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: June 7, 1999
-------------------------------------
(Date of earliest event reported)
MARQUEE ENTERTAINMENT, INC.
- -----------------------------------------------------------------
Exact name of registrant as specified in its charter
Nevada 0-15413 95-3480640
- --------------------------- ------------------- -----------------
State of other jurisdiction Commission File No. I.R.S. Employer
of incorporation or ID No.
organization
6404 Wilshire Boulevard, Suite 550, Los Angeles, California 90048
- -----------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:(323) 782-0090
--------------
N/A
- -----------------------------------------------------------------
(Former name or former address if changed since last report)
1
<PAGE>
Item 6. OTHER EVENTS
Pursuant to a Securities Exchange Agreement dated as of
June 7, 1999 (the "Securities Exchange Agreement"), Marquee
Entertainment, Inc. (the "Registrant"), agreed to acquire 100% of
the issued and outstanding common stock of Progressive
Telecommunications Corporation ("Progressive") from the
shareholders of Progressive, in exchange for an aggregate of
45,000,000 common shares and common share equivalents of the
Registrant.
The closing of the transaction is conditioned upon,
among other things, an audit of the financial statements of
Progressive and its subsidiaries. The Agreement also provides
for the Registrant to amend its certificate of incorporation to
change its name to Progressive Telecommunications, authorize a 1
for 5 reverse stock split and decrease its par value from $.04 to
$.001.
The transaction will be two-tiered, with shareholders
owning in excess of 80% of Progressive exchanging their shares
for the Registrant's shares at the first closing. Thereafter the
Registrant will file a registration statement under the
Securities Act of 1933 and Proxy Statement to offer the remaining
shareholders of Progressive and its majority owned subsidiary,
CCC Communications Corp., shares of the combined entity's stock
in a statutory consolidation in the same exchange ratio as was
provided for the shareholders owning 80% of Progressive.
The description contained herein of the transaction is
qualified in its entirety by reference to the Securities Exchange
Agreement, dated as of June 7, 1999, and the Press Release dated
June 9, 1999, which are attached as Exhibits 2.1 and 99.1,
respectively.
Effective with the closing of the acquisition, Harold
Brown, the Registrant's President, CEO and Chairman, will resign
as an officer and director. In addition, Mr. Brown will forgive
his unpaid salary (approximately $400,000 as of March 31, 1999)
through the date of closing and agree to the cancellation of his
employment contract in exchange for the Registrant's film
library. Mr. Brown has also agreed to convert his 8% Convertible
Debenture in the amount of $301,638 (as of March 31, 1999) into
1,206,552 shares of the Registrant's common stock.
2
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) Financial Statements
None.
(b) Pro Forma Financial Information
None.
(c) Exhibits
The following Exhibits are filed with this form 8-K
2.1 Securities Exchange Agreement dated as of
June 7, 1999 between Marquee Entertainment,
Inc. and the Shareholders of Progressive
Telecommunications Corporation.
99.1 Marquee Entertainment, Inc. Press Release
dated June 9, 1999.
Pursuant to the requirements of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
MARQUEE ENTERTAINMENT, INC.
By: /s/ Harold Brown
-----------------------------
Harold Brown, President
Dated: June 16, 1999
3
<PAGE>
EXHIBIT 2.1
-----------
<PAGE>
SECURITIES EXCHANGE AGREEMENT
SECURITIES EXCHANGE AGREEMENT ("this Agreement") dated as of
June 7, 1999 by and between MARQUEE ENTERTAINMENT, INC., a Nevada
corporation ("Marquee"), and the individuals whose names appear
on the signature page hereof, each being a shareholder (the
"Shareholders") of PROGRESSIVE TELECOMMUNICATIONS CORPORATION, a
Florida corporation ("Progressive").
W I T N E S S E T H:
WHEREAS, as of June 7, 1999 there are 5,888,273 outstanding
shares of the common stock, $.01 par value of Progressive (the
"Progressive Stock") of which 4,933,973 are owned beneficially
and of record, by the Shareholders who together own more than 80%
of the issued and outstanding shares of Progressive Stock, each
owning the number of shares set forth opposite their respective
names on the signature page hereof.
WHEREAS, as of June 7, 1999 Progressive has outstanding
convertible instruments, rights, warrants, options and agreements
to issue approximately 1,500,000 additional shares of its Common
Stock which will be factored into the exchange ratio described in
Section 1.2(a) below.
WHEREAS, Marquee proposes to exchange all of the outstanding
shares of Progressive in exchange for the issuance of an
aggregate of 9,000,000 post-split shares (described below) of
Marquee's common stock ("Marquee Stock"), representing 90% of the
post-closing, post-split issued and outstanding Marquee Stock at
a closing provided for in Section 4.3 of this Agreement.
WHEREAS, the Board of Directors of Marquee and Progressive
have determined that it is desirable to effect a plan of
reorganization meeting the requirement of Section 368(a)(1)(B) of
the Internal Revenue Code of 1986, as amended and the parties
intend that the issuance of the Marquee Stock and exchange for
the Progressive Stock shall qualify as a "tax free"
reorganization as contemplated by the provisions of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual covenants, agreements, representations and
warranties contained herein, the parties hereto agree as follows:
1
<PAGE>
ARTICLE 1
ISSUANCE AND EXCHANGE OF SHARES
-------------------------------
1.1 Issuance and Exchange. At Closing to be held in
accordance with the provisions of Article 2 below and subject to
the terms and agreements set forth herein, Marquee agrees to
issue each of the Shareholders who agree to, severally and
jointly, to exchange the number of authorized and newly issued
shares of Marquee Stock determined as provided in Section 1.2
below for each share of Progressive Stock owned by them. In
consideration for the shares of Marquee Stock to be exchanged,
the Shareholders each shall deliver to Marquee stock certificates
evidencing their ownership of Progressive, together with duly
executed stock powers to effectuate the transfer.
1.2 Exchange Ratio.
(a) At Closing, subject to the reverse stock split
discussed in Section 4.3 below, Marquee shall exchange
6.17427 pre-split shares of Marquee Stock (including
securities convertible into shares of Marquee Stock)
for each share of Progressive Stock in accordance with
the distribution shown on the signature page hereof and
as full consideration for the Progressive Stock.
