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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 23, 1998
------------------------------
SFX ENTERTAINMENT, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-24017 13-3977880
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(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
650 Madison Avenue, 16th Floor, New York, New York 10022
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 838-3100
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
The Marquee Group, Inc. (the "Company") has entered into an Agreement
and Plan of Merger (the "Merger Agreement"), dated as of July 23, 1998, with
SFX Entertainment, Inc. ("Parent") and SFX Acquisition Corp., a wholly-owned
subsidiary of Parent ("Sub"), pursuant to which Sub will merge with and into
the Company (the "Merger") and the Company shall continue as the surviving
corporation of the Merger. Pursuant to the Merger Agreement, upon the
consummation of the Merger, each outstanding share of common stock, $.01 par
value, of the Company (the "Marquee Common Stock") shall be converted into the
right to receive from Parent a number of shares of Class A Common Stock, $.01
par value, of Parent (the "SFX Class A Common Stock") equal to the following
exchange ratio (the "Exchange Ratio"): (i) if the SFX Class A Common Stock
Price (as defined below) is less than or equal to $57.50, then the Exchange
Ratio shall be the number of shares of SFX Class A Common Stock equal to the
quotient obtained by dividing $6.00 by the SFX Class A Common Stock Price; (ii)
if the SFX Class A Common Stock Price is greater than $57.50 and less than or
equal to $60.00, then the Exchange Ratio shall be the number of shares of SFX
Class A Common Stock equal to the difference between (A) 0.1200 and (B) the
quotient obtained by dividing 0.9000 by the SFX Class A Common Stock Price; and
(iii) if the SFX Class A Common Stock Price is greater than $60.00, then the
Exchange Ratio shall be the number of shares of SFX Class A Common Stock equal
to the quotient obtained by dividing $6.30 by the SFX Class A Common Stock
Price. The term "SFX Class A Common Stock Price" means the average of the
reported price for the fifteen consecutive trading days ending on the fifth
trading day prior to the effective time of the Merger on the primary exchange
on which the SFX Class A Common Stock is traded, including the Nasdaq National
Market.
The consummation of the Merger is subject to the satisfaction of a
number of conditions set forth in the Merger Agreement, including, but not
limited to, the approval by the stockholders of the Company of the transactions
contemplated thereby, the expiration or termination of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the
entry by the Company into a bank credit facility and the consummation of an
acquisition, and the receipt of all applicable consents to the Merger from
third parties and regulatory agencies. The Merger is expected to be consummated
in the fourth quarter of 1998.
The foregoing description of the Merger Agreement does not purport to
be complete and is qualified in its entirety by the copy of the Merger
Agreement attached hereto as an exhibit.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of July 23, 1998, among SFX
Entertainment, Inc., SFX Acquisition Corp. and The Marquee Group, Inc.
10.1 Press Release, dated July 23, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
SFX ENTERTAINMENT, INC.
By: /s/ Thomas P. Benson
------------------------------
Name: Thomas P. Benson
Title: Chief Financial Officer
Date: July 31, 1998
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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
SFX ENTERTAINMENT, INC.,
SFX ACQUISITION CORP.
AND
THE MARQUEE GROUP, INC.
DATED AS OF JULY 23, 1998
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TABLE OF CONTENTS
<TABLE>
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SECTION PAGE
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ARTICLE I -- THE MERGER
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1.01. THE MERGER................................................................2
1.02. EFFECTIVE TIME; CLOSING...................................................2
1.03. EFFECT OF THE MERGER......................................................2
1.04. CERTIFICATE OF INCORPORATION; BYLAWS......................................2
1.05. DIRECTORS AND OFFICERS....................................................2
ARTICLE II -- CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. CONVERSION OF SECURITIES..................................................2
2.02. EXCHANGE OF MARQUEE STOCK CERTIFICATES....................................4
2.03. STOCK TRANSFER BOOKS......................................................6
2.04. STOCK OPTIONS.............................................................6
2.05. WARRANTS .................................................................6
2.06. STOCK APPRECIATION RIGHTS.................................................6
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF MARQUEE
3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES..............................7
3.02. CERTIFICATE OF INCORPORATION AND BYLAWS...................................7
3.03. CAPITALIZATION............................................................7
3.04. AUTHORITY RELATIVE TO THIS AGREEMENT......................................8
3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS................................8
3.06. PERMITS; COMPLIANCE.......................................................9
3.07. SEC FILINGS; FINANCIAL STATEMENTS.........................................9
3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS.....................................10
3.09. ABSENCE OF LITIGATION....................................................11
3.10. EMPLOYEE BENEFIT MATTERS.................................................11
3.11. LABOR MATTERS............................................................13
3.12. INTELLECTUAL PROPERTY....................................................13
3.13. TAXES ...................................................................14
3.14. OPINION OF FINANCIAL ADVISOR.............................................15
3.15. VOTE REQUIRED............................................................15
3.16. BROKERS .................................................................15
3.17. TANGIBLE PROPERTY........................................................15
3.18. MATERIAL AND ACQUISITION CONTRACTS.......................................15
3.19. CERTAIN BUSINESS PRACTICES...............................................16
3.20. BOARD RECOMMENDATION.....................................................16
3.21. CHANGE IN CONTROL........................................................16
3.22. ENVIRONMENTAL MATTERS....................................................16
3.23. ACCOUNTS RECEIVABLE......................................................17
3.24. INSURANCE................................................................17
3.25. REAL PROPERTY AND LEASES.................................................18
3.26. INTERESTED PARTY TRANSACTIONS............................................18
3.27. CLIENTS AND EVENTS.......................................................18
3.28. RESTRICTIONS ON BUSINESS ACTIVITIES......................................19
(i)
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3.29. CORPORATE RECORDS........................................................19
3.30. STATE TAKEOVER STATUTES..................................................19
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF SFX AND ACQUISITION SUB
4.01. CORPORATE ORGANIZATION AND QUALIFICATION..................................19
4.02. CERTIFICATE OF INCORPORATION AND BYLAWS...................................19
4.03. OWNERSHIP OF ACQUISITION SUB; NO PRIOR ACTIVITIES.........................19
4.04. CAPITALIZATION............................................................20
4.05. AUTHORITY RELATIVE TO THIS AGREEMENT......................................20
4.06. NO CONFLICT; REQUIRED FILINGS AND CONSENTS................................20
4.07. SEC FILINGS; FINANCIAL STATEMENTS.........................................21
4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS......................................21
4.09. ABSENCE OF LITIGATION.....................................................22
4.10. TAXES ....................................................................22
4.11. OPINION OF FINANCIAL ADVISOR..............................................22
4.12. BROKERS ..................................................................22
4.13. BOARD RECOMMENDATION......................................................23
4.14. PERMITS; COMPLIANCE.......................................................23
4.15. CERTAIN BUSINESS PRACTICES................................................23
4.16. INTERESTED PARTY TRANSACTIONS.............................................23
4.17. ERISA COMPLIANCE..........................................................23
ARTICLE V -- CONDUCT OF BUSINESS PENDING THE MERGER
5.01. CONDUCT OF BUSINESS BY MARQUEE PENDING THE MERGER.........................23
5.02. CONDUCT OF BUSINESS BY SFX PENDING THE MERGER.............................25
5.03. OTHER ACTIONS.............................................................25
ARTICLE VI -- ADDITIONAL AGREEMENTS
6.01. REGISTRATION STATEMENT; PROXY STATEMENT...................................25
6.02. STOCKHOLDERS' MEETINGS....................................................27
6.03. APPROPRIATE ACTION; CONSENTS; FILINGS.....................................27
6.04. ACCESS TO INFORMATION.....................................................28
6.05. ACQUISITION PROPOSALS.....................................................28
6.06. DIRECTORS' AND OFFICERS' INDEMNIFICATION..................................29
6.07. OBLIGATIONS OF ACQUISITION SUB............................................30
6.08. PUBLIC ANNOUNCEMENTS......................................................30
6.09. NOTIFICATION OF CERTAIN MATTERS...........................................30
6.10. FURTHER ACTION............................................................30
6.11. AFFILIATE AGREEMENTS; TAX TREATMENT.......................................31
6.12. EMPLOYEE BENEFIT PLANS....................................................31
6.13. RELEASES .................................................................31
6.14. CERTAIN AGREEMENTS........................................................31
6.15. GOVERNANCE................................................................31
ARTICLE VII -- CONDITIONS TO THE MERGER
7.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY...............................31
7.02. CONDITIONS TO THE OBLIGATIONS OF SFX AND ACQUISITION SUB..................32
7.03. CONDITIONS TO THE OBLIGATIONS OF MARQUEE..................................33
(ii)
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ARTICLE VIII -- TERMINATION, AMENDMENT AND WAIVER
8.01. TERMINATION...............................................................33
8.02. FEES AND EXPENSES; EFFECT OF TERMINATION..................................34
8.03. AMENDMENT.................................................................35
8.04. WAIVER ...................................................................35
ARTICLE IX -- GENERAL PROVISIONS
9.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS................35
9.02. NOTICES ..................................................................35
9.03. CERTAIN DEFINITIONS.......................................................36
9.04. SEVERABILITY..............................................................37
9.05. ASSIGNMENT; BINDING EFFECT; BENEFIT.......................................37
9.06. INCORPORATION OF SCHEDULES................................................37
9.07. SPECIFIC PERFORMANCE......................................................37
9.08. GOVERNING LAW.............................................................37
9.09. HEADINGS .................................................................38
9.10. COUNTERPARTS..............................................................38
9.11. WAIVER OF JURY TRIAL......................................................38
9.12. ENTIRE AGREEMENT..........................................................38
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Exhibit A - Marquee Disclosure Schedule
Exhibit B - SFX Disclosure Schedule
Exhibit C - Form of Affiliate Agreements
Exhibit D - SFX Tax Certificate
Exhibit E - Marquee Tax Certificate
Exhibit F - Amendment to Unit Purchase Option Agreement
(iii)
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DEFINED TERMS
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TERM LOCATION
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Acquisition Contracts.............................................................. 3.18
Acquisition Sub.................................................................... recitals
Acquisition Sub Common Stock....................................................... 2.01
affiliate.......................................................................... 9.03
Affiliate Agreements............................................................... 6.11
Agreement.......................................................................... recitals
beneficial owner................................................................... 9.03
Benefit Plans...................................................................... 3.10
Blue Sky Laws...................................................................... 3.05
business day....................................................................... 9.03
Certificate........................................................................ 2.02
Certificate of Merger.............................................................. 1.02
Claim.............................................................................. 6.06
Closing............................................................................ 1.02
Code............................................................................... recitals
commercially reasonable efforts.................................................... 6.03
Commonly Controlled Entity......................................................... 3.10
control............................................................................ 9.03
Copyrights......................................................................... 3.12
Defined Benefit Plan............................................................... 3.10
Delaware Law....................................................................... recitals
Effective Time..................................................................... 1.02
Employment Agreement Amendments.................................................... recitals
Environmental and Occupational Safety and Health Claims............................ 3.22
Environmental Laws................................................................. 3.22
Environmental Permits.............................................................. 3.22
ERISA.............................................................................. 3.10
Escrow Agreement................................................................... recitals
Escrow Releases.................................................................... recitals
Exchange Act....................................................................... 3.05
Exchange Agent..................................................................... 2.02
Exchange Fund...................................................................... 2.02
Exchange Ratio..................................................................... 2.01
GAAP............................................................................... 3.07
Governmental Authority............................................................. 3.06
Hazardous Materials................................................................ 3.22
HSR Act............................................................................ 3.05
Indebtedness....................................................................... 3.05
Indemnified Parties................................................................ 6.06
Intellectual Property Assets....................................................... 3.12
Law................................................................................ 3.05
Marks.............................................................................. 3.12
Marquee............................................................................ recitals
Marquee Affiliate.................................................................. 6.11
Marquee Balance Sheet.............................................................. 3.07
Marquee Banker..................................................................... 3.14
Marquee Common Stock............................................................... 2.01
Marquee Disclosure Schedule........................................................ Art. III
Marquee Independent Committee...................................................... recitals
Marquee Interim Balance Sheet...................................................... 3.07
(iv)
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TERM LOCATION
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Marquee Permits.................................................................... 3.06
Marquee SEC Reports................................................................ 3.07
Marquee Stockholders' Meeting...................................................... 6.02
Marquee Subsidiaries............................................................... 3.01
Material Adverse Effect............................................................ 3.01
Material Contracts................................................................. 3.18
Merger............................................................................. recitals
Merger Consideration............................................................... 2.01
Occupational Safety and Health Laws................................................ 3.22
Options............................................................................ 2.04
Order.............................................................................. 7.01
Pension Plan....................................................................... 3.10
person............................................................................. 9.03
Proprietary Information............................................................ 3.12
Proxy Statement.................................................................... 6.01
Registration Statement............................................................. 6.01
Reported Price..................................................................... 2.01
SAR................................................................................ 2.06
SEC................................................................................ 3.07
Secretary.......................................................................... 1.02
Securities Act..................................................................... 3.05
Settlement Agreement............................................................... recitals
SFX................................................................................ recitals
SFX Banker......................................................................... 4.10
SFX Balance Sheet.................................................................. 4.07
SFX Class A Common Stock........................................................... 2.01
SFX Class A Common Stock Price..................................................... 2.01
SFX Disclosure Schedule............................................................ Art. IV
SFX Independent Committee.......................................................... recitals
SFX Interim Balance Sheet.......................................................... 4.07
SFX SEC Reports.................................................................... 4.06
SFX Subsidiary..................................................................... 4.04
Shareholders' Agreement............................................................ recitals
Specified Expenses................................................................. 8.02
Stock Option Plans................................................................. 2.04
subsidiary......................................................................... 9.03
Surviving Corporation.............................................................. 1.01
Takeover Proposal.................................................................. 6.05
Tax................................................................................ 3.13
Tax Return......................................................................... 3.13
Terminating Marquee Breach......................................................... 8.01
Terminating SFX Breach............................................................. 8.01
Termination Date................................................................... 8.01
Termination Fee.................................................................... 8.02
Transactions....................................................................... recitals
TSC................................................................................ recitals
Unit Purchase Option............................................................... 2.04
Unit Purchase Option Amendment..................................................... 6.13
Warrants........................................................................... 2.05
(v)
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 23, 1998 (this
"Agreement"), by and among SFX ENTERTAINMENT, INC., a Delaware corporation
("SFX"), SFX Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of SFX ("Acquisition Sub"), and THE MARQUEE GROUP, INC., a Delaware
corporation ("Marquee").
W I T N E S S E T H:
WHEREAS, Acquisition Sub, upon the terms and subject to the conditions
of this Agreement and in accordance with the General Corporation Law of the
State of Delaware ("Delaware Law"), intends to merge with and into Marquee (the
"Merger");
WHEREAS, the Board of Directors of Marquee (including a special
committee of the independent directors of Marquee, the "Marquee Independent
Committee") (a) has determined that the Merger is advisable and in the best
interests of Marquee and its stockholders, (b) has approved and adopted this
Agreement and the transactions contemplated hereby (the "Transactions") and (c)
has recommended the approval and adoption of this Agreement and the approval of
the Merger by, and directed that this Agreement and the Merger be submitted to
a vote of, the stockholders of Marquee;
WHEREAS, the Board of Directors of SFX (including a special committee
of the independent directors of SFX, the "SFX Independent Committee") has
determined that the Merger is in the best interests of SFX and its stockholders
and has approved and adopted this Agreement and the Transactions;
WHEREAS, the Board of Directors of Acquisition Sub has determined that
the Merger is in the best interests of Acquisition Sub and its stockholder and
has approved and adopted this Agreement and the Transactions;
WHEREAS, on July 22, 1998, the attorneys for the plaintiffs and
defendants named therein entered into a Memorandum of Understanding (the
"Settlement Agreement") with respect to the class action complaint filed in
Chancery Court in the State of Delaware, New Castle County, CA #16355NC, and
SFX is relying on such agreement in entering into this Agreement;
WHEREAS, simultaneously herewith, Marquee, SFX, The Sillerman
Companies, Inc. ("TSC") and certain officers and stockholders of Marquee have
entered into agreements to release and waive such officers' and stockholders'
rights to receive shares of Marquee Common Stock (as hereinafter defined)
("Escrow Releases") pursuant to an escrow agreement dated August 15, 1996, as
amended (the "Escrow Agreement"), and SFX is relying on such agreements in
entering into this Agreement;
WHEREAS, simultaneously herewith, Marquee, SFX, TSC and certain
officers and stockholders of Marquee have entered into an agreement to
terminate the Shareholders' Agreement dated as of March 21, 1996, as amended
(the "Shareholders' Agreement"), and SFX is relying on such agreement in
entering into this Agreement;
WHEREAS, simultaneously herewith, Marquee, SFX and certain officers of
Marquee and its subsidiaries have entered into amendments to existing
employment agreements ("Employment Agreement Amendments"), and SFX is relying
on such amendments in entering into this Agreement; and
WHEREAS, SFX and Marquee intend that the Merger constitute a tax-free
"reorganization" within the meaning of Section 368(a)(1)(A) and Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, SFX, Acquisition Sub and Marquee hereby agree as follows:
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ARTICLE I - THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law, at the
Effective Time (as hereinafter defined), (a) Acquisition Sub shall be merged
with and into Marquee, (b) the separate corporate existence of Acquisition Sub
shall cease, and (c) Marquee shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
SECTION 1.02. EFFECTIVE TIME; CLOSING. Unless this Agreement shall
have been terminated and the Transactions abandoned pursuant to Article VIII,
as promptly as practicable (and in any event within five business days)
following the satisfaction or waiver of the conditions set forth in Article VII
(or such other date as may be agreed to in writing by each of the parties
hereto), the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of Delaware (the "Secretary") in such form as is required
by, and executed in accordance with the relevant provisions of, Delaware Law.
The term "Effective Time" means the date and time of the filing of the
Certificate of Merger with the Secretary (or such later time as may be agreed
to in writing by each of the parties hereto and specified in the Certificate of
Merger). Immediately prior to the filing of the Certificate of Merger, a
closing (the "Closing") will be held at the offices of Baker & McKenzie, 805
Third Avenue, New York, New York (or such other place and time as the parties
hereto may agree).
SECTION 1.03. EFFECT OF THE MERGER. The effect of the Merger shall be
as provided in the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
property, rights, privileges, powers and franchises of Marquee and Acquisition
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Marquee and Acquisition Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.04. CERTIFICATE OF INCORPORATION; BYLAWS. (a) The
Certificate of Incorporation of Marquee, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation, until thereafter amended as provided therein or by applicable law.
(b) The Bylaws of Marquee, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation, until
thereafter amended as provided therein or by applicable law.
