UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

     
Date of Report (Date of Earliest Event Reported):   April 29, 2010

FX Real Estate and Entertainment Inc.
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(Exact name of registrant as specified in its charter)

     
Delaware 001-33902 36-4612924
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
of incorporation) File Number) Identification No.)
      
650 Madison Avenue, 15th Floor, New York, New York   10022
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(Address of principal executive offices)
  ___________
(Zip Code)
     
Registrant’s telephone number, including area code:   212-796-8174

Not Applicable
______________________________________________
Former name or former address, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 1.01 Entry into a Material Definitive Agreement.

On May 3, 2010, FX Real Estate and Entertainment Inc. (the "Company") entered into subscription agreements (the "Subscription Agreements") with certain of its directors, executive officers and greater than 10% stockholders (as named below in Item 3.02, the "Purchasers"), pursuant to which the Purchasers purchased from the Company an aggregate of 150 Units (the "Units") at a purchase price of $1,000 per Unit. Each Unit consists of (x) one share of the Company’s newly issued Series A Convertible Preferred Stock, $0.01 par value per share (the "Series A Convertible Preferred Stock"), and (y) a warrant to purchase up to 11,448.19 shares of the Company’s common stock (such number of shares being equal to the product of (i) the initial stated value of $1,000 per share of Series A Convertible Preferred Stock divided by the weighted average closing price per share of the Company’s common stock as reported on the Pink Sheets over the 30-day period immediately preceding the closing date (the "Closing Price") and (ii) 200%) at an exercise price of $0.2621 per share (such exercise price representing 150% of the Closing Price) (the "Warrants"). The Warrants are exercisable for a period of 5 years. The Company generated aggregate proceeds of $150,000 from the sale of the Units pursuant to the Subscription Agreements. The Company intends to use the proceeds to fund working capital requirements and for general corporate purposes.

As previously reported in the Company’s Current Report on Form 8-K dated February 11, 2010, as filed with the Securities and Exchange Commission on February 18, 2010 (the "February 2010 Form 8-K") , the Company created 1,500 shares of Series A Convertible Stock by filing a Certificate of Designation (the "Certificate of Designation") with the Secretary of State of the State of Delaware thereby amending its Amended and Restated Certificate of Incorporation, as amended. The Company has issued and sold thus far an aggregate of 1,299 shares of the Series A Convertible Preferred Stock as part of the Units and the sale of other units reported in the February 2010 Form 8-K, the Company’s Current Report on Form 8-K dated March 5, 2010, as filed with the Securities and Exchange Commission on March 11, 2010 (the "March 5, 2010 Form 8-K"), the Company’s Current Report on Form 8-K dated March 11, 2010, as filed with the Securities and Exchange Commission on March 17, 2010, the Company’s Current Report on Form 8-K dated April 5, 2010, as filed with the Securities and Exchange Commission on April 9, 2010 and has 201 authorized shares of Series A Convertible Preferred Stock that remain available for future issuance under the Certificate of Designation. The designation, powers, preferences and rights of the shares of Series A Convertible Preferred Stock and the qualifications, limitations and restrictions thereof are contained in the Certificate of Designation, the full text of which is filed with the March 5, 2010 Form 8-K as Exhibit 3.1, and are summarized in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as filed with the Securities and Exchange Commission on April 14, 2010.

The foregoing description of the Subscription Agreements and the Warrants is not complete and is qualified in its entirety by reference to the full text of the form of Subscription Agreement and the form of Warrant, copies of which are filed with the February 2010 Form 8-K as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.





Item 3.02 Unregistered Sales of Equity Securities.

Pursuant to the Subscription Agreements described in Item 1.01 above, the Company sold the following equity securities in a private placement:

• Laura Baudo Sillerman, the spouse of Robert F.X. Sillerman, the Company’s Chairman and Chief Executive Officer, purchased 50 Units.

• Paul C. Kanavos, the Company’s President, and his spouse, Dayssi Olarte de Kanavos, purchased 50 Units.

• TTERB Living Trust, an affiliate of Brett Torino, a greater than 10% stockholder of the Company, purchased 50 Units.

These sales of securities were made in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering.





Item 8.01 Other Events.

On April 29, 2010, the Company was notified that it has been named as a nominal defendant in a derivative lawsuit filed on April 28, 2010 by stockholders The Huff Alternative Fund, L.P. and The Huff Alternative Parallel Fund, L.P. (collectively, "Huff") on behalf of the Company in the New York Supreme Court in Manhattan, New York (Index No. 650338-10) against the Company’s directors Harvey Silverman, Michael J. Meyer, John D. Miller, Robert Sudack, Paul C. Kanavos and Robert F.X. Sillerman, and Brett Torino, a stockholder and former officer of the Company.

The filing of the lawsuit was precipitated by the Company’s Las Vegas subsidiary’s, namely, FX Luxury Las Vegas I, LLC (the "Las Vegas Subsidiary"), previously reported filing on April 21, 2010 of a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code (the "Chapter 11 Bankruptcy Proceeding") in the United States Bankruptcy Court for the District of Nevada (Case No. 10-17015) pursuant to the terms and conditions of the Las Vegas Subsidiary’s Lock Up and Plan Support Agreement dated as of October 23, 2009 (as amended, the "Lock Up Agreement") with the first lien lenders under the Las Vegas Subsidiary’s mortgage loans, and two corporate affiliates (LIRA Property Owner, LLC and its parent LIRA LLC; collectively, the "Newco Entities") of Messrs. Sillerman, Kanavos and Torino.

The Lock Up Agreement contemplates the orderly liquidation of the Las Vegas Subsidiary in the Chapter 11 Bankruptcy Proceeding by disposing of its Las Vegas property (approximately 17.72 contiguous acres of real property located at the southeast corner of Las Vegas Boulevard and Harmon Avenue in Las Vegas, Nevada) for the benefit of the Las Vegas Subsidiary’s (and its predecessor entities’) creditors either pursuant to an auction sale for at least $256 million or, if the auction sale is not completed, pursuant to a prearranged sale to the Newco Entities under the terms of the Chapter 11 Bankruptcy Proceeding’s plan of liquidation. The Las Vegas property constitutes substantially all of the Company’s business.

Prior to filing its lawsuit, on April 14, 2010, Huff made a formal demand upon the Company’s Board of Directors to, among other things, terminate and cease all efforts in furtherance of the Lock Up Agreement and commence an action against the defendants for alleged breaches of fiduciary duties of care and loyalty as set forth in its lawsuit and summarized below.

In its lawsuit, Huff alleges that such director defendants and stockholder defendant, as a former officer of the Company, breached their fiduciary duties of care and loyalty to the Company, its creditors and its non defendant stockholders by, among other things, (i) committing or permitting acts of misconduct such as self-dealing and disloyalty, without justifiable excuse, (ii) causing the Company to be contractually bound to transfer the Las Vegas property to the Newco Entities and (iii) usurping various corporate opportunities with respect to the Las Vegas property for which Huff is seeking on behalf of the Company damages of not less not $100 million, plus punitive damages. In addition, Huff alleges substantially the same claims against defendants Messrs. Kanavos and Torino for which Huff is seeking on behalf of the Company damages of not less than $50 million, plus punitive damages.

The Company was formally served with the lawsuit on May 5, 2010. The Company believes the lawsuit is without merit and intends to vigorously defend against it.






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 hereunto duly authorized.

         
    FX Real Estate and Entertainment Inc.
          
May 5, 2010   By:   Mitchell J. Nelson
       
        Name: Mitchell J. Nelson
        Title: Executive Vice President, General Counsel and Secretary