MARQUEE GROUP INC, SC 13E4, 1997-07-23

MARQUEE GROUP INC
SC 13E4, 1997-07-23
MANAGEMENT CONSULTING SERVICES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
-------------
THE MARQUEE GROUP, INC.
(Name of the Issuer)
THE MARQUEE GROUP, INC.
(Name of Person(s) Filing Statement)
WARRANTS
(Title of Class of Securities)
570906115
(CUSIP Number of Class of Securities)
ROBERT M. GUTKOWSKI, PRESIDENT
888 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
(212) 728-2000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
Copy to:
AMAR BUDARAPU, ESQ.
BAKER & MCKENZIE
805 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 751-5700
JULY 23, 1997
(Date Tender Offer First Published, Sent or Given to Security Holders)
-------------
CALCULATION OF FILING FEE

- -----------------------------------------------------------------------------
TRANSACTION VALUATION(1) AMOUNT OF FILING FEE(2)
$10,168,114.50 $2033.62
- -----------------------------------------------------------------------------

(1) Estimated solely for purposes of calculating the filing fee. Assumes
purchase of all 4,519,162 outstanding warrants at $2.25 per warrant.
(2) Calculated according to Rule 0-11(b)(1) under the Securities Exchange
Act of 1934, as amended, based upon the transaction valuation
multiplied by one fiftieth of one percent.

[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount Previously Paid: --------------
Filing Party: --------------
Form or Registration No.: --------------
Date Filed: --------------
==============================================================================

<PAGE>

ITEM 1. SECURITY AND ISSUER.

(a) The name of the issuer is The Marquee Group, Inc., a Delaware
corporation (the "Company"), which has its principal executive
offices at 888 Seventh Avenue, New York, New York 10019, telephone
number (212) 728-2000.

(b) The information set forth in the front cover page, "Introduction,"
"Section 1. Purpose of the Offer; Certain Effects of the Offer;
Plans of the Company After the Offer," "Section 4. Expiration Date;
Extension of the Offer" and "Section 12. Transactions and
Arrangements Concerning the Warrants" of the Offer to Purchase, a
copy of which is attached hereto as Exhibit (a)(1) (the "Offer to
Purchase"), is incorporated herein by reference.

(c) The information set forth in the front cover page, "Introduction,"
"Section 1. Purpose of the Offer; Certain Effects of the Offer;
Plans of the Company After the Offer" and "Section 9. Price Range of
Warrants" of the Offer to Purchase is incorporated herein by
reference.

(d) This statement is being filed by the issuer.

ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a)-(b) The information set forth in "Section 11. Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.

ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.

(a)-(j) The information set forth in "Section 1. Purpose of the Offer;
Certain Effects of the Offer; Plans of the Company After the Offer"
of the Offer to Purchase is incorporated herein by reference.

ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.

The information set forth in "Section 12. Transactions and Arrangements
Concerning the Warrants" of the Offer to Purchase is incorporated herein by
reference.

ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.

The information set forth in "Section 1. Purpose of the Offer; Certain
Effects of the Offer; Plans of the Company After the Offer" and "Section 12.
Transactions and Arrangements Concerning the Warrants" of the Offer to
Purchase is incorporated herein by reference.

ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.

The information set forth in "Section 14. Fees and Expenses" of the Offer
to Purchase is incorporated herein by reference.

ITEM 7. FINANCIAL INFORMATION.

(a)-(b) The information set forth in "Section 10. Certain Information
Concerning the Company" of the Offer to Purchase and in the sections
entitled "Capitalization," "Unaudited Pro Forma Condensed Combined
Financial Statements" and "Index to Financial Statements" contained
in Exhibit (g) hereto is incorporated herein by reference.

ITEM 8. ADDITIONAL INFORMATION.

(a) The information set forth in "Section 12. Transactions and
Arrangements Concerning the Warrants" of the Offer to Purchase is
incorporated herein by reference.

(b) The information set forth in "Section 3. Certain Legal Matters;
Regulatory and Foreign Approvals; No Appraisal Rights" of the Offer
to Purchase is incorporated herein by reference.

2
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(c) The information set forth in "Section 1. Purpose of the Offer;
Certain Effects of the Offer; Plans of the Company After the Offer"
of the Offer to Purchase is incorporated herein by reference.

(d) Not applicable.

(e) Reference is hereby made to the Offer to Purchase and the related
Letter of Transmittal, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively, and incorporated in their
entirety herein by reference.

ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.

(a)(1) Form of Offer to Purchase dated July 23, 1997.

(a)(2) Form of Letter of Transmittal.

(a)(3) Form of Notice of Guaranteed Delivery.

(a)(4) Form of letter to brokers, dealers, commercial banks, trust
companies and other nominees dated July 23, 1997.

(a)(5) Form of letter to clients for use by brokers, dealers, commercial
banks, trust companies and other nominees dated July 23, 1997.

(a)(6) Letter to holders of Warrants dated July 23, 1997.

(a)(7) Form of press release dated July 23, 1997.

(a)(8) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.

(b) None.

(d) None.

(e) None.

(f) None.

(g) Preliminary prospectus of the Company relating to the Stock
Offering.

3
<PAGE>

After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.

July 23, 1997 THE MARQUEE GROUP, INC.,
a Delaware corporation

By: /s/ Robert M. Gutkowski
-----------------------------
Robert M. Gutkowski
President and Chief
Executive Officer

4
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EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- -----------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Form of Offer to Purchase dated July 23, 1997.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of letter to brokers, dealers, commercial banks, trust companies and other nominees dated July
23, 1997.
(a)(5) Form of letter to clients for use by brokers, dealers, commercial banks, trust companies and other
nominees dated July 23, 1997.
(a)(6) Letter to holders of Warrants dated July 23, 1997.
(a)(7) Form of press release dated July 23, 1997.
(a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(g) Preliminary prospectus of the Company relating to the Stock Offering.
</TABLE>

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THE MARQUEE GROUP, INC.

[MARQUEE GROUP LOGO]

OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING WARRANTS,
EACH EXERCISABLE AT $7.50 PER SHARE OF COMMON STOCK,

$2.25 PER WARRANT

- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON THURSDAY, AUGUST 21, 1997, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------

The Marquee Group, Inc., a Delaware corporation (the "Company"), is
offering to purchase all of its outstanding redeemable warrants (the
"Warrants"), at a price, net to the seller in cash, of $2.25 per Warrant (the
"Purchase Price"), upon the terms and subject to the conditions set forth
herein and in the related Letter of Transmittal (which together constitute
the "Offer"). Each Warrant entitles the holder thereof to purchase one share
of Common Stock, $.01 par value per share ("Common Stock"), of the Company at
a price of $7.50 per share, subject to adjustment, from the date of issuance
until December 4, 2001, unless redeemed earlier.

As of July 16, 1997, the Company had issued and outstanding 4,519,162
Warrants. The Warrants are quoted on The Nasdaq Stock Market's SmallCap
Market ("Nasdaq SmallCap Market") under the symbol "MRQEW" and listed on the
Boston Stock Exchange under the symbol "MRT.WS." On July 21, 1997, the
closing sales price of the Warrants on the Nasdaq SmallCap Market was $1.88
per Warrant. See Section 9. WARRANTHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE WARRANTS.

--------------------

THE OFFER IS CONDITIONED UPON A MINIMUM OF 3,200,000 WARRANTS BEING
TENDERED AND NOT WITHDRAWN AND UPON OBTAINING FINANCING OR COMPLETING THE
COMPANY'S STOCK OFFERING (AS DEFINED HEREIN). IN ADDITION, THE OFFER IS ALSO
SUBJECT TO OTHER CONDITIONS. SEE SECTION 8.

--------------------

THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION AS TO WHETHER ANY WARRANTHOLDER SHOULD TENDER ANY OR ALL OF
SUCH WARRANTHOLDER'S WARRANTS PURSUANT TO THE OFFER. EACH WARRANTHOLDER MUST
MAKE HIS, HER OR ITS OWN DECISION WHETHER TO TENDER WARRANTS AND, IF SO, HOW
MANY WARRANTS TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR
EXECUTIVE OFFICER OF THE COMPANY CURRENTLY INTENDS TO TENDER WARRANTS
PURSUANT TO THE OFFER.

--------------------

THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR THE
ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

--------------------

The date of this Offer to Purchase is July 23, 1997.

<PAGE>

IMPORTANT

Any warrantholder desiring to tender all or any portion of such holder's
Warrants should either (a) complete and sign the Letter of Transmittal or a
facsimile thereof in accordance with the instructions in the Letter of
Transmittal, and mail or deliver it and any other required documents
(including the certificates representing the Warrants to be tendered) to
Continental Stock Transfer & Trust Company, who will act as depositary and
escrow agent for the Offer (the "Depositary"), or (b) request such holder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such holder. Any warrantholder whose Warrants are registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee must contact such person if such holder desires to tender Warrants.
Any warrantholder who desires to tender Warrants and whose certificates for
such Warrants are not immediately available for delivery to the Depositary,
should tender such Warrants by following the procedures for guaranteed
delivery set forth in Section 5.

Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to Georgeson & Company Inc. (the "Information
Agent") at the address and telephone number set forth on the back cover of
this Offer to Purchase.

NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER WARRANTHOLDERS SHOULD TENDER OR REFRAIN FROM TENDERING
WARRANTS PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER
THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY.................................................................................. 4
INTRODUCTION............................................................................. 6
SPECIAL FACTORS.......................................................................... 7
Section 1. Purpose of the Offer; Certain Effects of the Offer; Plans of the Company
After the Offer............................................................. 7
Section 2. Certain Federal Income Tax Consequences...................................... 9
Section 3. Certain Legal Matters; Regulatory and Foreign Approvals; No Appraisal
Rights...................................................................... 10
THE OFFER................................................................................ 10
Section 4. Expiration Date; Extension of the Offer...................................... 10
Section 5. Procedure for Tendering of Warrants.......................................... 11
Proper Tender of Warrants................................................... 11
Signature Guarantees and Method of Delivery................................. 11
Federal Backup Withholding.................................................. 11
Guaranteed Delivery......................................................... 11
Determinations of Validity of Warrants; Rejection of Warrants; Waiver of
Defects; No Obligation to Give Notice of Defects........................... 12
Section 6. Withdrawal Rights............................................................ 12
Section 7. Acceptance for Payment of Warrants and Payment of Purchase Price ............ 13
Section 8. Certain Conditions of the Offer.............................................. 13
Section 9. Price Range of Warrants...................................................... 15
Section 10. Certain Information Concerning the Company.................................. 15
General.................................................................... 15
Summary Consolidated Financial Data........................................ 16
Capitalization............................................................. 18
Additional Information..................................................... 19
Section 11. Source and Amount of Funds.................................................. 20
Section 12. Transactions and Arrangements Concerning the Warrants....................... 20
Section 13. Extension of the Tender Period; Termination; Amendments..................... 21
Section 14. Fees and Expenses........................................................... 22
Section 15. Miscellaneous............................................................... 23
SCHEDULE A. Directors and Executive Officers of the Company.............................. A-1
</TABLE>

<PAGE>
SUMMARY

This summary is provided solely for the convenience of the warrantholders
and is qualified in its entirety by reference to the full text and more
specific details contained in this Offer to Purchase and the related Letter
of Transmittal and any amendments hereto and thereto.

The Company ................... The Marquee Group, Inc.

Warrants ...................... Each Warrant entitles the holder thereof to
purchase one share of Common Stock at a
price of $7.50 per share, subject to
adjustment, from the date of issuance until
December 4, 2001, unless redeemed earlier.
See Section 12.

Number of Warrants ............ 4,519,162 (all of the Warrants outstanding).

Purchase Price ................ $2.25 per Warrant, net to the seller in
cash, upon the terms and conditions set
forth herein and in the Letter of
Transmittal. See Section 8.

Expiration Date of Offer ...... August 21, 1997, at 5:00 p.m., New York City
time, unless extended.

How to Tender Warrants ........ See Section 5. For further information, call
the Information Agent or consult your broker
for assistance.

Withdrawal Rights ............. Tendered Warrants may be withdrawn at any
time until the Expiration Date of the Offer,
and may also be withdrawn after September
18, 1997 unless previously accepted for
payment by the Company. See Section 4 and
Section 6.

Conditions to Offer ........... The Offer is conditioned upon a minimum
number of 3,200,000 Warrants tendered and
not withdrawn and obtaining financing or
completing the Stock Offering. In addition,
the Offer is also subject to other
conditions. See Section 8.

Purpose and Effects of Offer .. The Company is making the Offer to eliminate
the potential dilutive effect that would
occur if the Warrants are exercised by the
holders thereof on or before December 4,
2001, the expiration date of the Warrants.
The Offer also gives warrant holders the
opportunity to sell their Warrants at a
premium over the market price prevailing
prior to the announcement of the Offer and
without the usual transaction costs
associated with a market sale. See Section
1. The Company's purchase of Warrants
pursuant to the Offer will reduce the number
of warrantholders and the number of Warrants
outstanding, which may result in lack of
liquidity in the market for, and the
termination of the listing or quotation of,
any remaining Warrants.

<PAGE>

Market Price of Warrants ...... On July 21, 1997, the closing sales price of
the Warrants on the Nasdaq SmallCap Market
was $1.88 per Warrant. See Section 9. On
July 21, 1997, the closing sales price of
the Company's Common Stock on the Nasdaq
SmallCap Market was $6.13 per share.
Warrantholders are urged to obtain a current
market quotation. See Section 1.

Brokerage Commissions ......... Not payable by warrantholders.

Stock Transfer Tax ............ None, except as provided in Instruction 3 of
the Letter of Transmittal and Section 7.

Payment Date .................. As soon as practicable after the Expiration
Date of the Offer.

Further Information ........... Any questions, requests for assistance or
requests for additional copies of this Offer
to Purchase, the Letter of Transmittal or
other materials relating to the Offer may be
obtained by contacting the Information Agent
at the address and telephone number set
forth on the back cover of this Offer to
Purchase.

<PAGE>

INTRODUCTION

As of July 16, 1997, the Company had issued and outstanding 4,519,162
Warrants, which were held by 61 record holders and approximately 1,370
beneficial owners. The Warrants are quoted on the Nasdaq SmallCap Market
under the symbol "MRQEW" and listed on the Boston Stock Exchange under the
symbol "MRT.WS." On July 21, 1997, the closing sales price of the Warrants on
the Nasdaq SmallCap Market was $1.88 per Warrant. See Section 9.
WARRANTHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE
WARRANTS.

THE OFFER IS CONDITIONED UPON A MINIMUM OF 3,200,000 WARRANTS BEING
TENDERED AND NOT WITHDRAWN AND UPON OBTAINING FINANCING OR COMPLETING THE
STOCK OFFERING. IN ADDITION, THE OFFER IS ALSO SUBJECT TO OTHER CONDITIONS.
SEE SECTION 8.

THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE NO
RECOMMENDATION AS TO WHETHER ANY WARRANTHOLDER SHOULD TENDER ANY OR ALL OF
SUCH HOLDER'S WARRANTS PURSUANT TO THE OFFER. EACH WARRANTHOLDER MUST MAKE
HIS, HER OR ITS OWN DECISION WHETHER TO TENDER WARRANTS AND, IF SO, HOW MANY
WARRANTS TO TENDER. AT THE COMPANY'S REQUEST, ITS DIRECTORS AND EXECUTIVE
OFFICERS HAVE STATED THAT THEY DO NOT CURRENTLY INTEND TO TENDER THEIR
WARRANTS UNLESS THE COMPANY IS UNABLE TO MEET THE CONDITION FOR THE MINIMUM
NUMBER OF WARRANTS TENDERED. NOTWITHSTANDING THE FOREGOING, SUCH DIRECTORS
AND EXECUTIVE OFFICERS MAY TENDER OR NOT TENDER THEIR WARRANTS AT THEIR
DISCRETION.

Warrantholders are not under any obligation to accept the Offer or to
remit the Warrants to the Company pursuant to the Offer. Tendering
warrantholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to the Instructions to the Letter of
Transmittal, stock transfer taxes on the purchase of Warrants by the Company.
The Company will pay all charges and expenses of the Depositary and
Information Agent incurred in connection with the Offer. ANY TENDERING
WARRANTHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE AND SIGN THE SUBSTITUTE
FORM W-9 THAT IS INCLUDED IN THE LETTER OF TRANSMITTAL (OR, IN THE CASE OF A
FOREIGN INDIVIDUAL, FORM W-8 OBTAINABLE FROM THE DEPOSITARY) MAY BE SUBJECT
TO REQUIRED U.S. FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF THE GROSS
PROCEEDS PAYABLE TO SUCH WARRANTHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER.
SEE SECTION 5.

The address of the principal executive offices of the Company is 888
Seventh Avenue, New York, New York 10019.

<PAGE>

SPECIAL FACTORS

SECTION 1. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER; PLANS OF THE
COMPANY AFTER THE OFFER

Each Warrant is exercisable for one share of Common Stock at a price of
$7.50 per share, subject to adjustment in certain events. Of the 4,519,162
Warrants currently outstanding, 3,852,500 were issued in December 1996 in the
Company's initial public offering (the "IPO") and were registered under the
Securities Act of 1933, as amended (the "Securities Act"). The remaining
666,662 Warrants were issued in a private placement transaction exempt from
the registration requirements of the Securities Act, upon the conversion of
certain debentures that were issued prior to the IPO. See Section 12. To
date, neither the Warrants issued in the private placement transaction nor
the shares of Common Stock into which such Warrants are exercisable have been
registered under the Securities Act.

On July 16, 1997, there were 4,519,162 Warrants and 8,769,162 shares of
Common Stock issued and outstanding. On such date, the Warrants were held by
61 record holders and approximately 1,300 beneficial owners. If all
outstanding Warrants were exercised for shares of Common Stock on a
one-for-one basis, the Common Stock into which such Warrants were converted
would represent approximately 34.0% of the issued and outstanding Common
Stock of the Company (excluding the effect of the exercise or conversion of
the Company's other outstanding options). This percentage represents a
significant potential dilution of the Common Stock upon exercise of the
Warrants on or before December 4, 2001, the expiration date of the Warrants.

The Company is making the Offer to eliminate the potential dilutive effect
that would occur if the Warrants are exercised by the holders thereof. This
potential dilutive effect was of concern to the proposed managing
underwriters of the Stock Offering, who requested that the Company retire all
or a substantial portion of the Warrants as a condition to the Stock
Offering. In addition, because of the reduction in potential dilution if the
Offer is completed, the percentage of Common Stock held by directors and
executive officers of the Company will increase on a fully diluted basis upon
consummation of the Offer.

Owners of the Warrants are not under any obligation to accept the Offer to
remit their Warrants to the Company pursuant to the Offer. Warrants that the
Company acquires pursuant to the Offer will be retired and will not be
reissued. If fewer than all of the Warrants are purchased pursuant to the
Offer, the Company may, in its sole discretion, purchase any then outstanding
Warrants through privately negotiated transactions, open market purchases,
another tender offer or otherwise, on such terms and at such prices as the
Company may determine from time to time, the terms of which could be the same
as, or more or less favorable to warrantholders than, the terms of the Offer.
Any possible future purchases of Warrants by the Company will depend on many
factors, including the market price (if any) of the Warrants, the market
price of the Common Stock, the Company's business and financial position,
alternative investment opportunities available, the results of the Offer and
general economic and market conditions. However, Rule 13e-4 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prohibits
the Company and its affiliates from purchasing any Warrants, other than
pursuant to the Offer, until at least ten business days after the Expiration
Date.

The Board of Directors (including four directors who are not employees of
the Company) has unanimously authorized the Offer. The Company is exploring,
through its principal financial advisor, financing for this Offer, which may
take the form of a short-term loan or other indebtedness, or it will fund the
purchase of Warrants through a public offering of its Common Stock (the
"Stock Offering"), if successful. The Company has filed a Registration
Statement with the Commission with respect to the Stock Offering. The Company
anticipates that any indebtedness incurred in financing the Offer will be
repaid with the proceeds of the Stock Offering. The Stock Offering is
conditioned upon the consummation of the Offer and the transactions
contemplated by the ProServ Acquisition Agreements (as defined herein), and
the Offer is conditioned upon obtaining financing or completing the Stock
Offering. See Section 8. In the event that the Company incurs indebtedness to
finance the Offer, the Company will amend this Offer to Purchase to provide
the material terms of any such financing arrangement.

The Company believes that the Offer is fair to warrantholders. In
particular, the Offer gives warrantholders the opportunity to sell their
Warrants at a 20% premium over the closing sales price of the

<PAGE>

Warrants on July 21, 1997. The Offer will also provide warrantholders who are
considering a sale of all or a portion of their Warrants the opportunity to
sell their Warrants for cash without the usual transaction costs associated
with open market sales. However, neither the Company nor the Board of
Directors has received any report, opinion or appraisal that is materially
related to the Offer, including, but not limited to, any report, opinion or
appraisal relating to the consideration or the fairness of the consideration
to be offered to the holders of the Warrants or the fairness of such
transaction to the Company. Similarly, no directors of the Company have
retained an unaffiliated representative to act solely on behalf of
unaffiliated warrantholders for the purposes of negotiating the terms of the
Offer or preparing a report concerning the fairness of the Offer.

NOTWITHSTANDING THE FOREGOING, THE COMPANY, ITS BOARD OF DIRECTORS AND ITS
EXECUTIVE OFFICERS MAKE NO RECOMMENDATION AS TO WHETHER ANY WARRANTHOLDER
SHOULD TENDER ANY OR ALL OF SUCH HOLDER'S WARRANTS PURSUANT TO THE OFFER.
EACH WARRANTHOLDER MUST MAKE HIS, HER OR ITS OWN DECISION WHETHER TO TENDER
WARRANTS AND, IF SO, HOW MANY WARRANTS TO TENDER. At the Company's request,
its directors and executive officers (who hold an aggregate of 253,498
Warrants, representing approximately 5.6%) have stated that they do not
currently intend to tender their Warrants unless the Company is unable to
meet the condition for the minimum number of Warrants tendered. Therefore,
approximately 75.0% of the Warrants not held by such directors and officers
will be required to be tendered and not withdrawn, in order to satisfy such
condition to the Offer. See Section 8. Notwithstanding the foregoing, such
directors and executive officers may tender or not tender their Warrants at
their discretion.

The purchase of Warrants pursuant to the Offer will reduce the number of
warrantholders and the number of Warrants that might otherwise trade
publicly, and, depending upon the number of Warrants so purchased, could
adversely affect the liquidity and market value of the remaining Warrants
held by the public. Depending upon the number of Warrants purchased pursuant
to the Offer, the Warrants may also no longer meet the requirements of the
Nasdaq SmallCap Market for continued quotation. For continued listing on the
Nasdaq SmallCap Market, the Warrants must have at least 300 holders and there
must be at least 100,000 publicly held Warrants. The Company has also applied
for listing of the Common Stock and the Warrants on the American Stock
Exchange and anticipates that the Common Stock will be listed on the American
Stock Exchange and removed from the Nasdaq SmallCap Market and the Boston
Stock Exchange prior to the consummation of the Stock Offering. If the Common
Stock is listed on the American Stock Exchange, it is anticipated that the
Warrants will no longer be listed on the Boston Stock Exchange. There can be
no assurance that the Warrants will meet the requirements of the American
Stock Exchange for initial listing, which require that there be at least
1,000,000 outstanding Warrants and 100 beneficial owners of Warrants.

If the quotation or listing of the Warrants is terminated, whether because
the Warrants do not meet the quotation or listing requirements of the Nasdaq
SmallCap Market or the Boston Stock Exchange or otherwise, or if the Warrants
do not meet the initial listing requirements of the American Stock Exchange,
then the market for the Warrants could be adversely affected. If the Warrants
are not listed or quoted on any of these markets, it is possible that the
Warrants would continue to trade in the over-the-counter market. The extent
of the public market for the Warrants and the availability of such quotations
would, however, depend upon factors such as the number of warrantholders
remaining at such time, the interest in maintaining a market in the Warrants
on the part of securities firms, the possible termination of registration
under the Exchange Act, as described below, the availability of public
trading information concerning the Warrants and other factors.

The Warrants are presently "margin securities" under the regulations of
the Board of Governors of the Federal Reserve System, which has the effect,
among other things, of allowing brokers to extend credit on the collateral of
such securities. If the Warrants are listed on the American Stock Exchange,
they will continue to be "margin securities." If the Warrants are not so
listed, depending upon factors similar to those described above, they might
no longer constitute "margin securities" for purposes of the margin
regulations of the Board of Governors of the Federal System, and, therefore,
could no longer be used as collateral for loans made by brokers.

The Warrants are currently registered under the Exchange Act. Registration
of such Warrants under the Exchange Act may be terminated upon application of
the Company to the Commission if the

<PAGE>

Warrants are neither held by 300 or more holders of record nor listed on a
national securities exchange. Termination of registration of the Warrants
under the Exchange Act would substantially reduce the information required to
be furnished by the Company to the warrantholders (although the Company
would, among other things, remain subject to the reporting obligations under
the Exchange Act as a result of its other outstanding securities) and would
make certain provisions of the Exchange Act no longer applicable in respect
of the Warrants. If registration of the Warrants under the Exchange Act were
terminated, the Warrants would no longer be "margin securities" or be
eligible for Nasdaq reporting.

Concurrently with or subsequent to the consummation of the Offer, the
Company intends to consummate the Stock Offering and the Pending Acquisitions
(as defined herein). See Section 10. Except as disclosed in this Offer to
Purchase, the Company has no present plans or proposals that would result in
(a) the acquisition by any person of additional securities of the Company, or
the disposition of securities of the Company, other than in connection with
the Pending Acquisitions and the Stock Offering, (b) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation, or
any sale or transfer of a material amount of assets, involving the Company or
any of its subsidiaries, other than in connection with the Pending
Acquisitions and the Stock Offering, (c) any change in the present Board of
Directors or management of the Company including, but not limited to, any
plan or proposal to change the number or term of the directors, to fill any
existing vacancy on the Board of Directors or to change any material term of
the employment contract of any executive officer, except in each case
pursuant to actions that are described in the Company's Annual Proxy
Statement dated June 30, 1997, (d) any material change in the present
dividend rate or policy or indebtedness or capitalization of the Company
other than pursuant to the Pending Acquisitions and the Stock Offering, (e)
any other material change in the Company's corporate structure or business
other than the Pending Acquisitions, (f) any change in the Company's charter,
bylaws or instruments corresponding thereto or any other actions which may
impede the acquisition of control of the Company by any person, (g) any class
of equity security of the Company (other than the Warrants) being de-listed
from a national securities exchange or ceasing to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities
association, without listing on another national securities exchange or
quotation on an inter-dealer quotation system of a registered national
securities association, (h) any class of equity securities of the Company
(other than the Warrants) becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act or (i) the suspension of the
Company's obligation to file reports pursuant to Section 15(d) of the
Exchange Act. See Section 10.

SECTION 2. CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following summary of material federal income tax considerations
regarding the Offer is based on current law (except as specifically discussed
below), is for general purposes only, and is not tax advice. This discussion
does not purport to deal with all aspects of taxation that may be relevant to
particular warrantholders in light of their personal investment or tax
circumstances, or to certain types of warrantholders (including insurance
companies, tax-exempt organizations, financial institutions or
broker-dealers, foreign corporations, persons who hold Warrants as part of a
"straddle" or a "conversion" transaction and persons who are not citizens or
residents of the United States) subject to special treatment under the
federal income tax laws. This discussion assumes that the Warrants are held
as "capital assets" within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended.

EACH WARRANTHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE
SPECIFIC U.S. FEDERAL INCOME TAX CONSEQUENCES TO THAT WARRANTHOLDER TENDERING
WARRANTS FOR REDEMPTION PURSUANT TO THE OFFER, AND THE APPLICABILITY AND
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS AND RECENT OR POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.

The redemption by the Company of a Warrant pursuant to the Offer will be a
taxable transaction in which a tendering warrantholder will recognize taxable
gain or loss in an amount equal to the difference between the amount realized
on the redemption and the holder's adjusted tax basis in the Warrants. For
initial purchasers of the Warrants pursuant to the IPO, the adjusted tax
basis of a Warrant is the portion of the initial offering price of the
investment unit with respect to which such Warrant was issued that is

<PAGE>

allocable to the Warrant, based on the relative fair market values of the
Warrant and the Common Stock at the time of issuance. For initial holders of
Warrants and Common Stock received in exchange for debentures issued August
1996, the adjusted tax basis of such Warrants is their fair market value at
the time of issuance. If the redemption of a Warrant by the Company is
treated as a sale or exchange of a capital asset, any gain or loss recognized
on the transaction will be considered short-term capital gain or loss, as the
Warrants will not have been outstanding for more than one year. It is
unclear, however, whether the redemption of Warrants by the Company will be
treated as the sale or exchange of a capital asset. If such redemption is not
treated as the sale or exchange of a capital asset, the holder of a Warrant
will recognize ordinary income or loss on such redemption.

Under pending legislation that has been passed by Congress and is
currently in conference, any Warrants redeemed that have been acquired more
than 30 days after enactment of the pending legislation will be considered to
give rise to capital gain or loss, rather than to ordinary income or loss. It
is unclear whether this pending legislation will ultimately be enacted into
law or, if so, whether it will be enacted in its current form with its
existing effective dates.

SECTION 3. CERTAIN LEGAL MATTERS; REGULATORY AND FOREIGN APPROVALS; NO
APPRAISAL RIGHTS

The Company is not aware of any license or regulatory permit that appears
to be material to its business that might be adversely affected by its
acquisition of Warrants as contemplated in the Offer or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency, domestic or foreign, that would be required for the
Company's acquisition of Warrants pursuant to the Offer. Should any such
approval or other action be required, the Company currently contemplates that
it will seek such approval or other action. The Company cannot predict
whether it may determine that it is required to delay the acceptance for
payment of, or payment for, Warrants tendered pursuant to the Offer pending
the outcome of any such matter. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that the failure to obtain any such
approval or other action might not result in adverse consequences to the
Company's business. In lieu of seeking such approval, the Company may
determine to terminate the Offer as described in Section 8. The Company
intends to make all required filings under the Exchange Act. The Company's
obligations under the Offer to accept for payment, or make payment for,
Warrants is subject to certain conditions. See Section 8.

There is no stockholder or warrantholder vote required in connection with
the Offer.

There are no appraisal rights available to holders of Warrants in
connection with the Offer.

THE OFFER

SECTION 4. EXPIRATION DATE; EXTENSION OF THE OFFER

Upon the terms and subject to the conditions of the Offer, the Company
will accept for payment (and thereby purchase) all Warrants that are properly
tendered on or before the Expiration Date (and not withdrawn in accordance
with Section 6) at the Purchase Price. The term "Expiration Date" means 5:00
p.m., New York City time, on Thursday, August 21, 1997, unless and until the
Company shall have extended the period of time during which the Offer is
open, in which event the term "Expiration Date" shall refer to the latest
time and date at which the Offer, as so extended by the Company, shall
expire. See also Section 8 regarding certain conditions of the Offer.

As described in Section 13, the Company expressly reserves the right, in
its sole discretion, at any time or from time to time, to extend the period
of time during which the Offer is open by giving oral or written notice of
such extension to the Depositary and by making public announcement thereof.
See Section 13. There can be no assurance, however, that the Company will
exercise its right to extend the Offer.

If the Company increases the price to be paid for Warrants and the Offer
is scheduled to expire at any time earlier than the tenth business day from
and including the date that notice of such increase is first

<PAGE>

published, sent or given in the manner specified in Section 13, the Offer
will be extended until the expiration of the ten business day period
immediately following the date of such notice. For purposes of the Offer,
"business day" means any day other than a Saturday, Sunday or Federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New
York City time.

All Warrants purchased pursuant to the Offer will be purchased at the
Purchase Price in cash, upon the terms and subject to the conditions set
forth in this Offer to Purchase. All Warrants not purchased pursuant to the
Offer, including Warrants tendered and withdrawn, will be promptly returned
to the tendering warrantholders at the Company's expense.

SECTION 5. PROCEDURE FOR TENDERING OF WARRANTS

Proper Tender of Warrants. For Warrants to be properly tendered pursuant
to the Offer:

(a) the Warrants, together with a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) with any required signature
guarantees, and any other documents required by the Letter of Transmittal,
must be received before the Expiration Date by the Depositary at its address
set forth on the back cover of this Offer to Purchase; or

(b) the tendering warrantholder must comply with the guaranteed delivery
procedure set forth below.

A tender of Warrants made pursuant to any method of delivery set forth
herein will constitute a binding agreement between the tendering
warrantholder and the Company upon the terms and conditions of the Offer.
LETTERS OF TRANSMITTAL AND CERTIFICATES REPRESENTING WARRANTS SHOULD NOT BE
SENT DIRECTLY TO THE COMPANY.

Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal if the Letter of Transmittal is signed
by the registered owner of the Warrants tendered therewith, and payment and
delivery are to be made directly to such registered owner at such owner's
address shown on the records of the Company, or if Warrants are tendered for
the account of a bank, dealer, credit union, savings association or other
entity that is a member in good standing of a recognized Medallion Program
approved by the Securities Transfer Association (each such entity being
hereinafter referred to as an "Eligible Institution"). In all other cases,
all signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 2 of the Letter of Transmittal. If a Warrant is
registered in the name of a person other than the signer of a Letter of
Transmittal, or if payment is to be made, or Warrants not purchased or
tendered are to be issued, to a person other than the registered owner, the
Warrant must be endorsed or accompanied by an appropriate power, in either
case signed exactly as the name of the registered owner appears on the
Warrant, with the signature on the Warrant or power guaranteed by an Eligible
Institution. In all cases, payment for Warrants tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of such Warrants, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantee, and
any other required documents.

THE METHOD OF DELIVERY OF THE WARRANTS IS AT THE ELECTION AND RISK OF THE
TENDERING WARRANTHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.

Federal Backup Withholding. Unless an exemption applies under the
applicable law and regulations concerning "backup withholding" of Federal
income tax, the Depositary will be required to withhold, and will withhold,
31% of the gross proceeds otherwise payable to a warrantholder or other payee
pursuant to the Offer unless the warrantholder or other payee provides such
person's tax identification number (social security number or employer
identification number) and certifies that such number is correct. Each
tendering warrantholder, other than a non-corporate foreign warrantholder,
should complete and sign the main signature form and the Substitute Form W-9
included as part of the Letter of Transmittal, so as to provide the
information and certification necessary to avoid backup withholding, unless
an applicable

<PAGE>

exemption exists and is proved in a manner satisfactory to the Company and
the Depositary. Non-corporate foreign warrantholders should generally
complete and sign a Form W-8, Certificate of Foreign Status, a copy of which
may be obtained from the Depositary, in order to avoid backup withholding.
See Section 2.

Guaranteed Delivery. If a warrantholder desires to tender Warrants
pursuant to the Offer and such holder's Warrants are not immediately
available or time will not permit all required documents to reach the
Depositary before the Expiration Date, such Warrants may nevertheless be
tendered provided that all of the following conditions are satisfied:

(a) such tender is made by or through an Eligible Institution;

(b) the Depositary receives (by hand, mail, or facsimile transmission)
on or prior to the Expiration Date, a properly completed and duly executed
Notice of Guaranteed Delivery substantially in the form the Company has
provided with this Offer to Purchase; and

(c) the tendered Warrants in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) with any required signature guarantees, and any other documents
required by the Letter of Transmittal are received by the Depositary within
three Nasdaq trading days after the date of execution of such Notice of
Guaranteed Delivery.

Determinations of Validity of Warrants; Rejection of Warrants; Waiver of
Defects; No Obligation to Give Notice of Defects. All questions as to the
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of Warrants will be determined by the Company, in its
sole discretion, which determination shall be final and binding on all
parties. The Company reserves the absolute right to reject any or all tenders
it determines not to be in proper form or the acceptance for payment of which
may, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the absolute right to waive any of the conditions of the Offer and
any defect or irregularity in the tender of any particular Warrants. No
tender of Warrants will be deemed to be properly made until all defects or
irregularities have been cured or waived. Neither the Company, the
Depositary, the Information Agent nor any other person is or will be
obligated to give notice of any defects or irregularities in tenders, and
none of them will incur any liability for failure to give any such notice.

SECTION 6. WITHDRAWAL RIGHTS

Except as otherwise provided in this Section 6, a tender of Warrants
pursuant to the Offer is irrevocable. Warrants tendered pursuant to the Offer
may be withdrawn (a) at any time before the Expiration Date and (b) after
September 18, 1997 unless accepted before such time for payment by the
Company as described in the first paragraph of Section 7. If the Company
extends the period of time during which the Offer is open, is delayed in
accepting for payment or paying for Warrants or is unable to accept for
payment or pay for Warrants pursuant to the Offer for any reason, then,
without prejudice to the Company's rights under the Offer, the Depositary
may, on behalf of the Company, retain all Warrants tendered, and such
Warrants may not be withdrawn except as otherwise provided in this Section 6,
subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that the
issuer making the tender offer shall either pay the consideration offered, or
return the tendered securities promptly after the termination or withdrawal
of the tender offer.

For a withdrawal to be effective, the Depositary must timely receive (at
its address set forth on the back cover of this Offer to Purchase), by
written, telegraphic or facsimile transmission, a notice of withdrawal. Such
notice of withdrawal must specify the name of the person having tendered the
Warrants to be withdrawn, the number of Warrants to be withdrawn and the name
of the registered owner, if different from that of the person who tendered
such Warrants. If the Warrants have been delivered or otherwise identified to
the Depositary, then, prior to the release of such Warrants, the tendering
warrantholder must also submit the serial numbers shown on the particular
Warrants, and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution (except in the case of Warrants tendered by an
Eligible Institution).

<PAGE>

All questions as to the form and validity (including timely receipt) of
notices of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding on all parties.
None of the Company, the Depositary, the Information Agent or any other
person is or will be obligated to give any notice of any defects or
irregularities in any notice of withdrawal, and none of them will incur any
liability for failure to give any such notice. A withdrawal of a tender of
Warrants may not be rescinded, and Warrants properly withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer.
Withdrawn Warrants may, however, be re-tendered before the Expiration Date by
again following the applicable procedures described in Section 5.

SECTION 7. ACCEPTANCE FOR PAYMENT OF WARRANTS AND PAYMENT OF PURCHASE PRICE

Upon the terms and subject to the conditions of the Offer, promptly after
the Expiration Date, the Company will purchase and pay the Purchase Price for
all Warrants (subject to certain matters discussed in Section 4 and Section
13) as are properly tendered and not withdrawn as permitted in Section 6. For
purposes of the Offer, the Company will be deemed to have accepted for
payment (and thereby purchased) Warrants which are tendered and not withdrawn
when, as and if it gives oral or written notice to the Depositary of its
acceptance of such Warrants for payment pursuant to the Offer. See Section 8
for regarding certain conditions of the Offer.

Payment for Warrants pursuant to the Offer will be made by depositing the
aggregate Purchase Price therefor with the Depositary, which will act as
agent for tendering warrantholders for the purpose of receiving payment from
the Company and transmitting payment to the tendering warrantholders.
Notwithstanding any other provision hereof, payment for Warrants accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of the accepted Warrants, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and any other required documents. Under no circumstances
will interest be paid by the Company, regardless of any delay in making such
payment.

The Company will pay any stock transfer taxes with respect to the transfer
and sale of Warrants to it pursuant to the Offer. If, however, (a) payment of
the Purchase Price is to be made to any person other than the registered
holder, (b) Warrants not tendered or accepted for purchase are to be
registered in the name of any person other than the registered holder, (c)
tendered Warrants are registered in the name of any person other than the
person signing the Letter of Transmittal or (d) a transfer tax is imposed for
any reason other than the transfer or sale of the Warrants to the Company
pursuant to the Offer, then the amount of any transfer taxes (whether imposed
on the registered holder or such person) payable on account of the transfer
to such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
See Instruction 3 of the Letter of Transmittal.

ANY TENDERING WARRANTHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY AND
SIGN THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL (OR, IN
THE CASE OF A FOREIGN INDIVIDUAL, FORM W-8 OBTAINABLE FROM THE DEPOSITARY)
MAY BE SUBJECT TO REQUIRED U.S. FEDERAL INCOME TAX WITHHOLDING OF 31% OF THE
GROSS PROCEEDS PAID TO SUCH WARRANTHOLDER OR OTHER PAYEE PURSUANT TO THE
OFFER. SEE SECTION 5.

SECTION 8. CERTAIN CONDITIONS OF THE OFFER

Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of) the Company's right to extend or otherwise amend the
Offer at any time in its sole discretion, the Company shall not be required
to accept for payment or make payment for any Warrant tendered, and may
terminate or amend the Offer, if before acceptance for payment or payment for
any such Warrant any of the following shall have occurred or shall have been
determined to have occurred by the Company, whose determination shall be
conclusive:

(a) there shall not have been tendered and not withdrawn less than
3,200,000 Warrants as of the Expiration Date;

<PAGE>

(b) the Company shall not have obtained financing sufficient to
consummate the Offer, and the Stock Offering shall not have been
successfully completed;

(c) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person, domestic
or foreign, before any court or governmental, regulatory or administrative
authority, agency or tribunal, domestic or foreign, which (i) challenges or
seeks to challenge the making of the Offer, the acquisition of Warrants
pursuant to the Offer or otherwise relates in any manner to the Offer; or
(ii) in the sole judgment of the Company, could materially adversely affect
the business, condition (financial or other), income, operations or
prospects of the Company and its subsidiaries, taken as a whole, or
otherwise materially impair in any way the contemplated future conduct of
the business of the Company or any of its subsidiaries or materially impair
the Offer's contemplated benefits to the Company;

(d) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced, or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any court or any government or governmental,
regulatory or administrative authority, agency, tribunal, domestic or
foreign, which in the Company's sole judgment, would or might directly or
indirectly, (i) make the acceptance for payment of, or payment for, Warrants
illegal or otherwise restrict or prohibit consummation of the Offer; (ii)
delay or restrict the ability of the Company, or render the Company unable,
to accept for payment, or pay for, Warrants; (iii) materially impair the
contemplated benefits of the Offer to the Company; or (iv) materially and
adversely affect the business, condition (financial or other), income,
operations or prospects of the Company and its subsidiaries, taken as a
whole, or otherwise materially impair in any way the contemplated future
conduct of the business of the Company or any of its subsidiaries;

(e) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any United States national
securities exchange or in the over-the-counter market (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index); (ii) any significant decline in the market
prices of equity securities in the United States or abroad; (iii) the
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States; (iv) the commencement of a war, armed
hostilities or other international or national crisis directly or indirectly
involving the United States; (v) any limitation (whether or not mandatory)
by any governmental, regulatory or administrative agency or authority on, or
any event which, in the sole judgment of the Company, might affect, the
extension of credit by banks or other lending institutions in the United
States; (vi) any change in the general political, market, economic or
financial conditions in the United States or abroad that could, in the sole
judgment of the Company, have a material adverse effect on the Company's
business, operations, prospects or the trading in the Warrants; or (vii) in
the case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof;

(f) any tender or exchange offer with respect to the Warrants (other
than the Offer) or any other class of the Company's equity securities or
(except for the Pending Acquisitions) any merger, acquisition, business
combination or other similar transaction with or involving the Company or
any subsidiary, shall have been proposed, announced or made by any
unaffiliated person or entity;

(g) any change shall occur or be threatened in the business, condition
(financial or other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, which in the sole judgment of the Company,
is or may be materially adverse to the Company; or

(h) it shall have been publicly disclosed or the Company shall have
learned that (i) any person, entity or "group" (as that term is used in
Section 13(d)(3) of the Exchange Act) shall have acquired, or proposed to
acquire, beneficial ownership of more than 5% of the outstanding Common
Stock (other than a person, entity, or "group" which had publicly disclosed
such ownership in a Schedule 13D or 13G (or an amendment thereto) on file
with the Commission prior to July 23, 1997), (ii) any such person or group
that on or prior to July 23, 1997, had filed such a Schedule with the
Commission

<PAGE>

thereafter shall have acquired or shall propose to acquire beneficial
ownership of additional shares of Common Stock representing 2% or more of
the outstanding Common Stock, (iii) any new group shall have been formed
which beneficially owns more than 5% of the outstanding Common Stock or (iv)
any person, entity or group shall have filed a Notification and Report Form
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, or made a
public announcement reflecting an intent to acquire the Company or any of
its subsidiaries or any of their respective assets or securities;

and, in the sole judgment of the Company, in any such case and regardless of
the circumstances (including any action or inaction by the Company) giving
rise to such condition, such event makes it inadvisable or undesirable to
proceed with the Offer or with such acceptance for payment or payment.

The foregoing conditions are for the sole benefit of the Company and may
be asserted or waived by the Company regardless of the circumstances
(including any action or inaction by the Company) giving rise to any such
condition, and any such condition may be waived by the Company, in whole or
in part, at any time and from time to time in its sole discretion; provided,
however, that the Exchange Act and the rules and regulations promulgated
thereunder require that all conditions to the Offer, other than those
relating to the receipt of certain necessary governmental approvals, must be
satisfied or waived prior to the Expiration Date. The Company's failure at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right or the waiver of any such right with respect to particular
facts or circumstances, and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time. Any determination by
the Company concerning the events described above and any related judgment by
the Company regarding the inadvisability of proceeding with the acceptance of
payment or payment for any tendered Warrants will be final and binding on all
parties.

SECTION 9. PRICE RANGE OF WARRANTS

The Warrants are traded on the Nasdaq SmallCap Market under the trading
symbol "MRQEW" and on the Boston Stock Exchange under the trading symbol
"MRT.WS." The following table sets forth, for each period shown, the high and
low closing bid information for the Warrants as reported by the Nasdaq
SmallCap Market. Bid quotations reflect inter-dealer prices, without retail
markup, markdown or commissions, and may not represent actual transactions.
The Warrants were first traded on the Nasdaq SmallCap Market in December
1996, and on the Boston Stock Exchange in March 1997. There can be no
assurance that the Warrants will continue to be traded on such markets or
elsewhere upon the consummation of the Offer. See Section 1.

<TABLE>
<CAPTION>
1996 HIGH LOW
---- ---- ---
<S> <C> <C>
Fourth Quarter (since December 13, 1996) $2.00 $2.00

1997
----
First Quarter ............................ $2.00 $2.00
Second Quarter ........................... 2.00 1.25
Third Quarter (through July 21, 1997) .... 2.00 1.88
</TABLE>

On July 21, 1997, the closing sales price of the Warrants as reported by
the Nasdaq SmallCap Market was $1.88 per Warrant. Warrantholders are urged to
obtain a current market quotation for the Warrants. As of July 16, 1997, the
Company had issued and outstanding 4,519,162 Warrants held by approximately
61 record holders and approximately 1,300 beneficial owners.

SECTION 10. CERTAIN INFORMATION CONCERNING THE COMPANY

General. The Company provides integrated event management, television
production, marketing, talent representation and consulting services in the
sports, news and other entertainment industries. The Company's event
management, television production and marketing services generally involve
managing major sporting events, producing sports television programs and
marketing professional and collegiate athletic leagues and organizations. The
Company also arranges and negotiates sports and entertainment-

<PAGE>

related television rights, advertising, corporate sponsorships and naming
rights (or "entitlements") for its clients. The talent representation
services provided by the Company include negotiating employment agreements
and creating and evaluating various business opportunities for sports, news
and entertainment personalities. The Company also provides a variety of
consulting services to clients either seeking exposure in, or already engaged
in, sports and entertainment-related industries.

The Company was organized in July 1995 by Robert M. Gutkowski and Robert
F.X. Sillerman. Mr. Gutkowski is the Company's President and Chief Executive
Officer and has over 20 years of experience in the television, sports and
entertainment industries. He served as President of Madison Square Garden
Corporation (which included overall responsibility for MSG Cable Network)
from November 1991 until September 1994. Mr. Sillerman is the Chairman of the
Company, and his principal occupation is Executive Chairman of the Board of
Directors of SFX Broadcasting, Inc. ("SFX"), a publicly-traded company which
owns and operates radio stations and concert promotion businesses.

From the time of its organization until its IPO in December 1996, the
Company developed a sports television production, marketing and consulting
business. Simultaneously with the IPO, the Company acquired Sports Marketing
and Television International, Inc. ("SMTI"), a provider of television
production and marketing services in the sports and other entertainment
industries, and Athletes & Artists, Inc. ("A&A"), a sports and news talent
representation firm, which has a client list that includes athletes, sports
and news broadcasters and media executives. Since the IPO, the Company has
continued its growth by hiring individuals and groups whose businesses and
expertise complement those of the Company and by providing services to an
increasing number of clients.

The Company has recently entered into agreements (the "ProServ Acquisition
Agreements") to acquire approximately 94% of ProServ, Inc. and ProServ
Television, Inc. (collectively, "ProServ") and is currently negotiating to
acquire the remaining shares of ProServ (the "ProServ Acquisition"). If the
Company is unable to acquire the remaining shares of ProServ on satisfactory
terms, the Company intends to obtain full ownership of ProServ through a
statutory merger. ProServ is an established provider of international sports
event management, television production, marketing, talent representation and
consulting services. Upon the consummation of the transactions contemplated
by the ProServ Acquisition Agreements, Mr. Dell will continue to serve as the
chief executive officer of ProServ and will become a director of the Company.
The Company has also agreed to enter into employment contracts with William
J. Allard, an officer of ProServ whom the Company anticipates naming to its
Board of Directors, and two other officers of ProServ. The aggregate purchase
price pursuant to the ProServ Acquisition Agreements consists of
approximately $10.1 million in cash and 225,000 shares of Common Stock.

The Company has also entered into an agreement pursuant to which Marquee
Music, Inc. ("Marquee Music"), a wholly-owned subsidiary of the Company, will
acquire the assets of QBQ Entertainment, Inc. ("QBQ"), a booking
representative for musicians and other performers in domestic and
international concerts (the "QBQ Acquisition" and, together with the ProServ
Acquisition, the "Pending Acquisitions"). QBQ has relationships with, and has
provided booking and touring representation services to, a variety of
musicians and groups. Upon the consummation of the QBQ Acquisition, Dennis
Arfa, the founder of QBQ, will serve as the chief executive officer of
Marquee Music. The aggregate purchase price for the QBQ Acquisition consists
of approximately $3.1 million in cash, $1.6 million payable in annual
installments over eight years and up to $2.5 million payable in shares of
Common Stock.

Schedule A hereto sets forth the name, business address and present
principal occupation or employment and any other material occupations,
positions, offices or employments during the last five years of each director
and executive officer of the Company.

<PAGE>

Summary Consolidated Financial Data. The Summary Consolidated Financial
Data of the Company as of March 31, 1997 and for the three months ended March
31, 1997 and 1996 have been derived from the unaudited financial statements
and notes thereto of the Company. The pro forma summary data as of March 31,
1997, for the three months ended March 31, 1997 and for the year ended
December 31, 1996 are derived from the unaudited pro forma condensed combined
financial statements which, in the opinion of the Company, reflect all
adjustments necessary for a fair presentation of the transactions for which
such pro forma financial information is given. Operating results for interim
periods are not necessarily indicative of the results that may be achieved
for the entire fiscal year. The Company had no operations during the period
from July 11, 1995 (inception) through December 31, 1995. The following data
should be read in conjunction with the notes thereto and the audited and
unaudited financial statements and notes thereto.