SECTION 1.05. DIRECTORS AND OFFICERS. The directors of Acquisition Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation until the earlier of their resignation or removal or until their
respective successors are elected or appointed and qualified, as the case may
be. Marquee shall obtain such resignations as may be necessary to effect the
foregoing. The officers of Acquisition Sub immediately prior to the Effective
Time shall be the officers of the Surviving Corporation until the earlier of
their resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be.
ARTICLE II - CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. CONVERSION OF SECURITIES. (a) At the Effective Time, by
virtue of the Merger and without any action on the part of Acquisition Sub,
Marquee or the holders of any of the following shares of capital stock, and
except as otherwise provided herein:
(i) each share of Common Stock, $.01 par value, of Marquee (the
"Marquee Common Stock") then issued and outstanding (other than shares to be
canceled in accordance with Section 2.01(a)(iii)) shall be converted into
the right to receive from SFX a number of duly authorized, validly issued,
fully paid and nonassessable shares of Class A Common Stock, $.01 par value,
of SFX (the "SFX Class A Common Stock"), equal to the Exchange Ratio (as
defined in Section 2.01(b)) (the "Merger Consideration");
(ii) all shares of Marquee Common Stock shall no longer be outstanding
and shall automatically be canceled and cease to exist, and each certificate
previously evidencing any such shares shall thereafter
2
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represent the right to receive the Merger Consideration into which such
shares of Marquee Common Stock were converted in the Merger. The holders of
certificates previously evidencing such shares of Marquee Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Marquee Common Stock except as otherwise
provided herein or by Delaware Law. Such certificates previously evidencing
Marquee Common Stock shall be exchanged for the Merger Consideration issued
in consideration therefor upon the surrender of such certificates previously
evidencing Marquee Common Stock in accordance with the provisions of Section
2.02. No fractional shares of SFX Class A Common Stock shall be issued, and,
in lieu thereof, a cash payment shall be made pursuant to Section 2.02(e);
(iii) any shares of Marquee Common Stock (A) owned by SFX or Marquee
or any wholly-owned subsidiary of SFX or Marquee or (B) held in escrow
pursuant to the Escrow Agreement shall be canceled and extinguished without
any conversion thereof, and no payment shall be made with respect thereto;
and
(iv) each share of common stock, $.01 par value, of Acquisition Sub
(the "Acquisition Sub Common Stock"), then issued and outstanding shall be
converted into and become a number of fully paid and nonassessable shares of
Common Stock, par value $.01 per share, of the Surviving Corporation equal
to the quotient realized by dividing (A) the aggregate number of shares of
Marquee Common Stock determined on a fully-diluted basis immediately prior
to the Effective Time by (B) the aggregate number of shares of capital stock
of Acquisition Sub issued and outstanding immediately prior to the Effective
Time. The phrase "on a fully-diluted basis" shall mean, as of any date, the
number of shares of Marquee Common Stock then outstanding (including any
shares of Marquee Common Stock that are owned by and held in the treasury of
Marquee), together with the aggregate number of shares of Marquee Common
Stock that Marquee may be required, as of such date or thereafter, to issue
(with or without notice, lapse of time or the action of any third party)
pursuant to any outstanding securities, options, warrants, commitments,
agreements, arrangements or undertakings of any kind (including, without
limitation, the Options and Warrants (as such terms are defined in Sections
2.04 and 2.05) and assuming the maximum number of shares of Marquee Common
Stock issuable thereunder.
(b) "Exchange Ratio" shall have the following meaning:
(i) if the SFX Class A Common Stock Price (as defined hereinafter) is
less than or equal to $57.50, then "Exchange Ratio" shall mean a number of
shares of SFX Class A Common Stock equal to the quotient obtained by
dividing $6.00 by the SFX Class A Common Stock Price;
(ii) if the SFX Class A Common Stock Price is greater than $57.50 and
less than or equal to $60.00, then "Exchange Ratio" shall mean a number of
shares of SFX Class A Common Stock equal to the difference between (A)
0.1200 and (B) the quotient obtained by dividing 0.9000 by the SFX Class A
Common Stock Price; and
(iii) if the SFX Class A Common Stock Price is greater than $60.00,
then "Exchange Ratio" shall mean a number of shares of SFX Class A Common
Stock equal to the quotient obtained by dividing $6.30 by the SFX Class A
Common Stock Price.
All arithmetic calculations pursuant to this Section 2.01(b) shall be made
through the fourth decimal place (i.e., to the closest ten-thousandth). As used
in this Agreement, the term "Reported Price" means, with respect to each
trading day, the last reported sale price of the SFX Class A Common Stock on
such trading day, and the term "SFX Class A Common Stock Price" means the
average of the Reported Price for the fifteen consecutive trading days ending
on the fifth trading day prior to the Effective Time on the primary exchange on
which the SFX Class A Common Stock is traded, including the Nasdaq National
Market.
(c) If between the date of this Agreement and the Effective Time,
except as otherwise contemplated herein, the outstanding Marquee Common Stock
or SFX Class A Common Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend, reclassification,
recapitalization, split, division,
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combination or exchange of shares, then the Exchange Ratio shall be
correspondingly adjusted to reflect such stock dividend, reclassification,
recapitalization, split, division, combination or exchange of shares.
SECTION 2.02. EXCHANGE OF MARQUEE STOCK CERTIFICATES.
(a) EXCHANGE AGENT. Promptly after the Effective Time, SFX shall make
available to a bank or trust company organized under the laws of, and having an
office in, the United States or any state thereof (the "Exchange Agent") and
designated by SFX and approved by Marquee (which approval shall not be
unreasonably withheld), for exchange in accordance with this Article II,
through such reasonable procedures as SFX may adopt, certificates representing
shares of SFX Class A Common Stock constituting the Merger Consideration (such
shares of SFX Class A Common Stock, together with any dividends or
distributions with respect thereto, and any cash payable in lieu of any
fractional shares pursuant to Section 2.02(e), being hereinafter referred to as
the "Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions from SFX, deliver the Merger Consideration contemplated to be
issued pursuant to Section 2.01 and cash contemplated by Section 2.02(e) out of
the Exchange Fund.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, SFX will instruct the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the
Effective Time evidenced outstanding Marquee Common Stock (other than shares
canceled in accordance with Section 2.01(a)(iii)) (each a "Certificate" and
collectively, the "Certificates") (i) a letter of transmittal and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates evidencing shares of SFX Class A Common Stock. Upon surrender
of a Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, duly executed, and such other customary documents as may
be required pursuant to such instructions, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing the
number of whole shares of SFX Class A Common Stock which such holder has the
right to receive in respect of the Marquee Common Stock formerly represented by
such Certificate (after taking into account all Marquee Common Stock then held
by such holder), together with any cash in lieu of fractional SFX Class A
Common Stock to which such holder is entitled pursuant to Section 2.02(e) and
any dividends or distributions to which such holder is entitled pursuant to
Section 2.02(c), and the Certificate so surrendered shall forthwith be
canceled. Subject to Section 2.02(i), under no circumstances will any holder of
a Certificate be entitled to receive any part of the shares of SFX Class A
Common Stock into which the shares of Marquee Common Stock were converted in
the Merger until such holder shall have surrendered such Certificate. In the
event of a transfer of ownership of Marquee Common Stock which is not
registered in the transfer records of Marquee, the shares of SFX Class A Common
Stock into which such shares of Marquee Common Stock were converted in the
Merger may be issued in accordance with this Article II to the transferee if
the Certificate evidencing such shares of Marquee Common Stock is presented to
the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered as contemplated by this Section 2.02, each
Certificate shall be deemed at any time after the Effective Time to evidence
only the right to receive upon such surrender the certificate representing the
number of whole shares of SFX Class A Common Stock, which the holder has the
right to receive in respect of the Marquee Common Stock formerly represented by
such Certificate (after taking into account all Marquee Common Stock then held
by such holder), together with cash in lieu of fractional shares of SFX Class A
Common Stock to which such holder is entitled pursuant to Section 2.02(e) and
any dividends or distributions to which such holder is entitled pursuant to
Section 2.02(c). No interest will be paid or will accrue on any cash payable to
holders of Certificates pursuant to the provisions of this Article II. SFX
agrees, from and after the Effective Time, to treat the holders of Certificates
as holding of record the whole number of shares of SFX Class A Common Stock
which the holder has the right to receive pursuant to this Agreement for
purposes of voting and determinations of quorums for voting.
(c) DISTRIBUTIONS WITH RESPECT TO UN-EXCHANGED SHARES OF SFX CLASS A
COMMON STOCK. No dividends or other distributions declared or made after the
Effective Time with respect to SFX Class A Common Stock with a record date
after the Effective Time shall be paid to the holder of any un-surrendered
Certificate with respect to the shares of SFX Class A Common Stock into which
such shares of Marquee Common Stock were converted in the Merger, until the
holder of such Certificate shall surrender such Certificate for exchange as
provided herein. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be paid to the holder of such Certificate,
in addition to the applicable Merger Consideration as provided in Section
2.02(b) (including any cash paid or other
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distributions pursuant to Section 2.02(e)), without interest, (i) the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to the whole shares of SFX Class A Common Stock
evidenced by such Certificate and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and with a payment date subsequent
to such surrender payable with respect to such whole shares of SFX Class A
Common Stock.
(d) NO FURTHER RIGHTS IN MARQUEE COMMON STOCK. All shares of SFX Class
A Common Stock delivered upon conversion of the Marquee Common Stock in
accordance with the terms hereof (along with any cash paid or other
distributions pursuant to Sections 2.02(c) and (e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Marquee
Common Stock.
(e) NO FRACTIONAL SHARES. No certificates or scrip evidencing
fractional shares of SFX Class A Common Stock shall be issued upon the
surrender for exchange of Certificates, but in lieu thereof each holder of
Marquee Common Stock who would otherwise be entitled to receive a fraction of a
share of SFX Class A Common Stock, after aggregating all shares of SFX Class A
Common Stock which such holder would be entitled to receive under Section 2.01,
shall receive an amount equal to the SFX Class A Common Stock Price multiplied
by the fraction of a share of SFX Class A Common Stock to which such holder
would otherwise be entitled, without interest. Except as required by applicable
law, no dividend or distribution of SFX shall relate to such fractional share
interests, and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of SFX.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund,
including any interest on any cash portion thereof, which remains undistributed
to the holders of Marquee Common Stock for one year after the Effective Time
shall be delivered to SFX upon demand, and, subject to Section 2.02(g), any
holders of Marquee Common Stock who have not theretofore complied with this
Article II shall thereafter look only to SFX for the shares of SFX Class A
Common Stock, any cash in lieu of fractional shares of SFX Class A Common Stock
and any dividends or other distributions to which they are entitled pursuant to
this Section 2.02.
(g) NO LIABILITY. None of SFX, the Surviving Corporation or the
Exchange Agent shall be liable to any person in respect of any shares of SFX
Class A Common Stock (or dividends or distributions with respect thereto) or
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall invest any
cash included in the Exchange Fund as directed by SFX, on a daily basis. Any
interest and other income resulting from such investments shall be paid to SFX.
(i) LOST CERTIFICATES. If any Certificate shall have been lost, stolen
or destroyed, then, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the execution of an indemnity agreement by such
person and/or the posting by such person of a bond in such reasonable amount as
the Surviving Corporation may reasonably direct, as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange
Agent will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration, cash in lieu of fractional shares of SFX Class A Common
Stock and unpaid dividends and distributions on shares of SFX Class A Common
Stock deliverable in respect thereof pursuant to this Agreement.
(j) WITHHOLDING RIGHTS. SFX or the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Marquee Common Stock such amounts as SFX
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code or under any provision of state, local or
foreign tax law. To the extent that amounts are so withheld and paid over to
the appropriate taxing authority by SFX or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Marquee Common Stock in respect of which such
deduction and withholding were made by SFX or the Exchange Agent.
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SECTION 2.03. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of Marquee shall be closed, and there shall be no further
registration of transfers of Marquee Common Stock thereafter on the records of
Marquee. At or after the Effective Time, any Certificates presented to the
Exchange Agent or SFX for any reason shall be converted into the right to
receive the Merger Consideration, cash in lieu of fractional shares of SFX
Class A Common Stock and any dividends or other distributions to which they are
entitled pursuant to Section 2.02.
SECTION 2.04. STOCK OPTIONS. At the Effective Time, each then
outstanding (a) option to purchase shares of Marquee Common Stock granted by
Marquee pursuant to Marquee's 1996 and 1997 Stock Option Plan (collectively,
the "Stock Option Plans"), (b) option to purchase shares of Marquee Common
Stock, dated October 7, 1997, granted by Marquee to Robert F.X. Sillerman, (c)
option to purchase Marquee Common Stock, dated October 14, 1997, granted by
Marquee to Adam Kornfeld, (d) option to purchase Marquee Common Stock, dated
August 26, 1997 or September 11, 1997, granted by Marquee to The Huff
Alternative Income Fund, L.P., (e) option to purchase Marquee Common Stock,
dated September 11, 1997 granted by Marquee to TSC, and (f) unit purchase
option (the "Unit Purchase Option"), dated December 11, 1996, granted by
Marquee to Royce Investment Group, Inc. (collectively, the "Options"), shall,
as of the Effective Time, automatically and without any action on the part of
the holder thereof, be assumed by SFX. The holders of such Options shall
continue to have, and be subject to, the same terms and conditions set forth in
the stock option plans and agreements pursuant to which such Options were
issued as in effect immediately prior to the Effective Time, except that (i)
such Options shall be exercisable for that number of whole shares of SFX Class
A Common Stock equal to the product of the number of shares of Marquee Common
Stock covered by the Option immediately prior to the Effective Time multiplied
by the Exchange Ratio rounded up to the nearest whole number of shares of SFX
Class A Common Stock, and (ii) the per share exercise price for the shares of
SFX Class A Common Stock issuable upon the exercise of such assumed Option
shall be equal to the quotient determined by dividing the exercise price per
share of Marquee Common Stock specified for such Option under the applicable
stock option plan or agreement in effect immediately prior to the Effective
Time by the Exchange Ratio, rounding the resulting exercise price down to the
nearest whole cent. At the Effective Time, SFX shall reserve for issuance the
number of shares of SFX Class A Common Stock that will become issuable upon the
exercise of the Options pursuant to this Section 2.04. Nothing in this Section
2.04 shall affect the schedule of vesting (or the acceleration thereof) with
respect to the Options to be assumed by SFX as provided in this Section 2.04.
Notwithstanding anything to the contrary, nothing herein shall require SFX to
issue fractional shares of SFX Class A Common Stock upon the exercise of any
Option.
SECTION 2.05. WARRANTS. At the Effective Time, each then outstanding
warrant to purchase Marquee Common Stock (a) issued pursuant to that certain
warrant agreement, dated December 5, 1996, by and among Marquee, Continental
Stock Transfer & Trust Company, Royce Investment Group, Inc and Continental
Broker-Dealer Corporation and (b) issuable upon exercise of the Unit Purchase
Option (collectively, the "Warrants") shall be assumed by SFX. The holders of
such Warrants shall continue to have, and be subject to, the same terms and
conditions set forth in such Warrants (including, without limitation, any
provision contained therein relating to the repurchase or redemption thereof),
except that (i) such Warrants shall be exercisable for that number of shares of
SFX Class A Common Stock equal to the product of the number of shares of
Marquee Common Stock covered by the Warrant immediately prior to the Effective
Time multiplied by the Exchange Ratio, and (ii) the per share exercise price
for the shares of SFX Class A Common Stock issuable upon the exercise of such
assumed Warrant shall be equal to the quotient determined by dividing the
exercise price per share of Marquee Common Stock specified for such Warrant in
effect immediately prior to the Effective Time by the Exchange Ratio, rounding
the resulting exercise price down to the nearest whole cent. Notwithstanding
anything to the contrary, nothing herein shall require SFX to issue fractional
shares of SFX Class A Common Stock upon the exercise of any Warrant. At the
Effective Time, SFX shall reserve for issuance the number of shares of SFX
Class A Common Stock that will become issuable upon the exercise of such
Warrants pursuant to this Section 2.05.
SECTION 2.06. STOCK APPRECIATION RIGHTS. At the Effective Time, each
then outstanding (a) cash-only stock appreciation right ("ASAR") issued by
Marquee to Arthur Barron, dated February 12, 1998, (b) SAR issued by Marquee to
Myles Schumer, dated February 12, 1998, and (c) SAR issued by Marquee to each
of Arthur Barron, Myles Schumer and Howard Tytel, dated February 12, 1998
shall, as of the Effective Time, automatically and without any action on the
part of the holder thereof, be assumed by SFX. The holders of such SARs shall
continue to have, and be subject to, the same terms and conditions set forth in
the agreements pursuant to which such SARs were issued as in effect immediately
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prior to the Effective Time, except that (i) such SARs shall be exercisable for
cash representing that number of whole shares of SFX Class A Common Stock equal
to the product of the number of shares of Marquee Common Stock covered by the
SAR immediately prior to the Effective Time multiplied by the Exchange Ratio
rounded up to the nearest whole number of shares of SFX Class A Common Stock,
and (ii) the per share strike price for the cash representing shares of SFX
Class A Common Stock issuable upon the exercise of such assumed SAR shall be
equal to the quotient determined by dividing the strike price per share of
Marquee Common Stock specified for such SAR under the applicable agreement
immediately prior to the Effective Time by the Exchange Ratio, rounding the
resulting strike price down to the nearest whole cent. The holders of the SARs
will be entitled to receive only cash upon exercise of the SARs in lieu of
shares of SFX Class A Common Stock as such amount shall be determined in
accordance with the agreements pursuant to which the SARs were issued.
ARTICLE III - REPRESENTATIONS AND QARRANTIES OF MARQUEE
Except as set forth in the disclosure schedule delivered by Marquee to
SFX attached hereto as Exhibit A (the "Marquee Disclosure Schedule"), which
identifies exceptions by specific section references, Marquee hereby represents
and warrants to SFX and Acquisition Sub that:
SECTION 3.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Marquee is
a corporation, and each subsidiary of Marquee (each a "Marquee Subsidiary" and
collectively, the "Marquee Subsidiaries," which terms shall be deemed to
include all corporations and other entities that become subsidiaries of Marquee
subsequent to the date hereof) is a corporation or other entity, in each case
(i) duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and (ii) which has the requisite corporate or
other power and authority to own, lease and operate its properties and to carry
on its business as it is now being conducted. Marquee and each Marquee
Subsidiary are duly qualified or licensed as a foreign corporation (or other
entity) to do business, and are in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by them or the nature
of their business makes such qualification or licensing necessary, except for
such failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a Material Adverse Effect on
Marquee. As used in this Agreement, the term "Material Adverse Effect" means,
with respect to any person, any change or effect that, individually or when
taken together with all other changes or effects that have occurred on or prior
to the date of determination of the occurrence of the Material Adverse Effect
and which are continuing as of that date, is or is reasonably likely to be
materially adverse to the financial condition, business, results of operations
or prospects of such person and its subsidiaries, taken as a whole. As of the
date hereof, a true and correct list of all Marquee Subsidiaries, together with
the jurisdiction of organization of each Marquee Subsidiary and the percentage
of the outstanding capital stock (or other ownership interest) of each Marquee
Subsidiary owned by Marquee and each other Marquee Subsidiary, is set forth in
Section 3.01 of the Marquee Disclosure Schedule. Except as specifically
disclosed in Section 3.01 of the Marquee Disclosure Schedule, Marquee does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
SECTION 3.02. CERTIFICATE OF INCORPORATION AND BYLAWS. Marquee has
made available to SFX true, complete and correct copies of the Certificate of
Incorporation and Bylaws (or comparable organizational documents) of Marquee
and each Marquee Subsidiary, each as amended to date. Neither Marquee nor any
Marquee Subsidiary is in violation of any provision of its Certificate of
Incorporation or Bylaws or other organizational document, as applicable.
