, LLC’s term loan and revolving credit facilities (the “UFC Credit Facilities” and, collectively with the Credit Facilities, the “Senior Credit Facilities”), or borrowings under certain of our other debt facilities, are insufficient or unavailable at a reasonable cost, we may be required to adopt one or more alternatives to raise cash, such as incurring additional indebtedness, selling our assets, seeking to raise additional equity capital, or restructuring, which alternatives may not be available to us on favorable terms when required, or at all. Any of the foregoing could have a material adverse effect on our business. In addition, if we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences, or privileges senior to the rights of our Class A common stock, and our then existing stockholders may experience dilution.

Unfavorable outcomes in legal proceedings may adversely affect our business and operating results.

Our results may be affected by the outcome of pending and future litigation. Unfavorable rulings in our legal proceedings could result in material liability to us or have a negative impact on our reputation or relations with our employees or third parties. The outcome of litigation, including class action lawsuits, is difficult to assess or quantify. Plaintiffs in class action lawsuits may seek recovery of very large or indeterminate amounts and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. UFC is currently named in five related class-action lawsuits filed against it alleging that UFC violated Section 2 of the Sherman Act by monopolizing the alleged market for the promotion of elite professional MMA bouts and monopolizing the alleged market for elite professional MMA fighters’ services. Additionally, IMG is currently named in four claims against it in Milan, Italy alleging anti-competitive practices. See Part II., Item 1. “Legal Proceedings.” If we are unable to resolve these or other matters favorably, our business, operating results, and our financial condition may be adversely affected.

In addition, we are currently, and from time to time in the future may be, subject to various other claims, investigations, legal and administrative cases and proceedings (whether civil or criminal), or lawsuits by governmental agencies or private parties. If the results of these investigations, proceedings, or suits are unfavorable to us or if we are unable to successfully defend against third-party lawsuits, we may be required to pay monetary damages or may be subject to fines, penalties, injunctions, or other censure that could have an adverse effect on our business, financial condition, and results of operations. Even if we adequately address the issues raised by an investigation or proceeding or successfully defend a third-party lawsuit or counterclaim, we may have to devote significant financial and management resources to address these issues, which could have an adverse effect on our business, results of operations, and financial condition.

Risks Related to Our Organization and Structure

We are a holding company and our principal asset is our indirect equity interests in Endeavor Operating Company and, accordingly, we are dependent upon distributions from Endeavor Operating Company to pay taxes and other expenses.

We are a holding company and our principal asset is our indirect ownership of Endeavor Operating Company. We have no independent means of generating revenue. As the indirect sole managing member of Endeavor Operating Company, we intend to cause Endeavor Operating Company to make distributions to its equityholders, including the members of Endeavor Operating Company (including Endeavor Profits Units holders) and Endeavor Manager, in amounts sufficient to cover the taxes on their allocable share of the taxable income of Endeavor Operating Company. As the sole managing member of Endeavor Manager, we intend to cause Endeavor Manager, to the extent it is able, to make non-pro rata distributions to us such that we will be able to cover all applicable taxes payable by us, any payments we are obligated to make under the tax receivable agreement we intend to enter into as part of the reorganization transactions and other costs or expenses, but we are limited in our ability to cause Endeavor Operating Company to make distributions to its equityholders (including for purposes of paying corporate and other overhead expenses and dividends) under the Senior Credit Facilities. In addition, certain laws and regulations may result in restrictions on Endeavor Manager’s ability to make distributions to us, Endeavor Operating Company’s ability to make distributions to its equityholders, or the ability of Endeavor Operating Company’s subsidiaries to make distributions to it.

 

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To the extent that we need funds and Endeavor Manager, Endeavor Operating Company or Endeavor Operating Company’s subsidiaries are restricted from making such distributions, under applicable law or regulation, as a result of covenants in the Senior Credit Facilities or otherwise, we may not be able to obtain such funds on terms acceptable to us or at all and, as a result, could suffer an adverse effect on our liquidity and financial condition. In certain situations, including where Endeavor Operating Company does not have sufficient cash to make tax distributions to all of its members in the full amount provided for in the Endeavor Operating Company Agreement, tax distributions made to Endeavor Manager may be reduced (relative to those tax distributions made to other members of Endeavor Operating Company) to reflect the income tax rates to which Endeavor Manager and Endeavor Group Holdings are subject and certain other factors. Tax distributions will generally be treated as advances of other distributions made under the Endeavor Operating Company Agreement, but no adjustments will be made to the exchange ratio for members of Endeavor Operating Company or Endeavor Manager who exercise the redemption rights described above to account for prior tax distributions (and tax distributions paid prior to such an exercise of redemption rights will not reduce distributions otherwise payable to Endeavor Manager in respect of Endeavor Operating Company Units acquired in connection with the exercise of such redemption rights).

Under the limited liability company agreement of Endeavor Operating Company (the “Endeavor Operating Company Agreement”), we expect Endeavor Operating Company, from time to time, to make distributions in cash to its equityholders, including the members of Endeavor Operating Company (including the Endeavor Profits Units holders) and Endeavor Manager, in amounts sufficient to cover the taxes on their allocable share of the taxable income of Endeavor Operating Company. We further expect that, under the limited liability company agreement of Endeavor Manager (the “Endeavor Manager LLC Agreement”), Endeavor Manager may make non-pro rata distributions in cash to us using the proceeds it receives from any such tax distributions by Endeavor Operating Company. As a result of (i) potential differences in the amount of net taxable income indirectly allocable to us and to Endeavor Operating Company’s other equityholders, (ii) the lower tax rate applicable to corporations as opposed to individuals, (iii) the favorable tax benefits that we anticipate from (a) redemptions or exchanges of Endeavor Operating Company Units (and paired shares of Class X common stock), in exchange for, at our election (subject to certain exceptions), either cash (based on the market price of a share of our Class A common stock) or shares of our Class A common stock, (b) payments under the tax receivable agreement and (c) the acquisition of interests in Endeavor Operating Company from its equityholders (other than Endeavor Group Holdings and Endeavor Manager) and (iv) the fact that tax distributions made in respect of Endeavor Operating Company Units will generally be made pro rata in respect of such Units as described in the Endeavor Operating Company Agreement, we expect that these tax distributions may be in amounts that exceed our tax liabilities. Our board of directors will determine the appropriate uses for any excess cash so accumulated, which may include, among other uses, the payment of obligations under the tax receivable agreement and the payment of other expenses. We will have no obligation to distribute such cash (or other available cash) to our stockholders. No adjustments to the exchange ratio for Endeavor Operating Company Units or Endeavor Manager Units and corresponding shares of common stock will be made as a result of any cash distribution by us or any retention of cash by us. To the extent we do not distribute such cash as dividends on our Class A common stock and instead, for example, hold such cash balances, or lend them to Endeavor Operating Company, this may result in shares of our Class A common stock increasing in value relative to the value of Endeavor Operating Company Units. The holders of Endeavor Operating Company Units may benefit from any value attributable to such cash balances if they acquire shares of Class A common stock in exchange for their Endeavor Operating Company Units (and paired shares of Class X common stock).

We are controlled by Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders, whose interests in our business may be different than yours, and our board of directors has delegated significant authority to an Executive Committee and to Messrs. Emanuel and Whitesell.

Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders, as a group, control approximately 89.5% of the combined voting power of our common stock following the underwriters’ exercise of their option to purchase additional shares in full as a result of their ownership of shares of our Class A common stock and Class X common stock, each share of which is entitled to 1 vote on all matters submitted to a vote of our stockholders, and Class Y common stock, each share of which is entitled to 20 votes on all matters submitted to a vote of our stockholders.

Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders collectively have the ability to substantially control our Company, including the ability to control any action requiring the general approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and stockholder amendments to our by-laws, and the approval of any merger or sale of substantially all of our assets. This concentration of ownership and voting power may also delay, defer, or even prevent an acquisition by a third party or other change of control of our Company, and may make some transactions more difficult or impossible without the support of Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders, even if such events are in the best interests of minority stockholders. This concentration of voting power may have a negative impact on the price of our Class A common stock. In addition, because shares of our Class Y common stock each have 20 votes per share on matters submitted to a vote of our stockholders, Messrs. Emanuel

 

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and Whitesell, Executive Holdcos, and the Silver Lake Equityholders will be able to control our Company as long as they own Class Y common stock representing more than a majority of the total voting power of our issued and outstanding common stock, voting together as a single class. Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders will continue to control the outcome of matters submitted to stockholders so long as they collectively hold 123,972,031 shares of Class Y common stock, which represents 18.2% of the outstanding shares of all our common stock outstanding. Holders of Class Y common stock would continue to control the outcome of matters submitted to stockholders where Class Y common stock represents 18.2% of the outstanding shares of all our common stock.

Additionally, prior to a Triggering Event, pursuant to Section 141(a) of the Delaware General Corporation Law (“DGCL”), the Executive Committee will have all of the power and authority (including voting power) of the board of directors. The Executive Committee will have the authority to approve any actions of the Company, except for matters that must be approved by the Audit Committee of the board (or both the Executive Committee and the Audit Committee), or by a committee qualified to grant equity to persons subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for purposes of exempting transactions pursuant to Section 16b-3 thereunder, or as required under Delaware law, SEC rules and the rules of the Exchange. The Executive Committee consists of Messrs. Emanuel and Whitesell and two directors nominated to our board of directors by the Silver Lake Equityholders. The Executive Committee has delegated to Messrs. Emanuel and Whitesell the authority to manage the business of the Company with power and authority to approve any actions of the Company, except for certain specified actions that require the approval of the Executive Committee and as required under Delaware law, SEC rules and the rules of the Exchange.

Messrs. Emanuel’s and Whitesell’s, Executive Holdcos’, and the Silver Lake Equityholders’ interests may not be fully aligned with yours, which could lead to actions that are not in your best interest. Because Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders hold part of their economic interest in our business through Endeavor Operating Company, rather than through the public company, they may have conflicting interests with holders of shares of our Class A common stock. For example, Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders may have different tax positions from us, which could influence their decisions regarding whether and when we should dispose of assets or incur new or refinance existing indebtedness, and whether and when we should undergo certain changes of control within the meaning of the tax receivable agreement or terminate the tax receivable agreement. In addition, the structuring of future transactions may take into consideration these tax or other considerations even where no similar benefit would accrue to us. Messrs. Emanuel’s and Whitesell’s, Executive Holdcos’, and the Silver Lake Equityholders’ significant ownership in us and resulting ability to effectively control us may discourage someone from making a significant equity investment in us, or could discourage transactions involving a change in control, including transactions in which you as a holder of shares of our Class A common stock might otherwise receive a premium for your shares over the then-current market price.

Section 203 of the DGCL may affect the ability of an “interested stockholder” to engage in certain business combinations, including mergers, consolidations or acquisitions of additional shares, for a period of three years following the time that the stockholder becomes an “interested stockholder.” An “interested stockholder” is defined to include persons owning directly or indirectly 15% or more of the outstanding voting stock of a corporation. We have elected in our amended and restated certificate of incorporation not to be subject to Section 203 of the DGCL. Nevertheless, our amended and restated certificate of incorporation contains provisions that will become operative following a Triggering Event and that will have a similar effect to Section 203 of the DGCL, except that they provide that Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders and their respective affiliates and direct and indirect transferees will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to such restrictions.

Our amended certificate of incorporation provides that, to the fullest extent permitted by law, Endeavor Group Holdings renounces any interest or expectancy in a transaction or matter that may be a corporate opportunity for Endeavor Group Holdings and Messrs. Emanuel and Whitesell (other than in their capacity as officers and employees of the Company), Executive Holdcos, the Silver Lake Equityholders, or any of our non-employee directors have no duty to present such corporate opportunity to Endeavor Group Holdings and they may invest in competing businesses or do business with our clients or customers. To the extent that Messrs. Emanuel and Whitesell, Executive Holdcos, the Silver Lake Equityholders, or our non-employee directors invest in other businesses, they may have differing interests than our other stockholders. In addition, we may in the future partner with or enter into transactions with our pre-IPO investors or their affiliates, including with respect to future investments, acquisitions, and dispositions.

 

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We cannot predict the impact our capital structure and the concentrated control by Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders may have on our stock price or our business.

We cannot predict whether our multiple share class capital structure, combined with the concentrated control by Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders, will result in a lower trading price or greater fluctuations in the trading price of our Class A common stock, or will result in adverse publicity or other adverse consequences. In addition, some indices are considering whether to exclude companies with multiple share classes from their membership. For example, in July 2017, FTSE Russell, a provider of widely followed stock indices, stated that it plans to require new constituents of its indices to have at least five percent of their voting rights in the hands of public stockholders. In addition, in July 2017, S&P Dow Jones, another provider of widely followed stock indices, stated that companies with multiple share classes will not be eligible for certain of their indices. As a result, our Class A common stock will likely not be eligible for these stock indices. We cannot assure you that other stock indices will not take a similar approach to FTSE Russell or S&P Dow Jones in the future. Exclusion from indices could make our Class A common stock less attractive to investors and, as a result, the market price of our Class A common stock could be adversely affected.

We have a substantial amount of indebtedness, which could adversely affect our business.

As of March 31, 2021, we had an aggregate of $5.6 billion outstanding indebtedness under our Senior Credit Facilities, with the ability to borrow up to approximately $311.0 million more under revolving credit facilities under our Senior Credit Facilities, consisting primarily of availability under the UFC Credit Facilities. Additionally, as of March 31, 2021, we had certain other revolving line of credit facilities and long-term debt liabilities, primarily related to Endeavor Content, with total committed amounts of $365.0 million, of which $250.1 million was outstanding and $8.6 million was available for borrowing based on the supporting asset base, and similar to our Senior Credit Facilities, these facilities include restrictive covenants that may restrict certain business operations of the respective businesses who have borrowed from these facilities.

If we cannot generate sufficient cash flow from operations to service this debt, we may need to refinance this debt, dispose of assets, or issue equity to obtain necessary funds. Additionally, our credit rating has in the past and may in the future be downgraded. We do not know whether we will be able to take any of these actions on a timely basis, on terms satisfactory to us or at all.

This substantial amount of indebtedness could:

 

   

require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing funds available for working capital, capital expenditures or other purposes;

 

   

require us to refinance in order to accommodate the maturity of the term loans under our Credit Facilities in 2025 and the term loans under our UFC Credit Facilities in 2026;

 

   

increase our vulnerability to adverse economic and industry conditions, which could lead to a downgrade in our credit rating and may place us at a disadvantage compared to competitors who may have proportionately less indebtedness;

 

   

increase our cost of borrowing and cause us to incur substantial fees from time to time in connection with debt amendments or refinancings; and

 

   

limit our ability to obtain necessary additional financing for working capital, capital expenditures, or other purposes in the future, plan for or react to changes in our business and the industries in which we operate, make future acquisitions or pursue other business opportunities, and react in an extended economic downturn.

Despite this substantial indebtedness, we may still have the ability to incur significantly more debt. The incurrence of additional debt could increase the risks associated with this substantial leverage, including our ability to service this indebtedness. In addition, because a portion of the borrowings under our credit facilities bear interest at a variable rate, our interest expense could increase, exacerbating these risks. Of the aggregate principal balance of $5.6 billion outstanding under the Senior Credit Facilities as of March 31, 2021, $1.5 billion has been fixed through interest rate swaps leaving $4.1 billion of floating rate debt under those facilities. A 1% increase in the interest rates charged on the outstanding amount of our floating rate debt would increase our annual interest expense by $41 million.

Restrictive covenants in the Senior Credit Facilities may restrict our ability to pursue our business strategies.

The credit agreements governing the terms of the Senior Credit Facilities restrict, among other things, asset dispositions, mergers and acquisitions, dividends, stock repurchases and redemptions, other restricted payments, indebtedness, loans and investments, liens, and affiliate transactions. The Senior Credit Facilities also contain customary events of default, including a change in control. These covenants, among other things, limit our ability to fund future working capital needs and capital expenditures, engage in future acquisitions or development activities, or

 

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otherwise realize the value of our assets and opportunities fully. Such covenants could limit the flexibility of our subsidiaries in planning for, or reacting to, changes in the entertainment and sports industry. Our ability to comply with these covenants is subject to certain events outside of our control. Additionally, we have in the past, and may in the future need to amend or obtain waivers to our existing covenants, and cannot guarantee that we will be able to obtain those amendments or waivers on commercially reasonable terms or at all. If we are unable to comply with these covenants, the lenders under the Senior Credit Facilities could terminate their commitments and accelerate repayment of our outstanding borrowings, which also may result in the acceleration of or default under any other debt we may incur in the future to which a cross-acceleration or cross-default provision applies. If such an acceleration were to occur, we may be unable to obtain adequate refinancing for our outstanding borrowings on favorable terms, or at all. We have pledged a significant portion of our assets as collateral under our Senior Credit Facilities. If we are unable to repay our outstanding borrowings when due, the lenders under the Senior Credit Facilities will also have the right to proceed against the collateral granted to them to secure the indebtedness owed to them, which may have an adverse effect on our business, financial condition, and operating results.

We will require a significant amount of cash to service our indebtedness. The ability to generate cash or refinance our indebtedness as it becomes due depends on many factors, some of which are beyond our control.

Our ability to make payments on, or to refinance our respective obligations under, our indebtedness will depend on future operating performance and on economic, financial, competitive, legislative, regulatory, and other factors. Many of these factors are beyond our control. Additionally, the terms of the UFC Credit Facilities restrict the ability of our UFC subsidiaries to make distributions to us, which may limit us from using funds from our UFC subsidiaries to make payments on our indebtedness under the Credit Facilities. Our consolidated cash balance also includes cash from other consolidated non-wholly owned entities, such as our Endeavor China business. These businesses may have restrictions in their ability to distribute cash to the rest of the company, including under the terms of applicable operating agreements or debt agreements, which may require the approval of certain of our investors based on the timing and amount of distribution. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to satisfy our respective obligations under our indebtedness or to fund our other needs. In order for us to satisfy our obligations under our indebtedness, we must continue to execute our business strategy. If we are unable to do so, we may need to refinance all or a portion of our indebtedness on or before maturity.

We are exempt from certain corporate governance requirements since we are a “controlled company” within the meaning of the Exchange rules, and as a result our stockholders do not have the protections afforded by these corporate governance requirements.

Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders control, as a group, more than 50% of our combined voting power. As a result, we are considered a “controlled company” for the purposes of the Exchange rules and corporate governance standards, and therefore we are permitted to, and we intend to, elect not to comply with certain corporate governance requirements of the Exchange, including those that would otherwise require our board of directors to have a majority of independent directors and require that we either establish Compensation and Nominating and Corporate Governance Committees, each comprised entirely of independent directors, or otherwise ensure that the compensation of our executive officers and nominees for directors are determined or recommended to the board of directors by the independent members of the board of directors. Accordingly, holders of our Class A common stock do not have the same protections afforded to stockholders of companies that are subject to all of the rules and corporate governance standards of the Exchange, and the ability of our independent directors to influence our business policies and affairs may be reduced. We expect to remain a controlled company until Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders no longer control, as a group, more than 50% of our combined voting power. Each member of our control group holds Class A common stock and Class X common stock, each of which has 1 vote per share, and Class Y common stock, which has a 20-vote per share feature. The shares of Class Y common stock held by our control group will be canceled/redeemed for no consideration upon the earlier of (i) the disposition of (a) the paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock) and (b) the shares of Class A common stock (as a result of a redemption of paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock)) paired with such Class Y common stock, as applicable, and (ii) with respect to all shares of Class Y common stock, a Triggering Event. Because there is no time-based sunset date for our Class Y common stock, we may continue to be a controlled company indefinitely.

 

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We are required to pay certain of our pre-IPO investors, including certain Other UFC Holders, for certain tax benefits we may claim (or are deemed to realize) in the future, and the amounts we may pay could be significant.

In connection with the offering, we acquired existing equity interests in Endeavor Operating Company from certain of our pre-IPO investors in exchange for the issuance of shares of our Class A common stock, Class Y common stock and rights to receive payments under the tax receivable agreement and acquired certain existing interests in Endeavor Operating Company from certain of the Other UFC Holders in exchange for cash and rights to receive payments under the tax receivable agreement. As a result of these acquisitions, we succeeded to certain tax attributes of certain of our pre-IPO investors and will receive the benefit of tax basis in the assets of Endeavor Operating Company and certain of its subsidiaries. In addition, redemptions or exchanges of Endeavor Operating Company Units from members of Endeavor Operating Company (other than Endeavor Manager) in exchange for shares of our Class A common stock or cash are expected to produce favorable tax attributes that would not be available to us in the absence of such redemptions or exchanges.

We have entered into the tax receivable agreement with the Post-IPO TRA Holders that provides for the payment by us to the Post-IPO TRA Holders (or their transferees of Endeavor Operating Company Units or other assignees) of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we realize or are deemed to realize (determined by using certain assumptions) as a result of (i) any tax basis in the assets of Endeavor Operating Company and certain of its subsidiaries resulting from (a) the acquisition of equity interests in Endeavor Operating Company from certain of our pre-IPO investors and the acquisition of interests in Endeavor Operating Company (or UFC Parent) from certain of the Other UFC Holders, (b) future redemptions or exchanges by us of Endeavor Operating Company Units from members of Endeavor Operating Company (other than Endeavor Manager) in exchange for shares of our Class A common stock or cash or (c) payments made under the tax receivable agreement, (ii) any net operating losses or certain other tax attributes of certain pre-IPO investors or Other UFC Holders that are available to us to offset income or gain earned after the mergers, (iii) any existing tax basis associated with Endeavor Operating Company Units, the benefit of which is allocable to us as a result of the exchanges of such Endeavor Operating Company Units for shares of our Class A common stock or cash, and (iv) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. The tax receivable agreement makes certain simplifying assumptions regarding the determination of the cash savings that we realize or are deemed to realize from the covered tax attributes, which may result in payments pursuant to the tax receivable agreement in excess of those that would result if such assumptions were not made.

The actual tax benefit, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including, among others, the timing of redemptions or exchanges by members of Endeavor Operating Company, the price of our Class A common stock at the time of the redemptions or exchanges, the extent to which such redemptions or exchanges are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable, and the portion of our payments under the tax receivable agreement constituting imputed interest.

Future payments under the tax receivable agreement could be substantial. The payments under the tax receivable agreement are not conditioned upon any Post-IPO TRA Holder’s continued ownership of us.

In addition, the Post-IPO TRA Holders (or their transferees or other assignees) will not reimburse us for any payments previously made if any covered tax benefits are subsequently disallowed, except that any excess payments made to any Post-IPO TRA Holder (or such holder’s transferees or assignees) will be netted against future payments that would otherwise be made under the tax receivable agreement, if any, after our determination of such excess. We could make payments to the Post-IPO TRA Holders under the tax receivable agreement that are greater than our actual cash tax savings and may not be able to recoup those payments, which could negatively impact our liquidity.

In addition, the tax receivable agreement provides that, upon certain mergers, asset sales or other forms of business combination, or certain other changes of control, our or our successor’s obligations with respect to tax benefits would be based on certain assumptions, including that we or our successor would have sufficient taxable income to fully utilize the tax benefits covered by the tax receivable agreement. As a result, upon a change of control, we could be required to make payments under the tax receivable agreement that are greater than the specified percentage of our actual cash tax savings, which could negatively impact our liquidity.

In addition, the tax receivable agreement provides that in the case of a change in control of the Company or a material breach of our obligations under the tax receivable agreement, the Post-IPO TRA Holders will have the option to terminate the tax receivable agreement, and we will be required to make a payment to the Post-IPO TRA Holders covered by such termination in an amount equal to the present value of future payments (calculated using a discount rate equal to the lesser of 6.50 % or LIBOR plus 200 basis points, which may differ from our, or a potential acquirer’s, then-current cost of capital) under the tax receivable agreement, which payment would be based on certain assumptions, including those relating to our future taxable income. In these situations, our obligations under the tax receivable agreement could have a substantial

 

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negative impact on our, or a potential acquirer’s, liquidity and could have the effect of delaying, deferring, modifying, or preventing certain mergers, asset sales, other forms of business combinations, or other changes of control. These provisions of the tax receivable agreement may result in situations where the Post-IPO TRA Holders have interests that differ from or are in addition to those of our other stockholders. In addition, we could be required to make payments under the tax receivable agreement that are substantial, significantly in advance of any potential actual realization of such further tax benefits, and in excess of our, or a potential acquirer’s, actual cash savings in income tax.

Finally, because we are a holding company with no operations of our own, our ability to make payments under the tax receivable agreement is dependent on the ability of our subsidiaries to make distributions to us. The Senior Credit Facilities restrict the ability of our subsidiaries to make distributions to us, which could affect our ability to make payments under the tax receivable agreement. To the extent that we are unable to make payments under the tax receivable agreement as a result of restrictions in our Senior Credit Facilities, such payments will be deferred and will accrue interest until paid, which could negatively impact our results of operations and could also affect our liquidity in periods in which such payments are made.

Risks Related to Our Class A Common Stock

Future sales of our Class A common stock, or the perception in the public markets that these sales may occur, may depress the price of our Class A common stock.

Additional sales of a substantial number of shares of our Class A common stock in the public market, or the perception that such sales may occur, could have an adverse effect on our stock price and could impair our ability to raise capital through the sale of additional stock. As of May 12, 2021, we had 259,498,002 shares of Class A common stock issued and outstanding. In addition, 167,950,559 shares of Class A common stock may be issued upon the exercise of the redemption rights of our pre-IPO equityholders (other than outstanding Endeavor Profits Units and Endeavor Catchup Profits Units described below). Furthermore, redemptions or exchanges of Endeavor Manager Units and Endeavor Operating Company Units (and the corresponding shares of Class X common stock) into Class A common stock will have a dilutive effect on the number of outstanding shares of our Class A common stock, even if the indirect or direct economic ownership of Endeavor Operating Company or Endeavor Manager, as applicable, by holders of our Class A common stock remain unchanged. Our Class A common stock is freely tradable without restriction under the Securities Act of 1933, as amended (the “Securities Act”), except for any Class A common stock that may be held or acquired by our directors, executive officers, and other affiliates (as that term is defined in the Securities Act), which will be restricted securities under the Securities Act.

Under the Registration Rights Agreement, certain of our equityholders, including Executive Holdcos and the Silver Lake Equityholders (our “Principal Stockholders”), have demand and piggyback rights that require us to file registration statements registering their Class A common stock (including shares of Class A common stock issuable upon the exercise by members of Endeavor Operating Company (other than Endeavor Manager) or members of Endeavor Manager (other than us) of their redemption rights) or to include sales of such Class A common stock in registration statements that we may file for ourselves or other stockholders. Additionally, the private placement investors have the right to require us to register their shares of Class A common stock on a Form S-1 registration statement within 60 days following the closing of the IPO. We intend to file such registration statement on or around June 30, 2021. Additionally, we bear common stock sold under these registration statements, which will be freely tradable in the public market. In the event that such registration rights are exercised and a large number of Class A common stock is sold in the public market, such sales could reduce the trading price of our Class A common stock. These sales could also impede our ability to raise future capital. all expenses in connection with any such registrations, including reimbursement of the reasonable fees and disbursements of one law firm for the selling stockholders (except that selling stockholders will be responsible for their pro rata share of underwriters’ commissions and discounts).

We and each of our executive officers and directors, the Silver Lake Equityholders and certain of our other existing equityholders have agreed with the underwriters that for a period of 180 days after the date of the Prospectus, we and they will not offer, sell, assign, transfer, pledge, contract to sell or otherwise dispose of or hedge any of our common stock, or any options or warrants to purchase any of our common stock or any securities convertible into, exchangeable for or that represent the right to receive our common stock (including, without limitation, Endeavor Operating Company Units and Endeavor Manager Units), subject to specified exceptions including that we may, during such 180-day period, (i) offer, contract to sell or issue Class A common stock or securities convertible into Class A common stock (including Endeavor Operating Company Units or Endeavor Manager Units) in connection with an acquisition or business combination (including the filing of a registration statement on Form S-4 or other appropriate form with respect thereto) or the entering into of a joint venture, provided that the aggregate number of shares of Class A common stock that may be issued (excluding any shares of Class A common stock, Endeavor Manager Units or Endeavor Operating Company Units offered or contracted to be sold pursuant to a signed agreement in connection with an acquisition, business

 

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combination, joint venture or any similar transaction solely to the extent no shares of Class A common stock, Endeavor Operating Company Units or Endeavor Manager Units are issued during the 180-day period) shall not exceed 10% of the total number of shares of Class A common stock (determined after giving effect to the assumed exchange of all Endeavor Operating Company Units and Endeavor Manager Units then outstanding for newly issued shares of Class A common stock) issued and outstanding as of the closing of our IPO and provided further that the acquirer of such common stock agrees in writing to be bound by the obligations and restrictions of our lock-up agreement, (ii) offer or issue Endeavor Operating Company Units to our employees or employees of any of our subsidiaries who were not employees of such entity as of the date of the Prospectus. Morgan Stanley & Co. LLC may, in its discretion, at any time without prior notice (except with respect to common stock held by our executive officers and directors as described in the lock-up agreement), release all or any portion of the common stock from the restrictions in any such agreement, and (iii) allow sales as necessary for paying taxes (including estimated taxes) or to satisfy the income and payroll tax withholding obligations as a result of vesting and/or settlement of equity awards under the 2021 Incentive Award Plan. In addition, the Management Equityholders are subject to market standoff restrictions with us in the Endeavor Manager LLC Agreement and Endeavor Operating Company LLC Agreement that restricts certain transfers of such shares of Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock, including equity awards issued under our equity incentive plans for one year following the closing of the offering, covering an aggregate of 169,432,139 shares of Class A common stock. Notwithstanding the foregoing, up to 4,950,000 shares of our outstanding Class A common stock were available for sale beginning at the commencement of trading on the second trading day on which our common stock traded on NYSE and up to an additional 1,300,000 shares of our outstanding Class A common stock on the effective date of the Resale Registration Statement. After the lock-up agreements and market standoff restrictions expire, up to an additional 163,182,139 shares of Class A common stock (including shares of Class A common stock issuable upon the exercise by members of Endeavor Operating Company (other than Endeavor Manager) or Endeavor Manager (other than us) of their redemption rights) may be sold by these equityholders in the public market either in a registered offering or pursuant to an exemption from registration, such as Rule 144 promulgated under the Securities Act (“Rule 144”). Of these shares, 124,344,980 shares may be immediately sold under Rule 144 without being subject to the volume, manner of sale and other restrictions of such rule.

In addition, subject to certain restrictions:

 

   

the holders of 3,809,522 Endeavor Full Catch-up Profits Units (assuming our achievement of a $25.10 price per share that would fully satisfy their preference on distributions and result in their conversion into Endeavor Operating Company Units), may exchange their Endeavor Operating Company Units and paired shares of our Class X common stock and Class Y common stock. These holders may subsequently acquire shares of Class A common stock upon the exercise of their redemption rights;

 

   

the holders of 3,337,048 Endeavor Profits Units, which have a weighted-average per unit hurdle price of $17.68, may exchange their Endeavor Profits Units into Endeavor Operating Company Units and paired shares of our Class X common stock and Class Y common stock These holders may subsequently acquire shares of Class A common stock upon the exercise of their redemption rights; and

 

   

the holders of 11,919,786 Endeavor Partial Catch-Up Profits Units, which have a per unit hurdle price of $23.16 (assuming our achievement of a $25.10 price per share that would fully satisfy their preference on distributions and result in their conversion into Endeavor Profits Units), may exchange their Endeavor Profits Units and paired shares of our Class X common stock, as described in “Organizational Structure.” These holders may subsequently acquire shares of our Class A common stock upon the exercise of their redemption rights.

In addition, we have initially reserved for issuance under our 2021 Incentive Award Plan 21,700,000 shares of Class A common stock. We granted equity awards in connection with the IPO under our 2021 Incentive Award Plan and, if the price of our Class A common stock increases over time, we will issue restricted stock pursuant to performance-based equity awards to Mr. Emanuel and Mr. Whitesell. Any shares of Class A common stock that we issue, including under our 2021 Incentive Award Plan or other equity incentive plans that we may adopt in the future, will dilute the percentage ownership held by then current holders of our Class A common stock. Moreover, while in the past the Company has historically settled Endeavor Phantom Units in cash, it may in its discretion settle these in equity in the future (through the 2021 Incentive Award Plan or otherwise), which would dilute the percentage ownership held by the investors who purchase Class A common stock.

 

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The price of our Class A common stock may be volatile, and you may be unable to resell your Class A common stock at or above your purchase price or at all.

The market price for our Class A common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including, among others:

 

   

trends and changes in consumer preferences in the industries in which we operate;

 

   

changes in general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the consumer and advertising marketplaces;

 

   

changes in key personnel;

 

   

our entry into new markets;

 

   

changes in our operating performance;

 

   

investors’ perceptions of our prospects and the prospects of the businesses in which we participate;

 

   

fluctuations in quarterly revenue and operating results, as well as differences between our actual financial and operating results and those expected by investors;

 

   

the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

 

   

announcements relating to litigation;

 

   

guidance, if any, that we provide to the public, any changes in such guidance or our failure to meet such guidance;

 

   

changes in financial estimates or ratings by any securities analysts who follow our Class A common stock, our failure to meet such estimates or failure of those analysts to initiate or maintain coverage of our Class A common stock;

 

   

downgrades in our credit ratings or the credit ratings of our competitors;

 

   

the development and sustainability of an active trading market for our Class A common stock;

 

   

investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives;

 

   

the inclusion, exclusion, or deletion of our Class A stock from any trading indices;

 

   

future sales of our Class A common stock by our officers, directors, and significant stockholders;

 

   

other events or factors, including those resulting from system failures and disruptions, hurricanes, wars, acts of terrorism, other natural disasters, , or responses to such events;

 

   

price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; and

 

   

changes in accounting principles.

These and other factors may lower the market price of our Class A common stock, regardless of our actual operating performance. As a result, our Class A common stock may trade at prices significantly below the price at which you purchased your shares.

In addition, the stock markets, including the Exchange, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

 

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We do not expect to pay any cash dividends for the foreseeable future.

We currently expect to retain all of our future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends for the foreseeable future. The declaration and payment of future dividends to holders of our Class A common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, legal requirements, tax obligations, restrictions in the debt instruments of our subsidiaries, including the Senior Credit Facilities, and other factors deemed relevant by our board of directors. See Part I., Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Historical Liquidity and Capital Resources—Debt Facilities” for more information on the restrictions the Senior Credit Facilities impose on our ability to declare and pay cash dividends. As a holding company, our ability to pay dividends depends on our receipt of cash dividends from our subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their respective jurisdictions of organization, agreements of our subsidiaries, or covenants under future indebtedness that we or they may incur.

If we are unable to effectively implement or maintain a system of internal control over financial reporting, we may not be able to accurately or timely report our financial results and our stock price could be adversely affected.

Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires us to evaluate the effectiveness of our internal controls over financial reporting as of the end of each fiscal year, including a management report assessing the effectiveness of our internal controls over financial reporting, and a report issued by our independent registered public accounting firm on that assessment, in each case beginning with the filing of our second Annual Report on Form 10-K. In fiscal year 2019, we identified a material weakness with our internal controls over financial reporting that resulted from not having a sufficiently documented risk assessment process to identify and analyze risks of misstatement due to error and/or fraud, and not having sufficiently documented compliance communication and investigation policies. This deficiency did not result in any error or restatement of our financial statements. We have since enhanced the documentation of our risk assessment process and controls to identify and analyze risks of misstatement due to error or fraud, and implemented process and controls over our enhanced compliance communication and investigation policies. Such controls have operated effectively over a sufficient period of time to conclude we have fully remediated this material weakness. In the future, it is possible that additional material weaknesses or significant deficiencies may be identified that we may be unable to remedy before the requisite deadline for those reports. Our ability to comply with the annual internal control reporting requirements will depend on the effectiveness of our financial reporting and data systems and controls across our company. We expect these systems and controls to require additional investment as we become increasingly more complex and our business grows. To effectively manage this complexity, we will need to continue to maintain and revise our operational, financial and management controls, and our reporting systems and procedures. Any weaknesses or deficiencies or any failure to implement required new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm our operating results and cause us to fail to meet our financial reporting obligations, or result in material misstatements in our financial statements, which could adversely affect our business and reduce our stock price.

Provisions in our organizational documents and certain rules imposed by regulatory authorities may delay or prevent our acquisition by a third party.

Our certificate of incorporation and by-laws contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of our board of directors. These provisions, which may delay, prevent, or deter a merger, acquisition, tender offer, proxy contest or other transaction that stockholders may consider favorable, include the following, some of which may only become effective upon the Triggering Event:

 

   

the 20 vote per share feature of our Class Y common stock;

 

   

the fact that our Class Y common stock retains its 20 vote per share feature until such share of Class Y common stock is canceled/redeemed for no consideration upon, subject to certain exceptions, (i) the disposition of (a) the paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock) and/or (b) the shares of Class A common stock (as a result of a redemption of paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock) paired with such Class Y common stock or as a result of other transfers thereof) or (ii) a Triggering Event;

 

   

the division of our board of directors into three classes and the election of each class for three-year terms;

 

   

the sole ability of the Executive Committee, prior to the Triggering Event, to fill a vacancy on the board of directors;

 

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prior to a Triggering Event and subject to certain exceptions, the vesting of all the power and authority of our board of directors to our Executive Committee;

 

   

advance notice requirements for stockholder proposals and director nominations;

 

   

after the Triggering Event, provisions limiting stockholders’ ability to call special meetings of stockholders, to require special meetings of stockholders to be called and to take action by written consent;

 

   

after the Triggering Event, in certain cases, the approval of holders representing at least 66 2/3% of the total voting power of the shares entitled to vote generally in the election of directors will be required for stockholders to adopt, amend or repeal our by-laws, or amend or repeal certain provisions of our certificate of incorporation;

 

   

the required approval of holders representing at least 66 2/3% of the total voting power of the shares entitled to vote at an election of the directors to remove directors; and

 

   

the ability of our governing body to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our governing body.

These provisions of our certificate of incorporation and by-laws could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of our Class A common stock in the future, which could reduce the market price of our Class A common stock.

In the event of a merger, consolidation or tender or exchange offer, holders of our Class A common stock shall not be entitled to receive excess economic consideration for their shares over that payable to the holders of the Class C common stock.

No shares of Class C common stock, the primary purpose of which is to be available for issuance in connection with acquisitions, joint ventures, investments or other commercial arrangements, are currently issued and outstanding. If we choose to issue Class C common stock in the future, the holders of our Class A common stock shall not be entitled to receive economic consideration for their shares in excess of that payable to the holders of the then outstanding shares of Class C common stock in the event of a merger, consolidation or tender or exchange offer, even though our Class C common stock does not have the right to vote. This would result in a lesser payment to the holders of Class A common stock than if there are no shares of Class C common stock outstanding at the time of such merger, consolidation or tender or exchange offer.

The provision of our certificate of incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits and the federal district courts of the United States for the resolution of any complaint asserting a cause of action under the Securities Act may have the effect of discouraging lawsuits against our directors and officers.

Our amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, (A) the Court of Chancery of the State of Delaware be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of our company, (ii) any action asserting a claim of breach of fiduciary duty owed by any director (including any director serving as a member of the Executive Committee), officer, agent or other employee or stockholder of our company to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the amended and restated certificate of incorporation or our by-laws or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein or, if such court does not have subject matter jurisdiction thereof, the federal district court located in the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Notwithstanding the foregoing, the exclusive forum provision shall not apply to claims seeking to enforce any liability or duty created by the Exchange Act. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers. It is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action. If a court were to find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition, or results of operations.

 

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As a public company, our costs may increase, and the regular operations of our business may be disrupted.

We have historically operated as a privately owned company, and we have incurred, and expect to in the future incur, significant additional legal, accounting, reporting, and other expenses as a result of having publicly traded common stock, including, but not limited to, increased costs related to auditor fees, legal fees, directors’ fees, directors and officers insurance, investor relations, and various other costs. We also anticipate that we will incur costs associated with corporate governance requirements, including requirements under the Exchange Act, the Sarbanes-Oxley Act and the Dodd–Frank Wall Street Reform and Consumer Protection Act, 2010, as well as rules implemented by the Securities and Exchange Commission (the “SEC”) and the Public Company Accounting Oversight Board. Compliance with these rules and regulations will make some activities more difficult, time-consuming, or costly, and increase demand, and, as a result, may place a strain on our systems and resources. Moreover, the additional demands associated with being a public company may disrupt regular operations of our business by diverting the attention of some of our senior management team away from revenue producing activities.

In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us, which could have an adverse effect on our business, financial condition, and results of operations.

Risks Related to Tax Matters

Tax matters may cause significant variability in our financial results.

Our businesses are subject to income taxation in the United States, as well as in many tax jurisdictions throughout the world. Tax rates in these jurisdictions may be subject to significant change. If our effective tax rate increases, our operating results and cash flow could be adversely affected. Our effective income tax rate can vary significantly between periods due to a number of complex factors including, but not limited to, projected levels of taxable income, pre-tax income being lower than anticipated in countries with lower statutory rates or higher than anticipated in countries with higher statutory rates, increases or decreases to valuation allowances recorded against deferred tax assets, tax audits conducted and settled by various tax authorities, adjustments to income taxes upon finalization of income tax returns, the ability to claim foreign tax credits, and changes in tax laws and their interpretations in countries in which we are subject to taxation.

We may be required to pay additional taxes as a result of the new partnership audit rules.

The Bipartisan Budget Act of 2015 changed the rules applicable to U.S. federal income tax audits of partnerships, including entities such as Endeavor Operating Company that are taxed as partnerships. Under these rules (which generally are effective for taxable years beginning after December 31, 2017), subject to certain exceptions, audit adjustments to items of income, gain, loss, deduction, or credit of an entity (and any holder’s share thereof) is determined, and taxes, interest, and penalties attributable thereto, are assessed and collected, at the entity level. Although it is uncertain how these rules will continue to be implemented, it is possible that they could result in Endeavor Operating Company (or any of its applicable subsidiaries that are or have been treated as partnerships for U.S. federal income tax purposes) being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and we, as an indirect member of Endeavor Operating Company (or such other entities), could be required to indirectly bear the economic burden of those taxes, interest, and penalties even though we may not otherwise have been required to pay additional corporate-level taxes as a result of the related audit adjustment.

Under certain circumstances, Endeavor Operating Company may be eligible to make an election to cause holders of Endeavor Operating Company Units to take into account the amount of any understatement, including any interest and penalties, in accordance with such holders’ interest in Endeavor Operating Company in the year under audit. We will decide whether to cause Endeavor Operating Company to make this election in our sole discretion. If Endeavor Operating Company does not make this election, the then-current holders of Endeavor Operating

 

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Company Units (including Endeavor Group Holdings as an indirect member of Endeavor Operating Company) would economically bear the burden of the understatement even if such holders had a different percentage interest in Endeavor Operating Company during the year under audit, unless, and only to the extent, Endeavor Operating Company is able to recover such amounts from current or former impacted holders of Endeavor Operating Company. Similar rules also apply with respect to any of Endeavor Operating Company’s subsidiaries that are or have been treated as partnerships for U.S. federal income tax purposes.

The changes created by these new rules are sweeping, and in many respects, dependent on the promulgation of future regulations or other guidance by the U.S. Department of the Treasury.

The tax classification of Endeavor Operating Company could be challenged.

We intend that Endeavor Operating Company has been and will continue to be treated as a partnership for federal and, if applicable, state or local income tax purposes and not as an association taxable as a corporation. However, if any taxing authority were to successfully assert otherwise, the tax consequences resulting therefrom would be materially different than those described elsewhere in this Quarterly Report.

We may be required to fund withholding tax upon certain exchanges of Endeavor Operating Company Units into shares of our common stock by non-U.S. holders

In the event of a transfer by a non-U.S. transferor of an interest in a partnership that is engaged in a U.S. trade or business, the transferee generally must withhold tax in an amount equal to ten percent of the amount realized (as determined for U.S. federal income tax purposes) by the transferor on such transfer. After the reorganization transactions, holders of Endeavor Operating Company Units may include non-U.S. holders. Pursuant to the Endeavor Operating Company Agreement, any non-U.S. holders’ Endeavor Operating Company Units may be redeemed for, at our election (subject to certain exceptions), either cash (based on the market price of a share of our Class A common stock) or shares of our Class A common stock (which redemption, if made for shares of Class A common stock, would be effectuated via a direct purchase by Endeavor Group Holdings). It is expected that we would have to withhold ten percent of the amount realized (as determined for U.S. federal income tax purposes) by the non-U.S. holders in respect of any such transactions. We may not have sufficient cash to satisfy such withholding obligation, and, we may be required to incur additional indebtedness or sell shares of our Class A common stock in the open market to raise additional cash in order to satisfy our withholding tax obligations.

We may incur certain tax liabilities attributable to our pre-IPO investors and Other UFC Holders as a result of the transactions that occurred in connection with our IPO.

In connection with our IPO, certain of our pre-IPO investors and certain Other UFC Holders, including certain affiliates of Silver Lake, merged with and into Endeavor Group Holdings. As the successor to these merged entities, Endeavor Group Holdings will generally succeed to and be responsible for any outstanding or historical tax liabilities of the merged entities, including any liabilities that might be incurred as a result of the mergers described in the previous sentence. Any such liabilities for which Endeavor Group Holdings is responsible could have an adverse effect on our liquidity and financial condition.

Our ability to use certain net operating loss carryforwards and certain other tax attributes may be limited.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in ownership of the relevant corporation by “5% shareholders” (as defined under U.S. income tax laws) that exceeds 50 percentage points over a rolling three-year period. Similar rules apply under state tax laws. If our corporate subsidiaries experience one or more ownership changes in connection with transactions in our stock, then we may be limited in our ability to use our corporate subsidiaries’ net operating loss carryforwards and other tax assets to reduce taxes owed on the net taxable income that such subsidiaries earn. Any such limitations on the ability to use net operating loss carryforwards and other tax assets could adversely impact our business, financial condition, and operating results.

General Risk Factors

We may face labor shortages that could slow our growth.

The successful operation of our business depends upon our ability to attract, motivate, and retain a sufficient number of qualified employees. Shortages of labor may make it increasingly difficult and expensive to attract, train, and retain the services of a satisfactory

 

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number of qualified employees and could adversely impact our events and productions. Competition for qualified employees could require us to pay higher wages, which could result in higher labor costs and could have an adverse effect on our business, financial condition, and results of operations.

We also rely on contingent workers and volunteers in order to staff our live events and productions, and our failure to manage our use of such workers effectively could adversely affect our business, financial condition, and results of operations. We could potentially face various legal claims from contingent workers and volunteers in the future, including claims based on new laws or stemming from employees being misclassified. We may be subject to shortages, oversupply, or fixed contractual terms relating to contingent workers. Our ability to manage the size of, and costs associated with, the contingent workforce may be subject to additional constraints imposed by local laws.

Exchange rates may cause fluctuations in our results of operations.

Because we own assets overseas and derive revenues from our international operations, we may incur currency translation losses or gains due to changes in the values of foreign currencies relative to the U.S. Dollar. We cannot, however, predict the effect of exchange rate fluctuations upon future operating results. Although we cannot predict the future relationship between the U.S. Dollar and the currencies used by our international businesses, principally the British Pound and the Euro, we experienced a foreign exchange rate net loss of less than $0.1 million for the quarter ended March 31, 2021. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk.”

Costs associated with, and our ability to, obtain insurance could adversely affect our business.

Heightened concerns and challenges regarding property, casualty, liability, business interruption, cancellation, and other insurance coverage have resulted from terrorist and related security incidents along with varying weather-related conditions and incidents, including those in connection with the COVID-19 pandemic. As a result, we may experience increased difficulty obtaining high policy limits of coverage at a reasonable cost and with reasonable deductibles. We cannot assure you that future increases in insurance costs and difficulties obtaining high policy limits and reasonable deductibles will not adversely impact our profitability, thereby possibly impacting our operating results and growth. We have a significant investment in property and equipment at each of our venues, which are generally located near major cities and which hold events typically attended by a large number of people.

We cannot assure you that our insurance policy coverage limits, including insurance coverage for property, casualty, liability and business interruption losses, and acts of terrorism, would be adequate should one or multiple adverse events occur, or that our insurers would have adequate financial resources to sufficiently or fully pay our related claims or damages. We cannot assure you that adequate coverage limits will be available, offered at a reasonable cost, or offered by insurers with sufficient financial soundness. The occurrence of such an incident or incidents affecting any one or more of our venues could have an adverse effect on our financial position and future results of operations if asset damage or company liability were to exceed insurance coverage limits, or if an insurer were unable to sufficiently or fully pay our related claims or damages.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us or our business, the price of our Class A common stock and trading volume could decline.

The trading market for our Class A common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our Class A common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who cover us downgrades our Class A common stock or publishes inaccurate or unfavorable research about us or our business, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A common stock could decrease, which could cause our stock price and trading volume to decline. In addition, if our operating results fail to meet the expectations of securities analysts, our stock price would likely decline.

Future changes to U.S. and foreign tax laws could adversely affect us.

The Group of Twenty (“the G20”), the OECD, the U.S. Congress and Treasury Department and other government agencies in jurisdictions where we and our affiliates do business have had an extended focus on issues related to the taxation of multinational corporations, including,

 

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but not limited to, transfer pricing, country-by-country reporting and base erosion. As a result, the tax laws in the United States and other countries in which we and our affiliates do business could change on a prospective or retroactive basis, and any such changes could have an adverse effect on our worldwide tax liabilities, business, financial condition, and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds

On April 28, 2021, our registration statement on Form S-1 (File No. 333-254908), as amended (the “Registration Statement”), was declared effective by the SEC for our initial public offering of our Class A common stock, pursuant to which we sold a total of 21,300,000 shares of our Class A common stock, par value $0.0001 per share, at a public offering price of $24.00 per share. Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. acted as representatives of the several underwriters for our offering. As part of our initial public offering, the underwriters were provided with an option to acquire from us up to 3,195,000 additional shares of Class A common stock at $24.00 per share, which was exercised on May 12, 2021.

We received gross proceeds of $1,965.0 million from our sale of Class A common stock in our IPO (including the sale of shares under the over-allotment option) and the concurrent private placements (described below) and received estimated net proceeds of $1,887.1 million, after deducting underwriting discounts, commissions and other expenses of $77.9 million. None of the underwriting discounts and commissions or other expenses were paid directly or indirectly to any director, officer or general partner of ours or to their associates, persons owning ten percent or more of any class of our equity securities, or to any of our affiliates. The offering terminated after the sale of all securities registered pursuant to the Registration Statement.

We (1) used $835.7 million of the net proceeds from our IPO and the concurrent private placements (described below) to purchase Endeavor Operating Company Units (or interests in UFC Parent) directly from certain of the Other UFC Holders (or their affiliates) for $24.00 per unit (with respect to Endeavor Operating Company Units) and (2) contributed $1,053.1 million of the proceeds from our IPO (including the sale of shares under the over-allotment option) and the concurrent private placements to Endeavor Manager in exchange for a number of Endeavor Manager Units equal to the contribution amount divided by the price paid by the underwriters for shares of our Class A common stock in our IPO. Endeavor Manager, in turn, contributed such contribution amount to Endeavor Operating Company in exchange for an equal number of Endeavor Operating Company Units. Endeavor Operating Company in turn expects to use approximately $1.8 million of such contribution amount to pay a portion of the $77.9 million of expenses, leaving Endeavor Operating Company with $1,051.3 million of estimated net proceeds from our IPO (including the sale of shares under the over-allotment option) and the concurrent private placements (described below).

We intend to cause Endeavor Operating Company to use the remaining net proceeds we contribute to it from our IPO and the concurrent private placements for working capital and general corporate purposes (including an expected reduction of debt by up to $600 million) and may use a portion of the net proceeds from our IPO and the concurrent private placements to fund our current or future joint ventures, investments or acquisitions of complementary businesses or other assets.

Recent Sales of Unregistered Securities

On May 3, 2021, simultaneously with the consummation of our IPO, we closed the private placement of shares of our Class A common stock, $0.00001 par value per share (the “Class A common stock”) with each of Capital Research and Management Company, Coatue Management, L.L.C., Dragoneer Investment Group LLC, Elliott Investment Management L.P., Fertitta Capital, Fidelity Management & Research Company LLC, Kraft Group LLC, MSD Capital, L.P., Mubadala Investment Company, Silver Lake, Tako Ventures, LLC, Tencent, Third Point LLC, affiliates of Valiant Holding AG, and Zeke Capital Advisors, LLC (the “private placement investors”) to purchase an aggregate of 75,584,747 shares of our Class A common stock, consisting of 57,378,497 shares of Class A common stock sold by us and 18,206,250 shares of Class A common stock sold by affiliates of Kohlberg Kravis Roberts & Co. L.P. (“KKR”), in each case, at a price per share equal to $24.00 (the “Private Placements”). The aggregate proceeds from the Private Placements were $1,814.0 million, which included proceeds of $1,377.0 million to us and proceeds of $437.0 million to affiliates of KKR. No underwriting discounts or commissions were paid with respect to the Private Placements. The Private Placements were conducted as non-public transactions and, as transactions by an issuer not involving a public offering, are exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act. Certain investors in the Private Placement have various relationships with the Company.

 

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Item 6. Exhibits

 

Exhibit
Number
   Description    Form      File No.      Exhibit      Filing Date      Filed/
Furnished
Herewith
 
    1.1#    Transaction Agreement dated as of February  16, 2021, by and among Endeavor Operating Company, LLC, Endeavor Group Holdings, Inc., and the other parties named therein.      S-1/A        333-254908        1.2        04/20/2021     
    1.2    Amendment No. 1 to Transaction Agreement, dated as of April  19, 2021, by and among Endeavor Operating Company, LLC, Endeavor Group Holdings, Inc., and the other parties named therein      S-1/A        333-254908        1.3        04/20/2021     
    3.1    Amended and Restated Certificate of Incorporation of Endeavor Group Holdings, Inc.                  *  
    3.2    Amended and Restated Bylaws of Endeavor Group Holdings, Inc.                  *  
    4.1    Specimen Stock Certificate      S-1/A        333-254908        4.1        03/31/2021     
  10.1#    Amendment No. 9, dated as of April  19, 2021, among WME IMG Holdings LLC, WME IMG, LLC, William Morris Endeavor Entertainment, LLC, IMG Worldwide Holdings, LLC, each lender from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent, swingline lender and issuing bank.      S-1/A        333-254908        10.10        04/20/2021     
  10.2    Second Refinancing Amendment dated as of January  27, 2021, among Zuffa Guarantor, LLC, UFC Holdings, LLC, the lenders party thereto and Goldman Sachs Bank USA, as administrative agent.      S-1        333-254908        10.12        03/31/2021     
  10.3#    Stockholders Agreement by and among Endeavor Group Holdings, Inc. and the stockholders named therein.                  *  
  10.4#    Registration Rights Agreement.                  *  
  10.5#    Tax Receivable Agreement by and among Endeavor Group Holdings, Inc. and the Post-IPO TRA Holders.                  *  
  10.6    Amended and Restated Limited Liability Company Agreement of Endeavor Operating Company, LLC.                  *  
  10.7    Amended and Restated Limited Liability Company Agreement of Endeavor Manager, LLC.                  *  


Table of Contents
Exhibit
Number
   Description    Form      File No.      Exhibit      Filing Date      Filed/
Furnished
Herewith
 
  10.8    Subscription Agreement                  *  
  10.9    Endeavor Group Holdings, Inc. 2021 Incentive Award Plan.      S-1/A        333-254908        10.28        04/20/2021     
  10.10    Form of Nonqualified Option Award Agreement under the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan      S-1/A        333-254908        10.29        04/20/2021     
  10.11    Form of Restricted Stock Unit Award under the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan      S-1/A        333-254908        10.30        04/20/2021     
  10.12    Form of Restricted Stock Unit Agreement for Non-Employee  Directors under the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan.      S-1/A        333-254908        10.31        04/20/2021     
  10.13    Term Employment Agreement by and among Endeavor Group Holdings, Inc., Endeavor Operating Company, LLC and Jason Lublin, dated April 19, 2021.                  *  
  10.14    Term Employment Agreement by and among Endeavor Group Holdings, Inc., Endeavor Operating Company, LLC and Mark Shapiro, dated April 19, 2021.                  *  
  10.15    Term Employment Agreement by and among Endeavor Group Holdings, Inc., Endeavor Operating Company, LLC and Seth Krauss, dated April 19, 2021.                  *  
  10.16    Term Employment Agreement by and among Endeavor Group Holdings, Inc., Endeavor Operating Company, LLC and Christian Muirhead, dated April 19, 2021.                  *  
  10.17    Equity Award Agreement by and among Endeavor Operating Company, LLC, Endeavor Group Holdings, Inc., Jason Lublin, WME Iris Management Holdco II, LLC, WME Iris Management IV Holdco, LLC and WME Holdco, LLC, dated April 19, 2021.                  *  


Table of Contents
Exhibit
Number
   Description    Form      File No.      Exhibit      Filing Date      Filed/
Furnished
Herewith
 
  10.18    Equity Award Agreement by and among Endeavor Operating Company, LLC, Endeavor Group Holdings, Inc., Mark Shapiro, WME Iris Management Holdco, LLC, WME Iris Management Holdco II, LLC and WME Iris Management IV Holdco, LLC, dated April 19, 2021.                  *  
  10.19    Equity Award Agreement by and among Endeavor Operating Company, LLC, Endeavor Group Holdings, Inc., Seth Krauss, WME Iris Management Holdco, LLC, WME Iris Management IV Holdco, LLC and WME Iris Management V Holdco, LLC, dated April 19, 2021.                  *  
  10.20    Equity Award Agreement by and among Endeavor Operating Company, LLC, Endeavor Group Holdings, Inc., Christian Muirhead, WME Iris Management IV Holdco, LLC and WME Holdco, LLC, dated April 19, 2021.                  *  
  10.21    Non-Employee Director Compensation Policy.      S-1/A        333-254908        10.55        04/20/2021     
  10.22    Class B Unit Award Agreement, by and between Endeavor China Direct, LLC and Grantee.      S-1/A        333-254908        10.56        04/20/2021     
  10.23    Profits Interest Award Agreement, by and between WME IMG China, LP and Grantee.      S-1/A        333-254908        10.57        04/20/2021     
  10.24    Time-Vesting and Performance-Vesting Restricted Stock Unit Award Agreement under the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan, by and between Ariel Emanuel and Endeavor Group Holdings, Inc.                  *  
  10.25    Time-Vesting Restricted Stock Unit Award Agreement under the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan, by and between Ariel Emanuel and Endeavor Group Holdings, Inc.                  *  
  10.26    Performance-Vesting Restricted Stock Unit Award Agreement under the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan, by and between Patrick Whitesell and Endeavor Group Holdings, Inc.                  *  
  10.27    Zuffa Future Incentive Unit Cancellation Agreement, by and between Zuffa Parent, LLC and Ariel Emanuel, dated April 19, 2021.                  *  


Table of Contents
Exhibit
Number
   Description    Form      File No.      Exhibit      Filing Date      Filed/
Furnished
Herewith
 
  10.28    Future Incentive Unit Cancellation Agreement, by and among Endeavor Operating Company, LLC, Endeavor Group Holdings, Inc. and Ariel Emanuel, dated April 19, 2021.                  *  
  10.29    Form of Indemnification Agreement      S-1/A        333-254908        10.20        04/20/2021     
  31.1    Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                  *  
  31.2    Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                  *  
  32.1    Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                  *
  32.2    Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                  *
101.INS    XBRL Instance Document                  *  
101.SCH    XBRL Taxonomy Extension Schema Document                  *  
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document                  *  
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document                  *  
101.LAB    XBRL Taxonomy Extension Label Linkbase Document                  *  
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document                  *  

 

#

Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    ENDEAVOR GROUP HOLDINGS, INC.
Date: June 2, 2021     By:   /s/ Ariel Emanuel
          Ariel Emanuel
     

    Chief Executive Officer

    (Principal Executive Officer)

Date: June 2, 2021     By:   /s/ Jason Lublin
          Jason Lublin
     

    Chief Financial Officer

    (Principal Financial Officer)

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

of

ENDEAVOR GROUP HOLDINGS, INC.

(Pursuant to Section 242 and 245 of

the General Corporation Law of the State of Delaware)

April 28, 2021

Endeavor Group Holdings, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

FIRST: The name of the Corporation is Endeavor Group Holdings, Inc. The date of filing of its original certificate of incorporation with the Secretary of State of the State of Delaware was January 29, 2019.

SECOND: This Amended and Restated Certificate of Incorporation (this “Certificate of Incorporation”) amends, integrates and restates in its entirety the Corporation’s certificate of incorporation as currently in effect and has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware (as from time to time in effect, the “General Corporation Law”) and by consent of the stockholders entitled to vote thereon in accordance with the provisions of Section 228 of the General Corporation Law.

THIRD: This Certificate of Incorporation amends, integrates and restates in its entirety the certificate of incorporation of the Corporation as currently in effect to read as follows:

1. Name. The name of the Corporation is Endeavor Group Holdings, Inc.

2. Address; Registered Office and Agent. The address of the Corporation’s registered office in the State of Delaware is 251 Little Falls Drive, City of Wilmington, County of New Castle, State of Delaware 19808, and the name of its registered agent at such address is Corporation Service Company.

3. Purposes. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law.


4. Number of Shares.

4.1 The total number of shares of all classes of stock that the Corporation shall have authority to issue is 22,000,000,000 shares, consisting of: (a) 5,000,000,000 shares of Class A common stock, with the par value of $0.00001 per share (the “Class A Common Stock”), (b) 5,000,000,000 shares of Class B common stock, with the par value of $0.00001 per share (the “Class B Common Stock”), (c) 5,000,000,000 shares of Class C common stock, with the par value of $0.00001 per share (the “Class C Common Stock” and, together with Class A Common Stock and the Class B Common Stock, the “Class A/B/C Common Stock”), (d) 5,000,000,000 shares of Class X common stock, with the par value of $0.00001 per share (the “Class X Common Stock”), (e) 1,000,000,000 shares of Class Y common stock, with the par value of $0.00001 per share (the “Class Y Common Stock” and, together with the Class X Common Stock, the “Class X/Y Common Stock”, and the Class X/Y Common Stock together with the Class A/B/C Common Stock, the “Common Stock”) and (f) 1,000,000,000 shares of preferred stock, with the par value of $0.00001 per share (the “Preferred Stock”). Upon the filing and effectiveness of this Certificate of Incorporation (the “Effective Time”), all shares of common stock, par value $0.01 per share of the Corporation (the “Old Common Stock”) issued and outstanding immediately prior to the Effective Time shall, automatically without any further action by the Corporation or any stockholder, be reclassified, in the aggregate, into one fully paid and nonassessable share of Class A Common Stock.

4.2 Subject to the rights of the holders of any one or more series of Preferred Stock then-outstanding, the number of authorized shares of any class of the Common Stock or the Preferred Stock may be increased or decreased, in each case by the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, and no vote of the holders of any class of the Common Stock or the Preferred Stock voting separately as a class will be required therefor. Notwithstanding the immediately preceding sentence, the number of authorized shares of any particular class may not be decreased below the number of shares of such class then outstanding, plus:

(a) in the case of Class A Common Stock, the number of shares of Class A Common Stock issuable in connection with (x) the exchange of all outstanding Common Units, (plus any New Common Units issuable pursuant to an Exchange of all outstanding vested Profits Units pursuant to Section 9.02 of the OpCo LLC Agreement (without regard to any timing, vesting or other restrictions on Exchange contained therein)), as a result of any Redemption pursuant to the applicable provisions of Section 9.01 of the OpCo LLC Agreement or Section 8.01 of the Manager LLC Agreement (without regard to any timing, vesting, or other restrictions on Redemption contained therein and assuming no Redemptions for cash), as applicable and (y) the exercise of all outstanding options, warrants, exchange rights, conversion rights (including with respect to all outstanding shares of Class B Common Stock to the extent convertible into shares of Class A Common Stock) or similar rights for Class A Common Stock;

 

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(b) in the case of Class B Common Stock, the number of shares of Class B Common Stock issuable in connection with the exercise of all outstanding options, warrants, exchange rights, conversion rights or similar rights for Class B Common Stock;

(c) in the case of Class C Common Stock, the number of shares of Class C Common Stock issuable in connection with the exercise of all outstanding options, warrants, exchange rights, conversion rights or similar rights for Class C Common Stock;

(d) in the case of Class X Common Stock, the number of shares of Class X Common Stock issuable in connection with the exercise of all outstanding options, warrants, exchange rights, conversion rights or similar rights for Class X Common Stock; and

(e) in the case of Class Y Common Stock, the number of shares of Class Y Common Stock issuable in connection with the exercise of all outstanding options, warrants, exchange rights, conversion rights or similar rights for Class Y Common Stock.

5. Classes of Shares. The designation, relative rights, power and preferences, qualifications, restrictions and limitations of the shares of each class of stock are as follows:

5.1 Common Stock.

(a) Voting Rights.

(i) Each share of Class A Common Stock and Class X Common Stock will entitle the record holder thereof to one vote on all matters on which stockholders generally are entitled to vote, and each share of Class Y Common Stock will entitle the record holder thereof to 20 votes on all matters on which stockholders generally are entitled to vote, except that, in each case, to the fullest extent permitted by law, holders of shares of each class of Common Stock, as such, will have no voting power with respect to, and will not be entitled to vote on, any amendment to this Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of any outstanding Preferred Stock if the holders of such Preferred Stock are entitled to vote as a separate class thereon under this Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) or under the General Corporation Law. Shares of Class B Common Stock and Class C Common Stock will not entitle the record holder thereof to any voting powers, except as (and then only to the extent) otherwise required by applicable law.

(ii) Except as otherwise required in this Certificate of Incorporation or by applicable law, the holders of Common Stock (other than the holders of Class B Common Stock and Class C Common Stock) will vote together as a single class on all matters (or, if any holders of Preferred Stock are entitled to vote together with the holders of Common Stock, as a single class with the holders of Preferred Stock).

 

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(b) Dividends; Stock Splits or Combinations.

(i) Subject to Section 5.1(b)(ii), applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or any class or series of stock having a preference senior to or the right to participate with the Class A/B/C Common Stock with respect to the payment of dividends, dividends of cash or property may be declared and paid on the Class A/B/C Common Stock out of the assets of the Corporation that are by law available therefor, at the times and in the amounts as the Governing Body in its discretion may determine.

(ii) Subject to Section 5.1(b)(v), dividends of cash or property may not be declared or paid on the Class A Common Stock unless a dividend of the same amount per share and same type of cash or property (or combination thereof) per share is concurrently declared or paid on the Class B Common Stock and the Class C Common Stock. Dividends of cash or property may not be declared or paid on the Class B Common Stock unless a dividend of the same amount per share and same type of cash or property (or combination thereof) per share is concurrently declared or paid on the Class A Common Stock and Class C Common Stock. Dividends of cash or property may not be declared or paid on the Class C Common Stock unless a dividend of the same amount per share and same type of cash or property (or combination thereof) per share is concurrently declared or paid on the Class A Common Stock and Class B Common Stock.

(iii) Except as provided in Section 5.1(b)(iv) with respect to stock dividends, dividends of cash or property may not be declared or paid on the Class X/Y Common Stock.

(iv) In no event will any stock dividend, stock split, reverse stock split, combination of stock, reclassification or recapitalization be declared or made on any class of Common Stock (each, a “Stock Adjustment”) unless a corresponding Stock Adjustment for all other classes of Common Stock at the time outstanding is made in the same proportion and the same manner (unless the holders of shares representing a majority of the voting power of any such other class of Common Stock (voting separately as a single class) waive such requirement in advance and in writing, in which event no such Stock Adjustment need be made for such other class of Common Stock). Notwithstanding the foregoing, the Corporation shall be entitled to declare a stock dividend on the Class A Common Stock, Class B Common Stock and Class C Common Stock without any corresponding Stock Adjustment to the other classes of Common Stock so long as, after the payment of such stock dividend on the Class A Common Stock, Class B Common Stock and Class C Common Stock, the number of shares of Class A Common Stock, Class B Common Stock and Class C Common Stock outstanding (excluding any shares issuable upon the exercise of any options, warrants, restricted stock units, exchange rights, conversion rights or similar rights for Class A Common Stock, Class B Common Stock or Class C Common Stock, and excluding any shares issuable upon the exchange of Common Units, (or New Common Units issuable pursuant to an Exchange pursuant to Section 9.02 of the OpCo LLC Agreement), as a result of any Redemption pursuant to the applicable provisions of Section 9.01 of the

 

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OpCo LLC Agreement or Section 8.01 of the Manager LLC Agreement), when combined with the number of Manager Common Units held by persons other than the Corporation, does not exceed the number of OpCo Common Units owned by Manager. Stock dividends with respect to each class of Common Stock may only be paid with shares of stock of the same class of Common Stock.

(v) Notwithstanding anything to the contrary, if a dividend in the form of capital stock of a subsidiary of the Corporation is declared or paid on the Class A Common Stock, Class B Common Stock and the Class C Common Stock, the relative per share voting rights of the capital stock of such subsidiary so distributed in respect of the Class A Common Stock, Class B Common Stock and the Class C Common Stock shall be (a) in the same proportion as the relative voting rights of a share of Class A Common Stock, a share of Class B Common Stock and a share of Class C Common Stock or (b) as otherwise determined at the time of such dividend by the Governing Body.

(c) Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and of the preferential and other amounts, if any, to which the holders of Preferred Stock are entitled, if any, the holders of all outstanding shares of Common Stock will be entitled to receive, pari passu, an amount per share equal to the par value thereof, and thereafter the holders of all outstanding shares of Class A/B/C Common Stock will be entitled to receive the remaining assets of the Corporation available for distribution ratably in proportion to the number of shares of Class A/B/C Common Stock held by such holders. The holders of shares of Class X/Y Common Stock, as such, will not be entitled to receive, with respect to such shares, any assets of the Corporation in excess of the par value thereof, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.

(d) Merger, Consolidation, Tender or Exchange Offer. Except as expressly provided in this Article 5, all shares of the Class A/B/C Common Stock shall, as among each other, have the same rights and privileges and rank equally, share ratably and be identical in all respects as to all matters, and all shares of the Class X/Y Common Stock shall have the same rights and privileges and rank equally, share ratably and be identical as to all matters (unless holders of shares representing a majority of the voting power of any class of Common Stock (voting separately as a single class) waive such requirement in advance and in writing to different treatment as to such class of Common Stock, in which event different treatment may be permitted for such class of Common Stock). Without limiting the generality of the foregoing, unless holders of shares representing a majority of the voting power of any class of Common Stock (voting separately as a single class) waive such requirement in advance and in writing to different treatment as to such class of Common Stock, in which event different treatment may be permitted for such class of Common Stock, (1) in the event of a merger, consolidation or other business combination requiring the approval of the holders of the Corporation’s capital stock entitled to vote thereon (whether or not the Corporation is the surviving entity), the holders of any class of Class A/B/C Common Stock shall have the right to

 

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receive, or the right to elect to receive, the same form of consideration, if any, as the holders of any other class of Class A/B/C Common Stock and the holders of any class of Class A/B/C Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration, if any, on a per share basis as the holders of any other class of Class A/B/C Common Stock, and the holders of any class of Class X/Y Common Stock shall have the right to receive, or the right to elect to receive, the same form of consideration (if any) as the holders of any other class of Class X/Y Common Stock and the holders of any class of Class X/Y Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration (if any) on a per share basis as the holders of any other class of Class X/Y Common Stock and (2) in the event of (a) any tender or exchange offer to acquire any shares of Common Stock by any third party pursuant to an agreement to which the Corporation is a party or (b) any tender or exchange offer by the Corporation to acquire any shares of Common Stock, pursuant to the terms of the applicable tender or exchange offer, the holders of any class of Class A/B/C Common Stock shall have the right to receive, or the right to elect to receive, the same form of consideration, if any, as the holders of any other class of Class A/B/C Common Stock and the holders of any class of Class A/B/C Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration, if any, on a per share basis as the holders of any other class of Class A/B/C Common Stock, and the holders of any class of Class X/Y Common Stock shall have the right to receive, or the right to elect to receive, the same form of consideration (if any) as the holders of any other class of Class X/Y Common Stock and the holders of any class of Class X/Y Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration (if any) on a per share basis as the holders of any other class of Class X/Y Common Stock; provided that, for the purposes of the foregoing clauses (1) and (2) and notwithstanding the first sentence of this Section 5.1(d), (i) in the event any such consideration includes securities, (I) the consideration payable to holders of Class B and Class C Common Stock shall be deemed the same form of consideration and at least the same amount of consideration on a per share basis as the holders of Class A Common Stock on a per share basis if the only difference in the per share distribution to the holders of Class B and Class C Common Stock is that the securities distributed to such holders have no voting power, except as otherwise required by applicable law and (II) the consideration payable to holders of Class Y Common Stock shall be deemed the same form of consideration and at least the same amount of consideration on a per share basis as the holders of Class X Common Stock on a per share basis if the only difference in the per share distribution to the holders of Class Y Common Stock is that the securities distributed to such holders have not more than 20 times the voting power of any securities distributed to the holder of a share of Class X Common Stock and (ii) payments under or in respect of the tax receivable or similar agreement entered by the Corporation from time to time with any holders of Common Stock and/or securities of OpCo shall not be considered part of the consideration payable in respect of any share of Common Stock.

5.2 Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series of any number of shares, provided that the aggregate number of shares issued and not retired of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized, and with such powers,

 

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including voting powers, if any, and the designations, preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, all as shall hereafter be stated and expressed in the resolution or resolutions providing for the designation and issue of such shares of Preferred Stock from time to time adopted by the Governing Body. The powers, including voting powers, if any, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. Each series of shares of Preferred Stock: (i) may have such voting rights or powers, full or limited, if any; (ii) may be subject to redemption at such time or times and at such prices, if any; (iii) may be entitled to receive dividends (which may be cumulative or non-cumulative) at such rate or rates, on such conditions and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or series of stock, if any; (iv) may have such rights upon the voluntary or involuntary liquidation, winding up or dissolution of, upon any distribution of the assets of, or in the event of any merger, sale or consolidation of, the Corporation, if any; (v) may be made convertible into or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation (or any other securities of the Corporation or any other Person) at such price or prices or at such rates of exchange and with such adjustments, if any; (vi) may be entitled to the benefit of a sinking fund to be applied to the purchase or redemption of shares of such series in such amount or amounts, if any; (vii) may be entitled to the benefit of conditions and restrictions upon the creation of indebtedness of the Corporation or any subsidiary, upon the issue of any additional shares (including additional shares of such series or of any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Corporation or any subsidiary of, any outstanding shares of the Corporation, if any; (viii) may be subject to restrictions on transfer or registration of transfer, or on the amount of shares that may be owned by any Person or group of Persons; and (ix) may have such other relative, participating, optional or other special rights, qualifications, limitations or restrictions thereof, if any; all as shall be stated in said resolution or resolutions of the Governing Body providing for the designation and issue of such shares of Preferred Stock.

6. Certain Provisions Related to Conversion and Redemption Rights.

6.1 Conversion Rights of Class B Common Stock.

(a) Automatic Conversion. Each share of Class B Common Stock shall automatically, without any further action, convert into one share of Class A Common Stock immediately following a Transfer by the initial holder thereof, other than a Transfer to an Affiliate of such initial holder, of such share.

(b) Procedures. The Corporation may, from time to time, establish such policies and procedures relating to the conversion of Class B Common Stock into Class A Common Stock and the general administration of this multi-class stock structure, including the issuance of stock certificates (or the establishment of book-entry positions) with respect thereto, as it may deem reasonably necessary or advisable,

 

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and may from time to time request that holders of shares of Class B Common Stock furnish certifications, affidavits or other proof to the Corporation as it deems necessary to verify the ownership of Class B Common Stock and to confirm that a conversion into Class A Common Stock has not occurred. A determination in good faith by the Secretary of the Corporation that a Transfer results in a conversion into Class A Common Stock shall be conclusive and binding.

(c) Immediate Effect of Conversion. In the event of a conversion of shares of Class B Common Stock into shares of Class A Common Stock pursuant to this Article 6, such conversion(s) shall be deemed to have been made immediately after the time that the Transfer of such shares to a third party occurs. Upon any conversion of Class B Common Stock into Class A Common Stock, all rights of the holder of shares of Class B Common Stock shall cease and such holder shall be treated for all purposes as having become the record holder of such shares of Class A Common Stock. Shares of Class B Common Stock that are converted into shares of Class A Common Stock as provided in this Article 6 shall be retired and may not be reissued.

(d) Reservation of Shares of Class A Common Stock For Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class B Common Stock, such number of shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock into shares of Class A Common Stock.

6.2 No Conversion Rights of Class A Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock. The Class A Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock shall not have any conversion rights.

6.3 Reservation of Shares of Class A Common Stock for Redemptions. The Corporation will at all times reserve and keep available out of its authorized and unissued shares of Class A Common Stock, solely for the purposes of effecting any exchanges pursuant to the applicable provisions of Section 9.01 of the OpCo LLC Agreement or Section 8.01 of the Manager LLC Agreement, as applicable, the number of shares of Class A Common Stock that are issuable in connection with the exchange of all outstanding Common Units (plus any New Common Units issuable pursuant to an Exchange of all outstanding Profits Units pursuant to the applicable provisions of Section 9.02 of the OpCo LLC Agreement (without regard to any timing, vesting or other restrictions on Exchange contained therein)) as a result of any Redemption pursuant to the applicable provisions of Section 9.01 of the OpCo LLC Agreement or Section 8.01 of the Manager LLC Agreement, as applicable (without regard to any timing, vesting or other restrictions on Redemption contained therein and assuming no Redemptions for cash). The Corporation covenants that all the shares of Class A Common Stock that are issued upon any such redemption of such Common Units (together with the applicable number of shares of Class X Common Stock) will, upon issuance, be validly issued, fully paid and non-assessable.

 

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6.4 Retirement of Class X/Y Common Stock. In the event that no Common Units remain redeemable pursuant to the applicable provisions of Section 9.01 of the OpCo LLC Agreement (including any New Common Units issuable in respect of an Exchange of Profits Units (without regard to any timing, vesting or other restrictions on Exchange contained therein)) or Section 8.01 of the Manager LLC Agreement (without regard to any timing, vesting or other restrictions on Redemption contained therein and assuming no Redemptions for cash), as applicable, all shares of Class X Common Stock then-outstanding will automatically and without further action on the part of the Corporation or holders thereof be transferred to the Corporation for no consideration and thereupon the Corporation promptly shall take all necessary action to cause such shares to be retired, and such shares thereafter may not be reissued by the Corporation. In addition, in the event that holders of Class X Common Stock or Class Y Common Stock transfer shares of Class X Common Stock or Class Y Common Stock to the Corporation in connection with a Redemption of Common Units pursuant to the applicable provisions of Section 9.01 of the OpCo LLC Agreement or Section 8.01 of the Manager LLC Agreement, or an Exchange of Profits Units pursuant to the applicable provisions of Section 9.02 of the OpCo LLC Agreement, as applicable, the Corporation promptly shall take all necessary action to cause such shares to be retired, and such shares thereafter may not be reissued by the Corporation. In the event that any then-current holder of shares of Class A Common Stock or Class X Common Stock also holds shares of Class Y Common Stock (which shares of Class Y Common Stock were issued to the original holder thereof in connection with the issuance to such original holder of such shares of Class A Common Stock or Class X Common Stock, as applicable), and the then-current holder transfers or otherwise ceases to hold any such share of Class A Common Stock or Class X Common Stock, as applicable (except in the case of (i) a redemption of shares of Class X Common Stock made pursuant to the applicable provisions of Section 9.01 of the OpCo LLC Agreement or Section 8.01 of the Manager LLC Agreement in the event of a Share Settlement, or (ii) any transaction with respect to such shares of Class A Common Stock or Class X Common Stock contemplated by the first proviso in the definition of “Transfer” (provided, that in the case of a disposition of shares of Class A Common Stock or Class X Common Stock in a transaction contemplated by this clause (ii), the holder disposing of such shares shall also be required to dispose of an equal number of shares of Class Y Common Stock to the same recipient in such transaction in order for such transaction to qualify for the exception contemplated by this parenthetical)), then an equal number of shares of Class Y Common Stock held by such holder shall automatically and without further action on the part of the Corporation or its holder be transferred to the Corporation for no consideration, and thereupon the Corporation promptly shall take all necessary action to cause such shares to be retired, and such shares thereafter may not be reissued by the Corporation. Upon the occurrence of a Triggering Event, all shares of Class Y Common Stock issued and outstanding will automatically and without further action on the part of the Corporation or holders thereof be transferred to the Corporation for no consideration and thereupon the Corporation promptly shall take all necessary action to cause such shares to be retired, and thereafter no shares of Class Y Common Stock may be issued or reissued by the Corporation. In the event that any outstanding share of Class Y Common Stock is transferred (or purported to be transferred) (including pursuant to Section 4.3 of the Stockholders

 

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Agreement) or ceases to be held by the holder thereof (other than in a transaction described in the above clause (ii) of this Section 6.4, including the proviso thereof)), such share of Class Y Common Stock shall automatically and without further action on the part of the Corporation or its holder be transferred to the Corporation for no consideration, and thereupon the Corporation promptly shall take all necessary action to cause such shares to be retired, and such shares thereafter may not be reissued by the Corporation.

6.5 Taxes. The issuance of shares of Class A Common Stock pursuant to the applicable provisions of Section 9.01 of the OpCo LLC Agreement or Section 8.01 of the Manager LLC Agreement, as applicable, will be made without charge to the holders receiving such shares for any transfer taxes, stamp taxes or duties or other similar tax in respect of the issuance; provided, however, that if any such shares of Class A Common Stock are to be issued in a name other than that of the then record holder of the shares of Class X/Y Common Stock being exchanged (or The Depository Trust Company or its nominee for the account of a participant of The Depository Trust Company that will hold the shares for the account of such holder), then such holder and/or the Person in whose name such shares are to be delivered, shall pay to the Corporation the amount of any tax that may be payable in respect of any transfer involved in the issuance or shall establish to the reasonable satisfaction of the Corporation that the tax has been paid or is not payable.

7. Board of Directors; Executive Committee.

7.1 Number of Directors.

(a) The business and affairs of the Corporation shall be managed by, or under the direction of, the Board; provided, however, that prior to a Triggering Event, to the fullest extent permitted by Section 141(a) of the General Corporation Law, the Board shall be defeased of all of its power (including voting power) and authority and all power (including voting power) and authority of the Board shall be exclusively vested in the Executive Committee. For the avoidance of doubt, the Executive Committee is not a committee of the Board created pursuant to Section 141(c) of the General Corporation Law, but is instead an alternate governing body of the Corporation created pursuant to Section 141(a) of the General Corporation Law. In that connection, all references to the “Governing Body” in this Certificate of Incorporation shall mean (i) prior to a Triggering Event, the Executive Committee and (ii) from and after a Triggering Event, the Board. Unless and except to the extent that the Amended and Restated By-laws of the Corporation (as such By-laws may be amended from time to time, the “By-laws”) shall so require, the election of the directors of the Corporation (the “Directors”) need not be by written ballot. Except as otherwise provided for or fixed pursuant to the provisions of Section 5.2 of this Certificate of Incorporation relating to the rights of the holders of any series of Preferred Stock to elect additional Directors, (i) the total authorized number of Directors constituting the entire Board shall not be less than three (3) and shall not be more than twenty (20), with the then-authorized number of Directors being fixed from time to time by the Governing Body, which number shall initially be six (6) members.

 

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(b) During any period when the holders of any series of Preferred Stock have the right to elect additional Directors as provided for or fixed pursuant to the provisions of Section 5.2 (“Preferred Stock Directors”), upon the commencement, and for the duration, of the period during which such right continues: (i) the then-total authorized number of Directors shall automatically be increased by such specified number of Preferred Stock Directors, and the holders of the related Preferred Stock shall be entitled to elect the Preferred Stock Directors pursuant to the provisions of the certificate of designation for the series of Preferred Stock, and (ii) each such Preferred Stock Director shall serve until such Preferred Stock Director’s successor shall have been duly elected and qualified, or until such Preferred Stock Director’s right to hold such office terminates pursuant to such provisions, whichever occurs earlier, subject to his or her earlier death, disqualification, resignation or removal. Except as otherwise provided by the Governing Body in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect Preferred Stock Directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such Preferred Stock Directors elected by the holders of such Preferred Stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such Preferred Stock Directors, shall forthwith terminate and the total and authorized number of Directors shall automatically be reduced accordingly.

(c) Pursuant to Section 141(a) of the General Corporation Law, there is hereby established an Executive Committee (the “Executive Committee”) vested with such authority as is set forth in Section 7.1(a). The members of the Executive Committee shall be selected by the Executive Committee from among the Directors duly elected or appointed to the Board from time to time and shall serve until his or her successor shall be duly elected and qualified or until his or her earlier death, disqualification, resignation or removal. Any member of the Executive Committee who at any time ceases to also be a Director for any reason shall automatically cease to be a member of the Executive Committee. The total number of Directors serving on the Executive Committee shall be fixed from time to time by the Executive Committee; provided, that such number at any time shall not be (i) more than the total number of Directors then on the Board or (ii) less than the total number of Directors in the aggregate that each of the SL Parties and each of the Executive Parties then have the right to designate pursuant to the Stockholders Agreement. Notwithstanding anything to the contrary in this Section 7.1(c), at the Effective Time, the initial size of the Executive Committee shall be four (4) Directors and the initial members of the Executive Committee shall be Ariel Emanuel, Patrick Whitesell, Egon Durban and Stephen Evans.

(d) The Executive Committee shall be dissolved immediately and automatically upon the occurrence of a Triggering Event. After the occurrence of a Triggering Event, the provisions herein relating to the Executive Committee shall cease to be applicable and the business and affairs of the Corporation shall be managed by, or under the direction of, the Board.

 

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7.2 Staggered Board. The Board (other than Preferred Stock Directors) shall be divided into three (3) classes, as nearly equal in number as possible, designated Class I, Class II and Class III. Class I Directors shall initially serve until the first annual meeting of stockholders following the Effective Time; Class II Directors shall initially serve until the second annual meeting of stockholders following the Effective Time; and Class III Directors shall initially serve until the third annual meeting of stockholders following the Effective Time. Commencing with the first annual meeting of stockholders following the Effective Time, each Director of each class the term of which shall then expire shall be elected to hold office for a three-year term and until such Director’s successor has been duly elected and qualified. In case of any increase or decrease, from time to time, in the number of Directors (other than Preferred Stock Directors), the number of Directors in each class shall be apportioned as nearly equal as possible. The Governing Body is authorized to assign members of the Board already holding office to Class I, Class II and Class III.

7.3 Executive Committee Actions; Board Actions.

(a) Except as otherwise required in this Certificate of Incorporation or by applicable law or Stock Exchange Rules, actions of the Executive Committee or any committee thereof will require approval by the affirmative vote of (i) a majority of the members of the Executive Committee or such committee present at a meeting at which a quorum is present, (ii) each Executive Director that is then a member of the Executive Committee or such committee thereof and (iii) for so long as one or more of the SL Parties are entitled to designate an aggregate of two or more Directors for nomination to the Governing Body pursuant to the Stockholders Agreement (unless there is no SL Director then serving and such action occurs more than ten (10) business days following the date when there last ceased to be at least one SL Director serving and during such time none of the SL Parties have designated any SL Director for nomination or appointment to the Governing Body), at least one SL Director. Any action required or permitted to be taken at any meeting of the Executive Committee, or of any committee thereof, may be taken without a meeting if all members of the Executive Committee or committee thereof, as the case may be, consent thereto in writing or by electronic transmission; provided that each such action shall require the consent of at least one SL Director for so long as any of the SL Parties are entitled to designate at least one Director for nomination to the Governing Body pursuant to the Stockholders Agreement (unless there is no SL Director then serving and such action occurs more than ten (10) business days following the date when there last ceased to be at least one SL Director serving and during such time none of the SL Parties have designated any SL Director for nomination or appointment to the Governing Body).

(b) Except as otherwise required in this Certificate of Incorporation or by applicable law or Stock Exchange Rules, prior to a Triggering Event, actions of the Board or any committee thereof will only be taken or made at the direction or request of the Executive Committee, and following such direction or request, will require approval by the affirmative vote of (i) a majority of the Directors or such committee at a meeting at which a quorum is present and (ii) for so long as any of the SL Parties are entitled to designate two Directors for nomination to the Governing Body pursuant to the Stockholders Agreement (unless there is no SL Director then serving and such action occurs more than ten (10) business days following the date when there last

 

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ceased to be at least one SL Director serving and during such time none of the SL Parties have designated any SL Director for nomination or appointment to the Governing Body), at least one SL Director. Any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee thereof, as the case may be, consent thereto in writing or by electronic transmission; provided that each such action shall require the consent of at least one SL Director for so long as any of the SL Parties are entitled to designate at least one Director for nomination to the Governing Body pursuant to the Stockholders Agreement (unless there is no SL Director then serving and such action occurs more than ten (10) business days following the date when there last ceased to be at least one SL Director serving and during such time none of the SL Parties have designated any SL Director for nomination or appointment to the Governing Body); provided further that each such action shall require the consent of at least one Director appointed by any of the Executive Parties for so long as any of the Executive Parties are entitled to designate at least one Director for nomination to the Governing Body pursuant to the Stockholders Agreement (unless there is no Director appointed by any of the Executive Parties then serving and such action occurs more than ten (10) business days following the date when there last ceased to be at least one such Director serving and during such time none of the Executive Parties have designated any such Director for nomination or appointment to the Governing Body).

(c) Except as otherwise required in this Certificate of Incorporation or by applicable law or Stock Exchange Rules, following a Triggering Event, actions of the Board or any committee thereof will require approval by the affirmative vote of (i) a majority of the Directors or such committee at a meeting at which a quorum is present, (ii) for so long as any of the SL Parties are entitled to designate two Directors for nomination to the Board pursuant to the Stockholders Agreement (unless there is no SL Director then serving and such action occurs more than ten (10) business days following the date when there last ceased to be at least one SL Director serving and during such time none of the SL Parties have designated any SL Director for nomination or appointment to the Board), at least one SL Director and (iii) if any of the Executive Parties are entitled to designate any Directors for nomination to the Board pursuant to the Stockholders Agreement because the Continued Employment Condition (as defined in the Stockholders Agreement) remains satisfied and/or the SLP Step-Down (as defined in the Stockholders Agreement) has occurred (unless there is no such Director then serving and such action occurs more than ten (10) business days following the date when there last ceased to be at least one such Director serving and during such time none of the Executive Parties have designated any such Director for nomination or appointment to the Board), at least one such Director.

7.4 Vacancies and Newly Created Directorships. Subject to the rights of the holders of any one or more series of Preferred Stock then-outstanding and subject to obtaining any required stockholder votes or consents under the Stockholders Agreement (or complying with any stockholders’ designation rights under the Stockholders Agreement), newly created memberships on the Executive Committee or directorships resulting from any increase in the authorized number of members of the Executive Committee or Directors or any vacancies on the Governing Body or the Board

 

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resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by the affirmative vote of the remaining members of Governing Body then in office, even if less than a quorum of the Governing Body, or, at the request of the Governing Body (if then-different from the Board), by a majority of the remaining Directors then in office, even if less than a quorum of the Board; provided, however, that (i) newly created directorships and vacancies created pursuant to or after a Triggering Event may also be filled by the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class (except as otherwise required by the General Corporation Law) and (ii) for so long as one or more of the Executive Parties are otherwise entitled to designate an aggregate of two or more Directors pursuant to the Stockholders Agreement, vacancies on the Board or Executive Committee created as a result of the SLP Step-Down (as defined in the Stockholders Agreement) shall be filled by a vote of the Directors designated by each of the Executive Parties, provided, however, that in connection with such vote, no Directors or members of the Executive Committee shall be entitled to vote on such matter other than the Directors designated by any of the Executive Parties. Any member of the Executive Committee so chosen shall hold office until his or her successor shall be duly elected and qualified or until such his or her earlier death, disqualification, resignation or removal. Any Director so chosen shall hold office until the next election of the class of Directors in which such Director is included and until his or her successor shall be duly elected and qualified or until such Director’s earlier death, disqualification, resignation or removal. No decrease in the number of Directors shall shorten the term of any Director then in office.

7.5 Removal of Directors or Members of Executive Committee. Except for Preferred Stock Directors and subject to obtaining any required stockholder votes or consents under the Stockholders Agreement, (a) any Director or the entire Board may be removed from office at any time, with or without cause and only by the affirmative vote of the holders of sixty-six and two-thirds percent (66 2/3%) of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class and (b) any member of the Executive Committee or the entire Executive Committee may be removed from office at any time, with or without cause and only by the affirmative vote of the holders of sixty-six and two-thirds percent (66 2/3%) of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class.

7.6 Quorum. To the fullest extent permitted by the General Corporation Law and Stock Exchange Rules, prior to a Triggering Event: (i) for so long as any of the SL Parties are expressly conferred the right to designate at least one Director pursuant to the Stockholders Agreement, unless the SL Parties otherwise consent in writing, (x) unless there is no SL Director then serving and the applicable meeting occurs more than ten (10) business days following the date when there last ceased to be at least one SL Director serving and during such time none of the SL Parties have designated any SL Director for nomination or appointment to the Governing Body, the presence of at least one Director designated by any of the SL Parties shall be necessary in

 

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order for a quorum to be obtained at any meeting of the Executive Committee, the Board or any committee of the Board or subcommittee of the Executive Committee thereof and (y) the Governing Body shall appoint at least one Director designated by any of the SL Parties (to the extent any of the SL Parties exercise such right) to each committee of the Board and each subcommittee of the Executive Committee (except as otherwise required by applicable law or Stock Exchange Rules, and except for the Company’s Audit Committee, 16b-3 Committee and any other committee or sub-committee evaluating a related party transaction with any of the SL Parties or any of their respective Affiliates); and (ii) for so long as any of the Executive Parties are expressly conferred the right to designate at least one Director pursuant to the Stockholders Agreement, unless the Executive Parties otherwise consent in writing, (x) for so long as there is at least one Director designated by any of the Executive Parties then serving as a member of the Executive Committee, the Board, or any committee or subcommittee thereof, as applicable, the presence of at least one Director designated by any of the Executive Parties shall be necessary in order for a quorum to be obtained at any meeting of the Executive Committee, the Board or any committee of the Board or subcommittee of the Executive Committee and (y) the Governing Body shall appoint at least one Director designated by any of the Executive Parties (to the extent any of the Executive Parties exercise such right) to each committee of the Board and each subcommittee of the Executive Committee (except as otherwise required by applicable law or Stock Exchange Rules, and except for the Company’s Audit Committee, 16b-3 Committee and any other committee or sub-committee evaluating a related party transaction with any of the Executive Parties or any of their respective Affiliates). Notwithstanding the immediately preceding sentence, if a quorum does not exist at any properly called meeting of the Executive Committee, the Board or any committee of the Board or subcommittee of the Executive Committee solely due to the lack of attendance thereat by at least one Director designated by any of the SL Parties or at least one Director designated by any of the Executive Parties, respectively, (x) such meeting shall be adjourned and, subject to the obligation to provide proper prior notice pursuant to the By-laws to all members of, as applicable, the Executive Committee, the Board or such committee or subcommittee, recalled for the same purpose not less than twenty-four hours and not more than ten (10) calendar days from the date of adjournment and the attendance of at least one Director designated by any of the SL Parties or at least one Director designated by any of the Executive Parties, respectively, shall not be required to establish quorum for such recalled meeting (so long as the purpose and agenda of such recalled meeting are identical to those of the adjourned meeting and no matters not set forth on such agenda are considered at such meeting).

8. Meetings of Stockholders.

8.1 Action by Consent. From and after a Triggering Event, any action required or permitted to be taken by the stockholders of the Corporation may be effected only at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent by such stockholders. Prior to a Triggering Event, any action required or permitted to be taken by the stockholders of the Corporation may be effected by the consent of the holders of outstanding capital stock of the Corporation having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

 

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8.2 Special Meetings of Stockholders. Subject to any special rights of the holders of any series of Preferred Stock, and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only by or at the direction of (i) the Governing Body or (ii) the Chairman, the Vice Chairman, the Executive Chairman or the Chief Executive Officer. In addition, prior to a Triggering Event, special meetings of stockholders of the Corporation may be called by the Secretary of the Corporation at the request of the holders of a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class. Any business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting.

9. DGCL Section 203 and Business Combinations.

(A) The Corporation hereby expressly elects not to be governed by Section 203 of the DGCL. Notwithstanding the foregoing, following a Triggering Event, the provisions of Section 9(B)-(D) below shall apply.

(B) The provisions of this Section 9(B)-(D) shall be operative and shall apply to the Corporation only following a Triggering Event. The Corporation shall not engage in any business combination (as defined below), at any point in time at which the Corporation’s Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act of 1934, as amended (the “Exchange Act”), with any interested stockholder (as defined below) for a period of three years following the time that such stockholder became an interested stockholder, unless:

(1) prior to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or

(2) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock (as defined below) of the Corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (i) persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or

 

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(3) at or subsequent to such time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock of the Corporation which is not owned by the interested stockholder.

(C) The restrictions contained in the foregoing Section 9(B) shall not apply if:

(1) a stockholder becomes an interested stockholder inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the stockholder ceases to be an interested stockholder and (ii) would not, at any time, within the three-year period immediately prior to the business combination between the Corporation and such stockholder, have been an interested stockholder but for the inadvertent acquisition of ownership, or

(2) the business combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the second sentence of this Section 9(C)(2), (ii) is with or by a Person who either was not an interested stockholder during the previous three years or who became an interested stockholder with the approval of the Board and (iii) is approved or not opposed by a majority of the directors then in office (but not less than one) who were directors prior to any Person becoming an interested stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence are limited to (x) a merger or consolidation of the Corporation (except for a merger in respect of which, pursuant to Section 251(f) of the DGCL, no vote of the stockholders of the Corporation is required), (y) a sale, lease, exchange, mortgage, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation (other than to any direct or indirect wholly owned subsidiary or to the Corporation) having an aggregate market value equal to fifty percent or more of either that aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation or (z) a proposed tender or exchange offer for fifty percent (50%) or more of the outstanding voting stock of the Corporation. The Corporation shall give not less than 20 days’ notice to all interested stockholders prior to the consummation of any of the transactions described in clause (x) or (y) of the second sentence of this Section 9(C)(2).

(D) For purposes of this Section 9, references to:

(1) “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.

(2) “associate,” when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of the voting power thereof; (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.

 

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(3) “business combination,” when used in reference to the Corporation and any interested stockholder of the Corporation, means:

a. any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with the interested stockholder, or (b) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation subsection (B) of this Section 9 is not applicable to the surviving entity;

b. any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;

c. any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (a) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (b) pursuant to a merger under Section 251(g) of the DGCL; (c) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (d) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (e) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (c) through (e) of this subsection shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments);

 

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d. any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or

e. any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (a) through (d) above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary.

(4) “control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of a corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this subsection (B) of Section 9, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.

(5) “interested stockholder” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of 15% or more of the outstanding voting stock of the Corporation, or (ii) is an affiliate or associate of the Corporation and was the owner of 15% or more of the outstanding voting stock of the Corporation at any time within the three year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and associates of such person; but “interested stockholder” shall not include (a) any Stockholder Party, any Stockholder Party Direct Transferee, any Stockholder Party Indirect Transferee or any of their respective affiliates or successors or any “group,” or any member of any such group, to which such persons are a party under Rule 13d-5 of the Exchange Act, or (b) any person whose ownership of shares in excess of the 15% limitation set forth herein is the result of any action taken solely by the Corporation; provided, further, that in the case of clause (b) such person shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such person.

 

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For the purpose of determining whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include (x) stock deemed to be owned by the person through application of the definition of “owner” below and (y) stock of the Corporation that may be issuable to any person pursuant to Section 9.01 of the OpCo LLC Agreement (assuming all outstanding OpCo Common Units (including any New Common Units issuable upon an Exchange (without regard to any timing, vesting or other restrictions on Exchange contained therein)) are exchanged pursuant thereto (without regard to any timing, vesting or other restrictions on exchange contained therein and assuming no exchange for cash)) and/or Section 8.01 of the Manager LLC Agreement (assuming all outstanding Manager Common Units are exchanged pursuant thereto (without regard to any timing, vesting or other restrictions on exchange contained therein and assuming no exchanges for cash)), but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. For the avoidance of doubt, a Redemption of OpCo Common Units and/or Manager Common Units pursuant to Section 9.01 of the OpCo LLC Agreement and/or Section 8.01 of the Manager LLC Agreement, respectively, shall not, by itself, cause the person that is having OpCo Common Units and/or Manager Common Units redeemed, or any other person, to become an interested stockholder; and a retirement of any shares of Class X Common Stock or Class Y Common Stock pursuant to Section 6.4, and the related increase in the proportionate voting power of outstanding voting stock of the Corporation held by persons other than the holder of such shares of Class X Common Stock or Class Y Common Stock, shall not, by itself, cause any person to become an interested stockholder.

(6) “owner,” including the terms “own” and “owned,” when used with respect to any stock, means a person that individually or with or through any of its affiliates or associates:

a. beneficially owns such stock, directly or indirectly; or

b. has (a) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted for purchase or exchange; or (b) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or

 

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c. has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (b) of subsection (ii) above), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock.

(7) “person” means any individual, corporation, partnership, unincorporated association or other entity.

(8) “stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.

(9) “Stockholder Party” means any Executive Party or any SL Party.

(10) “Stockholder Party Direct Transferee” means any person that acquires (other than in a registered public offering) directly from any Stockholder Party or any of its successors or any “group,” or any member of any such group, of which such persons are a party under Rule 13d-5 of the Exchange Act beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.

(11) “Stockholder Party Indirect Transferee” means any person that acquires (other than in a registered public offering) directly from any Stockholder Party Direct Transferee or any other Stockholder Party Indirect Transferee beneficial ownership of 15% or more of the then outstanding voting stock of the Corporation.

(12) “voting stock” means stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. Every reference to a percentage of voting stock shall be calculated on the basis of the aggregate number of votes applicable to all shares of such voting stock, and by allocating to each share of voting stock, that number of votes to which such share is entitled (e.g., with respect to the voting stock of the Corporation, each share of Class A Common Stock and Class X Common Stock is allocated 1 vote, whereas each share of Class Y Common Stock is allocated 20 votes).

10. Corporate Opportunities. To the fullest extent permitted by the General Corporation Law, the Corporation acknowledges that: (i) each stockholder or Director (including any Director serving as a member of the Executive Committee) of the Corporation or any of its subsidiaries (collectively, the “Exempted Persons”; provided, that no Director (including any Director serving as a member of the Executive Committee) (other than a Director (including any Director serving as a member of the Executive Committee) who is also an Executive Director, in his capacity as such) who is an officer or employee of the Corporation or any of its subsidiaries shall be an

 

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“Exempted Person”) shall have no duty not to, directly or indirectly, engage in the same or similar business activities or lines of business as the Corporation or any of its subsidiaries, including those deemed to be competing with the Corporation or any of its subsidiaries, in each case, except to the extent otherwise set forth in a writing executed by the Corporation or one of its subsidiaries, on the one hand, and such Exempted Person, on the other hand; and (ii) in the event that any Exempted Person acquires knowledge of a potential transaction or matter that may be a corporate opportunity for the Corporation, the Corporation to the fullest extent permitted by Section 122(17) of the General Corporation Law hereby renounces any interest or expectancy therein and such Exempted Person shall have no duty to communicate or present such corporate opportunity to the Corporation or any of its subsidiaries, as the case may be, and to the fullest extent permitted by law shall not be liable to the Corporation or its Affiliates or stockholders for breach of any duty by reason of the fact that such Exempted Person, directly or indirectly, pursues or acquires such opportunity for itself, directs such opportunity to another person, or does not present such opportunity to the Corporation, in each case, except to the extent otherwise set forth in a writing executed by the Corporation or one of its subsidiaries, on the one hand, and such Exempted Person, on the other hand.

11. Limitation of Liability.

11.1 To the fullest extent permitted under the General Corporation Law, no Director (including any Director serving as a member of the Executive Committee) shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a member of the Executive Committee or Director, as applicable.

11.2 Any amendment or repeal of this Article 11 shall not adversely affect any right or protection of a Director (including any Director serving as a member of the Executive Committee) hereunder in respect of any act or omission occurring prior to the time of such amendment or repeal.

12. Indemnification.

12.1 To the fullest extent permitted by the General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), the Corporation shall indemnify, and advance expenses to, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she is or was a Director (including any Director serving as a member of the Executive Committee) or officer of the Corporation or, while a Director (including any Director serving as a member of the Executive Committee) or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (each, an “Indemnitee” and collectively, the “Indemnitees”), whether the basis of such proceeding is alleged action in an official

 

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capacity as a Director (including any Director serving as a member of the Executive Committee), officer, employee or agent or in any other capacity while serving as a Director (including any Director serving as a member of the Executive Committee), officer, employee, agent or trustee, from and against any and all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee in connection therewith. Notwithstanding the preceding sentence, other than an action against the Corporation brought by an Indemnitee to enforce his or her rights under this Article 12, the Corporation shall not be required to indemnify or advance expenses to any person in connection with a proceeding (or part thereof) commenced by such person if the commencement of such proceeding (or part thereof) was not authorized by the Governing Body.

12.2 The indemnification and advancement of expenses provided by, or granted pursuant to, this Article 12 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, contract, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.

12.3 To the extent not prohibited by applicable law, the Corporation shall pay the expenses (including attorneys’ fees) incurred by an Indemnitee in defending any proceeding in advance of its final disposition; provided, however, that to the extent required by applicable law, such payment of expenses in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by the Indemnitee to repay all amounts advanced if it should be ultimately determined that the Indemnitee is not entitled to be indemnified under this Article 12 or otherwise.

12.4 If a claim for indemnification or advancement of expenses under this Article 13 is not paid in full within thirty (30) days after a written claim therefor by the Indemnitee has been received by the Corporation, the Indemnitee may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Indemnitee is not entitled to the requested indemnification or advancement of expenses under applicable law. In (i) any suit brought by an Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by an Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, such person has not met any applicable standard for indemnification set forth in the General Corporation Law. Neither the failure of the Corporation (including by members of the Governing Body who are not parties to such action, a committee of such members, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the General Corporation Law, nor an actual determination by the Corporation (including by members of the Governing Body who are not parties to such action, a committee of such members, independent legal counsel, or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that such person has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit.

 

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12.5 The Corporation shall have the power to purchase and maintain insurance to protect itself and any person who is or was a Director (including any Director serving as a member of the Executive Committee), officer, employee or agent of the Corporation, or while a Director (including any Director serving as a member of the Executive Committee), officer, employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power or the obligation to indemnify him or her against such liability under the General Corporation Law or the provisions of this Article 12.

12.6 The indemnification and advancement of expenses provided by, or granted pursuant to, this Article 12 shall continue as to a person who has ceased to be a Director (including any Director serving as a member of the Executive Committee) or officer and shall inure to the benefit of the heirs, executors and administrators of such officer or Director (including any Director serving as a member of the Executive Committee). The indemnification and advancement of expenses that may have been provided to an employee or agent of the Corporation by action of the Governing Body, pursuant to Section 12.10, shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be an employee or agent of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such a person, after the time such person has ceased to be an employee or agent of the Corporation, only on such terms and conditions and to the extent determined by the Governing Body in its sole discretion.

12.7 Given that certain claims may be jointly indemnifiable (“Jointly Indemnifiable Claims”) by the Corporation, its Controlled Entities (as defined below) or Indemnitee-Related Entities (as defined below) in respect of the service of Indemnitee as a Director (including any Director serving as a member of the Executive Committee) and/or executive officer of the Corporation and/or a director, executive officer, employee, consultant, fiduciary or agent of other corporations, limited liability companies, partnerships, joint ventures, trusts, employee benefit plans or other enterprises controlled by the Corporation (the “Controlled Entities”), or by reason of any action alleged to have been taken or omitted in any such capacity, the Corporation acknowledges and agrees that the Corporation shall, and to the extent applicable shall cause the Controlled Entities to, be fully and primarily responsible for the payment to the Indemnitee in respect of indemnification or advancement of expenses in connection with any such Jointly Indemnifiable Claim, pursuant to and in accordance with (as applicable) the terms of (i) the General Corporation Law, (ii) this Certificate of Incorporation or the By-laws or (iii) any other agreement between the Corporation or any Controlled Entity and the Indemnitee pursuant to which the Indemnitee is indemnified, (iv) the laws of the

 

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jurisdiction of incorporation or organization of any Controlled Entity and/or (v) the certificate of incorporation, certificate of organization, bylaws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership or other organizational or governing documents of any Controlled Entity ((i) through (v) collectively, the “Indemnification Sources”), irrespective of any right of recovery the Indemnitee may have from the Indemnitee-Related Entities. Under no circumstance shall the Corporation or any Controlled Entity be entitled to any right of subrogation or contribution by the Indemnitee-Related Entities and no right of advancement or recovery the Indemnitee may have from the Indemnitee-Related Entities shall reduce or otherwise alter the rights of the Indemnitee or the obligations of the Corporation or any Controlled Entity under the Indemnification Sources. In the event that any of the Indemnitee-Related Entities shall make any payment to the Indemnitee in respect of indemnification or advancement of expenses with respect to any Jointly Indemnifiable Claim, (i) the Corporation shall, and to the extent applicable shall cause the Controlled Entities to, reimburse the Indemnitee-Related Entity making such payment to the extent of such payment promptly upon written demand from such Indemnitee-Related Entity, (ii) to the extent not previously and fully reimbursed by the Corporation and/or any Controlled Entity pursuant to clause (i), the Indemnitee-Related Entity making such payment shall be subrogated to the extent of the outstanding balance of such payment to all of the rights of recovery of the Indemnitee against the Corporation and/or any Controlled Entity or under any insurance policy, as applicable, and (iii) the Indemnitee and the Corporation and, as applicable, any Controlled Entity shall execute all papers reasonably required and shall do all things that may be reasonably necessary to secure such rights, including the execution of such documents as may be necessary to enable the Indemnitee-Related Entities effectively to bring suit to enforce such rights. The Corporation and the Indemnitee agree that each of the Indemnitee-Related Entities shall be third-party beneficiaries with respect to this Section 12.7.

12.8 “Indemnitee-Related Entities” means any company, corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise (other than the Corporation, any Controlled Entity or the insurer under and pursuant to an insurance policy of the Corporation or any Controlled Entity) from whom an Indemnitee may be entitled to indemnification or advancement of expenses with respect to which, in whole or in part, the Corporation or any Controlled Entity may also have an indemnification or advancement obligation.

12.9 Any amendment or repeal of the foregoing provisions of this Article 12 shall not adversely affect any right or protection hereunder of any Indemnitee or its successors in respect of any act or omission occurring prior to the time of such amendment or repeal.

12.10 This Article 12 shall not limit the right of the Corporation, to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to persons other than Indemnitees when and as authorized by appropriate corporate action.

 

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13. Adoption, Amendment or Repeal of By-Laws. In furtherance and not in limitation of the powers conferred by law, the Governing Body is expressly authorized to make, alter, amend or repeal the By-laws subject to the power of the stockholders of the Corporation entitled to vote with respect thereto to make, alter, amend or repeal the By-laws; provided, that with respect to the powers of stockholders entitled to vote with respect thereto to make, alter, amend or repeal the By-laws, from and after a Triggering Event, in addition to any other vote otherwise required by law, the affirmative vote of the holders of sixty-six and two-thirds percent (66 2/3%) of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, shall be required for the stockholders to make, alter, amend or repeal the By-laws.

14. Adoption, Amendment and Repeal of Certificate. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by the General Corporation Law, and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, Directors (including any Director serving as a member of the Executive Committee) or any other Persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended, are granted and held subject to this reservation. Notwithstanding anything to the contrary contained in this Certificate of Incorporation, and notwithstanding that a lesser percentage may be permitted from time to time by applicable law, no provision of Articles 7, 8, 9, 10, 12, 13, 14 or 15 may be altered, amended or repealed in any respect, nor may any provision or by-law inconsistent therewith be adopted, unless in addition to any other vote required by this Certificate of Incorporation or otherwise required by law, (i) prior to a Triggering Event, such alteration, amendment, repeal or adoption is approved by, in addition to any other vote otherwise required by law, the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, and (ii) from and after a Triggering Event, such alteration, amendment, repeal or adoption is approved by, in addition to any other vote otherwise required by law, the affirmative vote of the holders of sixty-six and two-thirds percent (66 2/3%) of the total voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, voting together as a single class, at a meeting of the stockholders called for that purpose.

15. Forum for Adjudication of Disputes. Unless the Corporation consents in writing to the selection of an alternative forum, (x) the Court of Chancery of the State of Delaware (the “Court of Chancery”) (or, in the event that the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any Director (including any Director serving as a member of the Executive Committee), officer, employee, agent or stockholder of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provision of the General Corporation Law, this Certificate of Incorporation or the By-

 

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laws or as to which the General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware or (d) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein; and (y) the federal district courts of the United States (the “Federal Courts”) shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. To the fullest extent permitted by law, any Person purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article 15. Notwithstanding the foregoing, this Article 15 shall not apply to claims seeking to enforce any liability or duty created by the Exchange Act, or any other claim for which the U.S. federal courts have exclusive jurisdiction.

16. Severability. If any provision or provisions of this Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its Directors (including any Director serving as a member of the Executive Committee), officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

17. Definitions. As used in this Certificate of Incorporation, unless the context otherwise requires or as set forth in another Article or Section of this Certificate of Incorporation, the term:

(a) “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person; provided, that (i) neither the Corporation nor any of its subsidiaries will be deemed an Affiliate of any stockholder of the Corporation or any of such stockholders’ Affiliates and (ii) no stockholder of the Corporation will be deemed an Affiliate of any other stockholder of the Corporation, in each case, solely by reason of any investment in the Corporation or any rights conferred on such stockholder pursuant to the Stockholders Agreement (including any representatives of such stockholder serving on the Governing Body or, if then-different from the Governing Body, the Board).

(b) “Certificate of Incorporation” is defined in the recitals.

(c) “Audit Committee” means the Audit Committee of the Board.

 

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(d) “Board” means the board of directors of the Corporation.

(e) “By-laws” is defined in Section 7.1.

(f) “Chairman” means the Chairman of the Board.

(g) “Chief Executive Officer” means the Chief Executive Officer of the Corporation.

(h) “Class A Common Stock” is defined in Section 4.1.

(i) “Class A/B/C Common Stock” is defined in Section 4.1.

(j) “Class B Common Stock” is defined in Section 4.1.

(k) “Class C Common Stock” is defined in Section 4.1.

(l) “Class X Common Stock” is defined in Section 4.1.

(m) “Class X/Y Common Stock” is defined in Section 4.1.

(n) “Class Y Common Stock” is defined in Section 4.1.

(o) “Common Stock” is defined in Section 4.1.

(p) “Common Unit” means an OpCo Common Unit or a Manager Common Unit, as applicable.

(q) “control” (including the terms “controlling” and “controlled”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

(r) “Controlled Entities” is defined in Section 12.7.

(s) “Corporation” means Endeavor Group Holdings, Inc.

(t) “Director” is defined in Section 7.1.

(u) “Exchange” is defined in the OpCo LLC Agreement.

(v) “Executive Committee” is defined in Section 7.1(c).

(w) “Executive Director” means Ariel Emanuel or Patrick Whitesell.

(x) “Executive Holdcos” means Endeavor Executive Holdco, LLC, Endeavor Executive PIU Holdco, LLC and Endeavor Executive II Holdco, LLC.

 

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(y) “Executive Parties” is defined in the Stockholders Agreement.

(z) “Exempted Persons” is defined in Section 10.

(aa) “Family Member” is defined in the OpCo LLC Agreement, as in effect on the date hereof.

(bb) “General Corporation Law” is defined in the recitals.

(cc) “Governing Body” is defined in Section 7.1(a).

(dd) “Indemnification Sources” is defined in Section 12.7.

(ee) “Indemnitee” is defined in Section 12.1.

(ff) “Indemnitee-Related Entities” is defined in Section 12.8.

(gg) “Indemnitees” is defined in Section 12.1.

(hh) “IPO” means the initial underwritten public offering of the Corporation.

(ii) “Jointly Indemnifiable Claims” is defined in Section 12.7.

(jj) “Manager” means Endeavor Manager, LLC, a Delaware limited liability company, or any successor thereto.

(kk) “Manager Common Unit” means a non-voting common interest unit of Manager.

(ll) “Manager LLC Agreement” means the Limited Liability Company Agreement of Manager, dated as of April 28, 2021, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

(mm) “New Common Units” is defined in the OpCo LLC Agreement.

(nn) “OpCo” means Endeavor Operating Company, LLC, a Delaware limited liability company, or any successor thereto.

(oo) “OpCo Common Unit” means a non-voting common interest unit of OpCo.

(pp) “OpCo LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of OpCo, dated as of April 28, 2021, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

 

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(qq) “Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity.

(rr) “Preferred Stock” is defined in Section 4.1.

(ss) “Preferred Stock Directors” is defined in Section 7.1.

(tt) “proceeding” is defined in Section 12.1.

(uu) “Profits Units” is defined in the OpCo LLC Agreement.

(vv) “Redemption” has the meaning given to it in the OpCo LLC Agreement or the Manager LLC Agreement, as the context may require.

(ww) “Restructuring Agreement” has the meaning given to it in the Stockholders Agreement.

(xx) “Share Settlement” is defined in the OpCo LLC Agreement.

(yy) “SL Director” means an individual that any of the SL Parties have designated or nominated to the Board and/or the Executive Committee pursuant to the Stockholders Agreement.

(zz) “SL Parties” is defined in the Stockholders Agreement.

(aaa) “Stock Adjustment” is defined in Section 5.1(b)(iv).

(bbb) “Stockholders Agreement” means the Stockholders’ Agreement, dated as of April 28, 2021, by and among the Corporation and the other persons party thereto or that may become parties thereto from time to time, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

(ccc) “Stock Exchange Rules” means the rules and regulations for listed companies as in effect from time to time of the principal United States national securities exchange on which the Class A Common Stock is listed for trading, which as of the date hereof is the New York Stock Exchange.

(ddd) “Transfer” of a share of Common Stock means, directly or indirectly, any sale, assignment, transfer, exchange, gift, bequest, pledge, hypothecation or other disposition or encumbrance of such share or any legal or beneficial interest in such share, in whole or in part, whether or not for value and whether voluntary or involuntary or by operation of law; provided, however, that the following shall not be considered a “Transfer”: (i) the granting of a revocable proxy to Executive Directors by members of the Executive Holdcos in connection with actions to be taken at annual or special meetings of stockholders or in connection with any action by consent of the stockholders solicited by the Governing Body (at such times as action by consent of

 

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stockholders is permitted under this Certificate of Incorporation) or otherwise as set forth in the Stockholders Agreement; (ii) the direct or indirect transfer of shares of Common Stock by or on behalf of an Executive Director (or by or on behalf of any other executive of the Company or any of its Subsidiaries in connection with a concurrent transfer of OpCo Common Units made with the consent of the Managing Member of OpCo) (or any transferee(s) of any such person (or of any such transferee’s transferee(s)), which transferee(s) received such shares in accordance with this clause (ii)) to a Family Member or a Trust of such person (or back to such person); (iii) entering into a customary voting or support agreement (with or without granting a proxy) in connection with any merger, consolidation or other business combination of the Corporation that has been approved by the Governing Body, whether effectuated through one transaction or series of related transactions (including a tender offer followed by a merger in which holders of Class A Common Stock receive the same consideration per share paid in the tender offer); (iv) the pledge of shares of capital stock of the Corporation by a stockholder that creates a mere security interest in such shares pursuant to a bona fide loan or indebtedness transaction so long as such stockholder continues to exercise sole voting control over such pledged shares and such pledged shares are not transferred to or registered in the name of the pledgee; provided, however, that a foreclosure on such shares or other similar action by the pledgee shall constitute a “Transfer”; (v) the fact that the spouse of any holder of Class A Common Stock, Class X Common Stock or Class Y Common Stock possesses or obtains an interest in such holder’s shares of Class A Common Stock, Class X Common Stock or Class Y Common Stock arising solely by reason of the application of the community property laws of any jurisdiction, so long as no other event or circumstance shall exist or have occurred that constitutes a “Transfer” of such shares of Class A Common Stock, Class X Common Stock or Class Y Common Stock; (vi) any transfer pursuant to or as contemplated by the Restructuring as defined in the Restructuring Agreement; (vii) the distribution of shares of Class X Common Stock or Class Y Common Stock by the Executive Holdcos to members thereof in connection with any Exchange or Redemption; or (viii) the transfer of shares of Common Stock by an SL Party (including any Person who becomes an SL Party after the date hereof pursuant to the terms of the Stockholders Agreement) to another SL Party (including a Person who becomes an SL Party prior to or in connection with such transfer) or any other Affiliate of Silver Lake Group, L.L.C., in each case so long as such transferee (A) is managed, sponsored, controlled or advised by Silver Lake Group, L.L.C. or an Affiliate thereof and (B) is already a party to the Stockholders Agreement prior to, or becomes a party to the Stockholders Agreement in connection with, such transfer (with such transferred shares of Common Stock being subject to the provisions of the Stockholders Agreement).

(eee) “Triggering Event” means the occurrence of the first date on which (i) neither Executive Director is employed as Chief Executive Officer or Executive Chairman by the Corporation or (ii) neither Executive Director (together with, in the case of each such Executive Director, the Specified Affiliated Transferees of such Executive Director and his Specified Affiliated Transferees) owns securities (including Profit Units and other securities of OpCo) representing, and/or representing the right to own, at least 25% of the Class A Common Stock owned, in the aggregate, by such Executive Director (together with the Specified Affiliated Transferees of such Executive Director and his Specified Affiliated Transferees) as of May 3, 2021 (including Class A

 

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Common Stock issuable in connection with a Redemption of OpCo Common Units outstanding as of May 3, 2021 (without regard to any timing, vesting or other restrictions on Redemption contained therein and assuming no Redemptions for cash), but excluding, solely for purposes of calculating the amount owned as of May 3, 2021, (A) any Class A Common Stock issuable in respect of New Common Units that would be issuable in respect of an Exchange of Profits Units outstanding as of May 3, 2021 (without regard to any timing, vesting or other restrictions on Exchange contained therein) and (B) any equity awards or similar incentive equity issued to such Executive Director or any Specified Affiliated Transferees of such Executive Director in connection with the IPO. For purposes of this definition, “Specified Affiliated Transferee” means an Affiliated Transferee described in clause (i) or clause (ii) of the definition of “Affiliated Transferee” in the Stockholders Agreement, in each case regardless of when the applicable transfer occurred.

(fff) “Trust” is defined in the OpCo LLC Agreement, as in effect on the date hereof.

(ggg) “Vice Chairman” means the Vice Chairman of the Board.

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation of Endeavor Group Holdings, Inc. has been duly executed by the officer below as of the date first written above.

 

By:  

/s/ Jason Lublin

  Name: Jason Lublin
  Title:   Chief Financial Officer

Exhibit 3.2

 

Amended and Restated Bylaws of

Endeavor Group Holdings, Inc.

(a Delaware corporation)


Table of Contents

 

              Page  

Article I - Corporate Offices

     1  
  1.1    Registered Office      1  
  1.2    Other Offices      1  

Article II - Meetings of Stockholders

     1  
  2.1    Place of Meetings      1  
  2.2    Annual Meeting      1  
  2.3    Special Meeting      1  
  2.4    Advance Notice Procedures for Business Brought before a Meeting      2  
  2.5    Advance Notice Procedures for Nominations of Directors      5  
  2.6    Notice of Stockholders’ Meetings      8  
  2.7    Manner of Giving Notice; Affidavit of Notice      9  
  2.8    Quorum      9  
  2.9    Adjourned Meeting; Notice      9  
  2.10    Conduct of Business      9  
  2.11    Voting      10  
  2.12    Record Date for Stockholder Meetings and Other Purposes      10  
  2.13    Proxies      11  
  2.14    List of Stockholders Entitled to Vote      11  
  2.15    Inspectors of Election      11  

Article III - Directors

     12  
  3.1    Powers      12  
  3.2    Number of Directors      12  
  3.3    Election, Qualification and Term of Office of Directors.      13  
  3.4    Resignation and Vacancies      13  
  3.5    Place of Meetings; Meetings by Telephone      13  
  3.6    Regular Meetings      13  
  3.7    Special Meetings; Notice      13  
  3.8    Quorum      14  
  3.9    Action by Written Consent without a Meeting      14  
  3.10    Fees and Compensation of Directors      15  

Article IV - Committees

     15  
  4.1    Committees of Directors      15  
  4.2    Committee Minutes      15  
  4.3    Meetings and Actions of Committees      15  

Article V - Officers

     16  
  5.1    Officers      16  
  5.2    Appointment of Officers      16  
  5.3    Subordinate Officers      16  
  5.4    Removal and Resignation of Officers      17  
  5.5    Vacancies in Offices      17  

 

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              Page  
  5.6    Representation of Shares of Other Corporations      17  
  5.7    Authority and Duties of Officers      17  

Article VI - Records

     17  

Article VII - General Matters

     18  
  7.1    Execution of Corporate Contracts and Instruments      18  
  7.2    Stock Certificates      18  
  7.3    Lost Certificates      18  
  7.4    Shares Without Certificates      18  
  7.5    Construction; Definitions      19  
  7.6    Dividends      19  
  7.7    Fiscal Year      19  
  7.8    Seal      19  
  7.9    Transfer of Stock      19  
  7.10    Stock Transfer Agreements      20  
  7.11    Registered Stockholders      20  
  7.12    Waiver of Notice      20  

Article VIII - Amendments

     20  

 

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Amended and Restated Bylaws of

Endeavor Group Holdings, Inc.

 

 

Article I - Corporate Offices

1.1    Registered Office.

The address of the registered office of Endeavor Group Holdings, Inc. (the “Corporation”) in the State of Delaware, and the name of its registered agent at such address, shall be as set forth in the Corporation’s certificate of incorporation, as the same may be amended and/or restated from time to time (the “Certificate of Incorporation”).

1.2    Other Offices.

The Corporation may have additional offices at any place or places, within or outside the State of Delaware, as the Corporation’s Governing Body may from time to time establish or as the business of the Corporation may require.

Article II - Meetings of Stockholders

2.1    Place of Meetings.

Meetings of stockholders shall be held at such place, if any, within or outside the State of Delaware, designated by the Governing Body. The Governing Body may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.

2.2    Annual Meeting.

The Governing Body shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 may be transacted. The Corporation may postpone, reschedule or cancel any annual meeting of stockholders previously scheduled by the Governing Body.

2.3    Special Meeting.

Special meetings of the stockholders may be called only by such Persons and only in such manner as set forth in the Certificate of Incorporation. The Corporation may postpone, reschedule or cancel any special meeting of stockholders previously scheduled by the Governing Body.

No business may be transacted at any special meeting of stockholders other than the business specified in the notice of such meeting.


2.4    Advance Notice Procedures for Business Brought before a Meeting.

(i)    At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in a notice of meeting given by or at the direction of the Governing Body, (b) if not specified in a notice of meeting, otherwise brought before the meeting by the Governing Body or the chairperson of the meeting, or (c) otherwise properly brought before the meeting by a stockholder present in person who (A)(1) was a stockholder of the Corporation both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.4 or (B) properly made such proposal in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”), which proposal has been included in the proxy statement for the annual meeting. The foregoing clause (c) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. The only matters that may be brought before a special meeting are the matters specified in the Corporation’s notice of meeting given by or at the direction of the Person calling the meeting pursuant to the Certificate of Incorporation and Section 2.3 of these bylaws. For purposes of this Section 2.4 and Section 2.5 of these bylaws, as applicable, “present in person” shall mean that the stockholder proposing that the business be brought before the annual or special meeting of the Corporation, or, if the proposing stockholder is not an individual, a qualified representative of such proposing stockholder, appear at such annual meeting, and a “qualified representative” of such proposing stockholder shall be (A) any person who is authorized in writing by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders or (B), if such proposing stockholder is (x) a general or limited partnership, any general partner or Person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership, (y) a corporation or a limited liability company, any officer or Person who functions as an officer of the corporation or limited liability company or any officer, director, general partner or Person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company or (z) a trust, any trustee of such trust. This Section 2.4 shall apply to any business that may be brought before an annual or special meeting of stockholders other than nominations for election to the Board at an annual meeting, which shall be governed by Section 2.5 of these bylaws. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5 of these bylaws, and this Section 2.4 shall not be applicable to nominations for election to the Board except as expressly provided in Section 2.5 of these bylaws.

(ii)    Without qualification, for business to be properly brought before an annual meeting by a stockholder pursuant to Section 2.4(i)(c), (a) the stockholder must provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation, (b) the stockholder must provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4 and (c) the proposed business must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the one-year anniversary of the preceding year’s annual meeting (which, in the case of the first annual meeting of stockholders following the closing of the Corporation’s initial underwritten public offering of common stock, the preceding year’s annual meeting date shall be deemed to be [__]1); provided, however, that if the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely

 

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Note to Draft: Annual meeting date to be confirmed.

 

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must be so delivered, or mailed and received, not later than the ninetieth (90th) day prior to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made (such notice within such time periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period or extend a time period for the giving of Timely Notice as described above.

(iii)    To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary shall set forth:

(a)    As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records); and (B) the number of shares of each class or series of stock of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of stock of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “Stockholder Information”);

(b)    As to each Proposing Person, (A) the full notional amount of any securities that, directly or indirectly, underlie any “derivative security” (as such term is defined in Rule 16a-1(c) under the Exchange Act) that constitutes a “call equivalent position” (as such term is defined in Rule 16a-1(b) under the Exchange Act) (“Synthetic Equity Position”) and that is, directly or indirectly, held or maintained by such Proposing Person with respect to any shares of any class or series of stock of the Corporation; provided that, for the purposes of the definition of “Synthetic Equity Position,” the term “derivative security” shall also include any security or instrument that would not otherwise constitute a “derivative security” as a result of any feature that would make any conversion, exercise or similar right or privilege of such security or instrument becoming determinable only at some future date or upon the happening of a future occurrence, in which case the determination of the amount of securities into which such security or instrument would be convertible or exercisable shall be made assuming that such security or instrument is immediately convertible or exercisable at the time of such determination; and, provided, further, that any Proposing Person satisfying the requirements of Rule 13d-1(b)(1) under the Exchange Act (other than a Proposing Person that so satisfies Rule 13d-1(b)(1) under the Exchange Act solely by reason of Rule 13d-1(b)(1)(ii)(E)) shall not be deemed to hold or maintain the notional amount of any securities that underlie a Synthetic Equity Position held by such Proposing Person as a hedge with respect to a bona fide derivatives trade or position of such Proposing Person arising in the ordinary course of such Proposing Person’s business as a derivatives dealer, (B) any rights to dividends on the shares of any class or series of stock of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (C) any material pending or threatened legal proceeding in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any Affiliate of the Corporation, (D) any other material relationship between such Proposing Person, on the one hand, and the Corporation or any Affiliate of the Corporation, on the other hand, (E) any direct or indirect material interest in any material contract or agreement of such Proposing Person with the Corporation or any Affiliate of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (F) any

 

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other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (F) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner and (G) a representation whether any Proposing Person, intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal and/or otherwise to solicit proxies or votes from stockholders in support of such proposal; and

(c)    As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration), (C) a reasonably detailed description of all agreements, arrangements and understandings (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other Person or entity (including their names) in connection with the proposal of such business by such stockholder and (D) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act; provided, however, that the disclosures required by this Section 2.4(iii) shall not include any disclosures with respect to any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner.

(iv)    For purposes of this Section 2.4, the term “Proposing Person shall mean (a) the stockholder providing the notice of business proposed to be brought before an annual meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, (c) any participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) with such stockholder in such solicitation or (d) any associate (within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder, beneficial owner or any other participant.

(v)    A Proposing Person shall update and supplement its notice to the Corporation of its intent to propose business at an annual meeting, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

 

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(vi)    Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting that is not properly brought before the meeting in accordance with this Section 2.4. The presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

(vii)    In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

(viii)    For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

2.5    Advance Notice Procedures for Nominations of Directors.

(i)    Subject in all respects to the provisions of the Stockholders Agreement and Certificate of Incorporation, nominations of any person for election to the Board at an annual meeting may be made at such meeting only (a) by or at the direction of the Governing Body, including by any committee or persons authorized to do so by the Governing Body or these bylaws, or (b) by a stockholder present in person (as defined in Section 2.4) who (1) was a beneficial owner of shares of the Corporation both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.5 as to such notice and nomination. The foregoing clause (b) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board at any annual meeting of stockholders other than in accordance with the provisions of the Stockholders Agreement and the Certificate of Incorporation.

(ii)    Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (a) provide Timely Notice (as defined in Section 2.4(ii) of these bylaws) thereof in writing and in proper form to the Secretary of the Corporation, (b) provide the information, agreements and questionnaires with respect to such stockholder and its candidate for nomination as required by this Section 2.5, and (c) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period or extend a time period for the giving of a stockholder’s notice as described above. The number of nominees a stockholder may nominate for election at the annual meeting (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the annual meeting on behalf of such beneficial owner) shall not exceed the number of directors to be elected at such annual meeting.

 

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(iii)    To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the Secretary shall set forth:

(a)    As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(iii)(a) of these bylaws) except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(a);

(b)    As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(iii)(b), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(b) and the disclosure with respect to the business to be brought before the meeting in Section 2.4(iii)(c) shall be made with respect to nomination of each person for election as a director at the meeting) and a representation whether any Nominating Person intends or is part of a group which intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the nominee and/or otherwise to solicit proxies or votes from stockholders in support of such nomination; and

(c)    As to each candidate whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such candidate for nomination that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such candidate for nomination were a Nominating Person, (B) all information relating to such candidate for nomination that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such candidate’s written consent to being named in the Corporation’s proxy statement as a nominee and to serving as a director if elected), (C) a description of any direct or indirect material interest in any material contract or agreement between or among any Nominating Person, on the one hand, and each candidate for nomination or his or her respective associates or any other participants in such solicitation, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the candidate for nomination were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (A) through (C) are referred to as “Nominee Information”), and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(viii).

(iv)    For purposes of this Section 2.5, the term “Nominating Person shall mean (a) the stockholder providing the notice of the nomination proposed to be made at the meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, (c) any other participant (as defined in paragraphs (a)(ii)-(vi) of Instruction 3 to Item 4 of Schedule 14A) in such solicitation and (d) any associate (within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder or beneficial owner or any other participant in such solicitation.

(v)    A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for notice of the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the

 

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record date for notice of the meeting (in the case of the update and supplement required to be made as of such record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

(vi)    Notwithstanding anything in Section 2.5(ii) to the contrary, in the event that the number of directors to be elected to the Board at the annual meeting is increased effective after the time period for which nominations would otherwise be due under Section 2.5(ii) and there is no public announcement by the Corporation naming the nominees for the additional directorships at least one hundred (100) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.5 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

(vii)    Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Governing Body or (2) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.5 is delivered to the Secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this Section 2.5. The number of nominees a stockholder may nominate for election at the special meeting (or in the case of a stockholder giving the notice on behalf of a beneficial owner, the number of nominees a stockholder may nominate for election at the special meeting on behalf of such beneficial owner) shall not exceed the number of directors to be elected at such special meeting. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 2.5(ii) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which the Corporation first makes a public announcement of the date of the special meeting at which directors are to be elected. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above.

(viii)    To be eligible to be a candidate for election as a director of the Corporation at an annual meeting, a candidate must be nominated in the manner prescribed in this Section 2.5 (or otherwise in accordance with the Stockholders Agreement or Certificate of Incorporation, as applicable) and the candidate for nomination, whether nominated by the Governing Body or by a stockholder of record, must have previously delivered (in the case of a nomination by a stockholder pursuant to Section 2.5(i)(b), in accordance with the time period prescribed in this Section 2.5 for delivery of the stockholder notice of nomination), to the Secretary at the principal executive offices of the Corporation, (a) a completed written questionnaire (in the form provided by the Corporation) with respect to the background, qualifications, stock ownership and independence of such candidate for nomination and (b) a written representation and agreement (in the form provided by the Corporation) that such candidate for nomination (A) is not, and will not become a party to, any agreement, arrangement or understanding with any Person or entity other than the Corporation with respect to any direct

 

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or indirect compensation or reimbursement for service as a director of the Corporation that has not been disclosed therein and (B) if elected as a director of the Corporation, will comply with all applicable corporate governance, conflict of interest, confidentiality, stock ownership and trading and other policies and guidelines of the Corporation applicable to all directors and in effect during such person’s term in office as a director (and, if requested by any candidate for nomination, the Secretary of the Corporation shall provide to such candidate for nomination all such policies and guidelines then in effect).

(ix)    The Governing Body may also require any proposed candidate for nomination as a Director to furnish such other information as may reasonably be requested by the Governing Body in writing prior to the meeting of stockholders at which such candidate’s nomination is to be acted upon in order for the Governing Body to determine the eligibility of such candidate for nomination to be an independent director of the Corporation in accordance with the Corporation’s corporate governance guidelines.

(x)    In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.

(xi)    No candidate shall be eligible for nomination as a director of the Corporation unless such candidate for nomination and the Nominating Person seeking to place such candidate’s name in nomination has complied with this Section 2.5, as applicable. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with this Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting, the defective nomination shall be disregarded and any ballots cast for the candidate in question (but in the case of any form of ballot listing other qualified nominees, only the ballots cast for the nominee in question) shall be void and of no force or effect.

(xii)    Notwithstanding anything in these bylaws to the contrary, no candidate for nomination shall be eligible to be seated as a director of the Corporation unless nominated and elected in accordance with this Section 2.5.

(xiii)    Notwithstanding anything to the contrary contained in these bylaws, for as long as any party to the Stockholders Agreement has a right to designate or nominate a Director, the procedure for any such nomination shall be governed by the Stockholders Agreement and such party shall not be subject to the notice procedures set forth in these bylaws for the nomination of any person to serve as a Director at any annual meeting or special meeting of stockholders.

2.6    Notice of Stockholders Meetings.

Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with either Section 2.7 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

 

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2.7    Manner of Giving Notice; Affidavit of Notice.

Notice of any meeting of stockholders shall be deemed given:

(i)    if mailed, when deposited in the U.S. mail, postage prepaid, directed to the stockholder at his or her address as it appears on the Corporation’s records;

(ii)    if delivered by courier service, the earlier of when the notice is received or left at the stockholder’s address; or

(iii)    if electronically transmitted as provided in the DGCL.

An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail, courier service or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

2.8    Quorum.

Unless otherwise provided by law, the Certificate of Incorporation or these bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote at the meeting, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. If, however, a quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting or (ii) a majority in voting power of the stockholders entitled to vote at the meeting, present in person, or by remote communication, if applicable, or represented by proxy, shall have power to adjourn the meeting from time to time in the manner provided in Section 2.9 of these bylaws until a quorum is present or represented.

2.9    Adjourned Meeting; Notice.

When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At any adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Governing Body shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting.

2.10    Conduct of Business.

The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the person presiding over the meeting. The Governing Body may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Governing Body, the chairperson of any meeting of stockholders shall have the right and

 

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authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairperson, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Governing Body or prescribed by the chairperson of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the chairperson of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Governing Body or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

2.11    Voting.

Each stockholder shall be entitled to a number of votes based on the number of and type of shares of capital stock held by such stockholder as provided in the Certificate of Incorporation or as required under the DGCL.

Except as otherwise provided by the Certificate of Incorporation, at all duly called or convened meetings of stockholders at which a quorum is present, for the election of directors, a plurality of the votes cast shall be sufficient to elect a director. Except as otherwise provided by the Certificate of Incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, each other matter presented to the stockholders at a duly called or convened meeting at which a quorum is present shall be decided by the affirmative vote of the holders of a majority of the votes cast (excluding abstentions and broker non-votes) on such matter.