The Company's unaudited financial statements and unaudited pro forma
condensed combined financial statements, along with audited financial
statements of the Company, ProServ and QBQ, are contained in Exhibit (h) to
the Company's Transaction Statement on Schedule 13E-3 filed with the
Commission on July 23, 1997. More comprehensive financial information is
included in such exhibit and in other documents filed by the Company with the
Commission. The summary consolidated financial information that follows is
qualified in its entirety by reference to such exhibit, including the
financial statements and related notes contained therein. Such exhibit may be
examined and copies may be obtained from the offices of the Commission as
described in "--Additional Information."

CONSOLIDATED SUMMARY FINANCIAL DATA
(amounts in thousands, except share data)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 THREE MONTHS ENDED MARCH 31,
-------------------------------------------- ------------------------------------------
PRO FORMA
FOR THE PRO FORMA
STOCK OFFERING FOR THE
PRO FORMA AND STOCK OFFERING
FOR THE RECENT AND AND PENDING
RECENT PENDING AS REPORTED AS REPORTED ACQUISITIONS(3)
ACQUISITIONS(1) ACQUISITIONS(2) 1996 1997 1997
AS REPORTED (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------- --------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues .................. $ 2,869 $ 15,185 $ 29,932 -- $ 1,978 $ 3,771
Operating expenses ........ 2,564 9,486 19,377 -- 943 2,092
General and administrative
expenses.................. 2,199 5,843 10,133 $ 245 1,788 2,559
Restructuring costs ....... -- -- 565 -- -- --
Depreciation and
amortization ............. 61 108 1,479 -- 32 378
Operating loss............. (1,955) (252) (1,622) (245) (785) (1,258)
Net loss................... (2,411) (914) (2,280) (245) (778) (1,245)
Net loss applicable to
common stockholders ...... $ (2,411) $ (914) $ (2,459) $ (245) $ (778) $ (1,296)
============= =============== ============== ============= ============= ==============
Net loss per share
applicable to common
stockholders ............. $ (1.03) $ (0.12) $ (0.16) $ (0.12) $ (0.10) $ (0.08)
============= =============== ============== ============= ============= ==============
Weighted average number of
shares of common stock
outstanding(4) ........... 2,346,717 7,494,162 15,552,495 2,066,662 7,494,162 15,552,495

OTHER OPERATING DATA:
Ratio of earnings to fixed
charges(5)................
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 AT MARCH 31, 1997
-------------------- ----------------------------
PRO FORMA
FOR THE OFFER
STOCK OFFERING
PENDING
AS REPORTED ACQUISITIONS(6)
AS REPORTED (UNAUDITED) (UNAUDITED)
-------------------- ------------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash ................................... $7,231 $5,286 $20,258
Current assets.......................... 9,085 7,397 25,987
Total assets ........................... 9,361 8,461 51,088
Current liabilities .................... 1,850 1,750 7,124
Long-term debt ......................... 1,760 1,760 2,825
Common Stock subject to put options in
connection with Pending
Acquisitions(7)........................ -- -- 3,225
Total indebtedness ..................... 2,093 2,093 3,320
Stockholders' equity ................... 5,409 4,524 36,651
Book value per common share ............ 0.72 0.60 2.36
</TABLE>

- --------------
(1) Gives effect to the IPO and acquisition of SMTI and A&A (the "Recent
Acquisitions"). The Company acquired SMTI and A&A on December 12, 1996
and included the results of their operations only from the acquisition
date in its consolidated results of operations for the year ended
December 31, 1996. Therefore, for pro forma purposes, the results of
operations of SMTI and A&A for the period prior to the acquisition date
are combined with the Company.
(2) Gives effect to (i) the IPO and Recent Acquisitions, (ii) the
completion of the Stock Offering at an assumed public offering price of
$6.00 per share and (iii) the Pending Acquisitions as if they had
occurred on January 1, 1996.
(3) Gives effect to (i) the completion of the Stock Offering at an assumed
public offering price of $6.00 per share and (ii) the Pending
Acquisitions as if they had occurred on January 1, 1996.
(4) Gives effect to the IPO as if it occurred as of January 1, 1996 and
excludes 1,275,000 shares held in escrow in connection with the IPO.
Assumes a stock price of $6.00 per share for purposes of determining
the number of shares to be issued in the QBQ Acquisition. The Pro Forma
for the Stock Offering and Recent and Pending Acquisitions excludes
approximately 83,333 shares held in escrow in connection with the QBQ
Acquisition. See Note 6 to the Company's Financial Statements contained
in Exhibit (h) to the Company's Transaction Statement on Schedule 13E-3
filed with the Commission on July 23, 1997.
(5) The ratio of earnings to fixed charges has not been included as such
ratios are negative amounts.
(6) The unaudited pro forma Balance Sheet Data gives effect to the
completion of the Stock Offering at an assumed public offering price of
$6.00 per share of Common Stock and the application of the net proceeds
therefrom to complete the Pending Acquisitions and the Offer, and
assumes all Warrants (other than those held by directors and executive
officers of the Company) are tendered at a price of $2.25 per Warrant.
In the event that the Company incurs indebtedness to finance the Offer,
the Company will amend this Offer to Purchase to provide the material
terms of any such financing arrangement.
(7) Represents the Company's potential obligation to repurchase 537,499
shares of Common Stock to be issued in the Pending Acquisitions, of
which 62,499 shares are to be deposited into escrow in connection with
the QBQ Acquisition. These shares are not included in stockholders'
equity. Assumes a price of $6.00 per share of Common Stock for purposes
of determining the number of shares to be issued in the QBQ
Acquisition.

Capitalization. The following table sets forth (a) the actual
capitalization of the Company at March 31, 1997 and (b) the pro forma
capitalization of the Company at March 31, 1997, giving effect to the
consummation of the Pending Acquisitions, the consummation of the Offer
(assuming the tender of all Warrants not held by directors and executive
officers) and the application of the approximate net proceeds from the Stock
Offering of $41.3 million (assuming a public offering price of $6.00 per
share and after deducting underwriting discounts and commissions and
estimated offering expenses payable by the Company). The following table
should be read in conjunction with the summary financial information set
forth above and the detailed information and financial statements included in
Exhibit (h) to the Company's Transaction Statement on Schedule 13E-3 filed
with the Commission on July 23, 1997 and is qualified in its entirety by
reference thereto. Such exhibit may be examined and copies may be obtained
from the offices of the Commission as described in "--Additional
Information."

<PAGE>

<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------------------
(IN THOUSANDS)
PRO FORMA FOR THE OFFER,
STOCK OFFERING AND
ACTUAL PENDING ACQUISITIONS(6)
--------- ------------------------
<S> <C> <C>
Cash and cash equivalents ...................................... $ 5,286 $20,258
======= =======
Acquisition indebtedness, net(1) ............................... 1,638 2,704
Loan payable to related party .................................. 122 122
Common Stock subject to put options in connection with Pending
Acquisitions(2)................................................ -- 3,225
Stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000 shares authorized;
no shares issued and outstanding ............................. -- --
Common Stock, $.01 par value, 25,000,000 shares authorized;
8,769,162 shares issued and outstanding; 16,910,828 pro forma
shares issued and outstanding for Stock Offering and Pending
Acquisitions(3) .............................................. 88 164(4)
Additional paid-in capital ..................................... 7,664 39,715(4)
Deferred compensation(5) ....................................... (40) (40)
Accumulated deficit ............................................ (3,188) (3,188)
------- -------
Total stockholders' equity ..................................... 4,524 36,651
------- -------
Total capitalization......................................... $ 6,284 $42,702
======= =======
</TABLE>

- --------------
(1) Represents installment payments payable to certain officers and
directors of the Company in connection with the Recent Acquisitions,
net of imputed interest ($480) and the current installment payment
($333) and installment payments payable to the sole stockholder of QBQ
in connection with the QBQ Acquisition, net of imputed interest ($388)
and the current installment payment ($161). See Note 1 of the Notes to
the Company's Financial Statements, which are contained in exhibit (h)
to the Company's Transaction Statement on Schedule 13E-3 filed with the
Commission on July 23, 1997. Assumes that the controlling stockholder
of ProServ does not elect to receive a $3.0 million promissory note in
lieu of cash.
(2) Represents the Company's potential obligation to repurchase 537,499
shares of Common Stock to be issued in the Pending Acquisitions, of
which 62,499 shares are to be deposited into escrow in connection with
the QBQ Acquisition. These shares are not included in stockholders'
equity. Assumes a price of $6.00 per share of Common Stock for purposes
of determining the number of shares to be issued in the QBQ
Acquisition.
(3) Excludes up to (i) 4,519,162 shares issuable upon the exercise of the
Warrants outstanding prior to the consummation of the Offer, (ii)
670,000 shares issuable upon exercise of the IPO underwriters' options,
including shares issuable upon exercise of the Warrants contained
therein, (iii) 500,000 shares reserved for issuance under the Company's
1996 Stock Option Plan, under which options to purchase 237,500 shares
are outstanding, (iv) an option to purchase 200,000 shares to be issued
to TSC in connection with the Offer and (v) 1,125,000 shares issuable
upon exercise of the over-allotment option of the underwriters in the
Stock Offering.
(4) Excludes amounts applicable to Common Stock subject to put options in
connection with the Pending Acquisitions.
(5) Represents deferred compensation related to 50,000 shares of Common
Stock issued to an officer in partial consideration of such officer
entering into an employment agreement with the Company.
(6) In the event that the Company incurs indebtedness to finance the Offer,
the Company will amend this Offer to Purchase to provide the material
terms of any such financing arrangement.

<PAGE>

Additional Information. The Company is subject to the informational
requirements of the Exchange Act and in accordance therewith files periodic
reports, proxy statements and other information with the Commission. The
Company is required to disclose in such proxy statements certain information,
as of particular dates, concerning the Company's directors and officers,
their remuneration, stock options granted to them, the principal holders of
the Company's securities and any material interest of such persons in
transactions with the Company. The Company has also filed a Transaction
Statement on Schedule 13E-3 and an Issuer Tender Offer Statement on Schedule
13E-4 with the Commission which include certain additional information
relating to the Offer.

For further information with respect to the Company and the Offer,
reference is made to the Schedules 13E-3 and 13E-4 and the exhibits thereto.
Such Schedules and exhibits, along with reports and other information filed
with the Commission, may be inspected without charge at the office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and at 500 West Madison (Suite 1400),
Chicago, Illinois 60661. Copies of such material may also be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a Web
site at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding issuers that file electronically
with the Commission. Statements contained in this Offer to Purchase as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract
or document filed with the Commission, each such statement being qualified in
all respects by such reference.

SECTION 11. SOURCE AND AMOUNT OF FUNDS

Assuming that the Company purchases 4,265,664 outstanding Warrants
pursuant to the Offer (assuming all Warrants not held by the Company's
directors and executive officers are tendered and not withdrawn), the total
amount required by the Company to purchase such Warrants at $2.25 per Warrant
and to pay related fees and expenses will be approximately $9.8 million. See
Section 14. The Company is exploring through its principal financial advisor
financing for the Offer, which may take the form of a short-term loan or
other indebtedness, or it will fund the purchase of Warrants through the
proceeds from the Stock Offering, if successful. The Company anticipates that
any indebtedness incurred in financing the Offer will be repaid with the
proceeds of the Stock Offering. See Section 10. The Stock Offering is
conditioned upon the consummation of the Offer and the transactions
contemplated by the ProServ Acquisition Agreements, and the Offer is
conditioned upon obtaining financing or completing the Stock Offering. In the
event that the Company incurs indebtedness to finance the Offer, the Company
will amend this Offer to Purchase to provide the material terms of any such
financing arrangement. See Section 8.

SECTION 12. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE WARRANTS

In the Company's IPO in December 1996, the Company issued 3,852,500 units
("Units"), each consisting of one share of Common Stock and one Warrant. The
Units were issued at a price to the public per Unit of $5.00, and the net
proceeds to the Company from the IPO were approximately $15,586,000. In
addition, the Company issued $2.0 million in principal amount of debentures
in August 1996 to the underwriters in the Company's IPO and to Robert M.
Gutkowski, Arthur C. Kaminsky, Michael Letis, Louis J. Oppenheim, Robert F.X.
Sillerman and Michael Trager, all of whom are directors and/or executive
officers of the Company. These debentures converted into 666,662 Warrants and
an equal number of shares of Common Stock concurrently with the IPO in
December 1996.

The Warrants were issued pursuant to a warrant agreement among the
Company, the underwriters in the IPO and Continental Stock Transfer & Trust
Company, as warrant agent, and are evidenced by warrant certificates in
registered form. The Warrants provide for adjustment of the exercise price
and for a change in the number of shares issuable upon exercise to protect
holders against dilution in the event of a stock dividend, stock split,
combination or reclassification of the Common Stock or upon issuance of
shares of Common Stock at prices lower than the market price of the Common
Stock, with certain exceptions.

<PAGE>

As of July 16, 1997, there were 4,519,162 Warrants outstanding. Each
Warrant entitles the registered holder to purchase one share of Common Stock
at an exercise price of $7.50 at any time until 5:00 p.m., New York City
time, on December 4, 2001. Commencing on December 5, 1997, the Warrants are
redeemable by the Company on 30 days' written notice at a redemption price of
$.05 per Warrant if the "closing price" of the Common Stock for any 20
consecutive trading days ending within five days of the notice of redemption
averages in excess of $11.50 per share. "Closing price" means the closing bid
price if listed in the over-the-counter market on Nasdaq or otherwise or the
closing sale price if listed on the Nasdaq National Market or a national
securities exchange. All Warrants must be redeemed if any are redeemed.

In addition to the outstanding Warrants, in connection with the IPO the
Company's underwriters received options to purchase an aggregate of 335,000
additional Units, which options will be exercisable during the three-year
period commencing December 1998 at an exercise price of $8.25 per Unit
(consisting of one share of Common Stock and one Warrant), subject to
adjustment in certain events to protect against dilution. The Warrants
included in the underwriters' options are not subject to redemption by the
Company unless, at the time the Warrants are called for redemption, the
underwriters' options have been exercised and the underlying Warrants are
outstanding. The underwriters' options cannot be transferred, sold, assigned
or hypothecated until December 1998, except to any officer of an IPO
underwriter or members of the IPO selling group or their officers. Pursuant
to the Offer, the Company is not offering to purchase Warrants included in
the underwriters' options, because such options are not exercisable prior to
the Expiration Date.

The Warrants do not confer upon the warrantholders any voting or other
rights of a stockholder of the Company. Upon notice to the warrantholders,
the Company has the right to reduce the exercise price or extend the
expiration date of the Warrants.

Neither the Company nor any of its subsidiaries has effected any
transactions in the Warrants since the issuance thereof in December 1996.
Except as set forth below, no director or executive officer of the Company
listed on Schedule A hereto, or any of subsidiaries or any associates of any
of the foregoing, owns any of the Warrants or has effected any transactions
in the Warrants since the issuance of the Warrants in December 1996:

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF WARRANTS
WARRANTS OUTSTANDING BEFORE
NAME BENEFICIALLY OWNED OFFER
- ---- ------------------ -----
<S> <C> <C>
Jan E. Chason ......... 2,000 *
Robert M. Gutkowski .. 38,461 *
Arthur C. Kaminsky ... 38,461 *
Michael Letis ......... 38,461 *
Louis J. Oppenheim ... 19,230 *
Miles W. Schumer ...... 1,500 *
Robert F.X. Sillerman 76,924 1.7%
Michael Trager ........ 38,461 *
------- ----
Total ............... 253,498 5.6%
======= ====
</TABLE>

- --------------
* Less than one percent.

Neither the Company, any of its directors or executive officers listed on
Schedule A hereto nor any of its subsidiaries is a party to any contract,
arrangement, understanding or relationship with any other person relating,
directly or indirectly, to the Offer (whether or not legally enforceable)
with respect to any securities of the Company (including, but not limited to,
any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guarantees of loans, guarantees against loss or
the giving or withholding of proxies, consents or authorizations). At the
Company's request, its directors and executive officers (who hold an
aggregate of 253,498 Warrants, representing approximately 5.6%) have stated
that they do not

<PAGE>

currently intend to tender their Warrants unless the Company is unable to
meet the condition for the minimum number of Warrants tendered. Therefore,
approximately 75.0% of the Warrants not held by such directors and officers
will be required to be tendered and not withdrawn, in order to satisfy such
condition to the Offer. See Section 8. Notwithstanding the foregoing, such
directors and executive officers may tender or not tender their Warrants at
their discretion.

SECTION 13. EXTENSION OF THE TENDER PERIOD; TERMINATION; AMENDMENTS

The Company expressly reserves the right, in its sole discretion, at any
time or from time to time and regardless of whether or not any of the events
set forth in Section 8 shall have occurred or shall be deemed by the Company
to have occurred, to extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, or payment for, any Warrants by
giving oral or written notice of such extension to the Depositary and making
a public announcement thereof. During any such extension, all Warrants
previously tendered and not purchased or withdrawn will remain subject to the
Offer, except to the extent that such Warrants may be withdrawn as set forth
in Section 6. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer, not accept for payment and not make
payment for any Warrants not theretofore accepted for payment or paid for
upon the occurrence of any of the conditions specified in Section 8 by giving
oral or written notice of such termination to the Depositary and making a
public announcement thereof. Subject to compliance with applicable law, the
Company further reserves the right, in its sole discretion, and regardless of
whether or not any of the events set forth in Section 8 shall have occurred
or shall be deemed by the Company to have occurred, to amend the Offer in any
respect, including, without limitation, by increasing or decreasing the
consideration offered in the Offer to owners of Warrants. Amendments to the
Offer may be made at any time or from time to time by public announcement
thereof, such announcement, in the case of an extension, to be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date. Any public announcement made pursuant
to the Offer will be disseminated promptly to warrantholders in a manner
reasonably designed to inform warrantholders of such change. Without limiting
the manner in which the Company may choose to make a public announcement,
except as required by applicable law, the Company shall have no obligation to
publish, advertise or otherwise communicate any such public announcement
other than by making a release to the Dow Jones News Service.

If the Company materially changes the terms of the Offer or the
information concerning the Offer, the Company will extend the Offer to the
extent required by Rule 13e-4 promulgated under the Exchange Act. If the
Company increases the price to be paid for Warrants and the Offer is
scheduled to expire at any time earlier than the expiration of a period
ending on the tenth business day from and including the date that notice of
such increase is first published, sent or given, the Offer will be extended
until the expiration of such period of ten business days.

SECTION 14. FEES AND EXPENSES

The Company has retained Continental Stock Transfer & Trust Company as
Depositary and Georgeson & Company Inc. as Information Agent in connection
with the Offer. The Information Agent will assist warrantholders who request
assistance in connection with the Offer and may request brokers, dealers and
other nominee warrantholders to forward materials relating to the Offer to
beneficial owners. Brokers, dealers, commercial banks and trust companies
will be promptly reimbursed by the Company for customary handling and mailing
expenses incurred by them in forwarding material to their customers.

As compensation for acting as Information Agent in connection with the
Offer, Georgeson & Company Inc. will be paid an estimated fee of $7,500 and
will also be reimbursed for certain out-of-pocket expenses. The Company will
pay the Depositary a fee of approximately $1,500 for its services in
connection with the Offer, plus reimbursement for out-of-pocket expenses. The
Company has agreed to indemnify the Depositary and Information Agent against
certain liabilities and expenses in connection with the Offer, including
certain liabilities under the Federal securities laws. Neither the Depositary
nor the Information Agent has been retained to make solicitations or
recommendations, in their respective roles as Depositary and Information
Agent.

<PAGE>

Certain directors or executive officers of the Company may, from time to
time, contact warrantholders to provide them with information regarding the
Offer. Such directors and executive officers will not make any recommendation
to any warrantholder as to whether to tender all or any Warrants and will not
solicit the tender of any Warrants. The Company will not compensate any
director or executive officer for this service.

The Company will pay (or cause to be paid) any stock transfer taxes on its
purchase of Warrants, except as otherwise provided in Instruction 3 of the
Letter of Transmittal. See Section 7.

Assuming all outstanding Warrants are tendered (except for the Warrants
held by the officers and directors of the Company) pursuant to the Offer, it
is estimated that the expenses incurred by the Company in connection with the
Offer will be approximately as set forth below. The Company will be
responsible for paying all such expenses.

<TABLE>
<CAPTION>
<S> <C>
Printing and mailing fees ........... $ 75,000.00
Filing fees ......................... 2,033.62
Legal, accounting and miscellaneous 122,966.38
-----------
Total ............................. $200,000.00
===========

</TABLE>

In addition, the Company has retained The Sillerman Companies, Inc.
("TSC") to advise and assist in the structuring and implementation of the
Offer. In connection therewith, the Company has agreed to grant to TSC
immediately exercisable options to purchase 200,000 shares of Common Stock at
an exercise price per share equal to the closing price of the Common Stock on
the date of consummation of the Offer. Such options will expire ten years
from the date of their grant.

SECTION 15. MISCELLANEOUS

The Offer is not being made to, nor will the Company accept tenders from,
owners of Warrants in any jurisdiction in which the Offer or its acceptance
would not be in compliance with the laws of such jurisdiction. The Company is
not aware of any jurisdiction where the making of the Offer or the tender of
Warrants would not be in compliance with applicable law. If the Company
becomes aware of any jurisdictions where the making of the Offer or the
tender of Warrants is not in compliance with any applicable law, the Company
will make a good faith effort to comply with such law. If, after such good
faith effort, the Company cannot comply with such law, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Warrants residing in such jurisdiction. In any jurisdiction in which the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on the Company's behalf
by one or more registered brokers or dealers licensed under the laws of such
jurisdiction.

THE MARQUEE GROUP, INC.

July 23, 1997

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

SCHEDULE A. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following table sets forth the name, current business address, present
principal occupation or employment and any other material occupations,
positions, offices or employments (and business addresses thereof) during the
last five years of each director and executive officer of the Company. Each
such person is a citizen of the United States.

<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT AND OTHER MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR
BUSINESS ADDRESS EMPLOYMENTS DURING THE LAST FIVE YEARS
- ----------------------------- ---------------------------------------------------------------------
<S> <C>
Robert M. Gutkowski Mr. Gutkowski has served as President, Chief Executive Officer and a director
The Marquee Group, Inc. of the Company since December 1995. From September 1994 until December
888 Seventh Avenue 1995, Mr. Gutkowski was a consultant to sports-related businesses. From
New York, NY 10019 November 1991 to September 1994, he served as President and Chief Executive
Officer of Madison Square Garden Corporation, Two Penn Plaza, New York,
NY 10121. From July 1990 to November 1991, Mr. Gutkowski served as President
of MSG Communications Group, Two Penn Plaza, New York, NY 10121.

Robert F.X. Sillerman Mr. Sillerman has been Chairman of the Company since July 1995. Mr. Sillerman
SFX Broadcasting, Inc. has been Executive Chairman of SFX and from 1992 through 1995 he served
150 East 58th Street as Chairman and/or Chief Executive Officer of SFX. Since 1985, Mr. Sillerman
New York, NY 10155 has been Chairman of the Board and Chief Executive Officer of Sillerman
Communications Management Corporation, Inc. ("SCMC"), 150 East 58th Street,
New York, NY 10155. Since 1985, he has been Chairman and Chief Executive
Officer of TSC, 150 East 58th Street, New York, NY 10155. In 1993, Mr.
Sillerman became the Chancellor of the Southampton campus of Long Island
University.

Arthur C. Kaminsky Mr. Kaminsky has been a director of the Company since March 1996 and an
The Marquee Group, Inc. Executive Vice President of the Company since December 1996. Since 1977,
888 Seventh Avenue Mr. Kaminsky has served as President and Chief Executive Officer of Athletes
New York, NY 10019 & Artists ("A&A"), 421 Seventh Avenue, New York, NY 10001.

Michael Letis Mr. Letis became a director and an Executive Vice President of the Company
The Marquee Group, Inc. in December 1996. Since 1984, Mr. Letis has served as President of Sports
888 Seventh Avenue Marketing & Television International, Inc. ("SMTI"),410 Greenwich Avenue,
New York, NY 10019 Greenwich, CT 06830. Mr. Letis has been a director of Thoroughbred Racing
Communications, Inc. and of the Thoroughbred Club of America.

Louis J. Oppenheim Mr. Oppenheim became a director and an Executive Vice President of the
The Marquee Group, Inc. Company in December 1996. Mr. Oppenheim has served as Chief Operating Officer,
888 Seventh Avenue Vice President and Secretary of A&A since 1985.
New York, NY 10019

A-1
<PAGE>

PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND CURRENT AND OTHER MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR
BUSINESS ADDRESS EMPLOYMENTS DURING THE LAST FIVE YEARS
- ----------------------------- ---------------------------------------------------------------------

Michael Trager Mr. Trager has been a director of the Company since March 1996 and an Executive
The Marquee Group, Inc. Vice President of the Company since December 1996. Mr. Trager has served
888 Seventh Avenue as Chairman of SMTI since 1984. From November 1994 to December 1995, Mr.
New York, NY 10019 Trager served as a director of Select Media Communications, Inc. Mr. Trager
is a member of the Board of Directors and the past President of the Greenwich
Old-timers Athletics Association.

Jan E. Chason Mr. Chason has been the Chief Financial Officer of the Company since June
The Marquee Group, Inc. 1997. From November 1996 to July 1997, Mr. Chason was the Chief Financial
888 Seventh Avenue Officer of Triathlon Broadcasting Company ("Triathlon"), Symphony Towers,
New York, NY 10019 750 B Street, San Diego, CA 92101. In addition, since June 1996, Mr. Chason
has been a consultant to SCMC and TSC. Mr. Chason was the principal in
JEC Consulting Associates, from October 1994 to June 1996. From 1982 until
September 1994, Mr. Chason was a Partner of Ernst & Young LLP.

Howard J. Tytel Mr. Tytel has served as a director of the Company since July 1995. Mr.
SFX Broadcasting, Inc. Tytel has been a director, Executive Vice President and Secretary of SFX
150 East 58th Street since 1992. Mr. Tytel has also been Executive Vice President and General
New York, NY 10155 Counsel of SCMC since 1985, a director of SCMC since 1989, and Executive
Vice President and General Counsel of TSC since 1985. From March 1995 until
March 1997, Mr. Tytel was a director of Interactive Flight Technologies,
Inc. Mr. Tytel is Of Counsel to the law firm of Baker & McKenzie, 805 Third
Avenue, New York, NY 10022, which represents the Company.

Arthur R. Barron Mr. Barron has served as a director of the Company since December 1996.
Hampshire House Since January 1997, Mr. Barron also serves as a non-exclusive consultant
150 Central Park South to Callahan Associates International LLC, The Citadel, 3200 Cherry Creek
New York, NY 10018 South Drive, Suite 650, Denver, CO 80209. From February 1990 to May 1995,
Mr. Barron served as Chairman of Time-Warner International, 75 Rockefeller
Plaza, New York, NY 10019.

Myles W. Schumer Mr. Schumer has served as a director of the Company since December 1996.
Cornick, Garber & Sandler For more than the past five years, Mr. Schumer has been a partner of Cornick,
630 Seventh Avenue Garber & Sandler. From July 1993 until November 1996, Mr. Schumer served
New York, NY 10017 as a director of Multi-Market Radio, Inc., 150 East 58th Street, New York,
NY 10155.
</TABLE>

Upon the consummation of the ProServ Acquisition, it is anticipated that
Donald L. Dell and William J. Allard will be appointed as directors of the
Company.

A-2
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Warrants and any other
required documents should be sent or delivered by each warrantholder of the
Company or such holder's broker, dealer, commercial bank or trust company to
the Depositary at one of its addresses set forth below.

The Depositary for the Offer is:
Continental Stock Transfer & Trust Company

<TABLE>
<CAPTION>
<S> <C> <C>
By Mail, Hand or
By Facsimile Transmission: Overnight Delivery: For Information:
(212) 509-5150 Continental Stock Transfer & Trust Company (212) 509-4000 x535
Attn: Reorganization Department 2 Broadway, 19th Floor
New York, New York 10004

</TABLE>

Any questions or requests for assistance or for additional copies of this
Offer to Purchase or the Letter of Transmittal may be directed to the
Information Agent. Warrantholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.

The Information Agent for the Offer is:

[GEORGESON & COMPANY INC. LOGO]

Wall Street Plaza
New York, New York 10005
(212) 440-9800 (banks and brokers may call collect)
or
(800) 223-2064

<PAGE>

THE MARQUEE GROUP, INC.

[MARQUEE GROUP LOGO]

OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING WARRANTS,
EACH EXERCISABLE AT $7.50 PER SHARE
OF COMMON STOCK,
AT
$2.25 PER WARRANT

LETTER OF TRANSMITTAL

- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON THURSDAY, AUGUST 21, 1997, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------

TO: CONTINENTAL STOCK TRANSFER & TRUST COMPANY

</TABLE>

DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.

Any questions or requests for assistance or for additional copies of the
Offer to Purchase or this Letter of Transmittal may be directed to the
Information Agent. Warrantholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer (as defined herein).

THE INFORMATION AGENT FOR THE OFFER IS:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
(212) 440-9800 (banks and brokers may call collect)
or
(800) 223-2064

The undersigned acknowledges receipt of the Offer to Purchase, dated July
23, 1997 (the "Offer to Purchase"), of The Marquee Group, Inc., a Delaware
corporation (the "Company"), and this Letter of Transmittal (which together
constitute the "Offer"), pursuant to which the Company is offering to
purchase all of its outstanding redeemable warrants (the "Warrants"), at a
price, net to the seller in cash, of $2.25 per Warrant. Each Warrant entitles
the holder thereof to purchase one share of Common Stock, $.01 par value per
share, of the Company at the exercise price of $7.50 per share, subject to
adjustment, from the date of issuance until December 4, 2001, unless redeemed
earlier.

This Letter of Transmittal must be used whether (a) Warrant certificates
are to be physically delivered herewith to Continental Stock Transfer & Trust
Company, as Depositary for the Offer (the "Depositary"), or (b) tenders are
to be made according to the guaranteed delivery procedures set forth in the
Offer to Purchase under "Section 5. Procedure for Tendering of
Warrants--Guaranteed Delivery." Capitalized terms used herein and not
otherwise defined shall have the respective meanings assigned to them in the
Offer to Purchase.

<PAGE>

NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW
PLEASE FOLLOW CAREFULLY THE INSTRUCTIONS ON THE REVERSE HEREOF

Warrantholders who wish to tender their Warrants and whose Warrants are
not immediately available, or who cannot deliver their Warrants and any other
documents required hereby prior to 5:00 p.m., New York City time, on the
Expiration Date, must tender their Warrants according to the guaranteed
delivery procedures set forth in the Offer to Purchase under "Section 5.
Procedure for Tendering of Warrants--Guaranteed Delivery."

[ ] CHECK HERE IF TENDERED WARRANT CERTIFICATES ARE ENCLOSED HEREWITH.

[ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED WARRANT CERTIFICATES
ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY
SENT TO THE DEPOSITARY:

Name(s) of Registered Holder(s):
-------------------------------------------

Window Ticket No. (if any):
------------------------------------------------

Date of Execution of Notice of Guaranteed Delivery:
------------------------

Name of Institution Which Guaranteed Delivery:
-----------------------------

List below the Warrants that are to be tendered pursuant to the Offer to
Purchase. If the space below is inadequate, list the certificate numbers and
principal amounts on a separate signed schedule and affix the list to this
Letter of Transmittal.

<TABLE>
<CAPTION>
DESCRIPTION OF WARRANTS TENDERED
- -------------------------------------------------------------------------------
NAME AND ADDRESS PLEASE FILL IN
OF REGISTERED HOLDER(A) NUMBERS AND AMOUNTS
- -------------------------------------------------------------------------------
(1) (2) (3)
WARRANT AGGREGATE NUMBER OF
CERTIFICATE NUMBER OF WARRANTS
NUMBER WARRANTS TENDERED(B)
-------------------------------------------
<S> <C> <C> <C>
-------------------------------------------

-------------------------------------------

-------------------------------------------
TOTAL
- -------------------------------------------------------------------------------
</TABLE>

(a) Any beneficial owner whose Warrants are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender Warrants should contact such registered holder
promptly and instruct such registered holder to tender the Warrants on
his or her behalf. If such beneficial holder wishes to tender Warrants
on his or her own behalf, such beneficial owner must, prior to
completing and executing this Letter of Transmittal and delivering such
holder's Warrant certificates, either make appropriate arrangements to
register ownership of the Warrants in such holder's name or obtain a
properly completed power from the registered holder. THE TRANSFER OF
RECORD OWNERSHIP OF THE WARRANTS MAY TAKE CONSIDERABLE TIME AND,
DEPENDING ON WHEN SUCH TRANSFER IS REQUESTED, MAY NOT BE ACCOMPLISHED
PRIOR TO THE EXPIRATION DATE.
(b) Unless otherwise indicated, it will be assumed that all Warrants
evidenced by each Warrant certificate delivered to the Depositary are
being tendered hereby.

<PAGE>

Ladies and Gentlemen:

Subject to, and effective upon, acceptance for payment of the Warrants
tendered herewith, in accordance with the terms and subject to the conditions
set forth in the Offer to Purchase, the undersigned hereby sells, assigns and
transfers to the Company all right, title and interest in the above-described
Warrants that are being tendered hereby.

The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Warrants
tendered hereby, and that when the same are accepted for purchase by the
Company, the Company will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and such
Warrants shall not be subject to any adverse claims. The undersigned will,
upon request, execute and deliver any additional documents deemed by the
Company to be necessary or desirable to complete the purchase of the Warrants
tendered hereby and constitutes and appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to the
Warrants, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to (a) present
such Warrants for registration and transfer on the books of the Company and
(b) receive all benefits and otherwise exercise all rights of beneficial
ownership of the Warrants all in accordance with the terms of the Offer.

All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators,
trustees in bankruptcy and legal representatives, successors and assigns of
the undersigned. Except as stated in the Offer to Purchase, the tender of
Warrants submitted herewith is irrevocable.

The undersigned understands that tenders of Warrants pursuant to any one
of the procedures described in Offer to Purchase under "Section 5. Procedure
for Tendering of Warrants" and in the instructions hereto will constitute the
undersigned's acceptance of the terms and conditions of the Offer, including
the undersigned's representation and warranty that (a) the undersigned has a
"net long position" in the Warrants being tendered within the meaning of Rule
14e-4 promulgated under the Securities Exchange Act of 1934, as amended, and
(b) the tender of such Warrants complies with Rule 14e-4. The Company's
acceptance for payment of Warrants tendered pursuant to the Offer will
constitute a binding agreement between the undersigned and the Company upon
the terms and conditions of the Offer.

The Offer to Purchase is subject to a number of conditions, each of which
may be waived or modified by the Company, as described in the Offer to
Purchase under the caption "Section 8. Certain Conditions of the Offer." THE
UNDERSIGNED RECOGNIZES THAT, AS A RESULT OF SUCH CONDITIONS, THE COMPANY MAY
NOT BE REQUIRED TO ACCEPT THE WARRANTS TENDERED HEREBY. In such event, the
tendered Warrants not accepted for purchase will be returned to the
undersigned at the address shown below the undersigned's signature(s), unless
otherwise indicated in the boxes entitled "Special Issuance Instructions" or
"Special Delivery Instructions" below.

Unless otherwise indicated herein under "Special Issuance Instructions,"
please issue the check for the purchase price of the Warrants purchased or
Warrant certificates evidencing Warrants (if any) not tendered or not
accepted for purchase in the name(s) of the registered holder(s) appearing
under the "Description of Warrants Tendered" above. Similarly, unless
otherwise indicated herein under "Special Delivery Instructions," please mail
the check for the purchase price of the Warrants purchased or Warrant
certificates evidencing Warrants (if any) not tendered or not accepted for
purchase to the address(es) of the registered holder(s) appearing under the
"Description of Warrants Tendered" above.

<PAGE>

SPECIAL ISSUANCE INSTRUCTIONS

- -------------------------------------------------------------------------------

To be completed ONLY if the check for the purchase price of the Warrants
purchased or Warrant certificates evidencing Warrants (if any) not tendered or
not accepted for purchase are to be issued in the name of someone other than
the person whose signature appears on the face of the Warrants.

Issue (check appropriate box(es)):

[ ] Check [ ] Warrants to:

Name(s):
-----------------------------------------------------------------------
Address(es):
-------------------------------------------------------------------

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)

(COMPLETE SUBSTITUTE FORM W-9)

TAX IDENTIFICATION OR SOCIAL SECURITY NO.:

------------------------------------------

- -------------------------------------------------------------------------------

SPECIAL DELIVERY INSTRUCTIONS

- -------------------------------------------------------------------------------

To be completed ONLY if the check for the purchase price of the Warrants
purchased or Warrant certificates evidencing Warrants (if any) not tendered or
not accepted for purchase are to be mailed to someone other than the person
whose signature appears on the face of the Warrants or to such persons at an
address other than that shown in the box entitled "Description of Warrants
Tendered."

Mail (check appropriate box(es)):

[ ] Check [ ] Warrants to:

Name(s):
-----------------------------------------------------------------------
Address(es):
-------------------------------------------------------------------

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)

(COMPLETE SUBSTITUTE FROM W-9)

TAX IDENTIFICATION OR SOCIAL SECURITY NO.:

------------------------------------------

- -------------------------------------------------------------------------------

<PAGE>

SIGNATURE(S)
- -------------------------------------------------------------------------------
IMPORTANT

A HOLDER WHO WISHES TO TENDER WARRANTS
IN THE TENDER OFFER MUST SIGN WHETHER OR NOT SUCH WARRANT
CERTIFICATES ARE BEING PHYSICALLY TENDERED HEREBY
(See Instructions 1 and 2 and the instructions in Section 5 of the Offer to
Purchase)

Signature of Registered Holder or
Authorized Signatory:

- ----------------------------------------------------------------------------
Type or Print Name:

- ----------------------------------------------------------------------------
Dated:
----------------------------------------------------------------------
Tax Identification or Social Security No.:

- ----------------------------------------------------------------------------

Signature of Registered Holder or
Authorized Signatory (if more than one):

- ----------------------------------------------------------------------------
Type or Print Name:

- ----------------------------------------------------------------------------
Dated:
----------------------------------------------------------------------
Tax Identification or Social Security No.:

- ----------------------------------------------------------------------------

Must be signed by registered holder(s) exactly as his, her or its name(s)
appear(s) on the certificate(s) for the tendered Warrants or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation, agent or other person
acting in a fiduciary or representative capacity, please provide the
following information and see Instruction 2 (please print):

Name:
-----------------------------------------------------------------------
Address:
-------------------------------------------------------------------

-------------------------------------------------------------------

Area Code and Telephone No.:
------------------------------------------------
Capacity (Full Title):
------------------------------------------------------

GUARANTEE OF SIGNATURE(S)
(If required)
(See Instruction 2)

Name of Firm:
---------------------------------------------------------------
Authorized Signature:
-------------------------------------------------------
Title:
----------------------------------------------------------------------
Dated: , 1997
-------------
(Please complete Substitute Form W-9
on the reverse side of this Letter of Transmittal)
- -------------------------------------------------------------------------------

<PAGE>

INSTRUCTIONS

1. Delivery of this Letter of Transmittal and Certificates for
Warrants. This Letter of Transmittal must be used whether (a) certificates
for Warrants are to be physically delivered to the Depositary herewith or (b)
tenders are to be made according to the guaranteed delivery procedures set
forth in the Offer to Purchase.

Certificates for all physically delivered Warrants, as well as a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by this Letter of Transmittal, must be received
by the Depositary at its address set forth on the front page of this Letter
of Transmittal on or prior to 5:00 p.m., New York City time, on the
Expiration Date. Warrantholders who cannot deliver their Warrants and all
other required documents to the Depositary on or prior to such time must
tender their Warrants pursuant to the guaranteed delivery procedure set forth
in the Offer to Purchase under the caption "Section 5. Procedure for
Tendering of Warrants--Guaranteed Delivery." Pursuant to such procedure: (a)
such tender must be made by or through an Eligible Institution, (b) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form provided by the Company, must be received by the
Depositary on or prior to the Expiration Date and (c) the tendered Warrants
in proper form for transfer, together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees, and any other documents required by the Letter of
Transmittal, must be received by the Depositary within three Nasdaq trading
days after the date of execution of such Notice of Guaranteed Delivery. See
the Offer to Purchase under "Section 5. Procedure for Tendering of
Warrants--Guaranteed Delivery."

THE METHOD OF DELIVERY OF WARRANTS AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND RISK OF THE TENDERING WARRANTHOLDER. IF CERTIFICATES FOR
SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED.

No alternative, conditional or contingent tenders will be accepted. By
executing this Letter of Transmittal (or photocopy thereof), the tendering
warrantholder waives any right to receive any notice of the acceptance for
payment of the Warrants.

2. Signatures on this Letter of Transmittal; Powers and Endorsements;
Guarantee of Signatures. The signature(s) of the registered holder(s) on this
Letter of Transmittal in the box titled "Signature(s)" must correspond with
the name(s) as written on the face of the Warrants without alteration,
enlargement or any change whatsoever.

(a) If any of the Warrants are held of record by two or more persons,
all such persons must sign this Letter of Transmittal.

(b) If any of the Warrants are registered in different names, it will be
necessary to complete, sign and submit as many separate Letters of
Transmittal and any necessary accompanying documents as there are different
registrations.

(c) If this Letter of Transmittal is signed by the registered holder(s)
of the Warrants, no endorsements of Warrants or separate powers are
required, unless certificates for Warrants not tendered are to be issued in
the name of, or delivered to, any person other than the registered
holder(s). Signatures on any such Warrants or powers must be guaranteed by
an Eligible Institution (unless signed by an Eligible Institution).

(d) If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Warrants, such Warrants must be endorsed or
accompanied by appropriate powers and signed exactly as the name(s) of the
registered holder(s) appear(s) on such Warrants. Signatures on any such
Warrants or powers must be guaranteed by an Eligible Institution (unless
signed by an Eligible Institution).

(e) If this Letter of Transmittal or any certificates or powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
unless waived by the Company, proper evidence satisfactory to the Company of
the authority of such person to so act must be submitted with this Letter of
Transmittal.

3. Transfer Taxes. The Company will pay or cause to be paid all stock
transfer taxes, if any, with respect to the tender of any Warrants to it
pursuant to the Offer. If, however, (a) payment of the purchase price for the
Warrants is to be made to, or certificates for any Warrants not tendered or
accepted for purchase are to be issued in the name

<PAGE>

of, or delivered to, any person other than the registered holder(s), (b)
tendered Warrants are registered in the name of any person other than the
person signing the Letter of Transmittal or (c) a stock transfer tax is
imposed for any reason other than the transfer or sale of the Warrants to the
Company pursuant to the Offer, the amount of any stock transfer taxes
(whether imposed on the registered holder(s) or such other person) will be
payable by the tendering holder(s). Unless satisfactory evidence of the
payment of such taxes, or exemption therefrom, is submitted herewith, the
amount of such transfer taxes will be deducted from the purchase price
payable to the tendering holder(s). EXCEPT AS PROVIDED IN THIS INSTRUCTION 3,
IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE WARRANT
CERTIFICATES LISTED IN THIS LETTER OF TRANSMITTAL.

4. Partial Tenders. If fewer than all the Warrants represented by any
certificate delivered to the Depositary are to be tendered, fill in the
number of Warrants that are to be tendered in the column three of the box
entitled "Description of Warrants Tendered." In such case, a new certificate
for the remainder of the Warrants represented by the old certificate will be
sent to the person(s) signing this Letter of Transmittal, unless otherwise
provided in the boxes entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on this Letter of Transmittal, as promptly as
practicable following the expiration or termination of the Offer. ALL
WARRANTS REPRESENTED BY CERTIFICATES DELIVERED TO THE DEPOSITARY WILL BE
DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.

5. Special Issuance and Delivery Instructions. If the check for the
Purchase Price of any Warrants purchased is to be issued in the name of,
and/or any Warrants not tendered or not purchased are to be returned to, a
person other than the person(s) signing this Letter of Transmittal or if the
check and/or any certificates for Warrants not tendered or not purchased are
to be mailed to someone other than the person(s) signing this Letter of
Transmittal or to an address other than that shown below the signature of the
person(s) signing this Letter of Transmittal, then the boxes captioned
"Special Issuance Instructions" and/or "Special Delivery Instructions" on
this Letter of Transmittal should be completed.

6. Requests for Assistance or Additional Copies. Any questions or requests
for assistance may be directed to the Information Agent at the telephone
number and address listed on the front of this Letter of Transmittal.
Requests for additional copies of the Offer to Purchase, this Letter of
Transmittal or other materials related to the Offer may be directed to the
Information Agent and such copies will be furnished promptly at the Company's
expense. Warrantholders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.

7. Irregularities. All questions as to the Purchase Price, the form of
documents and the validity, eligibility (including time of receipt) and
acceptance of any tender of Warrants will be determined by the Company, in
its sole discretion, and its determination shall be final and binding. The
Company reserves the absolute right to reject any or all tenders of Warrants
that it determines are not in proper form or the acceptance for payment of,
or payment for, Warrants that may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any of the
conditions to the Offer or any defect or irregularity in any tender of
Warrants and the Company's interpretation of the terms and conditions of the
Offer (including these instructions) shall be final and binding. Unless
waived, any defects or irregularities in connection with tenders must be
cured within such time as the Company shall determine. None of the Company,
the Depositary, the Information Agent or any other person shall be under any
duty to give notice of any defect or irregularity in tenders, nor shall any
of them incur any liability for failure to give any such notice. Tenders will
not be deemed to have been made until all defects and irregularities have
been cured or waived.

8. Substitute Form W-9 and Form W-8. The tendering warrantholder is
required to provide the Depositary with either a correct Taxpayer
Identification Number ("TIN") on Substitute Form W-9, which is provided
below, or, in the case of foreign warrantholders, a properly completed Form
W-8. Warrantholders wishing to obtain a copy of Form W-8 may contact the
Depositary. Failure to provide the information on either Substitute Form W-9
or Form W-8 may subject the tendering warrantholder to a 31% Federal income
tax backup withholding on the payment of the Purchase Price. The box in Part
2 of Substitute Form W-9 may be checked if the tendering warrantholder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future. If the box in Part 2 is checked and the Depositary
is not provided with a TIN by the time of payment, the Depositary will
withhold 31% of all payments of the Purchase Price thereafter until a TIN is
provided to the Depositary.

<PAGE>

COMPLETE AND SIGN SUBSTITUTE FORM W-9 IN ADDITION TO THE SIGNATURE(S)
REQUIRED ON THE FRONT HEREOF.

<TABLE>
<CAPTION>
<S> <C> <C>
PAYER'S NAME: CONTINENTAL STOCK TRANSFER & TRUST COMPANY
- ------------------------------------------------------------------------------------------------------------------------------
A SUBSTITUTE FORM W-9 MUST BE COMPLETED BY ALL WARRANTHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. --------------------------------------------
Department of the Treasury Social Security Number
Internal Revenue Service OR

--------------------------------------------
Employer Identification
Number
- ------------------------------------------------------------------------------------------------------------------------------
PAYER'S REQUEST FOR CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE PART 2--
TAXPAYER IDENTIFICATION INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE. Awaiting TIN [ ]
NUMBER (TIN) SIGNATURE DATE
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

<PAGE>

THE MARQUEE GROUP, INC.

[MARQUEE GROUP LOGO]

OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING WARRANTS,
EACH EXERCISABLE AT $7.50 PER SHARE
OF COMMON STOCK,
AT
$2.25 PER WARRANT
NOTICE OF GUARANTEED DELIVERY

As set forth in Section 5 of the Offer to Purchase, dated July 23, 1997
(the "Offer to Purchase"), this form, or one substantially equivalent hereto,
must be used to accept the Offer (as defined below) of The Marquee Group,
Inc., a Delaware corporation (the "Company"), if (a) certificates for the
redeemable warrants (the "Warrants") of the Company are not immediately
available or (b) the warrantholders cannot deliver their Warrants, Letter of
Transmittal and other required documents to Continental Stock Transfer &
Trust Company, who will act as depositary and escrow agent for the Offer (the
"Depositary"), on or prior to 5:00 p.m., New York City time, on the
Expiration Date (as defined in Section 4 of the Offer to Purchase). Such form
may be delivered by hand or transmitted by facsimile transmission or mail to
the Depositary prior to 5:00 p.m., New York City time, on the Expiration
Date.

The Eligible Institution (as defined in Section 5 of the Offer to
Purchase) that completes this form must communicate the guarantee to the
Depositary and must deliver the Letter of Transmittal and certificates for
the Warrants to the Depositary within the time period shown herein. Failure
to do so could result in a financial loss to such Eligible Institution.

CONTINENTAL STOCK TRANSFER & TRUST COMPANY

<TABLE>
<CAPTION>
<S> <C> <C>
By Mail, Hand or FOR INFORMATION:
BY FACSIMILE TRANSMISSION: Overnight Delivery: (212) 509-4000 x535
(212) 509-5150 Continental Stock Transfer & Trust Company
Attn: Reorganization Department 2 Broadway, 19th Floor
New York, New York 10004
</TABLE>

Delivery of this instrument to an address, or transmission of instructions
via facsimile number, other than as set forth above will not constitute a
valid delivery.

This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature must appear in the applicable
space provided in the signature box in the Letter of Transmittal.

<PAGE>

Ladies and Gentlemen:

The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Offer to Purchase and related Letter of
Transmittal (which together constitute the "Offer"), receipt of which is
hereby acknowledged, the number of Warrants specified below pursuant to the
Guaranteed Delivery procedure set forth in Section 5 of the Offer to
Purchase.

(PLEASE TYPE OR PRINT ALL INFORMATION BELOW)

Number of Warrants Tendered:
---------------------------------------------------
Warrant Certificate No(s) (if available):
--------------------------------------
Total Number of Warrants
Represented by Certificate(s):
-------------------------------------------------
Signature(s):
------------------------------------------------------------------
Name(s) of Record Holder(s):
---------------------------------------------------
Address(es):
-------------------------------------------------------------------

- -------------------------------------------------------------------------------

Area Code and Telephone No(s):
-------------------------------------------------
Name of Tendering Institution:
-------------------------------------------------
Account Number:
----------------------------------------------------------------

GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the
United States, hereby guarantees (a) that the above named person(s) has a
"net long position" in the Warrants tendered hereby within the meaning of
Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b) that
such tender of Warrants complies with Rule 14e-4 and (c) that delivery to
the Company of certificates representing the Warrants tendered hereby,
together with a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof properly completed and duly executed)
and any other required documents will be received by the Depositary no
later than three Nasdaq trading days after the date of execution of this
Notice of Guaranteed Delivery.

Name of Firm:
------------------------------------------------------------------
Address:
-----------------------------------------------------------------------

- -------------------------------------------------------------------------------
ZIP CODE

Area Code and
Telephone Number:
--------------------------------------------------------------

- -------------------------------------------------------------------------------
AUTHORIZED SIGNATURE

- -------------------------------------------------------------------------------
TITLE

Name:
- -------------------------------------------------------------------------------
PLEASE TYPE OR PRINT

Dated: , 1997
------------------------------------------------------------------

- -------------------------------------------------------------------------------
NOTE: DO NOT SEND WARRANT CERTIFICATES WITH THIS FORM. CERTIFICATES MUST BE
SENT WITH THE LETTER OF TRANSMITTAL.

<PAGE>

THE MARQUEE GROUP, INC.