SECTION 3.03. CAPITALIZATION. The authorized capital stock of Marquee
consists of 25,000,000 shares of common stock and 5,000,000 shares of preferred
stock. As of July 20, 1998, 17,918,003 shares of Marquee Common Stock were
issued and outstanding, all of which are validly issued, fully paid and
non-assessable and not subject to preemptive rights, and no shares have been
issued or become outstanding between such date and the date hereof, other than
pursuant to exercise of outstanding options or warrants described in Sections
2.04, 2.05 and 2.06 hereof, in Section 3.03(a) of the Marquee Disclosure
Schedule or in a Marquee SEC Report (as defined herein) filed as of the date
hereof. As of the date hereof, no shares of preferred stock of Marquee were
issued and outstanding. Except as set forth in Sections 2.04, 2.05 and 2.06
hereof or as specified in Section 3.03(a) of the Marquee Disclosure Schedule or
as disclosed in a Marquee SEC Report filed as of the date hereof, there are no
options, warrants, stock appreciation rights or other
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rights, agreements, arrangements or commitments of any character (including,
without limitation, employment and acquisition agreements) relating to the
issued or unissued capital stock of, or other equity interests in, Marquee or
any Marquee Subsidiary or obligating Marquee or any Marquee Subsidiary to issue
or sell any shares of capital stock of, or other equity interests in, Marquee
or any Marquee Subsidiary. Except as set forth in Section 3.03(b) of the
Marquee Disclosure Schedule, there are no outstanding contractual obligations
of Marquee or any Marquee Subsidiary to repurchase, redeem or otherwise acquire
any shares of Marquee Common Stock or any capital stock of, or any equity
interest in, any Marquee Subsidiary. Each outstanding share of capital stock
of, or other equity interest in, each Marquee Subsidiary is duly authorized,
validly issued, fully paid and nonassessable, and each such share or interest
owned by Marquee or another Marquee Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Marquee's or such other Marquee Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever. There are no
notes, bonds, debentures or other indebtedness of Marquee having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the stockholders of Marquee may vote.
SECTION 3.04. AUTHORITY RELATIVE TO THIS AGREEMENT. Marquee has all
necessary corporate power and authority to execute and deliver this Agreement
and, with respect to the Merger, upon the approval and adoption of this
Agreement by Marquee's stockholders in accordance with this Agreement and
Delaware Law, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Marquee and the
consummation by Marquee of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of Marquee are necessary to authorize this Agreement or
to consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the stockholders of Marquee as set
forth in Section 3.15 and the filing and recordation of an appropriate
Certificate of Merger with the Secretary as required by Delaware Law). This
Agreement has been duly and validly executed and delivered by Marquee and,
assuming the due authorization, execution and delivery of this Agreement by SFX
and Acquisition Sub, constitutes a legal, valid and binding obligation of
Marquee, enforceable against Marquee in accordance with its terms.
SECTION 3.05. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Marquee do not, and the performance
of this Agreement by Marquee will not, subject to, (x) with respect to the
Merger, obtaining the requisite approval and adoption of this Agreement by
Marquee's stockholders in accordance with this Agreement and Delaware Law, and
(y) obtaining the consents, approvals, authorizations and permits and making
the filings described in Section 3.05(b) of this Agreement, (i) conflict with
or violate the Certificate of Incorporation or Bylaws of Marquee or any Marquee
Subsidiary, (ii) conflict with or violate any domestic (federal, state or
local) or foreign law, rule, regulation, order, judgment or decree
(collectively, "Law" or "Laws") applicable to Marquee or any Marquee Subsidiary
or by which any property or asset of Marquee or any Marquee Subsidiary is bound
or affected, or (iii) except as described in Section 3.05(a)(iii) of the
Marquee Disclosure Schedule, result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, unilateral amendment,
acceleration or cancellation of, or give to others any right to invalidate or
terminate any purchase or other right to acquire property under, or result in
the creation of a lien or other encumbrance on any property or asset of Marquee
or any Marquee Subsidiary or require the consent of any third party pursuant
to, any note, bond, mortgage, indenture, evidence of Indebtedness, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Marquee or any Marquee Subsidiary is a party or by which Marquee or
any Marquee Subsidiary or any property or asset of Marquee or any Marquee
Subsidiary is bound or affected, except, in any of the cases enumerated in
clauses (ii) and (iii), for such conflicts, violations, breaches, defaults,
rights, liens and consents which individually or in the aggregate (x) would not
reasonably be expected to have a Material Adverse Effect on Marquee, and (y)
would not prevent or delay consummation of the Transactions or otherwise
prevent Marquee from timely performance of its obligations under this
Agreement. For purposes of this Agreement, "Indebtedness" shall mean, with
respect to any person, without duplication, (i) all obligations of such person
for borrowed money, or with respect to deposits or advances of any kind to such
person, (ii) all obligations of such person evidenced by bonds, debentures,
notes or similar instruments, (iii) all obligations of such person under
conditional sale or other title retention agreements relating to property
purchased by such person, (iv) all obligations of such person issued or assumed
as the deferred purchase price of property or services (excluding obligations
of such person to creditors for raw materials, inventory, services and supplies
incurred in the ordinary course of such person's business), (v) all capitalized
lease obligations of such person, (vi) all obligations of others secured by a
lien on property or assets owned or acquired by such person,
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whether or not the obligations secured thereby have been assumed, (vii) all
obligations of such person under interest rate or currency hedging transactions
(valued at the termination value thereof), (viii) all letters of credit issued
for the account of such person and (ix) all guarantees and arrangements having
the economic effect of a guarantee of such person of any Indebtedness of any
other person.
(b) The execution and delivery of this Agreement by Marquee do not,
and the performance of this Agreement by Marquee will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Securities Act of 1933, as amended (the "Securities Act"), state securities or
"blue sky" laws ("Blue Sky Laws"), the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and filing and recordation of an
appropriate Certificate of Merger with the Secretary as required by Delaware
Law, and (ii) where failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not reasonably be
likely to have a Material Adverse Effect on Marquee, would not prevent or delay
consummation of the Transactions, and would not otherwise prevent Marquee from
timely performing its obligations under this Agreement in any material respect.
SECTION 3.06. PERMITS; COMPLIANCE. Each of Marquee and the Marquee
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any United States (federal, state or local) or foreign
government, or governmental, regulatory or administrative authority, agency or
commission or court of competent jurisdiction ("Governmental Authority")
legally necessary for Marquee or any Marquee Subsidiary to own, lease and
operate its properties or to carry on its business as it is now being
conducted, except for those which the failure to possess would not individually
or in the aggregate reasonably be expected to have a Material Adverse Effect on
Marquee (the "Marquee Permits") and, as of the date hereof, no suspension or
cancellation of any of the Marquee Permits is pending or, to the knowledge of
Marquee, threatened. Neither Marquee nor any Marquee Subsidiary is in conflict
with, or in default or violation of, or, with the giving of notice or the
passage of time, would be in conflict with, or in default or violation of, (i)
any Law applicable to Marquee or any Marquee Subsidiary or by which any
property or asset of Marquee or any Marquee Subsidiary is bound or affected,
except in the case of any such conflict, default or violation which would not
reasonably be expected to have a Material Adverse Effect, or (ii) any of the
Marquee Permits.
SECTION 3.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) Marquee has filed
all forms, reports and documents required to be filed by it with the Securities
and Exchange Commission (collectively, the "Marquee SEC Reports"). The Marquee
SEC Reports, after giving effect to any amendments thereto, (i) were prepared
in all material respects in accordance with the requirements of the Securities
Act and the Exchange Act, as the case may be, and the rules and regulations
thereunder and (ii) did not, at the time they were filed, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. No
Marquee Subsidiary is currently required to file any form, report or other
document with the Securities and Exchange Commission (the "SEC").
(b) Each of the financial statements (including, in each case, any
notes thereto) contained in the Marquee SEC Reports was prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis ("GAAP") throughout the periods indicated (except as may be
indicated in the notes thereto and except that financial statements included
with quarterly reports on Form 10-QSB or Form 10-Q do not contain all GAAP
notes to such financial statements), and each fairly presented in all material
respects the financial position, results of operations and changes in
stockholders' equity and cash flows of Marquee and its consolidated
subsidiaries as of the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not and are not expected,
individually or in the aggregate, to have a Material Adverse Effect on
Marquee).
(c) Except (i) to the extent set forth on the audited consolidated
balance sheet of Marquee as of December 31, 1997, including the notes to the
audited financial statements of which such balance sheet is a part and which is
included in Marquee's Form 10-KSB for the year ended December 31, 1997 (the
"Marquee Balance Sheet"), or (ii) to the extent set forth on the consolidated
balance sheet of Marquee as of March 31, 1998, including the notes to the
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financial statements of which such balance sheet is a part and which is
included in Marquee's Form 10-Q for the three months ended March 31, 1998 (the
"Marquee Interim Balance Sheet"), neither Marquee nor any Marquee Subsidiary
has any liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet, or in the notes thereto, prepared in accordance with GAAP, except for
liabilities and obligations incurred in (x) the ordinary course of business
consistent with past practice since March 31, 1998 which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Marquee or (y) connection with this Agreement.
(d) Marquee has heretofore made available to SFX true, complete and
correct copies of all amendments and modifications (if any) that have not been
filed by Marquee with the SEC to all agreements, documents and other
instruments that previously had been filed by Marquee as exhibits to the
Marquee SEC Reports and are currently in effect.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31,
1998, Marquee has conducted its business only in the ordinary course and in a
manner consistent with Marquee's past practice, and, except as set forth in
Sections 3.08 and 5.01 of the Marquee Disclosure Schedule, as disclosed in a
Marquee SEC Report filed as of the date hereof or as contemplated by this
Agreement, there has not been:
(a) any amendment or other change to the Certificate of Incorporation
or Bylaws of Marquee or any Marquee Subsidiary;
(b) any issuance, sale, pledge, disposal, grant, encumbrance, or
authorization of the issuance, sale, pledge, disposition, grant or encumbrance
by Marquee or any Marquee Subsidiary of (i) any shares of their capital stock
of any class, or any options, warrants, convertible securities or other rights
of any kind to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of Marquee or
any Marquee Subsidiary (except for the issuance of shares of capital stock
pursuant to the exercise of Options and Warrants outstanding on March 31,
1998), or (ii) any of their assets;
(c) any declaration, setting aside, making or payment of any dividend
or other distribution, payable in cash, stock, property or otherwise, with
respect to any of the capital stock of Marquee or any Marquee Subsidiary;
(d) any reclassification, combination, split or division by Marquee or
any Marquee Subsidiary of any of their capital stock or redemption, purchase or
other acquisition, directly or indirectly, of any of their capital stock or
securities or obligations convertible into or exchangeable or exercisable for
such capital stock;
(e) any commitment or incurrence by Marquee or any Marquee Subsidiary
of any capital expenditure in excess of $50,000;
(f) any incurrence of any indebtedness for borrowed money in excess of
$50,000 or issuance of any debt securities or assumption, guarantee or
endorsement, or otherwise becoming responsible as an accommodation, for the
obligations of any person, or making of any loans or advances;
(g) any acquisition by Marquee or any Marquee Subsidiary (including,
without limitation, by merger, consolidation or acquisition of stock or assets)
of any interest in any corporation, partnership, other business organization or
any division thereof or any assets;
(h) any contract or agreement entered into or modified, amended or
terminated by Marquee or any Marquee Subsidiary material to their businesses,
results of operations or financial condition;
(i) any (i) increase in the compensation payable or to become payable
to any director, officer or other employee, or consultant or advisor, of
Marquee or any Marquee Subsidiary, (ii) grant of any bonus to, or grant of any
severance or termination pay to, except pursuant to existing compensation and
benefit plans, practices or arrangements that have been previously disclosed to
SFX, any director, officer or other employee, or consultant or advisor, of
Marquee
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or any Marquee Subsidiary, (iii) employment or severance agreement that has a
potential duration of more than 90 days or that involves an aggregate payment
of more than $50,000, entered into with any director, officer or other
employee, or consultant or advisor, of Marquee or any Marquee Subsidiary, or
(iv) collective bargaining agreement entered into or amended;
(j) any bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation or other plan,
trust or fund established, adopted, entered into or amended for the benefit of
any director, officer or class of employees of Marquee or any Marquee
Subsidiary;
(k) any settlement or compromise by Marquee or any Marquee Subsidiary
of any pending or threatened litigation which would reasonably be expected to
have a Material Adverse Effect on Marquee or which relates to the Transactions;
(l) any event, circumstance or fact (whether or not covered by
insurance), individually or in the aggregate, (i) having or reasonably likely
to have a Material Adverse Effect on Marquee or (ii) likely to prevent or delay
consummation of the Transactions or to otherwise prevent Marquee from timely
performance of its obligations under this Agreement; or
(m) any material change by Marquee or any Marquee Subsidiary in its
accounting methods, principles or practices, except as may be required by GAAP.
SECTION 3.09. ABSENCE OF LITIGATION. Section 3.09 of the Marquee
Disclosure Schedule sets forth each instance in which any of Marquee and the
Marquee Subsidiaries (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (ii) is a party or, to the knowledge of
Marquee and the Marquee Subsidiaries, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator, which has not otherwise been
disclosed in the Marquee SEC Reports filed as of the date of this Agreement and
which (x) would reasonably be expected to have a Material Adverse Effect on
Marquee or (y) would prevent or delay consummation of the Transactions or
otherwise prevent Marquee from timely performance of its obligations under this
Agreement. Neither Marquee nor any Marquee Subsidiary nor any property or asset
of Marquee or any Marquee Subsidiary is in violation of any order, writ,
judgment, injunction, decree, determination or award.
SECTION 3.10. EMPLOYEE BENEFIT MATTERS. Except as disclosed in Section
3.10 of the Marquee Disclosure Schedule or as disclosed in a Marquee SEC Report
filed as of the date hereof:
(a) Marquee has delivered or made available to SFX each "employee
pension benefit plan" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (a "Pension Plan"), each
"employee welfare benefit plan" (as defined in Section 3(1) of ERISA), each
stock option, stock purchase, deferred compensation plan or arrangement and
each other employee fringe benefit plan or arrangement maintained, contributed
to or required to be maintained or contributed to by Marquee, any of the
Marquee Subsidiaries or any other person or entity that, together with Marquee,
is treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code (each, a "Commonly Controlled Entity") which is currently in effect for
the benefit of any current or former employees, officers, directors or
independent contractors of Marquee or any of the Marquee Subsidiaries or with
respect to which Marquee or any Commonly Controlled Entity has any material
contingent liability (collectively, "Benefit Plans"). Marquee has delivered or
made available to SFX true, complete and correct copies of (i) the most recent
annual report on Form 5500 filed with the Internal Revenue Service with respect
to each Benefit Plan for which the filing of any such report is required by
ERISA or the Code, (ii) the most recent summary plan description for each
Benefit Plan for which the preparation of any such summary plan description is
required by ERISA, (iii) each currently effective trust agreement, insurance or
group annuity contract and each other funding or financing arrangement relating
to any Benefit Plan and (iv) a schedule of employer expenses with respect to
each Benefit Plan for the current plan year of each Benefit Plan.
(b) Each Benefit Plan has been administered in material compliance
with its terms, the applicable provisions of ERISA, the Code and all other
applicable laws and the terms of all applicable collective bargaining
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agreements. To the knowledge of Marquee, there are no investigations by any
governmental agency, termination proceedings or other claims (except routine
claims for benefits payable under the Benefit Plans), suits or proceedings
pending or threatened against any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan that, individually or in the
aggregate, (i) are reasonably likely to result in a Material Adverse Effect on
Marquee or (ii) would prevent or delay consummation of the Transactions or
otherwise prevent Marquee from timely performance of its obligations under this
Agreement.
(c) There has been no application for waiver of the minimum funding
standards imposed by Section 412 of the Code with respect to any Pension Plan.
No Pension Plan has or had at any time during the current plan year an
"accumulated funding deficiency" within the meaning of Section 412(a) of the
Code.
(d) Each Pension Plan that is intended to be a tax-qualified plan has
been the subject of a determination letter from the Internal Revenue Service to
the effect that such Pension Plan and related trust is qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a), respectively, of
the Code. To the knowledge of Marquee, (i) no such determination letter has
been revoked, (ii) revocation of such letter has not been threatened, and (iii)
such Pension Plan has not been amended since the effective date of its most
recent determination letter in any respect that would adversely affect its
qualification. Marquee has delivered or made available to SFX a copy of the
most recent determination letter received with respect to each Pension Plan for
which such a letter has been issued, as well as a copy of any pending
application for a determination letter. To the knowledge of Marquee, no event
has occurred that could subject any Pension Plan to any tax under Section 511
of the Code that, individually or in the aggregate, will result in a Material
Adverse Effect on Marquee or would prevent or delay consummation of the
Transactions or otherwise prevent Marquee from timely performance of its
obligations under this Agreement.
(e) Neither Marquee nor any of the Marquee Subsidiaries has engaged in
a "prohibited transaction" (as defined in Section 4975 of the Code or Section
406 of ERISA) that involves the assets of any Benefit Plan that, to Marquee's
knowledge, is reasonably likely to subject Marquee, any of the Marquee
Subsidiaries, any employee of Marquee or any Marquee Subsidiary or, to the
knowledge of Marquee, a non-employee trustee, non-employee administrator or
other non-employee fiduciary of any trust created under any Benefit Plan to any
tax or penalty on prohibited transactions imposed by Section 4975 of the Code
that individually, or in the aggregate, is reasonably likely to result in a
Material Adverse Effect on Marquee. Within the past five years, no Pension Plan
that is subject to Title IV of ERISA has been terminated other than in a
standard termination in accordance with Section 4041(b) of ERISA or, to the
knowledge of Marquee, has been the subject of a "reportable event" (as defined
in Section 4043 of ERISA and the regulations thereunder) for which the
reporting requirement has not been waived by applicable regulations, and no
such Pension Plan is reasonably expected to be terminated other than in such a
standard termination. None of Marquee, any of the Marquee Subsidiaries or, to
the knowledge of Marquee, any non-employee trustee, non-employee administrator
or other non-employee fiduciary of any Benefit Plan has breached the fiduciary
duty provisions of ERISA or any other applicable law in a manner that,
individually or in the aggregate, is reasonably likely to, result in a Material
Adverse Effect on Marquee.