2.12    Record Date for Stockholder Meetings and Other Purposes.

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Governing Body may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Governing Body, and which record date shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting. If the Governing Body so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Governing Body determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Governing Body, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is first given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Governing Body may fix a new record date for the adjourned meeting; and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in

 

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respect of any change, conversion or exchange of capital stock, or for the purposes of any other lawful action, the Governing Body may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Governing Body adopts the resolution relating thereto.

2.13    Proxies.

Each stockholder entitled to vote at a meeting of stockholders may authorize another Person or Persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but, no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of an electronic transmission which sets forth or is submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder.

2.14    List of Stockholders Entitled to Vote.

The Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, that if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the meeting date), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 2.14 or to vote in person or by proxy at any meeting of stockholders.

2.15    Inspectors of Election.

Before any meeting of stockholders, the Corporation shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The Corporation may designate one or more Persons as alternate inspectors to replace any inspector who fails to act. If any Person appointed as inspector or any alternate fails to appear or fails or refuses to act, then the chairperson of the meeting shall appoint a Person to fill that vacancy.

 

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Such inspectors shall:

(i)    determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting and the validity of any proxies and ballots;

(ii)    count all votes or ballots;

(iii)    count and tabulate all votes;

(iv)    determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspector(s); and

(v)    certify its or their determination of the number of shares represented at the meeting and its or their count of all votes and ballots.

Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspection with strict impartiality and according to the best of such inspector’s ability. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein. The inspectors of election may appoint such Persons to assist them in performing their duties as they determine.

2.16    Delivery to the Corporation.

Whenever Sections 2.4 and 2.5 of this Article II require one or more persons (including a record or beneficial owner of stock of the Corporation) to deliver a document or information to the Corporation or any officer, employee or agent thereof (including any notice, request, questionnaire, revocation, representation or other document or agreement), such document or information shall be in writing exclusively (and not in an electronic transmission) and shall be delivered exclusively by hand (including, without limitation, overnight courier service) or by certified or registered mail, return receipt requested and the Corporation shall not be required to accept delivery of any document not in such written form or so delivered. For the avoidance of doubt, with respect to any notice from any stockholder of record or beneficial owner of the Corporation’s capital stock pursuant to Sections 2.4 and 2.5 of this Article II, to the fullest extent permitted by law, the Corporation expressly opts out of Section 116 of the DGCL.

Article III - Directors

3.1    Powers.

Except as otherwise provided by the Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Governing Body.

3.2    Number of Directors.

The total number of directors constituting the Board and, if then-different from the Board, the Governing Body, shall be determined in accordance with the Certificate of Incorporation and the Stockholders Agreement.

 

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3.3    Election, Qualification and Term of Office of Directors. The procedures for election of directors, as well as the terms and qualifications of directors, shall be as set forth in the Certificate of Incorporation and the Stockholders Agreement.

3.4    Resignation and Vacancies. Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. The resignation shall take effect at the time specified therein or upon the happening of an event specified therein, and if no time or event is specified, at the time of its receipt. When one or more directors so resigns and the resignation is effective at a future date or upon the happening of an event to occur on a future date, except as otherwise provided for in the Certificate of Incorporation or the Stockholders Agreement, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

Vacancies and newly created directorships resulting from any increase in the authorized number of directors shall be filled in accordance with the Certificate of Incorporation and the Stockholders Agreement.

3.5    Place of Meetings; Meetings by Telephone.

The Governing Body or, if different than the Governing Body, the Board may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, members of the Governing Body (or, if different than the Governing Body, the Board), or any committee of the Board or subcommittee of the Governing Body, in each case, designated by the Governing Body, may participate in a meeting of the Governing Body, or any committee of the Board or subcommittee of the Governing Body, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.

3.6    Regular Meetings.

Regular meetings of the Governing Body or, if different than the Governing Body, the Board may be held without notice at such time and at such place as shall from time to time be determined by the Governing Body or, if different than the Governing Body, the Board.

3.7    Special Meetings; Notice.

Special meetings of the Governing Body or, if different than the Governing Body, the Board, for any purpose or purposes may be called at any time by the chairperson of the Board, the chief executive officer, the president, the secretary or a majority of the total number of directors constituting the Governing Body or, if different than the Governing Body, the Board.

Notice of the time and place of special meetings shall be:

(i)    delivered personally by hand, by courier or by telephone;

(ii)    sent by United States first-class mail, postage prepaid;

 

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(iii)    sent by facsimile or electronic mail; or

(iv)    sent by other means of electronic transmission,

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, or other address for electronic transmission, as the case may be, as shown on the Corporation’s records.

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or electronic mail, or (iii) sent by other means of electronic transmission, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by U.S. mail, it shall be deposited in the U.S. mail at least four (4) days before the time of the holding of the meeting. The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.

3.8    Quorum.

Subject to the Certificate of Incorporation and the Stockholders Agreement, at all meetings of the Governing Body or, if different than the Governing Body, the Board, a majority of the total number of authorized directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Governing Body or, if different than the Governing Body, the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation, the Stockholders Agreement or these bylaws. If a quorum is not present at any meeting of the Governing Body or, if different than the Governing Body, the Board, then a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

3.9    Action by Written Consent without a Meeting.

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Governing Body or, if different than the Governing Body, the Board, or of any committee of the Board or subcommittee of the Governing Body, may be taken without a meeting if all members of the Governing Body or, if different than the Governing Body, the Board, or committee or subcommittee, as the case may be, consent thereto in writing or by electronic transmission; provided that each such action shall require the consent of at least one SL Director (as defined in the Stockholders Agreement) for so long as SL Parties (as defined in the Stockholders Agreement) are entitled to designate at least one Director for nomination to the Governing Body pursuant to the Stockholders Agreement (unless there is no SL Director then serving and such action occurs more than ten (10) business days following the date when there last ceased to be at least one SL Director serving and during such time the SL Parties have not designated any SL Director for nomination or appointment to the Governing Body); provided further that each such action shall require the consent of at least one Director appointed by the Executive Parties (as defined in the Stockholders Agreement) for so long as the Executive Parties are entitled to designate at least one Director for nomination to the Governing Body pursuant to the Stockholders Agreement (unless there is no such Director then serving and such action occurs more than ten (10) business days following the date when there last ceased to be at least one such Director serving and during such time the Executive Parties have not designated any such Director for nomination or appointment to the Governing Body). After such an action is taken by written consent without a meeting, the consent or consents relating thereto shall be filed with the minutes of the proceedings of the Governing Body or, if different than the Governing Body, the Board, committee or subcommittee in the same paper or electronic form as the minutes are maintained.

 

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3.10    Fees and Compensation of Directors.

Unless otherwise restricted by the Certificate of Incorporation or these bylaws, the Governing Body shall have the authority to fix the compensation, including fees and reimbursement of expenses, of directors for services to the Corporation in any capacity.

Article IV - Committees

4.1    Committees of Directors.

The Governing Body may designate one (1) or more committees of the Board or the Governing Body, each committee of the Board to consist, of one (1) or more of the directors of the Corporation and each committee of the Governing Body, if different than the Board, to consent of one (1) or more members of the Governing Body. The Governing Body may designate one (1) or more directors or members of the Governing Body, as applicable, as alternate members of any committee of the Board or the Governing Body, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Governing Body or Board (as applicable) to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Governing Body or in these bylaws, shall have and may exercise all the powers and authority of the Governing Body or Board (as applicable) in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee or subcommittee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Corporation. Notwithstanding the foregoing, the power and authority of the Executive Committee and the composition of the Executive Committee shall be as set forth in the Certificate of Incorporation and the Stockholders Agreement (provided, for the avoidance of doubt, the Executive Committee is not a committee of the Board created pursuant to Section 141(c) of the DGCL, but is instead an alternate governing body of the Corporation, created pursuant to Section 141(a) of the DGCL).

4.2    Committee Minutes.

Each committee shall keep regular minutes of its meetings and report the same to the Governing Body when required.

4.3    Meetings and Actions of Committees.

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

(i)    Section 3.5 (place of meetings and meetings by telephone);

(ii)    Section 3.6 (regular meetings);

(iii)    Section 3.7 (special meetings and notice);

 

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(iv)    Section 3.9 (action without a meeting); and

(v)    Section 7.12 (waiver of notice),

with such changes in the context of those bylaws as are necessary to substitute the committee and its respective members for the Governing Body and its members. However:

(i)    the time of regular meetings of committees may be determined either by resolution of the Governing Body or by resolution of the committee;

(ii)    special meetings of committees may also be called by resolution of the Governing Body or the chairperson of the applicable committee; and

(iii)    the Governing Body may adopt rules for the governance of any committee to override the provisions that would otherwise apply to the committee pursuant to this Section 4.3, provided that such rules do not violate the provisions of the Certificate of Incorporation or applicable law.

Article V - Officers

5.1    Officers.

The officers of the Corporation shall initially include a chief executive officer, an executive chairman, a president, a chief financial officer and a secretary. The Corporation may also have, at the discretion of the Governing Body, a chairperson of the Board, a vice chairperson of the Board, a treasurer, one (1) or more vice presidents, one (1) or more assistant vice presidents, one (1) or more assistant treasurers, one (1) or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may be held by the same person.

5.2    Appointment of Officers.

The Governing Body or a duly authorized committee or subcommittee thereof shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws.

5.3    Subordinate Officers.

The Governing Body or a duly authorized committee or subcommittee thereof may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws,as the Governing Body or a duly authorized committee or subcommittee thereof may from time to time determine, or as determined by the officer upon whom such power of appointment has been conferred by the Governing Body or a duly authorized committee or subcommittee thereof.

 

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5.4    Removal and Resignation of Officers.

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the Governing Body or a duly authorized committee or subcommittee thereof or, except in the case of an officer chosen by the Governing Body or a duly authorized committee or subcommittee thereof, by any officer upon whom such power of removal may be conferred by the Governing Body or a duly authorized committee or subcommittee thereof.

Any officer may resign at any time by giving notice to the Corporation in writing or by electronic transmission. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

5.5    Vacancies in Offices.

Any vacancy occurring in any office of the Corporation shall be filled by the Governing Body or a duly authorized committee or subcommittee thereof or as provided in Section 5.2.

5.6    Representation of Shares of Other Corporations.

The chief executive officer, the executive chairman, the president, the chairperson of the Board, any vice president, the treasurer, the secretary or assistant secretary of this Corporation, or any other Person authorized by the Governing Body, the chief executive officer, the executive chairman, the president or a vice president, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares or securities of any other corporation or entity standing in the name of this Corporation. The authority granted herein may be exercised either by such Person directly or by any other Person authorized to do so by proxy or power of attorney duly executed by such Person having the authority.

5.7    Authority and Duties of Officers.

All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be provided herein or designated from time to time by the Governing Body and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Governing Body.

Article VI - Records

A stock ledger consisting of one or more records in which the names of all of the Corporation’s stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances and transfers of stock of the corporation are recorded in accordance with Section 224 of the DGCL shall be administered by or on behalf of the Corporation. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means of, or be in the form of, any information storage device, or method, or one or more electronic networks or databases (including one or more distributed electronic networks or databases), provided that the records so kept can be converted into clearly legible paper form within a reasonable time and, with respect to the stock ledger, that the records so kept (i) can be used to prepare the list of stockholders specified

 

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in Sections 219 and 220 of the DGCL, (ii) record the information specified in Sections 156, 159, 217(a) and 218 of the DGCL, and (iii) record transfers of stock as governed by Article 8 of the Delaware Uniform Commercial Code.

Article VII - General Matters

7.1    Execution of Corporate Contracts and Instruments.

The Governing Body, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Governing Body or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

7.2    Stock Certificates.

The shares of the Corporation shall be uncertificated, provided that the Governing Body by resolution may provide that some or all of the shares of any class or series of stock of the Corporation shall be represented by certificates. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the Corporation by, any two officers authorized to sign stock certificates representing the number of shares registered in certificate form. The Chief Executive Officer, Executive Chairman, chairperson or vice chairperson of the Governing Body, the president, vice president, the treasurer, any assistant treasurer, general counsel or deputy general counsel, the secretary or any assistant secretary of the Corporation shall be specifically authorized to sign stock certificates. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

7.3    Lost Certificates.

The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

7.4    Shares Without Certificates

The Corporation shall adopt a system of issuance, recordation and transfer of its shares of stock by electronic or other means not involving the issuance of certificates, provided the use of such system by the Corporation is permitted in accordance with applicable law.

 

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7.5    Construction; Definitions.

Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. In connection herewith, to the extent there are conflicts among these bylaws, the Certificate of Incorporation or the Stockholders Agreement, priority shall first be given to the Certificate of Incorporation, second to the Stockholders Agreement and third to the these bylaws, in each case except as otherwise required by the DGCL. Without limiting the generality of this provision, the singular number includes the plural and the plural number includes the singular.

7.6    Dividends.

The Governing Body, subject to any restrictions contained in either (i) the DGCL or (ii) the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.

The Governing Body may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.

7.7    Fiscal Year.

The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.

7.8    Seal.

The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

7.9    Transfer of Stock.

Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws subject to any transfer restrictions contained in the Certificate of Incorporation and the Stockholders Agreement. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation or a subsidiary of the Corporation pursuant to applicable provisions of the governing documents such subsidiary of the Corporation, of the certificate or certificates representing such shares endorsed by the appropriate Person or Persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the Persons from and to whom it was transferred.

 

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7.10    Stock Transfer Agreements.

The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes or series of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

7.11    Registered Stockholders.

The Corporation:

(i)     shall be entitled to recognize the exclusive right of a Person registered on its books as the owner of shares to receive dividends and to vote as such owner; and

(ii)    shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.

7.12    Waiver of Notice.

Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these bylaws, a written waiver, signed by the Person entitled to notice, or a waiver by electronic transmission by the Person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice. Attendance of a Person at a meeting shall constitute a waiver of notice of such meeting, except when the Person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the Certificate of Incorporation or these bylaws.

Article VIII - Amendments

The Board is expressly empowered to adopt, amend or repeal the bylaws of the Corporation. The stockholders also shall have power to adopt, amend or repeal the bylaws of the Corporation; provided, however, that, from and after the Triggering Event, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of at least 66 2/3% of the voting power of all the then-outstanding shares of voting stock of the Corporation with the power to vote at an election of directors, voting together as a single class.

Article IX - Definitions

As used in these bylaws, unless the context otherwise requires, the term:

Affiliate” means, with respect to any Person, any other Person that controls, is controlled by, or is under common control with such Person. For the purposes of this definition, “control,” when used with respect to any Person, means the power to direct or cause the direction of the affairs or management of that Person, whether through the ownership of voting securities, as trustee (or the power to appoint a trustee), personal

 

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representative or executor, by contract, credit arrangement or otherwise and “controlled” and “controlling” have meanings correlative to the foregoing.

Board” means the board of directors of the Corporation.

Executive Committee” has the meaning set forth in the Certificate of Incorporation of the Corporation.

Governing Body” means (i) prior to a Triggering Event, the Executive Committee and (ii) from and after a Triggering Event, the Board.

Person” means any individual, general partnership, limited partnership, limited liability company, corporation, trust, business trust, joint stock company, joint venture, unincorporated association, cooperative or association or any other legal entity or organization of whatever nature, and shall include any successor (by merger or otherwise) of such entity.

Stockholders Agreement” means the Stockholders Agreement, dated as of             , 2021, by and among the Corporation and the other parties thereto or that may become parties thereto from time to time, as it may be amended, supplemented or modified.

Triggering Event” has the meaning set forth in the Certificate of Incorporation.

 

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Endeavor Group Holdings, Inc.

Certificate of Amendment and Restatement of Bylaws

 

 

The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of Endeavor Group Holdings, Inc., a Delaware corporation (the “Corporation”), and that the foregoing bylaws were approved on April 28, 2021, effective as of April 28, 2021 by the Corporation’s board of directors.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 28th day of April, 2021.

 

/s/ Robert Hilton

Robert Hilton

Secretary


Annex A

FORM OF

JOINDER AGREEMENT

The undersigned is executing and delivering this Joinder Agreement pursuant to that certain Stockholders Agreement, dated as of             , 2021 (as amended, restated, supplemented or otherwise modified in accordance with the terms thereof, the “Stockholders Agreement”) by and among Endeavor Group Holdings, Inc., Endeavor Executive Holdco, LLC, Endeavor Executive PIU Holdco, LLC, Endeavor Executive II Holdco, LLC, The Ariel Z. Emanuel Living Trust, dated November 13, 2017, Ariel Emanuel, Patrick Whitesell, SLP West Holdings, L.L.C., SLP West Holdings II, L.L.C., SLP West Holdings III, L.P., SLP IV West Feeder I, LP, SL SPV-1 West Feeder I, LP, SLP West Holdings Co-Invest, L.P., SLP West Holdings Co-Invest II, L.P., Silver Lake Technology Investors IV (Delaware II), L.P., Silver Lake Partners IV DE (AIV III), L.P., SLP IV Basquiat Feeder I LP, HS Investments (A) LP, HS Investments NA5 Limited, HS Investments (W) Limited, SCC Growth IV Holdco II, Ltd., Jet2 Investment Holdings Limited, Sixjoy LLC, WC HoldCo (Delaware) LLC, Atreus Holdings LLC, Jasmine Ventures Pte Ltd. and CPP Investment Board (USRE III) Inc. and any other Persons thereto or who become a party thereto in accordance with the terms thereof. Capitalized terms used but not defined in this Joinder Agreement shall have the respective meanings ascribed to such terms in the Stockholders Agreement.

By executing and delivering this Joinder Agreement to the Stockholders Agreement, the undersigned hereby adopts and approves the Stockholders Agreement and agrees, effective commencing on the date hereof and as a condition to the undersigned’s becoming the beneficial owner and/or transferee of Company Securities, to become a party to, and to be bound by and comply with the provisions of, the Stockholders Agreement in the same manner as if the undersigned were an original signatory to the Stockholders Agreement.

The undersigned acknowledges and agrees that the provisions of Article IV of the Stockholders Agreement are incorporated herein by reference, mutatis mutandis.

Accordingly, the undersigned has executed and delivered this Joinder Agreement as of the      day of             ,         .


 

(Signature of Affiliated Transferee)

 

(Print Name of Affiliated Transferee)
Address:  

 

 

 

Telephone:  

 

Facsimile:  

 

Email:  

 

AGREED AND ACCEPTED

as of the      day of             ,         .

 

ENDEAVOR GROUP HOLDINGS, INC.

 

By:  

 

      Name:
      Title:


Annex B

FORM OF

SPOUSAL CONSENT

In consideration of the execution of that certain Stockholders Agreement, dated as of             , 2021 (as amended, restated, supplemented or otherwise modified in accordance with the terms thereof, the “Stockholders Agreement”) by and among Endeavor Group Holdings, Inc., Endeavor Executive Holdco, LLC, Endeavor Executive PIU Holdco, LLC, Endeavor Executive II Holdco, LLC, The Ariel Z. Emanuel Living Trust, dated November 13, 2017, Ariel Emanuel, Patrick Whitesell, SLP West Holdings, L.L.C., SLP West Holdings II, L.L.C., SLP West Holdings III, L.P., SLP IV West Feeder I, LP, SL SPV-1 West Feeder I, LP, SLP West Holdings Co-Invest, L.P., SLP West Holdings Co-Invest II, L.P., Silver Lake Technology Investors IV (Delaware II), L.P., Silver Lake Partners IV DE (AIV III), L.P., SLP IV Basquiat Feeder I LP, HS Investments (A) LP, HS Investments NA5 Limited, HS Investments (W) Limited, SCC Growth IV Holdco II, Ltd., Jet2 Investment Holdings Limited, Sixjoy LLC, WC HoldCo (Delaware) LLC, Atreus Holdings LLC, Jasmine Ventures Pte Ltd. and CPP Investment Board (USRE III) Inc. and any other Persons who are or may become a party thereto in accordance with the terms thereof, I,                     , the spouse of                     , who is a party to the Stockholders Agreement, do hereby join with my spouse in executing the foregoing Stockholders Agreement and do hereby agree to be bound by all of the terms and provisions thereof, in consideration of the issuance, acquisition or receipt of Company Securities and all other interests I may have in the shares and securities subject thereto, whether the interest may be pursuant to community property laws or similar laws relating to marital property in effect in the state or province of my or our residence as of the date of signing this consent. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Stockholders Agreement.

 

Dated as of             ,               

 

(Signature of Spouse)

     

 

      (Print Name of Spouse)

Exhibit 10.3

 

 

 

STOCKHOLDERS AGREEMENT

by and among

ENDEAVOR GROUP HOLDINGS, INC.,

ENDEAVOR EXECUTIVE HOLDCO, LLC

ENDEAVOR EXECUTIVE PIU HOLDCO, LLC

ENDEAVOR EXECUTIVE II HOLDCO, LLC

ARIEL EMANUEL

PATRICK WHITESELL

THE ARIEL Z. EMANUEL LIVING TRUST, DATED NOVEMBER 13, 2017

THE SILVER LAKE PARTIES NAMED HEREIN

AND

THE OTHER STOCKHOLDERS PARTY HERETO

 

 

Dated as of April 28, 2021

 

 

 

 

 


Table of Contents

 

         Page  

ARTICLE I DEFINITIONS

     2  

Section 1.1

  Certain Definitions      2  

Section 1.2

  Interpretive Provisions      8  

ARTICLE II CORPORATE GOVERNANCE

     9  

Section 2.1

  SL Directors      9  

Section 2.2

  Executive Directors      12  

Section 2.3

  Voting Agreement      16  

Section 2.4

  Controlled Company      17  

ARTICLE III OTHER COVENANTS AND AGREEMENTS

     18  

Section 3.1

  Indemnification Agreements      18  

Section 3.2

  IPO Expenses      18  

Section 3.3

  Company Charter; Company By-laws; Corporate Opportunities      18  

Section 3.4

  Conflicting Organizational Document Provisions      18  

Section 3.5

  Executive Committee Charter      19  

Section 3.6

  Acquisition or Disposition of Class A Shares      19  

Section 3.7

  Inspection Rights      19  

Section 3.8

  Cash Redemption      20  

ARTICLE IV GENERAL

     20  

Section 4.1

  Assignment      20  

Section 4.2

  Expenses      20  

Section 4.3

  Termination      20  

Section 4.4

  Severability      21  

Section 4.5

  Entire Agreement; Amendment      21  

Section 4.6

  Counterparts; Electronic Signature      22  

Section 4.7

  Governing Law      22  

Section 4.8

  Jurisdiction      22  

Section 4.9

  Waiver of Jury Trial      23  

Section 4.10

  No Presumption      23  

Section 4.11

  Immunity Waiver      23  

Section 4.12

  Specific Performance      23  

Section 4.13

  Notices      23  

Section 4.14

  Binding Effect; Third Party Beneficiaries      25  

Section 4.15

  Further Assurances      25  

Section 4.16

  Table of Contents, Headings and Captions      25  

Section 4.17

  No Recourse      25  


Exhibits and Annexes

 

Exhibit I     –        Company Charter
Exhibit II     –        Company By-laws
Annex A     –        Form of Joinder Agreement
Annex B     –        Form of Spousal Consent


STOCKHOLDERS AGREEMENT

This STOCKHOLDERS AGREEMENT (as amended, supplemented or restated from time to time, this “Agreement”) is entered into as of _________, 2021, by and among (i) Endeavor Group Holdings, Inc., a Delaware corporation (the “Company”), (ii) Endeavor Executive Holdco, LLC, a Delaware limited liability company (“Executive Holdco”), Endeavor Executive PIU Holdco, LLC, a Delaware limited liability company (“Employee Holdco I”), Endeavor Executive II Holdco, LLC, a Delaware limited liability company (“Employee Holdco II”, and together with Executive Holdco and Employee Holdco I, the “Executive Holding Companies”) and Ariel Emanuel and Patrick Whitesell (each a “Key Executive”), the Ariel Z. Emanuel Living Trust, dated November 13, 2017 (the “Executive Trust” and together with Executive Holdco, Employee Holdco I, Employee Holdco II and the Key Executives, the “Executive Equityholders”), (iii) SLP West Holdings, L.L.C., a Delaware limited liability company, SLP West Holdings II, L.L.C., a Delaware limited liability company, SLP West Holdings III, L.P., a Delaware limited partnership, SLP IV West Feeder I, LP, a Delaware limited partnership, SL SPV-1 Feeder I, LP, a Delaware limited partnership, SLP West Holdings Co-Invest, L.P., a Delaware limited partnership, SLP West Holdings Co-Invest Feeder II, L.P., a Delaware limited partnership, SLP West Holdings Co-Invest II, L.P., a Delaware limited partnership, Silver Lake Technology Investors IV (Delaware II), L.P., a Delaware limited partnership, Silver Lake Partners IV DE (AIV III), L.P., a Delaware limited partnership, SLP IV Basquiat Feeder I LP, a Delaware limited partnership, SLP West Holdings IV, L.P., a Delaware limited partnership, Silver Lake Partners VI DE (AIV), L.P., a Delaware limited Partnership and Silver Lake Technology Investors VI, L.P., a Delaware limited partnership (collectively, the “SL Equityholders”), (iv) HS Investments (A) LP (“HS A”), HS Investments NA5 Limited (“HS NA5”), HS Investments (W) Limited (together with HAS and HS NA5, the “HS Entities”), (v) SCC Growth IV Holdco II, Ltd. (the “Sequoia Entity”), (vi) Yacht Investment Holdings LLC (the “Focus Entity”), Sixjoy LLC (the “Tencent Entity”), (vi) WC HoldCo (Delaware) LLC (“Mubadala”), (vii) Atreus Holdings LLC (“Atreus”), (viii) Jasmine Ventures Pte. Ltd. (“GIC”) and (ix) CPP Investment Board (USRE III) Inc. (“CPPIB” and together with the HS Entities, the Sequoia Entity, the Focus Entity, the Tencent Entity, Mubadala, Atreus, GIC, the Executive Parties and the SL Equityholders, and any other holder of Company Securities that executes this Agreement or a Joinder hereto, the “Stockholders”).

RECITALS

WHEREAS, pursuant to the terms of the Master Restructuring Agreement (the “Restructuring Agreement”), dated as of the date hereof, by and among the Company and the Stockholders and the other Persons listed on the signature pages thereto, the parties hereto have agreed to enter into this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:


ARTICLE I

DEFINITIONS

Section 1.1 Certain Definitions. As used in this Agreement, the following definitions shall apply:

Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person; provided that no party shall be deemed to be an Affiliate of any other party or any of its Affiliates solely by virtue of such party’s ownership of Company Securities. Notwithstanding the foregoing, no SL Party shall be considered an Affiliate of any portfolio company in which the direct or indirect equityholders of such SL Party or any of their affiliated investment funds have made a debt or equity investment (or vice versa).

Affiliated Transferee” means (i) in the case of any Person that is an individual, any transferee of Company Securities of such Person that is (x) an immediate family member of such Person, (y) a trust, family-partnership or estate-planning vehicle for the benefit of such Person and/or any of its immediate family members or (z) an Affiliate of such Person, (ii) in the case of any Person that is a limited liability company, limited partnership or other entity, any transferee of Company Securities of such Person that is (x) an immediate family member of the individual that controls a majority of the voting or economic interest in such Person, (y) a trust, family-partnership or estate-planning vehicle for the benefit of the individual that controls a majority of the voting or economic interest in such Person and/or any of such individual’s immediate family members or (z) an Affiliate of such Person, (iii) in the case of each of the Executive Equityholders, without limiting clauses (i) or (ii), any transferee of Company Securities that is either (x) a Key Executive or (y) an Affiliate or Affiliated Transferee of either Key Executive or (iv) in the case of any transferor, without limiting clauses (i), (ii) or (iii), any transferee of shares of Class A Common Stock and/or Class X Common Stock that also received shares of Class Y Common Stock in the applicable transfer (i.e., shares of the transferor’s Class Y Common Stock were not automatically transferred to the Company and retired by the Company under Section 6.3 of the Company Charter as a result of such transaction).

Aggregate CPP Ownership” means the total number of shares of Class A Common Stock beneficially owned (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act (but without giving effect to beneficial ownership deemed to arise solely as a result of this Agreement or by membership in a “group”, as contemplated by Rule 13d-5, with non-Affiliates)), in the aggregate and without duplication, by CPPIB or any of its Affiliates as of the date of such calculation (determined on an “as-converted” basis taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of Class A Common Stock (including Common Units that are redeemable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing, vesting or other restrictions on redemptions contained therein and assuming no redemptions for cash))).

 

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Aggregate GIC Ownership” means the total number of shares of Class A Common Stock beneficially owned (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act (but without giving effect to beneficial ownership deemed to arise solely as a result of this Agreement or by membership in a “group”, as contemplated by Rule 13d-5, with non-Affiliates)), in the aggregate and without duplication, by GIC or any of its Affiliates as of the date of such calculation (determined on an “as-converted” basis taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of Class A Common Stock (including Common Units that are redeemable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing, vesting or other restrictions on redemptions contained therein and assuming no redemptions for cash))).

Aggregate Executive Ownership” means the total number of shares of Class A Common Stock beneficially owned (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act (but without giving effect to beneficial ownership deemed to arise solely as a result of this Agreement or by membership in a “group”, as contemplated by Rule 13d-5, with non-Affiliates)), in the aggregate and without duplication, by the Executive Parties and all Employee Holders as of the date of such calculation (determined on an “as-converted” basis taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of Class A Common Stock (including Common Units (including Profits Units exchangeable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing, vesting or other restrictions on exchange contained therein)) that are redeemable pursuant to the Endeavor Operating LLC Agreement or Endeavor Manager LLC Agreement (without regard to any timing, vesting or other restrictions on redemptions contained therein and assuming no redemptions for cash))).

Aggregate SL Ownership” means the total number of shares of Class A Common Stock beneficially owned (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act (but without giving effect to beneficial ownership deemed to arise solely as a result of this Agreement or by membership in a “group”, as contemplated by Rule 13d-5, with non-Affiliates)), in the aggregate and without duplication, by the SL Parties as of the date of such calculation (determined on an “as-converted” basis taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of Class A Common Stock (including Common Units that are redeemable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing, vesting or other restrictions on redemptions contained therein and assuming no redemptions for cash))).

Agreement” has the meaning set forth in the preamble.

Board” means the board of directors of the Company.

Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by applicable law to close.

 

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Class A Common Stock” means Class A common stock, $0.00001 par value per share, of the Company.

Class B Common Stock” means Class B common stock, $0.00001 par value per share, of the Company.

Class C Common Stock” means Class C common stock, $0.00001 par value per share, of the Company.

Class X Common Stock” means Class X common stock, $0.00001 par value per share, of the Company.

Class Y Common Stock” means Class Y common stock, $0.00001 par value per share, of the Company.

Common Unit” means a common limited liability company interest in Endeavor Operating Company or Endeavor Manager, as applicable.

Company” has the meaning set forth in the preamble.

Company By-laws” means the Amended and Restated By-laws of the Company, a copy of which is attached hereto as Exhibit II, as amended from time to time.

Company Charter” means the Amended and Restated Certificate of Incorporation of the Company, a copy of which is attached hereto as Exhibit I, as amended from time to time.

Company Common Stock” means all classes and series of common stock of the Company, including the Class A Common Stock, Class B Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock.

Company Securities” means (i) the Company Common Stock and (ii) securities convertible into, or exercisable, exchangeable or redeemable for, Company Common Stock (including Common Units (including Profits Units exchangeable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing, vesting or other restrictions on exchange contained therein)) redeemable pursuant to the Endeavor Operating LLC Agreement or the Endeavor Manager LLC Agreement, as applicable (without regard to any timing, vesting or other restrictions on redemption contained in either such agreement and assuming no redemptions for cash)) on an as-converted basis.

Continued Employment Condition” has the meaning set forth in Section 2.2(a).

 

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control” (including its correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise) of a Person.

Employee Holdco I” shall have the meaning set forth in the preamble.

Employee Holdco II” has the meaning set forth in the preamble.

Employee Holder” means any current or former employee or service provider (that is an individual) of the Company or any of its Subsidiaries that held (directly or indirectly through any other Person) any Company Securities as of the IPO or any Affiliate, Trust or Family Member thereof.

Endeavor Manager” means Endeavor Manager, LLC, a Delaware limited liability company.

Endeavor Manager LLC Agreement” means the Limited Liability Company Agreement of Endeavor Manager, dated as of the date hereof, as amended from time to time.

Endeavor Operating Company” means Endeavor Operating Company, LLC, a Delaware limited liability company.

Endeavor Operating LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of Endeavor Operating Company, dated as of the date hereof, as amended from time to time.

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

Executive Committee” means the Executive Committee of the Company as defined in the Company Charter.

Executive Director” has the meaning set forth in Section 2.2(a).

Executive Equityholders” has the meaning set forth in the preamble.

Executive Holdco” has the meaning set forth in the preamble.

Executive Holding Companies” has the meaning set forth in the preamble.

Executive Ownership Minimum” means, as of any date of determination, a number of shares of Class A Common Stock equal to 5% of the total number of outstanding shares of Class A Common Stock, in each case determined (x) assuming the redemption of all outstanding Common Units (determined assuming the exchange of all outstanding Profits Units exchangeable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing, vesting, or other restrictions on exchange contained therein)) redeemable pursuant to the Endeavor Operating LLC Agreement or

 

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the Endeavor Manager LLC Agreement in exchange for shares of Class A Common Stock (without regard to any timing, vesting or other restrictions on redemption contained therein and assuming no redemptions for cash), and (y) except as provided in the foregoing clause (x), without regard to the conversion, exercise, exchange or redemption of any other securities into or for shares of Class A Common Stock.

Executive Holdco Step-Down” has the meaning set forth in Section 2.2(a).

Executive Parties” means the Executive Equityholders or any Affiliated Transferee of the Executive Equityholders.

Executive Trust” has the meaning set forth in the preamble.

GIC/CPP Step-Down” means, such time as (a) in the case of GIC, the Aggregate GIC Ownership is equal to a number of shares of Class A Common Stock (determined on an “as-converted” basis taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of Class A Common Stock (including Common Units that are redeemable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing or other restrictions on redemption contained therein and assuming no redemptions for cash)) that is less than 50% of the Aggregate GIC Ownership as of the date hereof, as adjusted for any stock split, stock dividend, reverse stock split, combination, recapitalization, reclassification or similar event and (b) in the case of CPPIB, the Aggregate CPP Ownership is equal to a number of shares of Class A Common Stock (determined on an “as-converted” basis taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of Class A Common Stock (including Common Units that are redeemable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing or other restrictions on redemption contained therein and assuming no redemptions for cash)) that is less than 50% of the Aggregate CPP Ownership as of the date hereof, as adjusted for any stock split, stock dividend, reverse stock split, combination, recapitalization, reclassification or similar event.

Governing Body” has the meaning set forth in the Company Charter.

IPO” means the initial public offering of Company Common Stock.

IPO Expenses” means, with respect to any Person, any and all reasonable out-of-pocket expenses (other than taxes and underwriting discounts and commissions) incurred or accrued by such Person in connection with the IPO, the reorganization of the Company and/or Endeavor Operating Company and/or their respective Subsidiaries in connection therewith, including, (i) all out-of-pocket costs and expenses of such Person in connection with or related to drafting, negotiating, reviewing and/or entering into this Agreement, the Restructuring Agreement, the Endeavor Operating LLC Agreement, the Endeavor Manager LLC Agreement and all other agreements, documents, certificates and instruments related to the IPO and the reorganization of the Company, Endeavor Operating Company, its Subsidiaries and/or Endeavor Manager in connection therewith, (ii) all out-of-pocket fees and expenses of complying with all applicable securities laws, (iii) all out-of-pocket road show, printing, messenger and delivery expenses and (iv) the fees and disbursements of outside counsel, accountants and financial advisors.

 

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Key Executive” shall have the meaning set forth in the preamble.

Necessary Action” means, with respect to a specified result, all actions necessary to cause such result, including (i) voting or providing a written consent or proxy with respect to the Company Securities, whether at any annual or special meeting, by written consent or otherwise, (ii) causing the adoption of stockholders’ resolutions and amendments to organizational documents of the Company or its Subsidiaries, (iii) causing members of the Board or Governing Body, as applicable, to the extent such members were elected, nominated or designated by the Person obligated to undertake a Necessary Action, to act (subject to any applicable fiduciary duties) in a certain manner or causing them to be removed in the event they do not act in such a manner, (iv) executing agreements and instruments and (v) making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result.

Person” means any individual, firm, corporation, partnership, limited liability company, trust, estate, joint venture, governmental authority or other entity.

Restructuring Agreement” has the meaning set forth in the recitals.

SL Director” has the meaning set forth in Section 2.1(a).

Silver Lake” means SLP West Holdings, L.L.C. or any other SL Party designated in writing to the Company as such by Silver Lake.

SL Equityholders” has the meaning set forth in the preamble.

SL Limited Ownership Minimum” means, as of any date of determination, a number of shares of Class A Common Stock (determined on an “as-converted” basis taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of Class A Common Stock (including Common Units that are redeemable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing or other restrictions on redemption contained therein and assuming no redemptions for cash)) equal to 10% of the Aggregate SL Ownership as of the date hereof, as adjusted for any stock split, stock dividend, reverse stock split, combination, recapitalization, reclassification or similar event.

SL Ownership Minimum” means, as of any date of determination, a number of shares of Class A Common Stock (determined on an “as-converted” basis taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of Class A Common Stock (including Common Units that are redeemable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing or other restrictions on redemption contained therein and assuming no redemptions for cash)) equal to 40% of the Aggregate SL Ownership as of the date hereof, as adjusted for any stock split, stock dividend, reverse stock split, combination, recapitalization, reclassification or similar event.

 

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SL Parties” means the SL Equityholders or any Affiliate of Silver Lake Group, L.L.C., in each case, so long as any such SL Party (i) is managed, sponsored, controlled or advised by an investment fund affiliated with Silver Lake Group, L.L.C. or by a managing member or partner controlled by a managing director of Silver Lake Group, L.L.C. and (ii) owns Company Securities.

SLP Step-Down” has the meaning set forth in the Section 2.1(a).

Stockholder” has the meaning set forth in the preamble.

Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which: (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives or trustees thereof, and the right to designate a majority of such directors, representatives or trustees, is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; or (ii) if a limited liability company, partnership, association or other business entity, a majority of the total voting power of stock (or equivalent ownership interest) of the limited liability company, partnership, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses and shall be or control the managing member, managing director or other governing body or general partner of such limited liability company, partnership, association or other business entity.

transfer” means, any direct or indirect, sale, exchange, assignment, pledge, hypothecation, mortgage, gift or other transfer, disposition or encumbrance, in each case, whether in its own right or by its representative, whether voluntary or involuntary or by operation of law, including by a direct or indirect transfer of equity, ownership or economic interests, or options, warrants or other contractual rights to acquire an equity, ownership or economic interest, in any Person.

Triggering Event” has the meaning set forth in the Company Charter.

Section 1.2 Interpretive Provisions. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles and Sections are to Articles

 

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and Sections of this Agreement unless otherwise specified. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.

ARTICLE II

CORPORATE GOVERNANCE

Section 2.1 SL Directors.

(a) The parties hereby agree that Silver Lake shall have the right, (i) so long as the Aggregate SL Ownership is equal to or exceeds the SL Ownership Minimum, to designate two (2) individuals (each, an “SL Director”) for nomination to the Board, and (ii) so long as the Aggregate SL Ownership is equal to or exceeds the SL Limited Ownership Minimum but is below the SL Ownership Minimum, to designate one (1) individual as an SL Director for nomination to the Board (this clause (ii), the “SLP Step-Down”), in each case, subject to the proper exercise of the fiduciary duties of the Board or, if then-different from the Board, the Governing Body, as applicable (or the appropriate committee or subcommittee of either of the foregoing, as applicable) with respect to director nominations.

(b) For so long as the Company Charter shall provide for the division of directors into three classes, one SL Director shall be designated as a Class II director and, so long as Silver Lake has the right to designate a second SL Director, the other SL Director will be designated as a Class III director. The initial SL Directors shall be Egon Durban (who shall be designated as a Class III director) and Stephen Evans (who shall be designated as a Class II director).

(c) In connection with the election of the Class II and Class III directors, as applicable, the Board or, if then-different from the Board, the Governing Body, shall (i) nominate the applicable SL Director for election as a director as part of the slate that is included in the proxy statement (or consent solicitation or similar document) of the Company relating to the election of directors, (ii) recommend the election of such nominee, and (iii) provide as high a level of support to cause the election of such nominee as it provides to any other individual standing for election as a director of the Company as part of the Company’s applicable slate of directors. In the event the Company Charter does not provide for the division of directors into three classes, the Board or, if then-different from the Board, the Governing Body shall (x) nominate each

 

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SL Director for election as a director as part of the slate that is included in the proxy statement (or consent solicitation or similar document) of the Company relating to the election of directors, (y) recommend the election of such nominee, and (z) provide as high a level of support to cause the election of such nominee as it provides to any other individual standing for election as a director of the Company as part of the Company’s slate of directors. If the Governing Body is then-different from the Board, upon any such nominee’s election as a director, such director shall be appointed to the Executive Committee. In addition, so long as Silver Lake has the right to designate one (1) individual for nomination to the Board hereunder, and any such individual is then-serving on the Board, unless Silver Lake otherwise agrees, at least one (1) such director shall be appointed to each committee of the Board and sub-committee of the Executive Committee, except as otherwise required by applicable law or Stock Exchange Rules (as defined in the Company Charter) and except for the Company’s Audit Committee, 16b-3 Committee and any other committee or sub-committee evaluating a related party transaction with Silver Lake or any of its Affiliates.

(d) With respect to any SL Director to be designated by Silver Lake other than the initial SL Directors identified in Section 2.1(b), Silver Lake shall designate such SL Director for nomination by delivering to the Company a written statement at least ninety (90) days prior to the one-year anniversary of the preceding annual meeting nominating directors, or such shorter period as is agreed in writing by the Company, and setting forth such individual’s business address, telephone number, facsimile number and e-mail address; provided, that if Silver Lake shall fail to deliver such written notice, Silver Lake shall be deemed to have designated the SL Director(s) previously designated (or designated pursuant to this Section 2.1(d)) by Silver Lake who are currently serving on the Board; provided, further, that in the event that an SL Director becomes permanently disabled or dies or otherwise resigns within ninety (90) days prior to the one-year anniversary of the preceding annual meeting, Silver Lake shall be permitted to designate a replacement SL Director and the Company shall use its reasonable best efforts to comply with its obligations herein, including filing and disseminating an amendment to the proxy statement (or consent solicitation or similar document) of the Company relating to the election of directors to cause the election of such replacement SL Director. If the Governing Body is then-different from the Board, upon any such nominee’s election as a director, such director shall be appointed to the Executive Committee.

(e) Silver Lake shall have the right to request the removal of an SL Director from the Board, subject to the rights of holders of Company Securities (other than the other Stockholders that are parties hereto) under applicable law. The Executive Parties agree with the SL Parties and the Company, and the other Stockholders party hereto hereby agree with the Company, in each case that they will not take any action to remove (and will oppose any action to remove) an SL Director from the Board (and, if then-different from the Board, the Governing Body) unless (i) the removal is a removal “for cause” as defined for purposes of Delaware law and as determined by final, non-appealable judgment of a court of competent jurisdiction in the state of Delaware, (ii) the removal is at the request of Silver Lake in accordance with this Section 2.1(e) or (iii) the Governing Body (excluding the SL Directors) has requested Silver Lake to cause all SL

 

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Directors to resign from the Board (and, if then-different from the Board, the Governing Body) pursuant to Section 2.1(f). In addition, the Executive Parties agree with the SL Parties and the Company, and the other Stockholders party hereto agree with the Company, in each case that they shall take all Necessary Action reasonably available within their power to cause the removal of any SL Director at the request of Silver Lake. Except to the extent Silver Lake loses its designation rights as described in Section 2.1(f) below, Silver Lake shall have the right to designate for appointment to the Board a director to fill any vacancy created by reason of the permanent disability, death, removal or resignation of an SL Director, and the Executive Parties and the Company agree with the SL Parties, and the other Stockholders party hereto agree with the Company, in each case that they shall take all Necessary Action reasonably available within their power to cause any such vacancy to be filled by such designee as promptly as practicable (and if the Governing Body is then-different from the Board, upon any such designee’s appointment to such vacancy, such designee shall be appointed to the Executive Committee). In addition, with respect to any SL Director to be designated by Silver Lake other than a managing director (or more senior officer) of an SL Party or any of its affiliated management companies, Silver Lake shall select such SL Director in consultation with the nominating committee of the Board, if such committee is in existence (and if no such committee is in existence, then in consultation with the Governing Body). Silver Lake shall use reasonable best efforts to cause each SL Director at all times to comply with the Company’s corporate policies, including, its code of ethics, and Silver Lake shall promptly request the removal of any SL Director who fails to comply with such corporate policies after reasonable notice from the Company is provided to Silver Lake and such SL Director and such SL Director is given a reasonable opportunity to comply with such corporate policies; provided, that (A) the Company has provided such SL Director a written copy of such corporate policies reasonably in advance of the date on which such SL Director is obligated to comply therewith, (B) such corporate policies apply to all members of the Board in an equal manner and do not on their face apply differently or disproportionately to the SL Directors as compared to other members of the Board and (C) such corporate policies are enforced by the Company and its Subsidiaries against all members of the Board equally and to the same extent; provided, further, that such corporate policies shall not conflict with or otherwise be inconsistent with any agreement entered into by any SL Party (x) with the Company, Endeavor Operating Company or any of their respective Subsidiaries in connection with the IPO, including this Agreement, or (y) with the underwriters to the IPO in connection with the IPO or otherwise create any liability or obligation of the SL Director that is not reasonable or customary for public companies whose boards of directors include professionals from private equity firms or financial sponsors.

(f) If at any time the Aggregate SL Ownership is less than the SL Ownership Minimum but equals or exceeds the SL Limited Ownership Minimum, Silver Lake shall, unless otherwise requested by the Company in writing, cause one (1) SL Director to immediately resign from the Board and, if then different from the Board, the Governing Body, and Silver Lake shall no longer have the right to designate two (2) directors for nomination to the Board (but, subject to the immediately subsequent sentence, shall have the right to designate one (1) director for nomination to the Board). If at any time the Aggregate SL Ownership is less than the SL Limited Ownership Minimum and the SL Ownership Minimum, Silver Lake shall, if requested by the Governing Body (excluding the SL Directors) in writing, cause all SL Directors to promptly resign from the Board and, if then different from the Board, the Governing Body.

 

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(g) If at any time Silver Lake causes (or is required to cause) one or more of its SL Directors to resign from the Board and, if applicable, the Governing Body, pursuant to Section 2.1(f), Executive Holdco shall have the right, so long as the Continued Employment Condition remains satisfied, to designate one (1) or two (2) individuals, as applicable, for nomination to the Board to fill such vacancies, subject to the proper exercise of the fiduciary duties of the Board or, if then-different from the Board, the Governing Body, as applicable (or the appropriate committee or subcommittee of either of the foregoing) with respect to director nominations. Any such individuals designated by Executive Holdco in accordance with this Section 2.1(g) shall be deemed additional “Executive Directors” (as defined below) and treated in accordance with Section 2.2). If the Governing Body is then-different from the Board, upon any such nominee’s election as a director, such director shall be appointed to the Executive Committee.

(h) For the avoidance of doubt, any member of the Board and, if then-different from the Board, the Governing Body, other than the SL Directors and the Executive Directors may be removed from the Board (or Governing Body, as applicable) in accordance with the provisions of the Company Charter and the Company By-laws.

(i) The Company shall reimburse the SL Directors and any other director affiliated with any of the SL Parties for all reasonable out-of-pocket costs and expenses (including travel expenses) incurred in connection with such director’s attendance and participation at meetings of the Board, if then-different from the Board, the Governing Body, or any committee or subcommittee of either of the foregoing.

(j) For so long as a SL Director is serving on the Board, (i) any share ownership requirement for any SL Director serving on the Board of Directors will be deemed satisfied by the securities owned by the SL Parties and their Affiliates and (ii) under no circumstances shall any policy, procedure, code, rule, standard or guideline applicable to the Board and adopted by the Company restrict the number of boards of directors of other companies on which any SL Director may serve, and, in each case of (i) and (ii), it is agreed that any such policies in effect from time to time that purport to impose terms inconsistent with this Section 2.2(j) shall not apply to the extent inconsistent with this Section 2.2(j) (but shall otherwise be applicable to the SL Directors).

Section 2.2 Executive Directors.

(a) The parties hereby agree that Executive Holdco shall have the right, (i) to designate two (2) individuals initially, and to designate up to two (2) additional individuals in accordance with Section 2.1(g) and Section 2.2(d) (each, an “Executive Director”), for nomination to the Board, so long as either Key Executive is

 

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employed as Chief Executive Officer or Executive Chairman of the Company (the “Continued Employment Condition”) and (ii) to the extent the Continued Employment Condition is no longer satisfied, to designate one (1) individual as an Executive Director for nomination to the Board, so long as the Aggregate Executive Ownership is equal to or exceeds the Executive Ownership Minimum or a Triggering Event described in clause (ii) of the definition thereof has not otherwise occurred (this clause (ii), the “Executive Holdco Step-Down”), in each case, subject to the proper exercise of the fiduciary duties of the Board or if then-different from the Board, the Governing Body (or the appropriate committee or subcommittee of either of the foregoing) with respect to director nominations.

(b) For so long as the Company Charter shall provide for the division of directors into three classes, one Executive Director shall be designated as a Class II director and, so long as Executive Holdco has the right to designate a second Executive Director, the other Executive Director shall be designated as a Class III director. The initial Executive Directors shall be the Key Executives (with Ariel Emanuel being designated as the initial Class III director and Patrick Whitesell being the initial Class II director).

(c) In connection with the election of Class II and Class III directors, as applicable, the Board or, if then-different from the Board, the Governing Body, shall nominate the applicable Executive Director for election as a director as part of the slate that is included in the proxy statement (or consent solicitation or similar document) of the Company relating to the election of directors, shall recommend the election of such nominee, and shall provide as high a level of support to cause the election of such nominee as it provides to any other individual standing for election as a director of the Company as part of the Company’s applicable slate of directors. In the event the Company Charter does not provide for the division of directors into three classes, the Board or, if then-different from the Board, the Governing Body, shall nominate each Executive Director for election as a director as part of the slate that is included in the proxy statement (or consent solicitation or similar document) of the Company relating to the election of directors, shall recommend the election of such nominee, and shall provide as high a level of support to cause the election of such nominee as it provides to any other individual standing for election as a director of the Company as part of the Company’s slate of directors. If the Governing Body is then-different from the Board, upon any such nominee’s election as a director, such director shall be appointed to the Executive Committee. In addition, so long as Executive Holdco has the right to designate one (1) individual for nomination to the Board hereunder, and any such individual is then-serving on the Board, unless Executive Holdco otherwise agrees, at least one (1) such director shall be appointed to each committee of the Board and sub-committee of the Executive Committee, except as otherwise required by applicable law or Stock Exchange Rules (as defined in the Company Charter) and except for the Company’s Audit Committee, 16b-3 Committee and any other committee or sub-committee evaluating a related party transaction with Executive Holdco or any of its Affiliates.

 

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(d) With respect to any Executive Director to be designated by Executive Holdco other than the initial Executive Directors identified in Section 2.2(b), including any Executive Directors designated in accordance with this Section 2.2(d) or in accordance with Section 2.1(g) above, Executive Holdco shall designate such Executive Director for nomination by delivering to the Company a written statement at least ninety (90) days prior to the one-year anniversary of the preceding annual meeting nominating directors, or such shorter period as is agreed in writing by the Company, and setting forth such individual’s business address, telephone number, facsimile number and e-mail address; provided, that if Executive Holdco shall fail to deliver such written notice, Executive Holdco shall be deemed to have designated the Executive Director(s) previously designated (or designated pursuant to this Section 2.2(d)) by Executive Holdco who are currently serving on the Board; provided, further, that in the event that an Executive Director becomes permanently disabled or dies or otherwise resigns within ninety (90) days prior to the one-year anniversary of the preceding annual meeting, Executive Holdco shall be permitted to designate a replacement Executive Director and the Company shall use its reasonable best efforts to comply with its obligations herein, including filing and disseminating an amendment to the proxy statement (or consent solicitation or similar document) of the Company relating to the election of directors to cause the election of such replacement Executive Director. If the Governing Body is then-different from the Board, upon any such nominee’s election as a director, such director shall be appointed to the Executive Committee.

(e) Executive Holdco shall have the right to request the removal an Executive Director from the Board, subject to the rights of holders of Company Securities (other than the other Stockholder parties hereto) under applicable law. The SL Parties agree with the Executive Parties and the Company, and the other Stockholders party hereto hereby agree with the Company, in each case that they will not take any action to remove (and will oppose any action to remove) an Executive Director from the Board (and, if then-different from the Board, the Governing Body) unless (i) the removal is a removal “for cause” as defined for purposes of Delaware law and as determined by final non-appealable judgment of a court of competent jurisdiction in the state of Delaware, (ii) the removal is at the request of Executive Holdco in accordance with this Section 2.2(e) or (iii) the Governing Body (excluding the Executive Directors) has requested Executive Holdco to cause all Executive Directors to resign from the Board (and, if then-different from the Board, the Governing Body) pursuant to Section 2.2(f). In addition, the SL Parties agree with the Executive Parties and the Company, and the other Stockholders party hereto agree with the Company, in each case that they shall take all Necessary Action reasonably available within their power to cause the removal of any Executive Director at the request of Executive Holdco. Except to the extent Executive Holdco loses its designation rights as described in Section 2.2(f) below, Executive Holdco shall have the right to designate for appointment to the Board a director to fill any vacancy created by reason of the permanent disability, death, removal or resignation of an Executive Director, and the SL Parties agree with the Executive Parties and the Company, and the other Stockholder parties hereto agree with the Company that, in each case they shall take all Necessary Action reasonably available within their power to cause any such vacancy to be filled by such designee as promptly as practicable (and if the Governing Body is then-different from the Board, upon any such designee’s appointment

 

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to such vacancy, such designee shall be appointed to the Executive Committee). In addition, with respect to any Executive Director to be designated by Executive Holdco other than the Key Executives or any senior executive of the Company or any of its Affiliates, Executive Holdco shall select such Executive Director in consultation with the nominating committee of the Board, if such committee is in existence (and if no such committee is in existence, then in consultation with the Governing Body). Executive Holdco shall use reasonable best efforts to cause each Executive Director (other than with respect to any Executive Director that is a Key Executive or employee of the Company or any of its Affiliates) at all times to comply with the Company’s corporate policies, including, its code of ethics, and Executive Holdco shall promptly request the removal of any Executive Director who fails to comply with such corporate policies after reasonable notice from the Company is provided to Executive Holdco and such Executive Director and such Executive Director is given a reasonable opportunity to comply with such corporate policies; provided, that (A) the Company has provided such Executive Director a written copy of such corporate policies reasonably in advance of the date on which such Executive Director is obligated to comply therewith, (B) such corporate policies apply to all members of the Board in an equal manner and do not apply differently or disproportionately to the Executive Directors as compared to other members of the Board and (C) such corporate policies are enforced by the Company and its Subsidiaries against all members of the Board equally and to the same extent; provided, further, that such corporate policies shall not conflict with or otherwise be inconsistent with any agreement entered into by any Executive Party (x) with the Company, Endeavor Operating Company or any of their respective Subsidiaries in connection with the IPO, including this Agreement, or (y) with the underwriters to the IPO in connection with the IPO or otherwise create any liability or obligation of the Executive Director that is not reasonable or customary for public companies whose boards of directors include professionals from private equity firms or financial sponsors.

(f) If at any time the Continued Employment Condition is not satisfied, Executive Holdco shall, unless otherwise requested by the Company in writing, cause one (1) Executive Director to immediately resign from the Board and, if then-different from the Board, the Governing Body, and Executive Holdco shall no longer have the right to designate two (2) directors for nomination to the Board pursuant to Section 2.2(a) (but, subject to the immediately subsequent sentence, shall have the right to designate one (1) director for nomination to the Board pursuant to Section 2.2(a)). If at any time the Continued Employment Condition is no longer satisfied, the Aggregate Executive Ownership is less than the Executive Ownership Minimum and a Triggering Event described in clause (ii) of the definition thereof has occurred, Executive Holdco shall, if requested by the Governing Body (excluding the Executive Directors) in writing, cause all Executive Directors to promptly resign from the Board and, if then-different from the Board, the Governing Body.

(g) For the avoidance of doubt, any member of the Board and, if then-different from the Board, the Governing Body, other than the SL Directors and the Executive Directors may be removed from the Board (or Governing Body, as applicable) in accordance with the provisions of the Company Charter and the Company By-laws.

 

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(h) The Company shall reimburse the Executive Directors and any other director affiliated with Executive Holdco for all reasonable out-of-pocket costs and expenses (including travel expenses) incurred in connection with such director’s attendance and participation at meetings of the Board, if then-different from the Board, the Governing Body, or any committee or subcommittee of either of the foregoing.

(i) Notwithstanding anything herein to the contrary, in the event there exists any vacancy on the Board (and/or Governing Body, as applicable), and Executive Holdco is entitled to designate a replacement for nomination to fill such vacancy pursuant to the terms hereof, if either Key Executive remains as an Executive Director, such Key Executive shall be entitled to exercise such designation right in lieu of Executive Holdco, and all references to “Executive Holdco” herein with respect to such designation shall be deemed to be a reference to such Key Executive.

Section 2.3 Voting Agreement.

(a) Each of the SL Parties and the Executive Parties agree with each other and the Company, and the other Stockholders party hereto agree with the Company, in each case (i) to take all Necessary Action reasonably available within its power, including casting all votes to which such party is entitled in respect of its Company Securities, whether at any annual or special meeting, by written consent or otherwise, so as to cause the election to the Board (and, if applicable, Governing Body) of (x) the SL Directors (including any replacement nominees designated in accordance with Section 2.1(d) above) and (y) the Executive Directors (including any replacement nominees designated in accordance with Section 2.2(d) above and any designees in accordance with Section 2.1(g) above), and to otherwise effect the intent of this Article II and (ii) not to grant, or enter into a binding agreement with respect to, any proxy to any Person in respect of such Stockholder’s Company Securities that would prohibit such Stockholder from casting such votes in accordance with clause (i).

(b) Each Stockholder party hereto agrees with the Company (i) to take all Necessary Action reasonably available within their power, including casting all votes to which such party is entitled in respect of its Company Securities, whether at any annual or special meeting, by written consent or otherwise, so as to vote its Company Securities on all matters submitted to the stockholders of the Company in accordance with the recommendation of the Governing Body and (ii) not to grant, or enter into a binding agreement with respect to, any proxy to any Person in respect of such party’s Company Securities that would prohibit such party from casting such votes in accordance with clause (i); provided, that, notwithstanding the foregoing, (x) following an Executive Holdco Step-Down or dissolution of the Executive Committee in accordance with the Company Charter, the Executive Equityholders may only vote their shares in a manner consistent with how any Executive Director voted at the Governing Body level, and (y) following an SLP Step-Down or GIC/CPP Step-Down, as applicable, this Section 2.3(b) shall not apply to the SL Equityholders, GIC or CPPIB, as applicable (A) with respect to any vote, written consent or other agreement, in each case in respect of any amendment to the Company Charter that would have a disproportionate and material adverse effect on the SL Equityholders, GIC or CPPIB, as applicable, as compared to other holders of the same class of Company Securities or any Change of Control (as defined in the Endeavor Operating LLC Agreement) or (B) as the Company may otherwise consent.

 

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(c) In the event that any party hereto transfers, directly or indirectly, any Company Securities to any Affiliated Transferees, such party shall, as a condition to any such transfer, require, among other things, such transferee to enter into a Joinder Agreement in the form attached hereto as Annex A to become party to this Agreement and be deemed to be a party for all purposes herein. If any such transferee is an individual and married, such party shall, as a condition to such transfer, cause such transferee to deliver to the Company, Silver Lake and Executive Holdco a duly executed copy of a Spousal Consent in the form attached hereto as Annex B.

(d) Each Stockholder (other than the Executive Parties and the SL Parties) hereby constitutes and appoints as the proxies of such Stockholder, and hereby grants a power of attorney, to (a) the Chief Executive Officer of the Company and (b) a stockholder or other person designated by the Governing Body, and each of them, with full power and substitution, with respect to the matters set forth herein, and hereby authorizes each of them to represent and to vote, if and only if such Stockholder (i) fails to vote or (ii) attempts to vote (whether by proxy, in person or by written consent) in a manner which is inconsistent with the terms of this Agreement, all of such Stockholder’s Company Securities in the manner provided in this Section 2.3, and hereby authorizes each of them to take any Necessary Action to give effect to the provisions contained in this Section 2.3. Each of the proxy and power of attorney granted in this Section 2.3(d) is given in consideration of the agreements and covenants of the parties in connection with the transactions contemplated by this Agreement and, as such, each is coupled with an interest and shall be irrevocable until this Agreement terminates pursuant to its terms or this Section 2.3 is amended to remove such grant of proxy and power of attorney in accordance with Section 4.5 hereof. Each Stockholder granting a proxy and power of attorney hereunder hereby revokes any and all previous proxies or powers of attorney with respect to such Stockholder’s Company Securities and shall not hereafter, until this Agreement terminates pursuant to its terms or this Section 2.3 is amended to remove this provision in accordance with Section 4.5 hereof, grant, or purport to grant, any other proxy or power of attorney with respect to such Company Securities, deposit any of such Company Securities into a voting trust or enter into any agreement (other than this Agreement), arrangement or understanding with any person, directly or indirectly, to vote, grant any proxy or power of attorney or give instructions with respect to the voting of any of such Company Securities, in each case, with respect to any of the matters set forth in this Agreement.

Section 2.4 Controlled Company.

(a) The SL Parties and Executive Parties acknowledge and agree that, (i) by virtue of this Article II, they are acting as a “group” within the meaning of the Stock Exchange Rules as of the date hereof, and (ii) by virtue of the combined voting power of Company Common Stock held by the SL Parties and the Executive Parties representing more than 50% of the total voting power of the Company Common Stock outstanding as of the date of the closing of the IPO, the Company qualifies as of the date of the closing of the IPO as a “controlled company” within the meaning of Stock Exchange Rules.

 

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(b) So long as the Company qualifies as a “controlled company” for purposes of Stock Exchange Rules, the Company will elect to be a “controlled company” for purposes of Stock Exchange Rules, and will disclose in its annual meeting proxy statement that it is a “controlled company” and the basis for that determination. If the Company ceases to qualify as a “controlled company” for purposes of Stock Exchange Rules, the SL Parties, the Executive Parties and the Company will take whatever action may be reasonably necessary in relation to such party, if any, to cause the Company to comply with Stock Exchange Rules as then in effect within the timeframe for compliance available under such rules.

ARTICLE III

OTHER COVENANTS AND AGREEMENTS

Section 3.1 Indemnification Agreements. The Company has entered into and shall at all times maintain in effect an indemnification agreement with each SL Director and Executive Director in such form as has been previously agreed to by each of the Company and Silver Lake or Executive Holdco, as applicable.

Section 3.2 IPO Expenses. The Company shall promptly pay or reimburse, or cause to be paid or reimbursed, all IPO Expenses of the SL Parties, GIC, CPPIB and the Executive Parties.

Section 3.3 Company Charter; Company By-laws; Corporate Opportunities. The Company Charter, as may be amended, supplemented and/or restated from time to time, shall provide for a renunciation of corporate opportunities presented to the Executive Parties, the SL Parties, any of the Company’s non-employee directors (and their respective Affiliates and director designees) to the maximum extent permitted by Section 122(17) of the Delaware General Corporation Law and on the terms and conditions set forth in Section 10 of the Company Charter as in effect on the date hereof. The SLP Parties and the Executive Parties agree with each other and the Company and the other parties hereto agree with the Company that they shall take all Necessary Action reasonably available within their power, including, to the extent necessary, voting all of their Company Securities and executing proxies or written consents, as the case may be, to ensure that the provisions in respect of corporate opportunities and director and officer indemnification, exculpation and advancement of expenses set forth in the Company Charter in the form set forth in Exhibit I are not amended, modified or supplemented in any manner, without the prior written consent of Silver Lake and Executive Holdco.

Section 3.4 Conflicting Organizational Document Provisions. The SLP Parties and the Executive Parties agree with each other and the Company and the other parties hereto agree with the Company that they shall vote all of their Company Securities and execute proxies or written consents, as the case may be, and shall take all Necessary Action reasonably available within their power, to ensure that the Company Charter, Company By-laws and Executive Committee Charter each (i) facilitate, and do

 

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not at any time conflict with, any provision of this Agreement and (ii) permit the SL Parties and Executive Holdco to receive the benefits to which they are entitled under this Agreement. In the event of any ambiguity or conflict arising between the terms of this Agreement and those of the Company Charter, Company By-laws, and/or the Executive Committee Charter, the Company and the other parties hereto shall take all Necessary Action reasonably available within their power to amend the Company Charter, Company By-laws, and/or the Executive Committee Charter, as the case may be, to eliminate such ambiguity or conflict such that the terms of this Agreement shall prevail. The parties hereto acknowledge and agree that the Company Charter, in the form attached hereto as Exhibit I, Company By-laws, in the form attached hereto as Exhibit II, and the Executive Committee Charter, in the form adopted as of ___, 2021, (x) do not conflict with any provision of this Agreement and (y) permit the SL Parties and Executive Holdco to receive the benefits to which they are entitled under this Agreement.

Section 3.5 Executive Committee Charter. Notwithstanding anything to the contrary contained in the Company Charter, Company By-laws or this Agreement, prior to a Triggering Event, the Executive Committee Charter may not be altered, amended or repealed in any respect, nor may any provision or by-law inconsistent therewith be adopted without the approval of (i) Ariel Emanuel and Patrick Whitesell, in each case, so long as he is then a member of the Executive Committee and (ii) for so long as SL Parties are entitled to designate two Directors for nomination to the Governing Body pursuant to the Stockholders Agreement, at least one SL Director.

Section 3.6 Acquisition or Disposition of Class A Shares. After the date hereof, each of the Stockholders agrees that, for so long as any such party has obligations under Article II, if such party acquires or disposes of beneficial ownership (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) of shares of Class A Common Stock, such party shall promptly (and in no event later than two (2) calendar days following the date of such acquisition or disposition) notify (i) in the case of the SL Parties and the Executive Parties, the other SL Parties and Executive Parties and the Company and (ii) in the case of any other Stockholders, the Company.

Section 3.7 Inspection Rights. On reasonable notice and during regular business hours, each Stockholder that has the right to designate a director of the Company pursuant to this Agreement or holds at least 5% of the total number of outstanding shares of Class A Common Stock, in each case determined (x) assuming the redemption of all outstanding Common Units (determined assuming the exchange of all outstanding Profits Units exchangeable pursuant to the Endeavor Operating LLC Agreement (without regard to any timing, vesting or other restrictions on exchange contained therein)) redeemable pursuant to the Endeavor Operating LLC Agreement or Endeavor Manager LLC Agreement (without regard to any timing, vesting or other restrictions on redemption contained therein and assuming no exchanges for cash), and (y) except as provided in the foregoing clause (x), without regard to the conversion, exercise, exchange or redemption of any other securities into or for shares of Class A Common Stock shall have the right to inspect the books and records of the Company or any of its Subsidiaries for any purpose reasonably related to such Stockholder’s equity

 

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interest in the Company; provided, that, the Company shall have the right to keep confidential from any Stockholder that does not have the right to designate a director of the Company pursuant to this Agreement, for such period of time as the Company deems reasonable, any information which the Company reasonably believes to be privileged, in the nature of trade secrets or any other information the disclosure of which the Company in good faith believes is not in the best interest of the Company, could damage the Company or its business or which the Company is required by law or by agreement with a third party to keep confidential or could constitute a waiver of confidential privilege.

Section 3.8 Cash Redemption. So long as there exists any SL Party that holds Class A Common Stock that was issued to such SL Party (or its Affiliated transferor) as of the closing of the IPO, and any other SL Party that holds any Common Units that were issued to such SL Party (or its Affiliated transferor) as of the closing of the IPO, if the SL Party holding the Common Units desires to effect a Redemption (in accordance with, and as defined in, the Endeavor Operating LLC Agreement), PubCo shall not, and shall cause Endeavor Operating Company not to, settle such Redemption with a Cash Settlement (as defined in the Endeavor Operating LLC Agreement) without the prior written consent of the applicable SL Party.

ARTICLE IV

GENERAL

Section 4.1 Assignment. The rights and obligations hereunder shall not be assignable without the prior written consent of the other parties hereto. Any attempted assignment of rights or obligations in violation of this Section 4.1 shall be null and void. Notwithstanding the foregoing, the rights of the Executive Holding Companies shall be assignable to the Key Executives or an Affiliate or Affiliated Transferee thereof without the prior written consent of the other parties hereto.

Section 4.2 Expenses. Except as set forth above in Section 3.2, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such cost or expense.

Section 4.3 Termination. If not otherwise stipulated, the rights and obligations of the parties hereto under Article II of this Agreement shall terminate automatically (without any action by any party hereto) as of the date Silver Lake no longer has the right to designate an SL Director for nomination to the Board and Executive Holdco no longer has the right to designate an Executive Director for nomination to the Board, in each case, pursuant to Article II hereof, and the rights and obligations of the respective parties hereto under Article III shall terminate as provided therein. This Agreement shall terminate with respect to a particular Stockholder as of the date such Stockholder no longer holds any Company Securities. Each SL Equityholder and Executive Equityholder may terminate any of its rights, but not its obligations, set forth in this Agreement, in whole or in part, by delivering written notice of such termination to the Company. Without limitation of the preceding sentence, from and after the eighth anniversary of the date hereof, (i) if at any time the Aggregate SL Ownership is below the SL Limited Ownership Minimum, the SL Equityholders may terminate their

 

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rights and obligations under Article II, in whole but not in part, by delivering written notice of such termination to the Company, and (ii) if at any time the Aggregate Executive Ownership is below the Executive Ownership Minimum, the Executive Equityholders may terminate their rights and obligations under Article II, in whole but not in part, by delivering written notice of such termination to the Company; provided that, in connection with any termination under this sentence, (x) the shares of Class Y Common Stock held by the SL Equityholders (in connection with a termination pursuant to the foregoing clause (i)) or the Executive Equityholders (in connection with a termination pursuant to the foregoing clause (ii)) shall be transferred to the Company for no consideration and retired by the Company pursuant to Section 6.3 of the Company Charter and (y) the SL Equityholders shall cause the SL Directors to resign from the Board (in connection with a termination pursuant to the foregoing clause (i)) or the Executive Equityholders shall cause the Executive Directors to resign from the Board (in connection with a termination pursuant to the foregoing clause (ii)); and provided, further, that the right of termination set forth in this sentence shall only be available if, immediately following the retirement of shares of Class Y Common Stock pursuant to clause (x) of the preceding proviso, the combined voting power of the Company Common Stock held by the Stockholders that would remain subject to the voting obligations set forth in Section 2.3 following such termination would represent more than 60% of the total voting power of the Company Common Stock. If, at any time, Executive Holdco no longer has the right to designate any directors for nomination to the Board or Governing Body and Silver Lake no longer has the right to designate any directors for nomination to the Board or Governing Body, then any Stockholder may transfer the shares of Class Y Common Stock held by such Stockholder to the Company for no consideration, upon which transfer such shares of Class Y Common Stock shall be retired by the Company pursuant to Section 6.3 of the Company Charter.

Section 4.4 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other governmental authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible.

Section 4.5 Entire Agreement; Amendment.

(a) This Agreement sets forth the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. This Agreement or any provision thereof may only be amended, modified or waived, in whole or in part, at any time by an instrument in writing signed by (1) (i) the Company, (ii) Executive Holdco and (iii) Silver Lake on behalf of the SL Parties and (2) solely to the extent such amendment by its terms substantively and materially increases the obligations of any other party hereunder, such other party.

 

21


(b) No waiver of any provision or default under, nor consent to any exception to, the terms of this Agreement or any agreement contemplated hereby shall be effective unless in writing and signed by the party to be bound and then only to the specific purpose, extent and instance so provided. In the event that any of the obligations of the SL Parties are waived or released hereunder, then the reciprocal obligations of GIC and CPPIB hereunder shall be similarly released or waived on an equitable basis, taking into account all relevant facts and circumstances attendant thereto.

Section 4.6 Counterparts; Electronic Signature. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). Delivery of an executed signature page to this Agreement by facsimile transmission or electronic delivery (i.e. by email of a PDF signature page) shall be as effective as delivery of a manually signed counterpart of this Agreement and shall constitute and original for all purposes. The parties hereto hereby agree that this Agreement may be executed by way of electronic signatures and that the electronic signature has the same binding effect as a physical signature. For the avoidance of doubt, the parties hereto further agree that this Agreement, or any part thereof, shall not be denied legal effect, validity or enforceability solely on the ground that it is in the form of an electronic record.

Section 4.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules of such State that would result in the application of the laws of any other State.

Section 4.8 Jurisdiction. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought in the Delaware Chancery Court (or in the event, but only in the event, that such court does not have subject matter jurisdiction over such action or proceeding, the Superior Court of the State of Delaware (Complex Commercial Division) or, if subject matter jurisdiction over the action or proceeding is vested exclusively in the federal courts of the United States of America, the United States District Court for the District of Delaware) and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 4.10 shall be deemed effective service of process on such party.

 

22


Section 4.9 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR TRANSACTIONS CONTEMPLATED HEREBY.

Section 4.10 No Presumption. With regard to each and every term and condition of this Agreement, the parties hereto understand and agree that the same have or has been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement.

Section 4.11 Immunity Waiver. Each party hereto acknowledges that it is a separate entity distinct from its ultimate shareholders and/or the executive organs of the government of any state and is capable of suing and being sued. The entry by each party hereto into this Agreement constitutes, and the exercise by each party hereto of its respective rights and performance of its respective obligations hereunder will constitute, private and commercial acts performed for private and commercial purposes that shall not be deemed as being entered into in the exercise of any public function.

Section 4.12 Specific Performance. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that, in the event of any such failure, an aggrieved other party or third-party beneficiary specified in Section 4.14 will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which such party may be entitled at law or in equity) to injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties shall raise the defense that there is an adequate remedy at law.

Section 4.13 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission and electronic mail (“e-mail”) transmission, so long as a receipt of such e-mail is requested and received). All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt. All such notices, requests and other communications to any party hereunder shall be given to such party as follows or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto.

 

23


If to the Company, addressed to it at:

 

c/o Endeavor Group Holdings, Inc. 9601 Wilshire Boulevard, 3rd Floor
Beverly Hills, California 90210
Attention:    Chief Executive Officer
                     Executive Chairman
   General Counsel
Facsimile No.: ***
E-mail: ***

With copies (which shall not constitute actual or constructive notice) to:

 

Latham & Watkins LLP
1271 Avenue of the Americas
New York, NY 10020
Attention:    Justin G. Hamill
                     Marc D. Jaffe
   Ian D. Schuman
   Jonathan P. Solomon
Facsimile No.: (212) 751-4864
E-mail:    ***
   ***
   ***
   ***

If to any of the SL Parties, addressed to it at:

 

c/o Silver Lake Partners 2775 Sand Hill Road, Suite 100

Menlo Park, California 94025

Attention: Karen King

Facsimile No.: (650) 233-8125

E-mail: ***

and

 

c/o Silver Lake Partners 55 Hudson Yards 550 West 34th Street 40th Floor

New York, NY 10001

Attention: Andrew J. Schader

Facsimile No.: (212) 981-3535

E-mail: ***

With copies (which shall not constitute actual or constructive notice) to:

 

24


Simpson Thacher & Bartlett LLP 2475 Hanover Street

Palo Alto, California 94304

Attention: Daniel N. Webb

Facsimile No.: (650) 251-5002

E-mail: ***

If to any of the other parties hereto, to the address set forth on the books and records of the Company.

Section 4.14 Binding Effect; Third Party Beneficiaries. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Nothing in this Agreement shall create any third-party beneficiary rights in favor of any Person or other party, except to the extent provided herein with respect to Affiliates and Affiliated Transferees, each of whom are intended third-party beneficiaries of those provisions that specifically relate to them with the right to enforce such provisions as if they were a party hereto. Except as provided in this Section 4.14 and Section 4.17, no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

Section 4.15 Further Assurances. The parties hereto will sign such further documents, cause such meetings to be held, resolutions passed, exercise their votes and do and perform and cause to be done such further acts and things necessary, proper or advisable in order to give full effect to this Agreement and every provision hereof.

Section 4.16 Table of Contents, Headings and Captions. The table of contents, headings, subheadings and captions contained in this Agreement are included for convenience of reference only, and in no way define, limit or describe the scope of this Agreement or the intent of any provision hereof.

Section 4.17 No Recourse. This Agreement may only be enforced against, and any claims or cause of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against the entities that are expressly identified as parties hereto and no past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, controlling person, fiduciary, agent, attorney or representative of any party hereto, or any past, present or future Affiliate, director, officer, employee, incorporator, member, manager, partner, stockholder, controlling person, fiduciary, agent, attorney or representative of any of the foregoing shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby.

[Signatures on Next Page]

 

25


IN WITNESS WHEREOF, each of the parties hereto has caused this Stockholders Agreement to be executed by its duly authorized officers as of the day and year first above written.

 

COMPANY:

ENDEAVOR GROUP HOLDINGS, INC.

By:   /s/ Jason Lublin
 

Name:

 

Jason Lublin

 

Title:

 

Chief Financial Officer


THE EXECUTIVE PARTIES:

ENDEAVOR EXECUTIVE HOLDCO, LLC
By:   /s/ Jason Lublin
 

Name: Jason Lublin

 

Title:   Authorized Signatory

ENDEAVOR EXECUTIVE PIU HOLDCO, LLC
By:   /s/ Jason Lublin
 

Name: Jason Lublin

 

Title:   Authorized Signatory

ENDEAVOR EXECUTIVE II HOLDCO, LLC
By:   /s/ Jason Lublin
 

Name: Jason Lublin

 

Title:   Authorized Signatory

THE ARIEL Z. EMANUEL LIVING TRUST, DATED NOVEMBER 13, 2017
By:   /s/ Ariel Emanuel
 

Name: Ariel Emanuel

 

Title:   Trustee

 

/s/ Ariel Emanuel

 

Ariel Emanuel

 

/s/ Patrick Whitesell

 

Patrick Whitesell


SILVER LAKE PARTIES:
SLP WEST HOLDINGS, L.L.C.
By: Silver Lake Partners IV DE (AIV IV), L.P., its managing member
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
  Name: Egon Durban
  Title:   Co-CEO
SLP WEST HOLDINGS II, L.L.C.
By: Silver Lake Partners IV DE (AIV IV), L.P., its managing member
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
  Name: Egon Durban
  Title:   Co-CEO
SLP WEST HOLDINGS III, L.P.
By: SLP West GP Holdings, L.L.C., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
  Name: Egon Durban
  Title:   Co-CEO
SLP WEST HOLDINGS IV, L.P.
By: SLP West GP Holdings, L.L.C., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
  Name: Egon Durban
  Title:   Co-CEO


SLP IV WEST FEEDER I, LP
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
  Name: Egon Durban
  Title:   Co-CEO
SL SPV-1 WEST FEEDER I, LP
By: SLTA SPV-1, L.P., its general partner
By: SLTA SPV-1 (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
  Name: Egon Durban
  Title:   Co-CEO
SLP WEST HOLDINGS CO-INVEST, L.P.
By: SLP Co-Invest GP, L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
  Name: Egon Durban
  Title:   Co-CEO
SLP WEST HOLDINGS CO-INVEST II, L.P.
By: SLP Co-Invest GP, L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
  Name: Egon Durban
  Title:   Co-CEO


SLP WEST HOLDINGS CO-INVEST FEEDER II CORP.
By:   /s/ Egon Durban
 

Name: Egon Durban

 

Title:   Co-CEO


SLP IV BASQUIAT FEEDER II, L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
Name: Egon Durban
Title:    Co-CEO
SILVER LAKE PARTNERS IV DE (AIV III), L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
  Name: Egon Durban
  Title:   Co-CEO


SILVER LAKE TECHNOLOGY INVESTORS IV (DELAWARE II), L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:   /s/ Egon Durban
Name:   Egon Durban
Title:   Co-CEO
Silver Lake Partners VI DE (AIV), L.P.
By: Silver Lake Technology Associates VI, L.P., its general partner
By: SLTA VI (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
Silver Lake Technology Investors VI, L.P.
By: Silver Lake Technology Associates VI, L.P., its general partner
By: SLTA VI (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:

  Egon Durban
Title:   Co-CEO


HS INVESTMENTS (A) LP

/s/ Ken Wrigley

Name:   Ken Wrigley
Title:   Director of HS Investments (L) Limited acting as General Partner
HS INVESTMENTS NA5 LIMITED

/s/ James Nicolle

Name:   James Nicolle
Title:   Director
HS INVESTMENTS (W) LIMITED

/s/ Ken Wrigley

Name:   Ken Wrigley
Title:   Directors, Director One Limited


SCC GROWTH IV HOLDCO II, LTD.

/s/ Ip Siu Wai Eva

By:

 

Ip Siu Wai Eva

Title:

 

Authorized Signatory


YACHT INVESTMENT HOLDINGS LLC

By:  

Focus Media FountainVest Sports JV, .L.P., its managing member

By:   FMF Sports JV GP Limited, its general partner

/s/ Neil Colin Gray

By:

 

Neil Colin Gray

Title:

 

Authorized Signatory


SIXJOY LLC

/s/ Tang Yibin

By:

 

Tang Yibin

Title:

 

Authorized Signatory


WC HOLDCO (DELAWARE) LLC

By:  

MDC Capital Partners (SPV) GP, LP, its managing member

By:  

MDC Capital Partners GP, LLC, its general partner

/s/ Rodney Cannon

By:

 

Rodney Cannon

Title:

 

Authorized Signatory

ATREUS HOLDINGS LLC

/s/ Ossama Khoreibi

By:

 

Ossama Khoreibi

Title

 

Authorized Signatory


JASMINE VENTURES PTE LTD.

/s/ Jason Young

By:

 

Jason Young

Title:

 

Authorized Signatory


CPP INVESTMENT BOARD (USRE III) INC.

/s/ Geoff McKay

By:

  Geoff McKay

Title:

  Authorized Signatory

/s/ Sunny Lee

By:

 

Sunny Lee

Title:

 

Authorized Signatory


Exhibit I

Company Charter

[See attached.]


Exhibit II

Company By-laws

[See attached.]


Annex A

FORM OF

JOINDER AGREEMENT

The undersigned is executing and delivering this Joinder Agreement pursuant to that certain Stockholders Agreement, dated as of                     , 2021 (as amended, restated, supplemented or otherwise modified in accordance with the terms thereof, the “Stockholders Agreement”) by and among Endeavor Group Holdings, Inc., Endeavor Executive Holdco, LLC, Endeavor Executive PIU Holdco, LLC, Endeavor Executive II Holdco, LLC, The Ariel Z. Emanuel Living Trust, dated November 13, 2017, Ariel Emanuel, Patrick Whitesell, SLP West Holdings, L.L.C., SLP West Holdings II, L.L.C., SLP West Holdings III, L.P., SLP IV West Feeder I, LP, SL SPV-1 West Feeder I, LP, SLP West Holdings Co-Invest, L.P., SLP West Holdings Co-Invest II, L.P., Silver Lake Technology Investors IV (Delaware II), L.P., Silver Lake Partners IV DE (AIV III), L.P., SLP IV Basquiat Feeder I LP, HS Investments (A) LP, HS Investments NA5 Limited, HS Investments (W) Limited, SCC Growth IV Holdco II, Ltd., Jet2 Investment Holdings Limited, Sixjoy LLC, WC HoldCo (Delaware) LLC, Atreus Holdings LLC, Jasmine Ventures Pte Ltd. and CPP Investment Board (USRE III) Inc. and any other Persons thereto or who become a party thereto in accordance with the terms thereof. Capitalized terms used but not defined in this Joinder Agreement shall have the respective meanings ascribed to such terms in the Stockholders Agreement.

By executing and delivering this Joinder Agreement to the Stockholders Agreement, the undersigned hereby adopts and approves the Stockholders Agreement and agrees, effective commencing on the date hereof and as a condition to the undersigned’s becoming the beneficial owner and/or transferee of Company Securities, to become a party to, and to be bound by and comply with the provisions of, the Stockholders Agreement in the same manner as if the undersigned were an original signatory to the Stockholders Agreement.

The undersigned acknowledges and agrees that the provisions of Article IV of the Stockholders Agreement are incorporated herein by reference, mutatis mutandis.

Accordingly, the undersigned has executed and delivered this Joinder Agreement as of the __ day of ____________, _____.


 

(Signature of Affiliated Transferee)

 

(Print Name of Affiliated Transferee)
Address:  

                 

                 

                     

Telephone:  

             

Facsimile:  

             

Email:  

             

 

AGREED AND ACCEPTED as of the ____ day of ____________, _____.
ENDEAVOR GROUP HOLDINGS, INC.
By:                               
  Name:
  Title:


Annex B

FORM OF

SPOUSAL CONSENT

In consideration of the execution of that certain Stockholders Agreement, dated as of , 2021 (as amended, restated, supplemented or otherwise modified in accordance with the terms thereof, the “Stockholders Agreement”) by and among Endeavor Group Holdings, Inc., Endeavor Executive Holdco, LLC, Endeavor Executive PIU Holdco, LLC, Endeavor Executive II Holdco, LLC, The Ariel Z. Emanuel Living Trust, dated November 13, 2017, Ariel Emanuel, Patrick Whitesell, SLP West Holdings, L.L.C., SLP West Holdings II, L.L.C., SLP West Holdings III, L.P., SLP IV West Feeder I, LP, SL SPV-1 West Feeder I, LP, SLP West Holdings Co-Invest, L.P., SLP West Holdings Co-Invest II, L.P., Silver Lake Technology Investors IV (Delaware II), L.P., Silver Lake Partners IV DE (AIV III), L.P., SLP IV Basquiat Feeder I LP, HS Investments (A) LP, HS Investments NA5 Limited, HS Investments (W) Limited, SCC Growth IV Holdco II, Ltd., Jet2 Investment Holdings Limited, Sixjoy LLC, WC HoldCo (Delaware) LLC, Atreus Holdings LLC, Jasmine Ventures Pte Ltd. and CPP Investment Board (USRE III) Inc. and any other Persons who are or may become a party thereto in accordance with the terms thereof, I, ____________________, the spouse of ___________________________, who is a party to the Stockholders Agreement, do hereby join with my spouse in executing the foregoing Stockholders Agreement and do hereby agree to be bound by all of the terms and provisions thereof, in consideration of the issuance, acquisition or receipt of Company Securities and all other interests I may have in the shares and securities subject thereto, whether the interest may be pursuant to community property laws or similar laws relating to marital property in effect in the state or province of my or our residence as of the date of signing this consent. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Stockholders Agreement.

 

Dated as of _______ __, ____     

                     

     (Signature of Spouse)
    

                 

     (Print Name of Spouse)

Exhibit 10.4

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of April 28, 2021 by and among Endeavor Group Holdings, Inc., a Delaware corporation (the “Corporation”), and each Person identified on the Schedule of Holders attached hereto as of the date hereof (such Persons, collectively, the “Holders”).

RECITALS

WHEREAS, the Corporation is contemplating an offer and sale of its shares of Class A common stock, par value $0.00001 per share (the “Class A Common Stock” and such shares, the “Shares”), to the public in an underwritten initial public offering (the “IPO”);

WHEREAS, in contemplation of the IPO, the Corporation underwent a reorganization of its business structure (the “Reorganization”), pursuant to which, among other things, (i) the Corporation became the sole managing member of a newly formed subsidiary of the Corporation, Endeavor Manager, LLC, a Delaware limited liability company (“Endeavor Manager”), (ii) Endeavor Manager became the sole managing member of Endeavor Operating Company, LLC, a Delaware limited liability company (the “Company”), (iii) all of the existing equity interests in the Company (other than the PIUs (as defined below)) were reclassified into common units of the Company (“Opco Common Units”), (iv) the Company acquired equity interests in Zuffa Parent, LLC, a Delaware limited liability company (“UFC Parent”) from certain minority investors in UFC Parent (including certain of the SL Holders and KKR, the “Other UFC Holders”) resulting in the Company directly or indirectly owning 100% of the issued and outstanding equity interests of UFC Parent, (v) certain Other UFC Holders received equity interests in the Company and/or the Corporation in exchange for all or a portion of their equity interests in UFC Parent, (vi) certain pre-IPO investors of the Company and certain Other UFC Holders or their Affiliates merged with and into the Corporation and the members and/or stockholders, as applicable, of such pre-IPO investors or Other UFC Holders or their Affiliates (the “Investor Members”) were issued shares of Class A Common Stock and/or Class Y Common Stock in consideration for the units and/or shares, as applicable, of such pre-IPO investors or Other UFC Holders or their Affiliates, (vii) (A) the Management Holdcos merged with and into Endeavor Manager, the consideration for which was the Opco Common Units held by the Management Holdcos, in exchange for the issuance of common units of Endeavor Manager (“Manager Common Units” and together with the Opco Common Units, the “Common Units”) to the members of the Management Holdcos (the “Manager Equity Owners”) and (B) the members of the Management Holdcos (as defined below) received shares of Class X Common Stock (as defined below) in connection with the mergers with and into Endeavor Manager in an equal number to the Manager Common Units held by such members, and (viii) each member of the Company (other than Endeavor Manager) (the “Opco Equity Owners” and together with the Manager Equity Owners and the Investor Members, the “Equity Owners”) subscribed for shares of Class X Common Stock and certain of the OpCo Equity Owners subscribed for shares of Class Y Common Stock (as defined below), in each case, in an equal number to the Opco Common Units held by such Opco Equity Owner;


WHEREAS, the Corporation desires to use a portion of the net proceeds from the IPO to purchase Manager Common Units of Endeavor Manager, and Endeavor Manager desires to issue its Manager Common Units to the Corporation in exchange for such portion of the net proceeds from the IPO;

WHEREAS, Endeavor Manager desires to use the proceeds from the sale of Manager Common Units to purchase Opco Common Units of the Company, and the Company desires to issue its Common Units to Endeavor Manager in exchange for such proceeds;

WHEREAS, immediately prior to or simultaneous with the purchase by the Corporation of the Manager Common Units, the Corporation and Endeavor Manager will enter into that certain Amended and Restated Limited Liability Company Agreement of Endeavor Manager (such agreement, as it may be amended, restated, amended and restated, supplemented or otherwise modified form time to time, the “Manager LLC Agreement”);

WHEREAS, immediately prior to or simultaneous with the purchase by Endeavor Manager of the Opco Common Units, the Corporation, Endeavor Manager, the Company and the Opco Equity Owners will enter into that certain Third Amended and Restated Limited Liability Company Agreement of the Company (such agreement, as it may be amended, restated, amended and restated, supplemented or otherwise modified form time to time, the “Opco LLC Agreement” and together with the Manager LLC Agreement, the “LLC Agreements”);

WHEREAS, in connection with the closing of the IPO, (i) the Company has provided the Opco Equity Owners with a redemption right pursuant to which the Opco Equity Owners can redeem their Opco Common Units (and an equal number of shares of Class X Common Stock) for cash or, at the Corporation’s option, exchange Opco Common Units (and an equal number of shares of Class X Common Stock) for shares of Class A Common Stock the terms set forth in the Opco LLC Agreement, and (ii) Endeavor Manager has provided the Manager Equity Owners with a redemption right pursuant to which the Manager Equity Owners can redeem their Manager Common Units (and an equal number of shares of Class X Common Stock) for cash or, at the Corporation’s option, exchange Manager Common Units (and an equal number of shares of Class X Common Stock) for shares of Class A Common Stock the terms set forth in the Manager LLC Agreement; and

WHEREAS, in connection with the IPO and the transactions described above, the Corporation has agreed to grant to the Holders (as defined below) certain rights with respect to the registration of the Registrable Securities (as defined below) on the terms and conditions set forth herein.

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

Section 1. Definitions. For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1:

 

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1% Holders” means Holders beneficially owning Registrable Securities that, together with any Registrable Securities held by such Holder’s Affiliates, constitute at least one percent (1%) of the total issued and outstanding shares of Class A Common Stock (determined on an “as-converted” basis taking into account any and all securities convertible into, or exercisable, exchangeable or redeemable for, shares of Class A Common Stock (including Common Units that are redeemable pursuant to the OpCo LLC Agreement (without regard to any timing, vesting or other restrictions on redemptions contained therein and assuming no redemptions for cash))).

Acquired Common” has the meaning set forth in Section 9.

Additional Holder” has the meaning set forth in Section 9, and shall be deemed to include each such Person’s Affiliates, immediate family members, heirs, successors and assigns who may succeed to such Person as a Holder hereunder.

Affiliate” of (a) any Person means any other Person controlled by, controlling or under common control with such Person and (b) Fidelity and any Fidelity Holder means any investment company registered under the Investment Company Act of 1940 advised or sub-advised by Fidelity or any affiliated investment advisor of Fidelity, one or more mutual fund, pension fund, pooled investment vehicle or institutional client advised or sub-advised by Fidelity or any affiliated investment advisor of Fidelity; provided that the Corporation and its Subsidiaries shall not be deemed to be Affiliates of any Holder. As used in this definition, “control” (including, with its correlative meanings, “controlling,” “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities, by contract or otherwise).

Agreement” has the meaning set forth in the recitals.

Automatic Shelf Registration Statement” has the meaning set forth in Section 2(a).

Business Day” means any day of the year on which national banking institutions in New York are open to the public for conducting business and are not required or authorized to close.

Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock of such corporation (whether voting or nonvoting and whether common or preferred), (ii) with respect to any Person that is not a corporation, individual or governmental entity, any and all partnership, membership, limited liability company or other equity interests of such Person that confer on the holder thereof the right to receive (A) a share of the profits and losses of, or the distribution of assets of, the issuing Person and/or (B) voting rights in such Person, and (iii) any and all warrants, rights (including conversion and exchange rights) and options to purchase any security described in the clause (i) or (ii) above.

Class A Common Stock” has the meaning set forth in the recitals.

Class X Common Stock” means the Corporation’s Class X common stock, par value $0.00001 per share.

Class Y Common Stock” means the Corporation’s Class Y common stock, par value $0.00001 per share.

 

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Common Units” has the meaning set forth in the recitals.

Company” has the meaning set forth in the recitals.

Corporation” has the meaning set forth in the recitals.

Demand Holder” means each of the Management Holders and SL Holders, so long as such Management Holders and SL Holders continue to hold Registrable Securities.

Demand Registrations” has the meaning set forth in Section 2(a).

End of Suspension Notice” has the meaning set forth in Section 2(f)(ii).

Endeavor Manager” has the meaning set forth in the recitals.

Equity Owners” has the meaning set forth in the recitals

Equity Owner Parties” means the Equity Owners and their respective Affiliates, immediate family members, heirs, successors and assigns who may succeed to such Person as a Holder hereunder.

Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

Executive Holders” means each of the Executive Holders as identified on the Schedule of Holders, so long as such Holders continue to hold Registrable Securities.

Fidelity” means Fidelity Management & Research Company, and any successor or affiliated registered investment advisor to the Fidelity Holders.

Fidelity Holder” means any Holder that is advised or sub-advised by Fidelity.

FINRA” means the Financial Industry Regulatory Authority.

Follow-on Holdback Period” has the meaning set forth in Section 4(a)(ii).

Free Writing Prospectus” means a free-writing prospectus, as defined in Rule 405.

Holdback Period” has the meaning set forth in Section 4(a)(ii).

Holder” means any Person that is a party to this Agreement from time to time, as set forth on the signature pages hereto.

Holder Indemnified Parties” has the meaning set forth in Section 7(a).

IPO” has the meaning set forth in the recitals.

IPO Holdback Period” has the meaning set forth in Section 4(a)(i).

 

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Joinder” has the meaning set forth in Section 9.

Key Executives” means Ariel Emanuel and Patrick Whitesell, jointly and severally.

KKR” means KKR Cage Aggregator LLC, KKR North American Co-Invest Fund I L.P., KKR North America XI (Cage) Blocker Parent, L.P., KKR Principal Opportunities Partnership (Offshore) L.P., KKR Reference Fund Investments L.P., KKR TFO Partners L.P., their transferees who become party to this Agreement and each of their respective designees, so long as such Holders continue to hold Registrable Securities.

LLC Agreements” has the meaning set forth in the recitals.

Long-Form Registrations” has the meaning set forth in Section 2(a).

Management Blackout Window” means the Corporation’s regular quarterly trading blackout window during which directors, officers and employees of the Corporation are restricted from making sales of the Capital Stock of the Corporation or any of its subsidiaries, as set forth in Corporation’s insider trading policy.

Management Holdcos” means collectively WME Holdco, LLC, a Delaware limited liability company, WME Iris Management Holdco, LLC, a Delaware limited liability company, WME Iris Management III Holdco, LLC, a Delaware limited liability company, WME Iris Management V Holdco, LLC, a Delaware limited liability company, WME IMG SCP, LLC, a Delaware limited liability company, WME Iris Management VI Holdco, LLC, a Delaware limited liability company, WME Holdco SPV, LLC, a Delaware limited liability company, UFC Management Holdco, LLC, a Delaware limited liability company and UFC Management Holdco II, LLC, a Delaware limited liability company.

Management Holders” means each of the Management Holders as identified on the Schedule of Holders, so long as such Holders continue to hold Registrable Securities.

Manager Common Units” has the meaning set forth in the recitals.

Manager Equity Owners” has the meaning set forth in the recitals.

Manager LLC Agreement” has the meaning set forth in the recitals.

MNPI” means material non-public information within the meaning of Regulation FD promulgated under the Exchange Act.

Non-Demand Holders” means each of the Non-Demand Holders as identified on the Schedule of Holders, so long as such Holders continue to hold Registrable Securities.

Non-Employee Holders” means, collectively, the SL Holders and the Non-Demand Holders.

Opco Common Units” has the meaning set forth in the recitals.

 

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Opco Equity Owners” has the meaning set forth in the recitals.

Opco LLC Agreement” has the meaning set forth in the recitals.

Other UFC Holders” has the meaning set forth in the recitals.

Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

Piggyback Registrations” has the meaning set forth in Section 3(a).

PIUs” means the profits interest units of the Company.

Pricing Date” has the meaning set forth in Section 4(a)(i).

Public Offering” means any sale or distribution to the public of Capital Stock of the Corporation pursuant to an offering registered under the Securities Act, whether by the Corporation, by Holders and/or by any other holders of the Corporation’s Capital Stock.

Registrable Securities” means (i) any Class A Common Stock (A) issued by the Corporation in connection with the IPO or (B) issued by the Corporation in a Share Settlement in connection with (x) the redemption by the Company or Endeavor Manager, as applicable of Common Units owned by any Equity Owner Parties or (y) at the election of the Corporation, in a direct exchange for Common Units owned by any Equity Owner Party, in each case in accordance with the terms of the LLC Agreements, (ii) any Capital Stock of the Corporation or of any Subsidiary of the Corporation issued or issuable with respect to the securities referred to in clause (i) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization, and (iii) any other shares of Class A Common Stock owned, directly or indirectly, by Holders from time to time. As to any particular Registrable Securities owned by any Person, such securities shall cease to be Registrable Securities on the date such securities (a) have been sold or distributed pursuant to a Public Offering, (b) have been sold in compliance with Rule 144 following the consummation of the IPO, (c) have been repurchased by the Corporation or a Subsidiary of the Corporation or (d) together with securities of such class owned by such Holder’s Affiliates and securities that may be acquired by such Holder and such Holder’s Affiliates upon redemption, exchange, conversion or exercise of such class of securities, may be disposed of pursuant to Rule 144 in a single transaction without volume limitation or other restrictions on transfer thereunder; provided, that, this clause (d) shall not apply to any shares of Class A Common Stock held by (x) 1% Holders or (y) so long as Jasmine Ventures Pte Ltd. or CPP Investment Board (USRE III) Inc. is a party to the Stockholders Agreement, dated as of the date hereof, by and among the Corporation and the stockholders party thereto, Jasmine Ventures Pte Ltd. or CPP Investment Board (USRE III) Inc., respectively, solely for the purpose of allowing (I) 1% Holders, Jasmine Ventures Pte Ltd. or CPP Investment Board (USRE III) Inc., respectively, to “piggyback” as a Holder of Registrable Securities in any Demand Registration or Shelf Offering initiated by a Demand Holder in accordance with the terms of Section 2 hereof or in any Piggyback Registration and (II) 1% Holders to effect a sale of Shelf Registrable Securities pursuant to Section 2(d)(ii) or Section 2(d)(iii) hereof. For purposes of this Agreement, a Person shall be deemed to be a Holder, and

 

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the Registrable Securities shall be deemed to be in existence, whenever such Person (i) holds PIUs or (ii) has the right to acquire, directly or indirectly, such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a holder of Registrable Securities hereunder; provided a holder of Registrable Securities may only request that Registrable Securities in the form of Capital Stock of the Corporation that is registered or to be registered as a class under Section 12 of the Exchange Act be registered pursuant to this Agreement. For the avoidance of doubt, while Common Units may constitute Registrable Securities, under no circumstances shall the Corporation be obligated to register Common Units, and only Shares issuable upon redemption or exchange of Common Units will be registered.

Registration Expenses” has the meaning set forth in Section 6(a).

Reorganization” has the meaning set forth in the recitals.

Representative” means (i) the Key Executives in the case of the Management Holders and (ii) the SL Party in the case of the SL Holders.

Requesting Holder” has the meaning set forth in Section 8(b).

Rule 144,” “Rule 158,” “Rule 405” and “Rule 415” mean, in each case, such rule promulgated under the Securities Act (or any successor provision) by the Securities and Exchange Commission, as the same shall be amended from time to time, or any successor rule then in force.

Sale Transaction” has the meaning set forth in Section 4(a)(i).

Schedule of Holders” means the schedule attached to this Agreement entitled “Schedule of Holders,” which shall reflect each Holder from time to time party to this Agreement.

Section 13 Representatives” has the meaning set forth in Section 13(b).

Securities” has the meaning set forth in Section 4(a)(i).

Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

Share Settlement” means “Share Settlement” as defined in the LLC Agreements, as applicable.

Shares” has the meaning set forth in the recitals.

Shelf Offering” has the meaning set forth in Section 2(d)(ii).

Shelf Offering Notice” has the meaning set forth in Section 2(d)(ii).

 

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Shelf Offering Request” has the meaning set forth in Section 2(d)(ii).

Shelf Registrable Securities” has the meaning set forth in Section 2(d)(ii).

Shelf Registration” has the meaning set forth in Section 2(a).

Shelf Registration Statement” has the meaning set forth in Section 2(d)(i).

Short-Form Registrations” has the meaning set forth in Section 2(a).

SL Holders” means each of the SL Holders as identified on the Schedule of Holders and their transferees who become party to this Agreement, so long as such Holders continue to hold Registrable Securities.

SL Party” means SLP West Holdings, L.L.C., or any other SL Holder designated from time to time by a majority in interest of the SL Holders.

Subsidiary” means, with respect to the Corporation, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of Capital Stock of such Person entitled (without regard to the occurrence of any contingency) to vote in the election of directors is at the time owned or controlled, directly or indirectly, by the Corporation, or (ii) if a limited liability company, partnership, association or other business entity, either (x) a majority of the Capital Stock of such Person entitled (without regard to the occurrence of any contingency) to vote in the election of managers, general partners or other oversight board vested with the authority to direct management of such Person is at the time owned or controlled, directly or indirectly, by the Corporation or (y) the Corporation or one of its Subsidiaries is the sole manager or general partner of such Person.

Suspension Event” has the meaning set forth in Section 2(f)(ii).

Suspension Notice” has the meaning set forth in Section 2(f)(ii).

Suspension Period” has the meaning set forth in Section 2(f)(i).

Transferee” has the meaning set forth in the Third Amended and Restated Limited Liability Company Agreement of Company, dated as of the date hereof.

UFC Parent” has the meaning set forth in the recitals.

Underwriting Agreement” means the underwriting agreement dated as of or around the date hereof, by and among the Corporation, Endeavor Manager, the Company and Morgan Stanley & Co. LLC, as representative of the several underwriters named in Schedule I thereto.

Underwritten Takedown” has the meaning set forth in Section 2(d)(ii).

Violation” has the meaning set forth in Section 7(a).

WKSI” means a “well-known seasoned issuer” as defined under Rule 405.

 

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Section 2. Demand Registrations.

(a) Requests for Registration. Subject to the terms and conditions of this Agreement, at any time from and after the date that is 180 days following the IPO, the Demand Holders, through their respective Representatives, may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-1 or any similar long-form registration (“Long-Form Registrations”), and Demand Holders, through their respective Representatives, may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-3 or any similar short-form registration (“Short-Form Registrations”) if available; provided that the Company shall not be obligated to file registration statements relating to any Long-Form Registration or Short-Form Registration under this Section 2(a) unless the market value of the Registrable Securities proposed to be registered is at least $75 million (or, if less, such Registrable Securities represent all Registrable Securities then held by the Demand Holder requesting such registration). All registrations requested pursuant to this Section 2(a) are referred to herein as “Demand Registrations.” The Demand Holder making a Demand Registration may request that the registration be made pursuant to Rule 415 under the Securities Act (a “Shelf Registration”) and, if the Corporation is a WKSI at the time any request for a Demand Registration is submitted to the Corporation, that such Shelf Registration be an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “Automatic Shelf Registration Statement”). Except to the extent that Section 2(d) applies, upon receipt of the request for the Demand Registration, the Corporation shall as promptly as reasonably practicable (but in no event later than ten days after receipt of the request for the Demand Registration) give written notice of the Demand Registration to all other Holders who hold Registrable Securities and, subject to the terms of Section 2(e), shall include in such Demand Registration (and in all related registrations and qualifications under state blue sky laws and in any related underwriting) all Registrable Securities with respect to which the Corporation has received written requests for inclusion therein within (i) 15 days, in the case of any notice with respect to a Long-Form Registration, or (ii) ten days, in the case of any notice with respect to a Short-Form Registration, after the receipt of the Corporation’s notice. Notwithstanding the foregoing, the Corporation shall not be required to take any action that would otherwise be required under this Section 2 if such action would violate Section 4(a) hereof or any similar provision contained in the underwriting agreement entered into in connection with any underwritten Public Offering.

(b) Long-Form Registrations. The Management Holders shall be entitled to request, through the Key Executives, six Long-Form Registrations in the aggregate and the SL Holders shall be entitled to request, through the SL Party, six Long-Form Registrations in the aggregate, in each case in which the Corporation shall pay all Registration Expenses, regardless of whether any registration statement is filed or any such Demand Registration is consummated, excluding any underwriting commissions or fees for shares sold by the Holders which shall be paid by the applicable Holders. All Long-Form Registrations shall be underwritten registrations unless otherwise approved by the applicable Demand Holder. An initiating Demand Holder can abandon a Demand Registration without losing a demand right under this Section if (a) such Demand Holder pays the Corporation’s registration expenses or (b) the Corporation or the trading price of the Class A Common Stock on the principal U.S. stock exchange on which the Class A Common Stock is then listed has undergone a material adverse change since the demand notice.

 

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(c) Short-Form Registrations. In addition to the Long-Form Registrations described in Section 2(b), each Demand Holder shall be entitled to request, through its Representative, an unlimited number of Short-Form Registrations in which the Corporation shall pay all Registration Expenses, regardless of whether any registration statement is filed or any such Demand Registration is consummated, excluding any underwriting commissions or fees for shares sold by the Holders which shall be paid by the applicable Holders. Demand Registrations shall be Short-Form Registrations whenever the Corporation is permitted to use any applicable short form and if the managing underwriters (if any) agree to the use of a Short-Form Registration. After the Corporation has become subject to the reporting requirements of the Exchange Act, the Corporation shall use its reasonable best efforts to make Short-Form Registrations available for the sale of Registrable Securities.

(d) Shelf Registrations.

(i) As promptly as reasonably practicable after the completion of twelve calendar months following the effectiveness of the Form 8-A related to the IPO, the Corporation shall file with the Securities and Exchange Commission a registration statement under the Securities Act for the Shelf Registration (a “Shelf Registration Statement”), which shall be on an Automatic Shelf Registration Statement if the Corporation is then eligible to file such a registration statement. The Corporation shall use commercially reasonable efforts to cause any Shelf Registration Statement to be declared effective under the Securities Act as soon as practicable after the initial filing of such Shelf Registration Statement, and once effective, the Corporation shall cause such Shelf Registration Statement to remain continuously effective for such time period as is specified in the request by the Holders, but for no time period longer than the period ending on the earliest of (A) in the case of an Automatic Shelf Registration statement (and without limitation of Section 5(a)(xxiii)), the third anniversary of the initial effective date of such Shelf Registration Statement, (B) the date on which all Registrable Securities covered by such Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement, and (C) the date as of which there are no longer any Registrable Securities covered by such Shelf Registration Statement in existence. Without limiting the generality of the foregoing, the Corporation shall use its commercially reasonable efforts to prepare a Shelf Registration Statement with respect to all of the Registrable Securities owned by or issuable to the Equity Owner Parties in accordance with the terms of the LLC Agreements (or such other number of Registrable Securities specified in writing by the Holder with respect to the Registrable Securities owned by or issuable to such Holder) to enable and cause such Shelf Registration Statement to be filed and maintained with the Securities and Exchange Commission as soon as practicable after the later to occur of (i) the expiration of the IPO Holdback Period and (ii) the Corporation becomes eligible to file a Shelf Registration Statement for a Short-Form Registration; provided that any of the Equity Owner Parties may, with respect to itself, instruct the Corporation in writing not to include in such Shelf Registration Statement the Registrable Securities owned by or issuable to such Holder. In order for any of the Equity Owner Parties to be named as a selling securityholder in such Shelf Registration Statement, the Corporation may require such Holder to deliver all information about such Holder that is required to be included in such Shelf Registration Statement in accordance with applicable law, including Item 507 of Regulation S-K promulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto.

 

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(ii) In the event that a Shelf Registration Statement is effective, Holders representing Registrable Securities with a market value of at least $50 million shall have the right at any time or from time to time to elect to sell pursuant to an offering (including an underwritten offering (an “Underwritten Takedown”)) Registrable Securities available for sale pursuant to such registration statement (“Shelf Registrable Securities”), so long as the Shelf Registration Statement remains in effect, and the Corporation shall pay all Registration Expenses in connection therewith, excluding any underwriting commissions or fees for shares sold by Holders or other third parties; provided that any of the Demand Holders, through their respective Representatives, shall have the right at any time and from time to time to elect to sell pursuant to an offering (including an Underwritten Takedown) pursuant to a Shelf Offering Request (as defined below) made by such Demand Holder(s). The applicable Holders shall make such election by delivering to the Corporation a written request (a “Shelf Offering Request”) for such offering specifying the number of Shelf Registrable Securities that such Holders desire to sell pursuant to such offering (the “Shelf Offering”). In the case of an Underwritten Takedown, as promptly as practicable, but no later than three Business Days after receipt of a Shelf Offering Request, the Corporation shall give written notice (the “Shelf Offering Notice”) of such Shelf Offering Request to all other holders of Shelf Registrable Securities. The Corporation, subject to Sections 2(e) and 8 hereof, shall include in such Shelf Offering that is an Underwritten Offering the Shelf Registrable Securities of any other Holder that shall have made a written request to the Corporation for inclusion in such Shelf Offering (which request shall specify the maximum number of Shelf Registrable Securities intended to be sold by such Holder) within five Business Days after the receipt of the Shelf Offering Notice. The Corporation shall, as expeditiously as possible (and in any event within ten Business Days after the receipt of a Shelf Offering Request, unless a longer period is agreed to by the Holders representing a majority of the Registrable Securities that made the Shelf Offering Request), use its reasonable best efforts to facilitate such Shelf Offering. For the avoidance of doubt, no Holder shall have piggy-back or other rights of participation in any sales of Shelf Registrable Securities, or rights of inclusion in any amendment or supplement to any applicable prospectus, in each case for any Shelf Offering that is not an Underwritten Takedown.

(iii) If any Holders representing Registrable Securities with a market value of at least $50 million (or less than $50 million, if the applicable Shelf Registrable Securities constitute all of the Registrable Securities then held by such Holder(s)) desire to effect a sale of Shelf Registrable Securities that (A) does not constitute an Underwritten Takedown and (B) requires an amendment or supplement to the applicable prospectus prior to the time of sale to reflect changes in information regarding such Holder or the plan of distribution as related to such sale, the Holder shall deliver to the Corporation a Shelf Offering Request no later than two Business Days prior to the expected date of the sale of such Shelf Registrable Securities, and subject to the limitations set forth in Section 2(d)(i), the Corporation shall file and effect an amendment or supplement to its Shelf Registration Statement for such purpose as soon as reasonably practicable.

 

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(iv) Notwithstanding the foregoing, if a Demand Holder wishes to engage in an underwritten block trade off of a Shelf Registration Statement (either through filing an Automatic Shelf Registration Statement or through a take-down from an existing Shelf Registration Statement), then notwithstanding the foregoing time periods, such Holder(s) only need to notify the Corporation of the block trade Shelf Offering two Business Days prior to the day such offering is to commence (unless a longer period (A) is necessary for the completion of a customary due diligence process required for counsel to each of the Corporation and the underwriters to provide customary “10b-5” negative assurance letters and for the Corporation’s accountants to provide customary “comfort letters” or (B) is otherwise agreed to by Holders representing a majority of the Registrable Securities wishing to engage in the underwritten block trade) and the Corporation shall promptly notify other Holders and such other Holders must elect whether or not to participate by the next Business Day (i.e., one Business Day prior to the day such offering is to commence) (unless a longer period is agreed to by the Holders representing a majority of the Registrable Securities wishing to engage in the underwritten block trade) and the Corporation shall use its commercially reasonable efforts to facilitate such offering (which may close as early as two Business Days after the date it commences); provided that Holders representing a majority of the Registrable Securities wishing to engage in the underwritten block trade shall use commercially reasonable efforts to work with the Corporation and the underwriters prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the underwritten block trade.

(v) The Corporation shall, at the request of Holders representing a majority of the Registrable Securities covered by a Shelf Registration Statement, file any prospectus supplement or, if the applicable Shelf Registration Statement is an Automatic Shelf Registration Statement, any post-effective amendments and otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by such Holders to effect such Shelf Offering.

(e) Priority on Demand Registrations and Shelf Offerings. The Corporation shall not include in any Demand Registration or Shelf Offering any securities that are not Registrable Securities without the prior written consent of Holders representing a majority of the Registrable Securities included in such registration or offering. If a Demand Registration or a Shelf Offering is an underwritten offering and the managing underwriters advise the Corporation in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, that can be sold therein without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Corporation shall include in such registration or offering, as applicable, (i) first, the Registrable Securities of Holders requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the such Holders on the basis of the number of Registrable Securities owned by each such Holder that such Holder of Registrable Securities shall have requested to be included therein, (ii) second, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, and (iii) third, securities the Corporation requested to be included in such registration for its own account which, in the opinion of the underwriters, can be sold without

 

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any such adverse effect. Alternatively, if the number of Registrable Securities which can be included on a Shelf Registration Statement is otherwise limited by Instruction I.B.6 to Form S-3 (or any successor provision thereto), the Corporation shall include in such registration or offering prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securities requested to be included which can be included on such Shelf Registration Statement in accordance with the requirements of Form S-3, pro rata among the respective Holders thereof calculated on the proportion of Registrable Securities owned by each such Holder that such Holder of Registrable Securities shall have requested to be included therein to the total number of Registrable Securities requested by all such Holders.

(f) Restrictions on Demand Registration and Shelf Offerings.

(i) The Corporation shall not be obligated to effect or participate in any Demand Registration or Underwritten Takedown within 30 days after the effective date of a previous Demand Registration or Underwritten Takedown. The Corporation shall not be obligated to effect or participate in any Demand Registration, Underwritten Takedown or Shelf Offering during a Management Blackout Window. The Corporation may on one or more occasions postpone, for up to 180 days from the date of the request, the filing or the effectiveness of a registration statement for a Demand Registration or suspend the use of a prospectus that is part of a Shelf Registration Statement for up to 180 days from the date of the Suspension Notice (as defined below) and therefore suspend sales of the Shelf Registrable Securities (such period, the “Suspension Period”) by providing written notice to the Holders of Registrable Securities or Shelf Registrable Securities, as applicable, if (A) the Corporation’s executive committee, or in the case the executive committee does not exist, the board of directors, determines in its reasonable good faith judgment that the offer or sale of Registrable Securities would reasonably be expected to have a material adverse effect on any proposal or plan by the Corporation or any Subsidiary to engage in any material acquisition of assets or stock (other than in the ordinary course of business) or any material merger, consolidation, tender offer, recapitalization, reorganization, financing or other transaction involving the Corporation or any Subsidiary, (B) the offer or sale of Registrable Securities pursuant to the registration statement would require disclosure of MNPI not otherwise required to be disclosed under applicable law, or (C) the offer or sale of Registrable Securities could not be effected by the Corporation in compliance with the applicable financial statement requirements under the Securities Act; provided that in such event, the Holders shall be entitled to withdraw such request for a Demand Registration or underwritten Shelf Offering and the Corporation shall pay all Registration Expenses in connection with such Demand Registration or Shelf Offering.

(ii) In the case of an event that causes the Corporation to suspend the use of a Shelf Registration Statement as set forth in paragraph (f)(i) above or pursuant to applicable subsections of Section 5(a)(vi) (a “Suspension Event”), the Corporation shall give a notice to the Holders of Registrable Securities registered pursuant to such Shelf Registration Statement (a “Suspension Notice”) to suspend sales of the Registrable Securities and such notice shall state generally the basis for the notice and that such suspension shall continue only for so long as the Suspension Event or its effect is continuing. If the basis of such suspension is nondisclosure of MNPI, the Corporation

 

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shall not be required to disclose the subject matter of such MNPI to Holders. A Holder shall not effect any sales of the Registrable Securities pursuant to such Shelf Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Corporation and prior to receipt of an End of Suspension Notice (as defined below). Holders may recommence effecting sales of the Registrable Securities pursuant to the Shelf Registration Statement (or such filings) following further written notice to such effect (an “End of Suspension Notice”) from the Corporation, which End of Suspension Notice shall be given by the Corporation to the Holders and their counsel, if any, promptly following the conclusion of any Suspension Event; provided that an End of Suspension Notice must be given prior to the end of the Suspension Period unless with the consent of each Demand Holder.

(iii) Notwithstanding any provision herein to the contrary, if the Corporation gives a Suspension Notice with respect to any Shelf Registration Statement pursuant to this Section 2(f), the Corporation agrees that it shall (A) extend the period of time during which such Shelf Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from the date of receipt by the Holders of the Suspension Notice to and including the date of receipt by the Holders of the End of Suspension Notice, and (B) provide copies of any supplemented or amended prospectus necessary to resume sales, with respect to each Suspension Event; provided that such period of time shall not be extended beyond the date that there are no longer Registrable Securities covered by such Shelf Registration Statement.

(g) Selection of Underwriters. Demand Holder(s) initiating any Demand Registration shall have the right to select the investment banker(s) and manager(s) to administer the offering (including assignment of titles), subject to the Corporation’s approval not be unreasonably withheld, conditioned or delayed. If any Shelf Offering is an Underwritten Takedown, the Demand Holder(s) initiating the Underwritten Takedown shall have the right to select the investment banker(s) and manager(s) to administer the offering (including assignment of titles), subject to the Corporation’s approval not be unreasonably withheld, conditioned or delayed; provided, that if such Underwritten Takedown has not been initiated by any Demand Holder(s), Holders representing a majority of the Registrable Securities participating in such Underwritten Takedown shall have the right to select the investment banker(s) and manager(s) to administer the offering relating to such Shelf Offering (including assignment of titles), subject to the Corporation’s approval not to be unreasonably withheld, conditioned or delayed.

(h) Fulfillment of Registration Obligations. Notwithstanding any other provision of this Agreement, a registration requested pursuant to this Section 2 shall not be deemed to have been effected: (i) if the number of Registrable Securities requested to be included in a Long-Form Registration by the initiating Demand Holder is cut back by the managing underwriters pursuant to Section 2(e) by more than twenty percent (20%); (ii) if the registration statement is withdrawn without becoming effective in accordance with Section 2(f) or otherwise without the consent of the initiating Demand Holder; (iii) if after it has become effective such registration is interfered with by any stop order, injunction or other order or requirement of the Securities and Exchange Commission or any other governmental authority for any reason other than a misrepresentation or an omission by the Holder making such Demand Registration, or an Affiliate of such Holder (other than the Corporation and its controlled Affiliates), and, as a result

 

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thereof, the Registrable Securities requested to be registered cannot be completely distributed in accordance with the plan of distribution set forth in the related registration statement; (iv) if the registration does not contemplate an underwritten offering, if it does not remain effective for at least 180 days (or such shorter period as will terminate when all securities covered by such registration statement have been sold or withdrawn); or if such registration statement contemplates an underwritten offering, if it does not remain effective for at least 180 days plus such longer period as, in the opinion of counsel for the underwriter or underwriters, a prospectus is required by applicable law to be delivered in connection with the sale of Registrable Securities by an underwriter or dealer; or (v) in the event of an underwritten offering, if the conditions to closing (including any condition relating to an overallotment option) specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied or waived other than by reason of some wrongful act or omission by the Holder that made the Demand Registration, or an Affiliate of such Holder.

(i) Other Registration Rights. The Corporation represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any other Person with respect to any securities of the Corporation, other than pursuant to the Common Stock Purchase Agreement, dated as of February 15, 2021, by and among the Corporation and the other parties named therein.

Section 3. Piggyback Registrations.

(a) Right to Piggyback. In connection with the IPO and thereafter, whenever the Corporation proposes to register any of its securities under the Securities Act (other than (i) pursuant to a Demand Registration, (ii) in connection with registrations on Form S-4 or S-8 promulgated by the Securities and Exchange Commission or any successor or similar forms or (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Corporation shall give prompt written notice to all Holders who hold Registrable Securities of its intention to effect such Piggyback Registration and, subject to the terms of Section 3(c), shall include in such Piggyback Registration (and in all related registrations or qualifications under blue sky laws and in any related underwriting) all Registrable Securities with respect to which the Corporation has received written requests for inclusion therein within ten days after delivery of the Corporation’s notice.

(b) Piggyback Expenses. The Registration Expenses of the Holders shall be paid by the Corporation in all Piggyback Registrations, whether or not any such registration became effective, excluding any underwriting commissions or fees for shares sold by the Holders which shall be paid by the respective Holders.

(c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Corporation, and the managing underwriters advise the Corporation in writing that in their opinion the number of securities requested to be included in such registration exceeds the number that can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Corporation shall include in such registration (i) first, the securities the Corporation

 

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proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the Holders calculated on the basis of the number of Registrable Securities owned by each such Holder that such Holder of Registrable Securities shall have requested to be included therein to the total number of Registrable Securities requested by all such Holders, and (iii) third, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.

(d) Selection of Underwriters. If any Piggyback Registration is an underwritten offering, the selection of investment banker(s) and manager(s) for the offering shall be at the election of the Corporation (in the case of a primary registration) or at the election of the holders of other Corporation securities requesting such registration (in the case of a secondary registration); provided that Holders representing a majority of the Registrable Securities included in such Piggyback Registration may request that one or more investment banker(s) or manager(s) be included in such offering (such request not to be binding on the Corporation or such other initiating holders of Corporation securities).

(e) Right to Terminate Registration. The Corporation shall have the right to terminate or withdraw any registration initiated by it under this Section 3 whether or not any Holder has elected to include securities in such registration. The Registration Expenses of such withdrawn registration shall be borne by the Corporation in accordance with Section 6.

Section 4. Holdback Agreements.

(a) Holders of Registrable Securities. If requested by the Corporation or the managing underwriter(s), each Holder participating in an underwritten Public Offering shall enter into customary lock-up agreements with the managing underwriter(s) of such Public Offering containing terms that are consistent with the provisions of this Section 4. In the absence of any such lock-up agreement, each Holder agrees as follows:

(i) in connection with the IPO, such Holder shall not (A) offer, sell, pledge, contract to sell or grant any option to purchase, or otherwise transfer or dispose of (including sales pursuant to Rule 144), directly or indirectly, any shares of Capital Stock of the Corporation (including Capital Stock of the Corporation that may be deemed to be owned beneficially by such Holder in accordance with the rules and regulations of the Securities and Exchange Commission) owned by such Holder prior to the IPO (collectively, “Securities”), (B) enter into a transaction which would have the same effect as described in clause (A) above, (C) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any Securities, whether such transaction is to be settled by delivery of such Securities, in cash or otherwise (each of (A), (B) and (C) above, a “Sale Transaction”), or (D) publicly disclose the intention to enter into any Sale Transaction, commencing on the earlier of the date on which the Corporation gives notice to the Holders that a preliminary prospectus has been circulated for the IPO or the “pricing” of such offering (the “Pricing Date”) and continuing (1) with respect to the Fidelity Holders and KKR, to the date that is 180 days following the date of the final prospectus for the IPO and (2) with respect to all other Holders, to the date that is the later of (X) 180 days following the date of the final prospectus for the IPO and (Y) January 1, 2022 (the “IPO Holdback Period”), in each case, unless the Corporation otherwise agrees in writing;

 

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(ii) in connection with all underwritten Public Offerings (other than the IPO), such Holder shall not effect any Sale Transaction commencing on the earlier of the date on which the Corporation gives notice to the Holders of the circulation of a preliminary or final prospectus for such Public Offering or the “pricing” of such offering and continuing to the date that is 90 days following the date of the final prospectus for such Public Offering if such Underwritten Public Offering involves a road show or similar marketing efforts exceeding 48 hours, or 45 days otherwise (the “Follow-on Holdback Period” and together with the IPO Holdback Period, the “Holdback Periods”, and each a “Holdback Period”), unless (A) such Holder (together with his, her or its Affiliates) is the beneficial owner of less than 5% of the outstanding Capital Stock of the Corporation (excluding shares of Class Y Common Stock) and is not selling securities in such Public Offering, (B) such Holder is a Fidelity Holder and is not selling securities in such Public Offering or (C) the underwriters managing the Public Offering otherwise agree in writing; and

(iii) Any discretionary waiver or termination of the restrictions in the foregoing clauses (i) through (ii) shall apply pro rata to all Holders, based on the number of shares of Capital Stock of the Corporation subject to this Agreement.

(iv) The foregoing clauses (i) through (ii) shall not apply to (A) pursuant to any transfer, conversion, reclassification, contribution, subscription, sale redemption or exchange of Common Units to the Company, Endeavor Manager or the Corporation, or the respective subsidiaries thereof, as applicable, in connection with, and as contemplated by, the Reorganization; (B) pursuant to any redemption or exchange of (1) Common Units (along with an equal number of shares of Class X Common Stock) for shares Class A Common Stock or (2) the exchange of PIUs of the Company for Opco Common Units, in each case in accordance with the limited liability company agreement of Opco LLC Agreement or Manager LLC Agreement, as applicable; (C) as a result of the redemption by the Corporation, the Company, Endeavor Manager or their affiliates of Capital Stock held by or on behalf of an employee in connection with the termination of such employee’s employment; (D) as part of the repurchase of Capital Stock by the Corporation, not at the option of the Holders, pursuant to an employee benefit plan described in the Registration Statement or pursuant to the agreements pursuant to which such Securities were issued; (E) shares of Capital Stock of the Corporation acquired by Holders (1) in the open market in connection with or after the completion of the IPO or (2) from the underwriters in a Public Offering; (F) to any transfer of shares of Capital Stock of the Corporation by bona fide gift, will, intestacy or charitable contribution; provided, that the donee or donees, beneficiary or beneficiaries, heir or heirs or legal representatives thereof agree to be bound in writing by the restrictions set forth herein for the balance of the applicable Holdback Period (except that a Holder and any of its affiliates who have signed lock-up letters with the managing underwriters may make charitable gifts, without the donee(s) signing a lock-up letter or being bound by the restrictions set forth herein, of up to an aggregate of 0.5% (or such other percentage as may be agreed by the managing underwriters for such Public Offering) of the Securities

 

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beneficially owned by such Holder and its affiliates as of the date of the final prospectus used in the IPO, before giving effect to the Public Offering); (G) to any transfer of shares of Capital Stock of the Corporation to any trust, partnership, limited liability company or other entity for the direct or indirect benefit of the Holders or the immediate family of the Holders; provided, that the trustee of the trust or the partnership or limited liability company or other entity agrees to be bound in writing by the restrictions set forth herein for the balance of the applicable Holdback Period, and provided, further that any such transfer shall not involve a disposition for value; (H) to any transfer of shares of Capital Stock of the Corporation to any immediate family member or other dependent; provided, that the transferee agrees to be bound in writing by the restrictions set forth herein for the balance of the applicable Holdback Period; and provided, further that any such transfer shall not involve a disposition for value; (I) to any transfer of shares of Capital Stock of the Corporation to the Holders’ affiliates, subsidiaries, partners, members, equityholders, shareholders, trustor or beneficiary, or to any investment fund or other entity that controls, is controlled by, manages, is managed by or is under common control with the Holder (including, for the avoidance of doubt, if the Holder is a partnership, to its general partner or a successor partnership or fund, or any other funds managed by such partnership and, if the Holder is a trust, to a trustor or beneficiary of the trust); provided, that the transferee agrees to be bound in writing by the restrictions set forth herein for the balance of the applicable Holdback Period; and provided, further that any such transfer shall not involve a disposition for value; (J) to any transfer of shares of Capital Stock of the Corporation to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (F) through (I) above; provided, that the transferee agrees to be bound in writing by the restrictions set forth herein for the balance of the applicable Holdback Period; (K) pursuant to an order of a court or regulatory agency or to comply with any regulations related to the Holders’ ownership of Securities; provided, that in the case of any transfer or distribution pursuant to this clause, any filing under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership of shares of Capital Stock of the Corporation, shall state that such transfer is pursuant to an order of a court or regulatory agency or to comply with any regulations related to the ownership of Capital Stock of the Corporation unless such a statement would be prohibited by any applicable law, regulation or order of a court or regulatory authority; (L) to the Corporation or its affiliates upon death or disability of a Holder; (M) to any transfer of shares of Capital Stock of the Corporation to the Corporation or its affiliates (1) deemed to occur upon a vesting event of the Holders’ Securities or upon the net cashless exercise of options or warrants to purchase Securities or (2) for the sale by the Corporation (on behalf of the Holder) of up to such number of share of Capital Stock as necessary for the primary purpose of paying the exercise price of such options or for paying taxes (including estimated taxes) or to satisfy the Corporation’s income and payroll tax withholding obligations due as a result of the exercise of such options or warrants or as a result of the vesting of Capital Stock under restricted stock units or restricted stock awards, in each case (x) pursuant to employee benefit plans disclosed in the final prospectus for an applicable Public Offering and (y) that would otherwise expire during the Holdback Period; provided, that in the case of any transfer or distribution pursuant this clause, except as a result of the vesting of Securities under restricted stock units or restricted stock awards, no filing under Section 16(a) of the Exchange Act (other

 

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than a filing on Form 5), reporting a reduction in beneficial ownership of shares of Common Stock, shall be required or shall be voluntarily made during the Holdback Period; (N) to any third-party pledgee in a bona fide transaction as collateral to secure obligations pursuant to lending or other arrangements, between such third parties (or their affiliates or designees) and a Holder and/or its affiliates or any similar arrangement relating to a financing agreement for the benefit of a Holder and/or its affiliates, provided, that any such pledgee or other party shall agree to, upon foreclosure on the pledged Securities, execute and deliver to the managing underwriters for an applicable Public Offering an agreement with the restrictions set forth herein; (O) the sale and transfer of Securities by a Holder to the underwriters in a Public Offering pursuant to the terms of an underwriting agreement or with the prior written consent of the lead underwriter on behalf of the underwriters; (P) the establishment or amendment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act; provided, that such plan does not provide for any transfers during the Holdback Period and to the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by or on behalf of the undersigned or the Company regarding the establishment or amendment of such plan, such announcement or filing shall include a statement to the effect that no transfer of shares of Capital Stock may be made under such plan during the Holdback Period; provided, that in connection with the transfer pursuant to clauses (E), (F), (G), (H) and (J) above, Holders shall not voluntarily file a report under Section 16(a) of the Exchange Act reporting a reduction in a Holder’s beneficial ownership in connection with such transfer with the SEC in accordance with Section 16 of the Exchange Act, and if any such report is required to be filed during the applicable Holdback Period, such report shall include a statement to the effect that such transfer is not a transfer for value; provided, further, that in the case of a transfer pursuant to clause (I) above (other than a transfer or distribution to facilitate a charitable gift, which shall be addressed by the immediately preceding proviso), no report under Section 16 of the Exchange Act reporting a reduction in beneficial ownership shall, during the applicable Holdback Period, be required or voluntarily made.

The Corporation may impose stop-transfer instructions with respect to the shares of Capital Stock (or other securities) subject to the restrictions set forth in this Section 4(a) until the end of such period.

(b) Exceptions. The foregoing holdback agreements in Section 4(a) shall not apply to a registration in connection with an employee benefit plan or in connection with any registration on form S-4 or similar form in connection with any type of acquisition transaction or exchange offer.

Section 5. Registration Procedures.

(a) Whenever the Holders have requested that any Registrable Securities be registered pursuant to this Agreement or have initiated a Shelf Offering, (x) such Holders shall, if applicable, cause such Registrable Securities to be exchanged into shares of Class A Common Stock in accordance with the terms of the LLC Agreements prior to sale of such Registrable Securities and (y) the Corporation shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Corporation shall as expeditiously as possible:

 

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(i) in accordance with the Securities Act and all applicable rules and regulations promulgated thereunder, prepare and file with the Securities and Exchange Commission a registration statement, and all amendments and supplements thereto and related prospectuses, with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Corporation shall furnish to the counsel selected by the Representative of the initiating Demand Holder(s) initiating a Demand Registration or, in all other cases, the Holders representing a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel);

(ii) notify each holder of Registrable Securities of (A) the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose, (B) the receipt by the Corporation or its counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (C) the effectiveness of each registration statement filed hereunder;

(iii) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period ending when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of distribution by the sellers thereof set forth in such registration statement (but in any event not before the expiration of any longer period required under the Securities Act or, if such registration statement relates to an underwritten Public Offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sale of Registrable Securities by an underwriter or dealer) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

(iv) furnish to each seller of Registrable Securities thereunder such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), each Free Writing Prospectus and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

 

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(v) use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Corporation shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (B) consent to general service of process in any such jurisdiction or (C) subject itself to taxation in any such jurisdiction);

(vi) notify each seller of such Registrable Securities (A) promptly after it receives notice thereof, of the date and time when such registration statement and each post-effective amendment thereto has become effective or a prospectus or supplement to any prospectus relating to a registration statement has been filed and when any registration or qualification has become effective under a state securities or blue sky law or any exemption thereunder has been obtained, (B) promptly after receipt thereof, of any request by the Securities and Exchange Commission for the amendment or supplementing of such registration statement or prospectus or for additional information and (C) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, subject to Section 2(f), at the request of any such seller, the Corporation shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

(vii) use reasonable best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Corporation are then listed and, if not so listed, to be listed on a securities exchange and, without limiting the generality of the foregoing, to arrange for at least two market markers to register as such with respect to such Registrable Securities with FINRA;

(viii) use reasonable best efforts to provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

(ix) enter into and perform such customary agreements (including underwriting agreements in customary form) and take all such other actions as the Holders representing a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split, combination of shares, recapitalization or reorganization);

(x) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate and business documents and properties of the Corporation as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Corporation’s officers, directors, employees, agents, representatives and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

 

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(xi) take all reasonable actions to ensure that any Free-Writing Prospectus utilized in connection with any Demand Registration or Piggyback Registration hereunder complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, shall not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(xii) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Corporation’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158;

(xiii) to the extent that a Holder, in its sole and exclusive judgment, might be deemed to be an underwriter of any Registrable Securities or a controlling person of the Corporation, permit such Holder to participate in the preparation of such registration or comparable statement and allow such Holder to provide language for insertion therein, in form and substance satisfactory to the Corporation, which in the reasonable judgment of such Holder and its counsel should be included;

(xiv) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or the issuance of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Class A Common Stock included in such registration statement for sale in any jurisdiction use reasonable best efforts promptly to obtain the withdrawal of such order;

(xv) use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities;

(xvi) cooperate with the Holders of Registrable Securities covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing securities to be sold under the registration statement and enable such securities to be in such denominations and registered in such names as the managing underwriter, or agent, if any, or such Holders may request;

(xvii) cooperate with each Holder of Registrable Securities covered by the registration statement and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;

 

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(xviii) use its reasonable best efforts to make available the executive officers of the Corporation to participate with the Holders of Registrable Securities covered by the registration statement and any underwriters in any “road shows” or other selling efforts that may be reasonably requested by the Holders in connection with the methods of distribution for the Registrable Securities;

(xix) in the case of any underwritten Public Offering, use its reasonable best efforts to obtain one or more “comfort letters” from the Corporation’s independent public accountants in customary form and covering such matters of the type customarily covered by “comfort letters” as the Holders representing a majority of the Registrable Securities being sold reasonably request;

(xx) in the case of any underwritten Public Offering, use its reasonable best efforts to provide a legal opinion of the Corporation’s outside counsel, dated the closing date of the Public Offering, in customary form and covering such matters of the type customarily covered by legal opinions of such nature, which opinion shall be addressed to the underwriters and the Holders of such Registrable Securities being sold;

(xxi) if the Corporation files an Automatic Shelf Registration Statement covering any Registrable Securities, use its reasonable best efforts to remain a WKSI (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act)) during the period during which such Automatic Shelf Registration Statement is required to remain effective;

(xxii) if the Corporation does not pay the filing fee covering the Registrable Securities at the time an Automatic Shelf Registration Statement is filed, pay such fee at such time or times as the Registrable Securities are to be sold; and

(xxiii) if the Automatic Shelf Registration Statement has been outstanding for at least three (3) years, at the end of the third year, file a new Automatic Shelf Registration Statement covering the Registrable Securities, and, if at any time when the Corporation is required to re-evaluate its WKSI status the Corporation determines that it is not a WKSI, use its reasonable best efforts to refile the Shelf Registration Statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the period during which such registration statement is required to be kept effective.

(b) Any officer of the Corporation who is a Holder agrees that if and for so long as he or she is employed by the Corporation or any Subsidiary thereof, he or she shall participate fully in the sale process in a manner customary and reasonable for persons in like positions and consistent with his or her other duties with the Corporation and in accordance with applicable law, including the preparation of the registration statement and the preparation and presentation of any road shows.

 

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(c) The Corporation may require each Holder requesting, or electing to participate in, any registration to furnish the Corporation such information regarding such Holder and the distribution of such Registrable Securities as the Corporation may from time to time reasonably request in writing.

(d) If the Equity Owner Parties or any of their respective Affiliates seek to effectuate an in-kind distribution of all or part of their respective Registrable Securities to their respective direct or indirect equityholders, the Corporation shall, subject to any applicable lock-ups, work with the foregoing persons to facilitate such in-kind distribution in the manner reasonably requested and such distributees shall have the right to become a party to this Agreement by the joinder in the form of Exhibit A hereto and thereby have all of the rights of such Equity Owner Parties under this Agreement, other than the Demand Registration rights of a Demand Holder.

Section 6. Registration Expenses.

