SFX Entertainment (SFXE) Enters Spotify Settlement Agreement
On December 17, 2015, SFX Entertainment, Inc. (Nasdaq: SFXE), a Delaware corporation, and its wholly owned subsidiary Beatport LLC (“Beatport”) entered into a settlement agreement (the “Spotify Settlement Agreement”) with Spotify AB (“Spotify”) and Mr. Robert F.X. Sillerman, the Company’s Chairman and Chief Executive Officer. The Spotify Settlement Agreement terminates that certain commercial agreement by and among the Company, Beatport, and Spotify, dated July 14, 2015 (the “Content License Agreement”), save for certain payment provisions, and sets forth the terms by which the Company will repay to Spotify the $10.0 million recoupable advance (the “Advance”) which was paid to the Company pursuant to the Content License Agreement. The Spotify Settlement Agreement also includes a mutual release of claims under the Content License Agreement, except with respect to payment obligations.
Pursuant to the Spotify Settlement Agreement, the Company paid the first $2.5 million of the Advance on December 17, 2015, which payment obligation was personally guaranteed by Mr. Sillerman. The remaining $7.5 million of the Advance is payable to Spotify in installments as follows: (i) $5.0 million will be paid in twelve equal, twice monthly installments beginning on January 15, 2016, and ending on July 1, 2016, and (ii) the balance of $2.5 million will be paid on or before July 15, 2016. The outstanding amount of the Advance accrues interest at a rate of 2.5% per annum payable in arrears on a twice monthly basis. Under the Spotify Settlement Agreement, the occurrence of certain events of default or a sale of all or substantially all of Beatport’s assets will accelerate the payment of all or part of the Advance.