(f) Neither Marquee nor any of the Marquee Subsidiaries sponsors or
maintains any Pension Plan that is a "defined benefit pension plan" (as defined
in Section 3(35) of ERISA) (a "Defined Benefit Plan").
(g) No Commonly Controlled Entity has incurred any liability under
Title IV of ERISA (other than for contributions not yet due to a Defined
Benefit Plan and other than for the payment of premiums to the Pension Benefit
Guaranty Corporation not yet due), which liability, to the extent currently
due, has not been fully paid (or accrued on such entity's financial statements)
and would not, individually or in the aggregate, be reasonably likely to result
in a Material Adverse Effect on Marquee.
(h) No Commonly Controlled Entity has engaged in a transaction
described in Section 4069 of ERISA that could subject Marquee to liability at
any time after the date hereof that individually, or in the aggregate, is
reasonably likely to result in a Material Adverse Effect on Marquee.
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(i) Neither Marquee nor the Marquee Subsidiaries contributes to or
participates in any multi-employer plan (as defined in Section 3(31) or
4001(a)(3) of ERISA). No Commonly Controlled Entity has withdrawn from any
multi-employer plan (as defined in Section 3(37) or 4001(a)(3) of ERISA) where
such withdrawal has resulted in any "withdrawal liability" (as defined in
Section 4201 of ERISA) that has not been fully paid.
(j) Prior to the date hereof, Marquee has made available to SFX copies
of all agreements and Benefit Plans under which any employee of Marquee or any
of the Marquee Subsidiaries will be entitled to any additional benefits or any
acceleration of the time of payment or vesting of any benefits under any
Benefit Plan or under any employment, severance, termination or compensation
agreement as a result of the transactions contemplated by this Agreement.
Section 3.10(j) of the Marquee Disclosure Schedule sets forth any severance
payments contained in such agreements or Benefit Plans which provide for
payments in excess of $100,000 to any such employee.
(k) No Benefit Plan provides that payments pursuant to such Benefit
Plan may be made in securities of a Commonly Controlled Entity, nor does any
trust maintained pursuant to any Benefit Plan hold any securities of a Commonly
Controlled Entity.
(l) Notwithstanding any of the foregoing to the contrary, the
representations and warranties of this Section 3.10, other than clauses (a) and
(i), shall not apply to any multi-employer plan (as defined in Section 3(37) or
4001(a)(3) of ERISA), nor shall they apply with respect to any actions or
omissions of a Pension Plan prototype plan sponsor of which Marquee has no
knowledge.
(m) There are no arrangements or contracts with any employee, director
or independent contractor that require any deferred compensation or benefits to
be paid or provided following either the consummation of the transactions
contemplated under this Agreement or the termination of service.
SECTION 3.11. LABOR MATTERS. Neither Marquee nor any Marquee
Subsidiary is a party to any collective bargaining agreement, memorandum of
understanding, settlement or other labor union contract applicable to persons
employed by Marquee or any Marquee Subsidiary. There are no material
representation or certificate proceedings or petitions seeking a representation
proceeding pending or, to the knowledge of Marquee, threatened to be brought or
filed with the National Labor Relations Board or any other labor relations
tribunal or authority. To the knowledge of Marquee, there are no material
organizing activities of Marquee or any of the Marquee Subsidiaries, with
respect to any group of employees of Marquee or the Marquee Subsidiaries and no
union or labor organization has been recognized by Marquee or any Marquee
Subsidiary as an exclusive bargaining representative for employees of Marquee
or any Marquee Subsidiary.
There (i) is no grievance, arbitration, unfair labor practice,
investigation, employment discrimination or other labor or employment related
charge, complaint or claim against Marquee or any Marquee Subsidiary pending
before any court, arbitrator, mediator or governmental agency or tribunal, or,
to Marquee's knowledge, threatened, and (ii) has been no adjudication by any
court, arbitrator, mediator, or governmental agency or tribunal, that, in the
case of either (i) or (ii), has or that would reasonably be expected to have a
Material Adverse Effect on Marquee or otherwise limit or affect the business
operations of Marquee.
SECTION 3.12. INTELLECTUAL PROPERTY. (a) The term "Intellectual
Property Assets" includes: (i) all fictional business names, designs, trade
names, trade dress, registered and unregistered trademarks, and service marks
used or intended to be used by Marquee or any Marquee Subsidiary in relation to
its goods or services or events, including, without limitation, those names
identified on Marquee Disclosure Schedule 3.12(a)(i) (collectively, "Marks");
(ii) all copyrights authored or placed in a tangible medium by any employee of,
or any person retained by, Marquee or any Marquee Subsidiary within the scope
of such employment or retention, or otherwise acquired by Marquee or any
Marquee Subsidiary, including, without limitation, those names identified on
Marquee Disclosure Schedule 3.12(a)(ii) (collectively, "Copyrights"); (iii) all
proprietary information, confidential materials, trade secrets, know-how,
inventions, improvements, marketing plans, strategies, forecasts, customer
information, customer lists, and the like, developed, designed, made, or
conceived by any employee of, or any person retained by, Marquee or any Marquee
Subsidiary, within the scope of such employment or retention, or otherwise
acquired by Marquee or any Marquee
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Subsidiary (collectively, "Proprietary Information"); and (iv) all rights of
Marquee or any Marquee Subsidiary to any intellectual property of a third
party, including, without limitation, licenses with respect to any trade name,
trademark, service mark, patent, copyright, trade secret, or other proprietary
right of a third party.
(b) There are no outstanding and, to Marquee's knowledge, no
threatened disputes or disagreements with respect to any contract, agreement or
arrangement relating to the Intellectual Property Assets to which Marquee or
any Marquee Subsidiary is a party or by which Marquee or any Marquee Subsidiary
is bound. The Intellectual Property Assets are all those necessary for the
operation of Marquee's and the Marquee Subsidiaries' businesses as they are
currently conducted or contemplated to be conducted by Marquee. Marquee or a
Marquee Subsidiary is the owner of all right, title and interest in and to each
of the Intellectual Property Assets, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims, and has
the right to use all of the Intellectual Property Assets without payment to a
third party.
(c) All applications and registrations for any Mark, Copyright or
Proprietary Information are currently in compliance with all formal legal
requirements, are valid and in full force and effect, and are not subject to
any fees or taxes or actions falling due within ninety days after the Closing.
No application or registration for a Mark has been or is now involved in any
opposition, invalidation, or cancellation and, to Marquee's knowledge, (i) no
such action is threatened with respect to any such application or registration,
and (ii) there is no potentially interfering registration or application of any
third party.
(d) To Marquee's knowledge, no Mark, Copyright, or Proprietary
Information is infringed or violated by a third party or has been subject to
any adverse claim or challenged or threatened in any way by a third party.
(e) Neither Marquee nor any Marquee Subsidiary infringes or violates,
or has received notice that either is alleged to infringe or violate, any trade
name, trademark, service mark, patent, copyright, trade secret or other
proprietary right of any third party.
SECTION 3.13. TAXES. Except as described in Section 3.13 of the
Marquee Disclosure Schedule:
(a) Marquee and each of the Marquee Subsidiaries have filed all
material Tax Returns (as hereinafter defined) that they were required to file,
or requests for extensions to file such returns have been timely filed, have
been granted and have not expired. All such Tax Returns were correct and
complete in all material respects. All Taxes (as hereinafter defined) shown as
due on any Tax Return filed by any of Marquee and the Marquee Subsidiaries have
been paid. No claim has ever been made by an authority in a jurisdiction where
any of Marquee and the Marquee Subsidiaries does not file Tax Returns that it
is or may be subject to taxation by such jurisdiction. There are no Tax liens
on any of the assets of any of Marquee and the Marquee Subsidiaries that arose
in connection with any failure (or alleged failure) to pay any Tax other than
those which in the aggregate would not have a Material Adverse Effect on
Marquee or Taxes being contested in good faith by appropriate proceedings.
(b) No deficiencies for any Taxes have been proposed, asserted or
assessed against Marquee or any of the Marquee Subsidiaries that are not
adequately provided for on its financial statements, except for deficiencies
that individually or in the aggregate would not have a Material Adverse Effect
on Marquee, and no requests for waivers of the time to assess any such Taxes
have been granted or are pending. The U.S. Federal income Tax returns of
Marquee and each Marquee Subsidiary consolidated in such returns have been
either examined by and settled with the U.S. Internal Revenue Service or closed
by virtue of the applicable statute of limitations. There is no audit,
examination, deficiency or refund litigation pending with respect to Taxes,
and, during the past three years, no taxing authority has given written notice
of the intent to commence any such examination, audit deficiency or refund
litigation.
(c) Marquee and the Marquee Subsidiaries shall not be required to
include in a taxable period ending after the Effective Time any taxable income
attributable to income that economically accrued in a prior taxable period as a
result of Section 481 of the Code, the installment method of accounting or any
comparable provision of state or local Tax law.
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(d) Each of Marquee and the Marquee Subsidiaries has withheld and paid
all Taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other third party.
(e) As used in this Agreement, "Taxes" shall include all Federal,
state, local, foreign and other income, franchise, use, property, sales, excise
and other taxes, tariffs or governmental charges of any nature whatsoever,
domestic or foreign, including any interest, penalties or additions with
respect thereto. "Tax Return" means any return, report, declaration, claim for
refund, information statement or other documentation (including any additional
or supporting material and including any amendment thereof) filed or
maintained, or required to be filed or maintained, in connection with the
calculation, determination, assessment or collection of any Tax.
SECTION 3.14. OPINION OF FINANCIAL ADVISOR. Marquee has received the
written opinion of Prudential Securities, Inc. (the "Marquee Banker") on the
date of this Agreement to the effect that, as of the date hereof, the Merger
Consideration is fair, from a financial point of view, to the holders of
Marquee Common Stock.
SECTION 3.15. VOTE REQUIRED. The affirmative vote of the holders of a
majority of the voting power of the then outstanding shares of Marquee Common
Stock is the only vote of the holders of any class or series of capital stock
of Marquee necessary to approve the Merger.
SECTION 3.16. BROKERS. No broker, finder or investment banker (other
than the Marquee Banker) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of Marquee or any Marquee Subsidiary.
SECTION 3.17. TANGIBLE PROPERTY. Marquee and the Marquee Subsidiaries
have good title to, or a valid leasehold interest in, the tangible personal
properties and assets used by them or shown on the Marquee Balance Sheet or the
Marquee Interim Balance Sheet or acquired after the date thereof (except those
sold or otherwise disposed of for fair value since the date of the Marquee
Balance Sheet or the Marquee Interim Balance Sheet in the ordinary course of
business consistent with past practice and not in violation of this Agreement),
which are free and clear of any mortgage, pledge, lien, encumbrance, charge, or
other security interest, other than (a) mechanic's, materialmen's and similar
liens arising or incurred in the ordinary course of business, (b) purchase
money liens and liens securing rental payments under capital lease
arrangements, (c) liens which would not reasonably be expected to have a
Material Adverse Effect on Marquee, (d) liens and encumbrances identified and
reflected on the Marquee Balance Sheet or the Marquee Interim Balance Sheet, as
the case may be, and (e) mortgages, pledges, liens, encumbrances, charges or
other security interests that do not, individually, or in the aggregate,
materially adversely affect the current use of such property. All of the assets
of Marquee and the Marquee Subsidiaries have been maintained in all material
respects in accordance with the past practice of Marquee and the Marquee
Subsidiaries and generally accepted industry practice, are in good operating
condition and are usable in the ordinary course of business, except as would
not, individually or in the aggregate, have a Material Adverse Effect on
Marquee.
SECTION 3.18. MATERIAL AND ACQUISITION CONTRACTS. (a) Section 3.18(a)
of the Marquee Disclosure Schedule lists each contract which is required by its
terms or is currently expected to result in the payment or receipt by Marquee
or any Marquee Subsidiary of more than $100,000 per year or $250,000 in the
aggregate over the term of the contract (collectively, "Material Contracts"),
to which Marquee or any Marquee Subsidiary is a party, except for contracts
which have been filed and publicly available prior to the date of this
Agreement in any Marquee SEC Reports; provided, however, that Section 3.18(a)
of the Marquee Disclosure Schedule shall contain a list of all employment
agreements and shall set forth the material terms of any oral contracts. There
are no oral contracts that, individually or in the aggregate, are material to
Marquee and the Marquee Subsidiaries, taken as a whole. Each Material Contract
is in full force and effect and, to the knowledge of Marquee, is enforceable
against the parties thereto in accordance with its terms. No condition or state
of facts exists that, with notice or the passage of time, or both, would
constitute a default by Marquee or any Marquee Subsidiary or, to the knowledge
of Marquee, any third party under such Material Contracts, except for such
defaults which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on Marquee. Marquee or the
applicable Marquee Subsidiary has duly complied in all material respects with
the provisions of each Material Contract to which it is a party.
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(b) Section 3.18(b) of the Marquee Disclosure Schedule lists each
contract, agreement, arrangement or letter of intent (whether binding or
non-binding) entered into by Marquee or any Marquee Subsidiary subsequent to
March 31, 1998 for the acquisition (whether by merger or otherwise) of the
assets or operations of any person for which the consideration payable by
Marquee exceeds $100,000 or results in the issuance of Marquee Common Stock
(collectively, and together with any contract or agreement entered into on a
basis consistent with and pursuant to the terms of any such arrangement or
letter of intent, "Acquisition Contracts"). Marquee has delivered or made
available to SFX a true, complete and correct copy of each Acquisition
Contract, as amended to the date hereof. Each Acquisition Contract is in full
force and effect and, to the knowledge of Marquee, is enforceable against the
parties thereto in accordance with its terms. No condition or state of facts
exists that, with notice or the passage of time, or both, would constitute a
default by Marquee or any Marquee Subsidiary or, to the best knowledge of
Marquee, any third party under such Acquisition Contracts. Marquee or the
applicable Marquee Subsidiary has duly complied in all material respects with
the provisions of each Acquisition Contract to which it is a party.
SECTION 3.19. CERTAIN BUSINESS PRACTICES. Marquee, each Marquee
Subsidiary and, to the knowledge of Marquee, each director, officer, authorized
agent or employee of Marquee or any Marquee Subsidiary have not, directly or
indirectly, (a) used any funds for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity, (b) made any
unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended, (c) made any other
unlawful payment, (d) violated any of the provisions of Section 999 of the Code
or Section 8 of the Export Administration Act, as amended, or (e) established
or maintained any fund or asset that has not been recorded in the books and
records of Marquee and the Marquee Subsidiaries, except, in each case, as would
not individually or in the aggregate reasonably be expected to have a Material
Adverse Effect on Marquee.
SECTION 3.20. BOARD RECOMMENDATION. At a meeting duly called and held
in compliance with Delaware Law, (a) the Marquee Independent Committee has
unanimously adopted a resolution approving the Merger and recommended that the
Board of Directors of Marquee approve this Agreement and the Transactions, (b)
the Board of Directors of Marquee has unanimously adopted a resolution (with
two abstentions) (i) approving the Merger, based on a determination that the
Merger is in the best interests of the Marquee stockholders, and (ii) approving
and adopting this Agreement and the Transactions and recommending approval and
adoption of this Agreement and the Transactions by the stockholders of Marquee.
SECTION 3.21. CHANGE IN CONTROL. Except as set forth in Section 3.21
of the Marquee Disclosure Schedule or as disclosed in a Marquee SEC Report
filed as of the date hereof, neither Marquee nor any Marquee Subsidiary is a
party to any contract, agreement or understanding which is currently expected
to result in the payment or receipt by Marquee or any Marquee Subsidiary of
$50,000 or more individually and $100,000 or more in the aggregate which
contains a "change in control," "potential change in control" or similar
provision. Except as set forth in Section 3.21 of the Marquee Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the Transactions will (a) result in any payment (whether of
severance pay or otherwise) becoming due from Marquee or any Marquee Subsidiary
to any person, (b) materially increase any benefits otherwise payable by
Marquee or any Marquee Subsidiary or (c) result in the acceleration of the time
of payment or vesting of any such benefits.
SECTION 3.22. ENVIRONMENTAL MATTERS. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i)
"Hazardous Materials" means (A) those substances, pollutants, contaminants or
hazardous waste regulated under the following federal statutes and their state
counterparts, as in effect at the relevant time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Federal Water Pollution Control Act, the
Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide,
Fungicide, and Rodenticide Act, the Toxic Substances Control Act and the Clean
Air Act, (B) petroleum and petroleum products, byproducts and breakdown
products including crude oil and any fractions thereof, (C) polychlorinated
biphenyls, (D) asbestos, asbestos-containing material, or urea formaldehyde or
material that contains it, and (E) any substance with respect to which a
federal, state or local agency requires environmental investigation,
monitoring, reporting or remediation, and (ii) "Environmental Laws" means any
federal, state, foreign, or local Law, rule or regulation, as in effect at the
relevant time, and including any judicial or administrative order, consent
decree or judgment, relating to pollution or protection of the environment,
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health, safety or natural resources, including without limitation, those
relating to (A) the environment or public health and safety or (B) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Materials; (iii) "Occupational Safety and Health Laws" means any
legal requirement designed to provide safe and healthful working conditions and
reduce occupational safety and health hazards.