[MARQUEE GROUP LOGO]

OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING WARRANTS,
EACH EXERCISABLE AT $7.50 PER SHARE
OF COMMON STOCK,
AT
$2.25 PER WARRANT

- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON THURSDAY, AUGUST 21, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------

To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:

The Marquee Group, Inc., a Delaware corporation (the "Company"), is
offering to purchase all of its outstanding redeemable warrants (the
"Warrants"), at a price, net to the seller in cash, of $2.25 per Warrant (the
"Purchase Price"), upon the terms and subject to the conditions set forth in
the enclosed Offer to Purchase, dated July 23, 1997 (the "Offer to
Purchase"), and the enclosed Letter of Transmittal (which together constitute
the "Offer"). Each Warrant entitles the holder thereof to purchase one share
of Common Stock, $.01 par value per share (the "Common Stock"), of the
Company at a price of $7.50 per share, subject to adjustment, from the date
of issuance until December 4, 2001, unless redeemed earlier.

The Offer is subject to a number of conditions, including a minimum of
3,200,000 Warrants being tendered and not withdrawn and obtaining financing
or completing the Company's Stock Offering (as defined in Section 1 of the
Offer to Purchase). See the Offer to Purchase under "Section 8. Certain
Conditions to the Offer."

We are asking you to contact clients for whom you hold Warrants registered
in your name or in the name of your nominee or who hold Warrants registered
in their own names.

The Company will not pay any fees or commissions to any broker or dealer
or other person for soliciting tenders of Warrants pursuant to the Offer.
However, you will be reimbursed for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients.
The Company will pay or cause to be paid all transfer taxes, if any,
applicable to the purchase of Warrants to it or its order, except as
otherwise provided in Instruction 3 of the Letter of Transmittal.

For your information and for forwarding to your clients for whom you hold
Warrants registered in your name or in the name of your nominee or who hold
Warrants registered in their own names, enclosed are copies of the following
documents:

1. The Offer to Purchase, dated July 23, 1997;

2. The Letter of Transmittal;

3. A form letter that may be sent to your clients for whose accounts you
hold Warrants registered in your name or the name of your nominee, with
space provided for obtaining such clients' instructions with regard to
the Offer to Purchase;

4. A Notice of Guaranteed Delivery;

5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and

6. A return envelope addressed to the Depositary.

<PAGE>

WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. The Offer
will expire at 5:00 p.m., New York City time, on August 21, 1997, unless
extended.

A warrantholder wishing to tender Warrants pursuant to the Offer should
either (a) complete and execute the Letter of Transmittal (or facsimile
thereof) and have the signature thereon guaranteed if required by the
instructions thereof, and deliver such Letter of Transmittal, together with
certificates representing the Warrants to be tendered and any other required
documents, to the Depositary on or prior to the Expiration Date or (b)
request his broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for him. See the Offer to Purchase under "Section
5. Procedure for Tendering of Warrants--Guaranteed Delivery."

Warrantholders who wish to tender their Warrants pursuant to the Offer and
(a) whose certificate(s) for such Warrants are not immediately available or
(b) who cannot deliver their Warrants and Letter of Transmittal to the
Depositary on or prior to the Expiration Date, must tender their Warrants
according to the guaranteed delivery procedures set forth in the Offer to
Purchase under "Section 5. Procedure for Tendering of Warrants--Guaranteed
Delivery."

All questions relating to the Offer, as well as requests for assistance,
may be directed to the Company's Information Agent, Georgeson & Company Inc.,
at its address and telephone number set forth on the back cover of the Offer
to Purchase. Requests for additional copies of the Offer to Purchase, the
Letter of Transmittal and the other Offer materials may be directed to the
Information Agent.

Very truly yours,

THE MARQUEE GROUP, INC.

Enclosures

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE COMPANY, THE DEPOSITORY, THE INFORMATION AGENT
OR ANY AFFILIATE OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO
THE OFFER NOT MADE IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.

<PAGE>

THE MARQUEE GROUP, INC.

[MARQUEE GROUP LOGO]

OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING WARRANTS,
EACH EXERCISABLE AT $7.50 PER SHARE
OF COMMON STOCK,
AT
$2.25 PER WARRANT

To Our Clients:

The Marquee Group, Inc., a Delaware corporation (the "Company"), is
offering to purchase all of its outstanding redeemable warrants (the
"Warrants"), at a price, net to the seller in cash, of $2.25 per Warrant (the
"Purchase Price"), upon the terms and subject to the conditions set forth in
the enclosed Offer to Purchase, dated July 23, 1997 (the "Offer to
Purchase"), and the enclosed Letter of Transmittal (which together constitute
the "Offer"). Each Warrant entitles the holder thereof to purchase one share
of Common Stock, $.01 par value per share (the "Common Stock"), of the
Company at a price of $7.50 per share, subject to adjustment, from the date
of issuance until December 4, 2001, unless redeemed earlier.

This material is being forwarded to you as the beneficial owner of
Warrants held by us in your account but not registered in your name. A TENDER
WITH RESPECT TO SUCH WARRANTS MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD
AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO
YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER WARRANTS
HELD BY US FOR YOUR ACCOUNT.

Accordingly, we request instructions as to whether you wish us to tender
any or all of your Warrants held by us for your account, pursuant to the
terms and conditions of the Offer. Your instructions to us should be
forwarded as promptly as possible in order to permit us to tender your
Warrants on your behalf in accordance with the provisions of the Offer.

Your attention is directed to the following:

1. The Offer will expire at 5:00 p.m., New York City time, on Thursday,
August 21, 1997, unless the Offer is extended.

2. The Offer is conditioned upon a minimum of 3,200,000 Warrants being
validly tendered and not withdrawn and upon obtaining financing or
completing the Company's Stock Offering (as defined in Section 1 of the
Offer to Purchase). The Offer is also subject to certain other
conditions described in the Offer to Purchase.

3. Any stock transfer taxes applicable to the sale of Warrants to the
Company pursuant to the Offer will be paid by the Company, except as
otherwise provided in Instruction 3 of the Letter of Transmittal.

If you wish to have us tender any or all of your Warrants, please so
instruct us by completing, executing and returning to us the instruction form
on the reverse side of this letter. An envelope to return your instructions
to us is enclosed. If you authorize tender of your Warrants, all such
Warrants will be tendered unless otherwise specified on the attached
instruction form. Your instructions should be forwarded to us in ample time
to permit us to submit a tender on your behalf before the expiration of the
Offer.

We urge you to read carefully the enclosed Offer to Purchase before
instructing us to tender your Warrants.

THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON
BEHALF OF, WARRANTHOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OF THE
OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. IN THOSE JURISDICTIONS THE LAWS OF WHICH REQUIRE THAT THE OFFER
BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE
ON BEHALF OF THE COMPANY BY ONE OR MORE REGISTERED BROKERS OR DEALERS
LICENSED UNDER THE LAWS OF SUCH JURISDICTION.

<PAGE>

INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING WARRANTS OF THE MARQUEE GROUP, INC.

The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase and the Letter of Transmittal relating to the Offer by The
Marquee Group, Inc. to purchase Warrants.

This will instruct you to tender the number of Warrants indicated below
(or, if no number is indicated below, the entire number of Warrants) that are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer to Purchase and related Letter of
Transmittal.

Please TENDER Warrants held by you for my account on the appropriate
Letter of Transmittal.

SIGN HERE

Signature(s):
---------------------------------------------------------
Name(s):
--------------------------------------------------------------
Address(es):
----------------------------------------------------------
Area Code and Telephone No(s):
----------------------------------------
Taxpayer Identification or Social Security No(s):
---------------------
Dated:
-----------------------------

UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN IN THE SPACE PROVIDED, YOUR
SIGNATURE(S) HEREON SHALL CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL OF
YOUR WARRANTS PURSUANT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO
PURCHASE AND THE LETTER OF TRANSMITTAL.

<PAGE>

[MARQUEE GROUP LOGO]

THE MARQUEE GROUP, INC.
888 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
JULY 23, 1997

Re: The Warrants of The Marquee Group, Inc.

Dear Warrantholder:

The Marquee Group, Inc. (the "Company") is offering to purchase all of its
outstanding redeemable warrants (the "Warrants"), at a price, net to the
seller in cash, of $2.25 per Warrant (the "Offer"). The Offer is conditioned,
among other things, upon a minimum of 3,200,000 Warrants being tendered and
upon completing the Company's Stock Offering (as defined in the enclosed
Offer to Purchase) or obtaining alternative financing for the Offer.

On July 21, 1997, the closing sale price of the Warrants on the Nasdaq
SmallCap Market was $1.88 per Warrant. Warrantholders are urged to obtain a
current market quotation for the Warrants. Any warrantholder whose Warrants
are purchased in the Offer will not incur the usual transaction costs
associated with open market sales.

The Offer is explained in detail in the enclosed Offer to Purchase and the
Letter of Transmittal. The instructions on how to tender your Warrants are
also explained in detail in the enclosed accompanying materials. We encourage
you to read these materials carefully before making any decision with respect
to the Offer. If you do not wish to participate in the Offer, you do not need
to take any action.

The Board of Directors of the Company has approved the making of the
Offer. However, neither the Company nor the Board of Directors makes any
recommendation as to whether any warrantholder should tender any or all of
such warrantholder's Warrants. Warrantholders must make their own decision as
to whether to tender Warrants and, if so, how many Warrants to tender.

We have retained Georgeson & Company Inc. as our Information Agent to help
you respond to the Offer. Please contact them at their toll free number
(1-800-223-2064), if you have any questions. Their representatives will be
pleased to answer your questions and can help you complete the enclosed
materials.

Very truly yours,

THE MARQUEE GROUP, INC.

By: /s/ Robert M. Gutkowski
-----------------------
Robert M. Gutkowski
President and Chief
Executive Officer

<PAGE>

FOR IMMEDIATE RELEASE

FROM: The Marquee Group, Inc. CONTACT:
888 Seventh Avenue Timothy J. Klahs
16th Floor Director, Corporate Communications
New York, NY 10019 The Sillerman Companies
150 East 58th Street
New York, NY 10155
212-407-9126

THE MARQUEE GROUP COMMENCES TENDER OFFER FOR ITS WARRANTS

NEW YORK, July 23, 1997 - The Marquee Group, Inc. (NASDAQ Small Cap: MRQE)
today announced that it is commencing a tender offer to purchase all of its
outstanding redeemable warrants at a price of $2.25 per warrant. Each
warrant entitles the holder to purchase one share of common stock of
the company at a price of $7.50 per share, subject to adjustment, until
December 4, 2001, unless redeemed earlier. As of July 22, 1997, there
were 4,519,162 warrants issued and outstanding. The warrants are quoted
in The Nasdaq Stock Market's SmallCap Market under the symbol "MRQEW" and
on the Boston Stock Exchange under the symbol "MRT.WS." On July 22, 1997,
the last trading day before the commencement of the offer, the last reported
sales price of the warrants on The Nasdaq Stock Market's SmallCap Market
was $1.875 per warrant.

The offer is conditioned upon a minimum of 3,200,000 warrants being tendered
and not withdrawn and obtaining financing for the purchase of the tendered
warrants or completing the company's stock offering led by managing
underwriters Prudential Securities Incorporated and Cowen & Company. The offer
is also subject to other conditions, which are described in the Offer to
Purchase dated July 23, 1997. The company has requested that no director or
executive officer of the company tender warrants pursuant to the offer, and
it has been advised that they currently do not intend to do so unless the
company is unable to meet the condition for the minimum number of warrants
tendered. The information agent for this offer is Georgeson & Company Inc.,
Wall Street Plaza, New York, NY 10005, telephone 800-223-2064.

Marquee provides integrated event management, television production,
marketing, talent representation and consulting services in the sports, news
and other entertainment industries. The company's event management,
television production and marketing services involve managing sporting events,
producing television programming and marketing professional and collegiate
athletic leagues and organizations. The company also arranges and negotiates
sports and entertainment-related television rights, advertising, corporate
sponsorships and naming rights, or entitlements, for its clients. The
talent representation services provided by the company include negotiating
employment agreements and creating and evaluating various business
opportunities for sports, news and entertainment personalities. The company
also provides a variety of consulting services to clients either engaged in,
or seeking exposure in, sports and entertainment-related industries.

A registration statement relating to the stock offering has been filed with
the Securities and Exchange Commission but has not yet become effective.
These securities may not be sold, nor may offers to buy be accepted, prior
to the time the registration statement becomes effective. This press
release shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of the securities in any state
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.

A written prospectus relating to the securities may be obtained from
Timothy J. Klahs, Director, Corporate Communications, 150 East 58th Street,
19th Floor, New York, NY 10155, telephone 212-407-9126.

<PAGE>

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.

<TABLE>
<CAPTION>
- --------------------------------------------------------------
GIVE THE
NAME AND
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- --------------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first individual
on the account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the minor
account) is the only contributor,
the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
</TABLE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------
GIVE THE NAME
AND EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------------
<S> <C> <C>
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
state or local government,
school district, or prison)
that receives agricultural
program payments
</TABLE>
- -----------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you
furnish.
(2) Circle the minor's name and furnish the minor's social security
number.
(3) Circle the ward's, minor's or incompetent person's name and furnish
such person's social security number.
(4) Show your individual name. You may also enter your business name. You
may use your Social Security number or employer identification
number.
(5) List first and circle the name of the legal trust, estate or pension
trust.
Note: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.

<PAGE>

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

OBTAINING A NUMBER

If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
and apply for a number.

PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING

Payees specifically exempted from backup withholding on ALL payments include
the following:

o A corporation.
o A financial institution.

o An organization exempt from tax under Section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.

o The United States or any agency or instrumentality thereof.

o A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.

o A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.

o An international organization or any agency or instrumentality thereof.

o A registered dealer in securities or commodities registered in the United
States or a possession of the United States.

o A real estate investment trust.

o A common trust fund operated by a bank under Section 584(a) of the Code.

o An exempt charitable remainder trust, or a non-exempt trust described in
Section 4947(a)(1) of the Code.

o An entity registered at all times under the Investment Company Act of
1940.

o A foreign central bank of issue.

Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:

o Payments to nonresident aliens subject to withholding under Section 1441
of the Code.

o Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.

o Payments of patronage dividends where the amount received is not paid in
money.

o Payments made by certain foreign organizations.

o Payments made to a nominee.

Payments of interest not generally subject to backup withholding including
the following:

o Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the taxpayer's trade or business and you have not
provided your correct taxpayer identification number to the payer.

o Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code).

o Payments described in Section 6049(b)(5) of the Code to nonresident
aliens.

o Payments on tax-free covenant bonds under Section 1451 of the Code.

o Payments made by certain foreign organizations.

o Payments made to a nominee.

Exempt payees described above should file Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT
ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER
A COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).

Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under Sections 6041, 6041A(a),
6042, 6044, 6045, 6049, 6050A and 6050N of the Code.

PRIVACY ACT NOTICE. -- Section 6109 of the Code require most recipients of
dividends, interest, or other payments to give taxpayer identification
numbers to payers who must report the payments to IRS. IRS uses the numbers
for identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold
31% of taxable interest, dividends, and certain other payments to a payee who
does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.

PENALTIES

(1) FAILURE TO FURNISH TAXPAYER NUMBER. -- If you fail to furnish your
taxpayer identification number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and
not to willful neglect.

(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.

(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.

FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.

<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.

SUBJECT TO COMPLETION -- DATED JULY 23, 1997
PROSPECTUS
- -----------------------------------------------------------------------------

[LOGO]
7,500,000 Shares
THE MARQUEE GROUP, INC.
Common Stock

- -----------------------------------------------------------------------------

All of the shares of common stock, par value $.01 per share (the "Common
Stock"), offered hereby (this "Offering") are being sold by The Marquee
Group, Inc. (the "Company").

The Common Stock of the Company is included in The Nasdaq Stock Market's
SmallCap Market ("Nasdaq SmallCap Market") under the symbol "MRQE" and on the
Boston Stock Exchange under the symbol "MRT." On July 21, 1997, the last
reported sales price of the Common Stock on the Nasdaq SmallCap Market was
$6.125 per share. The Company has applied to the American Stock Exchange (the
"AMEX") to list the Common Stock under the symbol "MRQ" and expects to have
the Common Stock listed thereon prior to the consummation of this Offering.
See "Price Range of Common Stock and Warrants."

On July 23, 1997, the Company commenced an offer (the "Tender Offer") to
purchase for cash up to all (but not less than 3,200,000, representing
approximately 70.8%) of the Company's 4,519,162 outstanding warrants (the
"Warrants"). The consummation of this Offering is conditioned upon the
closing of the Tender Offer and the concurrent closing of the transactions
contemplated by the ProServ Acquisition Agreements (as defined herein).

SEE "RISK FACTORS" ON PAGES 10 TO 13 FOR A DISCUSSION OF CERTAIN MATERIAL
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
COMMON STOCK OFFERED HEREBY.
- -----------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

- -----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
- -------------- ------------ ----------------- ------------------
<S> <C> <C> <C>
Per Share ..... $ $ $
- -------------- ------------ ----------------- ------------------
Total(3)....... $ $ $
- -------------- ------------ ----------------- ------------------
</TABLE>

- -----------------------------------------------------------------------------
(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated to be $ .
(3) The Company has granted the several Underwriters a 30-day
over-allotment option to purchase up to 1,125,000 additional shares of
Common Stock on the same terms and conditions as set forth above. If
all such additional shares are purchased by the Underwriters, the total
Price to Public will be $ , the total Underwriting Discounts and
Commissions will be $ and the total Proceeds to Company will be
$ . See "Underwriting."
- -----------------------------------------------------------------------------

The shares of Common Stock are offered by the several Underwriters subject to
delivery by the Company and acceptance by the Underwriters, prior sale and
withdrawal, cancellation or modification of the offer without notice.
Delivery of the shares to the Underwriters is expected to be made at the
office of Prudential Securities Incorporated, One New York Plaza, New York,
New York, on or about , 1997.

PRUDENTIAL SECURITIES INCORPORATED COWEN & COMPANY

, 1997

<PAGE>
[ARTWORK]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
AND OF THE WARRANTS, INCLUDING PURCHASES OF THE COMMON STOCK AND OF THE
WARRANTS TO STABILIZE THE MARKET PRICE, PURCHASES OF THE COMMON STOCK AND OF
THE WARRANTS TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
AND THE WARRANTS ON THE NASDAQ SMALLCAP MARKET IN ACCORDANCE WITH RULE 103 OF
REGULATION M. SEE "UNDERWRITING."

2
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and
financial statements (including the notes thereto) appearing elsewhere in
this Prospectus. Except as otherwise noted, all information in this
Prospectus assumes (i) consummation of the Tender Offer and no exercise of
any remaining outstanding Warrants, (ii) no exercise of the outstanding IPO
Unit Options (as defined herein) representing the right to purchase an
aggregate of 670,000 shares of Common Stock, assuming exercise of the
Warrants underlying the IPO Unit Options, (iii) no exercise of the
outstanding options to purchase 237,500 shares of Common Stock which have
been granted under the Company's 1996 Stock Option Plan and (iv) that the
Underwriters' over-allotment option will not be exercised. Unless the context
otherwise requires, the "Company" refers to The Marquee Group, Inc. and its
subsidiaries. The consummation of this Offering is conditioned upon the
closing of the Tender Offer and the concurrent closing of the transactions
contemplated by the ProServ Acquisition Agreements. Investors should consider
carefully the information set forth under "Risk Factors."

THE COMPANY

The Company provides integrated event management, television production,
marketing, talent representation and consulting services in the sports, news
and other entertainment industries. The Company's event management,
television production and marketing services involve managing sporting
events, producing sports television programs and marketing professional and
collegiate athletic leagues and organizations. The Company also arranges and
negotiates sports and entertainment-related television rights, advertising,
corporate sponsorships and naming rights (or "entitlements") for its clients.
The talent representation services provided by the Company include
negotiating employment agreements and creating and evaluating various
business opportunities for sports, news and entertainment personalities. The
Company also provides a variety of consulting services to clients either
engaged in, or seeking exposure in, sports and entertainment-related
industries.

In recent years, significant developments in mass media, including the
growth of satellite communications and cable television, have resulted in
expanded national and international exposure of sports, news and
entertainment events and programming. For example, according to Gould Media,
a research and publishing company for the sports industry, the number of
national or regional television networks offering sports programming in the
United States has grown from three in 1977 to 43 in 1997. In addition,
according to IEG's Complete Guide to Sponsorship, annual North American
sponsorship spending has grown from $1.0 billion (of which the Company
believes $900 million was related to sports) in 1986 to $5.4 billion (of
which $3.5 billion was related to sports) in 1996. These amounts represent
compounded annual growth rates of 18.4% for sponsorship spending and 14.5%
for sports sponsorship spending. The increased exposure of sporting and
entertainment events and of high profile personalities has expanded the need
for the types of services provided by the Company and has given rise to
significant additional revenue sources, such as corporate sponsorships and
entitlements to events and venues. The Company intends to continue to seek
opportunities from these markets through its existing contacts and resources.

From the time of its organization until its initial public offering in
December 1996 (the "IPO"), the Company developed its sports television
production, marketing and consulting business. Simultaneously with the IPO,
the Company acquired Sports Marketing and Television International, Inc.
("SMTI"), a leading provider of television production and marketing services
in the sports and other entertainment

3
<PAGE>
industries since 1984, and Athletes & Artists, Inc. ("A&A"), a sports and
news talent representation firm founded in 1977, which has a client list that
includes premier athletes, sports and news broadcasters and media executives.
Since the IPO, the Company has continued to grow by hiring individuals whose
businesses and expertise complement those of the Company and by providing
services to an increasing number of clients. Through both acquisitions and
internal growth, the Company has developed or substantially expanded its
event management, television production, marketing, talent representation and
consulting capabilities. In addition, upon completion of this Offering, the
Company will continue to expand its capabilities through the consummation of
the ProServ Acquisition and the QBQ Acquisition (each as defined herein).

In order to capitalize on the opportunities available in the sports, news
and other entertainment industries, the Company has developed an operating
and acquisition strategy consisting of the following major elements:

OPERATING STRATEGY

Increase Breadth of Services. The Company intends to continue to expand
its current lines of business to provide a more comprehensive array of
services to its clients. As the needs of companies utilizing advertising and
marketing services become increasingly sophisticated, the Company believes
that its clients will require a broader range of the types of services it
provides. The Company will utilize its breadth of services, its financial
resources, its heightened visibility and its management's experience and
reputation to provide it with expanded opportunities. For example, the
Company's financial resources may enable it to create or purchase ownership
interests in sporting events and to develop in-house television production
capabilities. In addition, the Company intends to continue to expand its
consulting business in order to utilize management's substantial expertise in
various aspects of sports and entertainment event management, television
production and marketing.

Increase International Market Penetration. The Company intends to continue
to pursue expansion opportunities in international markets, primarily
focusing on the European and Pacific Rim markets. The Company believes that
the sports, news and other entertainment industries in these markets are less
developed than in the United States and therefore present significant
opportunities to provide the types of services offered by the Company.

ACQUISITION STRATEGY

The Company intends to continue to expand through the acquisition of
companies and events and through attracting individuals with relevant
expertise, both within its existing lines of business and within
complementary lines of business. According to the 1997 Sports Business
Directory published by E.J. Krause & Associates, Inc., there are presently
over 700 companies in North America that provide sports marketing and/or
talent representation services. The Company believes that the highly
fragmented nature of its industry offers many attractive acquisition
opportunities, and the Company intends to rely on the experience of its
management team to continue to identify acquisition candidates whose
businesses will complement the Company's existing operations and whose
operations may be constrained by lack of capital. The Company believes that
it is one of the few publicly-traded companies within its industry, and, as a
result, the Company will have certain advantages over many of its smaller
competitors in negotiating and consummating acquisitions.

4
<PAGE>
PENDING ACQUISITIONS

ProServ Acquisition. The Company has recently entered into agreements (the
"ProServ Acquisition Agreements") to acquire approximately 94% of ProServ,
Inc. and ProServ Television, Inc. (collectively, "ProServ") and is currently
negotiating to acquire the remaining minority interests in ProServ
(collectively, the "ProServ Acquisition"). If the Company is unable to
acquire the remaining minority interests in ProServ on satisfactory terms,
the Company intends to obtain full ownership of ProServ through a statutory
merger. ProServ is an established provider of international sports event
management, television production, marketing, talent representation and
consulting services. ProServ was founded in 1969 by the then-Captain of the
U.S. Davis Cup team, Donald Dell, who also co-founded the Association of
Tennis Professionals ("ATP") and pioneered the commercial development of
tennis as a major international sport. Upon the consummation of the
transactions contemplated by the ProServ Acquisition Agreements, Mr. Dell
will continue to serve as the chairman and chief executive officer of ProServ
and will become a director of the Company. ProServ provides many of the same
services that the Company currently provides and, as a result, the Company
anticipates increased revenues through the sharing of business development
opportunities, contacts and expertise. In addition, although the Company's
primary operations have been in the United States, the Company believes
ProServ's existing international operations will facilitate the Company's
goal of becoming a major competitor in the burgeoning business of
international sports, particularly in European and Pacific Rim markets.
ProServ has undergone an internal restructuring focused on eliminating
business activities that do not provide adequate financial returns and
reducing its operating expenses. See "Management's Discussion and Analysis of
Financial Condition." The aggregate purchase price pursuant to the ProServ
Acquisition Agreements consists of approximately $10.1 million in cash and
225,000 shares of Common Stock. The Company anticipates purchasing the
remaining minority interests for approximately $609,000. See "Agreements
Related to the Pending Acquisitions--ProServ Acquisition."

QBQ Acquisition. The Company has also entered into an agreement pursuant
to which Marquee Music, Inc. ("Marquee Music"), a wholly-owned subsidiary of
the Company, will acquire the assets of QBQ Entertainment, Inc. ("QBQ"), a
company that books tours and appearances for a variety of entertainers, which
was founded in 1986 (the "QBQ Acquisition" and, together with the ProServ
Acquisition, the "Pending Acquisitions"). QBQ has relationships with, and has
provided booking and touring representation services to, a variety of
musicians, entertainers and groups, including Billy Joel, Metallica, Lynyrd
Skynyrd, Luther Vandross, Rodney Dangerfield and Bruce Hornsby. The Company
believes that the music business offers commercial opportunities similar to
the sports business, such as corporate sponsorships and entitlements. Mr.
Gutkowski has significant expertise in the music concert business, having
served as President of Madison Square Garden Corporation, a premier indoor
concert venue, and has been actively involved in various aspects of the music
concert business, including production of televised concerts. Upon the
consummation of the QBQ Acquisition, Dennis Arfa, the founder and chief
executive officer of QBQ, will serve as the chief executive officer of
Marquee Music. The aggregate purchase price for the QBQ Acquisition consists
of approximately $3.1 million in cash, $1.6 million payable in annual
installments over eight years and up to $2.5 million payable in shares of
Common Stock, of which shares relating to up to $500,000 are subject to an
escrow agreement. See "Agreements Related to the Pending Acquisitions--QBQ
Acquisition."

The timing and consummation of the Pending Acquisitions are subject to a
number of conditions, certain of which are beyond the Company's control, and
there can be no assurance that the Pending Acquisitions will be consummated.
However, the consummation of this Offering is conditioned upon the concurrent
closing of the transactions contemplated by the ProServ Acquisition
Agreements. Although this Offering is not conditioned upon the closing of the
QBQ Acquisition, the Company anticipates closing the QBQ Acquisition promptly
following the consummation of this Offering. See "Agreements Related to the
Pending Acquisitions." While the Company has not entered into agreements
relating to any acquisitions other than the Pending Acquisitions, it intends
to continue to expand its operations through additional acquisitions of
companies and events and through attracting individuals with relevant
expertise. The Company anticipates that a portion of the proceeds of this
Offering will be used for such acquisitions. See "Use of Proceeds."

5
<PAGE>
SERVICES PROVIDED BY THE COMPANY

The Company believes that, upon the consummation of the Pending
Acquisitions, it will be one of the leading integrated providers of
comprehensive event management, television production, marketing, talent
representation and consulting services within the sports, news and
entertainment industries. The following are brief descriptions of the
Company's lines of business:

Event Management, Television Production and Marketing Services. The
Company's event management, television production and marketing services
involve managing sporting events, producing sports television programs and
marketing professional and collegiate athletic leagues and organizations. The
Company also arranges and negotiates sports and entertainment-related
television rights, advertising, corporate sponsorships and entitlements for
its clients. The Company's current projects include producing and/or
marketing The Breeders' Cup Championship, the Isuzu Celebrity Golf
Championship, the U.S. Open Figure Skating Championship and all ESPN and
ESPN2 boxing telecasts. Upon consummation of the ProServ Acquisition, the
Company will derive revenues from providing event management, television
production and marketing services to 14 professional tennis events annually
(including the sale of U.S. cable television rights to the U.S. Open Tennis
Championship and U.S. broadcast and cable television rights to the French
Open Tennis Championship and the management and production of the AT&T
Challenge Cup, an ATP tour event). The Company will also derive revenues from
the sale of the international television rights to substantially all NCAA
Championship events (including the Final Four and the College World Series)
and will own and/or manage other international events such as the Canon
Shootout golf tournament.

Talent Representation. The Company negotiates employment agreements and
creates and evaluates various business opportunities for sports, news and
entertainment personalities. The Company's roster of clients includes more
than 50 current and former professional athletes in a variety of sports
(including Brian Leetch, Ben Coates and Irving Fryar), 80 broadcasters
(including Forrest Sawyer, Al Michaels, Christiane Amanpour, Dan Dierdorf and
Chris Berman), authors and media executives. Upon consummation of the ProServ
Acquisition, the Company will represent over 100 additional national and
international athletes in a variety of sports, including Stefan Edberg,
Gabriela Sabatini, Mark Chmura, Per-Ulrik Johansson and Greg LeMond.

Upon consummation of the QBQ Acquisition, the Company will expand its
services into the music and entertainment business. QBQ has relationships
with, and has booked tours for, such clients as Billy Joel, Metallica, Lynyrd
Skynyrd, Rodney Dangerfield and Bruce Hornsby. Many of the clients
represented by QBQ have an extended history with QBQ, touring periodically
over a number of years.

Consulting. The Company currently provides specialized consulting services
to 12 clients either engaged in, or seeking exposure in, sports and
entertainment-related industries. For example, the Company advises and
assists in the development of local and regional sports programming for
Americast (a partnership consisting of Ameritech Corporation, BellSouth
Corporation, SBC Communications, Inc., GTE Corporation, Southern New England
Telecommunications and The Walt Disney Company). Upon consummation of the
ProServ Acquisition, the Company will also provide consulting services to,
among others, Staples, Inc., Schering-Plough Corporation and Hershey Foods
Corporation.

The Company was incorporated in Delaware in July 1995. The Company's
executive offices are located at 888 Seventh Avenue, New York, New York
10019, and its telephone number is (212) 728-2000.

TENDER OFFER

On July 23, 1997, the Company commenced the Tender Offer to purchase up to
all (but not less than 3,200,000, representing approximately 70.8%) of the
4,519,162 outstanding Warrants at a cash purchase price of $2.25 per Warrant.
On July 21, 1997, the last sales price for the Warrants as reported on the
Nasdaq SmallCap Market was $1.875 per Warrant. At the Company's request, its
directors and executive officers have stated that they do not currently
intend to tender their Warrants unless the Company is unable to purchase the
minimum number of Warrants. Notwithstanding the foregoing, such directors and
executive officers may tender or not tender their Warrants at their
discretion. The Company is exploring, through its principal financial
advisor, financing for the Tender Offer. Such financing may take the form

6
<PAGE>
of a short-term loan or other indebtedness, or the Company may fund the
purchase of the Warrants through the proceeds of this Offering. The Company
anticipates that any indebtedness incurred in financing the Tender Offer will
be repaid with a portion of the net proceeds of this Offering. See "Use of
Proceeds." The Warrants will not be listed on the Boston Stock Exchange
following the consummation of this Offering, and there can be no assurance
that the Warrants will be listed on AMEX or will continue to be quoted on the
Nasdaq SmallCap Market following the closing of the Tender Offer. The
consummation of this Offering is conditioned upon the closing of the Tender
Offer.

THE OFFERING

Common Stock Offered Hereby ... 7,500,000 shares

Common Stock to be Outstanding
after this Offering .......... 16,269,162 shares(1)

Common Stock to be Outstanding
after this Offering
and the Pending Acquisitions . 16,910,828 shares(1)(2)

Use of Proceeds ............... To fund the cash portion of the purchase
price of the Pending Acquisitions and
payment of certain indebtedness of ProServ,
to fund the indebtedness which may be
incurred to purchase the Warrants or to
purchase Warrants pursuant to the Tender
Offer and for working capital and other
general corporate purposes, including future
acquisitions. See "Use of Proceeds."

Nasdaq SmallCap Market Symbol . MRQE

Boston Stock Exchange Symbol .. MRT

Proposed AMEX Symbol .......... MRQ
- ------------
(1) Excludes up to (i) 4,519,162 shares issuable upon the exercise of the
Warrants outstanding prior to the consummation of the Tender Offer at
an exercise price of $7.50 per share, (ii) 670,000 shares issuable upon
exercise of the IPO underwriters' unit purchase options (the "IPO Unit
Options"), including shares issuable upon exercise of the Warrants
contained therein, (iii) 500,000 shares reserved for issuance under the
Company's 1996 Stock Option Plan, under which options to purchase
237,500 shares are outstanding, (iv) 200,000 shares issuable upon
exercise of an option to be granted to The Sillerman Companies, Inc.
("TSC") for consulting services provided in connection with the Tender
Offer and (v) 1,125,000 shares issuable upon exercise of the
Underwriters' over-allotment option. See "Management--1996 Stock Option
Plan," "Description of Securities" and "Certain Relationships and
Related Transactions--Consulting Agreement."
(2) Assumes a price of $6.00 per share of Common Stock for purposes of
determining the number of shares to be issued in connection with the
QBQ Acquisition. Includes (i) 1,275,000 shares of Common Stock placed
in escrow by certain officers, directors and consultants of the Company
in connection with the IPO (the "IPO Escrow Shares") and (ii) 83,333
shares of Common Stock that the Company has agreed to deposit in escrow
in connection with the QBQ Acquisition (the "QBQ Escrow Shares"). The
IPO Escrow Shares and the QBQ Escrow Shares are subject to cancellation
and will be contributed to the capital of the Company under certain
circumstances. In the event such shares are released from escrow, the
Company may record, for financial reporting purposes, a substantial
non-cash compensation charge to operations. See "Agreements Related to
the Pending Acquisitions--QBQ Acquisition" and "Principal
Stockholders--Escrow Shares."

RISK FACTORS

Investors should consider the material risk factors involved in connection
with an investment in the Common Stock offered hereby and the impact to
investors from various events that could adversely affect the Company's
business. See "Risk Factors."

7
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(amounts in thousands, except share data)

The Summary Consolidated Financial Data of the Company as of March 31,
1997 and for the three months ended March 31, 1997 and 1996 have been derived
from the unaudited financial statements and notes thereto of the Company
appearing elsewhere in this Prospectus. The pro forma summary data as of
March 31, 1997, for the three months ended March 31, 1997 and for the year
ended December 31, 1996 are derived from the unaudited pro forma condensed
combined financial statements which, in the opinion of the Company, reflect
all adjustments necessary for a fair presentation of the transactions for
which such pro forma financial information is given. Operating results for
interim periods are not necessarily indicative of the results that may be
achieved for the entire fiscal year. The Company had no operations during the
period from July 11, 1995 (inception) through December 31, 1995. The
following data should be read in conjunction with the notes thereto, the
audited and unaudited financial statements and notes contained elsewhere in
this Prospectus and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." See "Unaudited Pro Forma Condensed
Combined Financial Statements."

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 THREE MONTHS ENDED MARCH 31,
----------------------------------------------------------------------------------------------
PRO FORMA
FOR THE PRO FORMA
RECENT FOR THE PRO FORMA
PRO FORMA ACQUISITIONS, OFFERING FOR THE
FOR THE OFFERING, AND RECENT AS RECENT
AS RECENT AND PROSERV AND PENDING REPORTED ACQUISITIONS(1) HISTORICAL
REPORTED ACQUISITIONS(1) ACQUISITION(2)ACQUISITIONS(3) 1996 1996 1997
----------- ------------- ------------- ------------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenues ........... $ 2,869 $ 15,185 $ 28,573 $ 29,932 $ $ 1,520 $ 1,978
Operating expenses . 2,564 9,486 19,103 19,377 -- 954 943
General and
administrative
expenses........... 2,199 5,843 9,425 10,133 245 1,127 1,788
Restructuring
costs.............. -- -- 565 565 -- -- --
Depreciation and
amortization....... 61 108 1,092 1,479 -- 8 32
Operating loss ..... (1,955) (252) (1,612) (1,622) (245) (569) (785)
Net loss............ (2,411) (914) (2,274) (2,280) (245) (635) (778)
Net loss applicable
to common
stockholders....... $ (2,411) $ (914) $ (2,453) $ (2,459) $ (245) $ (635) $ (778)
Net loss per share
applicable to
common
stockholders....... $ (1.03) $ (0.12) $ (0.16) $ (0.16) $ (0.12) $ (0.31) $ (0.10)
Weighted average
number of shares
of common stock
outstanding(6) .... 2,346,717 7,494,162 15,219,162 15,552,495 2,066,662 2,066,662 7,494,162
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
FOR THE FOR THE
OFFERING OFFERING
AND PROSERV AND PENDING
ACQUISITION(4) ACQUISITIONS(5)
1997 1997
------------ -------------
<S> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenues ........... $ 3,347 $ 3,771
Operating expenses . 2,044 2,092
General and
administrative
expenses........... 2,383 2,559
Restructuring
costs.............. -- --
Depreciation and
amortization....... 285 378
Operating loss ..... (1,365) (1,258)
Net loss............ (1,358) (1,245)
Net loss applicable
to common
stockholders....... $ (1,409) $ (1,296)
Net loss per share
applicable to
common
stockholders....... $ (0.09) $ (0.08)
Weighted average
number of shares
of common stock
outstanding(6) .... 15,219,162 15,552,495
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
AT DECEMBER 31, 1996 AT MARCH 31, 1997
-------------------- ----------------------------------- --
PRO FORMA
FOR THE OFFERING,
TENDER OFFER AND
PENDING
AS REPORTED AS REPORTED ACQUISITIONS(7)
-------------------- ------------- ---------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash ................................. $7,231 $5,286 $20,258
Current assets ....................... 9,085 7,397 25,987
Total assets ......................... 9,361 8,461 51,088
Current liabilities .................. 1,850 1,750 7,124
Long-term debt ....................... 1,760 1,760 2,825
Common Stock subject to put options
in connection with Pending
Acquisition(8) ...................... -- -- 3,225
Stockholders' equity.................. 5,409 4,524 36,651
</TABLE>

8
<PAGE>
- ------------
(1) Gives effect to the IPO and acquisition of SMTI and A&A (the "Recent
Acquisitions"). The Company acquired SMTI and A&A on December 12, 1996
and included the results of their operations only from the acquisition
date in its consolidated results of operations for the year ended
December 31, 1996. Therefore, for pro forma purposes, the results of
operations of SMTI and A&A for the period prior to the acquisition date
are combined with the Company.
(2) Gives effect to (i) the IPO and the Recent Acquisitions, (ii) the
completion of this Offering at an assumed public offering price of
$6.00 per share and (iii) the ProServ Acquisition, as if they had
occurred on January 1, 1996.
(3) Gives effect to (i) the IPO and the Recent Acquisitions, (ii) the
completion of this Offering at an assumed public offering price of
$6.00 per share and (iii) the Pending Acquisitions, as if they had
occurred on January 1, 1996.
(4) Gives effect to (i) the completion of this Offering at an assumed
public offering price of $6.00 per share and (ii) the ProServ
Acquisition, as if they had occurred on January 1, 1996.
(5) Gives effect to (i) the completion of this Offering at an assumed
public offering price of $6.00 per share and (ii) the Pending
Acquisitions, as if they had occurred on January 1, 1996.
(6) Gives effect to the IPO as if it occurred as of January 1, 1996 and
excludes 1,275,000 IPO Escrow Shares. The Pro Forma for the Recent
Acquisitions, Offering and Pending Acquisitions excludes 83,333 QBQ
Escrow Shares. Assumes a price of $6.00 per share of Common Stock for
purposes of determining the number of shares to be issued in the QBQ
Acquisition. See "Principal Stockholders--Escrow Shares" and Note 6 to
the Company's Financial Statements.
(7) The unaudited pro forma Balance Sheet Data gives effect to the
completion of this Offering at an assumed public offering price of
$6.00 per share of Common Stock and the application of the net proceeds
therefrom to complete the Pending Acquisitions and the Tender Offer,
assuming all Warrants (other than those held by directors and executive
officers of the Company) are tendered at a price of $2.25 per Warrant.
See "Risk Factors--Limited Operating History; History of Losses; Future
Charges to Operations," "Use of Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
(8) Represents the Company's potential obligation to repurchase 537,499
shares of Common Stock to be issued in connection with the Pending
Acquisitions, of which 62,499 shares are QBQ Escrow Shares. These
shares are not included in stockholders' equity. Assumes a price of
$6.00 per share of Common Stock for purposes of determining the number
of shares to be issued in the QBQ Acquisition. See "Agreements Related
to the Pending Acquisitions."

9
<PAGE>
RISK FACTORS

An investment in the Common Stock offered hereby involves a high degree of
risk. In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the following risk factors
before purchasing the Common Stock offered hereby.

This Prospectus contains statements that constitute "forward-looking
statements" within the meaning of 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"). Those statements appear in a
number of places in this Prospectus and include statements regarding the
intent, belief or current expectations of the Company, its directors or its
officers with respect to, among other things: (i) the Company's business and
growth strategies; (ii) trends affecting the Company's financial condition or
results of operations; (iii) the use of proceeds of this Offering and (iv)
potential cost savings and revenue enhancements in connection with
acquisitions by the Company. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties and that actual results may differ materially
from those projected in the forward-looking statements as a result of various
factors. The accompanying information contained in this Prospectus including,
without limitation, the information set forth under the headings "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," identifies important factors that
could cause such differences.

LIMITED OPERATING HISTORY; HISTORY OF LOSSES; FUTURE CHARGES TO
OPERATIONS. Although the Company was formed in July 1995, it did not commence
operations until January 1996 and did not complete the Recent Acquisitions
until December 11, 1996. For the period from July 11, 1995 (inception)
through December 31, 1995, the Company had no revenues or expenses. For the
year ended December 31, 1996 and for the three months ended March 31, 1997,
the Company had net losses of $2.4 million and $778,000, respectively. On a
pro forma basis, giving effect to the IPO and the Recent Acquisitions, this
Offering and the Pending Acquisitions as if they had occurred on January 1,
1996, the Company would have had a net loss of $2.4 million for the year
ended December 31, 1996. On a pro forma basis, giving effect to this Offering
and the Pending Acquisitions as if they had occurred on January 1, 1996, the
Company would have had a net loss of $1.3 million for the three months ended
March 31, 1997. There can be no assurance that these losses will not continue
or that the Company will become profitable in the future. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's financial statements and the notes related thereto included
herein.

The Company has recorded and will continue to record substantial
compensation charges to operations in connection with the issuance prior to
the date hereof of securities to certain officers, directors and consultants,
including the release from escrow of the IPO Escrow Shares and the QBQ Escrow
Shares. In the event that the IPO Escrow Shares or the QBQ Escrow Shares are
released from escrow, the Company may recognize, during the period in which
the thresholds for release are probable of being met, a substantial non-cash
compensation charge to operations, which will not be deductible for income
tax purposes and which will have the effect of significantly increasing the
Company's losses or reducing or eliminating earnings, if any, at such time.
In addition, the Company may record charges to operations over the next two
years related to the Company's potential obligation to repurchase the shares
of Common Stock issued in connection with the ProServ Acquisition. Further,
in connection with employment agreements with two of its officers, the
Company will recognize charges to operations aggregating $565,400 over the
next five years, exclusive of their salaries and benefits. In connection with
the Recent Acquisitions, the Company will also incur charges to operations
aggregating $530,000 over the five year period commencing on the date of the
Recent Acquisitions related to the imputed interest on the indebtedness to
the stockholders of SMTI and A&A. In connection with the QBQ Acquisition, the
Company will incur additional charges to operations aggregating $388,000
related to the imputed interest on the indebtedness to the sole stockholder
of QBQ. The recognition of these charges to operations may depress the market
price of the Company's securities. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Principal
Stockholders--Escrow Shares" and "Agreements Related to the Pending
Acquisitions."

10
<PAGE>
ABILITY TO MANAGE GROWTH AND INTEGRATE ACQUISITIONS. The Company has grown
rapidly since its formation in 1995, primarily as a result of acquiring two
independently managed businesses, SMTI and A&A. The Company anticipates
continuing this growth with the consummation of the Pending Acquisitions. The
Company's growth may place a significant strain on the Company's management
and operations. The Company's acquisitions could involve a number of risks,
including the diversion of management's attention to the assimilation of the
companies to be acquired, unforeseen difficulties in acquired operations,
difficulties in integrating the operations of acquired businesses and
potential conflicts of interest. See "Certain Relationships and Related
Transactions--Potential Conflicts of Interest with SFX." In addition, the
Company's planned international expansion is likely to involve additional
increased costs and risks, including those related to foreign regulation,
currency fluctuations and exchange controls. There can be no assurance that
the growth experienced by the Company will continue or that the Company will
be able to manage any future expansion successfully. Furthermore, the
Company's plans with respect to the Pending Acquisitions and future
acquisitions involve, to a substantial degree, strategies to increase revenue
and to reduce operating expenses as a percentage of revenue. There can be no
assurances that the Company will be able to implement its plans or that, if
implemented, they will accomplish the desired objectives of increasing
revenue or reducing operating expenses as a percentage of revenue. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

BROAD DISCRETION OF MANAGEMENT IN USE OF PROCEEDS; UNCERTAINTY RELATED TO
ACQUISITION STRATEGY. The Company's management will have broad discretion
over the use of approximately $14.0 million of the net proceeds of this
Offering allocated to working capital and other general corporate purposes, a
substantial portion of which it intends to use for future acquisitions. In
addition, the completion of the QBQ Acquisition is subject to a number of
conditions, certain of which are beyond the Company's control, and there can
be no assurance that such acquisition will be consummated. In the event the
QBQ Acquisition is not consummated, the Company intends to apply the net
proceeds of this Offering allocated for the QBQ Acquisition to general
working capital, including future acquisitions. The Company does not intend
to seek stockholder approval of such future acquisitions unless required to
do so by applicable law or regulation. Accordingly, the Company's
stockholders will be substantially dependent on the business judgment of
management in making such acquisitions and otherwise allocating the net
proceeds from this Offering. See "Use of Proceeds" and "Agreements Related to
the Pending Acquisitions--QBQ Acquisition."

In addition, there can be no assurance that the Company will be able to
identify and acquire additional suitable businesses or obtain the financing
necessary to complete such acquisitions. After the utilization of the net
proceeds from this Offering, acquisitions may involve debt financing (which
would require payments of principal and interest on such indebtedness and
would adversely impact the Company's cash flows) and/or the issuance of
equity securities, which may be dilutive to the ownership interests of the
Company's then existing stockholders. Any such acquisitions may result in
charges to operations relating to interest expense or the recognition and
amortization of goodwill, which would have the effect of increasing the
Company's losses or reducing or eliminating earnings, if any.

DEPENDENCE UPON A LIMITED NUMBER OF CLIENTS AND EVENTS. A significant
portion of the Company's revenues to date has been derived from a small
number of clients and events. On a pro forma basis, giving effect to the
Recent Acquisitions as if they had occurred on January 1, 1996, the Company's
agreement with respect to The Breeders' Cup Championship would have accounted
for approximately 30% of the Company's revenues for the year ended December
31, 1996. On a pro forma basis, giving effect to the Recent Acquisitions and
the Pending Acquisitions as if they had occurred on January 1, 1996, The
Breeders' Cup Championship would have accounted for approximately 15% of the
Company's revenues for the year ended December 31, 1996. Although the Company
is negotiating to extend this agreement, it is scheduled to terminate in
December 1997, and there can be no assurance that the Company will be able to
extend the agreement on similar terms, or at all. In addition, on a pro forma
basis, giving effect to the Recent Acquisitions and the Pending Acquisitions
as if they had occurred on January 1, 1996, five clients or events would have
accounted for approximately 38% of the Company's revenues for the year ended
December 31, 1996. Furthermore, the timing of certain events and the
resulting recognition of

11
<PAGE>
revenue from such events may cause significant variations in the Company's
quarterly operating results, which may adversely effect the market price of
the Common Stock. The Company may continue to depend on a limited number of
clients and events for a significant portion of its revenues in future
periods. The loss of any of these clients or events without a replacement
would have a material adverse effect on the business and operations of the
Company. See "Business--Services Provided by the Company."

ABSENCE OF WRITTEN AGREEMENTS; NATURE OF CONTRACTS. Many of the Company's,
ProServ's and QBQ's representation arrangements with their clients, and
certain of the Company's and ProServ's corporate sponsorship projects, are
not evidenced by written agreements. Although the Company believes that the
lack of written agreements is common in the talent representation industry,
the lack of written agreements may adversely affect the enforceability and
term of certain oral agreements. In addition, written representation
agreements with clients are generally terminable annually on 30 days' notice,
and written contracts for corporate sponsorship projects are generally of a
short-term nature. The termination or expiration of the Company's, ProServ's
or QBQ's contracts with certain clients could have a material adverse effect
on the Company's operations. See "Business."

DEPENDENCE ON KEY PERSONNEL. The Company's success depends, to a large
extent, upon the continued contributions of certain key personnel. The
Company's ability to obtain new event management, television production,
marketing, talent representation and consulting agreements is dependent, to a
large extent, on the strength of certain key personnel's relationships within
the sports, news and other entertainment industries. The loss of any such key
personnel could adversely affect the business of the Company. See
"Management."

COMPETITION. The business of providing services in the sports, news and
other entertainment industries is highly competitive. The Company's
competitors include several large companies, such as Advantage International
Inc. (part of the Interpublic Group of Companies, Inc.) and International
Management Group in the sports industry and Creative Artists Agency, Inc.,
ICM Artists, Ltd. and the William Morris Agency, Inc. in the entertainment
industry, certain of which have substantially greater financial and other
resources than the Company. In addition, the Company competes with many
smaller entities. The success of the Company will be dependent upon its
ability to obtain additional event management, television production,
marketing, talent representation and consulting opportunities and to generate
revenues from such activities. See "Business--Competition."

INFLUENCE BY MANAGEMENT; EFFECTS OF ANTI-TAKEOVER PROVISIONS. Upon
completion of the Tender Offer, this Offering and the Pending Acquisitions,
the Company's officers and directors (including officers and directors to be
appointed upon the consummation of the Pending Acquisitions) will control
approximately 28.8% of the total voting power of the Company (without giving
effect to the exercise of Warrants and options held by such persons to
purchase shares of Common Stock). As a result, such stockholders will be able
to exert substantial influence over the election of the Company's Board of
Directors and all other issues submitted to the Company's stockholders. The
Company and certain of its principal stockholders have entered into a
stockholders' agreement (the "Stockholders' Agreement") that places certain
restrictions on the sale of shares by such stockholders and grants to such
stockholders certain rights with respect to matters affecting corporate
governance, including an agreement by such stockholders to vote for the
nominees of such stockholders to the Company's Board of Directors. The
existence of such restrictions and rights will solidify the control over the
Company by existing officers and directors. The Company is also subject to a
Delaware statute regulating business combinations, which could discourage,
hinder or preclude an unsolicited acquisition of the Company and could make
it less likely that stockholders receive a premium for their shares as a
result of any such attempt. See "Principal Stockholders," "Certain
Relationships and Related Transactions--Stockholders' Agreement" and
"Description of Securities."