(b) No fractional shares of Marquee's Common Stock will be
issued to any Shareholder. Accordingly, Shareholders
who would otherwise be entitled to receive fractional
shares of Marquee's Stock will, upon surrender of their
certificate representing the fractional shares of
Progressive Stock, receive a full share if the
fractional share exceeds fifty percent (50%) and if the
fractional share is less than fifty percent (50%) the
fractional share shall be canceled.
(c) An aggregate of 9,000,000 post-split shares of Marquee
Stock shall be exchanged by and issued to the
Progressive Shareholders. The issuance however, will
be in two stages, at the first closing the Progressive
Shareholders will deliver a minimum of 80% of the
issued and outstanding shares of Progressive Stock.
Thereafter the combined entity will file a Registration
Statement for the purposes of making a tender offer for
the remaining outstanding shares of Progressive
Telecommunications Corporation and CCC Communications
Corporation as identified on Exhibit 1.2(c). Except
with respect to the 1,500,000 shares of Progressive to
be issued as described in the second recital paragraph
of this Agreement, Progressive will not issue any
2
<PAGE>
additional shares of its Common Stock for a
consideration of less than $2.25 per share. If
Progressive issues shares for consideration of not less
than $2.25 per share, Marquee will issue additional
shares of its Common Stock on the same exchange ratio
as set forth in Section 1.2(a).
ARTICLE 2
CLOSING
-------
2. Closing.
The consummation of the exchange by the Shareholders (the
Closing") shall occur at the offices of Progressive
Telecommunications Corp., 601 Cleveland Street, Suite 930,
Clearwater, Florida 33755, on the 30th day of June, 1999, or at
such other place and/or on such other time and date as the
parties may agree upon (the "Closing Date"). If the Closing
fails to occur by June 30, 1999, or by such later date to which
the Closing may be extended as provided hereinabove, this
Agreement shall automatically terminate, all parties shall pay
their own expenses incurred in connection herewith, and no party
hereto shall have any further obligations hereunder; provided,
however, that no such termination shall constitute a waiver by
any party or parties which is/are not in default of any of its or
their respective representations, warranties or covenants if any
other party or parties is in default of any of its or their
respective representations, warranties or covenants under this
Agreement. At the Closing, as conditions thereto:
2.1 Deliveries by Marquee.
Marquee shall deliver, or cause to be delivered to the
Shareholders:
(a) As soon after the Closing as is feasiblely possible and no
later than July 7, 1999, certificates for the shares of
Marquee Stock being exchanged for their respective accounts,
in form and substance reasonably satisfactory to the
Shareholders and their counsel;
(b) The certificates, resolutions, opinions and resignations
specified in Article 6 below;
(c) All of the books and records of Marquee.
3
<PAGE>
2.2 Shareholders' Deliveries.
The Shareholders shall deliver to Marquee:
(a) A stock certificate or certificates evidencing the ownership
of each Shareholder, of all shares of Progressive Stock
currently owned by them, respectively, duly endorsed for
transfer to Marquee; and
(b) The certificates representing the shares of each Shareholder
listed on the signature page, specified in Article 5.
ARTICLE 3
REPRESENTATIONS OF SHAREHOLDERS
-------------------------------
The Shareholders hereby represent and warrant to Marquee as
follows (it being acknowledged that Marquee is entering into this
Agreement in material reliance upon each of the following
representations and warranties, and that the truth and accuracy
of each, as evidenced by their signature set forth on the
signature page, constitutes a condition precedent to the
obligations of Marquee hereunder):
3.1 Ownership of Stock. The Shareholders are the lawful
owners of the shares of Progressive Stock to be transferred to
Marquee free and clear of all preemptive or similar rights,
liens, encumbrances, restrictions and claims of every kind,
except those listed on Schedule 3.1 hereto and the delivery to
Marquee of the Progressive Stock pursuant to the provisions of
this Agreement will transfer to Marquee valid title thereto, free
and clear of all liens, encumbrances, restrictions and claims of
every kind. All of the shares of Progressive Stock to be
exchanged herein have been duly authorized and validly issued and
are fully paid and nonassessable.
3.2 Authority to Execute and Perform Agreement; No Breach.
Each Shareholder has the full legal right and power and all
authority and approval required to enter into, execute and
deliver this Agreement, and to sell, assign, transfer and convey
the Progressive Stock and to perform fully their respective
obligations hereunder. This Agreement has been duly executed and
delivered by each Shareholder and, assuming due execution and
delivery by, and enforceability against, Marquee, constitutes the
valid and binding obligation of each Shareholder enforceable in
accordance with its terms, subject to the qualifications that
enforcement of the rights and remedies created hereby is subject
to (i) bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting the rights and
4
<PAGE>
remedies of creditors, and (ii) general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law). No approval or consent of, or
filing with, any governmental or regulatory body, and no approval
or consent of, or filing with, any other person is required to be
obtained by the Shareholders or in connection with the execution
and delivery by the Shareholders of this Agreement and
consummation and performance by them of the transactions
contemplated hereby, other than as set forth on Schedule 3.2.
The execution, delivery and performance of this Agreement by
each Shareholder and the consummation of the transactions
contemplated hereby in accordance with the terms and conditions
hereof by each Shareholder will not:
(a) violate, conflict with or result in the breach of any
of the terms of, or constitute (or with notice or lapse
of time or both would constitute) a default under, any
contract, lease, agreement or other instrument or
obligation to which a Shareholder is a party or by or
to which any of the properties and assets of any of the
Shareholders may be bound or subject;
(b) violate any order, judgment, injunction, award or
decree of any court, arbitrator, governmental or
regulatory body, by which a Shareholder or the
securities, assets, properties or business of any of
them is bound; or
(c) violate any statute, law or regulation.
3.3 Existence and Good Standing. Progressive is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Florida. Progressive has the
power to own or lease its properties and assets and to carry on
its business as now being conducted. Progressive is duly
qualified to do business and is in good standing in the
jurisdiction set forth on Schedule 3.3, which are the only
jurisdictions in which the character or location of the
properties owned or leased by Progressive or the nature of the
business conducted by Progressive makes such qualification
necessary.