(a) The Corporation’s Obligation. All expenses incident to the Corporation’s performance of or compliance with this Agreement (including, without limitation, all registration, qualification and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Corporation and all independent certified public accountants, underwriters (excluding underwriting discounts and commissions) and other Persons retained by the Corporation) (all such expenses being herein called “Registration Expenses”), shall be borne as provided in this Agreement, except that the Corporation shall, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Corporation are then listed. Each Person that sells securities pursuant to a Demand Registration or Piggyback Registration hereunder shall bear and pay all underwriting discounts and commissions applicable to the securities sold for such Person’s account.

(b) Counsel Fees and Disbursements. In connection with each Demand Registration, each Piggyback Registration and each Shelf Offering, the Corporation shall reimburse the reasonable fees and disbursements of not more than one law firm for (i) each of the Demand Holders of Registrable Securities included in such registration engaged to represent such Demand Holders in connection with such registration or (ii) the Holders, if no Registrable Securities of any Demand Holders are included in such registration, as selected by Holders of a majority of the Registrable Securities included in such registration, engaged to represent such Holders in connection with such registration.

 

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Section 7. Indemnification and Contribution.

(a) By the Corporation. The Corporation shall indemnify and hold harmless, to the extent permitted by law, each Holder, such Holder’s officers, directors, managers, employees, partners, stockholders, members, trustees, Affiliates, agents and representatives, and each Person who controls such Holder (within the meaning of the Securities Act) (the “Holder Indemnified Parties”) against all losses, claims, actions, damages, liabilities and expenses (including with respect to actions or proceedings, whether commenced or threatened, and including reasonable attorney fees and expenses) caused by, resulting from, arising out of, based upon or related to any of the following statements, omissions or violations (each a “Violation”) by the Corporation: (i) any untrue or alleged untrue statement of material fact contained in (A) any registration statement, prospectus, preliminary prospectus or Free-Writing Prospectus, or any amendment thereof or supplement thereto or (B) any application or other document or communication (in this Section 7, collectively called an “application”) executed by or on behalf of the Corporation or based upon written information furnished by or on behalf of the Corporation filed in any jurisdiction in order to qualify any securities covered by such registration under the securities laws thereof, (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Corporation of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Corporation and relating to action or inaction required of the Corporation in connection with any such registration, qualification or compliance. In addition, the Corporation will reimburse such Holder Indemnified Party for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such losses. Notwithstanding the foregoing, the Corporation shall not be liable in any such case to the extent that any such losses result from, arise out of, are based upon, or relate to an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus, preliminary prospectus or Free-Writing Prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished in writing to the Corporation by such Holder Indemnified Party expressly for use therein or by such Holder Indemnified Party’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Corporation has furnished such Holder Indemnified Party with a sufficient number of copies of the same.

(b) By Each Holder. In connection with any registration statement in which a Holder is participating, each such Holder shall furnish to the Corporation in writing such information and affidavits as the Corporation reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, shall indemnify the Corporation, its officers, directors, managers, employees, agents and representatives, and each Person who controls the Corporation (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder; provided that the obligation to indemnify shall be individual, not joint and several, for each Holder and shall be limited to the net amount of proceeds received by such Holder from the sale of Registrable Securities pursuant to such registration statement.

 

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(c) Claim Procedure. Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall impair any Person’s right to indemnification hereunder only to the extent such failure has prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicted indemnified parties shall have a right to retain one separate counsel, chosen by the Holders representing a majority of the Registrable Securities included in the registration if such Holders are indemnified parties, at the expense of the indemnifying party.

(d) Contribution. If the indemnification provided for in this Section 7 is held by a court of competent jurisdiction to be unavailable to, or is insufficient to hold harmless, an indemnified party or is otherwise unenforceable with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided that the maximum amount of liability in respect of such contribution shall be limited, in the case of each seller of Registrable Securities, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if the contribution pursuant to this Section 7(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account such equitable considerations. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to herein shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject hereof. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(t) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

(e) Release. No indemnifying party shall, except with the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. Notwithstanding anything to the contrary in this Section 7, an indemnifying party shall not be liable for any amounts paid in settlement of any loss, claim, damage, liability, or action if such settlement is effected without the consent of the indemnifying party, such consent not to be unreasonably withheld, conditioned or delayed.

 

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(f) Non-exclusive Remedy; Survival. The indemnification and contribution provided for under this Agreement shall be in addition to any other rights to indemnification or contribution that any indemnified party may have pursuant to law or contract and shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of Registrable Securities and the termination or expiration of this Agreement. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

Section 8. Underwritten Registrations.

(a) Participation. No Person may participate in any Public Offering hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to any over-allotment or “green shoe” option requested by the underwriters; provided that no Holder shall be required to sell more than the number of Registrable Securities such Holder has requested to include) and (ii) completes and executes all reasonable and customary questionnaires, “know your customer” certificates, powers of attorney, indemnities, underwriting agreements, custody agreements and other documents reasonably required under the terms of such underwriting arrangements or required by managing underwriters. Each Holder shall execute and deliver such other agreements as may be reasonably requested by the Corporation and the lead managing underwriter(s) that are consistent with such Holder’s obligations under Section 4, Section 5 and this Section 8(a) or that are necessary to give further effect thereto. To the extent that any such agreement is entered into pursuant to, and consistent with, Section 4 and this Section 8(a), the respective rights and obligations created under such agreement shall supersede the respective rights and obligations of the Holders, the Corporation and the underwriters created pursuant to this Section 8(a).

(b) Price and Underwriting Discounts. In the case of an underwritten Demand Registration or Underwritten Takedown requested by Holders pursuant to this Agreement, the price, underwriting discount and other financial terms of the related underwriting agreement for the Registrable Securities shall be determined by the Holders representing a majority of the Registrable Securities included in such underwritten offering. Any Demand Holder who has requested inclusion in an underwritten Demand Registration or an Underwritten Takedown (including the party who made the Shelf Offering Request (such party, the “Requesting Holder”)) may elect to withdraw therefrom at any time prior to the signing of the underwriting agreement related to such offering by written notice to the Corporation, the managing underwriter and the Requesting Holder; provided that, if the underwriters’ counsel reasonably determines that such withdrawal would require a recirculation of the prospectus, then no Holder shall have the right to withdraw unless the Requesting Holder has also elected to withdraw.

 

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(c) Suspended Distributions. Each Person that is participating in any registration under this Agreement, upon receipt of any notice from the Corporation of the happening of any event of the kind described in Section 5(a)(vi)(B) or (C), shall immediately discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by Section 5(a)(vi). In the event the Corporation has given any such notice, the applicable time period set forth in Section 5(a)(iii) during which a Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section 8(c) to and including the date when each seller of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 5(a)(vi).

Section 9. Additional Parties; Joinder. In addition to Persons who may become Holders pursuant to Section 12 or Section 14(f) hereof, subject to the prior written consent of each Representative on behalf of the respective Demand Holders the Corporation may make any Person who acquires Class A Common Stock or rights to acquire Class A Common Stock from the Corporation after the date hereof (including without limitation any Person who acquires Common Units) a party to this Agreement (each such Person, an “Additional Holder”) and to succeed to all of the rights and obligations of a Holder under this Agreement by obtaining an executed joinder to this Agreement from such Additional Holder in the form of Exhibit A attached hereto (a “Joinder”). Upon the execution and delivery of a Joinder by such Additional Holder, the Class A Common Stock of the Corporation acquired by such Additional Holder or issuable upon redemption or exchange of Common Units acquired by such Additional Holder (the “Acquired Common”) shall be Registrable Securities to the extent provided herein, such Additional Holder shall be a Holder under this Agreement with respect to the Acquired Common, and the Corporation shall add such Additional Holder’s name and address to the Schedule of Holders and circulate such information to the parties to this Agreement.

Section 10. Rule 144. At all times after the Corporation has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Exchange Act, the Corporation shall file all reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as any Holder may reasonably request, including (i) instructing the transfer agent for the Registrable Securities to remove restrictive legends from any Registrable Securities sold pursuant to Rule 144 (to the extent such removal is permitted under Rule 144 and other applicable law), and (ii) cooperating with the Holder of such Registrable Securities to facilitate the transfer of such securities through the facilities of The Depository Trust Company, in such amounts and credited to such accounts as such Holder may request (or, if applicable, the preparation and delivery of certificates representing such securities, in such denominations and registered in such names as such Holder may request), all to the extent required to enable the Holders to sell Registrable Securities pursuant to Rule 144. Upon request, the Corporation shall deliver to any Holder a written statement as to whether it has complied with such requirements.

Section 11. Subsidiary Public Offering. If, after an initial Public Offering of the Capital Stock of one of its Subsidiaries (including the Company), the Corporation distributes securities of such Subsidiary to its equityholders, then the rights and obligations of the Corporation pursuant to this Agreement shall apply, mutatis mutandis, to such Subsidiary, and the Corporation shall cause such Subsidiary to comply with such Subsidiary’s obligations under this Agreement.

 

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Section 12. Transfer of Registrable Securities. Notwithstanding anything to the contrary contained herein, and subject to any transfer restrictions contained in the LLC Agreements, except in the case of (i) a transfer to the Corporation, (ii) a transfer or distribution by any Equity Owner Party or any of its Affiliates to its respective equityholders, (iii) a Public Offering, (iv) a sale pursuant to Rule 144 after the completion of the IPO or (v) a transfer in connection with a sale of the Corporation, prior to transferring any Registrable Securities to any Person (including, without limitation, by operation of law), the transferring Holder shall cause the prospective transferee to execute and deliver to the Corporation a Joinder agreeing to be bound by the terms of this Agreement. Any transfer or attempted transfer of any Registrable Securities in violation of any provision of this Agreement shall be void, and the Corporation shall not record such transfer on its books or treat any purported transferee of such Registrable Securities as the owner thereof for any purpose.

Section 13. MNPI Provisions.

(a) Each Holder acknowledges that the provisions of this Agreement that require communications by the Corporation or other Holders to such Holder may result in such Holder and its Section 13 Representatives (as defined below) acquiring MNPI (which may include, solely by way of illustration, the fact that an offering of the Corporation’s securities is pending or the number of Corporation securities or the identity of the selling Holders).

(b) Each Holder agrees that it will maintain the confidentiality of such MNPI and, to the extent such Holder is not a natural person, such confidential treatment shall be in accordance with procedures adopted by it in good faith to protect confidential information of third parties delivered to such Holder (“Policies”); provided that a holder may deliver or disclose MNPI to (i) its directors, officers, employees, agents, attorneys, affiliates and financial and other advisors (collectively, the “Section 13 Representatives”), but solely to the extent such disclosure reasonably relates to its evaluation of exercise of its rights under this Agreement and the sale of any Registrable Securities in connection with the subject of the notice, (ii) any federal or state regulatory authority having jurisdiction over such Holder, (iii) any Person if necessary to effect compliance with any law, rule, regulation or order applicable to such Holder, (iv) in response to any subpoena or other legal process, or (v) in connection with any litigation to which such Holder is a party; provided further, that in the case of clause (i), the recipients of such MNPI are subject to the Policies or agree to hold confidential the MNPI in a manner substantially consistent with the terms of Section 13 and that in the case of clauses (ii) through (v), such disclosure is required by law and such Holder shall promptly notify the Corporation of such disclosure to the extent such Holder is legally permitted to give such notice; provided further, that for the avoidance of doubt and notwithstanding anything herein to the contrary, nothing contained in this Section 13 shall in any way restrict or impair the ability of any Fidelity Holder to disclose information to Fidelity, respectively (or vice versa), or restrict or impair the obligations of Fidelity to report the investment of its advisory clients (as Holders) in the Corporation in accordance with applicable laws and regulations or internal policies, without any requirement of prior notice to the Corporation.

 

29


(c) Each Holder shall have the right, at any time and from time to time (including after receiving information regarding any potential Public Offering), to elect to not receive any notice that the Corporation or any other Holders otherwise are required to deliver pursuant to this Agreement by delivering to the Corporation a written statement signed by such Holder that it does not want to receive any notices hereunder (an “Opt-Out Request”); in which case and notwithstanding anything to the contrary in this Agreement the Corporation and other Holders shall not be required to, and shall not, deliver any notice or other information required to be provided to Holders hereunder to the extent that the Corporation or such other Holders reasonably expect would result in a Holder acquiring MNPI. An Opt-Out Request may state a date on which it expires or, if no such date is specified, shall remain in effect indefinitely. A Holder who previously has given the Corporation an Opt-Out Request may revoke such request at any time, and there shall be no limit on the ability of a Holder to issue and revoke subsequent Opt-Out Requests; provided that each Holder shall use commercially reasonable efforts to minimize the administrative burden on the Corporation arising in connection with any such Opt-Out Requests.

Section 14. General Provisions.

(a) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended, modified, terminated or waived only with the prior written consent of the Corporation and each Representative of the Demand Holders; provided that no such amendment, modification, termination or waiver that would materially and adversely affect a Holder in a manner materially different than any other Holder (provided that the accession by Additional Holders to this Agreement pursuant to Section 9 shall not be deemed to adversely affect any Holder), shall be effective against such Holder without the consent of such Holder that is materially and adversely affected thereby; provided further that (i) clause (b) of the definition of “Affiliate” (and the definition of “Affiliate” as it relates to such clause (b)), the definition of “Fidelity,” the definition of “Fidelity Holder,” Section 4 and Section 13(b) (and Section 13 as it relates to Section 13(b)) may be amended, modified, terminated or waived only with the prior written consent of each Fidelity Holder and (ii) the definition of “1% Holders”, any rights granted to a 1% Holder and Section 4 may be amended, modified, terminated or waived only with the prior written consent of KKR. The failure or delay of any Person to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such Person thereafter to enforce each and every provision of this Agreement in accordance with its terms. A waiver or consent to or of any breach or default by any Person in the performance by that Person of his, her or its obligations under this Agreement shall not be deemed to be a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person under this Agreement.

(b) Remedies. The parties to this Agreement shall be entitled to enforce their rights under this Agreement specifically (without posting a bond or other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that a breach of this Agreement would cause irreparable harm and money damages would not be an adequate remedy for any such breach and that, in addition to any other rights and remedies existing hereunder, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.

 

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

(d) Entire Agreement. Except as otherwise provided herein, this Agreement contains the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties hereto, written or oral, which may have related to the subject matter hereof in any way.

(e) Successors and Assigns. This Agreement shall bind and inure to the benefit and be enforceable by the Corporation and its successors and assigns and the Holders and their respective successors and assigns (whether so expressed or not). In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit Holders are also for the benefit of, and enforceable by, any subsequent or successor Holder.

(f) Assignment. This Agreement may not be assigned (by operation of law or otherwise) without the express prior written consent of the other parties hereto, and any attempted assignment, without such consents, will be null and void; provided, however, that (i) the Management Holders may assign all or any portion of their rights in Section 2 hereof to their shareholders, members, partners or other equity holders and (ii) the SL Holders may assign all or any portion of their rights in Section 2 hereof to a Transferee or to bona fide unaffiliated purchasers of Registrable Securities with a market value at the time of sale of at least $75 million.

(g) Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission and electronic mail (“e-mail”) transmission, so long as a receipt of such e-mail is requested and received, it being understood that if no such e-mail address or facsimile number is provided to the Corporation than notice may not be delivered by e-mail or facsimile, as applicable). All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt. All such notices, requests and other communications to any party hereunder shall be given to such party as follows or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto.

 

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If to the Corporation, addressed to it at:

c/o Endeavor Group Holdings, Inc. 9601 Wilshire Boulevard, 3rd Floor

Beverly Hills, California 90210

Attention: Chief Executive Officer

                  Executive Chairman

                  General Counsel

Facsimile No.: (310) 285-9010

E-mail: ***

With copies (which shall not constitute actual or constructive notice) to:

Latham & Watkins LLP

1271 Avenue of the Americas

New York, NY 10020

Attention: Justin G. Hamill

                 Marc D. Jaffe

                 Ian D. Schuman

                 Jonathan P. Solomon

Facsimile No.: (212) 751-4864

E-mail: ***

             ***

             ***

             ***

If to the SL Holders, addressed to them at:

c/o Silver Lake Partners

2775 Sand Hill Road, Suite 100

Menlo Park, CA 94025

Attention: Karen King

Facsimile No.: (650) 233-8125

E-mail: ***

 

and

 

c/o Silver Lake Partners

55 Hudson Yards

550 West 34th Street, 40th Floor

New York, NY 10001

Attention: Andrew Schader

Facsimile No.: (212) 981-3535

Email: ***

With copies (which shall not constitute actual or constructive notice) to:

Simpson Thacher & Bartlett LLP

2475 Hanover Street

 

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Palo Alto, California 94304

Attention: Daniel Webb

Fax: (650) 251-5002

Email: ***

If to any of the other parties hereto, to the address set forth on the books and records of the Company.

(h) Business Days. If any time period for giving notice or taking action hereunder expires on a day that is not a Business Day, the time period shall automatically be extended to the immediately following Business Day.

(i) Governing Law. The corporate law of the State of Delaware shall govern all issues and questions concerning the relative rights of the Corporation and its stockholders. All other issues and questions concerning the construction, validity, interpretation and enforcement of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

(j) MUTUAL WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

(k) CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE CITY AND COUNTY OF NEW YORK BOROUGH OF MANHATTAN, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS PARAGRAPH. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

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(l) No Recourse. Notwithstanding anything to the contrary in this Agreement, the Corporation and each Holder agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement, shall be had against any current or future director, officer, employee, general or limited partner or member of any Holder or of any Affiliate or assignee thereof, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any Holder or any current or future member of any Holder or any current or future director, officer, employee, partner or member of any Holder or of any Affiliate or assignee thereof, as such for any obligation of any Holder under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

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

(n) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

(o) Counterparts. This Agreement may be executed in multiple counterparts, any one of which need not contain the signature of more than one party, but all such counterparts taken together shall constitute one and the same agreement.

(p) Electronic Delivery. This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent executed and delivered by means of a photographic, photostatic, facsimile or similar reproduction of such signed writing using a facsimile machine or electronic mail (i.e. by email of a PDF signature page) shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. For the avoidance of doubt, the parties hereto further agree that this Agreement, or any part thereof, shall not be denied legal effect, validity or enforceability solely on the ground that it is in the form of an electronic record and no party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

 

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(q) Further Assurances. In connection with this Agreement and the transactions contemplated hereby, each Holder shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactions contemplated hereby.

(r) No Inconsistent Agreements. The Corporation shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the Holders in this Agreement.

* * * * *

 

 

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

 

ENDEAVOR GROUP HOLDINGS, INC.
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Chief Financial Officer

[Signature Page to Registration Rights Agreement]


ENDEAVOR EXECUTIVE HOLDCO, LLC
By:  

/s/ Jason Lublin

  Name: Jason Lublin
  Title:   Authorized Signatory
ENDEAVOR EXECUTIVE PIU HOLDCO, LLC
By:  

/s/ Jason Lublin

  Name: Jason Lublin
  Title:   Authorized Signatory
ENDEAVOR EXECUTIVE II HOLDCO, LLC
By:  

/s/ Jason Lublin

  Name: Jason Lublin
  Title:   Authorized Signatory
 

/s/ Ariel Emanuel

  Ariel Emanuel
 

/s/ Patrick Whitesell

  Patrick Whitesell

 

THE ARIEL Z. EMANUEL LIVING TRUST, DATED NOVEMBER 13, 2017
By:  

/s/ Ariel Emanuel

Name: Ariel Emanuel
Title:   Trustee
TONY BATES

/s/ Tony Bates

Name:  Tony Bates
NIKESH ARORA - AURORA TRUST
By:  

/s/ Nikesh Arora

Name:  Nikesh Arora
WEINER DEROUAUX REVOCABLE TRUST DTD 11/20/2012
By:  

/s/ Jeffrey Weiner

Name:  Jeffrey Weiner
Title:    Trustee
MARC ANDREESSEN
By:  

/s/ Marc Andreessen

Name:  Marc Andreessen
 

[Signature Page to Registration Rights Agreement]


DAW FAMILY TRUST
DATED 09/05/06 (AS AMENDED 05/30/13)
By:  

/s/ Dana F. White

Name:   Dana F. White
Title:   Trustee
By:  

/s/ Anne L. White

Name:   Anne L. White
Title:   Trustee
DANA AND ANNE WHITE 2012
IRREVOCABLE TRUST DATED 12/31/12
(AS AMENDED 05/30/13)
By:  

/s/ Lorenzo J. Fertitta

Name:   Lorenzo J. Fertitta
Title:   Trustee
 

/s/ Dana F. White

  Dana F. White

[Signature Page to Registration Rights Agreement]


SLP WEST HOLDINGS, L.L.C.
By: Silver Lake Partners IV DE (AIV IV), L.P., its managing member
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member

/s/ Egon Durban

By:

  Egon Durban

Title:

  Co-CEO
SLP WEST HOLDINGS II, L.L.C.
By: Silver Lake Partners IV DE (AIV IV), L.P., its managing member
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member

/s/ Egon Durban

By:

  Egon Durban

Title:

  Co-CEO
SLP WEST HOLDINGS III, L.P.
By: SLP West GP Holdings, L.L.C., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member

/s/ Egon Durban

By:

  Egon Durban

Title:

  Co-CEO
SLP WEST HOLDINGS CO-INVEST, L.P.
By: SLP Co-Invest GP, L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member

/s/ Egon Durban

By:

  Egon Durban

Title:

  Co-CEO

[Signature Page to Registration Rights Agreement]


SLP WEST HOLDINGS CO-INVEST II, L.P.
By: SLP Co-Invest GP, L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member

/s/ Egon Durban

Name:

  Egon Durban

Title:

  Co-CEO
SLP IV WEST FEEDER I, L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SL SPV-1 FEEDER I, L.P.
By: SLTA SPV-1, L.P., its general partner
By: SLTA SPV-1 (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member

/s/ Egon Durban

Name:

  Egon Durban

Title:

  Co-CEO
SLP WEST HOLDINGS CO-INVEST FEEDER II, L.P.
By: SLP Co-Invest GP, L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO

 

SLP WEST HOLDINGS IV, L.P.
By: SLP West GP Holdings, L.L.C., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Siler Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO

[Signature Page to Registration Rights Agreement]


SLP IV BASQUIAT FEEDER II, L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

  Name: Egon Durban
  Title:   Co-CEO
SILVER LAKE PARTNERS IV DE (AIV III), L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

  Name: Egon Durban
  Title:   Co-CEO
SILVER LAKE TECHNOLOGY INVESTORS IV (DELAWARE II), L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

  Name: Egon Durban
  Title:   Co-CEO

[Signature Page to Registration Rights Agreement]


SILVER LAKE PARTNERS VI DE (AIV), L.P.
By: Silver Lake Technology Associates VI, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

  Name: Egon Durban
  Title:   Co-CEO
SILVER LAKE TECHNOLOGY INVESTORS VI, L.P.
By: Silver Lake Technology Associates VI, L.P., its general partner
By: SLTA VI (GP), L.L.C., its general partner
By: Silver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

  Name: Egon Durban
  Title:   Co-CEO

[Signature Page to Registration Rights Agreement]


SCC Growth IV Holdco II, Ltd.
By:  

/s/ Ip Siu Wai Eva

Title:   Authorized Signatory

[Signature Page to Registration Rights Agreement]


HS INVESTMENTS (A) LP
By:  

/s/ Ken Wrigley

Name:   Ken Wrigley
Title:   Director of HS Investments (L) Limited acting as General Partner
HS INVESTMENTS NA5 LIMITED
By:  

/s/ James Nicolle

Name:   James Nicolle
Title:   Director
HS INVESTMENTS (W) LIMITED
By:  

/s/ Ken Wrigley and Anthony Tennant

Name:   Ken Wrigley and Anthony Tennant
Title:   Directors, Director One Limted

[Signature Page to Registration Rights Agreement]


Yacht Investment Holdings LLC

By: Focus Media FountainVest Sports JV, L.P., its managing member
By: FMF Sports JV GP Limited, its general partner

/s/ Neil Gray

By:   Neil Colin Gray
Title:   Authorized Signatory

[Signature Page to Registration Rights Agreement]


SIXJOY LLC

/s/ Tang Yibin

By:   Tang Yibin
Title:   Authorized Signatory

[Signature Page to Registration Rights Agreement]


WC HOLDCO (DELAWARE) LLC
By:   MDC Capital Partners (SPV) GP, LP, its managing member
By:   MDC Capital Partners GP, LLC, its general partner

/s/ Rodney Cannon

By:   Rodney Cannon
Title:   Authorized Signatory
ATREUS HOLDINGS LLC

/s/ Ossama Khoreibi

By:   Ossama Khoreibi
Title:   Authorized Signatory

[Signature Page to Registration Rights Agreement]


FIDELITY PURITAN FUND

/s/ Jonathan Davis

By:   Jonathan Davis
Title:   Authorized Signatory
FIDELITY – SECURITIES FUND: FIDELITY BLUE CHIP GROWTH FUND

/s/ Jonathan Davis

By:   Jonathan Davis
Title:   Authorized Signatory
FIDELITY – COMMON WEALTH TRUST: FIDELITY MID-CAP STOCK FUND

/s/ Jonathan Davis

By:   Jonathan Davis
Title:   Authorized Signatory
FIDELITY – MT. VERNON STREET TRUST: FIDELITY NEW MILLENNIUM FUND

/s/ Jonathan Davis

By:   Jonathan Davis
Title:   Authorized Signatory
FIDELITY – DESTINY PORTFOLIOS: FIDELITY ADVISOR DIVERSIFIED STOCK FUND

/s/ Jonathan Davis

By:

 

Jonathan Davis

Title:

  Authorized Signatory

[Signature Page to Registration Rights Agreement]


FIDELITY – CONTRABAND: FIDELITY ADVISOR NEW INSIGHTS FUND

/s/ Jonathan Davis

By:   Jonathan Davis
Title:   Authorized Signatory
FIDELITY – SECURITIES FUND: FIDELITY SERIES BLUE CHIP GROWTH

/s/ Jonathan Davis

By:   Jonathan Davis
Title:   Authorized Signatory

[Signature Page to Registration Rights Agreement]


JASMINE VENTURES PTE LTD.

/s/ Jason Young

By:   Jason Young
Title:   Authorized Signatory

[Signature Page to Registration Rights Agreement]


CPP INVESTMENT BOARD (USRE III) INC.

/s/ Geoff McKay

By:   Geoff McKay
Title:   Authorized Signatory

/s/ Sunny Lee

By:   Sunny Lee
Title:   Authorized Signatory
DRAGON HOLDCO, LLC

/s/ David Droga

Name:  
Title:  


KKR CAGE AGGREGATOR LLC
By: KKR North America Fund XI (Cage) L.P., its managing member
By: KKR Associates North America XI AIV L.P., its general partner
By: KKR North America AIV GP LLC, its general partner
By:  

/s/ Richard Sarnoff

  Name: Richard Sarnoff
  Title:   Authorized Signatory
KKR NORTH AMERICA (CAGE) BLOCKER PARENT, L.P.
By:  

/s/ Richard Sarnoff

  Name: Richard Sarnoff
  Title:   Authorized Signatory
KKR PRINCIPAL OPPORTUNITIES (OFFSHORE) L.P.
By:  

/s/ Richard Sarnoff

  Name: Richard Sarnoff
  Title:   Authorized Signatory
KKR REFERENCE FUND INVESTMENTS L.P.
By:  

/s/ Richard Sarnoff

  Name: Richard Sarnoff
  Title:   Authorized Signatory


KKR NORTH AMERICAN CO-INVEST FUND I L.P.
By:  

/s/ Richard Sarnoff

  Name: Richard Sarnoff
  Title:   Authorized Signatory
KKR TFO PARTNERS L.P.
By:  

/s/ Richard Sarnoff

  Name: Richard Sarnoff
  Title:   Authorized Signatory


SCHEDULE OF HOLDERS

 

Holder

  

Holder Group

Ariel Emanuel    Management Holders
The Ariel Z. Emanuel Living Trust, dated November 13, 2017    Management Holders
Patrick Whitesell    Management Holders
Endeavor Executive Holdco, LLC    Management Holders
Endeavor Executive PIU Holdco, LLC    Management Holders
Endeavor Executive II Holdco, LLC    Management Holders
SLP IV Basquiat Feeder I LP    SLP Holders
Silver Lake Technology Investors IV (Delaware II), L.P.    SLP Holders
Silver Lake Partners IV DE (AIV III), L.P.    SLP Holders
SLP West Holdings, L.L.C.    SLP Holders
SLP West Holdings II, L.L.C.    SLP Holders
SLP West Holdings III, L.P.    SLP Holders
SLP West Holdings Co-Invest, L.P.    SLP Holders
SLP West Holdings Co-Invest II, L.P.    SLP Holders
SLP IV West Feeder I, L.P.    SLP Holders
SL SPV-1 Feeder I, L.P.    SLP Holders
SLP West Holdings Co-Invest Feeder II, L.P.    SLP Holders
Silver Lake Partners VI DE (AIV), L.P.    SLP Holders
Silver Lake Technology Investors VI, L.P.    SLP Holders
DAW Family Trust, dated 09/05/06 (as amended 05/30/13)    Non-Demand Holders
Dana and Anne White 2012 Irrevocable Trust, dated 12/31/12    Non-Demand Holders
Dana White    Non-Demand Holders
KKR Cage Aggregator LLC    Non-Demand Holders
KKR North American Co-Invest Fund I L.P.    Non-Demand Holders
KKR North America XI (Cage) Blocker Parent, L.P.    Non-Demand Holders
KKR Principal Opportunities Partnership (Offshore) L.P.    Non-Demand Holders
KKR Reference Fund Investments L.P.    Non-Demand Holders


Holder

  

Holder Group

KKR TFO Partners L.P.    Non-Demand Holders
SCC Growth IV Holdco II, Ltd.    Non-Demand Holders
HS Investments (W) Limited    Non-Demand Holders
HS Investments (A) Limited Partnership    Non-Demand Holders
HS Investments NA5 Limited    Non-Demand Holders
Yacht Investment Holdings LLC    Non-Demand Holders
Sixjoy LLC    Non-Demand Holders
WC HoldCo (Delaware) LLC    Non-Demand Holders
Atreus Holdings LLC    Non-Demand Holders
Fidelity Puritan Trust: Fidelity Puritan Fund    Non-Demand Holders
Fidelity Securities Fund: Fidelity Blue Chip Growth Fund    Non-Demand Holders
Fidelity Commonwealth Trust: Fidelity Mid-Cap Stock Fund    Non-Demand Holders
Fidelity Mt. Vernon Street Trust: Fidelity New Millennium Fund    Non-Demand Holders
Fidelity Destiny Portfolios: Fidelity Advisor Diversified Stock Fund    Non-Demand Holders
Fidelity Contrafund: Fidelity Advisor New Insights Fund    Non-Demand Holders
Fidelity Securities Fund: Fidelity Series Blue Chip Growth    Non-Demand Holders
Jasmine Ventures Pte Ltd.    Non-Demand Holders
CPP Investment Board (USRE III) Inc.    Non-Demand Holders
Nikesh Arora – Aurora Trust    Non-Demand Holders
Weiner Derouaux Revocable Trust DTD 11/20/2012    Non-Demand Holders
Tony Bates    Non-Demand Holders
Marc Andreessen    Non-Demand Holders


EXHIBIT A

REGISTRATION RIGHTS AGREEMENT JOINDER

The undersigned is executing and delivering this Joinder pursuant to the Registration Rights Agreement dated as of ____, 2021 (as the same may hereafter be amended, the “Registration Rights Agreement”), among Endeavor Group Holdings, Inc., a Delaware corporation (the “Corporation”), and the other person named as parties therein.

By executing and delivering this Joinder to the Corporation, and upon acceptance hereof by the Corporation upon the execution of a counterpart hereof, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Registration Rights Agreement as a Holder of Registrable Securities [and as an SL Holder] [and as a Management Holder] in the same manner as if the undersigned were an original signatory to the Registration Rights Agreement, and the undersigned’s shares of Class A Common Stock shall be included as Registrable Securities under the Registration Rights Agreement to the extent provided therein. The Corporation is directed to add the address below the undersigned’s signature on this Joinder to the Schedule of Holders attached to the Registration Rights Agreement.

Accordingly, the undersigned has executed and delivered this Joinder as of the __________ day of __________, 20__.

 

 

Signature of Stockholder

 

Print Name of Stockholder
Its:
Address:  

 

 

 

 

Agreed and Accepted as of
____________, 20__
Endeavor Group Holdings, Inc.
By:  

                 

Name:
Its:

Exhibit 10.5

 

 

 

TAX RECEIVABLE AGREEMENT

by and among

ENDEAVOR GROUP HOLDINGS, INC.,

ENDEAVOR MANAGER, LLC,

ENDEAVOR OPERATING COMPANY, LLC,

the several EXCHANGE TRA PARTIES (as defined herein),

the several REORGANIZATION TRA PARTIES (as defined herein),

REPRESENTATIVE (as defined herein),

SL REPRESENTATIVE (as defined herein),

KKR Representative (as defined herein),

and

OTHER PERSONS FROM TIME TO TIME PARTY HERETO

Dated as of April 28, 2021

 

 

 


CONTENTS

 

         Page  

Article I. DEFINITIONS

     2  

Section 1.1

  Definitions      2  

Section 1.2

  Rules of Construction      11  

Article II. DETERMINATION OF REALIZED TAX BENEFIT

     12  

Section 2.1

  Attribute Schedule      12  

Section 2.2

  Tax Benefit Schedule      13  

Section 2.3

  Procedures, Amendments      13  

Article III. TAX BENEFIT PAYMENTS

     15  

Section 3.1

  Timing and Amount of Tax Benefit Payments      15  

Section 3.2

  No Duplicative Payments      16  

Section 3.3

  Pro Rata Payments      16  

Article IV. TERMINATION

     17  

Section 4.1

  Early Termination of Agreement; Breach of Agreement      17  

Section 4.2

  Early Termination Notice      18  

Section 4.3

  Payment upon Early Termination      19  

Article V. SUBORDINATION AND LATE PAYMENTS

     19  

Section 5.1

  Subordination      19  

Section 5.2

  Late Payments by the Corporation      20  

Article VI. TAX MATTERS; CONSISTENCY; COOPERATION

     20  

Section 6.1

  Participation in the Corporation’s and the LLC’s Tax Matters      20  

Section 6.2

  Consistency      20  

Section 6.3

  Cooperation      20  

Article VII. MISCELLANEOUS

     21  

Section 7.1

  Notices      21  

Section 7.2

  Counterparts; Electronic Signature      23  

Section 7.3

  Entire Agreement; No Third Party Beneficiaries      23  

Section 7.4

  Governing Law      23  

Section 7.5

  Severability      23  

Section 7.6

  Assignments; Amendments; Successors; No Waiver      23  

Section 7.7

  Titles and Subtitles      25  

Section 7.8

  Resolution of Disputes      25  

 

i


         Page  

Section 7.9

  Reconciliation      26  

Section 7.10

  Withholding      27  

Section 7.11

  Consolidated Group; Transfers of Corporate Assets      27  

Section 7.12

  Confidentiality      28  

Section 7.13

  Change in Law      28  

Section 7.14

  Interest Rate Limitation      29  

Section 7.15

  Independent Nature of Rights and Obligations      29  

Annexes and Exhibits

 

Annex A    –      Blocker Entities
Annex B    –      Exchange TRA Parties
Annex C    –      Reorganization TRA Parties
Annex D    –      Representatives
Annex E    –      SL TRA Parties
Annex F       KKR TRA Parties
Exhibit A    –      Form of Joinder Agreement
Exhibit B        –      Net Tax Benefit Splits

 

ii


TAX RECEIVABLE AGREEMENT

This TAX RECEIVABLE AGREEMENT (as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “Agreement”), dated April 28, 2021, is hereby entered into by and among Endeavor Group Holdings, Inc., a Delaware corporation (the “Corporation”), Endeavor Manager, LLC, (“Endeavor Manager”, and, along with the Corporation and any other member of the U.S. federal income tax consolidated group including Endeavor Manager and the Corporation, the members of the “Corporate Group”), Endeavor Operating Company, LLC, a Delaware limited liability company (the “LLC”), each of the Exchange TRA Parties from time to time party hereto, each of the Reorganization TRA Parties from time to time party hereto, the Representative (as defined below), the KKR Representative (as defined below), and SLP West Holdings, L.L.C. (the “SL Representative”). Capitalized terms used but not otherwise defined herein have the respective meanings set forth in Section 1.01.

RECITALS

WHEREAS, the Reorganization TRA Parties were previously owners of the Blocker Entities, and as a result of their previous ownership of the Blocker Entities, the Reorganization TRA Parties previously indirectly held equity interests in the LLC (the “Units”) through the Blocker Entities;

WHEREAS, the Exchange TRA Parties hold (or prior to an Exchange will hold) Units;

WHEREAS, Endeavor Manager, which is classified as an association taxable as a corporation for U.S. federal income tax purposes, holds Units in and is the sole managing member of the LLC, which is classified as a partnership for U.S. federal income tax purposes;

WHEREAS, the Blocker Entities were each classified as corporations for United States federal income tax purposes;

WHEREAS, as a result of certain reorganization transactions undertaken in connection with the IPO of the Corporation, the Blocker Entities were merged with and into the Corporation, with the Corporation surviving (the “Reorganization”);

WHEREAS, as a result of the Reorganization, the Corporate Group may be entitled to utilize (or otherwise be entitled to the benefits arising out of) the Pre-IPO Covered Tax Assets;

WHEREAS, on the date hereof certain of the TRA Parties sold Units and/or Zuffa Interests to the Corporation, and whereas on and after the date hereof, pursuant to, and subject to the provisions of, the LLC Agreement and any other applicable documentation, each Exchange TRA Party has the right from time to time to require the LLC to redeem (a “Redemption”) all or a portion of such TRA Party’s Units, which Redemption would be effected, at the Corporation’s election in its sole discretion, for cash (to be paid by the LLC), or by the Corporation effecting a direct exchange (a “Direct Exchange”) of Class A Common Stock for such Units, and as a result of such sales, Redemptions or Direct Exchanges the Corporate Group may be entitled to utilize (or otherwise be entitled to the benefits arising out of) the Exchange Covered Tax Assets;

 

1


WHEREAS, the income, gain, loss, expense, deduction and other Tax items of the Corporate Group may be affected by the Pre-IPO Covered Tax Assets and the Exchange Covered Tax Assets;

WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to the effects of the Pre-IPO Covered Tax Assets and the Exchange Covered Tax Assets;

NOW, THEREFORE, in connection with the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.1 Definitions. As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both (i) the singular and plural and (ii) the active and passive forms of the terms defined).

Actual Tax Liability” means, with respect to any Taxable Year, the actual liability for U.S. federal, state and local income Taxes of (i) the Corporate Group and (ii) without duplication, the LLC, but in the case of this clause (ii) only with respect to U.S. federal, state and local income Taxes imposed on the LLC and allocable to the Corporate Group; provided, that the actual liability for Taxes described in clauses (i) and (ii) shall be calculated (a) assuming that Subsequently Acquired TRA Attributes do not exist, (b) using the Assumed State and Local Tax Rate, solely for purposes of calculating the state and local Actual Tax Liability of the Corporate Group, and (c) assuming, solely for purposes of calculating the liability for U.S. federal income Taxes, in order to prevent double counting, that state and local income and franchise Taxes are not deductible by the Corporate Group for U.S. federal income Tax purposes.

Advance Payment” is defined in Section 3.1(b) of this Agreement.

Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such first Person.

Agreed Rate” means a per annum rate of LIBOR plus 100 basis points.

Agreement” is defined in the preamble.

Amended Schedule” is defined in Section 2.3(b) of this Agreement.

Assumed State and Local Tax Rate” means the tax rate equal to the sum of the product of (x) the LLC’s income and franchise Tax apportionment rate(s) for each state and local jurisdiction in which the LLC files income or franchise Tax Returns for the relevant Taxable Year and (y) the highest corporate income and franchise Tax rate(s) for each such state and local jurisdiction in which the LLC files income or franchise Tax Returns for each relevant Taxable Year; provided, that the Assumed State and Local Tax Rate calculated pursuant to the foregoing shall be reduced by the assumed federal income Tax benefit received by the Corporate Group with respect to state

 

2


and local jurisdiction income and franchise Taxes (with such benefit calculated as the product of (a) the Corporation’s marginal U.S. federal income tax rate for the relevant Taxable Year and (b) the Assumed State and Local Tax Rate (without regard to this proviso)). At the Corporation’s election, the Corporation shall be entitled to determine the Assumed State and Local Tax Rate for a given Taxable Year as of January 1 of the relevant Taxable Year based on good faith estimates of its expected apportionment rates for such Taxable Year and on the Tax rates in effect in relevant jurisdictions as of January 1 of the relevant Taxable Year.

Attributable” is defined in Section 3.1(b) of this Agreement.

Attribute Schedule” is defined in Section 2.1 of this Agreement.

Basis Adjustment” means the increase or decrease to the tax basis of, or the Corporation’s share of, the tax basis of the Reference Assets (i) under Section 734(b), 743(b) and 754 of the Code and, in each case, the comparable sections of U.S. state and local tax law (in situations where, following an Exchange, the LLC remains in existence as an entity for tax purposes) and (ii) under Sections 732 and 1012 of the Code and, in each case, the comparable sections of U.S. state and local tax law (in situations where, as a result of one or more Exchanges, the LLC becomes an entity that is disregarded as separate from its owner for tax purposes), in each case, as a result of any Exchange and any payments made under this Agreement. For purposes of determining the Basis Adjustments (and any payments made hereunder with respect to such Basis Adjustments) that are attributable to Reference Assets held by an entity in which the LLC owns a direct or indirect interest and where (i) the value of such direct or indirect interest held by the LLC is no greater than $220,000,000, (ii) such entity does not constitute a Subsidiary of the LLC and (iii) obtaining information necessary to determine the allocation of the Basis Adjustments is not practicable (as reasonably determined by the Corporation), it shall be assumed (unless the Corporation, the Representative and the SL Representative agree otherwise) that such Basis Adjustments will be allocable to property that is depreciable over a 15-year period. Notwithstanding any other provision of this Agreement, the amount of any Basis Adjustment resulting from an Exchange of one or more Units shall be determined without regard to any Pre-Exchange Transfer of such Units and as if any such Pre-Exchange Transfer had not occurred.

Blocker Entities” means the entities listed on Annex A.

Business Day” means any day excluding Saturday, Sunday and any day that is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in New York are closed.

Change of Control” means the occurrence of any of the following events or series of related events after the date hereof: (a) any Person, or group of Persons acting together which would constitute a “group” for purposes of Section 13(d) of the Exchange Act (as defined in the LLC Agreement), or any successor provisions thereto, is or becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing more than 50% of the combined voting power of the Corporation’s then-outstanding voting securities; (b) there is consummated a merger or consolidation of the Corporation with any other Person or Persons, and, immediately after the

 

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consummation of such merger or consolidation, the voting securities of the Corporation immediately prior to such merger or consolidation do not continue to represent or are not converted into more than 50% of the combined voting power of the then-outstanding voting securities of the Person resulting from such merger or consolidation. Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred (i) by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Class A Common Stock, Class B Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in and voting control over, and own substantially all of the shares or equity of, an entity which owns all or substantially all of the assets of the Corporation immediately following such transaction or series of transactions or (ii) by virtue of the consummation of any transaction or series of transactions, immediately following which, the Corporation and one or more other entities (the “Other Constituent Companies”) shall have become separate wholly-owned Subsidiaries of a holding company, and the record holders of the Class A Common Stock, Class B Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock immediately prior to such transaction or series of transactions, together with the record holders of the outstanding equity interests in the Other Constituent Companies immediately prior to such transaction or series of transactions, shall have become the equityholders of the new holding company in exchange for their respective equity interests in the Corporation and the Other Constituent Companies, and such transaction or transactions would not otherwise constitute a “Change of Control” assuming references to the Corporation are references to such holding company or (iii) at any time that the Executive Directors (as defined in the Corporation’s certificate of incorporation), any permitted transferee pursuant to Section 8.02(b) of the LLC Agreement, the SL Member and the SL Related Entities (each as defined in the LLC Agreement), collectively, continue to beneficially own (or have the right to vote), directly or indirectly, securities of the Corporation representing more than 35% of the combined voting power of the Corporation’s then-outstanding voting securities and no other Person or “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934) that does not include the Executive Directors, any permitted transferee pursuant to Section 8.02(b) of the LLC Agreement, the SL Member and the SL Related Entities, beneficially owns (or has the right to vote), directly or indirectly, securities of the Corporation representing a greater percentage of the combined voting power of the Corporation’s then-outstanding voting securities than that then beneficially owned by the Executive Directors, any permitted transferee pursuant to Section 8.02(b) of the LLC Agreement, the SL Member and the SL Related Entities.

Class A Common Stock” means Class A common stock, $0.00001 par value per share, of the Corporation.

Class B Common Stock” means Class B common stock, $0.00001 par value per share, of the Corporation.

Class C Common Stock” means Class C common stock, $0.00001 par value per share, of the Corporation.

Class X Common Stock” means Class X common stock, $0.00001 par value per share, of the Corporation.

 

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Class Y Common Stock” means Class Y common stock, $0.00001 par value per share, of the Corporation.

Code” means the U.S. Internal Revenue Code of 1986, as amended.

Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or other agreement.

Corporation” is defined in the preamble to this Agreement.

Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative amount of Realized Tax Benefits for all Taxable Years of the Corporate Group, up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the same period. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be based on the most recent Tax Benefit Schedules or Amended Schedules, if any, in existence at the time of such determination.

Default Rate” means a per annum rate of LIBOR plus 500 basis points.

Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of law, as applicable, or any other event (including the execution of IRS Form 870-AD) that finally and conclusively establishes the amount of any liability for tax and shall also include the acquiescence of the Corporation to the amount of any assessed liability for Tax.

Direct Exchange” is defined in the recitals to this agreement.

Dispute” is defined in Section 7.8(a) of this Agreement.

Early Termination Agreed Rate” means LIBOR plus 100 basis points.

Early Termination Date” means the date of an Early Termination Notice for purposes of determining the Early Termination Payment.

Early Termination Effective Date” is defined in Section 4.2 of this Agreement.

Early Termination Notice” is defined in Section 4.2 of this Agreement.

Early Termination Payment” is defined in Section 4.3(b) of this Agreement.

Early Termination Rate” means the lesser of (i) 6.50 % per annum, compounded annually, and (ii) the Early Termination Agreed Rate.

Early Termination Schedule” is defined in Section 4.2 of this Agreement.

Exchange” means any Direct Exchange or Redemption. For purposes of this Agreement, sales of Units (and/or Zuffa Interests) made on the date of this Agreement by the TRA Parties to the Corporation in exchange for cash shall constitute Exchanges.

 

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Exchange Covered Tax Assets” means, with respect to the Exchange TRA Parties, (i) existing Tax basis in the Reference Assets (other than cash, cash equivalents, receivables, inventory, and prepaid amounts), determined as of immediately prior to an Exchange, that is allocable to the Units (and/or Zuffa Interests) being exchanged by such Exchange TRA Party and acquired by the Corporate Group in connection with the relevant Exchange, (ii) Basis Adjustments, and (iii) Imputed Interest. The determination of the portion of the aggregate existing Tax basis in the Reference Assets and accompanying Basis Adjustments that is allocable to Units (and/or Zuffa Interests) being exchanged by the Exchange TRA Party (and payments made hereunder with respect to such Tax basis) shall be determined in good faith by the Corporation in consultation with its tax return preparer (which tax return preparer shall be a nationally recognized third party accounting firm) (e.g., by reference to such Units’ share of total enterprise value); provided that in no event will the portions of existing Tax basis in the Reference Assets that are included as Exchange Covered Tax Assets and Pre-IPO Covered Tax Assets exceed 100% of the existing Tax basis in the Reference Assets that is allocable to the Corporation at any time (as reasonably determined by the Corporation). For the avoidance of doubt, Exchange Covered Tax Assets shall include any carryforwards or similar attributes that are attributable to the Tax items described in clauses (i) through (iii).

Exchange TRA Parties” means the Persons listed on Annex B.

Executive Director” has the meaning set forth in the Corporation’s certificate of incorporation (as amended).

Expert” is defined in Section 7.9 of this Agreement.

Governing Body” has the meaning set forth in the Corporation’s certificate of incorporation (as amended).

Hypothetical Tax Liability” means, with respect to any Taxable Year, the liability for U.S. federal, state and local income Taxes of (i) the Corporate Group and (ii) without duplication, the LLC, but in the case of this clause (ii) only with respect to U.S. federal, state and local income Taxes imposed on the LLC and allocable to the Corporate Group, in each case using the same methods, elections, conventions, and practices used on the relevant Corporate Group Tax Return, but (a) calculated without taking into account the Pre-IPO Covered Tax Assets and the Exchange Covered Tax Assets (including, for the avoidance of doubt, any carryforward or carryback of any tax item attributable to the Pre-IPO Covered Tax Assets and the Exchange Covered Tax Assets), (b) using the Assumed State and Local Tax Rate, solely for purposes of calculating the state and local Hypothetical Tax Liability of the Corporate Group, and (c) assuming, solely for purposes of calculating the liability for U.S. federal income Taxes, in order to prevent double counting, that state and local income and franchise Taxes are not deductible by the Corporate Group for U.S. federal income Tax purposes. Furthermore, the Hypothetical Tax Liability shall be calculated assuming that the Subsequently Acquired TRA Attributes do not exist.

Imputed Interest” in respect of a TRA Party shall mean any interest imputed under the provisions of the Code with respect to the Corporation’s payment obligations in respect of such TRA Party under this Agreement.

 

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Interest Amount” is defined in Section 3.1(b) of this Agreement.

IPO” means the initial public offering of shares of Class A Common Stock by the Corporation.

IPO Date” means the closing date of the IPO.

IRS” means the U.S. Internal Revenue Service.

Joinder” means a joinder to this Agreement, in form and substance substantially similar to Exhibit A to this Agreement.

Joinder Requirement” is defined in Section 7.6(b) of this Agreement.

“KKR Representative” means Kohlberg Kravis Roberts & Co. L.P. or its designee.

KKR TRA Parties” means the persons listed on Annex F.

LIBOR” means during any period, the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by the Corporation as an authorized information vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market (an “Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the first day of such period as the London interbank offered rate for U.S. dollars having a borrowing date and a maturity comparable to such period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any LIBOR Alternate Source, a comparable replacement rate determined by the Corporation at such time, which determination shall be conclusive absent manifest error; provided, that at no time shall LIBOR be less than 0%.

LLC” is defined in the recitals to this Agreement.

LLC Agreement” means that certain Limited Liability Company Agreement of the LLC, dated as of the date hereof, as such agreement may be further amended, restated, supplemented and/or otherwise modified from time to time.

Market Value” means the Common Unit Redemption Price, as defined in the LLC Agreement, determined as of an Early Termination Date (treating such Early Termination Date as a Redemption Date).

Net Tax Benefit” is defined in Section 3.1(b) of this Agreement.

Objection Notice” is defined in Section 2.3(a) of this Agreement.

Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity.

 

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Permitted Transfer” has the meaning set forth in the LLC Agreement.

Permitted Transferee” has the meaning set forth in the LLC Agreement.

Pre-Exchange Transfer” means any transfer of one or more Units (including upon the death of a Member) (i) that occurs after the IPO but prior to a Redemption or Direct Exchange of such Units and (ii) to which Section 743(b) of the Code applies.

Pre-IPO Covered Tax Assets” means, with respect to a Reorganization TRA Party, (i) any net operating loss carryforwards, disallowed interest expense carryforwards under Section 163(j) of the Code, or tax credit carryforwards attributable to the Blocker Entity previously owned by such Reorganization TRA Party that are available to offset income or gain of the Corporate Group earned for periods (or portions thereof) beginning after the IPO; (ii) existing Tax basis in the Reference Assets (other than cash, cash equivalents, receivables, inventory, and prepaid amounts), determined as of immediately prior to the IPO (including for this purpose, without duplication, any adjustments under Section 743(b) of the Code), that is attributable to Units previously owned by such Blocker Entity and acquired by the Corporation in connection with the Reorganization; and (iii) Imputed Interest. The determination of the portion of existing Tax basis in the Reference Assets that is allocable to Units previously owned by an applicable Blocker Entity (and payments made hereunder with respect to such Tax basis) shall be determined in good faith by the Corporation in consultation with its tax return preparer (which tax return preparer shall be a nationally recognized third party accounting firm); provided that in no event will the portions of existing Tax basis in the Reference Assets that are included as Exchange Covered Tax Assets and Pre-IPO Covered Tax Assets at any time exceed 100% of the existing Tax basis in the Reference Assets that is allocable to the Corporation at such time (as reasonably determined by the Corporation). For the avoidance of doubt, Pre-IPO Covered Tax Assets shall include any carryforwards, carrybacks or similar attributes that are attributable to the Tax items described in clauses (ii) and (iii).

Realized Tax Benefit” means, for a Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the Actual Tax Liability. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Benefit until there has been a Determination.

Realized Tax Detriment” means, for a Taxable Year, the excess, if any, of the Actual Tax Liability over the Hypothetical Tax Liability. If all or a portion of the actual liability for such Taxes for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included in determining the Realized Tax Detriment unless and until there has been a Determination.

Reconciliation Dispute” is defined in Section 7.9 of this Agreement.

Reconciliation Procedures” is defined in Section 2.3(a) of this Agreement.

Redemption” has the meaning in the recitals to this Agreement.

 

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Reference Asset” means any tangible or intangible asset of the LLC or any of its successors or assigns, and any asset held by any entities in which the LLC owns a direct or indirect equity interest that are treated as a partnership or disregarded entity for U.S. federal income Tax purposes (but only to the extent such entities are held only through other entities treated as partnerships or disregarded entities) for purposes of the applicable Tax, as of the relevant date. A Reference Asset also includes any asset that is “substituted basis property” under Section 7701(a)(42) of the Code with respect to a Reference Asset.

Reorganization” is defined in the Recitals to this Agreement.

Reorganization TRA Parties” means the persons listed on Annex C.

Representative” means, acting jointly, Ari Emanuel and Patrick Whitesell; provided, that if one of Mr. Emanuel or Mr. Whitesell are (i) no longer employed by the Corporation, the Company or at least one of their respective Subsidiaries, and (ii) no longer serve on the Governing Body, then the other shall become the sole Representative hereunder; provided, further, that if both Mr. Emanuel and Mr. Whitesell are (x) no longer employed by the Corporation, the Company or one of their respective Subsidiaries, and (y) no longer serve on the Governing Body, then the Representative shall be determined based on a vote of the TRA Parties listed on Annex D or their Permitted Transferees (with voting rights for this purpose apportioned between the TRA Parties based on the relative amount of Early Termination Payments that would be hypothetically payable to all such TRA Parties (assuming all equity interests in the LLC that have redemption rights under the LLC Agreement are redeemed and exchanged for shares of Class A Common Stock at such time using the Valuation Assumptions)).

Schedule” means any of the following: (i) an Attribute Schedule, (ii) a Tax Benefit Schedule, or (iii) the Early Termination Schedule, and, in each case, any amendments thereto.

Senior Obligations” is defined in Section 5.1 of this Agreement.

SL TRA Parties” means the persons listed on Annex E.

Stockholders Agreement” means the Stockholders Agreement, dated as of the date hereof, by and among the Corporation and the other persons party thereto or that may become parties thereto from time to time, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

Subsequently Acquired TRA Attributes” means, except as otherwise determined by the Governing Body (with the approval of the SL Representative, the KKR Representative and the Representative), any net operating losses, tax basis or other tax attributes to which any of the Corporate Group, the LLC or any entity in which they hold a direct or indirect equity interest become entitled as a result of a transaction (other than any Exchanges undertaken by an Exchange TRA Party) after the IPO Date to the extent such net operating losses, tax basis and other tax attributes are subject to a tax receivable agreement (or comparable agreement) entered into by the Corporate Group or any of its Affiliates pursuant to which any member of the Corporate Group is obligated to pay over amounts with respect to tax benefits resulting from such net operating losses or other tax attributes.

 

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Subsidiary” means, with respect to any Person and as of the date of any determination, any other Person as to which such Person, owns, directly or indirectly, or otherwise controls, more than 50% of the voting power or other similar interests, or the sole general partner interest, or managing member or similar interest, of such Person.

Tax Benefit Payment” is defined in Section 3.1(b) of this Agreement.

Tax Benefit Schedule” is defined in Section 2.2(a) of this Agreement.

Tax Return” means any return, declaration, report or similar statement filed or required to be filed with respect to Taxes (including any attached schedules), including, without limitation, any information return, claim for refund, amended return and declaration of estimated Tax.

Taxable Year” means a taxable year of the Corporate Group under the Code or comparable sections of U.S. state or local tax law, as applicable (and, therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return is made), ending on or after the closing date of the IPO.

Taxes” means any and all United States federal, state or local taxes, assessments or other charges that are based on or measured with respect to net income or profits (including alternative minimum taxes).

Taxing Authority” means any national, federal, state, county, municipal, or local government, or any subdivision, agency, commission or authority thereof, or any quasi-governmental body, or any other authority of any kind, exercising regulatory or other authority in relation to tax matters.

TRA Parties” means the Exchange TRA Parties and the Reorganization TRA Parties.

Treasury Regulations” means the final, temporary, and (to the extent they can be relied upon) proposed regulations under the Code, as promulgated from time to time (including corresponding provisions and succeeding provisions) as in effect for the relevant taxable period.

U.S.” means the United States of America.

Units” is defined in the recitals to this Agreement.

Valuation Assumptions” means, as of an Early Termination Date, the assumptions that:

(1) in each Taxable Year ending on or after such Early Termination Date, the Corporate Group will have taxable income sufficient to fully use the Pre-IPO Covered Tax Assets and the Exchange Covered Tax Assets (other than any such Pre-IPO Covered Tax Assets or Exchange Covered Tax Assets that constitute or have resulted in net operating losses, excess interest deduction, or credit carryforwards or carryovers (determined as of the Early Termination Date), which shall be governed by paragraph 4 below) during such Taxable Year or future Taxable Years in which such deductions or other attributes would become available;

 

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(2) the U.S. federal income tax rates that will be in effect for each such Taxable Year will be those specified for each such Taxable Year by the Code and other law as in effect on the Early Termination Date, except to the extent any change to such tax rates for such Taxable Year have already been enacted into law;

(3) all taxable income of the Corporate Group will be subject to the maximum applicable tax rate for U.S. federal income tax purposes throughout the relevant period, and the tax rate for U.S. state and local income taxes shall be the Assumed State and Local Tax Rate as in effect for the Taxable Year of the Early Termination Date;

(4) any net operating loss, excess interest deduction, or credit carryovers or carrybacks (or similar items with respect to carryovers or carrybacks) generated by any Pre-IPO Covered Tax Asset or Exchange Covered Tax Asset and available as of the Early Termination Date will be used by the Corporation ratably over a period beginning on the Early Termination Date and ending on the earlier of (i) 15 years following the Early Termination Date, or (ii) the scheduled expiration date, if any, under applicable Tax law of such net operating losses, excess interest deductions, or credit carryovers or carrybacks (or similar items with respect to carryovers or carrybacks);

(5) any non-amortizable assets (other than equity interests in Subsidiaries that are treated as corporations for U.S. federal income tax purposes) will be disposed of in a fully taxable transaction on the fifteenth anniversary of the IPO Date (or, if later, on the Early Termination Date) ; provided, that in the event of a Change of Control, (i) such non-amortizable assets shall be disposed of at the time of the sale of the relevant asset (if earlier than such fifteenth anniversary); and (ii) such non-amortizable assets shall be considered to have been disposed of on the date of the Change of Control, if such Change of Control occurs more than 15 years after the applicable Exchange or IPO Date, as applicable;

(6) if, on the Early Termination Date, any Exchange TRA Party has Units that have not been Exchanged, then such Units shall be deemed to be Exchanged for the Market Value that would be received by such Exchange TRA Party if such Units had been Exchanged on the Early Termination Date, and such Exchange TRA Party shall be deemed to receive the amount of cash such Exchange TRA Party would have been entitled to pursuant to Section 4.3(a) had such Units actually been Exchanged on the Early Termination Date; and

(7) any payment obligations pursuant to this Agreement will be satisfied on the date that any Tax Return to which such payment obligation relates is required to be filed excluding any extensions.

Zuffa Interests” means any equity interests in Zuffa Parent, LLC (including for this purpose any warrants to acquire equity interests in Zuffa Parent, LLC)..

Section 1.2 Rules of Construction. Unless otherwise specified herein:

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

 

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(b) For purposes of interpretation of this Agreement:

(i) The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision thereof.

(ii) References in this Agreement to a Schedule, Article, Section, clause or sub-clause refer to the appropriate Schedule to, or Article, Section, clause or subclause in, this Agreement.

(iii) References in this Agreement to dollars or “$” refer to the lawful currency of the United States of America.

(iv) The term “including” is by way of example and not limitation.

(v) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

(c) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(d) Section headings herein are included for convenience of reference only and shall not affect the interpretation of this Agreement.

(e) Unless otherwise expressly provided herein, (a) references to organization documents (including the LLC Agreement), agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are permitted hereby; and (b) references to any law (including the Code and the Treasury Regulations) shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law.

ARTICLE II.

DETERMINATION OF REALIZED TAX BENEFIT

Section 2.1 Attribute Schedule. Following the IPO Date, within ninety (90) calendar days after the filing of Form 1120 (or any successor form) of the Corporate Group for a given Taxable Year, the Corporation shall deliver to the Representative, the KKR Representative and the SL Representative a schedule (the “Attribute Schedule”) that shows, in reasonable detail, (i) the Pre-IPO Covered Tax Assets that are available for use by the Corporate Group with respect to each Reorganization TRA Party with respect to such Taxable Year and the portion of the Pre-IPO Covered Tax Assets that are available for use by the Corporate Group with respect to each Reorganization TRA Party with respect to future Taxable Years; (ii) the Exchange Covered Tax Assets that are available for use by the Corporation with respect to such Taxable Year with respect to each Exchange TRA Party that has effected an Exchange (including the Basis Adjustments with

 

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respect to the Reference Assets resulting from Exchanges effected in such Taxable Year and the periods over which such Basis Adjustments are amortizable or depreciable), and the portion of the Exchange Covered Tax Assets that are available for use by the Corporate Group with respect to each Exchange TRA Party that has effected an Exchange in future Taxable Years. The Attribute Schedule shall also list any limitations on the ability of the Corporate Group to utilize any Pre-IPO Covered Tax Assets or Exchange Covered Tax Assets under applicable laws (including as a result of the operation of Section 382 of the Code or Section 383 of the Code).

Section 2.2 Tax Benefit Schedule.

(a) Tax Benefit Schedule. Within ninety (90) calendar days after the filing of the Form 1120 (or any successor form) of the Corporate Group for any Taxable Year, the Corporation shall provide to the Representative, the KKR Representative and the SL Representative a schedule showing, in reasonable detail, the calculation of the Tax Benefit Payment in respect of each TRA Party for such Taxable Year and the calculation of the Realized Tax Benefit and Realized Tax Detriment and the components thereof for such Taxable Year (a “Tax Benefit Schedule”). Each Tax Benefit Schedule will become final as provided in Section 2.3(a) and may be amended as provided in Section 2.3(b) (subject to the procedures set forth in Section 2.3(b)).

(b) Applicable Principles. For purposes of calculating the Realized Tax Benefit or Realized Tax Detriment for any period, carryovers or carrybacks of any Tax item attributable to the Pre-IPO Covered Tax Assets and the Exchange Tax Assets shall be considered to be subject to the rules of the Code and the Treasury Regulations, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any Tax item includes a portion that is attributable to a Pre-IPO Covered Tax Asset or an Exchange Covered Tax Asset and another portion that is not, such respective portions shall be considered to be used in accordance with the “with and without” methodology. For the avoidance of doubt, the Corporation shall be entitled to make reasonable simplifying assumptions in making determinations contemplated by this Agreement, including reasonable assumptions regarding basis recovery periods based on available balance sheet information and including the assumption that the Assumed State and Local Tax Rate is to be applied against the amount of taxable income of the Corporate Group for U.S. federal income tax purposes that is used in calculating the Actual Tax Liability and the Hypothetical Tax Liability (and the parties hereby agree that that the Corporation’s determination of the Realized Tax Benefit and Realized Tax Detriment with respect to U.S. state and local taxes will not take into account jurisdiction-specific U.S. state and local adjustments to the U.S. federal taxable income base or to the U.S. federal rules regarding the utilization of tax attribute carryovers).

Section 2.3 Procedures, Amendments.

(a) Procedure. Every time the Corporation delivers to the Representative, the KKR Representative and the SL Representative a Schedule under this Agreement, including any Amended Schedule delivered pursuant to Section 2.3(b), and any Early Termination Schedule or amended Early Termination Schedule, the Corporation shall also (x) deliver to the Representative, the KKR Representative and the SL Representative schedules, valuation reports, if any, and work papers, as determined by the Corporation or reasonably requested by the Representative, the KKR Representative or the SL Representative, providing reasonable detail regarding the preparation of

 

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the Schedule, and (y) allow the Representative, the KKR Representative and the SL Representative reasonable access at no cost to the appropriate representatives of the Corporation, as determined by the Corporation or requested by the Representative, the KKR Representative or the SL Representative, in connection with the review of such Schedule. Without limiting the application of the preceding sentence, each time the Corporation delivers to the Representative, the KKR Representative and the SL Representative a Tax Benefit Schedule, in addition to the Tax Benefit Schedule duly completed, the Corporation shall deliver to the Representative, the KKR Representative and the SL Representative a reasonably detailed calculation of the Corporate Group of the applicable Hypothetical Tax Liability, the reasonably detailed calculation of the applicable Actual Tax Liability, as well as any other work papers as determined by the Corporation or requested by the Representative, the KKR Representative or SL Representative, provided that the Corporation shall not be required to provide any information that it reasonably believes is unnecessary for purposes of determining the items in the applicable Schedule or amendment thereto. An applicable Schedule or amendment thereto shall become final and binding on all parties thirty (30) calendar days after the first date on which the Representative, the KKR Representative and SL Representative has received the applicable Schedule or amendment thereto unless the Representative, the KKR Representative or the SL Representative (i) provides the Corporation with notice of a material objection to such Schedule (“Objection Notice”) made in good faith or (ii) each provides a written waiver of such right of any Objection Notice within the period described in clause (i) above, in which case such Schedule or amendment thereto becomes binding on the date the last such waiver is received by the Corporation. If the Corporation and the Representative, the KKR Representative and SL Representative, for any reason, are unable to successfully resolve the issues raised in the Objection Notice within thirty (30) calendar days after receipt by the Corporation of an Objection Notice, then the Corporation and the Representative, the KKR Representative and the SL Representative shall employ the reconciliation procedures described in Section 7.9 of this Agreement (the “Reconciliation Procedures”).

(b) Amended Schedule. The applicable Attribute Schedule or Tax Benefit Schedule for any Taxable Year may be amended from time to time by the Corporation (i) in connection with a Determination affecting such Schedule, (ii) to correct inaccuracies in the Schedule identified after the date the Schedule was provided to the Representative, the KKR Representative and the SL Representative, (iii) to comply with the Expert’s determination under the Reconciliation Procedures, (iv) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Taxable Year, or (v) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year (any such Schedule, an “Amended Schedule”). The Attribute Schedule shall be appropriately amended by the Corporation, the Representative, the KKR Representative and the SL Representative to the extent that, as a result of a Determination, the Corporation is required to calculate its Tax liability in a manner inconsistent with the Attribute Schedule. The Corporation shall provide an Amended Schedule to the Representative, the KKR Representative and the SL Representative within sixty (60) calendar days of the occurrence of an event referenced in clauses (i) through (v) of the first sentence of this Section 2.3(b).

 

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ARTICLE III.

TAX BENEFIT PAYMENTS

Section 3.1 Timing and Amount of Tax Benefit Payments.

(a) Within five (5) Business Days after a Tax Benefit Schedule delivered to the Representative, the SL Representative and the KKR Representative becomes final in accordance with Section 2.3(a), the Corporation shall pay or cause to be paid to each TRA Party for such Taxable Year an amount equal to the excess, if any, of (i) the Tax Benefit Payment in respect of such TRA Party for such Taxable Year determined pursuant to Section 3.1(b) over (ii) the aggregate amount of Advance Payments previously made to such TRA Party in respect of such Taxable Year; provided that, if the Corporation makes Advance Payments, it shall make Advance Payments to all parties eligible to receive payments under this Tax Receivable Agreement with respect to a particular Taxable Year in proportion to their respective amount of anticipated payments under this Tax Receivable Agreement in respect of such Taxable Year. Each such Tax Benefit Payment or such Advance Payment shall be made by wire transfer of immediately available funds to the bank account previously designed by such TRA Party to the Corporation or as otherwise agreed by the Corporation and such TRA Party.

(b) A “Tax Benefit Payment” in respect of a TRA Party means an amount, not less than zero, equal to the sum of the portion of the Net Tax Benefit that is Attributable to such TRA Party and the Interest Amount with respect thereto. A Net Tax Benefit is “Attributable” to a Reorganization TRA Party to the extent that it is derived from a Pre-IPO Covered Tax Asset with respect to the Blocker Entity (or Units owned by such Blocker Entity) that was previously owned by such Reorganization TRA Party (in the case of a Blocker Entity with respect to which there is more than one Reorganization TRA Party, with the Net Tax Benefit apportioned to such Blocker Entity split among such Reorganization TRA Parties in a manner consistent with Exhibit B). A Net Tax Benefit is “Attributable” to an Exchange TRA Party to the extent that is derived from an Exchange Covered Tax Asset with respect to Units or Zuffa Interests that were Exchanged by such TRA Party. The “Net Tax Benefit” for a Taxable Year shall be an amount equal to the excess, if any, of 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over the sum of the total amount of payments previously made under Section 3.1(a) (excluding payments attributable to Interest Amounts) and the Advance Payments previously made under Section 3.1(b) of this Agreement; provided, for the avoidance of doubt, that (1) a TRA Party shall not be required to return any portion of any previously made Tax Benefit Payment or Advance Payment it receives under this Agreement; (2) no amounts due to a TRA Party under this Agreement shall be escrowed; (3) no TRA Party shall be required to make a payment to the Corporation on account of a Realized Tax Detriment. The “Interest Amount” in respect of the TRA Party shall equal the interest on the amount of the unpaid Net Tax Benefit Attributable to such TRA Party for a Taxable Year, which interest shall accrue on any unpaid Net Tax Benefit from and after the due date (without extensions) for filing the Form 1120 (or any successor form) for the Corporate Group for such Taxable Year, calculated at the Agreed Rate, until the date such unpaid amounts are paid. For the avoidance of doubt, for Tax purposes, the Interest Amount shall not be treated as interest but instead shall be treated as additional consideration in the

 

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Reorganization or Exchange, as applicable, unless otherwise required by law. “Advance Payments” in respect of a TRA Party for a Taxable Year means the payments made by the Corporation to such TRA Party as an advance of such TRA Party’s anticipated Tax Benefit Payment for such Taxable Year. The Corporation shall be entitled at its option to make Advance Payments. Notwithstanding the foregoing, for each Taxable Year ending on or after the date of a Change of Control, all Tax Benefit Payments shall be calculated by utilizing Valuation Assumptions (1) and (5), substituting in each case the terms “the date of a Change of Control” for an “Early Termination Date.” Notwithstanding anything to the contrary in this Agreement, after any lump-sum payment under Article IV of this Agreement in respect of present or future Pre-IPO Covered Tax Assets or Exchange Covered Tax Assets, such Pre-IPO Covered Tax Assets or Exchange Covered Tax Assets shall no longer be considered Pre-IPO Covered Tax Assets or Exchange Covered Tax Assets for purposes of determining Tax Benefit Payments or the Net Tax Benefit.

Section 3.2 No Duplicative Payments. It is intended that the provisions of this Agreement will not result in duplicative payment of any amount (including interest) required under this Agreement. The provisions of this Agreement shall be construed consistent with such intent.

Section 3.3 Pro Rata Payments.

(a) Notwithstanding anything in Section 3.1 to the contrary, to the extent that the aggregate amount of the tax benefit to the Corporate Group from the reduction in Tax Liability as a result of the Pre-IPO Covered Tax Assets and the Exchange Covered Tax Assets is limited in a particular Taxable Year because the Corporate Group does not have sufficient taxable income to fully utilize available deductions and other attributes, the Net Tax Benefit giving rise to Tax Benefit Payments shall be allocated among the TRA Parties in proportion to the respective amounts of Tax Benefit Payments that would have been paid under this Agreement if the Corporate Group had sufficient taxable income so that there were no such limitation; provided, that, for the avoidance of doubt, for purposes of allocating among the TRA Parties the aggregate Tax Benefit Payments payable under this Agreement with respect to any Taxable Year, the operation of this Section 3.3(a) with respect to any prior Taxable Years shall be taken into account. Consistent with the foregoing, the Attribute Schedule for a given Taxable Year shall reflect the operation of this Section 3.3(a) in respect of previous Taxable Years, with the Pre-IPO Covered Tax Assets and Exchange Covered Tax Assets described in such Attribute Schedule that are attributable to a TRA Party being adjusted to reflect payments received in respect of such Pre-IPO Covered Tax Assets and Exchange Covered Tax Assets (the intention of the parties being to avoid duplicative payments and maintain records sufficient to allow the Corporation to allocate Tax Benefit Payments consistent with the terms of this Section 3.3(a)).

(b) After taking into account Section 3.3(a), if for any reason the Corporation does not fully satisfy its payment obligations to make Tax Benefit Payments due under this Agreement in respect of a particular Taxable Year (for example, as a result of having insufficient cash to make the Tax Benefit Payments due hereunder), then the Corporation and the TRA Parties agree that (i) the Corporation shall make payments due hereunder to the TRA Parties in respect of a Taxable Year in the same proportion as such payments would have been made if the relevant payment had been made in full by the Corporation, and (ii) no Tax Benefit Payment shall be made in respect of any Taxable Year until all Tax Benefit Payments in respect of prior Taxable Years have been paid.

 

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(c) To the extent the Corporation makes a payment to a TRA Party in respect of a particular Taxable Year under Section 3.1(a) of this Agreement (taking into account Section 3.3(a) and (b)) in an amount in excess of the amount of such payment that should have been made to the TRA Party in respect of such Taxable Year, then (i) the TRA Party shall not receive further payments under Section 3.1(a) until the TRA Party has foregone an amount of payments equal to such excess and (ii) the Corporation shall pay the amount of the TRA Party’s foregone payments to other TRA Parties (to the extent applicable) in a manner such that each of the other TRA Parties, to the extent possible, shall have received aggregate payments under Section 3.1(a) and (b) in the amount it would have received if there had been no excess payment to the TRA Party.

ARTICLE IV.

TERMINATION

Section 4.1 Early Termination of Agreement; Breach of Agreement.

(a) With the prior written approval of the Governing Body (or any Person(s) to whom the Governing Body has delegated such authority), the Corporation may terminate this Agreement with respect to all amounts payable to the TRA Parties at any time by paying to each TRA Party the Early Termination Payment in respect of the TRA Party; provided, however, that (i) this Agreement shall only terminate pursuant to this Section 4.1(a) upon the receipt in full of the Early Termination Payment by the TRA Parties; (ii) the Corporation shall deliver an Early Termination Notice only if it is able to make all required Early Termination Payments under this Agreement; (iii) the Corporation may withdraw any notice to execute its termination rights under this Section 4.1(a) prior to the time at which any Early Termination Payment has been paid.

(b) In the event that the Corporation breaches any of its material obligations under this Agreement, whether as a result of a failure to make any payment when due, a failure to honor any other material obligation required hereunder or by operation of law as a result of the rejection of this Agreement in a case commenced under the Bankruptcy Code or otherwise, and the Corporation fails to cure such breach within 20 Business Days of a TRA Party informing the Corporation of such breach, then, at the election of the Representative, the KKR Representative or the SL Representative, subject to the following proviso, all obligations hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of such breach; provided, that (i) if the Representative makes such election, then such election shall be binding on all TRA Parties (other than the SL TRA Parties and the KKR TRA Parties), (ii) if the SL Representative makes such election, then the SL Representative’s election shall be binding only on the SL TRA Parties, (iii) if the KKR TRA Representative makes such election, then the KKR Representative’s election shall be binding only on the KKR TRA Parties, and (iv) at least five (5) Business Days prior to making any such election, the Representative, the KKR Representative or the SL Representative (as the case may be) shall provide written notice to the others in order to permit the other, if it wishes, to make its election simultaneously. Procedures similar to the procedures of Section 4.2 shall apply, mutatis mutandis, with respect to the determination of the amounts payable by the Corporation pursuant to this Section 4.1(b). Notwithstanding the foregoing, in the event that the Corporation breaches this Agreement, the Representative shall be entitled to elect on behalf of all TRA Parties (other than the SL TRA Parties and the KKR TRA Parties) and the SL Representative shall be entitled to elect on behalf of the SL TRA Parties, and the KKR Representative shall be entitled to elect on behalf

 

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of the KKR TRA Parties, in each case, to receive the amounts referred to in this Section 4.1(b) or to seek specific performance of the terms of this Agreement. Notwithstanding anything in this Agreement to the contrary, it shall not be a breach of this Agreement if the Corporation fails to make any Tax Benefit Payment when due to the extent that the Corporation has insufficient funds to make such payment despite using reasonable best efforts to obtain funds to make such payment (including by causing the LLC or any other Subsidiaries of the LLC to distribute or lend funds to facilitate such payment, and by accessing any revolving credit facilities or other sources of available credit to fund any such amounts); provided, that (x) the interest provisions of Section 5.2 shall apply to such late payment, and (y) solely with respect to a Tax Benefit Payment, if the Corporation does not have sufficient cash to make such payment as a result of limitations imposed by existing credit agreements to which the LLC is a party, which limitations are effective as of the date of this Agreement, Section 5.2 shall apply, but the Default Rate shall be replaced by the Agreed Rate.

(c) In connection with a Change of Control, (i) at the election of the Representative, all obligations hereunder with respect to the TRA Parties shall be terminated, (ii) only if the Representative has not elected to terminate pursuant to clause (i), at the election of the SL Representative, all obligations with respect to the SL TRA Parties shall be terminated, and (iii) only if the Representative has not elected to terminate pursuant to clause (i), at the election of the KKR Representative, all obligations with respect to the KKR TRA Parties shall be terminated. The Corporation hereby agrees to provide twenty days prior written notice to each TRA Party of a Change of Control. Within ten days of receipt of such notice, the Representative shall provide written notice as to whether it will terminate this Agreement pursuant to clause (i), and if the Representative does not so elect to terminate, within twenty days of receipt of such notice of such Change of Control from the Corporation, (A) the SL Representative shall provide notice as to whether it will terminate this Agreement with the SL TRA Parties pursuant to clause (ii) with respect to the applicable TRA Parties and (B) the KKR Representative shall provide notice as to whether it will terminate this Agreement with the KKR TRA Parties pursuant to clause (iii) with respect to the applicable TRA Parties. If the Representative, the KKR Representative or the SL Representative elects to terminate the Agreement, then all obligations under this Agreement with respect to the applicable TRA Parties shall be accelerated and such obligations shall be calculated as if an Early Termination Notice had been delivered on the date of the Change of Control. Procedures similar to the procedures of Section 4.2 shall apply, mutatis mutandis, with respect to the determination of the amounts payable by the Corporation.

Section 4.2 Early Termination Notice. If the Corporation chooses to exercise its right of early termination under Section 4.1(a) above, the Corporation shall deliver to the Representative, the KKR Representative and the SL Representative notice of such intention to exercise such right (“Early Termination Notice”). In addition, if the Corporation chooses to exercise its right of early termination under Section 4.1(a) above, the obligations under this Agreement are accelerated under Section 4.1(b) above or the Representative, the KKR Representative or the SL Representative, as applicable, exercise their right to terminate this Agreement under Section 4.1(c) above, the Corporation shall deliver to the Representative and the SL Representative and the KKR Representative a schedule (the “Early Termination Schedule”) showing in reasonable detail the calculation of the Early Termination Payment due to each TRA Party. Such Early Termination Schedule shall become final and binding on all parties consistent with the procedures described in Section 2.3(a). The date on which the Early Termination Schedule becomes final shall be the “Early Termination Effective Date.”

 

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Section 4.3 Payment upon Early Termination.

(a) Within three (3) calendar days after an Early Termination Effective Date, the Corporation shall pay to the TRA Parties an amount equal to the Early Termination Payment in respect of such TRA Party. Such payment shall be made by wire transfer of immediately available funds to a bank account or accounts designated by the TRA Party or as otherwise agreed by the Corporation and such TRA Party.

(b) “Early Termination Payment” in respect of a TRA Party shall equal (i) the present value, discounted at the Early Termination Rate, as of the date of the Early Termination Notice, of all Tax Benefit Payments in respect of such TRA Party that would be required to be paid by the Corporation beginning from the date of the Early Termination Notice and applying the Valuation Assumptions, plus (ii) any Tax Benefit Payment agreed to by the Corporation, the Representative, the KKR Representative and the SL Representative as due and payable with respect to such TRA Party that is unpaid as of the date of the Early Termination Notice, plus (iii) any Tax Benefit Payment due and payable with respect to such TRA Party for a Taxable Year ending prior to the date of the Early Termination Notice, plus (iv) (without duplication) interest accruing on the amounts described in clauses (i) through (iii) (which shall include interest accruing on the amount described in clause (i) from the date of the Early Termination Notice).

(c) Upon the payment of the Early Termination Payment by the Corporation to a TRA Party, the Corporation shall not have any further payment obligations under this Agreement in respect of such TRA Party.

ARTICLE V.

SUBORDINATION AND LATE PAYMENTS

Section 5.1 Subordination. Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment or Early Termination Payment required to be made by the Corporation under this Agreement shall rank subordinate and junior in right of payment to any principal, interest, or other amounts due and payable in respect of any obligations owed in respect of secured or unsecured indebtedness for borrowed money of the Corporation and its Subsidiaries (“Senior Obligations”) and shall rank pari passu in right of payment with all current or future unsecured obligations of the Corporation that are not Senior Obligations. To the extent that any payment under this Agreement is not permitted to be made at the time payment is due as a result of this Section 5.1 and the terms of the agreements governing Senior Obligations, such payment obligation nevertheless shall accrue for the benefit of the applicable TRA Parties and the Corporation shall make such payments at the first opportunity that such payments are permitted to be made in accordance with the terms of the Senior Obligations. Except as otherwise determined by the Governing Body (with the approval of the SL Representative and the Representative), payments under any tax receivable agreement (or similar agreement) entered into by the Corporation, the LLC, or their Subsidiaries after the date hereof shall be subordinate to all payments owed pursuant to this Agreement, and no such payments shall be made (i) for so long as the Corporation has any unpaid obligation pursuant this Agreement; and (ii) with respect to any particular taxable period governed by such tax receivable agreement until payments with respect to such taxable period under this Agreement have been determined and (if any) paid.

 

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Section 5.2 Late Payments by the Corporation. The amount of all or any portion of any Tax Benefit Payment, Early Termination Payment or other payment under this Agreement not made to the TRA Parties when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Default Rate and commencing from the date on which such Tax Benefit Payment, Early Termination Payment or other payment was due and payable.

ARTICLE VI.

TAX MATTERS; CONSISTENCY; COOPERATION

Section 6.1 Participation in the Corporation’s and the LLC’s Tax Matters. Except as otherwise provided herein, the Corporation (and Endeavor Manager, as applicable) shall have full responsibility for, and sole discretion over, all tax matters concerning the Corporation and the LLC and its Subsidiaries, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to taxes; provided, however, that the Corporation shall notify the Representative, the KKR Representative and the SL Representative of, and keep them reasonably informed with respect to, the portion of any audit of the Corporation, the LLC or any of their Subsidiaries the outcome of which is reasonably expected to affect the rights and obligations of the TRA Parties under this Agreement, and shall provide to the Representative, the KKR Representative and the SL Representative reasonable opportunity to provide information and other input to the Corporation, the LLC and their Subsidiaries concerning the conduct of any such portion of such audit, which information and other input the Corporation, the LLC and their Subsidiaries, as applicable, shall consider in good faith.

Section 6.2 Consistency. The Corporation, Endeavor Manager, the LLC and the TRA Parties agree to report and cause to be reported for all purposes, including federal, state and local Tax purposes and financial reporting purposes, all Tax-related items (including, without limitation, the Basis Adjustments and each Tax Benefit Payment) in a manner consistent with that specified in any Schedule finalized consistent with the terms of this Agreement, unless otherwise required by Law.

Section 6.3 Cooperation. Each of the Corporation, Endeavor Manager, the LLC and the TRA Parties shall (a) furnish to the other parties in a timely manner such information, documents and other materials as the other party may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, completing any financial statement audit, preparing any Tax Return or defending any audit, examination or controversy with any Taxing Authority, (b) make itself available to the other party and its representatives to provide explanations of documents and material and such other information as the other party or its representatives may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter, and the Corporation shall reimburse each TRA Party for any reasonable third-party costs and expenses incurred pursuant to this Section at the request of the Corporation, Endeavor Manager or the LLC.

 

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ARTICLE VII.

MISCELLANEOUS

Section 7.1 Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax, by electronic mail (delivery receipt requested) or by certified or registered mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be as specified in a notice given in accordance with this Section 7.1). All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:

If to the Corporation, Endeavor Manager or the LLC, to:

c/o Endeavor Group Holdings, Inc.

9601 Wilshire Boulevard, 3rd Floor

Beverly Hills, California 90210

Attention:   Chief Executive Officer

                   Executive Chairman

                   General Counsel

Facsimile No.: (310) 285-9010

E-mail: ***

with a copy (which shall not constitute notice to the Corporation, Endeavor Manager or the LLC) to:

Latham & Watkins LLP

1271 Avenue of the Americas

New York, NY 10020

Attention:   Justin G. Hamill

                   Matthew C. Dewitz

                   Facsimile No.: (212) 751-4864

E-mail: ***

             ***

If to the Representative:

c/o Endeavor Group Holdings, Inc.

9601 Wilshire Boulevard, 3rd Floor

Beverly Hills, California 90210

Attention:   Chief Executive Officer

                   Executive Chairman

                   General Counsel

Facsimile No.: (310) 285-9010

E-mail: ***

 

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with a copy (which shall not constitute notice to the Representative) to:

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Attention:   Justin G. Hamill

                   Lisa G. Watts

                   Matthew C. Dewitz

Facsimile No.: (212) 751-4864

E-mail: ***

             ***

             ***

If to the SL Representative:

Silver Lake

55 Hudson Yards

550 West 34th Street, 40th Floor

New York, NY 10001

Attention: Andrew J. Schader

E-mail: ***

with a copy (which shall not constitute notice to the SL Representative) to:

Simpson Thacher & Bartlett LLP

2475 Hanover Street

Palo Alto, California 94304

Attention:   Andrew B. Purcell

                   Daniel N. Webb

Facsimile No.: (650) 251-5002

E-mail: ***

             ***

If to the KKR Representative:

Kohl Kravis Roberts & Co. L.P.

30 Hudson Yards

New York, NY 10001

Attention: General Counsel

Fax: (212) 570-0003

***

with a copy (which shall not constitute notice to the KKR Representative) to:

Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

Attention: Sean Rodgers, P.C.

Ravi Agarwal, P.C.

Fax: 212 446-4900

Email: ***

Any Party may change its address, fax number or e-mail address by giving each of the other Parties written notice thereof in the manner set forth above.

 

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Section 7.2 Counterparts; Electronic Signature. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart. Delivery of an executed signature page to this Agreement by facsimile transmission or electronic delivery (i.e. by email of a PDF signature page) shall be as effective as delivery of a manually signed counterpart of this Agreement and shall constitute and original for all purposes. The parties hereto hereby agree that this Agreement may be executed by way of electronic signatures and that the electronic signature has the same binding effect as a physical signature. For the avoidance of doubt, the parties hereto further agree that this Agreement, or any part thereof, shall not be denied legal effect, validity or enforceability solely on the ground that it is in the form of an electronic record.

Section 7.3 Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each Party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.4 Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of Delaware, without regard to the conflicts of laws principles thereof that would mandate the application of the laws of another jurisdiction.

Section 7.5 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Section 7.6 Assignments; Amendments; Successors; No Waiver.

(a) Assignment.

(i) No TRA Party may assign, sell, pledge, or otherwise alienate or transfer any interest in this Agreement, including the right to receive any Tax Benefit Payments under this Agreement, to any Person (other than a Permitted Transferee) without (i) the prior written consent of the Governing Body (or any Person(s) to whom the Governing Body has delegated such authority) (such consent not to be unreasonably withheld) and (ii) such Person executing and delivering a Joinder agreeing to succeed to the applicable portion of such TRA Party’s interest in this Agreement and to become a Party for all purposes of this Agreement (the “Joinder Requirement”); provided, however, that such consent shall not be required in the case of (x) Permitted Transfers of Units or transfers by an executive set forth on Schedule 8.02(b) attached to

 

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the LLC Agreement (or one of his or her other Permitted Transferees) to immediate family members or estate planning vehicles or (y) a pledge, assignment or similar transfer to a debt financing source reasonably acceptable to the Governing Body for the purpose of creating a security interest herein or otherwise assigning collateral. For the avoidance of doubt, if a TRA Party transfers Units in accordance with the terms of the LLC Agreement but does not assign to the transferee of such Units its rights under this Agreement with respect to such transferred Units, such TRA Party shall continue to be entitled to receive the Tax Benefit Payments arising in respect of a subsequent Exchange of such Units (and any such transferred Units shall be separately identified, so as to facilitate the determination of Tax Benefit Payments hereunder). The Corporation may not assign any of its rights or obligations under this Agreement to any Person (other than any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation) without the prior written consent of each of the Representative and the SL Representative (and any purported assignment without such consent shall be null and void).

(ii) Notwithstanding anything to the contrary in this Section 7.6(a), following the applicable Permitted Transfer Date (as defined below), each of the Executive Directors, their permitted transferees pursuant to Section 8.02(b) of the LLC Agreement and the SL TRA Parties may assign, sell, pledge or otherwise alienate or transfer any interest in this Agreement subject only to the Joinder Requirement. As used herein, “Permitted Transfer Date” means (i) with respect to the Executive Directors and their permitted transferees pursuant to Section 8.02(b) of the LLC Agreement, sixty days following delivery of written notice from the Representative to the SL Representative indicating the intent of the Executive Directors and/or their permitted transferees pursuant to Section 8.02(b) of the LLC Agreement to assign, sell, pledge or otherwise alienate or transfer an interest in this Agreement, provided that such notice cannot be delivered until the earlier of (x) the seventh anniversary of the date hereof and (y) the Ownership Trigger Date (as defined herein), and (ii) with respect to the SL TRA parties, (A) the later of (x) the seventh anniversary of the date hereof and (y) such time (the “Ownership Trigger Date”) as the Executive Directors, their permitted transferees pursuant to Section 8.02(b) of the LLC Agreement, the SL Member and the SL Related Entities cease to beneficially own, directly or indirectly, in the aggregate, securities of the Corporation representing a majority of the combined voting power of the Corporation’s then outstanding securities generally entitled to vote in the election of directors or (B) if earlier than the time determined pursuant to clause (ii)(A), sixty days after the date of delivery of the written notice described in the foregoing clause (i). At any time that the SL TRA Parties are permitted to assign, sell, pledge or otherwise alienate or transfer their interests in this Agreement by operation of this Section 7.06(a)(ii), the KKR TRA Parties shall be permitted to sell, pledge or otherwise alienate or transfer their interests in this Agreement (whether or not any SL TRA Party has assigned, sold, pledged or otherwise alienated or transferred their interests in this Agreement).

(b) Amendments. No provision of this Agreement may be amended unless such amendment is approved in writing by each of (i) the Governing Body (or any Person(s) to whom the Governing Body has delegated such authority); and (ii) the TRA Parties who collectively would be entitled to receive at least a majority of any Early Termination Payments that would be hypothetically payable to all TRA Parties (assuming all equity interests in the LLC that have redemption rights under the LLC Agreement are redeemed and exchanged for shares of Class A Common Stock at such time and using the Valuation Assumptions). Notwithstanding the foregoing, (w) no provision of this Agreement may be amended in a manner that has a

 

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disproportionate material and adverse effect on the Exchange TRA Parties, on the one hand, or the Reorganization TRA Parties, on the other hand, without the consent of TRA Parties of the relevant class that are entitled to receive at least a majority of the Early Termination Payments payable to such TRA Parties of such class (assuming all equity interests in the LLC that have redemption rights under the LLC Agreement are redeemed and exchanged for shares of Class A Common Stock and using the Valuation Assumptions) without such TRA Parties’ consent; (x) no provision of this Agreement may be amended in a manner that has a disproportionate material and adverse effect on the KKR TRA Parties relative to the SLP TRA Parties (or shall modify unique rights specifically granted to the KKR TRA Parties or KKR Representative in their capacity as such) without the consent of the KKR Representative; (y) no provision of this Agreement may be amended in a manner that has a disproportionate material and adverse effect on the SL TRA Parties without the consent of the SL Representative, and (z) no provision of this Agreement may be amended in a manner that has a disproportionate material and adverse effect on any TRA Party (other than a KKR TRA Party or SL TRA Party) without the consent of the Representative.

(c) Successors. Except as provided in Section 7.6(a), all of the terms and provisions of this Agreement shall be binding upon, and shall inure to the benefit of and be enforceable by, the Parties hereto and their respective successors, assigns, heirs, executors, administrators and legal representatives. The Corporation shall require and cause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation, by written agreement, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.

(d) Waiver. No failure by any Party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement, or to exercise any right or remedy consequent upon a breach thereof, shall constitute a waiver of any such breach or any other covenant, duty, agreement, or condition.

Section 7.7 Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Section 7.8 Resolution of Disputes.

(a) Except for Reconciliation Disputes subject to Section 7.9, any and all disputes which cannot be settled amicably, including any ancillary claims of any party, arising out of, relating to or in connection with this Agreement (each a “Dispute”) shall be finally resolved by arbitration in accordance with the International Institute for Conflict Prevention and Resolution Rules for Administered Arbitration (the “Rules”) by three arbitrators, of which the Corporation shall appoint one arbitrator and the Representative and SL Representative shall appoint one arbitrator in accordance with the “screened” appointment procedure provided in Rule 5.4. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of the arbitration shall be New York, New York.

 

25


(b) Notwithstanding the provisions of paragraph (a), any party may bring an action or special proceeding in any court of competent jurisdiction for the purpose of compelling another party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of this paragraph (b), each party (i) expressly consents to the application of paragraph (c) of this Section 7.8 to any such action or proceeding, and (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of this Agreement would be difficult to calculate and that remedies at law would be inadequate. For the avoidance of doubt, this Section 7.8 shall not apply to Reconciliation Disputes to be settled in accordance with the procedures set forth in Section 7.9.

(c) Each party irrevocably consents to service of process by means of notice in the manner provided for in Section 7.1. Nothing in this Agreement shall affect the right of any party to serve process in any other manner permitted by law.

(d) WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).

(e) In the event the parties are unable to agree whether a dispute between them is a Reconciliation Dispute subject to the dispute resolution procedure set forth in Section 7.9 or a Dispute subject to the dispute resolution procedure set forth in this Section 7.8, such disagreement shall be decided and resolved in accordance with the procedure set forth in this Section 7.8.

Section 7.9 Reconciliation. In the event that the Corporation, the Representative, the KKR Representative and the SL Representative are unable to resolve a disagreement with respect to a Schedule (a “Reconciliation Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable to such parties. The Expert shall be a partner or principal in a nationally recognized accounting firm, and unless the Corporation, the Representative, the KKR Representative and the SL Representative agree otherwise, the Expert shall not, and the firm that employs the Expert shall not, have any material relationship with the Corporation, the Representative, the KKR Representative or the SL Representative or other actual or potential conflict of interest. If the Corporation, the Representative, the KKR Representative and the SL Representative are unable to agree on an Expert within fifteen (15) calendar days of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the selection of an Expert shall be treated as a Dispute subject to Section 7.8 and an arbitration panel shall pick an Expert from a nationally recognized accounting firm that does not have any material relationship with the Corporation, the Representative, the KKR Representative or the SL Representative or other actual or potential conflict of interest. The Expert shall resolve any matter relating to a Schedule or an amendment thereto as soon as reasonably practicable and in any event within thirty (30) calendar days after the matter has been submitted to the Expert for resolution. Notwithstanding the preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, the undisputed amount shall be paid on the date prescribed by

 

26


this Agreement and such Tax Return may be filed as prepared by the Corporation, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such Expert or amending any Tax Return shall be borne by the Corporation except as provided in the next sentence. The Corporation and the Representative, the KKR Representative and the SL Representative shall bear their own costs and expenses of such proceeding, unless (i) the Expert entirely adopts the position of the Representative, the KKR Representative and/or SL Representative, in which case the Corporation shall reimburse the Representative, the KKR Representative and/or SL Representative (as applicable) for any reasonable and documented out-of-pocket costs and expenses in such proceeding, or (ii) the Expert entirely adopts the Corporation’s position, in which case the whichever of the Representative, the KKR Representative or SL Representative (or all of them) that disputed the position shall reimburse the Corporation for any reasonable and documented out-of-pocket costs and expenses in such proceeding. The Expert shall finally determine any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9 shall be binding on the Corporation and the TRA Parties and may be entered and enforced in any court having competent jurisdiction.

Section 7.10 Representatives. Except as otherwise explicitly provided in this Agreement, (i) the actions of the SL Representative pursuant to and in accordance with this Agreement shall be binding only with respect to the SL TRA Parties and not with respect to the Representative, the KKR Representative or any other TRA Parties, (ii) the actions of the KKR Representative pursuant to and in accordance with this Agreement shall be binding only with respect to the KKR TRA Parties and not with respect to the Representative, the SL Representative or any other TRA Parties and (iii) the actions of the Representative pursuant to and in accordance with this Agreement shall be binding on all TRA Parties (except to the extent a matter is specifically reserved under this Agreement for the SL Representative and/or the KKR Representative, in which case the actions of the Representative with respect to such matter shall be binding on all TRA Parties other than the SL TRA Parties and/or the KKR Representative).

Section 7.11 Withholding. The Corporation and its affiliates and representatives shall be entitled to deduct and withhold from any payment that is payable to any TRA Party pursuant to this Agreement such amounts as are required to be deducted or withheld with respect to the making of such payment in accordance with the Code or any provision of U.S. state, local or foreign tax law (including for this purpose any withholding required by the Corporation or its affiliates that may be required in connection with the Reorganization, a Redemption or a Direct Exchange). To the extent that amounts are so deducted or withheld and paid over to the appropriate Taxing Authority, such amounts shall be treated for all purposes of this Agreement as having been paid by the Corporation to the relevant TRA Party. Each TRA Party shall promptly provide the Corporation with any applicable tax forms and certifications reasonably requested by the Corporation in connection with determining whether any such deductions and withholdings are required under the Code or any provision of U.S. state, local or foreign tax law, including under Sections 1441, 1442, 1445 or 1446 of the Code. The Corporation will consider in good faith any applicable certificates, forms or documentation provided by a TRA Party that in such TRA Party’s reasonable determination reduce or eliminate any such withholding.

 

27


Section 7.12 Consolidated Group; Transfers of Corporate Assets.

(a) The parties acknowledge that the Corporation and Endeavor Manager are members of the Corporate Group and that the provisions of this Agreement shall be applied with respect to the Corporate Group (and any other affiliated or consolidated Tax group of which the Corporation and Endeavor Manager become a part), and that Tax Benefit Payments, Early Termination Payments, and other applicable items hereunder shall be computed with reference to the consolidated taxable income of the group as a whole.

(b) If the Corporation, Endeavor Manager, their successors in interest or any member of a group described in Section 7.12(a) transfers one or more assets to a corporation (or a Person classified as a corporation for U.S. income tax purposes) with which the Corporation does not file a consolidated Tax Return for U.S. federal income Tax purposes (or if any entity that holds Reference Assets transfers any Reference Asset to a corporation (or a Person classified as a corporation for U.S. federal income tax purposes) with which the Corporation does not file a consolidated Tax Return for U.S. federal income Tax purposes), such entity, for purposes of calculating the amount of any Tax Benefit Payment or Early Termination Payment due hereunder, shall be treated as having disposed of such asset (or Reference Asset) in a fully taxable transaction on the date of such transfer. The consideration deemed to be received by such entity shall be equal to the fair market value of the transferred asset. For purposes of this Section 7.12, a transfer of a partnership interest shall be treated as a transfer of the transferring partner’s share of each of the assets and liabilities of that partnership. Notwithstanding anything to the contrary set forth herein, if the Corporation, its successor in interest or any member of a group described in Section 7.12(a), transfers its assets pursuant to a transaction that qualifies as a “reorganization” (within the meaning of Section 368(a) of the Code) in which such entity does not survive or pursuant to any other transaction to which Section 381(a) of the Code applies (other than any such reorganization or any such other transaction, in each case, pursuant to which such entity transfers assets to a corporation with which the Corporation, its successor in interest or any member of the group described in Section 7.12(a) (other than any such member being transferred in such reorganization or other transaction) does not file a consolidated Tax Return for U.S. federal income Tax purposes), the transfer will not cause such entity to be treated as having transferred any assets to a corporation (or a Person classified as a corporation for U.S. federal income tax purposes) pursuant to this Section 7.12(b) so long as the relevant successor is bound by the provisions of this Agreement.

Section 7.13 Confidentiality. Each TRA Party and its assignees acknowledges and agrees that the information of the Corporation and its Affiliates provided pursuant to this Agreement is confidential and, except in the course of performing any duties as necessary for the Corporation and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such Person shall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to this Agreement, of the Corporation and its Affiliates and successors, learned by any TRA Party heretofore or hereafter. This Section 7.13 shall not apply to (i) any information that has been made publicly available by the Corporation, becomes public knowledge (except as a result of an act of any TRA Party in violation of this Agreement) or is generally known to the business community, (ii) the disclosure of information to the extent necessary for a TRA Party to prosecute or defend claims arising under or relating to this Agreement, (iii) the disclosure of information to the extent necessary for a TRA Party to prepare and file its Tax Returns, to respond to any inquiries regarding the same from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any Taxing Authority with respect to such Tax Returns, (iv) the disclosure of financial and other information of the type typically

 

28


disclosed to limited partners and prospective investors in private equity funds affiliated with the SL TRA Parties and is made to the partners of, and/or prospective investors in, private equity Affiliates of the SL TRA Parties and such partner or prospective investor is bound by the confidentiality provisions of a customary non-disclosure agreement entered into with the disclosing party that covers the confidential information so disclosed, and (v) the disclosure of information necessary to effect an assignment, sale, pledge, alienation or transfer of any interest in this Agreement pursuant to Section 7.6(a). If a TRA Party or an assignee commits a breach, or threatens to commit a breach, of any of the provisions of this Section 7.13, the Corporation shall have the right and remedy to have the provisions of this Section 7.13 specifically enforced by injunctive relief or otherwise by any court of competent jurisdiction without the need to post any bond or other security, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to the Corporation or any of its Subsidiaries and that money damages alone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

Section 7.14 Change in Law. Notwithstanding anything herein to the contrary, if, as a result of or, in connection with an actual or proposed change in Tax law, an Exchange TRA Party reasonably believes that the existence of this Agreement could have material adverse tax consequences to such Exchange TRA Party or any direct or indirect owner of such Exchange TRA Party, then at the written election of such Exchange TRA Party in its sole discretion (in an instrument signed by such Exchange TRA Party and delivered to the Corporation) and to the extent specified therein by such Exchange TRA Party, this Agreement shall cease to have further effect and shall not apply to an Exchange with respect to such Exchange TRA Party occurring after a date specified by such Exchange TRA Party, or may be amended by in a manner reasonably determined by such Exchange TRA Party, provided that such amendment shall not result in an increase in any payments owed by the Corporation under this Agreement at any time as compared to the amounts and times of payments that would have been due in the absence of such amendment and provided, further, that such amendment shall not have any adverse effect on any other TRA Party.

Section 7.15 Interest Rate Limitation. Notwithstanding anything to the contrary contained herein, the interest paid or agreed to be paid hereunder with respect to amounts due to any TRA Party hereunder shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”). If any TRA Party shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the Tax Benefit Payment, Advance Payment or Early Termination Payment, as applicable (but in each case exclusive of any component thereof comprising interest) or, if it exceeds such unpaid non-interest amount, refunded to the Corporation. In determining whether the interest contracted for, charged, or received by any TRA Party exceeds the Maximum Rate, such TRA Party may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the payment obligations owed by the Corporation to such TRA Party hereunder. Notwithstanding the foregoing, it is the intention of the Parties to conform strictly to any applicable usury laws.

 

29


Section 7.16 Independent Nature of Rights and Obligations. The rights and obligations of the each TRA Party hereunder are several and not joint with the rights and obligations of any other Person. A TRA Party shall not be responsible in any way for the performance of the obligations of any other Person hereunder, nor shall a TRA Party have the right to enforce the rights or obligations of any other Person hereunder (other than the Corporation). Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any TRA Party pursuant hereto or thereto, shall be deemed to constitute the TRA Parties acting as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the TRA Parties are in any way acting in concert or as a group with respect to such rights or obligations or the transactions contemplated hereby, and the Corporation acknowledges that the TRA Party are not acting in concert or as a group and will not assert any such claim with respect to such rights or obligations or the transactions contemplated hereby.

Section 7.17 LLC Agreement. This Agreement shall be treated as part of the LLC Agreement as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations.

Section 7.18 Tax Characterization and Elections. The parties intend that (A) each Direct Exchange shall give rise to Basis Adjustments, (B) each Redemption using cash contributed to the LLC by the Corporation and Endeavor Manager shall be treated as a direct purchase of Units from the applicable Exchange TRA Parties pursuant to Section 707(a)(2)(B) of the Code that shall give rise to Basis Adjustments, (C) payments pursuant to this Agreement with respect to an Exchange (except with respect to amounts that constitute Imputed Interest) shall be treated as consideration in respect of such Exchange that give rise to additional Basis Adjustments, and (D) the rights received pursuant to this Agreement by the Reorganization TRA Parties and (without duplication) Tax Benefit Payments (excluding any amount that constitutes Imputed Interest thereon) made in respect of a Pre-IPO Covered Tax Asset will be treated as non-qualifying property or money for purposes of Section 356 of the Code received in the Reorganization. The Corporation and Endeavor Manager will ensure that, on and after the date hereof and continuing through the term of this Agreement, the LLC and each of its direct and indirect subsidiaries that they control and that is treated as a partnership for U.S. federal income tax purposes will have in effect an election under Section 754 of the Code.

Section 7.19 Payment Amounts. The Corporation and the Exchange TRA Parties agree that, as of the date of this Agreement and as of the date of any future Exchange that may be subject to this Agreement, the aggregate value of the Tax Benefit Payments cannot be reasonably ascertained for U.S. federal income tax purposes. Notwithstanding anything to the contrary in this Agreement, unless an Exchange TRA Party notifies the Corporation otherwise, (i) the stated maximum selling price (within the meaning of Treasury Regulation 15A.453-1(c)(2)) with respect to any Exchange by such Exchange TRA Party shall not exceed 200% of the amount of the initial consideration received in connection with such Exchange (which, for the avoidance of doubt, shall include the amount of any cash and the fair market value of any Class A Common Stock received in such Exchange and shall exclude the fair market value of any Tax Benefit Payments) and (ii) the sum of the initial consideration received in connection with such Exchange

 

30


and the aggregate Tax Benefit Payments paid to such Exchange TRA Party in respect of such Exchange (other than amounts accounted for as interest under the Code) shall not exceed such stated maximum selling price with respect to such Exchange. For the avoidance of doubt, this Section 7.19 shall not limit any amounts payable in connection with an Early Termination Payment.

[Signature Page Follows This Page]

 

31


IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement as of the date first written above.

 

CORPORATION:
ENDEAVOR GROUP HOLDINGS, INC.
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Chief Financial Officer

 

1


THE LLC:
ENDEAVOR OPERATING COMPANY LLC
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Chief Financial Officer


ENDEAVOR MANAGER, LLC
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Chief Financial Officer
SILVER LAKE PARTNERS IV DE (AIV III), L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner

By: Sliver Lake Group, L.L.C., its managing member

By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SILVER LAKE TECHNOLOGIES INVESTORS IV (DELAWARE II), L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP WEST HOLDINGS CO-INVEST, L.P.
By: SLP Co-Invest GP, L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP WEST HOLDINGS CO-INVEST II, L.P.
By: SLP Co-Invest GP, L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO


SLP WEST HOLDINGS, L.L.C.
By: Silver Lake Partners IV DE (AIV IV), L.P., its managing member
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP WEST HOLDINGS II, L.L.C.
By: Silver Lake Partners IV DE (AIV IV), L.P., its managing member
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP WEST HOLDINGS III, L.P.
By: SLP West GP Holdings, L.L.C., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP WEST HOLDINGS IV, L.P.
By: SLP West GP Holdings, L.L.C., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO


SLP WEST HOLDINGS CO-INVEST FEEDER II, L.P,
By: SLP Co-Invest GP, L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP IV WEST FEEDER I, L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP IV BASQUIAT FEEDER I, L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SL SPV-1 FEEDER I, L.P.
By: SLTA SPV-1, L.P., its general partner
By: SLTA SPV-1 (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO


MSD SPORTS PARTNERS (CAYMAN) TRUST
By:  

/s/ Marcello Liguori

Name:   Marcello Liguori
Title:   Authorized Signatory

FIDELITY SECURITIES FUND:

FIDELITY BLUE CHIP GROWTH

By:  

/s/ Jonathan Davis

Name:   Jonathan Davis
Title:   Authorized Signatory

FIDELITY DESTINY PORTFOLIOS:

FIDELITY ADVISOR DIVERSIFIED STOCK FUND

By:  

/s/ Jonathan Davis

Name:   Jonathan Davis
Title:   Authorized Signatory

FIDELITY CONTRAFUND:

FIDELITY ADVISOR NEW INSIGHTS FUND

By:  

/s/ Jonathan Davis

Name:   Jonathan Davis
Title:   Authorized Signatory

FIDELITY SECURITIES FUND:

FIDELITY SERIES BLUE CHIP GROWTH FUND

By:  

/s/ Jonathan Davis

Name:   Jonathan Davis
Title:   Authorized Signatory

FIDELITY COMMONWEALTH TRUST:

FIDELITY MID-CAP STOCK FUND

By:  

/s/ Jonathan Davis

Name:   Jonathan Davis
Title:   Authorized Signatory

FIDELITY MT. VERNON STREET TRUST:

FIDELITY NEW MILLENNIUM FUND

By:  

/s/ Jonathan Davis

Name:   Jonathan Davis
Title:   Authorized Signatory


FIDELITY PURITAN TRUST:

FIDELITY PURITAN FUND

By:  

/s/ Jonathan Davis

Name:   Jonathan Davis
Title:   Authorized Signatory

CPP INVESTMENT BOARD (USRE III) INC.

By:  

/s/ Geoff McKay

Name:   Geoff McKay
Title:   Authorized Signatory
By:  

/s/ Sunny Lee

Name:   Sunny Lee
Title:   Authorized Signatory

JASMINE VENTURE PTE. LTD.

By:  

/s/ Jason Young

Name:   Jason Young
Title:   Authorized Signatory

TONY BATES

By:  

/s/ Tony Bates

Name:   Tony Bates

MARC ANDREESSEN

By:  

/s/ Marc Andreessen

Name:   Marc Andreessen

WEINER DEROUAUX REVOCABLE TRUST

DTD 11/20/2012

By:  

/s/ Jeffrey Weiner

Name:   Jeffrey Weiner
Title:   Trustee

NIKESH ARORA - AURORA TRUST

By:  

/s/ Nikesh Arora

Name:   Nikesh Arora
Title:   Trustee


Sixjoy LLC

By:  

/s/ Tang Yibin

Name:   Tang Yibin
Title:   Authroized Signatory

Yacht Investment Holdings, LLC

By: Focus Media FountainVest Sports JV, L.P., its managing member
By: FMF Sports JV GP Limited, its general partner
By:  

/s/ Neil Gray

Name:   Neil Colin Gray
Title:   Authorized Signatory

SCC Growth IV Holdco II, Ltd.

By:  

/s/ Ip Siu Wai Eva

Name:   Ip Siu Wa Eva
Title:   Authorized Signatory

HS INVESTMENTS (W) LIMITED

By:  

/s/ Ken Wrigley and Anthony Tennant

Name:   Ken Wrigley and Anthony Tennant
Title:   Directors, Director One Limted

HS INVESTMENTS (A) LIMITED PARTNERSHIP

By:  

/s/ Ken Wrigley

Name:   Ken Wrigley
Title:   Director of HS Investments (L) Limited acting as General Partner

HS INVESTMENTS NA5 LIMITED

By:  

/s/ James Nicolle

Name:   James Nicolle
Title:   Director

WC HOLDCO (DELAWARE) LLC

By: MDC Capital Partners (SPV) GP, LP, its managing member
By: MD Capital Partners GP, LLC, its general partner
By:  

/s/ Rodney Cannon

Name:   Rodney Cannon
Title:   Authorized Signatory


ATERUS HOLDINGS LLC

By:  

/s/ Ossama Khoreibi

Name:   Ossama Khoreibi
Title:   Authorized Signatory

/s/ Ariel Emanuel

Ariel Emanuel

/s/ Ariel Emanuel

The Ariel Z. Emanuel Living Trust, dated November 13, 2017

/s/ Patrick Whitsell

Patrick Whitesell

/s/ Mark Shapiro

Mark Shaprio

/s/ Carole Katz

Carole Katz

/s/ Richard Rosen

Richard Rosen

/s/ Brent Richard

Brent Richard

/s/ Christian Muirhead

Christian Muirhead

/s/ Andrew Schleimer

Andrew Schleimer

/s/ Seth Krauss

Seth Krauss

/s/ Jason Lublin

Jason Lublin

/s/ Samuel Zussman

Samuel Zussman


KKR CAGE AGGEGATOR LLC

By: KKR North America Fund XI (Cage) L.P., its manging member

By: KKR Associates North America XI AIV L.P., its general partner
By: KKR North America AIV GP LLC, its general partner
By:  

/s/ Richard Sarnoff

Name:   Richard Sarnoff
Title:   Authorized Signatory
KKR NORTH AMERICA (CAGE) BLOCKER PARENT, L.P.
By:  

/s/ Richard Sarnoff

Name:   Richard Sarnoff
Title:   Authorized Signatory
KKR PRINCIPAL OPPORTUNITIES (OFFSHORE) L.P.
By:  

/s/ Richard Sarnoff

Name:   Richard Sarnoff
Title:   Authorized Signatory
KKR REFERENCE FUND INVESTMENTS L.P.
By:  

/s/ Richard Sarnoff

Name:   Richard Sarnoff
Title:   Authorized Signatory


KKR NORTH AMERICAN CO-INVEST FUND I L.P.
By:  

/s/ Richard Sarnoff

Name:   Richard Sarnoff
Title:   Authorized Signatory
KKR TFO PARTNERS L.P.
By:  

/s/ Richard Sarnoff

Name:   Richard Sarnoff
Title:   Authorized Signatory
DAW FAMILY TRUST DATED 09/05/06 (AS AMENDED 05/30/13)
By:  

/s/ Dana F. White

Name:   Dana F. White
Title:   Trustee
By:  

/s/ Anne L. White

Name:   Anne L. White
Title:   Trustee
DANA AND ANNE WHITE 2012 IRREVOCABLE TRUST DATED 12/31/12 (AS AMENDED 05/30/13)
By:  

/s/ Lorenzo J. Feritta

Name:   Lorenzo J. Fertittta
Title:   Trustee
By:  

/s/ Dana F. White

Dana F. White


Exhibit A

FORM OF JOINDER AGREEMENT

This JOINDER AGREEMENT, dated as of _________________, 20___ (this “Joinder”), is delivered pursuant to that certain Tax Receivable Agreement, dated as of April 28, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Tax Receivable Agreement”) by and among Endeavor Group Holdings, Inc., a Delaware corporation (the “Corporation”), Endeavor Operating Company, LLC, a Delaware limited liability company (“the LLC”), and the other persons time to time party thereto. Capitalized terms used but not otherwise defined herein have the respective meanings set forth in the Tax Receivable Agreement.

 

  1.

Joinder to the Tax Receivable Agreement. Upon the execution of this Joinder by the undersigned and delivery hereof to the Corporation, the undersigned hereby is and hereafter will be a [Reorganization/Exchange] TRA Party under the Tax Receivable Agreement and a Party thereto, with all the rights, privileges and responsibilities of a [Reorganization/Exchange] TRA Party thereunder. The undersigned hereby agrees that it shall comply with and be fully bound by the terms of the Tax Receivable Agreement as if it had been a signatory thereto as of the date thereof.

 

  2.

Incorporation by Reference. All terms and conditions of the Tax Receivable Agreement are hereby incorporated by reference in this Joinder as if set forth herein in full.

 

  3.

Address. All notices under the Tax Receivable Agreement to the undersigned shall be direct to:

[Name]

[Address]

[City, State, Zip Code]

Attn:

Facsimile:

E-mail:

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder as of the day and year first above written.

 

[NAME OF NEW PARTY]
By:  

                                              

Name:
Title:


Acknowledged and agreed

as of the date first set forth above:

ENDEAVOR GROUP HOLDINGS, INC.
By:  

                                              

Name:
Title:


Exhibit B

Net Tax Benefit Splits

 

SPV-1 Feeder LLC

  

SLP IV West Feeder I, LP

     47.61166

SPV-1 Feeder I, LP

     52.38834

 

West Investor-C LLC

  

SLP SPV-1 Feeder I LP

     0.8180

CPP Investment Board (USRE III) Inc.

     49.5910

Jasmine Ventures Pte Ltd.

     49.5910

 

KKR Cage Aggregator Blocker LLC

  

KKR Principal Opportunities Partnership (Offshore) L.P.

     58.3237

KKR Reference Fund Investments L.P.

     11.966

KKR North America Co-Invest Fund I L.P.

     3.375

KKR TFO Partners L.P.

     26.3353


Annex A

Blocker Entities

1.     SLP IV West Feeder Corp

2.     SL SPV-1 Feeder LLC

3.     SLP IV Basquiat Feeder Corp

4.     SLP West Holdings Co-Invest Feeder II Corp.

5.     SLP West Holdings Co-Invest Feeder Corp.

6.     West Investor-C LLC

7.     PUREQSB WM Holdings LLC

8.     BCGF WM Holdings LLC

9.     MIDCAP WM Holdings LLC

10.     WILM WM Holdings LLC

11.     DEST WM Holdings LLC

12.     FANIFB WM Holdings LLC

13.     FSBCGF WM Holdings LLC

14.     Wolf Cub Holdings LLC

15.     USWI Holding LLC

16.     KKR North America XI (Cage) Blocker L.P.

17.     KKR Cage Aggregator Blocker LLC

18.     MSD Sports Partners II, LLC

19.     Jet2 Investment Holdings Limited


Annex B

Exchange TRA Parties

1.     HS Investments (A) LP

2.     HS Investment NA5 Limited

3.     HS Investments (W) Limited

4.     SCG Growth IV Holdco II, Ltd.

5.     Sixjoy LLC

6.     SLP West Holdings, L.L.C.

7.     SLP West Holdings II, L.L.C.

8.     Silver Lake Partners IV DE (AIV III), L.P.

9.     Silver Lake Technology Investors IV (Delaware II), L.P.

10.     SLP West Holdings III, L.P.

11.     SLP West Holdings IV, L.P.

12.     SLP West Holdings Co-Invest II, L.P.

13.     SLP West Holdings Co-Invest, L.P.

14.     Weiner Derouaux Revocable Trust DTD 11/20/2012

15.     Anthony J. Bates

16.     Nikesh Arora – Aurora Trust

17.     Marc L. Andreessen

18.     Ariel Emanuel

19.     The Ariel Z. Emanuel Living Trust, dated November 13, 2017

20.     Patrick Whitesell

21.     Carole Katz

22.     Seth Krauss

23.     Jason Lublin

24.     Christian Muirhead

25.     Brent Richard

26.     Richard Rosen

27.     Mark Shapiro

28.     Samuel Zussman

29.     Andrew Schleimer

30.     KKR Cage Aggregator LLC

31.     DAW Family Trust dated 09/05/06 (as amended 05/30/13)

32.     Dana and Anne White 2012 Irrevocable Trust dated 12/31/12

33.     Dana White


Annex C

Reorganization TRA Parties

1.     SLP IV West Feeder I, L.P.

2.     SL SPV-1 Feeder, L.L.C.

3.     SLP West Holdings Co-Invest Feeder II, L.P.

4.     SLP IV Basquiat Feeder I, LP

5.     Jasmine Ventures Pte Ltd.

6.     CPP Investment Board (USRE III) Inc.

7.     WC HoldCo (Delaware) LLC

8.     Atreus Holdings LLC

9.     Fidelity Puritan Trust: Fidelity Puritan Fund

10.     Fidelity Securities Fund: Fidelity Blue Chip Growth Fund

11.     Fidelity Securities Fund: Fidelity Series Blue Chip Growth Fund

12.     Fidelity Commonwealth Trust: Fidelity Mid-Cap Stock Fund

13.     Fidelity Mt. Vernon Street Trust: Fidelity New Millennium Fund

14.     Fidelity Contrafund: Fidelity Advisor Insights Fund

15.     Fidelity Destiny Portfolios: Fidelity Advisor Diversified Stock Fund

16.     Yacht Investment Holdings LLC

17.     KKR North America XI (Cage) Blocker Parent, L.P.

18.     KKR Principal Opportunities Partnership (Offshore) L.P.

19.     KKR Reference Fund Investments L.P.

20.     KKR North America Co-Invest Fund I L.P.

21.     KKR TFO Partners L.P.

22.     MSD Sports Partners (Cayman) Trust


Annex D

Representatives

 

1.

Ariel Emanuel

 

2.

Patrick Whitesell

 

3.

Jason Lublin

 

4.

Mark Shapiro


Annex E

SL TRA Parties

1.     SLP West Holdings, L.L.C.

2.     SLP West Holdings II, L.L.C.

3.     Silver Lake Partners IV DE (AIV III), L.P.

4.     Silver Lake Technology Investors IV (Delaware II), L.P.

5.     SLP West Holdings III, L.P.

6.     SLP West Holdings IV, L.P.

7.     SLP West Holdings Co-Invest II, L.P.

8.     SLP West Holdings Co-Invest, L.P.

9.     SLP IV West Feeder I, L.P.

10.     SLP IV Basquiat Feeder I, L.P.

11.     SLP West Holdings Co-Invest Feeder II, L.P.

12.     SL SPV-1 Feeder I, L.P.


Annex F

KKR TRA Parties

1.     KKR Cage Aggregator LLC

2.     KKR North America XI (Cage) Blocker Parent, L.P.

3.     KKR Principal Opportunities Partnership (Offshore) L.P.

4.     KKR Reference Fund Investments L.P.

5.     KKR North America Co-Invest Fund I L.P.

6.     KKR TFO Partners L.P.

Exhibit 10.6

THIRD AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

of

ENDEAVOR OPERATING COMPANY, LLC

Dated as of April 28, 2021

THE LIMITED LIABILITY COMPANY INTERESTS IN ENDEAVOR OPERATING COMPANY, LLC HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, THE SECURITIES LAWS OF ANY STATE, OR ANY OTHER APPLICABLE SECURITIES LAWS, AND HAVE BEEN OR ARE BEING ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MAY BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND CONDITIONS OF THIS THIRD AMENDED AND RESTATED OPERATING AGREEMENT; AND (III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE MANAGING MEMBER AND ANY HOLDER OF SUCH INTERESTS.


TABLE OF CONTENTS

 

          Page  

ARTICLE I DEFINITIONS AND USAGE

     2  

Section 1.01

   Definitions      2  

Section 1.02

   Other Definitional and Interpretative Provisions      23  

ARTICLE II THE COMPANY

     24  

Section 2.01

   Continuation of the Company      24  

Section 2.02

   Name      24  

Section 2.03

   Term      24  

Section 2.04

   Registered Agent and Registered Office      24  

Section 2.05

   Purposes      25  

Section 2.06

   Powers of the Company      25  

Section 2.07

   Partnership Tax Status      25  

Section 2.08

   Regulation of Internal Affairs      25  

Section 2.09

   Ownership of Property      25  

ARTICLE III UNITS; MEMBERS; BOOKS AND RECORDS; REPORTS

     25  

Section 3.01

   Units; Admission of Members      25  

Section 3.02

   Substitute Members and Additional Members      25  

Section 3.03

   Tax and Accounting Information      27  

Section 3.04

   Books and Records      29  

Section 3.05

   Equity Incentive Plans      29  

ARTICLE IV MANAGER OWNERSHIP; RESTRICTIONS ON MANAGER UNITS

     29  

Section 4.01

   Manager Ownership      29  

Section 4.02

   Restrictions on Manager Units      30  

ARTICLE V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; DISTRIBUTIONS; ALLOCATIONS

     28  

Section 5.01

   Capital Contributions      28  

Section 5.02

   Capital Accounts      28  

Section 5.03

   Amounts and Priority of Distributions      30  

Section 5.04

   Allocations      33  

Section 5.05

   Other Allocation Rules      36  

Section 5.06

   Tax Withholding; Withholding Advances      37  

Section 5.07

   Tax Proceedings      38  

ARTICLE VI CERTAIN TAX MATTERS

     38  

Section 6.01

   Company Representative      38  

Section 6.02

   Section 83(b) Elections      39  

 

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ARTICLE VII

   MANAGEMENT OF THE COMPANY      40  

Section 7.01

   Management by the Managing Member      40  

Section 7.02

   Withdrawal of the Managing Member      40  

Section 7.03

   Decisions by the Members      41  

Section 7.04

   Fiduciary Duties      41  

Section 7.05

   Officers      41  

ARTICLE VIII TRANSFERS OF INTERESTS

     42  

Section 8.01

   Restrictions on Transfers      42  

Section 8.02

   Certain Permitted Transfers      43  

Section 8.03

   Registration of Transfers      43  

Section 8.04

   Restricted Units Legend      44  

ARTICLE IX REDEMPTION AND EXCHANGE RIGHTS

     44  

Section 9.01

   Redemption Right of a Member      44  

Section 9.02

   Exchange of Profits Units      48  

Section 9.03

   Reservation of Shares of Class A Common Stock; Listing; Certificate of PubCo, etc.      49  

Section 9.04

   Effect of Exercise of Redemption or Exchange      50  

Section 9.05

   Tax Treatment      50  

Section 9.06

   Other Redemption and Exchange Matters      50  

Section 9.07

   Employee Unit Redemption Right      52  

ARTICLE X CERTAIN OTHER MATTERS

     54  

Section 10.01

   Employee Holdco Members      54  

Section 10.02

   PubCo Change of Control; PubCo Approved Recap Transaction      54  

ARTICLE XI LIMITATION ON LIABILITY, EXCULPATION AND INDEMNIFICATION

     56  

Section 11.01

   Limitation on Liability      56  

Section 11.02

   Exculpation and Indemnification      56  

ARTICLE XII DISSOLUTION AND TERMINATION

     59  

Section 12.01

   Dissolution      59  

Section 12.02

   Winding Up of the Company      60  

Section 12.03

   Termination      60  

Section 12.04

   Survival      60  

ARTICLE XIII MISCELLANEOUS

     60  

Section 13.01

   Expenses      60  

Section 13.02

   Further Assurances      61  

Section 13.03

   Notices      61  

Section 13.04

   Binding Effect; Benefit; Assignment      61  

Section 13.05

   Jurisdiction      61  

 

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Section 13.06

   WAIVER OF JURY TRIAL      62  

Section 13.07

   Counterparts      62  

Section 13.08

   Entire Agreement      62  

Section 13.09

   Severability      62  

Section 13.10

   Amendment      63  

Section 13.11

   Governing Law      63  

Section 13.12

   No Presumption      63  

Section 13.13

   Attorney-In-Fact      63  

Section 13.14

   Immunity Waiver      63  

Section 13.15

   Specific Performance      63  

Section 13.16

   Agreement of Certain Members      64  

Schedule A

   Member Schedule   

 

iii


THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of ENDEAVOR OPERATING COMPANY, LLC, a Delaware limited liability company (the “Company”), dated as of April 28, 2021 (the “Restatement Date”), by and among the Company, Endeavor Group Holdings, Inc., a Delaware corporation (“PubCo”), Endeavor Manager, LLC, a Delaware limited liability company (“Manager”) and the Members (as defined below).

WITNESSETH:

WHEREAS, the Company was formed as a limited liability company under the Delaware Act (as defined below) pursuant to a certificate of formation (as amended, the “Certificate”) which was executed and filed with the Secretary of State of the State of Delaware on December 16, 2013;

WHEREAS, prior to the IPO (as defined below), the Company was subject to that certain First Amended and Restated Limited Liability Company Agreement of the Company, dated as of May 6, 2014 (as amended, the “Initial Agreement”);

WHEREAS, in connection with the IPO, the Company was a party to a series of reorganization transactions with PubCo, Manager and various other parties pursuant to which, among other matters, (a) the Company acquired interests in Zuffa Parent, LLC (“UFC Parent”) from certain minority investors of UFC Parent (the “Other UFC Holders”), resulting in the Company directly or indirectly owning 100% of the issued and outstanding equity interests in Zuffa Parent, LLC, (b) certain of the Other UFC Holders received equity interests in the Company in exchange for their interests in UFC Parent, (c) PubCo acquired interests in the Company and the Company amended and restated the Initial Agreement to reflect PubCo as the managing member of the Company (such amendment and restatement of the Initial Agreement, the “Prior Agreement”) and (d) thereafter, Manager became a Subsidiary of PubCo and PubCo contributed its equity interests in the Company to Manager;

WHEREAS, pursuant to the Prior Agreement, the Company and PubCo (as Managing Member under the Prior Agreement) have the authority to amend the Prior Agreement by written instrument executed by Company and PubCo; and

WHEREAS, in connection with the foregoing matters, the Company and PubCo desire to amend and restate the Prior Agreement in its entirety to reflect Manager as the sole Managing Member of the Company and to otherwise set forth the terms and conditions on which the Company shall be operated.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein made and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree to amend and restate the Prior Agreement in its entirety as follows:


ARTICLE I

DEFINITIONS AND USAGE

Section 1.01 Definitions.

(a) The following terms shall have the following meanings for the purposes of this Agreement:

Additional Member” means any Person admitted as a Member of the Company pursuant to Section 3.02 in connection with the issuance of new Units to such Person after the Restatement Date.

Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in any of such Member’s Capital Accounts as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:

(b) credit to such Capital Account any amounts that such Member is deemed to be obligated to restore pursuant to the penultimate sentence in Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(c) debit to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).

The foregoing definition of “Adjusted Capital Account Deficit” is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

Affiliate” of any specified Person means any other Person directly or indirectly Controlling, Controlled by or under direct or indirect common Control with such first specified Person; provided, that for purposes of this Agreement, (i) no Member (or equityholder of such Member) shall be deemed to be an Affiliate of any other Member (or equityholder of such Member) solely by virtue of this Agreement and (ii) the Company, on the one hand, and each of the Members (and each equityholder of any such Member), on the other hand, shall not be deemed to be Affiliates of each other solely by virtue of this Agreement.

Aggregate SL Ownership” has the meaning set forth in the Stockholders Agreement.

Black-Out Period” means any “black-out” or similar period under PubCo’s policies covering trading in PubCo’s securities (including any Trading Policy) to which the applicable Redeeming Member is subject (or will be subject at such time as it owns Class A Common Stock), which period restricts the ability of such Redeeming Member to immediately resell shares of Class A Common Stock to be delivered to such Redeeming Member in connection with a Share Settlement.

Business Day” means any day excluding Saturday, Sunday or any day which is a legal holiday under the Laws of the State of California or the State of New York or is a day on which banking institutions in the State of California or the State of New York are authorized or required by Law or other governmental action to close.

 

2


Capital Account” means the capital account established and maintained for each Member pursuant to Section 5.02.

Capital Contribution” means, with respect to any Member, the amount of money and the initial Carrying Value of any Property (other than money) contributed to the Company with respect to any Units held or purchased by such Member.

Carrying Value” means, with respect to any Property (other than money), such Property’s adjusted basis for federal income tax purposes, except as follows:

(a) the initial Carrying Value of any such Property contributed by a Member to the Company shall be the fair market value of such Property, as determined by the Managing Member; and

(b) the Carrying Values of all such assets may, as determined by the Managing Member, be adjusted to equal their respective fair market values at the following times: (i) immediately prior to the contribution of more than a de minimis amount of money or other property to the Company by a new or existing Member as consideration for an interest in the Company; (ii) immediately prior to the distribution by the Company to a Member of more than a de minimis amount of property (other than cash) in exchange for all or a portion of such Member’s interest in the Company; (iii) immediately prior to the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); and (iv) in connection with a grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a Member capacity or by a new Member acting in a Member capacity or in anticipation of becoming a Member; provided, however, that adjustments pursuant to clauses (i), (ii) or (iv) of this paragraph need not be made if the Managing Member reasonably determines that such adjustments are not necessary or appropriate to reflect the relative economic interests of the Members and that the absence of such adjustments does not adversely and disproportionately affect any Member.

In the case of any asset of the Company that has a Carrying Value that differs from its adjusted tax basis, the Carrying Value shall be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Loss.

Cash Settlement” means, with respect to any Redemption, immediately available funds in U.S. dollars in an amount equal to the number of Redeemed Units subject thereto, multiplied by the Common Unit Redemption Price.

Catch-Up Unit” means a Profits Unit designated as a “Catch-Up Unit” on the Member Schedule or in the applicable Vesting Letter or other agreement between the holder of such Profits Unit and the Company with respect to the issuance of such Profits Unit.

Change of Control” means, the occurrence of any of the following events or series of related events after the date hereof: there is consummated a merger or consolidation of PubCo with any other Person or Persons, including a tender offer followed by a merger in which holders

 

3


of Class A Common Stock receive the same consideration per share paid in the tender offer, and, immediately after the consummation of such merger or consolidation, the voting securities of PubCo immediately prior to such merger or consolidation do not continue to represent or are not converted into more than 50% of the combined voting power of the then-outstanding voting securities of the Person resulting from such merger or consolidation. Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred (i) by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Class A Common Stock, Class B Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in and voting control over, and own substantially all of the shares or equity of, an entity which owns all or substantially all of the assets of PubCo immediately following such transaction or series of transactions, (ii) by virtue of the consummation of any transaction or series of transactions, immediately following which, PubCo and one or more other entities (the “Other Constituent Companies”) shall have become separate wholly-owned Subsidiaries of a holding company, and the record holders of the Class A Common Stock, Class B Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock immediately prior to such transaction or series of transactions, together with the record holders of the outstanding equity interests in the Other Constituent Companies immediately prior to such transaction or series of transactions, shall have become the equityholders of the new holding company in exchange for their respective equity interests in PubCo and the Other Constituent Companies, and such transaction or transactions would not otherwise constitute a “Change of Control” assuming references to PubCo are references to such holding company or (iii) at any time that the Executive Directors, any Permitted Transferees of such Executive Directors pursuant to Section 8.02(b), the SL Member and the SL Related Entities, collectively continue to beneficially own (or have the right to vote), directly or indirectly, securities of PubCo representing more than 35% of the combined voting power of PubCo’s then-outstanding voting securities and no other Person or “group” (within the meaning of Section 13(d) of the Exchange Act) that does not include the Executive Directors, any Permitted Transferees pursuant to Section 8.02(b), the SL Member and the SL Related Entities, beneficially owns (or has the right to vote), directly or indirectly, securities of PubCo representing a greater percentage of the combined voting power of PubCo’s then-outstanding voting securities than that then beneficially owned by the Executive Directors, any Permitted Transferees pursuant to Section 8.02(b), the SL Member and the SL Related Entities.

Class A Common Stock” means Class A common stock, $0.00001 par value per share, of PubCo.

Class B Common Stock” means Class B common stock, $0.00001 par value per share, of PubCo.

Class C Common Stock” means Class C common stock, $0.00001 par value per share, of PubCo.

Class X Common Stock” means Class X common stock, $0.00001 par value per share, of PubCo.

 

4


Class Y Common Stock” means Class Y common stock, $0.00001 par value per share, of PubCo.

Code” means the Internal Revenue Code of 1986, as amended from time to time.

Common Member” means any Member that holds Common Units, in such Member’s capacity as a holder of Common Units.

Common Unit” means a limited liability company interest in the Company, designated herein as a “Common Unit”.

Common Unit Redemption Price” means, with respect to any Redemption Date, the price for a share of Class A Common Stock (or any class of stock into which it has been converted) on the Stock Exchange, as reported on bloomberg.com or such other reliable source as determined by the Managing Member in good faith, at the close of trading on the last full Trading Day immediately prior to the Redemption Date, subject to appropriate and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock. In the event the shares of Class A Common Stock are not publicly traded at the time of a Redemption, then the Managing Member shall determine the Common Unit Redemption Price in good faith.

Company Minimum Gain” means “partnership minimum gain,” as defined in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).

Company Representative” has, with respect to taxable periods beginning after December 31, 2017, the meaning assigned to the term “partnership representative” in Section 6223 of the Code and any Treasury Regulations or other administrative or judicial pronouncements promulgated thereunder and, with respect to taxable periods beginning on or before December 31, 2017, the meaning assigned to the term “tax matters partner” as defined in Code Section 6231(a)(7) prior to its amendment by Title XI of the Bipartisan Budget Act of 2015, in each case as appointed pursuant to Section 6.01(a).

Control” (including the terms “Controlling” and “Controlled”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

Covered Person” means (i) each Member or an Affiliate thereof, in each case in such capacity, (ii) each officer, director, equityholder, member, partner, employee, representative, agent or trustee of a Member or an Affiliate thereof, in each case in such capacity, and (iii) each officer, director, shareholder, member, partner, employee, representative, agent or trustee of the Managing Member, the Company or an Affiliate controlled thereby of, in each case in such capacity.

Delaware Act” means the Delaware Limited Liability Company Act, as amended from time to time.

 

5


Depreciation” means, for each Fiscal Year, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Fiscal Year, except that if the Carrying Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount that bears the same ratio to such beginning Carrying Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal Year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such Fiscal Year is zero (0), Depreciation shall be determined with reference to such beginning Carrying Value using any reasonable method selected by the Managing Member.

DGCL” means the Delaware General Corporation Law, as amended from time to time.

Employee Holdco I LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of Employee Holdco I Member.

Employee Holdco I Member” means Endeavor Executive PIU Holdco LLC, a Delaware limited liability company, in its capacity as a Member of the Company.

Employee Holdco II LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of Employee Holdco II Member.

Employee Holdco II Member” means Endeavor Executive II Holdco, LLC, a Delaware limited liability company, in its capacity as a Member of the Company.

Employee Holdco Members” means each of Employee Holdco I Member, Employee Holdco II Member and Executive Holdco Member.

Employee Member” means (i) any current or former employee or other service provider of PubCo or its Subsidiaries that holds Common Units (directly or indirectly through an Employee Holdco Member) as of date hereof, (ii) any current or former employee or other service provider of PubCo or its Subsidiaries that holds Profits Units (directly or indirectly through an Employee Holdco Member), as of the date hereof, and (iii) any other employee or other service provider of PubCo or its Subsidiaries who receives Units (directly or indirectly through an Employee Holdco Member) after the date hereof and is designated as an “Employee Member” by the Managing Member, in each case, in such employee or other service provider’s capacity as a holder of such Units.

Employee Units” means the Common Units and Profits Units, in each case, held (directly or indirectly through an Employee Holdco Member) by an Employee Member or Employee Holdco Member.

Equity Incentive Plan” means any equity incentive or similar plan, agreement or arrangement adopted or entered into by the Company, PubCo or Manager that is effective on or after the date hereof, including, without limitation, PubCo’s 2021 Incentive Award Plan.