(b) Except as would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on Marquee and except as
disclosed in a Marquee SEC Report filed as of the date hereof: (i) Marquee and
each Marquee Subsidiary are in material compliance with all applicable
Environmental Laws and Occupational Safety and Health Laws, (ii) Marquee and
each Marquee Subsidiary have obtained all permits, approvals, identification
numbers, licenses or other governmental authorizations required under any
applicable Environmental Laws ("Environmental Permits") and are in compliance
with their requirements, (iii) such Environmental Permits will remain with the
Surviving Corporation pursuant to the Merger without the consent of any
Governmental Authority, (iv) to Marquee's knowledge there are no underground or
aboveground storage tanks or any surface impoundments, landfills, dumps, septic
tanks, pits, sumps or lagoons (collectively, "Tanks") in which Hazardous
Materials are being or have been treated, stored or disposed of on any owned or
leased real property, and there were no such Tanks on any real property
formerly owned, leased or occupied by Marquee or any Marquee Subsidiary during
the period of such ownership or occupancy, (v) there is, to the knowledge of
Marquee, no friable asbestos or asbestos-containing material on any owned or
leased real property in violation of applicable Environmental Laws, (vi)
Marquee and the Marquee Subsidiaries have not released, discharged or disposed
of Hazardous Materials except in compliance with applicable Environmental Law
and have no knowledge of a threat of release of Hazardous Materials on any
owned or leased real property or on any real property formerly owned, leased or
occupied by Marquee or any Marquee Subsidiary not in compliance with applicable
Environmental Laws, (vii) other than routine operational matters neither
Marquee nor any of the Marquee Subsidiaries is undertaking, and neither Marquee
nor any of the Marquee Subsidiaries has completed, any investigation or
assessment or remedial or response action relating to any such release,
discharge or disposal of or contamination with Hazardous Materials at any site,
location or operation, either voluntarily or pursuant to the order of any
Governmental Authority or the requirements of any Environmental Law, and (viii)
there are no pending or, to the knowledge of Marquee, past or threatened
actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, notices of liability or potential liability,
investigations, proceedings, consent orders or consent agreements relating in
any way to Environmental Laws, Occupational Safety and Health Laws, any
Environmental Permits or any Hazardous Materials ("Environmental and
Occupational Safety and Health Claims") against Marquee or any Marquee
Subsidiary or any of their property or property to which Hazardous Materials
generated, manufactured, received, transferred, used or processed by Marquee or
any Marquee Subsidiary have been transported, treated, stored, handled,
transferred, disposed, recycled or received and to the knowledge of Marquee
there are no existing circumstances that can reasonably be expected to form the
basis of any such Environmental and Occupational Safety and Health Claim.
(c) Marquee and the Marquee Subsidiaries have delivered to SFX or
Acquisition Sub copies of any environmental reports, studies or analyses in its
possession or under its control relating to owned or leased real property or
the operations of Marquee or the Marquee Subsidiaries.
SECTION 3.23. ACCOUNTS RECEIVABLE. Except as would not have a Material
Adverse Effect on Marquee, all of the accounts receivable reflected in the
Marquee Balance Sheet or the Marquee Interim Balance Sheet or created
thereafter (a) are valid receivables subject to no set-offs or counterclaims,
(b) are current and collectible and (c) will be collected in accordance with
their terms at their recorded amounts, subject only to the reserve for bad
debts set forth in the Marquee Balance Sheet or the Marquee Interim Balance
Sheet, as the case may be, as adjusted for operations and transactions through
the Effective Time in accordance with the past custom and practice of Marquee
and the Marquee Subsidiaries.
SECTION 3.24. INSURANCE. Section 3.24 of the Marquee Disclosure
Schedule sets forth a list of each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which any of Marquee or any Marquee Subsidiary
has been a party, a named insured, or otherwise the beneficiary of coverage at
any time within the past one year. With respect to each such insurance policy
designated as "current": (a) the policy is in full force and effect, (b)
Marquee has not received notice from any insurance carrier of the intention of
such carrier to discontinue any such policy, (c) neither Marquee nor any
Marquee Subsidiary
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is, and, to the knowledge of Marquee, no other party to the policy is, in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse
of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy, and (d) no party to the policy
has repudiated any provision thereof. Section 3.24 of the Marquee Disclosure
Schedule lists any self-insurance arrangements affecting any of Marquee and the
Marquee Subsidiaries. All material assets and risks of Marquee and each Marquee
Subsidiary are covered by valid and currently effective insurance policies in
such types and amounts as are consistent with customary practices and standards
of companies engaged in business and operations similar to those of Marquee or
such Marquee Subsidiary.
SECTION 3.25. REAL PROPERTY AND LEASES.
(a) Section 3.25(a) of the Marquee Disclosure Schedule lists and
describes briefly all real property that any of Marquee and each Marquee
Subsidiary owns. With respect to each such parcel of owned real property and
except as noted in Section 3.25(a) of the Marquee Disclosure Schedule: (i) the
identified owner has good and marketable title to the parcel of real property,
free and clear of any liens or encumbrances, easement, covenant, or other
restriction, except for installments of special assessments not yet delinquent,
recorded easements, covenants, and other restrictions, and utility easements,
building restrictions, zoning restrictions, and other easements and
restrictions existing generally with respect to properties of a similar
character which do not affect materially and adversely the current use,
occupancy, or value, or the marketability of title, of the property subject
thereto, (ii) there are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any party or parties the right of use
or occupancy of any portion of the parcel of real property that would have a
Material Adverse Effect on Marquee's use of such property, and (iii) there are
no outstanding options or rights of first refusal to purchase, lease or occupy
the parcel of real property, or any portion thereof or interest therein which
would have a Material Adverse Effect on Marquee's use of such property.
(b) Section 3.25(b) of the Marquee Disclosure Schedule lists and
describes briefly all real property leased or subleased to any of Marquee and
any Marquee Subsidiary. With respect to each lease and sublease (i) the lease
or sublease is legal, valid, binding and enforceable against Marquee or such
Marquee Subsidiary, and in full force and effect in all material respects, (ii)
to the knowledge of Marquee, no party to the lease or sublease is in material
breach or default, and no event has occurred which, with notice or lapse of
time, would constitute a material breach or default or permit termination,
modification, or acceleration thereunder, (iii) no party to the lease or
sublease has repudiated any material provision thereof, (iv) there are no
material disputes, oral agreements, or forbearance programs in effect as to the
lease or sublease, (v) none of Marquee or any Marquee Subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold or sub-leasehold, and (vi) except as would not have a Material
Adverse Effect on Marquee, all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including material licenses
and permits) legally required in connection with the operation thereof, and
have been operated and maintained in accordance with applicable laws, rules,
and regulations in all material respects.
SECTION 3.26. INTERESTED PARTY TRANSACTIONS. No event or transaction
has occurred or been entered into that would be required to be, and has not
been, reported by Marquee as a "Certain Relationship or Related Transaction"
pursuant to Item 404 of Regulation S-K promulgated by the SEC. Except as
disclosed in the Marquee SEC Reports filed as of the date of this Agreement,
neither Marquee nor any Marquee Subsidiary has any liability or any other
obligation of any nature whatsoever to any officer, director or affiliate of
Marquee or of any Marquee Subsidiary.
SECTION 3.27. CLIENTS AND EVENTS. No client, sponsor or customer of
Marquee or any Marquee Subsidiary that during the 12 month period preceding the
date of this Agreement individually accounted for at least 1%, or in the
aggregate accounted for 5%, of Marquee's consolidated gross revenues (i) has
indicated to Marquee or any Marquee Subsidiary that it will stop, or decrease
materially the rate of, buying services or products of Marquee and the Marquee
Subsidiaries or (ii) has at any time on or after March 31, 1998 decreased
materially its usage of the services or products of Marquee and the Marquee
Subsidiaries. Marquee and the Marquee Subsidiaries have not received any notice
or other indication of the termination or reduction of Marquee's or any Marquee
Subsidiary's involvement in or receipt of fees from any event that Marquee or
such Marquee Subsidiary promoted, organized or otherwise derived revenues from
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during such preceding 12 month period, except for such events that individually
accounted for less than 1%, or in the aggregate accounted for 5%, of Marquee's
consolidated gross revenues during such preceding 12 month period.
SECTION 3.28. RESTRICTIONS ON BUSINESS ACTIVITIES. To the knowledge of
Marquee, there is no material agreement, judgment, injunction, order or decree
binding upon Marquee or any Marquee Subsidiary that has, or reasonably could be
expected to have, the effect of prohibiting or materially impairing any current
or future business practice of Marquee or any Marquee Subsidiary, any
acquisition of property by Marquee or any Marquee Subsidiary or the conduct of
business by Marquee or any Marquee Subsidiary as currently conducted or as
proposed to be conducted by Marquee or any Marquee Subsidiary.
SECTION 3.29. CORPORATE RECORDS. The books of account, minute books,
stock record books and other records of Marquee and the Marquee Subsidiaries
are complete and correct and have been maintained in accordance with sound
business practices. The minute books of Marquee and the Marquee Subsidiaries
made available to SFX contain true, complete and correct records of all
meetings of directors and stockholders or actions by written consent since the
time of incorporation of Marquee and each Marquee Subsidiary, and reflect all
transactions referred to in such minutes accurately in all material respects.
SECTION 3.30. STATE TAKEOVER STATUTES. The Board of Directors of
Marquee has taken all actions so that the restrictions contained in Section 203
of Delaware Law applicable to a "business combination" (as defined in such
Section 203) will not apply to the execution, delivery or performance of this
Agreement or the consummation of the Merger or the other Transactions. To
Marquee's knowledge, no other state takeover statute or similar statute or
regulation applies or purports to apply to this Agreement or any of the
Transactions.
ARTICLE IV -REPRESENTATIONS AND WARRANTIES OF SFX AND ACQUISITION SUB
Except as set forth in the Disclosure Schedule delivered by SFX to
Marquee attached hereto as Exhibit B (the "SFX Disclosure Schedule"), which
identifies exceptions by specific section references, SFX and Acquisition Sub
hereby, jointly and severally, represent and warrant to Marquee that:
SECTION 4.01. CORPORATE ORGANIZATION AND QUALIFICATION. SFX is a
corporation, and each subsidiary of SFX (each a "SFX Subsidiary" and
collectively, the "SFX Subsidiaries") is a corporation or other entity, in each
case (a) duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and (b) which has the requisite
corporate or other power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. SFX and each SFX
Subsidiary are duly qualified or licensed as a foreign corporation (or other
entity) to do business, and are in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by them or the nature
of their business makes such qualification or licensing necessary, except for
such failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a Material Adverse Effect on SFX.
SECTION 4.02. CERTIFICATE OF INCORPORATION AND BYLAWS. SFX has
heretofore made available to Marquee a complete and correct copy of the
Certificate of Incorporation and Bylaws of SFX, and the Certificate of
Incorporation and Bylaws of Acquisition Sub, each as amended to date. Neither
SFX nor Acquisition Sub is in violation of any provision of its Certificate of
Incorporation or Bylaws.
SECTION 4.03. OWNERSHIP OF ACQUISITION SUB; NO PRIOR ACTIVITIES.
Acquisition Sub is a direct or indirect wholly-owned subsidiary of SFX.
Acquisition Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement. Except for obligations or
liabilities incurred in connection with its incorporation or organization and
the Transactions and except for this Agreement and any other agreements or
arrangements contemplated by this Agreement, Acquisition Sub has not incurred,
directly or indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
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SECTION 4.04. CAPITALIZATION. The authorized capital stock of SFX
consists of 100,000,000 shares of SFX Class A Common Stock, 10,000,000 shares
of Class B Common Stock, par value $.01 per share, and 25,000,000 shares of
preferred stock, par value $.01 per share. As of July 20, 1998, 28,753,194
shares of SFX Class A Common Stock were issued and outstanding, all of which
are validly issued, fully paid and nonassessable and not subject to preemptive
rights, and no shares have been issued or become outstanding between such date
and the date hereof, other than pursuant to exercise of outstanding options or
warrants of SFX described in Section 4.04 of the SFX Disclosure Schedule or as
disclosed in an SFX SEC Report (as defined herein) filed prior to the date
hereof. As of the date hereof, (a) 1,697,037 shares of Class B Common Stock of
SFX were issued and outstanding, all of which are validly issued, fully paid
and nonassessable and not subject to preemptive rights, and (b) no shares of
preferred stock were issued and outstanding. The authorized capital stock of
Acquisition Sub consists of 1,000 shares of common stock, of which, as of the
date of this Agreement, 100 shares are issued and outstanding and held by SFX.
Except as contemplated by this Agreement, as set forth in Section 4.04 of the
SFX Disclosure Schedule or as disclosed in an SFX SEC Report filed prior to the
date hereof, as of the date of this Agreement, there are no options, warrants
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of SFX or any SFX Subsidiary,
obligating SFX or any SFX Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, SFX or any SFX Subsidiary. Except as
disclosed in an SFX SEC Report, there are no outstanding contractual
obligations of SFX or any SFX Subsidiary to repurchase, redeem or otherwise
acquire any shares of SFX Common Stock, or any capital stock of, or any equity
interests in, any SFX subsidiary. The shares of SFX Class A Common Stock to be
issued pursuant to the Merger will be duly authorized, validly issued, fully
paid and non-assessable and not subject to preemptive rights created by
statute, SFX's Certificate of Incorporation or Bylaws or any agreement to which
SFX is a party or by which SFX is bound and will, when issued, be registered
under the Securities Act and the Exchange Act and registered or exempt from
registration under applicable Blue Sky Laws.
SECTION 4.05. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of SFX and
Acquisition Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Transactions. The execution and delivery of this Agreement by SFX and
Acquisition Sub and the consummation by SFX and Acquisition Sub of the
Transactions have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of SFX or Acquisition
Sub are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the issuance of SFX Class A Common Stock pursuant
to the Merger, the applicable rules and regulations of the Nasdaq Stock Market,
and with respect to the Merger, the filing and recordation of an appropriate
Certificate of Merger with the Secretary as required by Delaware Law). This
Agreement has been duly and validly executed and delivered by SFX and
Acquisition Sub and, assuming the due authorization, execution and delivery of
this Agreement by Marquee, constitutes a legal, valid and binding obligation of
each of SFX and Acquisition Sub enforceable against each of SFX and Acquisition
Sub in accordance with its terms.
SECTION 4.06. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by SFX and Acquisition Sub do not, and
the performance of this Agreement by SFX and Acquisition Sub will not, subject
to obtaining the consents, approvals, authorizations and permits and making the
filings described in Section 4.06(b) of the SFX Disclosure Schedule or in
Section 4.06(b) of this Agreement, (i) conflict with or violate the Certificate
of Incorporation or Bylaws of SFX or any SFX Subsidiary, (ii) conflict with or
violate any Law applicable to SFX or any SFX Subsidiary or by which any
property or asset of any of them is bound or affected or (iii) except as
specified in Section 4.06(a)(iii) of the SFX Disclosure Schedule, result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of SFX or any
SFX Subsidiary or require the consent of any third party pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which SFX or any SFX Subsidiary
is a party or by which SFX or any SFX Subsidiary or any property or asset of
any of them is bound or affected, except, in any cases enumerated in clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, reasonably be
likely to have a Material Adverse Effect on SFX or prevent SFX and Acquisition
Sub from timely performing their respective obligations under this Agreement
and consummating the Transactions.
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(b) The execution and delivery of this Agreement by SFX and
Acquisition Sub do not, and the performance of this Agreement by SFX and
Acquisition Sub will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, except (i) pursuant to the Exchange Act, the
Securities Act, Blue Sky Laws, the HSR Act and filing and recordation of an
appropriate Certificate of Merger with the Secretary as required by Delaware
Law, (ii) such filings with and approvals of the Nasdaq Stock Market to permit
the shares of SFX Class A Common Stock to be listed, and (iii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not reasonably be likely to have a Material
Adverse Effect on SFX and would not prevent or delay consummation of the
Transactions, or otherwise prevent SFX or Acquisition Sub from performing their
respective obligations under this Agreement.
SECTION 4.07. SEC FILINGS; FINANCIAL STATEMENTS. (a) SFX has filed all
forms, reports and documents required to be filed by it with the SEC
(collectively, the "SFX SEC Reports"). The SFX SEC Reports after giving effect
to any amendments thereto, (i) were prepared in all material respects in
accordance with the requirements of the Securities Act and the Exchange Act, as
the case may be, and the rules and regulations thereunder and (ii) did not, at
the time they were filed, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SFX SEC Reports was prepared in
accordance with GAAP throughout the periods indicated (except as may be
indicated in the notes thereto and except that financial statements included
with interim reports do not contain all GAAP notes to such financial
statements) and each fairly presented in all material respects the consolidated
financial position, results of operations and changes in stockholders' equity
and cash flows of SFX and its consolidated subsidiaries as of the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments
which were not and are not expected, individually or in the aggregate, to have
a Material Adverse Effect on SFX).
(c) Except (i) to the extent set forth on the audited consolidated
balance sheet of SFX as of December 31, 1997, including the notes to the
audited financial statements of which such balance sheet is a part and which is
included in SFX's Form 10-K for the year ended December 31, 1997 (the "SFX
Balance Sheet"), or (ii) to the extent set forth on the consolidated balance
sheet of SFX as of March 31, 1998, including the notes to the financial
statements of which such balance sheet is a part and which is included in SFX's
Form 10-Q for the three months ended March 31, 1998 (the "SFX Interim Balance
Sheet"), neither SFX nor any SFX Subsidiary has any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with GAAP, except for liabilities and obligations incurred in (x)
the ordinary course of business consistent with past practice since March 31,
1998 which would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on SFX or (y) connection with this Agreement.
(d) SFX has heretofore made available to Marquee true, complete and
correct copies of all amendments and modifications (if any) that have not been
filed by SFX with the SEC to all agreements, documents and other instruments
that previously had been filed by SFX as exhibits to the SFX SEC Reports and
are currently in effect.
SECTION 4.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. (a) Since March
31, 1998, except in the ordinary course and in a manner consistent with SFX's
past practice or as contemplated by, or disclosed pursuant to, this Agreement,
including Section 4.08 of the SFX Disclosure Schedule, or disclosed in any SFX
SEC Report filed since March 31, 1998, there has not been (i) any event or
events (whether or not covered by insurance), individually or in the aggregate,
having or reasonably likely to have a Material Adverse Effect on SFX, (ii) any
material change by SFX in its accounting methods, principles or practices, or
(iii) any declaration, setting aside or payment of any dividend or distribution
in respect of any capital stock of SFX or any redemption, purchase or other
acquisition of any of its securities.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the Transactions and except for this Agreement and any other
agreements or
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arrangements contemplated by this Agreement, Acquisition Sub has not and will
not have incurred, directly or indirectly, through any subsidiary or affiliate,
any obligations or liabilities or engaged in any business activities of any
type or kind whatsoever or entered into any agreements or arrangements with any
person.
SECTION 4.09. ABSENCE OF LITIGATION. Section 4.09 of the SFX
Disclosure Schedule sets forth each instance in which any of SFX and the SFX
Subsidiaries (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party or, to the knowledge of SFX and
the SFX Subsidiaries, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator, which has not otherwise been
disclosed in the SFX SEC Reports filed as of the date of this Agreement and
which (x) would reasonably be expected to have a Material Adverse Effect on SFX
or (y) would prevent or delay consummation of the Transactions or otherwise
prevent SFX from timely performance of its obligations under this Agreement.
Neither SFX nor any SFX Subsidiary nor any property or asset of SFX or any SFX
Subsidiary is in violation of any order, writ, judgment, injunction, decree,
determination or award.