3.4 Capital Stock. Progressive has an authorized
capitalization consisting of 9,100,000 shares of Common Stock, of
which 5,888,273 shares are issued and outstanding and no shares
of Common Stock are held in Progressive's treasury and 900,000
shares of Preferred Stock of which no shares are issued and
outstanding and no shares of Preferred Stock are held in
Progressive's treasury. All such outstanding shares have been
duly authorized and validly issued and are fully paid and
5
<PAGE>
nonassessable. Except as set forth as Schedule 3.4 attached
hereto, there are no outstanding options, warrants, rights,
calls, commitments, conversion rights, rights of exchange, plans
or other agreements, commitments or arrangements of any character
providing for the purchase, subscription, issuance or sale of any
shares of the capital stock of Progressive, other than the
exchange of the Progressive Shares as contemplated by this
Agreement.
3.5 Financial Statements and No Material Changes. Annexed
hereto as Schedule 3.5 are: (i) the unaudited balance sheets of
Progressive and its members as of December 31, 1998; (the
"December Balance Sheet" and sometimes referred to as "Financial
Statements").
The Financial Statements were carefully prepared from the
books and records of Progressive, and although the Financial
Statements are not audited and do not contain the footnotes which
would be required in audited financial statements, present
fairly, subject to the final audit being completed, the financial
position, assets and liabilities of Progressive and the results
of its operations, for the respective periods indicated and
reflect all necessary accruals, all in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent
basis. The Financial Statements contain all adjustments
(consisting of only normal recurring accruals) required to be
made by GAAP, subject to normal year-end adjustments.
Since December 31, 1998 (the "December Balance Sheet Date")
there has been (x) no material adverse change in the assets or
liabilities, or in the business or condition, financial or
otherwise, or in the results of operations or prospects, of
Progressive whether as a result of any legislative or regulatory
change, revocation of any license or rights to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought,
riot, storm, condemnation or act of God or other public force or
otherwise and (y) no material adverse change in the assets or
liabilities, or in the business or condition, financial or
otherwise, or in the results of operations or prospects, of
Progressive and to the best knowledge, information and belief of
Progressive, no fact or condition exists or is contemplated or
threatened which might cause such a change in the future.
3.6 Books and Records. The minute books of Progressive,
all the contents of which have been previously made available to
Marquee and their representatives, contain accurate records of
all meetings of, and corporate action taken by (including action
taken by written consent) the shareholders and Board of Directors
of Progressive. Except as set forth on Schedule 3.6 attached
hereto, Progressive does not have any of its respective records,
systems, controls, data or information recorded, stored,
6
<PAGE>
maintained, operated or otherwise wholly or partly dependent upon
or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which
(including all means of access thereto and therefrom) are not
under the exclusive ownership and direct control of Progressive.
3.7 Title to Properties; Encumbrances.
(a) Except as set forth on Schedule 3.7 attached hereto,
Progressive has good, valid and marketable title to (a)
all of its properties and assets (real and personal,
tangible and intangible), including, without
limitation, all of the properties and assets reflected
in the balance sheet included as part of the August
Financial Statements, except as indicated in the
Schedules hereto; and (b) all of the properties and
assets purchased by Progressive since the December
Balance Sheet Date all of which purchases as of a date
not more than two days prior to the date of this
Agreement, have been set forth on Schedule 3.7 attached
hereto; in each case subject to no encumbrance, lien,
charge or other restriction of any kind or character,
except for (i) liens reflected in the balance sheet,
included as part of the December Financial Statements;
(ii) liens consisting of zoning or planning
restrictions, easements, permits and other restrictions
or limitations on the use of real property or
irregularities in title thereto which do not materially
detract from the value of, or impair the use of, such
property by Progressive in the operation of its
business; (iii) liens for current taxes, assessments or
governmental charges or levies on property not yet due
and delinquent; and (iv) liens described on Schedule
3.7 attached hereto (liens of the type described in
clause (i), (ii) and (iii) above are hereinafter
sometimes referred to as "Permitted Liens").
(b) The rights, properties and other assets presently
owned, leased or licensed, by Progressive reflected on
the balance sheet included in the December Financial
Statements or acquired since the December Balance Sheet
Date include all rights, properties and other assets
necessary to permit Progressive to conduct its business
in the same manner as its business has heretofore been
conducted. All such properties and assets owned or
leased by Progressive are in satisfactory condition and
repair, other than ordinary wear and tear.
No structure or improvement on the real property leased by
Progressive, whether now existing or intended to be constructed
7
<PAGE>
pursuant to existing plans and specifications, violates, or if
completed would violate, any applicable zoning or building
regulations or ordinances or similar federal, state or municipal
law.
3.8 Leases. Schedule 3.8 attached hereto, contains an
accurate and complete list and description of the terms of all
leases to which either Progressive or any of its subsidiaries is
a party (as lessee or lessor). Each lease set forth on Schedule
3.8 (or required to be set forth on Schedule 3.8) is in full
force and effect; all rents and additional rents due to date on
each such lease have been paid; in each case, the lessee has been
in peaceable possession since the commencement of the original
term of such lease and is not in default thereunder and no
waiver, indulgence or postponement of the lessee's obligations
thereunder has been granted by the lessor; and there exists no
event of default or event, occurrence, condition or act
(including the consummation of the transactions contemplated
hereby) which, with the giving of notice, the lapse of time or
the happening of any further event or condition, would become a
default under such lease. Neither Progressive nor any of its
subsidiaries has violated any of the terms or conditions under
any such lease in any material respect, and, to the best
knowledge, information and belief of Progressive, all of the
covenants to be performed by any other party under any such lease
have been fully performed. The property leased by Progressive or
any of its subsidiaries in a state of good maintenance and repair
and is adequate and suitable for the purposes for which it is
presently being used.
3.9 Material Contracts. Except as set forth on Schedule
3.9 attached hereto, neither Progressive or its subsidiaries has
nor is bound by:
(a) any agreement, contract or commitment relating to the
employment of any person by Progressive or its
subsidiaries, or any bonus, deferred compensation,
pension, profit sharing, stock option, employee stock
purchase, retirement or other employee benefit plan;
(b) any agreement, indenture or other instrument which
contains restrictions with respect to payment of
dividends or any other distribution in respect of its
capital stock;
(c) any loan or advance to, or investment in, any
individual, partnership, joint venture, corporation,
trust, unincorporated organization, government or other
entity (each a "Person") or any agreement, contract or
commitment relating to the making of any such loan,
advance or investment;
8
<PAGE>
(d) any guarantee or other contingent liability in respect
of any indebtedness or obligation of any Person (other
than the endorsement of negotiable instruments for
collection in the ordinary course of business);
(e) any management service, consulting or any other similar
type contract;
(f) any agreement, contract or commitment limiting the
freedom of Progressive or any subsidiary to engage in
any line of business or to compete with any Person;
(g) any agreement, contract or commitment not entered into
in the ordinary course of business which involves
$250,000 or more and is not cancelable without penalty
or premium within 30 days; or
(h) any agreement, contract or commitment which might
reasonably be expected to have a potential adverse
impact on the business or operations of Progressive or
any subsidiary; or
(i) any agreement, contract or commitment not reflected in
the Financial Statement under which Progressive or any
subsidiary is obligated to make cash payments of, or
deliver products or render services with a value
greater than $100,000 individually or $300,000 in the
aggregate, or receive cash payments of, or receive
products or services with a value greater than $100,000
individually or $300,000 in the aggregate, and any
other agreement, contract or commitment which is
material to the conduct of the business of Progressive.