Equity Securities” means, with respect to any Person, any (i) membership interests, partnership interests or shares of capital stock, (ii) equity, ownership, voting, profit or

 

6


participation interests or (iii) similar rights or securities in such Person or any of its Subsidiaries, or any rights or securities convertible into or exchangeable for, options or other rights to acquire from such Person or any of its Subsidiaries, or obligation on the part of such Person or any of its Subsidiaries to issue, any of the foregoing.

Exchange Act” means the Exchange Act of 1934, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules or regulations. Any reference herein to a specific section, rule or regulation of the Exchange Act shall be deemed to include any corresponding provisions of future Law.

Executive Director” has the meaning set forth in PubCo’s certificate of incorporation.

Executive Holdco LLC Agreement” means the Limited Liability Company Agreement of Executive Holdco.

Executive Holdco Member” means Endeavor Executive Holdco, LLC, a Delaware limited liability company, in its capacity as a Member of the Company.

Family Member” means, with respect to a Person, such Person’s spouse, domestic partner, parents, grandparents, lineal descendants or siblings, including any Affiliates thereof, or any trust, family-partnership or estate-planning vehicle, corporation, limited liability company, partnership or other entity of which all of the economic beneficial ownership thereof belongs to such Person or their Family Members, a charitable institution controlled by such Person and/or their Family Members, an individual mandated under a qualified domestic relations order and a legal or personal representative of such Person and/or their Family Members in the event of death or disability.

Fiscal Year” means (i) the Company’s fiscal year, which shall initially be the twelve (12) month period ending on December 31 of each year and which may be changed from time to time as determined by the Managing Member; and, (ii) for purposes of the allocations described in Article V, any other tax period for which such allocations will be made.

Governmental Authority” means any transnational, domestic or foreign federal, state or local governmental, regulatory or administrative authority, department, court, agency or official, including any political subdivision thereof and the SEC, any non-U.S. regulatory agency and any other regulatory authority or body (including any state or provincial securities authority and any self-regulatory organization) with jurisdiction over the Company or any of its Subsidiaries.

Holdback Date” means, with respect to any Employee Member or Employee Holdco Member Member, as applicable, the earlier of (i) death and (ii) first anniversary of Termination of Service; provided, that such Employee Member or Employee Holdco Member Member, as applicable, complies with all restrictive covenants to which he or she is subject for the benefit of the Company or any of its Affiliates.

Indebtedness” means (i) indebtedness for borrowed money or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money, (ii) amounts owing as deferred purchase price for property or services, including all seller notes and “earn out”

 

7


payments, and purchase price adjustment payments and non-competition payments in connection with any merger and/or acquisition transactions, (iii) indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security, (iv) obligations under any interest rate, currency or other hedging agreement and (v) obligations under any performance bond, letter of credit, banker’s acceptance or similar credit instrument.

Initial Capital Account Balance” means, with respect to any Member, the positive Capital Account balance of such Member as of immediately following the execution hereof, the amount of which is set forth on the Member Schedule.

IPO” means the initial underwritten public offering of PubCo. “Law” means, with respect to any Person, any federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person or its assets, in each case, as amended unless expressly specified otherwise.

KKR Member” means KKR Cage Aggregator, LLC, a Delaware limited liability company and any Permitted Transferee that is a KKR Related Entity.

KKR Related Entity” means any KKR Related Fund, any KKR Related Fund Subsidiary and any general partner of a KKR Related Fund.

KKR Related Fund” means a bona fide investment fund, or alternative investment vehicle of a bona fide investment fund, that is advised by the investment manager of the KKR Member, or by an Affiliate of the investment manager of the KKR Member.

KKR Related Fund Subsidiary” means any Person whose equity is directly or indirectly one hundred percent (100%) owned by (i) one or more KKR Related Funds and/or (ii) to the extent that the general partner(s) of such KKR Related Funds acquired an equity interest in such Person in connection with the KKR Related Fund’s investment in the Company, such general partner(s). For the avoidance of doubt, the KKR Member is a KKR Related Fund Subsidiary as of the Restatement Date.

Liquidation” means a liquidation or winding up of the Company.

Manager Common Unit” means a Common Unit (as defined in the Manager LLC Agreement) of Manager.

Manager LLC Agreement” means the limited liability company agreement of Manager (as amended, restated, modified or supplemented from time to time).

Managing Member” means (i) Manager so long as Manager has not withdrawn as the Managing Member pursuant to Section 7.02 and (ii) any successor thereof appointed as Managing Member in accordance with Section 7.02.

Member” means any Person named as a Member of the Company on Schedule A and the books and records of the Company, as the same may be amended from time to time to reflect any Person admitted as an Additional Member or a Substitute Member, for so long as such Person continues to be a Member of the Company.

 

8


Member Nonrecourse Debt” has the same meaning as the term “partner nonrecourse debt” in Treasury Regulations Section 1.704-2(b)(4).

Member Nonrecourse Debt Minimum Gain” means an amount with respect to each “partner nonrecourse debt” (as defined in Treasury Regulation Section 1.704-2(b)(4)) equal to the Company Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Treasury Regulation Section 1.752-1(a)(2)) determined in accordance with Treasury Regulation Section 1.704-2(i)(3).

Member Nonrecourse Deductions” has the same meaning as the term “partner nonrecourse deductions” in Treasury Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).

Net Income” and “Net Loss” means, for each Fiscal Year, an amount equal to the Company’s taxable income or loss for such Fiscal Year, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments (without duplication):

(a) any income of the Company that is exempt from Federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of “Net Income” and “Net Loss” shall be added to such taxable income or loss;

(b) any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income and Net Loss pursuant to this definition of “Net Income” and “Net Loss,” shall be subtracted from such taxable income or loss;

(c) gain or loss resulting from any disposition of Property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Carrying Value of the Property disposed of, notwithstanding that the adjusted tax basis of such Property differs from its Carrying Value;

(d) in lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year, computed in accordance with the definition of Depreciation;

(e) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) of the Code is required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) from the disposition of such asset and shall be taken into account for purposes of computing Net Income or Net Loss;

 

9


(f) if the Carrying Value of any Company asset is adjusted in accordance with clause (b) of the definition of Carrying Value, the amount of such adjustment shall be taken into account in the taxable year of such adjustment as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss; and

(g) notwithstanding any other provision of this definition, any items that are specially allocated pursuant to Section 5.04(b) shall not be taken into account in computing Net Income and Net Loss.

The amounts of the items of Company income, gain, loss, or deduction available to be specially allocated pursuant to Section 5.04(b) shall be determined by applying rules analogous to those set forth in subparagraphs (a) through (e) above.

New Common Units” means, with respect to any Exchanged Profits Unit, a number of Common Units equal to the quotient of (a) the amount to which the holder of such Exchanged Profits Unit would be entitled to receive if an amount equal to the fair market value of the Company as of the date of the Exchange were distributed in cash to the Members in accordance with Section 5.03(b) (taking into account the relevant Hurdle Amount and, in respect of any Exchanged Profits Units that are Catch-Up Units, any adjustments required to be made to the distributions in respect of such Catch-Up Units pursuant to Section 5.03, but determined without reduction for any Tax Distributions treated as advances with respect to such Exchange Profits Unit), divided by (b) the Per Common Unit Equity Value on the date of the Exchange; provided, that if the number of New Common Units determined by the foregoing calculation is a negative number, it shall be deemed to be zero (0).

Nonrecourse Deductions” has the meaning set forth in Treasury Regulations Sections 1.704-2(b)(1) and 1.704-2(c).

Parent” means, with respect to any Person, any other Person that directly or indirectly owns any equity or voting interest in the first specified Person.

Partnership Tax Audit Rules” means Sections 6221 through 6241 of the Code, as amended, together with any final or temporary Treasury Regulations, Revenue Rulings, and case law interpreting Sections 6221 through 6241 of the Code, as amended (and any analogous provision of state or local tax law).

Percentage Interest” means, with respect to any Member, a fractional amount, expressed as a percentage: (i) the numerator of which is the aggregate number of Units owned of record thereby and (ii) the denominator of which is the aggregate number of Units issued and outstanding. The sum of the outstanding Percentage Interests of all Members shall at all times equal 100%.

Per Common Unit Equity Value” means, as of any particular time, the amount to which a Common Unit held by Manager as of the Restatement Date would be entitled in respect of such Common Unit if the aggregate equity value of the Company as of such time (as reasonably determined by the Managing Member) were distributed to the Members in accordance with Section 5.03(b).

 

10


Permitted Exchange Percentage” means, unless otherwise determined by the Managing Member:

(i) for any Employee Members (other than the Employee Holdco Members) and the Employee Holdco Members with respect to Units corresponding to any Employee Holdco Member Interests held by Employee Holdco Member Members designated as members of Employee Group A in the Company’s books and records, (A) from the Restatement Date through the first anniversary thereof, zero percent (0%), (B) from the day following the first anniversary of the Restatement Date through the second anniversary of the Restatement Date, twenty-five percent (25%), (C) from the day following the second anniversary of the Restatement Date through the third anniversary of the Restatement Date, fifty percent (50%), and (D) from the day following the third anniversary of the Restatement Date, one hundred percent (100%);

(ii) subject to any further reduction pursuant to Section 9.02(c), for the Employee Holdco Members with respect to Units corresponding to any Employee Holdco Member Interests held by Employee Holdco Member Members designated as members of Employee Group B in the Company’s books and records, (A) from the Restatement Date through the first anniversary thereof, zero (0%), (B) from the day following the first anniversary of the Restatement Date through the second anniversary thereof, thirty-five (35%), (C) from the day following the second anniversary of the Restatement Date through the third anniversary of the Restatement Date, fifty percent (50%), (D) from the day following the third anniversary of the Restatement Date through the fourth anniversary of the Restatement Date, sixty-five percent (65%), (E) from the day following the fourth anniversary of the Restatement Date through the fifth anniversary thereof, eighty percent (80%), and (F) from the day following the fifth anniversary of the Restatement Date, one hundred percent (100%);

(iii) for the Employee Holdco Members with respect to Units corresponding to any Employee Holdco Member Interests held by Employee Holdco Member Members designated as members of Employee Group C in the Company’s books and records, (A) from the Restatement Date through the first anniversary thereof, zero percent (0%), (B) from the day following the first anniversary of the Restatement Date through the second anniversary thereof, thirty-six percent (36%), (C) from the day following the second anniversary of the Restatement Date through the third anniversary of the Restatement Date, fifty-two percent (52%), (D) from the day following the third anniversary of the Restatement Date through the fourth anniversary of the Restatement Date, sixty-eight percent (68%), (E) from the day following the fourth anniversary of the Restatement Date through the fifth anniversary thereof, eighty-four percent (84%), and (F) from the day following the fifth anniversary of the Restatement Date, one hundred percent (100%);

(iv) for the Employee Holdco Members with respect to Units corresponding to any Employee Holdco Member Interests held by Employee Holdco Member Members designated as members of Employee Group D in the Company’s books and records, (A) from the Restatement Date through the first anniversary thereof, zero percent (0%), (B) from the day following the first anniversary of the Restatement Date through the second anniversary thereof, forty-seven percent (47%), (C) from the day following the second anniversary of the Restatement Date through the third anniversary of the Restatement Date, seventy-three percent (73%), and (D) from the day following the third anniversary of the Restatement Date, one hundred percent (100%); and

 

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(v) for the Employee Holdco Members with respect to Units corresponding to any Employee Holdco Member Interests held by Employee Holdco Member Members designated as members of Employee Group E in the Company’s books and records, (A) from the Effective Date through the first anniversary thereof, zero percent (0%), (B) from the day following the first anniversary of the Effective Date through the second anniversary thereof, forty percent (40%), (C) from the day following the second anniversary of the Effective Date through the third anniversary of the Effective Date, sixty percent (60%), (D) from the day following the third anniversary of the Effective Date, eighty percent (80%), and (E) from and after the day following the fourth anniversary of the Effective Date, one hundred percent (100%).

Person” means any individual, firm, corporation, partnership, limited liability company, trust, estate, joint venture, Governmental Authority or other entity.

Prime Rate” means the rate of interest from time to time identified by The Wall Street Journal, as being the “prime” rate (or if The Wall Street Journal does not identify such a rate, the “prime” rate as identified by another newspaper of national circulation).

Profits Interest” means an interest in the Company that is classified as a partnership profits interest within the meaning of Internal Revenue Service Revenue Procedures 93-27 and 2001-43 (or the corresponding requirements of any subsequent guidance promulgated by the Internal Revenue Service or other Law).

Profits Units” means any Profits Interests issued by the Company or such other Units issued by the Company and designated as “Profits Units.”

Property” means an interest of any kind in any real or personal (or mixed) property, including cash, and any improvements thereto, and shall include both tangible and intangible property.

PubCo Approved Change of Control” means any Change of Control of PubCo that meets the following conditions: (i) such Change of Control was approved by the board of directors of PubCo prior to such Change of Control, (ii) such Change of Control results in an early termination of and acceleration of payments under the Tax Receivable Agreement, (iii) the terms of such Change of Control provide for the consideration for the Units in such Change of Control to consist solely of (A) freely and immediately tradeable common equity securities of an issuer listed on a national securities exchange and/or (B) cash and (iv) if such common equity securities would be Registrable Securities (as defined in the Registration Rights Agreement) of such issuer for any stockholder party to the Registration Rights Agreement, the issuer of such listed equity securities has become a party thereto as a successor to PubCo effective upon closing of such Change of Control.

Record Date” means, with respect to any distribution pursuant to Article V, the Business Day specified by the Managing Member for purposes of determining the outstanding Units entitled to participate in such distribution.

 

12


Redeemable Employee Common Units” means, with respect to any Employee Member, the number of Common Units held by such Employee Member (or an Employee Holdco Member corresponding to Employee Holdco Member Interests held by such Employee Member) equal to the product of (i) the sum of the number of vested Common Units held by such Employee Member and the number of Common Units held by an Employee Holdco Member corresponding to vested Employee Holdco Member Interests held by such Employee Member and (ii) the Permitted Exchange Percentage; provided that, to the extent such Employee Member is designated as a member of Employee Group B in the Company’s books and records, (x) the number of Redeemable Employee Units will be reduced by twenty percent (20%) until the Holdback Date and (y) to the extent such Employee Member breaches any restrictive covenants to which he or she is subject for the benefit of the Company, PubCo, Manager or any of their respective Affiliates, the Managing Member may in its sole discretion, to the maximum extent permitted by law, either (A) delay the Holdback Date with respect to the calculation of the Redeemable Employee Common Units for an additional period of time equal to the length of such breach (or such longer period as it determines in its sole discretion) or (B) cause the Redeemable Employee Common Units subject to reduction through the Holdback Date pursuant to subsection (x) of this definition to be cancelled for no consideration.

Registration Rights Agreement” means that certain Registration Rights Agreement, dated on or about the date hereof, by and among PubCo, the Members (other than Manager) and the members of Manager (other than PubCo in its capacity as a member of Manager).

Relative Percentage Interest” means, with respect to any Member relative to another Member or Members, a fractional amount, expressed as a percentage, the numerator of which is the Percentage Interest of such Member; and the denominator of which is (x) the Percentage Interest of such Member plus (y) the aggregate Percentage Interest of such other Member or Members.

Restructuring Agreement” means, that certain Restructuring Agreement, dated as or around the date hereof, by and among the Company, PubCo and other parties thereto.

Restructuring” means the consummation of the transactions contemplated by the Restructuring Agreement and the UFC Transaction Agreement.

SEC” means the United States Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules or regulations. Any reference herein to a specific section, rule or regulation of the Securities Act shall be deemed to include any corresponding provisions of future Law.

Share Settlement” means, with respect to any applicable Redemption, a number of shares of Class A Common Stock equal to the number of Redeemed Units.

SL Limited Ownership Minimum” has the meaning set forth in the Stockholders Agreement.

 

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SL Member” means SLP West Holdings, L.L.C., a Delaware limited liability company, SLP West Holdings II, L.L.C., a Delaware limited liability company, SLP West Holdings III, L.P., a Delaware limited partnership, SLP West Holdings Co-Invest, L.P., a Delaware limited partnership, SLP West Holdings Co-Invest II, L.P., a Delaware limited partnership, SLP West Holdings IV, L.P., a Delaware limited partnership, Silver Lake Technology Investors IV (Delaware II), L.P., a Delaware limited partnership, and Silver Lake Partners IV DE (AIV III), L.P., a Delaware limited partnership and any Permitted Transferee that is an SL Related Entity. Whenever any consent, approval or waiver is to be given under this Agreement by the SL Member, such consent, approval or waiver shall be given by SLP West Holdings, L.L.C., or any other SL Member designated from time to time by the SL Member.

SL Related Entity” means any SL Related Fund, any SL Related Fund Subsidiary and any general partner of a SL Related Fund.

SL Related Fund” means a bona fide investment fund, or alternative investment vehicle of a bona fide investment fund, that is advised by the investment manager of the SL Member, or by an Affiliate of the investment manager of the SL Member.

SL Related Fund Subsidiary” means any Person whose equity is directly or indirectly one hundred percent (100%) owned by (i) one or more SL Related Funds and/or (ii) to the extent that the general partner(s) of such SL Related Funds acquired an equity interest in such Person in connection with the SL Related Fund’s investment in the Company, such general partner(s). For the avoidance of doubt, the SL Member is a SL Related Fund Subsidiary as of the Restatement Date.

Stock Exchange” means the New York Stock Exchange.

Stockholders Agreement” means the Stockholders Agreement, dated as of the date hereof, by and among PubCo and the other persons party thereto or that may become parties thereto from time to time, as the same may be amended, restated, supplemented and/or otherwise modified, from time to time.

Subsidiary” means, with respect to any Person, any Person of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof (including (i) any limited partnership of which such Person, directly or indirectly, is the general partner or otherwise has the power to direct or cause the direction of the management and policies thereof and (ii) any limited liability company of which such Person, directly or indirectly, is the managing member or otherwise has the power to direct or cause the direction of the management and policies thereof).

Substitute Member” means any Person admitted as a Member of the Company pursuant to Section 3.02 in connection with the Transfer of then-existing Units to such Person.

 

14


Tax Distribution” means a distribution made by the Company pursuant to Section 5.03(e)(i) or Section 5.03(e)(ii).

Tax Distribution Amount” means, with respect to any Member, an amount equal to the excess of (i) the product of (A) the Tax Rate multiplied by (B) the estimated or actual cumulative taxable income or gain of the Company, as determined for U.S. federal income tax purposes, allocated to such Member for any fiscal year (or portion thereof) beginning after the consummation of the Restructuring, less prior taxable loss or deductions of the Company allocated to such Member for full or partial fiscal years commencing on or after the consummation of the Restructuring, in each case, as determined by the Managing Member over (ii) the cumulative Distributions made to such Member after the consummation of the Restructuring pursuant to Section 5.03 with respect to fiscal years (including any portion thereof) beginning after the consummation of the Restructuring. The Tax Distribution Amount with respect to Manager for a fiscal year shall in no event be less than an amount that will enable Manager and PubCo to meet both their tax obligations and PubCo’s obligations pursuant to the Tax Receivable Agreement for the relevant fiscal year. The Tax Distribution Amounts of the Members shall be determined without taking into account the effects of Section 743(b) of the Code.

Tax Rate” means the highest marginal tax rates for an individual or corporation that is resident in New York City or Los Angeles, California (whichever is highest) applicable to ordinary income, qualified dividend income or capital gains, as appropriate, taking into account the holding period of the assets disposed of and the year in which the taxable net income is recognized by the Company, and taking into account the deductibility of state and local income taxes as applicable at the time for federal income tax purposes and any limitations thereon including pursuant to Section 68 of the Code or Section 164 of the Code, which Tax Rate shall be the same for all Members and shall not be less than 45%.

Tax Receivable Agreement” means that certain Tax Receivable Agreement, dated as or around the date hereof, by and among PubCo, Manager, the Company and the other parties thereto.

Termination of Service” with respect to an Employee Member or Employee Holdco Member Member means the date he or she ceases to be an employee or other service provider of PubCo and its Subsidiaries. Manager, in its sole discretion, shall determine the effect of all matters and questions relating to any Termination of Service, including, without limitation, whether a Termination of Service has occurred and all questions of whether particular leaves of absence constitute a Termination of Service. For purposes of this Agreement, an Employee Member or Employee Holdco Member Member’s employee-employer relationship or consultancy relationship with PubCo and its Subsidiaries shall be deemed to be terminated in the event that the Subsidiary employing or contracting him or her ceases to remain a Subsidiary of PubCo following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).

Trading Day” means a day on which the Stock Exchange or such other principal United States securities exchange on which the Class A Common Stock is listed or admitted to trading is open for the transaction of business (unless such trading shall have been suspended for the entire day).

 

15


Trading Policy” means any exchange and/or insider trading policy that may be established by Manager or PubCo, as may be amended from time to time.

Transaction Documents” means the Employee Holdco I LLC Agreement, Employee Holdco II LLC Agreement, Executive Holdco LLC Agreement, Manager LLC Agreement, Registration Rights Agreement, Restructuring Agreement, Stockholders Agreement, Tax Receivable Agreement, any applicable Vesting Letters and the UFC Transaction Agreement.

Transfer” means any sale, assignment, transfer, exchange, gift, bequest, pledge, hypothecation or other disposition or encumbrance, direct or indirect, in whole or in part, by sale, merger, operation of Law or otherwise, and shall include all matters deemed to constitute a Transfer under Article VIII, including the issuance or other Transfer of Equity Securities or other interest of a Parent of a Member; provided, that “Transfer” shall be deemed not to include (a) any issuance or other transfer of Equity Securities in a Member’s Parent if both (A) Equity Securities of such Member’s Parent are publicly listed and traded on a national securities exchange and (B) Units in the Company are not a material portion of such Member’s Parent’s direct and indirect assets, (b) (1) any issuance or other transfer of Equity Securities or other interest in an SL Related Fund Subsidiary to any SL Related Entity or in a KKR Related Fund Subsidiary to any KKR Related Entity or (2) any issuance or other transfer of Equity Securities or other interest (i) in any SL Related Fund or KKR Related Fund, provided, that, to the extent such issuance or other transfer is of a limited partner interest in an alternative investment vehicle, such transfer must either be to a controlled Affiliate that is beneficially owned by the same Person as the transferor or be made in connection with a corresponding transfer in the bona fide investment fund to which such alternative investment vehicle relates, or (ii) in any Parent of any SL Related Fund or KKR Related Fund (Parent, for the avoidance of doubt, includes any limited partner, general partner or managing member of any SL Related Fund or KKR Related Fund and any Parent of such limited partner, general partner or managing member) or (c) may pledge to any third-party pledgee in a bona fide transaction as collateral to secure obligations pursuant to lending or other arrangements, between such third parties (or their affiliates or designees) and a Member and/or its affiliates or any similar arrangement relating to a financing agreement for the benefit of a Member and/or its affiliates.

The terms “Transferred”, “Transferring”, “Transferor”, “Transferee” and “Transferable” have meanings correlative to the foregoing.

Treasury Regulations” means the regulations promulgated under the Code, as amended from time to time.

Trust” means, with respect to any Person, (i) a revocable trust that is treated as a grantor trust for income tax purposes; provided, that and only so long as (a) the beneficiaries of such Trust include only such Person and such Person’s spouse, domestic partner, parents, grandparents, siblings or lineal descendants; (b) the Trust shall agree in writing to be bound by the terms of this Agreement; and (c) the Transferor retains exclusive voting control over the Units or other securities so Transferred, in a trustee capacity or otherwise or (ii) any other trust that is solely for bona fide estate planning purposes that shall not, and shall not be used to, circumvent the provisions herein; provided, that and only so long as the beneficiaries of such Trust include only such Person and such Person’s spouse, domestic partner or lineal descendants.

 

16


UFC Transaction Agreement” means that certain Transaction Agreement, dated as of February 16, 2021, by and among the Company, Manager, PubCo and the other parties thereto (as amended, restated, supplemented or otherwise modified from time to time).

Units” means Common Units, Profits Units or any other type, class or series of limited liability company interests in the Company designated by the Company after the date hereof in accordance with this Agreement; provided, that any type, class or series of Units shall have the designations, preferences and/or special rights set forth or referenced in this Agreement, and the limited liability company interests of the Company represented by such type, class or series of Units shall be determined in accordance with such designations, preferences and/or special rights.

Unvested Common Unit” means, on any date of determination, any Common Unit held by a Member (directly, or indirectly through an Employee Holdco Member) that is not “vested” in accordance with such Member’s (or its direct or indirect Transferor’s) applicable Vesting Letter.

Unvested Profits Unit” means, on any date of determination, any Profits Unit held by a Member (directly, or indirectly through an Employee Holdco Member) that is not “vested” in accordance with such Member’s (or its direct or indirect Transferor’s) applicable Vesting Letter.

Unvested Unit” means any Unvested Common Unit or Unvested Profits Unit, as applicable.

Vesting Letter” means an agreement between a Common Member, Employee Member, Employee Holdco Member, Manager and/or any of their respective Subsidiaries, as applicable, on the one hand, and the Company and/or an Employee Holdco Member, on the other hand (in each case, as amended from time to time), governing the issuance or other terms of Common Units or Profits Units or Employee Holdco Member Interests (or any interests which were converted into or exchanged for such Units or Employee Holdco Member Interests), as applicable, to the applicable party.

(h) Each of the following terms is defined in the Section set forth opposite such term:

 

Term    Section  

ACT

     8.04  

Agreement

     Preamble  

Cause

     13.16  

Certificate

     Preamble  

Change of Control Exchange Date

     10.02 (a) 

Company

     Preamble  

Controlled Entities

     11.02 (c)(ii) 

Direct Redemption

     9.01 (d) 

 

21


Dissolution Event

  

12.01(c)

Economic Manager Security

  

4.01(a)

Economic PubCo Security

  

4.01(a)

Election Notice

  

9.01(a)

Employee Holdco Member Action

  

10.01

Employee Holdco Member Interests

  

10.01

Employee Holdco Member Members

  

10.01

Employee Holdco Redemption Right

  

9.07(a)

Employee Member Put Right

  

9.07(a)

Employee Redemption Price

  

9.07(a)

Employee Unit Redemption Date

  

9.07(a)

Employee Unit Redemption Notice

  

9.07(a)

Employee Unit Redemption Right

  

9.07(a)

Exchange

  

9.02(a)

Exchange Date

  

9.02(a)

Exchange Notice

  

9.02(a)

Exchange Right

  

9.02(a)

Exchanged Profits Units

  

9.02(a)

Exchanging Member

  

9.02(a)

Expenses

  

11.02(c)(ii)

Hurdle Amount

  

3.01(c)

Indemnification Sources

  

11.02(c)(ii)

Indemnitee-Related Entities

  

11.02(c)(ii)(A)

Initial Agreement

  

Preamble

Jointly Indemnifiable Claims

  

11.02(c)(ii)(B)

Manager

  

Preamble

Manager Modified Distribution Amount

  

5.03(e)(ii)

Member Schedule

  

3.01(b)

Officers

  

7.05(a)

Permitted Transfer

  

8.02

Permitted Transferee

  

8.02

Prior Agreement

  

Preamble

Process Agent

  

13.05(b)

 

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Proposed Regulations

  

6.02(b)

PubCo

  

Preamble

PubCo Approved Recap Transaction

  

10.02(b)

Redeemed Employee Member

  

9.07(a)

Redeemed Employee Units

  

9.07(a)

Redeemed Units

  

9.01(a)

Redeeming Member

  

9.01(a)

Redemption

  

9.01(a)

Redemption Date

  

9.01(a)

Redemption Notice

  

9.01(a)

Redemption Right

  

9.01(a)

Regulatory Allocations

  

5.04(c)

Restatement Date

  

Preamble

Short Period 20

  

5.03(e)(iii)

Specified Covenants

  

11.02(a)

Transferor Member

  

5.02(b)

Withholding Advances

  

5.06(b)

Section 1.02 Other Definitional and Interpretative Provisions. The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections and Schedules are to Articles, Sections and Schedules of this Agreement unless otherwise specified. All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. The terms “clause(s)” and “subparagraph(s)” shall be used herein interchangeably. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. Unless otherwise expressly provided herein, any agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended,

 

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modified, supplemented or restated, including by waiver or consent, and references to all attachments thereto and instruments incorporated therein, but in the case of each of the foregoing, only to the extent that such amendment, modification, supplement, restatement, waiver or consent is effected in accordance with this Agreement. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. Unless otherwise expressly provided herein, any statute defined or referred to herein or in any agreement or instrument that is referred to herein means such statute as from time to time amended, modified, supplemented or restated, including by succession of comparable successor statutes. Unless otherwise expressly provided herein, when any approval, consent or other matter requires any action or approval of any group of Members, including any holders of any class of Units, such approval, consent or other matter shall require the approval of a majority in interest of such group of Members. Except to the extent otherwise expressly provided herein, all references to any Member shall be deemed to refer solely to such Person in its capacity as such Member and not in any other capacity.

ARTICLE II

THE COMPANY

Section 2.01 Continuation of the Company. The Members hereby agree to continue the Company as a limited liability company pursuant to the Delaware Act, upon the terms and subject to the conditions set forth in this Agreement. The authorized officer or representative, as an “authorized person” within the meaning of the Delaware Act, shall file and record any amendments and/or restatements to the Certificate and such other certificates and documents (and any amendments or restatements thereof) as may be required under the Laws of the State of Delaware and of any other jurisdiction in which the Company may conduct business. The authorized officer or representative shall, on request, provide any Member with copies of each such document as filed and recorded. The Members hereby agree that the Company and its Subsidiaries shall be governed by the terms and conditions of this Agreement and, except as provided herein, the Delaware Act.

Section 2.02 Name. The name of the Company shall be Endeavor Operating Company, LLC. The Managing Member may change the name of the Company in its sole discretion and shall have the authority to execute, acknowledge, deliver, file and record such further certificates, amendments, instruments and documents, and to do all such other acts and things, as may be required by Law or necessary or advisable to effect such change.

Section 2.03 Term. The term of the Company began on December 16, 2013, the date the Certificate was filed with the Secretary of State of the State of Delaware, and the Company shall have perpetual existence unless sooner dissolved and its affairs wound up as provided in Article XII.

Section 2.04 Registered Agent and Registered Office. The name of the registered agent of the Company for service of process on the Company in the State of Delaware shall be Corporation Service Company, and the address of such registered agent and the address of the registered office of the Company in the State of Delaware shall be 251 Little Falls Drive, Wilmington, Delaware 19808. Such office and such agent may be changed to such place within

 

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the State of Delaware and any successor registered agent, respectively, as may be determined from time to time by the Managing Member in accordance with the Delaware Act.

Section 2.05 Purposes. The Company has been formed for the object and purpose of engaging in any lawful act or activity for which a limited liability company may be organized under the Delaware Act.

Section 2.06 Powers of the Company. The Company shall have the power and authority to take any and all actions necessary, appropriate or advisable to or for the furtherance of the purposes set forth in Section 2.05.

Section 2.07 Partnership Tax Status. The Members intend that the Company shall be treated as a partnership for federal, state and local tax purposes to the extent such treatment is available, and agree to take (or refrain from taking) such actions as may be necessary to receive and maintain such treatment and refrain from taking any actions inconsistent therewith.

Section 2.08 Regulation of Internal Affairs. The internal affairs of the Company and the conduct of its business shall be regulated by this Agreement, and to the extent not provided for herein, shall be determined by the Managing Member.

Section 2.09 Ownership of Property. Legal title to all Property conveyed to, or held by, the Company or its Subsidiaries shall reside in the Company or its Subsidiaries, as applicable, and shall be conveyed only in the name of the Company or its Subsidiaries, as applicable, and no Member or any other Person, individually, shall have any ownership of such Property.

ARTICLE III

UNITS; MEMBERS; BOOKS AND RECORDS; REPORTS

Section 3.01 Units; Admission of Members.

(a) Each Member’s ownership interest in the Company shall be represented by Units, which may be divided into one or more types, classes or series, or subseries of any type, class or series, with each type, class or series, or subseries thereof, having the rights and privileges, set forth in this Agreement.

(b) The Managing Member shall have the right to authorize and cause the Company to issue (A) an unlimited number of Common Units and (B) an unlimited number of Profits Units. The number and type of Units issued to each Member shall be set forth opposite such Member’s name on the schedule of Members of the Company held by the Company in its books and records (the “Member Schedule”). The Member Schedule shall be maintained by the Managing Member on behalf of the Company in accordance with this Agreement. When any Units or other Equity Securities of the Company are issued, repurchased, redeemed, converted or Transferred in accordance with this Agreement, the Member Schedule shall be amended by the Managing Member to reflect such issuance, repurchase, redemption or Transfer, the admission of Additional Members or Substitute Members and the resulting Percentage Interest of each Member.

 

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Following the date hereof, no Person shall be admitted as a Member and no additional Units shall be issued except as expressly provided herein.

(c) The Common Units and Profits Units may be subject to vesting and other terms and conditions as set forth in the Vesting Letters. Each Profits Unit shall be subject to a hurdle amount (the “Hurdle Amount”), which shall be: (i) as of the date hereof with respect to each outstanding Profits Unit, as set forth on the Member Schedule (or in the applicable Vesting Letter) or, (ii) with respect to each subsequently issued Profits Unit that is intended to constitute a Profits Interest for U.S. federal income tax purposes, an amount not less than the amount determined by the Managing Member to be necessary to cause such Profits Unit to constitute a Profits Interest, as set forth on the Member Schedule, and (iii) with respect to each subsequently issued Profits Unit that is not intended to constitute a Profits Interest, the amount as determined by the Managing Member and set forth on the Member Schedule or the applicable Vesting Letter. The Hurdle Amount may be adjusted by the Managing Member in good faith to account for Capital Contributions and distributions made pursuant to Section 5.03(b). Each subsequently issued Profits Unit that is intended to constitute a Profits Interest shall have an initial Capital Account at the time of its issuance equal to zero dollars ($0.00).

(d) The Managing Member may cause the Company to authorize and issue from time to time such other Units or other Equity Securities of any type, class or series, in each case, having the designations, preferences and/or special rights as may be determined by the Managing Member. Such Units or other Equity Securities may be issued pursuant to such agreements as the Managing Member shall approve in its discretion. When any such other Units or other Equity Securities are authorized and issued, the Member Schedule and this Agreement shall be amended by the Managing Member to reflect such additional issuances and the resulting dilution, which shall be borne pro rata by all Members based on their Common Units and Profits Units (taking into account the applicable Hurdle Amounts).

(e) Unvested Common Units and Unvested Profits Units shall be subject to the terms of this Agreement and the applicable Vesting Letters, and the Managing Member shall have sole and absolute discretion to interpret and administer the Vesting Letters and to adopt such amendments thereto or otherwise determine the terms and conditions of such Unvested Common Units and Unvested Profits Units in accordance with this Agreement and the applicable Vesting Letters. Unvested Common Units and Unvested Profits Units that fail to vest and are forfeited by the applicable Member shall be cancelled by the Company (and corresponding shares of Class X Common Stock and Class Y Common Stock held by the applicable Member shall be cancelled, in each case for no consideration) and shall not be entitled to any distributions pursuant to Section 5.03.

(f) Unless the Managing Member otherwise directs, Units will not be represented by certificates.

Section 3.02 Substitute Members and Additional Members.

(a) No Transferee of any Units or Person to whom any Units are issued pursuant to this Agreement shall be admitted as a Member hereunder or acquire any rights hereunder, including any voting rights or the right to receive distributions and allocations in respect

 

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of the Transferred or issued Units, as applicable, unless (i) such Units are Transferred or issued in compliance with the provisions of this Agreement (including Article VIII) and (ii) such Transferee or recipient shall have executed and delivered to the Company such instruments as the Managing Member deems necessary or desirable, in its reasonable discretion, to effectuate the admission of such Transferee or recipient as a Member and to confirm the agreement of such Transferee or recipient to be bound by all the terms and provisions of this Agreement. Upon complying with the immediately preceding sentence, without the need for any further action of any Person, a Transferee or recipient shall be deemed admitted to the Company as a Member. A Substitute Member shall enjoy the same rights, and be subject to the same obligations, as the Transferor; provided, that such Transferor shall not be relieved of any obligation or liability hereunder arising prior to the consummation of such Transfer but shall, except as explicitly set forth herein, be relieved of all future obligations with respect to the Units so Transferred. As promptly as practicable after the admission of any Person as a Member, the books and records of the Company shall be changed to reflect such admission of a Substitute Member or Additional Member. In the event of any admission of a Substitute Member or Additional Member pursuant to this Section 3.02(a), this Agreement shall be deemed amended to reflect such admission, and any formal amendment of this Agreement (including Schedule A) in connection therewith shall only require execution by the Company and such Substitute Member or Additional Member, as applicable, to be effective.

(b) If a Member shall Transfer all (but not less than all) of its Units, the Member shall thereupon cease to be a Member of the Company.

Section 3.03 Tax and Accounting Information.

(a) Accounting Decisions and Reliance on Others. All decisions as to accounting matters, except as otherwise specifically set forth herein, shall be made by the Managing Member in accordance with Law and to the extent applicable with accounting methods followed for federal income tax purposes. In making such decisions, the Managing Member may rely upon the advice of the independent accountants of the Company.

(b) Records and Accounting Maintained. For financial reporting purposes, unless otherwise determined by PubCo’s audit committee, the books and records of the Company shall be kept on the accrual method of accounting applied in a consistent manner and shall reflect all Company transactions. For tax purposes, the books and records of the Company shall be kept on the accrual method. The Fiscal Year of the Company shall be used for financial reporting and for federal income tax purposes.

(c) Financial Reports.

(i) The books and records of the Company shall be audited as of the end of each Fiscal Year by the same accounting firm that audits the books and records of PubCo (or, if such firm declines to perform such audit, by an accounting firm selected by the Managing Member).

(ii) In the event that neither PubCo nor the Company is required to file an annual report on Form 10-K or quarterly report on Form 10-Q, the Company shall deliver,

 

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or cause to be delivered, the following to each Member (other than the Employee Holdco Members):

(A) not later than ninety (90) days after the end of each Fiscal Year of the Company, a copy of the audited consolidated balance sheet of the Company and its Subsidiaries as of the end of such Fiscal Year and the related statements of operations and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous year, all in reasonable detail; and

(B) not later than forty five (45) days or such later time as permitted under applicable securities law after the end of each of the first three fiscal quarters of each Fiscal Year, the unaudited consolidated balance sheet of the Company and its Subsidiaries, and the related statements of operations and cash flows for such quarter and for the period commencing on the first day of the Fiscal Year and ending on the last day of such quarter.

(d) Tax Returns.

(i) The Company shall timely cause to be prepared all federal, state, local and foreign tax returns (including information returns) of the Company and its Subsidiaries, which may be required by a jurisdiction in which the Company and its Subsidiaries operate or conduct business for each year or period for which such returns are required to be filed and shall cause such returns to be timely filed. Upon request of any Member (other than the Employee Holdco Members), the Company shall furnish to each Member a copy of such tax return.

(ii) The Company shall furnish to each Member (a) as soon as reasonably practical after the end of each Fiscal Year, all information concerning the Company and its Subsidiaries reasonably required for the preparation of tax returns of such Members (or any beneficial owner(s) of such Member), including a report (including Schedule K-1), indicating each Member’s share of the Company’s taxable income, gain, credits, losses and deductions for such year, in sufficient detail to enable such Member to prepare its federal, state and other tax returns; provided, that the Managing Member shall use commercially reasonable efforts to provide estimates of such information believed by the Managing Member in good faith to be reasonable, (b) as soon as reasonably practical after the close of the relevant fiscal period, such information concerning the Company as is required to enable such Member (or any beneficial owner of such Member) to pay estimated taxes and (c) as soon as reasonably practical after a request by such Member, such other information concerning the Company and its Subsidiaries that is reasonably requested by such Member for compliance with its tax obligations (or the tax obligations of any beneficial owner(s) of such Member) or for tax planning purposes.

(e) Inconsistent Positions. No Member shall take a position on its income tax return with respect to any item of Company income, gain, deduction, loss or credit that is different from the position taken on the Company’s income tax return with respect to such item unless such Member notifies the Company of the different position the Member desires to take and the Company’s regular tax advisors, after consulting with the Member, are unable to provide an opinion that (after taking into account all of the relevant facts and circumstances) the arguments in favor of the Company’s position outweigh the arguments in favor of the Member’s position.

 

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Section 3.04 Books and Records. The Company shall keep full and accurate books of account and other records of the Company at its principal place of business. No Member (other than the Managing Member) shall have any right to inspect the books and records of PubCo, the Company or any of its Subsidiaries.

Section 3.05 Equity Incentive Plans. If at any time or from time to time, in connection with any Equity Incentive Plan, equity incentive awards are granted to, vested, settled or exercised by any grantee (including employees of the Company and its Subsidiaries), such awards shall be administered between the Company, PubCo, Manager and their respective Affiliates in accordance with an equity grant policy adopted by the Company, PubCo and Manager, as may be amended from time to time.

ARTICLE IV

MANAGER OWNERSHIP; RESTRICTIONS ON MANAGER UNITS

Section 4.01 Manager Ownership.

(a) Except in connection with Redemptions or Exchanges under Article IX, or as otherwise determined by the Managing Member, if at any time PubCo issues a share of Class A Common Stock or any other Equity Security of PubCo entitled to any economic rights (including in the IPO) (an “Economic PubCo Security”) with regard thereto, (i) Manager shall issue to PubCo an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of Manager Common Units (if PubCo issues shares of Class A Common Stock) or such other Equity Securities of Manager (if PubCo issues Economic PubCo Securities other than a share of Class A Common Stock) corresponding to the Economic PubCo Security, with substantially the same rights to dividends and distributions (including distributions on liquidation) and other economic rights as those of such Economic PubCo Security (an “Economic Manager Security”), (ii) the Company shall issue to Manager an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of Common Units (if Manager issues a Manager Common Unit), or such other Equity Securities of the Company (if Manager issues Economic Manager Securities other than a Manager Common Unit) corresponding to the Economic Manager Security, with substantially the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Economic Manager Security, and (iii) in exchange for the issuances in the foregoing clauses (i) and (ii), the net proceeds or contributed proceeds received by (A) PubCo with respect to the corresponding issuance of Class A Common Stock or Economic PubCo Securities, if any, shall be concurrently contributed by PubCo to Manager, and (B) Manager with respect to the corresponding issuance of Manager Common Units or Economic Manager Securities, if any, shall be concurrently contributed by Manager to the Company.

(b) Notwithstanding Section 4.01(a), this Article IV shall not apply (i) to the issuance and distribution to holders of shares of PubCo Common Stock of rights to purchase Equity Securities of PubCo under a “poison pill” or similar shareholders rights plan (it being understood that upon a Redemption involving a Share Settlement or an Exchange under Article

 

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IX, the shares of Class A Common Stock and/or Class X Common Stock, as the case may be, issued therein will be issued together with a corresponding right) or (ii) to the issuance under the PubCo Equity Plan or PubCo’s other employee benefit plans of any warrants, options or other rights to acquire Equity Securities of PubCo or rights or property that may be converted into or settled in Equity Securities of PubCo, but shall in each of the foregoing cases apply to the issuance of Equity Securities of PubCo in connection with the exercise or settlement of such rights, warrants, options or other rights or property.

Section 4.02 Restrictions on Manager Units.

(a) Except as otherwise determined by the Managing Member, the Company may not issue any additional Common Units or any other Equity Securities of the Company to PubCo or any of its Subsidiaries, including Manager, unless substantially simultaneously therewith (i) Manager or such other Subsidiary issues or sells to PubCo an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of Manager Common Units or other Equity Securities of Manager or such other Subsidiary with substantially the same rights to dividends and distributions (including distributions upon liquidation of Manager) and other economic rights as the Equity Securities issued by the Company, and (ii) PubCo issues or sells an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of shares of Class A Common Stock or other Equity Securities of PubCo with substantially the same rights to dividends and distributions (including distributions upon liquidation of PubCo) and other economic rights as the Equity Securities issued by the Company.

(b) Except as otherwise determined by the Managing Member, (i) PubCo or any of its Subsidiaries may not redeem, repurchase or otherwise acquire any shares of Class A Common Stock unless substantially simultaneously therewith Manager redeems, repurchases or otherwise acquires from PubCo Manager Common Units and the Company redeems, repurchases or otherwise acquires from Manager an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of Common Units for the same price per security (or such other price as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) (or, if PubCo and Manager use funds received from distributions from Manager and the Company, respectively, or the net proceeds from an issuance of Shares of Class A Common Stock and Manager Common Units, respectively, to fund such redemption, repurchase or acquisition, then the Company shall cancel a corresponding number of Common Units for no consideration) and (ii) PubCo or any of its Subsidiaries may not redeem or repurchase any other Equity Securities of PubCo unless substantially simultaneously therewith, Manager and the Company redeem or repurchase from PubCo and Manager, respectively, an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of Equity Securities of Manager and the Company, respectively, of a corresponding class or series with substantially the same rights to dividends and distributions (including distributions upon liquidation) or other economic rights as those of such Equity Securities of PubCo for the same price per security (or such other price as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) (or, if PubCo and

 

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Manager use funds received from distributions from Manager and the Company, respectively, or the net proceeds from an issuance of Equity Securities other than shares of Class A Common Stock and Manager Common Units, respectively, to fund such redemption, repurchase or acquisition, then the Company shall cancel an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of its corresponding Equity Securities for no consideration). Except as otherwise determined by the Managing Member, the Company may not redeem, repurchase or otherwise acquire Common Units or the Equity Securities of the Company from PubCo or any of its Subsidiaries, including Manager, unless substantially simultaneously therewith Manager or such other Subsidiary redeems, repurchases or otherwise acquires an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of Manager Common Units or other corresponding Equity Security from PubCo, and PubCo redeems, repurchases or otherwise acquires an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of shares of Class A Common Stock, Class B Common Stock or other applicable Economic PubCo Securities for a corresponding price per security from holders thereof (except that if the Company cancels Common Units for no consideration as described in Section 4.02(b)(i) or (ii), then the price need not be the same). Notwithstanding the immediately preceding sentence, to the extent that any consideration payable to PubCo or Manager or such other Subsidiary of PubCo in connection with the redemption or repurchase of any shares or other Equity Securities of PubCo or Manager or such other Subsidiary of PubCo, respectively, as applicable, is or consists (in whole or in part) of shares or such other Equity Securities (including, for the avoidance of doubt, in connection with the cashless exercise of an option or warrant), then redemption or repurchase of the corresponding Equity Securities of the Company shall be effectuated in an equivalent manner (except if the Company cancels Common Units or other Equity Securities for no consideration as described in this Section 4.02(b)).

(c) Except as otherwise determined by the Managing Member, the Company shall not in any manner effect any subdivision (by any stock or Unit split, stock or Unit dividend or distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse stock or Unit split, reclassification, reorganization, recapitalization or otherwise) of the outstanding Common Units or Profits Units unless accompanied by a substantively identical subdivision or combination, as applicable, of the outstanding Equity Securities of Manager (and any other Subsidiary of PubCo that holds Equity Securities of the Company) and PubCo, with corresponding changes made with respect to any other exchangeable or convertible securities. Except as otherwise determined by the Managing Member, Manager (any other Subsidiary of PubCo that holds Equity Securities of the Company) shall not in any manner effect any subdivision (by any stock or unit split, stock or unit dividend or distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse stock or unit split, reclassification, reorganization, recapitalization or otherwise) of the outstanding Equity Securities of Manager (or such other Subsidiary of PubCo), as applicable, unless accompanied by a substantively identical subdivision or combination, as applicable, of the outstanding Common Units or Profits Units and Equity Securities of PubCo, with corresponding changes made with respect to any other exchangeable or convertible securities.

 

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(d) Notwithstanding anything herein or in the Manager LLC Agreement to the contrary, in the event that PubCo redeems, repurchases or otherwise acquires any shares of Class A Common Stock, Class B Common Stock or Class C Common Stock, (i) the Managing Member and PubCo shall be permitted to cancel for no consideration an equal number of Manager Common Units held by PubCo and (ii) the Managing Member shall be permitted to effect any subdivision (by any stock or Unit split, stock or Unit dividend or distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse stock or Unit split, reclassification, reorganization, recapitalization or otherwise) of the outstanding Common Units, in each case, to the extent the Managing Member determines appropriate to maintain the ratio between (A) outstanding shares of Class A Common Stock, Class B Common Stock and Class C Common Stock and Manager Common Units held by Persons other than PubCo on the one hand and (B) Common Units held by Manager on the other hand. In any such event, the Managing Member may also equitably adjust any applicable Hurdle Amount as is necessary or appropriate.

ARTICLE V

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;

DISTRIBUTIONS; ALLOCATIONS

Section 5.01 Capital Contributions.

(a) From and after the date hereof, no Member shall have any obligation to the Company, to any other Member or to any creditor of the Company to make any further Capital Contribution, except as expressly provided in this Agreement.

(b) Except as expressly provided herein, no Member, in its capacity as a Member, shall have the right to receive any Property of the Company.

Section 5.02 Capital Accounts.

(a) Maintenance of Capital Accounts. The Company shall maintain a Capital Account for each Member on the books of the Company in accordance with the provisions of Treasury Regulations Section 1.704-1(b)(2)(iv) and, to the extent consistent with such provisions, the following provisions:

(i) Each Member listed on the Member Schedule shall be credited with the Initial Capital Account Balance set forth on the Member Schedule. The Member Schedule shall be amended by the Managing Member after the closing of the IPO and from time to time to reflect adjustments to the Members’ Capital Accounts made in accordance with Sections 5.02(a)(ii), 5.02(a)(iii), 5.02(a)(iv), 5.02(c) or otherwise.

(ii) To each Member’s Capital Account there shall be credited: (A) such Member’s Capital Contributions, (B) such Member’s distributive share of Net Income and any item in the nature of income or gain that is allocated pursuant to Section 5.04 and (C) the amount of any Company liabilities assumed by such Member or that are secured by any Property distributed to such Member.

 

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(iii) To each Member’s Capital Account there shall be debited: (A) the amount of money and the Carrying Value of any Property distributed to such Member pursuant to any provision of this Agreement, (B) such Member’s distributive share of Net Loss and any items in the nature of expenses or losses that are allocated to such Member pursuant to Section 5.04 and (C) the amount of any liabilities of such Member assumed by the Company or that are secured by any Property contributed by such Member to the Company.

(iv) In determining the amount of any liability for purposes of subparagraphs (ii) and (iii) above there shall be taken into account Section 752(c) of the Code and any other applicable provisions of the Code and the Treasury Regulations.

The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Treasury Regulations. In the event that the Managing Member shall reasonably determine that it is prudent to modify the manner in which the Capital Accounts or any debits or credits thereto are maintained (including debits or credits relating to liabilities that are secured by contributed or distributed Property or that are assumed by the Company or the Members), the Managing Member may make such modification so long as such modification will not have any effect on the amounts distributed to any Person pursuant to Article XII upon the dissolution of the Company. The Managing Member also shall (i) make any adjustments that are necessary or appropriate to maintain equality between Capital Accounts of the Members and the amount of capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g), and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Treasury Regulations Section 1.704-1(b).

(b) Succession to Capital Accounts. In the event any Person becomes a Substitute Member in accordance with the provisions of this Agreement, such Substitute Member shall succeed to the Capital Account of the former Member (the “Transferor Member”) to the extent such Capital Account relates to the Transferred Units.

(c) Adjustments of Capital Accounts. The Company shall revalue the Capital Accounts of the Members in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(f) at the following times: (i) immediately prior to the contribution of more than a de minimis amount of money or other property to the Company by a new or existing Member as consideration for one or more Units; (ii) immediately prior to the distribution by the Company to a Member of more than a de minimis amount of property in respect of one or more Units; (iii) immediately prior to the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); and (iv) in connection with the issuance by the Company of more than a de minimis amount of Units as consideration for the provision of services to or for the benefit of the Company (as described in Treasury Regulations Section 1.704-1(b)(2)(iv)(f)(5)(iii)); provided, however, that adjustments pursuant to clauses (i), (ii) and (iv) above need not be made if the Managing Member reasonably determines that such adjustments are not necessary or appropriate to reflect the relative economic interests of the Members and that the absence of such adjustments does not adversely and disproportionately affect any Member. The Company shall be entitled to take all actions necessary (as determined by the Managing Member) to comply with the provisions of the Code and Treasury Regulations relating to non-compensatory options.

 

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(d) No Member shall be entitled to withdraw capital or receive distributions except as specifically provided herein. A Member shall have no obligation to the Company, to any other Member or to any creditor of the Company to restore any negative balance in the Capital Account of such Member. Except as expressly provided elsewhere herein, no interest shall be paid on the balance in any Member’s Capital Account.

(e) Whenever it is necessary for purposes of this Agreement to determine a Member’s Capital Account on a per Unit basis, such amount shall be determined by dividing the Capital Account of such Member attributable to the applicable class of Units held of record by such Member by the number of Units of such class held of record by such Member, with appropriate adjustments if necessary to reflect the economic differences between Units.

Section 5.03 Amounts and Priority of Distributions.

(a) Distributions Generally. Except as otherwise provided in Article XII, distributions shall be made to the Members as set forth in this Section 5.03, at such times and in such amounts as the Managing Member, in its sole discretion, shall determine.

(b) Distributions to the Members. Subject to Section 5.03(e) and (f), at such times and in such amounts as the Managing Member, in its sole discretion, shall determine, distributions shall be made to the Members in proportion to their respective Percentage Interests; provided, however, that notwithstanding anything in this Section 5.03 to the contrary (other than Section 5.03(e) and (f)), (i) no distributions shall be made in respect of any Unvested Units and (ii) distributions shall be made with respect to a vested Profits Unit if and only if (x) such Profits Unit is entitled to distributions in the applicable Vesting Letter and (y) solely to the extent that the aggregate amount of distributions made by the Company in respect of each Common Unit that was outstanding on the date of issuance of such Profits Unit (other than Tax Distributions which have not yet been applied against and reduced amounts that would otherwise be payable to the Members (as described in Section 5.03(e)(iv))) from and after the issuance of any such Profits Unit exceeds the Hurdle Amount of such Profits Unit (and for the avoidance of doubt, such vested Profits Unit shall only be entitled to participate in the portion of any such distribution that constitutes such excess); provided that, if a Profits Unit is a Catch-Up Unit, then the Managing Member shall, as promptly as reasonably practicable after the Hurdle Amount of such Catch-Up Unit is satisfied, make adjustments to distributions pursuant to this Section 5.03(b) so that the holder of such Catch-Up Unit is distributed, on a cumulative basis, the amount to which such Member would have been entitled to in respect of such Catch-Up Unit had the Hurdle Amount not been in effect and to otherwise equitably account for other distributions made by the Company to its Members after the issuance of such Catch-Up Unit and prior to the time that such Hurdle Amount was satisfied. Any amounts that are not distributed to holders of such Unvested Units or Profits Units by virtue of the foregoing proviso shall instead be distributed to the Members in accordance with this Section 5.03(b).

(c) Manager Distributions. Notwithstanding the provisions of Section 5.03(b), the Managing Member, in its sole discretion, may authorize that (i) cash be paid

 

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to Manager (which payment shall be made without pro rata distributions to the other Members) in exchange for the redemption, repurchase or other acquisition of Units held by Manager to the extent that such cash payment is used to redeem, repurchase or otherwise acquire an equal number of corresponding Equity Securities of Manager from PubCo in accordance with Section 4.02(b) (and used by PubCo to make a corresponding repurchase of Equity Securities of PubCo in accordance with Section 4.02(b)), and (ii) to the extent that the Managing Member determines that expenses or other obligations of Manager are related to its role as the Managing Member or the business and affairs of Manager that are conducted through the Company or any of the Company’s direct or indirect Subsidiaries, cash (and, for the avoidance of doubt, only cash) distributions may be made to Manager (which distributions shall be made without pro rata distributions to the other Members) in amounts required for Manager to pay (w) operating, administrative and other similar costs incurred by Manager, to the extent the proceeds are used or will be used by Manager to pay expenses described in this clause (ii) (in either case only to the extent economically equivalent Indebtedness or Equity Securities of the Company were not issued to Manager), and payments pursuant to any legal, tax, accounting and other professional fees and expenses (but, for the avoidance of doubt, excluding any tax liabilities of Manager), (x) any judgments, settlements, penalties, fines or other costs and expenses in respect of any claims against, or any litigation or proceedings involving, Manager, (y) fees and expenses (including any underwriters’ discounts and commissions) related to any securities offering, investment or acquisition transaction (whether or not successful) authorized by PubCo, as the managing member of Manager and (z) other fees and expenses in connection with the maintenance of the existence of Manager. For the avoidance of doubt, distributions made under this Section 5.03(c) may not be used to pay or facilitate dividends or distributions on the common stock of PubCo and must be used solely for one of the express purposes set forth under clause (i) or (ii) of the immediately preceding sentence.

(d) Distributions in Kind. Any distributions in kind shall be made at such times and in such amounts as the Managing Member, in its sole discretion, shall determine based on their fair market value as determined by the Managing Member in the same proportions as if distributed in accordance with Section 5.03(b). If cash and property are to be distributed in kind simultaneously, the Company shall distribute such cash and property in kind in the same proportion to each Member.

(e) Tax Distributions.

(i) Notwithstanding any other provision of this Section 5.03 to the contrary (but subject to Section 5.03(e)(ii)), to the extent permitted by Law and consistent with the Company’s obligations to its creditors as determined by the Managing Member, the Company shall make cash distributions pursuant to this Section 5.03(e)(i) to each Member at least two (2) Business Days prior to the date on which any U.S. federal corporate estimated tax payments are due, in an amount equal to such Member’s Tax Distribution Amount (estimated on a quarterly basis by the Managing Member, taking into account estimated taxable income or loss of the Company through the end of the relevant quarterly period). A final accounting for Tax Distributions shall be made after the allocation of the Company’s actual net taxable income or loss has been determined for a fiscal year (or applicable portion thereof) and any shortfall in the amount of Tax Distributions a Member received for such fiscal year based on such final accounting shall, to the extent permitted by law and consistent with the Company’s obligations to its creditors as determined by the Managing Member, be promptly distributed to such Member.

 

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(ii) To the extent a Member otherwise would be entitled to receive less than its Percentage Interest (for this purpose, determined solely in respect of Common Units) of the aggregate Tax Distributions to be paid pursuant to this Section 5.03(e) in respect of Common Units (excluding any distribution made pursuant to Section 5.03(e)(iii)) on any given date, then the Tax Distributions to such Member in respect of its Common Units shall be increased to ensure that all such Tax Distributions made pursuant to this Section 5.03(e) (excluding any distribution made pursuant to Section 5.03(e)(iii)) are made pro rata in accordance with the Members’ respective Percentage Interests (determined solely in respect of Common Units). If, on a Tax Distribution date, there are insufficient funds on hand to distribute to the Members the full amount of the Tax Distributions to which such Members are otherwise entitled, Tax Distributions pursuant to this Section 5.03(e) shall be made to the Members to the extent of available funds in accordance with the Tax Distributions that would have been paid to them had no such limitation existed and the Company shall make future Tax Distributions (pro rata in accordance with the Tax Distributions that would have been paid to the Members had no applicable limitation existed) as soon as funds become available sufficient to pay the remaining portion of Tax Distributions to which such Members would have been entitled had sufficient funds been available. In addition, notwithstanding the foregoing, to the extent that a Tax Distribution that would be made to Manager exceeds the Manager Modified Distribution Amount, the Managing Member may reduce the Tax Distribution payable to the Manager in an amount up to the amount of such excess (and, if there are insufficient funds on hand to distribute to the Members other than Manager the full amount of the Tax Distributions to which such other Members are otherwise entitled, then the Managing Member shall, pursuant to this sentence, reduce the Tax Distribution payable to the Manager in an amount equal to the lesser of (i) the amount of such excess or (ii) the aggregate amount required to permit the other Members to receive Tax Distributions equal to the amount they would have received under Section 5.03(e)(i) were sufficient cash available to make full Tax Distributions under such provision, with the amount of any such reduction being paid as Tax Distributions to the other Members pro rata in accordance with the Tax Distributions to which such other Members are otherwise entitled). For purposes of this clause (iv), the “Manager Modified Distribution Amount” shall mean the Tax Distribution Amount of Manager, adjusted as determined by the Managing Member to (x) reflect the marginal combined corporate income tax rates to which PubCo is subject, (y) reflect any adjustments with respect to PubCo or Manager pursuant to Section 743(b) of the Code, and (z) include any amounts that PubCo is required to pay pursuant to the Tax Receivable Agreement. Notwithstanding anything else contained herein, in the event of any PubCo Approved Recap Transaction or any Change of Control involving Units held by a Member (other than Manager), such Member shall be entitled to receive consideration in such transaction worth no less than the consideration to which such Member would be entitled assuming that its Units (or in the case of Profits Units, New Common Units issuable if such Profits Units were Exchanged) involved in such transaction were Redeemed for shares of Class A Common Stock pursuant to the terms of this Agreement.

(iii) The Members acknowledge and agree that (i) an estimated calculation of taxable income for 2020 and the portion of 2021 ending on the date of the Restructuring (the “Short Period 2021”) was made by the Company, (ii) based on such estimate, by resolution of the Company, the Company made tax distributions to its members, (iii) upon a final accounting of taxable income for periods (or portions thereof) ending on or prior to the Restructuring, if the final calculation of taxable income for 2020 and the Short Period 2021 is greater than the estimate, the Company shall make additional tax distributions that are payable after the date hereof in respect of allocations of such additional taxable income for 2020 and the Short Period 2021 with respect to Units (or predecessor units) that were held during such period.

 

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(iv) Tax Distributions with respect to income or gain allocations made for periods after the consummation of the Restructuring (or, in the case of Profits Units that were outstanding prior to the Restructuring and remain outstanding as Profits Units after the Restructuring, for periods prior to the consummation of the Restructuring) shall be treated as advances of amounts otherwise distributable to any Member pursuant to this Section 5.03 (other than this Section 5.03(e)) or Section 12.02(b)(ii), and accordingly shall be applied against and reduce (without duplication) the next amounts that would otherwise be payable to such Member pursuant to such provisions(provided, that in no event will the distributions payable to Manager in respect of Units transferred to Manager in connection with a Redemption or Direct Redemption be increased or reduced (as compared to Common Units held by Manager as of the date hereof) as a result of Tax Distributions made (or not made) in respect of such Units prior to their transfer to Manager in connection with the applicable Redemption or Direct Redemption).

(f) Limitations in respect of Profits Units. It is the intention of the parties to this Agreement that distributions to holders of Profits Units be limited to the extent necessary so that each Profits Unit constitutes a Profits Interest, and accordingly, a holder of a Profits Unit shall not be entitled to receive distributions in respect thereof unless and until the aggregate amount of distributions made by the Company from and after the issuance of any such Profits Unit in respect of a Common Unit that was outstanding on the date of issuance of such Profits Unit exceeds the Hurdle Amount of such Profits Unit (and for the avoidance of doubt, such Profits Unit shall only be entitled to participate in the portion of any such distribution that constitutes such excess); provided, however, that a holder of Profits Units may receive distributions under Section 5.03(e) hereof in respect thereof prior to such time as the aggregate amount of distributions made by the Company from and after the issuance of any such Profits Units in respect of a Common Unit outstanding on the date of issuance of such Profits Unit exceeds the foregoing sum. Any portion of any distribution that is not made to a holder of a Profits Unit by virtue of this Section 5.03(f) shall instead be distributed to the Members pursuant to Section 5.03(b).

Section 5.04 Allocations.

(a) Net Income and Net Loss. Except as otherwise provided in this Agreement, and after giving effect to the special allocations set forth in Section 5.04(b), Section 5.04(c) and Section 5.04(d), Net Income and Net Loss (and, to the extent necessary, individual items of income, gain, loss, deduction or credit) of the Company shall be allocated among the Members in a manner such that the Capital Account of each Member, immediately after making such allocation, is, as nearly as possible, equal to (i) the distributions that would be made to such Member pursuant to Section 5.03(b) if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their Carrying Value, all Company liabilities were satisfied (limited with respect to each nonrecourse liability to the Carrying Value of the assets securing such liability), and the net assets of the Company were distributed, in accordance with Section 5.03(b), to the Members immediately after making such allocation (assuming, solely for this purpose that all Unvested Units were fully vested), minus (ii) such Member’s share of Company Minimum Gain and Member Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets.

 

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(b) Special Allocations. The following special allocations shall be made in the following order:

(i) Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulations Section 1.704-2(f), notwithstanding any other provision of this Article V, if there is a net decrease in Company Minimum Gain during any Fiscal Year, each Member shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Treasury Regulations Section 1.704-2(g). Allocations pursuant to the immediately preceding sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(f)(6) and 1.704-2(j)(2). This Section 5.04(b)(i) is intended to comply with the minimum gain chargeback requirement in Treasury Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

(ii) Member Minimum Gain Chargeback. Except as otherwise provided in Treasury Regulations Section 1.704-2(i)(4), notwithstanding any other provision of this Article V, if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 5.04(b)(ii) is intended to comply with the minimum gain chargeback requirement in Treasury Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

(iii) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or Section 1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of the Member as promptly as possible; provided, that an allocation pursuant to this Section 5.04(b)(iii) shall be made only if and to the extent that the Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article V have been tentatively made as if this Section 5.04(b)(iii) were not in the Agreement.

 

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(iv) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Members in a manner determined by the Managing Member consistent with Treasury Regulations Sections 1.704-2(b) and 1.704-2(c).

(v) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulations Sections 1.704-2(i)(1) and 1.704-2(j)(1).

(vi) Section 754 Adjustments. (A) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Sections 734(b) or 743(b) of the Code is required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of such asset) or loss (if the adjustment decreases the basis of such asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income and Net Loss; and (B) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Sections 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of such Member’s interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to such Members in accordance with their interests in the Company in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution was made in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

(c) Curative Allocations. The allocations set forth in Section 5.04(b)(i) through Section 5.04(b)(vi) and Section 5.04(d) (the “Regulatory Allocations”) are intended to comply with certain requirements of the Treasury Regulations. It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special allocations of other items of Company income, gain, loss, or deduction pursuant to this Section 5.04(c). Therefore, notwithstanding any other provision of this Article V (other than the Regulatory Allocations), the Managing Member shall make such offsetting special allocations of Company income, gain, loss, or deduction in whatever manner it determines appropriate so that, after such offsetting allocations are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all Company items were allocated pursuant to Section 5.04.

(d) Loss Limitation. Net Loss (or individual items of loss or deduction) allocated pursuant to Section 5.04 hereof shall not exceed the maximum amount of Net Loss (or individual items of loss or deduction) that can be allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any Fiscal Year. In the event some but not all of the Members would have Adjusted Capital Account Deficits as a consequence of an allocation of Net Loss (or individual items of loss or deduction) pursuant to Section 5.04 hereof, the limitation

 

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set forth in this Section 5.04(d) shall be applied on a Member by Member basis and Net Loss (or individual items of loss or deduction) not allocable to any Member as a result of such limitation shall be allocated to the other Members in accordance with the positive balances in such Member’s Capital Accounts so as to allocate the maximum permissible Net Loss to each Member under Treasury Regulations Section 1.704-1(b)(2)(ii)(d). Any reallocation of Net Loss pursuant to this Section 5.04(d) shall be subject to chargeback pursuant to the curative allocation provision of Section 5.04(c).

Section 5.05 Other Allocation Rules.

(a) Interim Allocations Due to Percentage Adjustment. If the Members’ interests in the Company change pursuant to the terms of the Agreement during any Fiscal Year, the amount of Net Income and Net Loss (or items thereof) to be allocated to the Members for such entire Fiscal Year shall be allocated to the portion of such Fiscal Year which precedes the date of such Transfer or change (and if there shall have been a prior Transfer or change in such Fiscal Year, which commences on the date of such prior Transfer or change) and to the portion of such Fiscal Year which occurs on and after the date of such Transfer or change (and if there shall be a subsequent Transfer or change in such Fiscal Year, which precedes the date of such subsequent Transfer or change), and the amounts of the items so allocated to each such portion shall be credited or charged to the Members in accordance with Section 5.04 as in effect during each such portion of the Fiscal Year in question. Such allocation shall be in accordance with Section 706 of the Code and the regulations thereunder and made without regard to the date, amount or receipt of any distributions that may have been made with respect to the transferred interest to the extent consistent with Section 706 of the Code and the regulations thereunder, and shall be made using any method permitted by Section 706 of the Code and such regulations as determined by the Managing Member. As of the date of such Transfer, the Transferee Member shall succeed to the Capital Account of the Transferor Member with respect to the transferred Units.

(b) Tax Allocations: Code Section 704(c). In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any Property contributed to the capital of the Company and with respect to reverse Code Section 704(c) allocations described in Treasury Regulations 1.704-3(a)(6) shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such Property to the Company for federal income tax purposes and its initial Carrying Value or its Carrying Value determined pursuant to Treasury Regulation 1.704-1(b)(2)(iv)(f) (computed in accordance with the definition of Carrying Value) using the traditional allocation method under Treasury Regulation 1.704-3(b) and by applying the principles of Treasury Regulation 1.704-3(a)(9) to adjustments made pursuant to Treasury Regulation 1.704(b)(2)(iv)(f). Any elections or other decisions relating to such allocations shall be made by the Managing Member in any manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 5.05(b), Section 704(c) of the Code (and the principles thereof), and Treasury Regulation 1.704-1(b)(4)(i) are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Net Income, Net Loss, other items, or distributions pursuant to any provision of this Agreement.

 

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Section 5.06 Tax Withholding; Withholding Advances.

(a) Tax Withholding.

(i) If requested by the Managing Member, each Member shall, if able to do so, deliver to the Managing Member: (A) an affidavit in form satisfactory to the Company that the applicable Member (or its partners, as the case may be) is not subject to withholding under the provisions of any federal, state, local, foreign or other Law; (B) any certificate that the Company may reasonably request with respect to any such Laws; and/or (C) any other form or instrument reasonably requested by the Company relating to any Member’s status under such Law. In the event that a Member fails or is unable to deliver to the Company an affidavit described in subclause (A) of this clause (i), for the avoidance of doubt, the Company may withhold amounts from such Member in accordance with Section 5.06(b).

(ii) After receipt of a written request of any Member or former Member, the Company shall provide such information to such Member and take such other action as may be reasonably necessary to assist such Member in making any necessary filings, applications or elections to obtain any available exemption from, or any available refund of, any withholding imposed by any taxing authority with respect to amounts distributable or items of income allocable to such Member hereunder to the extent not adverse to the Company or any Member. In addition, the Company shall, at the request of any Member, make or cause to be made (or cause the Company to make) any such filings, applications or elections; provided, that any such requesting Member shall cooperate with the Company, with respect to any such filing, application or election to the extent reasonably determined by the Company and that any filing fees, taxes or other out-of-pocket expenses reasonably incurred and related thereto shall be paid and borne by such requesting Member or, if there is more than one requesting Member, by such requesting Members in accordance with their Relative Percentage Interests.

(b) Withholding Advances. To the extent PubCo, Manager or the Company is required by Law to withhold or to make tax payments on behalf of or with respect to any Member (e.g., in connection with the delivery of consideration in connection with a Redemption or Exchange, backup withholding, Section 1445 of the Code, Section 1446 of the Code or any “imputed underpayment” within the meaning of the Code or, in each case, similar provisions of state, local or other tax Law) (“Withholding Advances”), PubCo, Manager or the Company, as the case may be, may withhold such amounts and make such tax payments as so required.

(c) Repayment of Withholding Advances. All Withholding Advances made on behalf of a Member, plus interest thereon at a rate equal to the Prime Rate as of the date of such Withholding Advances plus 2.0% per annum, shall (i) be paid on demand by the Member on whose behalf such Withholding Advances were made (it being understood that no such payment shall increase such Member’s Capital Account), or (ii) with the consent of the Managing Member be repaid by reducing the amount of the current or next succeeding distribution or distributions that would otherwise have been made to such Member or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Member. Whenever repayment of a Withholding Advance by a Member is made as described in clause (ii) of this Section 5.06(c), for all other purposes of this Agreement such Member shall be treated as having received all distributions (whether before or upon any Dissolution Event) unreduced by the amount of such Withholding Advance and interest thereon.

 

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(d) Withholding Advances — Reimbursement of Liabilities. Each Member hereby agrees to reimburse the Company for any liability with respect to Withholding Advances (including interest thereon) required or made on behalf of or with respect to such Member (including penalties imposed with respect thereto). The obligations of a Member with respect to the repayment and reimbursement of Withholding Advances will survive the termination, liquidation, winding up and dissolution of the Company and will survive the partial or complete transfer or redemption of a Member’s interests in the Company.

Section 5.07 Tax Proceedings. In representing the Company before any taxing authorities and courts in tax matters affecting the Company and the Members in their capacity as such, the Company Representative shall, to the extent practicable and permitted under the circumstances, keep the Members promptly informed of any such administrative and judicial proceedings; provided, that, so long as the Aggregate SL Ownership is equal to or exceeds the SL Limited Ownership Minimum, the SL Member shall (to the extent permitted by applicable Law) be entitled to participate with the Company Representative in any tax matters that would reasonably be expected to have a material adverse effect, in a materially disproportionate manner on the SL Member (or any beneficial owners of the SL Member) as compared to Holdco (or any beneficial owners of Holdco). So long as the Aggregate SL Ownership is equal to or exceeds the SL Limited Ownership Minimum, the Company shall not make any tax election or adopt any method of tax allocation in a manner inconsistent with past practice that would materially affect the SL Member in a materially disproportionate manner as compared to the other Members without the SL Member’s prior written consent. For the avoidance of doubt, nothing in this Section 5.07 shall prevent the Company (or any of its Subsidiaries) from taking actions explicitly provided to be taken by the Company pursuant to this Agreement (including for this purpose making an election pursuant to Section 754 of the Code (or analogous provisions of state or local Law)).

ARTICLE VI

CERTAIN TAX MATTERS

Section 6.01 Company Representative.

(a) The Managing Member is specially authorized and appointed to act as the Company Representative and in any similar capacity under state or local Law; provided, that the Managing Member may appoint and replace the Company Representative. The Company Representative shall designate a “designated individual” in accordance with Treasury Regulations Section 301.6223-1(b)(3)(i). The Company and the Members (including any Member designated as the Company Representative prior to the date hereof) shall cooperate fully with each other and shall use reasonable best efforts to cause the Managing Member (or any Person subsequently designated) to become the Company Representative with respect to any taxable period of the Company with respect to which the statute of limitations has not yet expired, including (as applicable) by filing certifications pursuant to Treasury Regulations Section 301.6231(a)(7)-1(d).

(b) The Company Representative may retain, at the Company’s expense, such outside counsel, accountants and other professional consultants as it may reasonably deem necessary in the course of fulfilling its obligations as the Company Representative. The Company Representative is authorized to take, and shall determine in its sole discretion whether

 

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or not the Company will take, such actions and execute and file all statements and forms on behalf of the Company that are approved by the Managing Member and are permitted or required by the applicable provisions of the Partnership Tax Audit Rules (including a “push-out” election under Section 6226 of the Code or any analogous election under state or local tax Law). Each Member agrees to cooperate with the Company Representative and to use commercially reasonable efforts to do or refrain from doing any or all things requested by the Company Representative (including paying any and all resulting taxes, additions to tax, penalties and interest in a timely fashion) in connection with any examination of the Company’s affairs by any federal, state, or local tax authorities, including resulting administrative and judicial proceedings. The Managing Member shall have the authority to amend this Section 6.01 to give effect to the Partnership Tax Audit Rules, and each Member agrees to be bound by the provisions of any such amendment.

Section 6.02 Section 83(b) Elections.

(a) Each Member who acquires Units that are subject to a “substantial risk of forfeiture” within the meaning of Code Section 83 at the time of such acquisition shall consult with such Member’s tax advisor to determine the tax consequences of such acquisition and the advisability of filing an election under Code Section 83(b) with respect to such Units. Each Member who acquires Profits Units that are intended to constitute Profits Interests in accordance with Section 3.01(c) and at the time of such acquisition are subject to a “substantial risk of forfeiture” within the meaning of Code Section 83 shall make a timely election under Code Section 83 with respect to such Units. It is the sole responsibility of a Member, and not the Company, to file the election under Code Section 83(b) even if such Member requests the Company or any of its representatives to assist in making such filing. Each Member who files an election under Code Section 83(b) with respect to Units (including each Member who is required to file such an election under this Section 6.02) shall provide a copy of such election and proof of filing of such election to the Company on or before the due date for the filing of such election.

(b) The Company and the Manager are authorized to follow the proposed Treasury regulations that were issued on May 24, 2005 regarding the issuance of partnership equity for services (including Prop. Treas. Reg. §§1.83-3, 1.83-6, 1.704-1, 1.706-3, 1.721-1 and 1.761-1), as such regulations may be subsequently amended (the “Proposed Regulations”), upon the issuance of a Company interest for services rendered or to be rendered to or for the benefit of the Company or a subsidiary of the Company, until final Treasury regulations regarding such matters are issued. If the Manager determines to follow the Proposed Regulations, in furtherance of the foregoing, the definition of Capital Accounts and Carrying Value, and the allocations of Net Income and Net Loss set forth in this Agreement, will be made in a manner that is consistent with the Proposed Regulations. The Manager is expressly authorized by each Member to elect to apply the safe harbor set forth in the Proposed Regulations if the provisions of the Proposed Regulations and the proposed Revenue Procedure described in IRS Notice 2005-43, or provisions similar thereto, are adopted as final (or temporary) regulations. If the Manager determines that the Company should make such election, then the Manager is hereby authorized to amend this Agreement without the consent of any other Member to provide that (i) the Company is authorized and directed to elect the safe harbor, (ii) the Company and each of its Members (including any person to whom a partnership interest is transferred in connection with the performance of services) will comply with all requirements of the safe harbor with respect to all Company interests transferred in connection with the performance of services while such election

 

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remains in effect and (iii) the Company and each of its Members will take all actions necessary, including providing the Company with any required information, to permit the Company to comply with the requirements set forth or referred to in the applicable Proposed Regulations for such election to be effective until such time (if any) as the Manager determines, in its discretion, that the Company should terminate such election. The Manager is further authorized to amend this Agreement to the extent the Manager determines in its discretion that such modification is necessary or desirable as a result of the issuance of such Treasury regulations relating to the tax treatment of the transfer of a partnership interest in connection with the performance of services. Notwithstanding anything to the contrary in this Agreement, each Member expressly confirms and agrees that such Member will be legally bound by any such amendment.

ARTICLE VII

MANAGEMENT OF THE COMPANY

Section 7.01 Management by the Managing Member. Except as otherwise specifically set forth in this Agreement, the Managing Member shall be deemed to be a “manager” for purposes of the Delaware Act. Except as expressly provided in this Agreement or the Delaware Act, the day-to-day business and affairs of the Company and its Subsidiaries shall be managed, operated and controlled exclusively by the Managing Member in accordance with the terms of this Agreement, and no other Members shall have management authority or rights over the Company or its Subsidiaries. The Managing Member is, to the extent of its rights and powers set forth in this Agreement, an agent of the Company for the purpose of the Company’s and its Subsidiaries’ business, and the actions of the Managing Member taken in accordance with such rights and powers, shall bind the Company (and no other Members shall have such right). Except as expressly provided in this Agreement, the Managing Member shall have all necessary powers to carry out the purposes, business, and objectives of the Company and its Subsidiaries. The Managing Member may delegate to Members, employees, officers or agents of the Company or any Subsidiary in its discretion the authority to sign agreements and other documents on behalf of the Company or any Subsidiary. The Managing Member shall have the exclusive power and authority, on behalf of the Company and its Subsidiaries to take such actions not inconsistent with this Agreement as the Managing Member deems necessary or appropriate to carry on the business and purposes of the Company and its Subsidiaries.

Section 7.02 Withdrawal of the Managing Member. Manager may withdraw as the Managing Member and appoint as its successor at any time upon written notice to the Company (i) any wholly-owned Subsidiary of Manager, (ii) any Person into which Manager is merged or consolidated or (iii) any transferee of all or substantially all of the assets of Manager, which withdrawal and replacement shall be effective upon the delivery of such notice. No appointment of a Person as Managing Member shall be effective unless Manager and the new Managing Member provide all other Members with contractual rights, directly enforceable by such other Members against the new Managing Member, to cause the new Managing Member to comply with all the Managing Member’s obligations under this Agreement.

 

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Section 7.03 Decisions by the Members.

(a) Other than the Managing Member, the Members shall take no part in the management of the Company’s business, shall transact no business for the Company and shall have no power to act for or to bind the Company; provided, however, that the Company may engage any Member or principal, partner, member, shareholder or interest holder thereof as an employee, independent contractor or consultant to the Company, in which event the duties and liabilities of such Person with respect to the Company as an employee, independent contractor or consultant, as applicable, shall be governed by the terms of such engagement with the Company.

(b) Except as expressly provided herein, neither the Members nor any class of Members shall have the power or authority to vote, approve or consent to any matter or action taken by the Company (or by Manager, as Managing Member).

Section 7.04 Fiduciary Duties. (i) The Managing Member shall, in its capacity as Managing Member, and not in any other capacity, have the same fiduciary duties to the Company and the Members as a member of the board of directors of a Delaware corporation (assuming such corporation had in its certificate of incorporation a provision eliminating the liabilities of directors and officers to the maximum extent permitted by Section 102(b)(7) of the DGCL); and (ii) each Officer shall, in their capacity as such, and not in any other capacity, have the same fiduciary duties to the Company and the Members as an officer of a Delaware corporation (assuming such corporation had in its certificate of incorporation a provision eliminating the liabilities of directors and officers to the maximum extent permitted by Section 102(b)(7) of the DGCL). Notwithstanding the immediately preceding sentence, neither the Managing Member nor any Officer shall be subject to corporate opportunity or similar doctrines.

Section 7.05 Officers.

(a) Appointment of Officers. The Managing Member may appoint individuals as officers (“Officers”) of the Company, which may include such officers as the Managing Member determines are necessary or appropriate. No Officer need be a Member. An individual may be appointed to more than one office.

(b) Authority of Officers. The Officers shall have the duties, rights, powers and authority as may be prescribed by the Managing Member from time to time.

(c) Removal, Resignation and Filling of Vacancy of Officers. Unless otherwise set forth in the employment agreement of the applicable Officer, the Managing Member may remove any Officer, for any reason or for no reason, at any time. Any Officer may resign at any time by giving written notice to the Company, and such resignation shall take effect at the date of the receipt of that notice or any later time specified in that notice; provided, that, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any such resignation shall be without prejudice to the rights, if any, of the Company or such Officer under this Agreement. A vacancy in any office because of death, resignation, removal or otherwise shall be filled by the Managing Member.

 

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ARTICLE VIII

TRANSFERS OF INTERESTS

Section 8.01 Restrictions on Transfers.

(a) Except as expressly permitted by Section 8.02, and subject to Section 8.01(b), Section 8.01(c), Section 8.01(d) and Section 8.01(e), any underwriter lock-up agreement applicable to such Member, any Vesting Letter and/or any other agreement between such Member and the Company, Manager, PubCo or any of their respective Controlled Affiliates, without the prior written approval of the Managing Member, no Member shall directly or indirectly Transfer all or any part of its Units or any right or economic interest pertaining thereto, including the right to vote or consent on any matter or to receive or have any economic interest in distributions or advances from the Company pursuant thereto. Any such Transfer which is not in compliance with the provisions of this Agreement shall be deemed a Transfer by such Member of Units in violation of this Agreement (and a breach of this Agreement by such Member) and shall be null and void ab initio.

(b) Except as otherwise expressly provided herein, it shall be a condition precedent to any Transfer otherwise permitted or approved pursuant to this Article VIII that:

(i) the Transferor shall have provided to the Company prior notice of such Transfer;

(ii) the Transferee shall agree in writing to be bound by this Agreement by signing and delivering to the Company a joinder substantially in a form acceptable to the Company;

(iii) the Transfer shall comply with all applicable Laws;

(iv) to the knowledge of the Transferee and Transferor after reasonable inquiry of the Company, the Transfer shall not impose material liability or material reporting obligations on the Company or any Member thereof in any jurisdiction, whether domestic or foreign, or result in the Company or any Member thereof becoming subject to the jurisdiction of any Governmental Authority anywhere, other than the Governmental Authorities in which the Company is then subject to such liability, reporting obligation or jurisdiction; and

(v) such Transfer shall comply with Article IX (to the extent Article IX governs such Transfer of Units).

(c) Notwithstanding any other provision of this Agreement to the contrary, but subject to Article IX, no Member shall Transfer all or any part of its Units or any right or economic interest pertaining thereto if such Transfer, in the reasonable discretion of the Managing Member, would cause the Company to (i) be classified as a “publicly traded partnership” as that term is defined in Section 7704 of the Code and Regulations promulgated thereunder or (ii) fail to qualify for the safe harbor contained in Treasury Regulations Section 1.7704-1(h).

 

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(d) Any Transfer of Units pursuant to this Agreement, including this Article VIII, shall be subject to the provisions of Section 3.01 and Section 3.02.

(e) For the avoidance of doubt, in addition to any restrictions on Transfer set forth in this Article VIII that may apply to such Transfer, (i) any Transfer of Units by any Member shall be subject to the restrictions on Transfer applicable thereto pursuant to any Vesting Letter to which such Member is a party and (ii) any Transfer of Employee Holdco Member Interests (as defined below) shall be subject to the restrictions on Transfer applicable thereto pursuant to the Employee Holdco I LLC Agreement, Employee Holdco II LLC Agreement or Executive Holdco LLC Agreement, as applicable.

Section 8.02 Certain Permitted Transfers. Notwithstanding anything to the contrary herein, but subject to compliance with Sections 8.01(b) through (e), from and after the later of (x) one hundred eighty (180) days following the consummation of the IPO and (y) January 1, 2022 (unless such time restriction is waived by the Managing Member in its sole discretion with respect to any proposed Transfer(s)), the following Transfers shall be permitted (any such Transfer, a “Permitted Transfer” and, the applicable Transferee, a “Permitted Transferee”):

(a) Any Transfer of Units to any Employee Holdco Member or Employee Holdco Member Member in connection with (x) the exercise of any repurchase or redemption right in respect of such Units of such Employee Holdco Member or Employee Holdco Member Member pursuant to the terms of the Employee Holdco I LLC Agreement, Employee Holdco II LLC Agreement or Executive Holdco LLC Agreement, as applicable, (y) the exercise of any right of such Employee Holdco Member or Employee Holdco Member Member to be distributed such Units pursuant to the terms of the Employee Holdco I LLC Agreement, Employee Holdco II LLC Agreement or Executive Holdco LLC Agreement, as applicable (including in connection with an Exchange, Redemption or Employee Member Put Right hereunder), or (z) the liquidation, dissolution and/or winding up of any Employee Holdco Member;

(b) Any Transfer of (i) membership interests in an Employee Holdco Member or (ii) Units, in each case, by or on behalf of an Executive Director (or one of his or her other Permitted Transferees) to its Family Members or Trusts (or back to such executive);

(c) Any Transfer by any SL Member or any SL Related Entity to any SL Member or any SL Related Entity;

(d) Any Transfer by any KKR Member or any KKR Related Entity to any KKR Member or any KKR Related Entity;

(e) Any Transfer pursuant to the terms of Article IX; and

(f) Any Transfer contemplated by Section 10.02 in connection with a PubCo Approved Change of Control or PubCo Approved Recap Transaction.

Section 8.03 Registration of Transfers. When any Units are Transferred in accordance with the terms of this Agreement, the Company shall cause such Transfer to be registered on the books of the Company.

 

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Section 8.04 Restricted Units Legend. The Units have not been registered under the Securities Act and, therefore, in addition to the other restrictions on Transfer contained in this Agreement, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is then available. To the extent such Units have been certificated, each certificate evidencing Units and each certificate issued in exchange for or upon the Transfer of any Units (if such securities remain Units as defined herein after such Transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED ON             , 2021, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ENDEAVOR OPERATING COMPANY, LLC, AS MAY BE AMENDED AND MODIFIED FROM TIME TO TIME, AND ENDEAVOR OPERATING COMPANY, LLC RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY ENDEAVOR OPERATING COMPANY, LLC TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

The Company shall imprint such legend on certificates (if any) evidencing Units. The legend set forth above shall be removed from the certificates (if any) evidencing any units which cease to be Units in accordance with the definition thereof.

ARTICLE IX

REDEMPTION AND EXCHANGE RIGHTS

Section 9.01 Redemption Right of a Member.

(a) From and after the later of (i) one hundred eighty (180) days following the consummation of the IPO and (ii) January 1, 2022 (unless such time restriction is waived by the Managing Member in its sole discretion with respect to any proposed Redemption; provided that if such restriction is waived by the Managing Member with respect to any Member, such restriction shall be waived with respect to the SL Member and the KKR Member to the same extent), and subject to (A) the terms of any Trading Policy (including any Blackout Period contained therein) and (B) the waiver or expiration of any contractual lock-up period relating to the shares of PubCo (or any corresponding Units) that may be applicable to such Member, each Member (other than Manager) shall be entitled to cause the Company to redeem (a “Redemption”) its Common Units (excluding (1) any Common Units that are subject to vesting conditions or subject to Transfer limitations pursuant to this Agreement or an applicable Vesting Letter and (2) any Employee Units that are not Redeemable Employee Common Units) in whole or in part (the “Redemption Right”) at any time and from time to time; provided, that after one hundred eighty (180) days following the consummation of the IPO and prior to January 1, 2022, the KKR Member

 

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shall be permitted to elect to make one or more Redemptions over any thirty (30) day period to the extent such Redemptions represent in the aggregate more than two (2) percent (2%) of the total interests in partnership capital or profits in the Company within the meaning of Treas. Reg. Section 1.7704-1(e)(2); provided, further, that, notwithstanding anything else contained herein, a Redemption of any Unit(s) contemplated by the preceding proviso, shall not be permitted unless the KKR Member provides the Company with ten (10) days prior written notice of such Redemption and the Company (acting reasonably, and after consultation with advisors for the KKR Member) has determined in good faith that such Redemption will not cause the Company (x) to fail to qualify for the safe harbor in Treas. Reg. Section 1.7704-1(j) or (y) otherwise to be treated as a publicly traded partnership (within the meaning of Section 7704 of the Code and the regulations thereunder) (it being agreed that, under current law and regulations, a “block transfer” within the meaning of Treasury Regulation Section 1.7704-1(e)(2) would not cause the Company to fail to qualify for such safe harbor or to otherwise be treated as a publicly traded partnership). A Member desiring to exercise its Redemption Right (a “Redeeming Member”) shall exercise such right by giving written notice (the “Redemption Notice”) to the Company, with a copy to PubCo. The Redemption Notice shall specify the number of Common Units (the “Redeemed Units”) that the Redeeming Member intends to have the Company redeem and a date, not less than two (2) Business Days nor more than ten (10) Business Days after delivery of such Redemption Notice (unless and to the extent that the Managing Member in its sole discretion agrees in writing to waive such time periods), on which exercise of the Redemption Right shall be completed (the “Redemption Date”); provided, that the Redemption Notice may specify that the Redemption is to be contingent (including as to the timing) upon the consummation of a purchase by another Person (whether in a tender or exchange offer, an underwritten offering or otherwise) of the Share Settlement into which the Redeemed Units are exchangeable, or contingent (including as to timing) upon the closing of an announced merger, consolidation or other transaction or event in which the Share Settlement would be exchanged or converted or become exchangeable for or convertible into cash or other securities or property; provided, further that the Redeeming Member may withdraw or amend a Redemption Notice, in whole or in part, prior to the effectiveness of the Redemption, at any time prior to 5:00 p.m. New York City time, on the Business Day immediately preceding the Redemption Date (or any such later time as may be required by Applicable Law) by delivery of a written notice of withdrawal to the Company (with a copy to PubCo), specifying (1) the number of withdrawn Units, (2) if any, the number of Units as to which the Redemption Notice remains in effect and (3) if the Redeeming Member so determines, a new Redemption Date or any other new or revised information permitted in the Redemption Notice. Following receipt of the Redemption Notice, and in any event at least one (1) Business Days prior to the Redemption Date, PubCo shall deliver to the Redeeming Member a notice, specifying whether it elects to settle the Redemption with a Share Settlement or a Cash Settlement (an “Election Notice”). If the Election Notice specifies a Cash Settlement, then on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date):

(i) the Redeeming Member shall Transfer and surrender, free and clear of all liens and encumbrances (x) the Redeemed Units to the Company, and (y) an equal number of shares of Class X Common Stock to PubCo;

(ii) the Company shall (x) cancel the Redeemed Units, (y) pay to the Redeeming Member the applicable Cash Settlement, and (z) if the Units are certificated, issue to the Redeeming Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Redeeming Member pursuant to clause (i) of this Section 9.01(a) and the Redeemed Units; and

 

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(iii) PubCo shall cancel and retire for no consideration the shares of Class X Common Stock that were Transferred to PubCo pursuant to Section 9.01(a)(i)(y) above.

(b) Intentionally Omitted.

(c) If the Election Notice specifies a Share Settlement, a Redeeming Member shall be entitled to revoke its Redemption Notice or delay the consummation of a Redemption if any of the following conditions exists:

(i) any registration statement pursuant to which the resale of the Class A Common Stock to be registered for such Redeeming Member at or immediately following the consummation of the Redemption shall have ceased to be effective pursuant to any action or inaction by the SEC or no such resale registration statement has yet become effective;

(ii) PubCo shall have failed to cause any related prospectus to be supplemented by any required prospectus supplement necessary to effect such Redemption;

(iii) PubCo shall have exercised its right to defer, delay or suspend the filing or effectiveness of a registration statement and such deferral, delay or suspension shall affect the ability of such Redeeming Member to have its Class A Common Stock registered at or immediately following the consummation of the Redemption;

(iv) PubCo shall have disclosed in good faith to such Redeeming Member any material non-public information concerning PubCo, the receipt of which results in such Redeeming Member being prohibited or restricted from selling Class A Common Stock at or immediately following the Redemption without disclosure of such information (and PubCo does not permit such disclosure);

(v) any stop order relating to the registration statement pursuant to which the Class A Common Stock was to be registered by such Redeeming Member at or immediately following the Redemption shall have been issued by the SEC;

(vi) there shall have occurred a material disruption in the securities markets generally or in the market or markets in which the Class A Common Stock is then traded;

(vii) there shall be in effect an injunction, a restraining order or a decree of any nature of any Governmental Authority that restrains or prohibits the Redemption;

(viii) PubCo shall have failed to comply in all material respects with its obligations under the Registration Rights Agreement, and such failure shall have affected the ability of such Redeeming Member to consummate the resale of Class A Common Stock to be received upon such Redemption pursuant to an effective registration statement; or

 

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(ix) the Redemption Date would occur three (3) Business Days or less prior to, or during, a Black-Out Period.

(d) If the Election Notice specifies a Share Settlement, unless the Redeeming Member has revoked the applicable Redemption as provided in Section 9.01(c), PubCo shall settle such Redemption on the Redemption Date by Transferring the Share Settlement directly to the Redeeming Member in exchange for the Redeemed Units (a “Direct Redemption”).    In connection with a Direct Redemption, on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date), (1) the Redeeming Member shall Transfer and surrender, free and clear of all liens and encumbrances the Redeemed Units and an equal number of shares of Class X Common Stock to PubCo; (2) PubCo shall Transfer to the Redeeming Member the Share Settlement; (3) PubCo shall cancel and retire for no consideration such shares of Class X Common Stock; (4) PubCo shall contribute to Manager the Redeemed Units, in exchange for the issuance by Manager to PubCo of a number of Manager Common Units equal to the number of Redeemed Units and (5) the Company shall register Manager as the owner of the Redeemed Units and, if the Redeemed Units are certificated, shall issue to the Redeeming Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Redeeming Member pursuant to clause (1) of this Section 9.01(d) and the Redeemed Units. In furtherance of the foregoing, each of the Company, Manager and the Redeeming Member shall take all actions reasonably requested by PubCo to effect the transactions contemplated by this Section 9.01(d), including executing and delivering any document reasonably requested by PubCo in connection therewith.

(e) The number of shares of Class A Common Stock applicable to any Share Settlement or Cash Settlement shall not be adjusted on account of any distributions previously made with respect to the Redeemed Units, dividends previously paid with respect to Class A Common Stock or cash or cash equivalents held by PubCo or Manager; provided, however, that if a Redeeming Member causes the Company to redeem Redeemed Units and the Redemption Date occurs subsequent to the record date for any distribution with respect to the Redeemed Units but prior to payment of such distribution, the Redeeming Member shall be entitled to receive such distribution with respect to the Redeemed Units on the date that it is made notwithstanding that the Redeeming Member Transferred and surrendered the Redeemed Units to the Company prior to such date; provided, further, however, that a Redeeming Member shall be entitled to receive any and all Tax Distributions that such Redeeming Member otherwise would have received in respect of income allocated to such Member for the portion of any Fiscal Year irrespective of whether such Tax Distribution(s) are declared or made after the Redemption Date.

(f) In the case of a Share Settlement, in the event a reclassification or other similar transaction occurs following delivery of a Redemption Notice, but prior to the Redemption Date, as a result of which shares of Class A Common Stock are converted into another security, then a Redeeming Member shall be entitled to receive the amount of such other security that the Redeeming Member would have received if such Redemption Right had been exercised and the Redemption Date had occurred immediately prior to the record date of such reclassification or other similar transaction.

 

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Section 9.02 Exchange of Profits Units.

(a) From and after the later of (i) one hundred eighty (180) days following the consummation of the IPO and (ii) January 1, 2022 (unless such time restriction is waived by the Managing Member in its sole discretion with respect to any proposed Exchange), and subject to (A) the terms of any Trading Policy (including any Blackout Period contained therein), (B) the waiver or expiration of any contractual lock-up period relating to the shares of PubCo (or any corresponding Units) that may be applicable to such Member and (C) the limitations set forth in Sections 9.02(b) and 9.02(c), each Member (other than Manager) shall be entitled to cause the Company to exchange (an “Exchange”) its vested Profits Units, in whole or in part (the “Exchange Right”) at any time and from time to time. A Member desiring to exercise its Exchange Right (an “Exchanging Member”) shall exercise such right by giving written notice (the “Exchange Notice”) to the Company and PubCo. The Exchange Notice shall specify the number of Profits Units (the “Exchanged Profits Units”) that the Exchanging Member intends to have the Company exchange and a date, not less than two (2) Business Days nor more than ten (10) Business Days after delivery of such Exchange Notice (unless and to the extent that the Managing Member in its sole discretion agrees in writing to waive such time periods), on which exercise of the Exchange Right shall be completed (the “Exchange Date”); provided, that the Company and the Exchanging Member may change the number of Exchanged Profits Units and/or the Exchange Date specified in such Exchange Notice to another number and/or date by mutual agreement signed in writing by each of them. On the Exchange Date (to be effective immediately prior to the close of business on the Exchange Date): (a) the Exchanging Member shall Transfer and surrender, free and clear of all liens and encumbrances, the Exchanged Profits Units to the Company, (b) the Company shall (i) cancel the Exchanged Profits Units, (ii) issue to the Exchanging Member the New Common Units applicable to the Exchanged Profits Units and (iii) if the Exchanged Profits Units are certificated, issue to the Exchanging Member a certificate for a number of Profits Units equal to the difference (if any) between the number of Profits Units evidenced by the certificate surrendered by the Exchanging Member pursuant to clause (a) of this Section 9.02 and the Exchanged Profits Units and (c) PubCo shall either issue to the Exchanging Member a number of shares of Class X Common Stock and/or Class Y Common Stock or cancel a number of shares of Class X Common Stock and Class Y Common Stock (and in such event, the Exchanging Member shall surrender to PubCo such shares for cancellation) such that the number of shares of Class X Common Stock and Class Y Common Stock held by such Exchanging Member immediately after the Exchange on account of the ownership of the New Common Units is equal to the number of such New Common Units being issued to the Exchanging Member. Upon issuance of the New Common Units, such New Common Units shall immediately be subject to all of the provisions herein applicable to Common Units, including the Redemption provisions contained in this Article IX, and notwithstanding anything herein to the contrary, immediately upon consummation of any Exchange, the Exchanging Member shall be required to initiate its Redemption Right with respect to the New Common Units received in such Exchange, and therefore the provisions of the foregoing Section 9.01 shall be deemed to apply as though the applicable Member had sent a Redemption Notice thereunder on the date that it sent the Exchange Notice under this Section 9.02, such that the Redemption occurs on the same day as, and immediately following, the Exchange.

(b) Exchange Limitation. Notwithstanding Section 9.02(a) but subject to Section 9.02(c), (i) (A) the maximum number of vested Profits Units with respect to which an Employee Member (other than an Employee Holdco Member) may exercise the Exchange Right at any date equals the product of (x) the Permitted Exchange Percentage, as of such date, and (y) the number of Profits Units held by such Employee Member, less (B) the number of Profits Units

 

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held by such Employee Member with respect to which the Exchange Right was exercised prior to such date, and (ii) (A) the maximum number of vested Profits Units corresponding to the Employee Member Member’s Employee Member Interest with respect to which an Employee Holdco Member may exercise the Exchange Right at any date equals the product of (x) the Permitted Exchange Percentage, as of such date, and (y) the number of Profits Units held by such Employee Member that correspond to such Employee Member Member’s vested Employee Member Interest, less (B) the number of Profits Units corresponding to such Employee Member Member’s Employee Member Interest with respect to which the Exchange Right was exercised prior to such date.

(c) Holdback Limitation. Notwithstanding anything to the contrary in this Section 9.02, (i) an Employee Holdco Member may not prior to the Holdback Date exercise the Exchange Right with respect to twenty percent (20%) of the Profits Units corresponding to an Employee Member Interest held by an Employee Member Member who is designated as a member of Employee Group B in the Company’s books and records and, prior to the Holdback Date, the Profits Units subject to such limitation will reduce the number of Profits Units taken into account for purposes of Section 9.02(b)(i)(A)(y) and 9.02(b)(ii)(A)(y), and (ii) to the extent an Employee Member Member who is designated as a member of Employee Group B in the Company’s books and records breaches any restrictive covenants to which he or she is subject for the benefit of the Company or any of its Affiliates, the Managing Member may in its sole discretion, to the maximum extent permitted by law, either (A) delay the Holdback Date with respect to the Profits Interests corresponding to the Employee Member Interest held by such Employee Member Member for an additional period of time equal to the length of such breach (or such longer period as it determines in its sole discretion) or (B) cause the Profits Interests corresponding to the Employee Member Interest held by such Employee Member Member (or a portion thereof) to be cancelled for no consideration.

Section 9.03 Reservation of Shares of Class A Common Stock; Listing; Certificate of PubCo, etc.

(a) At all times PubCo shall reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of issuance upon a Share Settlement in a Redemption such number of shares of Class A Common Stock as shall be issuable upon any such Redemption, including any Redemption of New Common Units that are issuable in connection with any Exchange; provided, that nothing contained herein shall be construed to preclude PubCo from satisfying its obligations in respect of any such Redemption by delivery of purchased Class A Common Stock (which may or may not be held in the treasury of PubCo). PubCo shall deliver Class A Common Stock that has been registered under the Securities Act with respect to any Redemption in which a Share Settlement is made, to the extent a registration statement is effective and available for such shares. PubCo shall use its commercially reasonable efforts to list the Class A Common Stock required to be delivered upon any such Redemption prior to such delivery upon each national securities exchange upon which the outstanding shares of Class A Common Stock are listed at the time of such Redemption (it being understood that any such shares may be subject to transfer restrictions under applicable securities Laws). PubCo covenants that all Class A Common Stock issued upon a Redemption in which a Share Settlement is made will, upon issuance, be validly issued, fully paid and non-assessable. The provisions of this Article IX shall be interpreted and applied in a manner consistent with any corresponding provisions of PubCo’s certificate of incorporation (if any).

 

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(b) Subject to the terms of the Registration Rights Agreement, PubCo covenants and agrees to deliver shares of the Share Settlement, if requested, pursuant to an effective registration statement under the Securities Act with respect to any Redemption to the extent that a registration statement is effective and available for such shares. In the event that any Redemption in accordance with this Agreement is to be effected at a time when any required registration has not become effective or otherwise is unavailable, upon the request and with the reasonable cooperation of the Redeeming Member requesting such Redemption, PubCo and the Company shall use reasonable best efforts to promptly facilitate such Redemption pursuant to an available exemption from such registration requirements.

(c) PubCo agrees that it has taken all or will take such steps as may be required to cause to qualify for exemption under Rule 16b-3(d) or (e), as applicable, under the Exchange Act, and to be exempt for purposes of Section 16(b) under the Exchange Act, any acquisitions from, or dispositions to, PubCo of equity securities of PubCo (including derivative securities with respect thereto) and any securities that may be deemed to be equity securities or derivative securities of PubCo for such purposes that result from the transactions contemplated by this Agreement, by each officer or director of PubCo. The authorizing resolutions shall be approved by either PubCo’s board of directors or a committee composed solely of two or more Non-Employee Directors (as defined in Rule 16b-3) of PubCo.

Section 9.04 Effect of Exercise of Redemption or Exchange. This Agreement shall continue notwithstanding the consummation of a Redemption or Exchange and all other rights set forth herein shall be exercised by the remaining Members and the Redeeming Member and the Exchanging Member (to the extent of such Redeeming Member’s and Exchanging Member’s remaining interest in the Company). No Redemption shall relieve such Redeeming Member of any prior breach of this Agreement.

Section 9.05 Tax Treatment. Unless otherwise required by applicable Law, the parties hereto acknowledge and agree that, in the event PubCo delivers a timely Election Notice with respect to a Redemption, such Redemption shall be treated as a direct exchange between PubCo and the Redeeming Member for U.S. federal and applicable state and local income tax purposes.

Section 9.06 Other Redemption and Exchange Matters.

(a) Each Redemption shall be deemed to be effective immediately prior to the close of business on the Redemption Date, and, in the case of a Share Settlement, the Redeeming Member (or other Person(s) whose name or names in which the Share Settlement is to be issued) shall be deemed to be a holder of the Equity Securities issued in such Share Settlement, from and after that time, until such Equity Securities have been disposed of. As promptly as practicable on or after the Redemption Date, PubCo shall deliver or cause to be delivered to the Redeeming Member (or other Person(s) whose name or names in which the Share Settlement is to be issued) the number of the Share Settlement deliverable upon such Redemption, registered in the name of such Redeeming Member (or other Person(s) whose name or names in which the Share

 

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Settlement is to be issued). To the extent the Share Settlement is settled through the facilities of The Depository Trust Company, PubCo will, subject to Section 9.06(c) below, upon the written instruction of a Redeeming Member, deliver or cause to be delivered the shares of the Share Settlement deliverable to such Redeeming Member (or other Person(s) whose name or names in which the Share Settlement is to be issued), through the facilities of The Depository Trust Company, to the account of the participant of The Depository Trust Company designated by such Redeeming Member.

(b) Subject to Section 9.06(c), the shares of Share Settlement issued upon a Redemption shall bear a legend in substantially the following form:

THE TRANSFER OF THESE SECURITIES HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD OR TRANSFERRED OTHER THAN IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (OR OTHER APPLICABLE LAW), OR AN EXEMPTION THEREFROM.

(c) If (i) any shares of the Share Settlement may be sold pursuant to a registration statement that has been declared effective by the Securities and Exchange Commission, (ii) all of the applicable conditions of Rule 144 are met, or (iii) the legend (or a portion thereof) otherwise ceases to be applicable, PubCo, upon the written request of the Redeeming Member thereof shall promptly provide such Redeeming Member or its respective transferees, without any expense to such Persons (other than applicable transfer taxes and similar governmental charges, if any) with new certificates (or evidence of book-entry share) for securities of like tenor not bearing the provisions of the legend with respect to which the restriction has terminated. In connection therewith, such Redeeming Member shall provide PubCo with such information in its possession as PubCo may reasonably request in connection with the removal of any such legend.

(d) PubCo shall bear all of its own expenses in connection with the consummation of any Redemption, whether or not any such Redemption is ultimately consummated, including any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any Redemption; provided, however, that if any of the Share Settlement is to be delivered in a name other than that of the Redeeming Member that requested the Redemption (or The Depository Trust Company or its nominee for the account of a participant of The Depository Trust Company that will hold the shares for the account of such Redeeming Member), then such Redeeming Member and/or the Person in whose name such shares are to be delivered shall pay to PubCo the amount of any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, such Redemption or shall establish to the reasonable satisfaction of PubCo that such tax has been paid or is not payable. The Redeeming Member shall bear all of its own expenses in connection with the consummation of any Redemption (including, for the avoidance of doubt, expenses incurred by such Redeeming Member in connection with any Redemption that are invoiced to the Company).

 

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Section 9.07 Employee Unit Redemption Right.

(a) If any Employee Holdco Member elects pursuant to the rights in favor of, and exercisable by, such Employee Holdco Member, the Company, Managing Member, PubCo or any of their respective Subsidiaries under a Vesting Letter (or is required pursuant to any put right set forth in a Vesting Letter (an “Employee Member Put Right”)) to redeem or repurchase (whether at a discount or otherwise), or otherwise have forfeited, any Employee Holdco Member Interests held by an Employee Member (other than in connection with a Redemption contemplated by Section 9.01 directly as a result of a request from an Employee Holdco Member Member to redeem his or her equity interests in the Employee Holdco Member in accordance with Employee Holdco I LLC Agreement or Employee Holdco II LLC Agreement or Executive Holdco LLC Agreement, as applicable, and not pursuant to an Employee Member Put Right) (such redemption right, an “Employee Holdco Redemption Right”) and effects all or any portion of such redemption by exchanging Employee Units for Employee Holdco Member Interests held by such Employee Member (the “Redeemed Employee Member”), then the applicable Employee Holdco Member shall have the right (an “Employee Unit Redemption Right”), exercisable by delivering a written notice to the Company (an “Employee Unit Redemption Notice”), to require the Company to repurchase any or all of the Employee Units that are transferred to the Redeemed Employee Member by the Employee Holdco Member (the “Redeemed Employee Units”) at a price per Redeemed Employee Unit equal to the redemption price contemplated by the Employee Holdco Redemption Right (which, for the avoidance of doubt, will take into account any discount set forth in the applicable Vesting Letter or the Employee Holdco I LLC Agreement, Employee Holdco II LLC Agreement or Executive Holdco LLC Agreement, as applicable, or otherwise) (the “Employee Redemption Price”). The Employee Unit Redemption Notice shall set forth the number of Employee Units to be repurchased by the Company and shall include a copy of any notice(s) delivered in connection with the Employee Holdco Redemption Right. The Company shall, promptly after receiving an Employee Unit Redemption Notice, deliver to the applicable Employee Holdco Member a notice setting forth the Employee Redemption Price to be paid for the Redeemed Employee Units and the date (not later than sixty (60) days after receipt of the Employee Unit Redemption Notice) and place for the closing of the transaction (such date, the “Employee Unit Redemption Date”). The Company may elect, in its sole discretion, to pay for the Redeemed Employee Units by any combination of the following: (i) delivery of a cashier’s check or wire transfer of immediately available funds; (ii) issuance of an unsecured subordinated note bearing interest (payable in installments and/or at maturity) at a simple rate per annum equal to the prime rate; (iii) PubCo’s issuance of Class A Shares (which transaction may, at the election of PubCo, be settled via a direct transfer of such shares to the applicable Member in exchange for the Redeemed Employee Units; provided, that to the extent that the relevant Employee Redemption Price is less than the fair market value of the Redeemed Employee Units, the applicable Employee Holdco Member shall redeem and cancel a portion of the Employee Units consistent with the procedure described in the last proviso in this sentence prior to the transfer of PubCo Class A Shares to the Employee Member pursuant to this clause (iii)) or (iv) by offsetting against any indebtedness or obligations for advanced or borrowed funds owed to the Company, PubCo, Manager, the Employee Holdco Member or any of their respective Affiliates by the applicable Employee Member subject to the Employee Unit Redemption Notice; provided, that if the Company does not elect a method of payment, the Employee Units shall be paid for in accordance with clause (i); provided further, that in the event the Employee Redemption Price is less than the fair market value of the applicable Employee Units (i.e., the Employee Units are to be redeemed

 

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or repurchased at a discount, or otherwise forfeited), and the applicable Employee Holdco Member elects to exercise the Employee Holdco Redemption Right at such Employee Redemption Price by redeeming and cancelling a portion of the Employee Units for no consideration in accordance with the Employee Holdco I LLC Agreement, Employee Holdco II LLC Agreement or Executive Holdco LLC Agreement, as applicable, the Company shall cause the Redeemed Employee Units to be cancelled and retired for no consideration, such that the fair market value of the Employee Units corresponding to the Employee Holdco Member Interests of such Employee Holdco Member Member that are not cancelled and retired reflects such discount or forfeiture (as provided for in the Employee Holdco I LLC Agreement, Employee Holdco II LLC Agreement or Executive Holdco LLC Agreement, as applicable). For the avoidance of doubt, (x) notwithstanding anything in this Section 9.07 to the contrary, if an Employee Holdco Member, on the one hand, and an applicable Employee Member, on the other hand, agree that, or it otherwise becomes the case that, the consideration payable by such Employee Holdco Member to such Employee Member in connection with an Employee Holdco Redemption Right shall be less than one hundred percent (100%) of fair market value of the Employee Units (or corresponding Employee Holdco Member Interests), then the consideration payable by the Company to the applicable Employee Holdco Member pursuant to this Section 9.07 shall be reduced accordingly so that the Company shall only be obligated to pay a price per Redeemed Employee Unit equal to the price per corresponding Employee Holdco Member Interest attributable to such Redeemed Employee Unit actually contemplated by the Employee Holdco Redemption Right, and (y) to the extent an Employee Holdco Member exercises the Employee Unit Redemption Right pursuant to any rights it may have under any Vesting Letter, this Section 9.07 shall apply, regardless of whether or not prior to, on or after the exercise of the Employee Unit Redemption Right, the Employee Holdco Member Member has submitted a request to effect the Redemption by the Employee Holdco Member contemplated by Section 9.01.

(b) To the extent the Employee Unit Redemption Right is exercised, on the Employee Unit Redemption Date (to be effective immediately prior to the close of business on the Employee Unit Redemption Date):

(i) after the relevant Employee Holdco Member distributes the Redeemed Employee Units to the Redeemed Employee Member (x) the Redeemed Employee Member shall Transfer and surrender, free and clear of all liens and encumbrances the Redeemed Employee Units to the Company (including, for the avoidance of doubt, any such Redeemed Employee Units subject to a discounted repurchase or a forfeiture) and (y) Employee Holdco Member shall Transfer and surrender to PubCo for no consideration, free and clear of all liens and encumbrances an equal number of shares of Class X Common Stock. The Employee Holdco Member shall take all actions necessary or appropriate to cause the Redeemed Employee Member to timely complete such Transfer;

(ii) the Company shall (x) cancel the Redeemed Employee Units, (y) pay to the Redeemed Employee Member the Employee Redemption Price (except in the case of cancellation and retirement for no consideration described in Section 9.07(a)), and (z) if the Redeemed Employee Units are certificated, issue to the Employee Holdco Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Employee Holdco Member pursuant to clause (i) of this Section 9.07(b) and the Redeemed Employee Units; and

 

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(iii) PubCo shall cancel and retire for no consideration the shares of Class X Common Stock that were Transferred to PubCo pursuant to Section 9.07(b)(i)(y) above.

(c) Notwithstanding anything herein to the contrary, all Redeemed Employee Units hereunder shall automatically be counted towards the applicable Employee Member’s Permitted Exchange Percentage, and in connection therewith, shall reduce such Employee Member’s Permitted Exchange Percentage on a pro rata basis with respect to the then-current and each remaining period of time set forth in the portion of the definition thereof applicable to such Employee Member (i.e., the percentage of such Redeemed Employee Units allocated to the then-current and each such remaining period of time in such Employee Member’s Permitted Exchange Percentage will be equal to the percentage described in such definition for each such period of time); provided, however, that the provisions of Section 9.02(c) shall continue to apply to any Employee Units that remain outstanding in respect of such Employee Member.

ARTICLE X

CERTAIN OTHER MATTERS

Section 10.01 Employee Holdco Members. By virtue of their ownership of Equity Securities in the Employee Holdco Members, the members thereof (the “Employee Holdco Member Members”) indirectly hold interests in the Company (the “Employee Holdco Member Interests”). In applying the provisions of this Agreement and in order to determine equitably the rights and obligations of each Employee Holdco Member and the Employee Holdco Member Members, the Managing Member, the Company and/or the applicable Employee Holdco Member may treat (a) the Units held by an Employee Holdco Member as if they were hypothetically directly held by the Employee Holdco Member Members having an indirect economic interest therein and (b) any Employee Holdco Member Member as if it were hypothetically a Member with a corresponding interest in a proportionate portion of the Units owned by such Employee Holdco Member. Accordingly, with respect to each Employee Holdco Member, upon (i) any issuance of additional Units to such Employee Holdco Member for the benefit of any Employee Holdco Member Member (or the occurrence of any event that causes the repurchase or forfeiture of any Units), (ii) the Transfer of Units by such Employee Holdco Member or (iii) any merger, consolidation, sale of all or substantially all of the assets of the Company, issuance of debt or any other similar capital transaction of the Company (each, an “Employee Holdco Member Action”), the Managing Member, the Company and/or the Employee Holdco Member(s), as applicable, may take any action or make any adjustment with respect to the Employee Holdco Member Interests to replicate, as closely as possible, such Employee Holdco Member Action (including the effects thereof), and the Members shall take all actions reasonably requested by the Managing Member in connection with any Employee Holdco Member Action and this Section 10.01.

Section 10.02 PubCo Change of Control; PubCo Approved Recap Transaction.

(a) In connection with a PubCo Approved Change of Control, Manager shall have the right, in its sole discretion, to require each Member to effect an Exchange of all of such Member’s vested Profits Units (if any) pursuant to Section 9.02 and, thereafter, a Redemption of all or a portion of such Member’s and all other Members’ Units (including, but not limited to, any New Common Units received by such Member pursuant to such Exchange and any other

 

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Common Units otherwise held by such Members) together with an equal number of shares of Class X Common Stock, pursuant to which such Units and such shares of Class X Common Stock will be exchanged for shares of Class A Common Stock (or economically equivalent cash or securities of a successor entity), mutatis mutandis, in accordance with the Redemption provisions of Article IX (applied for this purpose as if PubCo had delivered an Election Notice that specified a Share Settlement with respect to such exchanges) and otherwise in accordance with this Section 10.02. Any such exchange pursuant to this Section 10.02(a) shall be effective immediately prior to the consummation of the PubCo Approved Change of Control (and, for the avoidance of doubt, shall not be effective if such PubCo Approved Change of Control is not consummated) (the date of such exchange, the “Change of Control Exchange Date”). From and after the Change of Control Exchange Date, (i) the Units and any shares of Class X Common Stock subject to such exchange shall be deemed to be transferred to PubCo (or, at PubCo’s election, Manager) on the Change of Control Exchange Date and (ii) each such Member shall cease to have any rights with respect to the Units and any shares of Class X Common Stock subject to such exchange (other than the right to receive shares of Class A Common Stock (or economically equivalent cash or equity securities in a successor entity) pursuant to such exchange). Manager shall provide written notice of an expected PubCo Approved Change of Control to all Members within the earlier of (x) five (5) Business Days following the execution of an agreement with respect to such PubCo Approved Change of Control and (y) ten (10) Business Days before the proposed date upon which the contemplated PubCo Approved Change of Control is to be effected, including in such notice such information as may reasonably describe the PubCo Approved Change of Control transaction, subject to Law, including the date of execution of such agreement or such proposed effective date, as applicable, the amount and types of consideration to be paid for shares of Class A Common Stock in the PubCo Approved Change of Control, any election with respect to types of consideration that a holder of shares of Class A Common Stock, as applicable, shall be entitled to make in connection with such PubCo Approved Change of Control (which election shall be available to each Member on the same terms as holders of shares of Class A Common Stock). Following delivery of such notice and on or prior to the Change of Control Exchange Date, the Members shall take all actions reasonably requested by PubCo to effect such exchange, including taking any action and delivering any document required pursuant to this Section 10.02 to effect such exchange.

(b) In the event that a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization or similar transaction with respect to all or any portion of shares of PubCo’s issued and outstanding Class A Common Stock is proposed by PubCo or PubCo’s stockholders and approved by the PubCo board of directors, or is otherwise consented to or approved by the PubCo board of directors (a “PubCo Approved Recap Transaction”), Manager shall provide written notice of the PubCo Approved Recap Transaction to all Members within the earlier of (i) five (5) Business Days following the execution of an agreement (if applicable) with respect to, or the commencement of (if applicable), such PubCo Approved Recap Transaction and (ii) ten (10) Business Days before the proposed date upon which the PubCo Approved Recap Transaction is to be effected, including in such notice such information as may reasonably describe the PubCo Approved Recap Transaction, subject to Law, including the date of execution of such agreement (if applicable) or of such commencement (if applicable), the material terms of such PubCo Approved Recap Transaction, including the amount and types of consideration to be received by holders of shares of Class A Common Stock in the PubCo Approved Recap Transaction, any election with respect to types of consideration that a holder of shares of Class A

 

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Common Stock, as applicable, shall be entitled to make in connection with such PubCo Approved Recap Transaction, and the number of Units (and the corresponding shares of Class X Common Stock and Class Y Common Stock) held by such Member that is applicable to such PubCo Approved Recap transaction. The Members (other than Manager) shall be permitted to participate in such offer by delivering a written notice of participation that is effective immediately prior to the consummation of such offer (and that is contingent upon consummation of such offer), and shall include such information necessary for consummation of such offer as requested by PubCo. In the case of any PubCo Approved Recap Transaction that was initially proposed by PubCo, PubCo shall use reasonable best efforts to enable and permit the Members (other than the Manager) to participate in such transaction to the same extent or on an economically equivalent basis as the holders of shares of Class A Common Stock, and to enable such Members to participate in such transaction without being required to exchange Units or shares of Class X Common Stock or Class Y Common Stock in connection therewith.

ARTICLE XI

LIMITATION ON LIABILITY, EXCULPATION

AND INDEMNIFICATION

Section 11.01 Limitation on Liability. The debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Covered Person shall be obligated personally for any such debt, obligation or liability of the Company; provided, that the foregoing shall not alter a Member’s obligation to return funds wrongfully distributed to it.

Section 11.02 Exculpation and Indemnification.

(a) Subject to the duties of the Managing Member and the Officers set forth in Section 7.04 and any employment agreement and/or restrictive covenants agreement with the Company as in effect from time to time (collectively, the “Specified Covenants”), neither the Managing Member nor any other Covered Person shall be liable, including under any legal or equitable theory of fiduciary duty or other theory of liability, to the Company or to any other Covered Person for any losses, claims, damages or liabilities incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company. There shall be, and each Covered Person shall be entitled to, a presumption that such Covered Person acted in good faith.

(b) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such Person’s professional or expert competence.

(c) (i) The Company shall indemnify, defend and hold harmless each Covered Person against any losses, claims, damages, liabilities, expenses (including all reasonable fees and expenses of counsel), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, in which such Covered Person may be involved or become subject to, in connection with any matter arising out of or in connection with

 

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the Company’s business or affairs, or this Agreement or any related document, unless such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount is as a result of a Covered Person not acting in good faith on behalf of the Company or arose as a result of the willful commission by such Covered Person of any act that is dishonest and materially injurious to the Company or (ii) results from its contractual obligations under any Transaction Agreement to be performed in a capacity other than as a Covered Person or results from a breach by such Covered Person of a Specified Covenant. If any Covered Person becomes involved in any capacity in any action, suit, proceeding or investigation in connection with any matter arising out of or in connection with the Company’s business or affairs, or this Agreement or any related document (other than any Transaction Agreement), other than (x) by reason of any act or omission performed or omitted by such Covered Person that was not in good faith on behalf of the Company or constituted a willful commission by such Covered Person of an act that is dishonest and materially injurious to the Company, or (y) as a result of any breach by such Covered Person of a Specified Covenant, the Company shall reimburse such Covered Person for its reasonable legal and other reasonable out-of-pocket expenses (including the cost of any investigation and preparation) as they are incurred in connection therewith; provided, that such Covered Person shall promptly repay to the Company the amount of any such reimbursed expenses paid to it if it shall be finally judicially determined that such Covered Person was not entitled to indemnification by, or contribution from, the Company in connection with such action, suit, proceeding or investigation. If for any reason (other than the bad faith of a Covered Person or the willful commission by such Covered Person of an act that is dishonest and materially injurious to the Company) the foregoing indemnification is unavailable to such Covered Person, or insufficient to hold it harmless, then the Company shall contribute to the amount paid or payable by such Covered Person as a result of such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount in such proportion as is appropriate to reflect any relevant equitable considerations. There shall be, and each Covered Person shall be entitled to, a rebuttable presumption that such Covered Person acted in good faith.

(i) The obligations of the Company under this Section 11.02(c) shall be satisfied solely out of and to the extent of the Company’s assets, and no Covered Person shall have any personal liability on account thereof.

(ii) Given that certain Jointly Indemnifiable Claims may arise by reason of the service of a Covered Person to the Company and/or as a director, trustee, officer, partner, member, manager, employee, consultant, fiduciary or agent of other corporations, limited liability companies, partnerships, joint ventures, trusts, employee benefit plans or other enterprises controlled by the Company (collectively, the “Controlled Entities”), or by reason of any action alleged to have been taken or omitted in any such capacity, the Company acknowledges and agrees that the Company shall, and to the extent applicable shall cause the Controlled Entities to, be fully and primarily responsible for the payment to the Covered Person in respect of indemnification or advancement of all out-of-pocket costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and related disbursements) in each case, actually and reasonably incurred by or on behalf of a Covered Person in connection with either the investigation, defense or appeal of a claim, demand, action, suit or proceeding or establishing or enforcing a right to indemnification under this Agreement or otherwise incurred in connection with a claim that is indemnifiable hereunder (collectively, “Expenses”) in connection with any such Jointly Indemnifiable Claim, pursuant to and in accordance with (as applicable) the terms of (A) the Delaware Act, (B) this Agreement, (C) any other agreement between the Company or any

 

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Controlled Entity and the Covered Person pursuant to which the Covered Person is indemnified, (D) the Laws of the jurisdiction of incorporation or organization of any Controlled Entity and/or (E) the certificate of incorporation, certificate of organization, bylaws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership, certificate of qualification or other organizational or governing documents of any Controlled Entity ((A) through (E) collectively, the “Indemnification Sources”), irrespective of any right of recovery the Covered Person may have from the Indemnitee-Related Entities. Under no circumstance shall the Company or any Controlled Entity be entitled to any right of subrogation or contribution by the Indemnitee-Related Entities and no right of advancement or recovery the Covered Person may have from the Indemnitee-Related Entities shall reduce or otherwise alter the rights of the Covered Person or the obligations of the Company or any Controlled Entity under the Indemnification Sources. In the event that any of the Indemnitee-Related Entities shall make any payment to the Covered Person in respect of indemnification or advancement of Expenses with respect to any Jointly Indemnifiable Claim, (x) the Company shall, and to the extent applicable shall cause the Controlled Entities to, reimburse the Indemnitee-Related Entity making such payment to the extent of such payment promptly upon written demand from such Indemnitee-Related Entity, (y) to the extent not previously and fully reimbursed by the Company and/or any Controlled Entity pursuant to clause (x), the Indemnitee-Related Entity making such payment shall be subrogated to the extent of the outstanding balance of such payment to all of the rights of recovery of the Covered Person against the Company and/or any Controlled Entity, as applicable, and (z) the Covered Person shall execute all papers reasonably required and shall do all things that may be reasonably necessary to secure such rights, including the execution of such documents as may be necessary to enable the Indemnitee-Related Entities effectively to bring suit to enforce such rights. The Company and the Covered Person agree that each of the Indemnitee-Related Entities shall be third-party beneficiaries with respect to this Section 11.02(c), entitled to enforce this Section 11.02(c) as though each such Indemnitee-Related Entity were a party to this Agreement. The Company shall cause each of the Controlled Entities to perform the terms and obligations of this Section 11.02(c) as though each such Controlled Entity was the “Company” under this Agreement. For purposes of this Section 11.02(c), the following terms shall have the following meanings:

(A) The term “Indemnitee-Related Entities” means any corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise (other than the Company, any Controlled Entity or the insurer under and pursuant to an insurance policy of the Company or any Controlled Entity) from whom a Covered Person may be entitled to indemnification or advancement of Expenses with respect to which, in whole or in part, the Company or any Controlled Entity may also have an indemnification or advancement obligation.

(B) The term “Jointly Indemnifiable Claims” shall be broadly construed and shall include, without limitation, any claim, demand, action, suit or proceeding for which the Covered Person shall be entitled to indemnification or advancement of Expenses from both (i) the Company and/or any Controlled Entity pursuant to the Indemnification Sources, on the one hand, and (ii) any Indemnitee-Related Entity pursuant to any other agreement between any Indemnitee-Related Entity and the Covered Person pursuant to which the Covered Person is indemnified, the Laws of the jurisdiction of incorporation or organization of any Indemnitee-Related Entity and/or the certificate of incorporation, certificate of organization, bylaws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership or other organizational or governing documents of any Indemnitee-Related Entity, on the other hand.

 

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ARTICLE XII

DISSOLUTION AND TERMINATION

Section 12.01 Dissolution.

(a) The Company shall not be dissolved by the admission of Additional Members or Substitute Members pursuant to Section 3.02.

(b) No Member shall (i) resign from the Company prior to the dissolution and winding up of the Company except in connection with a Transfer of Units pursuant to the terms of this Agreement or (ii) take any action to dissolve, terminate or liquidate the Company or to require apportionment, appraisal or partition of the Company or any of its assets, or to file a bill for an accounting, except as specifically provided in this Agreement, and each Member, to the fullest extent permitted by Law, hereby waives any rights to take any such actions under Law, including any right to petition a court for judicial dissolution under Section 18-802 of the Delaware Act.

(c) The Company shall be dissolved and its business wound up only upon the earliest to occur of any one of the following events (each a “Dissolution Event”):

(i) the expiration of forty-five (45) days after the sale or other disposition of all or substantially all the assets of the Company;

(ii) upon the approval of the Managing Member; or

(iii) the entry of a decree of judicial dissolution under Section 18-802 of the Delaware Act, in contravention of this Agreement.

The Members hereby agree that the Company shall not dissolve prior to the occurrence of a Dissolution Event and that no Member shall seek a dissolution of the Company, under Section 18-802 of the Delaware Act or otherwise, other than based on the matters set forth in subsections (i), (ii) and (iii) above. If it is determined by a court of competent jurisdiction that the Company has dissolved prior to the occurrence of a Dissolution Event, the Members hereby agree to continue the business of the Company without a Liquidation.

(d) The death, retirement, resignation, expulsion, bankruptcy, insolvency or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member of the Company shall not in and of itself cause dissolution of the Company.

 

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Section 12.02 Winding Up of the Company.

(a) The Managing Member shall promptly notify the other Members of any Dissolution Event. Upon dissolution, the Company’s business shall be liquidated in an orderly manner. The Managing Member shall appoint a liquidating trustee to wind up the affairs of the Company pursuant to this Agreement. In performing its duties, the liquidating trustee is authorized to sell, distribute, exchange or otherwise dispose of the assets of the Company in accordance with the Delaware Act and in any reasonable manner that the liquidating trustee shall determine to be in the best interest of the Members.

(b) The proceeds of the liquidation of the Company shall be distributed in the following order and priority:

(i) first, to the creditors (including any Members or their respective Affiliates that are creditors) of the Company in satisfaction of all of the Company’s liabilities (whether by payment or by making reasonable provision for payment thereof, including the setting up of any reserves which are, in the judgment of the liquidating trustee, reasonably necessary therefor); and

(ii) second, to the Members in the same manner as distributions under Section 5.03(b), subject to Section 5.03(e).

(c) Distribution of Property. In the event it becomes necessary in connection with the Liquidation to make a distribution of Property in-kind, subject to the priority set forth in Section 12.02(b), the liquidating trustee shall have the right to compel each Member, treating each such Member in a substantially similar manner, to accept a distribution of any Property in-kind (with such Property, as a percentage of the total liquidating distributions to such Member), corresponding as nearly as possible to the distributions such Member would receive under Section 12.02(b) with such distribution being based upon the amount of cash that would be distributed to such Members if such Property were sold for an amount of cash equal to the fair market value of such Property, as determined by the liquidating trustee in good faith.

Section 12.03 Termination. The Company shall terminate when all of the assets of the Company, after payment of or reasonable provision for the payment of all debts and liabilities of the Company, shall have been distributed to the Members in the manner provided for in this Article XII, and the Certificate shall have been cancelled in the manner required by the Delaware Act.

Section 12.04 Survival. Termination, dissolution or Liquidation of the Company for any reason shall not release any party from any liability which at the time of such termination, dissolution or Liquidation already had accrued to any other party or which thereafter may accrue in respect to any act or omission prior to such termination, dissolution or Liquidation.

ARTICLE XIII

MISCELLANEOUS

Section 13.01 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such cost or expense.

 

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Section 13.02 Further Assurances. Each Member agrees to execute, acknowledge, deliver, file and record such further certificates, amendments, instruments and documents, and to do all such other acts and things, as may be required by Law or as, in the reasonable judgment of the Managing Member, may be necessary or advisable to carry out the intent and purposes of this Agreement.

Section 13.03 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission and electronic mail (“e-mail”) transmission, so long as a receipt of such e-mail is requested and received) and shall be given to such party at the address, facsimile number or e-mail address specified for such party on the Member Schedule hereto or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt.

Section 13.04 Binding Effect; Benefit; Assignment.

(a) The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

(b) Except as provided in Article VIII, no Member may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the Managing Member.

Section 13.05 Jurisdiction.

(a) The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 13.03 shall be deemed effective service of process on such party.

 

61


(b) EACH OF THE COMPANY AND THE MEMBERS HEREBY IRREVOCABLY DESIGNATES THE CORPORATION SERVICE COMPANY (IN SUCH CAPACITY, THE “PROCESS AGENT”), WITH AN OFFICE AT 251 LITTLE FALLS DRIVE, WILMINGTON, NEW CASTLE COUNTY, DELAWARE 19801, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, FOR AND ON ITS BEHALF SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDINGS WITH RESPECT TO THIS AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT, AND SUCH SERVICE SHALL BE DEEMED COMPLETE UPON DELIVERY THEREOF TO THE PROCESS AGENT; PROVIDED THAT IN THE CASE OF ANY SUCH SERVICE UPON THE PROCESS AGENT, THE PARTY EFFECTING SUCH SERVICE SHALL ALSO DELIVER A COPY THEREOF TO EACH OTHER SUCH PARTY IN THE MANNER PROVIDED IN SECTION 13.03 OF THIS AGREEMENT. EACH PARTY SHALL TAKE ALL SUCH ACTION AS MAY BE NECESSARY TO CONTINUE SAID APPOINTMENT IN FULL FORCE AND EFFECT OR TO APPOINT ANOTHER AGENT SO THAT SUCH PARTY SHALL AT ALL TIMES HAVE AN AGENT FOR SERVICE OF PROCESS FOR THE ABOVE PURPOSES IN WILMINGTON, DELAWARE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE LAW. EACH PARTY EXPRESSLY ACKNOWLEDGES THAT THE FOREGOING WAIVER IS INTENDED TO BE IRREVOCABLE UNDER THE LAWS OF THE STATE OF DELAWARE AND OF THE UNITED STATES OF AMERICA.

Section 13.06 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 13.07 Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).

Section 13.08 Entire Agreement. This Agreement and the Transaction Documents constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. Nothing in this Agreement shall create any third-party beneficiary rights in favor of any Person or other party, except to the extent provided herein with respect to Indemnitee-Related Entities, each of whom are intended third-party beneficiaries of those provisions that specifically relate to them with the right to enforce such provisions as if they were a party hereto.

Section 13.09 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired

 

62


or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible.

Section 13.10 Amendment.

(a) This Agreement can be amended at any time and from time to time by the Managing Member.

(b) No waiver of any provision or default under, nor consent to any exception to, the terms of this Agreement or any agreement contemplated hereby shall be effective unless in writing and signed by the party to be bound and then only to the specific purpose, extent and instance so provided.

Section 13.11 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, without regard to the conflicts of law rules of such State that would result in the application of the Laws of any other State.

Section 13.12 No Presumption. With regard to each and every term and condition of this Agreement, the parties hereto understand and agree that the same have or has been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement.

Section 13.13 Attorney-In-Fact. Each Member (other than any Member that is entitled, as of the completion of the IPO, to appoint a director to the executive committee of PubCo (including, in any event, the SL Member and the SL Related Entities)) hereby appoints the Company as such Member’s attorney-in-fact (with full power of substitution) and hereby authorizes the Company to the execute and deliver in such Member’s name and on its behalf any amendment of this Agreement or other document relating hereto in furtherance of such Member’s rights and obligations pursuant to this Agreement. Each Member hereby acknowledges and agrees that such proxy is coupled with an interest and shall not terminate upon any bankruptcy, dissolution, liquidation, death or incapacity of such Member.

Section 13.14 Immunity Waiver. Each Member acknowledges that it is a commercial entity and is a separate entity distinct from its ultimate shareholders and/or the executive organs of the government of any state and is capable of suing and being sued. The entry by each Member into this Agreement constitutes, and the exercise by each Member of its respective rights and performance of its respective obligations hereunder will constitute, private and commercial acts performed for private and commercial purposes that shall not be deemed as being entered into in the exercise of any public function.

Section 13.15 Specific Performance. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that, in the event of any such failure, an aggrieved Member or other party or third-party beneficiary specified in Section 13.08

 

63


will be irreparably damaged and will not have an adequate remedy at Law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which such party may be entitled at Law or in equity) to injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the Company or Members shall raise the defense that there is an adequate remedy at Law.

Section 13.16 Agreement of Certain Members. By accepting the benefits of this Agreement, each Employee Member that is or was an employee or service provider of the Company, PubCo, Manager or any of their respective Affiliates (or is a Member that holds Units Transferred from or on behalf of any such individual) and each Employee Holdco Member on behalf of any Employee Holdco Member Member that is or was an employee or service provider of the Company or any of its Affiliates (or is an Employee Holdco Member Member that holds Units Transferred from or on behalf of any such individual) agrees that, to the extent any Vesting Letter, award agreement, guaranteed compensation agreement, employment agreement or other similar agreement between the Company or any of its Affiliates, on the one hand, and such employee or service provider (or any Affiliate that holds Units Transferred from or on behalf of any such individual) on the other hand, provides for rights and obligations of the parties thereto to be triggered upon the termination for “Cause” (or other similar construct) of such employee or service provider, unless a definition of “Cause” is expressly set forth in such agreement without reference to a definition thereof in any limited liability company or operating agreement, then the definition of “Cause” applicable to such agreement shall be the definition thereof in the applicable predecessor limited liability company or operating agreement referred to in such Vesting Letter, award agreement, guaranteed compensation agreement, employment agreement or other similar agreement; provided, however, that, by accepting the benefits of this Agreement, each such Employee Member further agrees and acknowledges that any such definition in any such predecessor limited liability company or operating agreement shall cease to be effective and shall be superseded at such time as the Managing Member adopts a new definition of “Cause” and provides thirty (30) days advance notice of such new definition to any such employee or service provider, in which event, such new definition shall become effective, but shall only apply to such employee or service provider with respect to matters first occurring after such effectiveness (whether or not discovered only after such effectiveness).

[signature pages follow]

 

64


IN WITNESS WHEREOF, the parties hereto have caused this Third Amended and Restated Limited Liability Company Agreement to be duly executed as of the day and year first written above.