SECTION 4.10. TAXES. Except as described in Section 4.10 of the SFX
Disclosure Schedule:
(a) SFX and each of the SFX Subsidiaries have filed all material Tax
Returns that they were required to file, or requests for extensions to file
such returns have been timely filed, granted and have not expired, or requests
for extensions to file such returns have been timely filed, have been granted
and have not expired. All such Tax Returns were correct and complete in all
material respects. All Taxes shown as due on any Tax Return by any of SFX and
the SFX Subsidiaries have been paid. No claim has ever been made by an
authority in a jurisdiction where any of SFX and the SFX Subsidiaries does not
file Tax Returns that it is or may be subject to taxation by such jurisdiction.
There are no Tax liens on any of the assets of any of SFX and the SFX
Subsidiaries that arose in connection with any failure (or alleged failure) to
pay any Tax other than those which in the aggregate would not have a Material
Adverse Effect or Taxes being contested in good faith by appropriate
proceedings.
(b) No deficiencies for any Taxes have been proposed, asserted or
assessed against SFX or any of the SFX Subsidiaries that are not adequately
provided for on its financial statements, except for deficiencies that
individually or in the aggregate would not have a Material Adverse Effect on
SFX, and no requests for waivers of the time to assess any such Taxes have been
granted or are pending. The U.S. Federal income Tax Returns of SFX and each SFX
Subsidiary consolidated in such returns have been either examined by and
settled with the U.S. Internal Revenue Service or closed by virtue of the
applicable statute of limitations. There is no audit, examination, deficiency
or refund litigation pending with respect to Taxes, and, during the past three
years, no taxing authority has given written notice of the intent to commence
any such examination, audit deficiency or refund litigation.
(c) SFX and the SFX Subsidiaries shall not be required to include in a
taxable period ending after the Effective Time any taxable income attributable
to income that economically accrued in a prior taxable period as a result of
Section 481 of the Code, the installment method of accounting or any comparable
provision of state or local Tax law.
(d) Each of SFX and the SFX Subsidiaries has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder or
other third party.
SECTION 4.11. OPINION OF FINANCIAL ADVISOR. SFX has received the
written opinion of Lehman Brothers (the "SFX Banker") on the date of this
Agreement to the effect that the Merger Consideration to be offered by SFX in
the Merger is fair, from a financial point of view, to SFX as of the date
thereof.
SECTION 4.12. BROKERS. No broker, finder or investment banker (other
than the SFX Banker) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of SFX or any SFX Subsidiary.
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SECTION 4.13. BOARD RECOMMENDATION. At a meeting duly called and held
in compliance with Delaware Law, (a) the SFX Independent Committee has
unanimously adopted a resolution approving the Merger and recommended that the
Board of Directors of SFX approve the Merger, (b) the Board of Directors of SFX
has unanimously adopted a resolution (with two abstentions) (i) approving the
Merger, based on a determination that the Merger is in the best interests of
the SFX stockholders, and (ii) approving and adopting this Agreement and the
Transactions.
SECTION 4.14. PERMITS; COMPLIANCE. Each of SFX and the SFX
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Authority legally necessary for SFX or
any SFX Subsidiary to own, lease and operate its properties or to carry on its
business as it is now being conducted, except for those which the failure to
possess would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect on SFX.
SECTION 4.15. CERTAIN BUSINESS PRACTICES. As of the date of this
Agreement, SFX, each SFX Subsidiary and, to the knowledge of SFX, each
director, officer, authorized agent or employee of SFX or any SFX Subsidiary
have not, directly or indirectly, (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, (c) made any other unlawful payment, (d) violated any of the
provisions of Section 999 of the Code or Section 8 of the Export Administration
Act, as amended, or (e) established or maintained any fund or asset that has
not been recorded in the books and records of SFX and the SFX Subsidiaries,
except, in each case, as would not individually or in the aggregate reasonably
be expected to have a Material Adverse Effect on SFX.
SECTION 4.16. INTERESTED PARTY TRANSACTIONS. No event or transaction
has occurred or been entered into that would be required to be, and has not
been, reported by SFX as a "Certain Relationship or Related Transaction"
pursuant to Item 404 of Regulation S-K promulgated by the SEC. Except as
disclosed in the SFX SEC Reports filed as of the date of this Agreement, SFX
does not have any liability or any other obligation of any nature whatsoever to
any officer, director or affiliate of SFX.
SECTION 4.17. ERISA COMPLIANCE. With respect to each "employee benefit
plan" (as defined in Section 3(1) of ERISA) maintained or contributed to by
SFX, no event has occurred and, to the knowledge of SFX, no condition or set of
circumstances exists, in connection with which SFX could be subject to any
liabilities (except liabilities for benefits claims and funding obligations
payable in the ordinary course) under ERISA, the Code or any other applicable
law that are individually or in the aggregate reasonably likely to have a
Material Adverse Effect on SFX.
ARTICLE V - CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. CONDUCT OF BUSINESS BY MARQUEE PENDING THE MERGER.
Marquee covenants and agrees that, from the date of this Agreement until the
earlier of (x) the date on which this Agreement is terminated and (y) the
Effective Time, except as contemplated by this Agreement, Marquee shall, and
shall cause the Marquee Subsidiaries to, carry on their respective businesses
in the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and in compliance in all material respects with all
applicable Laws. Without limiting the generality of the foregoing, during the
aforementioned period, except as contemplated by this Agreement, Marquee shall
not, and shall not permit any Marquee Subsidiary to, without the consent of SFX
(which shall not be unreasonably withheld):
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned Marquee Subsidiary to its
parent, (ii) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) other than as set forth
in Section 5.01(b) of the Marquee Disclosure Schedule or as set forth in the
agreements specifically identified thereon, purchase, redeem or otherwise
acquire any shares of capital stock of Marquee or any Marquee Subsidiary or any
other securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
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(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities other than as set forth in Section 5.01(b)
of the Marquee Disclosure Schedule or as set forth in the agreements
specifically identified thereon;
(c) amend its Certificate of Incorporation, Bylaws or other comparable
organizational documents;
(d) except as and to the extent set forth in the Acquisition
Contracts, acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, (i)
any business or any corporation, limited liability company, partnership, joint
venture, association or other business organization or division thereof or (ii)
any assets that, individually or in the aggregate, are material to Marquee and
the Marquee Subsidiaries, taken as a whole;
(e) sell, lease, license, mortgage or otherwise encumber or subject to
any lien or otherwise dispose of any of its properties or assets, other than in
the ordinary course of business consistent with past practice, that are
material to Marquee and the Marquee Subsidiaries, taken as a whole;
(f) except in the ordinary course of business consistent with past
practice, except as set forth in Section 5.01(f) of the Marquee Disclosure
Schedule or as set forth in the agreements specifically identified thereon and
except for intercompany Indebtedness between Marquee and any Marquee Subsidiary
or between Marquee Subsidiaries, (i) incur or guarantee any Indebtedness, or
(ii) make any loans, advances or capital contributions to, or investments in,
any other person, other than to Marquee or any direct or indirect wholly owned
Marquee Subsidiary or to officers and employees of Marquee or any Marquee
Subsidiary for travel, business or relocation expenses in the ordinary course
of business;
(g) make or agree to make any new capital expenditures which in the
aggregate are in excess of $50,000;
(h) make any tax election that could reasonably be expected to have a
Material Adverse Effect on Marquee or settle or compromise any material income
tax liability;
(i) except as required by Law, and except in the ordinary course of
business or as would not (x) reasonably be expected to have a Material Adverse
Effect on Marquee or (y) prevent or delay consummation of the Transactions or
otherwise prevent Marquee from timely performance of its obligations under this
Agreement, enter into (other than entry into the Acquisition Contracts and the
agreement contemplated by Section 7.02(d)), modify, amend or terminate any
material contract or agreement to which Marquee or any Marquee Subsidiary is a
party or waive, release or assign any material rights or claims thereunder;
(j) except as required by Law, modify, amend or terminate any
Acquisition Contract or waive, release or assign any material rights or claims
thereunder;
(k) make any material change to its accounting methods, principles or
practices, except as may be required by GAAP;
(l) fail to act in the ordinary course of business consistent with
past practice of Marquee, exercising commercially reasonable care to (i)
preserve substantially intact Marquee's and each Marquee Subsidiary's present
business organization, (ii) keep available the services of any employee with an
employment contract with Marquee or any Marquee Subsidiary, and (iii) preserve
its present relationships with clients, sponsors, suppliers and others having
significant business dealings with them;
(m) fail to use commercially reasonable efforts to maintain the
material assets of Marquee and each Marquee Subsidiary in their current
physical condition, except for ordinary wear and tear and damage, provided that
nothing contained herein shall be deemed to prohibit Marquee or the Marquee
Subsidiaries from undertaking or completing any capital expenditures permitted
by clause (g) hereof;
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(n) merge or consolidate with or into any other legal entity or
dissolve or liquidate any Marquee Subsidiary;
(o) except as required by the terms and provisions of written
contracts between Marquee or any Marquee Subsidiary and an employee thereof as
in existence on the date of this Agreement or as set forth in Section 5.01(o)
of the Marquee Disclosure Schedule or as set forth in the agreements
specifically identified thereon, (i) adopt or amend any Benefit Plan other than
in the ordinary course of business consistent with past practice or as required
by Law, or (ii) materially increase in any manner the aggregate compensation or
fringe benefits (including, without limitation, commissions) of any officer,
director, or employee or other personnel of Marquee or any Marquee Subsidiary
(whether employees or independent contractors) other than as required by Law;
(p) pay, discharge or satisfy any material (on a consolidated basis
for Marquee and the Marquee Subsidiaries taken as a whole) claims, liabilities,
or obligations (absolute, accrued, asserted or un-asserted, contingent or
otherwise), other than in the ordinary course of business consistent with past
practice, or fail to pay or otherwise satisfy (except if being contested in
good faith) any material (on a consolidated basis for Marquee and the Marquee
Subsidiaries, taken as a whole) accounts payable, liabilities or obligations
when due and payable;
(q) engage in any transactions with any of its affiliates other than
(i) transactions between Marquee and any Marquee Subsidiary or among Marquee
Subsidiaries, or (ii) transactions disclosed as of the date of this Agreement
in the Marquee SEC Reports; or
(r) authorize, or commit or agree to take, any of the foregoing
actions.
SECTION 5.02. CONDUCT OF BUSINESS BY SFX PENDING THE MERGER. SFX
covenants and agrees that, from the date of this Agreement until the earlier of
(x) the date on which this Agreement is terminated and (y) the Effective Time,
unless Marquee shall otherwise agree in writing or except as otherwise required
by this Agreement, SFX shall, and shall cause the SFX Subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, except where the failure
to so act would not adversely affect SFX's ability to perform its obligations
hereunder. Notwithstanding anything herein to the contrary, nothing contained
in this Agreement shall prohibit SFX from (i) consummating acquisitions with
respect to which definitive agreements have been executed as of the date
hereof, (ii) entering into transactions, on an arm's length basis, in
connection with the consummation of such acquisitions, including, without
limitation, debt and/or equity financing, or (iii) entering into additional
acquisition agreements on an arm's length basis.
SECTION 5.03. OTHER ACTIONS. Between the date of this Agreement and
the Effective Time, Marquee and SFX shall use their best efforts to cause the
conditions to the Merger set forth in Article VII to be satisfied. Marquee and
SFX shall not, and shall not permit any of their respective subsidiaries to,
take any action that would, or that could reasonably be expected to, result in
(i) any of the representations and warranties of such party set forth in this
Agreement becoming untrue or (ii) any of the conditions to the Merger set forth
in Article VII not being satisfied.
ARTICLE VI - ADDITIONAL AGREEMENTS
SECTION 6.01. REGISTRATION STATEMENT; PROXY STATEMENT. (a) Within 60
days after the execution of this Agreement, SFX and Marquee shall prepare and
file with the SEC a preliminary proxy statement or a registration statement on
Form S-4 (together with all amendments thereto, the "Registration Statement")
including therein a proxy statement to be sent to the stockholders of Marquee
(the "Proxy Statement") and prospectus, in connection with the registration
under the Securities Act of the shares of SFX Class A Common Stock to be issued
to the holders of the Marquee Common Stock pursuant to the Merger. SFX and
Marquee shall cooperate with each other in connection with any other filings
with the SEC that either is obligated to make as a result of the Transactions.
SFX and Marquee each shall use all reasonable efforts to cause the Registration
Statement to become effective as promptly as practicable, and, prior to the
effective date of the Registration Statement, SFX shall take all or any action
required under any applicable federal or state securities laws in connection
with the issuance of shares of SFX Class A Common Stock pursuant to the Merger.
Each of Marquee and SFX shall pay its own expenses incurred in connection with
the Registration Statement,
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Proxy Statement and the Marquee Stockholders' Meeting (as defined herein),
including, without limitation, the fees and disbursements of their respective
counsel, accountants and other representatives, except that Marquee and SFX
each shall pay one-half of any filing fees and printing expenses incurred in
connection therewith. Marquee shall furnish all information concerning Marquee
as SFX may reasonably request, and SFX shall furnish all information concerning
SFX as Marquee may reasonably request, in each case in connection with such
actions and the preparation of the Registration Statement and Proxy Statement.
As promptly as practicable after the Registration Statement shall have become
effective, Marquee shall mail the Proxy Statement to its stockholders. The
Proxy Statement shall include the unanimous recommendation of the Marquee
Independent Committee and the recommendation of the Board of Directors of
Marquee in favor of the Merger, unless otherwise required by the applicable
fiduciary duties of the directors as determined by such directors in good faith
after consultation with independent legal counsel.
No amendment or supplement to the Proxy Statement or the Registration
Statement will be made by SFX or Marquee without the approval of the other
party, which shall not be unreasonably withheld. SFX and Marquee each will
advise the other, promptly after it receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or amendment
has been filed, the issuance of any stop order, the suspension of the
qualification of the SFX Class A Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional
information.
SFX shall prepare and submit to the Nasdaq Stock Market a listing
application covering the shares of SFX Class A Common Stock issuable in the
Merger (including shares issuable upon exercise of Options and Warrants), and
shall use its commercially reasonable efforts to obtain, prior to the Effective
Time, approval for the listing of such shares of SFX Class A Common Stock,
subject to official notice of issuance. Marquee shall cooperate fully with SFX
with respect to such listing.
SFX shall use commercially reasonable efforts to maintain the
effectiveness of the Registration Statement (and maintain the current status of
the Prospectus contained therein) for so long as the Options and Warrants
remain outstanding.
(b) SFX represents, warrants and agrees that the information supplied
by SFX or its representatives for inclusion in the Registration Statement and
the Proxy Statement shall not, at (i) the time the Registration Statement is
declared effective, (ii) the time the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to the stockholders of Marquee, (iii)
the time of the Marquee Stockholders' Meeting, and (iv) the Effective Time
(with respect to the Registration Statement only), contain any statement which,
at such time and in light of the circumstances under which it is made, is false
or misleading with respect to any material fact, or omit to state any material
fact required to be stated therein, or necessary in order to make the
statements therein not false or misleading. If at any time prior to the
Effective Time any event or circumstance relating to SFX or any SFX Subsidiary,
or their respective officers or directors, should be discovered by SFX which
should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, SFX shall promptly inform Marquee.
Notwithstanding the foregoing, SFX and Acquisition Sub make no representation
or warranty with respect to any information supplied by Marquee or any of its
representatives which is contained in the Registration Statement or Proxy
Statement. All documents that SFX is responsible for filing with the SEC in
connection with the Transactions will comply as to form and substance in all
material aspects with the applicable requirements of the Securities Act and the
rules and regulations promulgated thereunder and the Exchange Act and the rules
and regulations promulgated thereunder.
(c) Marquee represents, warrants and agrees that the information
supplied by Marquee or its representatives for inclusion in the Registration
Statement and the Proxy Statement shall not, at (i) the time the Registration
Statement is declared effective, (ii) the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to the stockholders of
Marquee, (iii) the time of the Marquee Stockholders' Meeting, and (iv) the
Effective Time (with respect to the Registration Statement only), contain any
statement which, at such time and in light of the circumstances under which it
is made, is false or misleading with respect to any material fact, or omit to
state any material fact required to be stated therein, or necessary in order to
make the statements therein not false or misleading. If at any time prior to
the Effective Time any event or circumstance relating to Marquee or any Marquee
Subsidiary, or
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their respective officers or directors, should be discovered by Marquee which
should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, Marquee shall promptly inform SFX.
Notwithstanding the foregoing, Marquee makes no representation or warranty with
respect to any information supplied by SFX or Acquisition Sub or any of their
representatives in the Registration Statement or Proxy Statement. All documents
that Marquee is responsible for filing with the SEC in connection with the
Transactions will comply as to form and substance in all material respects with
the applicable requirements of the Securities Act and the rules and regulations
promulgated thereunder and the Exchange Act and the rules and regulations
promulgated thereunder.
(d) Marquee, SFX and Acquisition Sub each hereby (i) consents to the
use of its name and, on behalf of its subsidiaries and affiliates, the names of
such subsidiaries and affiliates, and to the inclusion of financial statements
and business information relating to such party and its subsidiaries and
affiliates (in each case, to the extent required by applicable securities
laws), in the Registration Statement and the Proxy Statement, (ii) agrees to
use all reasonable efforts to obtain the written consent of any person or
entity retained by it which may be required to be named (as an expert or
otherwise) in the Registration Statement or the Proxy Statement, and (iii)
agrees to cooperate fully, and agrees to use all reasonable efforts to cause
its subsidiaries and affiliates to cooperate fully, with any legal counsel,
investment banker, accountant or other agent or representative retained by any
of the parties specified in clause (i) above in connection with the preparation
of any and all information required, as determined after consultation with each
party's counsel, to be disclosed by applicable securities laws in the
Registration Statement or the Proxy Statement.
SECTION 6.02. STOCKHOLDERS' MEETINGS. Marquee shall call a meeting of
its stockholders (the "Marquee Stockholders' Meeting") as promptly as
practicable for the purpose of voting upon the approval of this Agreement and
the Merger, and Marquee shall use all commercially reasonable efforts to hold
the Marquee Stockholders' Meeting as soon as practicable after the date on
which the Registration Statement becomes effective. Without limiting the
generality of the foregoing, Marquee agrees that its obligations pursuant to
the preceding sentence shall not be affected by the commencement, public
proposal, public disclosure or communication to Marquee of any Takeover
Proposal (as defined hereinafter), unless this Agreement has been terminated.
Unless otherwise required under applicable fiduciary duties of Marquee's
directors, as determined in good faith after consultation with independent
legal counsel, Marquee shall use all commercially reasonable efforts to solicit
from its stockholders proxies in favor of the approval of this Agreement and
the Merger, and shall take all other action reasonably necessary or advisable
to secure the vote or consent of stockholders required by Delaware Law to
obtain such approvals.