DILUTION. Purchasers of shares of Common Stock in this Offering will incur
an immediate and substantial dilution in net tangible book value per share of
Common Stock of approximately $5.00. Dilution for this purpose represents the
difference between the per share offering price of the Common Stock and the
pro forma net tangible book value per share of Common Stock after the Pending
Acquisitions, this Offering and the Tender Offer (assuming the purchase of
all outstanding Warrants at

12
<PAGE>
a price of $2.25 per Warrant, except those held by executive officers and
directors of the Company). In connection with future acquisitions, the
Company may issue additional equity securities, which could result in further
dilution to the investors in this Offering.

SHARES ELIGIBLE FOR FUTURE SALE AND REGISTRATION RIGHTS. Upon consummation
of the Tender Offer, this Offering and the Pending Acquisitions (assuming the
purchase in the Tender Offer of all outstanding Warrants except those held by
executive officers and directors of the Company), the Company will have
16,910,828 shares of Common Stock (assuming the issuance of 416,666 shares in
connection with the QBQ Acquisition) and 253,496 Warrants outstanding
(assuming that the directors and executive officers do no tender their
Warrants in the Tender Offer). Of those securities, a total of 5,064,682
shares of Common Stock and no Warrants will be freely tradeable without
restriction or further registration under the Securities Act, unless
purchased or held by "affiliates" as that term is defined in Rule 144 under
the Securities Act. The Company's executive officers and directors, who own
an aggregate of 4,453,496 shares of Common Stock and 253,496 Warrants, have
entered into agreements (the "Lock-Up Agreements") with the Underwriters
pursuant to which they have agreed not to, directly or indirectly, offer,
sell, offer to sell, contract to sell, pledge, grant any option to purchase
or otherwise sell or dispose (or announce any offer, sale, offer of sale,
contract of sale, pledge, grant of any option to purchase or other sale or
disposition) any shares of Common Stock, Warrants or other capital stock or
any securities convertible into or exercisable or exchangeable for, or any
rights to purchase or acquire any shares of Common Stock or other capital
stock of the Company for a period of one year after the date of this
Prospectus without the prior written consent of Prudential Securities
Incorporated, on behalf of the Underwriters, except for options granted
pursuant to the Company's existing stock option plans. Prudential Securities
Incorporated may, in its sole discretion, at any time and without notice
release all or any portion of the shares of Common Stock subject to such
agreements. The holders of substantially all of the securities subject to the
Lock-Up Agreements have also entered into similar agreements with the
underwriters of the IPO which restrict the sale or other disposition of their
securities until December 5, 1998. In addition, the holders of the shares of
Common Stock to be issued in the Pending Acquisitions have agreed to
restrictions on the sale or other disposition of such shares but have been
granted registration rights for such shares. See "Agreements Related to the
Pending Acquisitions." Sales of substantial amounts of Common Stock, or the
possibility of such sales, could adversely affect the prevailing market price
for the Common Stock and could impair the Company's ability to raise capital
through a public offering of equity securities. See "Shares Eligible for
Future Sale," "Description of Securities" and "Underwriting."

POSSIBLE ADVERSE EFFECTS OF AUTHORIZATION OF PREFERRED STOCK. The
Company's Amended and Restated Certificate of Incorporation (the "Certificate
of Incorporation") authorizes the issuance of 5,000,000 shares of preferred
stock, par value $.01 per share ("Preferred Stock"), on terms to be fixed by
the Company's Board of Directors without further stockholder action. The
terms of any series of Preferred Stock, which may include priority claims to
assets and dividends and special voting rights, could adversely affect the
rights of holders of the Common Stock. The issuance of the Preferred Stock,
while providing flexibility in connection with possible acquisitions,
financing transactions and other corporate transactions, could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring capital stock of the Company, which
may adversely affect the market price of the Common Stock. The Company has no
present plans to issue shares of Preferred Stock. See "Description of
Securities--Preferred Stock."

13
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of shares of Common Stock
offered hereby, after deducting the underwriting discounts and commissions
and other estimated expenses of this Offering, are estimated to be
approximately $41.3 million (approximately $48.1 million if the Underwriters'
over-allotment is exercised in full), assuming a public offering price of
$6.00 per share. The Company intends to use the net proceeds from this
Offering as follows: (i) approximately $9.8 million (including related fees
and expenses) will be applied to fund the repayment of any indebtedness which
may be incurred to purchase the Warrants in the Tender Offer or to fund the
purchase of Warrants pursuant to the Tender Offer (assuming the purchase of
all outstanding Warrants, except those held by executive officers and
directors of the Company, at a price of $2.25 per Warrant), (ii) approximately
$10.7 million will be applied to fund the cash portion of the ProServ
Acquisition (assuming that the principal stockholder of ProServ does not
elect to receive a $3.0 million promissory note in lieu of cash), (iii)
approximately $1.8 million in outstanding indebtedness of ProServ will be
repaid, (iv) approximately $3.1 million will be applied to fund the cash
portion of the QBQ Acquisition, (v) a $1.5 million nonrecourse loan will be
made to the sole stockholder of QBQ and (vi) approximately $370,000 (of which
$50,000 will be paid to TSC for consulting services exclusive of amounts
previously paid) will be applied to the expenses relating to the Pending
Acquisitions. See "Agreements Relating to the Pending Acquisitions" and
"Certain Relationships and Related Transactions--Consulting Agreement." The
Company intends to use the remaining net proceeds of $14.0 million for
working capital and other general corporate purposes. Pending such use, the
Company intends to invest the net proceeds from this Offering in short-term,
investment-grade, interest-bearing instruments. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

The completion of the QBQ Acquisition is subject to a number of
conditions, certain of which are beyond the Company's control. In the event
the QBQ Acquisition is not consummated, the Company intends to apply the
proceeds allocated for the QBQ Acquisition to working capital. See
"Agreements Related to the Pending Acquisitions--QBQ Acquisition."

In the event the Company identifies attractive acquisition candidates, the
Company intends to use a portion of the proceeds from this Offering allocated
to working capital to finance such acquisitions; however, other than the
Pending Acquisitions, the Company has no agreements or understandings
regarding any possible future acquisitions. See "Risk Factors--Broad
Discretion of Management in Use of Proceeds; Uncertainty Related to
Acquisition Strategy." In addition, to the extent funds generated from
operations are not sufficient, the Company will use proceeds from this
Offering to pay compensation to its executive officers, consulting fees to
TSC and the installment payments to certain officers and directors of the
Company related to the Recent Acquisitions and the QBQ Acquisition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Certain Relationships and
Related Transactions."

The foregoing represents the Company's best estimate of the allocation of
the net proceeds of this Offering based on the current status of its
business. Future events, including changes in competitive conditions, the
ability of the Company to identify appropriate acquisition candidates, the
availability of other financing and funds generated from operations and the
status of the Company's business from time to time, may make changes in the
allocation of the net proceeds of this Offering necessary or desirable.

14
<PAGE>
PRICE RANGE OF COMMON STOCK AND WARRANTS

The Common Stock and Warrants of the Company are traded in the
over-the-counter market and are quoted on the Nasdaq SmallCap Market under
the symbols "MRQE" and "MRQEW," respectively, and are listed on the Boston
Stock Exchange under the symbols "MRT" and "MRT.WS," respectively. The
Company has filed an application with the AMEX to list the Common Stock and
Warrants under the symbols "MRQ" and "MRQ.WS," respectively. The Company
expects that the Common Stock will be listed on the AMEX prior to the
consummation of this Offering. The Warrants will not be listed on the Boston
Stock Exchange following the consummation of this Offering, and there can be
no assurance that the Warrants will be listed on the AMEX or will continue to
be listed on the Nasdaq SmallCap Market following the completion of the
Tender Offer.

From December 6, 1996 (the first trading day after the effective date of
the registration statement relating to the Company's IPO) until December 13,
1996, the shares of Common Stock and the Warrants traded only as units ("IPO
Units") on the Nasdaq SmallCap Market and did not trade separately. On
December 13, 1996, the IPO Units were separated into their constituent parts
and began trading separately on the Nasdaq SmallCap Market. On March 13,
1997, the Common Stock and Warrants each commenced trading on the Boston
Stock Exchange.

The following table sets forth, for the periods indicated, the high and
low closing bid information for the shares of Common Stock and the Warrants
of the Company, as reported by the Nasdaq SmallCap Market. Bid quotations
reflect interdealer prices, without retail mark-up, mark-down or commissions,
and may not represent actual transactions.

<TABLE>
<CAPTION>
COMMON STOCK WARRANTS
----------------- -----------------
YEAR ENDED DECEMBER 31, 1996 HIGH LOW HIGH LOW
- ----------------------------------------- --------- ------- ------- ---------
<S> <C> <C> <C> <C>
Fourth Quarter (since December 13, 1996) $ 6.00 $6.00 $2.00 $ 2.00
YEAR ENDING DECEMBER 31, 1997
- -----------------------------------------
First Quarter ............................ $ 7.25 $6.00 $2.00 $ 2.00
Second Quarter ........................... 6.375 5.50 2.00 1.25
Third Quarter (through July 21, 1997) ... 6.00 4.50 2.00 1.875
</TABLE>

On July 21, 1997, the last reported sales price of the Common Stock as
reported by the Nasdaq SmallCap Market was $6.125 per share. On July 16,
1997, the Company had 87 and 61 record holders of its Common Stock and
Warrants, respectively. The Company believes that there are over 2,500
beneficial holders of its shares of Common Stock and over 1,300 holders of
the Warrants.

DIVIDEND POLICY

The Company has not declared or paid any cash dividends on its Common
Stock since inception and does not anticipate declaring or paying any in the
foreseeable future. The Board of Directors intends to retain future earnings,
if any, to support the growth of the Company's business. The declaration and
payment of future dividends, if any, will be at the sole discretion of the
Board of Directors and will depend upon the Company's profitability,
financial condition, cash requirements and other factors deemed relevant by
the Board of Directors.

15
<PAGE>
CAPITALIZATION

The following table sets forth (i) the actual capitalization of the
Company at March 31, 1997 and (ii) the pro forma capitalization of the
Company at March 31, 1997, giving effect to the consummation of the Pending
Acquisitions and the Tender Offer (assuming the purchase of all outstanding
Warrants, except those held by directors and executive officers of the
Company, at a price of $2.25 per Warrant) and the application of the net
proceeds from this Offering (assuming a public offering price of $6.00 per
share and after deducting underwriting discounts and commissions and
estimated offering expenses payable by the Company). See "Use of Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------------
(IN THOUSANDS)
PRO FORMA FOR
OFFERING, TENDER
OFFER AND PENDING
AS REPORTED ACQUISITIONS
------------- -----------------
<S> <C> <C>
Cash and cash equivalents .................................... $ 5,286 $20,258
============= =================
Acquisition indebtedness, net(1) ............................. $ 1,638 $ 2,704
Loan payable to related party ................................ 122 122
Common Stock subject to put options in connection with
Pending Acquisitions(2)...................................... -- 3,225
Stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000 shares
authorized;
no shares issued and outstanding ........................... -- --
Common Stock, $.01 par value, 25,000,000 shares authorized;
8,769,162 shares issued and outstanding; 16,910,828 pro
forma shares issued and outstanding for Offering and
Pending Acquisitions(3) .................................... 88 164(4)
Additional paid-in capital ................................... 7,664 39,715(4)
Deferred compensation(5) ..................................... (40) (40)
Accumulated deficit .......................................... (3,188) (3,188)
------------- -----------------
Total stockholders' equity ................................... 4,524 36,651
------------- -----------------
Total capitalization........................................ $ 6,284 $42,702
============= =================
</TABLE>

- ------------
(1) Represents the installment payments payable to certain officers and
directors of the Company in connection with the Recent Acquisitions,
net of imputed interest ($480) and the current installment payment
($333) and the installment payments payable to the sole stockholder of
QBQ in connection with the QBQ Acquisition, net of imputed interest
($388) and the current installment payment ($161). See "Certain
Relationships and Related Transactions--SMTI Acquisition" and "--A&A
Acquisition" and Note 1 of the Notes to the Company's Financial
Statements. Assumes that the controlling stockholder of ProServ does
not elect to receive a $3.0 million promissory note in lieu of cash.
See "Agreements Related to the Pending Acquisitions."
(2) Represents the Company's potential obligation to repurchase 537,499
shares of Common Stock to be issued in connection with the Pending
Acquisitions, of which 62,499 shares are QBQ Escrow Shares. These
shares are not included in stockholders' equity. Assumes a price of
$6.00 per share of Common Stock for purposes of determining the number
of shares to be issued in the QBQ Acquisition. See "Agreements Related
to the Pending Acquisitions."
(3) Excludes up to (i) 4,519,162 shares issuable upon the exercise of the
Warrants outstanding prior to the consummation of the Tender Offer, at
an exercise price of $7.50 per share, (ii) 670,000 shares issuable upon
exercise of the IPO Unit Options, including shares issuable upon
exercise of the Warrants contained therein, (iii) 500,000 shares
reserved for issuance under the Company's 1996 Stock Option Plan, under
which options to purchase 237,500 shares are outstanding, (iv) 200,000
shares issuable upon exercise of an option to be granted to TSC for
consulting services provided in connection with the Tender Offer and
(v) 1,125,000 shares issuable upon exercise of the Underwriters'
over-allotment option. See "Management--1996 Stock Option Plan" and
"Description of Securities."
(4) Excludes amounts applicable to Common Stock subject to put options in
connection with Pending Acquisitions.
(5) Represents deferred compensation related to 50,000 shares of Common
Stock issued to an officer in partial consideration of such officer
entering into an employment agreement with the Company. See "Certain
Relationships and Related Transactions--Founders' Stock."

16
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1996 gives effect to the following
transactions and adjustments as if they had occurred as of January 1, 1996:
(i) the completion of the IPO and the Recent Acquisitions, (ii) the Pending
Acquisitions and related contractually required reductions in personnel,
officers' salaries and employee benefits and (iii) the completion of this
Offering.

The following Unaudited Pro Forma Condensed Combined Statement of
Operations for the three months ended March 31, 1997 gives effect to the
following transactions and adjustments as if they had occurred as of January
1, 1996: (i) the Pending Acquisitions and related contractually required
reductions in personnel, officers' salaries and employee benefits and (ii)
the completion of this Offering.

The following Unaudited Pro Forma Condensed Combined Balance Sheet at
March 31, 1997 gives effect to the following transactions and adjustments as
if they had occurred as of March 31, 1997: (i) the Pending Acquisitions, (ii)
the completion of this Offering and (iii) the completion of the Tender Offer.

The Unaudited Pro Forma Condensed Combined Financial Statements are based
upon, and should be read in conjunction with, the historical audited and
unaudited financial statements and the respective notes thereto of the
Company, ProServ and QBQ. The Recent Acquisitions have been reflected in the
Unaudited Pro Forma Condensed Combined Financial Statements as a
consolidation at historical cost due to the significance of the equity
interests in the Company held by the stockholders of SMTI and A&A. The
Pending Acquisitions have been reflected in the Unaudited Pro Forma Condensed
Combined Financial Statements using the purchase method of accounting. In the
opinion of management, all adjustments necessary to fairly present this pro
forma information have been made. The pro forma information does not purport
to be indicative of the results that would have been reported had such events
actually occurred on the dates specified, nor is it indicative of the
Company's future results if the transactions are completed. The Company
cannot predict whether the consummation of the Pending Acquisitions will
conform to the assumptions used in the preparation of the Unaudited Pro Forma
Condensed Combined Financial Statements. The Unaudited Pro Forma Statements
of Operations data include adjustments to operating expenses to reflect
anticipated savings that management believes it will be able to achieve
through the implementation of its operating strategy. However, there can be
no assurance that the Company will be able to achieve such savings. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

The following financial statements and notes thereto contain
forward-looking statements that involve risks and uncertainties. The actual
results of the Company may differ materially from those discussed herein.
Factors that could cause or contribute to such differences include, but are
not limited to, risks and uncertainties relating to the revenues of the
businesses owned and to be acquired, the integration of the businesses
acquired and management of growth and the ability of the Company to achieve
cost savings. See "Risk Factors." The Company undertakes no obligation to
publicly release the result of any revisions to these forward-looking
statements that may be made to reflect any future events or circumstances.

17
<PAGE>

THE MARQUEE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
MARQUEE FOR THE
AS RECENT PRO FORMA RECENT PROSERV PRO FORMA
REPORTED ACQUISITIONS(1) ADJUSTMENTS ACQUISITIONS ACQUISITION ADJUSTMENTS
<S> <C> <C> <C> <C> <C> <C>
----------- ------------- ----------- ------------ ----------- -----------
Revenues........................... $ 2,869 $ 12,316 -- $ 15,185 $13,388 --

Operating expenses................. 2,564 6,922 -- 9,486 10,131 $ 514 (4)
General and administrative
expenses.......................... 2,199 3,644 -- 5,843 4,725 1,143 (4)
Restructuring costs................ -- -- -- -- 565
Depreciation and amortization ..... 61 47 -- 108 276 (708)(5)
----------- ------------- ----------- ------------ ----------- -----------
Operating income (loss)............ (1,955) 1,703 -- (252) (2,309) 949
Interest expense (income).......... 283 (12) $ (98)(2) 369 208 208 (6)
Financing expense ................. 193 -- -- 193 -- --
----------- ------------- ----------- ------------ ----------- -----------
Income (loss) before income taxes . (2,431) 1,715 (98) (814) (2,517) 1,157
Income taxes provision (benefit) .. (20) 341 (221)(3) 100 240 (240)(7)
----------- ------------- ----------- ------------ ----------- -----------
Net income (loss).................. (2,411) 1,374 123 (914) (2,757) 1,397

Accretion of obligation related to
the option issued in connection
with the ProServ Acquisition ..... -- -- -- -- -- (179)(8)
----------- ------------- ----------- ------------ ----------- -----------

Net income (loss) applicable to
common stockholders .............. $ (2,411) $ 1,374 $ 123 $ (914) $(2,757) $ 1,218
=========== ============= =========== ============ =========== ===========
Net loss per share applicable to
common stockholders............... $ (1.03) $ (0.12)
=========== ============
Weighted average number of shares
of common stock outstanding(12) .. 2,346,717 7,494,162
=========== ============

</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
PRO FORMA FOR THE PRO FORMA FOR THE
OFFERING AND RECENT OFFERING AND RECENT
AND PROSERV QBQ PRO FORMA AND PENDING
ACQUISITIONS ACQUISITION ADJUSTMENTS ACQUISITIONS
<S> <C> <C> <C> <C>
------------------- ----------- ----------- -------------------
Revenues........................... $ 28,573 $1,359 -- $ 29,932

Operating expenses................. 19,103 274 -- 19,377
General and administrative
expenses.......................... 9,425 931 $ 223(9) 10,133
Restructuring costs................ 565 -- 565
Depreciation and amortization ..... 1,092 38 (349)(10) 1,479
------------------- ----------- ----------- -------------------
Operating income (loss)............ (1,612) 116 (126) (1,622)
Interest expense (income).......... 369 12 16 (11) 365
Financing expense ................. 193 -- -- 193
------------------- ----------- ----------- -------------------
Income (loss) before income taxes . (2,174) 104 (110) (2,180)
Income taxes provision (benefit) .. 100 12 (12)(7) 100
------------------- ----------- ----------- -------------------
Net income (loss).................. (2,274) 92 98 (2,280)

Accretion of obligation related to
the option issued in connection
with the ProServ acquisition ..... 179 -- -- 179
------------------- ----------- ----------- -------------------
-- --
Net income (loss) applicable to
common stockholders .............. $ (2,453) $ 92 $ (98) $ (2,459)
=================== =========== =========== ===================
Net loss per share applicable to
common stockholders............... $ (0.16) $ (0.16)
=================== ===================
Weighted average number of shares
of common stock outstanding(12) .. 15,219,162 15,552,495
=================== ===================

</TABLE>

<PAGE>

- ------------
(1) The Company acquired SMTI and A&A on December 12, 1996 and included the
results of their operations only from the acquisition date in its
consolidated results of operations for the year ended December 31,
1996. Therefore, for pro forma purposes, the results of operations of
SMTI and A&A for the period prior to the acquisition date are presented
separately.
(2) To record imputed interest expense on the indebtedness to the
stockholders of SMTI and A&A incurred in connection with the Recent
Acquisitions.
(3) To record income taxes as if SMTI had not been an S corporation and to
record the pro forma tax benefit for the separate net loss of the
Company.
(4) To reduce expenses to reflect contractually agreed to reductions in
personnel, officers' salaries and employee benefits and other costs
provided in the Dell Stock Purchase Agreement, but excludes $1,435
related to personnel and benefit costs incurred in 1996 which will be
eliminated in future periods as a result of the restructuring of
ProServ's operations and other cost reduction programs initiated by
ProServ.
(5) To record the amortization of the excess of the purchase price over net
assets acquired associated with the acquisition of ProServ over 20
years.
(6) To reduce interest expense of ProServ to reflect use of proceeds of
this Offering.
(7) To record the tax benefit of consolidated net losses.
(8) To record the expense related to the accretion of the put option over
the two year option period. See "Agreements related to the Pending
Acquisitions--ProServ Acquisition."
(9) To reduce general and administrative expenses to reflect contractually
agreed to reductions in officers' salaries and employee benefits.
(10) To record the amortization of the excess of the purchase price over net
assets acquired associated with the acquisition of QBQ over 20 years.
(11) To record interest income on note receivable ($105) net of imputed
interest expense ($89) on the indebtedness related to the QBQ
Acquisition.
(12) Gives effect to the IPO as if it occurred as of January 1, 1996 and
excludes 1,275,000 IPO Escrow Shares. The Pro Forma net loss applicable
to common stockholders per share for the Recent Acquisitions, Offering
and Pending Acquisitions excludes 83,333 QBQ Escrow Shares. Assumes a
price of $6.00 per share of Common Stock for purposes of determining
the number of shares to be issued in the QBQ Acquisition. See
"Agreements Related to the Pending Acquisitions--QBQ Acquisition" and
"Principal Stockholders--Escrow Shares." Shares of Common Stock
underlying outstanding Warrants or options are not included in the
weighted average number of shares of common stock outstanding.

18
<PAGE>
THE MARQUEE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA FOR
THE OFFERING
MARQUEE PROSERV PRO FORMA AND PROSERV
AS REPORTED ACQUISITION ADJUSTMENTS ACQUISITION
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Revenues............................ $ 1,978 $ 1,369 -- $ 3,347

Operating expenses.................. 943 1,231 $ 130(1) 2,044
General and administrative
expenses........................... 1,788 884 289(1) 2,383

Depreciation and amortization ...... 32 76 (177)(2) 285
------------- ------------- ------------- ---------------
Operating income (loss)............. (785) (822) 242 (1,365)
Interest (income) expense........... (7) 29 29 (3) (7)
------------- ------------- ------------- ---------------

Income (loss) before income taxes .. (778) (851) 271 (1,358)
Income taxes provision (benefit) ... -- 30 (30)(6) --
------------- ------------- ------------- ---------------

Net income (loss)................... (778) (881) 301 (1,358)

Accretion of obligation related to
the put option issued in
connection with the ProServ
Acquisition........................ -- -- (51)(7) 51
------------- ------------- ------------- ---------------
Net income (loss) applicable to
common stockholders ............... $ (778) $ (881) $ 250 $ (1,409)
============= ============= ============= ===============

Net loss per share applicable to
common stockholders ............... $ (0.10) $ (0.09)

Weighted average number of shares
of common stock outstanding (8) .. 7,494,162 15,219,162
============= ===============
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
PRO FORMA FOR
THE OFFERING
AND THE
QBQ PRO FORMA PENDING
ACQUISITION ADJUSTMENTS ACQUISITIONS
------------- ------------- ---------------
<S> <C> <C> <C>
Revenues............................ $ 424 -- $ 3,771

Operating expenses.................. 48 -- 2,092
General and administrative
expenses........................... 224 $ 48(4) 2,559

Depreciation and amortization ...... 6 (87)(2) 378
------------- ------------- ---------------
Operating income (loss)............. 146 (39) (1,258)
Interest (income) expense........... 2 (8)(5) (13)
------------- ------------- ---------------

Income (loss) before income taxes .. 144 (31) (1,245)
Income taxes provision (benefit) ... 6 (6)(6) --
------------- ------------- ---------------

Net income (loss)................... 138 (25) (1,245)

Accretion of obligation related to
the put option issued in
connection with the ProServ
Acquisition........................ -- -- 51
------------- ------------- ---------------
Net income (loss) applicable to
common stockholders ............... $ 138 $ (25) $ (1,296)
============= ============= ===============

Net loss per share applicable to
common stockholders ............... $ (0.08)

Weighted average number of shares
of common stock outstanding (8) .. 15,552,495
===============
</TABLE>

- ------------
(1) To reduce expenses to reflect contractually agreed to reductions in
personnel, officers' salaries and employee benefits and other costs
provided in the Dell Stock Purchase Agreement, but excludes $80 related
to personnel and benefit costs incurred by ProServ in the three-month
period which will be eliminated in future periods as a result of the
restructuring of ProServ's operations and other cost reduction programs
initiated by ProServ.
(2) To record the amortization of the excess of the purchase price over net
assets acquired associated with the Pending Acquisitions over 20 years.
(3) To reduce ProServ interest expense to reflect use of the proceeds from
this Offering.
(4) To reduce general and administrative expenses to reflect contractually
agreed to reductions in personnel, officers' salaries and employee
benefits.
(5) To record interest income on note receivable ($27) net of imputed
interest expense ($19) on the indebtedness related to the QBQ
Acquisition.
(6) To record the tax benefit of consolidated net losses.
(7) To record the expense related to accretion of the put option over the
two year option period. See "Agreements Related to the Pending
Acquisitions--ProServ Acquisition."
(8) Excludes 1,275,000 IPO Escrow Shares. In addition, the pro forma for
the Offering and the Pending Acquisitions excludes approximately 83,333
QBQ Escrow Shares. Assumes a price of $6.00 per share of Common Stock
for purposes of determining the number of shares to be issued in the
QBQ Acquisition. See "Agreements Related to the Pending
Acquisitions--QBQ Acquisition" and "Principal Stockholders--Escrow
Shares."

19
<PAGE>
THE MARQUEE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA FOR
THE OFFERING,
TENDER OFFER
MARQUEE PROSERV PRO FORMA AND PROSERV
AS REPORTED ACQUISITION ADJUSTMENTS ACQUISITION
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current assets................ $ 7,397 $ 4,536 $ 41,300 (1) $30,733
(10,934)(2)
(1,768)(3)
(9,798)(4)
Excess of purchase price over
net assets acquired.......... -- -- 14,168 (2) 14,168
Noncurrent assets............. 1,064 1,687 (300)(2) 2,451

------------- ------------- ------------- ---------------
Total assets................. $ 8,461 $ 6,223 $ 32,668 $47,352
============= ============= ============= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities........... $ 1,750 5,781 550 (2) $ 6,963
(1,118)(3)
Noncurrent liabilities........ 2,187 1,476 (650)(3) 3,013
Common stock subject to put
option ...................... 1,350 (2) 1,350
Stockholders' equity.......... 4,524 (1,034) 41,300 (1) 36,026
1,034 (2)
(9,798) (4)
------------- ------------- ------------- ---------------
Total liabilities and
stockholders' equity........ $ 8,461 $ 6,223 $ 32,668 $47,352
============= ============= ============= ===============
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
PRO FORMA FOR
THE OFFERING,
TENDER OFFER
QBQ PRO FORMA AND PENDING
ACQUISITION ADJUSTMENTS ACQUISITIONS
------------- ------------- ---------------
<S> <C> <C> <C>
ASSETS
Current assets................ $ 786 $(3,253)(5) $25,987
(779)(5)
(1,500)(6)

Excess of purchase price over
net assets acquired.......... -- 6,988 (5) 21,156
Noncurrent assets............. 94 1,500 (6) 3,945
(100)(5)
------------- ------------- ---------------
Total assets................. $ 880 $ 2,856 $51,088
============= ============= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities........... $ 838 $ (838)(5) $ 7,124
161 (5)
Noncurrent liabilities........ 9 1,066 (5) 4,088
Common stock subject to put
option ...................... 1,875 (5) 3,225
Stockholders' equity.......... 33 (33)(5) 36,651
625 (5)

------------- ------------- ---------------
Total liabilities and
stockholders' equity........ $ 880 $ 2,856 $51,088
============= ============= ===============
</TABLE>

- ------------
(1) To reflect the estimated net proceeds from this Offering of 7,500,000
shares of Common Stock at $6.00 per share:

<TABLE>
<CAPTION>
<S> <C>
Offering............ $45,000
Less: Fees and
expenses........... 3,700
---------
Net proceeds from
this Offering...... $41,300
=========
</TABLE>

(2) To reflect the acquisition of ProServ and the preliminary allocation of
the purchase price:

<TABLE>
<CAPTION>
<S> <C> <C>
Cash portion of purchase price
Dell Stock Agreement.................................................... $6,500
Non-Employee Stock Purchase Agreement................................... 3,000
Certain Minority Stockholders........................................... 1,214 (a)$10,714
----------
Issuance of 225,000 shares of Common Stock under Dell Stock Agreement
which are subject to a put option....................................... 1,350
Fees and expenses including TSC fees of $300 which will be offset
against amounts previously advanced..................................... 520
Assumption of severance liability........................................ 550
---------
Total acquisition cost................................................ 13,134
Deficiency in net assets acquired........................................ 1,034
---------
Excess of purchase price over net assets acquired........................ $14,168
=========
</TABLE>
- ------------------
(a) Assumes purchase of the remaining minority interests in ProServ
on terms similar to those contained in the Allard Stock
Purchase Agreement.

A deposit of $1,500 was paid to one of the sellers in June 1997 and will
be applied toward the purchase price.

The preliminary allocation of purchase price may change upon final
determination of the fair value of the net assets acquired.

(3) To reflect the payment of the ProServ indebtedness of $1,768 from the
proceeds of this Offering. See "Use of Proceeds."

(4) To reflect the purchase of 4,265,664 outstanding Warrants (all
outstanding Warrants except those held by executive officers and
directors of the Company) in the Tender Offer (including fees and
expenses of $200 and the issuance of an option to TSC to purchase
200,000 shares of Common Stock at an assumed exercise price of $6.00
per share).

20
<PAGE>
(5) To reflect the acquisition of QBQ and the preliminary allocation of the
purchase price:

<TABLE>
<CAPTION>
<S> <C> <C>
Cash portion of purchase price .................................................. $3,103
Issuance of 416,666 shares (including 83,333 QBQ Escrow Shares) of Common Stock,
of which 312,499 shares are subject to a put option ($1,875) ................... 2,500
Acquisition indebtedness of $1,615 less imputed interest of $388 (current
portion of $161)................................................................ 1,227
Fees and expenses including TSC fees of $150 of which $100 will be applied
against amount previously advanced.............................................. 250
--------
Total acquisition cost .......................................................... 7,080
--------
Net assets at March 31, 1997..................................................... 33
Less: Current assets not acquired................................................ (779)
Add: Current liabilities not acquired............................................ 838 92
------- --------
Excess of purchase price over net assets acquired ............................... $6,988
========
</TABLE>

A deposit of $400 in cash was paid to QBQ in July 1997 and will be applied
towards the purchase price.

The preliminary allocation of purchase price may change upon final
determination of the fair value of the net assets acquired.

(6) To reflect the non-recourse loan of $1,500 by the Company to the sole
stockholder of QBQ.

<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

The Selected Consolidated Financial Data of the Company as of March 31,
1997 and for the three months ended March 31, 1997 and 1996 have been derived
from the unaudited financial statements and notes thereto of the Company
appearing elsewhere in this Prospectus. The pro forma selected data as of
March 31, 1997, for the three months ended March 31, 1997 and for the year
ended December 31, 1996 are derived from the unaudited pro forma condensed
combined financial statements which, in the opinion of the Company, reflect
all adjustments necessary for a fair presentation of the transactions for
which such pro forma financial information is given. Operating results for
interim periods are not necessarily indicative of the results that may be
achieved for the entire fiscal year. The Company had no operations during the
period from July 11, 1995 (inception) through December 31, 1995. The
following data should be read in conjunction with the notes thereto, the
audited and unaudited financial statements and notes contained elsewhere in
this Prospectus and "Management's Discussion and Analysis of Financial
Condition and Results of Operations." See "Unaudited Pro Forma Condensed
Combined Financial Statements."

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996 THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------------------------------------
PRO FORMA
FOR THE PRO FORMA
RECENT FOR THE PRO FORMA
PRO FORMA ACQUISITIONS, OFFERING FOR THE
FOR THE OFFERING, AND RECENT AS RECENT
AS RECENT AND PROSERV AND PENDING REPORTED ACQUISITIONS(1) HISTORICAL
REPORTED ACQUISITIONS(1)ACQUISITION(2) ACQUISITIONS(3) 1996 1996 1997
----------- ------------- ------------- ------------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenues ........... $ 2,869 $ 15,185 $ 28,573 $ 29,932 $ $ 1,520 $ 1,978
Operating expenses . 2,564 9,486 19,103 19,377 -- 954 943
General and
administrative
expenses........... 2,199 5,843 9,425 10,133 245 1,127 1,788
Restructuring
costs.............. -- -- 565 565 -- -- --
Depreciation and
amortization....... 61 108 1,092 1,479 -- 8 32
Operating loss ..... (1,955) (252) (1,612) (1,622) (245) (569) (785)
Net loss............ (2,411) (914) (2,274) (2,280) (245) (635) (778)
Net loss applicable
to common
stockholders....... $ (2,411) $ (914) $ (2,453) $ (2,459) $ (245) $ (635) $ (778)
Net loss per share
applicable to
common
stockholders....... $ (1.03) $ (0.12) $ (0.16) $ (0.16) $ (0.12) $ (0.31) $ (0.10)
Weighted average
number of shares
of common stock
outstanding(6) .... 2,346,717 7,494,162 15,219,162 15,552,495 2,066,662 2,066,662 7,494,162
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

22
<PAGE>
- ------------
(1) Gives effect to the IPO and Recent Acquisitions. The Company acquired
SMTI and A&A on December 12, 1996 and included the results of their
operations only from the acquisition date in its consolidated results
of operations for the year ended December 31, 1996. Therefore, for pro
forma purposes, the results of operations of SMTI and A&A for the
period prior to the acquisition date are combined with the Company.
(2) Gives effect to (i) the IPO and the Recent Acquisitions, (ii) the
completion of this Offering at an assumed public offering price of
$6.00 per share and (iii) the ProServ Acquisition, as if they had
occurred on January 1, 1996.
(3) Gives effect to (i) the IPO and the Recent Acquisitions, (ii) the
completion of this Offering at an assumed public offering price of
$6.00 per share and (iii) the Pending Acquisitions, as if they had
occurred on January 1, 1996.
(4) Gives effect to (i) the completion of this Offering at an assumed
public offering price of $6.00 per share and (ii) the ProServ
Acquisition, as if they had occurred on January 1, 1996.
(5) Gives effect to (i) the completion of this Offering at an assumed
public offering price of $6.00 per share and (ii) the Pending
Acquisitions, as if they had occurred on January 1, 1996.
(6) Gives effect to the IPO as if it occurred as of January 1, 1996 and
excludes 1,275,000 IPO Escrow Shares. The Pro Forma for the Recent
Acquisitions, Offering and Pending Acquisitions excludes 83,333 QBQ
Escrow Shares. Assumes a price of $6.00 per share of Common Stock for
purposes of determining the number of shares to be issued in the QBQ
Acquisition. See "Principal Stockholders--Escrow Shares" and Note 6 to
the Company's Financial Statements.
(7) The unaudited pro forma Balance Sheet Data gives effect to the
completion of this Offering at an assumed public offering price of
$6.00 per share of Common Stock and the application of the net proceeds
therefrom to complete the Pending Acquisitions and the Tender Offer,
assuming all Warrants (other than those held by directors and executive
officers of the Company) are tendered at a price of $2.25 per Warrant.
See "Risk Factors--Limited Operating History; History of Losses; Future
Charges to Operations," "Use of Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
(8) Represents the Company's potential obligation to repurchase 537,499
shares of Common Stock to be issued in connection with the Pending
Acquisitions, of which 62,499 shares are QBQ Escrow Shares. These
shares are not included in stockholders' equity. Assumes a price of
$6.00 per share of Common Stock for purposes of determining the number
of shares to be issued in the QBQ Acquisition. See "Agreements Related
to the Pending Acquisitions."

23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The Company was formed in July 1995 for the purpose of providing
integrated event management, television production, marketing, talent
representation and consulting services in the sports, news and other
entertainment industries. From the time of its formation until its IPO and
the acquisitions of SMTI and A&A, the Company was engaged in developing its
sports television production, marketing and consulting business.

The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Unaudited
Pro Forma Condensed Combined Financial Statements, the Selected Financial
Data and the financial statements and notes thereto appearing elsewhere in
this Prospectus. For all periods presented, the discussion of the combined
results of operations on a pro forma basis for (i) the Company and the Recent
Acquisitions include the activities of the Company, SMTI and A&A and (ii) the
Company, the Recent Acquisitions and the Pending Acquisitions include the
Company, SMTI, A&A, ProServ and QBQ, as if they had always been members of
the same operating group, respectively. The following discussion also
contains certain forward-looking statements that involve risks and
uncertainties. The Company's future results of operations could differ
materially from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, uncertainties
related to the Company's business and growth strategies, and difficulties in
achieving cost savings and revenue enhancements. See "Risk Factors." The
Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.

The primary sources of the Company's revenues are fees from providing
event management, television production, sports marketing and consulting
services and commissions from representation of sports, news and
entertainment personalities. Revenues from event management services are
recognized when the events are held. Revenues from production services are
recognized when the programs are available for broadcast. Marketing revenues
are recognized for guaranteed amounts when contractual obligations are met.
Commissions from the Company's talent representation services are recognized
as revenue when they become payable to the Company under the terms of the
Company's agreements with its clients. Generally, such commissions are
payable by clients upon their receipt of payments for performance of
services. Commissions on profit or gross receipt participations are recorded
upon the determination of such amounts.

The Company's revenues may vary from quarter to quarter, due to the timing
of certain significant events and the resulting recognition of revenues from
such events. Historically, the fourth quarter produced the highest percentage
of revenues for the year, principally from the Company's management and
marketing of The Breeders' Cup Championship and from representation
agreements with professional hockey players, which results in revenue to the
Company upon the commencement of the National Hockey League season. As a
result of the Company's recent entry into the business of representing
professional football players and the Pending Acquisitions, it is anticipated
that the Company's revenues and expenses will increase significantly, and the
Company expects that these increased revenues and expenses will be recorded
substantially in the third as well as the fourth quarter. A significant
portion of the Company's revenues to date has been derived from a small
number of events and clients. On a pro forma basis, giving effect to the
Recent Acquisitions as if they had occurred on January 1, 1996, the Company's
agreement with respect to The Breeders' Cup Championship would have accounted
for approximately 30% of the Company's revenues for the year ended December
31, 1996. On a pro forma basis, giving effect to the Recent Acquisitions and
the Pending Acquisitions as if they had occurred on January 1, 1996, The
Breeders' Cup Championship would have accounted for approximately 15% of the
Company's revenues for the year ended December 31, 1996. Although the Company
expects that this agreement will be extended for an additional two-year
period, it is scheduled to terminate in December 1997. See "Risk
Factors--Dependence Upon a Limited Number of Clients and Events."

The Company's most significant costs and expenses are salaries and
production expenditures. Historically, general and administrative expenses
were impacted by the levels of compensation and

24
<PAGE>
related benefits that the stockholders of SMTI, A&A, ProServ and QBQ received
from their respective businesses during the periods when the companies were
privately owned. ProServ has undergone an internal restructuring focused on
reducing its operating expenses and eliminating business activities that do
not provide adequate financial returns. The pro forma adjustments for the
Recent Acquisitions and the Pending Acquisitions reflect contractually
required reductions in personnel, officers' salaries and employee benefits,
but do not reflect the effects of the restructuring since they are not
directly attributable to the ProServ Acquisition.

The Company has recorded and will continue to record substantial
compensation charges to operations in connection with the issuance of
securities to certain officers, directors and consultants, including the
release from escrow of the IPO Escrow Shares and the QBQ Escrow Shares. In
the event that the IPO Escrow Shares or the QBQ Escrow Shares are released
from escrow, the Company may recognize, during the period in which the
thresholds for release are probable of being met, a substantial non-cash
compensation charge, which will not be deductible for income tax purposes and
which will have the effect of significantly increasing the Company's losses
or reducing or eliminating earnings, if any, at such time. See "Agreements
Related to the Pending Acquisitions--QBQ Acquisition" and "Principal
Stockholders--Escrow Shares." In addition, the Company may record charges to
operations over the next two years related to the Company's potential
obligation to repurchase the shares of Common Stock issued in connection with
the ProServ Acquisition. Further, in connection with the issuance of Common
Stock in 1996 to a non-founding officer in partial consideration of such
officer entering into an employment agreement with the Company, the Company
will recognize a non-cash compensation charge of approximately $119,000 over
the 15-month vesting period and, in connection with an advance paid to
another officer in April 1997 pursuant to his employment agreement, the
Company will recognize a compensation charge of $446,000 over the next five
years. In connection with the Recent Acquisitions, the Company will also
incur charges to operations aggregating $530,000 over the five-year period
commencing on the date of the Recent Acquisitions related to the imputed
interest on the indebtedness to the stockholders of SMTI and A&A. In
connection with the QBQ Acquisition, the Company will incur additional
charges to operations aggregating $388,000 over eight years related to the
imputed interest on the indebtedness to the sole stockholder of QBQ.

RESULTS OF OPERATIONS

The Company's consolidated financial statements are not directly
comparable from period to period because the Company commenced operating
activities in January 1996 and the Recent Acquisitions did not occur until
December 1996.

Quarter Ended March 31, 1997 Compared to Quarter Ended March 31, 1996

For the three months ended March 31, 1997, the Company generated revenues
of approximately $2.0 million, principally related to commissions earned from
talent representation and fees generated through the Company's event
management for The Breeders' Cup Championship. Revenues were also derived
from the Company's production of boxing programs broadcast on ESPN. On a pro
forma basis giving effect to the Recent Acquisitions, as if they had occurred
as of January 1, 1996, the Company's revenues in the 1997 quarter increased
$458,000, or 30.1%, over the prior quarter, principally as a result of the
television production revenues associated with the ESPN boxing contract and
increased event management and consulting fees related to The Breeders' Cup
Championship. These increases were offset by reductions in consulting
revenues of $276,000 that resulted from a loss of a contract.

25
<PAGE>
The Company's revenues on a pro forma basis giving effect to the Recent
and the Pending Acquisitions, as if they had occurred on January 1, 1996,
would have been as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
31,
------------------------
1996 1997
------------ -----------
<S> <C> <C>
Event Management .... $ 266,000 $ 312,000
Television
Production........... 597,000 758,000
Marketing............. 126,000 146,000
Talent
Representation....... 1,588,000 1,749,000
Consulting Services . 509,000 806,000
------------ -----------
Total ............... $3,086,000 $3,771,000
============ ===========
</TABLE>

The increase in revenues of $685,000, or 22.2%, is principally attributable
to increased consulting revenues as a result of its new engagement to assist
in the creation of local sports networks for Americast and increased concert
bookings in 1997.

The Company's operating expenses of approximately $943,000 for the 1997
quarter consisted principally of event and television production costs
related to the costs of The Breeders' Cup Championship and boxing projects as
well as talent agent compensation expense. Operating expenses declined
$11,000 in 1997, as compared to 1996, on a pro forma basis for the Recent
Acquisitions. Pro forma for the Recent Acquisitions and the Pending
Acquisitions, operating expenses in the 1997 quarter declined by $275,000 or
11.6% to $2.1 million, principally as a result of the restructuring program
implemented by ProServ.

General and administrative expenses were approximately $1.8 million for
the three months ended March 31, 1997 as compared to $245,000 for the prior
year period. The increase of $1.6 million was the result of the inclusion of
costs associated with the operations of the Recent Acquisitions after their
acquisition and increased staffing and occupancy costs required to support
the substantial increase in the corporate infrastructure required for the
Company's expanded business operations. General and administrative expenses
in first quarter 1997 increased $661,000 from the 1996 quarter, on a pro
forma basis giving effect to the Recent Acquisitions. This increase, which is
expected to continue in subsequent quarters, is attributable to salary and
occupancy related costs, which the Company has added to support the
substantial increase in its business operations contemplated by the Pending
Acquisitions. On a pro forma basis giving effect to the Recent Acquisitions
and the Pending Acquisitions, general and administrative expenses were $2.6
million and $2.1 million in the 1997 and 1996 quarters, respectively.
ProServ's restructuring program contributed $203,000 in savings in the
current quarter, which were offset by the increases in the Company's general
and administrative expenses mentioned above.

The Company's operating loss for the three months ended March 31, 1997
increased $216,000 to $785,000, as compared to the prior year period on a pro
forma basis giving effect to the Recent Acquisitions, principally as a result
of the increase in general and administrative expenses partially offset by
the increased revenues for the 1997 period. With the inclusion of the
operations of ProServ and QBQ, on a pro forma basis, the 1997 quarter
operating loss of $1.3 million was $469,000 or 27% less than that of the
prior year quarter. The operating results for each period include charges for
the amortization of the excess of the purchase price over the net assets
acquired in the Pending Acquisitions of $264,000.

The Company's net loss for first quarter 1997 was approximately $778,000
compared to a net loss of $245,000 for the same period in 1996 as a result of
the matters discussed above. On a pro forma basis giving effect to the Recent
Acquisitions, the Company's net loss for the three months ended March 31,
1996 would have been $635,000, and giving effect to the Recent Acquisitions
and Pending Acquisitions, would have been $1.8 million. On a pro forma basis
giving effect to the Recent Acquisitions and the Pending Acquisitions, the
net loss applicable to common stockholders was $1.3 million and $1.8 million
for the three months ended March 31, 1997 and 1996, respectively. The pro
forma net loss applicable to common stockholders includes a charge of $51,000
related to the accretion of the Company's potential obligation under the put
option on the Common Stock to be issued in connection with the ProServ
Acquisition.

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<PAGE>
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

For the year ended December 31, 1996, the Company generated revenues of
approximately $2.9 million. The principal sources of revenues were fees
derived from the Company's representation of the sponsor of the 1996 Major
League Baseball All-Star balloting program and from production of boxing
programs broadcast on ESPN and ESPN2. Revenues were also derived from
commissions earned from talent representation and from production of other
programs for broadcast on various cable outlets.

On a pro forma basis giving effect to the Recent Acquisitions, as if they
had occurred on January 1, 1995, the Company would have had revenues for the
year ended December 31, 1996 of $15.2 million, an increase of approximately
$4.8 million, or 46.8%, over pro forma revenues for the prior year. The
increase was principally attributable to the Company's management of the
Major League Baseball All-Star Balloting Program and television production
for ESPN and other cable outlets. Event management and consulting fees also
increased as a result of increased fees from The Breeders' Cup Championship
and the addition of revenues from a consulting agreement pursuant to which
the Company handled sports marketing and advertising placement for a client.

On a pro forma basis giving effect to the Recent Acquisitions and the
Pending Acquisitions, as if they had occurred on January 1, 1995, the
Company's revenues would have been as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER
31,
---------------------------
1996 1997
------------- -------------
<S> <C> <C>
Event Management .... $11,999,000 $13,590,000
Television
Production........... 3,925,000 2,508,000
Marketing............. 2,664,000 1,474,000
Talent
Representation....... 9,033,000 10,010,000
Consulting Services . 2,311,000 2,046,000
------------- -------------
Total ............... $29,932,000 $29,628,000
============= =============
</TABLE>

On a pro forma basis giving effect to the Recent Acquisitions and Pending
Acquisitions, revenues increased $304,000 in 1996 versus 1995 as a result of
revenues attributable to the operations of the Company prior to the Recent
Acquisitions as well as increases related to the Recent Acquisitions, offset
by a reduction in ProServ's revenues of $4.4 million. Event management
revenue declined approximately $1.6 million, principally as a result of
ProServ's sale of a tennis tournament. ProServ's talent representation
commission fee income also declined in 1996 as a result of the loss of
certain clients and reductions in fees received under representation
agreements transferred to a former employee in a prior year.

The Company's operating expenses for the year ended December 31, 1996 were
approximately $2.6 million and principally consisted of expenses related to
the Major League Baseball All-Star balloting program and production of ESPN
boxing programs. On a pro forma basis giving effect to the Recent
Acquisitions, operating expenses for 1996 would have been $9.5 million as
compared to $5.5 million for 1995. The increase of $4.0 million was
principally the result of increased production expenses resulting from the
Company's one-time representation of the sponsor of the 1996 Major League
Baseball All-Star balloting program, expenses associated with a client's
advertising campaign, and television production costs associated with ESPN
boxing. After the inclusion of the Pending Acquisitions on a pro forma basis,
as if the Recent and Pending Acquisitions had taken place as of January 1,
1995, operating expenses would have been $19.4 million and $17.3 million for
1996 and 1995, respectively. The increase in pro forma operating expenses of
$2.1 million in 1996 was principally related to the Company's new business
ventures, which were partially offset by decreases in ProServ's event costs
which decreased as a result of the sale of one of its tennis tournaments.

General and administrative expenses for the year ended December 31, 1996
were $2.2 million and consisted principally of salary and benefits of $1.7
million. On a pro forma basis giving effect to the Recent Acquisitions, these
expenses increased $2.7 million to $5.8 million in 1996 from $3.1 million in
1995. The increase was principally associated with the increased costs and
expenses associated with the Company's

27
<PAGE>
new operations. Pro forma adjustments for 1995 reflect contractually required
reductions in personnel, officers' salaries and employee benefits related to
SMTI and A&A of approximately $1.5 million. On a pro forma basis giving
effect to the Recent Acquisitions and the Pending Acquisitions, general and
administrative expenses approximated $10.0 million, an increase of $692,000,
or 7.3%, over 1995. The pro forma results for both years reflect adjustments
for cost savings of approximately $1.4 million related to contractually
agreed to reductions in personnel, officer salaries and benefits and other
costs applicable to ProServ and QBQ. The pro forma results do not reflect the
effects of the restructuring begun by ProServ in 1996, since they are not
directly attributable to the ProServ Acquisition.

The Company's operating loss for the year ended December 31, 1996, as
reported, was $2.0 million and on a pro forma basis giving effect to the
Recent Acquisitions was $252,000. In 1995, on a pro forma basis for the
Recent Acquisitions, the Company's operating income was $1.6 million. On a
pro forma basis giving effect to the Recent Acquisitions and the Pending
Acquisitions, the operating loss for 1996 would have been $1.6 million and
the operating income in 1995 would have been $1.2 million. Pro forma
operating income (loss) includes one time charges related to the closing of
ProServ's Paris office of $565,000 in 1996 and $594,000 in 1995 related to
ProServ's loss on a sublease and a legal settlement. Pro forma operating
results for both years include a charge of $1.0 million for the amortization
of the excess of the purchase price over the net assets to be acquired in the
Pending Acquisitions. On a pro forma basis giving effect to the Recent
Acquisitions and the Pending Acquisitions, operating income declined from
1995 to 1996 due to the "start up costs" associated with the Company and the
reduction in ProServ's revenues discussed above.