 

ENDEAVOR OPERATING COMPANY, LLC
By:  

/s/ Jason Lublin

Name: Jason Lublin
Title:   Chief Financial Officer
ENDEAVOR MANAGER, LLC
By:  

/s/ Jason Lublin

Name: Jason Lublin
Title:   Chief Financial Officer
ENDEAVOR GROUP HOLDINGS, INC.
By:  

/s/ Jason Lublin

Name: Jason Lublin
Title:   Chief Financial Officer

/s/ Ariel Emanuel

Ariel Emanuel

/s/ Patrick Whitesell

Patrick Whitesell
ENDEAVOR EXECUTIVE HOLDCO, LLC
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Authorized Signatory
ENDEAVOR EXECUTIVE PIU HOLDCO, LLC
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Authorized Signatory
ENDEAVOR EXECUTIVE II HOLDCO, LLC
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Authorized Signatory
SCC Growth IV Holdco II, Ltd.
By:  

/s/ Ip Siu Wai Eva

Name:   Ip Siu Wai Eva
Title:   Authorized Sigantory

 

[Signature Page to the Third Amended and Restated

Limited Liability Company Agreement of Endeavor Operating Company, LLC]


HS INVESTMENTS (W) LIMITED
By:  

/s/ Ken Wrigley and Anthony Tennant

Name:   Ken Wrigley and Anthony Tennant
Title:   Directors, Director One Limted
HS INVESTMENTS (A) LIMITED PARTNERSHIP
By:  

/s/ Ken Wrigley

Name:   Ken Wrigley
Title:   Director of HS Investments (L) Limited acting as General Partner
HS INVESTMENTS NA5 LIMITED
By:  

/s/ James Nicolle

Name:   James Nicolle
Title:   Director
NIKESH ARORA - AURORA TRUST
By:  

/s/ Nikesh Arora

Name:   Nikesh Arora
Title:   Trustee
WEINER DEROUAUX REVOCABLE TRUST DTD 11/20/2012
By:  

/s/ Jeffrey Weiner

Name:   Jeffrey Weiner
Title:   Trustee
MARC ANDREESSEN
By:  

/s/ Marc Andreessen

Name:   Marc Andreessen
TONY BATES
By:  

/s/ Tony Bates

Name:   Tony Bates
SIXJOY LLC
By:  

/s/ Tang Yibin

Name:   Tang Yibin
Title:   Authorized Signatory

 

[Signature Page to the Third Amended and Restated

Limited Liability Company Agreement of Endeavor Operating Company, LLC]


SLP WEST HOLDINGS, L.L.C.
By: Silver Lake Partners IV DE (AIV IV), L.P., its managing member
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP WEST HOLDINGS II, L.L.C.
By: Silver Lake Partners IV DE (AIV IV), L.P., its managing member
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP WEST HOLDINGS III, L.P.
By: SLP West GP Holdings, L.L.C., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO

 

[Signature Page to the Third Amended and Restated

Limited Liability Company Agreement of Endeavor Operating Company, LLC]


SLP WEST HOLDINGS IV, L.P.
By: SLP West GP Holdings, L.L.C., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP WEST HOLDINGS CO-INVEST, L.P.
By: SLP Co-Invest GP, L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SLP WEST HOLDINGS CO-INVEST II, L.P.
By: SLP Co-Invest GP, L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
SILVER LAKE TECHNOLOGY INVESTORS IV (DELAWARE II), L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO

 

[Signature Page to the Third Amended and Restated

Limited Liability Company Agreement of Endeavor Operating Company, LLC]


SILVER LAKE PARTNERS IV DE (AIV III), L.P.
By: Silver Lake Technology Associates IV, L.P., its general partner
By: SLTA IV (GP), L.L.C., its general partner
By: Sliver Lake Group, L.L.C., its managing member
By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Co-CEO
KKR CAGE AGGREGATOR LLC
By:  

/s/ Richard Sarnoff

Name:   Richard Sarnoff
Title:   Partner
DAW FAMILY TRUST DATED 09/05/06 (AS AMENDED 05/30/13)
By:  

/s/ Dana F. White

Name:   Dana F. White
Title:   Trustee
By:  

/s/ Anne L. White

Name:   Anne L. White
Title:   Trustee
DANA AND ANNE WHITE 2012 IRREVOCABLE TRUST DATED 12/31/12 (AS AMENDED 05/30/13)
By:  

/s/ Lorenzo J. Feritta

Name:   Lorenzo J. Fertittta
Title:   Trustee
By:  

/s/ Dana F. White

Dana F. White

 

[Signature Page to the Third Amended and Restated

Limited Liability Company Agreement of Endeavor Operating Company, LLC]


Schedule A – Member Schedule

 

1.

Endeavor Manager, LLC

 

2.

Endeavor Executive PIU Holdco, LLC

 

3.

Endeavor Executive II Holdco, LLC

 

4.

Endeavor Executive Holdco, LLC

 

5.

Dana and Anne White 2012 Irrevocable Trust dated 12/31/12

 

6.

DAW Family Trust dated 09/05/06 (as amended 05/30/13)

 

7.

HS Investments (W) Limited

 

8.

HS Investments (A) Limited Partnership

 

9.

HS Investments NA5 Limited

 

10.

KKR Cage Aggregator LLC

 

11.

SCC Growth IV Holdco II, Ltd.

 

12.

Sixjoy LLC

 

13.

Silver Lake Technology Investors IV (Delaware II), L.P.

 

14.

Silver Lake Partners IV DE (AIV III), L.P.

 

15.

SLP West Holdings IV, L.P.

 

16.

SLP West Holdings, L.L.C.

 

17.

SLP West Holdings II, L.L.C.

 

18.

SLP West Holdings III, L.L.C.

 

19.

SLP West Holdings Co-Invest, L.P.

 

20.

SLP West Holdings Co-Invest II, L.P.

 

21.

Ariel Emanuel

 

22.

Patrick Whitesell

 

23.

Dana White


24.

Weiner Derouaux Revocable Trust DTD 11/20/2012

 

25.

Tony Bates

 

26.

Marc Andreessen

 

27.

Nikesh Arora – Aurora Trust

Exhibit 10.7

LIMITED LIABILITY COMPANY AGREEMENT

of

ENDEAVOR MANAGER, LLC

Dated as of April 28, 2021

THE LIMITED LIABILITY COMPANY INTERESTS IN ENDEAVOR MANAGER, LLC HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, THE SECURITIES LAWS OF ANY STATE, OR ANY OTHER APPLICABLE SECURITIES LAWS, AND HAVE BEEN OR ARE BEING ISSUED IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SUCH INTERESTS MAY BE ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE SECURITIES ACT, ANY APPLICABLE SECURITIES LAWS OF ANY STATE AND ANY OTHER APPLICABLE SECURITIES LAWS; (II) THE TERMS AND CONDITIONS OF THIS LIMITED LIABILITY COMPANY AGREEMENT; AND (III) ANY OTHER TERMS AND CONDITIONS AGREED TO IN WRITING BETWEEN THE MANAGING MEMBER AND ANY HOLDER OF SUCH INTERESTS.

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS AND USAGE

     1  

Section 1.01

 

Definitions

     1  

Section 1.02

 

Other Definitional and Interpretative Provisions

     11  

ARTICLE II THE COMPANY

     12  

Section 2.01

 

Continuation of the Company

     12  

Section 2.02

 

Name

     13  

Section 2.03

 

Term

     13  

Section 2.04

 

Registered Agent and Registered Office

     13  

Section 2.05

 

Purposes

     13  

Section 2.06

 

Powers of the Company

     13  

Section 2.07

 

Tax Status

     13  

Section 2.08

 

Regulation of Internal Affairs

     13  

Section 2.09

 

Ownership of Property

     13  

ARTICLE III UNITS; MEMBERS; BOOKS AND RECORDS; REPORTS

     14  

Section 3.01

 

Units; Admission of Members

     14  

Section 3.02

 

Substitute Members and Additional Members

     15  

Section 3.03

 

Tax and Accounting Information

     15  

Section 3.04

 

Books and Records

     16  

Section 3.05

 

Equity Incentive Plans

     16  

ARTICLE IV MANAGER OWNERSHIP; RESTRICTIONS ON MANAGER UNITS

     16  

Section 4.01

 

Manager Ownership

     16  

Section 4.02

 

Restrictions on Manager Units

     17  

ARTICLE V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; DISTRIBUTIONS; ALLOCATIONS

     18  

Section 5.01

 

Capital Contributions

     18  

Section 5.02

 

Amounts and Priority of Distributions

     18  

Section 5.03

 

Tax Withholding; Withholding Advances

     20  

ARTICLE VI MANAGEMENT OF THE COMPANY

     20  

Section 6.01

 

Management by the Managing Member

     20  

Section 6.02

 

Withdrawal of the Managing Member

     21  

Section 6.03

 

Decisions by the Members

     21  

Section 6.04

 

Fiduciary Duties

     21  

Section 6.05

 

Officers

     21  

 

i


ARTICLE VII TRANSFERS OF INTERESTS

     22  

Section 7.01

 

Restrictions on Transfers

     22  

Section 7.02

 

Certain Permitted Transfers

     23  

Section 7.03

 

Registration of Transfers

     23  

Section 7.04

 

Restricted Units Legend

     24  

Section 7.05

 

Early Release

     24  

ARTICLE VIII REDEMPTION RIGHTS

     24  

Section 8.01

 

Redemption Right of a Member

     24  

Section 8.02

 

[INTENTIONALLY OMITTED]

     27  

Section 8.03

 

Reservation of Shares of Class A Common Stock; Listing; Certificate of PubCo, etc.

     28  

Section 8.04

 

Effect of Exercise of Redemption

     28  

Section 8.05

 

[reserved]

     29  

Section 8.06

 

Other Redemption Matters

     29  

Section 8.07

 

Employee Unit Redemption Right.

     30  

ARTICLE IX PUBCO CHANGE OF CONTROL OR RECAPITALIZATION

     32  

Section 9.01

 

PubCo Change of Control; PubCo Approved Recap Transaction

     32  

ARTICLE X LIMITATION ON LIABILITY, EXCULPATION AND INDEMNIFICATION

     33  

Section 10.01

 

Limitation on Liability

     33  

Section 10.02

 

Exculpation and Indemnification

     33  

ARTICLE XI DISSOLUTION AND TERMINATION

     36  

Section 11.01

 

Dissolution

     36  

Section 11.02

 

Winding Up of the Company

     37  

Section 11.03

 

Termination

     37  

Section 11.04

 

Survival

     37  

ARTICLE XII MISCELLANEOUS

     38  

Section 12.01

 

Expenses

     38  

Section 12.02

 

Further Assurances

     38  

Section 12.03

 

Notices

     38  

Section 12.04

 

Binding Effect; Benefit; Assignment

     38  

Section 12.05

 

Jurisdiction

     38  

Section 12.06

 

WAIVER OF JURY TRIAL

     39  

Section 12.07

 

Counterparts

     39  

Section 12.08

 

Entire Agreement

     39  

Section 12.09

 

Severability

     40  

Section 12.10

 

Amendment

     40  

Section 12.11

 

Governing Law

     40  

Section 12.12

 

No Presumption

     40  

Section 12.13

 

Attorney-In-Fact

     40  

 

ii


Section 12.14

 

Immunity Waiver

     40  

Section 12.15

 

Specific Performance

     41  

Section 12.16

 

Agreement of Certain Members

     41  

 

Schedule A

  

Member Schedule

Schedule B

  

Certain Individuals

 

 

iii


LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of ENDEAVOR MANAGER, LLC, a Delaware limited liability company (the “Company”), dated as of , 2021 (the “Effective Date”), by and among the Company, Endeavor Group Holdings, Inc., a Delaware corporation (“PubCo”), Endeavor Operating Company, LLC, a Delaware limited liability company (“OpCo”) and the Members (as defined below).

W I T N E S S E T H:

WHEREAS, the Company was formed as a limited liability company under the Delaware Act (as defined below) pursuant to a certificate of formation (the “Certificate”) which was executed and filed with the Secretary of State of the State of Delaware on July 1, 2019; and

WHEREAS, the Company was formed for the purpose of holding OpCo Common Units and for exercising certain rights pursuant to the OpCo LLC Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein made and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS AND USAGE

Section 1.01 Definitions.

(a) The following terms shall have the following meanings for the purposes of this Agreement:

Additional Member” means any Person admitted as a Member of the Company pursuant to Section 3.02 in connection with the issuance of new Units to such Person after the Effective Date.

Affiliate” of any specified Person means any other Person directly or indirectly Controlling, Controlled by or under direct or indirect common Control with such first specified Person; provided, that for purposes of this Agreement, (i) no Member (or equityholder of such Member) shall be deemed to be an Affiliate of any other Member (or equityholder of such Member) solely by virtue of this Agreement and (ii) the Company, on the one hand, and each of the Members (and each equityholder of any such Member), on the other hand, shall not be deemed to be Affiliates of each other solely by virtue of this Agreement.

Black-Out Period” means any “black-out” or similar period under PubCo’s policies covering trading in PubCo’s securities (including any Trading Policy) to which the applicable Redeeming Member is subject (or will be subject at such time as it owns Class A Common Stock), which period restricts the ability of such Redeeming Member to immediately resell shares of Class A Common Stock to be delivered to such Redeeming Member in connection with a Share Settlement.


Business Day” means any day excluding Saturday, Sunday or any day which is a legal holiday under the Laws of the State of California or the State of New York or is a day on which banking institutions in the State of California or the State of New York are authorized or required by Law or other governmental action to close.

Capital Contribution” means, with respect to any Member, the amount of money and the fair market value of any Property (other than money) contributed to the Company with respect to any Units held or purchased by such Member.

Cash Settlement” means, with respect to any Redemption, immediately available funds in U.S. dollars in an amount equal to the number of Redeemed Units subject thereto, multiplied by the Common Unit Redemption Price.

Change of Control” means, the occurrence of any of the following events or series of related events after the date hereof: there is consummated a merger or consolidation of PubCo with any other Person or Persons, including a tender offer followed by a merger in which holders of Class A Common Stock receive the same consideration per share paid in the tender offer, and, immediately after the consummation of such merger or consolidation, the voting securities of PubCo immediately prior to such merger or consolidation do not continue to represent or are not converted into more than 50% of the combined voting power of the then-outstanding voting securities of the Person resulting from such merger or consolidation. Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred (i) by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Class A Common Stock, Class B Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in and voting control over, and own substantially all of the shares or equity of, an entity which owns all or substantially all of the assets of PubCo immediately following such transaction or series of transactions, (ii) by virtue of the consummation of any transaction or series of transactions, immediately following which, PubCo and one or more other entities (the “Other Constituent Companies”) shall have become separate wholly-owned Subsidiaries of a holding company, and the record holders of the Class A Common Stock, Class B Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock immediately prior to such transaction or series of transactions, together with the record holders of the outstanding equity interests in the Other Constituent Companies immediately prior to such transaction or series of transactions, shall have become the equityholders of the new holding company in exchange for their respective equity interests in PubCo and the Other Constituent Companies, and such transaction or transactions would not otherwise constitute a “Change of Control” assuming references to PubCo are references to such holding company or (iii) at any time that the Executive Directors, any permitted transferee pursuant to Section 8.02(b) of the OpCo LLC Agreement, the SL Member and the SL Related Entities (each as defined in the OpCo LLC Agreement), collectively, continue to beneficially own (or have the right to vote), directly or indirectly, securities of PubCo representing more than 35% of the combined voting power of PubCo’s then-outstanding voting securities and no other Person or “group” (within the meaning of Section 13(d) of the Exchange Act) that does not include the Executive Directors, any permitted transferee pursuant to Section 8.02(b) of the OpCo LLC Agreement, the SL Member and the SL Related Entities, beneficially owns (or has the right to vote), directly or indirectly, securities of PubCo representing a greater percentage of the combined voting power of PubCo’s then-outstanding voting securities than that then beneficially owned by the Executive Directors, any permitted transferee pursuant to Section 8.02(b) of the OpCo LLC Agreement, the SL Member and the SL Related Entities.

 

2


Class A Common Stock” means Class A common stock, $0.00001 par value per share, of PubCo.

Class B Common Stock” means Class B common stock, $0.00001 par value per share, of PubCo.

Class C Common Stock” means Class C common stock, $0.00001 par value per share, of PubCo.

Class X Common Stock” means Class X common stock, $0.00001 par value per share, of PubCo.

Class Y Common Stock” means Class Y common stock, $0.00001 par value per share, of PubCo.

Code” means the Internal Revenue Code of 1986, as amended from time to time.

Common Member” means any Member that holds Common Units, in such Member’s capacity as a holder of Common Units.

Common Unit” means a limited liability company interest in the Company, designated herein as a “Common Unit”.

Common Unit Redemption Price” means, with respect to any Redemption Date, the price for a share of Class A Common Stock (or any class of stock into which it has been converted) on the Stock Exchange, as reported on bloomberg.com or such other reliable source as determined by the Managing Member in good faith, at the close of trading on the last full Trading Day immediately prior to the Redemption Date, subject to appropriate and equitable adjustment for any stock splits, reverse splits, stock dividends or similar events affecting the Class A Common Stock. In the event the shares of Class A Common Stock are not publicly traded at the time of a Redemption, then the Managing Member shall determine the Common Unit Redemption Price in good faith.

Company Merger Agreements” means each of those certain merger agreements entered into by the Company on the date hereof.

Control” (including the terms “Controlling” and “Controlled”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

Covered Person” means (i) each Member or an Affiliate thereof, in each case in such capacity, (ii) each officer, director, equityholder, member, partner, employee, representative, agent or trustee of a Member or an Affiliate thereof, in each case in such capacity, and (iii) each officer, director, shareholder, member, partner, employee, representative, agent or trustee of the Managing Member, the Company or an Affiliate controlled thereby of, in each case in such capacity.

 

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Delaware Act” means the Delaware Limited Liability Company Act, as amended from time to time.

DGCL” means the Delaware General Corporation Law, as amended from time to time.

Employee Member” means (i) any current or former employee or other service provider of PubCo or its Subsidiaries that holds Common Units as of date hereof and (ii) any other employee or other service provider of PubCo or its Subsidiaries who receives Units after the date hereof and is designated as an “Employee Member” by the Managing Member, in each case, in such employee or other service provider’s capacity as a holder of such Units.

Employee Units” means the Common Units held by an Employee Member.

Equity Incentive Plan” means any equity incentive or similar plan, agreement or arrangement adopted or entered into by the Company, PubCo or OpCo that is effective on or after the date hereof, including, without limitation, the PubCo Equity Plan.

Equity Securities” means, with respect to any Person, any (i) membership interests, partnership interests or shares of capital stock, (ii) equity, ownership, voting, profit or participation interests or (iii) similar rights or securities in such Person or any of its Subsidiaries, or any rights or securities convertible into or exchangeable for, options or other rights to acquire from such Person or any of its Subsidiaries, or obligation on the part of such Person or any of its Subsidiaries to issue, any of the foregoing.

Exchange Act” means the Exchange Act of 1934, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules or regulations. Any reference herein to a specific section, rule or regulation of the Exchange Act shall be deemed to include any corresponding provisions of future Law.

Executive Director” has the meaning set forth in PubCo’s certificate of incorporation.

Fiscal Year” means the Company’s fiscal year, which shall initially be the twelve (12) month period ending on December 31 of each year and which may be changed from time to time as determined by the Managing Member.

Governmental Authority” means any transnational, domestic or foreign federal, state or local governmental, regulatory or administrative authority, department, court, agency or official, including any political subdivision thereof and the SEC, any non-U.S. regulatory agency and any other regulatory authority or body (including any state or provincial securities authority and any self-regulatory organization) with jurisdiction over the Company or any of its Subsidiaries.

 

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Holdback Date” means with respect to any Employee Member, the earlier of (i) death and (ii) first anniversary of Termination of Service; provided, that such Employee Member complies with all restrictive covenants to which he or she is subject for the benefit of the Company or any of its Affiliates.

Indebtedness” means (i) indebtedness for borrowed money or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money, (ii) amounts owing as deferred purchase price for property or services, including all seller notes and “earn out” payments, and purchase price adjustment payments and non-competition payments in connection with any merger and/or acquisition transactions, (iii) indebtedness evidenced by any note, bond, debenture, mortgage or other debt instrument or debt security, (iv) obligations under any interest rate, currency or other hedging agreement and (v) obligations under any performance bond, letter of credit, banker’s acceptance or similar credit instrument.

IPO” means the initial underwritten public offering of PubCo.

Law” means, with respect to any Person, any federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person or its assets, in each case, as amended unless expressly specified otherwise.

Liquidation” means a liquidation or winding up of the Company.

Manager” means PubCo, in its capacity as the managing member of the Company.

Managing Member” means (i) Manager so long as Manager has not withdrawn as the Managing Member pursuant to Section 6.02 and (ii) any successor thereof appointed as Managing Member in accordance with Section 6.02.

Member” means any Person named as a Member of the Company on Schedule A and the books and records of the Company, as the same may be amended from time to time to reflect any Person admitted as an Additional Member or a Substitute Member, for so long as such Person continues to be a Member of the Company.

OpCo Common Unit” means a Common Unit (as defined in the OpCo LLC Agreement).

OpCo LLC Agreement” means that certain Third Amended and Restated Limited Liability Company Agreement of OpCo, dated as of the date hereof (as may be amended, supplemented, modified or restated from time to time).

Parent” means, with respect to any Person, any other Person that directly or indirectly owns any equity or voting interest in the first specified Person.

Percentage Interest” means, with respect to any Member, a fractional amount, expressed as a percentage: (i) the numerator of which is the aggregate number of vested Units owned of record thereby and (ii) the denominator of which is the aggregate number of vested Units issued and outstanding. The sum of the outstanding Percentage Interests of all Members shall at all times equal 100%. For the avoidance of doubt, each Unit that is issued without being subject to any vesting requirements shall at all times be deemed to be a vested Unit for purposes of this definition.

 

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Permitted Exchange Percentage” means, unless otherwise determined by the Managing Member:

(i) for any Employee Members designated as members of Employee Group A in the Company’s books and records, (A) from the Effective Date through the first anniversary thereof, zero percent (0%), (B) from the day following the first anniversary of the Effective Date through the second anniversary of the Effective Date, twenty-five percent (25%), (C) from the day following the second anniversary of the Effective Date through the third anniversary of the Effective Date, fifty percent (50%), and (D) from the day following the third anniversary of the Effective Date, one hundred percent (100%);

(ii) subject to any further reduction pursuant to the provision in the definition of Redeemable Employee Units, for the Employee Members designated as members of Employee Group B in the Company’s books and records, (A) from the Effective Date through the first anniversary thereof, up to twenty percent (20%) (as determined by the Managing Member in its sole discretion), (B) from the day following the first anniversary of the Effective Date through the second anniversary thereof, thirty-five (35%), (C) from the day following the second anniversary of the Effective Date through the third anniversary of the Effective Date, fifty percent (50%), (D) from the day following the third anniversary of the Effective Date through the fourth anniversary of the Effective Date, sixty-five percent (65%), (E) from the day following the fourth anniversary of the Effective Date through the fifth anniversary thereof, eighty percent (80%), and (F) from the day following the fifth anniversary of the Effective Date, one hundred percent (100%);

(iii) for the Employee Members designated as members of Employee Group C in the Company’s books and records, (A) from the Effective Date through the first anniversary thereof, up to twenty percent (20%) (as determined by the Managing Member in its sole discretion), (B) from the day following the first anniversary of the Effective Date through the second anniversary thereof, thirty-six percent (36%), (C) from the day following the second anniversary of the Effective Date through the third anniversary of the Effective Date, fifty-two percent (52%), (D) from the day following the third anniversary of the Effective Date through the fourth anniversary of the Effective Date, sixty-eight percent (68%), (E) from the day following the fourth anniversary of the Effective Date through the fifth anniversary thereof, eighty-four percent (84%), and (F) from the day following the fifth anniversary of the Effective Date, one hundred percent (100%);

(iv) for the Employee Members designated as members of Employee Group D in the Company’s books and records, (A) from the Effective Date through the first anniversary thereof, up to twenty percent (20%) (as determined by the Managing Member in its sole discretion), (B) from the day following the first anniversary of the Effective Date through the second anniversary thereof, forty-seven percent (47%), (C) from the day following the second anniversary of the Effective Date through the third anniversary of the Effective Date, seventy-three percent (73%), and (D) from the day following the third anniversary of the Effective Date, one hundred percent (100%); and

 

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(v) for the Employee Members designated as members of Employee Group E in the Company’s books and records, (A) from the Effective Date through the first anniversary thereof, up to twenty percent (20%) (as determined by the Managing Member in its sole discretion), (B) from the day following the first anniversary of the Effective Date through the second anniversary thereof, forty percent (40%), (C) from the day following the second anniversary of the Effective Date through the third anniversary of the Effective Date, sixty percent (60%), (D) from the day following the third anniversary of the Effective Date, eighty percent (80%), and (E) from and after the day following the fourth anniversary of the Effective Date, one hundred percent (100%).

Person” means any individual, firm, corporation, partnership, limited liability company, trust, estate, joint venture, Governmental Authority or other entity.

Prime Rate” means the rate of interest from time to time identified by The Wall Street Journal, as being the “prime” rate (or if The Wall Street Journal does not identify such a rate, the “prime” rate as identified by another newspaper of national circulation).

Property” means an interest of any kind in any real or personal (or mixed) property, including cash, and any improvements thereto, and shall include both tangible and intangible property.

PubCo Approved Change of Control” means any Change of Control of PubCo that meets the following conditions: (i) such Change of Control was approved by the board of directors of PubCo prior to such Change of Control, (ii) such Change of Control results in an early termination of and acceleration of payments under the Tax Receivable Agreement, (iii) the terms of such Change of Control provide for the consideration for the Units in such Change of Control to consist solely of (A) freely and immediately tradeable common equity securities of an issuer listed on a national securities exchange and/or (B) cash and (iv) if such common equity securities would be Registrable Securities (as defined in the Registration Rights Agreement) of such issuer for any stockholder party to the Registration Rights Agreement, the issuer of such listed equity securities has become a party thereto as a successor to PubCo effective upon closing of such Change of Control.

PubCo Common Stock” means, collectively, Class A Common Stock, Class B Common Stock, Class C Common Stock, Class X Common Stock and Class Y Common Stock.

PubCo Equity Plan” means that certain Endeavor Group Holdings, Inc. 2021 Incentive Award Plan.

Redeemable Employee Units” means, with respect to any Employee Member, the number of Common Units held by such Employee Member equal to the product of (i) the sum of the number of vested Common Units held by such Employee Member and (ii) the Permitted Exchange Percentage; provided that, to the extent such Employee Member is designated as a member of Employee Group B in the Company’s books and records, (x) the number of

 

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Redeemable Employee Units will be reduced by twenty percent (20%) until the Holdback Date and (y) to the extent such Employee Member breaches any restrictive covenants to which he or she is subject for the benefit of the Company, OpCo or PubCo or any of their respective Affiliates, the Managing Member may in its sole discretion, to the maximum extent permitted by law, either (A) delay the Holdback Date with respect to the calculation of the Redeemable Employee Units for an additional period of time equal to the length of such breach (or such longer period as it determines in its sole discretion) or (B) cause the Redeemable Employee Units subject to reduction through the Holdback Date pursuant to subsection (x) of this definition to be cancelled for no consideration.

Registration Rights Agreement” means that certain Registration Rights Agreement, dated on or about the date hereof, by and among PubCo, the members of OpCo (other than the Company in its capacity as a member of OpCo) and certain other parties thereto.

Relative Percentage Interest” means, with respect to any Member relative to another Member or Members, a fractional amount, expressed as a percentage, the numerator of which is the Percentage Interest of such Member; and the denominator of which is (x) the Percentage Interest of such Member plus (y) the aggregate Percentage Interest of such other Member or Members.

Restructuring Agreement” means, that certain Restructuring Agreement, dated as or around the date hereof, by and among OpCo, PubCo and the other parties thereto.

Restructuring” means the consummation of the transactions contemplated by the Restructuring Agreement and the UFC Transaction Agreement.

SEC” means the United States Securities and Exchange Commission.

Securities Act” means the Securities Act of 1933, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules or regulations. Any reference herein to a specific section, rule or regulation of the Securities Act shall be deemed to include any corresponding provisions of future Law.

Share Settlement” means, with respect to any applicable Redemption, a number of shares of Class A Common Stock equal to the number of Redeemed Units.

Stock Exchange” means the New York Stock Exchange.

Subsidiary” means, with respect to any Person, any Person of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof (including (i) any limited partnership of which such Person, directly or indirectly, is the general partner or otherwise has the power to direct or cause the direction of the management and policies thereof and (ii) any limited liability company of which such Person, directly or indirectly, is the managing member or otherwise has the power to direct or cause the direction of the management and policies thereof).

 

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Substitute Member” means any Person admitted as a Member of the Company pursuant to Section 3.02 in connection with the Transfer of then-existing Units to such Person.

Tax Receivable Agreement” means that certain Tax Receivable Agreement, dated as of the date hereof, by and among PubCo and the other parties thereto.

Termination of Service” with respect to an Employee Member means the date he or she ceases to be an employee or other service provider of PubCo and its Subsidiaries. The Company, in its sole discretion, shall determine the effect of all matters and questions relating to any Termination of Service, including, without limitation, whether a Termination of Service has occurred and all questions of whether particular leaves of absence constitute a Termination of Service. For purposes of this Agreement, an Employee Member’s employee-employer relationship or consultancy relationship with PubCo and its Subsidiaries shall be deemed to be terminated in the event that the Subsidiary employing or contracting him or her ceases to remain a Subsidiary of PubCo following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).

Trading Day” means a day on which the Stock Exchange or such other principal United States securities exchange on which the Class A Common Stock is listed or admitted to trading is open for the transaction of business (unless such trading shall have been suspended for the entire day).

Trading Policy” means any exchange and/or insider trading policy that may be established by Manager or PubCo, as may be amended from time to time.

Transaction Documents” means the Employee Holdco I LLC Agreement (as defined in the OpCo LLC Agreement), Employee Holdco II LLC Agreement (as defined in the OpCo LLC Agreement), Executive Holdco LLC Agreement (as defined in the OpCo LLC Agreement), OpCo LLC Agreement, Registration Rights Agreement, Restructuring Agreement, Stockholders Agreement (as defined in the OpCo LLC Agreement), Tax Receivable Agreement, any applicable Vesting Letters and the UFC Transaction Agreement.

Transfer” means any sale, assignment, transfer, exchange, gift, bequest, pledge, hypothecation or other disposition or encumbrance, direct or indirect, in whole or in part, by sale, merger, operation of Law or otherwise, and shall include all matters deemed to constitute a Transfer under Article VIII, including the issuance or other Transfer of Equity Securities or other interest of a Parent of a Member; provided, that “Transfer” shall be deemed not to include any issuance or other transfer of Equity Securities in a Member’s Parent if both (A) Equity Securities of such Member’s Parent are publicly listed and traded on a national securities exchange and (B) Units in the Company are not a material portion of such Member’s Parent’s direct and indirect assets.The terms “Transferred”, “Transferring”, “Transferor”, “Transferee” and “Transferable” have meanings correlative to the foregoing.

Treasury Regulations” means the regulations promulgated under the Code, as amended from time to time.

 

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Trust” means, with respect to any Person, (i) a revocable trust that is treated as a grantor trust for income tax purposes; provided, that and only so long as (a) the beneficiaries of such Trust include only such Person and such Person’s spouse, domestic partner, parents, grandparents, siblings or lineal descendants; (b) the Trust shall agree in writing to be bound by the terms of this Agreement; and (c) the Transferor retains exclusive voting control over the Units or other securities so Transferred, in a trustee capacity or otherwise or (ii) any other trust that is solely for bona fide estate planning purposes that shall not, and shall not be used to, circumvent the provisions herein; provided, that and only so long as the beneficiaries of such Trust include only such Person and such Person’s spouse, domestic partner or lineal descendants.

UFC Transaction Agreement” means that certain Transaction Agreement, dated as of February 16, 2021, by and among the Company, PubCo, OpCo and the other parties thereto (as amended, restated, supplemented or otherwise modified from time to time).

Underwriting Agreement” means the underwriting agreement dated as of or around the date hereof, by and among PubCo, the Company, OpCo and Morgan Stanley & Co. LLC, as representative of the several underwriters named in Schedule I thereto.

Units” means Common Units or any other type, class or series of limited liability company interests in the Company designated by the Company after the date hereof in accordance with this Agreement; provided, that any type, class or series of Units shall have the designations, preferences and/or special rights set forth or referenced in this Agreement, and the limited liability company interests of the Company represented by such type, class or series of Units shall be determined in accordance with such designations, preferences and/or special rights.

Unvested Common Unit” means, on any date of determination, any Common Unit held by a Member that is not “vested” in accordance with such Member’s (or its direct or indirect Transferor’s) applicable Vesting Letter.

Vesting Letter” means an agreement between a Common Member and Manager or any of its Subsidiaries, as applicable, on the one hand, and the Company, on the other hand (in each case, as amended from time to time), governing the issuance or other terms of Common Units (or any interests which were converted into or exchanged for such Common Units) to the applicable party.

(b) Each of the following terms is defined in the Section set forth opposite such term:

 

Term    Section
Agreement    Preamble
Cause    12.16
Certificate    Preamble
Change of Control Redemption Date    9.01(a)
Company    Preamble
Controlled Entities    10.02(c)(ii)

 

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Direct Redemption    8.01(d)
Dissolution Event    11.01(c)
Economic Company Security    4.01(a)
Economic PubCo Security    4.01(a)
Effective Date    Preamble
Election Notice    8.01(a)
Employee Repurchase Price    8.07(a)
Employee Unit Repurchase Date    8.07(a)
Employee Unit Repurchase Rights    8.07(a)
Expenses    10.02(c)(ii)
Indemnification Sources    10.02(c)(ii)
Indemnitee-Related Entities    10.02(c)(ii)(A)
Jointly Indemnifiable Claims    10.02(c)(ii)(B)
Member Schedule    3.01(b)
Officers    6.05(a)
OpCo    Preamble
Permitted Transfer    7.02
Permitted Transferee    7.02
Process Agent    12.05(b)
PubCo    Preamble
PubCo Approved Recap Transaction    9.01(b)
Redeemed Units    8.01(a)
Redeeming Member    8.01(a)
Redemption    8.01(a)
Redemption Date    8.01(a)
Redemption Notice    8.01(a)
Redemption Right    8.01(a)
Repurchased Employee Units    8.07(a)
Specified Covenants    10.02(a)
Withholding Advances    5.03(b)

Section 1.02 Other Definitional and Interpretative Provisions. The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined.

 

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Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections and Schedules are to Articles, Sections and Schedules of this Agreement unless otherwise specified. All Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. The terms “clause(s)” and “subparagraph(s)” shall be used herein interchangeably. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. Unless otherwise expressly provided herein, any agreement or instrument defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement or instrument as from time to time amended, modified, supplemented or restated, including by waiver or consent, and references to all attachments thereto and instruments incorporated therein, but in the case of each of the foregoing, only to the extent that such amendment, modification, supplement, restatement, waiver or consent is effected in accordance with this Agreement. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. Unless otherwise expressly provided herein, any statute defined or referred to herein or in any agreement or instrument that is referred to herein means such statute as from time to time amended, modified, supplemented or restated, including by succession of comparable successor statutes. Unless otherwise expressly provided herein, when any approval, consent or other matter requires any action or approval of any group of Members, including any holders of any class of Units, such approval, consent or other matter shall require the approval of a majority in interest of such group of Members. Except to the extent otherwise expressly provided herein, all references to any Member shall be deemed to refer solely to such Person in its capacity as such Member and not in any other capacity.

ARTICLE II

THE COMPANY

Section 2.01 Continuation of the Company. The Members hereby agree to continue the Company as a limited liability company pursuant to the Delaware Act, upon the terms and subject to the conditions set forth in this Agreement. The authorized officer or representative, as an “authorized person” within the meaning of the Delaware Act, shall file and record any amendments and/or restatements to the Certificate and such other certificates and documents (and any amendments or restatements thereof) as may be required under the Laws of the State of Delaware and of any other jurisdiction in which the Company may conduct business. The authorized officer or representative shall, on request, provide any Member with copies of each such document as filed and recorded. The Members hereby agree that the Company and its Subsidiaries shall be governed by the terms and conditions of this Agreement and, except as provided herein, the Delaware Act.

 

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Section 2.02 Name. The name of the Company shall be Endeavor Manager, LLC. The Managing Member may change the name of the Company in its sole discretion and shall have the authority to execute, acknowledge, deliver, file and record such further certificates, amendments, instruments and documents, and to do all such other acts and things, as may be required by Law or necessary or advisable to effect such change.

Section 2.03 Term. The term of the Company began on July 1, 2019, the date the Certificate was filed with the Secretary of State of the State of Delaware, and the Company shall have perpetual existence unless sooner dissolved and its affairs wound up as provided in Article XII.

Section 2.04 Registered Agent and Registered Office. The name of the registered agent of the Company for service of process on the Company in the State of Delaware shall be Corporation Service Company, and the address of such registered agent and the address of the registered office of the Company in the State of Delaware shall be 251 Little Falls Drive, Wilmington, Delaware 19808. Such office and such agent may be changed to such place within the State of Delaware and any successor registered agent, respectively, as may be determined from time to time by the Managing Member in accordance with the Delaware Act.

Section 2.05 Purposes. The Company has been formed for the object and purpose of engaging in any lawful act or activity for which a limited liability company may be organized under the Delaware Act.

Section 2.06 Powers of the Company. The Company shall have the power and authority to take any and all actions necessary, appropriate or advisable to or for the furtherance of the purposes set forth in Section 2.05.

Section 2.07 Tax Status. The Members intend that the Company shall be treated as a corporation for U.S. federal, state and local tax purposes to the extent such treatment is available, and agree to take (or refrain from taking) such actions as may be necessary to receive and maintain such treatment and refrain from taking any actions inconsistent therewith. Accordingly, the Company, the Managing Member, the Officers and any other Persons acting on their behalf are hereby specifically authorized to take any actions necessary to make an election pursuant to Treasury Regulation Section 301.7701-3 for the Company to be treated as a corporation for U.S. federal income tax purposes (including preparing, signing and filing U.S. Internal Revenue Service Form 8832).

Section 2.08 Regulation of Internal Affairs. The internal affairs of the Company and the conduct of its business shall be regulated by this Agreement, and to the extent not provided for herein, shall be determined by the Managing Member.

Section 2.09 Ownership of Property. Legal title to all Property conveyed to, or held by, the Company or its Subsidiaries shall reside in the Company or its Subsidiaries, as applicable, and shall be conveyed only in the name of the Company or its Subsidiaries, as applicable, and no Member or any other Person, individually, shall have any ownership of such Property.

 

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ARTICLE III

UNITS; MEMBERS; BOOKS AND RECORDS; REPORTS

Section 3.01 Units; Admission of Members.

(a) Each Member’s ownership interest in the Company shall be represented by Units, which may be divided into one or more types, classes or series, or subseries of any type, class or series, with each type, class or series, or subseries thereof, having the rights and privileges, set forth in this Agreement.

(b) The Managing Member shall have the right to authorize and cause the Company to issue an unlimited number of Common Units. The number and type of Units issued to each Member shall be set forth opposite such Member’s name on the schedule of Members of the Company held by the Company in its books and records (the “Member Schedule”). The Member Schedule shall be maintained by the Managing Member on behalf of the Company in accordance with this Agreement. When any Units or other Equity Securities of the Company are issued, repurchased, redeemed, converted or Transferred in accordance with this Agreement, the Member Schedule shall be amended by the Managing Member to reflect such issuance, repurchase, redemption or Transfer, the admission of Additional Members or Substitute Members and the resulting Percentage Interest of each Member. Following the date hereof, no Person shall be admitted as a Member and no additional Units shall be issued except as expressly provided herein.

(c) The Common Units may be subject to vesting and other terms and conditions as set forth in the Vesting Letters.

(d) The Managing Member may cause the Company to authorize and issue from time to time such other Units or other Equity Securities of any type, class or series, in each case, having the designations, preferences and/or special rights as may be determined by the Managing Member. Such Units or other Equity Securities may be issued pursuant to such agreements as the Managing Member shall approve in its discretion. When any such other Units or other Equity Securities are authorized and issued, the Member Schedule and this Agreement shall be amended by the Managing Member to reflect such additional issuances and the resulting dilution, which shall be borne pro rata by all Members based on their Common Units.

(e) Unvested Common Units shall be subject to the terms of this Agreement and the applicable Vesting Letters, and the Managing Member shall have sole and absolute discretion to interpret and administer the Vesting Letters and to adopt such amendments thereto or otherwise determine the terms and conditions of such Unvested Common Units in accordance with this Agreement and the applicable Vesting Letters. Unvested Common Units that fail to vest and are forfeited by the applicable Member shall be cancelled by the Company (and shares of Class X Common Stock held by the applicable Member shall be cancelled, for no consideration) and shall not be entitled to any distributions pursuant to Section 5.02.

 

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(f) Unless the Managing Member otherwise directs, Units will not be represented by certificates.

Section 3.02 Substitute Members and Additional Members.

(a) No Transferee of any Units or Person to whom any Units are issued pursuant to this Agreement shall be admitted as a Member hereunder or acquire any rights hereunder, including any voting rights or the right to receive distributions in respect of the Transferred or issued Units, as applicable, unless (i) such Units are Transferred or issued in compliance with the provisions of this Agreement (including Article VIII) and (ii) such Transferee or recipient shall have executed and delivered to the Company such instruments as the Managing Member deems necessary or desirable, in its reasonable discretion, to effectuate the admission of such Transferee or recipient as a Member and to confirm the agreement of such Transferee or recipient to be bound by all the terms and provisions of this Agreement. Upon complying with the immediately preceding sentence, without the need for any further action of any Person, a Transferee or recipient shall be deemed admitted to the Company as a Member. A Substitute Member shall enjoy the same rights, and be subject to the same obligations, as the Transferor; provided, that such Transferor shall not be relieved of any obligation or liability hereunder arising prior to the consummation of such Transfer but shall be relieved of all future obligations with respect to the Units so Transferred. As promptly as practicable after the admission of any Person as a Member, the books and records of the Company shall be changed to reflect such admission of a Substitute Member or Additional Member. In the event of any admission of a Substitute Member or Additional Member pursuant to this Section 3.02(a), this Agreement shall be deemed amended to reflect such admission, and any formal amendment of this Agreement (including Schedule A) in connection therewith shall only require execution by the Company and such Substitute Member or Additional Member, as applicable, to be effective.

(b) If a Member shall Transfer all (but not less than all) of its Units, the Member shall thereupon cease to be a Member of the Company.

Section 3.03 Tax and Accounting Information.

(a) Accounting Decisions and Reliance on Others. All decisions as to accounting matters, except as otherwise specifically set forth herein, shall be made by the Managing Member in accordance with Law and to the extent applicable with accounting methods followed for federal income tax purposes. In making such decisions, the Managing Member may rely upon the advice of the independent accountants of the Company.

(b) Records and Accounting Maintained. For financial reporting purposes, unless otherwise determined by PubCo’s audit committee, the books and records of the Company shall be kept on the accrual method of accounting applied in a consistent manner and shall reflect all Company transactions. For tax purposes, the books and records of the Company shall be kept on the accrual method. The Fiscal Year of the Company shall be used for financial reporting and for federal income tax purposes.

 

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(c) Financial Reports.

(i) The books and records of the Company shall be audited as of the end of each Fiscal Year by the same accounting firm that audits the books and records of PubCo (or, if such firm declines to perform such audit, by an accounting firm selected by the Managing Member).

(ii) In the event that neither PubCo nor the Company is required to file an annual report on Form 10-K or quarterly report on Form 10-Q, the Company shall deliver, or cause to be delivered, the following to each Member:

(A) not later than ninety (90) days after the end of each Fiscal Year of the Company, a copy of the audited consolidated balance sheet of the Company and its Subsidiaries as of the end of such Fiscal Year and the related statements of operations and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous year, all in reasonable detail; and

(B) not later than forty five (45) days or such later time as permitted under applicable securities law after the end of each of the first three fiscal quarters of each Fiscal Year, the unaudited consolidated balance sheet of the Company and its Subsidiaries, and the related statements of operations and cash flows for such quarter and for the period commencing on the first day of the Fiscal Year and ending on the last day of such quarter.

Section 3.04 Books and Records. The Company shall keep full and accurate books of account and other records of the Company at its principal place of business. No Member (other than the Managing Member) shall have any right to inspect the books and records of PubCo, the Company or any of its Subsidiaries.

Section 3.05 Equity Incentive Plans. If at any time or from time to time, in connection with any Equity Incentive Plan, equity incentive awards are granted to, vested, settled or exercised by any grantee (including employees of the Company and its Subsidiaries), such awards shall be administered between the Company, PubCo, OpCo and their respective Affiliates in accordance with an equity grant policy adopted by the Company, PubCo and OpCo, as may be amended from time to time.

ARTICLE IV

MANAGER OWNERSHIP; RESTRICTIONS ON MANAGER UNITS

Section 4.01 Manager Ownership.

(a) Except in connection with Redemptions under Article VIII, or as otherwise determined by the Managing Member, if at any time PubCo issues a share of Class A Common Stock or any other Equity Security of PubCo entitled to any economic rights (including in the IPO) (an “Economic PubCo Security”) with regard thereto, (i) the Company shall issue to PubCo an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of Common Units (if PubCo issues shares of Class A Common Stock) or such other Equity Securities of the Company (if PubCo issues Economic PubCo Securities other than a share of Class A

 

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Common Stock) corresponding to the Economic PubCo Security, with substantially the same rights to dividends and distributions (including distributions on liquidation) and other economic rights as those of such Economic PubCo Security (an “Economic Company Security”), (ii) OpCo shall issue to the Company an equal number (or such other number as determined by the Company, in its capacity as the managing member of OpCo, in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of OpCo Common Units (if the Company issues a Common Unit), or such other Equity Securities of OpCo (if the Company issues Economic Company Securities other than a Common Unit) corresponding to the Economic Company Security, with substantially the same rights to dividends and distributions (including distributions upon liquidation) and other economic rights as those of such Economic Company Security, and (iii) in exchange for the issuances in the foregoing clauses (i) and (ii), the net proceeds or contributed proceeds received by (A) PubCo with respect to the corresponding issuance of Class A Common Stock or Economic PubCo Securities, if any, shall be concurrently contributed by PubCo to the Company, and (B) the Company with respect to the corresponding issuance of Common Units or Economic Company Securities, if any, shall be concurrently contributed by the Company to OpCo.

(b) Notwithstanding Section 4.01(a), this Article IV shall not apply (i) to the issuance and distribution to holders of shares of PubCo Common Stock of rights to purchase Equity Securities of PubCo under a “poison pill” or similar shareholders rights plan (it being understood that upon a Redemption involving a Share Settlement under Article VIII, the shares of Class A Common Stock and/or Class X Common Stock, as the case may be, issued therein will be issued together with a corresponding right) or (ii) to the issuance under the PubCo Equity Plan or PubCo’s other employee benefit plans of any warrants, options or other rights to acquire Equity Securities of PubCo or rights or property that may be converted into or settled in Equity Securities of PubCo, but shall in each of the foregoing cases apply to the issuance of Equity Securities of PubCo in connection with the exercise or settlement of such rights, warrants, options or other rights or property.

Section 4.02 Restrictions on Manager Units.

(a) Except as otherwise determined by the Managing Member, the Company may not issue any additional Common Units or any other Equity Securities of the Company to PubCo or any of its Subsidiaries, unless substantially simultaneously therewith PubCo issues or sells an equal number (or such other number as determined by the Managing Member in good faith to reflect the respective economic entitlements of the applicable Equity Securities) of shares of Class A Common Stock or other Equity Securities of PubCo with substantially the same rights to dividends and distributions (including distributions upon liquidation of PubCo) and other economic rights as the Equity Securities issued by the Company.

(b) Except as otherwise determined by the Managing Member, the Company shall not in any manner effect any subdivision (by any stock or Unit split, stock or Unit dividend or distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse stock or Unit split, reclassification, reorganization, recapitalization or otherwise) of the outstanding Common Units unless accompanied by a substantively identical subdivision or combination, as applicable, of the outstanding Equity Securities of PubCo (and any other Subsidiary of PubCo that holds Equity Securities of the Company), with corresponding changes made with respect to any other exchangeable or convertible securities.

 

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(c) Notwithstanding anything herein or in the OpCo LLC Agreement to the contrary, in the event that PubCo redeems, repurchases or otherwise acquires any shares of Class A Common Stock, Class B Common Stock or Class C Common Stock, (i) the Company and PubCo shall be permitted to cancel for no consideration an equal number of Common Units held by PubCo and (ii) the Company, as managing member of OpCo, shall be permitted to effect any subdivision (by any stock or unit split, stock or unit dividend or distribution, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse stock or unit split, reclassification, reorganization, recapitalization or otherwise) of the outstanding OpCo Common Units, in each case, to the extent the Company determines appropriate to maintain the ratio between (A) outstanding shares of Class A Common Stock, Class B Common Stock, Class C Common Stock and Common Units held by Persons other than PubCo on the one hand and (B) OpCo Common Units held by the Company on the other hand.

ARTICLE V

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS;

DISTRIBUTIONS; ALLOCATIONS

Section 5.01 Capital Contributions.

(a) From and after the date hereof, no Member shall have any obligation to the Company, to any other Member or to any creditor of the Company to make any further Capital Contribution, except as expressly provided in this Agreement.

(b) Except as expressly provided herein, no Member, in its capacity as a Member, shall have the right to receive any Property of the Company.

Section 5.02 Amounts and Priority of Distributions.

(a) Distributions Generally. Except as otherwise provided in Article XII, distributions shall be made to the Members as set forth in this Section 5.02, at such times and in such amounts as the Managing Member, in its sole discretion, shall determine.

(b) Distributions to the Members. At such times and in such amounts as the Managing Member, in its sole discretion, shall determine, distributions shall be made to the Members in proportion to their respective Percentage Interests; provided, however, that notwithstanding anything in this Section 5.02 to the contrary, no distributions shall be made in respect of any Unvested Common Units. Any amounts that are not distributed to holders of such Unvested Common Units by virtue of the foregoing proviso shall instead be distributed to the Members in accordance with this Section 5.02(b).

(c) PubCo Distributions. Notwithstanding the provisions of Section 5.02(b), the Managing Member, in its sole discretion, may authorize that (i) cash be paid to PubCo (which payment shall be made without pro rata distributions to the other Members) in exchange for the redemption, repurchase or other acquisition of Units held by PubCo to the extent

 

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that such cash payment is used by PubCo to make a corresponding repurchase of Equity Securities of PubCo in accordance with Section 4.02(b) of the OpCo LLC Agreement, and (ii) to the extent that the Managing Member determines that expenses or other obligations of Manager are related to its role as the Managing Member or the business and affairs of Manager that are conducted through the Company or any of the Company’s direct or indirect Subsidiaries, cash (and, for the avoidance of doubt, only cash) distributions may be made to Manager (which distributions shall be made without pro rata distributions to the other Members) in amounts required for Manager to pay (w) operating, administrative and other similar costs incurred by Manager, to the extent the proceeds are used or will be used by Manager to pay expenses described in this clause (ii), and payments pursuant to any legal, tax, accounting and other professional fees and expenses, (x) any judgments, settlements, penalties, fines or other costs and expenses in respect of any claims against, or any litigation or proceedings involving, Manager, (y) fees and expenses (including any underwriters’ discounts and commissions) related to any securities offering, investment or acquisition transaction (whether or not successful) authorized by the Managing Member or (z) other fees and expenses in connection with the maintenance of the existence of Manager. In addition, the Company shall distribute cash to PubCo (which payment shall be made without pro rata distributions to the other Members) in amounts necessary for PubCo to pay any income Tax liabilities of PubCo attributable to the operations of the Company or its Subsidiaries or PubCo’s ownership of the Company and its Subsidiaries, any obligations of PubCo in connection with the Tax Receivable Agreement, and any costs and expenses incidental thereto. Without limiting the generality of the previous sentence, to the extent of available cash (taking into account the Company’s liabilities), the Company shall promptly distribute to PubCo (which payment shall be made without pro rata distributions to the other Members) any and all distributions that the Company receives pursuant to Section 5.03(e) of the OpCo LLC Agreement from OpCo, except that the Company shall retain (and not pay to PubCo pursuant to this sentence) any amounts required to allow the Company to meet its payment obligations to the Members in connection with the Restructuring transactions pursuant to which the Company acquired such OpCo Common Units in accordance with Section 3.2(c) of the respective Company Merger Agreements. For the avoidance of doubt, distributions made under clauses (i) and (ii) of this Section 5.02(c) may not be used to pay or facilitate dividends or distributions on the common stock of PubCo and must be used solely for one of the express purposes set forth under clauses (i) or (ii) of the immediately preceding sentence.

(d) Distributions in Kind. Any distributions in kind shall be made at such times and in such amounts as the Managing Member, in its sole discretion, shall determine based on their fair market value as determined by the Managing Member in the same proportions as if distributed in accordance with Section 5.02(b), with all Members participating in proportion to their respective Percentage Interests. If cash and Property are to be distributed in kind simultaneously, the Company shall distribute such cash and Property in kind in the same proportion to each Member.

 

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Section 5.03 Tax Withholding; Withholding Advances.

(a) Tax Withholding.

(i) If requested by the Managing Member, each Member shall, if able to do so, deliver to the Managing Member: (A) an affidavit in form satisfactory to the Company that the applicable Member (or its partners, as the case may be) is not subject to withholding under the provisions of any federal, state, local, foreign or other Law; (B) any certificate that the Company may reasonably request with respect to any such Laws; and/or (C) any other form or instrument reasonably requested by the Company relating to any Member’s status under such Law. For the avoidance of doubt, in the event that a Member fails or is unable to deliver to the Company an affidavit described in subclause (A) of this clause (i), the Company may withhold amounts from such Member in accordance with Section 5.03(b).

(b) Withholding Advances. To the extent the Company is required by Law to withhold or to make tax payments on behalf of or with respect to any Member (“Withholding Advances”) the Company may withhold such amounts and make such tax payments as so required.

(c) Repayment of Withholding Advances. All Withholding Advances made on behalf of a Member, plus interest thereon at a rate equal to the Prime Rate as of the date of such Withholding Advances plus 2.0% per annum, shall (i) be paid on demand by the Member on whose behalf such Withholding Advances were made, or (ii) with the consent of the Managing Member be repaid by reducing the amount of the current or next succeeding distribution or distributions that would otherwise have been made to such Member or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Member. Whenever repayment of a Withholding Advance by a Member is made as described in clause (ii) of this Section 5.03(c), for all other purposes of this Agreement such Member shall be treated as having received all distributions (whether before or upon any Dissolution Event) unreduced by the amount of such Withholding Advance and interest thereon.

(d) Withholding Advances — Reimbursement of Liabilities. Each Member hereby agrees to reimburse the Company for any liability with respect to Withholding Advances (including interest thereon) required or made on behalf of or with respect to such Member (including penalties imposed with respect thereto).

ARTICLE VI

MANAGEMENT OF THE COMPANY

Section 6.01 Management by the Managing Member. Except as otherwise specifically set forth in this Agreement, the Managing Member shall be deemed to be a “manager” for purposes of the Delaware Act. Except as expressly provided in this Agreement or the Delaware Act, the day-to-day business and affairs of the Company and its Subsidiaries shall be managed, operated and controlled exclusively by the Managing Member in accordance with the terms of this Agreement, and no other Members shall have management authority or rights over the Company or its Subsidiaries. The Managing Member is, to the extent of its rights and powers set forth in this Agreement, an agent of the Company for the purpose of the Company’s and its Subsidiaries’ business, and the actions of the Managing Member taken in accordance with such rights and powers, shall bind the Company (and no other Members shall have such right). Except as expressly provided in this Agreement, the Managing Member shall have all necessary powers to carry out the purposes, business, and objectives of the Company and its Subsidiaries. The Managing Member may delegate to Members, employees, officers or agents of the Company or any

 

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Subsidiary in its discretion the authority to sign agreements and other documents on behalf of the Company or any Subsidiary. The Managing Member shall have the exclusive power and authority, on behalf of the Company and its Subsidiaries to take such actions not inconsistent with this Agreement as the Managing Member deems necessary or appropriate to carry on the business and purposes of the Company and its Subsidiaries.

Section 6.02 Withdrawal of the Managing Member. Manager may withdraw as the Managing Member and appoint as its successor at any time upon written notice to the Company (i) any wholly-owned Subsidiary of Manager, (ii) any Person into which Manager is merged or consolidated or (iii) any transferee of all or substantially all of the assets of Manager, which withdrawal and replacement shall be effective upon the delivery of such notice. No appointment of a Person as Managing Member shall be effective unless Manager and the new Managing Member provide all other Members with contractual rights, directly enforceable by such other Members against the new Managing Member, to cause the new Managing Member to comply with all the Managing Member’s obligations under this Agreement.

Section 6.03 Decisions by the Members.

(a) Other than the Managing Member, the Members shall take no part in the management of the Company’s business, shall transact no business for the Company and shall have no power to act for or to bind the Company; provided, however, that the Company may engage any Member or principal, partner, member, shareholder or interest holder thereof as an employee, independent contractor or consultant to the Company, in which event the duties and liabilities of such Person with respect to the Company as an employee, independent contractor or consultant, as applicable, shall be governed by the terms of such engagement with the Company.

(b) Except as expressly provided herein, neither the Members nor any class of Members shall have the power or authority to vote, approve or consent to any matter or action taken by the Company (or by Manager, as Managing Member).

Section 6.04 Fiduciary Duties. (i) The Managing Member shall, in its capacity as Managing Member, and not in any other capacity, have the same fiduciary duties to the Company and the Members as a member of the board of directors of a Delaware corporation (assuming such corporation had in its certificate of incorporation a provision eliminating the liabilities of directors and officers to the maximum extent permitted by Section 102(b)(7) of the DGCL); and (ii) each Officer shall, in their capacity as such, and not in any other capacity, have the same fiduciary duties to the Company and the Members as an officer of a Delaware corporation (assuming such corporation had in its certificate of incorporation a provision eliminating the liabilities of directors and officers to the maximum extent permitted by Section 102(b)(7) of the DGCL). Notwithstanding the immediately preceding sentence, neither the Managing Member nor any Officer shall be subject to corporate opportunity or similar doctrines.

Section 6.05 Officers.

(a) Appointment of Officers. The Managing Member may appoint individuals as officers (“Officers”) of the Company, which may include such officers as the Managing Member determines are necessary or appropriate. No Officer need be a Member. An individual may be appointed to more than one office.

 

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(b) Authority of Officers. The Officers shall have the duties, rights, powers and authority as may be prescribed by the Managing Member from time to time.

(c) Removal, Resignation and Filling of Vacancy of Officers. Unless otherwise set forth in the employment agreement of the applicable Officer, the Managing Member may remove any Officer, for any reason or for no reason, at any time. Any Officer may resign at any time by giving written notice to the Company, and such resignation shall take effect at the date of the receipt of that notice or any later time specified in that notice; provided, that, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any such resignation shall be without prejudice to the rights, if any, of the Company or such Officer under this Agreement. A vacancy in any office because of death, resignation, removal or otherwise shall be filled by the Managing Member.

ARTICLE VII

TRANSFERS OF INTERESTS

Section 7.01 Restrictions on Transfers.

(a) Except as expressly permitted by Section 7.02, and subject to Section 7.01(b), Section 7.01(c), Section 7.01(d), Section 7.01(e), Section 7.01(f) and Section 7.01(g), any underwriter lock-up agreement applicable to such Member, any Vesting Letter and/or any other agreement between such Member and the Company, PubCo or any of their respective Controlled Affiliates, without the prior written approval of the Managing Member, no Member shall directly or indirectly Transfer all or any part of its Units or any right or economic interest pertaining thereto, including the right to vote or consent on any matter or to receive or have any economic interest in distributions or advances from the Company pursuant thereto. Any such Transfer which is not in compliance with the provisions of this Agreement shall be deemed a Transfer by such Member of Units in violation of this Agreement (and a breach of this Agreement by such Member) and shall be null and void ab initio.

(b) Except as otherwise expressly provided herein, it shall be a condition precedent to any Transfer otherwise permitted or approved pursuant to this Article VII that:

(i) the Transferor shall have provided to the Company prior notice of such Transfer;

(ii) the Transferee shall agree in writing to be bound by this Agreement by signing and delivering to the Company a joinder substantially in a form acceptable to the Company;

(iii) the Transfer shall comply with all applicable Laws;

 

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(iv) to the knowledge of the Transferee and Transferor after reasonable inquiry of the Company, the Transfer shall not impose material liability or material reporting obligations on the Company or any Member thereof in any jurisdiction, whether domestic or foreign, or result in the Company or any Member thereof becoming subject to the jurisdiction of any Governmental Authority anywhere, other than the Governmental Authorities in which the Company is then subject to such liability, reporting obligation or jurisdiction; and

(v) such Transfer shall comply with Article VIII (to the extent Article VIII governs such Transfer of Units).

(c) [reserved].

(d) Any Transfer of Units pursuant to this Agreement, including this Article VII, shall be subject to the provisions of Section 3.01 and Section 3.02.

(e) For the avoidance of doubt, in addition to any restrictions on Transfer set forth in this Article VII that may apply to such Transfer, any Transfer of Units by any Member shall be subject to the restrictions on Transfer applicable thereto pursuant to any Vesting Letter to which such Member is a party.

(f) Notwithstanding anything else contained herein, without the prior written consent of the Manager, none of the individuals listed on Schedule B may transfer any Units or other Equity Securities of the Company.

(g) Notwithstanding anything else contained herein, without the prior written consent of the Manager, (i) no Member shall Transfer any Units or other Equity Securities of the Company; and (ii) the Company shall not issue any Units or other Equity Securities; in each case, to the extent such action would result in PubCo owning less than eighty percent (80%) of the total voting power or value of the Company, as determined under Section 1504(a)(2) of the Code.

Section 7.02 Certain Permitted Transfers. Notwithstanding anything to the contrary herein, but subject to compliance with Sections 7.01(b) through (g), from and after one hundred eighty (180) days following the consummation of the IPO (unless such time restriction is waived by the Managing Member in accordance with Section 7.05 with respect to any proposed Transfer(s)), the following Transfers shall be permitted (any such Transfer, a “Permitted Transfer” and, the applicable Transferee, a “Permitted Transferee”):

(a) Any Transfer pursuant to the terms of Article VIII; and

(b) Any Transfer contemplated by Section 9.01 in connection with a PubCo Approved Change of Control or PubCo Approved Recap Transaction.

Section 7.03 Registration of Transfers. When any Units are Transferred in accordance with the terms of this Agreement, the Company shall cause such Transfer to be registered on the books of the Company.

 

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Section 7.04 Restricted Units Legend. The Units have not been registered under the Securities Act and, therefore, in addition to the other restrictions on Transfer contained in this

Agreement, cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is then available. To the extent such Units have been certificated, each certificate evidencing Units and each certificate issued in exchange for or upon the Transfer of any Units (if such securities remain Units as defined herein after such Transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED ON                , 2021, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE LIMITED LIABILITY COMPANY AGREEMENT OF ENDEAVOR MANAGER, LLC, AS MAY BE AMENDED AND MODIFIED FROM TIME TO TIME, AND ENDEAVOR MANAGER, LLC RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY ENDEAVOR MANAGER, LLC TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

The Company shall imprint such legend on certificates (if any) evidencing Units. The legend set forth above shall be removed from the certificates (if any) evidencing any units which cease to be Units in accordance with the definition thereof.

Section 7.05 Early Release. Notwithstanding anything contained in this Agreement to the contrary (including the time restrictions set forth in Section 7.02 and Section 8.01 with respect to Employee Members), but subject to compliance with Sections 7.01(b) through (g) and the other provisions of Sections 7.02 and 8.01, beginning at the commencement of trading on the second Trading Day on which the PubCo Common Stock is traded on the New York Stock Exchange, the Managing Member may, in its sole discretion, permit the Employee Members to Transfer (including in connection with a Redemption) a number of Equity Securities of the Company and PubCo that does not exceed [ 🌑 ]1 Equity Securities of the Company and PubCo in the aggregate.

ARTICLE VIII

REDEMPTION RIGHTS

Section 8.01 Redemption Right of a Member.

(a) From and after the later of one hundred eighty (180) days following the consummation of the IPO (unless such time restriction is waived by the Managing Member in accordance with Section 7.05 with respect to any proposed Redemption), and subject to (A) the

 

1 

To be $[150] million in shares calculated at the midpoint of the range.

 

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terms of any Trading Policy (including any Blackout Period contained therein), (B) any underwriter lock-up agreement applicable to such Member (including any early release provisions contained therein) and (C) the waiver or expiration of any contractual lock-up period relating to the shares of PubCo (or any corresponding Units) that may be applicable to such Member, each Member (other than Manager) shall be entitled to cause the Company to redeem (a “Redemption”) its Common Units (excluding, (1) any Common Units that are subject to vesting conditions or subject to Transfer limitations pursuant to this Agreement or an applicable Vesting Letter and (2) any Employee Units that are not Redeemable Employee Units) in whole or in part (the “Redemption Right”) at any time and from time to time. A Member desiring to exercise its Redemption Right (a “Redeeming Member”) shall exercise such right by giving written notice (the “Redemption Notice”) to the Company, with a copy to PubCo,. The Redemption Notice shall specify the number of Common Units (the “Redeemed Units”) that the Redeeming Member intends to have the Company redeem and a date, not less than five (5) Business Days nor more than ten (10) Business Days after delivery of such Redemption Notice (unless and to the extent that the Managing Member in its sole discretion agrees in writing to waive such time periods), on which exercise of the Redemption Right shall be completed (the “Redemption Date”); provided, that the Redemption Notice may specify that the Redemption is to be contingent (including as to the timing) upon the consummation of a purchase by another Person (whether in a tender or exchange offer, an underwritten offering or otherwise) of the Share Settlement into which the Redeemed Units are exchangeable, or contingent (including as to timing) upon the closing of an announced merger, consolidation or other transaction or event in which the Share Settlement would be exchanged or converted or become exchangeable for or convertible into cash or other securities or property; provided, further that the Redeeming Member may withdraw or amend a Redemption Notice, in whole or in part, prior to the effectiveness of the Redemption, at any time prior to 5:00 p.m. New York City time, on the Business Day immediately preceding the Redemption Date (or any such later time as may be required by applicable Law) by delivery of a written notice of withdrawal to the Company (with a copy to Pubco), specifying (1) the number of withdrawn Units, (2) if any, the number of Units as to which the Redemption Notice remains in effect and (3) if the Redeeming Member so determines, a new Redemption Date or any other new or revised information permitted in the Redemption Notice. Following receipt of the Redemption Notice, and in any event at least two (2) Business Days prior to the Redemption Date, PubCo shall deliver to the Redeeming Member a notice, specifying whether it elects to settle the Redemption with a Share Settlement or a Cash Settlement (an “Election Notice”). If the Election Notice specifies a Cash Settlement, then on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date):

(i) the Redeeming Member shall Transfer and surrender, free and clear of all liens and encumbrances the Redeemed Units to the Company and an equal number of shares of Class X Common Stock to PubCo (to the extent applicable);

(ii) the Company shall (x) cancel the Redeemed Units, (y) pay to the Redeeming Member the applicable Cash Settlement, and (z) if the Units are certificated, the Company shall issue to the Redeeming Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Redeeming Member pursuant to clause (i) of this Section 8.01(a) and the Redeemed Units; and

 

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(iii) PubCo shall cancel and retire for no consideration the shares of Class X Common Stock that were Transferred to PubCo pursuant to Section 8.01(a)(i)(y) above.

(b) Intentionally Omitted.

(c) If the Election Notice specifies a Share Settlement, a Redeeming Member shall be entitled to revoke its Redemption Notice or delay the consummation of a Redemption if any of the following conditions exists:

(i) any registration statement pursuant to which the resale of the Class A Common Stock to be registered for such Redeeming Member at or immediately following the consummation of the Redemption shall have ceased to be effective pursuant to any action or inaction by the SEC or no such resale registration statement has yet become effective;

(ii) PubCo shall have failed to cause any related prospectus to be supplemented by any required prospectus supplement necessary to effect such Redemption;

(iii) PubCo shall have exercised its right to defer, delay or suspend the filing or effectiveness of a registration statement and such deferral, delay or suspension shall affect the ability of such Redeeming Member to have its Class A Common Stock registered at or immediately following the consummation of the Redemption;

(iv) PubCo shall have disclosed in good faith to such Redeeming Member any material non-public information concerning PubCo, the receipt of which results in such Redeeming Member being prohibited or restricted from selling Class A Common Stock at or immediately following the Redemption without disclosure of such information (and PubCo does not permit such disclosure);

(v) any stop order relating to the registration statement pursuant to which the Class A Common Stock was to be registered by such Redeeming Member at or immediately following the Redemption shall have been issued by the SEC;

(vi) there shall have occurred a material disruption in the securities markets generally or in the market or markets in which the Class A Common Stock is then traded;

(vii) there shall be in effect an injunction, a restraining order or a decree of any nature of any Governmental Authority that restrains or prohibits the Redemption;

(viii) PubCo shall have failed to comply in all material respects with its obligations under the Registration Rights Agreement, and such failure shall have affected the ability of such Redeeming Member to consummate the resale of Class A Common Stock to be received upon such Redemption pursuant to an effective registration statement; or

(ix) the Redemption Date would occur three (3) Business Days or less prior to, or during, a Black-Out Period.

 

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(d) If the Election Notice specifies a Share Settlement, unless the Redeeming Member has revoked the applicable Redemption as provided in Section 8.01(c), on the Redemption Date (to be effective immediately prior to the close of business on the Redemption Date), (1) PubCo shall transfer to the Redeeming Member the Share Settlement, in exchange for the Redeemed Units; (2) the Redeeming Member shall Transfer, free and clear of all liens and encumbrances the Redeemed Units and an equal number of shares of Class X Common Stock to PubCo; (3) PubCo shall cancel and retire for no consideration such shares of Class X Common Stock; and (4) the Company shall, if the Redeemed Units are certificated, issue to the Redeeming Member and PubCo a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Redeeming Member pursuant to clause (2) of this Section 8.01(d) and the Redeemed Units. In furtherance of the foregoing, each of the Company and the Redeeming Member shall take all actions reasonably requested by PubCo to effect the transactions contemplated by this Section 8.01(d), including executing and delivering any document reasonably requested by PubCo in connection therewith.

(e) The number of shares of Class A Common Stock applicable to any Share Settlement or Cash Settlement shall not be adjusted on account of any distributions previously made with respect to the Redeemed Units, dividends previously paid with respect to Class A Common Stock or cash or cash equivalents held by PubCo; provided, however, that if a Redeeming Member effects a Redemption of Redeemed Units and the Redemption Date occurs subsequent to the record date for any distribution with respect to the Redeemed Units but prior to payment of such distribution, the Redeeming Member shall be entitled to receive such distribution with respect to the Redeemed Units on the date that it is made notwithstanding that the Redeeming Member Transferred and surrendered or transferred the Redeemed Units prior to such date.

(f) In the case of a Share Settlement, in the event a reclassification or other similar transaction occurs following delivery of a Redemption Notice, but prior to the Redemption Date, as a result of which shares of Class A Common Stock are converted into another security, then a Redeeming Member shall be entitled to receive the amount of such other security that the Redeeming Member would have received if such Redemption Right had been exercised and the Redemption Date had occurred immediately prior to the record date of such reclassification or other similar transaction.

(g) Notwithstanding anything herein to the contrary, in the event that PubCo declares a stock dividend on the Class A Common Stock, Class B Common Stock or Class C Common Stock as contemplated by the penultimate sentence of Section 5.1(b)(iv) of Article Third of PubCo’s Amended and Restated Certificate of Incorporation, the number of shares of Class X Common Stock to be transferred to PubCo in any Redemption that may occur following such declaration may be equitably adjusted by PubCo.

Section 8.02 [INTENTIONALLY OMITTED].

 

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Section 8.03 Reservation of Shares of Class A Common Stock; Listing; Certificate of PubCo, etc.

(a) At all times PubCo shall reserve and keep available out of its authorized but unissued Class A Common Stock, solely for the purpose of issuance upon a Share Settlement in a Redemption such number of shares of Class A Common Stock as shall be issuable upon any such Redemption; provided, that nothing contained herein shall be construed to preclude PubCo from satisfying its obligations in respect of any such Redemption by delivery of purchased Class A Common Stock (which may or may not be held in the treasury of PubCo). PubCo shall deliver Class A Common Stock that has been registered under the Securities Act with respect to any Redemption in which a Share Settlement is made, to the extent a registration statement is effective and available for such shares. PubCo shall use its commercially reasonable efforts to list the Class A Common Stock required to be delivered upon any such Redemption prior to such delivery upon each national securities exchange upon which the outstanding shares of Class A Common Stock are listed at the time of such Redemption (it being understood that any such shares may be subject to transfer restrictions under applicable securities Laws). PubCo covenants that all Class A Common Stock issued upon a Redemption in which a Share Settlement is made will, upon issuance, be validly issued, fully paid and non-assessable. The provisions of this Article VIII shall be interpreted and applied in a manner consistent with any corresponding provisions of PubCo’s certificate of incorporation (if any).

(b) Subject to the terms of the Registration Rights Agreement, PubCo covenants and agrees to deliver shares of the Share Settlement, if requested, pursuant to an effective registration statement under the Securities Act with respect to any Redemption to the extent that a registration statement is effective and available for such shares. In the event that any Redemption in accordance with this Agreement is to be effected at a time when any required registration has not become effective or otherwise is unavailable, upon the request and with the reasonable cooperation of the Redeeming Member requesting such Redemption, PubCo and the Company shall use reasonable best efforts to promptly facilitate such Redemption pursuant to an available exemption from such registration requirements.

(c) PubCo agrees that it has taken all or will take such steps as may be required to cause to qualify for exemption under Rule 16b-3(d) or (e), as applicable, under the Exchange Act, and to be exempt for purposes of Section 16(b) under the Exchange Act, any acquisitions from, or dispositions to, PubCo of equity securities of PubCo (including derivative securities with respect thereto) and any securities that may be deemed to be equity securities or derivative securities of PubCo for such purposes that result from the transactions contemplated by this Agreement, by each officer or director of PubCo. The authorizing resolutions shall be approved by either PubCo’s board of directors or a committee composed solely of two or more Non-Employee Directors (as defined in Rule 16b-3) of PubCo.

Section 8.04 Effect of Exercise of Redemption. This Agreement shall continue notwithstanding the consummation of a Redemption and all other rights set forth herein shall be exercised by the remaining Members and the Redeeming Member (to the extent of such Redeeming Member’s remaining interest in the Company). No Redemption shall relieve such Redeeming Member of any prior breach of this Agreement.

 

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Section 8.05 [reserved]

Section 8.06 Other Redemption Matters.

(a) Each Redemption shall be deemed to be effective immediately prior to the close of business on the Redemption Date, and, in the case of a Share Settlement, the Redeeming Member (or other Person(s) whose name or names in which the Share Settlement is to be issued) shall be deemed to be a holder of the Equity Securities issued in such Share Settlement, from and after that time, until such Equity Securities have been disposed of. As promptly as practicable on or after the Redemption Date, PubCo shall deliver or cause to be delivered to the Redeeming Member (or other Person(s) whose name or names in which the Share Settlement is to be issued) the number of the Share Settlement deliverable upon such Redemption, registered in the name of such Redeeming Member (or other Person(s) whose name or names in which the Share Settlement is to be issued). To the extent the Share Settlement is settled through the facilities of The Depository Trust Company, PubCo will, subject to Section 8.06(c) below, upon the written instruction of a Redeeming Member, deliver or cause to be delivered the shares of the Share Settlement deliverable to such Redeeming Member (or other Person(s) whose name or names in which the Share Settlement is to be issued), through the facilities of The Depository Trust Company, to the account of the participant of The Depository Trust Company designated by such Redeeming Member.

(b) Subject to Section 8.06(c), the shares of Share Settlement issued upon a Redemption shall bear a legend in substantially the following form:

THE TRANSFER OF THESE SECURITIES HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY NOT BE SOLD OR TRANSFERRED OTHER THAN IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (OR OTHER APPLICABLE LAW), OR AN EXEMPTION THEREFROM.

(c) If (i) any shares of the Share Settlement may be sold pursuant to a registration statement that has been declared effective by the Securities and Exchange Commission, (ii) all of the applicable conditions of Rule 144 are met, or (iii) the legend (or a portion thereof) otherwise ceases to be applicable, PubCo, upon the written request of the Redeeming Member thereof shall promptly provide such Redeeming Member or its respective transferees, without any expense to such Persons (other than applicable transfer taxes and similar governmental charges, if any) with new certificates (or evidence of book-entry share) for securities of like tenor not bearing the provisions of the legend with respect to which the restriction has terminated. In connection therewith, such Redeeming Member shall provide PubCo with such information in its possession as PubCo may reasonably request in connection with the removal of any such legend.

 

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(d) PubCo shall bear all of its own expenses in connection with the consummation of any Redemption, whether or not any such Redemption is ultimately consummated, including any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, any Redemption; provided, however, that if any of the Share Settlement is to be delivered in a name other than that of the Redeeming Member that requested the Redemption (or The Depository Trust Company or its nominee for the account of a participant of The Depository Trust Company that will hold the shares for the account of such Redeeming Member), then such Redeeming Member and/or the Person in whose name such shares are to be delivered shall pay to PubCo the amount of any transfer taxes, stamp taxes or duties, or other similar taxes in connection with, or arising by reason of, such Redemption or shall establish to the reasonable satisfaction of PubCo that such tax has been paid or is not payable. The Redeeming Member shall bear all of its own expenses in connection with the consummation of any Redemption.

Section 8.07 Employee Unit Redemption Right.

(a) Employee Units shall at all times be subject to any redemption or repurchase rights (whether at a discount or otherwise), and any forfeiture rights, in favor of, and exercisable only by and in the sole discretion of, the Company or Managing Member or any of their respective Subsidiaries, as applicable, set forth in any applicable Vesting Letter (“Employee Unit Repurchase Rights”), which, for the avoidance of doubt, are separate and apart from any Redemption contemplated by Section 8.01. If the Company elects to exercise the Employee Unit Repurchase Right, the Company will repurchase any or all of the Employee Units held by the applicable Employee Member (the “Repurchased Employee Units”) at a price per Repurchased Employee Unit equal to the repurchase price contemplated by the Employee Unit Repurchase Right (which, for the avoidance of doubt, will take into account any discount set forth in the applicable Vesting Letter or otherwise) (the “Employee Repurchase Price”); provided, that in the event the Repurchased Employee Units are to be redeemed or repurchased at a discount to the fair market value of the Employee Units subject to the Employee Unit Repurchase Rights (or otherwise forfeited), the Company shall have the right, in its sole discretion, to effectuate the repurchase contemplated by the Employee Units Repurchase Rights by instead redeeming and cancelling a portion of the Employee Units for no consideration such that the fair market value (as determined by the Managing Member) of the portion of the Employee Units that is not redeemed and cancelled for no consideration pursuant to the immediately preceding clause is equal to the Employee Repurchase Price that the applicable Employee Member would have otherwise received had all of such Employee Member’s Employee Units been redeemed at the applicable Employee Repurchase Price in cash. Upon exercise of the Employee Unit Repurchase Right, the Company shall deliver to the applicable Employee Member a notice setting forth the number of Employee Repurchased Units, the Employee Repurchase Price to be paid for the Repurchased Employee Units (or, if applicable, the number of Repurchased Employee Units to be cancelled and retired for no consideration) and the date (not later than sixty (60) days after date of such notice) and place for the closing of the transaction (such date, the “Employee Unit Repurchase Date”). The Company may elect, in its sole discretion, to pay for the Repurchased Employee Units that are not being cancelled and retired for no consideration (as described above) by any combination of the following: (i) delivery of a cashier’s check or wire transfer of immediately available funds; (ii) issuance of an unsecured subordinated note bearing interest (payable in installments and/or at maturity) at a simple rate per annum equal to the prime rate and subject to such other terms and

 

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conditions as may be established by the Managing Member; or (iii) by offsetting against any indebtedness or obligations for advanced or borrowed funds owed to the Company, PubCo, OpCo or any of their respective Affiliates by the applicable Employee Member subject to the repurchase notice; provided, that if the Company does not elect a method of payment, the Repurchased Employee Units shall be paid for in accordance with clause (i). For the avoidance of doubt, to the extent the Company exercises the Employee Unit Repurchase Right pursuant to any rights it may have under any Vesting Letter, this Section 8.07 shall apply, regardless of whether or not prior to, on or after the exercise of the Employee Unit Repurchase Right, the Employee Member has submitted a request to effect the Redemption by the Employee Member contemplated by Section 8.01.

(b) To the extent the Employee Unit Repurchase Right is exercised, on the Employee Unit Repurchase Date (to be effective immediately prior to the close of business on the Employee Unit Repurchase Date):

(i) the Employee Member holding Repurchased Employee Units (x) shall Transfer and surrender, free and clear of all liens and encumbrances the Repurchased Employee Units (including, for the avoidance of doubt, any such Repurchased Employee Units subject to a discounted repurchase or a forfeiture) to the Company and (y) shall Transfer and surrender to PubCo for no consideration, free and clear of all liens and encumbrances an equal number of shares of Class X Common Stock.

(ii) the Company shall (x) cancel the Repurchased Employee Units, (y) pay to the Employee Member holding the Repurchased Employee Units the Employee Repurchase Price (except in the case of cancellation and retirement for no consideration described in Section 8.07(a)), and (z) if the Repurchased Employee Units are certificated, issue to the Employee Member a certificate for a number of Common Units equal to the difference (if any) between the number of Common Units evidenced by the certificate surrendered by the Employee Member pursuant to clause (i) of this Section 8.07(b) and the Repurchased Employee Units; and

(iii) PubCo shall cancel and retire for no consideration the shares of Class X Common Stock that were Transferred to PubCo pursuant to Section 8.07(b)(i)(y) above.

(c) Notwithstanding anything herein to the contrary, all Repurchased Employee Units hereunder shall automatically be counted towards the applicable Employee Member’s Permitted Exchange Percentage, and in connection therewith, shall reduce such Employee Member’s Permitted Exchange Percentage on a pro rata basis with respect to the then-current and each remaining period of time set forth in the portion of the definition thereof applicable to such Employee Member (i.e., the percentage of such Repurchased Employee Units allocated to the then-current and each such remaining period of time in such Employee Member’s Permitted Exchange Percentage will be equal to the percentage described in such definition for each such period of time); provided, however, that the provisions of the proviso in the definition of Redeemable Employee Units shall continue to apply to any Employee Units that remain outstanding in respect of such Employee Member.

 

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ARTICLE IX

PUBCO CHANGE OF CONTROL OR RECAPITALIZATION

Section 9.01 PubCo Change of Control; PubCo Approved Recap Transaction.

(a) In connection with a PubCo Approved Change of Control, Manager shall have the right, in its sole discretion, to require each Member to effect a Redemption of all or a portion of such Member’s and all other Members’ Units together with an equal number of shares of Class X Common Stock, pursuant to which such Units and such shares of Class X Common Stock will be exchanged for shares of Class A Common Stock (or economically equivalent cash or securities of a successor entity), mutatis mutandis, in accordance with the Redemption provisions of Article VIII (applied for this purpose as if PubCo had delivered an Election Notice that specified a Share Settlement with respect to such Redemptions) and otherwise in accordance with this Section 9.01. Any such Redemption pursuant to this Section 9.01(a) shall be effective immediately prior to the consummation of the PubCo Approved Change of Control (and, for the avoidance of doubt, shall not be effective if such PubCo Approved Change of Control is not consummated) (the date of such Redemption, the “Change of Control Redemption Date”). From and after the Change of Control Redemption Date, (i) the Units and any shares of Class X Common Stock subject to such redemption shall be deemed to be transferred to PubCo on the Change of Control Redemption Date and (ii) each such Member shall cease to have any rights with respect to the Units and any shares of Class X Common Stock subject to such Redemption (other than the right to receive shares of Class A Common Stock (or economically equivalent cash or equity securities in a successor entity) pursuant to such Redemption). Manager shall provide written notice of an expected PubCo Approved Change of Control to all Members within the earlier of (x) five (5) Business Days following the execution of an agreement with respect to such PubCo Approved Change of Control and (y) ten (10) Business Days before the proposed date upon which the contemplated PubCo Approved Change of Control is to be effected, including in such notice such information as may reasonably describe the PubCo Approved Change of Control transaction, subject to Law, including the date of execution of such agreement or such proposed effective date, as applicable, the amount and types of consideration to be paid for shares of Class A Common Stock in the PubCo Approved Change of Control, any election with respect to types of consideration that a holder of shares of Class A Common Stock, as applicable, shall be entitled to make in connection with such PubCo Approved Change of Control (which election shall be available to each Member on the same terms as holders of shares of Class A Common Stock). Following delivery of such notice and on or prior to the Change of Control Redemption Date, the Members shall take all actions reasonably requested by PubCo to effect such exchange, including taking any action and delivering any document required pursuant to this Section 9.01 to effect such exchange.

(b) In the event that a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization or similar transaction with respect to all or any portion of shares of PubCo’s issued and outstanding Class A Common Stock is proposed by PubCo or PubCo’s stockholders and approved by the PubCo board of directors, or is otherwise consented to or approved by the PubCo board of directors (a “PubCo Approved Recap Transaction”), Manager shall provide written notice of the PubCo Approved Recap Transaction to all Members within the earlier of (i) five (5) Business Days following the execution of an agreement (if applicable) with

 

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respect to, or the commencement of (if applicable), such PubCo Approved Recap Transaction and (ii) ten (10) Business Days before the proposed date upon which the PubCo Approved Recap Transaction is to be effected, including in such notice such information as may reasonably describe the PubCo Approved Recap Transaction, subject to Law, including the date of execution of such agreement (if applicable) or of such commencement (if applicable), the material terms of such PubCo Approved Recap Transaction, including the amount and types of consideration to be received by holders of shares of Class A Common Stock in the PubCo Approved Recap Transaction, any election with respect to types of consideration that a holder of shares of Class A Common Stock, as applicable, shall be entitled to make in connection with such PubCo Approved Recap Transaction, and the number of Units (and the corresponding shares of Class X Common Stock) held by such Member that is applicable to such PubCo Approved Recap transaction. The Members (other than Manager) shall be permitted to participate in such offer by delivering a written notice of participation that is effective immediately prior to the consummation of such offer (and that is contingent upon consummation of such offer), and shall include such information necessary for consummation of such offer as requested by PubCo. In the case of any PubCo Approved Recap Transaction that was initially proposed by PubCo, PubCo shall use reasonable best efforts to enable and permit the Members (other than the Manager) to participate in such transaction to the same extent or on an economically equivalent basis as the holders of shares of Class A Common Stock, and to enable such Members to participate in such transaction without being required to exchange Units or shares of Class X Common Stock in connection therewith.

ARTICLE X

LIMITATION ON LIABILITY, EXCULPATION

AND INDEMNIFICATION

Section 10.01 Limitation on Liability. The debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Covered Person shall be obligated personally for any such debt, obligation or liability of the Company ; provided, that the foregoing shall not alter a Member’s obligation to return funds wrongfully distributed to it or other obligations specifically enumerated in this Agreement.

Section 10.02 Exculpation and Indemnification.

(a) Subject to the duties of the Managing Member and the Officers set forth in Section 6.04 and any employment agreement and/or restrictive covenants agreement with the Company as in effect from time to time (collectively, the “Specified Covenants”), neither the Managing Member nor any other Covered Person shall be liable, including under any legal or equitable theory of fiduciary duty or other theory of liability, to the Company or to any other Covered Person for any losses, claims, damages or liabilities incurred by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company. There shall be, and each Covered Person shall be entitled to, a presumption that such Covered Person acted in good faith.

(b) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements

 

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presented to the Company by any Person as to matters the Covered Person reasonably believes are within such Person’s professional or expert competence.

(c) (i) The Company shall indemnify, defend and hold harmless each Covered Person against any losses, claims, damages, liabilities, expenses (including all reasonable fees and expenses of counsel), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, in which such Covered Person may be involved or become subject to, in connection with any matter arising out of or in connection with the Company’s business or affairs, or this Agreement or any related document, unless such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount is as a result of a Covered Person not acting in good faith on behalf of the Company or arose as a result of the willful commission by such Covered Person of any act that is dishonest and materially injurious to the Company or (ii) results from its contractual obligations under any Transaction Agreement to be performed in a capacity other than as a Covered Person or results from a breach by such Covered Person of a Specified Covenant. If any Covered Person becomes involved in any capacity in any action, suit, proceeding or investigation in connection with any matter arising out of or in connection with the Company’s business or affairs, or this Agreement or any related document (other than any Transaction Agreement), other than (x) by reason of any act or omission performed or omitted by such Covered Person that was not in good faith on behalf of the Company or constituted a willful commission by such Covered Person of an act that is dishonest and materially injurious to the Company, or (y) as a result of any breach by such Covered Person of a Specified Covenant, the Company shall reimburse such Covered Person for its reasonable legal and other reasonable out-of-pocket expenses (including the cost of any investigation and preparation) as they are incurred in connection therewith; provided, that such Covered Person shall promptly repay to the Company the amount of any such reimbursed expenses paid to it if it shall be finally judicially determined that such Covered Person was not entitled to indemnification by, or contribution from, the Company in connection with such action, suit, proceeding or investigation. If for any reason (other than the bad faith of a Covered Person or the willful commission by such Covered Person of an act that is dishonest and materially injurious to the Company) the foregoing indemnification is unavailable to such Covered Person, or insufficient to hold it harmless, then the Company shall contribute to the amount paid or payable by such Covered Person as a result of such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount in such proportion as is appropriate to reflect any relevant equitable considerations. There shall be, and each Covered Person shall be entitled to, a rebuttable presumption that such Covered Person acted in good faith.

(i) The obligations of the Company under this Section 10.02(c) shall be satisfied solely out of and to the extent of the Company’s assets, and no Covered Person shall have any personal liability on account thereof.

(ii) Given that certain Jointly Indemnifiable Claims may arise by reason of the service of a Covered Person to the Company and/or as a director, trustee, officer, partner, member, manager, employee, consultant, fiduciary or agent of other corporations, limited liability companies, partnerships, joint ventures, trusts, employee benefit plans or other enterprises controlled by the Company (collectively, the “Controlled Entities”), or by reason of any action alleged to have been taken or omitted in any such capacity, the Company acknowledges and agrees that the Company shall, and to the extent applicable shall cause the Controlled Entities to, be fully and primarily responsible for the payment to the Covered Person in respect of indemnification or

 

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advancement of all out-of-pocket costs of any type or nature whatsoever (including, without limitation, all attorneys’ fees and related disbursements) in each case, actually and reasonably incurred by or on behalf of a Covered Person in connection with either the investigation, defense or appeal of a claim, demand, action, suit or proceeding or establishing or enforcing a right to indemnification under this Agreement or otherwise incurred in connection with a claim that is indemnifiable hereunder (collectively, “Expenses”) in connection with any such Jointly Indemnifiable Claim, pursuant to and in accordance with (as applicable) the terms of (A) the Delaware Act, (B) this Agreement, (C) any other agreement between the Company or any Controlled Entity and the Covered Person pursuant to which the Covered Person is indemnified, (D) the Laws of the jurisdiction of incorporation or organization of any Controlled Entity and/or (E) the certificate of incorporation, certificate of organization, bylaws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership, certificate of qualification or other organizational or governing documents of any Controlled Entity ((A) through (E) collectively, the “Indemnification Sources”), irrespective of any right of recovery the Covered Person may have from the Indemnitee-Related Entities. Under no circumstance shall the Company or any Controlled Entity be entitled to any right of subrogation or contribution by the Indemnitee-Related Entities and no right of advancement or recovery the Covered Person may have from the Indemnitee-Related Entities shall reduce or otherwise alter the rights of the Covered Person or the obligations of the Company or any Controlled Entity under the Indemnification Sources. In the event that any of the Indemnitee-Related Entities shall make any payment to the Covered Person in respect of indemnification or advancement of Expenses with respect to any Jointly Indemnifiable Claim, (x) the Company shall, and to the extent applicable shall cause the Controlled Entities to, reimburse the Indemnitee-Related Entity making such payment to the extent of such payment promptly upon written demand from such Indemnitee-Related Entity, (y) to the extent not previously and fully reimbursed by the Company and/or any Controlled Entity pursuant to clause (x), the Indemnitee-Related Entity making such payment shall be subrogated to the extent of the outstanding balance of such payment to all of the rights of recovery of the Covered Person against the Company and/or any Controlled Entity, as applicable, and (z) the Covered Person shall execute all papers reasonably required and shall do all things that may be reasonably necessary to secure such rights, including the execution of such documents as may be necessary to enable the Indemnitee-Related Entities effectively to bring suit to enforce such rights. The Company and the Covered Person agree that each of the Indemnitee-Related Entities shall be third-party beneficiaries with respect to this Section 10.02(c), entitled to enforce this Section 10.02(c) as though each such Indemnitee-Related Entity were a party to this Agreement. The Company shall cause each of the Controlled Entities to perform the terms and obligations of this Section 10.02(c) as though each such Controlled Entity was the “Company” under this Agreement. For purposes of this Section 10.02(c), the following terms shall have the following meanings:

(A) The term “Indemnitee-Related Entities” means any corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise (other than the Company, any Controlled Entity or the insurer under and pursuant to an insurance policy of the Company or any Controlled Entity) from whom a Covered Person may be entitled to indemnification or advancement of Expenses with respect to which, in whole or in part, the Company or any Controlled Entity may also have an indemnification or advancement obligation.

 

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(B) The term “Jointly Indemnifiable Claims” shall be broadly construed and shall include, without limitation, any claim, demand, action, suit or proceeding for which the Covered Person shall be entitled to indemnification or advancement of Expenses from both (i) the Company and/or any Controlled Entity pursuant to the Indemnification Sources, on the one hand, and (ii) any Indemnitee-Related Entity pursuant to any other agreement between any Indemnitee-Related Entity and the Covered Person pursuant to which the Covered Person is indemnified, the Laws of the jurisdiction of incorporation or organization of any Indemnitee-Related Entity and/or the certificate of incorporation, certificate of organization, bylaws, partnership agreement, operating agreement, certificate of formation, certificate of limited partnership or other organizational or governing documents of any Indemnitee-Related Entity, on the other hand.

ARTICLE XI

DISSOLUTION AND TERMINATION

Section 11.01 Dissolution.

(a) The Company shall not be dissolved by the admission of Additional Members or Substitute Members pursuant to Section 3.02.

(b) No Member shall (i) resign from the Company prior to the dissolution and winding up of the Company except in connection with a Transfer of Units pursuant to the terms of this Agreement or (ii) take any action to dissolve, terminate or liquidate the Company or to require apportionment, appraisal or partition of the Company or any of its assets, or to file a bill for an accounting, except as specifically provided in this Agreement, and each Member, to the fullest extent permitted by Law, hereby waives any rights to take any such actions under Law, including any right to petition a court for judicial dissolution under Section 18-802 of the Delaware Act.

(c) The Company shall be dissolved and its business wound up only upon the earliest to occur of any one of the following events (each a “Dissolution Event”):

(i) the expiration of forty-five (45) days after the sale or other disposition of all or substantially all the assets of the Company;

(ii) upon the approval of the Managing Member; or

(iii) the entry of a decree of judicial dissolution under Section 18-802 of the Delaware Act, in contravention of this Agreement.

The Members hereby agree that the Company shall not dissolve prior to the occurrence of a Dissolution Event and that no Member shall seek a dissolution of the Company, under Section 18-802 of the Delaware Act or otherwise, other than based on the matters set forth in subsections (i), (ii) and (iii) above. If it is determined by a court of competent jurisdiction that the Company has dissolved prior to the occurrence of a Dissolution Event, the Members hereby agree to continue the business of the Company without a Liquidation.

 

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(d) The death, retirement, resignation, expulsion, bankruptcy, insolvency or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member of the Company shall not in and of itself cause dissolution of the Company.

Section 11.02 Winding Up of the Company.

(a) The Managing Member shall promptly notify the other Members of any Dissolution Event. Upon dissolution, the Company’s business shall be liquidated in an orderly manner. The Managing Member shall appoint a liquidating trustee to wind up the affairs of the Company pursuant to this Agreement. In performing its duties, the liquidating trustee is authorized to sell, distribute, exchange or otherwise dispose of the assets of the Company in accordance with the Delaware Act and in any reasonable manner that the liquidating trustee shall determine to be in the best interest of the Members.

(b) The proceeds of the liquidation of the Company shall be distributed in the following order and priority:

(i) first, to the creditors (including any Members or their respective Affiliates that are creditors) of the Company in satisfaction of all of the Company’s liabilities (whether by payment or by making reasonable provision for payment thereof, including the setting up of any reserves which are, in the judgment of the liquidating trustee, reasonably necessary therefor); and

(ii) second, to the Members in the same manner as distributions under Section 5.02(b).

(c) Distribution of Property. In the event it becomes necessary in connection with the Liquidation to make a distribution of Property in-kind, subject to the priority set forth in Section 11.02(b), the liquidating trustee shall have the right to compel each Member, treating each such Member in a substantially similar manner, to accept a distribution of any Property in-kind (with such Property, as a percentage of the total liquidating distributions to such Member), corresponding as nearly as possible to the distributions such Member would receive under Section 11.02(b) with such distribution being based upon the amount of cash that would be distributed to such Members if such Property were sold for an amount of cash equal to the fair market value of such Property, as determined by the liquidating trustee in good faith.

Section 11.03 Termination. The Company shall terminate when all of the assets of the Company, after payment of or reasonable provision for the payment of all debts and liabilities of the Company, shall have been distributed to the Members in the manner provided for in this Article XI, and the Certificate shall have been cancelled in the manner required by the Delaware Act.

Section 11.04 Survival. Termination, dissolution or Liquidation of the Company for any reason shall not release any party from any liability which at the time of such termination,

 

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dissolution or Liquidation already had accrued to any other party or which thereafter may accrue in respect to any act or omission prior to such termination, dissolution or Liquidation.

ARTICLE XII

MISCELLANEOUS

Section 12.01 Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such cost or expense.

Section 12.02 Further Assurances. Each Member agrees to execute, acknowledge, deliver, file and record such further certificates, amendments, instruments and documents, and to do all such other acts and things, as may be required by Law or as, in the reasonable judgment of the Managing Member, may be necessary or advisable to carry out the intent and purposes of this Agreement.

Section 12.03 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission and electronic mail (“e-mail”) transmission, so long as a receipt of such e-mail is requested and received) and shall be given to such party at the address, facsimile number or e-mail address specified for such party on the Member Schedule hereto or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding Business Day in the place of receipt.

Section 12.04 Binding Effect; Benefit; Assignment.

(a) The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

(b) Except as provided in Article VII, no Member may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the Managing Member.

Section 12.05 Jurisdiction.

(a) The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties hereby irrevocably consents to the jurisdiction

 

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of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 13.03 shall be deemed effective service of process on such party.

(b) EACH OF THE COMPANY AND THE MEMBERS HEREBY IRREVOCABLY DESIGNATES THE CORPORATION SERVICE COMPANY (IN SUCH CAPACITY, THE “PROCESS AGENT”), WITH AN OFFICE AT 251 LITTLE FALLS DRIVE, WILMINGTON, NEW CASTLE COUNTY, DELAWARE 19801, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, FOR AND ON ITS BEHALF SERVICE OF PROCESS IN SUCH JURISDICTION IN ANY LEGAL ACTION OR PROCEEDINGS WITH RESPECT TO THIS AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT, AND SUCH SERVICE SHALL BE DEEMED COMPLETE UPON DELIVERY THEREOF TO THE PROCESS AGENT; PROVIDED THAT IN THE CASE OF ANY SUCH SERVICE UPON THE PROCESS AGENT, THE PARTY EFFECTING SUCH SERVICE SHALL ALSO DELIVER A COPY THEREOF TO EACH OTHER SUCH PARTY IN THE MANNER PROVIDED IN SECTION 13.03 OF THIS AGREEMENT. EACH PARTY SHALL TAKE ALL SUCH ACTION AS MAY BE NECESSARY TO CONTINUE SAID APPOINTMENT IN FULL FORCE AND EFFECT OR TO APPOINT ANOTHER AGENT SO THAT SUCH PARTY SHALL AT ALL TIMES HAVE AN AGENT FOR SERVICE OF PROCESS FOR THE ABOVE PURPOSES IN WILMINGTON, DELAWARE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE LAW. EACH PARTY EXPRESSLY ACKNOWLEDGES THAT THE FOREGOING WAIVER IS INTENDED TO BE IRREVOCABLE UNDER THE LAWS OF THE STATE OF DELAWARE AND OF THE UNITED STATES OF AMERICA.

Section 12.06 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 12.07 Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication).

Section 12.08 Entire Agreement. This Agreement and the Transaction Documents constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. Nothing in this Agreement shall

 

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create any third-party beneficiary rights in favor of any Person or other party, except to the extent provided herein with respect to Indemnitee-Related Entities, each of whom are intended third-party beneficiaries of those provisions that specifically relate to them with the right to enforce such provisions as if they were a party hereto.

Section 12.09 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the fullest extent possible.

Section 12.10 Amendment.

(a) This Agreement can be amended at any time and from time to time by the Managing Member.

(b) No waiver of any provision or default under, nor consent to any exception to, the terms of this Agreement or any agreement contemplated hereby shall be effective unless in writing and signed by the party to be bound and then only to the specific purpose, extent and instance so provided.

Section 12.11 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of Delaware, without regard to the conflicts of law rules of such State that would result in the application of the Laws of any other State.

Section 12.12 No Presumption. With regard to each and every term and condition of this Agreement, the parties hereto understand and agree that the same have or has been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement.

Section 12.13 Attorney-In-Fact. Each Member hereby appoints the Company as such Member’s attorney-in-fact (with full power of substitution) and hereby authorizes the Company to the execute and deliver in such Member’s name and on its behalf any amendment of this Agreement or other document relating hereto in furtherance of such Member’s rights and obligations pursuant to this Agreement. Each Member hereby acknowledges and agrees that such proxy is coupled with an interest and shall not terminate upon any bankruptcy, dissolution, liquidation, death or incapacity of such Member.

Section 12.14 Immunity Waiver. Each Member, that is not an individual, acknowledges that it is a commercial entity and is a separate entity distinct from its ultimate shareholders and/or the executive organs of the government of any state and is capable of suing and being sued. The entry by each Member into this Agreement constitutes, and the exercise by each Member of its respective rights and performance of its respective obligations hereunder will

 

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constitute, private and commercial acts performed for private and commercial purposes that shall not be deemed as being entered into in the exercise of any public function.

Section 12.15 Specific Performance. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that, in the event of any such failure, an aggrieved Member or other party or third-party beneficiary specified in Section 12.08 will be irreparably damaged and will not have an adequate remedy at Law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which such party may be entitled at Law or in equity) to injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the Company or Members shall raise the defense that there is an adequate remedy at Law.

Section 12.16 Agreement of Certain Members. By accepting the benefits of this Agreement, each Member that is or was an employee or service provider of the Company or any of its Affiliates (or that holds Units Transferred from or on behalf of any such individual) agrees that, to the extent any Vesting Letter, award agreement, guaranteed compensation agreement, employment agreement or other similar agreement between the Company or any of its Affiliates, on the one hand, and such employee or service provider (or any Affiliate that holds Units Transferred from or on behalf of any such individual) on the other hand, provides for rights and obligations of the parties thereto to be triggered upon the termination for “Cause” (or other similar construct) of such employee or service provider, unless a definition of “Cause” is expressly set forth in such agreement without reference to a definition thereof in any limited liability company or operating agreement, then the definition of “Cause” applicable to such agreement shall be the definition thereof in the applicable predecessor limited liability company or operating agreement referred to in such Vesting Letter, award agreement, guaranteed compensation agreement, employment agreement or other similar agreement; provided, however, that, by accepting the benefits of this Agreement, each such Member further agrees and acknowledges that any such definition in any such predecessor limited liability company or operating agreement shall cease to be effective and shall be superseded at such time as the Managing Member adopts a new definition of “Cause” and provides thirty (30) days advance notice of such new definition to any such employee or service provider, in which event, such new definition shall become effective, but shall only apply to such employee or service provider with respect to matters first occurring after such effectiveness (whether or not discovered only after such effectiveness).

[signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Limited Liability Company Agreement to be duly executed as of the day and year first written above.

 

ENDEAVOR MANAGER, LLC

By:

 

/s/ Jason Lublin

Name:

 

Jason Lublin

Title:

 

Chief Financial Officer

ENDEAVOR GROUP HOLDINGS, INC.

By:

 

/s/ Jason Lublin

Name:

 

Jason Lublin

Title:

 

Chief Financial Officer

ENDEAVOR OPERATING COMPANY, LLC

By:

 

/s/ Jason Lublin

Name:

 

Jason Lublin

Title:

 

Chief Financial Officer

 

DRAGON HOLDCO, LLC
By:  

/s/ David Droga

Name:  
Title:  

 

[Signature Page to the Limited Liability Company Agreement of Endeavor Manager, LLC]


Schedule A – Member Schedule

 

  1.

Endeavor Group Holdings, Inc.

 

  2.

Dragon Holdco, LLC

 

  3.

Employee Members


Schedule B – Certain Members

 

1.

Chris Jeffries

 

2.

Meredith Wechter

 

3.

Simon Faber

Exhibit 10.8

ENDEAVOR GROUP HOLDINGS, INC.

COMMON STOCK PURCHASE AGREEMENT

February 15, 2021


TABLE OF CONTENTS

 

               Page
1.    Purchase and Sale of Stock    1
   1.1    Sale and Issuance of Common Stock    1
   1.2    Closing    2
2.    Representations and Warranties of the Company    2
   2.1    Organization, Good Standing and Qualification    2
   2.2    Authorization    2
   2.3    Valid Issuance of Common Stock    2
   2.4    Compliance with Other Instruments    2
   2.5    Description of Capital Stock    3
   2.6    Registration Statement    3
   2.7    Brokers or Finders    4
   2.8    Private Placement    4
   2.9    No Other Company Representations or Warranties    4
3.    Representations and Warranties of the Selling Stockholders    4
   3.1    Title to Shares    4
   3.2    Authorization    5
   3.3    Compliance with Other Instruments    5
   3.4    Brokers or Finders    5
   3.5    Sophisticated Selling Stockholder    5
   3.6    Taxes    5
   3.7    No Other Selling Stockholder Representations or Warranties    6
4.    Representations and Warranties of the Investors    6
   4.1    Organization, Good Standing and Qualification    6
   4.2    Authorization    6
   4.3    Purchase Entirely for Own Account    6
   4.4    Disclosure of Information    6
   4.5    Sophisticated Investor    7
   4.6    Accredited Investor    7
   4.7    Brokers or Finders    7
   4.8    Restricted Securities    7
   4.9    Legends    7
5.    Covenants    8
   5.1    Regulatory Approvals    8
   5.2    Registration Rights    10
   5.3    Most Favored Nation    12
   5.4    Private Placement    13

 

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6.    Conditions of the Investors’ Obligations at Closing    13
   6.1    Representations and Warranties    13
   6.2    Public Offering Shares    13
   6.3    Performance by the Sellers    13
   6.4    Absence of Injunctions, Decrees, Etc.    14
   6.5    Governmental Approvals    14
   6.6    Absence of Material Adverse Effect    14
   6.7    NYSE Listing of Class A Common Stock    15
   6.8    Pricing Prospectus    15
   6.9    Company Structure    15
7.    Conditions of the Sellers’ Obligations at Closing    15
   7.1    Representations and Warranties    15
   7.2    Performance by Such Investor    15
   7.3    Absence of Injunctions, Decrees, Etc.    16
   7.4    Governmental Approvals    16
8.    Indemnification    16
9.    Termination    18
10.    Miscellaneous    18
   10.1    Publicity    18
   10.2    Survival    18
   10.3    Successors and Assigns    18
   10.4    Governing Law    19
   10.5    Counterparts    19
   10.6    Notices    19
   10.7    Amendments and Waivers    20
   10.8    Severability    20
   10.9    Documentation    20
   10.10    Corporate Securities Law    20
   10.11    Entire Agreement    20
   10.12    Brokers or Finders    20
   10.13    Specific Performance    21
   10.14    Independent Nature of Investors’ Obligations and Rights    21
   10.15    No Recourse    21

 

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ENDEAVOR GROUP HOLDINGS, INC.

COMMON STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of February 15, 2021, 2021, by and among Endeavor Group Holdings, Inc., a Delaware corporation (the “Company”), the stockholders of the Company who have executed a Joinder (as defined below) as a Selling Stockholder after the date hereof (the “Selling Stockholders” and, together with the Company, the “Sellers”), the undersigned investors and any other investors who have executed a Joinder as an Investor after the date hereof (each an “Investor” and collectively, the “Investors”).

THE PARTIES HEREBY AGREE AS FOLLOWS:

1.    Purchase and Sale of Stock.

1.1    Sale and Issuance of Common Stock. Subject to the terms and conditions of this Agreement, each Investor agrees to purchase from the Company and the Company agrees to sell and issue to each Investor the number and class of shares (the “Company Shares”) of Common Stock of the Company (the “Common Stock”) equal to the aggregate purchase price set forth opposite such Investor’s name on Schedule 1 divided by the Private Placement Price (as defined below) in exchange for a cash payment equal to the aggregate purchase price set forth opposite such Investors’ name on Schedule 1 (which Schedule 1 may be amended solely to reflect (a) subsequent commitments to purchase Shares (as defined below) by Investors who execute a joinder to this Agreement in the form attached hereto as Exhibit A (each, a “Joinder”) after the date hereof or (b) assignments permitted under Section 10.3) at a price per share of $24.00 (as adjusted for stock splits, combinations and the like occurring after the date hereof and not otherwise contemplated by the applicable parties in connection with the transactions contemplated hereby) (the “Private Placement Price”); provided, that at the option of the Company, the Investors designated by the Company shall purchase from one or more Selling Stockholders that are Affiliates of Kohlberg Kravis Roberts & Co. L.P. or MSD Partners, L.P. that have signed a Joinder a number of Secondary Shares set forth on such Selling Stockholders’ Joinders (as adjusted for stock splits, combinations and the like occurring after the date hereof and not otherwise contemplated by the applicable parties in connection with the transactions contemplated hereby), and in such event, the number of Company Shares that such Investor is required to acquire from the Company hereunder shall be reduced by such number of Secondary Shares (the “Secondary Sale Election”). For purposes hereof, “Secondary Shares” shall mean, with respect to any Selling Stockholder, the aggregate number of shares of Common Stock to be sold by such Selling Stockholder hereunder set forth on such Selling Stockholder’s Joinder (if any) (as adjusted for stock splits, combinations and the like occurring after the date hereof and not otherwise contemplated by the applicable parties in connection with the transactions contemplated hereby) and “Shares” shall mean the Company Shares and Secondary Shares. In addition, for purposes hereof, “Qualified IPO” shall mean the issuance and sale of shares of the Common Stock by the Company, pursuant to an Underwriting Agreement to be entered into by and among the Company and certain underwriters (the “Underwriters”), in connection with the Company’s initial public offering pursuant to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission (the “SEC), as amended (the “Registration Statement”) and/or any related registration statements (the “Underwriting Agreement”).

 

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1.2    Closing. The purchase and sale of the Shares shall take place immediately subsequent to the closing of the Qualified IPO (the “Closing”). At the Closing, each Investor shall make payment of the purchase price of the Shares being purchased by such Investor by wire transfer in immediately available funds to the accounts specified by the Company and, in the event of a Secondary Sale Election, each Selling Stockholder, respectively, against delivery to each Investor of the Shares registered in the name of such Investor, which Shares shall be uncertificated shares.

2.    Representations and Warranties of the Company. The Company hereby represents and warrants to each Investor that as of the date hereof and as of the date of the Closing (unless any representation is made as of a specified date, in which case, as of such date):

2.1    Organization, Good Standing and Qualification.

(a)    The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted.

(b)    The Company is duly qualified to transact business and is in good standing in each jurisdiction in which it is required to be so qualified or in good standing, except where the failure to so qualify or be in good standing would not be material and adverse to the Company.

2.2    Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of the Company under this Agreement, and for the authorization, issuance, sale and delivery of the Shares being sold hereunder has been taken, and this Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

2.3    Valid Issuance of Common Stock. The Shares being purchased by the Investors hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer other than restrictions on transfer under applicable state and federal securities laws or as contemplated hereby.

2.4    Compliance with Other Instruments.

(a)    The Company is not in violation or default of any provision of its Certificate of Incorporation or Bylaws.

(b)    Except as would not be material to the Company, neither the Company nor any of its subsidiaries is in violation or default of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, or of any provision of any federal or state statute, rule or regulation applicable to the Company.

 

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(c)    The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated by this Agreement will not (i) result in any material violation or default or be in conflict with or constitute, with or without the passage of time and giving of notice, either a material default under any such provision, instrument, judgment, order, writ, decree or contract or an event that results in the creation of any material lien, charge or encumbrance upon any assets of the Company or any of its subsidiaries or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company or any of its subsidiaries, their respective businesses or operations or any of their respective assets or properties, (ii) result in any violation or default of its Certificate of Incorporation or Bylaws, or (iii) result in any material violation of any law, statute, rule or regulation, or of any judgment or order of any court, arbitrator or governmental or regulatory authority, in each case applicable to the Company or any of its subsidiaries.

(d)    No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company or any of its subsidiaries is required in connection with the consummation of the transactions contemplated by this Agreement, except (i) as required under the HSR Act (as defined below) and (ii) the filings required by applicable state “blue sky” securities laws, rules and regulations and the declaration of the effectiveness of the Registration Statement by the SEC.

2.5    Description of Capital Stock. As of the date of the Closing, the statements set forth in the Pricing Prospectus (as defined in the Underwriting Agreement) and Prospectus (as defined in the Underwriting Agreement) under the caption “Description of Capital Stock,” insofar as they purport to constitute a summary of the terms of the Company’s capital stock, will be accurate, complete and fair in all material respects.

2.6    Registration Statement. To the Company’s knowledge, the Registration Statement when confidentially submitted or filed (as applicable) with the SEC and any amendment thereto, including any information deemed to be included therein pursuant to the rules and regulations of the SEC promulgated under the Securities Act of 1933, as amended (the “Securities Act”), complied (or, in the case of confidential submissions or filings made after the date of this Agreement, will comply) as of its filing date in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder, and did not (or, in the case of confidential submissions or filings made after the date hereof, will not) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date it is declared effective by the SEC, the Registration Statement, as so amended, and any related registration statements, will comply in all material respects with the requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder, and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Any preliminary prospectus included in the Registration Statement or any amendment thereto, any free writing prospectus related to the Registration Statement and any final prospectus related to the Registration Statement filed pursuant to Rule 424 promulgated under the Securities Act, in each case as of its date, will comply in all material respects with the requirements of the Securities Act

 

3


and the rules and regulations promulgated thereunder, and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

2.7    Brokers or Finders. The Company has not engaged any brokers, finders or agents such that the Investors will incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the sale of the Shares contemplated by this Agreement.

2.8    Private Placement. Assuming the accuracy of the representations, warranties and covenants of the Investors set forth in Section 4 of this Agreement, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Investors under this Agreement.

2.9    No Other Company Representations or Warranties. Except for the representations and warranties made by the Company in this Section 2, neither the Company, any of its Affiliates nor any other Person acting on its behalf makes any other express or implied representation or warranty in connection with or related to this Agreement or the transactions contemplated hereby, including with respect to its capital stock, the Company or any of its subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, and each Investor acknowledges and agrees to the foregoing. In entering into this Agreement, each Investor has relied solely on its own investigation and analysis and the representations of the Company expressly set forth in this Section 2 and no other representations or warranties of the Company, any of their respective Affiliates or any other Person, whether express or implied (other than, for the avoidance of doubt, the representations and warranties of the Selling Stockholders set forth in Section 3 (if applicable)). For purposes of this Agreement, (a) the term “Person” means an individual, corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization or any other entity, including a Governmental Entity (as defined below) and (b) the term “Affiliates” means any individual or entity that directly or indirectly controls, is controlled by, or is under common control with the individual or entity in question.

3.    Representations and Warranties of the Selling Stockholders. In the event of a Secondary Sale Election, each Selling Stockholder, severally and not jointly, hereby represents and warrants to each Investor who is purchasing Secondary Shares and the Company that as of the date such Selling Stockholder executes a Joinder and as of the date of the Closing (unless any representation is made as of a specified date, in which case, as of such date):

3.1    Title to Shares. Immediately prior to the Closing, each Selling Stockholder will be the owner, beneficially and of record, of all the Shares to be sold by such Selling Stockholder under this Agreement and immediately prior to the Closing, will have good and marketable right, title and interest in and to all the Shares, free and clear of all liens, encumbrances, security agreements, claims, charges and restrictions, including, without limitation, any right of first refusal, preemptive, tag-along or other comparable obligations or restrictions. Upon payment for the Shares in accordance with this Agreement, each Selling Stockholder will convey the Shares to the Investors, and the Investors shall acquire good and marketable title to such Shares, free and clear of all liens, pledges, security interests, charges, contractual obligations, transfer restrictions, claims or encumbrances of any kind (other than any of the foregoing created by any Investors or imposed by applicable securities laws).

 

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3.2    Authorization. All corporate, limited liability company or other requisite action on the part of each Selling Stockholder, its officers, directors, managers or equityholders, as applicable, necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of such Selling Stockholder under this Agreement and the sale and delivery of the Shares being sold hereunder has been taken, and this Agreement constitutes the valid and legally binding obligation of each Selling Stockholder, enforceable against each Selling Stockholder in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

3.3    Compliance with Other Instruments. The sale and delivery of the Shares by each Selling Stockholder will not violate:

(a)    such Selling Stockholder’s Certificate of Incorporation and Bylaws, as they exist at the time of the Closing; or

(b)    any lease, or material agreement or contract to which such Selling Stockholder is a party or by which it is bound.

3.4    Brokers or Finders. No Selling Stockholder has engaged any brokers, finders or agents such that the Investors will incur, directly or indirectly, as a result of any action taken by any Selling Stockholder, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the sale of the Shares contemplated by this Agreement.

3.5    Sophisticated Selling Stockholder. Each Selling Stockholder (a) is a sophisticated entity familiar with transactions similar to those contemplated by this Agreement, (b) has adequate information concerning the business and financial condition of the Company to make an informed decision regarding the sale of the Shares, (c) has negotiated this Agreement on an arm’s-length basis and has had an opportunity to consult with its legal, tax and financial advisors concerning this Agreement and its subject matter and (d) has independently and without reliance upon the Investors or the Company, and based on such information and the advice of such advisors as each Selling Stockholder has deemed appropriate, made its own analysis and decision to enter into this Agreement. Each Selling Stockholder acknowledges that neither the Company nor the Investors or any of their respective Affiliates is acting as a fiduciary or financial or investment adviser to such Selling Stockholder, and none of such persons has given such Selling Stockholder any investment advice, opinion or other information on whether the sale of the Shares is prudent. Each Selling Stockholder understands that the Investors will rely on the accuracy and truth of the foregoing representations, and each Selling Stockholder hereby consents to such reliance.

3.6    Taxes. Each Selling Stockholder agrees and understands that such Selling Stockholder alone shall be responsible for the payment of all U.S. local, state and/or federal income and transfer taxes imposed in connection with the sale of the Secondary Shares of such Selling

 

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Stockholder and the consideration received by such Selling Stockholder pursuant to this Agreement, and any penalties or assessments thereon. Each Selling Stockholder agrees and acknowledges that neither the Company nor any of its Affiliates has provided any tax advice or representation or warranty relating to tax matters or the tax consequences of the transactions contemplated by this Agreement, and that such Selling Stockholder is relying solely on any tax advice provided by its own tax advisor(s).

3.7    No Other Selling Stockholder Representations or Warranties. Except for the representations and warranties made by the Selling Stockholders in this Section 3, neither the Selling Stockholders, any of their respective Affiliates nor any other Person acting on such Selling Stockholders’ behalf makes any other express or implied representation or warranty in connection with or related to this Agreement or the transactions contemplated hereby, including with respect to the Company’s capital stock, the Company or any of its subsidiaries or their respective businesses, operations, properties, assets, liabilities, condition (financial or otherwise) or prospects, and each Investor acknowledges and agrees to the foregoing. In entering into this Agreement, such Investor has relied solely on its own investigation and analysis and the representations of the Selling Stockholders expressly set forth in this Section 3 and no other representations or warranties of any Selling Stockholder, any of their respective Affiliates or any other Person, whether express or implied (other than, for the avoidance of doubt, the representations and warranties of the Company set forth in Section 2).

4.    Representations and Warranties of the Investors. Each Investor, severally and not jointly, hereby represents and warrants that as of the date hereof and as of the date of the Closing:

4.1    Organization, Good Standing and Qualification. Such Investor is a limited liability company, corporation, partnership or other legal entity, as applicable, duly organized, validly existing and in good standing under the laws of the state of its organization.

4.2    Authorization. Such Investor has full power and authority to enter into this Agreement, and such agreement constitutes a valid and legally binding obligation of such Investor, enforceable in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

4.3    Purchase Entirely for Own Account. By such Investor’s execution of this Agreement, such Investor hereby confirms, that the Shares to be received by such Investor will be acquired for investment for such Investor’s own account, not as a nominee or agent, and not with a view to the distribution of any part thereof, and that such Investor has no present intention of selling, granting any participation in, or otherwise distributing the same, except as permitted by applicable federal or state securities laws. By executing this Agreement, such Investor further represents that such Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Shares.

4.4    Disclosure of Information. Such Investor believes it has received all the information it considers necessary or appropriate for deciding whether to purchase the Shares.

 

6


Such Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 2 of this Agreement or of the Selling Stockholders in Section 3 of this Agreement or the right of such Investor to rely thereon.

4.5    Sophisticated Investor. Such Investor (a) is a sophisticated entity familiar with transactions similar to those contemplated by this Agreement, (b) can bear the economic risk of its investment, (c) has adequate information concerning the business and financial condition of the Company to make an informed decision regarding the purchase of the Shares, (d) has negotiated this Agreement on an arm’s-length basis and has had an opportunity to consult with its legal, tax and financial advisors concerning this Agreement and its subject matter and (e) has independently and without reliance upon the Sellers, and based on such information and the advice of such advisors as such Investor has deemed appropriate, made its own analysis and decision to enter into this Agreement. Such Investor acknowledges that none of the Sellers or any of their respective Affiliates (i) is acting as a fiduciary or financial or investment adviser to such Investor, and none of such persons has given such Investor any investment advice, opinion or other information on whether the purchase of the Shares is prudent or (ii) has provided to Investor any tax advice or representation or warranty relating to tax matters or the tax consequences of the transactions contemplated by this Agreement. Such Investor also represents it has not been organized for the purpose of acquiring the Shares. Such Investor understands that the Sellers will rely on the accuracy and truth of the foregoing representations, and such Investor hereby consents to such reliance.

4.6    Accredited Investor. Such Investor is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the SEC under the Securities Act, as presently in effect.

4.7    Brokers or Finders. Such Investor has not engaged any brokers, finders or agents such that the Company will incur, directly or indirectly, as a result of any action taken by such Investor, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the sale of the Shares contemplated by this Agreement.

4.8    Restricted Securities. Such Investor understands that the Shares will be characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act, only in certain limited circumstances. In this connection, such Investor represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

4.9    Legends. Such Investor understands that the Shares may bear one or all of the following legends:

(a)    “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE

 

7


ACT”), OR UNDER THE SECURITIES LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, APPLICABLE STATE SECURITIES LAWS (PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM). INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.”

(b)    Any legend required by applicable state “blue sky” securities laws, rules and regulations.

In the event that all the Shares held by an Investor are eligible to be transferred in a single transaction without volume limitation or other restrictions on transfer in accordance with Rule 144 under the Securities Act, the Company shall (x) instruct the Company’s transfer agent to issue new uncertificated (book-entry) instruments representing such Investor’s Shares, which shall not contain such portion of the above legend that is no longer applicable, (y) take all actions with the Company’s transfer agent reasonably requested by such Investor to permit such un-legended Shares to be deposited into the account specified by such Investor to the Company in writing, and (z) instruct the Company’s transfer agent to cause such Shares to be assigned the same CUSIP as the shares of Common Stock that are then traded on the principal stock exchange on which the shares of Common Stock are then listed; provided that, (1) such Investor surrenders to the Company the previously issued uncertificated (book-entry) instruments representing the Shares and (2) such Investor delivers a customary representation letter, opinion of counsel and such other documentation to the extent requested by the Company’s transfer agent.

5.    Covenants.

5.1    Regulatory Approvals

(a)    Subject to the terms hereof, including Section 5.1(b), the parties hereto shall, and shall cause each of their respective subsidiaries to, cooperate and to use their respective commercially reasonable efforts (i) to make any appropriate filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”) with respect to the transactions contemplated by this Agreement promptly (and in any event within five (5) business days following the date of this Agreement), to cause any waiting period under the HSR Act (and any extension thereof) to expire or be terminated, and to respond as promptly as reasonably practicable to any requests from any Governmental Entities for information pursuant to the HSR Act and (ii) to obtain, file with or deliver to, as applicable, any other consents or approvals of any Governmental Entities necessary, proper or advisable to consummate the transactions contemplated by this Agreement, to cause any other waiting or review periods required for the consummations contemplated by this Agreement to expire or be terminated, and to respond as promptly as reasonably practicable to any requests from any such Governmental Entities for information required in connection with any of the foregoing. Each party hereto shall (A) give the other party prompt notice of any material request, inquiry, objection, charge or other Action (as

 

8


defined below), actual or threatened, by or before any Governmental Entity with respect to the transactions contemplated by this Agreement, (B) keep the other party informed as to the status of any such material request, inquiry, objection, charge or other action, suit, proceeding, claim, arbitration or investigation (collectively, “Action”), (C) promptly inform the other party of any material communication to or from any Governmental Entity regarding the transactions contemplated by this Agreement and (D) permit the other party to review in advance, and consider in good faith any comments made by the other party in relation to, any proposed substantive communication by such party to any Governmental Entity relating to such matters. The parties hereto will (x) use their commercially reasonable efforts to resolve any such request, inquiry, objection, charge or other action so as to permit consummation of the transactions contemplated by this Agreement, and (y) consult and cooperate with one another, and consider in good faith the views of one another, in connection with, and provide to the other party in advance, any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in connection with the transactions contemplated by this Agreement. Such cooperation shall include consulting with each other in advance of any meeting or substantive communication with any Governmental Entity and, to the extent permitted by law or such applicable Governmental Entity, providing each other the opportunity to participate in such meetings and other substantive conversations.

(b)    Notwithstanding anything to the contrary in this Agreement, none of the parties hereto or any of their respective subsidiaries shall be required to (i) respond to a Second Request, (ii) contest, administratively or in court, any ruling, order or other action of the Federal Trade Commission or the United States Department of Justice or any third party respecting the transactions contemplated hereby, or (iii) become subject to, consent to, or offer or agree to, or otherwise take any action with respect to, any requirement, condition, limitation, understanding, agreement or order to (A) sell, license, assign, transfer, divest, hold separate or otherwise dispose of any assets, business or portion of the business of such party, or any of their respective subsidiaries, (B) conduct, restrict, operate, invest or otherwise change the assets, business or portion of the business of such party or any of their respective subsidiaries in any manner or (C) impose any restriction, requirement or limitation on the operation of the business or portion of the business of the such party or any of their respective subsidiaries.

For purposes of this Agreement, (i) “Governmental Entity” means any foreign or domestic governmental authority, including any supranational, national, federal, territorial, state, commonwealth, province, territory, county, municipality, district, local governmental jurisdiction of any nature or any other governmental, self-regulatory or quasi-governmental authority of any nature (including any governmental department, division, agency, bureau, office, branch, court, arbitrator, commission, tribunal or other governmental instrumentality and any national or international stock exchange) or any political or other subdivision or part of any of the foregoing and (ii) “Second Request” means a request for additional information or documentary material pursuant to 15 U.S.C. § 18a(e)(1).

Notwithstanding anything to the contrary, nothing in this Section 5.1 shall be deemed to require the Company or any of its subsidiaries to (1) delay, postpone, or otherwise alter the timing for or other plans or activities relating to the Qualified IPO or (2) file, or take or agree to take any action that would require the filing of, any amendment to its Registration Statement with the SEC.

 

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Any filing fee under the HSR Act pursuant to this Section 5.1 shall be borne by the Company.

5.2    Registration Rights.

(a)    The Company shall file within 60 calendar days after the Closing (the “Filing Deadline”), and use commercially reasonable efforts to cause to be declared effective as soon as reasonably practicable thereafter, a registration statement on Form S-1 (the “Resale Registration Statement”) registering the resale of all of the shares of the Company’s Class A Common Stock issued to the Investors pursuant to this Agreement and any shares of Class A Common Stock issued in exchange for shares of Class B Common Stock issued to the Investors hereunder pursuant to the Amended and Restated Certificate of Incorporation of the Company (the “Class A Shares”) (the “Effectiveness Deadline”); provided, that the Company’s obligations to include an Investor’s Class A Shares in the Resale Registration Statement are contingent upon such Investor furnishing in writing to the Company such information regarding such Investor, the securities of the Company held by such Investor and the intended method of disposition of the Class A Shares held by such Investor (which shall be limited to non-underwritten public offerings) as shall be reasonably requested by the Company to effect the registration of the Class A Shares held by such Investor, and Investor shall execute such documents in connection with such registration as the Company may reasonably request. The Company agrees to use commercially reasonable efforts to keep such Resale Registration Statement, or another shelf registration statement that includes the Class A Shares, to remain effective until the earliest of (x) two years following the date of effectiveness of the Resale Registration Statement, (y) the date on which the Investors cease to hold any Class A Shares issued pursuant to this Agreement and (z) the first date on which the Investors are able to sell all of their Class A Shares in a 90-day period without registration under Rule 144 of the Securities Act or any successor rule promulgated under the Securities Act (but with no volume or other restrictions or limitations including as to manner or timing of sale); provided, that the Company shall be entitled to delay or postpone the effectiveness of the Resale Registration Statement, and from time to time require the Investors not to sell under the Resale Registration Statement or suspend effectiveness thereof, if it determines that in order for the Resale Registration Statement not to contain a material misstatement or omission, (i) the negotiation or consummation of a transaction by the Company or its subsidiaries is pending or another event has occurred, which negotiation, consummation or (ii) other event the Company’s board of directors reasonably and in good faith believes would require additional disclosure by the Company in the Resale Registration Statement of material information that the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Resale Registration Statement would be expected, in the reasonable determination of the Company’s board of directors, to cause the Resale Registration Statement to fail to comply with applicable disclosure requirements (such circumstance, a “Suspension Event”); provided, however, that the Company may not delay or suspend the Resale Registration Statement on more than three occasions or for more than 90 consecutive calendar days, or more than 120 calendar days, in each case during any 12-month period. Upon receipt of written notice from the Company (which notice shall not contain any material non-public information regarding the Company) of the happening of any Suspension Event during the period that the Resale Registration Statement is effective or if as a result of a Suspension Event the Resale Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they

 

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were made (in the case of the prospectus) not misleading, each Investor hereby agrees that (i) it will immediately discontinue offers and sales of the Class A Shares under the Resale Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) until such Investor receives copies of a supplemental or amended prospectus (which the Company agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales, and (ii) it will maintain the confidentiality of any information included in such written notice delivered by the Company unless otherwise required by law or subpoena. If so directed by the Company, each Investor will deliver to the Company or, in such Investor’s sole discretion destroy, all copies of the prospectus covering the Class A Shares in such Investor’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Class A Shares shall not apply (A) to the extent such Investor is required to retain a copy of such prospectus (I) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (II) in accordance with a bona fide pre-existing document retention policy or (B) to copies stored electronically on archival servers as a result of automatic data back-up. The Investors shall not in connection with the foregoing be required to execute any lock-up or similar agreement or otherwise be subject to any contractual restriction on the ability to transfer the Class A Shares. Any failure by Company to file the Resale Registration Statement by the Filing Deadline or to effect such Resale Registration Statement by the Effectiveness Deadline shall not otherwise relieve the Company of its obligations to file or effect the Resale Registration Statement as set forth in this Section 5.2.

(b)    The Company shall advise the Investors as expeditiously as possible and within five business days after:

 

  (i)

a Resale Registration Statement or any amendment thereto has been filed with the SEC and when such Resale Registration Statement or any post-effective amendment thereto has become effective;

 

  (ii)

any request by the SEC for amendments or supplements to any Resale Registration Statement or the prospectus included therein or for additional information;

 

  (iii)

the issuance by the SEC of any stop order suspending the effectiveness of any Resale Registration Statement or the initiation of any proceedings for such purpose;

 

  (iv)

the receipt by the Company of any notification with respect to the suspension of the qualification of the Class A Shares included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

 

  (v)

subject to the provisions in this Agreement, the occurrence of any event that requires the making of any changes in any Resale Registration Statement or prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.

 

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Notwithstanding anything to the contrary set forth herein, the Company shall not, when so advising the Investors of such events, provide the Investors with any material, nonpublic information regarding the Company other than to the extent that providing notice to Investor of the occurrence of the events listed in (i) through (v) above constitutes material, nonpublic information regarding the Company.

(c)    The Company shall use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Resale Registration Statement as soon as reasonably practicable.

(d)    Upon the occurrence of any Suspension Event, except for such times as the Company is permitted hereunder to suspend, and has suspended, the use of a prospectus forming part of a Resale Registration Statement as contemplated by this Agreement, the Company shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective amendment to such Resale Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Class A Shares included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(e)    The Company shall use its commercially reasonable efforts to cause all Class A Shares to be listed on each securities exchange or market, if any, on which Class A Shares of the Company’s Common Stock have been listed.

(f)    The Company shall use its commercially reasonable efforts to allow the Investor to review disclosure regarding such Investor in the Resale Registration Statement; and

(g)    The Company shall otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Investor, consistent with the terms of this Agreement, in connection with the registration of the Class A Shares.

5.3    Most Favored Nation. Notwithstanding anything herein to the contrary, to the extent that any investor enters into any definitive agreement or arrangement with the Company for the purchase and sale of shares of Common Stock from the Company in a private placement transaction prior to or substantially concurrent with the closing of the Qualified IPO (excluding, for the avoidance of doubt, any agreement or arrangement involving the conversion, exchange, reclassification or recapitalization of or dividend or distribution in respect of equity interests of the Company or any of its subsidiaries (including UFC Parent (as defined below)) held by an investor prior to closing of the Qualified IPO) on terms and conditions that are more favorable to such other investor than those set forth in this Agreement are to the Investors, the Company will promptly advise the Investors of such fact and provide a copy of drafts and the execution version of such definitive agreement or arrangement, and each Investor will have the right, exercisable by no later than 5:00 p.m., Pacific time, on the earlier of (a) the third business day after a copy of the execution version of such definitive agreement or arrangement is provided to such Investor, and (b) if the execution version of such definitive agreement or arrangement is signed and provided to such Investor within three business days prior to the expected launch of the roadshow for the IPO, the day that is one full business day after a copy of such execution version is provided to such Investor,

 

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to purchase the Shares on all of the terms and conditions set forth in such other definitive agreement or applicable to such arrangement, as the case may be, rather than the terms and conditions set forth in this Agreement. Notwithstanding anything to the contrary contained herein, the foregoing shall not apply to (i) any provision that is solely related to any regulation imposed on, or tax provisions applicable to, an investor that is party to such agreement (unless such investor is subject to the same or similar regulations or requirements), (ii) any provision that is personal to such investor solely based on the place of organization or headquarters, or organizational form of (or regulations applicable to) such investor (unless such investor has the same or similar place of organization or headquarters, or organizational form, or regulations applicable to the investor), or (iii) any provision that relates to commercial rights that primarily involve or are ancillary to the provision of services, the purchase or sale of goods or other assets, or the grant or receipt of rights under a license.

5.4    Private Placement. None of the Company, any Selling Stockholder, and any agent acting on their respective behalf will take any action hereafter that would require registration under the Securities Act for the offer and sale of the Shares by the Company and the Selling Stockholders to the Investors pursuant to this Agreement.

6.    Conditions of the Investors Obligations at Closing. The obligations of each Investor under Section 1.1 of this Agreement are subject to the fulfillment, or waiver by such Investor, on or before the Closing of each of the following conditions.

6.1    Representations and Warranties. Each of the representations and warranties of the Company that are set forth in Section 2.1(a), Section 2.2, Section 2.3, Section 2.4(a), Section 2.5, Section 2.6, Section 2.7 and Section 2.8, and of the Selling Stockholders that are set forth in Section 3 other than the representations and warranties of the Selling Stockholders set forth in Section 3.3(b), shall be true and correct on and as of the Closing (except for those representations and warranties that address matters only as of a particular date (which shall remain true and correct as of such particular date)). Each of the other representations and warranties of the Company that are set forth in Section 2 and the representations and warranties of the Selling Stockholders set forth in Section 3.3(b) shall be true and correct on and as of the Closing, except as would not reasonably be expected to have a material adverse effect on the Company (except for those representations and warranties that address matters only as of a particular date (which shall be true and correct as of such particular date, except as would not reasonably be expected to have a material adverse effect on the Company)).

6.2    Public Offering Shares. The Underwriters shall have purchased, immediately prior to the purchase of the Shares by such Investor hereunder, the Firm Shares (as defined in the Underwriting Agreement) pursuant to the Registration Statement and Underwriting Agreement.

6.3    Performance by the Sellers. The Sellers shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by the Company and, following a Secondary Sale Election, each Selling Stockholder, as applicable, on or before the Closing.

 

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6.4    Absence of Injunctions, Decrees, Etc. No Governmental Entity of competent jurisdiction in the United States shall have issued an order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept, command, directive, consent, approval, award, judgment, injunction, or other similar determination or finding (each, an “Order”) restraining or enjoining the transactions contemplated by this Agreement and there shall not have been enacted or made applicable any law that makes the transactions contemplated by this Agreement illegal or otherwise prohibited.

6.5    Governmental Approvals. Such Investor and each Seller, as applicable, shall have timely obtained all approvals required under the HSR Act. All applicable waiting periods with respect to such Investor contemplated by the HSR Act shall have expired or been terminated.

6.6    Absence of Material Adverse Effect. Since the date of this Agreement to the pricing of the Qualified IPO, there shall not have been the occurrence of a Material Adverse Effect (as defined below). The Company shall have delivered to each Investor a certificate, dated as of immediately prior to the pricing of the Qualified IPO, signed by a duly authorized officer of the Company, certifying to such effect. No Investor shall be entitled to assert a failure to satisfy the condition set forth in this Section 6.6 as a basis not to perform its obligations under Section 1.1 of this Agreement after the pricing of the Qualified IPO; provided that the certifications contained in such certificate shall be deemed to be a representation and warranty made by the Company as of pricing of the Qualified IPO which shall survive the Closing, the consummation of the transactions contemplated hereby and any termination of this Agreement, and each Investor shall be entitled to any and all remedies (whether pursuant to this Agreement, at law or otherwise) available to such Investor for any breach of representation or warranty. As used herein, a “Material Adverse Effect” means any event, circumstance, change, development, effect or occurrence (collectively “Effect”) that, individually or in the aggregate with all other Effects, (a) has or would reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), assets, liabilities or operations of the Company or (b) would prevent, materially delay or materially impede the performance by the Company of its obligations under this Agreement or the consummation of the Qualified IPO; provided, however, that none of the following shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether there has been or will be, a Material Adverse Effect: (i) any change or proposed change in or change in the interpretation of any law (including any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester, workplace safety or similar law promulgated by any Governmental Entity in connection with or in response to the COVID-19 pandemic) or accounting principles; (ii) events or conditions generally affecting the industries or geographies in which the Company operates; (iii) any downturn in general economic conditions, including changes in the credit, debt, securities, financial or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets); (iv) acts of war, sabotage, civil unrest, terrorism, epidemics, pandemics or disease outbreaks (including the COVID-19 pandemic), or any escalation or worsening of any such acts of war, sabotage, civil unrest, terrorism epidemics, pandemics or disease outbreaks, or changes in global, national, regional, state or local political or social conditions; (v) any hurricane, tornado, flood, earthquake, natural disaster, or other acts of God; or (vi) any failure in and of itself to meet any projections, forecasts, guidance, estimates, milestones, budgets or financial or operating predictions of revenue, earnings, cash flow or cash position,

 

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provided that this clause (vi) shall not prevent a determination that any Effect underlying such failure has resulted in a Material Adverse Effect, except in the cases of clauses (i) through (v), to the extent that the Company is disproportionately affected thereby as compared with other participants in the industries or geographies in which the Company operates.