SECTION 6.03. APPROPRIATE ACTION; CONSENTS; FILINGS. (a) Marquee, SFX
and Acquisition Sub shall use their commercially reasonable efforts to (i)
take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable under applicable Laws or
required to be taken by any Governmental Authority or otherwise to consummate
and make effective the Transactions as promptly as practicable, (ii) obtain
from all applicable Governmental Authorities all consents, licenses, permits,
waivers, approvals, authorizations or orders legally required to be obtained or
made by SFX or Marquee or any of their subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the Transactions, including, without limitation, the Merger, and (iii) as
promptly as practicable, make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement and the Merger
required under (A) the Securities Act, the Exchange Act and any other
applicable federal or state securities Laws, (B) the rules and regulations of
the Nasdaq National Market, (C) Delaware Law, (D) the HSR Act and any related
governmental request thereunder, and (E) all other applicable Laws; provided
that SFX and Marquee shall cooperate fully with each other in connection with
the making of all such filings, including providing copies of all such
documents to the non-filing party and its advisors prior to filing and, if
requested, accepting all reasonable additions, deletions or changes suggested
in connection therewith. Marquee and SFX shall use reasonable best efforts to
furnish to each other all information required for each application or other
filing to be made pursuant to the rules and regulations of the Nasdaq National
Market and all applicable Laws (including all information required to be
included in the Proxy Statement and the Registration Statement) in connection
with the Transactions.
(b) (i) Each of SFX and Marquee shall give (or shall cause their
respective subsidiaries to give) any notices to third parties, and use, and
cause their respective subsidiaries to use, their commercially reasonable
efforts to obtain any third party consents, (A) legally necessary to
consummate the Transactions, (B) disclosed or required to be disclosed in
the Marquee Disclosure Schedule or the SFX Disclosure Schedule or (C)
required
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to prevent a Material Adverse Effect on SFX or Marquee from occurring prior
to or after the Effective Time; provided, however, that "commercially
reasonable efforts" as used in this Agreement shall not require any party to
undertake extraordinary or unreasonable measures to obtain any approvals or
consents, including, without limitation, the initiation or prosecution of
legal proceedings. At Closing, Marquee will deliver landlord estoppel
certificates in form reasonably satisfactory to SFX.
(ii) If SFX or Marquee fails to obtain any third party consent
described in subsection (b)(i) above, then it shall use its commercially
reasonable efforts, and shall take any actions reasonably requested by the
other party, to minimize any adverse effect upon Marquee and SFX, their
respective subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after the Effective Time, from the
failure to obtain such consent.
(c) From the date of this Agreement until the earlier of (x) the
termination of this Agreement and (y) the Effective Time, each party shall
promptly notify the other party of any actual or, to the best knowledge of the
first party, threatened action, proceeding or investigation by or before any
Governmental Authority or any other person (i) challenging or seeking material
damages in connection with the Merger, the conversion of Marquee Common Stock
into SFX Class A Common Stock pursuant to the Merger or the Transactions or
(ii) seeking to restrain or prohibit the consummation of the Merger or the
Transactions or otherwise limit the right of SFX to own or operate all or any
portion of the businesses or assets of Marquee, which in either case is
reasonably likely to have a Material Adverse Effect on Marquee prior to the
Effective Time, or a Material Adverse Effect on SFX (including the Surviving
Corporation) after the Effective Time.
SECTION 6.04. ACCESS TO INFORMATION. (a) From the date hereof until
the earlier of (x) the termination of this Agreement and (y) the Effective
Time, SFX and Marquee will each provide to the other, during normal business
hours and upon reasonable notice, access to all information and documents which
the other may reasonably request regarding the business, assets, liabilities,
employees and other aspects of the other party, other than information and
documents that in the opinion of such other party's counsel may not be
disclosed under applicable Law.
(b) Marquee shall cooperate fully (with SFX responsible for all
reasonable costs and expenses) with SFX in connection with certain financing
transactions SFX may undertake. In connection therewith, at the request of SFX,
Marquee (with SFX responsible for all reasonable costs and expenses) will cause
its officers, directors, employees, representatives, consultants and advisors
to assist in the preparation of offering memoranda and pro forma financial
information and to participate in any road show presentations SFX shall
undertake in connection therewith, provided that such assistance shall not
unreasonably interfere with the performance by any of such officers, directors,
employees, representatives, consultants or advisors of services for Marquee. In
furtherance of the foregoing, Marquee shall use its best efforts to cause its
auditors to provide and allow the filing of consents and "comfort letters" and
other documentation as may be required for the inclusion of any financial
statements of Marquee prepared at the request of SFX, to allow such financial
statements to be used in public or private financing documents.
SECTION 6.05. ACQUISITION PROPOSALS. Neither Marquee nor any Marquee
Subsidiary shall initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal, or enter into discussions or
negotiate with any person or entity in furtherance of such inquiries to obtain
a Takeover Proposal, or enter into an agreement with respect to any Takeover
Proposal or agree to or endorse any Takeover Proposal, or authorize or permit
any of the officers, directors or employees of Marquee or any Marquee
Subsidiary or any investment banker, financial advisor, attorney, accountant or
other representative retained by Marquee or any Marquee Subsidiary to take any
such action, and Marquee shall promptly notify SFX of all relevant terms and
conditions of any such inquiries and proposals received by Marquee or any
Marquee Subsidiary or by any such officer, director, investment banker,
financial advisor or attorney (including the identity of the person from whom
such inquiry or proposal was received), and if such inquiry or proposal is in
writing, Marquee shall deliver or cause to be delivered to SFX a copy of such
inquiry or proposal; provided, however, that nothing contained in this
Agreement shall prohibit the Board of Directors of Marquee or any Marquee
Subsidiary or their representatives from (i) furnishing information
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to, facilitating, entering into discussions or negotiations with, or agreeing
with, any person or entity in connection with an unsolicited bona fide Takeover
Proposal that involves consideration to Marquee's stockholders with a value
that the Board of Directors of Marquee reasonably believes, after consultation
with the Marquee Banker, is superior to the consideration provided for in the
Merger, if, and only to the extent that (A) the Board of Directors of Marquee,
after consultation with independent legal counsel determines in good faith that
such action is required for the Board of Directors of Marquee to comply with
its fiduciary duties to stockholders imposed by applicable Law and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, Marquee (x) provides as promptly as practicable
written notice to SFX of Marquee's intention to furnish such information to, or
begin such discussions or negotiations with, such person or entity and (y)
obtains from such person or entity a customary confidentiality agreement, or
(ii) complying with Rule 14e-2 promulgated under the Exchange Act with regard
to a Takeover Proposal. For purposes of this Agreement, "Takeover Proposal"
shall mean any of the following involving Marquee or any Marquee Subsidiary:
(i) any merger, consolidation, share exchange, business combination, or other
similar transaction (other than the transactions contemplated by this
Agreement), (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 25% or more of the assets of Marquee and the Marquee
Subsidiaries, taken as a whole, in a single transaction or series of
transactions, (iii) any tender offer or exchange offer for 25% or more of any
outstanding class of capital stock of Marquee or the filing of a registration
statement under the Securities Act in connection therewith, (iv) the
acquisition by any person of "beneficial ownership" or the right to acquire
beneficial ownership of, or the formation of any "group" (as such terms are
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) which beneficially owns, or has the right to acquire
beneficial ownership of, 25% or more of the then outstanding shares of any
class of capital stock of Marquee, or (v) any public announcement of a
proposal, plan or intention to do any of the foregoing.
SECTION 6.06. DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) From and
after the Effective Time, the Surviving Corporation shall indemnify, defend and
hold harmless each person who is now, who has been at any time prior to the
date of this Agreement or who becomes prior to the Effective Time, an officer
or director of Marquee or any of the Marquee Subsidiaries, or an employee of
Marquee or any of the Marquee Subsidiaries who acts as a fiduciary under any
employee benefit plan of Marquee or any of the Marquee Subsidiaries
(collectively, the "Indemnified Parties") against all losses, expenses
(including reasonable attorneys' fees), claims, damages, liabilities or amounts
that are paid in settlement of, or otherwise in connection with, any threatened
or actual claim, action, suit, proceeding or investigation (a "Claim"), based
in whole or in part on or arising in whole or in part out of the fact that the
Indemnified Party (or the person controlled by the Indemnified Party) is or was
a director, officer or such an employee of Marquee or any of the Marquee
Subsidiaries and pertaining to any matter existing or arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, any Claim arising out of this Agreement or any of the
Transactions), whether asserted or claimed prior to, at or after the Effective
Time, in each case to the fullest extent permitted under Delaware Law or the
Surviving Corporation's Certificate of Incorporation and Bylaws, and shall pay
any expenses, as incurred, in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the fullest extent permitted
under Delaware Law or the Surviving Corporation's Certificate of Incorporation
and Bylaws; provided, however, that the Surviving Corporation shall not be
liable for any settlement effected without its written consent (which shall not
be unreasonably withheld). Without limiting the foregoing, in the event any
such claim is brought against any of the Indemnified Parties, such Indemnified
Parties may retain counsel (including local counsel) satisfactory to them and
which shall be reasonably satisfactory to SFX, and the Surviving Corporation
shall pay all fees and expenses of such counsel for such Indemnified Parties.
The Indemnified Parties as a group shall retain only one law firm (plus
appropriate local counsel) to represent them with respect to each such Claim
unless there is, as determined by counsel to the Indemnified Parties, under
applicable standards of professional conduct, a conflict or a reasonable
likelihood of a conflict on any significant issue between the positions of any
two or more Indemnified Parties, in which event each such Indemnified Party
shall be entitled to retain separate legal counsel at the expense of the
Surviving Corporation. SFX hereby unconditionally and irrevocably guarantees
the full and prompt payment and performance of any and all of the Surviving
Corporation's obligations under this Agreement. The indemnification provisions
in the Surviving Corporation's Certificate of Incorporation and Bylaws shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any matter that would affect adversely the rights
thereunder of any Indemnified Party, unless such modification shall be required
by Delaware Law.
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(b) For a period of six (6) years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by Marquee
covering all of the individuals currently covered thereby (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous to such officers and directors) with respect to claims arising
from facts or events which occurred at or prior to the Effective Time;
provided, however, that the Surviving Corporation shall not be required to pay
annual premiums for such insurance in excess of 200% in the aggregate of
Marquee's current annual premium unless SFX continues to maintain its
directors' and officers' liability insurance despite a comparable increase; and
provided further, that if the premium for such coverage exceeds such amount,
the Surviving Corporation shall purchase a policy with the greatest coverage
available for such 200% of the annual premium.
SECTION 6.07. OBLIGATIONS OF ACQUISITION SUB. SFX shall take all
action necessary to cause Acquisition Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement and hereby irrevocably and
unconditionally guarantees all such obligations of Acquisition Sub.
SECTION 6.08. PUBLIC ANNOUNCEMENTS. SFX and Marquee shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any Transaction and shall not
issue any such press release or make any such public statement prior to such
consultation. Prior to the Effective Time, Marquee will not issue any other
press release or otherwise make any public statements regarding its business,
except, in each case, as may be required by Law or any listing agreement with
the American Stock Exchange or any other exchange to which Marquee is a party.
Marquee and SFX shall consult with each other concerning the means by which the
employees, clients, sponsors and suppliers of, and others having dealings with,
Marquee and the Marquee Subsidiaries will be informed of the Transactions.
SECTION 6.09. NOTIFICATION OF CERTAIN MATTERS. (a) Between the date of
this Agreement and the Closing Date, each of Marquee and SFX shall promptly
notify the other party in writing (i) if it becomes aware of any fact or
condition that causes or constitutes a breach of any of its representations and
warranties as of the date of this Agreement, (ii) if it becomes aware of the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition, (iii) in the event of any breach of any covenant contained in this
Agreement or (iv) of the occurrence of any event or change (A) making, or which
insofar as can be reasonably foreseen would make, the satisfaction of the
conditions contained in Article VII impossible or unlikely or (B) having, or
which insofar as can be reasonably foreseen would have, a Material Adverse
Effect on such party. The delivery of any such notice shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
(b) If any fact, condition or event described in paragraph (a) above
would require any change in the Marquee Disclosure Schedule or the SFX
Disclosure Schedule if such disclosure schedule were dated the date of the
occurrence or discovery of any such fact or condition, then Marquee or SFX, as
the case may be, will promptly deliver to the other party a supplement to such
disclosure schedule specifying such change. If the receiving party does not
deliver written notice of termination pursuant to Section 8.01(e) or Section
8.01(f) within 20 days after delivery of such supplement, then the portions of
the applicable disclosure schedule relating to the delivering party's
representations and warranties (but no other portion of such disclosure
schedule) shall be deemed to have included the information set forth in such
supplement as if set forth therein on the date hereof and for all purposes
hereof, including, without limitation, Sections 7.02(a) and 7.03(a).
SECTION 6.10. FURTHER ACTION. At any time and from time to time, each
party to this Agreement agrees, subject to the terms and conditions of this
Agreement, to take such actions and to execute and deliver such documents as
may be necessary to effectuate the purposes of this Agreement at the earliest
practicable time, including, without limitation, any required documents to
permit SFX to assume the Options and Warrants; provided, however, that this
Section shall not require either party to undertake extraordinary or
commercially unreasonable measures in connection therewith, including, without
limitation, the initiation or prosecution of legal proceedings.
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SECTION 6.11. AFFILIATE AGREEMENTS; TAX TREATMENT. (a) Section 6.11(a)
of the Marquee Disclosure Schedule lists the names and addresses of those
persons who are, in Marquee's reasonable judgment, "affiliates" of Marquee
within the meaning of Rule 145 under the Securities Act (each, a "Marquee
Affiliate"). Marquee shall use all best efforts to obtain Affiliate Agreements
in the form of Exhibit C hereto ("Affiliate Agreements") from (i) at least 30
days prior to the Effective Time, each of the officers, directors and
stockholders of Marquee specified in Section 6.11(a) of the Marquee Disclosure
Schedule and (ii) any person who may be deemed to have become an Marquee
Affiliate (under Rule 145 under the Securities Act) after the date of this
Agreement and on or prior to the Effective Time as soon as practicable after
the date on which such person attains such status. Each party hereto shall use
its best efforts to cause the Merger to qualify as a reorganization qualifying
under the provisions of Section 368(a) of the Code, including, without
limitation, that SFX agrees that, with respect to the Merger, it will, and will
cause the Surviving Corporation to, satisfy the continuity of business
enterprise requirements within the meaning of Treas. Reg. Section 1.368-1(d).
(b) Both on the date that is two days prior to the date the Proxy
Statement is first mailed to stockholders of Marquee and on the date that the
Merger is consummated, Marquee and SFX shall receive an opinion of Baker &
McKenzie, reasonably satisfactory in form and substance to Marquee and its
counsel Paul, Hastings, Janofsky & Walker LLP and SFX, based, in each case,
upon representation letters substantially in the form of Exhibits D and E,
dated on or about the date of such opinion, and such other facts and
representations as counsel may reasonably deem relevant, to the effect that (i)
the Merger will be treated for federal income tax purposes as a reorganization
qualifying under the provisions of Section 368(a) of the Code, (ii) SFX,
Acquisition Sub and Marquee will each be a party to that reorganization within
the meaning of Section 368(b) of the Code, and (iii) neither the stockholders
of Marquee nor Marquee shall recognize any gain or loss or dividend income for
U.S. federal income Tax purposes as a result of the Merger, other than (in the
case of the stockholders of Marquee) to the extent such stockholders receive
cash in lieu of fractional shares in the Merger.
SECTION 6.12. EMPLOYEE BENEFIT PLANS. SFX and Marquee agree that the
Benefit Plans in effect at the date of this Agreement shall, to the extent
practicable, remain in effect until otherwise determined by SFX after the
Effective Time. To the extent such Benefit Plans are not continued, it is the
current non-binding intent of the parties that employee benefit plans of SFX
which are no less favorable, in the aggregate, to the employees covered by such
plans shall be provided.
SECTION 6.13. RELEASES. Marquee shall use its commercially reasonable
efforts to obtain, prior to the Effective Time, the amendment to the Unit
Purchase Option in the form attached hereto as Exhibit F from the holder(s) of
the Unit Purchase Option ("Release Agreement").
SECTION 6.14. CERTAIN AGREEMENTS. Marquee shall use its best efforts
to enter into the agreements (and consummate the transactions contemplated
therein) listed in Section 6.14 of the SFX Disclosure Schedule substantially in
such manner as set forth therein.
SECTION 6.15. GOVERNANCE. At or prior to the Effective Time, SFX will
cause Robert M. Gutkowski to be appointed as a non-voting observer to the Board
of Directors of SFX.
ARTICLE VII - CONDITIONS TO THE MERGER
SECTION 7.01. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of Marquee, SFX and Acquisition Sub to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement and the Transactions contemplated hereby shall have
been approved and adopted by the affirmative vote of the stockholders of
Marquee in accordance with Delaware Law and Marquee's Certificate of
Incorporation and Bylaws;
(b) no Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any order, executive order, stay, decree, judgment or
injunction (each an "Order") or Law which is in effect and which has the effect
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of making the Merger illegal or otherwise prohibiting consummation of the
Merger; provided, however, that each of the parties shall have used all
reasonable efforts to prevent the entry of any such Order that may be entered;
(c) the Registration Statement shall have been declared effective, and
no stop order suspending the effectiveness of the Registration Statement shall
be in effect;
(d) SFX and Marquee shall have received from the Nasdaq Stock Market
evidence that the shares of SFX Class A Common Stock to be issued to the
stockholders of Marquee in the Merger shall be listed on the Nasdaq National
Market immediately following the Effective Time;
(e) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(f) SFX and Marquee shall have received the tax opinion provided for
in Section 6.11; and
(g) all other consents, authorizations, orders and approvals of (or
filings or registrations with) any third party or governmental commission,
board or other regulatory body required in connection with the execution,
delivery and performance of this Agreement shall have been obtained or made,
except (x) for filings in connection with the Merger and any other documents
required to be filed after the Effective Time and (y) where the failure to have
obtained or made any such consent, authorization, order, approval, filing or
registration would not have a Material Adverse Effect on either the business of
Marquee and the Marquee Subsidiaries, taken as a whole, following the Effective
Time, or the business of SFX and the SFX Subsidiaries, taken as a whole,
following the Effective Time.