For the year ended December 31, 1996, the Company's loss before taxes was
approximately $2.4 million, including interest expense of $283,000 and
financing expense of $193,000 related to the sale of debentures (the
"Debentures") in the aggregate principal amount of $2.0 million (the "Private
Placement"). For 1996, the Company had a net loss of $2.4 million after
giving effect to an income tax benefit of $20,000. On a pro forma basis for
the Recent Acquisitions, the Company had a net loss of $914,000 for the year
ended December 31, 1996 versus net income of $790,000 for the prior year.
Giving pro forma effect to the Recent Acquisitions and the Pending
Acquisitions, the net loss applicable to common stockholders was $2.4 million
in 1996 versus net income applicable to common stockholders of $284,000 in
1995. Such amounts reflect the $179,000 charge related to the accretion of
the Company's potential obligation under the put option on common stock
issued in connection with the ProServ Acquisition.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of working capital have been net proceeds
of approximately $1,363,000 from the Private Placement, which was completed
in August 1996, advances by stockholders aggregating $767,000 and net
proceeds of approximately $15,586,000 from the IPO, which was completed in
December 1996. At March 31, 1997, the Company had working capital of
approximately $5,647,000.

Of the net proceeds of approximately $15,586,000 that the Company received
from the IPO, an aggregate of $9,000,000 was paid to the stockholders of SMTI
and A&A. In addition, the Company has agreed to pay such stockholders
installment payments aggregating $2,500,000 over the four-year period which
commenced April 1, 1997. On April 1, 1997, the Company made the first
installment payment of $500,000 to such stockholders. Further, the agreement
relating to the acquisition of SMTI (the "SMTI Acquisition") provided that
SMTI is to distribute to its stockholders, by means of a dividend, an amount
equal to 40% of the accumulated adjustments account of SMTI. It is
contemplated that a distribution of approximately $382,000 will be paid in
the third quarter of 1997. In connection with the conversion of the
Debentures into IPO Units upon the closing of the IPO in December 1996, the
Company paid interest of approximately $254,000.

The Company has recently entered into the ProServ Acquisition Agreements,
pursuant to which it has agreed to acquire approximately 94% of ProServ, and
is currently negotiating to acquire the remaining minority interests in
ProServ. If the Company is unable to acquire the remaining minority interests
in ProServ on satisfactory terms, the Company intends to obtain full
ownership of ProServ through a statutory merger. Pursuant to the Dell Stock
Purchase Agreement, the Company has agreed to purchase

28
<PAGE>
70.4% of ProServ for an aggregate purchase price of $6.5 million in cash and
the issuance of 225,000 shares of Common Stock ("Dell Consideration Stock"),
subject to certain put and call options, payable to Mr. Dell, the chief
executive officer and majority stockholder of ProServ. Mr. Dell has the
option to elect to receive in lieu of cash at closing a $3.0 million
promissory note payable on January 2, 1998, secured by an irrevocable letter
of credit. The Dell Acquisition Agreement (as defined herein) also provides
that, at any time within the 60 day period following the second anniversary
of the consummation of the ProServ Acquisition, Mr. Dell may elect to
transfer to the Company up to all of the remaining Dell Consideration Stock
held by Mr. Dell at a price per share of $7.70 (up to approximately $1.7
million in the aggregate). In addition, at any time between the 61st and 90th
day following the second anniversary of the consummation of the transactions
contemplated by the ProServ Acquisition Agreements, the Company may purchase
50% of the Dell Consideration Stock held by Mr. Dell at a price per share of
$7.70 (up to $866,250 in the aggregate). In addition, the Company will enter
into an employment agreement with Mr. Dell providing for a base salary of not
less than $300,000 per year. Pursuant to the Non-Employee Stock Purchase
Agreement and the Allard Stock Purchase Agreement (each as defined herein),
the Company has agreed to purchase an aggregate of 300 shares of the common
stock of ProServ, Inc. and options to purchase an aggregate of 20 shares of
the common stock of ProServ, Inc. for an aggregate purchase price of
approximately $3.6 million. The Company anticipates purchasing the remaining
minority interests for approximately $609,000. The Company has deposited into
escrow an aggregate of $1.5 million in connection with the ProServ
Acquisition, and anticipates depositing an additional $500,000 by August 15,
1997 to extend the date of the ProServ Acquisition to be concurrent with the
consummation of this Offering. See "Agreements Related to the Pending
Acquisitions--ProServ Acquisition."

The Company has also agreed to purchase QBQ for an aggregate purchase
price of approximately $6.7 million, of which $2.0 million will be payable in
shares of Common Stock, $1.0 million will be payable in equal annual
installments over eight years, subject to acceleration in certain
circumstances and $615,000 will be payable in annual installments over five
years. In addition, the Company has agreed to deposit shares of Common Stock
with a value of approximately $500,000 into an escrow account, to be released
to QBQ in the event that certain financial performance goals are achieved
with respect to the acquired assets in any of the first four full fiscal
years following the consummation of the QBQ Acquisition. The Company has made
a cash deposit of $400,000 to secure the Company's obligations under the QBQ
Acquisition Agreement (as defined herein). In connection with the QBQ
Acquisition, the Company anticipates entering into an employment agreement
with Mr. Arfa, the chief executive officer and sole stockholder of QBQ, which
will provide for a non-recourse loan by the Company of $1.5 million secured
by the Common Stock to be issued in the QBQ Acquisition. The QBQ Acquisition
Agreement also provides that, at any time within the 30-day period following
the first to occur of (i) the second anniversary of the consummation of the
QBQ Acquisition or (ii) an Acceleration Event (as defined in the QBQ
Acquisition Agreement), QBQ may, at its option, elect to transfer to the
Company up to 75% of the shares it receives in connection with the QBQ
Acquisition for an aggregate purchase price of up to $1.5 million. In
addition, at any time within the 30-day period following the first to occur
of the second anniversary of the closing of the QBQ Acquisition or a Pledge
Event (as defined in the Pledge Agreement between the Company and Mr. Arfa),
the Company may, at its option, elect to purchase 50% of such shares from QBQ
for an aggregate of $1.5 million. In addition, if the QBQ Escrow Shares are
released from escrow at any time within the first 30 days after the second
anniversary of the consummation of the QBQ Acquisition or an Acceleration
Event, (i) QBQ may, at its option, elect to transfer up to 75% of the QBQ
Escrow Shares to the Company for an aggregate purchase price of up to
$375,000 and (ii) the Company may, at its option, elect to purchase up to 50%
of the QBQ Escrow Shares for an aggregate purchase price of up to $750,000.
If the QBQ Acquisition Agreement is terminated due to the Company's material
breach of a representation, warranty or covenant, the Company shall pay QBQ
$1.0 million as liquidated damages (of which $400,000 may be offset against
the cash deposit previously paid by the Company). See "Use of Proceeds" and
"Agreements Related to the Pending Acquisitions--QBQ Acquisition."

On July 23, 1997, the Company commenced the Tender Offer to purchase up to
all (but not less than 3,200,000, representing approximately 70.8%) of the
4,519,162 outstanding Warrants at a cash purchase price of $2.25 per Warrant.
The Company is exploring, through its principal financial advisor, financing
for the Tender Offer. Such financing may take the form of a short-term loan
or other indebtedness, or the

29
<PAGE>
Company may fund the purchase of the Warrants through the proceeds from this
Offering. The Company anticipates that any indebtedness incurred in financing
the Tender Offer will be repaid with a portion of the net proceeds of this
Offering. Assuming a price of $2.25 per Warrant, the aggregate consideration
for Warrants tendered in the Tender Offer and related expenses could range
from $7.4 million (with the tender of 70.8% of the outstanding Warrants) to
approximately $9.8 million (with the tender of all of the outstanding
Warrants not held by directors or executive officers of the Company). At the
Company's request, its directors and executive officers have stated that they
do not currently intend to tender their Warrants unless the Company is unable
to purchase the minimum number of Warrants. Notwithstanding the foregoing,
such directors and executive officers may tender or not tender their Warrants
at their discretion. The consummation of this Offering is conditioned upon
the closing of the Tender Offer.

The net proceeds from this Offering are estimated to be approximately
$41.3 million, of which approximately $17.4 million will be paid in
connection with the Pending Acquisitions and approximately $9.8 million will
be paid in connection with the Tender Offer (assuming the tender of all
Warrants not held by directors or executive officers of the Company) or to
repay any indebtedness which may be incurred to purchase such Warrants. The
timing and consummation of the Pending Acquisitions and the Tender Offer are
subject to a number of conditions, certain of which are beyond the Company's
control, and there can be no assurance that the Pending Acquisitions or the
Tender Offer will be consummated. However, the consummation of this Offering
is conditioned upon the closing of the Tender Offer and the concurrent
closing of the transactions contemplated by the ProServ Acquisition
Agreements. Although this Offering is not conditioned upon the closing of the
QBQ Acquisition, the Company anticipates closing the QBQ Acquisition promptly
following the consummation of this Offering. If the QBQ Acquisition is not
consummated, the Company intends to apply the proceeds of this Offering
allocated for the QBQ Acquisition to working capital or other general
corporate purposes, including future acquisitions. See "Agreements Related to
the Pending Acquisitions." See "Use of Proceeds."

While the Company has not entered into agreements relating to any
acquisitions other than the Pending Acquisitions, it intends to continue to
expand its operations through further acquisitions of companies, events and
employees. In the event the Company identifies attractive acquisition
candidates, the Company intends to use a portion of the net proceeds from
this Offering allocated to working capital to finance such acquisitions. See
"Risk Factors--Broad Discretion of Management in Use of Proceeds; Uncertainty
Related to Acquisition Strategy." In addition, to the extent funds generated
from operations are not sufficient, the Company will use a portion of the
proceeds from this Offering to pay compensation to its executive officers,
consulting fees to TSC and the installment payments to certain officers and
directors of the Company related to the Recent Acquisitions and the QBQ
Acquisition. See "Certain Relationships and Related Transactions."

In August 1996 the Company entered into a six-year consulting agreement
with Sillerman Communications Management Corporation ("SCMC"), a company
controlled by Robert F.X. Sillerman, the Chairman of the Company. The
consulting agreement provides for the payment by the Company of a monthly fee
of $30,000, commencing in September 1997 for regular periodic financial
consulting services. Such monthly fee will increase annually by the
percentage increase in the Consumer Price Index. If SCMC performs advisory
services in the nature of investment banking services, it is entitled to a
fee (a "Special Advisory Fee") for such services, the exact amount of which
will be negotiated between the parties to the consulting agreement. In
February 1997, the Company advanced to SCMC the sum of $400,000 as an advance
against future Special Advisory Fees. In March 1997, SCMC assigned its
rights, obligations and duties under the consulting agreement to TSC. In
connection with the Pending Acquisitions, TSC will receive Special Advisory
Fees of $450,000 (of which $400,000 will be offset against the amount
previously advanced to TSC) and, in connection with the Tender Offer, TSC
will receive an

30
<PAGE>
immediately exercisable option to purchase 200,000 shares of Common Stock at
a price per share equal to the closing price of the Common Stock on the date
of consummation of the Tender Offer. See "Certain Relationships and Related
Transactions--Consulting Agreement."

In October 1996, the Company entered into a lease for new facilities which
requires initial annual rent of $537,000 commencing October 1997, subject to
certain increases. The Company intends to incur capital expenditures of
approximately $1.0 million to furnish its new office space, complete
leasehold improvements and install television edit facilities.

BUSINESS

GENERAL

The Company provides integrated event management, television production,
marketing, talent representation and consulting services in the sports, news
and other entertainment industries. The Company's event management,
television production and marketing services involve managing sporting
events, producing sports television programs and marketing professional and
collegiate athletic leagues and organizations. The Company also arranges and
negotiates sports and entertainment-related television rights, advertising,
corporate sponsorships and entitlements for its clients. The talent
representation services provided by the Company include negotiating
employment agreements and creating and evaluating various business
opportunities for sports, news and entertainment personalities. The Company
also provides a variety of consulting services to clients either engaged in,
or seeking exposure in, sports and entertainment-related industries.

The Company was organized in July 1995 by Robert M. Gutkowski and Robert
F.X. Sillerman. Mr. Gutkowski is the Company's President and Chief Executive
Officer and has over 20 years of experience in the television, sports and
entertainment industries. He served as President of Madison Square Garden
Corporation (which included overall responsibility for MSG Cable Network)
from November 1991 until September 1994. Mr. Sillerman is the Chairman of the
Company, and his principal occupation is Executive Chairman of the Board of
Directors of SFX, a publicly-traded company which owns and operates radio
stations and concert promotion businesses.

From the time of its organization until its IPO in December 1996, the
Company developed its sports television production, marketing and consulting
business. Simultaneously with the IPO, the Company acquired SMTI, a leading
provider of television production and marketing services in the sports and
other entertainment industries since 1984, and A&A, a sports and news talent
representation firm founded in 1977, which has a client list that includes
premier athletes, sports and news broadcasters and media executives. Since
the IPO, the Company has continued to grow by hiring individuals whose
businesses and expertise complement those of the Company and by providing
services to an increasing number of clients. Through both acquisitions and
internal growth, the Company has developed or substantially expanded its
event management, television production, marketing, talent representation and
consulting capabilities. In addition, upon completion of this Offering, the
Company will continue to expand its capabilities through the consummation of
the ProServ Acquisition and the QBQ Acquisition.

31
<PAGE>
PENDING ACQUISITIONS

ProServ Acquisition. The Company has recently entered into the ProServ
Acquisition Agreements to acquire approximately 94% of ProServ, Inc. and
ProServ Television, Inc. and is currently negotiating to acquire the
remaining minority interests in ProServ. If the Company is unable to acquire
the remaining minority interests in ProServ on satisfactory terms, the
Company intends to obtain full ownership of ProServ through a statutory
merger. ProServ is an established provider of international sports event
management, television production, marketing, talent representation and
consulting services. ProServ was founded in 1969 by the then-Captain of the
U.S. Davis Cup team, Donald Dell, who also co-founded the ATP and pioneered
the commercial development of tennis as a major international sport. Upon the
consummation of the transactions contemplated by the ProServ Acquisition
Agreements, Mr. Dell will continue to serve as the chairman and chief
executive officer of ProServ and will become a director of the Company.
ProServ provides many of the same services that the Company currently
provides and, as a result, the Company anticipates increased revenues through
the sharing of business development opportunities, contacts and expertise. In
addition, although the Company's primary operations have been in the United
States, the Company believes ProServ's existing international operations will
facilitate the Company's goal of becoming a major competitor in the
burgeoning business of international sports, particularly in European and
Pacific Rim markets. ProServ has undergone an internal restructuring focused
on eliminating business activities that do not provide adequate financial
returns and reducing its operating expenses. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The aggregate
purchase price pursuant to the ProServ Acquisition Agreements consists of
approximately $10.1 million in cash and 225,000 shares of Common Stock. The
Company anticipates purchasing the remaining minority interests for
approximately $609,000. See "Agreements Related to the Pending
Acquisitions--ProServ Acquisition."

QBQ Acquisition. The Company has also entered into an agreement pursuant
to which Marquee Music, a wholly-owned subsidiary of the Company, will
acquire the assets of QBQ, a company that books tours and appearances for a
variety of entertainers, which was founded in 1986. QBQ has relationships
with, and has provided booking and touring representation services to, a
variety of musicians and groups, including Billy Joel, Metallica, Lynyrd
Skynyrd, Luther Vandross and Bruce Hornsby. The Company believes that the
music business offers commercial opportunities similar to the sports
business, such as corporate sponsorships and entitlements. Mr. Gutkowski has
significant expertise in the music concert business, having served as
President of Madison Square Garden Corporation, a premier indoor concert
venue, and has been actively involved in various aspects of the music concert
business, including production of televised concerts. Upon the consummation
of the QBQ Acquisition, Dennis Arfa, the founder and chief executive officer
of QBQ, will serve as the chief executive officer of Marquee Music. The
aggregate purchase price for the QBQ Acquisition consists of approximately
$3.1 million in cash, $1.6 million payable in annual installments over eight
years and up to $2.5 million payable in shares of Common Stock, of which
shares relating up to $500,000 are subject to an escrow agreement. See
"Agreements Related to the Pending Acquisitions--QBQ Acquisition."

32
<PAGE>
OPERATING STRATEGY

Enhance Revenues by Offering Integrated Services. The Company intends to
continue to enhance its revenues from its event management, television
production, marketing, talent representation and consulting businesses by
offering integrated sports and entertainment-related services. The Company
will continue to cross-promote its various services by offering additional
complementary services within its lines of business to new and existing
clients. For example, in connection with a particular event, the Company may
organize the event, provide the talent and/or broadcasters, produce the
television coverage, sell the corporate advertising and sponsorships and
negotiate the distribution and other ancillary rights. It is the Company's
intention to expand its involvement with current clients for whom it provides
less than a full complement of services, and to market its full service
capabilities to new clients by emphasizing its ability to deliver integrated
services, thereby relieving the client of the costly and inefficient burden
of sourcing multiple providers. Furthermore, where possible, the Company
intends to create and/or seek ownership interests in sports and
entertainment-related events in order to maximize its earnings potential from
such events.

Increase Breadth of Services. The Company intends to continue to expand
its current lines of business to provide a more comprehensive array of
services to its clients. As the needs of companies utilizing advertising and
marketing services become increasingly sophisticated, the Company believes
that its clients will require a broader range of the types of services it
provides. The Company will utilize its breadth of services, its financial
resources, its heightened visibility and its management's experience and
reputation to provide it with expanded opportunities. For example, the
Company's financial resources may enable it to create or purchase ownership
interests in sporting events and to develop in-house television production
capabilities. The Company believes that, by reducing its dependence on
outside service providers, it will be able to increase its margins as well as
increase the quality of the services which it provides.

In addition, the Company intends to continue to expand its consulting
business in order to utilize management's substantial expertise in various
aspects of sports and entertainment event management, television production
and marketing. Through its wide array of activities, the Company is able to
gain experience and insight into the overall economics and developments in
the sports and other entertainment industries, including such issues as
pricing, marketability, logistics and publicity. Various sports and
entertainment-related businesses require such expertise in order to maximize
revenues from activities such as team and event ticket sales, venue
management, sales of television rights, program development and obtaining and
maintaining sponsorships. The Company is also able to use its expertise in
advising businesses that are seeking exposure through sports and
entertainment events.

Increase International Market Penetration. The Company intends to continue
to pursue expansion opportunities in international markets, focusing on the
European and Pacific Rim markets. The Company believes that the sports, news
and entertainment industries in these markets are less developed than in the
United States and therefore present significant opportunities for the
Company. For example, IEG's Complete Guide to Sponsorship projects 1997
sponsorship spending to be $4.5 billion in Europe and $3.1 billion in the
Pacific Rim (compared to $5.9 billion in the United States). The Company also
believes that, over the next few years, these international markets will
exhibit rapid growth, in which case there will be significant opportunities
to provide the types of services offered by the Company.

ACQUISITION STRATEGY

As part of its strategy to provide comprehensive services to sports, news
and entertainment-related businesses, the Company intends to continue to
expand through the acquisition of companies and events and through attracting
individuals with relevant expertise, both within its existing lines of
business and within complementary lines of business. According to the 1997
Sports Business Directory published by E.J. Krause & Associates, Inc., there
are presently over 700 companies in North America that provide sports
marketing and/or talent representation services. The Company believes that
the highly fragmented nature of its industry offers many attractive
acquisition opportunities, and the Company intends to rely on the experience
of its management team to continue to identify acquisition candidates whose
businesses will complement the Company's existing operations and whose
operations may be constrained by lack of

33
<PAGE>
capital. In particular, the Company intends to focus on consolidation
opportunities presented by privately-held competitors of moderate size. In
the European and Asian markets, the Company intends to focus on companies
with an established presence in their market and experienced management. The
Company believes that it is one of the few publicly-traded companies within
its industry, and, as a result, the Company will have certain advantages over
many of its smaller competitors in negotiating and consummating acquisitions.
To date, the Company has no agreements to acquire any companies, other than
ProServ and QBQ. See "Risk Factors--Broad Discretion of Management in Use of
Proceeds; Uncertainty Related to Acquisition Strategy."

SERVICES PROVIDED BY THE COMPANY

Event Management, Television Production and Marketing Services

The Company manages sporting events, produces sports television programs
and markets professional and collegiate athletic leagues and organizations.
The Company also arranges and negotiates sports and entertainment-related
television rights, advertising, corporate sponsorships and entitlements for
its clients. The Company mainly derives its revenue for these services from
commissions and/or fees for managing sporting events, selling broadcast
rights to television networks and cable stations, packaging an event for a
particular corporate sponsor, producing and distributing television
programming or videos and selling entitlements and signage to sporting events
and venues. For an event in which the Company has ownership rights, the
Company derives revenues from the various revenue streams associated with the
event's operations.

Although they may vary from event to event, the Company's activities in
event management include site selection, recruitment of athletes or
personalities, procurement of television coverage, merchandising, sale of
corporate sponsorship, creation of corporate hospitality programs and general
administrative duties, including contract negotiation and scheduling. The
Company generally receives fixed fees and/or commissions, generally ranging
from 15% to 35% of the contracted amount, although these fees and commissions
are negotiated between the parties on an event-by-event basis. The Company's
corporate sponsorship projects are generally on a short-term basis and may
not be evidenced by written agreements in advance of Company expenditures or
at all, which the Company believes to be common in its industry. See "Risk
Factors--Absence of Written Agreements; Nature of Contracts."

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<PAGE>
The Company provides, or will provide upon consummation of the ProServ
Acquisition, event management, television production and/or marketing
services to many clients or events, including the following:

<TABLE>
<CAPTION>
FIRST YEAR OF
PROJECT SPORT/FOCUS SERVICES PROVIDED AFFILIATION
- ------------------------------------- ------------------------ --------------------- ---------------
<S> <C> <C> <C>
The Breeders' Cup Championship ...... Thoroughbred horse Event management, 1984
racing television production
and marketing

The Hambletonian ..................... Harness horse racing Television production 1985
and marketing

Legg Mason Tennis Classic ............ Tennis Event management and 1969
marketing

AT&T Challenge* ...................... Tennis Event management, 1986
television production
and marketing

U.S. Open Tennis Championship ....... Tennis Television marketing 1989

French Open Tennis Championship ..... Tennis Television marketing 1991

Isuzu Celebrity Golf Championship* .. Golf Event management 1991
and marketing

Canon Shootout ....................... Golf Event management, 1991
television production
and marketing

NCAA Championships ................... Collegiate sports Television marketing 1993

Major League Baseball ................ Baseball Marketing 1993

ESPN Boxing .......................... Boxing Television production 1996

ESPN-Subaru American Outback ......... Wilderness television Television production 1996
series

The PBA Tour ......................... Bowling Television production 1996
and marketing

U.S. Open Professional Figure Skating
Championship ........................ Figure skating Television production 1996
and marketing

More Than a Game...................... Sports television Television Production 1997
series

Lifetime Sports Presents ............. Women's sports Television production 1997
television series
</TABLE>

- ------------
* The Company has, or upon consummation of the ProServ Acquisition will
have, an ownership interest in these events.

The Breeders' Cup Championship. In 1984, SMTI, together with the
Thoroughbred Racing Association and NBC Sports, created The Breeders' Cup
Championship. This event consists of an annual series of thoroughbred horse
races held at a rotating series of racetracks, including Churchill Downs,
Santa Anita and Belmont Park. As co-creator of The Breeders' Cup
Championship, SMTI handles substantially every management, television
production, marketing and sponsorship aspect of the event. The Company has
entered into a marketing agreement (the "Breeders' Cup Agreement") with
Breeders' Cup Limited ("BCL"), pursuant to which the Company was granted the
right to provide general marketing consultation, sales of broadcast and
sponsorship rights, television advertising production, media placement,
publicity, public relations, television and video production, production of
promotional materials, merchandising and licensing of BCL in connection with
The Breeders' Cup Championship. The Company also supervises the televising of
the event and has sold the television rights to NBC-TV, with which it works
to create a four-hour broadcast. The Breeders' Cup Agreement terminates on
December 31, 1997, unless terminated earlier in accordance with the terms of
the agreement, including the termination, for any reason, of the Company's
employment of Michael Letis or the unavailability of Mr. Letis to perform the
services necessary to enable the Company to comply with the terms of the
Breeders' Cup Agreement. The Company expects that the Breeders' Cup Agreement
will be extended for an additional two years; however, there can be no
assurance that the Company will be able to extend such agreement on similar
terms, or at all. Giving pro forma effect to the Recent Acquisitions and the
Pending Acquisitions as if such acquisitions had occurred on January 1, 1996,
the Breeders' Cup Agreement would have accounted for approximately 15% of the
Company's revenues for the year ended December 31, 1996. See "Risk
Factors--Dependence upon a Limited Number of Clients and Events."

35
<PAGE>
The Hambletonian. Since April 1995, the Company has acted as the exclusive
television agent for The Hambletonian, a premier event in harness racing held
annually at The Meadowlands. The Company's responsibilities include
negotiating all television contracts and producing the telecast of the event.
This agreement expires in March 1998.

Legg Mason Tennis Classic. Since July 1969, when this event was first
held, ProServ has operated all aspects of this event for the Washington
Tennis Foundation, a non-profit group which runs programs for "at-risk"
youths throughout the metropolitan Washington area. This event is a
Championship Series event on the ATP tour that features 56 singles players
and 28 doubles teams. ProServ's agreement with the Washington Tennis
Federation has expired, and ProServ is currently negotiating to extend this
agreement. There can be no assurance that the Company will be able to extend
such agreement on similar terms or at all.

AT&T Challenge. In January 1986, ProServ created the AT&T Challenge, a
men's tennis tournament authorized by the ATP Tour that features 32 singles
players and 16 doubles teams. ProServ owns the rights to this event, which
serves as a major clay-court tune-up event for the French Open. ProServ
provides all event management and television production services relating to
the event, including ticket sales, sponsorship sales, player procurement,
site preparation, public relations, television rights and event management.

U.S. Open Tennis Championship. Since October 1990, ProServ has negotiated
the sale of U.S. cable television rights to the U.S. Open Tennis
Championship. This event is one of only four Grand Slam events on the
professional tennis tour. ProServ's agreement with respect to the U.S. Open
Tennis Championship expires in October 2002.

French Open Tennis Championship. Since 1991, ProServ has acted as the
exclusive consultant and representative for the distribution and sale of all
television rights to the French Open Tennis Championship in North America.
The French Open Tennis Championship is another of the four Grand Slam events
on the professional tennis tour. ProServ's agreement with the French Tennis
Federation expires in January 2001.

Isuzu Celebrity Golf Championship. In January 1995, the Company and NBC
formed Celebrity Golf Championship, LLC (in which the Company owns a 25%
interest) to conduct the Isuzu Celebrity Golf Championship. This event is an
annual celebrity professional golf tournament held in Lake Tahoe, Nevada,
where the competitors include well-known sports, entertainment and media
personalities. In partnership with NBC, the Company organizes all aspects of
the event, including event management, sponsorship sales and television
production.

Canon Shootout. In 1991, ProServ developed in conjunction with the
European PGA a series of nine-hole sudden death shoot-outs between 10
European PGA golfers. In November 1993, ProServ arranged the license of the
name to this event to Canon Europa N.V. This series is known as the Canon
Shootout and consists of 10 weekly shoot-outs. The agreement expires in
December 1997.

NCAA Championships. Since December 1993, ProServ has had the right to
sell, on behalf of the NCAA, all television rights outside the United States
for most of the NCAA Championships, including the Final Four and the College
World Series. ProServ's agreement with the NCAA expires in July 1997. The
Company is currently negotiating with the NCAA to extend its agreement;
however, there can be no assurance that the Company will be able to extend
such agreement on similar terms, or at all.

Major League Baseball. Since September 1993, the Company has represented
Major League Baseball Properties, Inc. in its negotiations with current and
potential corporate sponsors. The Company also creates and manages
sponsorship campaigns and derives fees for such services. The Company's
representation of Major League Baseball Properties, Inc. is not evidenced by
a formal agreement.

ESPN Boxing. Since March 1996, the Company has produced all of the boxing
matches broadcast on ESPN and ESPN2. In 1996, the Company produced
approximately 30 such boxing matches, and the Company anticipates that it
will produce approximately 50 boxing matches in 1997. The Company's

36
<PAGE>
television production services in connection with these boxing matches
include reviewing sites, arranging for television cameras, lighting, audio
and video equipment and technical facilities and coordinating the use of
on-air broadcasters. The Company's agreement with ESPN expires in April 1998.

ESPN-Subaru American Outback. In October 1996, the Company agreed to
produce "Subaru America Outback," an outdoor television series featuring
adventurers who take on the challenges of the wilderness. Twenty-four
half-hour episodes are scheduled to air on ESPN and ESPN2, which began in the
second quarter of 1997.

The PBA Tour. Since September 1996, the Company has served as the
exclusive representative to the Professional Bowling Association's ("PBA")
Pro Bowlers Tour, one of the longest-running sports series on network and
cable television. In connection therewith, the Company handles sponsorship
sales, television rights negotiations and television production. The Company
receives a portion of the proceeds from the sale of television rights and
fees for television production and sponsorship sales. The Company's agreement
with the PBA expires in December 1999.

U.S. Open Professional Figure Skating Championship. Since December 1996,
the Company has licensed from the Professional Skaters Association the rights
to the United States Open Professional Figure Skating Championship. The
Company is the exclusive promoter of this event, with full financial and
management responsibility for the event's operation. The Company has also
agreed to produce two prime-time television specials annually featuring this
event for United Paramount Network ("UPN"), a television network. The
Company's licensing agreement expires in April 2001, subject to the right of
the Company to renew for an additional five years, and its agreement with UPN
expires in January 1999, subject to the right of UPN to renew for up to an
additional three years.

More Than a Game. In February 1997, the Company agreed with Raycom Sports,
a television syndication company, to produce 52 episodes of "More Than a
Game," a weekly sports magazine show featuring athletes and sports
personalities who present examples of the positive side of sports. The
episodes are scheduled to begin to air in the third quarter of 1997.

Lifetime Sports Presents. In December 1996, the Company agreed with The
Lifetime Television Network, a cable television network devoted to women's
programming, to produce four special television programs dealing with sports,
sports personalities and sports-related issues of interest to the network's
audience. Two of these programs aired in the second quarter of 1997, and the
two remaining programs are scheduled to air in 1997.

Talent Representation

The Company represents broadcasting, sports, news and entertainment
personalities. These representation services encompass the negotiation of
employment agreements and the creation and evaluation of endorsement,
promotional and other business opportunities for such personalities. Fees for
these services may be fixed, but ordinarily represent a percentage of income
realized by the Company's clients through its efforts. The Company's fees
generated from a particular client are not necessarily related to the
prominence of such client. The Company's written representation agreements
with its clients are generally terminable annually on 30 days' notice and the
Company does not have written representation agreements with many of its
clients, which the Company believes to be common in the industry. In
addition, the Company's relationship with the talent which it represents may
be dependent upon the Company's continued relationship with the particular
agent who represents such talent. While the Company has agreements with many
of its agents, there can be no assurance that they will continue to be
employed by the Company during the term of such agreements. See "Risk
Factors--Absence of Written Agreements; Nature of Contracts."

37
<PAGE>
Upon the consummation of the ProServ Acquisition, the Company will
represent, or derive revenues from the representation of, over 150
professional athletes in a variety of sports, 80 national broadcasters, 40
local broadcasters, 5 authors and 8 television producers and directors,
including:

SELECTED ATHLETES

<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOOTBALL HOCKEY BASKETBALL
Mark Chmura* Ken Dryden Kareem Abdul-Jabbar*
Ben Coates Jody Hull Marcus Camby*
Irving Fryar Brian Leetch Avery Johnson*
Joey Galloway* Darren Turcotte Shawn Kemp*
Kevin Hardy* Sergei Zubov Gheorghe Muresan*
Billy Joe Hobert* Nick Van Exel*

MEN'S TENNIS WOMEN'S TENNIS GOLF
Alex Corretja* Amanda Coetzer* Per-Ulrik Johansson*
Stefan Edberg* Lindsay Lee* Olle Karlsson*
Greg Rusedski* Gabriela Sabatini*
Stan Smith* Naoko Sawamatsu*
MaliVai Washington*
</TABLE>

- ------------
* The Company will provide talent representation services to, or derive
revenues from the representation of, these clients upon consummation of
the ProServ Acquisition.

In July 1997, in anticipation of the ProServ Acquisition, the Company and
ProServ combined their operations relating to the representation of football
players. No revenues have been realized to date from this combination of
operations.

SELECTED BROADCASTERS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Kenny Albert Christiane Amanpour Willow Bay Chris Berman
Len Berman Vince Cellini Bud Collins Dan Dierdorf
John Donvan Mike Emrick Bill Geist Jim Gray
Kevin Harlan Leon Harris Fred Hickman John Hockenberry
Tom Jackson Craig James Mark Jones Andrea Joyce
Jim Lampley Steve Lyons Sean McDonough Bob McKeown
Al Michaels Russ Mitchell Brad Nessler Eileen O'Connor
Judd Rose Forrest Sawyer Dick Schaap Claire Shipman
Hannah Storm Al Trautwig Mike Tirico Sam Wyche

</TABLE>

QBQ, a company that books tours and appearances for a variety of
musicians, entertainers and groups, was founded in 1986. As a booking
representative, QBQ is exclusively responsible for, among other things,
evaluating and reserving particular concert venues, planning and scheduling
concert routes and negotiating the entertainer's fees. In some instances, QBQ
also negotiates merchandising agreements in connection with a concert tour.
QBQ generally receives payment based upon a percentage of the entertainer's
fees. QBQ has provided such booking and touring representation services to a
variety of musicians, entertainers and groups including:

SELECTED MUSICIANS AND ENTERTAINERS

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Billy Joel Bruce Hornsby Def Leppard Duran Duran
Joan Jett & the Blackhearts Luther Vandross Lynyrd Skynyrd Metallica
Queensryche Richard Marx Rodney Dangerfield Styx
</TABLE>

QBQ's revenues are dependent, to a large extent, on the caliber of talent
which it represents. Although many of the clients represented by QBQ have an
extended history with QBQ, touring

38
<PAGE>
periodically over a number of years, generally, QBQ's agreements are for
one-time tours or events and are not evidenced by written agreements. For the
year ended December 31, 1996, two clients represented 38% of QBQ's revenues;
however, on a pro forma basis, giving effect to the Recent Acquisitions and
the Pending Acquisitions as if they had occurred on January 1, 1996, such two
clients would have accounted for only 2% of the Company's revenues. QBQ's
revenues will vary depending on the timing, frequency and size of concert
tours its clients conduct. QBQ's agreements with clients and venues regarding
specific performances are generally not evidenced by written contracts until
shortly prior to such performances. See "Risk Factors--Absence of Written
Agreements; Nature of Contracts."

The Company believes that transactions between personalities it represents
and entities for which it produces events generally have been conducted at
arms' length and on terms no less favorable to the personalities and entities
than could be obtained from independent third parties. However, there can be
no assurance that the Company will not have a conflict of interest between
personalities and entities that it represents in differing capacities.

Consulting

The Company offers specialized consulting services to clients either
engaged in, or seeking exposure in, the sports and entertainment-related
industries. The Company's employees have substantial experience in all
aspects of sports, news and entertainment event management, marketing, sales
and television production. The Company's employees also have numerous
personal contacts within the sports, news and other entertainment industries
with individuals who work for companies that are in need of consulting
services or are in a position to refer clients to the Company.

Sports, news and entertainment-related businesses often require expertise
in areas that are outside of their principal line of business. Such
businesses may seek consultants to advise them in connection with team and
event ticket sales, venue management of concert halls and sporting arenas,
sales of television rights, program development, and obtaining and
maintaining sponsorships. In addition, businesses that are seeking exposure
within the sports and entertainment industries may seek consultants to advise
them on the most efficient way to reach their target audiences. The Company
will seek to enter into agreements with businesses pursuant to which it will
provide customized services in these and other areas.

Upon consummation of the ProServ Acquisition, the Company will provide the
following consulting services:

Americast. Ameritech Corporation, BellSouth Corporation, GTE Corporation,
SBC Communications, Inc., Southern New England Telecommunications and The
Walt Disney Company have entered into a joint venture doing business as
Americast, which will provide traditional and interactive television services
to consumers in the United States. Since October 1996, the Company has
consulted with Americast in identifying programming partners, negotiating
rights agreements, producing sports programming and marketing these efforts
to potential subscribers and sponsors. The Company is also assisting
Americast in developing local sports networks which will produce
professional, college and high school sporting events and interactive sports
programming. Currently, such sports networks are planned for Columbus, Ohio;
New Orleans, Louisiana; Clearwater, Florida; Detroit, Michigan; and Hartford
and New Haven, Connecticut. The Company's agreement with Americast expires in
June 1998.

Hershey Foods Corporation. Hershey Foods Corporation manufactures,
distributes and sells a broad line of chocolate and non-chocolate
confectionary, pasta and grocery products. Since October 1993, ProServ has
provided consulting services to Hershey Foods Corporation. ProServ's
consulting duties include strategic consulting regarding Hershey Foods
Corporation's investments in sports and entertainment. ProServ provides such
services pursuant to an oral understanding.

Princeton Video Image, Inc. Princeton Video Image, Inc. ("PVI") has
developed a computer system that makes it possible to insert images into a
live television program without interrupting the action being televised. For
example, this system can place an advertiser's logo into the video scene so
that it appears to the television viewer to exist at the place of the event,
such as on the back wall of a tennis court or in the end zone of a football
field. Since September 1996, the Company has advised PVI on marketing this
system to sports teams, events and sponsors. The Company's agreement with PVI
expires in September 1998.

39
<PAGE>
Schering-Plough Corporation. Schering-Plough Corporation produces
Claritin, a drug used in alleviating allergies and sinus problems. Since
March 1997, ProServ has assisted in the promotion of Claritin by developing
and implementing sponsorships of PGA Tour events and by creating a wide range
of opportunities for consumers to sample Claritin. ProServ's agreement with
Schering-Plough Corporation expires in October 1997.

Staples, Inc. Staples, Inc. owns and operates a chain of office products
superstores. Since January 1994, ProServ has assisted Staples, Inc. in
developing and implementing sponsorships of major league sports teams.
ProServ's agreement with Staples, Inc. may be terminated by Staples, Inc. at
its discretion.

Wizards of the Coast, Inc. Wizards of the Coast, Inc. produces Magic: The
Gathering(Registered Trademark), a best-selling fantasy and adventure trading
card game. Since January 1996, ProServ has developed sponsorships for the
game and has assisted in the game's professional tour. ProServ provides such
services pursuant to an oral understanding.

DEPENDENCE ON A LIMITED NUMBER OF CLIENTS AND EVENTS; REVENUE RECOGNITION

A significant portion of the Company's revenues to date has been derived
from a small number of clients and events. On a pro forma basis, giving
effect to the Recent Acquisitions as if they had occurred on January 1, 1996,
the Company's agreement with respect to The Breeders' Cup Championship would
have accounted for approximately 30% of the Company's revenues for the year
ended December 31, 1996. On a pro forma basis, giving effect to the Recent
Acquisitions and the Pending Acquisitions as if they had occurred on January
1, 1996, The Breeders' Cup Championship would have accounted for
approximately 15% of the Company's revenues for the year ended December 31,
1996. Although the Company is negotiating to extend this agreement, it is
scheduled to terminate in December 1997, and there can be no assurance that
the Company will be able to extend the agreement on similar terms, or at all.
In addition, on a pro forma basis, giving effect to the Recent Acquisitions
and the Pending Acquisitions as if they had occurred on January 1, 1996, five
clients or events would have accounted for approximately 38% of the Company's
revenues for the year ended December 31, 1996. The Company may continue to
depend on a limited number of clients and events for a significant portion of
its revenues in future periods. See "Risk Factors--Dependence on a Limited
Number of Clients and Events."

The Company's revenues vary throughout the year. Historically, the fourth
quarter produced the highest percentage of revenues for the year, principally
from the Company's management and marketing of The Breeders' Cup Championship
and from representation agreements with professional hockey players, which
results in revenue to the Company upon the commencement of the National
Hockey League season. As a result of the Company's recent entry into the
business of representing professional football players and the Pending
Acquisitions, it is anticipated that the Company's revenues will increase
significantly, and the Company expects that these increased revenues will be
recorded substantially in the third as well as the fourth quarter.

COMPETITION

The business of providing services in the sports, news and other
entertainment industries is highly competitive. The Company's competitors
include several large companies, such as Advantage International Inc. (part
of the Interpublic Group of Companies, Inc.) and International Management
Group in the sports industry and Creative Artists Agency, Inc., ICM Artists,
Ltd. and the William Morris Agency, Inc. in the entertainment industry,
certain of which have substantially greater financial and other resources
than the Company. In addition, the Company competes with many smaller
entities. The success of the Company will be dependent upon its ability to
obtain additional event management, television production, marketing, talent
representation and consulting opportunities and to generate revenues from
such activities. The Company believes that it competes with other companies
primarily on the basis of the experience of its management and the breadth of
the services that it offers.

EMPLOYEES

As of July 1, 1997, the Company had approximately 47 full-time employees,
none of whom were covered by a collective bargaining agreement. The Company
considers its relations with its employees to

40
<PAGE>
be good. In addition, from time-to-time, the Company engages independent
contractors to provide certain of the services required by its business. Upon
consummation of the Pending Acquisitions, the Company will have approximately
120 full-time employees.

PROPERTIES

The Company's executive offices are located at 888 Seventh Avenue, New
York, New York, and are occupied pursuant to a lease which provides for an
initial annual rent, commencing in October 1997, of approximately $537,000,
subject to certain increases, and expiring in October 2007. The Company is
making certain capital improvements to furnish its new office space, complete
leasehold improvements and install video editing facilities.

ProServ's executive offices are located at 1101 Wilson Boulevard,
Arlington, Virginia. ProServ also leases office space in New York, New York;
Los Angeles, California; Atlanta, Georgia; Scottsdale, Arizona; and London,
England.

The Company believes that its facilities will be sufficient for its
current operations for the foreseeable future. However, the Company's
expansion plans may require the Company to obtain the use of additional
office space or other facilities in the future. The Company anticipates that
such facilities will be available at a reasonable cost.

LEGAL PROCEEDINGS

The Company is a defendant in various legal actions, involving breach of
contract and various other claims, which are incidental to the conduct of its
business. In the opinion of management, there are no material threatened or
pending legal proceedings against the Company which if adversely decided,
would have a material effect on the financial condition or prospects of the
Company.

The Company has been notified of a lawsuit brought by Heaven Corporation
in 1993 in the Circuit Court of Cook County, Illinois, No. 93 L 8902, naming
Michael Jordan, David Falk and ProServ as defendants. The plaintiff alleges
that Mr. Jordan breached a contract to act in a motion picture and that Mr.
Falk (a former employee of ProServ) and ProServ tortiously interfered with
Mr. Jordan's contractual relations with the plaintiff. The plaintiff seeks
unspecified damages in excess of $1.0 million on both counts, and also seeks
unspecified punitive damages against Mr. Falk and ProServ. Each of the
defendants has filed a motion for summary judgment, requesting the dismissal
of the complaint. Upon consummation of the ProServ Acquisition, the Company
intends to defend the case vigorously.

The Company has been notified of a lawsuit brought by Angel Salgado in
1996 in the Superior Court of the State of Arizona, County of Maricopa, No.
CV 96-18700, naming Shawn Kemp, Tony Dutt, ProServ and others as defendants.
The plaintiff alleges that Mr. Kemp breached a contract to act in a motion
picture and that Mr. Dutt (a former employee and a current business associate
of ProServ) and ProServ tortiously interfered with Mr. Kemp's contractual
relations with the plaintiff. The plaintiff seeks unspecified damages. The
parties are engaging in discovery. Upon consummation of the ProServ
Acquisition, the Company intends to defend the case vigorously.

There can be no assurance that one or both of the foregoing cases will not
be decided adversely to ProServ or settled, and, if so decided or settled,
such decision or settlement may have a material adverse effect on the
financial conditions or prospects of the Company upon the consummation of the
ProServ Acquisition.

41
<PAGE>
AGREEMENTS RELATED TO THE PENDING ACQUISITIONS

The following is a summary of certain terms of the agreements related to
the Pending Acquisitions. This summary is not intended to be complete and is
subject to, and is qualified in its entirety by reference to, the agreements,
copies of which have been filed with the Commission as exhibits to the
Registration Statement, of which this Prospectus forms a part, and are
incorporated herein by reference.

PROSERV ACQUISITION

The Company has recently entered into the ProServ Acquisition Agreements,
which will allow it to acquire approximately 94% of ProServ, and is currently
negotiating to acquire the remaining minority interests in ProServ. If the
Company is unable to acquire the remaining minority interests in ProServ on
satisfactory terms, the Company intends to obtain full ownership of ProServ
through a statutory merger. The ProServ Acquisition Agreements consist of the
Dell Stock Purchase Agreement, the Non-Employee Stock Purchase Agreement and
the Allard Stock Purchase Agreement (each as defined herein).

Dell Stock Purchase Agreement. The Company has entered into a Purchase and
Sale Agreement dated as of June 25, 1997 (the "Dell Stock Purchase
Agreement") among ProServ, Inc., ProServ Television, Inc. and Donald L. Dell,
the principal stockholder of such companies, pursuant to which the Company
has agreed to purchase 70.4% of the outstanding common stock and 100% of the
outstanding preferred stock of ProServ, Inc. and 51% of the outstanding
capital stock of ProServ Television, Inc., the remainder of which is owned by
ProServ, Inc. Pursuant to the agreement, the aggregate purchase price is $6.5
million, subject to certain adjustments, and the Dell Consideration Stock,
consisting of 225,000 shares of Common Stock. Mr. Dell has the option to
receive the $6.5 million purchase price entirely in cash or may elect to
receive $3.5 million in cash and a $3.0 million promissory note, secured by a
standby letter of credit, payable on January 2, 1998.

The Company has deposited $1.5 million of the purchase price into escrow
to secure its obligations under the Dell Stock Purchase Agreement, which
amount will be forfeited to Mr. Dell in the event that the consummation of
the purchase of Mr. Dell's shares is not consummated by September 15, 1997.
If, on or before August 15, 1997, the Company anticipates that the
consummation of the purchase of Mr. Dell's shares will not be consummated by
September 15, 1997, the Company may deposit an additional $500,000 into
escrow to secure its obligations under the agreement, in which event the
transactions contemplated by the Dell Stock Purchase Agreement must be
consummated by October 15, 1997. If the Company fails to purchase Mr. Dell's
shares within the specified time periods for any reason other than certain
breaches by Mr. Dell or ProServ, Mr. Dell may cause the Company to forfeit
any amounts deposited, and the Company will indemnify Mr. Dell for his legal
fees and expenses relating to the ProServ Acquisition. The Company is not
obligated to purchase Mr. Dell's shares unless it is able to acquire
simultaneously the 250 shares of ProServ, Inc. pursuant to the Non-Employee
Stock Purchase Agreement.

Mr. Dell has agreed not to offer, sell or otherwise transfer or dispose
of, directly or indirectly, 50% of the Dell Consideration Stock (except, in
certain circumstances, by gift, inheritance or pledge) for a period of 12
months from the consummation of the purchase of his shares and the remaining
50% of the Dell Consideration Stock for a period of 27 months from the
consummation of the purchase of his shares. The Company has granted Mr. Dell
certain demand and piggyback registration rights with respect to the Dell
Consideration Stock, which, in certain situations, permit Mr. Dell to sell
100% of the Dell Consideration Stock 12 months after the consummation of the
purchase of his shares of ProServ.

In addition, the Company and Mr. Dell have agreed to indemnify each other
for any losses incurred by either party as a result of the inaccuracy of any
representation or warranty or the breach of any covenant or agreement. Mr.
Dell has also agreed to indemnify the Company for 50% of the amount by which
ProServ's deficit in net working capital at the time of the consummation of
the purchase of Mr. Dell's shares exceeds $1,450,000 and for all of such
amount exceeding $1,750,000.

The Dell Stock Purchase Agreement provides that, at any time within the 60
day period following the second anniversary of the consummation of the
purchase of Mr. Dell's shares, Mr. Dell may elect to transfer to the Company
up to all of the remaining Dell Consideration Stock held by Mr. Dell at a
price

42
<PAGE>
per share equal to $7.70 (up to approximately $1.7 million in the aggregate).
In the event the Company does not have enough cash to purchase the shares
from Mr. Dell, Mr. Dell has certain rights to require the Company to issue
more shares of Common Stock to Mr. Dell. In addition, at any time between the
61st and 90th day following the second anniversary of the consummation of the
purchase of Mr. Dell's shares, the Company may purchase up to 50% of the Dell
Consideration Stock held by Mr. Dell at a price per share equal to $7.70 (up
to $866,250 in the aggregate). The Company will record charges to operations
over the next two years related to the Company's potential obligation to
repurchase the Dell Consideration Stock. See "Risk Factors--Limited Operating
History; History of Losses; Future Charges to Operations."

The Company has agreed to enter into an employment agreement with Mr. Dell
pursuant to which Mr. Dell will serve for an initial term of four years as
the chairman and chief executive officer of ProServ and a director of the
Company for a base salary of not less than $300,000 per year plus certain
bonuses. The employment agreement will be terminable after three years by Mr.
Dell without any further obligation on his part (except that he will be
subject to a one-year agreement not to compete with the Company if he opts to
receive options to purchase 40,000 shares of Common Stock); if he does not so
terminate the employment agreement, the Company may extend the employment
agreement for a fifth year. In addition, pursuant to the employment
agreement, Mr. Dell will receive, at the closing and upon each anniversary
thereof during the term of his employment agreement, an option to purchase
40,000 shares of Common Stock at an exercise price per share based upon the
closing price of the Common Stock on the date of grant.

Other Stock Purchase Agreements. The Company has also entered into an
agreement dated as of July 2, 1997 (the "Non-Employee Stock Purchase
Agreement") with a non-employee stockholder, pursuant to which the Company
has agreed to purchase 250 shares (or 20.0%) of the common stock of ProServ,
Inc. for an aggregate purchase price of $3.0 million. The consummation of the
purchase will take place concurrently with the consummation of the purchase
of Mr. Dell's shares.

In addition, the Company has entered into an agreement dated as of July
18, 1997 (the "Allard Stock Purchase Agreement") with William J. Allard, the
president and chief operating officer of ProServ. Pursuant to the Allard
Stock Purchase Agreement, the Company has agreed to purchase Mr. Allard's
interest in ProServ, consisting of 50 shares (or 4.0%) of the common stock of
ProServ, Inc. and options to purchase 20 shares of the common stock of
ProServ, for an aggregate purchase price of $605,000. Upon the consummation
of the transactions contemplated by the Allard Stock Purchase Agreement, the
Company intends to enter into an employment agreement with Mr. Allard and to
appoint him to the Company's Board of Directors.

Further Negotiations. The Company is currently negotiating with two
officers of ProServ to purchase the remaining 70 shares (or 5.6%) of the
common stock of ProServ, Inc. and options to purchase 50 shares of the common
stock of ProServ, Inc., which are held by such officers. If the Company is
able to acquire such officers' shares and options on terms satisfactory to
the Company, the Company intends to enter into employment agreements with
such officers. If the Company is unable to acquire such officers' shares and
options on satisfactory terms, the Company intends to obtain full ownership
of ProServ, Inc. through a statutory merger.

The timing and consummation of the ProServ Acquisition is subject to a
number of conditions, certain of which are beyond the Company's control, and
there can be no assurance that the ProServ Acquisition will be consummated.
However, the consummation of this Offering is conditioned upon the concurrent
closing of the transactions contemplated by the ProServ Acquisition
Agreements.