6.7    NYSE Listing of Class A Common Stock. Prior to the Closing, the shares of Class A Common Stock to be sold in the Qualified IPO, and the shares of Class A Common Stock sold by the Sellers, shall have been duly listed on the New York Stock Exchange (the “NYSE”), subject only to official notice of issuance. The Company shall use its reasonable best efforts to maintain the listing of such shares on the NYSE.

6.8    Pricing Prospectus. The Company shall have delivered to each Investor a certificate, signed by the chief executive officer of the Company (and for clarity, on behalf of the Company and not in his personal capacity), certifying that, at and as of the time of sale of the Firm Shares (as defined in the Underwriting Agreement) and the Closing Date (as defined in the Underwriting Agreement) (the “IPO Closing”), the Rule 10b-5 representation and warranty regarding the Time of Sale Prospectus (as defined in the Underwriting Agreement) set forth in the Underwriting Agreement is true and correct and each Investor can rely on such representation and warranty as if it were addressed to the Investor; provided that certifications in such certificate shall be deemed to be a representation and warranty made by the Company at and as of the time of sale of the Firm Shares and the IPO Closing which shall survive the Closing, the consummation of the transactions contemplated hereby and any termination of this Agreement, and the Investor shall be entitled to any and all remedies (whether pursuant to this Agreement, at law or otherwise) available to the Investor for any breach of representation or warranty.

6.9    Company Structure. (a) Immediately following the Closing, the Company, Endeavor Operating Company, LLC and their respective wholly-owned subsidiaries shall collectively own directly or indirectly all of the outstanding equity securities of Zuffa Parent, LLC (“UFC Parent”), other than equity securities held by members of management or holders of warrants of UFC Parent or its subsidiaries and (b) none of (i) Silver Lake Partners, (ii) Ariel Emanuel and (iii) Patrick Whitesell and their respective Affiliates will receive, directly or indirectly, any cash proceeds in respect of their equity in the Company or any of its subsidiaries (including UFC Parent) in connection with the Qualified IPO or this Agreement.

7.    Conditions of the Sellers Obligations at Closing. The obligations of the Sellers under Section 1.1 of this Agreement to each of the Investors are subject to the fulfillment on or before the Closing of each of the following conditions.

7.1    Representations and Warranties. The representations and warranties of such Investor contained in Section 4 shall be true and correct on and as of the Closing with the same force and effect as if they had been made at the Closing, except for those representations and warranties that address matters only as of a particular date (which shall remain true and correct as of such particular date).

7.2     Performance by Such Investor. Such Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by such Investor on or before the Closing.

 

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7.3    Absence of Injunctions, Decrees, Etc. No Governmental Entity of competent jurisdiction in the United States shall have issued an Order restraining or enjoining the transactions contemplated by this Agreement and there shall not have been enacted or made applicable any law that makes the transactions contemplated by this Agreement illegal or otherwise prohibited.

7.4    Governmental Approvals. Each Seller, as applicable, and such Investor shall have timely obtained all approvals required under the HSR Act. All applicable waiting periods with respect to such Investor contemplated by the HSR Act shall have expired or been terminated.

8.    Indemnification.

8.1    The Company agrees to indemnify and hold harmless, to the extent permitted by law, each Investor, their respective directors, and officers, employees, and agents, and each person who controls such Investors (within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended from time to time (the “Exchange Act”)) and each Affiliate of such Investor (within the meaning of Rule 405 under the Securities Act) from and against any and all losses, claims, damages, liabilities and expenses (including, without limitation, any reasonable attorneys’ fees and expenses incurred in connection with defending or investigating any such action or claim) caused by any untrue or alleged untrue statement of material fact contained in any Resale Registration Statement, prospectus included in any Resale Registration Statement or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances in which they were made) not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by or on behalf of any Investor expressly for use therein.

8.2    Each Investor agrees, severally and not jointly with any other Investor, to indemnify and hold harmless the Company, its directors, officers, employees and agents, and each person who controls the Company (within the meaning of the Securities Act or the Exchange Act) and each Affiliate of the Company against any losses, claims, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ fees and expenses incurred in connection with defending or investigating any such action or claim) resulting from any untrue statement of material fact contained in the Resale Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances in which they were made) not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by or on behalf of such Investor expressly for use therein. In no event shall the liability of any Investor pursuant to this Section 8.2 or Section 8.5 be greater in amount than the dollar amount of the net proceeds received by such Investor upon the sale of the Shares giving rise to such indemnification obligation.

 

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8.3    Any person entitled to indemnification herein shall (a) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (b) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent. An indemnifying party who elects not to assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of legal counsel to any indemnified party a conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

8.4    The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, employee, agent, Affiliate or controlling person of such indemnified party and shall survive the transfer of the Shares purchased pursuant to this Agreement.

8.5    If the indemnification provided under this Section 8 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by or on behalf of, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 8 from any person who was not guilty of such fraudulent misrepresentation. Any contribution pursuant to this Section 8.5 by any seller of Shares shall be limited in amount to the amount of net proceeds received by such seller from the sale of such Shares pursuant to the Resale Registration Statement. Notwithstanding anything to the contrary herein, in no event will any party be liable for consequential, special, exemplary or punitive damages in connection with this Agreement.

 

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9.    Termination. This Agreement shall terminate (a) at any time upon the written consent of the Company, each Investor and, if a Secondary Sale Election has occurred, the Selling Stockholders, (b) upon the withdrawal by the Company of the Registration Statement, or (c) on the date that is 180 days following the date hereof if the Closing has not occurred.

10.    Miscellaneous.

10.1    Publicity. No party shall issue any press release or make any other public announcement, including any website posting or social media post, that includes the name or any logo or brand name of any party, or discloses the terms of this Agreement or the fact that the Investors have made or proposes to make an investment in the Company, except as may be required by law, with the prior written consent of the Company and any other parties named or otherwise identified in such press release or other public announcement or as may be included in any confidential submissions or filings made by the Company with the SEC. Each party will provide reasonable advance notice to the other parties prior to making any disclosure of this Agreement or the terms hereof in any filings made with the SEC, and will provide the other parties with reasonable opportunity to review and comment on such proposed disclosures.

10.2    Survival. The warranties, representations and covenants of the Company, the Selling Stockholders and the Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investor or the Company.

10.3    Successors and Assigns. This Agreement, and any and all rights, duties and obligations hereunder, shall not be assigned, transferred, delegated or sublicensed by any Investor without the prior written consent of the Company; provided, however, that the Shares and the rights, duties and obligations of any Investor hereunder may be assigned to an affiliate of the Investor without the prior written consent of the Company; provided, further, that no such assignment shall relieve such Investor of its duties and obligations pursuant to this Agreement. Any attempt by an Investor without such permission to assign, transfer, delegate or sublicense any rights, duties or obligations that arise under this Agreement in a manner that is not permitted by the foregoing sentence to be made without such permission shall be void. Subject to the foregoing and except as otherwise provided herein, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. This Agreement, and any and all rights, duties and obligations hereunder, shall not be assigned, transferred, delegated or sublicensed by the Company or any Selling Stockholder without the prior written consent of each Investor. Notwithstanding anything to the contrary in this Section 10.3 or elsewhere in this Agreement, it is understood that Silver Lake is still in the process of determining which Silver Lake fund or other investment vehicle would be the most appropriate party to hold this commitment as of closing and therefore Silver Lake Technology Management, L.L.C. (“SLTM”) is signing this agreement on behalf of and in anticipation of assigning the commitment to an affiliated fund or other investment vehicle. Such assignment, which shall occur prior to Closing, once made shall thereafter relieve SLTM of its duties and obligations pursuant to this Agreement and the assignee shall assume all such duties and obligations as if it had originally signed this Agreement from the start. Notwithstanding anything to the contrary in this Section 10.3 or elsewhere in this Agreement, it is understood that MSD Capital is still in the process of

 

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determining which investment vehicle would be the most appropriate party to hold this commitment as of closing and therefore MSD Capital, L.P. is signing this Agreement in anticipation of assigning the commitment to one or more affiliates of MSD Capital or affiliates of MSD Partners. Such assignment, which shall occur prior to Closing, once made shall thereafter relieve MSD Capital of its duties and obligations pursuant to this Agreement and the assignee shall assume all such duties and obligations as if it had originally signed this Agreement from the start.

10.4    Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of Delaware as applied to agreements entered into among Delaware residents to be performed entirely within Delaware, without regard to principles of conflicts of law.

10.5    Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

10.6    Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:

(a)    if to an Investor to such Investor’s address or electronic mail address as shown on such Investor’s signature page to this Agreement or on Schedule 1, with a copy (which shall not constitute notice) to the Person(s) set forth on such Investor’s signature page to this Agreement or on Schedule 1.

(b)    if to a Selling Stockholder, to such Selling Stockholder’s address or electronic mail address as shown on such Selling Stockholder’s Joinder, with a copy (which shall not constitute notice) to the Person(s) set forth on such Selling Stockholder’s Joinder.

(c)    if to the Company, to the attention of the General Counsel or Chief Financial Officer of the Company at 9601 Wilshire Boulevard, 3rd Floor Beverly Hills, CA 90210, or at such other current address or electronic mail address as the Company shall have furnished to the Investors, with a copy (which shall not constitute notice) to Justin G. Hamill, Latham & Watkins, 1271 Avenue of the Americas, New York, NY 10020.

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via electronic mail, when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day. In the event of any conflict between the Company’s books and records and this Agreement or any notice delivered hereunder, the Company’s books and records will control absent fraud or error.

 

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10.7    Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company, each Investor, and, if a Secondary Sale Election has occurred, the Selling Stockholders; provided, however, that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. For the avoidance of doubt, (a) the Company can amend Schedule 1 in accordance with Section 1.1 without the prior written consent of any Investor or Selling Stockholder and (b) the provisions of this Section 10.7 shall not apply to any Selling Stockholder’s Joinder.

10.8    Severability. If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such court will replace such illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance of this Agreement shall be enforceable in accordance with its terms.

10.9    Documentation. As of the date of this Agreement, each Investor represents and warrants to the Company that it has provided to the Company a duly executed IRS Form W-9 or applicable IRS Form W-8, and after the date of this Agreement each Investor will provide updated forms or other tax-related documentation that the Company may reasonably request.

10.10    Corporate Securities Law. THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

10.11    Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties. No party shall be liable or bound to any other party in any manner with regard to the subjects hereof or thereof by any warranties, representations or covenants except as specifically set forth herein or therein.

10.12    Brokers or Finders. The Company shall indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission (and the costs and expenses of defending against such liability or asserted liability) for which the Investor or any of its constituent partners, members, officers, directors, employees or representatives is responsible to the extent such liability is attributable to any inaccuracy or breach of the representations and warranties contained in Section 2.7 or Section 3.3.

 

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10.13    Specific Performance. The parties to this Agreement hereby acknowledge and agree that the Sellers would be irreparably injured by a breach of this Agreement by the Investors, and the Investors would be irreparably injured by a breach of this Agreement by the Sellers, and that money damages are an inadequate remedy for an actual or threatened breach of this Agreement because of the difficulty of ascertaining the amount of damage that will be suffered by the aggrieved party in the event that this agreement is breached. Therefore, each party to this Agreement agrees to the granting of specific performance of this Agreement and injunctive or other equitable relief in favor of the aggrieved party as a remedy for any such breach, without proof of actual damages, and the parties to this Agreement further waive any requirement for the securing or posting of any bond in connection with any such remedy. Such remedy shall not be deemed to be the exclusive remedy for breach of this Agreement, but shall be in addition to all other remedies available at law or in equity to the aggrieved party. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

10.14    Independent Nature of Investors Obligations and Rights. The obligations of each Investor under this Agreement are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement. The failure or waiver of performance under this Agreement by any Investor does not excuse performance by any other Investor or by the Company or any Selling Stockholder with respect to the other Investors. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and the Selling Stockholders, on one hand, and an Investor, on the other hand, solely, and not between the Company and the Selling Stockholders, on one hand, and the Investors, collectively, and not between and among the Investors. Nothing contained herein and no action taken by any Investor pursuant hereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Investors are in any way acting in concert or as a group for purposes of Section 13(d) of the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, or otherwise with respect to such obligations or the transactions contemplated by this Agreement. Each Investor shall be entitled to independently protect and enforce its rights arising out of this Agreement, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose.

10.15    No Recourse.

(a)    Notwithstanding anything to the contrary in this Agreement, each Investor’s liability for any liability, loss, damage or recovery of any kind (including special, exemplary, consequential, indirect or punitive damages or damages arising from loss of profits, business opportunities or goodwill, diminution in value or any other losses or damages, whether at law, in equity, in contract, in tort or otherwise) arising under or in connection with any breach of this Agreement (whether willfully, intentionally, unintentionally or otherwise) or in respect of any oral representations made or alleged to have been made in connection herewith shall be no greater than an amount equal to the total purchase price payable by such Investor in respect of the Shares plus any reasonable and documented out-of-pocket expenses the Company may recover in connection with any claim therefor following the determination in a final, non-appealable

 

21


judgment by a court of competent jurisdiction that the Investor has so breached this Agreement, and such Investor shall have no further liability or obligation relating to or arising out of this Agreement or the transactions contemplated hereby in excess of such amount.

(b)    This Agreement may only be enforced against, and any claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement, may only be made against, the entities that are expressly identified as parties hereto, including entities that become parties hereto after the date hereof or that agree in writing for the benefit of the Company to be bound by the terms of this Agreement applicable to any Investor, and no former, current or future equityholders, controlling persons, directors, officers, employees, agents or affiliates of any party hereto or any former, current or future equityholder, controlling person, director, officer, employee, general or limited partner, member, manager, advisor, agent or affiliates of any of the foregoing (each, a “Non-Recourse Party”) shall have any liability for any obligations or liabilities of the parties to this Agreement or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, the transactions contemplated hereby or in respect of any representations made or alleged to be made in connection herewith. Without limiting the rights of any party against the other parties hereto, in no event shall any party or any of its affiliates seek to enforce this Agreement against, make any claims for breach of this Agreement against, or seek to recover monetary damages from any Non-Recourse Party.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties have executed this Common Stock Purchase Agreement as of the date first above written.

 

COMPANY:
ENDEAVOR GROUP HOLDINGS, INC.
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Chief Financial Officer


INVESTORS:
COATUE OFFSHORE MASTER FUND, LTD.

By: Coatue Management, L.L.C., its investment

manager

By:  

/s/ Zachary Feingold

Name:   Zachary Feingold
Title:   Authorized Signatory
COATUE LONG ONLY OFFSHORE MASTER FUND LTD

By: Coatue Management, L.L.C., its investment

manager

By:  

/s/ Zachary Feingold

Name:   Zachary Feingold
Title:   Authorized Signatory


DRAGONEER GLOBAL FUND II, L.P.

By: Dragoneer Global GP II, LLC, its general

partner

By:  

/s/ Pat Robertson

Name:   Pat Robertson
Title:   Chief Operating Officer


SILVER LAKE TECHNOLOGY

MANAGEMENT, L.L.C.

By:  

/s/ Egon Durban

Name:   Egon Durban
Title:   Managing Partner


MIC CAPITAL PARTNERS (PUBLIC)

PARALLEL CAYMAN, L.P.

By: MIC Capital Partners (Public) GP, LP (Cayman), its General Partner
By:  

/s/ Rodney Cannon

Name:   Rodney Cannon
Title:   Authorized Signatory


ELLIOTT ASSOCIATES, L.P.

By: Elliott Investment Management L.P., as

Attorney-in-Fact

By:  

/s/ Elliot Greenberg

  Name: Elliot Greenberg
  Title: Vice President
ELLIOTT INTERNATIONAL, L.P.
By: Hambledon, Inc., its General Partner

By: Elliott Investment Management L.P., as

Attorney-in-Fact

By:  

/s/ Elliot Greenberg

  Name: Elliot Greenberg
  Title: Vice President


MSD CAPITAL, L.P.
By:  

/s/ Marcello Liguori

  Name: Marcello Liguori
  Title: Authorized Signatory


Form of Joinder Agreement

JOINDER AGREEMENT

The undersigned is executing and delivering this Joinder Agreement pursuant to that certain Common Stock Purchase Agreement, dated as of [ ● ], 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”) by and among Endeavor Group Holdings, Inc., a Delaware corporation (the “Company”) and the Investors party thereto. Capitalized terms used but not defined in this Joinder Agreement shall have the respective meanings ascribed to them in the Agreement.

[By executing and delivering this Joinder Agreement to the Agreement, the undersigned hereby agrees to (i) subject to and in accordance with the terms of the Agreement, sell to the applicable Investor the number of Secondary Shares set forth below in exchange for a cash payment equal to the aggregate price set forth below at a price per share equal to the Private Placement Price, subject to, and in accordance with, the terms and conditions set forth in the Agreement and (ii) become a party to, to be bound by, and to comply with the provisions of the Agreement in the same manner as if the undersigned were an original signatory to such agreement as a Selling Stockholder.]

[By executing and delivering this Joinder Agreement to the Agreement, the undersigned hereby agrees to (i) subject to and in accordance with the terms of the Agreement, purchase from the applicable Seller the number of Shares set forth below in exchange for a cash payment equal to the aggregate price set forth below at a price per share equal to the Private Placement Price, subject to, and in accordance with, the terms and conditions set forth in the Agreement and (ii) become a party to, to be bound by, and to comply with the provisions of the Agreement in the same manner as if the undersigned were an original signatory to such agreement as an Investor.]

Accordingly, the undersigned has executed and delivered this Joinder Agreement as of the      day of                 , 20    .

 

[SELLING STOCKHOLDER / INVESTOR]
By:  
  Name:                                                                  
  Title:                                                                    

 

[ ● ]

Address of [Selling Stockholder / Investor]

 

Shares

 

 

Purchase Price

 

[ ● ]

 

 

$[ ● ]

 


SCHEDULE 1

INVESTORS

Exhibit 10.13

Execution Version

TERM EMPLOYMENT AGREEMENT

THIS TERM EMPLOYMENT AGREEMENT (this “Agreement”) IS DATED AS OF APRIL 19, 2021 BY AND AMONG ENDEAVOR GROUP HOLDINGS, INC., A DELAWARE CORPORATION (“EGH”), ENDEAVOR OPERATING COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (Endeavor Operating Company, LLC or such affiliate thereof which may employ Employee from time to time, the “Employer”), and JASON LUBLIN, AN INDIVIDUAL (“Employee”).

RECITALS

 

A.

Employee is currently providing services to the “Employer Group” (as defined below) pursuant to the terms and conditions of that certain Amended and Restated Term Employment Agreement, entered into on December 7, 2020, by and between WME IMG, LLC, Employee and, for limited purposes, Endeavor Operating Company, LLC (the “Existing Agreement”).

 

B.

Employee acknowledges and agrees that many aspects of the business and affairs of the Employer Group are confidential and that Employee will have access to “Confidential Information” (as defined below).

 

C.

Employee acknowledges and agrees that the services to be rendered by Employee under this Agreement are of a special, unique, unusual, extraordinary and intellectual character which gives such services peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.

 

D.

Employee currently holds equity interests in WME Holdco, LLC (“WME Holdco”), WME Iris Management Holdco II, LLC (“Iris II Holdco”), WME Iris Management IV Holdco, LLC (“Iris IV Holdco”) and UFC Management Holdco, LLC (“UFC Management Holdco,” and collectively with WME Holdco, Iris II, and Iris V Holdco, together with any successors thereto (including, without limitation, any entities through which he will directly or indirectly hold equity interests in Endeavor Operating Company, LLC or Endeavor Manager, LLC following any reorganization or restructuring in connection with the consummation of an initial public offering of EGH), the “Management Holdcos”).

 

E.

The parties hereto wish to supersede the Existing Agreement as of the Effective Date (as defined below) and are entering into this Agreement in order to, among other things, memorialize the terms of the continued employment of Employee by Employer, to protect to the fullest extent permissible the Confidential Information of EGH, Employer and their respective affiliates’ clients, and to insure the strictest compliance by Employee with Employee’s fiduciary obligations to EGH, Employer and their respective affiliates (including the Management Holdcos) (collectively with EGH, the “Employer Group”) and to their respective clients.


TERMS AND CONDITIONS

NOW, THEREFORE, in consideration of the mutual agreements set forth herein and in consideration of and as a condition to the employment of Employee by Employer, the parties hereto agree as follows:

1. Effectiveness.

This Agreement shall be effective as of the effective date of the consummation of the initial public offering of EGH (the “Effective Date”). To the extent such public offering does not occur on or prior to December 31, 2021, this Agreement shall be void ab initio and the Existing Agreement shall remain in full force and effect.

2. Position and Duties.

2.1 Employer hereby agrees to employ Employee as Chief Financial Officer, subject to the terms, conditions and provisions of this Agreement. As a material term of this Agreement, Employee shall report directly to Ariel Emanuel and/or Patrick Whitesell, in each case as Chief Executive Officer and Executive Chairman of Employer, respectively; provided, that, in the event of the termination of employment of either the Chief Executive Officer or the Executive Chairman as a result of death or disability, Employee shall report directly to the other and any successor to the deceased or disabled Chief Executive Officer and/or Executive Chairman, as applicable; provided further, that, in the event of the termination of employment of both the Chief Executive Officer and the Executive Chairman as a result of death or disability, Employee shall report directly to any successor(s) thereto. Employee accepts such employment and agrees to render services as provided herein, all of which services shall be performed conscientiously and to the fullest extent of Employee’s ability. Employee shall devote substantially all of Employee’s business time to the Employer Group during the Term (as defined in Subsection 4.1 below); provided, that nothing in this Agreement shall preclude Employee from serving as a member of the board of directors of any charitable, educational, religious, public interest or public service organization (but not as a member of the board of directors of a “for-profit” entity not part of the Employer Group unless approved by the Chief Executive Officer or Executive Chairman of Employer or set forth on Exhibit A hereto), in each instance not inconsistent with the business practices and policies of Employer, or from devoting reasonable periods of time to the activities of the aforementioned organizations, unless such activities interfere in any material respect with the performance of Employee’s duties and responsibilities hereunder to the Employer Group. Notwithstanding the foregoing or any other provision herein, nothing in this Agreement shall prohibit Employee from continuing to serve as a member of the board of director of the entities listed on Exhibit A hereto (subject to the terms thereof) and to retain any fees earned in respect of such service; provided, that, except as otherwise set forth on Exhibit A, Employee shall not serve in any other such position unless prior approval is obtained from Employer.

 

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2.2 During the Term, Employee’s principal place of employment will be located in the Los Angeles Metropolitan Area. Employee understands that this position requires business travel and Employee will travel as is reasonably necessary to perform his duties.

3. Compensation.

3.1 During the Term, Employer agrees to pay and Employee agrees to accept a salary (the “Base Salary”) at an annual rate of $2,250,000. The Base Salary at the annual rate set forth in this Section 3.1 shall only apply following the Effective Date (and have no retroactive effect) and shall be payable in accordance with Employer’s customary procedures and practices commencing on the first payroll date following the Effective Date.

3.2 Cash Bonus Compensation.

(a) In addition to the Base Salary, Employee shall have the opportunity to earn an annual cash bonus (the “Annual Bonus”) in respect of each calendar year during the Term with a target Annual Bonus of one hundred percent (100%) of Employee’s Base Salary (the “Target Bonus”). The amount of the Annual Bonus for each fiscal year shall be determined by EGH’s Board of Directors (the “Board”) or such committee to which the Board has defeased its power and authority under EGH’s certificate of incorporation as in effect from time to time (or any committee or subcommittee thereof to which the Board or such committee to which the Board has defeased its power and authority has delegated the applicable authority (if any such delegation has occurred)) (the Board or such committee, as applicable, the “Governing Body”) in its sole discretion and may exceed the amount of the target Annual Bonus for such fiscal year.

(b) Fifty percent (50%) of the Annual Bonus shall be based on the attainment of certain annual performance metrics and the remaining fifty percent (50%) of the Annual Bonus shall be based on continued service and/or other criteria, as determined in the sole discretion of the Governing Body. Without limiting the foregoing, unless otherwise determined by the Governing Body, the right to payment of any Annual Bonus shall be subject to Employee’s continued employment through the end of the fiscal year to which it relates. Payment of the Annual Bonus shall be made at such time as Employer customarily pays annual bonuses to its senior executives but in no event later than March 15th of the year following the year to which such Annual Bonus relates. Notwithstanding anything herein to the contrary, Employee’s Annual Bonus for each year ending during the Term shall in no event be an amount less than $750,000 (the “Minimum Annual Bonus”), provided, that, for calendar year 2023, the Minimum Annual Bonus shall be equal to $750,000, multiplied by a fraction, the numerator of which is equal to the number of days Employee was employed by the Company during such year through the expiration of the Term and the denominator of which is 365.

 

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3.3 Equity Compensation.

(a) Employee shall be eligible to receive an equity award (an “Annual Equity Award”) in respect of each calendar year commencing during the Term. Fifty percent (50%) of the size of the Annual Equity Award shall be based on the attainment of certain annual performance metrics and fifty percent (50%) of the size of the Annual Equity Award shall be based on continued service and/or other criteria, which shall be determined in the sole discretion of the Governing Body (or the Board or a committee thereof if required with respect to actions taken to comply with Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the Board or a committee thereof for these purposes, the “16b-3 Committee”)). Subject to approval by the Governing Body or the 16b-3 Committee, as applicable, the Annual Equity Award for each fiscal year is expected to (i) represent an aggregate value ranging from seventy-five percent (75%) to one-hundred and fifty percent (150%) of the sum of Employee’s (A) Base Salary and (B) Target Bonus for the fiscal year in which the Annual Equity Award is granted (such value calculated by the Governing Body or the 16b-3 Committee, as applicable, in its good faith discretion) and (ii) consist of fifty percent (50%) grants in the form of options (or similar awards) vesting based on continued service over a three-year period following grant, and fifty percent (50%) grants in the form of restricted stock units (or similar awards) vesting based on continued service and/or attainment of performance goals or metrics, and in each case will be issued pursuant to award agreements on EGH’s applicable forms at the time of grant (the “Annual Equity Award Agreements”). Notwithstanding the foregoing, the terms and conditions of each of Employee’s Annual Equity Award (including the nature and vesting conditions thereof) shall be determined in the sole discretion of the Governing Body or the 16b-3 Committee, as applicable, subject to the terms of their applicable charters (if any), and the value of the Annual Equity Award may exceed (or be less than) the expected amount for such fiscal year as described above.

(b) Employee will be entitled to receive a one-time equity award (the “IPO Equity Award”), subject to approval by the Governing Body or 16b-3 Committee, as applicable, and Employee’s continued employment through the date of grant. The IPO Equity Award shall be comprised of restricted stock, restricted stock units or similar awards of EGH and options or similar awards of EGH, and shall cover a number of shares of EGH equal to $7,500,000 divided by the price at pricing of the initial public offering of EGH. One-third of the IPO Equity Award shall be fully vested on the date of grant (or, if later, the effective date of the initial public offering of EGH) and the remaining IPO Equity Award will vest in two equal installments on each of the one-year and two-year anniversaries of the date of grant, subject to Employee’s continued employment through the vesting date, and will be issued pursuant to award agreements in EGH’s applicable forms at the time of grant (the “IPO Equity Award Agreements”).

 

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3.4 Employee acknowledges that, unless otherwise determined by the Governing Body or 16b-3 Committee, as applicable, in accordance with the terms of their applicable charters (if any), the sole cash and equity-based compensation that Employee is entitled to receive from the Employer Group shall be (a) the Base Salary pursuant to Subsection 3.1, (b) the Annual Bonus pursuant to Subsection 3.2, and (c) the Annual Equity Award and IPO Equity Award pursuant to Subsection 3.3. For the avoidance of doubt, the Governing Body and 16b-3 Committee, as applicable, may from time to time in its sole and absolute discretion provide for increases to (or cash and/or equity-based compensation in addition to) the compensation set forth in this Agreement.

3.5 EGH, Employer and Employee agree that Employer and EGH shall be entitled to allocate, for federal, state and local income tax and other tax purposes, the percentage of Employee’s services that Employee provides in each of his capacities as the Chief Financial Officer of Employer and an officer of EGH. For purposes of this Agreement, references to the “Governing Body” shall include, in each case, any committee or subcommittee thereof, to which the Governing Body has delegated the applicable authority (if any such delegation has occurred).

4. Term and Termination.

4.1 Employer and Employee acknowledge and agree that the employment of Employee under this Agreement is for a term beginning on the Effective Date and, subject to earlier termination in accordance with this Section 4, ending on the second anniversary of the Effective Date (the “Term”).

4.2 In the event that Employee shall, for any reason, continue to render services to the Employer Group after the expiration of the Term, and shall not have resigned or been terminated due to an Employer Non-Renewal (as defined below) following the second anniversary of the Effective Date in accordance with Section 4.8, Employee shall be deemed an “at-will” employee whose employment may be terminated by either Employer (or any of its Subsidiaries, as applicable) or Employee at any time and for any reason and Employee shall only be entitled to receive, notwithstanding anything herein or in any bonus or incentive agreement, arrangement, plan, policy or program to the contrary (other than due to Cause (as defined below) in accordance with Section 4.7), (a) accrued and unpaid Base Salary as of the date of termination of employment, and (b) except in the event of termination of employment by Employer for Cause, the Annual Bonus in respect of fiscal year 2023 based on actual performance (to the extent unpaid), multiplied by a fraction, the numerator of which is the number of days that have elapsed from the commencement of the 2023 fiscal year through the date of such termination and the denominator of which is 365, payable on the scheduled payment date for the applicable Annual Bonus in accordance with Subsection 3.2 as if Employee had remained employed through the payment date of such Annual Bonus (and Employee shall in no event be entitled to the Continuation Payments, the Bonus Continuation or the Equity Award Acceleration (as such terms defined in Subsection 4.6 below) following any such termination). In the event Employee’s employment hereunder is terminated for any reason after expiration of the Term, Employee shall resign all positions held with the Employer Group.

 

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4.3 Employer may terminate the Term and Employee’s employment hereunder for Disability. “Disability” means (a) Employee’s incompetence, as determined and declared by a court of competent jurisdiction or (b) as determined in good faith by Employer, that the mental or physical incapacity of Employee is such that Employee is incapable of rendering services to the Employer Group for a period of ninety (90) consecutive days or for an aggregate of one hundred and twenty (120) days in any period of three hundred and sixty five (365) consecutive days. In addition, Employer may also terminate the Term and Employee’s employment hereunder with or without Cause. “Cause” shall mean Employee’s (a) conduct constituting embezzlement, fraud, or material misappropriation, whether or not related to Employee’s employment with Employer; (b) conviction of a felony, whether or not related to Employee’s employment with Employer; (c) conviction or indictment of a financial crime, material act of dishonesty or material unethical business conduct; (d) unauthorized disclosure or use of Confidential Information or material breach of Section 8 (Intellectual Property) of this Agreement, in each case that results in material harm to the Employer Group; (e) material breach of any applicable restrictive covenants set forth in any agreement between Employee and the Employer Group; (f) material breach of any other material obligation under this Agreement; (g) material violation of Employer Group’s written policies that the Governing Body determines is detrimental to the best interests of the Employer Group; (h) use of alcohol or drugs that materially interferes with the performance of Employee’s duties; or (i) conduct that brings Employee or the Employer Group into public disrepute, scandal, contempt or ridicule that shocks, insults or offends a substantial portion or group of the community or reflects unfavorably on Employee or the Employer Group. Notwithstanding the foregoing, termination by Employer for Cause shall not be effective until and unless Employee has been given written notice of particular acts or circumstances which are the basis for the termination for Cause, Employee is thereafter given thirty (30) days to cure (other than with respect to clause (b) or (c) of the preceding sentence) the omission or conduct that is the basis of such claim if such omission or conduct is reasonably capable of being cured (it being understood that any errors in expense reimbursement may be cured by repayment).

4.4 Employee may terminate the Term and Employee’s employment hereunder for Good Reason at any time, except at such time as Cause exists with respect to Employee. Employee shall notify Employer in writing within ninety (90) days after the occurrence of any event giving rise to Good Reason. If Employer shall not have cured such event or events giving rise to Good Reason within thirty (30) days after receipt of written notice from Employee, Employee may terminate employment for Good Reason by delivering a resignation letter to Employer within five (5) business days following such thirty-day cure period; provided, that if Employee has not delivered such resignation letter to Employer within such five-day period, Employee waives the right to terminate employment for Good Reason. “Good Reason” shall mean, without Employee’s written consent the material breach by Employer of any material obligation under this Agreement (including any failure of Employer to pay or provide the compensation provided for in Section 3 above). For the avoidance of doubt, subject to any applicable cure period set forth above, any requirement for Employee to relocate Employee’s principal place of employment outside of the Los Angeles Metropolitan Area without his consent will constitute “Good Reason”.

 

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4.5 Termination on Account of Death or Disability. In the event that the Term and Employee’s employment hereunder terminates as a result of Employee’s death or is terminated by Employer due to Employee’s Disability prior to the second anniversary of the Effective Date, Employee (or Employee’s estate, as applicable) shall only be entitled to receive (a) accrued and unpaid Base Salary as of the date of termination of employment and (b) an amount equal to the Target Bonus for the fiscal year in which the termination of employment occurs multiplied by a fraction, the numerator of which is the number of days that have elapsed from the commencement of the fiscal year in which such termination occurs through the date of such termination and the denominator of which is 365. Such amounts shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment, or otherwise required by applicable law. In the event the Term and Employee’s employment hereunder is terminated by Employer on account of Disability, Employee shall resign all positions held with the Employer Group and in the event of termination of the Term and Employee’s employment hereunder on account of Employee’s death, Employee shall be deemed to have so resigned.

4.6 Termination Without Cause or for Good Reason. In the event that the Term and Employee’s employment hereunder is terminated by Employer without Cause or by Employee for Good Reason, in each case, prior to the second anniversary of the Effective Date, Employee shall be entitled to receive (a) accrued and unpaid Base Salary or Annual Bonus earned but not yet paid as of the date of termination of employment, which shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment, or otherwise required by applicable law, or, in respect of the Annual Bonus, on the scheduled payment date in accordance with Subsection 3.2, (b) payment of the Annual Bonus in an amount equal to the Minimum Annual Bonus for each calendar year during the period commencing on the date of termination and ending on the later of (i) the second anniversary of the Effective Date and (ii) the first anniversary of the date of termination (such period of time, the “Continuation Period”) for which the Annual Bonus has not yet been earned or paid (prorated for any partial year at the end of the Continuation Period), payable on the scheduled payment date for the applicable Annual Bonus in accordance with Subsection 3.2 as if Employee had remained employed through the payment date of such Annual Bonus, assuming the Minimum Annual Bonus for any period after the Term, as applicable, remained consistent with Subsection 3.2 (the “Bonus Continuation”), (c) continued payment of the Base Salary in effect as of the date of Employee’s termination of employment as if Employee had remained employed through the Continuation Period (the “Continuation Payments”), and (d) accelerated vesting of the portion of (i) the Annual Equity Award subject to time-based vesting and (ii) the IPO Equity Award, in each case (i) and (ii) that remains unvested as of the date of termination (the “Equity Award Acceleration”). Notwithstanding anything in this Agreement to the

 

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contrary, the Continuation Payments and any right to the Bonus Continuation shall immediately cease (and Employee shall forfeit the portion of the Annual Equity Award and IPO Equity Award subject to the Equity Award Acceleration and any equity received in respect thereof (and refund all proceeds received in respect of such equity through sale thereof or otherwise)) in the event that Employee breaches any of the covenants set forth in Sections 7 or 8 of this Agreement or any restrictive covenants then-applicable to Employee. In order to receive the Continuation Payments, the Bonus Continuation and the Equity Award Acceleration, Employee must first execute and deliver a release of claims in the form attached hereto as Exhibit B (the “Release”), that has become effective in accordance with its terms (including the expiration of any applicable revocation period contained therein or required by applicable law) within sixty (60) days after the date of termination of Employee’s employment (such 60-day period, the “Release Period”). The Continuation Payments shall be paid ratably in monthly installments over the Continuation Period with the first such installment to be paid no later than ten (10) days following the date on which the Release becomes effective and irrevocable (which installment shall include any installment of the Continuation Payments that would have been paid to Employee prior to such date absent the requirement to execute the Release); provided, that, if the Release Period spans two calendar years, then the first installment of the Continuation Payments (which installment shall include any installment of the Continuation Payments that would have been paid to Employee prior to such date absent this proviso) will be paid on the first business day of the second calendar year if such date is later than the date on which such installment would otherwise have been paid pursuant to this Subsection 4.6 absent this proviso. Notwithstanding anything to the contrary in the Annual Equity Award Agreements or the IPO Equity Award Agreements, (i) the portion of the Annual Equity Award subject to time-based vesting and IPO Equity Award that, in each case, remains unvested as of the date of termination by Employer without Cause or by Employee for Good Reason shall remain outstanding and unvested and shall become vested (and be exercisable and/or settled) if and only if the Release becomes effective as described above and Employee is otherwise entitled hereunder, subject to compliance with Section 409A of the Code, and (ii) if the Release does not become so effective, such portion shall be forfeited for no consideration immediately following the end of the Release Period. In the event of any termination of the Term and Employee’s employment hereunder by Employer without Cause or by Employee for Good Reason, Employee shall resign all positions held with the Employer Group.

4.7 Termination for Cause. If Employer terminates the Term and Employee’s employment hereunder for Cause prior to the second anniversary of the Effective Date, then Employer shall have no further obligations to Employee under this Agreement, other than the payment of accrued and unpaid Base Salary, which shall be paid in a lump sum within thirty (30) days after the date of termination of employment, or as otherwise required by applicable law. In the event of any termination of the Term and Employee’s employment hereunder by Employer for Cause, Employee shall no longer hold any positions with the Employer Group.

 

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4.8 Termination due to Employer Non-Renewal.

(a) Upon an Employer Non-Renewal (as defined below), Employee shall be entitled to receive (i) accrued and unpaid Base Salary or Annual Bonus earned for any year prior to the year of termination, but not yet paid as of the date of termination of employment, which shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment (or as otherwise required by applicable law) or, in respect of the Annual Bonus, on the scheduled payment date in accordance with Subsection 3.2, (ii) payment equal to an amount equal to $750,000 (the “Post-Term Bonus Continuation”), payable on the scheduled payment date for the Annual Bonus for the year of termination in accordance with Subsection 3.2 as if Employee had remained employed through the payment date of such Annual Bonus, and (iii) continued payment of the Base Salary in effect as of the date of Employee’s termination of employment as if Employee had remained employed through the end of the twelve (12) month period immediately following Employee’s termination of employment (the “Post-Term Continuation Payments” and such period, the “Post-Term Continuation Period”).

(b) Notwithstanding anything in this Agreement to the contrary, the Post-Term Continuation Payments and any right to the Post-Term Bonus Continuation shall immediately cease in the event that Employee breaches any of the covenants set forth in Sections 7 or 8 of this Agreement or any restrictive covenants then-applicable to Employee. In order to receive the Post-Term Continuation Payments and the Post-Term Bonus Continuation, Employee must first execute and deliver a Release that has become effective in accordance with its terms (including the expiration of any applicable revocation period contained therein or required by applicable law) within the Release Period. The Post-Term Continuation Payments shall be paid ratably in monthly installments over the Post-Term Continuation Period with the first such installment to be paid no later than ten (10) days following the date on which the Release becomes effective and irrevocable (which installment shall include any installment of the Post-Term Continuation Payments that would have been paid to Employee prior to such date absent the requirement to execute the Release); provided, that, if the Release Period spans two calendar years, then the first installment of the Post-Term Continuation Payments (which installment shall include any installment of the Post-Term Continuation Payments that would have been paid to Employee prior to such date absent this proviso) will be paid on the first business day of the second calendar year if such date is later than the date on which such installment would otherwise have been paid pursuant to this Subsection 4.8 absent this proviso. In the event of any termination of Employee’s employment under this Section 4.8, Employee shall resign all positions held with the Employer Group. For the avoidance of doubt, except as set forth in Section 4.2 and this Section 4.8, Employee shall not be entitled to any severance payments or benefits hereunder upon any termination of employment following the second anniversary of the Effective Date.

 

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(c) An “Employer Non-Renewal” shall mean the occurrence of both of the following: (i) the Employer’s failure to furnish a bona fide offer of employment which provides for annual cash and equity compensation opportunities that are substantially comparable, in the aggregate, to the annual cash and equity compensation opportunities Employee received hereunder (excluding from such comparison, for the avoidance of doubt, the Minimum Annual Bonus and the IPO Equity Award) at any time prior to the second anniversary of the Effective Date, and (ii) the termination of Employee’s employment by Employer without Cause or by Employee for any reason during within the thirty (30) day period after the second anniversary of the Effective Date (provided that, at the time of such termination, events or circumstances that could constitute Cause (without regard for any cure periods) do not exist with respect to Employee, and Employee has continued to comply with all applicable restrictive covenants). For the avoidance of doubt, in no event shall an Employer Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason for purposes of this Article 4 (other than Section 4.8(c)).

4.9 Treatment of Equity. Except as otherwise set forth in Section 4.6, upon termination of Employee’s employment hereunder, Employee’s equity interests in the Management Holdcos, EGH or any other member of the Employer Group shall be treated in accordance with the award agreements, and other applicable agreements governing such equity interests and equity-based awards.

4.10 Mitigation and Offset. As a condition to Employee receiving the payments under Subsection 4.6 or 4.8, Employee shall be required to mitigate by actively seeking other employment following termination of employment with Employer. In the event that the Term and Employee’s employment hereunder is (a) terminated by Employer without Cause or by Employee for Good Reason (including, for the avoidance of doubt, termination of Employee’s employment pursuant to Section 4.8) or (b) terminated as a result of Employee’s resignation within thirty (30) days following the expiration of the Term in accordance with Section 4.8, the Continuation Payments and Bonus Continuation or Post-Term Continuation Payments and Post-Term Bonus Continuation, as applicable, shall be reduced by any compensation earned by Employee from any business activities; provided, that, for avoidance of doubt, any income Employee receives from any board or advisory roles shall not reduce the Continuation Payments and Bonus Continuation or Post-Term Continuation Payments and Post-Term Bonus Continuation, as applicable, due to him hereunder; provided, however, that, if income received from any board or advisory roles is structured with the purpose or effect of circumventing this Section 4.10, the Continuation Payments and Bonus Continuation or Post-Term Continuation Payments and Post-Term Bonus Continuation, as applicable, shall be reduced by such amounts. Employee shall notify Employer immediately upon obtaining other employment or commencing any business activity and shall report immediately following the end of each month the amount of any compensation earned during such month, which amount shall reduce the Continuation Payments and Bonus Continuation or Post-Term Continuation Payments and Post-Term Bonus Continuation, as applicable.

 

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5. Other Benefits.

Subject to Subsection 3.4, during the Term and Employee’s employment with the Employer Group, Employee shall be eligible to participate in all group health insurance benefit plans, group life insurance benefit plans, qualified defined contribution retirement plans, annual vacation plans, and other welfare benefit plans and programs (excluding any severance plans) that are made available to all active employees of the Employer Group. To the extent that there are multiple benefit plans within the Employer Group, Employee will be entitled to participate in the same level of benefit plans as are available to the senior most active employees of Employer, other than the Chief Executive Officer and Executive Chairman of Employer.

6. Employer Expense Reimbursement.

During Employee’s employment by Employer, Employee will be reimbursed in accordance with Employer’s policy in effect from time to time for travel, entertainment and other expenses reasonably incurred in the performance of Employee’s duties and responsibilities hereunder; provided, that Employee provides Employer with proper substantiation of such travel, entertainment and other expenses; and provided, further, that any such expense will not be considered to be reasonably incurred in the performance of Employee’s duties and responsibilities hereunder if it is an expense that otherwise expressly requires the prior approval or consent of the Governing Body. Any such reimbursements shall be paid no later than the end of the calendar year following the calendar year in which the related expense is incurred.

7. Confidential Information.

7.1 Employee agrees that Employee will not at any time, whether during or subsequent to Employee’s employment by the Employer Group, either directly or indirectly, use or divulge, disclose or communicate to any person, firm or corporation, other than in the course of performing Employee’s duties to the Employer Group, any confidential and proprietary information and trade secrets of the Employer Group, including, without limitation, client and customer information, pricing information, financial plans, business plans, business concepts, supplier information, know-how and intellectual property and materials related thereto (the “Confidential Information”), whether heretofore or hereafter obtained by Employee while in the employ of the Employer Group. Upon leaving the employ of the Employer Group, Employee will not take or use, without the prior written consent of Employer, any memoranda, notes (whether or not prepared by Employee during the course of Employee’s employment with the Employer Group), lists, schedules, forms or other documents, papers or records of any kind (including, but not limited to, computerized or other records and documents in digital form or otherwise), relating to the Employer Group’s businesses or clients or any reproduction, summary or abstract thereof (including by means of discs or any other medium), all of which Employee acknowledges are the exclusive property of the Employer Group;

 

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provided that Employee shall be entitled to retain any such material solely relating to his equity interests in the Management Holdcos or any other member of the Employer Group and use the same solely to the extent relating to such ownership interests. Employee hereby agrees to surrender to Employer upon request at any time after the termination of Employee’s employment with the Employer Group all such documents and other property. Employer acknowledges that Employee is an experienced attorney and prior to his employment with Employer maintained electronically an extensive list of professional contacts. As soon as is practicable following the termination of his employment, but no longer than thirty (30) days following the termination of employment, Employer shall provide an electronic copy (in a form reasonably acceptable to Employee) of Employee’s professional contacts as maintained on the IT systems of Employer.

7.2 Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall prohibit Employee from reporting possible violations of federal law or regulation to or otherwise cooperating with or providing information requested by any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Employee does not need the prior authorization of the Employer to make any such reports or disclosures and Employee is not required to notify the Employer that Employee has made such reports or disclosures.

8. Intellectual Property.

8.1 If Employee creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, intellectual property, materials, documents or other work product (including, without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content or audiovisual materials) (“Works”), either alone or with third parties, at any time during Employee’s employment by the Employer Group and within the scope of such employment and/or with the use of any of the Employer Group’s resources (“Employer Works”), Employee hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to Employer to the extent ownership of any such rights does not vest originally in Employer.

8.2 Employee shall take all requested actions and execute all requested documents (including any licenses or assignments) at Employer’s expense (but without further remuneration) to assist Employer in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of Employer’s rights in Employer Works. If Employer is unable for any other reason to secure Employee’s signature on any document for this purpose, then Employee hereby irrevocably designates and appoints Employer and its duly authorized officers and agents as Employee’s agent and attorney in fact, to act for and in Employee’s behalf and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing.

 

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8.3 Employee shall not knowingly improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with any member of the Employer Group any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Employee shall comply with all relevant policies and guidelines of Employer, including, without limitation, policies and guidelines regarding the protection of confidential information and intellectual property and potential conflicts of interest. Employee acknowledges that Employer may amend any such policies and guidelines from time to time, and that Employee remains at all times bound by their most current version.    

8.4 Notwithstanding anything to the contrary contained herein, pursuant to the Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that: (A) is made (i) in confidence to a Federal, state, or local government official, either directly or indirectly, or to an attorney, and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Employee also understands that if he files a lawsuit for retaliation by the Employer Group for reporting a suspected violation of law, Employee may disclose the trade secret to his attorney and use the trade secret information in the court proceeding, if Employee (i) files any document containing the trade secret under seal, and (ii) does not disclose the trade secret, except pursuant to court order.

8.5 Notwithstanding the foregoing, this Section 8 is subject to the provisions of California Labor Code Sections 2870, 2871 and 2872. In accordance with Section 2870 of the California Labor Code, Employee’s obligation to assign Employee’s right, title and interest throughout the world in and to all Employer Works does not apply to any Works that Employee developed entirely on Employee’s own time without using Employer’s equipment, supplies, facilities, or Confidential Information except for those Works that relate to either (a) the business of Employer at the time of conception or reduction to practice of the Work, or actual or demonstrably anticipated research or development of Employer or (b) result from any work performed by Employee for Employer. A copy of California Labor Code Sections 2870, 2871 and 2872 is attached to this Agreement as Exhibit C.

 

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9. Enforcement.

9.1 Employee agrees that Employer would suffer irreparable damage, that Employer would not have any adequate remedy at law in the event of a breach or threatened breach of any of the covenants set forth in Sections 7 or 8 of this Agreement, that the damages resulting from any such breach or threatened breach would be material but not readily susceptible to being measured in monetary terms, and that any remedy at law (including the payment of damages) would be inadequate as a result of such breach or threatened breach. Accordingly, it is agreed that Employer shall be entitled to an immediate injunction or injunctions to prevent breaches or threatened breaches of Sections 7 or 8 of this Agreement and to specific performance of such Sections 7 or 8 of this Agreement, in each case without proof of actual damages, and Employee waives any requirement for the securing or posting of any bond in connection with any such remedy.

9.2 Employee further agrees that the remedies provided for in this Section 9 shall be in addition to, and not in limitation of, any other remedies that may be available to Employer whether at law or in equity, including monetary damages, and all of Employer’s rights shall be unrestricted, including, but not limited to, the right to terminate Employee at any time for any reason.

10. Severability.

The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any of the provisions of this Agreement shall be determined to be invalid under the laws of any applicable jurisdiction, such invalidity shall not invalidate all of the provisions of this Agreement, but rather the Agreement shall be construed insofar as the laws of that jurisdiction are concerned, as not containing invalid or contravening provisions, and the rights and obligations of the parties shall otherwise be enforced to the fullest extent possible. If, however, any such invalid or contravening provisions relate to Sections 7 or 8, then such Sections shall be construed as providing for the maximum protections available to an employer which the laws of that jurisdiction permit.

11. Section 409A.

11.1 This Agreement shall be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and any Treasury Regulations or other Department of Treasury guidance issued thereunder (“Section 409A”). The parties intend that any amounts payable hereunder will be compliant with or exempt from Section 409A.

11.2 If required by Section 409A, no payment or benefit that would otherwise be payable or commence upon the termination of employment shall be paid or shall commence unless and until Employee has had a “separation from service” within the meaning of Section 409A as determined in accordance with Section 1.409A-1(h) of the Treasury Regulations. For purposes of determining whether a separation from service has occurred, Employee shall be considered to have experienced a separation from service when the facts and circumstances indicate that Employee and Employer reasonably anticipate that either (i) no further services will be performed for Employer after a certain date, or (ii) that the level of bona fide services Employee will perform for Employer after such date (whether

 

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as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by Employee (whether as an employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services to Employer if Employee has been providing services to Employer for less than 36 months).

11.3 For purposes of Section 409A, each of the payments that may be made hereunder is designated as a separate payment. In no event may Employee, directly or indirectly, designate the calendar year of any payment to be made under this Agreement. Notwithstanding anything to the contrary in this Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Section 1.409A-1(b)(9)(v)(A) or (C) of the Treasury Regulations (relating to certain reimbursements and in-kind benefits paid under a separation pay plan) shall be paid or provided to Employee only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which Employee’s “separation from service” occurs; and provided, further, that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which Employee’s “separation from service” occurs. With respect to any expense reimbursement or the provision of any in-kind benefit that is subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any lifetime or other aggregate limitation applicable to reimbursements of medical expenses referred to in Section 105(b) of the Code), and in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which Employee incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

11.4 Notwithstanding any provision of this Agreement to the contrary, if, at the time of Employee’s “separation from service”, Employee is a “specified employee” (as defined in Section 409A) and it is necessary to postpone the commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result of such “separation from service” to prevent any accelerated or additional tax under Section 409A, then Employer will postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee) that are not otherwise paid within the short-term deferral exception under Section 409A and do not qualify as involuntary separation pay (within the meaning of Section 409A). If any payments or benefits are postponed due to such requirements, such amounts will be paid in a lump sum (without interest) to Employee on the first payroll date that occurs after the date that is six months and one day following Employee’s “separation from service” and any remaining payments and benefits shall be paid or provided in accordance with the normal payment dates specified for such payment or benefit. If Employee dies during the postponement period prior to the payment of postponed amount, the amounts withheld on account of Section 409A shall be paid to the personal representative of Employee’s estate within sixty (60) days after the date of Employee’s death.

 

15


11.5 Employer and Employee agree to negotiate in good faith to make amendments to this Agreement as the parties mutually agree, reasonably and in good faith, are necessary or desirable to avoid the possible imposition of taxes or penalties under Section 409A, while preserving any affected benefit or payment to the extent reasonably practicable without materially increasing the cost to Employer. Notwithstanding the foregoing, Employee shall be solely responsible and liable for the satisfaction of all taxes, interest, and penalties that may be imposed on Employee or for Employee’s account in connection with any payment or benefit under this Agreement (including any taxes, interest, and penalties under Section 409A), and Employer shall have no obligation to indemnify or otherwise hold Employee (or any beneficiary, successor or assign) harmless from any or all of such taxes, interest, or penalties.

12. Excess Parachute Payments. Notwithstanding anything in this Agreement to the contrary, if any of the payments or benefits provided or to be provided by Employer or any member of the Employer Group to Employee or for Employee’s benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) are determined to constitute “excess parachute payments” within the meaning of Section 280G of the Code and would, but for this Section 12 be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be reduced (but not below zero) to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax. All determinations required to be made under this Section 12, including whether a payment would result in an “excess parachute payment” and the assumptions utilized in arriving at such determination, shall be made by an accounting firm selected by Employer.

13. Arbitration.

13.1 In consideration of Employee’s employment or engagement with Employer, his promise to arbitrate all employment or service related disputes and Employee’s receipt of the compensation and other benefits paid to Employee by Employer, at present and in the future, EMPLOYEE AGREES THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING EMPLOYER AND ANY EMPLOYEE, OFFICER, DIRECTOR, STOCKHOLDER OR BENEFIT PLAN OF EMPLOYER IN THEIR CAPACITY AS SUCH OR OTHERWISE) ARISING OUT OF, RELATING TO, OR RESULTING FROM EMPLOYEE’S EMPLOYMENT WITH EMPLOYER OR THE TERMINATION OF EMPLOYEE’S EMPLOYMENT WITH EMPLOYER, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION UNDER THE ARBITRATION RULES SET FORTH IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 1280 THROUGH

 

16


1294.2, INCLUDING SECTION 1283.05 AND PURSUANT TO CALIFORNIA LAW. Employee agrees to arbitrate such disputes, and thereby agrees to waive any right to a trial by jury, including any statutory claims under state or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the California Fair Employment and Housing Act, the California Labor Code, claims of harassment, discrimination or wrongful termination and any statutory claims. Employee further understands that this agreement to arbitrate also applies to any disputes that Employer may have with Employee.

13.2 Employee agrees that any arbitration will be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and JAMS appellate procedures (such rules and procedures, the “Procedure”) before a sole arbitrator who shall have been a member of the State Bar of California for at least ten (10) years prior to appointment, in accordance with the laws of the State of California for agreements made in and to be performed in California. Employee agrees that the arbitration will be conducted in Los Angeles, California. Employee agrees that the arbitrator shall have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions to dismiss and demurrers, prior to any arbitration hearing. Employee also agrees that the arbitrator shall have the power to award any remedies, including attorneys’ fees and costs, available under applicable law and that any decision or judgment of the arbitrator will be enforceable in any court of competent jurisdiction. Employee understands Employer will pay for any administrative or hearing fees charged by the arbitrator or JAMS except that Employee shall pay the first $200 of any filing fees associated with any arbitration which Employee initiates. Employee agrees that the decision of the arbitrator shall be in writing and shall be binding upon Employee and Employer.

13.3 Except as provided by the Procedure and this Agreement, arbitration shall be the sole, exclusive and final remedy for any dispute between Employee and Employer. Accordingly, except as provided for by the Procedure and this Agreement, neither Employee nor Employer will be permitted to pursue court action regarding claims that are subject to arbitration. Notwithstanding the foregoing, the arbitrator will not have the authority to disregard or refuse to enforce any lawful Employer policy, and the arbitrator shall not order or require Employer to adopt a policy not otherwise required by law which Employer has not adopted.

13.4 In addition to the right under the Procedure to petition the court for provisional relief, Employee agrees that any party may also petition the court for injunctive relief where either party alleges or claims a violation of this Agreement.

13.5 Except to the extent otherwise provided herein, Employee agrees that the arbitration shall be conducted on a strictly confidential basis and Employee will not disclose the existence or nature of a claim, any documents, exhibits or information exchanged or presented in connection with such a claim or the decision or result of any such claim to any third party except Employee’s legal counsel, who shall also be bound by the confidentiality provision of this Subsection 13.5.

 

17


13.6 Employee understands that this Agreement does not prohibit Employee from pursuing an administrative claim with a local, state or federal administrative body such as the Department of Labor, the Department of Fair Employment and Housing, the Equal Employment Opportunity Commission or the Workers’ Compensation Board. This Agreement does, however, preclude Employee from pursuing court action regarding any such claim. Employee also understands and agrees that after exhaustion of administrative remedies under a statute that requires exhaustion of administrative proceedings before seeking relief, Employee must pursue any such claim through this binding arbitration procedure.

14. Governing Law; Consent to Jurisdiction; Jury Trial Waiver.

THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY. EXCEPT AS IS SPECIFICALLY PROVIDED IN SECTION 14, ANY ACTION TO ENFORCE THIS AGREEMENT OR AN ARBITRATION AWARD MUST BE BROUGHT IN, AND THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF, A COURT SITUATED IN LOS ANGELES, CALIFORNIA. EACH PARTY HEREBY WAIVES THE RIGHTS TO CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM FOR THE RESOLUTION OF ANY SUCH ACTION. EACH PARTY TO THIS AGREEMENT WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM.

15. Binding Effect.

The provisions of this Agreement shall be binding on the heirs, executors, administrators and other successors in interest of Employee.

 

18


16. Entire Agreement; Amendment.

This Agreement, any award agreements governing Employee’s equity interests in the Management Holdcos, EGH and any other member of the Employer Group, and any other applicable agreements governing such Management Holdcos, EGH, other member of the Employer Group or the equity interests therein shall constitute the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions, preliminary agreements, executed agreements and understandings, including, without limitation to the foregoing, the Existing Agreement. This Agreement may not be amended except in writing executed by the parties hereto. Notwithstanding the foregoing, the parties acknowledge and agree that this Agreement is not intended to supersede or replace any restrictive covenants to which Employee may be subject pursuant to any other agreement or policy.

17. Waiver.

Employer’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any provision or provisions, or prevent Employer from thereafter enforcing each and every other provision of this Agreement.

18. Notices.

All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or facsimile numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):

If to Employer, to:

Endeavor Operating Company, LLC

Endeavor Group Holdings, Inc.

9601 Wilshire Boulevard, Third Floor

Beverly Hills, CA 90210

Attention: Chief Legal Officer

Fax: (310) 246-3065

If to Employee, to:

The address provided by Employee to Employer as set forth in Employer’s records.

19. Taxes.

19.1 Employer shall be entitled to withhold from any payment due to Employee hereunder any amounts required to be withheld by applicable tax laws or regulations. Notwithstanding the foregoing, to the extent Employee is treated as a partner for tax purposes in accordance with Subsection 19.2, Employee shall be responsible for satisfying Employee’s obligations in respect of any self-employment taxes out of Employee’s funds.

 

19


19.2 Employer and Employee acknowledge and agree that from time to time as determined by Employer, for federal, state and local income tax purposes, Employee may be treated as a partner or employee, subject to applicable law. With respect to any period that Employee is treated as a partner for federal income tax purposes (a) all payments made by Employer to Employee pursuant to this Agreement shall be treated as “guaranteed payments”, within the meaning of Section 707(c) of the Code and (b) any payments made by Employer to Employee pursuant to this Agreement following Employee’s termination shall be treated as payments described in Section 736(a) of the Code and, solely for federal, state and local income tax purposes, Employee shall continue to be treated as a partner for federal income tax purposes with respect to the receipt of such payments. Notwithstanding anything to the contrary in this Agreement, to the extent permitted by law, all payments by Employer hereunder may be appropriately adjusted to take into account any additional taxes of Employer as a result of Employee being treated as an employee rather than as a partner for federal, state and local income tax purposes.

20. Set Off.

Employer’s obligation to pay Employee the amounts provided and to make the arrangements provided hereunder shall be subject to set-off, counterclaim or recoupment of any amounts owed by Employee to Employer or any of its Subsidiaries, except to the extent any such set-off, counterclaim or recoupment would violate, or result in the imposition of a tax under Section 409A, in which case such right shall be null and void.

21. Exculpation and Indemnification.

Employer shall indemnify, defend and hold harmless Employee in his capacity as an officer of the Employer Group against any losses, claims, damages, liabilities, expenses (including all reasonable fees and expenses of counsel), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, in which Employee may be involved or become subject to, in connection with any matter arising out of or in connection with the Employer Group’s business or affairs, or this Agreement or any related document, unless such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount is as a result of Employee not acting in good faith on behalf of the Employer Group or arose as a result of the willful commission by Employee of any act that is dishonest and materially injurious to the Employer Group or results from a breach by Employee of any of Specified Covenant. If Employee, in his capacity as an officer of the Employer Group, becomes involved in any capacity in any action, suit, proceeding or investigation in connection with any matter arising out of or in connection with the Employer Group’s business or affairs, or this Agreement or any related document, other than (x) by reason of any act or omission performed or omitted by Employee that was not in good faith on behalf of the Employer Group or constituted a willful commission by Employee of an act that is dishonest and materially injurious to the Employer Group, or (y) as a result of any breach by Employee of a Specified Covenant, Employer shall reimburse Employee for its reasonable legal and other reasonable out-of-

 

20


pocket expenses (including the cost of any investigation and preparation) as they are incurred in connection therewith; provided, that Employee shall promptly repay to Employer the amount of any such reimbursed expenses paid to it if it shall be finally judicially determined that Employee was not entitled to indemnification by, or contribution from, Employer in connection with such action, suit, proceeding or investigation. If for any reason (other than the bad faith of Employee or the willful commission by Employee of an act that is dishonest and materially injurious to the Employer Group) the foregoing indemnification is unavailable to Employee, or insufficient to hold it harmless, then Employer shall contribute to the amount paid or payable by Employee as a result of such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount in such proportion as is appropriate to reflect any relevant equitable considerations. There shall be, and Employee shall be entitled to, a rebuttable presumption that Employee acted in good faith. For purposes of this Section 21, “Specified Covenant” means Employee’s covenants and agreements contained herein and any other restrictive covenants then applicable to Employee and Employee’s duty of care and duty of loyalty to the Employer Group under applicable law.

22. Successors and Assigns.

This Agreement is personal to Employee and without the prior written consent of Employer shall not be assignable by Employee otherwise than by will or the laws of descent and distribution. This Agreement, and any rights and obligations of Employer hereunder, may be assigned or delegated, in whole or in part, by Employer to any person for any reason, including any person who is a successor to Employer or to a person who acquires one or more businesses from Employer or any of its affiliates. As used in this Agreement, “Employer” shall mean Employer as hereinbefore defined and any other person that assumes the obligations of Employer hereunder or agrees to perform as Employer hereunder, in each case whether by operation of law or otherwise.

23. Survival.

Insofar as any of the obligations contained in this Agreement are capable of surviving termination of this Agreement they shall so survive and continue to apply to the parties hereto, and if applicable, their respective assignees or successors including, for the avoidance of doubt and without limitation, obligations set forth in Sections 7 through 9 and 25.

24. Interpretation.

The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part of this Agreement.

 

21


25. Cooperation.

During the Term and at any time thereafter, Employee agrees to cooperate (i) with Employer in the defense of any legal matter involving any matter that arose during Employee’s employment with the Employer Group and (ii) with all governmental authorities on matters pertaining to any investigation, litigation or administrative proceeding pertaining to the Employer Group. Employer will reimburse Employee for any reasonable travel and out-of-pocket expenses incurred by Employee in providing such cooperation, including, but not limited to, reimbursing Employee for all reasonable and documented attorneys’ fees and costs he incurs in connection therewith, and will provide Employee with a per diem payment of $2,750 for each day or partial day that he provides such cooperation. Furthermore, any such cooperation occurring after the termination of Employee’s employment shall be scheduled to the extent reasonably practicable so as not to unreasonably interfere with Employee’s business or personal affairs.

26. Counterparts.

This Agreement may be executed in any number of counterparts, each of which when executed and delivered, shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument binding upon all of the parties hereto notwithstanding the fact that all parties are not signatory to the original or the same counterpart. For purposes of this Agreement, facsimile signatures or signatures via email as a portable document format (.pdf) shall be deemed originals.

*         *         *

 

22


IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

ENDEAVOR OPERATING COMPANY, LLC
By  

/s/ Ariel Emanuel

Its  

 

  Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

/s/ Ariel Emanuel

Its  

 

  Authorized Signatory
EMPLOYEE:
/s/ Jason Lublin

 

Jason Lublin

[Signature Page to Employment Agreement]


Exhibit A

Other Activities

None.


Exhibit B

General Release

THIS AGREEMENT AND RELEASE, dated as of _______, 20__ (this “Agreement”), is entered into by and among Jason Lublin (“Employee”), Endeavor Operating Company, LLC and Endeavor Group Holdings, Inc. (collectively, the “Employer”).

WHEREAS, Employee is currently employed with Employer; and

WHEREAS, Employee’s employment with Employer will terminate effective as of ____, 20__;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement and other good and valuable consideration, the parties hereby agree as follows:

1. Employee shall be provided the [Continuation Payments, Bonus Continuation, and Equity Award Acceleration][Post-Term Continuation Payments and Post-Term Bonus Continuation] (as defined in the Term Employment Agreement by and between Employee and Employer, dated as of ______ 2021 (the “Employment Agreement”)), in accordance with the terms and conditions of Subsections 4.6 and 4.8 of the Employment Agreement; provided, that the [Continuation Payments, Bonus Continuation, and Equity Award Acceleration][Post-Term Continuation Payments and Post-Term Bonus Continuation] shall not be paid or provided if Employee revokes this Agreement pursuant to Section 4 below.

2. Employee, for and on behalf of himself and Employee’s heirs, successors, agents, representatives, executors and assigns, hereby waives and releases any common law, statutory or other complaints, claims, demands, expenses, damages, liabilities, charges or causes of action (each, a “Claim”) arising out of or relating to Employee’s employment or termination of employment with, or Employee’s serving in any capacity in respect of, any of Employer and any of its affiliates (collectively, the “Employer Group”), both known and unknown, in law or in equity, which Employee may now have or ever had against any member of the Employer Group or any equityholder, agent, representative, administrator, trustee, attorney, insurer, fiduciary, employee, director or officer of any member of the Employer Group, including their successors and assigns (collectively, the “Employer Releasees”), including, without limitation, any claim for any severance benefit which might have been due Employee under any previous agreement executed by and between any member of the Employer Group and Employee, and any complaint, charge or cause of action arising out of his employment with the Employer Group under the Age Discrimination in Employment Act of 1967 (“ADEA,” a law which prohibits discrimination on the basis of age against individuals who are age 40 or older), the National


Labor Relations Act, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Family Medical Leave Act, the Equal Pay Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act, the California Family Rights Act, California law regarding Relocations, Terminations and Mass Layoffs and the California Labor Code, all as amended; and all other federal, state and local statutes, ordinances and regulations. By signing this Agreement, Employee acknowledges that Employee intends to waive and release any rights known or unknown Employee may have against the Employer Releasees under these and any other laws; provided, that, notwithstanding anything to the contrary herein, Employee does not waive or release Claims with respect to (i) the right to enforce this Agreement or those provisions of the Employment Agreement that expressly survive the termination of Employee’s employment with the Employer, (ii) that portion of Employee’s equity interests in any member of the Employer Group that remains outstanding following Employee’s termination of employment in accordance with the terms of the agreements governing such equity interests and any rights of Employee pursuant thereto, (iii) any vested right Employee may have under any employee pension or welfare benefit plan of the Employer Group or (iv) any rights to indemnification Employee may have under any indemnification agreement Employee may have with any member of the Employer Group or pursuant to the charter, by-laws or other organizational documents of any member of the Employer Group. Employee acknowledges and agrees that the Employer Releasees are third-party beneficiaries of the release of claims set forth in this Section 2.

Employee has read Section 1542 of the California Civil Code, which states in full:

“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, and that if known by him or her would have materially affected his or her settlement with the debtor or released party.”

Employee expressly waives any rights that he may have under Section 1542 of the California Civil Code to the full extent that he may lawfully waive such rights pertaining to a general release of claims, and Employee affirms that he is releasing all known or unknown claims that he has or may have against Employer or any of the Employer Releasees as stated in this Release.

BY SIGNING THIS RELEASE, EMPLOYEE WILL HAVE WAIVED ANY RIGHT EMPLOYEE MAY HAVE HAD TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST THE EMPLOYER RELEASEES BASED ON ANY ACTS OR OMISSIONS OF THE EMPLOYER RELEASEES UP TO THE DATE OF THE SIGNING OF THIS RELEASE. NOTWITHSTANDING THE ABOVE, NOTHING IN THIS AGREEMENT SHALL PREVENT EMPLOYEE FROM (I) INITIATING OR CAUSING TO BE INITIATED ON HIS BEHALF ANY COMPLAINT,

 

2


CHARGE, CLAIM OR PROCEEDING AGAINST EMPLOYER BEFORE ANY LOCAL, STATE OR FEDERAL AGENCY, COURT OR OTHER BODY CHALLENGING THE VALIDITY OF THE WAIVER OF HIS CLAIMS UNDER ADEA CONTAINED IN THIS AGREEMENT (BUT NO OTHER PORTION OF SUCH WAIVER); OR (II) INITIATING OR PARTICIPATING IN (BUT NOT BENEFITING FROM) AN INVESTIGATION OR PROCEEDING CONDUCTED BY THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION WITH RESPECT TO ADEA.

3. Employee acknowledges that Employee has been given 21 days from the date of receipt of this Agreement to consider all of the provisions of the Agreement, such 21-day period was not affected by any changes to this Agreement, whether or not material, and, to the extent he has not used the entire 21-day period prior to executing the Agreement, he does hereby knowingly and voluntarily waive the remainder of said 21-day period. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT CAREFULLY, HAS BEEN ADVISED BY THE EMPLOYER TO CONSULT AN ATTORNEY AND FULLY UNDERSTANDS THAT BY SIGNING BELOW HE IS GIVING UP CERTAIN RIGHTS WHICH HE MAY HAVE TO SUE OR ASSERT A CLAIM AGAINST ANY OF THE EMPLOYER RELEASEES, AS DESCRIBED HEREIN AND THE OTHER PROVISIONS HEREOF. EMPLOYEE ACKNOWLEDGES THAT HE HAS NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS AGREEMENT AND EMPLOYEE AGREES TO ALL OF ITS TERMS VOLUNTARILY.

4. Employee shall have seven (7) days from the date of Employee’s execution of this Agreement to revoke the release, including with respect to all claims referred to herein (including, without limitation, any and all claims arising under ADEA). If Employee revokes the Agreement, Employee will be deemed not to have accepted the terms of this Agreement.

5. Each party and its counsel have reviewed this Agreement and have been provided the opportunity to review this Release and accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole, and according to their fair meaning, and not strictly for or against either party.

 

3


IN WITNESS WHEREOF, the parties hereto have executed and delivered this Release as of the date first above written.

 

ENDEAVOR OPERATING COMPANY, LLC
By  

 

Its  

 

  Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

 

Its  

 

  Authorized Signatory
EMPLOYEE

 

Jason Lublin


Exhibit C

California Labor Code Sections 2870, 2871 and 2872

SECTION 2870

(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

 

  (1)

Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or

 

  (2)

Result from any work performed by the employee for the employer.

(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

SECTION 2871

No employer shall require a provision made void and unenforceable by Section 2870 as a condition of employment or continued employment. Nothing in this article shall be construed to forbid or restrict the right of an employer to provide in contracts of employment for disclosure, provided that any such disclosures be received in confidence, of all of the employee’s inventions made solely or jointly with others during the term of his or her employment, a review process by the employer to determine such issues as may arise, and for full title to certain patents and inventions to be in the United States, as required by contracts between the employer and the United States or any of its agencies.

SECTION 2872

If an employment agreement entered into after January 1, 1980 contains a provision requiring the employee to assign or offer to assign any of his or her rights in any invention to his or her employer, the employer must also, at the time the agreement is made, provide a written notification to the employee that the agreement does not apply to an invention which qualifies fully under the provisions of Section 2870. In any suit or action arising thereunder, the burden of proof shall be on the employee claiming the benefits of its provisions.

Exhibit 10.14

Execution Version

TERM EMPLOYMENT AGREEMENT

THIS TERM EMPLOYMENT AGREEMENT (this “Agreement”) IS DATED AS OF APRIL 19, 2021 BY AND AMONG ENDEAVOR GROUP HOLDINGS, INC., A DELAWARE CORPORATION (“EGH”), ENDEAVOR OPERATING COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (Endeavor Operating Company, LLC or such affiliate thereof which may employ Employee from time to time subject to the terms and conditions of this Agreement and which duly executes this Agreement, the “Employer”), and MARK SHAPIRO, AN INDIVIDUAL (“Employee”).

RECITALS

 

A.

Employee is currently providing services to WME IMG, LLC and its affiliates pursuant to the terms and conditions of that certain Term Employment Agreement, entered into on October 12, 2018, by and between WME IMG, LLC and Employee (the “Existing Agreement”).

 

B.

Employee acknowledges and agrees that many aspects of the business and affairs of the “Employer Group” (as defined below) are confidential and that Employee will have continued access to “Confidential Information” (as defined below).

 

C.

Employee acknowledges and agrees that the services to be rendered by Employee under this Agreement are of a special, unique, unusual, extraordinary and intellectual character which gives such services peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.

 

D.

Employee currently holds equity interests in WME Iris Management Holdco, LLC (“Iris I Holdco”), WME Iris Management Holdco II, LLC (“Iris II Holdco”) and WME Iris Management IV Holdco, LLC (“Iris IV Holdco”) and UFC Management Holdco, LLC (“UFC Management Holdco,” and collectively with Iris I Holdco, Iris II Holdco, and Iris IV Holdco, together with any successors thereto (including, without limitation, any entities through which Employee will directly or indirectly hold interests in Endeavor Operating Company, LLC or Endeavor Manager, LLC following any reorganization or restructuring in connection with the consummation of initial public offering of EGH), the “Management Holdcos”).

 

E.

The parties hereto wish to supersede the Existing Agreement as of the “Effective Date” (as defined below) and are entering into this Agreement in order to, among other things, memorialize the terms of the employment of Employee by Employer, to protect the Confidential Information of EGH, Employer and their respective affiliates’ clients, and to set forth the respective obligations of Employee, on the one hand, and EGH, Employer and their respective affiliates (including the Management Holdcos (and any successors)) (collectively, with EGH, the “Employer Group”), on the other hand.


TERMS AND CONDITIONS

NOW, THEREFORE, in consideration of the mutual agreements set forth herein and in consideration of and as a condition to the continued employment of Employee by Employer, the parties hereto agree as follows:

1. Effectiveness.

This Agreement shall be effective as of the effective date of the consummation of the initial public offering of EGH (the “Effective Date”). To the extent such public offering does not occur on or prior to December 31, 2021, this Agreement shall be void ab initio and the Existing Agreement shall remain in full force and effect. For the avoidance of doubt, prior to the Effective Date, the Existing Agreement will remain in full force and effect in accordance with its terms and conditions (including, for avoidance of doubt, its provisions regarding the payment of all compensation and benefits). Employee, Employer and the other members of the Employer Group acknowledge and agree that Employee has been continuously employed by a member of the Employer Group and that there has not been a termination of employment or any forfeiture of equity under the Existing Agreement or any agreement governing Employee’s equity interests or equity-based awards in any member of the Employer Group, including, without limitation, any Management Holdco (or any successor) and/or UFC Management Holdco LLC (or any successor).

2. Position and Duties.

2.1 Employer hereby agrees to employ Employee as President of the Employer Group, subject to the terms, conditions and provisions of this Agreement. As a material term of this Agreement, Employee shall be the sole President of the Employer Group and shall report directly to Ariel Emanuel as Chief Executive Officer of the Employer Group (“CEO”); provided, that, in the event of the termination of employment of the CEO as a result of his death or disability, Employee shall report directly to the successor thereto. Employee accepts such continued employment and agrees to render services as provided herein, all of which services shall be performed conscientiously and to the fullest extent of Employee’s ability. Employee shall devote substantially all of Employee’s business time to the Employer Group during the Term (as defined in Subsection 4.1 below); except nothing in this Agreement shall preclude Employee from serving as a member of the board of directors of any charitable, educational, religious, public interest or public service organization (but not as a member of the board of directors of a “for-profit” entity not part of the Employer Group unless approved by Employer or set forth on Exhibit A hereto), in each instance not inconsistent with the business practices and policies of Employer, or from devoting reasonable periods of time to the activities of the aforementioned organizations, unless such activities interfere in any material respect with the performance of Employee’s duties and responsibilities hereunder to the Employer Group. Notwithstanding the foregoing or any other provision herein, nothing in this Agreement shall prohibit Employee from continuing to serve in the board, advisory and ownership positions he maintains as of the date hereof listed on Exhibit A hereto (subject to the terms thereof); provided, that, except as otherwise set forth on Exhibit A, Employee shall not serve in any other such position unless prior approval is obtained from Employer.

 

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2.2 Employee’s principal work location shall be the Employer’s offices in New York, New York.

2.3 Employee shall be permitted to retain his full-time administrative assistant(s), which assistant(s) shall be on the Employer’s payroll and eligible to participate in all group health insurance benefit plans, group life insurance benefit plans, qualified defined contribution retirement plans, annual vacation plans, and other welfare benefit plans and programs that are made available to other employees of the Employer Group; provided, that such administrative assistant(s) shall be remunerated at a rate commensurate with similarly situated administrative assistants of Employer.

3. Compensation.

3.1 During the Term, Employer agrees to pay and Employee agrees to accept a salary at an annual rate of $3,000,000 (the “Base Salary”), pro-rated for any partial calendar year, if applicable. The Base Salary shall be payable in accordance with Employer’s customary procedures and practices commencing on the first payroll date following the Effective Date.

3.2 Cash Bonus Compensation

(a) In addition to the Base Salary, beginning in fiscal year 2021 and thereafter during the Term, Employee shall have the opportunity to earn an annual cash bonus (the “Annual Bonus”) in respect of each such fiscal year with a target amount of one hundred percent (100%) of Base Salary (the target for any applicable fiscal year, the “Target Bonus” for such fiscal year). The amount of the Annual Bonus for each fiscal year shall be determined by EGH’s Board of Directors (the “Board”) or such committee to which the Board has defeased its power and authority under EGH’s certificate of incorporation as in effect from time to time (or any committee or subcommittee thereof to which the Board or such committee to which the Board has defeased its power and authority the applicable authority (if any such delegation has occurred)) (the Board or such committee, as applicable, the “Governing Body”) in its sole discretion and may exceed the amount of the target Annual Bonus for such fiscal year based on performance above target performance levels for the applicable year, as determined in the sole discretion of the Governing Body; provided that, in no event may the Annual Bonus for any fiscal year exceed two hundred percent (200%) of Base Salary.

(b) Fifty Percent (50%) of the Annual Bonus shall be based on the attainment of certain annual performance metrics and the remaining fifty percent (50%) of the Annual Bonus shall be based on continued service and/or other criteria, determined in the sole discretion of the Governing Body. Payment of the Annual Bonus shall be made at such time as Employer customarily pays annual bonuses to its senior executives but in no event later than March 15th of the year following the year to which such Annual Bonus relates.

 

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3.3 Employer or one of its affiliates previously paid Employee a sign-on bonus of $6,000,000 (the “Sign-On Bonus”) on or about January 1, 2019. If Employee’s employment with Employer is terminated by Employer for Cause or due to his resignation without Good Reason (as such terms are defined below) prior to December 31, 2021, then Employee shall, within forty-five (45) days following such termination of employment, repay a portion of the after-tax amount of the Sign-On Bonus equal to the product obtained by multiplying (x) the after-tax amount of $5,311,237 by (y) the quotient obtained by dividing (i) the difference between (A) the total number of days from January 1, 2019 through December 31, 2021 (i.e., 1096 days) (the “Total Days”) less (B) the number of days elapsed from January 1, 2019 through (and including) the date of termination by (ii) the Total Days. For avoidance of doubt, the repayment obligation set forth in this Subsection 3.3 shall not apply to a termination by Employee for Good Reason, a termination by Employer without Cause, a termination due to Employee’s death or Disability, or a termination due to the expiration of the Term.

3.4 Employee acknowledges that, except as otherwise provided in this Agreement, including, for the avoidance of doubt, as provided under Sections 4, 5 and 6, and unless otherwise determined by the Governing Body or 16b-3 Committee (as defined below), as applicable, in accordance with the terms of their applicable charters (if any), the sole compensation that Employee is entitled to receive from Employer under this Agreement on and following the Effective Date shall be (a) the Base Salary, pursuant to Subsection 3.1, (b) the Annual Bonus, if any, pursuant to Subsection 3.2, and (c) the Annual Equity Award and IPO Equity Award pursuant to Subsection 3.5. Employee also retains his rights under the equity or equity-based awards previously granted to him by any member of the Employer Group in accordance with the applicable agreements governing such equity or equity-based interests. For the avoidance of doubt, the Governing Body and 16b-3 Committee, as applicable, may from time to time in its sole and absolute discretion provide for increases to (or cash and/or equity-based compensation in addition to) the compensation set forth in this Agreement.

3.5 Equity Compensation

(a) Employee shall be eligible to receive equity awards (the “Annual Equity Awards”) in respect of each calendar year commencing during the Term (for avoidance of doubt, beginning with the 2022 calendar year). Fifty percent (50%) of the size of the Annual Equity Awards for each calendar year shall be based on the attainment of certain annual performance metrics and fifty percent (50%) of the size of the Annual Equity Awards for each calendar year shall be based on continued service and/or other criteria, in each case as determined in the sole discretion of the Governing Body or the Board or a committee thereof if required with respect to actions taken to comply with Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the Board or committee thereof for this purpose, the “16b-3 Committee”). Subject to approval by the

 

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Governing Body or 16b-3 Committee, as applicable, the Annual Equity Awards for each calendar year are expected to (i) represent an aggregate value (as of the date of issuance) ranging from seventy-five percent (75%) to one-hundred and fifty percent (150%) of Employee’s (A) Base Salary and (B) Target Bonus for the fiscal year in which the Annual Equity Award is granted (such value calculated by the Governing Body or the 16b-3 Committee, as applicable, in its good faith discretion) and (ii) consist of fifty percent (50%) grants in the form of options (or similar awards) vesting based on continued service over a three-year period following grant, and fifty percent (50%) of grants in the form of restricted stock units (or similar awards) vesting based on continued service and/or attainment of performance goals or metrics, and in each case will be issued pursuant to award agreements on EGH’s applicable forms at the time of grant (“Annual Equity Award Agreements”). Notwithstanding the foregoing, the terms and conditions of each of Employee’s Annual Equity Awards (including the nature and vesting conditions thereof) shall be determined in the sole discretion of the Governing Body or 16b-3 Committee, as applicable, subject to the terms of their applicable charters (if any), and the value of the Annual Equity Awards may exceed the expected amount for such calendar year as described above; provided, however, that, for the avoidance of doubt, in no event shall any Annual Equity Award Agreement or the applicable equity plan subject Employee to restrictive covenants that are more extensive than those set forth in Sections 7 or 8 of this Agreement or Schedule E to the Award Agreement (as defined below).

(b) Employee will be entitled to receive a one-time equity award (the “IPO Equity Award”), subject to approval by the Governing Body or 16b-3 Committee, as applicable, and Employee’s continued employment through the date of grant. The IPO Equity Award shall be comprised of restricted stock, restricted stock units or similar awards of EGH and options or similar awards of EGH, and shall cover a number of shares of EGH equal to $20,000,000 divided by the price at pricing of the initial public offering of EGH. One-third of the IPO Equity Award shall be fully vested on the date of grant (or, if later, the effective date of the initial public offering of EGH) and the remaining IPO Equity Award will vest in two equal installments on each of the one-year and two-year anniversaries of the date of grant, subject to Employee’s continued employment through the vesting date, and will be issued pursuant to award agreements in EGH’s applicable forms at the time of grant (“IPO Equity Award Agreements”).

4. Term; Termination; Equity.

4.1 Employer and Employee acknowledge and agree that the employment of Employee under this Agreement is for a term beginning on the Effective Date and, subject to earlier termination in accordance with this Section 4, ending on the third (3rd) anniversary of the Effective Date (the “Term”).

 

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4.2 In the event that Employee’s employment terminates following the expiration of the Term (other than due to Employer Non-Renewal (as defined below) in accordance with Section 4.9), Employee shall only be entitled to receive (i) accrued and unpaid Base Salary through the date of termination of employment, (ii) notwithstanding anything herein or in any bonus or incentive agreement, arrangement, plan, policy or program to the contrary, the aggregate amount of any unpaid Annual Bonuses, if applicable, for any fiscal year preceding the fiscal year in which such termination of employment occurs, (iii) notwithstanding anything herein or in any bonus or incentive agreement, arrangement, plan, policy or program to the contrary, other than upon termination by the Employer for Cause (as defined below), any Annual Bonus in respect of fiscal year 2024 based on actual performance (to the extent unpaid), multiplied by a fraction, the numerator of which is the number of days that have elapsed from the commencement of the fiscal year in which such termination occurs through the date of such termination and the denominator of which is 365, (iv) reimbursement, within thirty (30) days following submission by Employee to Employer of appropriate supporting documentation, for any unreimbursed business expenses properly incurred by Employee in accordance with Employer’s policy prior to the date of Employee’s termination of employment; provided claims for such reimbursement (accompanied by appropriate supporting documentation) are submitted to Employer within ninety (90) days following the date of Employee’s termination of employment, and (v) all amounts and benefits then or thereafter due to Employee under the applicable terms of any applicable plan, program, award, agreement or arrangement (including any equity or equity-based plan, program, award, agreement or arrangement) of any member of the Employer Group in accordance with the terms and conditions of any such plan, program, award, agreement or arrangement. Such amounts in clause (i) above shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment and the amount in clause (ii) and (iii) above shall be paid at such time as such Annual Bonus in respect of the applicable fiscal year is otherwise paid to similarly situated senior executives, but in no event later than March 15 of the year following the year to which such Annual Bonus relates. In the event Employee’s employment hereunder is terminated for any reason after expiration of the Term, Employee shall resign all positions held with the Employer Group.

4.3 In the event that Employee shall, for any reason, continue to render services to the Employer Group after the expiration of the Term, and shall not have resigned or been terminated due to an Employer Non-Renewal following the expiration of the Term in accordance with Section 4.9, (a) Employee shall be deemed an “at-will” employee whose employment may be terminated by either Employer (or any of its Subsidiaries, as applicable) or Employee at any time and for any reason and (b) Employee shall in no event be entitled to the Severance Payments (defined in Subsection 4.7 below), Equity Award Acceleration (defined in (defined in Subsection 4.7 below) or Post-Term Continuation Payments (defined in Subsection 4.9(a) below) following any such termination, but, notwithstanding anything herein or in any bonus or incentive agreement, arrangement, plan, policy or program to the contrary, other than upon termination by the Employer for Cause, Employee shall remain entitled to receive the aggregate amount of any unpaid Annual Bonuses, if applicable, for any fiscal year preceding the expiration of the Term, payable at such time as such Annual Bonuses are otherwise paid to similarly situated senior executives, but in no event later than March 15 of the year following the year to which such Annual Bonus relates.

 

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4.4 Employer may terminate the Term and Employee’s employment hereunder for Disability. “Disability” means (a) Employee’s incompetence, as determined and declared by a court of competent jurisdiction or (b) it is determined by Employee’s treating physician or health care professional that Employee is physically or mentally incapacitated such that he is incapable of rendering services to the Employer Group for a period of ninety (90) consecutive days or for an aggregate of one hundred and twenty (120) days in any period of three hundred and sixty five (365) consecutive days. In addition, Employer may also terminate the Term and Employee’s employment hereunder with or without Cause. “Cause” shall mean Employee’s (a) conduct constituting embezzlement, fraud, or material misappropriation, whether or not related to Employee’s employment with Employer; (b) conduct constituting a felony, whether or not related to Employee’s employment with Employer; (c) conviction or indictment of a financial crime, material act of dishonesty or material unethical business conduct; (d) unauthorized disclosure or use of Confidential Information or material breach of Section 8 (Intellectual Property) of this Agreement, in each case that results in material harm to the Employer Group; (e) material breach of any restrictive covenant set forth in Schedule E to that certain Equity Award Agreement, dated as of April 19, 2021, by and between Employer, EGH, Employee, Iris I Holdco, Iris II Holdco, Iris IV Holdco and Employee, as it may be amended from time to time (the “Award Agreement”); (f) material breach of any other material obligation under this Agreement; (g) material violation of Employer’s written policies that is detrimental to the best interests of the Employer Group; (h) use of alcohol or drugs that materially interferes with the performance of Employee’s duties; or (i) conduct that brings Employee or the Employer Group into public disrepute, scandal, contempt or ridicule that shocks, insults or offends a substantial portion or group of the community or reflects unfavorably on Employee or the Employer Group. Notwithstanding the foregoing, termination by Employer for Cause shall not be effective until and unless Employee has been given written notice of particular acts or circumstances which are the basis for the termination for Cause, Employee is thereafter given thirty (30) days to cure (other than with respect to clauses (b) or (c) of the preceding sentence) the omission or conduct that is the basis of such claim if such omission or conduct is reasonably capable of being cured (it being understood that any errors in expense reimbursement may be cured by repayment).

4.5 Employee may tender notice of his resignation hereunder with or without Good Reason at any time; provided, however, that, in the event that Employee provides notice of his resignation for Good Reason, Employer shall have five (5) days from the date of such notice to instead notify Employee of its intent to terminate Employee for Cause, which termination shall take effect as of the date of such notification or, if applicable, following the expiration of the thirty (30) day cure period set forth in Subsection 4.4 above. Before resigning for Good Reason, Employee shall notify Employer in writing within ninety (90) days after the occurrence of any event giving rise to Good Reason. If Employer shall not have cured such event or events giving rise to Good Reason within thirty (30) days after receipt of written notice from Employee, Employee may terminate employment for Good Reason by delivering a resignation letter to Employer within five (5) business days following such thirty-day cure period; provided, that if Employee has not delivered such resignation letter to Employer within such five-business day period, Employee waives

 

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the right to terminate employment for Good Reason for the reasons set forth in the applicable written notice.    “Good Reason” shall mean, without Employee’s written consent the material breach by Employer of any material obligation under, this Agreement (including, but not limited to, the obligations under Section 2 above (including, for the avoidance of doubt, Employee ceasing to report directly to Ariel Emanuel as CEO, except in the event of the termination of Mr. Emanuel’s employment as a result of his death or disability) and any failure of Employer to pay or provide the compensation provided for in Section 3 above). Employee shall notify Employer in writing at least thirty (30) days before resigning without Good Reason, whereupon the Employer may, in its absolute discretion, relieve Employee of his responsibilities pending the effectiveness of resignation.

4.6 Termination on Account of Death or Disability. In the event that the Term and Employee’s employment hereunder terminates as a result of Employee’s death or is terminated by Employer due to Employee’s Disability prior to the third anniversary of the Effective Date, Employee (or Employee’s estate, as applicable) shall only be entitled to receive (a) accrued and unpaid Base Salary through the date of termination of employment, (b) an amount equal to the Target Bonus for the fiscal year in which the termination of employment occurs multiplied by a fraction, the numerator of which is the number of days that have elapsed from the commencement of the fiscal year in which such termination occurs through the date of such termination and the denominator of which is 365, (c) notwithstanding anything herein or in any bonus or incentive agreement, arrangement, plan, policy or program to the contrary, the payment by Employer of the aggregate amount of unpaid Annual Bonuses, if applicable, in respect of any fiscal year preceding the fiscal year in which the termination of employment occurs, (d) reimbursement, within thirty (30) days following submission by Employee (or Employee’s estate, as applicable) to Employer of appropriate supporting documentation, for any unreimbursed business expenses properly incurred by Employee in accordance with Employer’s policy prior to the date of Employee’s termination of employment; provided claims for such reimbursement (accompanied by appropriate supporting documentation) are submitted to Employer within ninety (90) days following the date of Employee’s termination of employment, and (e) all amounts and benefits then or thereafter due to Employee (or Employee’s estate, as applicable) under the applicable terms of any applicable plan, program, award, agreement or arrangement (including any equity or equity-based plan, program award, agreement or arrangement) of any member of the Employer Group in accordance with the terms and conditions of any such plan, program, award, agreement or arrangement. Such amounts in clause 4.6(a) shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment and the amounts in clause 4.6(b) and (c) shall be paid at such time as such Annual Bonus is otherwise paid to similarly situated senior executives, but in no event later than March 15 of the year following the year to which such Annual Bonus relates. In the event the Term and Employee’s employment hereunder is terminated by Employer on account of Disability or of his death, Employee shall be deemed to have resigned all positions held with the Employer Group as of the date of such termination of employment.

 

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4.7 Termination Without Cause or for Good Reason. In the event that the Term and Employee’s employment hereunder is terminated by Employer without Cause or by Employee for Good Reason, in each case, prior to the third anniversary of the Effective Date, Employee shall be entitled to receive (a) accrued and unpaid Base Salary through the date of termination of employment, (b) notwithstanding anything herein or in any bonus or incentive agreement, arrangement, plan, policy or program to the contrary, the payment by Employer of the aggregate amount of unpaid Annual Bonuses, if applicable, in respect of any fiscal year preceding the fiscal year in which the termination of employment occurs, (c) an amount equal to the Target Bonus for each calendar year commencing with the calendar year in which the date of termination occurs (including the portion of such calendar year preceding the date of termination, to the extent not already earned and paid) and ending on the later of (i) the end of the Term or (ii) the end of the twenty-four (24) month period immediately following Employee’s termination of employment (the “Bonus Severance” and such period, the “Continuation Period”) (prorated for any partial year), payable on the scheduled payment date for the applicable Annual Bonus in accordance with Subsection 3.2 as if Employee had remained employed through the payment date of such Annual Bonus, (d) reimbursement, within thirty (30) days following submission by Employee to Employer of appropriate supporting documentation, for any unreimbursed business expenses properly incurred by Employee in accordance with Employer’s policy prior to the date of Employee’s termination of employment; provided claims for such reimbursement (accompanied by appropriate supporting documentation) are submitted to Employer within ninety (90) days following the date of Employee’s termination of employment, (e) all amounts and benefits then or thereafter due to Employee under the applicable terms of any applicable plan, program, award, agreement or arrangement (including any equity or equity-based plan, program, award, agreement or arrangement) of any member of the Employer Group in accordance with the terms and conditions of any such plan, program, award, agreement or arrangement, (f) accelerated vesting of the portion of (i) the Annual Equity Award subject to time-based vesting and (ii) the IPO Equity Award, in each case of (i) and (ii) that remains unvested as of the date of termination (“Equity Award Acceleration”) and (g) payment of an amount equal to the Base Salary, payable by Employer as if Employee had remained employed through the Continuation Period (the “Salary Severance,” and collectively with the Bonus Severance, the “Severance Payments”). Such amounts in clause 4.7(a) shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment and the amounts in clauses 4.7(b) and (c) will be paid at such time as such Annual Bonus is otherwise paid to similarly situated senior executives, but in no event later than March 15 of the year of following the year to which such Annual Bonus relates. In order to receive the Severance Payments and Equity Award Acceleration, Employee must first execute and deliver a release of claims in the form attached hereto as Exhibit B (the “Mutual Release”) within sixty (60) days after the date of termination of Employee’s employment (such 60-day period, the “Release Period”), and must not revoke the Mutual Release within seven (7) days of signing it (the “Revocation Period”). Employer will also execute the Mutual Release within ten (10) days of receiving it, and return an executed original to Employee. Notwithstanding anything to the contrary in the Annual Equity Award Agreements or the IPO Equity Award

 

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Agreements, (i) the portion of the Annual Equity Awards subject to time-based vesting and IPO Equity Award that, in each case, remains unvested as of the date of termination by Employer without Cause or by Employee for Good Reason shall remain outstanding and unvested and shall become vested (and be exercisable and/or settled) on the eighth (8th) day after Employee has timely executed and delivered the Mutual Release, so long as Employee has not revoked the Mutual Release during the Revocation Period, subject to compliance with Section 409A of the Code, and (ii) if Employee either does not execute and deliver the Mutual Release or revokes the Mutual Release during the Revocation Period, such portion shall be forfeited for no consideration immediately following the end of the Release Period. The Salary Severance shall be paid ratably in monthly installments over the twenty-four-(24-) month period following termination of employment with the first such installment to be paid no later than the date on which Employee has executed (and not timely revoked) the Mutual Release (the “Severance Commencement Date”) (which installment shall include any installment of the Salary Severance that would have otherwise been paid to Employee prior to such date absent the requirement to execute the Mutual Release assuming for these purposes that installments are paid on the day of each month that corresponds to the date of termination) and the remaining installments to be paid during the remaining portion of such 24 month period on the day that corresponds to the date of termination with the final installment to be paid on the first anniversary of such termination date; provided, that, if the Release Period together with the Revocation Period spans across two calendar years, the Bonus Severance will be paid and the first installment of the Salary Severance will commence, in each case, on the first business day of the second calendar year if such date is later than the date on which such payment would otherwise have been made pursuant to this Subsection 4.7 absent this proviso and the first installment of the Salary Severance shall include any installment of the Salary Severance that would have otherwise been paid to Employee prior to such date absent this proviso (with any remaining installments paid on the day of each month that corresponds to the date of termination). Notwithstanding anything to the contrary, the Severance Payments shall immediately cease (and Employee shall forfeit the portion of the Annual Equity Awards and IPO Equity Awards subject to the Equity Award Acceleration and any equity received in respect thereof (and refund all proceeds received in respect of such equity through sale thereof or otherwise)) in the event that a duly appointed arbitrator determines that Employee has materially breached any of the covenants set forth in Sections 7 or 8 of this Agreement or Schedule E to the Award Agreement. In the event of any termination of the Term and Employee’s employment hereunder by Employer without Cause or by Employee for Good Reason, Employee shall be deemed to have resigned all positions held with the Employer Group as of the date of such termination of employment.

4.8 Termination for Cause or without Good Reason. In the event that the Term and Employee’s employment hereunder is terminated by Employer for Cause or by Employee without Good Reason, prior to the third anniversary of the Effective Date, then Employer shall have no further obligations to Employee under this Agreement, other than (a) accrued and unpaid Base Salary through the date of termination of employment, (b) reimbursement, within thirty (30) days following submission by Employee to Employer of appropriate supporting documentation, for any unreimbursed business expenses properly

 

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incurred by Employee in accordance with Employer’s policy prior to the date of Employee’s termination of employment; provided claims for such reimbursement (accompanied by appropriate supporting documentation) are submitted to Employer within ninety (90) days following the date of Employee’s termination of employment, (c) all amounts and benefits then or thereafter due to Employee under the applicable terms of any applicable plan, program, award, agreement or arrangement (including any equity or equity-based plan, program, award, agreement or arrangement) of any member of the Employer Group in accordance with the terms and conditions of any such plan, program, award, agreement or arrangement, and (d) notwithstanding anything herein or in any bonus or incentive agreement, arrangement, plan, policy or program to the contrary, the payment by Employer of the aggregate amount of unpaid Annual Bonuses, if applicable, in respect of any fiscal year preceding the fiscal year in which the termination of employment occurs. Such amounts in clause 4.7(a) shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment and the amounts in clause 4.7(d) shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination other than with respect to any Annual Bonus in respect of the year immediately prior to the year in which the termination occurs, which Annual Bonus will be paid at such time as such Annual Bonus is otherwise paid to similarly situated senior executives, but in no event later than March 15 of the year of termination, or as otherwise required by applicable law. In the event of any termination of the Term and Employee’s employment hereunder by Employer for Cause or by Employee without Good Reason, Employee shall no longer hold any positions with the Employer Group effective as of the date of such termination of employment.

4.9 Termination due to Employer Non-Renewal.

(a) Upon an Employer Non-Renewal, Employee shall be entitled to receive (i) accrued and unpaid Base Salary through the date of termination and Annual Bonus earned for any year prior to the year of termination, but not yet paid as of the date of termination of employment, which shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment (or as otherwise required by applicable law) or, in respect of the Annual Bonus, on the scheduled payment date in accordance with Subsection 3.2, (ii) an amount equal to the Annual Bonus (based on the Annual Bonus earned in respect of the calendar year prior to the calendar year in which such termination of employment occurs) for each calendar year during the period commencing with the calendar year in which the date of termination occurs (including the portion of such calendar year preceding the date of termination, to the extent not already earned and paid) and ending on the end of the twenty-four (24) month period immediately following Employee’s termination of employment (the “Post-Term Bonus Severance” and such period, the “Post-Term Continuation Period”) (prorated for any partial year at the end of the Post-Term Continuation Period), payable on the scheduled payment date for the applicable Annual Bonus in accordance with Subsection 3.2 as if Employee had remained employed through the payment date of such Annual Bonus, (iii) continued payment of the Base Salary in effect as of the end of the Term as if Employee had remained employed through the Post-Term Continuation Period (the “Post-Term Salary Severance”, and

 

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together with the Post-Term Bonus Severance, the “Post-Term Continuation Payments”), and (iv) the Equity Award Acceleration in the event the Employer terminates Employee’s employment without Cause in connection with an Employer Non-Renewal. For the avoidance of doubt, the Equity Award Acceleration will not occur in the event Employee terminates his employment for any reason in connection with an Employer Non-Renewal.

(b) Notwithstanding anything in this Agreement to the contrary, the Post-Term Continuation Payments and Equity Award Acceleration, if applicable, shall immediately cease in the event that Employee breaches any of the covenants set forth in Sections 7 or 8 of this Agreement. In order to receive the Post-Term Continuation Payments and Equity Award Acceleration, if applicable, Employee must first execute and deliver a Release that has become effective in accordance with its terms (including the expiration of any applicable revocation period contained therein or required by applicable law) within the Release Period. Notwithstanding anything to the contrary in the Annual Equity Award Agreements, (i) the portion of any Annual Equity Award that remains unvested as of the date of termination by the Employer in connection with an Employer Non-Renewal shall remain outstanding and unvested and shall become vested (and be exercisable and/or settled) on the eighth (8th) day after Employee has timely executed and delivered the Mutual Release, so long as Employee has not revoked the Mutual Release during the Revocation Period, subject to compliance with Section 409A of the Code, and (ii) if Employee either does not execute and deliver the Mutual Release or revokes the Mutual Release during the Revocation Period, such portion shall be forfeited for no consideration immediately following the end of the Release Period. The Post-Term Salary Severance shall be paid ratably in monthly installments over the twenty-four- (24-) month period following termination of employment with the first such installment to be paid no later than the Severance Commencement Date (which installment shall include any installment of the Post-Term Salary Severance that would have otherwise been paid to Employee prior to such date absent the requirement to execute the Mutual Release assuming for these purposes that installments are paid on the day of each month that corresponds to the date of termination) and the remaining installments to be paid during the remaining portion of such 24 month period on the day that corresponds to the date of termination with the final installment to be paid on the first anniversary of such termination date; provided, that, if the Release Period spans two calendar years, then the first installment of the Post-Term Salary Severance (which installment shall include any installment of the Post-Term Salary Severance that would have been paid to Employee prior to such date absent this proviso) will be paid on the first business day of the second calendar year if such date is later than the date on which such installment would otherwise have been paid pursuant to this Subsection 4.9 absent this proviso. In the event of any termination of Employee’s employment under this Section 4.9, Employee shall resign all positions held with the Employer Group. For the avoidance of doubt, except as set forth in Section 4.2 and this Section 4.9, Employee shall not be entitled to any severance payments or benefits hereunder upon any termination of employment following the third anniversary of the Effective Date.

 

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(c) An “Employer Non-Renewal” shall mean the occurrence of both of the following: (i) the Employer’s failure to furnish a bona fide offer of employment prior to the third anniversary of the Effective Date, which provides for annual cash and equity compensation opportunities that are substantially comparable, in the aggregate, to the annual cash and equity compensation opportunities Employee received hereunder (excluding from such comparison, for the avoidance of doubt, the IPO Equity Award) at any time prior to the third anniversary of the Effective Date, and (ii) the termination of Employee’s employment by Employer without Cause or by Employee for any reason during within the thirty (30) day period following the third anniversary of the Effective Date (provided that, at the time of such termination, events or circumstances that could constitute Cause (without regard for any cure periods) do not exist with respect to Employee, and Employee has continued to comply with all applicable restrictive covenants). For the avoidance of doubt, in no event shall an Employer Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason for purposes of this Article 4 (other than Section 4.9(a) and 4.9(c)).

4.10 Treatment of Equity. Except as otherwise set forth in Section 4.7 and 4.9(a), upon termination of Employee’s employment hereunder Employee’s equity interests and equity-based awards in any member of the Employer Group shall be treated in accordance with the applicable agreements governing such equity interests and equity-based awards, including, without limitation, the Award Agreement, the Limited Liability Company Agreement of any Management Holdco and the Limited Liability Company Agreement of UFC Management Holdco LLC (or any successor) (as such agreements may be amended, supplemented or restated from time to time in accordance with their terms, the “Management Holdco LLC Agreements”).

5. Other Benefits.

During the Term and Employee’s employment with the Employer Group, Employee shall be eligible to participate in all group health insurance benefit plans, group life insurance benefit plans, qualified defined contribution retirement plans, annual vacation plans, other welfare benefit plans and programs (excluding any severance plans), fringe benefit plans and programs and perquisites that are made available to other senior executives of the Employer Group (other than any such fringe benefit plans and programs and perquisites that are made available exclusively to the Chief Executive Officer and the Executive Chairman of Employer).

6. Employer Expense Reimbursement.

During Employee’s employment by Employer, Employee will be reimbursed in accordance with Employer’s policy in effect from time to time for travel, entertainment and other expenses reasonably incurred in the performance of Employee’s duties and responsibilities hereunder; provided, that Employee provides Employer with proper substantiation of such travel, entertainment and other expenses; and provided, further, that Employee shall be permitted to travel first class and obtain reimbursement for all such travel. Any such reimbursements shall be paid no later than March 15th following the calendar year in which the related expense is incurred.

 

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7. Confidential Information.

7.1 Employee agrees that Employee will not at any time, whether during or subsequent to Employee’s employment by the Employer Group, either directly or indirectly, use or divulge, disclose or communicate to any person, firm or corporation, other than in the course of performing Employee’s duties to the Employer Group, any confidential and proprietary information and trade secrets of the Employer Group, including, without limitation, client and customer information, pricing information, financial plans, business plans, business concepts, supplier information, know-how and intellectual property and materials related thereto (the “Confidential Information”), whether heretofore or hereafter obtained by Employee while in the employ of the Employer Group. Upon leaving the employ of the Employer Group, Employee will not take or use, without the prior written consent of Employer, any memoranda, notes (whether or not prepared by Employee during the course of Employee’s employment with the Employer Group), lists, schedules, forms or other documents, papers or records of any kind (including, but not limited to, computerized or other records and documents in digital form or otherwise), relating to the Employer Group’s businesses or clients or any reproduction, summary or abstract thereof (including by means of discs or any other medium), all of which Employee acknowledges are the exclusive property of the Employer Group; provided that Employee shall be entitled to retain and utilize any such material solely relating to this Agreement, his rights hereunder, and his equity interests or equity-based awards in any Management Holdco (or any successor) or any other member of the Employer Group. Employee hereby agrees to surrender to Employer upon request at any time after the termination of Employee’s employment with the Employer Group all Confidential Information and other Employer property; provided, that, under no circumstances shall Employee be required to surrender or turn over his Outlook contacts, which shall remain his sole property.

7.2 Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall prohibit Employee from reporting possible violations of federal law or regulation to or otherwise cooperating with or providing information requested by any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Employee does not need the prior authorization of Employer to make any such reports or disclosures and Employee is not required to notify Employer that Employee has made such reports or disclosures.

 

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8. Intellectual Property.

8.1 If Employee creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, intellectual property, materials, documents or other work product (including, without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content or audiovisual materials) (“Works”), either alone or with third parties, at any time during Employee’s employment by the Employer Group and within the scope of such employment and/or with the use of any of the Employer Group’s resources (“Employer Works”), Employee hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to Employer to the extent ownership of any such rights does not vest originally in Employer.

8.2 Employee shall take all requested actions and execute all necessary documents (including any licenses or assignments) at Employer’s expense (but without further remuneration) to assist Employer in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of Employer’s rights in Employer Works. If Employer is unable for any other reason to secure Employee’s signature on any document for this purpose, then Employee hereby irrevocably designates and appoints Employer and its duly authorized officers and agents as Employee’s agent and attorney in fact, to act for and in Employee’s behalf and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing.

8.3 Employee shall not knowingly improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with any member of the Employer Group any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Employee shall comply with all relevant policies and guidelines of Employer, including, without limitation, policies and guidelines regarding the protection of confidential information and intellectual property and potential conflicts of interest. Employee acknowledges that Employer may amend any such policies and guidelines from time to time, and that Employee remains at all times bound by their most current version.

8.4 Notwithstanding anything to the contrary contained herein, pursuant to the Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that: (A) is made (i) in confidence to a Federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Employee also understands that if he files a lawsuit for retaliation by the Employer Group for reporting a suspected violation of law, Employee may disclose the trade secret to his attorney and use the trade secret information in the court proceeding, if Employee (i) files any document containing the trade secret under seal, and (ii) does not disclose the trade secret, except pursuant to court order.

 

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9. Enforcement.

9.1 Employee agrees that Employer would suffer irreparable damage, that Employer would not have any adequate remedy at law in the event of a breach or threatened breach of any of the covenants set forth in Sections 7 or 8 of this Agreement, that the damages resulting from any such breach or threatened breach would be material but not readily susceptible to being measured in monetary terms, and that any remedy at law (including the payment of damages) would be inadequate as a result of such breach or threatened breach. Accordingly, it is agreed that Employer shall be entitled to an immediate injunction or injunctions to prevent breaches or threatened breaches of Sections 7 or 8 of this Agreement and to specific performance of such Sections 7 or 8 of this Agreement, in each case without proof of actual damages, and Employee waives any requirement for the securing or posting of any bond in connection with any such remedy.

9.2 Employee further agrees that the remedies provided for in this Section 9 shall be in addition to, and not in limitation of, any other remedies that may be available to Employer whether at law or in equity, including monetary damages, and all of Employer’s rights shall be unrestricted, including, but not limited to, the right to terminate Employee at any time for any reason.

9.3 Employee acknowledges and agrees that as used in this Agreement, the “Employer Group” shall mean the Employer Group as hereinbefore defined and any person who is a successor to Employer, or a person who acquires one or more businesses from Employer or any of its affiliates; provided, that, Ariel Emanuel and/or Patrick Whitesell continue to be employed in a bona fide capacity with such successor or such acquirer.

10. Severability.

The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any of the provisions of this Agreement shall be determined to be invalid under the laws of any applicable jurisdiction, such invalidity shall not invalidate all of the provisions of this Agreement, but rather the Agreement shall be construed insofar as the laws of that jurisdiction are concerned, as not containing invalid or contravening provisions, and the rights and obligations of the parties shall otherwise be enforced to the fullest extent possible. If, however, any such invalid or contravening provisions relate to Sections 7 or 8, then such Sections shall be construed as providing for the maximum protections available to an employer which the laws of that jurisdiction permit.

 

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11. Section 409A.

11.1 This Agreement shall be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and any Treasury Regulations or other Department of Treasury guidance issued thereunder (“Section 409A”). The parties intend that any amounts payable hereunder will be compliant with or exempt from Section 409A.

11.2 If required by Section 409A, no payment or benefit that would otherwise be payable or commence upon the termination of employment shall be paid or shall commence unless and until Employee has had a “separation from service” within the meaning of Section 409A as determined in accordance with Section 1.409A-1(h) of the Treasury Regulations. For purposes of determining whether a separation from service has occurred, Employee shall be considered to have experienced a separation from service when the facts and circumstances indicate that Employee and Employer reasonably anticipate that either (i) no further services will be performed for Employer after a certain date, or (ii) that the level of bona fide services Employee will perform for Employer after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by Employee (whether as an employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services to Employer if Employee has been providing services to Employer for less than 36 months).

11.3 For purposes of Section 409A, each of the payments that may be made hereunder is designated as a separate payment. In no event may Employee, directly or indirectly, designate the calendar year of any payment to be made under this Agreement. Notwithstanding anything to the contrary in this Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Section 1.409A-1(b)(9)(v)(A) or (C) of the Treasury Regulations (relating to certain reimbursements and in-kind benefits paid under a separation pay plan) shall be paid or provided to Employee only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which Employee’s “separation from service” occurs; and provided further that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which Employee’s “separation from service” occurs. With respect to any expense reimbursement or the provision of any in-kind benefit that is subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any lifetime or other aggregate limitation applicable to reimbursements of medical expenses referred to in Section 105(b) of the Code), and in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which Employee incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

 

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11.4 Notwithstanding any provision of this Agreement to the contrary, if, at the time of Employee’s “separation from service”, Employee is a “specified employee” (as defined in Section 409A) and it is necessary to postpone the commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result of such “separation from service” to prevent any accelerated or additional tax under Section 409A, then Employer will postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee) that are not otherwise paid within the short-term deferral exception under Section 409A and do not qualify as involuntary separation pay (within the meaning of Section 409A). If any payments or benefits are postponed due to such requirements, such amounts will be paid in a lump sum (without interest) to Employee on the first payroll date that occurs after the date that is six months and one day following Employee’s “separation from service” and any remaining payments and benefits shall be paid or provided in accordance with the normal payment dates specified for such payment or benefit. If Employee dies during the postponement period prior to the payment of postponed amount, the amounts withheld on account of Section 409A shall be paid to the personal representative of Employee’s estate within sixty (60) days after the date of Employee’s death.

11.5 Employer and Employee agree to negotiate in good faith to make amendments to this Agreement as the parties mutually agree, reasonably and in good faith, are necessary or desirable to avoid the possible imposition of taxes or penalties under Section 409A, while preserving any affected benefit or payment to the extent reasonably practicable without materially increasing the cost to Employer. Notwithstanding the foregoing, Employee shall be solely responsible and liable for the satisfaction of all taxes, interest, and penalties that may be imposed on Employee or for Employee’s account in connection with any payment or benefit made in accordance with this Agreement (including any taxes, interest, and penalties under Section 409A), and Employer shall have no obligation to indemnify or otherwise hold Employee (or any beneficiary, successor or assign) harmless from any or all of such taxes, interest, or penalties.

12. Excess Parachute Payments.

12.1 Notwithstanding anything in this Agreement to the contrary, and subject to the application of Subsection 12.2 below, if any of the payments or benefits provided or to be provided by Employer or any member of the Employer Group to Employee or for Employee’s benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) are determined to constitute “excess parachute payments” within the meaning of Section 280G of the Code and would, but for this Subsection 12.1 be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be reduced (but not below zero) to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax; provided, however, that Employer agrees to, and agrees to cause any other relevant member of the Employer Group to, use commercially reasonable best efforts to obtain shareholder approval of any payments or benefits in excess of the safe harbor level in accordance with Q&A #7 of Section 280G of the Code (the “Shareholder Approval Exception”), to the extent applicable and available, such that there will be no such loss of deductibility under Code Section 280G or imposition of tax under Section 4999 of the Code.

 

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12.2 In the event that the Shareholder Approval Exception is not applicable and/or available, the cutback to the Covered Payments contemplated pursuant to Subsection 12.1 shall only be applied if such reduction will result in, after taking into account all applicable taxes, including any federal, state and local taxes and the Excise Tax, a greater net after-tax benefit to Employee than the net after-tax benefit to Employee of payment of all Covered Payments computed without regard to any such reduction.

12.3 All determinations required to be made under Subsection 12.1 and Subsection 12.2, including whether a payment would result in an “excess parachute payment” and the assumptions utilized in arriving at such determination, shall be made by a “Big Four” accounting firm selected by Employer.

13. Arbitration.

13.1 In consideration of Employee’s employment or engagement with Employer, his promise to arbitrate all employment or service related disputes and Employee’s receipt of the compensation and other benefits paid to Employee by Employer, at present and in the future, THE PARTIES AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES BETWEEN EMPLOYEE, ON THE ONE HAND, AND ANY MEMBER OF THE EMPLOYER GROUP AND ANY EMPLOYEE, OFFICER, DIRECTOR, STOCKHOLDER OR BENEFIT PLAN OF THE EMPLOYER GROUP IN THEIR CAPACITY AS SUCH OR OTHERWISE, ON THE OTHER HAND, ARISING OUT OF, RELATING TO, OR RESULTING FROM EMPLOYEE’S EMPLOYMENT WITH EMPLOYER OR THE TERMINATION OF EMPLOYEE’S EMPLOYMENT WITH EMPLOYER, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION. The parties agree to arbitrate such disputes, and hereby agree to waive any right to a trial by jury, including any statutory claims under state or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, claims of harassment, discrimination or wrongful termination and any statutory claims. This agreement to arbitrate also applies to any disputes that any member(s) of the Employer Group or any employee, officer, director, stockholder or benefit plan thereof may have with Employee.

13.2 Any arbitration will be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and JAMS appellate procedures (such rules and procedures, the “Procedure”) before a sole arbitrator who shall be a lawyer. Employee agrees that the arbitration will be conducted in New York, New York. The arbitrator shall have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions to dismiss, prior to any arbitration hearing. The arbitrator shall have the power to award any

 

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remedies, including attorneys’ fees and costs, available under applicable law and any decision or judgment of the arbitrator will be enforceable in any court of competent jurisdiction. Employer will pay for any administrative or hearing fees charged by the arbitrator or JAMS except that Employee shall pay the first $200 of any filing fees associated with any arbitration which Employee initiates. Employee agrees that the decision of the arbitrator shall be in writing and shall be binding upon the parties to the arbitration.

13.3 Except as provided by the Procedure and this Agreement, arbitration shall be the sole, exclusive and final remedy for any dispute between Employee, on the one hand, and the members of the Employer Group and their respective employees, officers, directors, stockholders, and benefit plans, on the other hand. Accordingly, except as provided for by the Procedure and this Agreement, neither Employee nor any member of the Employer Group (or its employees, officers, directors, stockholders, or benefit plans) will be permitted to pursue court action regarding claims that are subject to arbitration. Notwithstanding the foregoing, the arbitrator will not have the authority to disregard or refuse to enforce any lawful term of this Agreement, and the arbitrator shall not order or require Employer to adopt a policy not otherwise required by law which Employer has not adopted.

13.4 In addition to the right under the Procedure to petition the court for provisional relief, Employee agrees that any party may also petition the court for injunctive relief where any party alleges or claims a violation of this Agreement.

13.5 Except to the extent otherwise provided herein, the parties agree that the arbitration shall be conducted on a strictly confidential basis and neither Employee nor any member of the Employer Group (or any of their respective employees, officers, directors, stockholders or benefit plans) will disclose the existence or nature of a claim, any documents, exhibits or information exchanged or presented in connection with such a claim or the decision or result of any such claim to any third party except for the parties’ legal counsel, who shall also be bound by the confidentiality provision of this Subsection 13.5.

13.6 Employee understands that this Agreement does not prohibit Employee from pursuing an administrative claim with a local, state or federal administrative body such as the Department of Labor, the Department of Fair Employment and Housing, the Equal Employment Opportunity Commission or the Workers’ Compensation Board. This Agreement does, however, preclude Employee from pursuing court action regarding any such claim (except as necessary to enforce an arbitrator’s award). Employee also understands and agrees that after exhaustion of administrative remedies under a statute that requires exhaustion of administrative proceedings before seeking relief, Employee must pursue any such claim through this binding arbitration procedure.

 

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14. Governing Law; Consent to Jurisdiction; Jury Trial Waiver.

THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY. EXCEPT AS IS SPECIFICALLY PROVIDED IN SECTION 14, ANY ACTION TO ENFORCE THIS AGREEMENT OR AN ARBITRATION AWARD MUST BE BROUGHT IN, AND THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF, A COURT SITUATED IN NEW YORK, NEW YORK. EACH PARTY HEREBY WAIVES THE RIGHTS TO CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM FOR THE RESOLUTION OF ANY SUCH ACTION. EACH PARTY TO THIS AGREEMENT WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM.

15. Binding Effect.

The provisions of this Agreement shall be binding on the heirs, executors, administrators and other successors in interest of Employee.

16. Entire Agreement; Amendment.

This Agreement, the Management Holdco LLC Agreements, the Award Agreement and any award agreement or letter agreement pursuant to which any equity or equity-based award in any member of the Employer Group has been or is awarded to Employee constitute the entire understanding between the parties and their affiliates with respect to the subject matter hereof and supersede all prior negotiations, discussions, preliminary agreements, executed agreements and understandings, including, without limitation to the foregoing, the Existing Agreement (which Existing Agreement shall be superseded as of the Effective Date but in no event prior thereto). This Agreement may not be amended except in writing executed by the parties hereto.

17. Waiver.

A party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any provision or provisions, or prevent such party from thereafter enforcing each and every other provision of this Agreement.

 

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18. Notices.

All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or facsimile numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):

If to Employer, to:

c/o Endeavor Operating Company, LLC

Endeavor Group Holdings, Inc.

9601 Wilshire Boulevard, Third Floor

Beverly Hills, CA 90210

Attention: Chief Legal Officer

Fax: (310) 246-3065

If to Employee, to:

Mark Shapiro

33 Green Acre Lane

Westport, CT 06880

Tel: (203) 249-9855

With a copy (which shall not constitute notice) to:

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, NY 10036

Attention: Richard J. Rabin

Tel.: (212) 872-1086

Fax: (212) 872-1002

19. Taxes.

Employer shall be entitled to withhold from any payment due to Employee hereunder any amounts required to be withheld by applicable tax laws or regulations. Notwithstanding the foregoing, to the extent Employee is treated as a partner for tax purposes, which shall only occur with Employee’s prior notice and to the extent permitted by law, Employee shall be responsible for satisfying Employee’s obligations in respect of any self-employment taxes out of Employee’s funds.

 

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20. Advice of Counsel and Construction.

The parties acknowledge that they have had the opportunity to be represented by counsel in the negotiation and execution of this Agreement. Accordingly, the rule of construction of contract language against the drafting party is hereby waived by each party to this Agreement.

21. Successors and Assigns.

This Agreement is personal to Employee and without the prior written consent of Employer shall not be assignable by Employee otherwise than by will or the laws of descent and distribution. This Agreement, and any rights and obligations of Employer hereunder, may be assigned or delegated, in whole or in part, by Employer to any person who is a successor to Employer or to a person who acquires one or more businesses from Employer or any of its affiliates; provided, that, Ariel Emanuel and/or Patrick Whitesell continue to be employed in a bona fide capacity with such successor or such acquirer; provided, further, that Employee’s rights, the Management Holdcos’ and UFC Management Holdco LLC’s (or any successors’) obligations or any other member of the Employer Group’s obligations under any Management Holdco LLC Agreement (or any successor limited liability company agreement) and any award or similar agreement (as such agreement may be amended in accordance with its terms) pursuant to which any equity in or equity-based award of any member of the Employer Group (including any Management Holdcos (or any successors) and UFC Management Holdco LLC (or any successor)) was awarded to Employee shall, in each case, remain in full force and effect. As used in this Agreement, “Employer” shall mean Employer as hereinbefore defined and any other person that assumes the obligations of Employer hereunder or agrees to perform as Employer hereunder, in each case whether by operation of law or otherwise.

22. Survival.

Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24 and 25 shall survive and continue in full force in accordance with their terms notwithstanding any termination of this Agreement for any reason or the Term or of Employee’s employment with Employer.

23. Interpretation.

The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part of this Agreement.

 

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24. Cooperation.

During the Term and at any time thereafter, Employee agrees to cooperate (i) with Employer in the defense of any legal matter involving any matter that arose during Employee’s employment with the Employer Group, (ii) with Employer in connection with Employee’s obligations under Section 8 hereunder, and (iii) with all governmental authorities on matters pertaining to any investigation, litigation or administrative proceeding pertaining to the Employer Group. Employer will reimburse Employee for any reasonable travel and out-of-pocket expenses incurred by Employee in providing such cooperation, including, but not limited to, reimbursing Employee for all reasonable and documented attorneys’ fees and costs he incurs in connection therewith, and will provide Employee with a per diem payment of $8,219 for each day or partial day that he provides such cooperation. Furthermore, any such cooperation occurring after the termination of Employee’s employment shall be scheduled to the extent reasonably practicable so as not to unreasonably interfere with Employee’s business or personal affairs.

25. Counterparts.

This Agreement may be executed in any number of counterparts, each of which when executed and delivered, shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument binding upon all of the parties hereto notwithstanding the fact that all parties are not signatory to the original or the same counterpart. For purposes of this Agreement, facsimile signatures or signatures via email as a portable document format (.pdf) shall be deemed originals.

*     *     *

 

 

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IN WITNESS WHEREOF, Employer and Employee have executed and delivered this Agreement as of the date first above written.

 

ENDEAVOR OPERATING COMPANY, LLC

By

 

/s/ Jason Lublin

Its

 

 

 

Authorized Signatory

ENDEAVOR GROUP HOLDINGS, INC.

By

 

/s/ Jason Lublin

Its

 

 

 

Authorized Signatory

WME IMG, LLC

By

 

/s/ Jason Lublin

Its

 

 

 

Authorized Signatory

EMPLOYEE:

 

/s/ Mark Shapiro

Mark Shapiro

[Signature Page to Mark Shapiro Employment Agreement]


Exhibit A

Current Board, Advisory and Ownership Positions

 

Live Nation

 

Equity Residential

 

Captivate Network

 

Bright Lights Acquisition Corp.

 

Shaq Foundation

If any of the above entities enters into a material business relationship with any material competitor of the Employer Group, as determined by the Employer Group in good faith, Employee will either resign or advise Employer of such relationship and Employer may require Employee to resign from any positions with such company.


Exhibit B

Mutual Release

THIS AGREEMENT AND RELEASE, dated as of _______, 20__ (this “Release Agreement”), is entered into by and among Mark Shapiro (“Employee”), Endeavor Group Holdings, Inc. (“EGH”), and Endeavor Operating Company, LLC (together with any affiliate thereof which may have employed Employee from time to time subject to the terms and conditions of the Employment Agreement (as hereafter defined) and which has duly executed the Employment Agreement, the “Employer,” and together with EGH and their respective affiliates, collectively, the “Employer Group”).

WHEREAS, Employee is currently employed with Employer; and

WHEREAS, Employee’s employment with Employer will terminate effective as of ____, 20__; and

WHEREAS, capitalized terms used herein but not otherwise defined herein shall have the meaning ascribed to such terms in the Term Employment Agreement by and between Employee, EGH and Employer , dated as of April [•], 2021 (the “Employment Agreement”).

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Release Agreement and other good and valuable consideration, the parties hereby agree as follows:

1 Employee shall be (i) provided the [Severance Payments and Equity Award Acceleration][Post-Term Continuation Payments] (as defined in the Term Employment Agreement by and between Employee and Employer, dated as of ______ 2021 (the “Employment Agreement”) in accordance with the terms and conditions of Subsections 4.7 and 4.9 of the Employment Agreement and (ii) entitled to retain 100% of the Sign-On Bonus; provided, that if Employee revokes this Release Agreement pursuant to Section 6 below, the [Severance Payments and Equity Award Acceleration][Post-Term Continuation Payments] shall not be paid or provided to Employee and Employee shall be required to repay a portion of the Sign-On Bonus to Employer as contemplated pursuant to Subsection 3.3 of the Employment Agreement.

2 Employee, for and on behalf of himself and Employee’s heirs, successors, agents, representatives, executors and assigns, hereby waives and releases any common law, statutory or other complaints, claims, demands, expenses, damages, liabilities, charges or causes of action (each, a “Claim”) arising out of or relating to Employee’s employment or termination of employment with, or Employee’s serving in any capacity in respect of, any member of the Employer Group, both known and unknown, in law or in equity, which Employee may now have or ever had against any member of the Employer Group or any equityholder, agent, representative, administrator, trustee, attorney, insurer, fiduciary,

 


employee, director or officer of any member of the Employer Group, including their successors and assigns (collectively, the “Employer Parties”), including, without limitation, any claim for any severance benefit which might have been due Employee under any previous agreement executed by and between any member of the Employer Group and Employee (but excluding, for avoidance of doubt, any Claims employee may have to the Severance Payments), and any complaint, charge or cause of action arising out of his employment with the Employer Group under the Age Discrimination in Employment Act of 1967 (“ADEA,” a law which prohibits discrimination on the basis of age against individuals who are age 40 or older), the National Labor Relations Act, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Family Medical Leave Act, the Equal Pay Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification Act, the New York Labor Law (including but not limited to the Retaliatory Action By Employers Law, the New York State Worker Adjustment and Retraining Notification Act, all provisions prohibiting discrimination and retaliation, and all provisions regulating wage and hour law), the New York Civil Rights Law, Section 125 of the New York Workers’ Compensation Law, Article 23-A of the New York Correction Law, the New York City Human Rights Law, and the New York City Earned Sick Leave Law, all as amended; and all other federal, state and local statutes, ordinances and regulations. By signing this Release Agreement, Employee acknowledges that Employee intends to waive and release any rights known or unknown Employee may have against the Employer Parties under these and any other laws; provided, that, notwithstanding anything to the contrary herein, Employee does not waive or release Claims with respect to (i) the right to enforce this Release Agreement or those provisions of the Employment Agreement that expressly survive the termination of Employee’s employment with the Employer (including, for avoidance of doubt, Employee’s right to the Severance Payments), (ii) that portion of Employee’s equity interests and equity-based awards in any member of the Employer Group that remains outstanding following Employee’s termination of employment in accordance with the terms of the agreements governing such equity interests and equity-based awards and any rights of Employee pursuant thereto (including, for avoidance of doubt, the Award Agreement, and that certain Award Agreement, made effective as of December 16, 2016, by and between UFC Management Holdco LLC and Employee, as it may be amended in accordance with its terms, and the Management Holdco LLC Agreements (or any successor limited liability company agreements)), (iii) any vested right Employee may have under any employee pension or welfare benefit plan of the Employer Group or (iv) any rights to indemnification, contribution, or exculpation Employee may have under any insurance policy or agreement, including any indemnification agreement Employee may have with any member of the Employer Group, or pursuant to the charter, by-laws or other organizational documents of any member of the Employer Group. Employee acknowledges and agrees that the Employer Parties are third-party beneficiaries of the release of claims set forth in this Section 2.

 

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3 Employer, for and on behalf of itself and all of the other Employer Parties, hereby waives and releases any and all Claims arising out of or relating to Employee’s employment or termination of employment with, or Employee’s serving in any capacity in respect of, any member of the Employer Group, both known and unknown, in law or in equity, which any of the Employer Parties may now have or ever had against Employee or any of his agents, representatives, trustees, attorneys, insurers, fiduciaries, heirs, successors, executors or assigns (collectively, the “Employee Parties”), including, without limitation, any complaint, charge or cause of action arising under any and all federal, state and local statutes, ordinances and regulations. Notwithstanding the foregoing, Employer does not release or waive: (i) any Claims based on any intentional fraud by Employee (to the extent not known by, or reasonably capable of being discovered upon reasonable investigation by, Employer before termination); (ii) any Claims arising out of a breach by Employee of the covenants sets forth in Sections 7 and 8 of the Employment Agreement and Schedule E to the Award Agreement (to the extent not known by, or reasonably capable of being discovered upon reasonable investigation by, Employer before termination), (iii) any Claims for any breach of any documents governing the grant of equity to Employee, (iv) any counterclaims by Employer to any claim for indemnity, contribution or exculpation, (v) any breach by Employee of this Release Agreement, or (vi) any rights that cannot be released as a matter of law. By signing this Release Agreement, Employer acknowledges that the Employer Parties intend to waive and release any rights known or unknown that any of the Employer Parties may have against the Employee Parties under these and any other laws; provided, that, notwithstanding anything to the contrary herein, the Employer Parties do not waive or release Claims with respect to the right to enforce this Release Agreement or those provisions of the Employment Agreement that expressly survive the termination of Employee’s employment with the Employer. Employer acknowledges and agrees that the Employee Parties are third-party beneficiaries of the release of claims set forth in this Section 3.

4 The parties have read Section 1542 of the California Civil Code, which states in full: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” The parties expressly waive any rights that they may have under Section 1542 of the California Civil Code to the full extent that they may lawfully waive such rights pertaining to a general release of claims, and (i) Employee affirms that he is releasing all known or unknown claims that he has or may have against Employer or any of the Employer Parties as stated in this Release and (ii) Employer affirms that the Employer Parties are releasing all known or unknown claims that they have or may have against Employee or any of the Employee Parties as stated in this Release Agreement.

BY SIGNING THIS RELEASE, THE EMPLOYEE PARTIES WILL HAVE WAIVED ANY RIGHT THEY MAY HAVE HAD TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST THE EMPLOYER PARTIES, AND THE EMPLOYER PARTIES WILL HAVE WAIVED ANY RIGHT THEY MAY HAVE HAD TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST THE EMPLOYEE PARTIES, BASED ON ANY ACTS OR OMISSIONS ARISING UP TO THE DATE OF THE SIGNING OF THIS RELEASE. NOTWITHSTANDING THE ABOVE, NOTHING IN THIS RELEASE AGREEMENT SHALL PREVENT EMPLOYEE FROM (I) INITIATING OR CAUSING TO BE INITIATED ON HIS

 

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BEHALF ANY COMPLAINT, CHARGE, CLAIM OR PROCEEDING AGAINST EMPLOYER BEFORE ANY LOCAL, STATE OR FEDERAL AGENCY, COURT OR OTHER BODY CHALLENGING THE VALIDITY OF THE WAIVER OF HIS CLAIMS UNDER ADEA CONTAINED IN THIS RELEASE AGREEMENT (BUT NO OTHER PORTION OF SUCH WAIVER); OR (II) INITIATING OR PARTICIPATING IN (BUT NOT BENEFITING FROM) AN INVESTIGATION OR PROCEEDING CONDUCTED BY THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION WITH RESPECT TO ADEA.

5 Employee acknowledges that Employee has been given 21 days from the date of receipt of this Release Agreement to consider all of the provisions of the Release Agreement, such 21-day period was not affected by any changes to this Agreement, whether or not material, and, to the extent he has not used the entire 21-day period prior to executing the Release Agreement, he does hereby knowingly and voluntarily waive the remainder of said 21-day period. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS READ THIS RELEASE AGREEMENT CAREFULLY, HAS BEEN ADVISED BY THE EMPLOYER TO CONSULT AN ATTORNEY AND FULLY UNDERSTANDS THAT BY SIGNING BELOW HE IS GIVING UP CERTAIN RIGHTS WHICH HE MAY HAVE TO SUE OR ASSERT A CLAIM AGAINST ANY OF THE EMPLOYER PARTIES, AS DESCRIBED HEREIN AND THE OTHER PROVISIONS HEREOF. EMPLOYEE ACKNOWLEDGES THAT HE HAS NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS RELEASE AGREEMENT AND EMPLOYEE AGREES TO ALL OF ITS TERMS VOLUNTARILY.

6 Employee shall have seven (7) days from the date of Employee’s execution of this Release Agreement to revoke the release, including with respect to all claims referred to herein (including, without limitation, any and all claims arising under ADEA). If Employee revokes the Release Agreement, Employee will be deemed not to have accepted the terms of this Release Agreement.

7 Each party and its counsel have reviewed this Release Agreement and have been provided the opportunity to review this Release Agreement and accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Release Agreement. Instead, the language of all parts of this Release Agreement shall be construed as a whole, and according to their fair meaning, and not strictly for or against either party.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Release Agreement as of the date first above written.

 

ENDEAVOR OPERATING COMPANY, LLC

 

By  

                 

Its  

             

 

Authorized Signatory

 

ENDEAVOR GROUP HOLDINGS, INC.

By  

                 

Its  

                 

 

Authorized Signatory

 

EMPLOYEE

             

Mark Shapiro

Exhibit 10.15

Execution Version

TERM EMPLOYMENT AGREEMENT

THIS TERM EMPLOYMENT AGREEMENT (this “Agreement”) IS DATED AS OF APRIL 19, 2021 (THE “EXECUTION DATE”) BY AND AMONG ENDEAVOR GROUP HOLDINGS, INC., A DELAWARE CORPORATION (“EGH”), ENDEAVOR OPERATING COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (Endeavor Operating Company, LLC or such affiliate thereof which may employ Employee from time to time, the “Employer”), and SETH KRAUSS, AN INDIVIDUAL (“Employee”).

RECITALS

 

A.

Employee is currently providing services to the “Employer Group” (as defined below) pursuant to the terms and conditions of that certain Amended and Restated Term Employment Agreement, entered into on November 20, 2020, by and between WME IMG, LLC, Employee and, for limited purposes, Endeavor Operating Company, LLC, WME Iris Management Holdco, LLC (“Iris Holdco”), WME Iris Management IV Holdco, LLC (“Iris IV Holdco”) and WME Iris Management Holdco V, LLC, (“Iris V Holdco”) (the “Existing Agreement”).

 

B.

Employee acknowledges and agrees that many aspects of the business and affairs of the Employer Group are confidential and that Employee will have access to “Confidential Information” (as defined below).

 

C.

Employee acknowledges and agrees that the services to be rendered by Employee under this Agreement are of a special, unique, unusual, extraordinary and intellectual character which gives such services peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.

 

D.

Employee currently holds equity interests in Iris Holdco, Iris IV Holdco, Iris V Holdco and UFC Management Holdco LLC (Iris Holdco, Iris IV Holdco, Iris V Holdco and UFC Management Holdco LLC, collectively, together with any successors thereto (including, without limitation, any entities through which he will directly or indirectly hold equity interests in Endeavor Operating Company, LLC or Endeavor Manager, LLC following any reorganization or restructuring in connection with the consummation of an initial public offering of EGH), the “Management Holdcos”).

 

E.

The parties hereto wish to supersede the Existing Agreement as of the Effective Date (as defined below) and are entering into this Agreement in order to, among other things, memorialize the terms of the continued employment of Employee by Employer, to protect to the fullest extent permissible the Confidential Information of EGH, Employer and their respective affiliates’ clients, and to insure the strictest compliance by Employee with Employee’s fiduciary obligations to EGH, Employer and their respective affiliates (including the Management Holdcos) (collectively with EGH, the “Employer Group”) and to their respective clients.


TERMS AND CONDITIONS

NOW, THEREFORE, in consideration of the mutual agreements set forth herein and in consideration of and as a condition to the employment of Employee by Employer, the parties hereto agree as follows:

1. Effectiveness.

This Agreement (other than Section 3.2(c)) shall be effective as of the effective date of the consummation of the initial public offering of EGH (the “Effective Date”) and Section 3.2(c) shall be effective as of the Execution Date. To the extent such public offering does not occur on or prior to December 31, 2021, this Agreement shall be void ab initio and the Existing Agreement shall remain in full force and effect, provided that, notwithstanding the foregoing, Section 3.2(c) shall not be void ab initio and shall continue in full force and effect such that, for the avoidance of doubt, notwithstanding Sections 3.3 and 17.2 of the Existing Agreement, Employee shall not in any event be entitled to the Second Supplemental Bonus (as defined in the Existing Agreement).