Each contract or agreement set forth on Schedule 3.9 (or not
required to be set forth on Schedule 3.9) is in full force and
effect and there exists no default or event of default or event,
occurrence, condition or act (including the consummation of the
transactions contemplated hereby) which, with the giving of
notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder.
Neither Progressive or any subsidiary has violated any of the
terms or conditions of any contract or agreement set forth on
Schedule 3.9 (or not required to be set forth on Schedule 3.9) in
any material respect, and, to the best knowledge, information and
belief of Progressive, all of the covenants to be performed by
any other party thereto have been fully performed. Except as set
forth on Schedule 3.9, the consummation of the transactions
contemplated hereby does not constitute an event of default (or
an event, which with notice or the lapse of time or both would
constitute a default) under any such contract or agreement.
9
<PAGE>
3.10 Restrictive Documents. Other than telecommunications
licenses except as set forth on Schedule 3.10 attached hereto,
neither Progressive or any subsidiary, nor Shareholder is subject
to, or a party to, any charter, by-law, mortgage, lien, lease,
license, permit, agreement, contract, instrument, law, rule,
ordinance, regulation, order, judgment or decree, or any other
restriction of any kind or character, which could materially
adversely affect the business practices, operations or condition
of Progressive or any of its assets or property ("Progressive's
Property", which for the purposes of this Agreement includes the
assets and property of all of Progressive's subsidiaries), or
which would prevent consummation of the transactions contemplated
by this Agreement, compliance by the Shareholders with the terms,
conditions and provisions hereof or the continued operation of
"Progressive's Business" (which for the purpose of this Agreement
includes the business of CCC Communications) after the date
hereof or the Closing Date (as hereinafter defined) on
substantially the same basis as heretofore operated or which
would restrict the ability of Progressive to conduct business in
any area.
3.11 Litigation. Except as set forth on Schedule 3.11
attached hereto, there is no action, suit, proceeding at law or
in equity, arbitration or administrative or other proceeding by
or before (or to the best knowledge, information and belief of
the Shareholders any investigation by) any governmental or other
instrumentality or agency, pending, or, to the best knowledge,
information and belief of Progressive or any subsidiary,
threatened, against or affecting Progressive or any subsidiary,
or any of their respective properties or rights, or against the
Shareholders, or any officer, director or employee of a
Shareholder other than such items which are insignificant and
immaterial and which do not adversely affect (i) the right or
ability of Progressive's Business to carry on business as now
conducted; (ii) the condition, whether financial or otherwise, or
properties of Progressive; or (iii) the consummation of the
transactions contemplated hereby and the Shareholders do not know
of any valid basis for any such action, proceeding or
investigation. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal by which either the
Shareholders or Progressive, or any officer, director or employee
of Progressive, or the securities, assets, properties or business
of any of them is bound, other than any such items which are
insignificant and immaterial and which do not and will not
adversely affect (i) the right of Progressive to carry on its
business as now conducted and as proposed to be conducted by
Marquee after the consummation of the transactions contemplated
by this Agreement; (ii) the condition, whether financial or
otherwise, or properties of Progressive; or (iii) the
consummation of the transactions contemplated hereby.
10
<PAGE>
3.12 Taxes. Except as set forth on Schedule 3.12,
Progressive and every member of the consolidated group of which
Progressive is a part has filed or caused to be filed, within the
times and within the manner prescribed by law, all federal,
state, local and foreign tax returns and tax reports which are
required to be filed by, or with respect to, Progressive. Such
returns and reports reflect accurately all liability for taxes of
Progressive for the periods covered thereby. Except as set forth
on Schedule 3.12, all federal, state, local and foreign income,
profits, franchise, employment, sales, use, occupancy, excise and
other taxes and assessments, stock and transfer taxes (including
interest and penalties) payable by, or due from, Progressive and
any member of the consolidated group of which Progressive is a
part, have been fully paid and fully provided for in the books
and financial statements of Progressive. No examination of any
tax return of Progressive or any member of a consolidated group
of which Progressive is a part, is currently in progress. There
are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any tax return of Progressive.
Schedule 3.12 attached hereto lists all tax sharing contracts,
agreements or arrangements to which Progressive is a party and
all such contracts, agreements and arrangements have been
terminated prior to the Closing Date with no liability or
obligation to Progressive.
3.13 Liabilities. Except as set forth on Schedule 3.13,
Progressive on a consolidated basis has no outstanding claims,
liabilities or indebtedness, contingent or otherwise, which are
not properly reflected in the Financial Statements in a manner
consistently with past practice, other than liabilities incurred
subsequent to the December Balance Sheet Date in the ordinary
course of business not exceeding $250,000 individually or
$500,000 in the aggregate; the reserves reflected in the
Financial Statements are adequate, appropriate and reasonable.
Progressive is not in default in respect of the terms or
conditions of any indebtedness.