QBQ ACQUISITION

The Company has entered into an Asset Purchase Agreement, dated as of July
21, 1997 (the "QBQ Acquisition Agreement"), with QBQ Entertainment, Inc.,
Dennis Arfa and Marquee Music, Inc., a wholly-owned subsidiary of the
Company, pursuant to which the Company will purchase substantially all of the
assets, and assume certain obligations, of QBQ for (i) approximately $3.1
million in cash, (ii) $1.0 million to be paid in equal annual installments
over eight years, subject to acceleration in certain

43
<PAGE>
circumstances, (iii) $615,000 to be paid in annual installments over five
years beginning on April 1, 1998 and (iv) shares of Common Stock with an
aggregate market value on the day before the date of consummation of the QBQ
Acquisition of $2.0 million, such market value to be determined by the
average closing price per share of Common Stock from the date of the QBQ
Acquisition Agreement until the date five business days prior to the
consummation of the QBQ Acquisition (the "Closing Value"); provided, however,
that the Closing Value will not be greater than $8.50. In addition, upon
consummation of the QBQ Acquisition, the Company has agreed to deposit into
escrow the QBQ Escrow Shares with a Closing Value of $500,000, which shall be
released from escrow to QBQ if the Operating Income (as defined in the QBQ
Acquisition Agreement) derived from the purchased assets exceeds $1.0 million
in any of the first three full fiscal years (or $1.25 million in the fourth
full fiscal year) of operation of the assets by the Company. If the QBQ
Escrow Shares are released from escrow, the Company will record, for
financial reporting purposes, a substantial non-cash compensation charge to
operations. See "Risk Factors--Limited Operating History; History of Losses;
Future Charges to Operations." The Company has made a cash deposit of
$400,000 to secure the Company's obligations under the QBQ Acquisition
Agreement. If the QBQ Acquisition Agreement is terminated due to the
Company's material breach of a representation, warranty or covenant, the
Company is required to pay $1.0 million to QBQ as liquidated damages (of
which $400,000 may be offset against the cash deposit). The Company has
granted Dennis Arfa certain demand and piggyback registration rights with
respect to the Common Stock to be issued to him in connection with the QBQ
Acquisition.

The QBQ Acquisition Agreement may be terminated by either party, if the
party seeking termination is not in material default or breach of the
agreement, upon, among other things: (i) an uncured material default by the
other party in respect of the observance or timely performance of any of its
covenants or agreements which is not cured within 15 days of notice thereof
or (ii) the first anniversary of the agreement, if there is then in effect
any judgement, final decree or order that would prevent or make unlawful the
consummation of the acquisition.

The QBQ Acquisition Agreement provides that, at any time within the 30-day
period following the first to occur of (i) the second anniversary of the
consummation of the QBQ Acquisition or (ii) an Acceleration Event (as defined
in the QBQ Acquisition Agreement), QBQ may, at its option, elect to transfer
to the Company up to 75% of the shares it receives in connection with the
acquisition for an aggregate purchase price of up to $1.5 million. In
addition, at any time within the 30-day period following the first to occur
of the second anniversary of the closing of the QBQ Acquisition or a Pledge
Event (as defined in the Pledge Agreement between the Company and Mr. Arfa),
the Company may, at its option, elect to purchase 50% of such shares from QBQ
for an aggregate of $1.5 million. In addition, if the QBQ Escrow Shares are
released from escrow at any time within the first 30 days after the second
anniversary of the consummation of the QBQ Acquisition or an Acceleration
Event, (i) QBQ may, at its option, elect to transfer up to 75% of the QBQ
Escrow Shares to the Company for an aggregate purchase price of up to
$375,000 and (ii) the Company may, at its option, elect to purchase up to 50%
of the QBQ Escrow Shares for an aggregate purchase price of up to $750,000.
See "Principal Stockholders--Escrow Shares."

The Company has agreed to enter into an employment agreement with Marquee
Music and Dennis Arfa pursuant to which Mr. Arfa has agreed to serve for a
term of five years as the chairman, president and chief executive officer of
Marquee Music. Upon execution of the employment agreement with Mr. Arfa, the
Company will make a non-recourse loan to Mr. Arfa in the amount of $1.5
million. Such loan will (i) accrue interest at a rate of 7% per annum, (ii)
mature on the fifth anniversary of the agreement and (iii) be secured by a
pledge of all of the shares of Common Stock issued in connection with the QBQ
Acquisition. If Mr. Arfa's employment is terminated for certain reasons, the
$1.0 million in deferred payments will become immediately due and payable
unless Mr. Arfa receives an offer of comparable employment.

The Company anticipates that it will consummate the QBQ Acquisition
promptly following the closing of this Offering. However, the timing and
completion of the QBQ Acquisition is subject to a number of conditions,
certain of which are beyond the Company's control, and there can be no
assurance that the acquisition will be consummated. If the QBQ Acquisition is
not consummated, the Company intends to apply the proceeds of this Offering
allocated for the QBQ Acquisition to general working capital, including
future acquisitions. See "Use of Proceeds."

44
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth the names, ages and positions of the
executive officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------- ----- -----------------------------------------------
<S> <C> <C>
Robert M. Gutkowski 49 President, Chief Executive Officer and Director
Robert F.X. Sillerman 49 Chairman
Arthur C. Kaminsky 50 Director and Executive Vice President
Michael Letis 56 Director and Executive Vice President
Louis J. Oppenheim 39 Director and Executive Vice President
Michael Trager 55 Director and Executive Vice President
Jan E. Chason 51 Chief Financial Officer
Howard J. Tytel 50 Director
Arthur R. Barron 62 Director
Myles W. Schumer 51 Director
</TABLE>

The following are brief descriptions of the business experience of the
executive officers and directors of the Company.

Robert M. Gutkowski has served as President, Chief Executive Officer and a
director of the Company since December 1995. Mr. Gutkowski has more than 20
years of experience in the television, sports and entertainment industries.
From September 1994 until December 1995, Mr. Gutkowski was a consultant to
sports-related businesses. From November 1991 to September 1994, he served as
President and Chief Executive Officer of Madison Square Garden Corporation,
where he oversaw the operations of the New York Knicks, the New York Rangers,
the MSG Entertainment Group, the MSG Cable Network, Madison Square Garden and
the Paramount Theater. From July 1990 to November 1991, Mr. Gutkowski served
as President of MSG Communications Group, having served as Executive Vice
President thereof from September 1987 to July 1990. From October 1985 to
September 1987, he served as President of Madison Square Garden Network.
Prior to his tenure at Madison Square Garden, Mr. Gutkowski was Vice
President--Sales for Paramount Television Domestic Distribution. From
February 1981 to September 1983, Mr. Gutkowski was Vice
President--Programming for ESPN. Mr. Gutkowski earned a B.A. from Hofstra
University.

Robert F.X. Sillerman has been Chairman of the Company since July 1995.
Mr. Sillerman has been Executive Chairman of SFX, a publicly-traded company
since 1995, which owns and operates radio stations and concert venues, and
from 1992 through 1995 he served as Chairman and/or Chief Executive Officer
of SFX. Since 1985, Mr. Sillerman has been Chairman of the Board and Chief
Executive Officer of SCMC, a private investment company which makes
investments in and provides financial consulting services to companies
engaged in media and sports-related businesses, including the Company, and,
through privately-held entities, he controls the general partner of Sillerman
Communications Partners, L.P., an investment partnership. See "Certain
Relationships and Related Transactions." Since 1985, he has been Chairman and
Chief Executive Officer of TSC, a private investment company which provides
financial advisory, marketing, consulting and investment banking services to
media companies and sports-related businesses and which is a principal
stockholder of the Company. Mr. Sillerman earned a B.A. from Brandeis
University. In 1993, Mr. Sillerman became the Chancellor of the Southampton
campus of Long Island University.

45
<PAGE>
Arthur C. Kaminsky has been a director of the Company since March 1996 and
an Executive Vice President of the Company since December 1996. Mr. Kaminsky
has served as President and Chief Executive Officer of A&A since 1977. From
1974 to 1990, Mr. Kaminsky was a partner with the law firm of Taft &
Kaminsky. Mr. Kaminsky earned a B.A. from Cornell University and a J.D. from
Yale University.

Michael Letis became a director and an Executive Vice President of the
Company in December 1996. Mr. Letis has served as President of SMTI since
1984. Mr. Letis is a director of Thoroughbred Racing Communications, Inc. and
of the Thoroughbred Club of America. Mr. Letis earned a B.A. from Dartmouth
College.

Louis J. Oppenheim became a director and an Executive Vice President of
the Company in December 1996. Mr. Oppenheim has served as Chief Operating
Officer, Vice President and Secretary of A&A since 1985. From 1981 to 1985,
he served as a talent representative for A&A. Mr. Oppenheim earned a B.A.
from The University of Pennsylvania and a J.D. from Fordham University.

Michael Trager has been a director of the Company since March 1996 and an
Executive Vice President of the Company since December 1996. Mr. Trager has
served as Chairman of SMTI since 1984. From November 1994 to December 1995,
Mr. Trager served as a director of Select Media Communications, Inc. Mr.
Trager is a member of the Board of Directors and the past President of the
Greenwich Old-timers Athletics Association, which provides college
scholarships and financial assistance to young athletes in the Greenwich
community. Mr. Trager earned a B.A. and M.S. from Bucknell University.

Jan E. Chason has been the Chief Financial Officer of the Company since
June 1997. From November 1996 to July 1997, Mr. Chason was the Chief
Financial Officer of Triathlon Broadcasting Company, a publicly-traded
company that owns and operates radio stations. In addition, since June 1996,
Mr. Chason has been a consultant to SCMC and TSC and, through TSC, has
provided advisory services to the Company. Mr. Chason was the principal in
JEC Consulting Associates, which specialized in providing financial
consulting and advisory services, from October 1994 to June 1996. From 1982
until September 1994, Mr. Chason was a Partner, specializing in auditing and
accounting services, of Ernst & Young LLP. Mr. Chason earned a B.B.A. from
City College of New York and is a Certified Public Accountant.

Howard J. Tytel has served as a director of the Company since July 1995.
Mr. Tytel has been a director, Executive Vice President and Secretary of SFX
since 1992. Mr. Tytel has also been Executive Vice President and General
Counsel of SCMC since 1985, a director of SCMC since 1989, and Executive Vice
President and General Counsel of TSC since 1985. From March 1995 until March
1997, Mr. Tytel was a director of Interactive Flight Technologies, Inc., a
company providing computer-based in-flight entertainment. Mr. Tytel is Of
Counsel to the law firm of Baker & McKenzie, which represents the Company,
SFX, SCMC and TSC. Mr. Tytel earned a B.A. and B.S. from Washington
University and a J.D. from New York University.

Arthur R. Barron has served as a director of the Company since December
1996. Since January 1997, Mr. Barron also serves as a non-exclusive
consultant to Callahan Associates International LLC, a company seeking to
finance, develop and acquire communication, entertainment and wireless
projects around the world. In May 1995, Mr. Barron retired from Time-Warner
Inc. ("Time-Warner"), where he served from February 1990 to May 1995 as
Chairman of Time-Warner International, which is engaged in international
strategic development activities in the media and entertainment industries,
and as Chairman of Time-Warner Enterprises, the strategic and business
development unit of Time-Warner. From 1984 until July 1989, Mr. Barron served
as President of Paramount Communications Inc.'s entertainment group, which
includes Paramount Pictures, Madison Square Garden, the New York Knicks and
the New York Rangers.

Myles W. Schumer has served as a director of the Company since December
1996. For more than the past five years, Mr. Schumer has been a partner,
specializing in tax matters, of Cornick, Garber & Sandler, New York,
independent public accountants. From July 1993 until November 1996, Mr.
Schumer served as a director of Multi-Market Radio, Inc., a publicly-traded
company engaged in the ownership and operation of radio stations.

46
<PAGE>
In addition, upon the consummation of the ProServ Acquisition, it is
anticipated that Donald L. Dell and William J. Allard will be appointed as
directors of the Company. See "Agreements Related to the Pending
Acquisitions."

Donald L. Dell founded, and since 1971 has been the Chairman and Chief
Executive Officer of, ProServ, Inc. In 1980, Mr. Dell founded and became the
Chairman of the Board of ProServ Television, Inc. Mr. Dell is also the
Honorary Chairman of the KidSports Foundation, the Co-Chairman of the D.C.
Tennis Classic in Washington, D.C. and the Vice Chairman of the International
Tennis Hall of Fame in Newport, Rhode Island. He also serves on the Advisory
Committee of the Washington Tennis Foundation. Mr. Dell earned a B.A. from
Yale University and a J.D. from the University of Virginia.

William J. Allard has served as the Chief Operating Officer of ProServ,
Inc. since January 1993 and as President of ProServ, Inc. since December
1996. From December 1990 to January 1993, Mr. Allard served as Managing
Director of ProServ Europe, S.A., a French subsidiary of ProServ, Inc. Mr.
Allard earned a B.S. from Babson College and an M.B.A. from Harvard
University.

Directors serve until the next annual meeting or until their successors
are elected and qualified subject to the provisions of the Stockholders'
Agreement. Officers serve at the discretion of the Board of Directors,
subject to rights, if any, under employment agreements with the Company.

The Company has agreed with Royce Investment Group, Inc., the underwriters
in the IPO, that until December 5, 2001, the Company will have at least two
non-affiliated independent directors on its Board of Directors. Messrs.
Barron and Schumer presently serve as the Company's independent directors.

EXECUTIVE COMPENSATION

The table below sets forth certain information regarding all the
compensation awarded to, earned by or paid to Robert M. Gutkowski, the
President and Chief Executive Officer of the Company, and the next most
highly compensated officers who received salary and bonuses of at least
$100,000, on an annual basis (collectively, the "Named Executive Officers")
during the year ended December 31, 1996 for services rendered in all
capacities to the Company and its subsidiaries. No executive officer of the
Company, other than Mr. Gutkowski, received compensation in excess of
$100,000 during the year ended December 31, 1996.

47
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------- ----------------------
SECURITIES UNDERLYING
NAME SALARY ($) BONUS ($) OPTIONS/SARS (#)
- --------------------------------------- ----------- --------- ----------------------
<S> <C> <C> <C>
Robert M. Gutkowski, ................... 231,250 122,500 20,000
President and Chief Executive Officer
Arthur C. Kaminsky ..................... 12,500(1) -- 20,000
Executive Vice President
Michael Letis .......................... 12,500(2) -- 20,000
Executive Vice President
Louis J. Oppenheim ..................... 7,292(3) -- 10,000
Executive Vice President
Michael Trager ......................... 12,500(4) -- 20,000
Executive Vice President

</TABLE>

- ------------
(1) Mr. Kaminsky became an Executive Vice President of the Company
effective December 11, 1996 upon the consummation of the A&A
Acquisition, when he entered into an employment agreement providing for
an initial annual salary of $300,000. See "--Employment Agreements."
(2) Mr. Letis became an Executive Vice President of the Company effective
December 11, 1996 upon the consummation of the SMTI Acquisition, when
he entered into an employment agreement providing for an initial annual
salary of $300,000. See "--Employment Agreements."
(3) Mr. Oppenheim became an Executive Vice President of the Company
effective December 11, 1996 upon the consummation of the A&A
Acquisition, when he entered into an employment agreement providing for
an initial annual salary of $175,000. See "--Employment Agreements."
(4) Mr. Trager became an Executive Vice President of the Company effective
December 11, 1996 upon the consummation of the SMTI Acquisition, when
he entered into an employment agreement providing for an initial annual
salary of $300,000. See "--Employment Agreements."

The table below sets forth information with respect to the grant of stock
options and stock appreciation rights ("SARs") to the Named Executive
Officers during the year ended December 31, 1996.

OPTION/SAR GRANTS IN 1996

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING PERCENT OF TOTAL EXERCISE OR
OPTIONS/SARS OPTIONS GRANTED TO BASE PRICE
NAME GRANTED(#) EMPLOYEES IN 1996 ($/SHARE) EXPIRATION DATE
- -------------------- -------------------- ------------------ ------------- ---------------
<S> <C> <C> <C> <C>
Robert M. Gutkowski 20,000 8.7% $6.25 October 1, 2001
Arthur C. Kaminsky . 20,000 8.7% $6.25 October 1, 2001
Michael Letis ....... 20,000 8.7% $6.25 October 1, 2001
Louis J. Oppenheim . 10,000 4.3% $6.25 October 1, 2001
Michael Trager....... 20,000 8.7% $6.25 October 1, 2001
</TABLE>

The table below sets forth information with respect to the exercise of
stock options and SARs by the Named Executive Officers during the year ended
December 31, 1996 and the value at December 31, 1996 of unexercised stock
options and SARs held by the Named Executive Officers.

48
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1996
AND FISCAL YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED VALUE AT FY-END AT FY-END
ON REALIZED (#) EXERCISABLE/ ($) EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE(1)
- -------------------- ------------ ---------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Robert M. Gutkowski 0 0 0/20,000 0/0
Arthur C. Kaminsky . 0 0 0/20,000 0/0
Michael Letis ....... 0 0 0/20,000 0/0
Louis J. Oppenheim . 0 0 0/10,000 0/0
Michael Trager....... 0 0 0/20,000 0/0
</TABLE>

- ------------
(1) No listed options were in-the-money as of December 31, 1996, when the
closing price of the Common Stock was $6.00 per share.

EMPLOYMENT AGREEMENTS

The Company and Robert M. Gutkowski have entered into an employment
agreement dated as of March 21, 1996, pursuant to which Mr. Gutkowski agreed
to serve as the Company's President and Chief Executive Officer for an
initial term of five years. The employment agreement provides that Mr.
Gutkowski will receive an annual base salary of $325,000 plus an annual bonus
of at least $150,000 (which bonus may be increased in the discretion of the
Board of Directors of the Company).

The employment agreement provides that the Company may terminate Mr.
Gutkowski's employment agreement prior to the expiration of its term in the
event of his death, disability for a period of 26 consecutive weeks or for
"cause." For purposes of the employment agreement, "cause" is defined as the
conviction of a felony, the commission of an act of fraud or embezzlement
upon the Company, a material breach by Mr. Gutkowski of his agreement not to
compete with the Company or the wilful malfeasance or gross negligence by Mr.
Gutkowski in the performance of his duties under the employment agreement or
his failure to perform his duties thereunder, which malfeasance, negligence
or failure has a material adverse effect on the business of the Company and
which shall remain uncured for a period of 15 days following written notice
from the Company.

Pursuant to his employment agreement, Mr. Gutkowski has agreed not to
compete with the Company or solicit any of the Company's clients or employees
during the term of the agreement. In addition, the employment agreement
prohibits Mr. Gutkowski from engaging in such activities for certain periods
of time in the event that he voluntarily terminates his employment agreement,
the Company terminates his employment agreement or the employment agreement
is not extended on substantially similar terms.

Upon the consummation of the Recent Acquisitions, the Company entered into
employment agreements with each of Messrs. Kaminsky, Letis, Oppenheim and
Trager on substantially the same terms and conditions as Mr. Gutkowski's
employment agreement with the Company, pursuant to which each such person has
agreed to serve as an Executive Vice President of the Company for an initial
term of five years. The employment agreements provided that each of Messrs.
Kaminsky, Letis and Trager will receive an annual base salary of $300,000 and
that Mr. Oppenheim will receive an annual base salary of $175,000.

The Company has agreed to enter into employment agreements with Messrs.
Dell and Allard upon the consummation of the ProServ Acquisition and with Mr.
Arfa upon the consummation of the QBQ Acquisition. In addition, the Company
anticipates entering into two additional employment agreements with
current executive officers of ProServ. See "Agreements Related to the Pending
Acquisitions."

DIRECTOR COMPENSATION

Each director who is not an employee of the Company receives $1,500 for
each Board of Directors' meeting attended and $750 for each committee meeting
attended, in addition to reimbursement for travel expenses in attending such
meetings.

49
<PAGE>
1996 STOCK OPTION PLAN

The Company's Board of Directors has adopted and the stockholders have
approved the Company's 1996 Stock Option Plan. The Stock Option Plan, which
provides for grants of non-qualified and incentive stock options to purchase
up to 500,000 shares of Common Stock to eligible employees and consultants,
is designed to attract and retain the best available personnel for the
positions of substantial responsibility, to provide additional incentive to
key employees, officers, and consultants of the Company and its subsidiaries
and to promote the success of the Company's business.

In October 1996, options to purchase an aggregate of 230,000 shares of
Common Stock were granted under the Stock Option Plan. Of such options, 14
employees of the Company received 100,000 options with an exercise price of
$5.00 per share, and the Company's executive officers and directors received
130,000 options with an exercise price of $6.25 per share. All of these
options vest in annual installments over a five year period commencing
October 1, 1997 and expire on October 1, 2002, except that options to
purchase 6,500 shares of Common Stock vest in annual installments over a
three year period commencing on October 1, 1997 and expire on October 1,
2002. In June 1997, the Company granted an executive officer options to
purchase 7,500 shares of Common Stock at a price of $5.875 which vest over a
three year period and expire in June 2002.

INDEMNIFICATION OF DIRECTORS AND OFFICERS AND RELATED MATTERS

The Company has adopted provisions in its Certificate of Incorporation
that eliminate the personal liability of its directors for monetary damages
arising from a breach of their fiduciary duties in certain circumstances to
the fullest extent permitted by the Delaware General Corporation Law
("Delaware Law"). In addition, the Certificate of Incorporation requires the
Company to indemnify its directors and officers if they are made parties to
litigation because they are directors and officers of the Company or because
they were acting in certain capacities for other entities at the Company's
request. The Company's By-laws also require the Company to indemnify its
officers and directors to the fullest extent permitted by Delaware Law and
provide for the advancement of legal expenses in litigation to which the
directors and officers are parties. Accordingly, indemnification may occur
pursuant to the Certificate of Incorporation and By-laws for liabilities
arising under the Securities Act.

The underwriting agreement relating to this Offering provides for
indemnification of the Company's officers and directors by the Underwriters
against certain liabilities, including liabilities under the Securities Act,
that arise out of, among other things, an actual or alleged untrue statement
contained in this Prospectus or the actual or alleged omission of a material
fact required to be stated in this Prospectus. However, this indemnification
is only required to the extent that the misstatement or omission was based on
written information furnished to the Company by the Underwriters for use in
this Prospectus.

At present, there is no pending material litigation or proceeding
involving a director or officer of the Company where indemnification may be
required or permitted. The Company is not aware of any threatened material
litigation or proceeding that may result in a claim for such indemnification.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that, in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

50
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding ownership of
Common Stock, including the IPO Escrow Shares, as of July 1, 1997, and as
adjusted to reflect the completion of this Offering and the Pending
Acquisitions, by (i) each person known by the Company to own beneficially
more than five percent of the outstanding Common Stock, (ii) each director of
the Company and (iii) all executive officers and directors of the Company as
a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO THE OFFERING, AFTER THE OFFERING, TENDER
TENDER OFFER AND PENDING OFFER AND PENDING
ACQUISITIONS ACQUISITIONS(1)
--------------------------- ---------------------------
NAME(2) NUMBER PERCENT NUMBER PERCENT
- ------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Robert F.X. Sillerman(3)(4) ................ 1,369,230 15.6% 1,569,230 9.2%
Robert M. Gutkowski(4)(5) .................. 684,615 7.8 684,615 4.0
Arthur C. Kaminsky(4)(6) ................... 684,615 7.8 684,615 4.0
Michael Letis(4)(7) ........................ 684,615 7.8 684,615 4.0
Michael Trager(4)(8) ....................... 684,615 7.8 684,615 4.0
Louis J. Oppenheim(4)(9) ................... 342,306 3.9 342,306 2.0
Myles W. Schumer(10) ....................... 3,000 * 3,000 *
Howard J. Tytel(11) ........................ -- -- -- --
Arthur R. Barron ........................... -- -- -- --
Jan E. Chason(12) .......................... 4,000 * 4,000 *
Donald L. Dell(13) ......................... -- -- 265,000 1.6
William J. Allard(14) ...................... -- -- 25,000 *
All executive officers and directors of the
Company as a group (10 persons prior to
Offering and Pending Acquisitions,
12 persons after Offering and Pending
Acquisitions)(15) ......................... 4,456,996 50.8% 4,946,996 28.8%
</TABLE>

- ------------
* Less than 1%.
(1) Assumes (i) no exercise of the Underwriters' over-allotment option,
(ii) a price per share of Common Stock of $6.00 for purposes of
determining the number of shares of Common Stock issued in
connection with the QBQ Acquisition and (iii) the purchase in the
Tender Offer of all Warrants other than those held by directors and
executive officers of the Company at a price of $2.25 per Warrant.
(2) The address of each beneficial owner is c/o The Marquee Group, Inc.,
888 Seventh Avenue, 37th Floor, New York, New York. Unless otherwise
noted, the Company believes that all persons named in the table have
sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.
(3) Robert F.X. Sillerman, the Chairman of the Company, is the Chairman,
Chief Executive Officer and controlling stockholder of TSC, which
beneficially owns 1,369,230 shares of Common Stock. Includes 392,308
shares of Common Stock held in escrow but in respect of which TSC
retains the power to vote. See "--Escrow Shares--IPO Escrow Shares."
Does not include 76,922 shares of Common Stock issuable upon
exercise of an equal number of Warrants, which are not exercisable
until December 5, 1997. Does not include 40,000 shares of Common
Stock issuable upon the exercise of options which are not
exercisable within 60 days. Shares Beneficially Owned After the
Offering, Tender Offer and Pending Acquisitions includes options to
purchase 200,000 shares of Common Stock to be granted to TSC in
connection with the Tender Offer, which will be exercisable on the
date of grant. See "Certain Relationships and Related
Transactions--Consulting Agreement."
(4) The Company, TSC and Messrs. Gutkowski, Kaminsky, Letis, Trager and
Oppenheim have entered into an agreement with respect to the voting
of shares of Common Stock held by them. See "Certain Relationships
and Related Transactions--Stockholders' Agreement."
(5) Includes 196,154 shares of Common Stock that Mr. Gutkowski placed in
escrow but in respect of which he retains the power to vote. See
"--Escrow Shares--IPO Escrow Shares." Does not include 38,461 shares
of Common Stock issuable upon exercise of an equal number of
Warrants, which are not exercisable until December 5, 1997. Does not
include 20,000 shares of Common Stock issuable upon the exercise of
options which are not exercisable within 60 days.

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(6) Includes 196,154 shares of Common Stock that Mr. Kaminsky placed in
escrow but in respect of which he retains the power to vote. See
"--Escrow Shares--IPO Escrow Shares." Does not include 38,461 shares
of Common Stock issuable upon exercise of an equal number of
Warrants, which are not exercisable until December 5, 1997. Does not
include 20,000 shares of Common Stock issuable upon the exercise of
options which are not exercisable within 60 days.
(7) Includes 196,154 shares of Common Stock that Mr. Letis placed in
escrow but in respect of which he retains the power to vote. See
"--Escrow Shares--IPO Escrow Shares." Does not include 38,461 shares
of Common Stock issuable upon exercise of an equal number of
Warrants, which are not exercisable until December 5, 1997. Does not
include 20,000 shares of Common Stock issuable upon the exercise of
options which are not exercisable within 60 days.
(8) Includes 196,154 shares of Common Stock that Mr. Trager placed in
escrow but in respect of which he retains the power to vote. See
"--Escrow Shares--IPO Escrow Shares." Does not include 38,461 shares
of Common Stock issuable upon exercise of an equal number of
Warrants, which are not exercisable until December 5, 1997. Does not
include 20,000 shares of Common Stock issuable upon the exercise of
options which are not exercisable within 60 days.
(9) Includes 98,076 shares of Common Stock that Mr. Oppenheim placed in
escrow but in respect of which he retains the power to vote. See
"--Escrow Shares--IPO Escrow Shares." Does not include 19,230 shares
of Common Stock issuable upon exercise of an equal number of
Warrants, which are not exercisable until December 5, 1997. Does not
include 10,000 shares of Common Stock issuable upon the exercise of
options which are not exercisable within 60 days.
(10) Includes 1,500 shares of Common Stock issuable upon exercise of an
equal number of Warrants, which are currently exercisable.
(11) Mr. Tytel is a minority stockholder of TSC, which owns 1,369,230
shares of Common Stock; however, he is not deemed to beneficially
own any such shares.
(12) Includes 2,000 shares issuable upon exercise of an equal number of
Warrants, which are currently exercisable. Does not include 7,500
shares of Common Stock issuable upon the exercise of options which
are not exercisable within 60 days.
(13) Includes 40,000 shares issuable upon exercise of options to be
granted at the consummation of the transactions contemplated by the
ProServ Acquisition Agreements, which will be immediately
exercisable. See "Agreements Related to the Pending
Acquisitions--ProServ Acquisition--Dell Stock Purchase Agreement."
(14) Includes 25,000 shares issuable upon exercise of options to be
granted at the consummation of the transactions contemplated by the
ProServ Acquisition Agreements, which will be immediately
exercisable. See "Agreements Related to the Pending
Acquisitions--ProServ Acquisition--Other Stock Purchase Agreements."
(15) All amounts include 3,500 shares issuable upon exercise of an equal
number of Warrants, which are currently exercisable but do not
include (i) 249,996 shares issuable upon exercise of an equal number
of Warrants, which Warrants are not exercisable until December 5,
1997, or (ii) 137,500 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days. In
addition, shares Beneficially Owned After the Offering, Tender Offer
and Pending Acquisitions includes (i) options to purchase 200,000
shares of Common Stock to be granted to TSC in connection with the
Tender Offer, which will be exercisable on the date of grant and
(ii) options to purchase 65,000 shares to be issued in connection
with the Pending Acquisitions. See "Agreements Related to the
Pending Acquisitions" and "Certain Relationships and
Related Transactions--Consulting Agreement."

ESCROW SHARES

IPO Escrow Shares. In connection with the IPO, TSC and Messrs. Gutkowski,
Kaminsky, Oppenheim, Letis and Trager deposited an aggregate of 1,275,000 IPO
Escrow Shares into escrow. The IPO Escrow Shares are not assignable or
transferable. Of the IPO Escrow Shares, (i) 425,000 shares shall be released
from escrow if, for the fiscal year ending December 31, 1997, the Company's
income before provision for taxes (the "Minimum Pretax Income") equals or
exceeds $1,400,000; (ii) 425,000 shares (or, if the condition set forth in
(i) above was not met, 850,000 shares) shall be released, if, for the fiscal
year ending December 31, 1998, the Minimum Pretax Income equals or exceeds
$2,400,000; (iii) 425,000 shares (or, if the conditions set forth in either
(i) or (ii) were not met, the remaining IPO Escrow Shares) shall be released
if, for the fiscal year ending December 31, 1999, the Minimum Pretax Income
equals or exceeds $3,400,000 and (iv) all of the IPO Escrow Shares will be
released from escrow if one or more of the following conditions is/are met:
(a) the Closing Price (as defined in the escrow agreement) of the Company's
Common Stock averages in excess of $15.00 per share for any 20 consecutive
trading days

52
<PAGE>
during the period from December 5, 1998 until December 31, 1999; or (b) the
Company is acquired by or merged into another entity in a transaction in
which the value of the per share consideration received by the stockholders
of the Company on the date of such transaction equals or exceeds $15.00 per
share.

If the applicable Minimum Pretax Income levels or Closing Price level set
forth above have not been met by March 31, 2000, the IPO Escrow Shares, as
well as any dividends or other distributions made with respect thereto, will
be canceled and contributed to the capital of the Company.

The Minimum Pretax Income amounts set forth above shall be (i) calculated
exclusive of (x) any extraordinary earnings or charges (including any charges
incurred in connection with the release from escrow of the IPO Escrow Shares
and any Escrow Property (as defined below) in respect thereof) and (y) any
interest expense relating to the debentures issued by the Company in
connection with the Private Placement; (ii) derived solely from the
businesses owned and operated by the Company following completion of the
Acquisitions and shall not give effect to any operations relating to
businesses or assets acquired after such date and (iii) audited by the
Company's independent public accountants. The Closing Price amount set forth
above is subject to adjustment in the event of any stock splits, reverse
stock splits or other similar events.

Any money, securities, rights or property distributed in respect of the
IPO Escrow Shares shall be received by the escrow agent, including any
property distributed as dividends or pursuant to any stock split, merger,
recapitalization, dissolution or total or partial liquidation of the Company
(the "Escrow Property"); provided however, that with the exception of any
securities of the Company or any successor to the Company issued as a result
of any of the foregoing, such property shall be delivered to the holders of
the IPO Escrow Shares promptly upon the escrow agent's receipt thereof. The
Minimum Pretax Income and Closing Price levels set forth above were
determined by negotiation between the Company and the underwriters in the IPO
and should not be construed to imply or predict any future earnings by the
Company or any increase in the market price of its securities.

QBQ Escrow Shares. In connection with the QBQ Acquisition, the Company has
agreed to deposit into escrow shares of Common Stock with an aggregate value
at the closing of the QBQ Acquisition of approximately $500,000. Pursuant to
the terms of such escrow, the QBQ Escrow Shares shall be released from escrow
if Marquee Music's Operation Income (as defined in the acquisition agreement)
exceeds $1.0 million in any of the three fiscal years (or $1.25 million in
the fourth fiscal year) following the consummation of the QBQ Acquisition.
See "Agreements Related to the Pending Acquisitions--QBQ Acquisition."

Potential Charges to Operations. The Company expects that the release of
the IPO Escrow Shares or the QBQ Escrow Shares will be deemed compensatory
and, accordingly, will result in a substantial charge to operations, which
would equal the then fair market value of such shares. Such charge could
substantially increase the Company's losses or reduce or eliminate the
Company's net income for financial reporting purposes for the period during
which such shares are, or become probable of being, released from escrow.
Although the amount of compensation expense recognized by the Company will
not affect the Company's total stockholders' equity, it may have a negative
effect on the market price of the Company's securities. See "Risk
Factors--Limited Operating History; History of Losses; Future Charges to
Operations."

IPO UNIT OPTIONS

The Company issued to the underwriters of its IPO, Royce Investment Group,
Inc. and Continental Broker-Dealer Corp., the IPO Unit Options to purchase up
to 335,000 IPO Units. The holders of the IPO Unit Options have certain demand
and piggyback registration rights. See "Description of Securities--IPO Unit
Options."

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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CONSULTING AGREEMENT

The Company has entered into a Financial Consulting Agreement with SCMC,
dated as of August 1, 1996 (the "Consulting Agreement"). In March 1997, SCMC
assigned its rights, obligations and duties under the Consulting Agreement to
TSC. Pursuant to the Consulting Agreement, TSC, a principal stockholder of
the Company, has agreed to serve as the Company's financial consultant until
August 1, 2002. Robert F.X. Sillerman, the Chairman of the Company, is the
Chairman, Chief Executive Officer and controlling stockholder of SCMC and
TSC, and Howard J. Tytel, a director of the Company, is the Executive Vice
President and General Counsel of SCMC and TSC. SCMC and/or TSC have entered
into similar agreements with other companies, including companies in which
Mr. Sillerman or his affiliates have substantial interests. The Company has
agreed to pay $30,000 per month commencing in September 1997 to TSC as
compensation for its services under the Consulting Agreement, which amount
will be increased annually based on the Consumer Price Index for New York
City. Under the Consulting Agreement, TSC has agreed to perform, or assist
the Company in, among other things: (i) production of financial reports and
other data for the Company's lenders and investors and as required under the
Securities Act and the Exchange Act, (ii) assistance with the preparation of
the Company's books and records, (iii) the maintenance of relationships with
financial institutions participating in Company financings, (iv) the design
and implementation of the Company's accounting systems, (v) the purchase,
installation and implementation of computer hardware and software for the
Company's accounting systems, (vi) the implementation of a cash management
system, (vii) the establishment of regularized procedures for the
accumulation of cash balances available for interest and other required debt
service payments, (viii) the engagement of bookkeeping, accounting and other
personnel necessary for the implementation of the Company's accounting
systems and (ix) placement of financing.

The Consulting Agreement also provides for Special Advisory Fees to be
paid to TSC in the event of any financings or mergers and acquisitions,
whether or not such transactions are originated by TSC, although such fees
are subject to the approval of the Company's independent directors. The
Company did not, however, make any such payment to SCMC or TSC in connection
with the IPO, the Recent Acquisitions or the Private Placement. In February
1997, the Company advanced $400,000 to TSC as an advance against Special
Advisory Fees to be earned by TSC. In connection with, the Pending
Acquisitions TSC will receive Special Advisory Fees of $450,000 (of which
400,000 will be offset against the amount previously advanced to TSC) and, in
connection with the Tender Offer, TSC will receive an immediately exercisable
option to purchase 200,000 shares of Common Stock at a price per share equal
to the closing price of the Common Stock on the date of consummation of the
Tender Offer. Although the Special Advisory Fees to be paid in connection
with the Pending Acquisitions exceed those contemplated by the Consulting
Agreement, the Company's independent directors have approved such fees as an
affiliated transaction.

The Company has also agreed to reimburse TSC for all reasonable
out-of-pocket disbursements incurred by TSC in connection with the
performance of services under the Consulting Agreement and to indemnify TSC
and its affiliates for losses, claims, damages or liabilities arising out of
TSC's performance of its obligations under the Consulting Agreement.

Howard J. Tytel, a director of the Company, is Of Counsel to the law firm
of Baker & McKenzie, which is counsel in certain matters to the Company,
SCMC, TSC and certain other affiliates of Mr. Sillerman, the Chairman of the
Company. Baker & McKenzie compensates Mr. Tytel based upon the fees it
receives for providing legal services to the Company and other clients
introduced to the firm by Mr. Tytel. Mr. Tytel's primary employment is as an
officer of SCMC and TSC.

In January 1996, the Company entered into a month-to-month lease with TSC
providing for a monthly rent of approximately $4,000, which lease was
terminated in September 1996.

STOCKHOLDERS' AGREEMENT

In March 1996, the Company entered into the Stockholders' Agreement with
each of TSC, Robert M. Gutkowski, Arthur C. Kaminsky, Louis J. Oppenheim,
Michael Trager and Michael Letis. The Stockholders' Agreement generally
covers certain corporate governance matters. Pursuant to the

54
<PAGE>
Stockholders' Agreement, TSC is entitled to nominate two directors to the
Company's Board of Directors, Messrs. Kaminsky and Oppenheim are entitled to
nominate two directors, Messrs. Trager and Letis are entitled to nominate two
directors, and Mr. Gutkowski is entitled to nominate one director. Each of
the stockholder parties to the Stockholders' Agreement (a "Stockholder") has
agreed to vote all of the shares of Common Stock owned by such person for the
election of the directors so nominated and not to take any action to remove
any director so elected (except for the director(s) nominated by such
Stockholder). The Company anticipates that the Stockholders' Agreement will
be amended to provide for an increase in the size of the Company's Board of
Directors in order to permit the addition of Messrs. Dell and Allard upon the
consummation of the transactions contemplated by the ProServ Acquisition
Agreements.

The Stockholders' Agreement will terminate upon the mutual consent of the
parties to such agreement, when there is only one Stockholder bound thereby
or March 21, 2004. In addition, the Stockholders' Agreement will terminate
with respect to a Stockholder if he dies or a guardian is appointed to
oversee his affairs or he holds less than 65% of the shares of Common Stock
beneficially owned by him on December 11, 1996 (the date of the closing of
the IPO), provided that such Stockholder shall remain obligated to vote his
shares of Common Stock in accordance with the terms of the Stockholders'
Agreement.

POTENTIAL CONFLICTS OF INTEREST WITH SFX

Robert F.X. Sillerman, the Chairman of the Company, is principally
employed as the Executive Chairman of, and Howard J. Tytel, a director of the
Company, serves as a director, Executive Vice President and Secretary of,
SFX. In connection with its concert promotion business, SFX owns, operates or
is the exclusive promoter for certain major music venues. Upon the
consummation of the QBQ Acquisition, the Company may book musicians it
represents at such venues. In such cases, Messrs. Sillerman and Tytel may
have conflicts between their responsibilities to the Company and to SFX.

FOUNDERS' STOCK

In connection with the organization of the Company, in July 1995 the
Company sold 333 shares of Common Stock to Robert M. Gutkowski, the Company's
President and Chief Executive Officer, and in August 1995 the Company sold
666 shares of Common Stock to TSC, which is controlled by Robert F.X.
Sillerman, the Company's Chairman, for an aggregate purchase price of $19,980
(or approximately $.01 per share on a post-Stock Split basis). In May 1996,
the Company sold one share of Common Stock to Martin R. Ehrlich, the Senior
Vice President of Programming of the Company, for a purchase price of $500
(or $.01 per share on a post-Stock Split basis). In August 1996, the Company
increased the number of shares outstanding by means of a stock split (the
"Stock Split") thereby increasing the number of shares held by Mr. Gutkowski
to 646,154 shares, TSC to 1,292,308 shares and Mr. Ehrlich to 50,000 shares.

PRIVATE PLACEMENT AND CORPORATE INDEBTEDNESS

In August 1996 the Company consummated the Private Placement of $2,000,000
aggregate principal amount of Debentures. The $2,000,000 aggregate principal
amount of Debentures were converted into an aggregate of 666,662 IPO Units
upon the consummation of the IPO in December 1996.

From January 3, 1996 through September 30, 1996, Robert M. Gutkowski made
loans to the Company in the aggregate principal amount of $437,000, which
loans accrued interest at the rate of 12% per annum. The funds advanced by
Mr. Gutkowski were used by the Company for working capital purposes. In
August 1996, the Company repaid $125,000 of such amount to Mr. Gutkowski from
the proceeds of the Private Placement, and Mr. Gutkowski purchased $115,385
in principal amount of Debentures through the cancellation of an equal
portion of such indebtedness, which Debentures automatically converted upon
the consummation of the Company's IPO into 38,461 shares of Common Stock and
38,461 Warrants. In September 1996 the Company repaid $75,000 of its
indebtedness to Mr. Gutkowski from working capital. The Company will repay
the balance of such indebtedness plus accrued interest at the rate of 12% per
annum to Mr. Gutkowski on January 1, 1998. The investment by Mr. Gutkowski in
the Private Placement was on the same terms as the investments by the
non-affiliated investors, except that Mr. Gutkowski agreed not to sell the
securities issuable upon conversion of the Debentures during the two-year
period commencing on December 5, 1996.

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<PAGE>
From May 15, 1996 through August 12, 1996, TSC incurred expenses and made
loans to the Company in the aggregate principal amount of $196,385. The
indebtedness accrued interest at the rate of 12% per annum but the interest
was waived by TSC. The indebtedness was used by the Company for working
capital purposes, including rent payable to TSC. In August 1996, TSC
purchased $230,768 in principal amount of Debentures through the payment of
$34,383 and the cancellation of such indebtedness, which Debentures
automatically converted upon the consummation of the IPO into 76,924 shares
of Common Stock and 76,924 Warrants. The investment by TSC in the Private
Placement was on the same terms as the investments by the non-affiliated
investors, except that TSC agreed not to sell the securities issuable upon
conversion of the Debentures during the two-year period commencing on
December 5, 1996.

On May 30, 1996, Michael Trager, the Chairman of SMTI and a director of
the Company, and Michael Letis, the President of SMTI, each of whom is
currently an Executive Vice President and a director of the Company, made a
loan to the Company in the aggregate principal amount of $100,000. The loan
accrued interest at the rate of 12% per annum but the interest was waived by
Messrs. Trager and Letis. The proceeds of the loan was used by the Company
for working capital purposes. In August 1996, Messrs. Trager and Letis each
purchased $115,385 in principal amount of Debentures through the payment of
an aggregate of $130,770 and the cancellation of the $100,000 loan, which
Debentures automatically converted upon the consummation of the IPO into an
aggregate of 76,924 shares of Common Stock and 76,924 Warrants. The
investments by Messrs. Trager and Letis in the Private Placement were on the
same terms as the investments by the non-affiliated investors, except that
Messrs. Trager and Letis each agreed not to sell the securities issuable upon
conversion of the Debentures during the two-year period commencing on
December 5, 1996.

On August 6, 1996, Louis J. Oppenheim, the Vice President of A&A and an
Executive Vice President and a director of the Company, made a loan to the
Company in the aggregate principal amount of $33,334. The loan accrued
interest at the rate of 12% per annum but the interest was waived by Mr.
Oppenheim. The proceeds of the loan was used by the Company for working
capital purposes. In August 1996, Mr. Oppenheim purchased $57,692 in
principal amount of Debentures through the payment of $24,358 and the
cancellation of the $33,334 loan, which Debentures automatically converted
upon the consummation of the IPO into 19,230 shares of Common Stock and
19,230 Warrants. The investment by Mr. Oppenheim in the Private Placement was
on the same terms as the investments by the non-affiliated investors, except
that Mr. Oppenheim agreed not to sell the securities issuable upon conversion
of the Debentures during the two-year period commencing on December 5, 1996.

In August 1996, Arthur C. Kaminsky, the President and Chief Executive
Officer of A&A and an Executive Officer and a director of the Company,
purchased $115,385 principal amount of Debentures, which Debentures
automatically converted upon the consummation of the IPO into 38,461 shares
of Common Stock and 38,461 Warrants. The investment by Mr. Kaminsky in the
Private Placement was on the same terms as the investments by the
non-affiliated investors, except that Mr. Kaminsky agreed not to sell the
securities issuable upon conversion of the Debentures during the two-year
period commencing on December 5, 1996.

SMTI ACQUISITION

The Company, SMTI, Messrs. Trager, Letis, Gutkowski and TSC entered into
an acquisition agreement, amended and restated as of March 21, 1996 (the
"SMTI Acquisition Agreement"), pursuant to which a wholly-owned subsidiary of
the Company merged with and into SMTI on December 11, 1996, simultaneously
with the closing of the IPO. The aggregate purchase price paid by the Company
to Messrs. Trager and Letis, the sole stockholders of SMTI, consisted of (i)
$8,000,000 cash, of which $6,500,000 was paid at the closing and an aggregate
of $1,500,000 is payable in five equal annual installments commencing April
1, 1997 and (ii) the issuance to each of Messrs. Trager and Letis of 646,154
shares of Common Stock. The Company also entered into five-year employment
agreements with each of Messrs. Trager and Letis. See "Management--Employment
Agreements."

From its inception until immediately prior to the completion of the SMTI
Acquisition, SMTI was treated as a closely-held corporation under Subchapter
S of the Internal Revenue Code of 1986, as amended (the "Code"), and,
therefore, did not pay federal income taxes on amounts earned during such
period. Accordingly, SMTI distributed through dividends to its stockholders
substantially all of its

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<PAGE>
earnings during such period. Pursuant to the SMTI Acquisition Agreement,
immediately prior to the closing of the SMTI Acquisition, SMTI declared a
dividend to Messrs. Trager and Letis of an amount equal to 40% of the
increase in SMTI's accumulated adjustments account, as defined in the Code,
which amount approximates the amount the stockholders of SMTI expected to pay
personally for income taxes based on such earnings. The amount of such
dividend was $382,311 and it is anticipated that it will be paid by the
Company in the third quarter of 1997.

The SMTI Acquisition constituted a tax-free exchange to the extent of the
receipt of Common Stock under Section 351 of the Code.

A&A ACQUISITION

The Company, A&A, Messrs. Kaminsky, Oppenheim, Gutkowski and TSC entered
into an acquisition agreement, amended and restated as of March 21, 1996 (the
"A&A Acquisition Agreement"), pursuant to which a wholly-owned subsidiary of
the Company merged with and into A&A on December 11, 1996, simultaneously
with the consummation of the IPO. The aggregate purchase price paid by the
Company to Messrs. Kaminsky and Oppenheim, the sole stockholders of A&A,
consisted of (i) $3,500,000 cash, of which $2,500,000 was payable at the
closing and an aggregate of $1,000,000 which is payable in five equal annual
installments commencing April 1, 1997 and (ii) the issuance to Messrs.
Kaminsky and Oppenheim of an aggregate of 969,231 shares of Common Stock,
646,154 of which were issued to Mr. Kaminsky and 323,076 of which were issued
to Mr. Oppenheim. The Company also entered into five-year employment
agreements with each of Messrs. Kaminsky and Oppenheim. See
"Management--Employment Agreements."

The terms of the A&A Acquisition Agreement provided that Messrs. Kaminsky
and Oppenheim were to be permitted to withdraw from A&A an amount of money
equal to the amount that A&A recovers in pending lawsuits in which it is the
plaintiff, provided, however, that such amount shall not exceed $100,000.
Messrs. Kaminsky and Oppenheim have withdrawn an aggregate of approximately
$80,000 from A&A pursuant to this provision of the A&A Acquisition Agreement
and have waived their right to withdraw any additional amount from A&A
pursuant to this provision.

The A&A Acquisition constituted a tax-free exchange to the extent of the
receipt of Common Stock under Section 351 of the Code.

PENDING ACQUISITIONS

In connection with the ProServ Acquisition, the Company has agreed to
purchase shares of ProServ held by Donald L. Dell and William J. Allard. Upon
the consummation of the transactions contemplated by the ProServ Acquisition
Agreements, Mr. Dell will continue to serve as the chief executive officer of
ProServ and will become a director of the Company, and Mr. Allard will
continue to serve as president and chief operating officer of ProServ and
will become a director of the Company. See "Agreements Relating to the
Pending Acquisitions--ProServ Acquisition."

Pursuant to the QBQ Acquisition Agreement, the Company has agreed to
purchase substantially all of the assets of QBQ, of which Dennis Arfa is the
founder and sole stockholder. Upon the consummation of the QBQ Acquisition,
Mr. Arfa will serve as the chief executive officer of Marquee Music. See
"Agreements Relating to the Pending Acquisitions--QBQ Acquisition."

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with Messrs. Gutkowski,
Kaminsky, Letis, Oppenheim and Trager. See "Management--Employment
Agreements."

GENERAL

The Company believes that transactions between the Company and its
officers, directors and principal stockholders or affiliates thereof have
been on terms no less favorable to the Company than could be obtained from
independent third parties. The Company expects that all future transactions
between the Company and its officers, directors and principal stockholders or
affiliates thereof will be subject to the approval of the Company's
independent directors.

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DESCRIPTION OF SECURITIES

The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock, par value $.01 per share, and 5,000,000 shares of Preferred
Stock, par value $.01 per share.

COMMON STOCK

As of July 16, 1997, there are 8,769,162 shares of Common Stock
outstanding, and after this Offering and the Pending Acquisitions there will
be 16,910,828 shares of Common Stock outstanding (assuming no exercise of the
Underwriters' over-allotment option and that 416,666 shares will be issued in
connection with the QBQ Acquisition). In addition, the Company will have
923,496 shares of Common Stock reserved for issuance upon the exercise of the
Warrants and the IPO Unit Options (including the shares issuable upon
exercise of the Warrants contained therein) upon consummation of the Tender
Offer (assuming the tender of all of the outstanding Warrants not held by
directors and executive officers of the Company), and 230,000 shares of
Common Stock reserved for issuance upon the exercise of options pursuant to
the 1996 Stock Option Plan. The holders of 4,449,996 shares of Common Stock
have entered into a shareholders' agreement with respect to the voting of
such shares. See "Certain Relationships and Related
Transactions--Stockholders' Agreement." Holders of Common Stock have the
right to cast one vote for each share held of record on all matters submitted
to a vote of the stockholders, including the election of directors. Holders
of Common Stock are entitled to receive such dividends, pro rata, based on
the number of shares held, when, as and if declared by the Board of
Directors, from funds legally available therefor, subject to the rights of
holders of any outstanding Preferred Stock. In the event of the liquidation,
dissolution or winding up of the affairs of the Company, all assets and funds
of the Company remaining after the payment of all debts and other
liabilities, subject to the rights of the holders of any outstanding
Preferred Stock, shall be distributed, pro rata, among the holders of the
Common Stock. Holders of Common Stock are not entitled to preemptive,
subscription, cumulative voting or conversion rights, and there are no
redemption or sinking fund provisions applicable to the Common Stock.