2. Position and Duties.

Employer hereby agrees to employ Employee as Chief Legal Officer, subject to the terms, conditions and provisions of this Agreement. Employee accepts such employment and agrees to render services as provided herein, all of which services shall be performed conscientiously and to the fullest extent of Employee’s ability. Employee shall report directly to the Chief Executive Officer and/or Executive Chairman of Employer (or, from time to time, to their designees). Employee shall devote substantially all of Employee’s business time to the Employer Group during the Term (as defined in Subsection 4.1 below); provided, that nothing in this Agreement shall preclude Employee from serving as a member of the board of directors of any charitable, educational, religious, public interest or public service organization (but not as a member of the board of directors of a “for-profit” entity not part of the Employer Group unless approved by the Chief Executive Officer or Executive Chairman of Employer), in each instance not inconsistent with the business practices and policies of Employer, or from devoting reasonable periods of time to the activities of the aforementioned organizations, unless such activities interfere in any material respect with the performance of Employee’s duties and responsibilities hereunder to the Employer Group. During the Term, Employee’s principal place of employment will be located in New York County. Employee understands that this position requires business travel and Employee will travel as is reasonably necessary to perform his duties.

 

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3. Compensation.

3.1 During the Term, Employer agrees to pay and Employee agrees to accept a salary (the “Base Salary”) at an annual rate of $1,500,000. The Base Salary at the annual rate set forth in this Section 3.1 shall only apply following the Effective Date (and have no retroactive effect) and shall be payable in accordance with Employer’s customary procedures and practices commencing on the first payroll date following the Effective Date.

3.2 Cash Bonus Compensation.

(a) In addition to the Base Salary, Employee shall have the opportunity to earn an annual cash bonus (the “Annual Bonus”) in respect of each calendar year during the Term with a target Annual Bonus of up to one hundred percent (100%) of Employee’s Base Salary (the “Target Bonus”). The amount of the Annual Bonus for each fiscal year shall be determined by EGH’s Board of Directors (the “Board”) or such committee to which the Board has defeased its power and authority under EGH’s certificate of incorporation as in effect from time to time (or any committee or subcommittee thereof to which the Board or such committee to which the Board has defeased its power and authority has delegated the applicable authority (if any such delegation has occurred)) (the Board or such committee, as applicable, the “Governing Body”) in its sole discretion and may exceed the amount of the target Annual Bonus for such fiscal year.

(b) Fifty percent (50%) of the Annual Bonus shall be based on the attainment of certain annual performance metrics and the remaining fifty percent (50%) of the Annual Bonus shall be based on continued service and/or other criteria, as determined in the sole discretion of the Governing Body. Without limiting the foregoing, unless otherwise determined by the Governing Body, the right to payment of any Annual Bonus shall be subject to Employee’s continued employment through the end of the fiscal year to which it relates. Payment of the Annual Bonus shall be made at such time as Employer customarily pays annual bonuses to its senior executives but in no event later than March 15th of the year following the year to which such Annual Bonus relates.

(c) Effective as of the Execution Date, Employee hereby irrevocable releases the Employer Group from any obligations or liability with respect to, and waives any rights to payment or any other benefits in respect of, the Second Supplemental Bonus (as described in Section 3.3 of the Existing Agreement), whether arising pursuant to Section 3.3 or 4.6 of the Existing Agreement or otherwise.

3.3 Equity Compensation.

(a) Employee shall be eligible to receive an equity award (an “Annual Equity Award”) in respect of each calendar year commencing during the Term. Fifty percent (50%) of the size of the Annual Equity Award shall be based on the attainment of certain annual performance metrics and fifty percent (50%) of the size of the Annual Equity Award shall be based on continued service and/or other criteria, which shall be determined

 

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in the sole discretion of the Governing Body (or the Board or a committee thereof if required with respect to actions taken to comply with Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the Board or a committee thereof for these purposes, the “16b-3 Committee”)). Subject to approval by the Governing Body or the 16b-3 Committee, as applicable, the Annual Equity Award for each fiscal year is expected to (i) represent an aggregate value ranging from fifty percent (50%) to one-hundred and fifty percent (150%) of Employee’s Base Salary (such value calculated by the Governing Body or the 16b-3 Committee, as applicable, in its good faith discretion) and (ii) consist of fifty percent (50%) grants in the form of options (or similar awards) vesting based on continued service over a three-year period following grant, and fifty percent (50%) grants in the form of restricted stock units (or similar awards) vesting based on continued service and/or attainment of performance goals or metrics, and in each case will be issued pursuant to award agreements on EGH’s applicable forms at the time of grant (the “Annual Equity Award Agreements”). Notwithstanding the foregoing, the terms and conditions of each of Employee’s Annual Equity Award (including the nature and vesting conditions thereof) shall be determined in the sole discretion of the Governing Body or the 16b-3 Committee, as applicable, subject to the terms of their applicable charters (if any), and the value of the Annual Equity Award may exceed (or be less than) the expected amount for such fiscal year as described above.

(b) Employee will be entitled to receive a one-time equity award (the “IPO Equity Award”), subject to approval by the Governing Body or 16b-3 Committee, as applicable, and Employee’s continued employment through the date of grant. The IPO Equity Award shall be comprised of restricted stock, restricted stock units or similar awards of EGH and options or similar awards of EGH, and shall cover a number of shares of EGH equal to $1,000,000 divided by the price at pricing of the initial public offering of EGH. One-third of the IPO Equity Award shall be fully vested on the date of grant (or, if later, the effective date of the initial public offering of EGH) and the remaining IPO Equity Award will vest in two equal installments on each of the one-year and two-year anniversaries of the date of grant, subject to Employee’s continued employment through the vesting date, and will be issued pursuant to award agreements in EGH’s applicable forms at the time of grant (the “IPO Equity Award Agreements”).

(c) In addition to the foregoing, to the extent Employee has not received the Supplemental Equity Award (as defined and described in Section 3.4 of the Existing Agreement) prior to the Effective Date, Employee will be entitled to receive a one-time equity award (the “Post-IPO Supplemental Equity Award”), subject to approval by the Governing Body or 16b-3 Committee, as applicable, and Employee’s continued employment through the date of grant. Two-thirds of the Post-IPO Supplemental Equity Award shall be comprised of restricted stock, restricted stock units or similar awards of EGH and the remaining one-third of the Post-IPO Supplemental Equity Award shall be comprised of options or similar awards of EGH, and shall cover a number of shares of EGH equal to $500,000 divided by the price at pricing of the initial public offering of EGH. The Post-IPO Supplemental Equity Award will vest in three equal installments on each of December 31, 2021, December 31, 2022 and December 31, 2023, subject to Employee’s continued employment through the vesting date, and will be issued pursuant to award agreements in EGH’s applicable forms at the time of grant (the “Post-IPO Supplemental Equity Award Agreements”).

 

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3.4 Employee acknowledges that, unless otherwise determined by the Governing Body or 16b-3 Committee, as applicable, in accordance with the terms of their applicable charters (if any), the sole cash and equity-based compensation that Employee is entitled to receive from the Employer Group shall be (a) the Base Salary pursuant to Subsection 3.1, (b) the Annual Bonus pursuant to Subsection 3.2, and (c) the Annual Equity Award, IPO Equity Award and Post-IPO Supplemental Equity Award pursuant to Subsection 3.3. For the avoidance of doubt, the Governing Body and 16b-3 Committee, as applicable, may from time to time in its sole and absolute discretion provide for increases to (or cash and/or equity-based compensation in addition to) the compensation set forth in this Agreement.

3.5 EGH, Employer and Employee agree that Employer and EGH shall be entitled to allocate, for federal, state and local income tax and other tax purposes, the percentage of Employee’s services that Employee provides in each of his capacities as the Chief Legal Officer of Employer and an officer of EGH. For purposes of this Agreement, references to the “Governing Body” shall include, in each case, any committee or subcommittee thereof, to which the Governing Body has delegated the applicable authority (if any such delegation has occurred).

4. Term and Termination.

4.1 Employer and Employee acknowledge and agree that the employment of Employee under this Agreement is for a term beginning on the Effective Date and, subject to earlier termination in accordance with this Section 4, ending on the close of business on December 31, 2023 (the “Term”).

4.2 In the event that Employee shall, for any reason, continue to render services to the Employer Group after the expiration of the Term, and shall not have resigned or been terminated due to an Employer Non-Renewal (as defined below) following December 31, 2023 in accordance with Section 4.8, Employee shall be deemed an “at-will” employee whose employment may be terminated by either Employer (or any of its Subsidiaries, as applicable) or Employee at any time and for any reason (and Employee shall in no event be entitled to the Continuation Payments, the Bonus Continuation or the Equity Award Acceleration (as such terms defined in Subsection 4.6 below) following any such termination). In the event Employee’s employment hereunder is terminated for any reason after expiration of the Term, Employee shall resign all positions held with the Employer Group.

 

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4.3 Employer may terminate the Term and Employee’s employment hereunder for Disability. “Disability” means (a) Employee’s incompetence, as determined and declared by a court of competent jurisdiction or (b) as determined in good faith by Employer, that the mental or physical incapacity of Employee is such that Employee is incapable of rendering services to the Employer Group for a period of ninety (90) consecutive days or for an aggregate of one hundred and twenty (120) days in any period of three hundred and sixty five (365) consecutive days. In addition, Employer may also terminate the Term and Employee’s employment hereunder with or without Cause. “Cause” shall mean Employee’s (a) conduct constituting embezzlement, fraud, or material misappropriation, whether or not related to Employee’s employment with Employer; (b) conviction of a felony, whether or not related to Employee’s employment with Employer; (c) conviction or indictment of a financial crime, material act of dishonesty or material unethical business conduct; (d) unauthorized disclosure or use of Confidential Information or material breach of Section 8 (Intellectual Property) of this Agreement, in each case that results in material harm to the Employer Group; (e) material breach of any applicable restrictive covenants set forth in any agreement between Employee and the Employer Group; (f) material breach of any other material obligation under this Agreement; (g) material violation of Employer Group’s written policies that the Governing Body determines is detrimental to the best interests of the Employer Group; (h) use of alcohol or drugs that materially interferes with the performance of Employee’s duties; or (i) conduct that brings Employee or the Employer Group into public disrepute, scandal, contempt or ridicule that shocks, insults or offends a substantial portion or group of the community or reflects unfavorably on Employee or the Employer Group. Notwithstanding the foregoing, termination by Employer for Cause shall not be effective until and unless Employee has been given written notice of particular acts or circumstances which are the basis for the termination for Cause, Employee is thereafter given thirty (30) days to cure (other than with respect to clause (b) or (c) of the preceding sentence) the omission or conduct that is the basis of such claim if such omission or conduct is reasonably capable of being cured (it being understood that any errors in expense reimbursement may be cured by repayment).

4.4 Employee may terminate the Term and Employee’s employment hereunder for Good Reason at any time, except at such time as Cause exists with respect to Employee. Employee shall notify Employer in writing within ninety (90) days after the occurrence of any event giving rise to Good Reason. If Employer shall not have cured such event or events giving rise to Good Reason within thirty (30) days after receipt of written notice from Employee, Employee may terminate employment for Good Reason by delivering a resignation letter to Employer within five (5) business days following such thirty-day cure period; provided, that if Employee has not delivered such resignation letter to Employer within such five-day period, Employee waives the right to terminate employment for Good Reason. “Good Reason” shall mean, without Employee’s written consent the material breach by Employer of any material obligation under this Agreement (including any failure of Employer to pay or provide the compensation provided for in Section 3 above). For the avoidance of doubt, subject to any applicable cure period set forth above, any requirement for Employee to relocate Employee’s principal place of employment outside of New York County without his consent will constitute “Good Reason”.

 

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4.5 Termination on Account of Death or Disability. In the event that the Term and Employee’s employment hereunder terminates as a result of Employee’s death or is terminated by Employer due to Employee’s Disability prior to December 31, 2023, Employee (or Employee’s estate, as applicable) shall only be entitled to receive accrued and unpaid Base Salary as of the date of termination of employment. Such amounts shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment, or otherwise required by applicable law. In the event the Term and Employee’s employment hereunder is terminated by Employer on account of Disability, Employee shall resign all positions held with the Employer Group and in the event of termination of the Term and Employee’s employment hereunder on account of Employee’s death, Employee shall be deemed to have so resigned.

4.6 Termination Without Cause or for Good Reason. In the event that the Term and Employee’s employment hereunder is terminated by Employer without Cause or by Employee for Good Reason, in each case, prior to December 31, 2023, Employee shall be entitled to receive (a) accrued and unpaid Base Salary or Annual Bonus earned but not yet paid as of the date of termination of employment, which shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment, or otherwise required by applicable law, or, in respect of the Annual Bonus, on the scheduled payment date in accordance with Subsection 3.2, (b) payment equal to the Target Bonus for the calendar year in which termination occurs, payable on the scheduled payment date for the Target Bonus in accordance with Subsection 3.2 as if Employee had remained employed through the payment date of such Target Bonus (the “Bonus Continuation”), (c) continued payment of the Base Salary in effect as of the date of Employee’s termination of employment, payable by Employer in equal installments as if Employee had remained employed through the later of (i) December 31, 2023, and (ii) the first anniversary of the date of termination (the “Continuation Payments” and such period, the “Continuation Period”) and (d) accelerated vesting of the portion of (i) the Annual Equity Award subject to time-based vesting, (ii) the IPO Equity Award, and (iii) the Post-IPO Supplemental Equity Award, in each case (i), (ii) and (iii), that remains unvested as of the date of termination (the “Equity Award Acceleration”). Notwithstanding anything in this Agreement to the contrary, the Continuation Payments and any right to the Bonus Continuation shall immediately cease (and Employee shall forfeit the portion of the Annual Equity Award, IPO Equity Award and Post-IPO Supplemental Equity Award subject to the Equity Award Acceleration and any equity received in respect thereof (and refund all proceeds received in respect of such equity through sale thereof or otherwise)) in the event that Employee breaches any of the covenants set forth in Sections 7 or 8 of this Agreement or any restrictive covenants then-applicable to Employee. In order to receive the Continuation Payments, the Bonus Continuation and the Equity Award Acceleration, Employee must first execute and deliver a release of claims in the form attached hereto as Exhibit A (the “Release”), that has become effective in accordance with its terms (including the expiration of any applicable revocation period contained therein or required by applicable law) within sixty (60) days after the date of termination of Employee’s employment (such 60-day period, the “Release Period”). The Continuation Payments shall be paid ratably in monthly installments over the Continuation Period with the first such installment to be paid no later than ten (10) days following the date on which the Release becomes effective and irrevocable (which installment shall include any installment of the Continuation Payments that would have been paid to Employee prior to such date absent

 

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the requirement to execute the Release); provided, that, if the Release Period spans two calendar years, then the first installment of the Continuation Payments (which installment shall include any installment of the Continuation Payments that would have been paid to Employee prior to such date absent this proviso) will be paid on the first business day of the second calendar year if such date is later than the date on which such installment would otherwise have been paid pursuant to this Subsection 4.6 absent this proviso. Notwithstanding anything to the contrary in the Annual Equity Award Agreements, IPO Equity Award Agreements or the Post-IPO Supplemental Equity Award Agreements, (i) the portion of the Annual Equity Award subject to time-based vesting, IPO Equity Award and Post-IPO Supplemental Equity Award that, in each case, remains unvested as of the date of termination by Employer without Cause or by Employee for Good Reason shall remain outstanding and unvested and shall become vested (and be exercisable and/or settled) if and only if the Release becomes effective as described above and Employee is otherwise entitled hereunder, subject to compliance with Section 409A of the Code, and (ii) if the Release does not become so effective, such portion shall be forfeited for no consideration immediately following the end of the Release Period. In the event of any termination of the Term and Employee’s employment hereunder by Employer without Cause or by Employee for Good Reason, Employee shall resign all positions held with the Employer Group.

4.7 Termination for Cause. If Employer terminates the Term and Employee’s employment hereunder for Cause , then Employer shall have no further obligations to Employee under this Agreement, other than the payment of accrued and unpaid Base Salary, which shall be paid in a lump sum within thirty (30) days after the date of termination of employment, or as otherwise required by applicable law. In the event of any termination of the Term and Employee’s employment hereunder by Employer for Cause, Employee shall no longer hold any positions with the Employer Group.

4.8 Termination due to Employer Non-Renewal.

(a) Upon an Employer Non-Renewal (as defined below), Employee shall be entitled to receive (i) accrued and unpaid Base Salary or Annual Bonus earned for any year prior to the year of termination, but not yet paid as of the date of termination of employment, which shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment (or as otherwise required by applicable law) or, in respect of the Annual Bonus, on the scheduled payment date in accordance with Subsection 3.2, and (ii) continued payment of the Base Salary in effect as of the date of Employee’s termination of employment as if Employee had remained employed through the end of the six (6) month period immediately following Employee’s termination of employment (the “Post-Term Continuation Payments” and such period, the “Post-Term Continuation Period”).

(b) Notwithstanding anything in this Agreement to the contrary, the Post-Term Continuation Payments shall immediately cease in the event that Employee breaches any of the covenants set forth in Sections 7 or 8 of this Agreement or any restrictive covenants then-applicable to Employee. In order to receive the Post-Term Continuation

 

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Payments, Employee must first execute and deliver a Release that has become effective in accordance with its terms (including the expiration of any applicable revocation period contained therein or required by applicable law) within the Release Period. The Post-Term Continuation Payments shall be paid ratably in monthly installments over the Post-Term Continuation Period with the first such installment to be paid no later than ten (10) days following the date on which the Release becomes effective and irrevocable (which installment shall include any installment of the Post-Term Continuation Payments that would have been paid to Employee prior to such date absent the requirement to execute the Release); provided, that, if the Release Period spans two calendar years, then the first installment of the Post-Term Continuation Payments (which installment shall include any installment of the Post-Term Continuation Payments that would have been paid to Employee prior to such date absent this proviso) will be paid on the first business day of the second calendar year if such date is later than the date on which such installment would otherwise have been paid pursuant to this Subsection 4.8 absent this proviso. In the event of any termination of Employee’s employment under this Section 4.8, Employee shall resign all positions held with the Employer Group. For the avoidance of doubt, except as set forth in this Section 4.8, Employee shall not be entitled to any severance payments or benefits hereunder upon any termination of employment following December 31, 2023.

(c) An “Employer Non-Renewal” shall mean the occurrence of both of the following: (i) the Employer’s failure to furnish a bona fide offer of employment on or before August 31, 2023, which provides for annual cash and equity compensation opportunities that are substantially comparable, in the aggregate, to the annual cash and equity compensation opportunities Employee received hereunder (excluding from such comparison, for the avoidance of doubt, the IPO Equity Award and the Post-IPO Supplemental Equity Award), and (ii) the termination of Employee’s employment by Employer without Cause or by Employee for any reason during within the thirty (30) day period on or after January 1, 2024 (provided that, at the time of such termination, events or circumstances that could constitute Cause (without regard for any cure periods) do not exist with respect to Employee, and Employee has continued to comply with all applicable restrictive covenants). For the avoidance of doubt, in no event shall an Employer Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason for purposes of this Article 4 (other than Section 4.8(c)).

4.9 Treatment of Equity. Except as otherwise set forth in Section 4.6, upon termination of Employee’s employment hereunder, Employee’s equity interests in the Management Holdcos, EGH or any other member of the Employer Group shall be treated in accordance with the award agreements, and other applicable agreements governing such equity interests and equity-based awards.

5. Other Benefits.

Subject to Subsection 3.4, during the Term and Employee’s employment with the Employer Group, Employee shall be eligible to participate in all group health insurance benefit plans, group life insurance benefit plans, qualified defined contribution retirement plans, annual vacation plans, and other welfare benefit plans and programs (excluding any

 

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severance plans) that are made available to all active employees of the Employer Group. To the extent that there are multiple benefit plans within the Employer Group, Employee will be entitled to participate in the same level of benefit plans as are available to the senior most active employees of Employer, other than the Chief Executive Officer and Executive Chairman of Employer.

6. Employer Expense Reimbursement.

During Employee’s employment by Employer, Employee will be reimbursed in accordance with Employer’s policy in effect from time to time for travel, entertainment and other expenses reasonably incurred in the performance of Employee’s duties and responsibilities hereunder; provided, that Employee provides Employer with proper substantiation of such travel, entertainment and other expenses; and provided, further, that any such expense will not be considered to be reasonably incurred in the performance of Employee’s duties and responsibilities hereunder if it is an expense that otherwise expressly requires the prior approval or consent of the Governing Body. Any such reimbursements shall be paid no later than the end of the calendar year following the calendar year in which the related expense is incurred.

7. Confidential Information.

7.1 Employee agrees that Employee will not at any time, whether during or subsequent to Employee’s employment by the Employer Group, either directly or indirectly, use or divulge, disclose or communicate to any person, firm or corporation, other than in the course of performing Employee’s duties to the Employer Group, any confidential and proprietary information and trade secrets of the Employer Group, including, without limitation, client and customer information, pricing information, financial plans, business plans, business concepts, supplier information, know-how and intellectual property and materials related thereto (the “Confidential Information”), whether heretofore or hereafter obtained by Employee while in the employ of the Employer Group. Upon leaving the employ of the Employer Group, Employee will not take or use, without the prior written consent of Employer, any memoranda, notes (whether or not prepared by Employee during the course of Employee’s employment with the Employer Group), lists, schedules, forms or other documents, papers or records of any kind (including, but not limited to, computerized or other records and documents in digital form or otherwise), relating to the Employer Group’s businesses or clients or any reproduction, summary or abstract thereof (including by means of discs or any other medium), all of which Employee acknowledges are the exclusive property of the Employer Group; provided that Employee shall be entitled to retain any such material solely relating to his equity interests in the Management Holdcos or any other member of the Employer Group and use the same solely to the extent relating to such ownership interests. Employee hereby agrees to surrender to Employer upon request at any time after the termination of Employee’s employment with the Employer Group all such documents and other property. Employer acknowledges that Employee is an experienced attorney and prior to his employment with Employer maintained electronically an extensive list of professional contacts. As soon as is practicable following the termination of his employment, but no longer than thirty (30) days following the termination of employment, Employer shall provide an electronic copy (in a form reasonably acceptable to Employee) of Employee’s professional contacts as maintained on the IT systems of Employer.

 

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7.2 Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall prohibit Employee from reporting possible violations of federal law or regulation to or otherwise cooperating with or providing information requested by any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Employee does not need the prior authorization of the Employer to make any such reports or disclosures and Employee is not required to notify the Employer that Employee has made such reports or disclosures.

8. Intellectual Property.

8.1 If Employee creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, intellectual property, materials, documents or other work product (including, without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content or audiovisual materials) (“Works”), either alone or with third parties, at any time during Employee’s employment by the Employer Group and within the scope of such employment and/or with the use of any of the Employer Group’s resources (“Employer Works”), Employee hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to Employer to the extent ownership of any such rights does not vest originally in Employer.

8.2 Employee shall take all requested actions and execute all requested documents (including any licenses or assignments) at Employer’s expense (but without further remuneration) to assist Employer in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of Employer’s rights in Employer Works. If Employer is unable for any other reason to secure Employee’s signature on any document for this purpose, then Employee hereby irrevocably designates and appoints Employer and its duly authorized officers and agents as Employee’s agent and attorney in fact, to act for and in Employee’s behalf and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing.

8.3 Employee shall not knowingly improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with any member of the Employer Group any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Employee shall comply with all relevant policies and guidelines of Employer, including, without limitation, policies and guidelines regarding the protection of confidential information and intellectual property and potential conflicts of interest. Employee acknowledges that Employer may amend any such policies and guidelines from time to time, and that Employee remains at all times bound by their most current version.

 

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8.4 Notwithstanding anything to the contrary contained herein, pursuant to the Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that: (A) is made (i) in confidence to a Federal, state, or local government official, either directly or indirectly, or to an attorney, and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Employee also understands that if he files a lawsuit for retaliation by the Employer Group for reporting a suspected violation of law, Employee may disclose the trade secret to his attorney and use the trade secret information in the court proceeding, if Employee (i) files any document containing the trade secret under seal, and (ii) does not disclose the trade secret, except pursuant to court order.

9. Enforcement.

9.1 Employee agrees that Employer would suffer irreparable damage, that Employer would not have any adequate remedy at law in the event of a breach or threatened breach of any of the covenants set forth in Sections 7 or 8 of this Agreement, that the damages resulting from any such breach or threatened breach would be material but not readily susceptible to being measured in monetary terms, and that any remedy at law (including the payment of damages) would be inadequate as a result of such breach or threatened breach. Accordingly, it is agreed that Employer shall be entitled to an immediate injunction or injunctions to prevent breaches or threatened breaches of Sections 7 or 8 of this Agreement and to specific performance of such Sections 7 or 8 of this Agreement, in each case without proof of actual damages, and Employee waives any requirement for the securing or posting of any bond in connection with any such remedy.

9.2 Employee further agrees that the remedies provided for in this Section 9 shall be in addition to, and not in limitation of, any other remedies that may be available to Employer whether at law or in equity, including monetary damages, and all of Employer’s rights shall be unrestricted, including, but not limited to, the right to terminate Employee at any time for any reason.

10. Severability.

The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any of the provisions of this Agreement shall be determined to be invalid under the laws of any applicable jurisdiction, such invalidity shall not invalidate all of the provisions of this Agreement, but rather the Agreement shall be construed insofar as the laws of that jurisdiction are concerned, as not containing invalid or contravening provisions, and the rights and obligations of the parties shall otherwise be enforced to the fullest extent possible. If, however, any such invalid or contravening provisions relate to Sections 7 or 8, then such Sections shall be construed as providing for the maximum protections available to an employer which the laws of that jurisdiction permit.

 

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11. Section 409A.

11.1 This Agreement shall be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and any Treasury Regulations or other Department of Treasury guidance issued thereunder (“Section 409A”). The parties intend that any amounts payable hereunder will be compliant with or exempt from Section 409A.

11.2 If required by Section 409A, no payment or benefit that would otherwise be payable or commence upon the termination of employment shall be paid or shall commence unless and until Employee has had a “separation from service” within the meaning of Section 409A as determined in accordance with Section 1.409A-1(h) of the Treasury Regulations. For purposes of determining whether a separation from service has occurred, Employee shall be considered to have experienced a separation from service when the facts and circumstances indicate that Employee and Employer reasonably anticipate that either (i) no further services will be performed for Employer after a certain date, or (ii) that the level of bona fide services Employee will perform for Employer after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by Employee (whether as an employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services to Employer if Employee has been providing services to Employer for less than 36 months).

11.3 For purposes of Section 409A, each of the payments that may be made hereunder is designated as a separate payment. In no event may Employee, directly or indirectly, designate the calendar year of any payment to be made under this Agreement. Notwithstanding anything to the contrary in this Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Section 1.409A-1(b)(9)(v)(A) or (C) of the Treasury Regulations (relating to certain reimbursements and in-kind benefits paid under a separation pay plan) shall be paid or provided to Employee only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which Employee’s “separation from service” occurs; and provided, further, that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which Employee’s “separation from service” occurs. With respect to any expense reimbursement or the provision of any in-kind benefit that is subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any lifetime or other aggregate limitation applicable to reimbursements of medical expenses referred to in Section 105(b) of the Code), and in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which Employee incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

 

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11.4 Notwithstanding any provision of this Agreement to the contrary, if, at the time of Employee’s “separation from service”, Employee is a “specified employee” (as defined in Section 409A) and it is necessary to postpone the commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result of such “separation from service” to prevent any accelerated or additional tax under Section 409A, then Employer will postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee) that are not otherwise paid within the short-term deferral exception under Section 409A and do not qualify as involuntary separation pay (within the meaning of Section 409A). If any payments or benefits are postponed due to such requirements, such amounts will be paid in a lump sum (without interest) to Employee on the first payroll date that occurs after the date that is six months and one day following Employee’s “separation from service” and any remaining payments and benefits shall be paid or provided in accordance with the normal payment dates specified for such payment or benefit. If Employee dies during the postponement period prior to the payment of postponed amount, the amounts withheld on account of Section 409A shall be paid to the personal representative of Employee’s estate within sixty (60) days after the date of Employee’s death.

11.5 Employer and Employee agree to negotiate in good faith to make amendments to this Agreement as the parties mutually agree, reasonably and in good faith, are necessary or desirable to avoid the possible imposition of taxes or penalties under Section 409A, while preserving any affected benefit or payment to the extent reasonably practicable without materially increasing the cost to Employer. Notwithstanding the foregoing, Employee shall be solely responsible and liable for the satisfaction of all taxes, interest, and penalties that may be imposed on Employee or for Employee’s account in connection with any payment or benefit under this Agreement (including any taxes, interest, and penalties under Section 409A), and Employer shall have no obligation to indemnify or otherwise hold Employee (or any beneficiary, successor or assign) harmless from any or all of such taxes, interest, or penalties.

12. Excess Parachute Payments. Notwithstanding anything in this Agreement to the contrary, if any of the payments or benefits provided or to be provided by Employer or any member of the Employer Group to Employee or for Employee’s benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) are determined to constitute “excess parachute payments” within the meaning of Section 280G of the Code and would, but for this Section 12 be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be reduced (but not below zero) to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax. All determinations required to be made under this Section 12, including whether a payment would result in an “excess parachute payment” and the assumptions utilized in arriving at such determination, shall be made by an accounting firm selected by Employer.

 

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13. Arbitration.

13.1 In consideration of Employee’s employment or engagement with Employer, his promise to arbitrate all employment or service related disputes and Employee’s receipt of the compensation and other benefits paid to Employee by Employer, at present and in the future, EMPLOYEE AGREES THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING EMPLOYER AND ANY EMPLOYEE, OFFICER, DIRECTOR, STOCKHOLDER OR BENEFIT PLAN OF EMPLOYER IN THEIR CAPACITY AS SUCH OR OTHERWISE) ARISING OUT OF, RELATING TO, OR RESULTING FROM EMPLOYEE’S EMPLOYMENT WITH EMPLOYER OR THE TERMINATION OF EMPLOYEE’S EMPLOYMENT WITH EMPLOYER, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION. Employee agrees to arbitrate such disputes, and thereby agrees to waive any right to a trial by jury, including any statutory claims under state or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the New York Labor Law (including but not limited to the Retaliatory Action By Employers Law, the New York State Worker Adjustment and Retraining Notification Act, all provisions prohibiting discrimination and retaliation, and all provisions regulating wage and hour law), the New York Civil Rights Law, Section 125 of the New York Workers’ Compensation Law, Article 23-A of the New York Correction Law, the New York City Human Rights Law, and the New York City Earned Sick Leave Law, all as amended, claims of harassment, discrimination or wrongful termination and any statutory claims. Employee further understands that this agreement to arbitrate also applies to any disputes that Employer may have with Employee.

13.2 Employee agrees that any arbitration will be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and JAMS appellate procedures (such rules and procedures, the “Procedure”) before a sole arbitrator who shall have been a member of the State Bar of New York for at least ten (10) years prior to appointment. Employee agrees that the arbitration will be conducted in New York City, New York. Employee agrees that the arbitrator shall have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions to dismiss and demurrers, prior to any arbitration hearing. Employee also agrees that the arbitrator shall have the power to award any remedies, including attorneys’ fees and costs, available under applicable law and that any decision or judgment of the arbitrator will be enforceable in any court of competent jurisdiction. Employee understands Employer will pay for any administrative or hearing fees charged by the arbitrator or JAMS except that Employee shall pay the first $200 of any filing fees associated with any arbitration which Employee initiates. Employee agrees that the decision of the arbitrator shall be in writing and shall be binding upon Employee and Employer.

 

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13.3 Except as provided by the Procedure and this Agreement, arbitration shall be the sole, exclusive and final remedy for any dispute between Employee and Employer. Accordingly, except as provided for by the Procedure and this Agreement, neither Employee nor Employer will be permitted to pursue court action regarding claims that are subject to arbitration. Notwithstanding the foregoing, the arbitrator will not have the authority to disregard or refuse to enforce any lawful Employer policy, and the arbitrator shall not order or require Employer to adopt a policy not otherwise required by law which Employer has not adopted.

13.4 In addition to the right under the Procedure to petition the court for provisional relief, Employee agrees that any party may also petition the court for injunctive relief where either party alleges or claims a violation of this Agreement.

13.5 Except to the extent otherwise provided herein, Employee agrees that the arbitration shall be conducted on a strictly confidential basis and Employee will not disclose the existence or nature of a claim, any documents, exhibits or information exchanged or presented in connection with such a claim or the decision or result of any such claim to any third party except Employee’s legal counsel, who shall also be bound by the confidentiality provision of this Subsection 13.5.

13.6 Employee understands that this Agreement does not prohibit Employee from pursuing an administrative claim with a local, state or federal administrative body such as the Department of Labor, the Department of Fair Employment and Housing, the Equal Employment Opportunity Commission or the Workers’ Compensation Board. This Agreement does, however, preclude Employee from pursuing court action regarding any such claim. Employee also understands and agrees that after exhaustion of administrative remedies under a statute that requires exhaustion of administrative proceedings before seeking relief, Employee must pursue any such claim through this binding arbitration procedure.

14. Governing Law; Consent to Jurisdiction; Jury Trial Waiver.

THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY. EXCEPT AS IS SPECIFICALLY PROVIDED IN SECTION 14, ANY ACTION TO ENFORCE THIS AGREEMENT OR AN ARBITRATION AWARD MUST BE BROUGHT IN, AND THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF, A COURT SITUATED IN NEW YORK, NEW YORK. EACH PARTY HEREBY WAIVES THE RIGHTS TO CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM FOR THE RESOLUTION OF ANY SUCH ACTION. EACH PARTY TO THIS AGREEMENT WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM.

 

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15. Binding Effect.

The provisions of this Agreement shall be binding on the heirs, executors, administrators and other successors in interest of Employee.

16. Entire Agreement; Amendment.

This Agreement, any award agreements governing Employee’s equity interests in the Management Holdcos, EGH and any other member of the Employer Group, and any other applicable agreements governing such Management Holdcos, EGH, other member of the Employer Group or the equity interests therein shall constitute the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions, preliminary agreements, executed agreements and understandings, including, without limitation to the foregoing, the Existing Agreement, provided, that, notwithstanding the foregoing, Section 10 of the Existing Agreement shall continue in full force and effect. This Agreement may not be amended except in writing executed by the parties hereto. Notwithstanding the foregoing, the parties acknowledge and agree that this Agreement is not intended to supersede or replace any restrictive covenants to which Employee may be subject pursuant to any other agreement or policy.

17. Waiver.

Employer’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any provision or provisions, or prevent Employer from thereafter enforcing each and every other provision of this Agreement.

18. Notices.

All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or facsimile numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):

If to Employer, to:

Endeavor Operating Company, LLC

Endeavor Group Holdings, Inc.

9601 Wilshire Boulevard, Third Floor

Beverly Hills, CA 90210

Attention: Chief Financial Officer

Fax: (310) 246-3065

 

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If to Employee, to:

The address provided by Employee to Employer as set forth in Employer’s records.

19. Taxes.

19.1 Employer shall be entitled to withhold from any payment due to Employee hereunder any amounts required to be withheld by applicable tax laws or regulations. Notwithstanding the foregoing, to the extent Employee is treated as a partner for tax purposes in accordance with Subsection 19.2, Employee shall be responsible for satisfying Employee’s obligations in respect of any self-employment taxes out of Employee’s funds.

19.2 Employer and Employee acknowledge and agree that from time to time as determined by Employer, for federal, state and local income tax purposes, Employee may be treated as a partner or employee, subject to applicable law. With respect to any period that Employee is treated as a partner for federal income tax purposes (a) all payments made by Employer to Employee pursuant to this Agreement shall be treated as “guaranteed payments”, within the meaning of Section 707(c) of the Code and (b) any payments made by Employer to Employee pursuant to this Agreement following Employee’s termination shall be treated as payments described in Section 736(a) of the Code and, solely for federal, state and local income tax purposes, Employee shall continue to be treated as a partner for federal income tax purposes with respect to the receipt of such payments. Notwithstanding anything to the contrary in this Agreement, to the extent permitted by law, all payments by Employer hereunder may be appropriately adjusted to take into account any additional taxes of Employer as a result of Employee being treated as an employee rather than as a partner for federal, state and local income tax purposes.

20. Set Off.

Employer’s obligation to pay Employee the amounts provided and to make the arrangements provided hereunder shall be subject to set-off, counterclaim or recoupment of any amounts owed by Employee to Employer or any of its Subsidiaries, except to the extent any such set-off, counterclaim or recoupment would violate, or result in the imposition of a tax under Section 409A, in which case such right shall be null and void.

21. Exculpation and Indemnification.

Employer shall indemnify, defend and hold harmless Employee in his capacity as an officer of the Employer Group against any losses, claims, damages, liabilities, expenses (including all reasonable fees and expenses of counsel), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, in which Employee may be involved or become subject to, in connection with any matter

 

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arising out of or in connection with the Employer Group’s business or affairs, or this Agreement or any related document, unless such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount is as a result of Employee not acting in good faith on behalf of the Employer Group or arose as a result of the willful commission by Employee of any act that is dishonest and materially injurious to the Employer Group or results from a breach by Employee of any of Specified Covenant. If Employee, in his capacity as an officer of the Employer Group, becomes involved in any capacity in any action, suit, proceeding or investigation in connection with any matter arising out of or in connection with the Employer Group’s business or affairs, or this Agreement or any related document, other than (x) by reason of any act or omission performed or omitted by Employee that was not in good faith on behalf of the Employer Group or constituted a willful commission by Employee of an act that is dishonest and materially injurious to the Employer Group, or (y) as a result of any breach by Employee of a Specified Covenant, Employer shall reimburse Employee for its reasonable legal and other reasonable out-of-pocket expenses (including the cost of any investigation and preparation) as they are incurred in connection therewith; provided, that Employee shall promptly repay to Employer the amount of any such reimbursed expenses paid to it if it shall be finally judicially determined that Employee was not entitled to indemnification by, or contribution from, Employer in connection with such action, suit, proceeding or investigation. If for any reason (other than the bad faith of Employee or the willful commission by Employee of an act that is dishonest and materially injurious to the Employer Group) the foregoing indemnification is unavailable to Employee, or insufficient to hold it harmless, then Employer shall contribute to the amount paid or payable by Employee as a result of such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount in such proportion as is appropriate to reflect any relevant equitable considerations. There shall be, and Employee shall be entitled to, a rebuttable presumption that Employee acted in good faith. For purposes of this Section 21, “Specified Covenant” means Employee’s covenants and agreements contained herein and any other restrictive covenants then applicable to Employee and Employee’s duty of care and duty of loyalty to the Employer Group under applicable law.

22. Successors and Assigns.

This Agreement is personal to Employee and without the prior written consent of Employer shall not be assignable by Employee otherwise than by will or the laws of descent and distribution. This Agreement, and any rights and obligations of Employer hereunder, may be assigned or delegated, in whole or in part, by Employer to any person for any reason, including any person who is a successor to Employer or to a person who acquires one or more businesses from Employer or any of its affiliates. As used in this Agreement, “Employer” shall mean Employer as hereinbefore defined and any other person that assumes the obligations of Employer hereunder or agrees to perform as Employer hereunder, in each case whether by operation of law or otherwise.

 

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23. Survival.

Insofar as any of the obligations contained in this Agreement are capable of surviving termination of this Agreement they shall so survive and continue to apply to the parties hereto, and if applicable, their respective assignees or successors including, for the avoidance of doubt and without limitation, obligations set forth in Sections 7 through 9 and 25.

24. Interpretation.

The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part of this Agreement.

25. Cooperation.

During the Term and at any time thereafter, Employee agrees to cooperate (i) with Employer in the defense of any legal matter involving any matter that arose during Employee’s employment with the Employer Group and (ii) with all governmental authorities on matters pertaining to any investigation, litigation or administrative proceeding pertaining to the Employer Group. Employer will reimburse Employee for any reasonable travel and out-of-pocket expenses incurred by Employee in providing such cooperation. Furthermore, any such cooperation occurring after the termination of Employee’s employment shall be scheduled to the extent reasonably practicable so as not to unreasonably interfere with Employee’s business or personal affairs.

26. Counterparts.

This Agreement may be executed in any number of counterparts, each of which when executed and delivered, shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument binding upon all of the parties hereto notwithstanding the fact that all parties are not signatory to the original or the same counterpart. For purposes of this Agreement, facsimile signatures or signatures via email as a portable document format (.pdf) shall be deemed originals.

*         *         *

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

ENDEAVOR OPERATING COMPANY, LLC
By  

/s/ Jason Lublin

Its  

 

  Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

/s/ Jason Lublin

Its  

 

  Authorized Signatory
EMPLOYEE:
/s/ Seth Krauss

 

Seth Krauss

[Signature Page to Employment Agreement]


Exhibit A

General Release

THIS AGREEMENT AND RELEASE, dated as of _______, 20__ (this “Agreement”), is entered into by and among Seth Krauss (“Employee”), Endeavor Operating Company, LLC and Endeavor Group Holdings, Inc. (collectively, the “Employer”).

WHEREAS, Employee is currently employed with Employer; and

WHEREAS, Employee’s employment with Employer will terminate effective as of ____, 20__;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement and other good and valuable consideration, the parties hereby agree as follows:

1 Employee shall be provided the [Continuation Payments, Bonus Continuation and Equity Award Acceleration][Post-Term Continuation Payments] (as defined in the Term Employment Agreement by and between Employee and Employer, dated as of ______ 2021 (the “Employment Agreement”)) in accordance with the terms and conditions of Subsections 4.6 and 4.8 of the Employment Agreement; provided, that the [Continuation Payments, Bonus Continuation and Equity Award Acceleration][Post-Term Continuation Payments] shall not be paid or provided if Employee revokes this Agreement pursuant to Section 4 below.

2 Employee, for and on behalf of himself and Employee’s heirs, successors, agents, representatives, executors and assigns, hereby waives and releases any common law, statutory or other complaints, claims, demands, expenses, damages, liabilities, charges or causes of action (each, a “Claim”) arising out of or relating to Employee’s employment or termination of employment with, or Employee’s serving in any capacity in respect of, any of Employer and any of its affiliates (collectively, the “Employer Group”), both known and unknown, in law or in equity, which Employee may now have or ever had against any member of the Employer Group or any equityholder, agent, representative, administrator, trustee, attorney, insurer, fiduciary, employee, director or officer of any member of the Employer Group, including their successors and assigns (collectively, the “Employer Releasees”), including, without limitation, any claim for any severance benefit which might have been due Employee under any previous agreement executed by and between any member of the Employer Group and Employee, and any complaint, charge or cause of action arising out of his employment with the Employer Group under the Age Discrimination in Employment Act of 1967 (“ADEA,” a law which prohibits discrimination on the basis of age against individuals who are age 40 or older), the National Labor Relations Act, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Family Medical Leave Act, the Equal Pay Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Rehabilitation Act of 1973, the Worker


Adjustment and Retraining Notification Act, the New York Labor Law (including but not limited to the Retaliatory Action By Employers Law, the New York State Worker Adjustment and Retraining Notification Act, all provisions prohibiting discrimination and retaliation, and all provisions regulating wage and hour law), the New York Civil Rights Law, Section 125 of the New York Workers’ Compensation Law, Article 23-A of the New York Correction Law, the New York City Human Rights Law, and the New York City Earned Sick Leave Law, all as amended; and all other federal, state and local statutes, ordinances and regulations. By signing this Agreement, Employee acknowledges that Employee intends to waive and release any rights known or unknown Employee may have against the Employer Releasees under these and any other laws; provided, that, notwithstanding anything to the contrary herein, Employee does not waive or release Claims with respect to (i) the right to enforce this Agreement or those provisions of the Employment Agreement that expressly survive the termination of Employee’s employment with the Employer, (ii) that portion of Employee’s equity interests in any member of the Employer Group that remains outstanding following Employee’s termination of employment in accordance with the terms of the agreements governing such equity interests and any rights of Employee pursuant thereto, (iii) any vested right Employee may have under any employee pension or welfare benefit plan of the Employer Group or (iv) any rights to indemnification Employee may have under any indemnification agreement Employee may have with any member of the Employer Group or pursuant to the charter, by-laws or other organizational documents of any member of the Employer Group. Employee acknowledges and agrees that the Employer Releasees are third-party beneficiaries of the release of claims set forth in this Section 2.

BY SIGNING THIS RELEASE, EMPLOYEE WILL HAVE WAIVED ANY RIGHT EMPLOYEE MAY HAVE HAD TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST THE EMPLOYER RELEASEES BASED ON ANY ACTS OR OMISSIONS OF THE EMPLOYER RELEASEES UP TO THE DATE OF THE SIGNING OF THIS RELEASE. NOTWITHSTANDING THE ABOVE, NOTHING IN THIS AGREEMENT SHALL PREVENT EMPLOYEE FROM (I) INITIATING OR CAUSING TO BE INITIATED ON HIS BEHALF ANY COMPLAINT, CHARGE, CLAIM OR PROCEEDING AGAINST EMPLOYER BEFORE ANY LOCAL, STATE OR FEDERAL AGENCY, COURT OR OTHER BODY CHALLENGING THE VALIDITY OF THE WAIVER OF HIS CLAIMS UNDER ADEA CONTAINED IN THIS AGREEMENT (BUT NO OTHER PORTION OF SUCH WAIVER); OR (II) INITIATING OR PARTICIPATING IN (BUT NOT BENEFITING FROM) AN INVESTIGATION OR PROCEEDING CONDUCTED BY THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION WITH RESPECT TO ADEA.

3 Employee acknowledges that Employee has been given 21 days from the date of receipt of this Agreement to consider all of the provisions of the Agreement, such 21-day period was not affected by any changes to this Agreement, whether or not material, and, to the extent he has not used the entire 21-day period prior to executing the Agreement, he does hereby knowingly and voluntarily waive the remainder of said 21-day period. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS READ THIS

 

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AGREEMENT CAREFULLY, HAS BEEN ADVISED BY THE EMPLOYER TO CONSULT AN ATTORNEY AND FULLY UNDERSTANDS THAT BY SIGNING BELOW HE IS GIVING UP CERTAIN RIGHTS WHICH HE MAY HAVE TO SUE OR ASSERT A CLAIM AGAINST ANY OF THE EMPLOYER RELEASEES, AS DESCRIBED HEREIN AND THE OTHER PROVISIONS HEREOF. EMPLOYEE ACKNOWLEDGES THAT HE HAS NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS AGREEMENT AND EMPLOYEE AGREES TO ALL OF ITS TERMS VOLUNTARILY.

4 Employee shall have seven (7) days from the date of Employee’s execution of this Agreement to revoke the release, including with respect to all claims referred to herein (including, without limitation, any and all claims arising under ADEA). If Employee revokes the Agreement, Employee will be deemed not to have accepted the terms of this Agreement.

5 Each party and its counsel have reviewed this Agreement and have been provided the opportunity to review this Release and accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole, and according to their fair meaning, and not strictly for or against either party.

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Release as of the date first above written.

 

ENDEAVOR OPERATING COMPANY, LLC
By  

 

Its  

 

  Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

 

Its  

 

  Authorized Signatory
EMPLOYEE
 

 

Seth Krauss

Exhibit 10.16

Execution Version

TERM EMPLOYMENT AGREEMENT

THIS TERM EMPLOYMENT AGREEMENT (this “Agreement”) IS DATED AS OF APRIL 19, 2021 (THE “EXECUTION DATE”) BY AND AMONG ENDEAVOR GROUP HOLDINGS, INC., A DELAWARE CORPORATION (“EGH”), ENDEAVOR OPERATING COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (Endeavor Operating Company, LLC or such affiliate thereof which may employ Employee from time to time, the “Employer”), and CHRISTIAN MUIRHEAD, AN INDIVIDUAL (“Employee”).

RECITALS

 

A.

Employee is currently providing services to the “Employer Group” (as defined below) pursuant to the terms and conditions of that certain Term Employment Agreement, entered into on November 30, 2020, by and between WME IMG, LLC, Employee and, for limited purposes, Endeavor Operating Company, LLC, WME Holdco, LLC (“WME Holdco”) and WME Iris Management IV Holdco, LLC (“Iris IV Holdco”) (the “Existing Agreement”).

 

B.

Employee acknowledges and agrees that many aspects of the business and affairs of the Employer Group are confidential and that Employee will have access to “Confidential Information” (as defined below).

 

C.

Employee acknowledges and agrees that the services to be rendered by Employee under this Agreement are of a special, unique, unusual, extraordinary and intellectual character which gives such services peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.

 

D.

Employee currently holds equity interests in WME Holdco, Iris IV Holdco and UFC Management Holdco LLC (WME Holdco, Iris IV Holdco and UFC Management LLC, collectively, together with any successors thereto (including, without limitation, any entities through which he will directly or indirectly hold equity interests in Endeavor Operating Company, LLC or Endeavor Manager, LLC following any reorganization or restructuring in connection with the consummation of an initial public offering of EGH), the “Management Holdcos”).

 

E.

The parties hereto wish to supersede the Existing Agreement as of the Effective Date (as defined below) and are entering into this Agreement in order to, among other things, memorialize the terms of the continued employment of Employee by Employer, to protect to the fullest extent permissible the Confidential Information of EGH, Employer and their respective affiliates’ clients, and to insure the strictest compliance by Employee with Employee’s fiduciary obligations to EGH, Employer and their respective affiliates (including the Management Holdcos) (collectively with EGH, the “Employer Group”) and to their respective clients.


Execution Version

TERMS AND CONDITIONS

NOW, THEREFORE, in consideration of the mutual agreements set forth herein and in consideration of and as a condition to the employment of Employee by Employer, the parties hereto agree as follows:

1. Effectiveness.

This Agreement shall be effective as of the effective date of the consummation of the initial public offering of EGH (the “Effective Date”). To the extent such public offering does not occur on or prior to December 31, 2021, this Agreement shall be void ab initio and the Existing Agreement shall remain in full force and effect.

2. Position and Duties.

Employer hereby agrees to employ Employee as Chief Communications Officer, subject to the terms, conditions and provisions of this Agreement. Employee accepts such employment and agrees to render services as provided herein, all of which services shall be performed conscientiously and to the fullest extent of Employee’s ability. Employee shall report directly to the Chief Executive Officer and/or Executive Chairman of Employer (or, from time to time, to their designees). Employee shall devote substantially all of Employee’s business time to the Employer Group during the Term (as defined in Subsection 4.1 below); provided, that nothing in this Agreement shall preclude Employee from serving as a member of the board of directors of any charitable, educational, religious, public interest or public service organization (but not as a member of the board of directors of a “for-profit” entity not part of the Employer Group unless approved by the Chief Executive Officer or Executive Chairman of Employer), in each instance not inconsistent with the business practices and policies of Employer, or from devoting reasonable periods of time to the activities of the aforementioned organizations, unless such activities interfere in any material respect with the performance of Employee’s duties and responsibilities hereunder to the Employer Group. During the Term, Employee’s principal place of employment will be located in New York County. Employee understands that this position requires business travel and Employee will travel as is reasonably necessary to perform his duties.

3. Compensation.

3.1 During the Term, Employer agrees to pay and Employee agrees to accept a salary (the “Base Salary”) at an annual rate of $1,000,000. The Base Salary at the annual rate set forth in this Section 3.1 shall only apply following the Effective Date (and have no retroactive effect) and shall be payable in accordance with Employer’s customary procedures and practices commencing on the first payroll date following the Effective Date.

3.2 Cash Bonus Compensation.


(a) In addition to the Base Salary, Employee shall have the opportunity to earn an annual cash bonus (the “Annual Bonus”) in respect of each calendar year during the Term with a target Annual Bonus of up to one hundred percent (100%) of Employee’s Base Salary (the “Target Bonus”). The amount of the Annual Bonus for each fiscal year shall be determined by EGH’s Board of Directors (the “Board”) or such committee to which the Board has defeased its power and authority under EGH’s certificate of incorporation as in effect from time to time (or any committee or subcommittee thereof to which the Board or such committee to which the Board has defeased its power and authority has delegated the applicable authority (if any such delegation has occurred)) (the Board or such committee, as applicable, the “Governing Body”) in its sole discretion and may exceed the amount of the target Annual Bonus for such fiscal year.

(b) Fifty percent (50%) of the Annual Bonus shall be based on the attainment of certain annual performance metrics and the remaining fifty percent (50%) of the Annual Bonus shall be based on continued service and/or other criteria, as determined in the sole discretion of the Governing Body. Without limiting the foregoing, unless otherwise determined by the Governing Body, the right to payment of any Annual Bonus shall be subject to Employee’s continued employment through the end of the fiscal year to which it relates. Payment of the Annual Bonus shall be made at such time as Employer customarily pays annual bonuses to its senior executives but in no event later than March 15th of the year following the year to which such Annual Bonus relates.

3.3 Equity Compensation.

(a) Employee shall be eligible to receive an equity award (an “Annual Equity Award”) in respect of each calendar year commencing during the Term. Fifty percent (50%) of the size of the Annual Equity Award shall be based on the attainment of certain annual performance metrics and fifty percent (50%) of the size of the Annual Equity Award shall be based on continued service and/or other criteria, which shall be determined in the sole discretion of the Governing Body (or the Board or a committee thereof if required with respect to actions taken to comply with Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the Board or a committee thereof for these purposes, the “16b-3 Committee”)). Subject to approval by the Governing Body or the 16b-3 Committee, as applicable, the Annual Equity Award for each fiscal year is expected to (i) represent an aggregate value ranging from fifty percent (50%) to one-hundred and fifty percent (150%) of Employee’s Base Salary (such value calculated by the Governing Body or the 16b-3 Committee, as applicable, in its good faith discretion) and (ii) consist of fifty percent (50%) grants in the form of options (or similar awards) vesting based on continued service over a three-year period following grant, and fifty percent (50%) grants in the form of restricted stock units (or similar awards) vesting based on continued service and/or attainment of performance goals or metrics, and in each case will be issued pursuant to award agreements on EGH’s applicable forms at the time of grant (the “Annual Equity Award Agreements”). Notwithstanding the foregoing, the terms and conditions of each of Employee’s Annual Equity Award (including the nature and vesting conditions thereof) shall be determined in the sole discretion of the Governing Body or the 16b-3 Committee, as applicable, subject to the terms of their applicable charters (if any), and the value of the Annual Equity Award may exceed (or be less than) the expected amount for such fiscal year as described above.

 

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(b) In addition to the foregoing, to the extent Employee has not received the Supplemental Equity Award (as defined and described in Section 3.3 of the Existing Agreement) prior to the Effective Date, Employee will be entitled to receive a one-time equity award (the “Post-IPO Supplemental Equity Award”), subject to approval by the Governing Body or 16b-3 Committee, as applicable, and Employee’s continued employment through the date of grant. Two-thirds of the Post-IPO Supplemental Equity Award shall be comprised of restricted stock, restricted stock units or similar awards of EGH and the remaining one-third of the Post-IPO Supplemental Equity Award shall be comprised of options or similar awards of EGH, and shall cover a number of shares of EGH equal to $2,000,000 divided by the price at pricing of the initial public offering of EGH. The Post-IPO Supplemental Equity Award will vest in three equal installments on each of December 31, 2021, December 31, 2022 and December 31, 2023, subject to Employee’s continued employment through the vesting date, and will be issued pursuant to award agreements in EGH’s applicable forms at the time of grant (the “Post-IPO Supplemental Equity Award Agreements”).

3.4 Employee acknowledges that, unless otherwise determined by the Governing Body or 16b-3 Committee, as applicable, in accordance with the terms of their applicable charters (if any), the sole cash and equity-based compensation that Employee is entitled to receive from the Employer Group shall be (a) the Base Salary pursuant to Subsection 3.1, (b) the Annual Bonus pursuant to Subsection 3.2, and (c) the Annual Equity Award and Post-IPO Supplemental Equity Award pursuant to Subsection 3.3. For the avoidance of doubt, the Governing Body and 16b-3 Committee, as applicable, may from time to time in its sole and absolute discretion provide for increases to (or cash and/or equity-based compensation in addition to) the compensation set forth in this Agreement.

3.5 EGH, Employer and Employee agree that Employer and EGH shall be entitled to allocate, for federal, state and local income tax and other tax purposes, the percentage of Employee’s services that Employee provides in each of his capacities as the Chief Communications Officer of Employer and an officer of EGH. For purposes of this Agreement, references to the “Governing Body” shall include, in each case, any committee or subcommittee thereof, to which the Governing Body has delegated the applicable authority (if any such delegation has occurred).

4. Term and Termination.

4.1 Employer and Employee acknowledge and agree that the employment of Employee under this Agreement is for a term beginning on the Effective Date and, subject to earlier termination in accordance with this Section 4, ending on the close of business on December 31, 2023 (the “Term”).

 

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4.2 In the event that Employee shall, for any reason, continue to render services to the Employer Group after the expiration of the Term, and shall not have resigned or been terminated due to an Employer Non-Renewal (as defined below) following December 31, 2023 in accordance with Section 4.8, Employee shall be deemed an “at-will” employee whose employment may be terminated by either Employer (or any of its Subsidiaries, as applicable) or Employee at any time and for any reason (and Employee shall in no event be entitled to the Continuation Payments, the Bonus Continuation or the Equity Award Acceleration (as such terms defined in Subsection 4.6 below) following any such termination). In the event Employee’s employment hereunder is terminated for any reason after expiration of the Term, Employee shall resign all positions held with the Employer Group.

4.3 Employer may terminate the Term and Employee’s employment hereunder for Disability. “Disability means (a) Employee’s incompetence, as determined and declared by a court of competent jurisdiction or (b) as determined in good faith by Employer, that the mental or physical incapacity of Employee is such that Employee is incapable of rendering services to the Employer Group for a period of ninety (90) consecutive days or for an aggregate of one hundred and twenty (120) days in any period of three hundred and sixty five (365) consecutive days. In addition, Employer may also terminate the Term and Employee’s employment hereunder with or without Cause. “Cause” shall mean Employee’s (a) conduct constituting embezzlement, fraud, or material misappropriation, whether or not related to Employee’s employment with Employer; (b) conviction of a felony, whether or not related to Employee’s employment with Employer; (c) conviction or indictment of a financial crime, material act of dishonesty or material unethical business conduct; (d) unauthorized disclosure or use of Confidential Information or material breach of Section 8 (Intellectual Property) of this Agreement, in each case that results in material harm to the Employer Group; (e) material breach of any applicable restrictive covenants set forth in any agreement between Employee and the Employer Group; (f) material breach of any other material obligation under this Agreement; (g) material violation of Employer Group’s written policies that the Governing Body determines is detrimental to the best interests of the Employer Group; (h) use of alcohol or drugs that materially interferes with the performance of Employee’s duties; or (i) conduct that brings Employee or the Employer Group into public disrepute, scandal, contempt or ridicule that shocks, insults or offends a substantial portion or group of the community or reflects unfavorably on Employee or the Employer Group. Notwithstanding the foregoing, termination by Employer for Cause shall not be effective until and unless Employee has been given written notice of particular acts or circumstances which are the basis for the termination for Cause, Employee is thereafter given thirty (30) days to cure (other than with respect to clause (b) or (c) of the preceding sentence) the omission or conduct that is the basis of such claim if such omission or conduct is reasonably capable of being cured (it being understood that any errors in expense reimbursement may be cured by repayment).

4.4 Employee may terminate the Term and Employee’s employment hereunder for Good Reason at any time, except at such time as Cause exists with respect to Employee. Employee shall notify Employer in writing within ninety (90) days after the occurrence of any event giving rise to Good Reason. If Employer shall not have cured such event or events giving rise to Good Reason within thirty (30) days after receipt of written notice from Employee, Employee may terminate employment for Good Reason by delivering a resignation letter to Employer within five (5) business days following such thirty-day cure

 

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period; provided, that if Employee has not delivered such resignation letter to Employer within such five-day period, Employee waives the right to terminate employment for Good Reason. “Good Reason” shall mean, without Employee’s written consent the material breach by Employer of any material obligation under this Agreement (including any failure of Employer to pay or provide the compensation provided for in Section 3 above). For the avoidance of doubt, subject to any applicable cure period set forth above, any requirement for Employee to relocate Employee’s principal place of employment outside of New York County without his consent will constitute “Good Reason”.

4.5 Termination on Account of Death or Disability. In the event that the Term and Employee’s employment hereunder terminates as a result of Employee’s death or is terminated by Employer due to Employee’s Disability prior to December 31, 2023, Employee (or Employee’s estate, as applicable) shall only be entitled to receive accrued and unpaid Base Salary as of the date of termination of employment. Such amounts shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment, or otherwise required by applicable law. In the event the Term and Employee’s employment hereunder is terminated by Employer on account of Disability, Employee shall resign all positions held with the Employer Group and in the event of termination of the Term and Employee’s employment hereunder on account of Employee’s death, Employee shall be deemed to have so resigned.

4.6 Termination Without Cause or for Good Reason. In the event that the Term and Employee’s employment hereunder is terminated by Employer without Cause or by Employee for Good Reason, in each case, prior to December 31, 2023, Employee shall be entitled to receive (a) accrued and unpaid Base Salary or Annual Bonus earned but not yet paid as of the date of termination of employment, which shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment, or otherwise required by applicable law or, in respect of the Annual Bonus, on the scheduled payment date in accordance with Subsection 3.2, (b) payment equal to the Target Bonus for the calendar year in which termination occurs, payable on the scheduled payment date for the Target Bonus in accordance with Subsection 3.2 as if Employee had remained employed through the payment date of such Target Bonus (the “Bonus Continuation”), (c) continued payment of the Base Salary in effect as of the date of Employee’s termination of employment, payable by Employer in equal installments as if Employee had remained employed through the later of (i) December 31, 2023, and (ii) the first anniversary of the date of termination (the “Continuation Payments” and such period, the “Continuation Period”) and (d) accelerated vesting of the portion of (i) the Annual Equity Award subject to time-based vesting and (ii) the Post-IPO Supplemental Equity Award, in each case (i) and (ii), that remains unvested as of the date of termination (the “Equity Award Acceleration”). Notwithstanding anything in this Agreement to the contrary, the Continuation Payments and any right to the Bonus Continuation shall immediately cease (and Employee shall forfeit the portion of the Annual Equity Award and Post-IPO Supplemental Equity Award subject to the Equity Award Acceleration and any equity received in respect thereof (and refund all proceeds received in respect of such equity through sale thereof or otherwise)) in the event that Employee breaches any of the covenants set forth in Sections 7 or 8 of this Agreement or any restrictive covenants then-

 

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applicable to Employee. In order to receive the Continuation Payments, the Bonus Continuation and the Equity Award Acceleration, Employee must first execute and deliver a release of claims in the form attached hereto as Exhibit A (the “Release”), that has become effective in accordance with its terms (including the expiration of any applicable revocation period contained therein or required by applicable law) within sixty (60) days after the date of termination of Employee’s employment (such 60-day period, the “Release Period”). The Continuation Payments shall be paid ratably in monthly installments over the Continuation Period with the first such installment to be paid no later than ten (10) days following the date on which the Release becomes effective and irrevocable (which installment shall include any installment of the Continuation Payments that would have been paid to Employee prior to such date absent the requirement to execute the Release); provided, that, if the Release Period spans two calendar years, then the first installment of the Continuation Payments (which installment shall include any installment of the Continuation Payments that would have been paid to Employee prior to such date absent this proviso) will be paid on the first business day of the second calendar year if such date is later than the date on which such installment would otherwise have been paid pursuant to this Subsection 4.6 absent this proviso. Notwithstanding anything to the contrary in the Annual Equity Award Agreements and Post-IPO Supplemental Equity Award Agreements, (i) the portion of the Annual Equity Award subject to time-based vesting and Post-IPO Supplemental Equity Award that, in each case, remains unvested as of the date of termination by Employer without Cause or by Employee for Good Reason shall remain outstanding and unvested and shall become vested (and be exercisable and/or settled) if and only if the Release becomes effective as described above and Employee is otherwise entitled hereunder, subject to compliance with Section 409A of the Code, and (ii) if the Release does not become so effective, such portion shall be forfeited for no consideration immediately following the end of the Release Period. In the event of any termination of the Term and Employee’s employment hereunder by Employer without Cause or by Employee for Good Reason, Employee shall resign all positions held with the Employer Group.

4.7 Termination for Cause. If Employer terminates the Term and Employee’s employment hereunder for Cause, then Employer shall have no further obligations to Employee under this Agreement, other than the payment of accrued and unpaid Base Salary, which shall be paid in a lump sum within thirty (30) days after the date of termination of employment, or as otherwise required by applicable law. In the event of any termination of the Term and Employee’s employment hereunder by Employer for Cause, Employee shall no longer hold any positions with the Employer Group.

4.8 Termination due to Employer Non-Renewal.

(a) Upon an Employer Non-Renewal (as defined below), Employee shall be entitled to receive (i) accrued and unpaid Base Salary or Annual Bonus earned for any year prior to the year of termination, but not yet paid as of the date of termination of employment, which shall be paid in a lump sum within thirty (30) days after the date of Employee’s termination of employment (or as otherwise required by applicable law) or, in respect of the Annual Bonus, on the scheduled payment date in accordance with Subsection 3.2, and (ii) continued payment of the Base Salary in effect as of the date of Employee’s termination of employment as if Employee had remained employed through the end of the six (6) month period immediately following Employee’s termination of employment (the “Post-Term Continuation Payments” and such period, the “Post-Term Continuation Period”).

 

 

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(b) Notwithstanding anything in this Agreement to the contrary, the Post-Term Continuation Payments shall immediately cease in the event that Employee breaches any of the covenants set forth in Sections 7 or 8 of this Agreement or any restrictive covenants then-applicable to Employee. In order to receive the Post-Term Continuation Payments, Employee must first execute and deliver a Release that has become effective in accordance with its terms (including the expiration of any applicable revocation period contained therein or required by applicable law) within the Release Period. The Post-Term Continuation Payments shall be paid ratably in monthly installments over the Post-Term Continuation Period with the first such installment to be paid no later than ten (10) days following the date on which the Release becomes effective and irrevocable (which installment shall include any installment of the Post-Term Continuation Payments that would have been paid to Employee prior to such date absent the requirement to execute the Release); provided, that, if the Release Period spans two calendar years, then the first installment of the Post-Term Continuation Payments (which installment shall include any installment of the Post-Term Continuation Payments that would have been paid to Employee prior to such date absent this proviso) will be paid on the first business day of the second calendar year if such date is later than the date on which such installment would otherwise have been paid pursuant to this Subsection 4.8 absent this proviso. In the event of any termination of Employee’s employment under this Section 4.8, Employee shall resign all positions held with the Employer Group. For the avoidance of doubt, except as set forth in this Section 4.8, Employee shall not be entitled to any severance payments or benefits hereunder upon any termination of employment following December 31, 2023.

(c) An “Employer Non-Renewal” shall mean the occurrence of both of the following: (i) the Employer’s failure to furnish a bona fide offer of employment on or before August 31, 2023, which provides for annual cash and equity compensation opportunities that are substantially comparable, in the aggregate, to the annual cash and equity compensation opportunities Employee received hereunder (excluding from such comparison, for the avoidance of doubt, the IPO Equity Award and the Post-IPO Supplemental Equity Award), and (ii) the termination of Employee’s employment by Employer without Cause or by Employee for any reason during within the thirty (30) day period on or after January 1, 2024 (provided that, at the time of such termination, events or circumstances that could constitute Cause (without regard for any cure periods) do not exist with respect to Employee, and Employee has continued to comply with all applicable restrictive covenants). For the avoidance of doubt, in no event shall an Employer Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason for purposes of this Article 4 (other than Section 4.8(c)).

4.9 Treatment of Equity. Except as otherwise set forth in Section 4.6, upon termination of Employee’s employment hereunder, Employee’s equity interests in the Management Holdcos, EGH or any other member of the Employer Group shall be treated in accordance with the award agreements, and other applicable agreements governing such equity interests and equity-based awards.

 

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5. Other Benefits.

Subject to Subsection 3.4, during the Term and Employee’s employment with the Employer Group, Employee shall be eligible to participate in all group health insurance benefit plans, group life insurance benefit plans, qualified defined contribution retirement plans, annual vacation plans, and other welfare benefit plans and programs (excluding any severance plans) that are made available to all active employees of the Employer Group. To the extent that there are multiple benefit plans within the Employer Group, Employee will be entitled to participate in the same level of benefit plans as are available to the senior most active employees of Employer, other than the Chief Executive Officer and Executive Chairman of Employer.

6. Employer Expense Reimbursement.

During Employee’s employment by Employer, Employee will be reimbursed in accordance with Employer’s policy in effect from time to time for travel, entertainment and other expenses reasonably incurred in the performance of Employee’s duties and responsibilities hereunder; provided, that Employee provides Employer with proper substantiation of such travel, entertainment and other expenses; and provided, further, that any such expense will not be considered to be reasonably incurred in the performance of Employee’s duties and responsibilities hereunder if it is an expense that otherwise expressly requires the prior approval or consent of the Governing Body. Any such reimbursements shall be paid no later than the end of the calendar year following the calendar year in which the related expense is incurred.

7. Confidential Information.

7.1 Employee agrees that Employee will not at any time, whether during or subsequent to Employee’s employment by the Employer Group, either directly or indirectly, use or divulge, disclose or communicate to any person, firm or corporation, other than in the course of performing Employee’s duties to the Employer Group, any confidential and proprietary information and trade secrets of the Employer Group, including, without limitation, client and customer information, pricing information, financial plans, business plans, business concepts, supplier information, know-how and intellectual property and materials related thereto (the “Confidential Information”), whether heretofore or hereafter obtained by Employee while in the employ of the Employer Group. Upon leaving the employ of the Employer Group, Employee will not take or use, without the prior written consent of Employer, any memoranda, notes (whether or not prepared by Employee during the course of Employee’s employment with the Employer Group), lists, schedules, forms or other documents, papers or records of any kind (including, but not limited to, computerized or other records and documents in digital form or otherwise), relating to the Employer Group’s businesses or clients or any reproduction, summary or abstract thereof (including by means of discs or any other medium), all of which Employee acknowledges are the exclusive property of the Employer Group;

 

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provided that Employee shall be entitled to retain any such material solely relating to his equity interests in the Management Holdcos or any other member of the Employer Group and use the same solely to the extent relating to such ownership interests. Employee hereby agrees to surrender to Employer upon request at any time after the termination of Employee’s employment with the Employer Group all such documents and other property.

7.2 Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall prohibit Employee from reporting possible violations of federal law or regulation to or otherwise cooperating with or providing information requested by any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Employee does not need the prior authorization of the Employer to make any such reports or disclosures and Employee is not required to notify the Employer that Employee has made such reports or disclosures.

8. Intellectual Property.

8.1 If Employee creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, intellectual property, materials, documents or other work product (including, without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content or audiovisual materials) (“Works”), either alone or with third parties, at any time during Employee’s employment by the Employer Group and within the scope of such employment and/or with the use of any of the Employer Group’s resources (“Employer Works”), Employee hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to Employer to the extent ownership of any such rights does not vest originally in Employer.

8.2 Employee shall take all requested actions and execute all requested documents (including any licenses or assignments) at Employer’s expense (but without further remuneration) to assist Employer in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of Employer’s rights in Employer Works. If Employer is unable for any other reason to secure Employee’s signature on any document for this purpose, then Employee hereby irrevocably designates and appoints Employer and its duly authorized officers and agents as Employee’s agent and attorney in fact, to act for and in Employee’s behalf and stead to execute any documents and to do all other lawfully permitted acts in connection with the foregoing.

8.3 Employee shall not knowingly improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with any member of the Employer Group any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Employee shall comply with all relevant policies and guidelines of Employer, including, without limitation, policies and guidelines regarding the protection of confidential information and intellectual property and potential conflicts of interest. Employee acknowledges that Employer may amend any such policies and guidelines from time to time, and that Employee remains at all times bound by their most current version.

 

 

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8.4 Notwithstanding anything to the contrary contained herein, pursuant to the Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that: (A) is made (i) in confidence to a Federal, state, or local government official, either directly or indirectly, or to an attorney, and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Employee also understands that if he files a lawsuit for retaliation by the Employer Group for reporting a suspected violation of law, Employee may disclose the trade secret to his attorney and use the trade secret information in the court proceeding, if Employee (i) files any document containing the trade secret under seal, and (ii) does not disclose the trade secret, except pursuant to court order.

9. Enforcement.

9.1 Employee agrees that Employer would suffer irreparable damage, that Employer would not have any adequate remedy at law in the event of a breach or threatened breach of any of the covenants set forth in Sections 7 or 8 of this Agreement, that the damages resulting from any such breach or threatened breach would be material but not readily susceptible to being measured in monetary terms, and that any remedy at law (including the payment of damages) would be inadequate as a result of such breach or threatened breach. Accordingly, it is agreed that Employer shall be entitled to an immediate injunction or injunctions to prevent breaches or threatened breaches of Sections 7 or 8 of this Agreement and to specific performance of such Sections 7 or 8 of this Agreement, in each case without proof of actual damages, and Employee waives any requirement for the securing or posting of any bond in connection with any such remedy.

9.2 Employee further agrees that the remedies provided for in this Section 9 shall be in addition to, and not in limitation of, any other remedies that may be available to Employer whether at law or in equity, including monetary damages, and all of Employer’s rights shall be unrestricted, including, but not limited to, the right to terminate Employee at any time for any reason.

10. Severability.

The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any of the provisions of this Agreement shall be determined to be invalid under the laws of any applicable jurisdiction, such invalidity shall not invalidate all of the provisions of this Agreement, but rather the Agreement shall be construed insofar as the laws of that jurisdiction are concerned, as not containing invalid or contravening provisions, and the rights and obligations of the parties shall otherwise be enforced to the fullest extent possible. If, however, any such invalid or contravening provisions relate to Sections 7 or 8, then such Sections shall be construed as providing for the maximum protections available to an employer which the laws of that jurisdiction permit.

 

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11. Section 409A.

11.1 This Agreement shall be interpreted in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and any Treasury Regulations or other Department of Treasury guidance issued thereunder (“Section 409A”). The parties intend that any amounts payable hereunder will be compliant with or exempt from Section 409A.

11.2 If required by Section 409A, no payment or benefit that would otherwise be payable or commence upon the termination of employment shall be paid or shall commence unless and until Employee has had a “separation from service” within the meaning of Section 409A as determined in accordance with Section 1.409A-1(h) of the Treasury Regulations. For purposes of determining whether a separation from service has occurred, Employee shall be considered to have experienced a separation from service when the facts and circumstances indicate that Employee and Employer reasonably anticipate that either (i) no further services will be performed for Employer after a certain date, or (ii) that the level of bona fide services Employee will perform for Employer after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by Employee (whether as an employee or as an independent contractor) over the immediately preceding 36-month period (or the full period of services to Employer if Employee has been providing services to Employer for less than 36 months).

11.3 For purposes of Section 409A, each of the payments that may be made hereunder is designated as a separate payment. In no event may Employee, directly or indirectly, designate the calendar year of any payment to be made under this Agreement. Notwithstanding anything to the contrary in this Agreement, any payment or benefit under this Agreement or otherwise that is exempt from Section 409A pursuant to Section 1.409A-1(b)(9)(v)(A) or (C) of the Treasury Regulations (relating to certain reimbursements and in-kind benefits paid under a separation pay plan) shall be paid or provided to Employee only to the extent that the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar year following the calendar year in which Employee’s “separation from service” occurs; and provided, further, that such expenses are reimbursed no later than the last day of the third calendar year following the calendar year in which Employee’s “separation from service” occurs. With respect to any expense reimbursement or the provision of any in-kind benefit that is subject to Section 409A (and not exempt pursuant to the prior sentence or otherwise), the amount of any such expenses eligible for reimbursement, or the provision of any in-kind benefit, in one calendar year shall not affect the provision of in-kind benefits or expenses eligible for reimbursement in any other calendar year (except for any lifetime or other aggregate limitation applicable to reimbursements of medical expenses referred to in Section 105(b) of the Code), and in no event shall any expenses be reimbursed after the last day of the calendar year following the calendar year in which Employee incurred such expenses, and in no event shall any right to reimbursement or the provision of any in-kind benefit be subject to liquidation or exchange for another benefit.

 

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11.4 Notwithstanding any provision of this Agreement to the contrary, if, at the time of Employee’s “separation from service”, Employee is a “specified employee” (as defined in Section 409A) and it is necessary to postpone the commencement of any payments or benefits otherwise payable pursuant to this Agreement as a result of such “separation from service” to prevent any accelerated or additional tax under Section 409A, then Employer will postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Employee) that are not otherwise paid within the short-term deferral exception under Section 409A and do not qualify as involuntary separation pay (within the meaning of Section 409A). If any payments or benefits are postponed due to such requirements, such amounts will be paid in a lump sum (without interest) to Employee on the first payroll date that occurs after the date that is six months and one day following Employee’s “separation from service” and any remaining payments and benefits shall be paid or provided in accordance with the normal payment dates specified for such payment or benefit. If Employee dies during the postponement period prior to the payment of postponed amount, the amounts withheld on account of Section 409A shall be paid to the personal representative of Employee’s estate within sixty (60) days after the date of Employee’s death.

11.5 Employer and Employee agree to negotiate in good faith to make amendments to this Agreement as the parties mutually agree, reasonably and in good faith, are necessary or desirable to avoid the possible imposition of taxes or penalties under Section 409A, while preserving any affected benefit or payment to the extent reasonably practicable without materially increasing the cost to Employer. Notwithstanding the foregoing, Employee shall be solely responsible and liable for the satisfaction of all taxes, interest, and penalties that may be imposed on Employee or for Employee’s account in connection with any payment or benefit under this Agreement (including any taxes, interest, and penalties under Section 409A), and Employer shall have no obligation to indemnify or otherwise hold Employee (or any beneficiary, successor or assign) harmless from any or all of such taxes, interest, or penalties.

12. Excess Parachute Payments. Notwithstanding anything in this Agreement to the contrary, if any of the payments or benefits provided or to be provided by Employer or any member of the Employer Group to Employee or for Employee’s benefit pursuant to the terms of this Agreement or otherwise (“Covered Payments”) are determined to constitute “excess parachute payments” within the meaning of Section 280G of the Code and would, but for this Section 12 be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “Excise Tax”), then the Covered Payments shall be reduced (but not below zero) to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax. All determinations required to be made under this Section 12, including whether a payment would result in an “excess parachute payment” and the assumptions utilized in arriving at such determination, shall be made by an accounting firm selected by Employer.

 

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13. Arbitration.

13.1 In consideration of Employee’s employment or engagement with Employer, his promise to arbitrate all employment or service related disputes and Employee’s receipt of the compensation and other benefits paid to Employee by Employer, at present and in the future, EMPLOYEE AGREES THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING EMPLOYER AND ANY EMPLOYEE, OFFICER, DIRECTOR, STOCKHOLDER OR BENEFIT PLAN OF EMPLOYER IN THEIR CAPACITY AS SUCH OR OTHERWISE) ARISING OUT OF, RELATING TO, OR RESULTING FROM EMPLOYEE’S EMPLOYMENT WITH EMPLOYER OR THE TERMINATION OF EMPLOYEE’S EMPLOYMENT WITH EMPLOYER, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION. Employee agrees to arbitrate such disputes, and thereby agrees to waive any right to a trial by jury, including any statutory claims under state or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, the New York Labor Law (including but not limited to the Retaliatory Action By Employers Law, the New York State Worker Adjustment and Retraining Notification Act, all provisions prohibiting discrimination and retaliation, and all provisions regulating wage and hour law), the New York Civil Rights Law, Section 125 of the New York Workers’ Compensation Law, Article 23-A of the New York Correction Law, the New York City Human Rights Law, and the New York City Earned Sick Leave Law, all as amended, claims of harassment, discrimination or wrongful termination and any statutory claims. Employee further understands that this agreement to arbitrate also applies to any disputes that Employer may have with Employee.

13.2 Employee agrees that any arbitration will be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and JAMS appellate procedures (such rules and procedures, the “Procedure”) before a sole arbitrator who shall have been a member of the State Bar of New York for at least ten (10) years prior to appointment. Employee agrees that the arbitration will be conducted in New York City, New York. Employee agrees that the arbitrator shall have the power to decide any motions brought by any party to the arbitration, including motions for summary judgment and/or adjudication and motions to dismiss and demurrers, prior to any arbitration hearing. Employee also agrees that the arbitrator shall have the power to award any remedies, including attorneys’ fees and costs, available under applicable law and that any decision or judgment of the arbitrator will be enforceable in any court of competent jurisdiction. Employee understands Employer will pay for any administrative or hearing fees charged by the arbitrator or JAMS except that Employee shall pay the first $200 of any filing fees associated with any arbitration which Employee initiates. Employee agrees that the decision of the arbitrator shall be in writing and shall be binding upon Employee and Employer.

 

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13.3 Except as provided by the Procedure and this Agreement, arbitration shall be the sole, exclusive and final remedy for any dispute between Employee and Employer. Accordingly, except as provided for by the Procedure and this Agreement, neither Employee nor Employer will be permitted to pursue court action regarding claims that are subject to arbitration. Notwithstanding the foregoing, the arbitrator will not have the authority to disregard or refuse to enforce any lawful Employer policy, and the arbitrator shall not order or require Employer to adopt a policy not otherwise required by law which Employer has not adopted.

13.4 In addition to the right under the Procedure to petition the court for provisional relief, Employee agrees that any party may also petition the court for injunctive relief where either party alleges or claims a violation of this Agreement.

13.5 Except to the extent otherwise provided herein, Employee agrees that the arbitration shall be conducted on a strictly confidential basis and Employee will not disclose the existence or nature of a claim, any documents, exhibits or information exchanged or presented in connection with such a claim or the decision or result of any such claim to any third party except Employee’s legal counsel, who shall also be bound by the confidentiality provision of this Subsection 13.5.

13.6 Employee understands that this Agreement does not prohibit Employee from pursuing an administrative claim with a local, state or federal administrative body such as the Department of Labor, the Department of Fair Employment and Housing, the Equal Employment Opportunity Commission or the Workers’ Compensation Board. This Agreement does, however, preclude Employee from pursuing court action regarding any such claim. Employee also understands and agrees that after exhaustion of administrative remedies under a statute that requires exhaustion of administrative proceedings before seeking relief, Employee must pursue any such claim through this binding arbitration procedure.

14. Governing Law; Consent to Jurisdiction; Jury Trial Waiver.

THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY. EXCEPT AS IS SPECIFICALLY PROVIDED IN SECTION 14, ANY ACTION TO ENFORCE THIS AGREEMENT OR AN ARBITRATION AWARD MUST BE BROUGHT IN, AND THE PARTIES HEREBY CONSENT TO THE JURISDICTION OF, A COURT SITUATED IN NEW YORK, NEW YORK. EACH PARTY HEREBY WAIVES THE RIGHTS TO CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM FOR THE RESOLUTION OF ANY SUCH ACTION. EACH PARTY TO THIS AGREEMENT WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM.

 

 

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15. Binding Effect.

The provisions of this Agreement shall be binding on the heirs, executors, administrators and other successors in interest of Employee.

16. Entire Agreement; Amendment.

This Agreement, any award agreements governing Employee’s equity interests in the Management Holdcos, EGH and any other member of the Employer Group, and any other applicable agreements governing such Management Holdcos, EGH, other member of the Employer Group or the equity interests therein shall constitute the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions, preliminary agreements, executed agreements and understandings, including, without limitation to the foregoing, the Existing Agreement. This Agreement may not be amended except in writing executed by the parties hereto. Notwithstanding the foregoing, the parties acknowledge and agree that this Agreement is not intended to supersede or replace any restrictive covenants to which Employee may be subject pursuant to any other agreement or policy.

17. Waiver.

Employer’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any provision or provisions, or prevent Employer from thereafter enforcing each and every other provision of this Agreement.

18. Notices.

All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or facsimile numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):

If to Employer, to:

Endeavor Operating Company, LLC

Endeavor Group Holdings, Inc.

9601 Wilshire Boulevard

Third Floor

Beverly Hills, CA 90210

Attention: Chief Legal Officer

Fax: (310) 246-3065

 

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If to Employee, to:

The address provided by Employee to Employer as set forth in Employer’s records.

19. Taxes.

19.1 Employer shall be entitled to withhold from any payment due to Employee hereunder any amounts required to be withheld by applicable tax laws or regulations. Notwithstanding the foregoing, to the extent Employee is treated as a partner for tax purposes in accordance with Subsection 19.2, Employee shall be responsible for satisfying Employee’s obligations in respect of any self-employment taxes out of Employee’s funds.

19.2 Employer and Employee acknowledge and agree that from time to time as determined by Employer, for federal, state and local income tax purposes, Employee may be treated as a partner or employee, subject to applicable law. With respect to any period that Employee is treated as a partner for federal income tax purposes (a) all payments made by Employer to Employee pursuant to this Agreement shall be treated as “guaranteed payments”, within the meaning of Section 707(c) of the Code and (b) any payments made by Employer to Employee pursuant to this Agreement following Employee’s termination shall be treated as payments described in Section 736(a) of the Code and, solely for federal, state and local income tax purposes, Employee shall continue to be treated as a partner for federal income tax purposes with respect to the receipt of such payments. Notwithstanding anything to the contrary in this Agreement, to the extent permitted by law, all payments by Employer hereunder may be appropriately adjusted to take into account any additional taxes of Employer as a result of Employee being treated as an employee rather than as a partner for federal, state and local income tax purposes.

20. Set Off.

Employer’s obligation to pay Employee the amounts provided and to make the arrangements provided hereunder shall be subject to set-off, counterclaim or recoupment of any amounts owed by Employee to Employer or any of its Subsidiaries, except to the extent any such set-off, counterclaim or recoupment would violate, or result in the imposition of a tax under Section 409A, in which case such right shall be null and void.

21. Exculpation and Indemnification.

Employer shall indemnify, defend and hold harmless Employee in his capacity as an officer of the Employer Group against any losses, claims, damages, liabilities, expenses (including all reasonable fees and expenses of counsel), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, in which Employee may be involved or become subject to, in connection with any matter arising out of or in connection with the Employer Group’s business or affairs, or this Agreement or any related document, unless such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount is as a result of Employee not acting in good faith on behalf of the Employer Group or arose as a result of the willful commission by

 

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Employee of any act that is dishonest and materially injurious to the Employer Group or results from a breach by Employee of any of Specified Covenant. If Employee, in his capacity as an officer of the Employer Group, becomes involved in any capacity in any action, suit, proceeding or investigation in connection with any matter arising out of or in connection with the Employer Group’s business or affairs, or this Agreement or any related document, other than (x) by reason of any act or omission performed or omitted by Employee that was not in good faith on behalf of the Employer Group or constituted a willful commission by Employee of an act that is dishonest and materially injurious to the Employer Group, or (y) as a result of any breach by Employee of a Specified Covenant, Employer shall reimburse Employee for its reasonable legal and other reasonable out-of-pocket expenses (including the cost of any investigation and preparation) as they are incurred in connection therewith; provided, that Employee shall promptly repay to Employer the amount of any such reimbursed expenses paid to it if it shall be finally judicially determined that Employee was not entitled to indemnification by, or contribution from, Employer in connection with such action, suit, proceeding or investigation. If for any reason (other than the bad faith of Employee or the willful commission by Employee of an act that is dishonest and materially injurious to the Employer Group) the foregoing indemnification is unavailable to Employee, or insufficient to hold it harmless, then Employer shall contribute to the amount paid or payable by Employee as a result of such loss, claim, damage, liability, expense, judgment, fine, settlement or other amount in such proportion as is appropriate to reflect any relevant equitable considerations. There shall be, and Employee shall be entitled to, a rebuttable presumption that Employee acted in good faith. For purposes of this Section 21, “Specified Covenant” means Employee’s covenants and agreements contained herein and any other restrictive covenants then applicable to Employee and Employee’s duty of care and duty of loyalty to the Employer Group under applicable law.

22. Successors and Assigns.

This Agreement is personal to Employee and without the prior written consent of Employer shall not be assignable by Employee otherwise than by will or the laws of descent and distribution. This Agreement, and any rights and obligations of Employer hereunder, may be assigned or delegated, in whole or in part, by Employer to any person for any reason, including any person who is a successor to Employer or to a person who acquires one or more businesses from Employer or any of its affiliates. As used in this Agreement, “Employer” shall mean Employer as hereinbefore defined and any other person that assumes the obligations of Employer hereunder or agrees to perform as Employer hereunder, in each case whether by operation of law or otherwise.

23. Survival.

Insofar as any of the obligations contained in this Agreement are capable of surviving termination of this Agreement they shall so survive and continue to apply to the parties hereto, and if applicable, their respective assignees or successors including, for the avoidance of doubt and without limitation, obligations set forth in Sections 7 through 9 and 25.

 

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24. Interpretation.

The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part of this Agreement.

25. Cooperation.

During the Term and at any time thereafter, Employee agrees to cooperate (i) with Employer in the defense of any legal matter involving any matter that arose during Employee’s employment with the Employer Group and (ii) with all governmental authorities on matters pertaining to any investigation, litigation or administrative proceeding pertaining to the Employer Group. Employer will reimburse Employee for any reasonable travel and out-of-pocket expenses incurred by Employee in providing such cooperation. Furthermore, any such cooperation occurring after the termination of Employee’s employment shall be scheduled to the extent reasonably practicable so as not to unreasonably interfere with Employee’s business or personal affairs.

26. Counterparts.

This Agreement may be executed in any number of counterparts, each of which when executed and delivered, shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument binding upon all of the parties hereto notwithstanding the fact that all parties are not signatory to the original or the same counterpart. For purposes of this Agreement, facsimile signatures or signatures via email as a portable document format (.pdf) shall be deemed originals.

*        *        *

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

ENDEAVOR OPERATING COMPANY, LLC
By   /s/ Jason Lublin
Its    
  Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

/s/ Jason Lublin

Its  

 

  Authorized Signatory
EMPLOYEE:

/s/ Christian Muirhead

Christian Muirhead

[Signature Page to Term Employment Agreement]


Exhibit A

General Release

THIS AGREEMENT AND RELEASE, dated as of             , 20     (this “Agreement”), is entered into by and among Christian Muirhead (“Employee”), Endeavor Operating Company, LLC and Endeavor Group Holdings, Inc. (collectively, the “Employer”).

WHEREAS, Employee is currently employed with Employer; and

WHEREAS, Employee’s employment with Employer will terminate effective as of             , 20    ;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement and other good and valuable consideration, the parties hereby agree as follows:

1 Employee shall be provided the [Continuation Payments, Bonus Continuation and Equity Award Acceleration][Post-Term Continuation Payments] (as defined in the Term Employment Agreement by and between Employee and Employer, dated as of              2021 (the “Employment Agreement”)) in accordance with the terms and conditions of Subsections 4.6 and 4.8 of the Employment Agreement; provided, that the [Continuation Payments, Bonus Continuation and Equity Award Acceleration][Post-Term Continuation Payments] shall not be paid or provided if Employee revokes this Agreement pursuant to Section 4 below.

2 Employee, for and on behalf of himself and Employee’s heirs, successors, agents, representatives, executors and assigns, hereby waives and releases any common law, statutory or other complaints, claims, demands, expenses, damages, liabilities, charges or causes of action (each, a “Claim”) arising out of or relating to Employee’s employment or termination of employment with, or Employee’s serving in any capacity in respect of, any of Employer and any of its affiliates (collectively, the “Employer Group”), both known and unknown, in law or in equity, which Employee may now have or ever had against any member of the Employer Group or any equityholder, agent, representative, administrator, trustee, attorney, insurer, fiduciary, employee, director or officer of any member of the Employer Group, including their successors and assigns (collectively, the “Employer Releasees”), including, without limitation, any claim for any severance benefit which might have been due Employee under any previous agreement executed by and between any member of the Employer Group and Employee, and any complaint, charge or cause of action arising out of his employment with the Employer Group under the Age Discrimination in Employment Act of 1967 (“ADEA,” a law which prohibits discrimination on the basis of age against individuals who are age 40 or older), the National Labor Relations Act, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Family Medical Leave Act, the Equal Pay Act, the Securities Act of 1933,


the Securities Exchange Act of 1934, the Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification Act, the New York Labor Law (including but not limited to the Retaliatory Action By Employers Law, the New York State Worker Adjustment and Retraining Notification Act, all provisions prohibiting discrimination and retaliation, and all provisions regulating wage and hour law), the New York Civil Rights Law, Section 125 of the New York Workers’ Compensation Law, Article 23-A of the New York Correction Law, the New York City Human Rights Law, and the New York City Earned Sick Leave Law, all as amended; and all other federal, state and local statutes, ordinances and regulations. By signing this Agreement, Employee acknowledges that Employee intends to waive and release any rights known or unknown Employee may have against the Employer Releasees under these and any other laws; provided, that, notwithstanding anything to the contrary herein, Employee does not waive or release Claims with respect to (i) the right to enforce this Agreement or those provisions of the Employment Agreement that expressly survive the termination of Employee’s employment with the Employer, (ii) that portion of Employee’s equity interests in any member of the Employer Group that remains outstanding following Employee’s termination of employment in accordance with the terms of the agreements governing such equity interests and any rights of Employee pursuant thereto, (iii) any vested right Employee may have under any employee pension or welfare benefit plan of the Employer Group or (iv) any rights to indemnification Employee may have under any indemnification agreement Employee may have with any member of the Employer Group or pursuant to the charter, by-laws or other organizational documents of any member of the Employer Group. Employee acknowledges and agrees that the Employer Releasees are third-party beneficiaries of the release of claims set forth in this Section 2.

BY SIGNING THIS RELEASE, EMPLOYEE WILL HAVE WAIVED ANY RIGHT EMPLOYEE MAY HAVE HAD TO BRING A LAWSUIT OR MAKE ANY CLAIM AGAINST THE EMPLOYER RELEASEES BASED ON ANY ACTS OR OMISSIONS OF THE EMPLOYER RELEASEES UP TO THE DATE OF THE SIGNING OF THIS RELEASE. NOTWITHSTANDING THE ABOVE, NOTHING IN THIS AGREEMENT SHALL PREVENT EMPLOYEE FROM (I) INITIATING OR CAUSING TO BE INITIATED ON HIS BEHALF ANY COMPLAINT, CHARGE, CLAIM OR PROCEEDING AGAINST EMPLOYER BEFORE ANY LOCAL, STATE OR FEDERAL AGENCY, COURT OR OTHER BODY CHALLENGING THE VALIDITY OF THE WAIVER OF HIS CLAIMS UNDER ADEA CONTAINED IN THIS AGREEMENT (BUT NO OTHER PORTION OF SUCH WAIVER); OR (II) INITIATING OR PARTICIPATING IN (BUT NOT BENEFITING FROM) AN INVESTIGATION OR PROCEEDING CONDUCTED BY THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION WITH RESPECT TO ADEA.

3 Employee acknowledges that Employee has been given 21 days from the date of receipt of this Agreement to consider all of the provisions of the Agreement, such 21-day period was not affected by any changes to this Agreement, whether or not material, and, to the extent he has not used the entire 21-day period prior to executing the Agreement, he does hereby knowingly and voluntarily waive the remainder of said 21-day period.

 

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EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT CAREFULLY, HAS BEEN ADVISED BY THE EMPLOYER TO CONSULT AN ATTORNEY AND FULLY UNDERSTANDS THAT BY SIGNING BELOW HE IS GIVING UP CERTAIN RIGHTS WHICH HE MAY HAVE TO SUE OR ASSERT A CLAIM AGAINST ANY OF THE EMPLOYER RELEASEES, AS DESCRIBED HEREIN AND THE OTHER PROVISIONS HEREOF. EMPLOYEE ACKNOWLEDGES THAT HE HAS NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS AGREEMENT AND EMPLOYEE AGREES TO ALL OF ITS TERMS VOLUNTARILY.

4 Employee shall have seven (7) days from the date of Employee’s execution of this Agreement to revoke the release, including with respect to all claims referred to herein (including, without limitation, any and all claims arising under ADEA). If Employee revokes the Agreement, Employee will be deemed not to have accepted the terms of this Agreement.

5 Each party and its counsel have reviewed this Agreement and have been provided the opportunity to review this Release and accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole, and according to their fair meaning, and not strictly for or against either party

 

3


IN WITNESS WHEREOF, the parties hereto have executed and delivered this Release as of the date first above written.

 

ENDEAVOR OPERATING COMPANY, LLC
By  

 

Its  

 

  Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

 

Its  

 

  Authorized Signatory
EMPLOYEE

 

Christian Muirhead

Exhibit 10.17

Execution Version

EQUITY AWARD AGREEMENT

THIS EQUITY AWARD AGREEMENT (this “Agreement”) IS DATED AS OF APRIL 19, 2021 (the “Effective Date”), BY AND AMONG ENDEAVOR OPERATING COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“EOC Parent”), ENDEAVOR GROUP HOLDINGS, INC., A DELAWARE CORPORATION (“EGH”), JASON LUBLIN, AN INDIVIDUAL (“Grantee”), WME IRIS MANAGEMENT HOLDCO II, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“Iris II”), WME IRIS MANAGEMENT IV HOLDCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“Iris IV”), AND WME HOLDCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“WME Holdco”).

RECITALS

 

A.

EOC Parent, EGH and Grantee have entered into that certain Term Employment Agreement by and between EGH, EOC Parent and Grantee dated as of April 19, 2021, as may be amended from time to time (the “Employment Agreement”).

 

B.

Iris II, Iris IV, WME Holdco and Grantee are party to those certain agreements set forth on Schedule A hereto (the “Prior Agreements”).

 

C.

Iris II, Iris IV, WME Holdco and Grantee acknowledge and agree that, as of the Effective Date, except as set forth herein, the Prior Agreements shall be superseded in their entirety by this Agreement and the Prior Agreements shall hereby terminate and no longer have any force or effect.

 

D.

This Agreement is designed to amend and restate all the terms and conditions of the equity interests previously granted pursuant to the Prior Agreements in connection with Grantee’s performance of services to EOC Parent, EGH and their respective subsidiaries (collectively, “Employer”).

TERMS AND CONDITIONS

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the parties hereto agree as follows:

1.    Grantees Owned Units.

1.1    Iris II, Iris IV and WME Holdco each acknowledge and agree that, as of the Effective Date, (a) Grantee, or Grantee’s Related Person(s), owns the class and number of equity securities set forth on Schedule B attached hereto (the “Owned Units”), (b) the number of vested and unvested Owned Units is set forth opposite such Owned Units under the headings “Vested Owned Units” and “Unvested Owned Units”, respectively, (c) the unvested Owned Units shall vest in accordance with the vesting principles set forth on Schedule C attached hereto, (d) the Owned Units shall on and after the Effective Date remain subject to certain repurchase obligations as set forth on Schedule D attached hereto, and (e) the Distribution Threshold of the Owned Units, to the extent such Owned Units are


profits interests, is set forth opposite such Owned Units under the heading “Distribution Threshold” and is subject to the principles set forth opposite such Owned Units under the heading “Catch-Up Principles”.

1.2    The Distribution Threshold of the Owned Units, as applicable, may be adjusted, prior to or in connection with (a) an “IPO” ( as defined in the EOC Parent LLC Agreement), or (b) a merger or other transaction following which EOC Parent or an affiliate of EOC Parent has publicly traded securities, by the EOC Managing Member, in good faith, to account for a Restructuring (as defined below), a Recapitalization (as defined below), capital contributions, distributions or other similar events; provided, that in the case of adjustments to the Distribution Threshold, such adjustment shall only be by the amount necessary so that the Owned Units satisfy the requirements for a profits interest as set forth in Internal Revenue Service (“IRS”) Revenue Procedures 93-27 and 2001-43, or any future IRS guidance or other authority that supplements or supersedes the foregoing IRS Revenue Procedures.

1.3    Grantee acknowledges and agrees that (a) EOC Parent, Iris II, Iris IV and WME Holdco may be recapitalized, reorganized, liquidated, merged into or consolidated or combined with another entity, or otherwise restructured in connection with an IPO (a “Restructuring”) and, in connection with any Restructuring, EOC Parent, Iris II, Iris IV and WME Holdco are entitled to, in their good faith discretion, unilaterally cause the Owned Units to be converted, recapitalized, reclassified, redeemed or otherwise exchanged and the terms and conditions of the Owned Units to be adjusted (a “Recapitalization”), in each case, without Grantee’s consent, and (b) (i) any rights and obligations of Grantee with respect to Grantee’s equity interests in Iris II, Iris IV and WME Holdco immediately prior to a Restructuring and/or Recapitalization shall apply equally to the equity interests received by Grantee in connection with a Restructuring and/or Recapitalization and (ii) all references to Iris II, Iris IV and WME Holdco (and any governing bodies and organizational documents thereof) shall be deemed to refer to the applicable successors thereto (and any governing bodies and organizational documents thereof) following a Restructuring and/or Recapitalization and all references to equity interests in Iris II, Iris IV and WME Holdco herein shall be deemed to refer to the corresponding equity interests held by Grantee immediately following a Restructuring and/or Recapitalization. Without limiting the foregoing, Grantee, EOC Parent, EGH, Iris II, Iris IV and WME Holdco agree that the Owned Units that are “catch-up” profits interests that, based on the total equity value of EOC Parent implied by the offering price of a share of common stock of EGH to the public in an IPO, will receive the same economics that they would have received if such Owned Units had a Distribution Threshold equal to the applicable “catch-up” Distribution Threshold of such Owned Units set forth on Schedule B, may be converted, recapitalized, reclassified, redeemed or otherwise exchanged into direct or indirect interests in Class A Common Units (as defined in the EOC Parent LLC Agreement) of EOC Parent in connection with a Restructuring and/or Recapitalization.

1.4    Grantee acknowledges and agrees that, on and after the Effective Date, the Grantee will be subject to the Restrictive Covenants (as defined in and set forth on Schedule E attached hereto).

 

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2.    Miscellaneous.

2.1    Operating Agreements. By entering into this Agreement, Grantee agrees and acknowledges that (a) Grantee has received and read a copy of the applicable Operating Agreement(s), (b) the Owned Units are subject to the applicable Operating Agreement(s) (including indirectly to the EOC Parent LLC Agreement), the terms of which Operating Agreement(s) are hereby incorporated herein by reference and made part of this Agreement, and (c) Grantee shall be bound by all of the terms and conditions of the applicable Operating Agreement(s). In the event of a conflict between any term or provision contained in this Agreement (other than Section 2.4 hereof) and a term or provision of an applicable Operating Agreement (other than the EOC Parent LLC Agreement) and/or the EOC Parent LLC Agreement, the applicable terms and provisions of the EOC Parent LLC Agreement shall govern and prevail, and then in decreasing order of seniority, the applicable Operating Agreement and lastly, this Agreement. Without limiting the provisions of this Section 2.1, Grantee acknowledges that the Owned Units are subject to the provisions of the applicable Operating Agreement(s) under which (i) the applicable governing body has full discretion to interpret and administer this Agreement and its judgments are final, binding and conclusive on Grantee (absent manifest error), and (ii) Grantee shall be prohibited from Transferring the Owned Units to any other Person except as expressly permitted by the applicable Operating Agreement(s) or as provided for herein. Notwithstanding Grantee’s status as a member of Iris II, Iris IV and WME Holdco, Grantee shall have no right whatsoever to (A) examine the books and records of Iris II, Iris IV and WME Holdco or Employer or (B) obtain any information about the identities of the other members of Iris II, Iris IV and WME Holdco or members of Employer (or of the size or nature of such other members’ or members’ interests in Iris II, Iris IV and WME Holdco or Employer, respectively). This Agreement shall not restricted in any way the adoption of any amendment to any applicable Operating Agreement(s) in accordance with the terms of such applicable Operating Agreement(s).

2.2    Notices. Notices to EOC Parent, Iris II, Iris IV or WME Holdco (or any successor entities thereto) hereunder shall be addressed to such party c/o EOC Parent at the principal executive office of EOC Parent, unless otherwise designated in writing by EOC Parent. Notices to Grantee hereunder shall be addressed to Grantee at the address appearing in the personnel records of Employer or an Affiliate thereof for Grantee, unless otherwise designated in writing by Grantee.

2.3    Governing Law. This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of Delaware applicable to contracts entered into and wholly performed in said State.

2.4    Disputes. Upon the occurrence of any dispute or disagreement between the parties hereto arising out of or in connection with any term of this Agreement, the subject matter hereof, or the interpretation or enforcement hereof, the parties shall comply with the dispute resolution procedure set forth in Section 13 of the Employment Agreement.

 

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2.5    Entire Agreement. This Agreement, together with the Partner Agreement, the organizational documents of EOC Parent, Iris II, Iris IV and EGH (in each case, as may be amended, modified or supplemented from time to time) and any other agreements which may be entered into by Grantee and Employer on and after the Effective Date, constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions and preliminary agreements (including, without limitation, the Prior Agreements); provided, that the release of claims set forth in that certain Class A Member Agreement, dated as of December 17, 2014, by and between WME Holdco and Grantee shall not be superseded by this Agreement and remain in full force and effect. This Agreement may not be amended except in writing executed by the parties hereto. EOC Parent, Iris II, Iris IV, WME Holdco and Grantee acknowledge and agree that, except as set forth herein, as of the Effective Date, the Prior Agreements shall be superseded in their entirety by this Agreement and the Prior Agreements shall hereby terminate and no longer have any force or effect; provided, that the parties acknowledge and agree that any terms of the Prior Agreements that are intended to be incorporated herein shall be interpreted in a manner consistent with the intention of the Prior Agreements (except as explicitly set forth herein). Notwithstanding anything herein to the contrary, to the extent an IPO does not occur on or prior to December 31, 2021, this Agreement shall be void ab initio and the Prior Agreements shall remain in full force and effect.

2.6    Counterparts. This Agreement may be executed in any number of counterparts and by facsimile, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

2.7    Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and have participated jointly in the drafting of this Agreement and, therefore, waive the application of any law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against or interpreted to the disadvantage of the party drafting or structuring such agreement or document.

2.8    Interpretation. Defined terms used in this Agreement in the singular shall import the plural and vice versa. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Sections shall be deemed to be references to Sections of this Agreement unless the context shall otherwise require. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement (including any schedules or annexes attached hereto) as a whole and not to any particular provision of this Agreement. Any statute or laws defined or referred to herein shall include any rules, regulations or forms promulgated thereunder from time to time and as from time to time amended, modified or supplemented, including by succession of successor rules, regulations or forms. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or

 

4


instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Any reference to the number of Owned Units means such Owned Units as appropriately adjusted to give effect to any share combinations, restructuring or other capitalizations of EOC Parent or its capital structures. Any reference herein to the holder of a particular class or series of Owned Units shall be a reference to such Person solely in its capacity as a holder of that particular class or series of Owned Units.

2.9    Successors and Assigns. Each party hereto may, in his or its discretion, assign his or its rights and obligations under this Agreement (including, without limitation, in connection with a Restructuring); provided that Grantee shall not be entitled to assign any of Grantee’s rights or obligations without the consent of each of EOC Parent, Iris II, Iris IV and WME Holdco (or any successor entities thereto). The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

2.10    Definitions. For purposes of this Agreement and the schedules thereto:

(a)    “Affiliates” of any specified Person means any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person, and including any Trust or Family Member of such Person.

(b)    “Cause” shall have the meaning set forth in the Employment Agreement.

(c)    “Distribution Threshold” means the “Distribution Threshold” set forth opposite each applicable Owned Unit on Schedule B, as may be adjusted in accordance with Section 1.2.

(d)    “Employer Non-Renewal” means a termination of Grantee’s employment or service relationship with Employer pursuant to clause (ii) of the definition of Grantee Non-Renewal where Employer did not offer Grantee a new employment, services, guaranteed compensation or other similar agreement with Employer pursuant to a bona fide offer prior to such termination. For the avoidance of doubt, in no event shall an Employer Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason.

(e)     “EOC Parent LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of EOC Parent, as may be amended, restated, modified or supplemented, from time to time.

(f)    “Family Member” means with respect to a Person, such Person’s spouse, domestic partner, parents, children or siblings, including any Affiliates thereof.

 

5


(g)    “Good Reason” shall have the meaning set forth in the Employment Agreement.

(h)    “Grantee Non-Renewal” means (i) any failure of Grantee to execute a new employment, services, guaranteed compensation, or other similar agreement with Employer offered pursuant to a bona fide offer by Employer following (or to become effective upon) expiration of Grantee’s then-existing (or prior) employment or agreement or (ii) any termination of Grantee’s employment or service relationship with Employer following expiration of Grantee’s prior employment, services, guaranteed compensation or other similar agreement with Employer if a new agreement between Employer and Grantee has not been executed. For the avoidance of doubt, in no event shall a Grantee Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason.

(i)    “Operating Agreement” shall mean, with respect to each of EOC Parent, Iris II, Iris IV or WME Holdco, its limited liability company agreement, as may be amended from time to time, and, following an IPO, the organizational document of its successor (including any successor in connection with any Restructuring).

(j)    “Person” means any individual, firm, corporation, partnership, limited liability company, trust, estate, joint venture, governmental authority or other entity.

(k)    “Related Person(s)” means any Family Member, Trust and any other Person of which Grantee or any of the foregoing has a direct or indirect economic or beneficial or other interest in or is a beneficiary of.

(l)    “Trust” means, with respect to Grantee, (i) a revocable trust that is treated as a grantor trust for income tax purposes; provided, that and only so long as (a) the beneficiaries of such Trust includes only Grantee and Grantee’s spouse, domestic partner or lineal descendants; and (b) Grantee retains exclusive voting control over the Owned Units, in a trustee capacity or otherwise or (ii) any other trust that is solely for bona fide estate planning purposes that shall not, and shall not be used to, circumvent the provisions herein; provided, that and only so long as the beneficiaries of such Trust include only Grantee and Grantee’s spouse, domestic partner or lineal descendants.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

/s/ Jason Lublin

Jason Lublin
ENDEAVOR OPERATING COMPANY, LLC
By  

/s/ Ariel Emanuel

Its Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

/s/ Ariel Emanuel

Its Authorized Signatory
WME IRIS MANAGEMENT HOLDCO II, LLC
By  

/s/ Ariel Emanuel

Its Authorized Signatory
WME IRIS MANAGEMENT IV HOLDCO, LLC
By  

/s/ Ariel Emanuel

Its Authorized Signatory
WME HOLDCO, LLC
By  

/s/ Ariel Emanuel

Its Authorized Signatory

Signature Page to Equity Award Agreement


SCHEDULE A

Prior Agreements

 

   

Class A Member Agreement, by and between WME Holdco, LLC and Jason Lublin, dated as of December 17, 2014

 

   

Letter Agreement regarding New Management Holdco Interests, by and between WME Holdco, LLC and Jason Lublin, dated January 8, 2016

 

   

Unit Exchange and Redemption Agreement, by and among WME Entertainment Parent, LLC, WME Holdco, LLC and Jason Lublin, dated as of March 21, 2017

 

   

Management Unit Award Agreement, by and between WME Iris Management IV Holdco, LLC and Jason Lublin, dated June 15, 2017

 

   

Letter Agreement, amending the Management Unit Award Agreement, by and between WME Iris Management IV Holdco, LLC and Jason Lublin, dated June 30, 2018


SCHEDULE B

Owned Units

(as of the Effective Date, except as otherwise noted)

 

Owned Units    Vested
Owned
Units
   Unvested
Owned
Units
   Distribution
Threshold1
  Catch-Up Principles
7,282,362 Class A Units of WME Holdco, LLC (the “Class A Units”)    7,282,362    0    Not applicable   Not applicable.
5,306,220 Profits Units of WME Holdco, LLC (the “Profits Units”)    5,306,220    0    Not applicable   Not applicable.
979,980 performance-vesting Management Units of WME Iris Management IV Holdco, LLC (the “Iris IV Performance Based Units” and, together with the Iris IV Time Based Units, the “Iris IV Units”)    0    979,980    $5,551,926,999   The Iris IV Performance Based Units will “catch-up” on distributions or appreciation from and after such Distribution Threshold is met so that, assuming sufficient distribution or appreciation, such Iris IV Performance Based Units will “catch-up” and receive the same economics in any applicable distribution under the terms of the EOC Parent LLC Agreement that they would have received if the Iris IV Performance Based Units had a Distribution Threshold of $0.

 

1 

Distribution Thresholds are as of December 31, 2020.

 

9


SCHEDULE C

Vesting Principles

 

  1.

Iris IV Units:

 

  A.

For purposes of this subsection (1) to Schedule C:

 

  (i)

Change of Control” shall mean, prior to an IPO, “Sale Transaction” (as defined in the EOC Parent LLC Agreement) and, as of and following an IPO, “Change of Control” (as defined in the EOC Parent LLC Agreement).

 

  (ii)

Performance Vesting Equity Value” means, at any applicable time of determination, the total equity value of EOC Parent and its subsidiaries as reasonably determined by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Board of Directors of EGH (or any other body to which it defeases or delegates authority) (the “Governing Body”) in good faith.

 

  (iii)

Vested Iris IV Units” means, as of any date, the Iris IV Units that have become vested pursuant to this subsection (1) to Schedule C on or prior to such date.

 

  B.

The Iris IV Performance Based Units shall vest in such amounts and at such times, so that, (i) as of the Effective Date, 46.6% of the Iris IV Performance Based Units shall be vested, and (ii) as of the applicable time of determination, 70% of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $7,000,000,000, 90% of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $8,000,000,000, and all of the Performance Vesting Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $9,000,000,000. Any of the Iris IV Performance Based Units that do not vest upon a Change of Control based on the Performance Vesting Equity Value implied thereby in accordance with the foregoing shall remain outstanding and shall continue to be subject to vesting in accordance with the terms of this subsection(1)(B) to Schedule C, or, alternatively, solely to the extent agreed to by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, may be exchanged into Units in EOC Parent (which exchange shall be caused by Iris IV pursuant to the applicable Operating Agreement) and thereafter rolled over into equity interests of the buyer with an equivalent economic value as of the consummation of such Change of Control and vesting conditions that


  are no less favorable to Grantee than the remaining vesting conditions with respect to the unvested Iris IV Performance Based Units as of the consummation of such Change of Control. Solely to the extent agreed to by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, any or all of the Iris IV Performance Based Units that do not vest upon the consummation of an IPO based on the Performance Vesting Equity Value implied thereby in accordance with the foregoing shall remain outstanding and shall continue to be subject to vesting in accordance with the terms of this subsection(1)(B) to Schedule C. Notwithstanding anything to the contrary, each of the threshold dollar amounts set forth herein with respect to the Performance Vesting Equity Value may be adjusted by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, in good faith, to account for Capital Contributions (as defined in the WME Iris Management IV LLC Agreement), distributions of capital proceeds or available cash flow, restructurings or other recapitalizations of EOC Parent, EGH or their capital structures, or other similar events (including, without limitation, any transaction pursuant to which EOC Parent acquires equity interests in Zuffa Parent, LLC or any of its Affiliates).

 

  C.

Notwithstanding anything to the contrary contained in this Agreement, upon the consummation of a Change of Control, any or all of the unvested Iris IV Units may be cancelled as determined by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body.

 

  D.

Upon the termination of Grantee’s employment or services with Employer for any reason: (i) subject to the provisions of this Schedule C and of the applicable Operating Agreement, Grantee (or Grantee’s estate, in the case of a termination upon the death of Grantee) shall be entitled to retain Grantee’s Vested Iris IV Units following such termination; and (ii) all of the Iris IV Units that are not Vested Iris IV Units shall be forfeited without any consideration paid to Grantee. Upon the termination of Grantee’s employment or services with Employer by Employer without Cause, by Grantee with Good Reason, or due to an Employer Non-Renewal, a number of the unvested Iris IV Performance Based Units shall be eligible to vest based on the Performance Vesting Equity Value as of the date of such termination of employment or services.


SCHEDULE D

Repurchase Obligations

Each of WME Holdco, Iris II and Iris IV may, at any time upon delivery of written notice to Grantee following a termination of Grantee’s employment or services with Employer for any reason, exercise a Repurchase Option (as defined in the applicable Operating Agreement) with respect to any or all of the vested WME Holdco Units, Iris II Units or Iris IV Units, as applicable, in accordance with, and subject to the terms and conditions of, the applicable Operating Agreement.

Notwithstanding anything to the contrary in the Operating Agreements, if (X) prior to the consummation of an IPO, Grantee’s employment or services with Employer is terminated by Employer with Cause or by Grantee without Good Reason (and not upon any other termination of Grantee’s employment with Employer), or (Y) on or following the consummation of an IPO, Grantee’s employment or services with Employer is terminated by Employer with Cause, then the consideration payable by WME Holdco, Iris II or Iris IV, respectively, to Grantee pursuant to an exercise by WME Holdco, Iris II or Iris IV, respectively, of the applicable Repurchase Option with respect to Grantee’s vested Class A Units or Profits Units or Iris II Units and Iris IV Units shall, (a) prior to an IPO, be 75% of the fair market value of such vested Class A Units or Profits Units as determined by the Executive Committee of WME Holdco in accordance with the Operating Agreement of WME Holdco, and in the case of Iris II Units or Iris IV Units, be 75% of the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units of EOC Parent and (b) as of and following an IPO, 75% of the fair market value of the Units in EOC Parent corresponding to the vested Class A Units or Profits Units or Iris II Units or Iris IV Units as applicable (as determined by the Governing Body).

For clarity, notwithstanding anything to the contrary contained in the Prior Agreements, if (a) prior to the consummation of an IPO, Grantee’s employment or services with Employer is terminated for any reason other than (i) by Employer with Cause or (ii) by Grantee without Good Reason, or (b) on or following the consummation of an IPO, Grantee’s employment or services with Employer is terminated for any reason other than by the Employer with Cause, then the consideration payable by WME Holdco, Iris II or Iris IV, respectively, to Grantee pursuant to an exercise by WME Holdco, Iris II or Iris IV, respectively, of the applicable Repurchase Option shall be (A) prior to an IPO, with respect to Grantee’s vested Class A Units or Profits Units, the fair market value of such vested Class A Units or Profits Units as determined by the Executive Committee of WME Holdco in accordance with the Operating Agreement of WME Holdco, and, with respect to vested Iris II Units and Iris IV Units, the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units of EOC Parent and (B) as of and following an IPO, the fair market value of the Units in EOC Parent corresponding to the vested Class A Units or Profits Units or Iris II Units or Iris IV Units, as applicable (as determined by the Governing Body).


In connection with any Repurchase Option and as a condition to Grantee’s receipt of consideration for the vested Class A Units or Profits Units, Iris II Units or Iris IV Units to be repurchased pursuant thereto, Grantee or Grantee’s estate, as applicable, shall take or cause to be taken all actions requested by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body in order to expeditiously consummate such repurchase and any related transactions, including executing, acknowledging and delivering assignments, a general release of EOC Parent and its Affiliates and related person(s) (in form and substance satisfactory to EOC Parent) and other documents and instruments as may be reasonably requested and otherwise cooperating with the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, and making customary representations and warranties, including as to due approval and ownership free and clear of any liens and transfer of the applicable vested Class A Units or Profits Units, Iris II Units or Iris IV Units.


SCHEDULE E

Restrictive Covenants

 

  1.

Non-Solicitation; Non-Hire. During the period commencing on the Effective Date and ending on the second (2nd) anniversary of the date on which Grantee or any Affiliates of Grantee cease to be direct or indirect members of EOC Parent or, if earlier, the second (2nd) anniversary of the date on which Grantee’s employment or services with the Company Group terminates for any reason (the “Restricted Period”), Grantee shall not (and shall cause each of Grantee’s controlled Affiliates not to) directly, or indirectly through another Person, (a) induce or attempt to induce any employee, consultant or independent contractor of the Company Group to leave the employ or services of the Company Group or (b) hire any employee, consultant or independent contractor of the Company Group; provided, that the restrictions on solicitation in clause (a) of this Section 1 to Schedule E shall not preclude solicitations through the use of general advertising (such as web postings or advertisements in publications) or search firms, employment agencies or similar entities not specifically directed at the Company Group.

 

  2.

Non-Competition. Grantee acknowledges and agrees that (a) at all times while Grantee is employed with the Company Group, Grantee shall pursue all appropriate business opportunities of the Company Group exclusively through the Company Group and (b) the Company Group would be irreparably damaged if Grantee (or, if applicable, any of Grantee’s controlled Affiliates) were to provide services to any Person (including Grantee) engaged in a Restricted Business (as defined below) and that such competition by Grantee (or, if applicable, any of Grantee’s controlled Affiliates) would result in a significant loss of goodwill by the Company Group. Therefore, Grantee agrees that during the period commencing on the Effective Date and ending on the first (1st) anniversary of the date on which Grantee or any Grantee’s Affiliates cease to be direct or indirect members of EOC Parent or, if earlier, the first (1st) anniversary of the date on which Grantee’s employment or services with the Company Group terminates for any reason, Grantee shall not (and, as applicable, shall cause each of his controlled Affiliates not to) directly or indirectly through another Person own any interest in, manage, control, participate in (whether as an officer, director, manager, employee, partner, equity holder, member, agent, advisor, individual independent contractor, consultant, representative or otherwise), consult with, represent, render services for, or in any other manner engage in the Restricted Business in any geographic area where the Company Group conducts it; provided, that nothing herein shall prohibit Grantee and any of his controlled Affiliates, as applicable from (i) being a passive owner of not more than two percent (2%) of the outstanding stock of any class of a corporation or entity which is publicly traded so long as Grantee (or any of Grantee’s controlled Affiliates, if applicable) does not have any active participation in the management or other business of such corporation or entity or (ii) being employed by or otherwise providing services to any corporation or entity, a division or subsidiary of which is engaged in Restricted Businesses so long as Grantee is


  not involved with such division or subsidiary. As used herein, the term “Restricted Business” means collectively (x) any talent agency business or (y) any business or businesses or a type not described in clause (x) in which Grantee was actively engaged on behalf of the Company Group during the preceding twelve (12) month period prior to the date on which Grantee ceases to be employed by or providing services to the Company Group (and any logical extensions thereof). Notwithstanding anything in this Agreement (including this Schedule E) to the contrary, this Section 2 of Schedule E (other than clause (a) hereof) shall not apply and shall have no force and effect upon (i) an Employer Non-Renewal, (ii) a termination of Grantee’s employment or services with the Company Group by the Company without Cause or (iii) a termination of Grantee’s employment or services with the Company Group by Grantee with Good Reason. No amendment of the Operating Agreement of WME Holdco that would change the covenants set forth in this Section 2 of Schedule E in a manner adverse to Grantee shall be effective as to Grantee without his written consent.

 

  3.

Non-Disparagement. During the Restricted Period, Grantee shall not (and, if applicable, shall cause each of Grantee’s controlled Affiliates not to) defame or disparage the Company Group in any medium to any Person. Notwithstanding the foregoing, Grantee (and Grantee’s controlled Affiliates, if applicable) may confer in confidence with Grantee’s (or, if applicable, Grantee’s controlled Affiliates’) legal representatives and make truthful statements as are required by applicable law or legal process.

 

  4.

Enforcement.

 

  a.

Grantee agrees that the Company Group would suffer irreparable damage, that the Company Group would not have any adequate remedy at law in the event of a breach or threatened breach of any of the covenants set forth in Sections 1, 2 or 3 of this Schedule E (collectively, the “Restrictive Covenants”), that the damages resulting from any such breach or threatened breach would be material but not readily susceptible to being measured in monetary terms, and that any remedy at law (including the payment of damages) would be inadequate as a result of such breach or threatened breach. Accordingly, it is agreed that any member of the Company Group shall be entitled to an immediate injunction or injunctions to prevent breaches or threatened breaches of the Restrictive Covenants and to specific performance of such Restrictive Covenants, in each case without proof of actual damages, and Grantee waives any requirement for the securing or posting of any bond in connection with any such remedy.

 

  b.

Grantee further agrees that the remedies provided for in this Section 4 of Schedule E shall be in addition to, and not in limitation of, any other remedies that may be available to the Company Group whether at law or in equity, including monetary damages, and all of the Company Group’s rights shall be unrestricted, including, but not limited to, the right to terminate Grantee at any time for any reason.


  c.

Grantee acknowledges and agrees that as used in this Schedule E, the “Company Group” shall mean Employer and any current or former Affiliate of any member of Employer, as determined by EOC Parent in its discretion. Without limiting the foregoing, the Company may elect to assign or transfer all or any portion of its rights to enforce the provisions of this Schedule E to any person or entity who is a successor to any member of the Company Group or to any person or entity who acquires one or more businesses from any member of the Company Group.

 

  5.

Restrictive Covenants Generally. If, at the time of enforcement of the Restrictive Covenants, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by applicable law. Grantee acknowledges that Grantee has had the opportunity to be represented by counsel in the negotiation and execution of this Agreement and hereby acknowledge that the Restrictive Covenants are reasonable in terms of duration, scope and area restrictions and are necessary to protect the goodwill of the Company Group.

 

  6.

Termination of Non-Competition Covenant. Notwithstanding the foregoing, if within ten (10) days of the date on which Grantee’s employment or services with the Company Group terminates upon a Grantee Non-Renewal (other than an Employer Non-Renewal), Grantee delivers an irrevocable and unconditional notice to EOC Parent, together with supporting documentation evidencing Grantee’s authority to do so and certificates and other evidence of ownership and surrender, in each case in forms reasonably acceptable to EOC Parent, that Grantee thereby relinquish to EOC Parent and its designees (a) all of the Owned Units (whether vested or unvested) and any and all other securities or other assets for or into which all or a portion of such Owned Units has been or may be exchanged or converted and (b) all proceeds (cash or otherwise) received or receivable with respect to such Owned Units or other assets (excluding tax distributions payable in respect of periods prior thereto, ordinary course annual bonus payments payable in respect of periods prior thereto and proceeds received prior thereto in respect of any sale of the Owned Units (and any and all other securities or other assets for or into which all or a portion of such Owned Units has been or may be exchanged or converted) in the public market following an IPO), in the case of each of clauses (a) and (b), in exchange for no consideration payable by the Company Group or any other Person, then the covenants set forth in Section 2 of this Schedule E shall terminate thereupon and have no further force or effect. For the avoidance of doubt, following the election described in the foregoing sentence, other than the covenants set forth in Section 2 of this Schedule E, each of Grantee’s covenants and obligations with respect to the Company Group (whether set forth in this Schedule E or otherwise) shall remain in effect in accordance with its terms.

Exhibit 10.18

Execution Version

EQUITY AWARD AGREEMENT

THIS EQUITY AWARD AGREEMENT (this “Agreement”) IS DATED AS OF JUNE APRIL 19, 2021 (the “Effective Date”), BY AND AMONG ENDEAVOR OPERATING COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“EOC Parent”), ENDEAVOR GROUP HOLDINGS, INC., A DELAWARE CORPORATION (“EGH”), MARK SHAPIRO, AN INDIVIDUAL (“Grantee”), WME IRIS MANAGEMENT HOLDCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“Iris I”), WME IRIS MANAGEMENT HOLDCO II, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“Iris II”), AND WME IRIS MANAGEMENT IV HOLDCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“Iris IV”).

RECITALS

 

A.

EOC Parent, EGH and Grantee have entered into that certain Term Employment Agreement by and between EGH, EOC Parent and Grantee dated as of April 19, 2021, as may be amended from time to time (the “Employment Agreement”).

 

B.

Iris I, Iris II, and Iris IV and Grantee are party to those certain agreements set forth on Schedule A hereto (the “Prior Agreements”).

 

C.

Iris I, Iris II, and Iris IV and Grantee acknowledge and agree that, as of the Effective Date, except as set forth herein, the Prior Agreements shall be superseded in their entirety by this Agreement.

 

D.

This Agreement is designed to amend and restate all the terms and conditions of the equity interests previously granted pursuant to the Prior Agreements in connection with Grantee’s performance of services to EOC Parent, EGH and their respective subsidiaries (collectively, “Employer”).

TERMS AND CONDITIONS

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the parties hereto agree as follows:

 

1.

Grantee’s Owned Units.

1.1      Iris I, Iris II and Iris IV each acknowledge and agree that, as of the Effective Date, (a) Grantee, or Grantee’s Related Person(s), owns the class and number of non-forfeitable and non-redeemable equity securities set forth on Schedule B attached hereto (the “Owned Units”), (b) the number of vested and unvested Owned Units is set forth opposite such Owned Units under the headings “Vested Owned Units” and “Unvested Owned Units”, respectively, (c) the unvested Owned Units shall vest in accordance with the vesting principles set forth on Schedule C attached hereto, (d) the Owned Units shall on and after the Effective Date remain subject to certain repurchase obligations as set forth on Schedule D attached hereto, and (e) the Distribution Threshold of the Owned Units, to the extent such Owned Units are profits interests, is set forth opposite such Owned Units

 

1


under the heading “Distribution Threshold” and is subject to the principles set forth opposite such Owned Units under the heading “Catch-Up Principles”.

1.2      The Distribution Threshold of the Owned Units, as applicable, may be adjusted, prior to or in connection with (a) an “IPO” (as defined in the EOC Parent LLC Agreement), or (b) a merger or other transaction following which EOC Parent or an affiliate of EOC Parent has publicly traded securities, by the Managing Member of EOC Parent, in good faith, to account for a Restructuring (as defined below), a Recapitalization (as defined below), capital contributions, distributions or other similar events; provided, that in the case of adjustments to the Distribution Threshold, such adjustment shall only be by the amount necessary so that the Owned Units satisfy the requirements for a profits interest as set forth in Internal Revenue Service (“IRS”) Revenue Procedures 93-27 and 2001-43, or any future IRS guidance or other authority that supplements or supersedes the foregoing IRS Revenue Procedures.

1.3      Grantee acknowledges and agrees that EOC Parent, Iris I, Iris II and Iris IV may be recapitalized, reorganized, liquidated, merged into or consolidated or combined with another entity, or otherwise restructured in connection with an IPO (a “Restructuring”) and, in connection with any Restructuring, EOC Parent, Iris I, Iris II and Iris IV are entitled to, in their good faith discretion, unilaterally cause the Owned Units to be converted, recapitalized, reclassified, redeemed or otherwise exchanged and the terms and conditions of the Owned Units to be adjusted (a “Recapitalization”), in each case, without Grantee’s consent. Grantee, EOC Parent, Iris I, Iris II and Iris IV each acknowledge and agree that (i) any rights and obligations of Grantee with respect to Grantee’s equity interests in Iris I, Iris II and Iris IV immediately prior to a Restructuring and/or Recapitalization shall apply equally to the equity interests received by Grantee in connection with a Restructuring and/or Recapitalization and (ii) all references to Iris I, Iris II and Iris IV (and any governing bodies and organizational documents thereof) shall be deemed to refer to the applicable successors thereto (and any governing bodies and organizational documents thereof) following a Restructuring and/or Recapitalization and all references to equity interests in Iris I, Iris II and Iris IV herein shall be deemed to refer to the corresponding equity interests held by Grantee immediately following a Restructuring and/or Recapitalization, which corresponding equity interests shall have vesting and repurchase terms that are in no event less favorable than those set forth on Schedules C and D attached hereto. Without limiting the foregoing, Grantee, EOC Parent, EGH, Iris I, Iris II and Iris IV agree that the Owned Units that are “catch-up” profits interests that, based on the total equity value of EOC Parent implied by the offering price of a share of common stock of EGH to the public in an IPO, will receive the same economics that they would have received if such Owned Units had a Distribution Threshold equal to the applicable “catch-up” Distribution Threshold of such Owned Units set forth on Schedule B, may be converted, recapitalized, reclassified, redeemed or otherwise exchanged into direct or indirect interests in Class A Common Units (as defined in the EOC Parent LLC Agreement) of EOC Parent in connection with a Restructuring and/or Recapitalization.

 

2


1.4      Grantee acknowledges and agrees that, on and after the Effective Date, Grantee will be subject to the Restrictive Covenants (as defined in and set forth on Schedule E attached hereto).

1.5      Notwithstanding anything to the contrary in any of the Operating Agreements, including, without limitation, Section 7.01 of each of the Operating Agreements, but subject to compliance with Sections 7.01(b)(ii), 7.01(b)(iii) and 7.01(c) of each of the Operating Agreements, the Owned Units shall be permitted at any time to be Transferred (as defined in each respective Operating Agreement) to Grantee’s spouse or lineal descendants by will (including through the designation of such spouse or lineal descendant as a beneficiary of Grantee) or by applicable laws of descent and distribution (each such Transfer shall be deemed a “Permitted Transfer”, and each such Transferee shall be deemed a “Permitted Transferee”, under each respective Operating Agreement). Iris I, Iris II and Iris IV hereby agree and acknowledge that this Agreement has been approved by the applicable Board of Directors (as defined in each respective Operating Agreement) and accordingly, the foregoing constitutes the prior written consent of each such applicable Board of Directors for purposes of Section 7.01 of each of the Operating Agreements.

 

2.

Miscellaneous.

2.1      Operating Agreements. By entering into this Agreement, Grantee agrees and acknowledges that (a) Grantee has received and read a copy of the applicable Operating Agreement(s), (b) the Owned Units are subject to the applicable Operating Agreement(s) (including indirectly to the EOC Parent LLC Agreement), the terms of which Operating Agreement(s) are hereby incorporated herein by reference and made part of this Agreement, and (c) Grantee shall be bound by all of the terms and conditions of the applicable Operating Agreement(s). In the event of a conflict between any term or provision contained in this Agreement (other than Section 2.4 hereof) and a term or provision of an applicable Operating Agreement (other than the EOC Parent LLC Agreement) and/or the EOC Parent LLC Agreement, the applicable terms and provisions of the EOC Parent LLC Agreement shall govern and prevail, and then in decreasing order of seniority, the applicable Operating Agreement and lastly, this Agreement. Without limiting the provisions of this Section 2.1, Grantee acknowledges that the Owned Units are subject to the provisions of the applicable Operating Agreement(s) under which (i) the applicable governing body has full discretion to interpret and administer this Agreement and its judgments are final, binding and conclusive on Grantee (absent manifest error), and (ii) Grantee shall be prohibited from Transferring the Owned Units to any other Person except as expressly permitted by the applicable Operating Agreement(s) or as provided for herein. Notwithstanding Grantee’s status as a member of Iris I, Iris II and Iris IV, Grantee shall have no right whatsoever to (A) examine the books and records of Iris I, Iris II and Iris IV or Employer, or (B) obtain any information about the identities of the other members of Iris I, Iris II and Iris IV or members of Employer (or of the size or nature of such other members’ or members’ interests in Iris I, Iris II and Iris IV or Employer, respectively). This Agreement shall not restrict in any way the adoption of any amendment to the applicable Operating Agreement(s) in accordance with the terms of such applicable Operating Agreement(s).

 

3


2.2      Notices. Notices to EOC Parent, Iris I, Iris II or Iris IV (or any successor entities thereto) hereunder shall be addressed to such party c/o EOC Parent at the principal executive office of EOC Parent, unless otherwise designated in writing by EOC Parent. Notices to Grantee hereunder shall be addressed to Grantee at the address appearing in the personnel records of Employer or an Affiliate thereof for Grantee, unless otherwise designated in writing by Grantee.

2.3      Governing Law. This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of Delaware applicable to contracts entered into and wholly performed in said State.

2.4      Disputes. Upon the occurrence of any dispute or disagreement between the parties hereto arising out of or in connection with any term of this Agreement, the subject matter hereof, or the interpretation or enforcement hereof, the parties shall comply with the dispute resolution procedure set forth in Section 13 of the Employment Agreement.

2.5      Entire Agreement. This Agreement, together with the organizational documents of EOC Parent, Iris I, Iris II, Iris IV and EGH (in each case, as may be amended, modified or supplemented from time to time in accordance with their terms) and any other agreements which may be entered into by Grantee and Employer on and after the Effective Date, constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions and preliminary agreements (including, without limitation, the Prior Agreements). This Agreement may not be amended except in writing executed by the parties hereto. EOC Parent, Iris I, Iris II, Iris IV and Grantee acknowledge and agree that, except as set forth herein, as of the Effective Date, the Prior Agreements shall be superseded in their entirety by this Agreement; provided, that the parties acknowledge and agree that any terms of the Prior Agreements that are intended to be incorporated herein shall be interpreted in a manner consistent with the intention of the Prior Agreements (except as explicitly set forth herein). Notwithstanding anything herein to the contrary, to the extent an IPO does not occur on or prior to December 31, 2021, this Agreement shall be void ab initio and the Prior Agreements shall remain in full force and effect.

2.6      Counterparts. This Agreement may be executed in any number of counterparts and by facsimile, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

2.7      Interpretation. Defined terms used in this Agreement in the singular shall import the plural and vice versa. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Sections shall be deemed to be references to Sections of this Agreement unless the context shall otherwise require. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement (including any schedules or annexes attached hereto) as a whole and not to any particular provision of this Agreement. Any statute or laws defined or referred to

 

4


herein shall include any rules, regulations or forms promulgated thereunder from time to time and as from time to time amended, modified or supplemented, including by succession of successor rules, regulations or forms. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Any reference to the number of Owned Units means such Owned Units as appropriately adjusted to give effect to any share combinations, restructuring or other capitalizations of EOC Parent or its capital structures. Any reference herein to the holder of a particular class or series of Owned Units shall be a reference to such Person solely in its capacity as a holder of that particular class or series of Owned Units.

2.8      Successors and Assigns. Each party hereto may, in his or its discretion, assign his or its rights and obligations under this Agreement (including, without limitation, in connection with a Restructuring); provided, that Grantee shall not be entitled to assign any of Grantee’s rights or obligations without the consent of each of EOC Parent, Iris I, Iris II and Iris IV (or any successor entities thereto). The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

2.9      Definitions. For purposes of this Agreement and the schedules thereto:

(a)        “Affiliates” of any specified Person means any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person, and including any Trust or Family Member of such Person.

(b)        “Cause” shall have the meaning set forth in Grantee’s employment agreement with Employer as in effect from time to time.

(c)        “Distribution Threshold” means the “Distribution Threshold” set forth opposite each applicable Owned Unit on Schedule B, as may be adjusted in accordance with Section 1.2.

(d)        “EOC Parent LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of EOC Parent, as may be amended, restated, modified or supplemented, from time to time.

(e)        “Family Member” means with respect to a Person, such Person’s spouse, domestic partner, parents, children or siblings, including any Affiliates thereof.

(f)        “Good Reason” shall have the meaning set forth in Grantee’s employment agreement with Employer as in effect from time to time.

 

5


(g)        “Operating Agreement” shall mean, with respect to each of EOC Parent, Iris I, Iris II or Iris IV, its limited liability company agreement, as may be amended from time to time, and, following an IPO, the organizational document of its successor (including any successor in connection with any Restructuring).

(h)        “Person” means any individual, firm, corporation, partnership, limited liability company, trust, estate, joint venture, governmental authority or other entity.

(i)        “Related Person(s)” means any Family Member, Trust and any other Person of which Grantee or any of the foregoing has a direct or indirect economic or beneficial or other interest in or is a beneficiary of.

(j)        “Trust” means, with respect to Grantee, (i) a revocable trust that is treated as a grantor trust for income tax purposes; provided, that and only so long as (a) the beneficiaries of such Trust includes only Grantee and Grantee’s spouse, domestic partner or lineal descendants and (b) Grantee retains exclusive voting control over the Owned Units, in a trustee capacity or otherwise; or (ii) any other trust that is solely for bona fide estate planning purposes that shall not, and shall not be used to, circumvent the provisions herein; provided, that and only so long as the beneficiaries of such Trust include only Grantee and Grantee’s spouse, domestic partner or lineal descendants.