3.14 Insurance. Set forth on Schedule 3.14, attached
hereto, is a brief description of insurance policies (specifying
the insurer, the policy number or coverage note number with
respect to binders and the amount of any deductible, describing
the pending claims if such claims exceed the applicable policy
limits, setting forth the aggregate amount paid out by the
insurer under each policy from December 31, 1998, through the
date hereof and the aggregate limit, if any, of the insurer's
liability thereunder) which Progressive and any member of its
consolidated group maintain with respect to its business,
properties or employees. Such policies are valid, binding and
enforceable in accordance with their terms and are in full force
and effect and are free from any right of termination on the part
11
<PAGE>
of the insurance carriers. Such policies, with respect to their
amounts and types of coverage, are adequate to insure fully
against risks to which Progressive and any member of its
consolidated group and their respective property and assets are
normally exposed in the operation of their businesses. Neither
Progressive nor any member of its consolidated group is in
default with respect to any material provision in any such policy
or binder and has not failed to give any notice or present any
claim under any such policy or binder in due and timely fashion,
and neither Progressive nor any member of its consolidated group
has received any notice of cancellation or non-renewal with
respect to any such policy or binder. Except for claims set
forth on Schedule 3.14, there are no outstanding unpaid claims
under any such policy or binder which have gone unpaid for more
than 45 days or as to which the carrier has disclaimed liability.
3.15 Intellectual Properties. The operation of the
business of Progressive or any member of its consolidated group
requires no rights under Intellectual Property (as hereinafter
defined) other than rights under Intellectual Property listed on
Schedule 3.15 attached hereto, and rights granted to Progressive
or any member of its consolidated group pursuant to agreements
listed on Schedule 3.15. Within the three year period
immediately prior to the date of this Agreement, neither the
business of Progressive or any member of its consolidated group
made use of Intellectual Property rights other than rights under
Intellectual Property listed on Schedule 3.15 and rights granted
to Progressive or any member of its consolidated group pursuant
to agreements listed on Schedule 3.15. Except as otherwise set
forth on Schedule 3.15, either Progressive or any member of its
consolidated group owns all right, title and interest in the
Intellectual Property listed on Schedule 3.15 including, without
limitation, exclusive rights to use and license the same. Each
item of Intellectual Property listed on Schedule 3.15 has been
duly registered with, filed in, or issued by the appropriate
domestic or foreign governmental agency, to the extent required,
and each such registration, filing and issuance remains in full
force and effect. Except as set forth on Schedule 3.15, no claim
adverse to the interests of Progressive or any member of its
consolidated group in the Intellectual Property or agreements
listed on Schedule 3.15 has been made in litigation. To the best
knowledge, information and belief of the Shareholders, no such
claim has been threatened or asserted, no basis exists for any
such claim, and no Person has infringed or otherwise violated the
rights of Progressive or any member of its consolidated group in
any of the Intellectual Property or agreements listed on Schedule
3.15. Except as set forth on Schedule 3.15, no litigation is
pending wherein Progressive or any member of its consolidated
group is accused of infringing or otherwise violating the
Intellectual Property right of another, or of breaching a
12
<PAGE>
contract conveying rights under Intellectual Property. To the
best knowledge, information and belief of the Shareholders, no
such claim has been asserted or threatened against Progressive or
any member of its consolidated group, nor are there any facts
that would give rise to such a claim. For purposes of this
Section 3.15, "Intellectual Property" means domestic and foreign
patents, patent applications, registered and unregistered trade
marks and service marks, trade names, registered and unregistered
copyrights, computer programs, data bases, trade secrets and
proprietary information. Shareholders will transfer any
Intellectual Property owned by it and used in Progressive or any
member of its consolidated group's Business to Marquee.
3.16 Compliance with Laws. Neither Progressive nor any
member of its consolidated group, nor to the knowledge of
Progressive, the Shareholders, any officer, director or employee
of Progressive or any member of its consolidated group is in
violation of any applicable order, judgment, injunction, award or
decree, related to, arising out of or affecting the business or
operations of Progressive or any member of its consolidated group
or their respective properties or assets. Neither the
Shareholders, Progressive nor any member of its consolidated
group, nor to the knowledge of Progressive, any officer, director
or employee of either Progressive or any member of its
consolidated group is in violation of any federal, state, local
or foreign law, ordinance, regulation or any other requirement of
any governmental or regulatory body, court or arbitrator
(including, without limitation, laws relating to the environment
and OSHA and the Americans with Disabilities Act) other than
insignificant or immaterial violations which do not and will not
adversely affect (i) Progressive's Business or Property; (ii) the
business proposed to be conducted by Marquee after the
consummation of the transactions contemplated by this Agreement;
or (iii) the consummation of the transactions contemplated by
this Agreement. Each permit, license, order or approval of any
governmental or regulatory body or other applicable authority
("Permits") that is material to the conduct of Progressive's
Business is in full force and effect, no violations are or have
been recorded in respect of any permit and no proceeding is
pending or, to the knowledge of the Shareholders or Progressive,
threatened, to revoke or limit any Permit, which revocation or
limitation could have an adverse effect on Progressive's Business
or Property or the business to be conducted by Marquee after the
consummation of the transactions contemplated by this Agreement.
Schedule 3.16 contains a list of all Permits. Except as set
forth on Schedule 3.16, no approval or consent of any person is
needed in order that the Permits continue in full force and
effect following the consummation of the transactions
contemplated by this Agreement.
13
<PAGE>
3.17 Employment Relations.
(a) Progressive and each member of its consolidated group
is in compliance with all Federal, state or other
applicable laws, domestic or foreign, respecting
employment and employment practices, terms and
conditions of employment and wages and hours, and has
not and is not engaged in any unfair labor practice;
(b) no unfair labor practice complaint against Progressive
or any member of its consolidated group is currently
pending before the National Labor Relations Board nor
has such a complaint been pending in the last two
years;
(c) there is no labor strike, dispute, slowdown or stoppage
actually pending or threatened against or involving
Progressive or any member of its consolidated group nor
has one existed during the last two years;
(d) no representation question exists respecting the
employees of Progressive or any member of its
consolidated group;
(e) no grievance which might have an adverse effect upon
Progressive or any member of its consolidated group or
the conduct of Progressive's Business exists, no
arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim
therefore has been asserted;
(f) Neither Progressive nor any member of its consolidated
group is a party to, nor does there otherwise exist,
any union, collective bargaining agreement or similar
agreement with respect to the employees of Progressive
or any member of its consolidated group and no
collective bargaining agreement or similar agreement is
currently being negotiated by Progressive or any member
of its consolidated group; and
(g) Neither Progressive nor any member of its consolidated
group has experienced any labor difficulty during the
last two years. There has not been, and to the best
knowledge, information and belief of the Shareholders
there will not be, any adverse change in relations with
employees of Progressive or any member of its
consolidated group as a result of any announcement of
the transactions contemplated by this Agreement.