WARRANTS

As of July 16, 1997, there were 4,519,162 Warrants outstanding. Each
Warrant entitles the registered holder to purchase one share of Common Stock
at an exercise price of $7.50 at any time until 5:00 P.M., New York City
time, on December 13, 2001. Commencing on December 5, 1997, the Warrants are
redeemable by the Company on 30 days' written notice at a redemption price of
$.05 per Warrant if the "closing price" of the Common Stock for any 20
consecutive trading days ending within five days of the notice of redemption
averages in excess of $11.50 per share. "Closing price" shall mean the
closing bid price if listed in the over-the-counter market on Nasdaq or
otherwise or the closing sale price if listed on the Nasdaq National Market
or a national securities exchange. All Warrants must be redeemed if any are
redeemed.

The Warrants do not confer upon the Warrant holder any voting or other
rights of a stockholder of the Company. Upon notice to the Warrant holders,
the Company has the right to reduce the exercise price or extend the
expiration date of the Warrants.

58
<PAGE>
indebtedness, or the Company may fund the purchase of the Warrants through
the proceeds of this Offering. The Company anticipates that any indebtedness
incurred in financing the Tender Offer will be repaid with a portion of the
net proceeds of this Offering. See "Use of Proceeds."At the Company's
request, its directors and executive officers have stated that they do not
intend to tender their Warrants unless the Company is unable to purchase the
minimum number of Warrants. Notwithstanding the foregoing, such directors and
executive officers may tender or not tender their Warrants at their
discretion. The consummation of this Offering is conditioned upon the closing
of the Tender Offer.

IPO UNIT OPTIONS

The Company issued to the underwriters of its IPO, Royce Investment Group,
Inc. and Continental Broker-Dealer Corp., the IPO Unit Options to purchase up
to 335,000 IPO Units. Each IPO Unit consists of one share of Common Stock and
one warrant. The warrants included in the IPO Unit Options are identical to
the Warrants except that they will not be subject to redemption by the
Company unless, at the time the warrants are called for redemption, the IPO
Unit Options have been exercised and the underlying warrants are outstanding.
The IPO Unit Options cannot be transferred, sold, assigned or hypothecated
for two years, except to any officer of either IPO underwriter or members of
the IPO selling group or their officers. The IPO Unit Options are exercisable
during the three-year period commencing December 1998 at an exercise price of
$8.25 per Unit, subject to adjustment in certain events to protect against
dilution. The holders of the IPO Unit Options have certain demand and
piggyback registration rights.

PREFERRED STOCK

As of June 1, 1997, 5,000,000 shares of Preferred Stock are authorized and
no shares are outstanding. The Board of Directors has the authority to issue
this Preferred Stock in one or more series and to fix the number of shares
and the relative rights, conversion rights, voting rights and terms of
redemption (including sinking fund provisions) and liquidation preferences,
without further vote or action by the stockholders. If shares of Preferred
Stock with voting rights are issued, such issuance could affect the voting
rights of the holders of the Company's Common Stock by increasing the number
of outstanding shares having voting rights, and by the creation of class or
series voting rights. If the Board of Directors authorizes the issuance of
shares of Preferred Stock with conversion rights, the number of shares of
Common Stock outstanding could potentially be increased by up to the
authorized amount. Issuances of Preferred Stock could, under certain
circumstances, have the effect of delaying or preventing a change in control
of the Company and may adversely affect the rights of holders of Common
Stock. Also, Preferred Stock could have preferences over the Common Stock
(and other series of Preferred Stock) with respect to dividend and
liquidation rights. The Company has no shares of Preferred Stock outstanding
and has no present plans to issue any Preferred Stock.

TRANSFER AGENT

Continental Stock Transfer & Trust Company, New York, New York, serves as
Transfer Agent for the shares of Common Stock and Warrant Agent for the
Warrants.

RESTRICTIONS ON CERTAIN BUSINESS COMBINATIONS

The Company is subject to the "business combination" statute of the
Delaware Law, an anti-takeover law enacted in 1988. In general, Section 203
of the Delaware Law prohibits a publicly-held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an "interested stockholder," unless (i) prior to such date the board
of directors of the corporation approved either the "business combination" or
the transaction which resulted in the stockholder becoming an "interested
stockholder," (ii) 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 of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (a) by
persons who are directors and also officers and (b)

59
<PAGE>
employee stock plans in which employee participants do not have the agent to
determine confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer or (iii) on or subsequent to such date
the "business combination" is approved by the board of directors and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66% of the outstanding voting stock which is not owned by
the "interested stockholder." A "business combination" includes mergers,
stock or asset sales and other transactions resulting in a financial benefit
to the "interested stockholders." An "interested stockholder" is a person
who, together with affiliates and associates, owns (or within three years,
did own) 15% or more of the corporation's voting stock. Although Section 203
permits the Company to elect not to be governed by its provisions, the
Company to date has not made this election. As a result of the application of
Section 203 of the Delaware Law, potential acquirees of the Company may be
discouraged from attempting to effect an acquisition transaction with the
Company, thereby possibly depriving holders of the Company's securities of
certain opportunities to sell or otherwise dispose of such securities at
above-market prices pursuant to such transactions.

60
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Pending Acquisitions and this Offering, the Company
will have outstanding 16,910,828 shares of Common Stock, assuming the
issuance of 416,666 shares in connection with the QBQ Acquisition and
assuming no exercise of Warrants or options. Of these shares, a total of
5,064,682 shares and 3,852,500 Warrants will be freely tradeable without
restriction or further registration under the Securities Act, unless
purchased or held by "affiliates" of the Company as that term is defined in
Rule 144 under the Securities Act ("Rule 144"). However, the Company has
commenced the Tender Offer to acquire up to all (but in no event less than
3,200,000, representing approximately 70.8%) of the Warrants. At the
Company's request, its directors and executive officers have stated that they
do not intend to tender their Warrants unless the Company is unable to
purchase the minimum number of Warrants. Notwithstanding the foregoing, such
directors and executive officers may tender or not tender their Warrants at
their discretion. The remaining 3,704,480 shares will be "restricted
securities" as that term is defined in Rule 144. In addition, 4,453,496
shares (including certain of the foregoing restricted securities) and 253,496
Warrants are subject to the Lock-Up Agreements, as discussed below.

In December 1997, an aggregate of 3,062,813 shares that constitute
restricted securities will become eligible for sale subject to the manner of
sale, volume and similar limitations of Rule 144. However, these shares are
also subject to the Lock-Up Agreements, which restrict their availability for
sale until one year after the consummation of this Offering. An additional
225,000 shares will become eligible for sale subject to the limitations of
Rule 144 one year following the consummation of the purchase of Mr. Dell's
shares of ProServ, and up to approximately 416,666 shares will become
eligible for such sale one year after the consummation of the QBQ
Acquisition.

In general, under Rule 144, as recently amended, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least
one year (including the holding period of any prior owner except an affiliate
from whom those shares were purchased) is entitled to sell in "brokers'
transactions" or to market makers, within any three-month period, a number of
shares that does not exceed the greater of (i) one percent of the number of
shares of Common Stock then outstanding (approximately 1.7 million shares
upon completion of this Offering and the Pending Acquisitions) or (ii)
generally, the average weekly trading volume in the Common Stock during the
four calendar weeks preceding the required filing of a Form 144 with respect
to such sale. Sales under Rule 144 are also subject to certain requirements
pertaining to the availability of current public information concerning the
Company. Affiliates may sell shares not constituting restricted securities in
accordance with the foregoing volume limitations and other requirements but
without regard to the one year holding period. Under Rule 144(k), a person
who is not deemed to have been an affiliate of the Company at any time during
the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years (including the holder of any prior
owner other than an affiliate from whom the shares were purchased), is
entitled to sell the shares without having to comply with the manner of sale,
public information, volume limitation or notice provisions of Rule 144.

As an alternative to sales under Rule 144, shares of Common Stock and
Warrants may be sold without any volume limitations pursuant to an effective
registration statement filed with the Commission. The persons who acquired
shares of Common Stock and Warrants upon conversion of the Debentures and the
holders of the IPO Options have demand and "piggyback" registration rights
covering such securities (including the securities underlying the IPO
Options). In addition, the Company has agreed to grant the holders of the
shares of Common Stock to be issued in the Pending Acquisitions certain
demand and piggyback registration rights. See "Agreements Related to Pending
Acquisitions," "Certain Relationships and Related Transactions--Private
Placement and Corporate Indebtedness" and "Description of Securities--IPO
Unit Options."

Pursuant to the Lock-Up Agreements, all of the Company's officers and
directors, owning, in the aggregate, 4,453,496 shares of Common Stock and
253,496 Warrants, have agreed not to, directly or indirectly, offer, sell,
offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, offer of sale,
contract of sale, pledge, grant of any option to purchase or other sale or
disposition) any shares of Common Stock, Warrants or other capital stock or
any

61
<PAGE>
securities convertible into or exercisable or exchangeable for, or any rights
to purchase or acquire any shares of Common Stock or other capital stock of
the Company for a period of one year after the date of this Prospectus
without the prior written consent of Prudential Securities Incorporated, on
behalf of the Underwriters, except for options granted pursuant to the
Company's existing stock option plans. Prudential Securities Incorporated
may, in its sole discretion, at any time and without notice, release all or
any portion of the shares of Common Stock and Warrants subject to such
agreements. The holders of substantially all of the securities subject to the
Lock-Up Agreements have also entered into similar agreements with the
underwriters of the IPO which restrict the sale or other disposition of their
securities until December 5, 1998. In addition, the holders of the shares of
Common Stock to be issued in the Pending Acquisitions have agreed to
restrictions on the sale or other disposition of such shares. Sales of
substantial amounts of Common Stock, or the possibility of such sales, could
adversely affect the prevailing market price for the Common Stock and could
impair the Company's ability to rise capital through a public offering of
equity securities. See "Agreements Related to the Pending Acquisitions,"
"Description of Securities" and "Underwriting."

An aggregate of 1,275,000 IPO Escrow Shares are, and upon consummation of
the QBQ Acquisition approximately 83,333 QBQ Escrow Shares will be, held in
escrow and may become available for sale in the future. See "Principal
Stockholders--Escrow Shares." The Company also has outstanding (i) Warrants
representing the right to purchase an aggregate of 4,519,162 shares of Common
Stock, prior to the Tender Offer, and (ii) IPO Options representing the right
to purchase an aggregate of 670,000 shares of Common Stock, assuming exercise
of the underlying Warrants. In addition, in connection with the Tender Offer,
TSC will receive an immediately exercisable option to purchase 200,000 shares
of Common Stock at a price per share equal to the closing price of the Common
Stock on the date of consummation of the Tender Offer. See "Certain
Relationships and Related Transactions--Consulting Agreement."

Pursuant to the Dell Acquisition Agreement, Mr. Dell has agreed not to
offer, sell or otherwise transfer or dispose of, directly or indirectly, 50%
of the Dell Consideration Stock (except, in certain circumstances, by gift,
inheritance or pledge) for a period of 12 months from the consummation of the
purchase of his shares and the remaining 50% of the Dell Consideration Stock
for a period of 27 months from the consummation of the purchase of his
shares. The Company has granted Mr. Dell certain demand and piggyback
registration rights with respect to the Dell Consideration Stock, which, in
certain situations, permit Mr. Dell to sell 100% of the Dell Consideration
Stock 12 months after the consummation of the purchase of his shares of
ProServ.

In August 1997, the Company's stockholders are scheduled to vote on the
adoption of the Company's 1997 Stock Option Plan, which would allow the
granting of options to purchase up to 300,000 shares of Common Stock.
Following this Offering, the Company intends to file a Registration Statement
on Form S-8 covering an aggregate of 800,000 shares of Common Stock
(including 237,500 shares subject to outstanding options as of the date
hereof) that have been or are anticipated to be reserved for issuance under
the 1996 Stock Option Plan and the 1997 Stock Option Plan, thus permitting
the resale of such shares in the public market without restriction under the
Securities Act.

Future sales of substantial amounts of Common Stock in the public market
could adversely affect the prevailing market prices and impair the Company's
ability to raise capital through the sale of equity securities.

62
<PAGE>
UNDERWRITING

The Underwriters named below (the "Underwriters"), for whom Prudential
Securities Incorporated and Cowen & Company are acting as representatives
(the "Representatives"), have severally agreed, subject to the terms and
conditions contained in the Underwriting Agreement, to purchase from the
Company the number of Common Stock set forth opposite their respective names:

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- --------------------------------------- -------------
<S> <C>
Prudential Securities Incorporated ....
Cowen & Company ........................

-------------
Total................................. 7,500,000
=============
</TABLE>

The Company is obligated to sell, and the Underwriters are obligated to
purchase, all of the shares of Common Stock offered hereby if any are
purchased.

The Underwriters, through their Representatives, have advised the Company
that they propose to offer the Common Stock initially at the public offering
price set forth on the cover page of this Prospectus; that the Underwriters
may allow to selected dealers a concession of $ per share; and that such
dealers may re-allow a concession of $ per share to certain other dealers.
After the public offering, the offering price and the concessions may be
changed by the Representatives.

The Company has granted the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to 1,125,000 additional
shares of Common Stock at the public offering price, less underwriting
discounts and commissions, as set forth on the cover page of this Prospectus.
The Underwriters may exercise such option solely for the purpose of covering
over-allotments incurred in the sale of the shares of Common Stock offered
hereby. To the extent such option to purchase is exercised, each Underwriter
will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number set
forth next to such Underwriter's name in the preceding table bears to
7,500,000.

The Company has agreed to indemnify the several Underwriters or contribute
to losses arising out of certain liabilities, including liabilities under the
Securities Act.

The Company, its officers and directors and certain other beneficial
owners of the Common Stock and holders of warrants or options to purchase
Common Stock have agreed not to, directly or indirectly, offer, sell, offer
to sell, contract to sell, pledge, grant any option to purchase or otherwise
sell or dispose (or announce any offer, sale, offer of sale, contract of
sale, pledge, grant of any option to purchase or other sale or disposition)
of any shares of Common Stock, Warrants or other capital stock or any
securities convertible into or exercisable or exchangeable for any shares of
Common Stock or other capital stock of the Company, for a period of 365 days
after the date of this Prospectus without the prior written consent of
Prudential Securities Incorporated, on behalf of the Underwriters. Prudential
Securities Incorporated may in its sole discretion, and at any time without
notice release all or any portion of the securities subject to lock-up
agreements.

In connection with this Offering, certain Underwriters and selling group
members (if any) who are qualified market makers on the Nasdaq SmallCap
Market may engage (if the Common Stock and the Warrants are still included
for quotation in the Nasdaq SmallCap Market) in passive market making
transactions in the Common Stock and the Warrants on the Nasdaq SmallCap
Market in accordance with Rule 103 of Regulation M under the Securities Act
during the business day prior to the pricing of the Offering before the
commencement of offers of sales of the Common Stock. Passive market makers
must comply with applicable volume and price limitations and must be
identified as such. In general, a passive

63
<PAGE>
market maker must display its bid at a price not in excess of the highest
independent bid for such security; if all independent bids are lowered below
the passive market maker's bid, however, such bid must then be lowered when
certain purchase limits are exceeded.

In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock
and the Warrants. Such transactions may include stabilization transactions
effected in accordance with Rule 104 of Regulation M, pursuant to which such
persons may bid for or purchase Common Stock for the purpose of stabilizing
its market price. The Underwriters also may create a short position for the
account of the Underwriters by selling more Common Stock in connection with
the Offering then they are committed to purchase from the Company, and in
such case may purchase Common Stock in the open market following completion
of the Offering to cover all or a portion of such short position. The
Underwriters may also cover all or a portion of such short position, up to
1,125,000 shares of Common Stock, by exercising the Underwriters'
over-allotment option referred to above. In addition, Prudential Securities
Incorporated, on behalf of the Underwriters, may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or dealer participating in the offering) for the account of the
other Underwriters, the selling concession with respect to Common Stock that
is distributed in the Offering but subsequently purchased for the account of
the Underwriters in the open market. Any of the transactions described in
this paragraph may result in the maintenance of the price of the Common Stock
and the Warrants at a level above that which might otherwise prevail in the
open market. None of the transactions described in this paragraph is
required, and, if they are undertaken, they may be discounted at any time.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for the
Company by Baker & McKenzie, New York, New York. Howard J. Tytel, a director
of the Company and Executive Vice President and General Counsel of TSC, a
principal stockholder of the Company, is Of Counsel to Baker & McKenzie. See
"Management," "Principal Stockholders" and "Certain Relationships and Related
Transactions." Certain legal matters related to this Offering will be passed
upon for the Underwriters by Morgan, Lewis & Bockius LLP, New York, New York.

EXPERTS

The consolidated financial statements of The Marquee Group, Inc. as of
December 31, 1996 and for the year ended December 31, 1996 and for the period
from July 11, 1995 (inception) to December 31, 1995, each appearing in this
Prospectus and Registration Statement, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon, appearing
elsewhere herein and are included in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.

The consolidated balance sheet of ProServ, Inc. as of December 31, 1996
and the consolidated statements of operations, stockholders' equity (deficit)
and cash flows for the years ended December 31, 1996 and 1995, included in
this Prospectus, have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.

The financial statements of QBQ Entertainment, Inc. as of December 31,
1996 and for the years ended December 31, 1995 and 1996, each appearing in
this Prospectus and Registration Statement, have been audited by David Berdon
& Co., LLP, independent auditors, as set forth in their reports thereon,
appearing elsewhere herein and are included in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.

64
<PAGE>
AVAILABLE INFORMATION

The Company is a reporting company under the Exchange Act. The Company has
filed a Registration Statement on Form SB-2 under the Securities Act with the
Commission in Washington, D.C. with respect to the Common Stock offered
hereby. This Prospectus, which is part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement
and the exhibits thereto. For further information with respect to the Company
and the Common Stock offered hereby, reference is hereby made to the
Registration Statement and such exhibits. The Registration Statement,
exhibits, reports and other information filed with the Commission may be
inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
at 500 West Madison (Suite 1400), Chicago, Illinois 60661. Copies of such
material may also be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission maintains a Web site at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission. Statements contained in
this Prospectus as to the contents of any contract or other document referred
to are not necessarily complete and in each instance reference is made to the
copy of such contract or document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.

65
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES

- ------------------------------------------------------------------------------------------------------

Report of Independent Auditors F-2

Consolidated Balance Sheets as of December 31, 1996 and March 31, 1997 (unaudited) F-3

Consolidated Statements of Operations for the period from July 11, 1995 (inception) to
December 31, 1995 and for the year ended December 31, 1996 and for the three months ended
March 31, 1997 and 1996 (unaudited) F-4

Consolidated Statements of Stockholders' Equity for the period from July 11, 1995 (inception)
to December 31, 1995 and for the year ended December 31, 1996 and for the three months ended
March 31, 1997 (unaudited) F-5

Consolidated Statements of Cash Flows for the period from July 11, 1995 (inception) to
December 31, 1995 and for the year ended December 31, 1996 and for the three months ended
March 31, 1997 and 1996 (unaudited) F-6

Notes to Consolidated Financial Statements F-8

PROSERV, INC. AND SUBSIDIARIES

Report of Independent Accountants F-17

Consolidated Balance Sheets as of December 31, 1996 and March 31, 1997 (unaudited) F-18

Consolidated Statements of Operations for the years ended December 31, 1996 and 1995 and for
the three months ended March 31, 1997 and 1996 (unaudited) F-19

Consolidated Statements of Stockholders' Equity/(Deficit) for the years ended December 31,
1996 and 1995 and for the three months ended March 31, 1997 (unaudited) F-20

Consolidated Statements of Cash Flows for the years ended December 31, 1996 and 1995 and for
the three months ended March 31, 1997 and 1996 (unaudited) F-21

Notes to Consolidated Financial Statements F-22

QBQ ENTERTAINMENT, INC.

Report of Independent Auditors F-35

Balance Sheets as of December 31, 1996 and March 31, 1997 (unaudited) F-36

Statements of Operations for the years ended December 31, 1996 and 1995 and for the three
months ended March 31, 1997 and 1996 (unaudited) F-37

Statements of Stockholder's Equity (Deficiency) for the years ended December 31, 1996 and
1995 and the three months ended March 31, 1997 (unaudited) F-38

Statements of Cash Flows for the years ended December 31, 1996 and 1995 and for the three
months ended March 31, 1997 and 1996 (unaudited) F-39

Notes to Financial Statements F-40
</TABLE>

F-1

<PAGE>
REPORT OF INDEPENDENT AUDITORS

To the Stockholders of The Marquee Group, Inc.

We have audited the accompanying consolidated balance sheet of The Marquee
Group, Inc. and Subsidiaries (the "Company"), as of December 31, 1996 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the year ended December 31, 1996 and for the period from July 11,
1995 (Inception) to December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company
at December 31, 1996, and the consolidated results of its operations and its
cash flows for the year ended December 31, 1996 and for the period from July
11, 1995 (Inception) to December 31, 1995, in conformity with generally
accepted accounting principles.

Ernst & Young LLP

February 14, 1997

F-2

<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................... $ 7,230,526 $ 5,285,934
Accounts receivable......................................... 1,295,894 1,344,426
Due from related parties.................................... 138,699 75,250
Due from Celebrity Golf Championship, LLC................... 169,100 --
Prepaid expenses and other current assets................... 250,363 691,750
----------------- --------------
Total current assets......................................... 9,084,582 7,397,360
Property and equipment, net.................................. 218,604 506,109
Deferred advisory costs...................................... -- 400,000
Other assets................................................. 57,612 157,812
----------------- --------------
Total assets................................................. $ 9,360,798 $ 8,461,281
================= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................... $ 866,442 $ 1,035,668
Income taxes payable........................................ 268,250 --
Distribution payable to stockholders........................ 382,311 382,311
Acquisition indebtedness--current portion................... 332,500 332,500
----------------- --------------
Total current liabilities.................................... 1,849,503 1,750,479
Loan payable to officer/stockholder.......................... 121,615 121,615
Acquisition indebtedness--stockholders....................... 1,637,500 1,637,500
Other liabilities............................................ 343,000 427,750
Commitments
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares
authorized,
no shares issued ..........................................
Common stock, $.01 par value; 25,000,000 shares authorized,
8,769,162 shares issued and outstanding.................... 87,692 87,692
Additional paid-in capital.................................. 7,795,199 7,664,071
Deferred compensation....................................... (63,334) (39,586)
Accumulated deficit......................................... (2,410,377) (3,188,240)
----------------- --------------
5,409,180 4,523,937
----------------- --------------
Total liabilities and stockholders' equity................... $ 9,360,798 $ 8,461,281
================= ==============
</TABLE>

See accompanying notes.

F-3
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE PERIOD THREE MONTHS ENDED
FROM JULY 11, 1995 MARCH 31,
YEAR ENDED (INCEPTION) TO -------------------------
DECEMBER 31, 1996 DECEMBER 31, 1995 1997 1996
----------------- ------------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Commissions and fee income.......... $ 2,868,788 $ -- $1,978,407 $ --
Operating expenses.................. 2,563,682 -- 943,156 --
General and administrative
expenses........................... 2,259,760 -- 1,819,884 244,846
----------------- ------------------ ------------ ------------
Loss from operations................ (1,954,654) -- (784,633) (244,846)
Interest expense (income)........... 283,222 -- (6,770) --
Financing expense................... 192,501 -- -- --
----------------- ------------------ ------------ ------------
Loss before income taxes............ (2,430,377) -- (777,863) (244,846)
Income tax benefit.................. 20,000 -- -- --
----------------- ------------------ ------------ ------------
Net loss............................ $ (2,410,377) $ -- $ (777,863) $ (244,846)
================= ================== ============ ============
Net loss per share.................. $ (1.03) $ -- $ (.10) $ (.12)
================= ================== ============ ============
Weighted average common stock
outstanding........................ 2,346,717 2,066,662 7,494,162 2,066,662
================= ================== ============ ============
</TABLE>

See accompanying notes.

F-4
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
NUMBER OF COMMON ADDITIONAL DEFERRED ACCUMULATED
SHARES STOCK PAID-IN CAPITAL COMPENSATION DEFICIT TOTAL
----------- --------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common
stock--July 1995 ............ 1,938,462 $19,385 $ 595 $ -- $ -- $ 19,980
----------- --------- --------------- -------------- -------------- --------------
Balance--December 31, 1995 ... 1,938,462 19,385 595 -- -- 19,980
Issuance of common stock:
Issuance to employee......... 50,000 500 118,750 (118,750) -- 500
Conversion of Debentures .... 666,662 6,667 1,993,333 -- -- 2,000,000
Public offering, net of
offering costs.............. 3,852,500 38,525 15,547,001 -- -- 15,585,526
Acquisition of Subsidiaries . 2,261,538 22,615 1,487,831 -- -- 1,510,446
Distribution to acquired
companies' stockholders...... -- -- (10,970,000) -- -- (10,970,000)
S corporation dividend of
subsidiary................... -- -- (382,311) -- -- (382,311)
Amortization of deferred
compensation................. -- -- -- 55,416 -- 55,416
Net loss for the year ended
December 31, 1996............ -- -- -- -- (2,410,377) (2,410,377)
----------- --------- --------------- -------------- -------------- --------------
Balance--December 31, 1996 ... 8,769,162 87,692 7,795,199 (63,334) (2,410,377) 5,409,180
Offering costs................ -- -- (131,128) -- -- (131,128)
Amortization of deferred
compensation................. -- -- -- 23,748 -- 23,748
Net loss for the three months
ended March 31, 1997......... -- -- -- -- (777,863) (777,863)
----------- --------- --------------- -------------- -------------- --------------
Balance--March 31, 1997
(unaudited).................. 8,769,162 $87,692 $ 7,664,071 $ (39,586) $(3,188,240) $ 4,523,937
=========== ========= =============== ============== ============== ==============
</TABLE>

See accompanying notes.

F-5
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM THREE MONTHS ENDED
JULY 11, 1995 MARCH 31,
YEAR ENDED (INCEPTION) TO --------------------------
DECEMBER 31, 1996 DECEMBER 31, 1995 1997 1996
----------------- ----------------- ------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.................................. $(2,410,377) $ -- $ (777,863) $(244,846)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation............................ 5,620 -- 8,156 --
Non-cash compensation................... 55,416 -- 23,748 --
Deferred income taxes................... (40,000) -- -- --
Changes in operating assets and
liabilities:
Accounts receivable.................... 974,169 -- (48,532) --
Due from related parties............... (67,810) -- 63,449 --
Due from Celebrity Golf Championship,
LLC .................................. -- -- 169,100 --
Prepaids and other current assets ..... (178,318) -- (441,387) --
Accounts payable and accrued
liabilities........................... (192,630) -- 169,226 50,819
Income taxes payable................... 20,250 -- (268,250) --
Other liabilities ..................... -- -- 14,800 --
----------------- ----------------- ------------- ------------
Net cash used in operating activities .... (1,833,680) -- (1,087,553) (194,027)
----------------- ----------------- ------------- ------------
INVESTING ACTIVITIES
Purchase of fixed assets.................. (122,422) -- (295,661) --
Other assets.............................. (44,760) -- (100,200) --
----------------- ----------------- ------------- ------------
Net cash used in investing activities .... (167,182) -- (395,861) --
----------------- ----------------- ------------- ------------
FINANCING ACTIVITIES
Proceeds from loans payable to related
parties.................................. 766,718 -- 69,950 225,000
Repayments of loans payable to related
parties.................................. (200,000) -- -- --
Proceeds from private placement........... 1,554,897 -- -- --
Issuance of common stock, net of offering
costs.................................... 15,586,026 19,980 (131,128) 500
Distribution to Subsidiary stockholders .. (9,000,000) -- -- --
Cash acquired through acquisition of
Subsidiaries............................. 503,767 -- -- --
Deferred advisory costs .................. -- -- (400,000) --
----------------- ----------------- ------------- ------------
Net cash provided by financing
activities............................... 9,211,408 19,980 (461,178) 225,500
Increase (decrease) in cash and cash
equivalents.............................. 7,210,546 19,980 (1,944,592) 31,473
Cash and cash equivalents at beginning of
period................................... 19,980 -- 7,230,526 19,980
----------------- ----------------- ------------- ------------
Cash and cash equivalents at end of
period................................... $ 7,230,526 $19,980 $ 5,285,934 $ 51,453
================= ================= ============= ============
</TABLE>

F-6
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM THREE MONTHS ENDED
JULY 11, 1995 MARCH 31,
YEAR ENDED (INCEPTION) TO -----------------------
DECEMBER 31, 1996 DECEMBER 31, 1995 1997 1996
----------------- ----------------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITIES:
Exchange of loans payable--related
parties for debentures................... $ 445,103 $-- $ -- $--
================= ================= =========== ===========
Conversion of debentures to common stock . $2,000,000 $-- -- --
================= ================= =========== ===========
Issuance of acquisition
indebtedness--stockholders............... $1,970,000 $-- -- --
================= ================= =========== ===========
S Corporation dividend payable............ $ 382,311 $-- -- --
================= ================= =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income taxes............................. $ -- $-- $268,250 --
================= ================= =========== ===========
Interest................................. $ 254,000 $-- -- --
================= ================= =========== ===========
</TABLE>

See accompanying notes.

F-7
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND 1997 IS UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS AND ORGANIZATION

The Marquee Group, Inc. (the "Company"), which began operations in 1996,
was organized in the State of Delaware on July 11, 1995 for the purpose of
providing integrated event management, televised production, marketing,
talent representation and consulting services in the sports, news and other
entertainment industries.

On December 12, 1996, the Company acquired by merger, concurrently with
the closing of its initial public offering ("IPO"), Sports Marketing &
Television International, Inc. ("SMTI") which provides production and
marketing services to sporting events, sports television shows and
professional and collegiate leagues and organizations and, Athletes and
Artists, Inc. ("A&A"), a sports and media talent representation firm. The
SMTI stockholders received cash of $6,500,000 from the proceeds of the IPO,
an additional $1,500,000 payable in five equal installments over five years
and 1,292,307 shares of the Company's common stock. The A&A stockholders
received cash of $2,500,000 from the proceeds of the IPO, miscellaneous
reimbursements of $80,000, an additional $1,000,000 payable in five equal
installments over five years and 969,231 shares of the Company's common
stock.

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of
the Company and its Subsidiaries from and after December 12, 1996. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

INTERIM FINANCIAL STATEMENTS

The unaudited interim information as of March 31, 1997 and for the three
months ended March 31, 1996 and 1997 has been prepared on the same basis as
the annual financial statements and, in the opinion of the Company's
management, reflects normal recurring adjustments necessary for a fair
presentation of the information for the periods presented. Interim results
are not necessarily indicative of results for a full year. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted.

REVENUE RECOGNITION

Fee revenue from television production services is recognized when the
program is available for broadcast. Licensing, sponsorship and merchandise
revenues are recognized for guaranteed amounts when contractual obligations
are met (subsequent royalties are recorded when received). Fee revenue from
advertising services is recognized in the month the advertisement is
broadcast or printed. Consulting revenue is recognized as services are
provided.

The Company recognizes talent representation commissions as income when
they become due to the Company under terms of the Company's representation
agreements with its clients. Generally, commissions are payable by clients
upon their receipt of payments for performance of services or upon the
delivery or use of material created by them. Commissions on profit or gross
receipt participations are recorded upon determination of the amounts.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and are depreciated on a
straight-line basis over their estimated useful lives ranging from five to
seven years. Leasehold improvements are amortized over the shorter of their
estimated useful lives or the remaining lease term.

F-8
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND 1997 IS UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
INCOME TAXES

The Company accounts for income taxes using the liability method.

CASH EQUIVALENTS

The Company considers all highly liquid financial instruments with a
maturity of three months or less when purchased to be cash equivalents.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash investments and
trade accounts receivable.

At March 31, 1997 and December 31, 1996, approximately 79% and 90%,
respectively, of the Company's cash and cash equivalents is invested with one
financial institution.

Concentrations of credit risk with respect to trade accounts receivable
are limited due to the large number of entities comprising the Company's
client base.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:

Loan payable to officer stockholder: The carrying amount of the Company's
borrowings under its long-term debt agreement approximates fair value.

Acquisition indebtedness--stockholders: The carrying amount of the
Company's borrowings under its long-term debt agreement approximates fair
value.

NET INCOME (LOSS) PER SHARE

Net income (loss) per share is based upon net income (loss) divided by
weighted average number of shares of common stock and common stock
equivalents outstanding during the year. Shares of common stock placed in
escrow upon completion of the IPO described in Note 6, which are common stock
equivalents, have been excluded from the calculation of earnings per share.
The shares of common stock issued upon the automatic conversion of the
debentures (see Note 5) are considered outstanding for all periods presented.
In addition, all shares have been adjusted to give effect to the stock split
discussed in Note 4.

Supplementary net loss per share would have been $(.83) for the year ended
December 31, 1996 if the debentures had been converted at the beginning of
the year.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share," which is required to be adopted in
December 1997. At that time the Company will be required

F-9
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND 1997 IS UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

to change the method currently used to compute earnings per share and to
restate all prior periods. The impact of Statement No. 128 on earnings per
share is not expected to be material.

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
-------------- -----------
(UNAUDITED)
<S> <C> <C>
Furniture and fixtures.................... $118,172 $121,123
Leasehold improvements.................... 79,413 372,123
Vehicles.................................. 26,639 26,639
-------------- -----------
224,224 519,885
Accumulated depreciation and
amortization............................. 5,620 13,776
-------------- -----------
$218,604 $506,109
============== ===========
</TABLE>

3. RELATED PARTY TRANSACTIONS

At March 31, 1997 and December 31, 1996, the Company has a loan payable of
$121,615 to an officer/stockholder which is due on January 1, 1998 with
interest at 12% per annum.

The Company provided services as a subcontractor for SMTI aggregating
$724,000, for the period from January 1, 1996 to December 12, 1996 (see Note
1), which are included in revenues in the accompanying consolidated statement
of operations.

4. STOCKHOLDERS' EQUITY

COMMON STOCK

On July 17, 1996, the Board of Directors and stockholders of the Company
approved an increase in the authorized capitalization of the Company to
25,000,000 shares of common stock, par value $.01 per share, and 5,000,000
shares of preferred stock, par value $.01 per share. Furthermore, in August
1996 the Board of Directors and the stockholders of the Company approved a
stock split whereby 999 shares of the 1,000 shares of common stock
outstanding at that time were split on the basis of approximately 1,940-for-1
and the remaining one share of common stock outstanding at that time was
split on the basis of 50,000-for-1. All share information in the financial
statements has been restated to reflect such stock split.

5. PRIVATE PLACEMENT

In August 1996, the Company issued debentures (the "Debentures"), in the
aggregate principal amount of $2,000,000, each Debenture consisted of $50,000
principal amount of 10% Convertible Debentures. Interest on the Debentures of
$254,000 was calculated for the period from the final closing of the Private
Placement to a date one year from the effective date of the Company's IPO.
The Debentures were automatically converted into units (see Note 6) identical
in all respects to those offered in the IPO at a rate of one unit for each
$3.00 principal amount of Debentures.

Stockholders of the Company and stockholders of the Subsidiaries purchased
an aggregate of $750,000 principal amount of Debentures, of which $445,103
was in exchange for existing indebtedness of the Company to such
stockholders. In addition, the Company repaid $125,000 to one of the officer/
stockholders from the proceeds of the private placement.

F-10
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND 1997 IS UNAUDITED)

6. INITIAL PUBLIC OFFERING AND ACQUISITIONS

In December 1996, the Company closed its IPO of 3,852,500 units (the
"Units"), each unit consisting of one share of common stock and one
redeemable warrant, at a price of $5.00 per Unit. Each warrant entitles the
holder to purchase one share of common stock at an exercise price of $7.50,
subject to adjustment, at any time until December 4, 2001. The warrants are
redeemable by the Company under certain circumstances at a redemption price
of $.05 per warrant.

The Company also granted to the underwriters or their designees options
(the "IPO Options") to purchase up to 335,000 Units. The Units purchaseable
upon exercise of the IPO Options are identical to the Units described above,
except that the underlying warrants are redeemable only by the Company under
limited circumstances. The IPO Options are exercisable during a three-year
period commencing two years from the date of the public offering at an
exercise price of $8.25, subject to adjustment in certain events.

Certain of the Company's stockholders and the stockholders of the
Subsidiaries have placed an aggregate of 1,275,000 of their shares of common
stock in escrow. These shares will not be assignable or transferable (but may
be voted) until such time as they are released from escrow based upon the
Company meeting certain annual earnings levels or the common stock attaining
certain price levels. All reserved shares remaining in escrow on March 31,
2000 will be forfeited and contributed to the Company's capital. In the event
the Company attains any of the earnings thresholds or stock prices providing
for the release of the escrow shares to the stockholders, the Company will
recognize compensation expense at such time based on the then fair market
value of the shares.

The acquisition by merger of the Subsidiaries was accounted for as a
consolidation at historical cost due to the significance of the equity
interests in the Company to be held by the stockholders of the Subsidiaries
following completion of the acquisitions. Accordingly, the acquired assets
and liabilities of the Subsidiaries were recorded at their historical
amounts. The capital stock of the Subsidiaries was included in additional
paid-in capital. In addition, the cash paid to the Subsidiaries' stockholders
was recorded as a dividend charged to additional paid-in capital.

SMTI was an S Corporation prior to the merger. The SMTI stockholders will
receive a distribution of $382,000 which represents 40% of the taxable
earnings of SMTI prior to the merger.

The following unaudited pro forma information presents the results of
operations of the Company as though the aforementioned acquisitions and the
completion of the IPO had occurred as of the beginning of 1996 and 1995.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------
1996 1995
------------- -------------
<S> <C> <C>
Pro forma revenue..................... $15,184,589 $10,341,827
============= =============
Pro forma net income (loss)........... $ (913,005) $ 789,773
============= =============
Pro forma net income (loss) per
share................................ $ (.12) $ .10
============= =============
Pro forma weighted average shares .... 7,494,162 7,494,162
============= =============
</TABLE>

F-11
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND 1997 IS UNAUDITED)

6. INITIAL PUBLIC OFFERING AND ACQUISITIONS (Continued)

Included in the above unaudited pro forma information are the historical
results of operations of SMTI and A&A for the years ended December 31, 1996
and 1995 as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
---------------------------
SMTI A&A
------------- -------------
<S> <C> <C>
Revenues................... $ 9,193,000 $ 4,103,000
Costs and expenses......... (8,055,000) (3,625,000)
------------- -------------
Income before income
taxes..................... 1,138,000 478,000
Income tax provision....... (112,000) (229,000)
------------- -------------
Net income................. $ 1,026,000 249,000
============= =============
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
---------------------------
SMTI A&A
------------- -------------
<S> <C> <C>
Revenues................... $ 6,495,000 $ 3,846,000
Costs and expenses......... (6,402,000) (3,770,000)
------------- -------------
Income before income
taxes..................... 93,000 76,000
Income tax provision....... (9,000) (77,000)
------------- -------------
Net income (loss).......... $ 84,000 $ (1,000)
============= =============
</TABLE>

In addition, the pro forma information for the years ended December 31,
1996 and 1995, include adjustments for the following transactions, as if they
had each occurred on January 1, 1995.

o The terms of new employment contracts with key executives of SMTI and
A&A provide for salaries which are $1,345,000 less than their
historical salaries for the year ended December 31, 1995 and the
reduction of benefit expenses of $140,000 for the termination of the
employee benefit plans. Pursuant to the acquisition agreements, the key
executives of SMTI and A&A have reduced their salaries and committed to
terminate the employee benefit plans for the year ended December 31,
1996 (therefore no pro forma adjustment is required); and

o At December 12, 1996, the date of the consummation of the IPO, the
status of SMTI as an S Corporation was terminated and accordingly, SMTI
is subject to federal and local income taxes. The pro forma statement
of operations reflect income taxes based upon the income of SMTI, as if
SMTI had not been an S Corporation.

7. INCOME TAXES

The income tax benefit for the year ended December 31, 1996 consists of:

<TABLE>
<CAPTION>
<S> <C>
Current:
Federal.......... $ --
State and local . $(20,000)
-----------
$(20,000)
-----------
Deferred:
Federal ......... 30,000
State and local 10,000
-----------
$ 40,000
-----------
$ 20,000
===========
</TABLE>

F-12
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND 1997 IS UNAUDITED)

7. INCOME TAXES (Continued)

A reconciliation of the federal statutory tax rate to the actual
effective rate for the year ended December 31, 1996 is as follows:

<TABLE>
<CAPTION>
<S> <C>
Statutory rate ....................................... (34.0)%
State and local income taxes, net of federal benefit .4
Valuation allowance................................... 31.8
Permanent differences................................. 1.0
---------
(.8)%
=========
</TABLE>

The net deferred tax liabilities is comprised of the following at December
31, 1996:

<TABLE>
<CAPTION>
<S> <C>
Cumulative effect of change in tax accounting basis ... $ (343,000)
Compensation expense deducted for tax purposes, not
for financial reporting purposes...................... (29,000)
Net operating losses................................... 1,051,000
Valuation allowance.................................... (1,022,000)
-------------
$ (343,000)
=============
</TABLE>

8. STOCK OPTION PLAN

The Company's Board of Directors has adopted and the stockholders have
approved the Company's 1996 Stock Option Plan (the "Plan"). The Plan provides
for the grant, at the discretion of the Board of Directors, of (i) options
that are intended to qualify as incentive stock options within the meaning of
Section 422A of the Internal Revenue Code to certain employees and
consultants and (ii) options not intended to so qualify. The total number of
shares of common stock for which options may be granted under the Plan is
500,000 shares. In October 1996, options to purchase an aggregate of 230,000
shares of common stock were granted under the Plan. Of such options, 100,000
were granted to 14 employees of the Company and have an exercise price of $5
per share, and 130,000 were granted to the Company's executive officers and
directors and have an exercise price of $6.25 per share. The options vest in
annual installments over the three to five year period commencing one year
from the date of grant. In June 1997, the Company granted an executive
officer options to purchase 7,500 shares of Common Stock at a price of $5.875
which vest over a three year period and expire in June 2002.

The Plan is administered by a Stock Option Committee (the "Committee")
which is appointed by the Board of Directors. The Committee determines who
among those eligible will be granted options, the time or times at which
options will be granted, the terms of the options, including the exercise
price, the number of shares subject to the options and the terms and
conditions of exercise.

The Company has elected to follow Accounting Principles Board opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
FASB Statement No. 123, "Accounting for Stock-Based Compensation," requires
use of options valuation models that were not developed for use in valuing
employee stock options. The exercise price of the Company's employee stock
options equals the market price of the underlying stock on the date of grant
and, therefore, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of
grant using a

F-13
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND 1997 IS UNAUDITED)

8. STOCK OPTION PLAN (Continued)

Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rates ranging from 5.45% to 6.18% and a
volatility factor of the expected market price of the Company's common stock
of .718. The weighted-average expected life of the options is 3.6 years.
Dividends are not expected in the future.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation models
require the input of highly subjective assumptions including the expected
stock price volatility. Because the Company's stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its
employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information for the year ended December 31, 1996 is as
follows:

<TABLE>
<CAPTION>
<S> <C>
Pro forma net loss .......... $ (2,453,995)
===============
Pro forma net loss per
share....................... $ (1.05)
===============
</TABLE>

The weighted average fair value of options granted during 1996 is $2.57.
The exercise prices for options outstanding as of December 31, 1996 ranged
from $5.00 to $6.25. The weighted average remaining contractual life of those
options is 9.75 years. At December 31, 1996 none of the options are
exercisable.

9. COMMITMENTS AND CONTINGENCIES

The Company leases office space under operating leases which expire
through 2008. These operating leases provide for basic annual rents plus
escalation charges. The aggregate future minimum lease payments required
under these leases are as follows:

<TABLE>
<CAPTION>
<S> <C>
1997......... $ 135,000
1998......... 404,000
1999......... 672,000
2000......... 696,000
2001......... 719,000
Thereafter .. 4,515,000
-----------
$7,141,000
===========
</TABLE>

The Company also rents office space on a month-to-month basis. Rent
expense amounted to $45,000, $12,000, and $74,000, respectively, for the year
ended December 31, 1996, for the three months ended March 31, 1996 and 1997.

During March 1996, the Company entered into a five-year employment
agreement with a key executive that provides for an annual base salary plus
bonus aggregating $475,000. During December 1996 the Company entered into
five-year employment agreements with four key executives that provide for an
annual base salaries aggregating $1,075,000.

During May 1996, the Company entered into a three-year employment
agreement with a key executive that provides for an annual base salary
ranging from $250,000 to $350,000. Upon entering into the employment
agreement, the Company issued one share of common stock to this employee.

F-14
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND 1997 IS UNAUDITED)

9. COMMITMENTS AND CONTINGENCIES (Continued)

Furthermore, the Company agreed that prior to the IPO the employee's one
share would be converted into 50,000 shares of common stock, contingent upon
the employee remaining with the Company for fifteen months. The Company will
recognize non-cash compensation expense of $118,750 over the vesting period.
The Company recognized non-cash compensation expense of $55,416 in 1996,
which is included in general and administrative expense in the accompanying
consolidated statement of operations.

During August 1996, the Company entered into a six-year consulting
agreement with Sillerman Communications Management Corporation ("SCMC"),
which is controlled by Robert F.X. Sillerman, the Chairman of the Company and
the controlling stockholder of The Sillerman Companies, Inc., a principal
stockholder of the Company, that provides for a monthly fee of $30,000
commencing in September 1997. The monthly fee shall be increased annually by
the percentage increase in the consumer price index.

In February 1997, the Company paid to SCMC the sum of $400,000 as an
advance against investment advisory services to be provided in connection
with certain identified acquisition opportunities.

In March 1997, SCMC assigned its rights, obligations, and duties under the
consulting agreement to The Sillerman Companies, Inc.

The Company is subject to certain legal proceedings and claims which have
arisen in the ordinary course of its business. In the opinion of management,
settlement of these actions, when ultimately concluded, will not have a
material adverse effect on the results of operations, cash flows or the
financial condition of the Company.

10. INVESTMENT IN JOINT VENTURE

SMTI and NBC formed a limited liability corporation, Celebrity Golf
Championship, LLC ("CGC") the purpose of which is to conduct the annual
golfing tournament currently known as The Celebrity Golf Championship.
Earnings are allocated 75% to NBC and 25% to SMTI in accordance with the LLC
agreement. All profits from CGC are distributed.

Condensed financial information of CGC at December 31, 1996 is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1996 1995
------------- -------------
<S> <C> <C>
Revenues........... $ 2,743,700 $ 2,875,600
Costs and
expenses.......... (2,067,400) (1,928,300)
------------- -------------
Net income......... $ 676,300 $ 947,300
============= =============
</TABLE>

11. SUBSEQUENT EVENTS (UNAUDITED)

In June and July 1997, the Company entered into agreements to acquire
approximately 94% of the capital stock of ProServ, Inc. and ProServ
Television, Inc. for an aggregate purchase price of $10,100,000 in cash, and
the issuance of 225,000 shares of common stock. The Company anticipates
acquiring the remaining minority interest in ProServ for an aggregate
purchase price of $609,000.

In July 1997, the Company entered into an agreement to acquire
substantially all the assets of QBQ Entertainment, Inc. for an aggregate
purchase price of $3.1 million in cash, $1.6 million payable over eight years
and $2.5 million payable in shares of common stock, of which shares relating
to up to $500,000 are subject to an escrow agreement.

F-15
<PAGE>
THE MARQUEE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1996 AND 1997 IS UNAUDITED)

11. SUBSEQUENT EVENTS (UNAUDITED) (Continued)

In July 1997, the Company commenced a tender offer to purchase up to all
(but not less than 3,200,000, representing 70.8%) of the 4,519,162
outstanding warrants at a cash purchase price of $2.25 per warrant.

The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2 in July 1997 in order to register for
sale 8,625,000 shares of its common stock including 1,125,000 shares for
Underwriter's over-allotment. The proceeds of the proposed stock offering
will be used to fund the cash portion of the acquisitions described above,
certain debt, the tender offer, working capital and other general corporate
purposes.