[SIGNATURE PAGE FOLLOWS]

 

6


IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

/s/ Mark Shapiro

Mark Shapiro
ENDEAVOR OPERATING COMPANY, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

/s/ Jason Lublin

Its Authorized Signatory
WME IRIS MANAGEMENT HOLDCO, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory
WME IRIS MANAGEMENT HOLDCO II, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory
WME IRIS MANAGEMENT IV HOLDCO, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory

Signature Page to Equity Award Agreement


SCHEDULE A

Prior Agreements

 

   

Management Unit Award Agreement, by and between WME Iris Management Holdco, LLC and Grantee, made effective as of October 30, 2014

 

   

Letter Agreement regarding Additional Management Units, by and between WME Iris Management Holdco, LLC and Grantee, dated January 4, 2016

 

   

Letter Agreement regarding New Management Holdco Interests, by and between WME Iris Management Holdco II, LLC and Grantee, dated January 8, 2016

 

   

Management Unit Award Agreement by and between WME Iris Management IV Holdco, LLC and Grantee, made effective as of June 15, 2017

 

   

Letter Agreement regarding vesting, by and between WME Iris Management IV Holdco, LLC and Grantee, dated June 30, 2018

 

   

Letter Agreement regarding transfer and repurchase rights, by and among WME Iris Management Holdco, LLC, WME Iris Management Holdco II, LLC, WME Iris Management IV Holdco, LL and Grantee, dated October 12, 2018


SCHEDULE B

Owned Units

(as of the Effective Date, except as otherwise noted)

 

Owned Units

   Vested
Owned
Units
     Unvested
Owned
Units
     Distribution
Threshold1
    

Catch-Up Principles

10,585,002 Management Units of Iris I (the “Initial Iris I Units”)      10,585,002        0      $ 3,158,077,736      Not applicable.
294,028 Management Units of Iris I (the “Additional Iris I Units”, and together with the Initial Iris I Units, the “Iris I Units”)      294,028        0      $ 3,549,227,776      The Additional Iris I Units will “catch-up” on distributions or appreciation from and after such Distribution Threshold is met so that, assuming sufficient distribution or appreciation, such Additional Iris I Units will “catch-up” and receive the same economics in any applicable distribution under the terms of the EOC Parent LLC Agreement that they would have received if the Additional Iris I Units had a Distribution Threshold of $3,215,554,103.2
2,109,057 Management Units of Iris II (the “Iris II Units”)      2,109,057        0      $ 3,607,160,193      Not applicable.
1,837,462 time-vesting Management Units of Iris IV (the “Iris IV Time Based Units”)      1,837,462        0      $ 5,111,662,715      Not applicable.
1,837,463 performance-vesting Management Units of Iris IV (the “Iris IV Performance Based Units” and, together with the Iris IV Time Based Units, the “Iris IV Units”)      857,483        979,980      $ 5,551,926,999      The Iris IV Performance Based Units will “catch-up” on distributions or appreciation from and after such Distribution Threshold is met so that, assuming sufficient distribution or appreciation, such Iris IV Performance Based Units will “catch-up” and receive the same economics in any applicable distribution under the terms of the EOC Parent LLC Agreement that they would have received if the Iris IV Performance Based Units had a Distribution Threshold of $0.

 

1 

Distribution Thresholds are as of December 31, 2020

2 

Distribution Thresholds are as of December 31, 2020.


SCHEDULE C

Vesting Principles

 

1.

Iris IV Units:

A.        For purposes of this subsection (1) to Schedule C:

 

  (i)

Change of Control” shall mean, prior to an IPO, “Sale Transaction” (as defined in the EOC Parent LLC Agreement) and, as of and following an IPO, “Change of Control” (as defined in the EOC Parent LLC Agreement).

 

  (ii)

Employer Non-Renewal” means any termination of Grantee’s employment or service relationship with Employer following expiration of Grantee’s prior employment, services, guaranteed compensation, or other similar agreement with Employer if (A) a new agreement between Employer and Grantee has not been executed and (B) Employer did not offer Grantee a new employment, services, guaranteed compensation, or other similar agreement with Employer pursuant to a bona fide offer prior to such termination. For the avoidance of doubt, in no event shall an Employer Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason.

 

  (iii)

Performance Vesting Equity Value” means, at any applicable time of determination, the total equity value of EOC Parent and its subsidiaries as reasonably determined by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Board of Directors of EGH (or any other body to which it defeases or delegates authority) (the “Governing Body”) in good faith.

 

  (iv)

Vested Iris IV Units” means, as of any date, the Iris IV Units that have become vested pursuant to this subsection (1) to Schedule C on or prior to such date.

B.        The Iris IV Performance Based Units shall vest in such amounts and at such times, so that, (i) as of the Effective Date, 46.6% of the Iris IV Performance Based Units shall be vested, and (ii) as of the applicable time of determination, 70% of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $7,000,000,000, 90% of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $8,000,000,000, and all of the Iris IV


Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $9,000,000,000. Any of the Iris IV Performance Based Units that do not vest upon a Change of Control based on the Performance Vesting Equity Value implied thereby in accordance with the foregoing shall remain outstanding and shall continue to be subject to vesting in accordance with the terms of this subsection (1)(B) to Schedule C, or, alternatively, solely to the extent agreed to by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, may be exchanged into Units in EOC Parent (which exchange shall be caused by Iris IV pursuant to the applicable Operating Agreement) and thereafter rolled over into equity interests of the buyer with an equivalent economic value as of the consummation of such Change of Control and vesting conditions that are no less favorable to Grantee than the remaining vesting conditions with respect to the unvested Iris IV Performance Based Units as of the consummation of such Change of Control. Solely to the extent agreed to by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, any or all of the Iris IV Performance Based Units that do not vest upon the consummation of an IPO based on the Performance Vesting Equity Value implied thereby in accordance with the foregoing shall remain outstanding and shall continue to be subject to vesting in accordance with the terms of this subsection (1)(B) to Schedule C. Notwithstanding anything to the contrary, each of the threshold dollar amounts set forth herein with respect to the Performance Vesting Equity Value may be adjusted by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, in good faith, to account for Capital Contributions (as defined in the WME Iris Management IV LLC Agreement), distributions of capital proceeds or available cash flow, restructurings or other recapitalizations of EOC Parent, EGH or their capital structures, or other similar events (including, without limitation, any transaction pursuant to which EOC Parent acquires equity interests in Zuffa Parent, LLC or any of its Affiliates).

C.        Notwithstanding anything to the contrary contained in this Agreement, upon the consummation of a Change of Control, any or all of the unvested Iris IV Units may be cancelled as determined by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body.

D.        Upon the termination of Grantee’s employment or services with Employer for any reason: (i) subject to the provisions of this Schedule C and of the applicable Operating Agreement, Grantee (or Grantee’s estate, in the case of a termination upon the death of Grantee) shall be entitled to retain Grantee’s Vested Iris IV Units following such termination; and (ii) all of the Iris IV Units that are not Vested Iris IV Units shall be forfeited without any consideration paid to Grantee. Upon the termination of Grantee’s employment or services with Employer by Employer without Cause, by


Grantee with Good Reason, or due to an Employer Non-Renewal, a number of the unvested Iris IV Performance Based Units shall be eligible to vest based on the Performance Vesting Equity Value as of the date of such termination of employment.


SCHEDULE D

Repurchase Obligations

Each of Iris I, Iris II and Iris IV may, at any time upon delivery of written notice to Grantee following a termination of Grantee’s employment or services with Employer for any reason, exercise a Repurchase Option (as defined in the applicable Operating Agreement) with respect to any or all of the vested Iris I Units, Iris II Units or Iris IV Units, as applicable, in accordance with, and subject to the terms and conditions of, the applicable Operating Agreement.

Notwithstanding anything to the contrary in the Operating Agreements, if Grantee’s employment with Employer is terminated by Employer with Cause, then the consideration payable by Iris I or Iris II, respectively, to Grantee pursuant to an exercise by Iris I or Iris II, respectively, of the applicable Repurchase Option shall (i) prior to an IPO, be 75% of the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units of EOC Parent and (ii) as of and following an IPO, 75% of the fair market value of the Units in EOC Parent corresponding to the Iris I Units or Iris II Units, as applicable (as determined by the Governing Body). If Grantee’s employment with Employer is terminated by Employer with Cause, then the consideration payable by Iris IV, to Grantee pursuant to an exercise by Iris IV of the applicable Repurchase Option shall (i) prior to an IPO, be 50% of the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units of EOC Parent and (ii) as of and following an IPO, 50% of the fair market value of the Units in EOC Parent corresponding to the Iris IV Units, as applicable (as determined in good faith by the Governing Body). For clarity, notwithstanding anything to the contrary contained in the Prior Agreements, if Grantee’s employment with Employer is terminated for any reason other than by Employer with Cause, then the consideration payable by Iris I, Iris II or Iris IV, respectively, to Grantee pursuant to an exercise by Iris I, Iris II or Iris IV, respectively, of the applicable Repurchase Option shall be (i) prior to an IPO, with respect to vested Iris I Units, Iris II Units and Iris IV Units, 100% of the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units of EOC Parent and (ii) as of and following an IPO, the fair market value of the Units in EOC Parent corresponding to the vested Iris I Units, Iris II Units or Iris IV Units, as applicable (as determined in good faith by the Governing Body).    

In connection with any Repurchase Option and as a condition to Grantee’s receipt of consideration for the vested Iris I Units, Iris II Units or Iris IV Units to be repurchased pursuant thereto, Grantee or Grantee’s estate, as applicable, shall take or cause to be taken all actions requested by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, in order to expeditiously consummate such repurchase and any related transactions, including executing, acknowledging and delivering assignments, a general release of EOC Parent and its Affiliates and related person(s) (in form and substance satisfactory to EOC Parent) and other documents and instruments as may be reasonably requested and otherwise cooperating with the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, and making customary representations and warranties, including as to due approval and ownership free and clear of any liens and transfer of the applicable vested Iris I Units, Iris II Units or Iris IV Units.


SCHEDULE E

Restrictive Covenants

 

  1.

Non-Solicitation; Non-Hire. During the period commencing on the Effective Date and ending on the second anniversary of the date on which Grantee’s employment with Employer terminates for any reason, Grantee shall not (and shall cause each of Grantee’s controlled Affiliates not to) directly, or indirectly through another Person, (a) (i) induce or attempt to induce any employee, consultant or independent contractor of Employer to leave the employ or services of Employer or (ii) hire any employee, consultant or independent contractor of Employer; provided, that the restrictions on solicitation in clause (a)(i) of this Section 1 to Schedule E shall not preclude solicitations through the use of general advertising (such as web postings or advertisements in publications) or search firms, employment agencies or similar entities not specifically directed at Employer, or (b) directly or indirectly solicit or represent or otherwise provide services to (i) any client of any member of Employer or (ii) any prospective client of any member of Employer that was actively solicited as such by or on behalf of any member of Employer within the twelve (12) month period prior to the date on which Grantee ceases to be employed with Employer; provided, that, the restrictions on solicitation in clause (b) of this Section 1 to Schedule E shall not preclude solicitations of any clients or prospective clients of Employer for any business that is not competitive with the business being performed for, or solicited from, such clients or prospective clients by Employer.

 

  2.

Non-Competition. Grantee acknowledges and agrees that (a) at all times while Grantee is employed with Employer, Grantee shall pursue all appropriate business opportunities of Employer exclusively through Employer and (b) Employer would be irreparably damaged if Grantee (or, if applicable, any of Grantee’s controlled Affiliates) were to provide services to any Person (including Grantee) engaged in a Restricted Business (as defined below) and that such competition by Grantee (or, if applicable, any of Grantee’s controlled Affiliates) would result in a significant loss of goodwill by Employer. Therefore, Grantee agrees that during the period commencing on the Effective Date and ending on the second anniversary of the date on which Grantee’s employment with Employer terminates for any reason, Grantee shall not (and, as applicable, shall cause each of Grantee’s controlled Affiliates not to) directly or indirectly through another Person own any interest in, manage, control, participate in (whether as an officer, director, manager, employee, partner, equity holder, member, agent, advisor, individual independent contractor, consultant, representative or otherwise), consult with, represent, render services for, or in any other manner engage in the Restricted Business in any geographic area where EOC Parent, EGH and their respective controlled affiliates conducts it; provided, that nothing herein shall prohibit Grantee and any of Grantee’s controlled Affiliates, as applicable, from being a passive owner of not more than two percent (2%) of the outstanding stock of any class of a corporation or entity which is publicly traded so long as Grantee (or any of Grantee’s controlled Affiliates, if applicable) does not have any active participation in the management or other


  business of such corporation or entity. As used herein, the term “Restricted Business” means collectively (x) the following eight (8) entities (and any of their respective successors and Affiliates which engage in similar businesses): Creative Artists Agency, United Talent Agency, International Creative Management, Learfield, the Interpublic Group of Companies (including Octagon), Wasserman Media Group, InFront and Lagardere Group; provided, that Employer and Grantee shall negotiate in good faith to consider expanding the foregoing list annually, as mutually agreed to by Employer and Grantee, to cover additional entities of a similar size, scope, and business focus, and (y) any talent agency.

 

  3.

Restrictive Covenants Generally. If, at the time of enforcement of the covenants set forth in Sections 1 and 2 of this Schedule E (collectively, the “Restrictive Covenants”), a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by applicable law. Grantee acknowledges that Grantee has had the opportunity to be represented by counsel in the negotiation and execution of this Agreement and hereby acknowledges that the Restrictive Covenants are reasonable in terms of duration, scope and area restrictions and are necessary to protect the goodwill of Employer.

Exhibit 10.19

Execution Version

EQUITY AWARD AGREEMENT

THIS EQUITY AWARD AGREEMENT (this “Agreement”) IS DATED AS OF APRIL 19, 2021 (the “Effective Date”), BY AND AMONG ENDEAVOR OPERATING COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“EOC Parent”), ENDEAVOR GROUP HOLDINGS, INC., A DELAWARE CORPORATION (“EGH”), SETH KRAUSS, AN INDIVIDUAL (“Grantee”), WME IRIS MANAGEMENT HOLDCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“Iris I”), WME IRIS MANAGEMENT IV HOLDCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“Iris IV”), AND WME IRIS MANAGEMENT V HOLDCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“Iris V”).

RECITALS

 

A.

EOC Parent, EGH and Grantee have entered into that certain Term Employment Agreement by and between EGH, EOC Parent and Grantee dated as of April 19, 2021, as may be amended from time to time (the “Employment Agreement”).

 

B.

Iris I, Iris IV, and Iris V and Grantee are party to those certain agreements set forth on Schedule A hereto (the “Prior Agreements”).

 

C.

Iris I, Iris IV, and Iris V and Grantee acknowledge and agree that, as of the Effective Date, except as set forth herein, the Prior Agreements shall be superseded in their entirety by this Agreement and the Prior Agreements shall hereby terminate and no longer have any force or effect.

 

D.

This Agreement is designed to amend and restate all the terms and conditions of the equity interests previously granted pursuant to the Prior Agreements in connection with Grantee’s performance of services to EOC Parent, EGH and their respective subsidiaries (collectively, “Employer”).

TERMS AND CONDITIONS

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the parties hereto agree as follows:

 

1.

Grantee’s Owned Units.

1.1    Iris I, Iris IV and Iris V each acknowledge and agree that, as of the Effective Date, (a) Grantee, or Grantee’s Related Person(s), owns the class and number of equity securities set forth on Schedule B attached hereto (the “Owned Units”), (b) the number of vested and unvested Owned Units is set forth opposite such Owned Units under the headings “Vested Owned Units” and “Unvested Owned Units”, respectively, (c) the unvested Owned Units shall vest in accordance with the vesting principles set forth on Schedule C attached hereto, (d) the Owned Units shall on and after the Effective Date remain subject to certain repurchase obligations as set forth on Schedule D attached hereto, and (e) the Distribution Threshold of the Owned Units, to the extent such Owned Units are


profits interests, is set forth opposite such Owned Units under the heading “Distribution Threshold” and is subject to the principles set forth opposite such Owned Units under the heading “Catch-Up Principles”.

1.2    The Distribution Threshold of the Owned Units, as applicable, may be adjusted, prior to or in connection with (a) an “IPO” (as defined in the EOC Parent LLC Agreement), or (b) a merger or other transaction following which EOC Parent or an affiliate of EOC Parent has publicly traded securities, by the EOC Managing Member, in good faith, to account for a Restructuring (as defined below), a Recapitalization (as defined below), capital contributions, distributions or other similar events; provided, that in the case of adjustments to the Distribution Threshold, such adjustment shall only be by the amount necessary so that the Owned Units satisfy the requirements for a profits interest as set forth in Internal Revenue Service (“IRS”) Revenue Procedures 93-27 and 2001-43, or any future IRS guidance or other authority that supplements or supersedes the foregoing IRS Revenue Procedures.

1.3    Grantee acknowledges and agrees that (a) EOC Parent, Iris I, Iris IV and Iris V may be recapitalized, reorganized, liquidated, merged into or consolidated or combined with another entity, or otherwise restructured in connection with an IPO (a “Restructuring”) and, in connection with any Restructuring, EOC Parent, Iris I, Iris IV and Iris V are entitled to, in their good faith discretion, unilaterally cause the Owned Units to be converted, recapitalized, reclassified, redeemed or otherwise exchanged and the terms and conditions of the Owned Units to be adjusted (a “Recapitalization”), in each case, without Grantee’s consent, and (b) (i) any rights and obligations of Grantee with respect to Grantee’s equity interests in Iris I, Iris IV and Iris V immediately prior to a Restructuring and/or Recapitalization shall apply equally to the equity interests received by Grantee in connection with a Restructuring and/or Recapitalization and (ii) all references to Iris I, Iris IV and Iris V (and any governing bodies and organizational documents thereof) shall be deemed to refer to the applicable successors thereto (and any governing bodies and organizational documents thereof) following a Restructuring and/or Recapitalization and all references to equity interests in Iris I, Iris IV and Iris V herein shall be deemed to refer to the corresponding equity interests held by Grantee immediately following a Restructuring and/or Recapitalization. Without limiting the foregoing, Grantee, EOC Parent, EGH, Iris I, Iris IV and Iris V agree that the Owned Units that are “catch-up” profits interests that, based on the total equity value of EOC Parent implied by the offering price of a share of common stock of EGH to the public in an IPO, will receive the same economics that they would have received if such Owned Units had a Distribution Threshold equal to the applicable “catch-up” Distribution Threshold of such Owned Units set forth on Schedule B, may be converted, recapitalized, reclassified, redeemed or otherwise exchanged into direct or indirect interests in Class A Common Units (as defined in the EOC Parent LLC Agreement) of EOC Parent in connection with a Restructuring and/or Recapitalization.

1.4    Grantee acknowledges and agrees that, on and after the Effective Date, the Grantee will be subject to the Restrictive Covenants (as defined in and set forth on Schedule E attached hereto).

 

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2.

Miscellaneous.

2.1    Operating Agreements. By entering into this Agreement, Grantee agrees and acknowledges that (a) Grantee has received and read a copy of the applicable Operating Agreement(s), (b) the Owned Units are subject to the applicable Operating Agreement(s) (including indirectly to the EOC Parent LLC Agreement), the terms of which Operating Agreement(s) are hereby incorporated herein by reference and made part of this Agreement, and (c) Grantee shall be bound by all of the terms and conditions of the applicable Operating Agreement(s). In the event of a conflict between any term or provision contained in this Agreement (other than Section 2.4 hereof) and a term or provision of an applicable Operating Agreement (other than the EOC Parent LLC Agreement) and/or the EOC Parent LLC Agreement, the applicable terms and provisions of the EOC Parent LLC Agreement shall govern and prevail, and then in decreasing order of seniority, the applicable Operating Agreement and lastly, this Agreement. Without limiting the provisions of this Section 2.1, Grantee acknowledges that the Owned Units are subject to the provisions of the Operating Agreement(s) under which (i) the applicable governing body has full discretion to interpret and administer this Agreement and its judgments are final, binding and conclusive on Grantee (absent manifest error), and (ii) Grantee shall be prohibited from Transferring his or her Owned Units to any other Person except as expressly permitted by the applicable Operating Agreement(s) or as provided herein. Notwithstanding Grantee’s status as a member of Iris I, Iris IV and Iris V, Grantee shall have no right whatsoever to (A) examine the books and records of Iris I, Iris IV and Iris V or Employer or (B) obtain any information about the identities of the other members of Iris I, Iris IV and Iris V or members of Employer (or of the size or nature of such other members’ or members’ interests in Iris I, Iris IV and Iris V or Employer, respectively). This Agreement shall not restricted in any way the adoption of any amendment to any applicable Operating Agreement(s) in accordance with the terms of such applicable Operating Agreement(s).

2.2    Notices. Notices to EOC Parent, Iris I, Iris IV or Iris V (or any successor entities thereto) hereunder shall be addressed to such party c/o EOC Parent at the principal executive office of EOC Parent, unless otherwise designated in writing by EOC Parent. Notices to Grantee hereunder shall be addressed to Grantee at the address appearing in the personnel records of Employer or an Affiliate thereof for Grantee, unless otherwise designated in writing by Grantee.

2.3    Governing Law. This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of Delaware applicable to contracts entered into and wholly performed in said State.

2.4    Disputes. Upon the occurrence of any dispute or disagreement between the parties hereto arising out of or in connection with any term of this Agreement, the subject matter hereof, or the interpretation or enforcement hereof, the parties shall comply with the dispute resolution procedure set forth in Section 13 of the Employment Agreement.

 

3


2.5    Entire Agreement. This Agreement, together with the Partner Agreement, the organizational documents of EOC Parent, Iris IV, Iris V and EGH (in each case, as may be amended, modified or supplemented from time to time) and any other agreements which may be entered into by Grantee and Employer on and after the Effective Date, constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions and preliminary agreements (including, without limitation, the Prior Agreements); provided that, for the avoidance of doubt, the parties acknowledge and agree that the Partner Letter Agreement, dated as of June 30, 2018, among EOC, Iris I, Iris IV, Iris V and Grantee (the “Put Letter”) terminated on January 1, 2021 and, since such date has been void and of no force and effect. This Agreement may not be amended except in writing executed by the parties hereto. EOC Parent, Iris I, Iris IV, Iris V and Grantee acknowledge and agree that, except as set forth herein, as of the Effective Date, the Prior Agreements shall be superseded in their entirety by this Agreement and the Prior Agreements shall hereby terminate and no longer have any force or effect; provided, that the parties acknowledge and agree that any terms of the Prior Agreements that are intended to be incorporated herein shall be interpreted in a manner consistent with the intention of the Prior Agreements (except as explicitly set forth herein). Notwithstanding anything herein to the contrary, to the extent an IPO does not occur on or prior to December 31, 2021, this Agreement shall be void ab initio and the Prior Agreements shall remain in full force and effect.

2.6    Counterparts. This Agreement may be executed in any number of counterparts and by facsimile, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

2.7    Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and have participated jointly in the drafting of this Agreement and, therefore, waive the application of any law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against or interpreted to the disadvantage of the party drafting or structuring such agreement or document.

2.8    Interpretation. Defined terms used in this Agreement in the singular shall import the plural and vice versa. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Sections shall be deemed to be references to Sections of this Agreement unless the context shall otherwise require. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement (including any schedules or annexes attached hereto) as a whole and not to any particular provision of this Agreement. Any statute or laws defined or referred to herein shall include any rules, regulations or forms promulgated thereunder from time to time and as from time to time amended, modified or supplemented, including by succession of successor rules, regulations or forms. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or

 

4


instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Any reference to the number of Owned Units means such Owned Units as appropriately adjusted to give effect to any share combinations, restructuring or other capitalizations of EOC Parent or its capital structures. Any reference herein to the holder of a particular class or series of Owned Units shall be a reference to such Person solely in its capacity as a holder of that particular class or series of Owned Units.

2.9    Successors and Assigns. Each party hereto may, in his or its discretion, assign his or its rights and obligations under this Agreement (including, without limitation, in connection with a Restructuring); provided, that Grantee shall not be entitled to assign any of Grantee’s rights or obligations without the consent of each of EOC Parent, Iris I, Iris IV and Iris V (or any successor entities thereto). The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

2.10    Definitions. For purposes of this Agreement and the schedules thereto:

(a)    “Affiliates” of any specified Person means any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person, and including any Trust or Family Member of such Person.

(b)    “Cause” shall have the meaning set forth in the Employment Agreement.

(c)    “Distribution Threshold” means the “Distribution Threshold” set forth opposite each applicable Owned Unit on Schedule B, as may be adjusted in accordance with Section 1.2.

(d)    “EOC Parent LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of EOC Parent, as may be amended, restated, modified or supplemented, from time to time.

(e)    “Family Member” means with respect to a Person, such Person’s spouse, domestic partner, parents, children or siblings, including any Affiliates thereof.

(f)    “Good Reason” shall have the meaning set forth in the Employment Agreement.

(g)    “Operating Agreement” shall mean, with respect to each of EOC Parent, Iris I, Iris IV or Iris V, its limited liability company agreement, as may be amended from time to time, and, following an IPO, the organizational document of its successor (including any successor in connection with any Restructuring).

 

5


(h)    “Person” means any individual, firm, corporation, partnership, limited liability company, trust, estate, joint venture, governmental authority or other entity.

(i)    “Related Person(s)” means any Family Member, Trust and any other Person of which Grantee or any of the foregoing has a direct or indirect economic or beneficial or other interest in or is a beneficiary of.

(j)    “Trust” means, with respect to Grantee, (i) a revocable trust that is treated as a grantor trust for income tax purposes; provided, that and only so long as (a) the beneficiaries of such Trust includes only Grantee and Grantee’s spouse, domestic partner or lineal descendants and (b) Grantee retains exclusive voting control over the Owned Units, in a trustee capacity or otherwise; or (ii) any other trust that is solely for bona fide estate planning purposes that shall not, and shall not be used to, circumvent the provisions herein; provided, that and only so long as the beneficiaries of such Trust include only Grantee and Grantee’s spouse, domestic partner or lineal descendants.

[SIGNATURE PAGE FOLLOWS]

 

6


IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

/s/ Seth Krauss

Seth Krauss

 

Signature Page to Equity Award Agreement


ENDEAVOR OPERATING COMPANY, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

/s/ Jason Lublin

Its Authorized Signatory
WME IRIS MANAGEMENT HOLDCO, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory
WME IRIS MANAGEMENT IV HOLDCO, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory
WME IRIS MANAGEMENT V HOLDCO, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory

 

Signature Page to Equity Award Agreement


SCHEDULE A

Prior Agreements

 

 

Management Unit Award Agreement, by and between WME Iris Management Holdco, LLC and Grantee, dated October 30, 2014

 

 

Letter Agreement regarding Additional Management Units, by and between WME Iris Management Holdco, LLC and Grantee, dated October 26, 2015

 

 

Management Unit Award Agreement, by and between WME Iris Management IV Holdco, LLC and Grantee, dated June 15, 2017

 

 

Management Unit Award Agreement, dated June 30, 2018, by and among WME Iris Management V Holdco, LLC and Grantee and solely for purposes of Section 5(b), WME Iris Management Holdco, LLC and WME Iris Management IV Holdco, LLC


SCHEDULE B

Owned Units

(as of the Effective Date, except as otherwise noted)

 

Owned Units

   Vested
Owned
Units
     Unvested
Owned
Units
     Distribution
Threshold1
    

Catch-Up Principles

3,505,693 Management Units of WME Iris Management Holdco, LLC (the “Initial Iris I Units”)      3,505,693        0      $ 3,215,554,103      Not applicable.
97,381 Management Units of WME Iris Management Holdco, LLC (the “Additional Iris I Units”, and together with the Initial Iris I Units, the “Iris I Units”)      97,381        0      $ 3,607,160,193      The Additional Iris I Units will “catch-up” on distributions or appreciation from and after such Distribution Threshold is met so that, assuming sufficient distribution or appreciation, such Additional Iris I Units will “catch-up” and receive the same economics in any applicable distribution under the terms of the EOC Parent LLC Agreement that they would have received if the Additional Iris I Units had a Distribution Threshold of $3,215,554,103.2
918,731 time-vesting Management Units of WME Iris Management IV Holdco, LLC (the “Iris IV Time Based Units”)      918,731        0      $ 5,111,662,715      Not applicable.
918,732 performance-vesting Management Units of WME Iris Management IV Holdco, LLC (the “Iris IV Performance Based Units” and, together with the Iris IV Time Based Units, the “Iris IV Units”)      428,741        489,991      $ 5,551,926,999      The Iris IV Performance Based Units will “catch-up” on distributions or appreciation from and after such Distribution Threshold is met so that, assuming sufficient distribution or appreciation, such Iris IV Performance Based Units will “catch-up” and receive the same economics in any applicable distribution under the terms of the EOC Parent LLC Agreement that they would have received if the Iris IV Performance Based Units had a Distribution Threshold of $0.
926,811 Common Management Units of WME Iris Management V Holdco, LLC (the “Iris V Units”)      926,811        0      $ 5,551,926,999      Not applicable.

 

1 

Distribution Thresholds are as of December 31, 2020.

2 

Distribution Thresholds are as of December 31, ó2020.


SCHEDULE C

Vesting Principles

 

1.

Iris IV Units:

 

  A.

For purposes of this subsection (1) to Schedule C:

 

  (i)

Change of Control” shall mean, prior to an IPO, “Sale Transaction” (as defined in the EOC Parent LLC Agreement) and, as of and following an IPO, “Change of Control” as (defined in the EOC Parent LLC Agreement).

 

  (ii)

Employer Non-Renewal” means any termination of Grantee’s employment or service relationship with Employer following expiration of Grantee’s prior employment, services, guaranteed compensation, or other similar agreement with Employer if (A) a new agreement between Employer and Grantee has not been executed and (B) Employer did not offer Grantee a new employment, services, guaranteed compensation, or other similar agreement with Employer pursuant to a bona fide offer prior to such termination. For the avoidance of doubt, in no event shall an Employer Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason.

 

  (iii)

Performance Vesting Equity Value” means, at any applicable time of determination, the total equity value of EOC Parent and its subsidiaries as reasonably determined by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Board of Directors of EGH (or any other body to which it defeases or delegates authority) (the “Governing Body”) in good faith.

 

  (iv)

Vested Iris IV Units” means, as of any date, the Iris IV Units that have become vested pursuant to this subsection (1) to Schedule C on or prior to such date.

 

  B.

The Iris IV Performance Based Units shall vest in such amounts and at such times, so that, (i) as of the Effective Date, 46.6% of the Iris IV Performance Based Units shall be vested, and (ii) as of the applicable time of determination, 70% of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $7,000,000,000, 90% of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $8,000,000,000, and all of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $9,000,000,000. Any of the Iris IV


  Performance Based Units that do not vest upon a Change of Control based on the Performance Vesting Equity Value implied thereby in accordance with the foregoing shall remain outstanding and shall continue to be subject to vesting in accordance with the terms of this subsection (1)(B) to Schedule C, or, alternatively, solely to the extent agreed to by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, may be exchanged into Units in EOC Parent (which exchange shall be caused by Iris IV pursuant to the applicable Operating Agreement) and thereafter rolled over into equity interests of the buyer with an equivalent economic value as of the consummation of such Change of Control and vesting conditions that are no less favorable to Grantee than the remaining vesting conditions with respect to the unvested Iris IV Performance Based Units as of the consummation of such Change of Control. Solely to the extent agreed to by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, any or all of the Iris IV Performance Based Units that do not vest upon the consummation of an IPO based on the Performance Vesting Equity Value implied thereby in accordance with the foregoing shall remain outstanding and shall continue to be subject to vesting in accordance with the terms of this subsection (1)(B) to Schedule C. Notwithstanding anything to the contrary, each of the threshold dollar amounts set forth herein with respect to the Performance Vesting Equity Value may be adjusted by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, in good faith, to account for Capital Contributions (as defined in the WME Iris Management IV LLC Agreement), distributions of capital proceeds or available cash flow, restructurings or other recapitalizations of EOC Parent, EGH or their capital structures, or other similar events (including, without limitation, any transaction pursuant to which EOC Parent acquires equity interests in Zuffa Parent, LLC or any of its Affiliates).

 

  C.

Notwithstanding anything to the contrary contained in this Agreement, upon the consummation of a Change of Control, any or all of the unvested Iris IV Units may be cancelled as determined by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body.

 

  D.

Upon the termination of Grantee’s employment or services with Employer for any reason: (a) subject to the provisions of this Schedule C and of the applicable Operating Agreement, Grantee (or Grantee’s estate, in the case of a termination upon the death of Grantee) shall be entitled to retain Grantee’s Vested Iris IV Units following such termination; and (b) all of the Iris IV Units that are not Vested Iris IV Units shall be forfeited without any consideration paid to Grantee. Upon the termination of Grantee’s employment or services with Employer by Employer without Cause, by


  Grantee with Good Reason, or due to an Employer Non-Renewal, a number of the unvested Iris IV Performance Based Units shall be eligible to vest based on the Performance Vesting Equity Value as of the date of such termination of employment.


SCHEDULE D

Repurchase Obligations

Each of Iris I, Iris IV and Iris V may, at any time upon delivery of written notice to Grantee following a termination of Grantee’s employment or services with Employer for any reason, exercise a Repurchase Option (as defined in the applicable Operating Agreement) with respect to any or all of the vested Iris I Units, Iris IV Units or Iris V Units, as applicable, in accordance with, and subject to the terms and conditions of, the applicable Operating Agreement.

Notwithstanding anything to the contrary in the Operating Agreements, if Grantee’s employment with Employer is terminated by Employer with Cause, then the consideration payable by Iris I or Iris IV, respectively, to Grantee pursuant to an exercise by Iris I or Iris IV, respectively, of the applicable Repurchase Option shall (i) prior to an IPO, be 50% of the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units of EOC Parent and (ii) as of and following an IPO, 50% of the fair market value of the Units in EOC Parent corresponding to the Iris I Units or Iris IV Units, as applicable (as determined by the Governing Body). If (X) prior to the consummation of an IPO, Grantee’s employment with Employer is terminated by Employer with Cause or by Grantee without Good Reason, or (Y) on or following the consummation of an IPO, Grantee’s employment with Employer is terminated by Employer with Cause, then the consideration payable by Iris V, to Grantee pursuant to an exercise by Iris V, of the applicable Repurchase Option shall (i) prior to an IPO, be 50% of the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units of EOC Parent and (ii) as of and following an IPO, 50% of the fair market value of the Units in EOC Parent corresponding to the Iris V Units, as applicable (as determined by the Governing Body).

For clarity, notwithstanding anything to the contrary contained in the Prior Agreements, if (a) prior to the consummation of an IPO, Grantee’s employment with Employer is terminated for any reason other than as described above, or (b) on or following the consummation of an IPO, Grantee’s employment or services with Employer is terminated for any reason other than by the Employer with Cause, then the consideration payable by Iris I, Iris IV or Iris V, respectively, to Grantee pursuant to an exercise by Iris I, Iris IV or Iris V, respectively, of the applicable Repurchase Option shall be (A) prior to an IPO, with respect to vested Iris I Units, Iris IV Units and Iris V Units, the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units of EOC Parent and (B) as of and following an IPO, the fair market value of the Units in EOC Parent corresponding to the vested Iris I Units, Iris IV Units or Iris V Units, as applicable (as determined by the Governing Body).

In connection with any Repurchase Option and as a condition to Grantee’s receipt of consideration for the vested Iris I Units, Iris IV Units or Iris V Units to be repurchased pursuant thereto, Grantee or Grantee’s estate, as applicable, shall take or cause to be taken all actions requested by the Chief Executive Officer and Executive Chairman of EOC


Parent (or their respective successors) or, following an IPO, the Governing Body, in order to expeditiously consummate such repurchase and any related transactions, including executing, acknowledging and delivering assignments, a general release of EOC Parent and its Affiliates and related person(s) (in form and substance satisfactory to EOC Parent) and other documents and instruments as may be reasonably requested and otherwise cooperating with the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, and making customary representations and warranties, including as to due approval and ownership free and clear of any liens and transfer of the applicable vested Iris I Units, Iris IV Units or Iris V Units.


SCHEDULE E

Restrictive Covenants

 

1.

Non-Solicitation; Non-Hire. During the period commencing on the Effective Date and ending on the second anniversary of the date on which Grantee’s employment with Employer terminates for any reason, Grantee shall not (and shall cause each of Grantee’s controlled Affiliates not to) directly, or indirectly through another Person, (a)(i) induce or attempt to induce any employee, consultant or independent contractor of Employer to leave the employ or services of Employer or (ii) hire any employee, consultant or independent contractor of Employer; provided, that the restrictions on solicitation in clause (a)(i) of this Section 1 to Schedule E shall not preclude solicitations through the use of general advertising (such as web postings or advertisements in publications) or search firms, employment agencies or similar entities not specifically directed at Employer, or (b) directly or indirectly solicit or represent or otherwise provide services to (i) any client of any member of Employer or (ii) any prospective client of any member of Employer that was actively solicited as such by or on behalf of any member of Employer within the twelve (12) month period prior to the date on which Grantee ceases to be employed with Employer. Grantee shall inform future employers of the obligations of Grantee under this Schedule E but shall not be in violation of this Schedule E if said employer without Grantee’s involvement solicits or hires any employee, consultant or independent contractor of Employer.

 

2.

Non-Competition. Grantee acknowledges and agrees that (a) at all times while Grantee is employed with Employer, Grantee shall pursue all appropriate business opportunities of Employer exclusively through Employer and (b) Employer would be irreparably damaged if Grantee (or, if applicable, any of Grantee’s controlled Affiliates) were to provide services to any Person (including Grantee) engaged in a Restricted Business (as defined below) and that such competition by Grantee (or, if applicable, any of Grantee’s controlled Affiliates) would result in a significant loss of goodwill by Employer. Therefore, Grantee agrees that during the period commencing on the Effective Date and ending on the second (2nd) anniversary of the date on which Grantee’s employment with Employer terminates if Grantee’s employment is terminated by Employer with Cause or by Grantee without Good Reason, or otherwise ending on the date on which Grantee’s employment with Employer terminates for any other reason (such period, the “Restricted Period”), to the extent permitted by the New York Canon of Ethics, Grantee shall not (and, as applicable, shall cause each of Grantee’s controlled Affiliates not to) directly or indirectly through another Person own any interest in, manage, control, participate in (whether as an officer, director, manager, employee, partner, equity holder, member, agent, advisor, individual independent contractor, consultant, representative or otherwise), consult with, represent, render services for, or in any other manner engage in the Restricted Business in any geographic area where the Restricted Business of Employer conducts it; provided, that in the event that Grantee’s employment with Employer terminates upon a Grantee Non-Renewal (as


  defined below), Employer shall have the option, in its sole discretion, to elect to continue to pay to Grantee, in monthly installments, the Base Salary (as defined in the Employment Agreement) payable by Employer as if Grantee had remained employed for a period of up to 6 months following such termination, and if Employer shall so elect, then, notwithstanding anything in this Section 2 to Schedule E to the contrary, the Restricted Period shall continue for such period (not to exceed 6 months following the date of such termination) in respect of which such payments are made; provided, further, that nothing herein shall prohibit Grantee and any of Grantee’s controlled Affiliates, as applicable, from (x) being a passive owner of not more than two percent (2%) of the outstanding stock of any class of a corporation or entity which is publicly traded so long as Grantee (or any of Grantee’s controlled Affiliates, if applicable) does not have any active participation in the management or other business of such corporation or entity, (y) being employed by or otherwise providing services to any corporation or entity, a division or subsidiary of which is engaged in Restricted Businesses or (z) practicing law at a law firm. As used herein, the term “Restricted Business” means collectively (i) any business that, in the preceding twelve (12) months derived more than 25% of its revenue from businesses involved in (1) the representation of Persons involved in television, film, music, literature, sports, internet, advertising, public speaking and all other mediums, including actors, writers, producers, directors, artists, musicians, athletes, models, sports leagues, mixed martial arts or boxing leagues and promotions and public figures, including any talent and/or entertainment agency business, (2) league development, sponsorship, hospitality, licensing, sports training and consulting, (3) sports programming and event management, (4) marketing and merchandising and (5) corporate advisory services or (ii) any business or businesses of a type not described in clause (i) in which Grantee was actively engaged on behalf of Employer during the preceding twelve (12) month period prior to the date on which Grantee ceases to be employed with Employer (and any logical extensions thereof) so long as such business in the preceding twelve (12) months derived more than 25% of its revenue from businesses.

 

3.

Restrictive Covenants Generally. If, at the time of enforcement of the covenants set forth in Sections 1 and 2 of this Schedule E (collectively, the “Restrictive Covenants”), a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by applicable law. Grantee hereby acknowledges that the Restrictive Covenants are reasonable in terms of duration, scope and area restrictions and are necessary to protect the goodwill of Employer.

 

4.

Grantee Non-Renewal. Grantee Non-Renewal” means (a) any failure of Grantee to execute a new employment agreement offered by Employer following (or to become effective upon) expiration of Grantee’s then-existing (or prior) employment agreement or (b) any termination of Grantee’s employment relationship with


  Employer following expiration of Grantee’s prior employment agreement if a new employment agreement between Employer and Grantee has not been executed; provided, that, in each case of clauses (a) and (b), Employer shall have offered to continue an employment relationship with Grantee for a period of at least one (1) additional year on materially similar (or more favorable) cash economic terms as those set forth in Grantee’s prior or then-existing (as applicable) employment agreement and with no additional equity award(s).

Exhibit 10.20

Execution Version

EQUITY AWARD AGREEMENT

THIS EQUITY AWARD AGREEMENT (this “Agreement”) IS DATED AS OF APRIL 19, 2021 (the “Effective Date”), BY AND AMONG ENDEAVOR OPERATING COMPANY, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“EOC Parent”), ENDEAVOR GROUP HOLDINGS, INC., A DELAWARE CORPORATION (“EGH”), CHRISTIAN MUIRHEAD, AN INDIVIDUAL (“Grantee”), WME IRIS MANAGEMENT IV HOLDCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“Iris IV”), AND WME HOLDCO, LLC, A DELAWARE LIMITED LIABILITY COMPANY (“WME Holdco”).

RECITALS

 

A.

EOC Parent, EGH and Grantee have entered into that certain Term Employment Agreement by and between EGH, EOC Parent and Grantee dated as of April 19, 2021, as may be amended from time to time (the “Employment Agreement”).

 

B.

EOC Parent, Iris IV, WME Holdco and Grantee are party to those certain agreements set forth on Schedule A hereto (the “Prior Agreements”).

 

C.

EOC Parent, Iris IV, WME Holdco and Grantee acknowledge and agree that, as of the Effective Date, except as set forth herein, the Prior Agreements shall be superseded in their entirety by this Agreement and the Prior Agreements shall hereby terminate and no longer have any force or effect.

 

D.

This Agreement is designed to amend and restate all the terms and conditions of the equity interests previously granted pursuant to the Prior Agreements in connection with Grantee’s performance of services to EOC Parent, EGH and their respective subsidiaries (collectively, “Employer”).

TERMS AND CONDITIONS

NOW, THEREFORE, in consideration of the mutual agreements set forth herein, the parties hereto agree as follows:

 

1.

Grantee’s Owned Units.

1.1    EOC Parent, Iris IV and WME Holdco each acknowledge and agree that, as of the Effective Date, (a) Grantee, or Grantee’s Related Person(s), owns the class and number of equity securities set forth on Schedule B attached hereto (the “Owned Units”), (b) the number of vested and unvested Owned Units is set forth opposite such Owned Units under the headings “Vested Owned Units” and “Unvested Owned Units”, respectively, (c) the unvested Owned Units shall vest in accordance with the vesting principles set forth on Schedule C attached hereto, (d) the Owned Units shall on and after the Effective Date remain subject to certain repurchase obligations as set forth on Schedule D attached hereto, (e) the Distribution Threshold of the Owned Units, to the extent such Owned Units are profits interests, is set forth opposite such Owned


Units under the heading “Distribution Threshold” and is subject to the principles set forth opposite such Owned Units under the heading “Catch-Up Principles”; and (f) the Owned Units shall remain subject to the terms and conditions of that certain Partner Letter Agreement, dated as of September 30, 2018, among EOC, WME Holdco, Iris IV and Grantee (provided, that, references to the “WME Parent” shall be deemed to refer to EOC Parent and “WME Parent Board” shall be deemed to refer to the Managing Member of EOC Parent (the “EOC Managing Member”)) (the “Partner Agreement”). For the avoidance of doubt, unless otherwise determined by EOC Parent, the Partner Agreement shall terminate upon the consummation of an IPO.

1.2    The Distribution Threshold of the Owned Units, as applicable, may be adjusted, prior to or in connection with (a) an “IPO” (as defined in the EOC Parent LLC Agreement), or (b) a merger or other transaction following which EOC Parent or an affiliate of EOC Parent has publicly traded securities, by the EOC Managing Member, in good faith, to account for a Restructuring (as defined below), a Recapitalization (as defined below), capital contributions, distributions or other similar events; provided, that in the case of adjustments to the Distribution Threshold, such adjustment shall only be by the amount necessary so that the Owned Units satisfy the requirements for a profits interest as set forth in Internal Revenue Service (“IRS”) Revenue Procedures 93-27 and 2001-43, or any future IRS guidance or other authority that supplements or supersedes the foregoing IRS Revenue Procedures.

1.3    Grantee acknowledges and agrees that (a) EOC Parent, Iris IV and WME Holdco may be recapitalized, reorganized, liquidated, merged into or consolidated or combined with another entity, or otherwise restructured in connection with an IPO (a “Restructuring”) and, in connection with any Restructuring, EOC Parent, Iris IV and WME Holdco are entitled to, in their good faith discretion, unilaterally cause the Owned Units to be converted, recapitalized, reclassified, redeemed or otherwise exchanged and the terms and conditions of the Owned Units to be adjusted (a “Recapitalization”), in each case, without Grantee’s consent, and (b) (i) any rights and obligations of Grantee with respect to Grantee’s equity interests in Iris IV and WME Holdco immediately prior to a Restructuring and/or Recapitalization shall apply equally to the equity interests received by Grantee in connection with a Restructuring and/or Recapitalization and (ii) all references to Iris IV and WME Holdco (and any governing bodies and organizational documents thereof) shall be deemed to refer to the applicable successors thereto (and any governing bodies and organizational documents thereof) following a Restructuring and/or Recapitalization and all references to equity interests in Iris IV and WME Holdco herein shall be deemed to refer to the corresponding equity interests held by Grantee immediately following a Restructuring and/or Recapitalization. Without limiting the foregoing, Grantee, EOC Parent, EGH, Iris IV and WME Holdco agree that the Owned Units that are “catch-up” profits interests that, based on the total equity value of EOC Parent implied by the offering price of a share of common stock of EGH to the public in an IPO, will receive the same economics that they would have received if such Owned Units had a Distribution Threshold equal to the applicable “catch-up” Distribution Threshold of such Owned Units set forth on Schedule B, may be converted, recapitalized, reclassified, redeemed or otherwise exchanged into direct or indirect interests in Class A Common Units (as defined in the EOC Parent LLC Agreement) of EOC Parent in connection with a Restructuring and/or Recapitalization.

 

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1.4    Grantee acknowledges and agrees that, on and after the Effective Date, Grantee will be subject to the Restrictive Covenants (as defined in and set forth on Schedule E attached hereto).

 

2.

Miscellaneous.

2.1    Operating Agreements. By entering into this Agreement, Grantee agrees and acknowledges that (a) Grantee has received and read a copy of the applicable Operating Agreement(s), (b) the Owned Units are subject to the applicable Operating Agreement(s) (including indirectly to the EOC Parent LLC Agreement), the terms of which Operating Agreement(s) are hereby incorporated herein by reference and made part of this Agreement, and (c) Grantee shall be bound by all of the terms and conditions of the applicable Operating Agreement(s). In the event of a conflict between any term or provision contained in this Agreement (other than Section 2.4 hereof) and a term or provision of an applicable Operating Agreement (other than the EOC Parent LLC Agreement) and/or the EOC Parent LLC Agreement, the applicable terms and provisions of the EOC Parent LLC Agreement shall govern and prevail, and then in decreasing order of seniority, the applicable Operating Agreement and lastly, this Agreement. Without limiting the provisions of this Section 2.1, Grantee acknowledges that the Owned Units are subject to the provisions of the applicable Operating Agreement(s) under which (i) the applicable governing body has full discretion to interpret and administer this Agreement and its judgments are final, binding and conclusive on Grantee (absent manifest error), and (ii) Grantee shall be prohibited from Transferring the Owned Units to any other Person except as expressly permitted by the applicable Operating Agreement(s) or as provided for herein. Notwithstanding Grantee’s status as a member of Iris IV and WME Holdco, Grantee shall have no right whatsoever to (A) examine the books and records of Iris IV and WME Holdco or Employer or (B) obtain any information about the identities of the other members of Iris IV and WME Holdco or members of Employer (or of the size or nature of such other members’ or members’ interests in Iris IV and WME Holdco or Employer, respectively). This Agreement shall not restrict in any way the adoption of any amendment to any applicable Operating Agreement(s) in accordance with the terms of such applicable Operating Agreements.

2.2    Notices. Notices to EOC Parent, Iris IV or WME Holdco (or any successor entities thereto) hereunder shall be addressed to such party c/o EOC Parent at the principal executive office of EOC Parent, unless otherwise designated in writing by EOC Parent. Notices to Grantee hereunder shall be addressed to Grantee at the address appearing in the personnel records of Employer or an Affiliate thereof for Grantee, unless otherwise designated in writing by Grantee.

2.3    Governing Law. This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of Delaware applicable to contracts entered into and wholly performed in said State.

 

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2.4    Disputes. Upon the occurrence of any dispute or disagreement between the parties hereto arising out of or in connection with any term of this Agreement, the subject matter hereof, or the interpretation or enforcement hereof, the parties shall comply with the dispute resolution procedure set forth in Section 13 of the Employment Agreement.

2.5    Entire Agreement. This Agreement, together with the Partner Agreement, the organizational documents of EOC Parent, Iris IV, and EGH (in each case, as may be amended, modified or supplemented from time to time) and any other agreements which may be entered into by Grantee and Employer on and after the Effective Date, constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions and preliminary agreements (including, without limitation, the Prior Agreements); provided, that the release of claims set forth in that certain Class A Member Agreement, dated as of October 30, 2014, by and between WME Holdco and Grantee shall not be superseded by this Agreement and remain in full force and effect. This Agreement may not be amended except in writing executed by the parties hereto. EOC Parent, Iris IV, WME Holdco and Grantee acknowledge and agree that, except as set forth herein, as of the Effective Date, the Prior Agreements shall be superseded in their entirety by this Agreement and the Prior Agreements shall hereby terminate and no longer have any force or effect; provided, that the parties acknowledge and agree that any terms of the Prior Agreements that are intended to be incorporated herein shall be interpreted in a manner consistent with the intention of the Prior Agreements (except as explicitly set forth herein). Notwithstanding anything herein to the contrary, to the extent an IPO does not occur on or prior to December 31, 2021, this Agreement shall be void ab initio and the Prior Agreements shall remain in full force and effect.

2.6    Counterparts. This Agreement may be executed in any number of counterparts and by facsimile, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

2.7    Rules of Construction. The parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and have participated jointly in the drafting of this Agreement and, therefore, waive the application of any law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against or interpreted to the disadvantage of the party drafting or structuring such agreement or document.

2.8    Interpretation. Defined terms used in this Agreement in the singular shall import the plural and vice versa. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Sections shall be deemed to be references to Sections of this Agreement unless the context shall otherwise require. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement (including any schedules or annexes attached hereto) as a whole and not to any particular provision of this Agreement. Any statute or

 

4


laws defined or referred to herein shall include any rules, regulations or forms promulgated thereunder from time to time and as from time to time amended, modified or supplemented, including by succession of successor rules, regulations or forms. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein. Any reference to the number of Owned Units means such Owned Units as appropriately adjusted to give effect to any share combinations, restructuring or other capitalizations of EOC Parent or its capital structures. Any reference herein to the holder of a particular class or series of Owned Units shall be a reference to such Person solely in its capacity as a holder of that particular class or series of Owned Units.

2.9    Successors and Assigns. Each party hereto may, in his or its discretion, assign his or its rights and obligations under this Agreement (including, without limitation, in connection with a Restructuring); provided, that Grantee shall not be entitled to assign any of Grantee’s rights or obligations without the consent of each of EOC Parent, Iris IV and WME Holdco (or any successor entities thereto). The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

2.10    Definitions. For purposes of this Agreement and the schedules thereto:

(a)    “Affiliates” of any specified Person means any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person, and including any Trust or Family Member of such Person.

(b)    “Cause” shall have the meaning set forth in the Employment Agreement.

(c)    “Distribution Threshold” means the “Distribution Threshold” set forth opposite each applicable Owned Unit on Schedule B, as may be adjusted in accordance with Section 1.2.

(d)    “Employer Non-Renewal” means a termination of Grantee’s employment or service relationship with Employer pursuant to clause (ii) of the definition of Grantee Non-Renewal where Employer did not offer Grantee a new employment, services, guaranteed compensation or other similar agreement with Employer pursuant to a bona fide offer prior to such termination. For the avoidance of doubt, in no event shall an Employer Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason.

 

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(e)     “EOC Parent LLC Agreement” means the Third Amended and Restated Limited Liability Company Agreement of EOC Parent, as may be amended, restated, modified or supplemented, from time to time.

(f)    “Family Member” means with respect to a Person, such Person’s spouse, domestic partner, parents, children or siblings, including any Affiliates thereof.

(g)    “Good Reason” shall have the meaning set forth in the Employment Agreement.

(h)    “Grantee Non-Renewal” means (i) any failure of Grantee to execute a new employment, services, guaranteed compensation, or other similar agreement with Employer offered pursuant to a bona fide offer by Employer following (or to become effective upon) expiration of Grantee’s then-existing (or prior) employment or agreement or (ii) any termination of Grantee’s employment or service relationship with Employer following expiration of Grantee’s prior employment, services, guaranteed compensation or other similar agreement with Employer if a new agreement between Employer and Grantee has not been executed. For the avoidance of doubt, in no event shall a Grantee Non-Renewal be deemed to be a termination with or without Cause or with or without Good Reason.

(i)    “Operating Agreement” shall mean, with respect to each of EOC Parent, Iris IV or WME Holdco, its limited liability company agreement, as may be amended from time to time, and, following an IPO, the organizational document of its successor (including any successor in connection with any Restructuring).

(j)    “Person” means any individual, firm, corporation, partnership, limited liability company, trust, estate, joint venture, governmental authority or other entity.

(k)    “Related Person(s)” means any Family Member, Trust and any other Person of which Grantee or any of the foregoing has a direct or indirect economic or beneficial or other interest in or is a beneficiary of.

(l)    “Trust” means, with respect to Grantee, (i) a revocable trust that is treated as a grantor trust for income tax purposes; provided, that and only so long as (a) the beneficiaries of such Trust includes only Grantee and Grantee’s spouse, domestic partner or lineal descendants and (b) Grantee retains exclusive voting control over the Owned Units, in a trustee capacity or otherwise or (ii) any other trust that is solely for bona fide estate planning purposes that shall not, and shall not be used to, circumvent the provisions herein; provided, that and only so long as the beneficiaries of such Trust include only Grantee and Grantee’s spouse, domestic partner or lineal descendants.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.

 

/s/ Christian Muirhead

Christian Muirhead
ENDEAVOR OPERATING COMPANY, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By  

/s/ Jason Lublin

Its Authorized Signatory
WME IRIS MANAGEMENT IV HOLDCO, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory
WME HOLDCO, LLC
By  

/s/ Jason Lublin

Its Authorized Signatory

Signature Page to Equity Award Agreement


SCHEDULE A

Prior Agreements

 

 

Class A Member Agreement, by and between WME Holdco, LLC and Grantee, dated as of October 30, 2014

 

 

Unit Exchange and Redemption Agreement, by and among WME Entertainment Parent, LLC, WME Holdco, LLC and Grantee, dated as of March 21, 2017

 

 

Management Unit Award Agreement by and between WME Iris Management IV Holdco, LLC and Grantee, dated June 15, 2017

 

 

Letter Agreement, by and between WME Iris Management IV Holdco, LLC and Grantee, dated June 30, 2018


SCHEDULE B

Owned Units

(as of the Effective Date, except as otherwise noted)

 

Owned Units

   Vested
Owned
Units
     Unvested
Owned
Units
     Distribution
Threshold1
    

Catch-Up Principles

2,194,268 Class A Units of WME Holdco, LLC (the “Class A Units”)      2,194,268        0        Not applicable      Not applicable.
732,697 Profits Units of WME Holdco, LLC (the “Profits Units”)      732,697        0        Not applicable      Not applicable.
822,875 time-vesting Management Units of WME Iris Management IV Holdco, LLC (the “Iris IV Time Based Units”)      822,875        0      $ 5,111,662,715      Not applicable.
873,999 performance-vesting Management Units of WME Iris Management IV Holdco, LLC (the “Iris IV Performance Based Units” and, together with the Iris IV Time Based Units, the “Iris IV Units”)      384,008        489,991      $ 5,551,926,999      The Iris IV Performance Based Units will “catch-up” on distributions or appreciation from and after such Distribution Threshold is met so that, assuming sufficient distribution or appreciation, such Iris IV Performance Based Units will “catch-up” and receive the same economics in any applicable distribution under the terms of the EOC Parent LLC Agreement that they would have received if the Iris IV Performance Based Units had a Distribution Threshold of $0.

 

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Distribution Thresholds are as of December 31, 2020.

 

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SCHEDULE C

Vesting Principles

 

1.

Iris IV Units:

 

  A.

For purposes of this subsection (1) to Schedule C:

 

  (i)

Change of Control” shall mean, prior to an IPO, “Sale Transaction” (as defined in the EOC Parent LLC Agreement) and, as of and following an IPO, “Change of Control” (as defined in the EOC Parent LLC Agreement).

 

  (ii)

Performance Vesting Equity Value” means, at any applicable time of determination, the total equity value of EOC Parent and its subsidiaries as reasonably determined by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Board of Directors of EGH (or any other body to which it defeases or delegates authority) (the “Governing Body”) in good faith.

 

  (iii)

Vested Iris IV Units” means, as of any date, the Iris IV Units that have become vested pursuant to this subsection (1) to Schedule C on or prior to such date.

 

  B.

The Iris IV Performance Based Units shall vest in such amounts and at such times, so that, (i) as of Effective Date, 46.6% of the Iris IV Performance Based Units shall be vested, and (ii) as of the applicable time of determination, 70% of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $7,000,000,000, 90% of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $8,000,000,000, and all of the Iris IV Performance Based Units shall be vested upon the achievement by EOC Parent of a Performance Vesting Equity Value of $9,000,000,000. Any of the Iris IV Performance Based Units that do not vest upon a Change of Control based on the Performance Vesting Equity Value implied thereby in accordance with the foregoing shall remain outstanding and shall continue to be subject to vesting in accordance with the terms of this subsection (1)(B) to Schedule C, or, alternatively, solely to the extent agreed to by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, may be exchanged into Units in EOC Parent (which exchange shall be caused by Iris IV pursuant to the applicable Operating Agreement) and thereafter rolled over into equity interests of the buyer with an equivalent economic value as of the consummation of such Change of Control and


  vesting conditions that are no less favorable to Grantee than the remaining vesting conditions with respect to the unvested Iris IV Performance Based Units as of the consummation of such Change of Control. Solely to the extent agreed to by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, any or all of the Iris IV Performance Based Units that do not vest upon the consummation of an IPO based on the Performance Vesting Equity Value implied thereby in accordance with the foregoing shall remain outstanding and shall continue to be subject to vesting in accordance with the terms of this subsection (1)(B) to Schedule C. Notwithstanding anything to the contrary, each of the threshold dollar amounts set forth herein with respect to the Performance Vesting Equity Value set forth herein with respect to the Iris IV Performance Based Units (the “Threshold Amounts”) may be adjusted by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, in good faith, to account for Capital Contributions (as defined in the WME Iris Management IV LLC Agreement), distributions of capital proceeds or available cash flow, restructurings or other recapitalizations of EOC Parent, EGH or their capital structures, or other similar events (including, without limitation, any transaction pursuant to which EOC Parent acquires equity interests in Zuffa Parent, LLC or any of its Affiliates).

 

  C.

Notwithstanding anything to the contrary contained in this Agreement, upon the consummation of a Change of Control, any or all of the unvested Iris IV Units may be cancelled as determined by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body.

 

  D.

Upon the termination of Grantee’s employment or services with Employer for any reason: (i) subject to the provisions of this Schedule C and of the applicable Operating Agreement, Grantee (or Grantee’s estate, in the case of a termination upon the death of Grantee) shall be entitled to retain Grantee’s Vested Iris IV Units following such termination; and (ii) all of the Iris IV Units that are not Vested Iris IV Units shall be forfeited without any consideration paid to Grantee. Upon the termination of Grantee’s employment or services with Employer by Employer without Cause, by Grantee with Good Reason, or due to an Employer Non-Renewal, a number of the unvested Iris IV Performance Based Units shall be eligible to vest based on the Performance Vesting Equity Value as of the date of such termination of employment.


SCHEDULE D

Repurchase Obligations

Each of WME Holdco and Iris IV may, at any time upon delivery of written notice to Grantee following a termination of Grantee’s employment or services with Employer for any reason, exercise a Repurchase Option (as defined in the applicable Operating Agreement) with respect to any or all of the vested WME Holdco Units or Iris IV Units, as applicable, in accordance with, and subject to the terms and conditions of, the applicable Operating Agreement.

Notwithstanding anything to the contrary in the Operating Agreements, if (X) prior to the consummation of an IPO, Grantee’s employment with Employer is terminated by Employer with Cause or by Grantee without Good Reason or, solely in the case of Class A Units or Profits Units of WME Holdco, upon a Grantee Non-Renewal, or (Y) on or following the consummation of an IPO, Grantee’s employment or services with Employer is terminated by Employer with Cause, then the consideration payable by WME Holdco or Iris IV, respectively, to Grantee pursuant to an exercise by WME Holdco or Iris IV, respectively, of the applicable Repurchase Option with respect to Grantee’s vested Class A Units or Profits Units or Iris IV Units shall, (a) prior to an IPO, be 50% of the fair market value of such vested Class A Units or Profits Units as determined by the Executive Committee of WME Holdco in accordance with the Operating Agreement of WME Holdco, and in the case of Iris IV Units, be 50% of the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units and (b) as of and following an IPO, 50% of the fair market value of the Units in EOC Parent corresponding to the vested Class A Units or Profits Units or Iris IV Units, as applicable (as determined by the Governing Body).

For clarity, notwithstanding anything to the contrary contained in the Prior Agreements, if (a) prior to the consummation of an IPO, Grantee’s employment with Employer is terminated for any reason other than described in subsection (X) of the immediately preceding paragraph, or (b) on or following the consummation of an IPO, Grantee’s employment or services with Employer is terminated for any reason other than by the Employer with Cause, then the consideration payable by WME Holdco or Iris IV, respectively, to Grantee pursuant to an exercise by WME Holdco or Iris IV, respectively, of the applicable Repurchase Option shall be (A) prior to an IPO, with respect to Grantee’s vested Class A Units or Profits Units, the fair market value of such vested Class A Units or Profits Units as determined by the Executive Committee of WME Holdco in accordance with the Operating Agreement of WME Holdco, and, with respect to vested Iris IV Units, the Fair Market Value (as defined in the EOC Parent LLC Agreement) of the corresponding Profits Units of EOC Parent and (B) as of and following an IPO, the fair market value of the Units in EOC Parent corresponding to the vested Class A Units or Profits Units or Iris IV Units, as applicable (as determined by the Governing Body).


In connection with any Repurchase Option and as a condition to Grantee’s receipt of consideration for the vested Class A Units or Profits Units or Iris IV Units to be repurchased pursuant thereto, Grantee or Grantee’s estate, as applicable, shall take or cause to be taken all actions requested by the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body in order to expeditiously consummate such repurchase and any related transactions, including executing, acknowledging and delivering assignments, a general release of EOC Parent and its Affiliates and related persons (in form and substance satisfactory to EOC Parent) and other documents and instruments as may be reasonably requested and otherwise cooperating with the Chief Executive Officer and Executive Chairman of EOC Parent (or their respective successors) or, following an IPO, the Governing Body, and making customary representations and warranties, including as to due approval and ownership free and clear of any liens and transfer of the applicable vested Class A Units or Profits Units or Iris IV Units.


SCHEDULE E

Restrictive Covenants

 

1.

Non-Solicitation/No-Hire. During the period commencing on the Effective Date and ending on the second (2nd) anniversary of the date on which Grantee or any Affiliates of Grantee cease to be direct or indirect members of EOC Parent or, if earlier, the second (2nd) anniversary of the date on which Grantee’s employment or services with the Company Group terminates for any reason (the “Restricted Period”), Grantee shall not (and shall cause each of Grantee’s controlled Affiliates not to) directly, or indirectly through another Person, (a) induce or attempt to induce any employee, consultant or independent contractor of the Company Group to leave the employ or services of the Company Group or (b) hire any employee, consultant or independent contractor of the Company Group; provided, that the restrictions on solicitation in clause (a) of this Section 1 to Schedule E shall not preclude solicitations through the use of general advertising (such as web postings or advertisements in publications) or search firms, employment agencies or similar entities not specifically directed at the Company Group.

 

2.

Non-Competition. Grantee acknowledges and agrees that (a) at all times while Grantee is employed with the Company Group, Grantee shall pursue all appropriate business opportunities of the Company Group exclusively through the Company Group and (b) the Company Group would be irreparably damaged if Grantee (or, if applicable, any of Grantee’s controlled Affiliates) were to provide services to any Person (including Grantee) engaged in a Restricted Business (as defined below) and that such competition by Grantee (or, if applicable, any of Grantee’s controlled Affiliates) would result in a significant loss of goodwill by the Company Group. Therefore, Grantee agrees that during the period commencing on the Effective Date and ending on the first (1st) anniversary of the date on which Grantee or any Grantee’s Affiliates cease to be direct or indirect members of EOC Parent or, if earlier, the first (1st) anniversary of the date on which Grantee’s employment or services with the Company Group terminates for any reason, Grantee shall not (and, as applicable, shall cause each of his controlled Affiliates not to) directly or indirectly through another Person own any interest in, manage, control, participate in (whether as an officer, director, manager, employee, partner, equity holder, member, agent, advisor, individual independent contractor, consultant, representative or otherwise), consult with, represent, render services for, or in any other manner engage in the Restricted Business in any geographic area where the Company Group conducts it; provided, that nothing herein shall prohibit Grantee (and any of his controlled Affiliates, as applicable) from (i) being a passive owner of not more than two percent (2%) of the outstanding stock of any class of a corporation or entity which is publicly traded so long as Grantee (or any of Grantee’s controlled Affiliates, if applicable) does not have any active participation in the management or other business of such corporation or entity or (ii) being employed by or otherwise providing services to any corporation or entity, a division or subsidiary of which is engaged


  in Restricted Businesses so long as Grantee is not involved with such division or subsidiary. As used herein, the term “Restricted Business” means collectively (x) any talent agency business or (y) any business or businesses or a type not described in clause (x) in which Grantee was actively engaged on behalf of the Company Group during the preceding twelve (12) month period prior to the date on which Grantee ceases to be employed by or providing services to the Company Group (and any logical extensions thereof). Notwithstanding anything in this Agreement (including this Schedule E) to the contrary, this Section 2 of Schedule E (other than clause (a) hereof) shall not apply and shall have no force and effect upon (i) an Employer Non-Renewal, (ii) a termination of Grantee’s employment or services with the Company Group by the Company without Cause or (iii) a termination of Grantee’s employment or services with the Company Group by Grantee with Good Reason. No amendment of the Operating Agreement of WME Holdco that would change the covenants set forth in this Section 2 of Schedule E in a manner adverse to Grantee shall be effective as to Grantee without his written consent.

 

3.

Non-Disparagement. During the Restricted Period, Grantee shall not (and, if applicable, shall cause each of Grantee’s controlled Affiliates not to) defame or disparage the Company Group in any medium to any Person. Notwithstanding the foregoing, Grantee (and Grantee’s controlled Affiliates, if applicable) may confer in confidence with Grantee’s (or, if applicable, Grantee’s controlled Affiliates’) legal representatives and make truthful statements as are required by applicable law or legal process.

 

4.

Enforcement.

 

  a.

Grantee agrees that the Company Group would suffer irreparable damage, that the Company Group would not have any adequate remedy at law in the event of a breach or threatened breach of any of the covenants set forth in Sections 1, 2 or 3 of this Schedule E (collectively, the “Restrictive Covenants”), that the damages resulting from any such breach or threatened breach would be material but not readily susceptible to being measured in monetary terms, and that any remedy at law (including the payment of damages) would be inadequate as a result of such breach or threatened breach. Accordingly, it is agreed that any member of the Company Group shall be entitled to an immediate injunction or injunctions to prevent breaches or threatened breaches of the Restrictive Covenants and to specific performance of such Restrictive Covenants, in each case without proof of actual damages, and Grantee waives any requirement for the securing or posting of any bond in connection with any such remedy.

 

  b.

Grantee further agrees that the remedies provided for in this Section 4 of Schedule E shall be in addition to, and not in limitation of, any other remedies that may be available to the Company Group whether at law or


  in equity, including monetary damages, and all of the Company Group’s rights shall be unrestricted, including, but not limited to, the right to terminate Grantee at any time for any reason.

 

  c.

Grantee acknowledges and agrees that as used in this Schedule E, the “Company Group” shall mean Employer and any current or former Affiliate of any member of Employer, as determined by EOC Parent in its discretion. Without limiting the foregoing, the Company may elect to assign or transfer all or any portion of its rights to enforce the provisions of this Schedule E to any person or entity who is a successor to any member of the Company Group or to any person or entity who acquires one or more businesses from any member of the Company Group.

 

5.

Restrictive Covenants Generally. If, at the time of enforcement of the Restrictive Covenants, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by applicable law. Grantee acknowledges that Grantee has had the opportunity to be represented by counsel in the negotiation and execution of this Agreement and hereby acknowledge that the Restrictive Covenants are reasonable in terms of duration, scope and area restrictions and are necessary to protect the goodwill of the Company Group.

 

6.

Termination of Non-Competition Covenant. Notwithstanding the foregoing, if within ten (10) days of the date on which Grantee’s employment or services with the Company Group terminates upon a Grantee Non-Renewal (other than an Employer Non-Renewal), Grantee delivers an irrevocable and unconditional notice to EOC Parent, together with supporting documentation evidencing Grantee’s authority to do so and certificates and other evidence of ownership and surrender, in each case in forms reasonably acceptable to EOC Parent, that Grantee thereby relinquish to EOC Parent and its designees (a) all of the Owned Units (whether vested or unvested) and any and all other securities or other assets for or into which all or a portion of such Owned Units has been or may be exchanged or converted and (b) all proceeds (cash or otherwise) received or receivable with respect to such Owned Units or other assets (excluding tax distributions payable in respect of periods prior thereto, ordinary course annual bonus payments payable in respect of periods prior thereto and proceeds received prior thereto in respect of any sale of the Owned Units (and any and all other securities or other assets for or into which all or a portion of such Owned Units has been or may be exchanged or converted) in the public market following an IPO), in the case of each of clauses (a) and (b), in exchange for no consideration payable by the Company Group or any other Person, then the covenants set forth in Section 2 of this Schedule E shall terminate thereupon and have no further force or effect. For the avoidance of doubt, following the election described in the


  foregoing sentence, other than the covenants set forth in Section 2 of this Schedule E, each of Grantee’s covenants and obligations with respect to the Company Group (whether set forth in this Schedule E or otherwise) shall remain in effect in accordance with its terms.

Exhibit 10.24

ENDEAVOR GROUP HOLDINGS, INC.

2021 INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), is entered into as of May 3, 2021 (the “Date of Grant”), by and between Endeavor Group Holdings, Inc., a Delaware corporation (the “Company”), and Ariel Emanuel (the “Participant”). Capitalized terms used in this Agreement and not otherwise defined herein have the meanings ascribed to such terms in the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan, as amended, restated or otherwise modified from time to time in accordance with its terms (the “Plan”).

WHEREAS, the Company has adopted the Plan, pursuant to which Restricted Stock Units (“RSUs”) may be granted; and

WHEREAS, the Committee has determined that it is in the best interests of the Company and its stockholders to grant the RSUs provided for herein to the Participant on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, for and in consideration of the premises and the covenants of the parties contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:

 

1.

Grant of Restricted Stock Units.

(a)    Grant. The Company hereby grants to the Participant a grant of Time-Vesting RSUs and Performance-Vesting RSUs (each as defined below), on the terms and subject to the conditions set forth in this Agreement and as otherwise provided in the Plan. The Time-Vesting RSUs and Performance-Vesting RSUs shall vest in accordance with Section 2 hereof. The Time-Vesting RSUs and Performance-Vesting RSUs shall be credited to a separate book-entry account maintained for the Participant on the books of the Company.

(b)    Incorporation by Reference. The provisions of the Plan are incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan. The Committee shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its decision shall be binding and conclusive upon the Participant and the Participant’s beneficiary in respect of any questions arising under the Plan or this Agreement. The Participant acknowledges that the Participant has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.

 

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2.      Vesting; Settlement. Except as otherwise provided herein or otherwise determined by the Committee, the RSUs granted hereunder will become vested and settled as follows:

(a)    Time-Vesting RSUs.

(i)    The Company hereby grants the Participant 2,333,334 RSUs as of the Date of Grant (the “Time-Vesting RSUs”), with one-third of the Time-Vesting RSUs being fully vested upon the Date of Grant (the “First Tranche”) and the remaining Time-Vesting RSUs eligible to become vested in two equal annual installments on each of the first and second anniversaries of the Date of Grant (each, a “Subsequent Tranche”), subject to the Participant’s continued employment with the Company or any of its Affiliates through the applicable vesting date.

(ii)    The number of Time-Vesting RSUs eligible to vest on any vesting date shall be rounded down to the nearest whole share and any fractional Time-Vesting RSU reduced by such rounding shall be aggregated and the Time-Vesting RSUs resulting from such aggregation shall vest on the final applicable vesting date.

(iii)    The First Tranche of the Time-Vesting RSUs shall be settled in an equal number of shares of Common Stock within 30 days following the six-month anniversary of the Date of Grant. Each Subsequent Tranche of the Time-Vesting RSUs shall be settled in an equal number of shares of Common Stock within 30 days following the applicable vesting date.

(b)    Performance-Vesting RSUs.

(i)    The Company hereby grants the Participant 1,104,167 RSUs as of the Date of Grant (the “Performance-Vesting RSUs”), on the conditions set forth in this Section 2(b)(i). Upon the achievement by the Company of a Common Stock Price that equals or exceeds each Stock Price Threshold during the Performance Share Eligibility Period (the date of such achievement, a “Stock Price Threshold Achievement Date”), the Company shall issue to the Participant following such Stock Price Threshold Achievement Date, a number of shares of Common Stock (the “Performance Shares”) equal to (A) the number of Performance-Vesting RSUs, multiplied by (B) the Initial Stock Price, divided by (C) the applicable Stock Price Threshold achieved. The Performance Shares achieved on a Stock Price Threshold Achievement Date shall be issued on, or as soon as reasonably practicable following, the Stock Price Threshold Achievement Date (but in any event on or prior to March 15 of the calendar year following the year in which the Stock Price Threshold Achievement Date occurs). For the avoidance of doubt, (x) subject to Section 3, the Performance-Vesting RSUs will remain outstanding through the end of the Performance Share Eligibility Period and will be settled in additional shares of Common Stock upon attainment of each Stock Price Threshold (provided that not more than one issuance of the Performance Shares shall be made in respect of each specific Stock Price Threshold achieved) and (y) the Participant shall not be eligible to receive any Performance Shares with respect to achievement of any Stock Price Threshold following the end of the Performance Share Eligibility Period.

 

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(ii)    The number of Performance Shares issued following any vesting date shall be rounded down to the nearest whole share.

(iii)    One-third of the Performance Shares issued following any Stock Price Threshold Achievement Date shall be fully vested upon issuance and the remaining Performance Shares shall become vested in two equal annual installments on each of the first and second anniversaries of the applicable Stock Price Threshold Achievement Date, subject to the Participant’s continued employment with the Company or any of its Affiliates through the applicable vesting date. Notwithstanding anything to the contrary herein, to the extent the Company reasonably anticipates that the issuance of Performance Shares hereunder will violate Federal securities laws or other applicable law (within the meaning of Treasury Regulation 1.409A-2(b)(7)(ii) and any interpretative guidance thereunder), then such issuance may be delayed until the earliest date at which the Company reasonably anticipates that the issuance will not cause such violation.

 

3.

Termination of Employment.

(a)    In General. Except as otherwise provided herein or otherwise determined by the Committee, if the Participant’s employment with the Company and its Affiliates terminates for any reason, all unvested Time-Vesting RSUs and Performance-Vesting RSUs and unvested Performance Shares shall be canceled immediately upon termination of employment with the Company and its Affiliates and the Participant shall not be entitled to receive any payments with respect thereto.

(b)    Time-Vesting RSUs. Notwithstanding anything to the contrary contained in this Agreement, (i) upon the earliest to occur of (x) the consummation of a Change of Control and (y) the date the Participant no longer is employed by the Company or any of its Affiliates (other than due to termination by the Company or any of its Affiliates for Cause, by the Participant without Good Reason or due to death or Disability), 100% of the Time-Vesting RSUs shall be vested upon the occurrence of such event, and (ii) if the Participant no longer is employed by the Company or any of its Affiliates due to the Participant’s death or Disability, the portion of each issuance of the Participant’s then-unvested Time-Vesting RSUs, if any, that, absent termination, would have vested within one year following such termination of employment will become fully vested on the date of such termination of employment. Any Time-Vesting RSUs that become vested pursuant to this Section 3(b) shall be settled in an equal number of shares of Common Stock within 30 days following the date of termination.

(c)    Performance-Vesting RSUs. Notwithstanding anything to the contrary contained in this Agreement, with respect to the Performance-Vesting RSUs, upon the date the Participant no longer is employed by the Company or any of its Affiliates for any reason (other than due to termination by the Company for Cause or by the Participant without Good Reason), the Company shall (i) remain obligated to settle any Performance-Vesting RSUs for which the Stock Price Threshold Achievement Date occurred prior to such termination of employment in Performance Shares in accordance with Section 2(b)(i), and (ii) issue to the Participant on such date of such termination of employment, a number of shares of Common Stock equal to the (A) (x) the number of Performance-Vesting RSUs, multiplied by (y) the Initial Stock Price, divided by (z) the Common Stock Price as of the date of such termination of employment, multiplied by (B) a

 

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percentage, represented by a fraction, the numerator of which is the amount that the Common Stock Price as of the date of such termination of employment exceeds the last Stock Price Threshold above the Initial Stock Price achieved by the Company (or, if no such Stock Price Threshold above the Initial Stock Price has been achieved, the Initial Stock Price), and the denominator of which equals $4.50, rounded down to the nearest whole share (such shares, the “Partial Performance Shares”). Any Performance-Vesting RSUs that become earned pursuant to this Section 3(c) shall be settled in the Partial Performance Shares on, or as soon as reasonably practicable following, the date of termination (but in any event on or prior to March 15 of the calendar year following the year in which the date of termination occurs). Notwithstanding anything to the contrary set forth herein, the Performance Shares described in this subsection (c) and the Partial Performance Shares shall be fully vested on the date of grant.

(d)    Performance Shares. Notwithstanding anything to the contrary contained in this Agreement, (i) upon the earliest to occur of (x) the consummation of a Change of Control and (y) the date the Participant no longer is employed by the Company or any of its Affiliates for any reason (other than due to termination by the Company or any of its Affiliates for Cause, by the Participant without Good Reason or due to death or Disability), 100% of the outstanding Performance Shares shall be vested upon the occurrence of such event, and (ii) if the Participant no longer is employed by the Company or any of its Affiliates due to the Participant’s death or Disability, the portion of each issuance of the Participant’s then-unvested Performance Shares, if any, that, absent termination, would have vested within one year following such termination of employment will become fully vested on the date of such termination of employment.

 

4.

Definitions.

(a)    “Common Stock Price” shall mean, at any applicable time of determination, the per share price of Common Stock of the Company, which for this purpose shall be equal to: (i) in the case of a Change of Control, the purchase price of a share of Common Stock in connection with (or implied by) such Change of Control, and (ii) at all other applicable times of determination, the volume weighted average price of a share of Common Stock on the primary exchange on which it is listed during the 30 consecutive trading days immediately preceding such applicable time of determination. The Common Stock Price shall be reduced by the Committee in good faith to take into account any extraordinary dividends and adjusted by the Committee in good faith to take into account any stock splits or similar corporate events, in each case, in accordance with Section 12 of the Plan.

(b)    “Cause” shall have the meaning set forth in the Employment Agreement.

(c)    “Disability” shall have the meaning set forth in the Employment Agreement.

(d)    “Employment Agreement” means that certain Second Amended and Restated Term Employment Agreement, by and among the Participant, the Company and Endeavor Operating Company, LLC, effective as of the March 13, 2019. For the avoidance of doubt, the references to the Employment Agreement herein shall continue to apply regardless of whether or not the employment term under the Employment Agreement has expired.

(e)    “Good Reason” shall have the meaning set forth in the Employment Agreement.

 

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(f)    “Initial Stock Price” shall mean $24.00.

(g)    “Performance Share Eligibility Period” means the period beginning on the Date of Grant and ending on the earlier of (x) the ten-year anniversary of the Date of Grant and (y) the date the Participant no longer is employed by the Company or any of its Affiliates for any reason.

(h)     “Stock Price Threshold” means each of $28.50 and each amount that is $4.50 more than the prior amount (i.e., $33.00, then $37.50, then $42.00, continuing indefinitely).

5.      Rights as a Stockholder. The Participant shall not be deemed for any purpose to be the owner of any shares of Common Stock underlying the Time-Vesting RSUs and Performance-Vesting RSUs unless, until and to the extent that (a) the Company shall have issued and delivered to the Participant the shares of Common Stock underlying the Time-Vesting RSUs and Performance-Vesting RSUs and (b) the Participant’s name shall have been entered as a stockholder of record with respect to such shares of Common Stock on the books of the Company. The Company shall cause the actions described in clauses (a) and (b) of the preceding sentence to occur promptly following settlement as contemplated by this Agreement, subject to compliance with applicable laws.

 

6.

Compliance with Legal Requirements.

(a)    Generally. The granting and settlement of the Time-Vesting RSUs and Performance-Vesting RSUs and the granting and vesting of the Performance Shares and Partial Performance Shares, and any other obligations of the Company under this Agreement, shall be subject to all applicable U.S. federal, state and local laws, rules and regulations, all applicable non-U.S. laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required. The Participant agrees to take all steps that the Committee or the Company determines are reasonably necessary to comply with all applicable provisions of U.S. federal and state securities law and non-U.S. securities law in exercising the Participant’s rights under this Agreement.

(b)    Tax Withholding.

(i)    In general. Vesting and settlement of the Performance-Vesting RSUs and the grant and vesting of the Performance Shares and Partial Performance Shares shall be subject to the Participant’s satisfying any applicable U.S. federal, state and local tax withholding obligations and non-U.S. tax withholding obligations. The Company shall have the right and is hereby authorized to withhold from any amounts payable to the Participant in connection with the Time-Vesting RSUs, Performance-Vesting RSUs, Performance Shares, Partial Performance Shares or otherwise the amount of any required withholding taxes in respect of the Time-Vesting RSUs, Performance-Vesting RSUs, Performance Shares or Partial Performance Shares, their settlement, vesting or any payment or transfer of the Time-Vesting RSUs, Performance-Vesting RSUs, Performance Shares or Partial Performance Shares or under the Plan and to take any such other action as the Committee or the Company deem necessary to satisfy all obligations for the payment of such withholding taxes (up to the maximum permissible withholding amounts).

 

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(ii)    Withholding Tax Election. Notwithstanding the foregoing, by accepting this Award, the Participant understands and agrees that as a condition of the grant of the RSUs hereunder, the Participant (A) is required to, and hereby affirmatively elects to (the “Sell to Cover Election”), sell that number of shares of Common Stock with a value equal to (x) to the extent subject to income tax withholdings as an employee of the Company or any of its Affiliates, the amount necessary to satisfy all applicable tax withholding obligations with respect to any taxable event arising in connection with the Time-Vesting RSUs, Performance Vesting RSUs, Performance Shares or Partial Performance Shares (at the highest U.S. federal and applicable state tax withholding rate for supplemental income (or any successor thereto) or state equivalent, as applicable, or (y) to the extent not subject to income tax withholdings as an employee of the Company or any of its Affiliates, the product of (x) the amount of taxable income incurred with respect to any taxable event arising in connection with the Time-Vesting RSUs, Performance Vesting RSUs, Performance Shares or Partial Performance Shares and (y) the highest marginal U.S. federal and applicable state income tax rates that are applicable to the Participant (based on his state of residence), (B) to the extent subject to income tax withholdings as an employee of the Company or any of its Affiliates, agrees to execute any letter of instruction or agreement required by the Company’s transfer agent, stock plan administrator, bank, broker, nominee or other similar agent or representative (the “Agent”) to allow the Agent to timely remit the cash proceeds of such sale(s) to the Company. The Participant has carefully reviewed Section 6(b) and the Participant hereby represents and warrants that, as of the Date of Grant and the date he executes the Grant Notice, he is not aware of any material, nonpublic information with respect to the Company or any securities of the Company, is not subject to any legal, regulatory or contractual restriction that would prevent the Agent from conducting sales (other than any lock-up agreements in connection with the Company’s initial public offering or any limitations in any insider trading policy of the Company), does not have, and will not attempt to exercise, authority, influence or control over any sales of shares of Common Stock effected by the Agent pursuant to the Agreement, and is entering into the Agreement and this election to “sell to cover” in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 (regarding trading of the Company’s securities on the basis of material nonpublic information) under the Exchange Act. It is the Participant’s intent that this election to “sell to cover” comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c) under the Exchange Act. To effect Participant’s Sell to Cover Election pursuant to this Agreement, the Participant hereby acknowledges and agrees:

(A)    The Participant hereby appoints the Agent as the Participant’s agent and authorizes the Agent to sell on the open market at the then prevailing market price(s), on the Participant’s behalf, as soon as practicable on or after the shares of Common Stock are issued upon the vesting and/or settlement of the Time-Vesting RSUs, Performance-Vesting RSUs, Performance Shares or Partial Performance Shares, that number (rounded up to the next whole number) of the shares of Common Stock so issued necessary to generate proceeds to cover the amount elected in the Sell to Cover Election all applicable fees and commissions due to, or required to be collected by, the Agent with respect thereto.

 

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(B)    The Participant hereby authorizes the Company and the Agent to cooperate and communicate with one another to determine the number of shares of Common Stock that must be sold pursuant to subsection (A) above.

(C)    The Participant understands that the Agent may effect sales as provided in subsection (A) above in one or more sales and that the average price for executions resulting from bunched orders will be assigned to the Participant’s account. In addition, the Participant acknowledges that it may not be possible to sell shares of Common Stock as provided by subsection (A) above due to (x) a legal or contractual restriction applicable to the Participant or the Agent, (y) a market disruption, or (z) rules governing order execution priority on the national exchange where the shares of Common Stock may be traded. The Participant further agrees and acknowledges that in the event the sale of shares of Common Stock would result in material adverse harm to the Company, as determined by the Company in its sole discretion, the Company may instruct the Agent not to sell shares of Common Stock as provided by subsection (A) above. In the event of the Agent’s inability to sell shares of Common Stock, the Participant will continue to be responsible for the timely payment to the Company and/or its Affiliates of all federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld, including but not limited to those amounts specified in subsection (A) above.

(D)    The Participant hereby agrees to execute and deliver to the Agent any other agreements or documents as the Agent reasonably deems necessary or appropriate to carry out the purposes and intent of this Section 6(b)(ii).

(E)    This Section 6(b)(ii) shall terminate not later than the date on which all tax withholding obligations arising in connection with the vesting and/or settlement of the Time-Vesting RSUs, Performance-Vesting RSUs, Performance Shares and Partial Performance Shares have been satisfied.

7.      Clawback. The Time-Vesting RSUs, Performance-Vesting RSUs, Performance Shares and Partial Performance Shares shall at all times be subject to any clawback or similar policy or program established by the Company, as may be amended from time to time (a “Clawback Policy”). In addition (and without limiting the Company’s rights and Participant’s obligations under any Clawback Policy), to the extent required by applicable law or the rules and regulations of the NYSE or any other securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted, the RSUs shall be subject (including on a retroactive basis) to clawback, forfeiture or similar requirements (and such requirements shall be deemed incorporated by reference into this Agreement).

 

8.

Miscellaneous.

(a)    Transferability. The Time-Vesting RSUs, Performance-Vesting RSUs and unvested Performance Shares may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered (a “Transfer”) by the Participant other than by will or by the laws of descent and distribution, pursuant to a DRO or as otherwise permitted under Section 14(b) of the

 

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Plan; provided that the Committee hereby consents to and permits any transfers to Permitted Transferees in accordance with Section 14(b) of the Plan and agrees not to adopt any rules that would unduly limit such transfers, and this Agreement represents notice from the Committee that any such transfer would comply with the requirements of the Plan. Any attempted Transfer of the Time-Vesting RSUs, Performance-Vesting RSUs or unvested Performance Shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Time-Vesting RSUs, Performance-Vesting RSUs or unvested Performance Shares, shall be null and void and without effect. The Company will not be required to (i) reflect on its books any Transfer of the Time-Vesting RSUs, Performance-Vesting RSUs or unvested Performance Shares in violation of this Agreement or (ii) treat as owner of the Time-Vesting RSUs, Performance-Vesting RSUs or unvested Performance Shares any purchaser or other transferee receiving the Time-Vesting RSUs, Performance-Vesting RSUs or unvested Performance Shares in such Transfer.

(b)    Waiver. Any right of the Company contained in this Agreement may be waived in writing by the Committee. No waiver of any right hereunder by any party shall operate as a waiver of any other right, or as a waiver of the same right with respect to any subsequent occasion for its exercise, or as a waiver of any right to damages. No waiver by any party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a waiver of the continuation of the same breach.

(c)    Section 409A.

(i)    The Time-Vesting RSUs, Performance-Vesting RSUs and Performance Shares are intended to be exempt from, or compliant with, Section 409A of the Code. This Section 8(c)(i) does not create an obligation on the part of the Company to modify the Plan or this Agreement and does not guarantee that the Time-Vesting RSUs, Performance-Vesting RSUs and/or Performance Shares will not be subject to interest and penalties under Section 409A of the Code.

(ii)    Notwithstanding the foregoing or any provision of the Plan or this Agreement to the contrary, if the Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no payments or deliveries in respect of any Awards that are “deferred compensation” subject to Section 409A of the Code shall be made to such Participant prior to the date that is six months after the date of such Participant’s “separation from service” within the meaning of Section 409A of the Code or, if earlier, the Participant’s date of death. All such delayed payments or deliveries will be paid or delivered (without interest) in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.

(d)    General Assets. All amounts credited in respect of the Time-Vesting RSUs, Performance-Vesting RSUs to the book-entry account under this Agreement shall continue for all purposes to be part of the general assets of the Company. The Participant’s interest in such account shall make the Participant only a general, unsecured creditor of the Company.

(e)    Notices. Any notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax, pdf/email or overnight courier, or by postage-paid first-class mail. Notices sent by mail shall be deemed

 

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received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated by the Company’s records, or if to the Company, to the attention of the Chief Legal Officer at the Company’s principal executive office.

(f)    Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

(g)    No Rights to Employment, Directorship or Service. Nothing contained in this Agreement shall be construed as giving the Participant any right to be retained, in any position, as an employee, consultant or director of the Company or any of its Affiliates or shall interfere with or restrict in any way the rights of the Company or any of its Affiliates, which are hereby expressly reserved, to remove, terminate or discharge the Participant at any time for any reason whatsoever.

(h)    Fractional Shares. In lieu of issuing a fraction of a share of Common Stock resulting from adjustment of the Time-Vesting RSUs, Performance-Vesting RSUs, Performance Shares or Partial Performance Shares pursuant to Section 9 or Section 11 of the Plan or otherwise, the Company shall be entitled to pay to the Participant an amount in cash equal to the Fair Market Value of such fractional share.

(i)    Beneficiary. The Participant may appoint any individual or legal entity in writing as his beneficiary to receive any Time-Vesting RSUs, Performance-Vesting RSUs, Performance Shares or Partial Performance Shares (to the extent not previously terminated or forfeited) under this Agreement upon the Participant’s death or becoming subject to a Disability. The Participant may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Participant must complete the designation of a beneficiary or revocation of a beneficiary by written notice (in the Company’s applicable form) to the Company under Section 8(e) hereof before the date of the Participant’s death. In the absence of a beneficiary designation, the Participant’s beneficiary shall be his or her spouse (or domestic partner if such status is recognized by the Company and in such jurisdiction), or if the Participant is otherwise unmarried at the time of death, his or her estate.

(j)    Successors. The terms of this Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and of the Participant and the beneficiaries, executors, administrators, heirs and successors of the Participant.

(k)    Entire Agreement. This Agreement and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in respect thereto. No change, modification or waiver of any provision of this Agreement shall be valid unless the same be in writing and signed by the parties hereto, except for any changes permitted without consent under the Plan.

 

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(l)    Governing Law and Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction other than the State of Delaware.

(m)    Dispute Resolution. Upon the occurrence of any dispute or disagreement between the parties hereto arising out of or in connection with any term of this Agreement, the subject matter hereof, or the interpretation or enforcement hereof, the parties shall comply with the dispute resolution procedure set forth in Section 12 of the Employment Agreement.

(n)    Headings. The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

(o)    Counterparts. This Agreement may be executed in one or more counterparts (including via facsimile and electronic image scan (pdf)), each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

(p)    Electronic Signature and Delivery. This Agreement may be accepted by return signature or by electronic confirmation. By accepting this Agreement, the Participant consents to the electronic delivery of prospectuses, annual reports and other information required to be delivered by U.S. Securities and Exchange Commission rules (which consent may be revoked in writing by the Participant at any time upon three business days’ notice to the Company, in which case subsequent prospectuses, annual reports and other information will be delivered in hard copy to the Participant).

(q)    Electronic Participation in Plan. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

(r)    Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, the Plan, this Agreement and the Time-Vesting RSUs, Performance-Vesting RSUs, Performance Shares or Partial Performance Shares will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent applicable laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

[Remainder of page intentionally blank]

 

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IN WITNESS WHEREOF, this Restricted Stock Unit Award Agreement has been executed by the Company and the Participant as of the day first written above.

 

ENDEAVOR GROUP HOLDINGS, INC.
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Chief Financial Officer

[Signature Page to Restricted Stock Unit Award Agreement]


PARTICIPANT

/s/ Ariel Emanuel

Ariel Emanuel

[Signature Page to Restricted Stock Unit Award Agreement]

Exhibit 10.25

ENDEAVOR GROUP HOLDINGS, INC.

2021 INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), is entered into as of May 3, 2021 (the “Date of Grant”), by and between Endeavor Group Holdings, Inc., a Delaware corporation (the “Company”), and Ariel Emanuel (the “Participant”). Capitalized terms used in this Agreement and not otherwise defined herein have the meanings ascribed to such terms in the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan, as amended, restated or otherwise modified from time to time in accordance with its terms (the “Plan”).

WHEREAS, the Company has adopted the Plan, pursuant to which Restricted Stock Units (“RSUs”) may be granted; and

WHEREAS, the Committee has determined that it is in the best interests of the Company and its stockholders to grant the RSUs provided for herein to the Participant on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, for and in consideration of the premises and the covenants of the parties contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:

 

1.

Grant of Restricted Stock Units.

(a)    Grant. The Company hereby grants to the Participant a grant of Time-Vesting RSUs (each as defined below), on the terms and subject to the conditions set forth in this Agreement and as otherwise provided in the Plan. The Time-Vesting RSUs shall vest in accordance with Section 2 hereof. The Time-Vesting RSUs shall be credited to a separate book-entry account maintained for the Participant on the books of the Company.

(b)    Incorporation by Reference. The provisions of the Plan are incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan. The Committee shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its decision shall be binding and conclusive upon the Participant and the Participant’s beneficiary in respect of any questions arising under the Plan or this Agreement. The Participant acknowledges that the Participant has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.

 

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2.      Vesting; Settlement. Except as otherwise provided herein or otherwise determined by the Committee, the RSUs granted hereunder will become vested and settled as follows:

(a)    Time-Vesting RSUs.

(i)    The Company hereby grants the Participant 520,834 RSUs as of the Date of Grant (the “Time-Vesting RSUs”), with one-third of the Time-Vesting RSUs being fully vested upon the Date of Grant (the “First Tranche”) and the remaining Time-Vesting RSUs eligible to become vested in two equal annual installments on each of the first and second anniversaries of the Date of Grant (each, a “Subsequent Tranche”), subject to the Participant’s continued employment with the Company or any of its Affiliates through the applicable vesting date.

(ii)    The number of Time-Vesting RSUs eligible to vest on any vesting date shall be rounded down to the nearest whole share and any fractional Time-Vesting RSU reduced by such rounding shall be aggregated and the Time-Vesting RSUs resulting from such aggregation shall vest on the final applicable vesting date.

(iii)    The First Tranche of the Time-Vesting RSUs shall be settled in an equal number of shares of Common Stock within 30 days following the six-month anniversary of the Date of Grant. Each Subsequent Tranche of the Time-Vesting RSUs shall be settled in an equal number of shares of Common Stock within 30 days following the applicable vesting date.

 

3.

Termination of Employment.

(a)    In General. Except as otherwise provided herein or otherwise determined by the Committee, if the Participant’s employment with the Company and its Affiliates terminates for any reason, all unvested Time-Vesting RSUs shall be canceled immediately upon termination of employment with the Company and its Affiliates and the Participant shall not be entitled to receive any payments with respect thereto.

(b)    Time-Vesting RSUs. Notwithstanding anything to the contrary contained in this Agreement, (i) upon the earliest to occur of (x) the consummation of a Change of Control and (y) the date the Participant no longer is employed by the Company or any of its Affiliates for any reason (other than due to termination by the Company or any of its Affiliates for Cause, by the Participant without Good Reason or due to death or Disability), 100% of the Time-Vesting RSUs shall be vested upon the occurrence of such event, and (ii) if the Participant no longer is employed by the Company or any of its Affiliates due to the Participant’s death or Disability, the portion of each issuance of the Participant’s then-unvested Time-Vesting RSUs, if any, that, absent termination, would have vested within one year following such termination of employment will become fully vested on the date of such termination of employment. Any Time-Vesting RSUs that become vested pursuant to this Section 3(b) shall be settled in an equal number of shares of Common Stock within 30 days following the date of termination.

 

4.

Definitions.

(a)    “Cause” shall have the meaning set forth in the Employment Agreement.

 

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(b)    “Disability” shall have the meaning set forth in the Employment Agreement.

(c)    “Employment Agreement” means that certain Second Amended and Restated Term Employment Agreement, by and among the Participant, the Company and Endeavor Operating Company, LLC, effective as of the March 13, 2019. For the avoidance of doubt, the references to the Employment Agreement herein shall continue to apply regardless of whether or not the employment term under the Employment Agreement has expired.

(d)    “Good Reason” shall have the meaning set forth in the Employment Agreement.

5.      Rights as a Stockholder. The Participant shall not be deemed for any purpose to be the owner of any shares of Common Stock underlying the Time-Vesting RSUs unless, until and to the extent that (a) the Company shall have issued and delivered to the Participant the shares of Common Stock underlying the Time-Vesting RSUs and (b) the Participant’s name shall have been entered as a stockholder of record with respect to such shares of Common Stock on the books of the Company. The Company shall cause the actions described in clauses (a) and (b) of the preceding sentence to occur promptly following settlement as contemplated by this Agreement, subject to compliance with applicable laws.

 

6.

Compliance with Legal Requirements.

(a)    Generally. The granting and settlement of the Time-Vesting RSUs, and any other obligations of the Company under this Agreement, shall be subject to all applicable U.S. federal, state and local laws, rules and regulations, all applicable non-U.S. laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required. The Participant agrees to take all steps that the Committee or the Company determines are reasonably necessary to comply with all applicable provisions of U.S. federal and state securities law and non-U.S. securities law in exercising the Participant’s rights under this Agreement.

(b)    Tax Withholding.

(i)    In general. Vesting and settlement of the Time-Vesting RSUs shall be subject to the Participant’s satisfying any applicable U.S. federal, state and local tax withholding obligations and non-U.S. tax withholding obligations. The Company shall have the right and is hereby authorized to withhold from any amounts payable to the Participant in connection with the Time-Vesting RSUs or otherwise the amount of any required withholding taxes in respect of the Time-Vesting RSUs, their settlement, vesting or any payment or transfer of the Time-Vesting RSUs or shares of Common Stock or under the Plan and to take any such other action as the Committee or the Company deem necessary to satisfy all obligations for the payment of such withholding taxes (up to the maximum permissible withholding amounts).

(ii)    Withholding Tax Election. Notwithstanding the foregoing, by accepting this Award, the Participant understands and agrees that as a condition of the grant of the RSUs hereunder, the Participant (A) is required to, and hereby affirmatively elects to (the “Sell to Cover Election”), sell that number of shares of Common Stock with a value equal to (x) to the extent subject to income tax withholdings as an employee of the Company or any of its Affiliates, the amount necessary to satisfy all applicable tax withholding obligations

 

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with respect to any taxable event arising in connection with the Time-Vesting RSUs (at the highest U.S. federal and applicable state tax withholding rate for supplemental income (or any successor thereto) or state equivalent, as applicable, or (y) to the extent not subject to income tax withholdings as an employee of the Company or any of its Affiliates, the product of (x) the amount of taxable income incurred with respect to any taxable event arising in connection with the Time-Vesting RSUs and (y) the highest marginal U.S. federal and applicable state income tax rates that are applicable to the Participant (based on his state of residence), (B) to the extent subject to income tax withholdings as an employee of the Company or any of its Affiliates, agrees to execute any letter of instruction or agreement required by the Company’s transfer agent, stock plan administrator, bank, broker, nominee or other similar agent or representative (the “Agent”) to allow the Agent to timely remit the cash proceeds of such sale(s) to the Company. The Participant has carefully reviewed Section 6(b) and the Participant hereby represents and warrants that, as of the Date of Grant and the date he executes the Grant Notice, he is not aware of any material, nonpublic information with respect to the Company or any securities of the Company, is not subject to any legal, regulatory or contractual restriction that would prevent the Agent from conducting sales (other than any lock-up agreements in connection with the Company’s initial public offering or any limitations in any insider trading policy of the Company), does not have, and will not attempt to exercise, authority, influence or control over any sales of shares of Common Stock effected by the Agent pursuant to the Agreement, and is entering into the Agreement and this election to “sell to cover” in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 (regarding trading of the Company’s securities on the basis of material nonpublic information) under the Exchange Act. It is the Participant’s intent that this election to “sell to cover” comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c) under the Exchange Act. To effect Participant’s Sell to Cover Election pursuant to this Agreement, the Participant hereby acknowledges and agrees:

(A)    The Participant hereby appoints the Agent as the Participant’s agent and authorizes the Agent to sell on the open market at the then prevailing market price(s), on the Participant’s behalf, as soon as practicable on or after the shares of Common Stock are issued upon the vesting and/or settlement of the Time-Vesting RSUs, that number (rounded up to the next whole number) of the shares of Common Stock so issued necessary to generate proceeds to cover the amount elected in the Sell to Cover Election all applicable fees and commissions due to, or required to be collected by, the Agent with respect thereto.

(B)    The Participant hereby authorizes the Company and the Agent to cooperate and communicate with one another to determine the number of shares of Common Stock that must be sold pursuant to subsection (A) above.

(C)    The Participant understands that the Agent may effect sales as provided in subsection (A) above in one or more sales and that the average price for executions resulting from bunched orders will be assigned to the Participant’s account. In addition, the Participant acknowledges that it may not be possible to

 

4


sell shares of Common Stock as provided by subsection (A) above due to (x) a legal or contractual restriction applicable to the Participant or the Agent, (y) a market disruption, or (z) rules governing order execution priority on the national exchange where the shares of Common Stock may be traded. The Participant further agrees and acknowledges that in the event the sale of shares of Common Stock would result in material adverse harm to the Company, as determined by the Company in its sole discretion, the Company may instruct the Agent not to sell shares of Common Stock as provided by subsection (A) above. In the event of the Agent’s inability to sell shares of Common Stock, the Participant will continue to be responsible for the timely payment to the Company and/or its Affiliates of all federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld, including but not limited to those amounts specified in subsection (A) above.

(D)    The Participant hereby agrees to execute and deliver to the Agent any other agreements or documents as the Agent reasonably deems necessary or appropriate to carry out the purposes and intent of this Section 6(b)(ii).

(E)    This Section 6(b)(ii) shall terminate not later than the date on which all tax withholding obligations arising in connection with the vesting and/or settlement of the Time-Vesting RSUs have been satisfied.

7.      Clawback. The Time-Vesting RSUs shall at all times be subject to any clawback or similar policy or program established by the Company, as may be amended from time to time (a “Clawback Policy”). In addition (and without limiting the Company’s rights and Participant’s obligations under any Clawback Policy), to the extent required by applicable law or the rules and regulations of the NYSE or any other securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted, the Time-Vesting RSUs shall be subject (including on a retroactive basis) to clawback, forfeiture or similar requirements (and such requirements shall be deemed incorporated by reference into this Agreement).

 

8.

Miscellaneous.

(a)    Transferability. The Time-Vesting RSUs may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered (a “Transfer”) by the Participant other than by will or by the laws of descent and distribution, pursuant to a DRO or as otherwise permitted under Section 14(b) of the Plan; provided that the Committee hereby consents to and permits any transfers to Permitted Transferees in accordance with Section 14(b) of the Plan and agrees not to adopt any rules that would unduly limit such transfers, and this Agreement represents notice from the Committee that any such transfer would comply with the requirements of the Plan. Any attempted Transfer of the Time-Vesting RSUs contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Time-Vesting RSUs, shall be null and void and without effect. The Company will not be required to (i) reflect on its books any Transfer of the Time-Vesting RSUs in violation of this Agreement or (ii) treat as owner of the Time-Vesting RSUs any purchaser or other transferee receiving the Time-Vesting RSUs in such Transfer.

 

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(b)    Waiver. Any right of the Company contained in this Agreement may be waived in writing by the Committee. No waiver of any right hereunder by any party shall operate as a waiver of any other right, or as a waiver of the same right with respect to any subsequent occasion for its exercise, or as a waiver of any right to damages. No waiver by any party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a waiver of the continuation of the same breach.

(c)    Section 409A.

(i)    The Time-Vesting RSUs are intended to be exempt from, or compliant with, Section 409A of the Code. This Section 8(c)(i) does not create an obligation on the part of the Company to modify the Plan or this Agreement and does not guarantee that the Time-Vesting RSUs will not be subject to interest and penalties under Section 409A of the Code.

(ii)    Notwithstanding the foregoing or any provision of the Plan or this Agreement to the contrary, if the Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no payments or deliveries in respect of any Awards that are “deferred compensation” subject to Section 409A of the Code shall be made to such Participant prior to the date that is six months after the date of such Participant’s “separation from service” within the meaning of Section 409A of the Code or, if earlier, the Participant’s date of death. All such delayed payments or deliveries will be paid or delivered (without interest) in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.

(d)    General Assets. All amounts credited in respect of the Time-Vesting RSUs to the book-entry account under this Agreement shall continue for all purposes to be part of the general assets of the Company. The Participant’s interest in such account shall make the Participant only a general, unsecured creditor of the Company.

(e)    Notices. Any notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax, pdf/email or overnight courier, or by postage-paid first-class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated by the Company’s records, or if to the Company, to the attention of the Chief Legal Officer at the Company’s principal executive office.

(f)    Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

(g)    No Rights to Employment, Directorship or Service. Nothing contained in this Agreement shall be construed as giving the Participant any right to be retained, in any position, as an employee, consultant or director of the Company or any of its Affiliates or shall interfere with or restrict in any way the rights of the Company or any of its Affiliates, which are hereby expressly reserved, to remove, terminate or discharge the Participant at any time for any reason whatsoever.

 

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(h)    Fractional Shares. In lieu of issuing a fraction of a share of Common Stock resulting from adjustment of the Time-Vesting RSUs pursuant to Section 9 or Section 11 of the Plan or otherwise, the Company shall be entitled to pay to the Participant an amount in cash equal to the Fair Market Value of such fractional share.

(i)    Beneficiary. The Participant may appoint any individual or legal entity in writing as his beneficiary to receive any Time-Vesting RSUs (to the extent not previously terminated or forfeited) under this Agreement upon the Participant’s death or becoming subject to a Disability. The Participant may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Participant must complete the designation of a beneficiary or revocation of a beneficiary by written notice (in the Company’s applicable form) to the Company under Section 8(e) hereof before the date of the Participant’s death. In the absence of a beneficiary designation, the Participant’s beneficiary shall be his or her spouse (or domestic partner if such status is recognized by the Company and in such jurisdiction), or if the Participant is otherwise unmarried at the time of death, his or her estate.

(j)    Successors. The terms of this Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and of the Participant and the beneficiaries, executors, administrators, heirs and successors of the Participant.

(k)    Entire Agreement. This Agreement and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in respect thereto. No change, modification or waiver of any provision of this Agreement shall be valid unless the same be in writing and signed by the parties hereto, except for any changes permitted without consent under the Plan. For the avoidance of doubt, the RSUs granted hereunder are in full settlement of any obligations under that certain Profits Units Award Agreement, dated March 13, 2019 (the “Profits Units Award Agreement”) by and between Zuffa Parent, LLC, the Participant and, for limited purposes, Endeavor Operating Company, LLC, and the Participant has no (and hereby waives any) future rights under the Profits Units Award Agreement.

(l)    Governing Law and Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction other than the State of Delaware.

(m)    Dispute Resolution. Upon the occurrence of any dispute or disagreement between the parties hereto arising out of or in connection with any term of this Agreement, the subject matter hereof, or the interpretation or enforcement hereof, the parties shall comply with the dispute resolution procedure set forth in Section 12 of the Employment Agreement.

(n)    Headings. The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

 

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(o)    Counterparts. This Agreement may be executed in one or more counterparts (including via facsimile and electronic image scan (pdf)), each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

(p)    Electronic Signature and Delivery. This Agreement may be accepted by return signature or by electronic confirmation. By accepting this Agreement, the Participant consents to the electronic delivery of prospectuses, annual reports and other information required to be delivered by U.S. Securities and Exchange Commission rules (which consent may be revoked in writing by the Participant at any time upon three business days’ notice to the Company, in which case subsequent prospectuses, annual reports and other information will be delivered in hard copy to the Participant).

(q)    Electronic Participation in Plan. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

(r)    Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, the Plan, this Agreement and the Time-Vesting RSUs will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent applicable laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

[Remainder of page intentionally blank]

 

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IN WITNESS WHEREOF, this Restricted Stock Unit Award Agreement has been executed by the Company and the Participant as of the day first written above.

 

ENDEAVOR GROUP HOLDINGS, INC.
By:   /s/ Jason Lublin
Name:   Jason Lublin
Title:   Chief Financial Officer
 
PARTICIPANT

/s/ Ariel Emanuel

Ariel Emanuel

[Signature Page to Restricted Stock Unit Award Agreement]

Exhibit 10.26

ENDEAVOR GROUP HOLDINGS, INC.

2021 INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”), is entered into as of May 3, 2021 (the “Date of Grant”), by and between Endeavor Group Holdings, Inc., a Delaware corporation (the “Company”), and Patrick Whitesell (the “Participant”). Capitalized terms used in this Agreement and not otherwise defined herein have the meanings ascribed to such terms in the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan, as amended, restated or otherwise modified from time to time in accordance with its terms (the “Plan”).

WHEREAS, the Company has adopted the Plan, pursuant to which Restricted Stock Units (“RSUs”) may be granted; and

WHEREAS, the Committee has determined that it is in the best interests of the Company and its stockholders to grant the RSUs provided for herein to the Participant on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, for and in consideration of the premises and the covenants of the parties contained in this Agreement, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree as follows:

 

1.

Grant of Restricted Stock Units.

(a)    Grant. The Company hereby grants to the Participant a grant of Performance-Vesting RSUs (each as defined below), on the terms and subject to the conditions set forth in this Agreement and as otherwise provided in the Plan. The Performance-Vesting RSUs shall vest in accordance with Section 2 hereof. The Performance-Vesting RSUs shall be credited to a separate book-entry account maintained for the Participant on the books of the Company.

(b)    Incorporation by Reference. The provisions of the Plan are incorporated herein by reference. Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan. The Committee shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its decision shall be binding and conclusive upon the Participant and the Participant’s beneficiary in respect of any questions arising under the Plan or this Agreement. The Participant acknowledges that the Participant has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.

 

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2.       Vesting; Settlement. Except as otherwise provided herein or otherwise determined by the Committee, the RSUs granted hereunder will become vested and settled as follows:

(a)    Performance-Vesting RSUs.

(i)    The Company hereby grants the Participant 4,166,667 RSUs as of the Date of Grant (the “Performance-Vesting RSUs”), on the conditions set forth in this Section 2(a)(i). Upon the achievement by the Company of a Common Stock Price that equals or exceeds each Stock Price Threshold during the Performance Share Eligibility Period (the date of such achievement, a “Stock Price Threshold Achievement Date”), the Company shall issue to the Participant following such Stock Price Threshold Achievement Date, a number of shares of Common Stock (the “Performance Shares”) equal to (A) the number of Performance-Vesting RSUs, multiplied by (B) the Initial Stock Price, divided by (C) the applicable Stock Price Threshold achieved. The Performance Shares achieved on a Stock Price Threshold Achievement Date shall be issued on, or as soon as reasonably practicable following, the Stock Price Threshold Achievement Date (but in any event on or prior to March 15 of the calendar year following the year in which the Stock Price Threshold Achievement Date occurs). For the avoidance of doubt, (x) subject to Section 3, the Performance-Vesting RSUs will remain outstanding through the end of the Performance Share Eligibility Period and will be settled in additional shares of Common Stock upon attainment of each Stock Price Threshold (provided that not more than one issuance of the Performance Shares shall be made in respect of each specific Stock Price Threshold achieved) and (y) the Participant shall not be eligible to receive any Performance Shares with respect to achievement of any Stock Price Threshold following the end of the Performance Share Eligibility Period.

(ii)    The number of Performance Shares issued following any vesting date shall be rounded down to the nearest whole share.

(iii)    One-third of the Performance Shares issued following any Stock Price Threshold Achievement Date shall be fully vested upon issuance and the remaining Performance Shares shall become vested in two equal annual installments on each of the first and second anniversaries of the applicable Stock Price Threshold Achievement Date, subject to the Participant’s continued employment with the Company or any of its Affiliates through the applicable vesting date. Notwithstanding anything to the contrary herein, to the extent the Company reasonably anticipates that the issuance of Performance Shares hereunder will violate Federal securities laws or other applicable law (within the meaning of Treasury Regulation 1.409A-2(b)(7)(ii) and any interpretative guidance thereunder), then such issuance may be delayed until the earliest date at which the Company reasonably anticipates that the issuance will not cause such violation.

 

3.

Termination of Employment.

(a)    In General. Except as otherwise provided herein or otherwise determined by the Committee, if the Participant’s employment with the Company and its Affiliates terminates for any reason, all Performance-Vesting RSUs and unvested Performance Shares shall be canceled immediately upon termination of employment with the Company and its Affiliates and the Participant shall not be entitled to receive any payments with respect thereto.

(b)    Performance-Vesting RSUs. Notwithstanding anything to the contrary contained in this Agreement, with respect to the Performance-Vesting RSUs, upon the date the Participant no longer is employed by the Company or any of its Affiliates for any reason (other than due to

 

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termination by the Company for Cause or by the Participant without Good Reason), the Company shall (i) remain obligated to settle any Performance-Vesting RSUs for which the Stock Price Threshold Achievement Date occurred prior to such termination of employment in Performance Shares in accordance with Section 2(a)(i), and (ii) issue to the Participant on such date of such termination of employment, a number of shares of Common Stock equal to the (A) (x) the number of Performance-Vesting RSUs, multiplied by (y) the Initial Stock Price, divided by (z) the Common Stock Price as of the date of such termination of employment, multiplied by (B) a percentage, represented by a fraction, the numerator of which is the amount that the Common Stock Price as of the date of such termination of employment exceeds the last Stock Price Threshold above the Initial Stock Price achieved by the Company (or, if no such Stock Price Threshold above the Initial Stock Price has been achieved, the Initial Stock Price), and the denominator of which equals $25.00, rounded down to the nearest whole share (such shares, the “Partial Performance Shares”). Any Performance-Vesting RSUs that become earned pursuant to this Section 3(b) shall be settled in the Partial Performance Shares on, or as soon as reasonably practicable following, the date of termination (but in any event on or prior to March 15 of the calendar year following the year in which the date of termination occurs). Notwithstanding anything to the contrary set forth herein, the Performance Shares described in this subsection (b) and the Partial Performance Shares shall be fully vested on the date of grant.

(c)    Performance Shares. Notwithstanding anything to the contrary contained in this Agreement, (i) upon the earliest to occur of (x) the consummation of a Change of Control and (y) the date the Participant no longer is employed by the Company or any of its Affiliates for any reason (other than due to termination by the Company or any of its Affiliates for Cause, by the Participant without Good Reason or due to death or Disability), 100% of the outstanding Performance Shares shall be vested upon the occurrence of such event, and (ii) if the Participant no longer is employed by the Company or any of its Affiliates due to the Participant’s death or Disability, the portion of each issuance of the Participant’s then-unvested Performance Shares, if any, that, absent termination, would have vested within one year following such termination of employment will become fully vested on the date of such termination of employment.

 

4.

Definitions.

(a)    “Common Stock Price” shall mean, at any applicable time of determination, the per share price of Common Stock of the Company, which for this purpose shall be equal to: (i) in the case of a Change of Control, the purchase price of a share of Common Stock in connection with (or implied by) such Change of Control, and (ii) at all other applicable times of determination, the volume weighted average price of a share of Common Stock on the primary exchange on which it is listed during the 30 consecutive trading days immediately preceding such applicable time of determination. The Common Stock Price shall be reduced by the Committee in good faith to take into account any extraordinary dividends and adjusted by the Committee in good faith to take into account any stock splits or similar corporate events, in each case, in accordance with Section 11 of the Plan.

(b)    “Cause” shall have the meaning set forth in the Employment Agreement.

(c)    “Disability” shall have the meaning set forth in the Employment Agreement.

 

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(d)     “Employment Agreement” means that certain Second Amended and Restated Term Employment Agreement, by and among the Participant, the Company and Endeavor Operating Company, LLC, effective as of the March 13, 2019. For the avoidance of doubt, the references to the Employment Agreement herein shall continue to apply regardless of whether or not the employment term under the Employment Agreement has expired.

(e)    “Good Reason” shall have the meaning set forth in the Employment Agreement.

(f)    “Initial Stock Price” shall mean $24.00.

(g)    “Performance Share Eligibility Period” means the period beginning on the Date of Grant and ending on the earlier of (x) the ten-year anniversary of the Date of Grant and (y) the date the Participant no longer is employed by the Company or any of its Affiliates for any reason.

(h)     “Stock Price Threshold” means each of $49.00 and each amount that is $25.00 more than the prior amount (i.e., $74.00, then $99.00, then $124.00, continuing indefinitely).

5.       Rights as a Stockholder. The Participant shall not be deemed for any purpose to be the owner of any shares of Common Stock underlying the Performance-Vesting RSUs unless, until and to the extent that (a) the Company shall have issued and delivered to the Participant the shares of Common Stock underlying the Performance-Vesting RSUs and (b) the Participant’s name shall have been entered as a stockholder of record with respect to such shares of Common Stock on the books of the Company. The Company shall cause the actions described in clauses (a) and (b) of the preceding sentence to occur promptly following settlement as contemplated by this Agreement, subject to compliance with applicable laws.

 

6.

Compliance with Legal Requirements.

(a)    Generally. The granting and settlement of the Performance-Vesting RSUs and the granting and vesting of the Performance Shares and Partial Performance Shares, and any other obligations of the Company under this Agreement, shall be subject to all applicable U.S. federal, state and local laws, rules and regulations, all applicable non-U.S. laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required. The Participant agrees to take all steps that the Committee or the Company determines are reasonably necessary to comply with all applicable provisions of U.S. federal and state securities law and non-U.S. securities law in exercising the Participant’s rights under this Agreement.

(b)    Tax Withholding.

(i)    In general. Vesting and settlement of the Performance-Vesting RSUs and the grant and vesting of the Performance Shares and Partial Performance Shares shall be subject to the Participant’s satisfying any applicable U.S. federal, state and local tax withholding obligations and non-U.S. tax withholding obligations. The Company shall have the right and is hereby authorized to withhold from any amounts payable to the Participant in connection with the Performance-Vesting RSUs, Performance Shares, Partial Performance Shares or otherwise the amount of any required withholding taxes in respect of the Performance-Vesting RSUs, Performance Shares or Partial Performance Shares, their settlement, vesting or any payment or transfer of the Performance-Vesting RSUs,

 

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Performance Shares or Partial Performance Shares or under the Plan and to take any such other action as the Committee or the Company deem necessary to satisfy all obligations for the payment of such withholding taxes (up to the maximum permissible withholding amounts).

(ii)    Withholding Tax Election. Notwithstanding the foregoing, by accepting this Award, the Participant understands and agrees that as a condition of the grant of the RSUs hereunder, the Participant (A) is required to, and hereby affirmatively elects to (the “Sell to Cover Election”), sell that number of shares of Common Stock with a value equal to (x) to the extent subject to income tax withholdings as an employee of the Company or any of its Affiliates, the amount necessary to satisfy all applicable tax withholding obligations with respect to any taxable event arising in connection with the Performance Vesting RSUs, Performance Shares or Partial Performance Shares (at the highest U.S. federal and applicable state tax withholding rate for supplemental income (or any successor thereto) or state equivalent, as applicable, or (y) to the extent not subject to income tax withholdings as an employee of the Company or any of its Affiliates, the product of (x) the amount of taxable income incurred with respect to any taxable event arising in connection with the Performance Vesting RSUs, Performance Shares or Partial Performance Shares and (y) the highest marginal U.S. federal and applicable state income tax rates that are applicable to the Participant (based on his state of residence), (B) to the extent subject to income tax withholdings as an employee of the Company or any of its Affiliates, agrees to execute any letter of instruction or agreement required by the Company’s transfer agent, stock plan administrator, bank, broker, nominee or other similar agent or representative (the “Agent”) to allow the Agent to timely remit the cash proceeds of such sale(s) to the Company. The Participant has carefully reviewed Section 6(b) and the Participant hereby represents and warrants that, as of the Date of Grant and the date he executes the Grant Notice, he is not aware of any material, nonpublic information with respect to the Company or any securities of the Company, is not subject to any legal, regulatory or contractual restriction that would prevent the Agent from conducting sales (other than any lock-up agreements in connection with the Company’s initial public offering or any limitations in any insider trading policy of the Company), does not have, and will not attempt to exercise, authority, influence or control over any sales of shares of Common Stock effected by the Agent pursuant to the Agreement, and is entering into the Agreement and this election to “sell to cover” in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 (regarding trading of the Company’s securities on the basis of material nonpublic information) under the Exchange Act. It is the Participant’s intent that this election to “sell to cover” comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c) under the Exchange Act. To effect Participant’s Sell to Cover Election pursuant to this Agreement, the Participant hereby acknowledges and agrees:

(A)    The Participant hereby appoints the Agent as the Participant’s agent and authorizes the Agent to sell on the open market at the then prevailing market price(s), on the Participant’s behalf, as soon as practicable on or after the shares of Common Stock are issued upon the vesting and/or settlement of the Performance-Vesting RSUs, Performance Shares or Partial Performance Shares, that number

 

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(rounded up to the next whole number) of the shares of Common Stock so issued necessary to generate proceeds to cover the amount elected in the Sell to Cover Election all applicable fees and commissions due to, or required to be collected by, the Agent with respect thereto.

(B)    The Participant hereby authorizes the Company and the Agent to cooperate and communicate with one another to determine the number of shares of Common Stock that must be sold pursuant to subsection (A) above.

(C)    The Participant understands that the Agent may effect sales as provided in subsection (A) above in one or more sales and that the average price for executions resulting from bunched orders will be assigned to the Participant’s account. In addition, the Participant acknowledges that it may not be possible to sell shares of Common Stock as provided by subsection (A) above due to (x) a legal or contractual restriction applicable to the Participant or the Agent, (y) a market disruption, or (z) rules governing order execution priority on the national exchange where the shares of Common Stock may be traded. The Participant further agrees and acknowledges that in the event the sale of shares of Common Stock would result in material adverse harm to the Company, as determined by the Company in its sole discretion, the Company may instruct the Agent not to sell shares of Common Stock as provided by subsection (A) above. In the event of the Agent’s inability to sell shares of Common Stock, the Participant will continue to be responsible for the timely payment to the Company and/or its Affiliates of all federal, state, local and foreign taxes that are required by applicable laws and regulations to be withheld, including but not limited to those amounts specified in subsection (A) above.

(D)    The Participant hereby agrees to execute and deliver to the Agent any other agreements or documents as the Agent reasonably deems necessary or appropriate to carry out the purposes and intent of this Section 6(b)(ii).

(E)    This Section 6(b)(ii) shall terminate not later than the date on which all tax withholding obligations arising in connection with the vesting and/or settlement of the Performance-Vesting RSUs, Performance Shares and Partial Performance Shares have been satisfied.

7.       Clawback. The Performance-Vesting RSUs, Performance Shares and Partial Performance Shares shall at all times be subject to any clawback or similar policy or program established by the Company, as may be amended from time to time (a “Clawback Policy”). In addition (and without limiting the Company’s rights and Participant’s obligations under any Clawback Policy), to the extent required by applicable law or the rules and regulations of the NYSE or any other securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted, the RSUs shall be subject (including on a retroactive basis) to clawback, forfeiture or similar requirements (and such requirements shall be deemed incorporated by reference into this Agreement).

 

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8.

Miscellaneous.

(a)    Transferability. The Performance-Vesting RSUs and unvested Performance Shares may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered (a “Transfer”) by the Participant other than by will or by the laws of descent and distribution, pursuant to a DRO or as otherwise permitted under Section 14(b) of the Plan; provided that the Committee hereby consents to and permits any transfers to Permitted Transferees in accordance with Section 14(b) of the Plan and agrees not to adopt any rules that would unduly limit such transfers, and this Agreement represents notice from the Committee that any such transfer would comply with the requirements of the Plan. Any attempted Transfer of the Performance-Vesting RSUs or unvested Performance Shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Performance-Vesting RSUs or unvested Performance Shares shall be null and void and without effect. The Company will not be required to (i) reflect on its books any Transfer of the Performance-Vesting RSUs or unvested Performance Shares in violation of this Agreement or (ii) treat as owner of the Performance-Vesting RSUs or unvested Performance Shares any purchaser or other transferee receiving the Performance-Vesting RSUs or unvested Performance Shares in such Transfer.

(b)    Waiver. Any right of the Company contained in this Agreement may be waived in writing by the Committee. No waiver of any right hereunder by any party shall operate as a waiver of any other right, or as a waiver of the same right with respect to any subsequent occasion for its exercise, or as a waiver of any right to damages. No waiver by any party of any breach of this Agreement shall be held to constitute a waiver of any other breach or a waiver of the continuation of the same breach.

(c)    Section 409A.

(i)    The Performance-Vesting RSUs and Performance Shares are intended to be exempt from, or compliant with, Section 409A of the Code. This Section 8(c)(i) does not create an obligation on the part of the Company to modify the Plan or this Agreement and does not guarantee that the Performance-Vesting RSUs and/or Performance Shares will not be subject to interest and penalties under Section 409A of the Code.

(ii)    Notwithstanding the foregoing or any provision of the Plan or this Agreement to the contrary, if the Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no payments or deliveries in respect of any Awards that are “deferred compensation” subject to Section 409A of the Code shall be made to such Participant prior to the date that is six months after the date of such Participant’s “separation from service” within the meaning of Section 409A of the Code or, if earlier, the Participant’s date of death. All such delayed payments or deliveries will be paid or delivered (without interest) in a single lump sum on the earliest date permitted under Section 409A of the Code that is also a business day.

 

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(d)    General Assets. All amounts credited in respect of the Performance-Vesting RSUs to the book-entry account under this Agreement shall continue for all purposes to be part of the general assets of the Company. The Participant’s interest in such account shall make the Participant only a general, unsecured creditor of the Company.

(e)    Notices. Any notices provided for in this Agreement or the Plan shall be in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax, pdf/email or overnight courier, or by postage-paid first-class mail. Notices sent by mail shall be deemed received three business days after mailing but in no event later than the date of actual receipt. Notices shall be directed, if to the Participant, at the Participant’s address indicated by the Company’s records, or if to the Company, to the attention of the Chief Legal Officer at the Company’s principal executive office.

(f)    Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

(g)    No Rights to Employment, Directorship or Service. Nothing contained in this Agreement shall be construed as giving the Participant any right to be retained, in any position, as an employee, consultant or director of the Company or any of its Affiliates or shall interfere with or restrict in any way the rights of the Company or any of its Affiliates, which are hereby expressly reserved, to remove, terminate or discharge the Participant at any time for any reason whatsoever.

(h)    Fractional Shares. In lieu of issuing a fraction of a share of Common Stock resulting from adjustment of the Performance-Vesting RSUs, Performance Shares or Partial Performance Shares pursuant to Section 9 or Section 11 of the Plan or otherwise, the Company shall be entitled to pay to the Participant an amount in cash equal to the Fair Market Value of such fractional share.

(i)    Beneficiary. The Participant may appoint any individual or legal entity in writing as his beneficiary to receive any Performance-Vesting RSUs, Performance Shares or Partial Performance Shares (to the extent not previously terminated or forfeited) under this Agreement upon the Participant’s death or becoming subject to a Disability. The Participant may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Participant must complete the designation of a beneficiary or revocation of a beneficiary by written notice (in the Company’s applicable form) to the Company under Section 8(e) hereof before the date of the Participant’s death. In the absence of a beneficiary designation, the Participant’s beneficiary shall be his or her spouse (or domestic partner if such status is recognized by the Company and in such jurisdiction), or if the Participant is otherwise unmarried at the time of death, his or her estate.

(j)    Successors. The terms of this Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and of the Participant and the beneficiaries, executors, administrators, heirs and successors of the Participant.

 

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(k)    Entire Agreement. This Agreement and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in respect thereto. No change, modification or waiver of any provision of this Agreement shall be valid unless the same be in writing and signed by the parties hereto, except for any changes permitted without consent under the Plan.

(l)    Governing Law and Venue. This Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction other than the State of Delaware.

(m)    Dispute Resolution. Upon the occurrence of any dispute or disagreement between the parties hereto arising out of or in connection with any term of this Agreement, the subject matter hereof, or the interpretation or enforcement hereof, the parties shall comply with the dispute resolution procedure set forth in Section 12 of the Employment Agreement.

(n)    Headings. The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.

(o)    Counterparts. This Agreement may be executed in one or more counterparts (including via facsimile and electronic image scan (pdf)), each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

(p)    Electronic Signature and Delivery. This Agreement may be accepted by return signature or by electronic confirmation. By accepting this Agreement, the Participant consents to the electronic delivery of prospectuses, annual reports and other information required to be delivered by U.S. Securities and Exchange Commission rules (which consent may be revoked in writing by the Participant at any time upon three business days’ notice to the Company, in which case subsequent prospectuses, annual reports and other information will be delivered in hard copy to the Participant).

(q)    Electronic Participation in Plan. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

(r)    Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant is subject to Section 16 of the Exchange Act, the Plan, this Agreement and Performance-Vesting RSUs, Performance Shares or Partial Performance Shares will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent applicable laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

[Remainder of page intentionally blank]

 

9


IN WITNESS WHEREOF, this Restricted Stock Unit Award Agreement has been executed by the Company and the Participant as of the day first written above.

 

ENDEAVOR GROUP HOLDINGS, INC.
By:  

/s/ Jason Lublin

Name:   Jason Lublin
Title:   Chief Financial Officer
PARTICIPANT

/s/ Patrick Whitesell

Patrick Whitesell

[Signature Page to Restricted Stock Unit Award Agreement]

Exhibit 10.27

Zuffa Parent, LLC

9601 Wilshire Boulevard

Beverly Hills, CA 90210

April 19, 2021

Ariel Emanuel

[Address]

Dear Mr. Emanuel:

For purposes of this letter agreement (the “Letter Agreement”) by and between Zuffa Parent, LLC (“Zuffa”), and Ariel Emanuel (“Grantee”), reference is hereby made to that certain Profits Units Award Agreement, dated March 13, 2019 (the “Award Agreement”) by and between Zuffa, you and, for limited purposes, Endeavor Operating Company, LLC, a Delaware limited liability company (“EOC”), pursuant to which Zuffa granted you rights to receive Future Incentive Units (as defined in the Award Agreement).

Notwithstanding anything to the contrary in the Award Agreement, for good and valuable consideration (including Zuffa and EOC’s consummation of those certain transactions contemplated by the Transaction Agreement between EOC and certain holders of equity interests in Zuffa (the “UFC Buyout”) and the benefits to you in connection therewith), the receipt and sufficiency of which are hereby acknowledged, Zuffa, EOC and Grantee hereby acknowledge and agree that (a) Grantee will be entitled to a grant of Future Incentive Awards with a value equal to $12,500,000 following the UFC Buyout and the initial public offering of EOC (the “IPO”) with respect to the achievement of Zuffa of one Applicable Future Incentive Threshold (as defined in the Award Agreement), (b) other than as set forth in subsection (a), (i) Grantee is not entitled to (and is not expected to be entitled to) any Future Incentive Awards in connection with the UFC Buyout or the IPO or any transactions related thereto and (ii) effective as of immediately prior to the closing of the IPO, the Award Agreement is terminated and all of Grantee’s rights to receive Future Incentive Units are hereby cancelled and forfeited without any payment owed to Grantee therefor. Grantee hereby (A) unconditionally, irrevocably and absolutely releases and forever discharges Zuffa, EOC and their affiliates from any claims or liabilities arising from, relating to, or in any way connected with the Award Agreement or the Future Incentive Units or any other rights in respect thereof (other than as set forth in subsection (a) above) and (B) represents that he has not assigned or transferred, or purported to assign or transfer, the Future Incentive Units (or any interest therein) to any other person or entity.

This Letter Agreement has been duly executed and delivered to Grantee and shall be binding upon and shall inure to the benefit of the parties and their successors and assigns. This Letter Agreement constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions and preliminary agreements. This Letter Agreement may not be amended except in writing executed by the parties hereto.

[Signature page follows.]


IN WITNESS WHEREOF, the parties hereto, each intending to be legally bound hereby, have caused this Letter Agreement to be executed as of the date first above written.

 

ZUFFA PARENT, LLC
By:  

/s/ Jason Lublin

  Its Authorized Signatory
ENDEAVOR OPERATING COMPANY, LLC
By:  

/s/ Jason Lublin

  Its Authorized Signatory
ARIEL EMANUEL

/s/ Ariel Emanuel

[Signature Page to Amendment to Profit Units Award Agreement]

Exhibit 10.28

 

                   Endeavor Operating Company, LLC           Endeavor Group Holdings, Inc.                       
  9601 Wilshire Boulevard
Beverly Hills, CA 90210
 

April 19, 2021

Ariel Emanuel

[Address]

Dear Mr. Emanuel:

For purposes of this letter agreement (the “Letter Agreement”) by and between Endeavor Operating Company, LLC, a Delaware limited liability company (“EOC”), Endeavor Group Holdings, Inc., a Delaware corporation (“EGH”), and Ariel Emanuel (“Grantee”), reference is hereby made to that certain Future Incentive Units Award Agreement, dated March 13, 2019 (the “Award Agreement”) by and between EOC, EGH, you and, for limited purposes, WME Iris Management Holdco II LLC, a Delaware limited liability Company, WME Iris Management V Holdco, LLC, a Delaware limited liability company and WME Holdco, LLC, a Delaware limited liability company, pursuant to which EOC and EGH granted you rights to receive Future Incentive Units (as defined in the Award Agreement).

Notwithstanding anything to the contrary in the Award Agreement, for good and valuable consideration (including EGH’s consummation of its initial public offering (the “IPO”) and the benefits to you in connection therewith), the receipt and sufficiency of which are hereby acknowledged, EOC, EGH and Grantee hereby acknowledge and agree that (a) Grantee is not entitled to (and is not expected to be entitled to) any Future Incentive Awards in connection with the IPO or any transactions related thereto and (b) effective as of immediately prior to the closing of the IPO, all of Grantee’s rights to receive Future Incentive Units are hereby cancelled and forfeited without any payment owed to Grantee therefor. Grantee hereby (a) unconditionally, irrevocably and absolutely releases and forever discharges EOC, EGH, and their affiliates from any claims or liabilities arising from, relating to, or in any way connected with Future Incentive Units or any other rights in respect thereof and (b) represents that he has not assigned or transferred, or purported to assign or transfer, the Future Incentive Units (or any interest therein) to any other person or entity.

Except as expressly modified by this Letter Agreement, all other terms, conditions and provisions of the Award Agreement (including, without limitation, those with respect to equity awards not related to the Future Incentive Units) shall remain in full force and effect. This Letter Agreement has been duly executed and delivered to Grantee and shall be binding upon and shall inure to the benefit of the parties and their successors and assigns. In the event of any conflict between this Letter Agreement and the Award Agreement, the terms and conditions of this Letter Agreement shall control. This Letter Agreement constitutes the entire understanding between the parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions and preliminary agreements. This Letter Agreement may not be amended except in writing executed by the parties hereto.

[Signature page follows.]


IN WITNESS WHEREOF, the parties hereto, each intending to be legally bound hereby, have caused this Letter Agreement to be executed as of the date first above written.

 

ENDEAVOR OPERATING COMPANY, LLC
By:  

/s/ Jason Lublin

  Its Authorized Signatory
ENDEAVOR GROUP HOLDINGS, INC.
By:  

/s/ Jason Lublin

  Its Authorized Signatory
WME IRIS MANAGEMENT HOLDCO II, LLC
By:  

/s/ Jason Lublin

  Its Authorized Signatory
WME IRIS MANAGEMENT V HOLDCO, LLC
By:  

/s/ Jason Lublin

  Its Authorized Signatory
WME HOLDCO, LLC
By:  

/s/ Jason Lublin

  Its Authorized Signatory
ARIEL EMANUEL

/s/ Ariel Emanuel

[Signature Page to Amendment to Future Incentive Units Award Agreement]

Exhibit 31.1

CERTIFICATIONS

I, Ariel Emanuel, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021 of Endeavor Group Holdings, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  (a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b)

[omitted];

 

  (c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 2, 2021     By:   /s/ Ariel Emanuel
      Ariel Emanuel
      Chief Executive Officer
      (principal executive officer)

Exhibit 31.2

CERTIFICATIONS

I, Jason Lublin, certify that:

 

1.

I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021 of Endeavor Group Holdings, Inc.;

 

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

 

  (a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b)

[omitted];

 

  (c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: June 2, 2021     By:   /s/ Jason Lublin
      Jason Lublin
     

Chief Financial Officer

(principal financial officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Endeavor Group Holdings, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

  (2)

the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: June 2, 2021     By:   /s/ Ariel Emanuel
      Ariel Emanuel
     

Chief Executive Officer

(principal executive officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Endeavor Group Holdings, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

  (2)

the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

Date: June 2, 2021     By:   /s/ Jason Lublin
      Jason Lublin
     

Chief Financial Officer

(principal financial officer)