14
<PAGE>
3.18 Employee Benefit Plans.
(a) Schedule 3.18 contains a complete list, as of March 31,
1999, of all employees, including their names,
birth dates, job titles, base salaries and dates of
hire. Schedule 3.18 contains a true and complete list
and accurate description of each employee welfare
benefit plan (an "Employee Welfare Plan"), as defined
in Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained
currently or at any time by Progressive or any other
organization which as of the Closing Date is a member
of a controlled group of organizations within the
meaning of Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended, (the
"Code"), of which Progressive is a member (an "ERISA
Affiliate"), or to which Progressive or any ERISA
Affiliate contributes or is required to contribute or
contributed or was required to contribute at any time.
Schedule 3.18 contains a true and complete list and
accurate description of each employee pension benefit
plan, as defined in Section 3(2) of ERISA (an "Employee
Pension Plan"), maintained currently or at any time by
Progressive or any ERISA affiliate or to which
Progressive or any ERISA Affiliate contributes or is
required to contribute or contributed or was required
to contribute at any time. The Employee Welfare Plans,
the Employee Pension Plans and the other plans listed
on Schedule 3.18 are collectively referred to herein as
the "Plans." Neither Progressive nor any ERISA
Affiliate has maintained at any time, nor does it
contribute to or has it contributed to or is or was
required to contribute to: (i) any multi-employer plan
(as defined in Section 3(37) of ERISA); or (ii) any
funded or unfunded medical, health or life insurance
plans or arrangements for current or future retirees or
terminated employees.
(b) With respect to each current Plan, Marquee has been
provided heretofore with true and complete copies of:
(i) all Plan documents and all documents or instruments
establishing or constituting any related trust, annuity
contract or other funding instrument, and any
amendments thereto; (ii) the most recent determination
letter received from the IRS; (iii) the most recent
financial statement; (iv) the most recent IRS Form
5500; and (v) written descriptions of all non-written
agreements relating to the Plans. All current Plans,
all Plan documents and all documents or instruments
establishing or constituting any related trust, annuity
15
<PAGE>
contract or other funding instrument, and any
amendments thereto, comply in all material respects
with the provisions of ERISA and the Code and
applicable laws, rules and regulations. All necessary
governmental approvals for all current Plans have been
obtained and favorable determinations as to the
qualification under the Code of each of the current
Plans, and for any Code Section 501(c)(9) trust
maintained in connection with any current Employee
Welfare Plan, and each amendment thereto, have been
made by the IRS, or have been applied for and no event
has occurred and no facts or circumstances exist that
may cause the loss of any such qualification or may
cause any such application to be denied.
(c) Except as set forth on Schedule 3.18, the
administration of all Plans has been consistent with,
and in compliance in all material respects with,
applicable requirements of the Code and ERISA,
including, without limitation, compliance on a timely
basis with all requirements for reporting, disclosure
and requirements for the continuation of group health
insurance. Neither Progressive, any ERISA Affiliate
nor any Plan fiduciary (as defined in Section 3(21) of
ERISA), with respect to any Plan, has engaged in any
transaction or acted or failed to act in any manner
that violates Section 404 or 406 of ERISA or engaged in
any prohibited transaction (as defined in Section
4975(c)(1) of the Code) for which there exists neither
a statutory nor regulatory exemption or for which an
exemption has not been obtained. All obligations
required to be performed by Progressive or any ERISA
Affiliate under each Plan have been performed, and
Progressive is not in violation of the terms of any
Plan, nor does Progressive or the Shareholders have any
knowledge of any existing violation by any other party
of any term or requirement of or applicable to any
current Plan. All contributions required by law to
have been made under any Plan, or to any trusts or
funds established thereunder or in connection
therewith, have been made by the due dates thereof
(including any valid extensions).
(d) No claims, suits or other proceedings are pending or
threatened, and no facts or circumstances exist that
could provide a basis for any such claim, suit or other
proceeding, by any of Progressive's or any ERISA
Affiliate's current or former employees, any
participant (as defined in Section 3(7) of ERISA) to
any Plan maintained at any time by Progressive or any
16
<PAGE>
ERISA Affiliate to which Progressive contributes or has
contributed or is or was required to contribute, any
fiduciary of any Plan, any beneficiary (as defined in
Section 3(8) of ERISA) of any such person or by any
governmental body, agency or instrumentality thereof
relating to or affecting any Plan, other than usual and
ordinary claims for benefits by eligible persons.
Neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated
hereby will constitute: (i) a termination of employment
or other event entitling any person to any additional
or other benefits, or that would otherwise modify any
benefits or the vesting of any benefits, under any Plan
maintained at any time by Progressive or any ERISA
affiliate, or to which Progressive or any ERISA
Affiliate contributes or has contributed or is or was
required to contribute; or (ii) a violation of Section
404 or 406 of ERISA or a prohibited transaction (as
defined in Section 4975(c)(1) of the Code) for which
there exists neither a statutory nor regulatory
exemption or for which an exemption has not been
obtained.
(e) Neither Progressive nor any ERISA Affiliate maintains
any Plans that are subject to the requirements of
Section 412 of the Code.
3.19 Environmental Laws and Regulations.
(a) Neither Progressive nor any member of its consolidated
group has generated, transported or disposed of any
hazardous material (defined below) during the past
three years.
(b) Neither Progressive nor any member of its consolidated
group has Hazardous Materials at any site or facility
owned or operated presently or at any previous time by
Progressive or any member of its consolidated group.
Progressive and its subsidiaries are in compliance in all
material respects with all applicable federal, state and local
laws and regulations relating to product registration, pollution
control and environmental contamination including, but not
limited to, all laws and regulations governing the generation,
use, collection, discharge, or disposal of Hazardous Materials
and all laws and regulations with regard to record keeping,
notification and reporting requirements respecting Hazardous
Materials. Neither Progressive nor any of its subsidiaries has
been alleged to be in violation of, and has not been subject to
any administrative or judicial proceeding pursuant to, such laws
17
<PAGE>
or regulations either now or any time during the past three
years. There are no facts or circumstances which Progressive or
the Shareholders reasonably expects could form the basis for the
assertion of any Environmental Claim (as defined below) against
Progressive or any member of its consolidated group relating to
environmental matters including, but not limited to, any
Environmental Claim arising from past or present environmental
practices asserted under CERCLA (as defined below) and RCRA (as
defined below), or any other federal, state or local
environmental statute, which Progressive or the Shareholders
believes might have an adverse effect on the business, results of
operations, financial condition or prospects of Progressive and
its subsidiaries taken as a whole.