SECTION 7.02. CONDITIONS TO THE OBLIGATIONS OF SFX AND ACQUISITION
SUB. The obligations of SFX and Acquisition Sub to consummate the Merger are
subject to the satisfaction of the following further conditions:
(a) Marquee shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be performed by
it on or prior to the Effective Time, and the representations and warranties of
Marquee set forth in this Agreement shall be true and correct (without regard
to any materiality qualifications or references to Material Adverse Effect
contained in any specific representation or warranty), as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, except to the extent such representations and warranties expressly relate
to an earlier date (in which case as of such date); provided that this
paragraph (a) shall be deemed satisfied so long as the failure of all such
representations and warranties to be true and correct would not have a Material
Adverse Effect on Marquee, and SFX shall have received a certificate signed on
behalf of Marquee by the chief executive officer and the chief financial
officer of Marquee to such effect;
(b) SFX shall have received a signed Affiliate Agreement from each
Marquee Affiliate and any other person who may be deemed to have become an
affiliate of Marquee (under Rule 145 under the Securities Act) after the date
of this Agreement and at or prior to the Effective Time;
(c) since the date of this Agreement, there shall not have occurred
any Material Adverse Effect relating to Marquee, and SFX shall have received a
certificate, subject to a knowledge qualification, of the chief executive
officer and chief financial officer of Marquee to that effect;
(d) Marquee shall have entered into a credit agreement with
BankBoston, N.A. on substantially the same terms as set forth in the commitment
letter between Marquee and BankBoston, N.A. dated June 19, 1998, a copy of
which has been provided to SFX;
(e) each of the Escrow Releases, the Settlement Agreement and the
Employment Agreement Amendments shall remain in full force and effect; and
(f) Marquee shall have (i) consummated the acquisition set forth in
Section 7.02(f) of the Marquee Disclosure Schedule substantially as described
therein or (ii) entered into an agreement to acquire one or more
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comparable entities (including, without limitation, in terms of EBITDA and
operations) on comparable terms and conditions (including, without limitation,
purchase price), such entity or entities, terms and conditions being acceptable
to SFX (including the SFX Independent Committee) and the SFX Banker in their
sole discretion.
SECTION 7.03. CONDITIONS TO THE OBLIGATIONS OF MARQUEE. The
obligations of Marquee to consummate the Merger are subject to the satisfaction
of the following additional conditions:
(a) SFX and Acquisition Sub shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
to be performed by them on or prior to the Effective Time, and the
representations and warranties of SFX and Acquisition Sub set forth in this
Agreement shall be true and correct (without regard to any materiality
qualifications or references to Material Adverse Effect contained in any
specific representation or warranty), as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case as of such date); provided that this paragraph (a) shall be
deemed satisfied so long as the failure of all such representations and
warranties to be true and correct would not have a Material Adverse Effect on
SFX, and Marquee shall have received a certificate signed on behalf of SFX by
the chief executive officer and the chief financial officer of SFX to such
effect; and
(b) since the date of this Agreement, there shall not have occurred
any Material Adverse Effect relating to SFX, and Marquee shall have received a
certificate, subject to a knowledge qualification, of the chief executive
officer and the chief financial officer of SFX to that effect.
ARTICLE VIII - TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors (including the Marquee Independent Committee or the SFX Independent
Committee, as the case may be) of each of SFX and Marquee;
(b) by either SFX or Marquee, if either (i) the Effective Time shall
not have occurred on or before March 31, 1999 (the "Termination Date");
provided, however, that the right to terminate this Agreement under this
Section 8.01(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date; or (ii) there
shall be any Order which is final and nonappealable preventing the consummation
of the Merger, except if the party relying on such Order has not complied with
its obligations under Section 6.03(a) and under the proviso to Section 7.01(b);
(c) by SFX, if (i) the Marquee Independent Committee or the Board of
Directors of Marquee fails to recommend, withdraws, or materially modifies or
materially changes, their recommendations of this Agreement or the Merger in a
manner adverse to SFX or shall have resolved to do any of the foregoing, (ii)
the Marquee Independent Committee or the Board of Directors of Marquee shall
have recommended to the stockholders of Marquee a Takeover Proposal or shall
have failed to recommend against accepting a Takeover Proposal or take no
position with respect thereto or shall have resolved to do any of the
foregoing, or (iii) any person (other than SFX, Acquisition Sub or any
affiliate thereof) shall have acquired "beneficial ownership" or the right to
acquire beneficial ownership of, or any "group" (as such terms are defined
under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) shall have been formed which beneficially owns, or has
the right to acquire beneficial ownership of, more than 25% of the then
outstanding shares of any class of capital stock of Marquee;
(d) by Marquee or SFX, if the stockholders of Marquee shall have
failed to approve and adopt this Agreement, the Merger and the other
Transactions at a meeting duly convened therefor;
(e) by SFX, upon a breach of any representation, warranty, covenant or
agreement on the part of Marquee set forth in this Agreement, or if any
representation or warranty of Marquee shall have become untrue, in either case
such
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that the conditions set forth in Section 7.02 would not be satisfied (a
"Terminating Marquee Breach"); provided, however, that such Terminating Marquee
Breach cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such breach ("Material Breach")
(provided that SFX is not then in Material Breach of any representation,
warranty, covenant or agreement set forth in this Agreement);
(f) by Marquee, upon breach of any representation, warranty, covenant
or agreement on the part of SFX set forth in this Agreement, or if any
representation or warranty of SFX shall have become untrue, in either case such
that the conditions set forth in Section 7.03 would not be satisfied
("Terminating SFX Breach"); provided, however, that such Terminating SFX Breach
cannot be or has not been cured within 30 days after the giving of written
notice to the breaching party of such breach (provided that Marquee is not then
in Material Breach of any representation, warranty, covenant or agreement set
forth in this Agreement);
(g) by Marquee or the Marquee Independent Committee, upon the
revocation by the Marquee Banker of its written fairness opinion if such
revocation was (i)(A) directly related to a material misstatement or omission
contained in the information regarding SFX provided to the Marquee Banker by
SFX, and (B) Marquee does not directly or indirectly solicit such a revocation
or (ii) a direct result of a Material Adverse Effect with respect to SFX;
(h) by SFX or the SFX Independent Committee, upon the revocation by
the SFX Banker of its written fairness opinion if such revocation was (i)(A)
directly related to a material misstatement or omission contained in the
information regarding Marquee provided to the SFX Banker by Marquee, and (B)
SFX does not directly or indirectly solicit such a revocation or (ii) a direct
result of a Material Adverse Effect with respect to Marquee;
(i) by Marquee, if Marquee accepts a Takeover Proposal in accordance
with its obligations under Section 6.05; provided that it complies with the
applicable requirements of Section 8.02; or
(j) by SFX, if the Reported Price for the SFX Class A Common Stock for
any twenty consecutive trading days beginning on or after the date hereof is
less than $32.00, upon written notice of such termination delivered to Marquee
within five trading days of such twentieth consecutive trading day.
SECTION 8.02. FEES AND EXPENSES; EFFECT OF TERMINATION. (a) Except as
provided in Section 6.01 and below in this Section 8.02, and except for filing
fees under the HSR Act in connection with the transactions contemplated by this
Agreement, 50% of which shall be paid by SFX and 50% of which shall be paid by
Marquee, all fees and expenses incurred in connection with the Merger, this
Agreement and the Transactions shall be paid by the party incurring such fees
or expenses, whether or not the Merger is consummated.
(b) Marquee shall pay, or shall cause to be paid, upon demand in same
day funds to SFX a termination fee (the "Termination Fee") of $1,800,000, and
Specified Expenses (as defined herein), if:
(i) this Agreement is terminated pursuant to Section 8.01(i) or
Section 8.01(c) (except in the event a termination occurs pursuant to
Section 8.01(c)(i) due to the occurrence of an event described in Section
8.01(f) or 8.01(g)); or
(ii) this Agreement is terminated pursuant to Section 8.01(b)(i) or
8.01(d) and in either event a Takeover Proposal has been made prior to such
termination and definitive documentation with respect to such Takeover
Proposal is entered into within 12 months of such termination.
(c) Except in connection with a termination pursuant to which the
Termination Fee would otherwise be due and owing, Marquee shall pay SFX upon
demand a fee in same day funds of $1,000,000, if this Agreement is terminated
pursuant to Section 8.01(d).
(d) The fees and expenses pursuant to this section shall be paid
without reservation of rights or protests, and Marquee, upon making such
payment, shall be deemed to have released and waived any and all rights that it
may have to recover such amounts.
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(e) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to Section 8.01, all obligations of the parties hereto
shall terminate except the obligations of the parties pursuant to this Section
8.02 and Article IX.
No termination of this Agreement pursuant to Section 8.01(e), (f), (g)
or (h) shall prejudice the ability of a non-breaching party from seeking
damages from any other party for any breach of this Agreement, including,
without limitation, attorneys' fees and the right to pursue any remedy at law
or in equity. Notwithstanding the foregoing, if SFX is required to file suit to
seek the Termination Fee or Specified Expenses, and it ultimately succeeds on
the merits, it shall be entitled to all expenses, including attorneys' fees,
which it has incurred in enforcing its rights under this Section 8.02.
(f) As used herein, "Specified Expenses" means all reasonable
out-of-pocket expenses and fees actually incurred or accrued by a party or on
its behalf in connection with the Transactions prior to the termination of this
Agreement (including, without limitation, all fees and expenses of counsel,
financial advisors, banks or other entities providing financing to such party
(including financing, commitment and other fees payable thereto), accountants
and other experts and consultants to such party and its affiliates, and all
printing and advertising expenses) and in connection with the negotiation,
preparation, execution, performance and termination of this Agreement, the
structuring of the Transactions, any agreements relating thereto and any
filings to be made in connection therewith; provided, however, that the
aggregate amount of Specified Expenses shall not exceed $500,000.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the parties
at any time before or after the approval of this Agreement and the Merger by
the stockholders of Marquee; provided, however, that after any such approval,
there shall not be made any amendment that by Law requires further approval by
the stockholders of Marquee without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties.
SECTION 8.04. WAIVER. At any time prior to the Effective Time, any
party hereto with the consent of its Independent Committee and Board of
Directors may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of such rights.
ARTICLE IX - GENERAL PROVISIONS
SECTION 9.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. The representations, warranties and agreements in this Agreement
and any certificate delivered pursuant hereto by any person shall terminate at
the Effective Time, except that the agreements set forth in Articles I and II
and Sections 6.06 and 6.10 and the agreements delivered pursuant to this
Agreement shall survive the Effective Time indefinitely, or for such other term
specified in any such agreements, and except that this Section 9.01 shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
SECTION 9.02. NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 9.02):
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if to SFX or Acquisition Sub:
SFX Entertainment, Inc.
650 Madison Avenue, 16th Floor
New York, New York 10022
Attention: Robert F.X. Sillerman
Facsimile: (212) 753-3188
with copies to:
Baker & McKenzie
Two Allen Center, Suite 1200
1200 Smith Street
Houston, Texas 77002-4579
Attention: Amar Budarapu
Facsimile: (713) 427-5099
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10128
Attention: Howard L. Shecter
Facsimile: (212) 309-7044
if to Marquee:
The Marquee Group, Inc.
888 Seventh Avenue
New York, New York 10019
Attention: Robert M. Gutkowski
Facsimile: (212) 977-4625
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue, 31st Floor
New York, New York 10022
Attention: William F. Schwitter
Facsimile: (212) 319-4090
SECTION 9.03. CERTAIN DEFINITIONS. Unless the context requires
otherwise, for purposes of this Agreement, the term:
(a) "affiliate" of a specified person means a person who, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares (i) which such person
or any of its affiliates or associates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) beneficially owns, directly or indirectly,
(ii) which such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding, (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or any person with whom such
person or any of its affiliates
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or associates has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of any such shares, or (iv) pursuant
to Section 13(d) of the Exchange Act and any rules or regulations promulgated
thereunder;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in New York, New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a
government; and
(f) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary), owns or
has rights to acquire, directly or indirectly, more than 50% of the stock or
other equity interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.04. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, then all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the Transactions be consummated as originally
contemplated to the fullest extent possible.
SECTION 9.05. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties; provided,
however, that the rights, interests and obligations hereunder of Acquisition
Sub may be assigned to any SFX Subsidiary. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Article II and Section 6.06, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 9.06. INCORPORATION OF SCHEDULES. The Marquee Disclosure
Schedule and the SFX Disclosure Schedule referred to herein and all Exhibits
attached hereto and referred to herein are hereby incorporated herein and made
a part hereof for all purposes as if fully set forth herein.
SECTION 9.07. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at Law or equity.
SECTION 9.08. GOVERNING LAW. EXCEPT TO THE EXTENT THAT DELAWARE LAW IS
MANDATORILY APPLICABLE TO THE MERGER AND THE RIGHTS OF THE STOCKHOLDERS OF
MARQUEE AND ACQUISITION SUB, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
RULES OF CONFLICTS OF LAW THEREOF. ALL ACTIONS AND PROCEEDINGS ARISING OUT OF
OR RELATING
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TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED IN ANY COURT SITTING IN THE
CITY OF NEW YORK, STATE OF NEW YORK.
SECTION 9.09. HEADINGS. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 9.10. COUNTERPARTS. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which
when executed and delivered shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.11. WAIVER OF JURY TRIAL. Each of SFX, Marquee and
Acquisition Sub hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement or the actions of SFX,
Marquee or Acquisition Sub in the negotiation, administration, performance and
enforcement thereof.
SECTION 9.12. ENTIRE AGREEMENT. This Agreement, the Marquee Disclosure
Schedule, the SFX Disclosure Schedule, the Exhibits attached hereto, and all
documents delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, SFX, Acquisition Sub and Marquee have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
SFX ENTERTAINMENT, INC.
By: /s/ Robert F.X. Sillerman
-------------------------------------
Robert F.X. Sillerman
Executive Chairman and
Member of the Office of the Chairman
SFX ACQUISITION CORP.
By: /s/ Robert F.X. Sillerman
-------------------------------------
Robert F.X. Sillerman
Executive Chairman
THE MARQUEE GROUP, INC.
By: /s/ Robert M. Gutkowski
-------------------------------------
Robert M. Gutkowski
President and Chief Executive Officer
<PAGE>
Thursday July 23, 11:25 am Eastern Time
Company Press Release
SFX Entertainment Announces Agreement to Acquire The Marquee Group for $6.00 Per
Share
NEW YORK--(BUSINESS WIRE)--July 23, 1998--SFX Entertainment, Inc.(NASDAQ:
SFXE-news) and The Marquee Group (AMEX: MRT - news) today jointly announced
that SFX has agreed to acquire Marquee in a stock merger transaction valued at
approximately $100 million. The Marquee Group provides integrated event
management, television production, marketing, talent representation and
consulting services in the sports, news and entertainment industries. It is
expected that senior management of Marquee will enter into new employment
contracts with SFX.
For each share of Marquee common stock, Marquee shareholders will receive $6.00
of SFX Entertainment Class A stock, subject to adjustment. For this purpose,
SFX stock will be valued at the average closing price for the fifteen
consecutive trading days ending five days prior to the merger's effective date.
In the event that the SFX average price exceeds $57.50, the exchange ratio will
be adjusted ratably to provide incremental value to a maximum of $6.30 per
Marquee share. The transaction has received the approval of both the SFX and
Marquee Boards of Directors and the independent committee of the Marquee Board
which was created to evaluate any such transaction. A meeting of Marquee
shareholders will be called to vote on the transaction as soon as practicable.
The closing of the transaction will be subject to several conditions, including
shareholder approval, expiration of the applicable Hart-Scott-Rodino waiting
period, and the consummation by Marquee of certain anticipated transactions. It
is expected that the merger will be consummated in 1998.
Commenting on the transaction, Robert F. X. Sillerman, Executive Chairman of
SFX Entertainment, Inc., said, "We are very pleased to announce this important
strategic acquisition. We began our entry into the sports arena with our
acquiring David Falk's FAME organization, which we completed less than a month
ago. The addition of Marquee now provides us with a full complement of sports
marketing services. Marquee has incredible breadth in its involvement across
diverse sports including tennis, hockey, basketball, baseball, soccer, golf,
football and horse racing; and it has an integrated approach to adding many
elements of value for its clients through event management, promotion,
production, consulting, naming rights, and talent representation. The
well-established marketing and promotional capabilities demonstrated by all of
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these activities will be the perfect addition to the ever-expanding SFX product
line of live entertainment events, and we will be able to access a wider
variety of corporate clients who already have shown their commitment to the
value of promotion in the setting of live event presentation. We have spoken
before about the diminishing boundary between sports and entertainment, and we
expect to be both drivers and beneficiaries of this rapidly evolving process as
we link the tremendous power of these two enterprises."
Robert M. Gutkowski, Marquee's President and Chief Executive Officer, added,
"This is a great development for the future of The Marquee Group. We have
already made substantial progress in building a fully integrated sports
marketing company, and we expect that this process of growth, both domestically
and internationally, will now be accelerated and enhanced by our combination
with SFX. Its resources will provide us with the capacity to take advantage of
many additional opportunities which we have already identified to grow our
business, and its extensive marketing activities will further inform and
improve our own efforts on behalf of our clients and enhance our product line
of promotional vehicles. We already have significant interest in the live
entertainment field, and fully understand the similarities and combined
strengths of the sports and live entertainment businesses. We look forward to a
prosperous future together."
SFX Entertainment is a leading promoter, producer and venue operator for live
entertainment events. It owns and/or operates the largest network of venues in
the country used principally for music concerts and other live entertainment
events. Upon completion of all pending acquisitions, it will have 44 venues
either directly owned or operated under lease or exclusive booking arrangements
in 22 of the top 50 markets, including 11 amphitheaters in 7 of the top 10
markets. Through its large number of venues, its strong market presence and the
long operating histories of the businesses it has acquired, SFX operates an
integrated franchise that promotes and produces a broad variety of live
entertainment events locally, regionally and nationally. Pro forma for all
completed and pending acquisitions, during 1997, approximately 27 million
people attended 9,600 events promoted and/or produced by SFX, including
approximately 4,200 music concerts, 4,900 theatrical shows and over 190
specialized motor sports events.
This press release includes forward-looking statements within the meaning of
the Securities Act of 1933 and the Securities Exchange Act of 1934. These
forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. These statements are
subject to risks and uncertainties that could cause actual results to differ
materially from those projected, including the company's absence of combined
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operating history with acquired businesses, potential inability to integrate
acquired businesses, risks related to recent acquisitions, need for additional
financing, high degree of leverage, future charges to earnings, strategy of
future acquisitions, indemnification and deferred payment arrangements,
granting of rights to acquire certain portions of the company's operations,
variable economic conditions and consumer tastes, need for availability of
appropriate artists and events, ability to retain control of the company's
venues, restrictions imposed by existing debt, payment obligations to SFX
Broadcasting, Inc., control by management, and dependence on key personnel. For
a more detailed discussion of these and other relevant risks and uncertainties,
see the company's latest annual report and other filings with the Securities
and Exchange Commission.
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Contact:
SFX Entertainment, Inc.
Timothy J. Klahs
Director, Investor Relations
(212) 407-9126
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