F-16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders of
ProServ, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of ProServ,
Inc. and Subsidiaries as of December 31, 1996 and the related consolidated
statements of operations, stockholders' equity (deficit) and cash flows for
the years ended December 31, 1996 and 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of ProServ,
Inc. and Subsidiaries as of December 31, 1996, and the consolidated results
of their operations and their cash flows for the years ended December 31,
1996 and 1995, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Washington, D.C.
June 25, 1997

F-17
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1997
-------------- --------------
1996 (UNAUDITED)
--------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 168,295 $ 925,320
Restricted cash....................................... -- 207,955
Accounts receivable, net.............................. 3,241,184 3,222,084
Prepaid expenses and other current assets............. 158,364 180,212
-------------- --------------
Total current assets................................... 3,567,843 4,535,571
Property and equipment, net ........................... 468,444 462,491
Noncurrent accounts receivable......................... 1,228,206 1,182,305
Other assets........................................... 76,426 42,827
-------------- --------------
Total assets........................................... $ 5,340,919 $ 6,223,194
============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of notes payable...................... $ 900,000 $ 1,117,500
Accounts payable...................................... 1,104,623 1,979,139
Accrued expenses...................................... 1,003,968 620,736
Income tax payable.................................... 48,290 78,310
Production rights payable............................. 42,741 80,433
Accounts payable--clients............................. -- 207,955
Deferred revenue...................................... 659,386 1,438,246
Deferred income taxes................................. 259,000 259,000
-------------- --------------
Total current liabilities.............................. 4,018,008 5,781,319
Notes payable.......................................... 650,000 650,000
Deferred rent.......................................... 875,778 826,252
-------------- --------------
Total liabilities...................................... 5,543,786 7,257,571
-------------- --------------
Commitments and contingencies
Stockholders' deficit:
Class A preferred stock, $1,000 par value--2,000
shares authorized; 600 shares issued and
outstanding.......................................... 600,000 600,000
Common stock, $1.00 par value--20,000 shares
authorized; 1,250 shares issued and outstanding .... 1,250 1,250
Additional paid-in capital............................ 3,571,692 3,571,692
Unearned compensation................................. (341,369) (285,834)
Accumulated deficit................................... (4,232,051) (5,113,512)
Cumulative translation adjustment..................... 197,611 192,027
-------------- --------------
Total stockholders' deficit............................ (202,867) (1,034,377)
-------------- --------------
Total liabilities and stockholders' deficit............ $ 5,340,919 $ 6,223,194
============== ==============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-18
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH
YEAR ENDED DECEMBER 31, 31,
----------------------------- --------------------------
1996 1995 1997 1996
-------------- -------------- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating revenue....................... $13,387,810 $17,792,247 $1,369,260 $ 1,449,768
Operating expenses...................... 10,130,353 11,926,379 1,231,404 1,495,116
General and administrative expenses .... 5,000,927 6,581,388 959,949 1,162,012
Restructuring costs..................... 565,000 -- -- --
Legal settlement........................ -- 300,000 -- --
Loss on sublease........................ -- 293,832 -- --
-------------- -------------- ------------ -------------
Loss from operations.................... (2,308,470) (1,309,352) (822,093) (1,207,360)
Interest expense, net................... 208,691 190,967 29,348 46,825
Equity in loss of joint venture......... -- (6,927) -- --
Gain on sale of joint venture interest -- 67,763 -- --
-------------- -------------- ------------ -------------
Loss before income taxes................ (2,517,161) (1,439,483) (851,441) (1,254,185)
Provision (benefit) for income taxes ... 239,824 (1,126) 30,020 (23,000)
-------------- -------------- ------------ -------------
Net loss................................ $(2,756,985) $(1,438,357) $ (881,461) $(1,231,185)
============== ============== ============ =============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-19
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE
PREFERRED COMMON PAID-IN TREASURY UNEARNED ACCUMULATED TRANSLATION
STOCK STOCK CAPITAL STOCK COMPENSATION DEFICIT ADJUSTMENT TOTAL
----------- ---------------------- ---------------------- ---------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 . $600,000 $1,000 $ 248,041 $(218,020) $ (59,778) $ (36,709) $141,468 $ 676,002
Net loss.................. -- -- -- -- -- (1,438,357) -- (1,438,357)
Treasury stock reissued
under restricted
purchase................. -- -- -- 218,020 (218,020) -- -- --
Amortization of unearned
compensation............. -- -- -- -- 164,937 -- -- 164,937
Foreign currency
translation adjustment .. -- -- -- -- -- -- 107,332 107,332
----------- ---------------------- ---------------------- ---------------------- -----------
Balance, December 31,
1995 .................... 600,000 1,000 248,041 -- (112,861) (1,475,066) 248,800 (490,086)
Net loss.................. -- -- -- -- -- (2,756,985) -- (2,756,985)
Issuance of stock
options.................. -- -- 323,901 -- (323,901) -- -- --
Issuance of common stock . -- 250 2,999,750 -- -- -- -- 3,000,000
Amortization of unearned
compensation............. -- -- -- -- 95,393 -- -- 95,391
Foreign currency
translation adjustment .. -- -- -- -- -- -- (51,189) (51,189)
----------- ---------------------- ---------------------- ---------------------- -----------
Balance, December 31,
1996 .................... 600,000 1,250 3,571,692 -- (341,369) (4,232,051) 197,611 (202,867)
Net loss.................. -- -- -- -- -- (881,461) -- (881,461)
Amortization of unearned
compensation............. -- -- -- -- 55,535 -- -- 55,535
Foreign currency
translation adjustment .. -- -- -- -- -- -- (5,584) (5,584)
----------- ---------------------- ---------------------- ---------------------- -----------
Balance, March 31, 1997
(unaudited).............. $600,000 $1,250 $3,571,692 $ -- $(285,834) $(5,113,512) $192,027 $(1,034,377)
=========== ====================== ====================== ====================== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-20
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED MARCH
DECEMBER 31, 31,
---------------------------
1996 1995 1997 1996
-------------- -------------- ------------ --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss .................................................... $(2,756,985) $(1,438,357) $(881,461) $(1,231,185)
Adjustments to reconcile net (loss) income to net cash used
in operating activities:
Depreciation ............................................... 181,048 152,349 20,723 28,947
Deferred income taxes ...................................... 77,000 (288,119) -- --
Provision for bad debts .................................... 537,820 385,616 -- --
Amortization of unearned compensation ...................... 95,393 164,937 55,535 22,000
Equity in loss of investee ................................. -- 6,927 -- --
Gain on distribution from joint venture .................... -- (67,763) -- --
Realized gain on sale of marketable securities ............ -- (4,511) -- --
Changes in assets and liabilities:
Restricted cash ........................................... (332,999) (31,886) (208,220) 83,150
Accounts receivable ....................................... (256,278) 466,686 20,150 (27,555)
Income tax receivable ..................................... 83,175 143,959 -- --
Prepaid expenses and other current assets ................. 233,664 (74,220) (21,848) (15,000)
Noncurrent accounts receivable ............................ 410,016 445,949 45,901 102,504
Other assets .............................................. (6,202) 37,275 33,599 (1,550)
Accounts payable .......................................... (702,583) 212,128 866,055 112,958
Accrued expenses .......................................... 21,551 35,000 (383,232) 10,000
Income tax payable ........................................ (47,869) 96,159 30,020 (23,000)
Production rights payable ................................. (12,573) (522,327) 37,692 45,000
Deferred revenue .......................................... (211,276) (1,109,279) 778,860 735,675
Deferred rent ............................................. (172,879) 263,036 (49,526) (43,200)
Accounts payable-clients .................................. 332,999 31,886 208,220 (83,150)
-------------- -------------- ------------ --------------
Net cash (used in) provided by operating activities ..... (2,526,978) (1,094,555) 552,468 315,594
-------------- -------------- ------------ --------------
Cash flows from investing activities:
Proceeds from sale of marketable securities ................. -- 216,590 -- --
Purchases of property and equipment.......................... (74,297) (142,609) (14,770) (19,000)
Investment in joint venture ................................. (10,836) (89,164) -- (10,836)
-------------- -------------- ------------ --------------
Net cash used in investing activities .................... (85,133) (15,183) (14,770) (29,836)
-------------- -------------- ------------ --------------
Cash flows from financing activities:
Proceeds from issuance of capital stock ..................... 3,000,000 -- -- --
Proceeds from notes payable ................................. 1,250,000 2,460,000 217,500 200,000
Payments on notes payable ................................... (1,800,000) (1,822,500) -- --
-------------- -------------- ------------ --------------
Net cash provided by financing activities ................ 2,450,000 637,500 217,500 200,000
-------------- -------------- ------------ --------------
Effect of exchange rate changes on cash and cash equivalents 47,626 30,090 1,827 12,221
-------------- -------------- ------------ --------------
Increase (decrease) in cash and cash equivalents ............ (114,485) (442,148) 757,025 497,979
Cash and cash equivalents, beginning of period ............... 282,780 724,928 168,295 282,780
-------------- -------------- ------------ --------------
Cash and cash equivalents, end of period ..................... $ 168,295 $ 282,780 $ 925,320 $ 780,759
============== ============== ============ ==============
Supplemental disclosure of cash flow information:
Cash paid during the year for income taxes, net of refunds . $ 127,518 $ 61,930 $ -- $ --
============== ============== ============ ==============
Cash paid during the year for interest ...................... $ 224,461 $ 181,106 $ 29,348 $ 46,825
============== ============== ============ ==============
Noncash investing and financing activities:
Issuance of treasury stock for restricted stock award ...... $ -- $ 218,020 $ -- $ --
============== ============== ============ ==============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-21
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

ProServ, Inc. and Subsidiaries (the Company) is an international
corporation operating as one segment in the business of sports marketing. The
Company provides career management and advisory services to professional
athletes and also engages in sports event management and promotion,
production and distribution of television sports broadcasting, and corporate
sports consulting. The Company conducts its business principally in North
America and Europe.

The Company experienced negative cash flow from operations during the
years ended December 31, 1996 and 1995, and the Company has been reliant on
financing activities to fund its operations. As further described in Note 4,
the Company has certain lines of credit available to fund working capital
through May 31, 1998. In management's opinion, the Company has sufficient
financing available to meet its current obligations as they come due.

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the
Company's wholly-owned subsidiaries and a partially owned subsidiary in which
the Company has a controlling financial interest through its direct and
indirect ownership. The following entities are included in the consolidated
financial statements:

o ProServ, Inc.

o ProServ Europe

o ProServ, U.K.

o ProServ Financial Services, Inc.

o ProServ Television, Inc.

The above subsidiaries are wholly-owned except for ProServ Television,
Inc. (ProServ TV), which is 49% owned by the Company and 51% owned by an
officer/majority shareholder of the Company. The 51% ownership is accounted
for as a minority interest in the accompanying consolidated financial
statements. As of December 31, 1996 and March 31, 1997, there is no minority
interest liability. All significant intercompany balances and transactions
have been eliminated in consolidation.

INVESTMENT IN JOINT VENTURE

The Company accounts for its investment in joint venture (see Note 9)
under the equity method. Under this method, the original investment is
recorded at cost and adjusted by the Company's share of undistributed
earnings of the joint venture. The investment balance is further adjusted for
additional investments in and cash distributions from the joint venture.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingencies at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.

REVENUE RECOGNITION

The Company's revenues arise primarily from a percentage fee or
commissions received for performing services. The Company recognizes revenue
when services have been performed. Fees or

F-22
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

commissions collected in advance for services to be performed in subsequent
years are recorded on the accompanying consolidated balance sheets as
deferred revenue. Deferred revenue is recognized when the event is held or
the Company's client performs under the related contract. Revenue associated
with television event production is recorded net of fees payable to the
related events. All recognized but unpaid fees are included in the
accompanying consolidated balance sheets as production rights payable. The
Company manages or represents various sporting events and has an ownership
interest in certain of these events. Revenues and expenses from these events
are recognized on the accrual basis.

CASH EQUIVALENTS

Short-term investments with an original maturity of three months or less
are considered to be cash equivalents.

RESTRICTED CASH

The Company collects endorsement fees, special appearance fees, and
tournament earnings on behalf of its clients. These funds are held in
separate bank accounts pending disbursement to the individual clients. These
cash balances are reflected separately on the accompanying consolidated
balance sheets as restricted cash with a corresponding accounts payable to
clients.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded net of an allowance for doubtful accounts
of $577,650 and $569,738 at December 31, 1996 and March 31, 1997,
respectively.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of cash and cash equivalents
and accounts receivable. The Company deposits its cash and cash equivalents
in two financial institutions which are insured by the Federal Depository
Insurance Corporation (FDIC). The Company has not experienced any losses on
these balances to date. In addition, the Company maintains a repurchase
agreement with one of the financial institutions, in which excess funds are
deposited by the financial institution in an overnight investment account.
The Company establishes an allowance for doubtful accounts based upon factors
surrounding the credit risk of specific clients, historical trends and other
information.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial instruments including cash and cash
equivalents, restricted cash, accounts receivable, notes payable and accounts
payable approximate fair value as of December 31, 1996 and March 31, 1997
because of the relatively short maturity of these instruments. The carrying
value of noncurrent receivables approximates fair value as of December 31,
1996 and March 31, 1997 based on discounted future cash flows using a
discount rate that approximates the current interest rate available from the
Company's financial institutions.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets,
ranging from five to fifteen years. Leasehold improvements are amortized over
the remaining lease term using the straight-line method. Upon retirement or
disposition of property and equipment, the cost and accumulated depreciation
are removed from the accounts and any resulting gain or loss is reflected in
operations.

F-23
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

INCOME TAXES

ProServ, Inc. and ProServ Financial Services, Inc. file a consolidated
Federal income tax return. ProServ TV files separate Federal and state
returns and ProServ Europe and ProServ U.K. file separate tax returns in
their respective tax jurisdictions. The Company accounts for income taxes
utilizing the liability method. Deferred income taxes are recognized for the
tax consequences in future years for differences between the tax bases of
assets and liabilities and their financial reporting amounts at each year
end, based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized. The provision for income taxes
is the current tax expense for the period plus the change during the period
in deferred tax assets and liabilities.

STOCK OPTIONS

In October 1995, the Financial Accounting Standards Board issued SFAS 123,
"Accounting for Stock-Based Compensation." SFAS 123 is effective for the year
ended December 31, 1996. SFAS 123 permits companies to account for stock
based compensation based on the provisions prescribed in SFAS 123 or based on
the authoritative guidance in Accounting Principles Board Opinion No. 25
("APB 25"), "Accounting for Stock Issued to Employees." The Company has
elected to continue to account for its stock based compensation in accordance
with APB 25, however, as required by SFAS 123, the Company has disclosed the
pro forma impact on the financial statements assuming the recognition
provisions of SFAS No. 123 had been adopted.

CURRENCY TRANSLATION

The assets and liabilities of the Company's foreign subsidiaries are
translated at the exchange rates in effect on the reporting date and revenues
and expenses are translated at the weighted average exchange rate in effect
during the period. Adjustments resulting from these translations are included
as a separate component of stockholders' equity.

UNAUDITED INTERIM FINANCIAL INFORMATION

The interim financial information as of March 31, 1997 and for the three
months ended March 31, 1997 and 1996 is unaudited. The unaudited interim
financial statements reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly present
the results of operations, changes in cash flows and financial position as of
and for the periods presented. The unaudited interim financial information
should be read in conjunction with the audited financial statements and
related notes thereto. The results for the interim periods presented are not
necessarily indicative of results to be expected for the full year.

F-24
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
-------------- -------------
(UNAUDITED)
<S> <C> <C>
Office equipment ................................ $ 1,651,915 $ 1,666,685
Leasehold improvements .......................... 264,639 264,639
Tape library .................................... 229,813 229,813
-------------- -------------
2,146,367 2,161,137
Less: accumulated depreciation and amortization (1,677,923) (1,698,646)
-------------- -------------
$ 468,444 $ 462,491
============== =============
</TABLE>

Depreciation and amortization expense was $181,048 and $152,349 for the
years ended December 31, 1996 and 1995, respectively and $20,723 and $28,947
for the three months ended March 31, 1997 and 1996, respectively.

3. NONCURRENT ACCOUNTS RECEIVABLE

Noncurrent accounts receivable include certain contractually earned
amounts for which there is no future performance required by the Company and
outstanding loans that will not be collected within one year from the balance
sheet date. Amounts to be collected during the twelve months subsequent to
December 31, 1996 are included in accounts receivable. The noncurrent
accounts receivable are reflected at the present value of future receipts
based on the discount rate prevailing on the date upon which the earnings
process is complete and are recorded net of an unamortized discount of
approximately $872,000 and $854,000 as of December 31, 1996 and March 31,
1997, respectively. Interest resulting from the amortization of the discount,
which is included in operating revenues, was approximately $80,000 and
$129,000 for the years ended December 31, 1996 and 1995, respectively and
approximately $18,000 and $30,000 for the three months ended March 31, 1997
and 1996, respectively. Based on the present value at December 31, 1996 of
future cash receipts, the noncurrent accounts receivable will be realized
over the next five years and thereafter as follows:

<TABLE>
<CAPTION>
<S> <C>
1997.................. $ 482,559
1998.................. 534,836
1999.................. 52,695
2000.................. 11,724
2001.................. 12,566
Thereafter............ 616,385
-----------
1,710,765
Less: current
portion.............. (482,559)
-----------
Total................ $1,228,206
===========
</TABLE>

F-25
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

4. NOTES PAYABLE

Notes payable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
-------------- -------------
(UNAUDITED)
<S> <C> <C>
Lines of credit....... $1,450,000 $ 1,667,500
Term notes payable ... 100,000 100,000
-------------- -------------
Total notes payable . 1,550,000 1,767,500
Less: current
portion.............. (900,000) (1,117,500)
-------------- -------------
Noncurrent portion .. $ 650,000 $ 650,000
============== =============
</TABLE>

LINES OF CREDIT

The Company maintains three lines of credit providing an aggregate working
capital facility of $1,850,000, of which $1,450,000 and $1,467,500 was
outstanding as of December 31, 1996 and March 31, 1997, respectively.
Specific descriptions of these lines of credit are set forth below.

The Company maintains two of its lines of credit with one financial
institution for an aggregate working capital facility of up to $1,100,000.
Total amounts outstanding under these lines of credit were $700,000 and
$717,500 at December 31, 1996 and March 31, 1997, respectively. Interest
payments are due monthly on these facilities at the bank's prime rate (8.25%
at December 31, 1996 and March 31, 1997, respectively). These lines of credit
are collateralized by substantially all of the Company's assets and certain
future contract rights and are guaranteed by a shareholder of the Company.
One of the lines maintained by ProServ TV is also guaranteed by ProServ, Inc.
The line of credit agreements contain certain restrictive covenants,
including a minimum cash flow coverage requirement, a minimum net worth
requirement and restrictions on incurring additional indebtedness and issuing
shares of common stock. As of December 31, 1996, the Company was not in
compliance with these covenants but received a waiver from the bank related
to each covenant violation. These facilities expired on May 31, 1997. On June
17, 1997, the Company renegotiated these lines of credit. The lines were
combined into one $1,100,000 line of credit with a maturity date of May 31,
1998. The revised line of credit agreement requires a principal payment of
$550,000 on the earlier of October 15, 1997 or the closing of a definitive
purchase and sale agreement (the Agreement) between the majority shareholder
of the Company and The Marquee Group (see Note 10) and a principal payment on
the earlier of October 30, 1997 or 15 days after the closing of the
Agreement. All other terms of the previous lines of credit remain the same.

The Company has an additional line of credit at another bank that provides
for a working capital facility of up to $750,000, all of which was
outstanding, as of December 31, 1996 and March 31, 1997. Interest payments
were due monthly on this facility at the prime rate as published in the Wall
Street Journal (8.25% at December 31, 1996 and March 31, 1997). This line of
credit expired on December 31, 1996. The Company subsequently renegotiated
this line of credit, and the resulting new terms include a scheduled
principal payment of $150,000 on or before September 30, 1997 with the
remaining outstanding balance due May 31, 1998. The terms of the renegotiated
line of credit terms included an increase in the maximum principal available
on the line of credit to $1,000,000 and an increased interest rate of prime
(as published in the Wall Street Journal) plus 1%. This line is
collateralized by the rights to the Company's earnings generated by an
agreement related to a specific Company sponsored event, earnings generated
from certain ongoing management contracts, the rights to certain cash flow
generated from the Company's team sports operations and certain royalties
received by the Company pursuant to a specific contract. The line is also
guaranteed by a shareholder of the Company. The line contains certain
restrictive covenants,

F-26
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

4. NOTES PAYABLE (Continued)

including a requirement that the Company maintain thirty consecutive days
with a zero balance on this line. The Company was not in compliance with this
covenant as of December 31, 1996, but received a waiver from the bank related
to this covenant violation.

During 1996, the Company borrowed an additional $482,500 from this
financial institution. Interest payments were due monthly on this facility at
the prime rate (as published in the Wall Street Journal) plus 2%. This loan
was repaid in full during July 1996.

The majority shareholder of the Company also entered into a line of credit
agreement with a third financial institution during 1996. This line provides
the Company with up to $600,000 in borrowings, none of which was outstanding
at December 31, 1996 and $200,000 of which was outstanding at March 31, 1997.
Interest payments are due monthly at the bank's prime rate (8.50% at December
31, 1996 and March 31, 1997) plus 50%, and this line expires July 31, 1997.
This line is collateralized by the majority shareholder's primary residence.
The Company and the majority shareholder are currently in negotiations with
this financial institution regarding the extension of this line of credit.

The weighted average interest rate on short term borrowings was
approximately 8.75% and 9.25% for the years ended December 31, 1996 and 1995,
respectively and approximately 8.75% and 8.45% for the three months ended
March 31, 1997 and 1996, respectively.

TERM NOTES PAYABLE

The Company maintains a term note payable with a financial institution
with quarterly principal payments and monthly interest payments at the bank's
prime rate (8.25% at December 31, 1996 and March 31, 1997). The note is
collateralized by substantially all of the Company's assets as well as
certain future contract rights and is guaranteed by a shareholder of the
Company. This note expires on July 31, 1997. The term notes payable agreement
contain certain restrictive covenants including a minimum cash flow coverage
requirement, a minimum net worth requirement, and restrictions on incurring
additional indebtedness and issuing common stock. As of December 31, 1996,
the Company was not in compliance with these covenants but received a waiver
from the bank related to each covenant violation.

5. INCOME TAXES

The components of the provision (benefit) for income taxes were as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER THREE MONTHS
31, ENDED MARCH 31,
---------------------- ---------------------
1996 1995 1997 1996
---------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current:
Federal .. $123,116 $ 220,340 $27,000 $(20,000)
State...... 39,708 41,313 3,020 (3,000)
Foreign.... -- 25,340 -- --
---------- ----------- --------- -----------
162,824 286,993 30,020 (23,000)
---------- ----------- --------- -----------
Deferred
Federal.... -- (276,119) -- --
State...... -- (12,000) -- --
Foreign.... 77,000 -- -- --
---------- ----------- --------- -----------
77,000 (288,119) -- --
---------- ----------- --------- -----------
Total..... $239,824 $ (1,126) $30,020 $(23,000)
========== =========== ========= ===========
</TABLE>

F-27
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

5. INCOME TAXES (Continued)

Although the Company has a loss before income taxes on a consolidated
basis for the years ended December 31, 1996 and 1995, ProServ TV has
generated taxable income for both of those years, giving rise to the current
provision. The Company's consolidated provision (benefit) for income taxes
differs from the provision (benefit) that would have resulted from applying
the federal statutory rates to net income before taxes. The reasons for these
differences are as follows:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------- -------------------------
1996 1995 1997 1996
------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
(Benefit) provision based upon Federal
statutory rate of 34%................... $ (855,835) $(489,424) $(289,490) $(426,423)
State tax provision--ProServ TV.......... 20,000 28,432 3,000 (2,400)
IRS contingency (see Note 7)............. -- 57,000 -- --
Increase in deferred tax asset valuation
allowance............................... 1,054,000 312,000 320,000 400,000
French tax audit (see Note 7)............ 77,000 -- -- --
Other.................................... (55,341) 90,866 (3,490) 5,823
------------ ------------ ------------ ------------
$ 239,824 $ (1,126) $ 30,020 $ (23,000)
============ ============ ============ ============
</TABLE>

The sources and tax effects of temporary differences which give rise to
deferred tax assets (liabilities) are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
-------------- -------------
(UNAUDITED)
<S> <C> <C>
Deferred tax assets:
Net operating loss
carryforwards.................... $ 1,244,000 $ 1,564,000
AMT credit carryforwards......... 109,000 109,000
Deferred rent.................... 333,000 320,000
Accrued liabilities.............. 302,000 300,000
Foreign tax credit
carryforwards.................... 360,000 360,000
-------------- -------------
2,348,000 2,653,000
Less: valuation allowance........ (1,726,000) (2,046,000)
-------------- -------------
Total deferred tax assets........ 622,000 607,000
-------------- -------------
Deferred tax liabilities:
Property and equipment........... (80,000) (80,000)
Accounts receivable.............. (535,000) (520,000)
IRS contingency.................. (182,000) (182,000)
French Tax Audit................. (77,000) (77,000)
Other............................ (7,000) (7,000)
-------------- -------------
Total deferred tax liabilities .. (881,000) (866,000)
-------------- -------------
Net deferred tax liability ...... $ (259,000) $ (259,000)
============== =============
</TABLE>

As of December 31, 1996 and March 31, 1997, the Company had foreign tax
credit carryforwards (FTC's) of $360,000 expiring in 1997. Utilization of the
FTC's is subject to certain limitations, including the generation of future
foreign source taxable income, the effective tax rate on such income and the
amount of future U.S. taxable income. Based on the expiration of the FTC's in
1997, their recoverability is doubtful; therefore, a valuation allowance has
been established for the full amount of these FTC's at December 31, 1996 and
March 31, 1997. The $1,054,000 increase in the valuation allowance at
December 31, 1996 relates primarily to the Company's net operating loss
carryforwards generated during 1996.

F-28
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

5. INCOME TAXES (Continued)

The Company has approximately $3,054,000 in domestic net operating loss
carryforwards and approximately $220,000 in foreign net operating loss
carryforwards. The realizability of the deferred tax asset generated from
these operating loss carryforwards is dependent upon future taxable income
generated by the entity to which the operating loss carryforwards relate. The
Company's net operating loss carryforwards expire as follows:

6. RESTRUCTURING COSTS

During 1996, the Company incurred $565,000 in restructuring costs related
to closing down the Paris office of ProServ Europe. Included in these costs
were approximately $432,000 in severance, resulting from the termination of
16 employees and $133,000 in other miscellaneous costs. There were no
significant accrued expenses resulting from this restructuring included in
the consolidated balance sheet as of December 31, 1996.

7. COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company rents all of its space under operating leases, primarily a
twelve-year lease that expires in May 2001. The terms of this lease included
a waiver of rental payments for the first year of the lease term and
scheduled rent increases at specified intervals during the twelve year term
of the lease. The Company is recognizing rent expense on a straight-line
basis over the life of the lease, giving rise to deferred rent. The rental
payments prescribed in the lease are also subject to changes resulting from
changes in the consumer price index. During 1995, the Company entered into an
agreement with the lessor resulting in a reduction of the space under lease
and a corresponding reduction in annual rental payments. In connection with
this agreement and in connection with a sublease entered into during 1995,
the Company recorded a non-cash loss of $293,832 in the consolidated
statement of operations for the year ended December 31, 1995. The loss
reflects the Company's future lease commitments for space for which no future
benefit to the Company is anticipated. Aggregate future minimum rental
payments, net of noncancelable subleases, greater than one year as of
December 31, 1996, are as follows:

<TABLE>
<CAPTION>
RENTAL SUBLEASE
PAYMENTS INCOME NET
------------ ---------- -----------
<S> <C> <C> <C>
1997 ... $ 825,501 $169,057 $ 656,444
1998 ... 838,869 182,511 656,358
1999 ... 847,086 186,161 660,925
2000 ... 844,548 189,884 654,664
2001 ... 351,895 80,166 271,729
------------ ---------- -----------
$3,707,899 $807,779 $2,900,120
============ ========== ===========
</TABLE>

Rent expense, net of sublease income of $160,902 and $11,572, was $740,444
and $1,321,612 for the years ended December 31, 1996 and 1995, respectively.
Rent expense, net of sublease income of $40,806 and $39,935, was $128,593 and
$183,546 for the three months ended March 31, 1997 and 1996, respectively.

F-29
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

7. COMMITMENTS AND CONTINGENCIES (Continued)

OTHER CONTRACTUAL COMMITMENTS

The Company has entered into employment agreements with certain key
officers of the Company. These employment agreements set forth salary terms
and provide for the issuance of restricted common stock of the Company that
will be released to the officers at specified dates if the officers remain
with the Company. Unearned compensation, representing the difference between
the price of the restricted stock issued to the officers and the estimated
fair value of the stock on the effective date of the agreements, is amortized
over the stated period of performance. Amortization of unearned compensation,
which represents non-cash charge, was $95,393 and $164,937 for the years
ended December 31, 1996 and 1995, respectively.

During 1996, one of the employment agreements with an officer of the
Company was revised. The terms of this revised agreement include a reduction
in the period of performance associated with the restricted common stock
mentioned above and certain bonus provisions based on the achievement of
specific criteria set forth in the agreement. Additionally, the officer was
granted options to purchase 50 shares of the Company's common stock at an
exercise price of $2,585 per share. Twenty-five of these options will vest on
December 31, 1997 and the remaining 25 options will vest on December 31,
1998. All 50 options were outstanding and there were none exercisable as of
December 31, 1996. The fair value of these options, which was determined
using the Black-Scholes Valuation method, was $10,042 per share on the date
of grant, and the assumptions used to estimate the fair value were as
follows: risk-free interest rate 5.71%; expected term of 5 years; expected
volatility of 0%; and dividend yield of 0%. The remaining contractual life of
these options was 4.8 years as of December 31, 1996. Had the recognition
provisions of SFAS 123 been implemented and this compensation cost recorded
based on the fair value of the stock options at the date of grant, the
Company's net loss would have been $(2,771,000).

Subsequent to December 31, 1996, an employment agreement with a second key
officer was revised. This revised employment agreement included the grant of
options to purchase 30 shares of the Company's common stock that will vest at
specified dates in 1997 and 1998 based on the achievement of certain
performance criteria.

In the normal course of business, the Company enters into certain
contracts in which specified revenue levels are guaranteed to its clients.
Any material known future losses related to these guarantees are recorded in
the period in which the losses are determined.

CONTINGENCIES

The Company was a party to a suit filed by a former client alleging legal
and investment advisory wrongdoing on the part of the Company and several
other named parties. Pursuant to an agreement dated May 28, 1996, the Company
and the other named parties reached a settlement with the former client.
Under the terms of the agreement, the Company is required to pay $300,000 in
aggregate from March 1997 through March 1999 in three annual installments.
Additionally, the Company could be liable for recapture taxes due by the
former client on any passive income to be generated by certain of the
investments in question. The Company's potential liability related to these
recapture taxes is not presently estimable. The Company's payments related to
this settlement agreement are guaranteed by a shareholder of the Company. As
a result of the settlement agreement, the Company recorded a one-time expense
of $300,000 in the consolidated statement of operations for the year ended
December 31, 1995. The related liability is recorded in accrued expenses as
of December 31, 1996 and March 31, 1997.

The Company, a former employee (current business associate) and a former
client have been named as defendants in a lawsuit, in which the plaintiff
alleges that the Company's former client breached a contract to act in a
motion picture and that the Company and the former employee tortiously
interfered with the former client's contractual relations to the plaintiff.
The Company, the former employee and its

F-30
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

7. COMMITMENTS AND CONTINGENCIES (Continued)

former client have each filed motions for summary judgment, requesting the
dismissal of the complaint. The Company is not presently able to determine
the likelihood of any exposure resulting from this lawsuit.

The Company, a former employee (current business associate) and a client
are defendants in a lawsuit. The plaintiff alleges that the Company's client
breached a contract to act in a motion picture and the former employee
(current business associate) and the Company tortiously interfered with the
client's contractual relations with the plaintiff. The plaintiff seeks
unspecified damages. The parties are engaging in discovery. The Company is
not presently able to determine the likelihood of any exposure resulting from
this lawsuit.

In connection with examinations of the consolidated federal tax returns of
ProServ, Inc. and ProServ Financial Services, Inc. for the years 1990 through
1993, the Internal Revenue Service (IRS) has raised questions regarding the
tax treatment of certain significant transactions. Although the Company
believes it has valid defenses to defeat any tax assessment, the Company has
accrued $182,000, reflected in deferred income taxes (see Note 5), for this
contingency, representing the best estimate of the exposure to the Company as
of December 31, 1996 and March 31, 1997.

The French taxing authorities are conducting an audit of ProServ Europe's
tax returns for the years 1993 through 1995. The Company has accrued $77,000,
reflected in deferred income taxes (see Note 5), for this contingency,
representing the best estimate of the exposure to the Company as of December
31, 1996 and March 31, 1997.

In the normal course of business, the Company is involved in various
lawsuits. Management is of the opinion that any liability or loss resulting
from such litigation will not have a material adverse effect on the
consolidated financial statements.

8. EMPLOYEE BENEFIT PLAN

The Company sponsors a qualified defined contribution plan under section
401(k) of the Internal Revenue Code. The defined contribution plan enables
all full time employees who have completed one year of service with the
Company to make voluntary contributions to the plan of up to 15% of their
compensation not to exceed the dollar limits prescribed by the IRS.
Additional contributions to be made by the Company are prescribed in the
Plan, subject to certain limitations. The Company's expense related to the
plan totaled approximately $35,000 and $45,000 for the years ended December
31, 1996 and 1995, respectively.

9. AGREEMENT AND MEMORANDUM OF UNDERSTANDING

In January 1992, an Agreement and Memorandum of Understanding was executed
with a former officer of the Company under which the former officer
represents, through a separate company, certain former clients of the
Company. Under the terms of the agreements, the revenue on certain playing
and endorsement contracts was divided between the companies based on varying
percentages and terms, including dates of execution, renegotiations and
renewals of such playing and endorsement contracts. Net revenue recognized
under this agreement was approximately $694,000 and $1,228,000 for the years
ended December 31, 1996 and 1995, respectively and $27,000 and $132,000 for
the three months ended March 31, 1997 and 1996, respectively.

10. INVESTMENT IN JOINT VENTURE

On March 30, 1995, the Company and a former executive of the Company
formed a corporate joint venture to produce sports and entertainment events
for television. Under the terms of the original joint

F-31
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

10. INVESTMENT IN JOINT VENTURE (Continued)

venture agreement, the Company invested $48,000 in cash, certain contracts
and events with a fair value of $400,000, and $52,000 in professional
service, valued at cost, to be contributed over a one year period,
collectively representing a 50% interest in the joint venture. The fair value
of the contracts and events was agreed upon by both original shareholders of
the joint venture. As of December 31, 1996 and 1995, the Company had incurred
$52,000 and $41,000, respectively, of the professional services as part of
the Company's investment in the joint venture.

In December 1995, the joint venture entered into an agreement with a third
investor for the purchase of a 20% ownership interest in the joint venture
for $550,000 in cash. The agreement stipulated that each previously existing
shareholder in the joint venture would receive a $150,000 payment as a result
of this cash infusion. Upon completion of this transaction, the Company's
interest in the joint venture was reduced to 40%

The Company's basis in the contracts and events that were contributed to
the joint venture was $0 upon the initial contribution. The Company is
amortizing the resulting basis difference over the seven year estimated life
of the related contracts and events.

The joint venture allocates and distributes income and losses in
proportion to each shareholders' percentage ownership. The following
represents a rollforward of the investment in joint venture for the years
ending December 31, 1996 and 1995:

<TABLE>
<CAPTION>
<S> <C> <C>
Balance, January 1, 1995 ...................... $ --
Cash investment ............................... 48,000
Professional services ......................... 41,164
Equity in loss of investee:
Share of investee net loss ................... (52,165)
Amortization of basis difference ............. 45,238
----------
(6,927)
Reduction of investment based on sale of joint
venture interest ............................. (82,237)
----------
Balance, December 31, 1995 .................... --
Professional services ......................... 10,836
Equity in loss of investee:
Amortization of basis difference ............. 57,142
Share of investee net loss ................... (67,978)
----------
(10,836)
----------
Balance December 31, 1996 ..................... $ --
==========
</TABLE>

The Company's proportionate share of the joint venture's net loss for the
year ended December 31, 1996 and the three month period ended March 31, 1997
was approximately $72,000 and $43,000, respectively; however, since the
investment in joint venture balance is $0, these losses were only recognized
to the extent of the amortization of the basis difference in the contracts
and events and the professional services contributed to the joint venture.

F-32
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

10. INVESTMENT IN JOINT VENTURE (Continued)

Summarized unaudited financial information of the joint venture are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------------- ------------------------
1996 1995 1997 1996
------------- ------------- ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
Operating revenues....... $ 910,000 $ 505,000 $ 557,000 $ 146,000
Operating expenses....... (1,090,000) (609,000) 665,000 (220,000)
------------- ------------- ------------ -----------
Net loss................. $ (180,000) $ (104,000) $ (108,000) $ (74,000)
============= ============= ============ ===========
BALANCE SHEET
Total assets............. $ 1,266,000 $1,031,000
Total liabilities ....... (301,000) (231,000)
------------- ------------
Shareholders' equity .... $ 965,000 $ 800,000
============= ============
</TABLE>

11. FINANCIAL INFORMATION BY GEOGRAPHIC AREA

Operating revenue, (loss) income from operations and identifiable assets
for the Company's North America and European operations are as follows:

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------------- ---------------------------
1996 1995 1997 1996
-------------- -------------- ------------ --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating revenue
North America................ $10,910,000 $14,551,000 $1,031,000 $ 1,125,000
Europe....................... 2,478,000 3,241,000 338,000 329,000
-------------- -------------- ------------ --------------
Total....................... $13,388,000 $17,792,000 $1,369,000 $ 1,449,000
============== ============== ============ ==============
(Loss) income from operations
North America................ $(1,465,000) $(1,421,000) $ (866,000) $ (918,000)
Europe....................... (843,000) 112,000 14,000 (336,000)
-------------- -------------- ------------ --------------
Total....................... $(2,308,000) $(1,309,000) $ (852,000) $(1,254,000)
============== ============== ============ ==============
Identifiable assets
North America................ $ 4,786,000 $ 5,384,000 $4,234,000
Europe....................... 555,000 1,604,000 1,989,000
-------------- -------------- ------------
Total....................... $ 5,341,000 $ 6,988,000 $6,223,000
============== ============== ============
</TABLE>

12. SUBSEQUENT EVENTS (UNAUDITED)

The majority shareholder of the Company has entered into a Purchase and
Sale Agreement dated as of June 25, 1997 with The Marquee Group, Inc.
("Marquee"), pursuant to which he has agreed to sell 70.4% of the outstanding
common stock and 100% of the outstanding preferred stock of ProServ, Inc. and
51% of the outstanding capital stock of ProServ TV, the remainder of which is
owned by ProServ, Inc. Pursuant to the agreement, the aggregate purchase
price is $6.5 million, subject to certain adjustments, and 225,000 shares of
common stock of Marquee. The majority shareholder of the Company has the
option to receive the $6.5 million in cash or $3.5 million in cash and a $3.0
million promissory note payable on January 2, 1998. Marquee has deposited
$1.5 million of the purchase price in escrow to secure its obligations under
the purchase agreement.

F-33
<PAGE>
PROSERV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1997 AND FOR THE THREE MONTHS ENDED MARCH 31,
1997 AND 1996 IS UNAUDITED)

12. SUBSEQUENT EVENTS (UNAUDITED) (Continued)

Marquee has also entered into a Stock Purchase Agreement dated as of July
2, 1997 (the "Non-Employee Stock Purchase Agreement") with the holder of 250
shares of the Company's common stock, pursuant to which Marquee has agreed to
purchase the shares held for an aggregate purchase price of $3.0 million. The
consummation of the purchase will take place concurrently with the
consummation of the purchase of the majority shareholders' shares.

On July 18, 1997, Marquee entered into an agreement with one of the
Company's stockholders to purchase his 50 shares of the Company's common
stock and options to purchase 20 shares of the Company's common stock for an
aggregate purchase price of $605,000 in cash.

F-34
<PAGE>
REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholder
of QBQ Entertainment, Inc.

We have audited the accompanying balance sheet of QBQ Entertainment, Inc.
as of December 31, 1996, and the related statements of operations,
stockholder's equity (deficiency) and cash flows for each of the two years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of QBQ Entertainment, Inc.
as of December 31, 1996, and the results of its operations and its cash flows
for each of the two years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.

As discussed in Note 3 to the financial statements, the Company changed
its method of computing rent expense and depreciation and amortization of
property and equipment in 1995.

David Berdon & Co. LLP

New York, New York
June 13, 1997

F-35
<PAGE>
QBQ ENTERTAINMENT, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................................. $323,237 $731,362
Accounts receivable........................................ 27,634 22,613
Prepaid expenses .......................................... 6,070 6,081
Loan receivable--stockholder............................... 60,936 25,439
----------------- --------------
TOTAL CURRENT ASSETS...................................... 417,877 785,495
PROPERTY AND EQUIPMENT--NET ................................ 82,235 76,040
CASH--RESTRICTED............................................ 17,554 17,772
----------------- --------------
$517,666 $879,307
================= ==============
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accrued expenses and other liabilities..................... $130,005 $ 42,720
Loan payable--bank......................................... 170,000 170,000
Clients' deposits payable.................................. 266,610 624,828
----------------- --------------
TOTAL CURRENT LIABILITIES................................. 566,615 837,548
----------------- --------------
DEFERRED LEASE OBLIGATION................................... 10,736 8,722
----------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY (DEFICIENCY)
Common stock--no par value; 100 shares authorized, issued
and outstanding........................................... 100 100
Additional paid-in capital................................. 900 900
Accumulated earnings (losses).............................. (60,685) 32,037
----------------- --------------
TOTAL STOCKHOLDER'S EQUITY (DEFICIENCY)................... (59,685) 33,037
----------------- --------------
$517,666 $879,307
================= ==============
</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

F-36
<PAGE>
QBQ ENTERTAINMENT, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------- ----------------------
1996 1995 1997 1996
------------ ------------ ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUE
Commissions.................. $1,358,922 $1,495,245 $423,552 $ 116,041
------------ ------------ ---------- -----------
EXPENSES
Operating.................... 274,224 299,484 48,115 47,825
General and administrative .. 930,815 1,071,657 223,597 210,057
Depreciation and
amortization................ 38,043 49,398 6,195 12,218
------------ ------------ ---------- -----------
TOTAL EXPENSES.............. 1,243,082 1,420,539 277,907 270,100
------------ ------------ ---------- -----------
INCOME (LOSS) FROM
OPERATIONS................... 115,840 74,706 145,645 (154,059)
------------ ------------ ---------- -----------
OTHER INCOME (EXPENSE)
Interest income.............. 12,329 13,764 2,470 1,394
Interest expense............. (24,329) (1,797) (3,940) (7,158)
------------ ------------ ---------- -----------
TOTAL OTHER INCOME
(EXPENSE).................. (12,000) 11,967 (1,470) (5,764)
------------ ------------ ---------- -----------
INCOME (LOSS) BEFORE INCOME
TAXES........................ 103,840 86,673 144,175 (159,823)
PROVISION FOR STATE AND
LOCAL INCOME TAXES........... 12,521 15,140 5,875 120
------------ ------------ ---------- -----------
NET INCOME (LOSS)............. $ 91,319 $ 71,533 $138,300 $(159,943)
============ ============ ========== ===========
</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

F-37
<PAGE>
QBQ ENTERTAINMENT, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIENCY)
FOR THE YEAR ENDED DECEMBER 31, 1996
AND THE THREE MONTHS ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
COMMON STOCK
--------------------------- ADDITIONAL ACCUMULATED
NUMBER OF PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (LOSSES) TOTAL
-------------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE--JANUARY 1, 1995 as
previously reported.................. $100 $100 $900 $ 193,484 $ 194,484
Prior period adjustments.............. -- -- -- (41.410) (41,410)
-------------- ------------ ------------- ----------- -----------
BALANCE--JANUARY 1, 1995 as restated . 100 100 900 152,074 153,074
Net income for the year ended
December 31, 1995.................... -- -- -- 71,533 71,533
Distribution to stockholder........... -- -- -- (282,033) (282,033)
-------------- ------------ ------------- ----------- -----------
BALANCE--DECEMBER 31, 1995............ 100 100 900 (58,426) (57,426)
Net income for the year ended
December 31, 1996.................... -- -- -- 91,319 91,319
Distribution to stockholder........... -- -- -- (93,578) (93,578)
-------------- ------------ ------------- ----------- -----------
BALANCE--DECEMBER 31, 1996............ 100 100 900 (60,685) (59,685)
Net income for the three months ended
March 31, 1997....................... -- -- -- 138,300 138,300
Distribution to stockholder........... -- -- -- (45,578) (45,578)
-------------- ------------ ------------- ----------- -----------
BALANCE--MARCH 31, 1997 (Unaudited) .. $100 $100 $900 $ 32,037 $ 33,037
============== ============ ============= =========== ===========
</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

F-38
<PAGE>
QBQ ENTERTAINMENT, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- -----------------------
1996 1995 1997 1996
----------- ----------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................. $ 91,319 $ 71,533 $138,300 $(159,943)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization................... 38,043 49,398 6,195 12,218
Decrease (increase) in:
Accounts receivable............................ 1,639 19,879 5,021 27,649
Prepaid expenses .............................. 8,936 (9,556) (11) (4,869)
Increase (decrease) in:
Accrued expenses and other liabilities ........ 37,185 (40,650) (87,285) 9,432
Clients' deposits payable...................... 222,035 (21,400) 358,218 4,275
Deferred lease obligation...................... (6,385) (3,052) (2,014) (762)
----------- ----------- ---------- ------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES....................................... 392,772 66,152 418,424 (112,000)
----------- ----------- ---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment............... (34,440) (21,682) -- (558)
(Increase) decrease in loans to stockholder ...... (5,034) (55,902) 35,497 47,550
----------- ----------- ---------- ------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES....................................... (39,474) (77,584) 35,497 46,992
----------- ----------- ---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of loan payable--bank.................. (300,000) -- -- --
(Increase) in restricted cash..................... (898) (864) (218) (244)
Distributions to stockholder...................... (93,578) (282,033) (45,578) --
Proceeds from loan payable--bank.................. 170,000 300,000 -- --
----------- ----------- ---------- ------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES....................................... (224,476) 17,103 (45,796) (244)
----------- ----------- ---------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS...................................... 128,822 5,671 408,125 (65,252)
CASH AND CASH EQUIVALENTS--BEGINNING OF PERIOD ... 194,415 188,744 323,237 194,415
----------- ----------- ---------- ------------
CASH AND CASH EQUIVALENTS--
END OF PERIOD.................................... $ 323,237 $ 194,415 $731,362 $ 129,163
=========== =========== ========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest ...................................... $ 23,479 $ 379 $ 1,966 $ 3,351
=========== =========== ========== ============
Income taxes .................................. $ 558 $ 64,307 $ 924 $ 565
=========== =========== ========== ============
</TABLE>

The accompanying notes to financial statements are an integral part of these
statements.

F-39
<PAGE>
QBQ ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION AT MARCH 31, 1997 AND 1996 IS UNAUDITED)

NOTE 1 -- ORGANIZATION

QBQ Entertainment, Inc. (the "Company") was incorporated and commenced
operations in April 1986 as a booking agent in the music and entertainment
industry.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Revenue Recognition

The Company receives advance deposits, on behalf of its clients, in the
ordinary course of business, to book an artist/entertainer for a future event
(i.e., concert). Commission income is recognized when the event takes place.
The funds held on behalf of the Company's clients are held in a separate bank
account.

(b) Concentration of Credit Risk

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and cash
equivalents, and accounts receivable. The Company places its cash and cash
equivalents, which at times exceed federally insured amounts, with a major
financial institution.

Commissions earned during 1996 includes approximately $521,000 from two
clients, which represents approximately 38% of revenue earned during the year
ended December 31, 1996. Commissions earned during 1995 includes
approximately $875,000 from three clients, which represents approximately 58%
of revenue earned during the year ended December 31, 1995.

Commissions earned during the three months (unaudited) ended March 31 1997
includes approximately $392,000 from two clients and accounts for
approximately 93% of the quarterly commissions earned. Commissions earned
during the three months (unaudited) ended March 31, 1996 includes
approximately $92,000 from four clients and account for approximately 79% of
quarterly commissions earned.

The Company has elected "S" corporation status under the applicable
provisions of the Internal Revenue Code and New York State tax law. The
Company will be treated for federal and New York State income tax purposes
substantially as if it were a partnership while a valid election is in
effect, and the stockholder's respective share in the net income (loss) of
the Company will be reportable on his individual returns. The Company remains
liable for New York City general corporation tax and certain New York State
corporate income taxes.

(d) Property and Equipment

Property and equipment are stated at cost and are being depreciated under
the straight-line method over the estimated useful lives of the related
assets, which range from 3-1/2 to 7 years.

(e) Use of Estimates in Financial Statement Presentation

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at December 31, 1996, and
March 31, 1997, and the reported amounts of revenues and expenses during the
two years ended December 31, 1996, and the three months ended March 31, 1997
and 1996. Actual results could differ from those estimates.

(f) Statements of Cash Flows

For purposes of the statements of cash flows, the Company considers as
cash equivalents all highly liquid investments with a maturity of three
months or less when purchased.

F-40
<PAGE>
QBQ ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS --(CONTINUED)
(INFORMATION AT MARCH 31, 1997 AND 1996 IS UNAUDITED)

(g) Accounts Receivable

The Company has deemed all receivables collectible at December 31, 1996
and March 31, 1997 (unaudited) and does not anticipate any additional
probable material losses as at those dates.

NOTE 3 -- PRIOR PERIOD ADJUSTMENTS

The Company has changed its method of accounting in computing rent expense
and depreciation and amortization of property and equipment in 1995 as a
result of the misapplication of accounting principles prior to the year ended
December 31, 1995. Accordingly, accumulated earnings has been reduced by
$41,410 as of January 1, 1995 for the cumulative effect of these prior period
adjustments. The Company has not determined the effect of these changes on
income as previously reported for the year ended December 31, 1994.

NOTE 4 -- LOAN RECEIVABLE -- STOCKHOLDER

At December 31, 1996 and March 31, 1997 (unaudited), $60,936 and $25,439,
respectively, were due from the Company's sole stockholder. These amounts
represent noninterest-bearing demand loans made to the stockholder.

NOTE 5 -- PROPERTY AND EQUIPMENT

Property and equipment -net consists of the following at December 31,
1996 and March 31, 1997:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
-------------- -----------
(UNAUDITED)
<S> <C> <C>
Furniture and fixtures.......................... $ 70,770 $ 70,770
Equipment....................................... 170,053 170,053
Automobiles..................................... 108,235 108,235
Leasehold improvements.......................... 6,138 6,138
-------------- -----------
355,196 355,196
Less, accumulated depreciation and
amortization................................... 272,961 279,156
-------------- -----------
$ 82,235 $ 76,040
============== ===========
</TABLE>

NOTE 6 -- LOAN PAYABLE -- BANK

Loan payable -bank at December 31, 1996 and March 31, 1997 (unaudited),
amounting to $170,000, represents borrowings by the Company under a $300,000
unsecured grid demand promissory loan agreement ("grid loan").

Interest is payable monthly at the rate of 1% above the bank's reference
rate. Interest expense on the grid loan amounted to $24,329 and $1,797 for
the years ended December 31, 1996 and 1995, respectively, and $3,940 and
$7,158 for the three months (unaudited) ended March 31, 1997 and 1996,
respectively.

The grid loan has been guaranteed by the Company's stockholder.

In April 1997, $70,000 of the loan payable was repaid by the Company with
the remaining $100,000 repaid in May 1997.

F-41
<PAGE>
QBQ ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS --(CONTINUED)
(INFORMATION AT MARCH 31, 1997 AND 1996 IS UNAUDITED)

NOTE 7 -- LEASE COMMITMENT

The Company occupies premises for its office facilities under a
noncancelable operating lease agreement which commenced on May 15, 1993 and
expires on May 14, 1998. Minimum lease payments required under the terms of
such lease agreement at December 31, 1996 are as follows:

<TABLE>
<CAPTION>
<S> <C>
1997.... $65,625
1998.... 21,875
---------
Total... $87,500
=========
</TABLE>

The lease also requires payment of additional sums under escalation
clauses. Rent expense, which is reflected on a straight-line basis over the
term of the lease, amounted to $51,948 for the years ended December 31, 1996
and 1995, and $12,987 for the three months (unaudited) ended March 31, 1997
and 1996. Obligations of $10,736 and $8,722, representing pro-rata future
payments, are reflected in the accompanying December 31, 1996 and March 31,
1997 (unaudited) balance sheets, respectively.

The Company is contingently liable for a standby letter of credit, in the
sum of $15,156, given to its landlord in lieu of a security deposit. This
letter of credit is secured by a certificate of deposit that matured April
14, 1997.

NOTE 8 -- RETIREMENT PLANS

The Company has two defined contribution plans, a profit sharing plan and
a money purchase plan, both of which cover all eligible employees.
Contributions to the profit-sharing plan are based on 0% to 15% of eligible
employees' annual salaries. Contributions to the money purchase plans are
based on 5% of eligible employees' annual salaries. Costs of the plans
charged to operations for the years ended December 31, 1996 and 1995 amounted
to $74,951 and $67,165, respectively, and $18,738 and $16,791 for the three
months (unaudited) ended March 31, 1997 and 1996, respectively.

F-42
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OF THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary................................. 3
Risk Factors ...................................... 10
Use of Proceeds ................................... 14
Price Range of Common Stock and Warrants ......... 15
Dividend Policy ................................... 15
Capitalization .................................... 16
Unaudited Pro Forma Condensed Combined Financial
Statements ....................................... 17
Selected Consolidated Financial Data .............. 22
Management's Discussion and Analysis of Financial
Condition and Results of Operations .............. 24
Business .......................................... 31
Agreements Related to the Pending Acquisitions ... 42
Management ........................................ 45
Principal Stockholders ............................ 51
Certain Relationships and Related Transactions .... 54
Description of Securities ......................... 58
Shares Eligible for Future Sale ................... 61
Underwriting ...................................... 63
Legal Matters ..................................... 64
Experts ........................................... 64
Available Information ............................. 65
Index to Financial Statements...................... F-1
</TABLE>

7,500,000 Shares

THE MARQUEE GROUP, INC.

[LOGO]
Common Stock

P R O S P E C T U S

PRUDENTIAL SECURITIES INCORPORATED

COWEN & COMPANY
, 1997