For purposes of this Section 3.19, the following terms shall
have the following meanings: (A) "Hazardous Materials" shall mean
materials defined as "hazardous substances", "hazardous wastes"
or "solid wastes" in (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections
9601--5657, and any amendments thereto ("CERCLA"); (ii) the
Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901-6987 and
any amendments thereto ("RCRA"); and (iii) any similar federal,
state or local environmental statute; and (B) "Environmental
Claim" shall mean any and all claims, demands, causes of actions,
suits, proceedings, administrative proceedings, losses,
judgments, decrees, debts, damages, liabilities, court costs,
attorneys' fees and any other expenses incurred, assessed or
sustained by or against Progressive.
3.20 Interests in Clients, Suppliers, Etc. At closing and
in accordance with the respective employment agreement, except as
set forth on Schedule 3.20 attached hereto, as of the date of
closing no officer or director of Progressive or any member of
its consolidated group possesses, directly or indirectly, any
financial interest in, or is a director, officer or employee of,
any corporation, firm, association or business organization which
is a client, supplier, customer, lessor, lessee, or competitor or
potential competitor of Progressive. Ownership of securities of
a company whose securities are registered under the Securities
Exchange Act of 1934, as amended, not in excess of 1% of any
class of such securities shall not be deemed to be a financial
interest for purposes of this Section 3.20.
3.21 Bank Accounts, Powers of Attorney and Compensation of
Employees. Set forth on Schedule 3.21 attached hereto is an
accurate and complete list showing (a) the name and address of
each bank in which Progressive or any member of its consolidated
group has an account or safe deposit box, the number of any such
account or any such box and the names of all persons authorized
to draw thereon or to have access thereto; (b) the names of all
18
<PAGE>
persons, if any, holding powers of attorney from Progressive or
any member of its consolidated group and a summary statement of
the terms thereof; and (c) the names and current salaries,
including bonus and fringe benefits (other than those described
on Schedule 3.18 hereto) of all officers and of all persons whose
compensation from Progressive or any member of its consolidated
group for the calendar year to date ended on the December Balance
Sheet Date exceeded an annualized rate of $500,000, together with
a statement of the full amount paid or payable to each such
person for services rendered during such fiscal year.
3.22 No Changes Since December Balance Sheet Date. Since
the December Balance Sheet Date, Progressive has not on a
consolidated basis:
(a) except for the CCC merger agreement and its subsequent
amendment, incurred any liability or obligation of any
nature (whether accrued, absolute, contingent or
otherwise), except liabilities and obligations in the
ordinary course of business and consistent with past
practice, resulting in an increase for the liabilities
shown on the December Balance Sheet of more than
$500,000 in the aggregate;
(b) permitted any of its assets to be subjected to any
mortgage, pledge, lien, security interest, encumbrance,
restriction or charge of any kind (other than Permitted
Liens);
(c) sold, transferred or otherwise disposed of any assets
except inventory sold in the ordinary course of
business and consistent with past practice;
(d) with the exception of new carrier commitments and
agreements needed in the ordinary course of business,
made any single capital expenditure or commitment
therefore, in excess of $200,000 or made aggregate
capital expenditures and commitments therefore in
excess of $500,000;
(e) except as set forth on Schedule 3.22(e), declared or
paid any dividend or made any distribution on any
shares of its capital stock, or redeemed, purchased or
otherwise acquired any shares of its capital stock or
any option, warrant or other right to purchase or
acquire any such shares;
(f) except as set forth on Schedule 3.22(f), made any bonus
or profit sharing distribution or payment of any kind;
(g) increased its indebtedness for borrowed money, or made
any loan to any Person;
19
<PAGE>
(h) written off as uncollectible any notes or accounts
receivable, except immaterial write-downs or write-offs
in the ordinary course of business and consistent with
past practice which do not exceed $250,000 in the
aggregate charged to applicable reserves, and none of
which individually or in the aggregate is material to
Progressive on a consolidated basis;
(i) granted any increase in the rate of wages, salaries,
bonuses or other remuneration or benefits of any
executive employee or other employees or consultants,
and no such increase is customary on a periodic basis
or required by agreement or understanding except as set
forth on Schedule 3.18 and 3.22;
(j) canceled or waived any claims or rights of substantial
value;
(k) made any change in any method of accounting or auditing
practice;
(l) otherwise conducted its business or entered into any
transaction, except in the usual and ordinary manner
and in the ordinary course of business and consistent
with past practices;
(m) paid, discharged or satisfied any claims, liabilities
or obligations (absolute, accrued, contingent or
otherwise) other than the payment, discharge or
satisfaction in the ordinary course of business and
consistent with past practice of liabilities and
obligations reflected and reserved against in
Progressive's December Balance Sheet Date Financial
Statements or incurred in the ordinary course of
business and consistent with past practice since the
December Balance Sheet Date;
(n) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets (real,
personal or mixed, tangible or intangible to, or
entered into any agreement or arrangement of any kind
with, any of its officers, directors or shareholders or
any affiliate or associate of its officers, directors
or shareholders, except compensation to officers at
rates not exceeding the rate of compensation in effect
as of the December Balance Sheet Date with the
exception of the CCC Merger Agreement and its
amendment;
20
<PAGE>
(o) suffered any material adverse changes in its working
capital, financial condition, assets, liabilities
(absolute, accrued, contingent or otherwise), reserves,
business operations or prospects; or
(p) agreed, whether or not in writing, to do any of the
foregoing.
3.23 Securities Matters. The Shareholders hereby
represent, warrant and covenant to Marquee, as follows:
(a) The Shareholders have been advised that the Marquee
Shares have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), or any
state securities act in reliance on exemptions
therefrom.
(b) The Marquee Shares are being acquired solely for the
Shareholder's own account, for investment and are not
being acquired with a view to or for the resale,
distribution, subdivision or fractionalization thereof,
the Shareholder's have no present plans to enter into
any such contract, undertaking, agreement or
arrangement and the Shareholders further understands
that the Marquee Shares, may only be resold pursuant to
a registration statement under the Securities Act, or
pursuant to some other available exemption;
(c) The Shareholders acknowledge, in connection with the
exchange of the Marquee Shares, that no representation
has been made by representatives of Marquee regarding
its business, assets or prospects other than that set
forth herein and that it is relying upon the
information set forth in the filings made by Marquee
pursuant to Section 13 of the Securities Exchange Act
of 1934, as amended and such other representations and
warranties as set forth in this Agreement.
(d) The Shareholders agree that the certificate or
certificates representing the Marquee Shares will be
inscribed with substantially the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933. The securities have
been acquired for investment and may not be sold, transferred
assigned in the absence of an effective registration statement
for these securities under the Securities Act of 1933 or an
opinion of Marquee's counsel that registration is not required
under said Act."
21
<PAGE>
3.24 Certain Business Practices. No officer, director,
shareholder, employee, agent or other representative of
Progressive or any member of its consolidated group, or any
person acting on behalf of Progressive, has directly or
indirectly, within the past two years, given or agreed to give
any illegal, unethical or improper gift or similar benefit to any
customer, supplier, governmental employee or other person who is
or may be in a position to help or hinder Progressive or any
member of its consolidated group in connection with an actual or
proposed transaction.
3.25 Subsidiaries. Except as set forth on Schedule 3.25,
Progressive has no subsidiaries or interest in any corporation,
partnership, joint venture or other entity.
3.26 Disclosure. To the best of Shareholder's knowledge
and belief, neither this Agreement, nor the Financial Statements
referred to in Section 3.5 hereof, any Schedule, Exhibit or
certificate attached hereto or delivered in accordance with the
terms hereof or any document or statement in writing which has
been supplied by or on behalf of the Shareholders or by or on
behalf of any of Progressive's directors or officers in
connection with the transactions contemplated by this Agreement
contains any untrue statement of a material fact, or omits any
statement of a material fact necessary in order to make the
statements contained herein or therein not misleading. There is
no fact known to the Shareholders or Progressive which could
materially and adversely affect the business, prospects or
financial condition of Progressive or any member of its
consolidated group or their respective properties or assets,
which has not been set forth in this Agreement, the Financial
Statements referred to in Section 3.5 hereof (including the
footnotes thereto), any Schedule, Exhibit or certificate attached
hereto or delivered in accordance with the terms hereof or any
document or statement in writing which has been supplied by or on
behalf of the Shareholder or by or on behalf of any of
Progressive's directors or officers in connection with the
transactions contemplated by this Agreement.
3.27 Broker's or Finder's Fees. No agent, broker, person
or firm acting on behalf of the Shareholders or Progressive is,
or will be, entitled to any commission or broker's or finder's
fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of
the parties hereto, in connection with any of the transactions
contemplated by this Agreement.
3.28 Copies of Documents. The Shareholders have caused to
be made available for inspection and copying by Marquee and its
advisers, true, complete and correct copies of all documents
referred to in this Article 3 or in any Schedule attached hereto.
22
<PAGE>
ARTICLE 4
REPRESENTATIONS OF MARQUEE
--------------------------
Marquee represents, warrants and agrees as follows:
4.1 Organization and Corporate Power.
Marquee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada, and
is duly qualified and in good standing to do business as a
foreign corporation in each jurisdiction in which such
qualification is required and where the failure to be so
qualified would have a materially adverse effect upon Marquee.
Marquee has all requisite corporate power and authority to
conduct its business as now being conducted and to own and lease
the properties which it now owns and leases. Marquee's Articles
of Incorporation as amended to date, certified by the Secretary
of State of Nevada, and the By-laws of Marquee as amended to
date, certified by the President and the Secretary of Marquee,
which have been delivered to the Shareholders prior to the
execution hereof, are true and complete copies thereof as in
effect as of the date hereof.
4.2 Authorization.
Marquee has full power, legal capacity and authority to
enter into this Agreement, to execute all attendant documents and
instruments necessary to consummate the transaction herein
contemplated, and to exchange the Marquee Shares with the
Shareholders, and to perform all of its obligations hereunder.
This Agreement and all other agreements, documents and
instruments to be executed in connection herewith have been
effectively authorized by all necessary action, corporate or
otherwise, on the part of Marquee, which authorizations remain in
full force and effect, have been duly executed and delivered by
Marquee, and no other corporate proceedings on the part of
Marquee are required to authorize this Agreement and the
transactions contemplated hereby, except as specifically set
forth herein. This Agreement constitutes the legal, valid and
binding obligation of Marquee and is enforceable with respect to
Marquee in accordance with its terms, except as enforcement
hereof may be limited by bankruptcy, insolvency, reorganization,
priority or other laws of court decisions relating to or
affecting generally the enforcements of creditors' rights or
affecting generally the availability of equitable remedies.
Neither the execution and delivery of this Agreement, nor the
consummation by Marquee of any of the transactions contemplated
23
<PAGE>
hereby, or compliance with any of the provisions hereof, will (i)
conflict with or result in a breach or, violation of, or default
under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, credit agreement or
other agreement, document, instrument or obligation (including,
without limitation, any of its charter documents) to which
Marquee is a party or by which Marquee or any of its assets or
properties may be bound, or (ii) violate any judgment, order,
injunction, decree, statute, rule or properties of Marquee. No
authorization, consent or approval of any public body of
authority or any third party is necessary for the consummation by
Marquee of the transactions contemplated by this Agreement.
4.3 Capitalization.
The authorized capital stock of Marquee consists of
25,000,000 shares of Common Stock and 10,000,000 shares of
Preferred Stock. As of the date of Closing there will be
4,545,220 shares of Marquee's Common Stock issued and outstanding
after the taking into account of certain conversions of
outstanding convertible debentures discussed in Section 5.11
below. No shares of Preferred Stock are now or will, at the time
of closing be issued and outstanding. As of the date of Closing,
the Board of Directors and a majority of shareholders of Marquee
will have duly authorized an amendment of Marquee's Articles of
Incorporation so as to approve a 1 for 5 reverse common stock
split and maintain the number of authorized Common Shares at
25,000,000. Said amendment to the Articles of Incorporation will
be duly and properly filed as soon after Closing as is feasibly
possible. All of the outstanding shares of Marquee's Common
Stock have been, all of Marquee's Common Stock to be issued and
sold to each Shareholder pursuant to this Agreement, when issued
and delivered as provided herein will be duly authorized, validly
issued, fully paid and non-assessable and free of preemptive or
similar rights. Except as set forth on Schedule 4.3 there are no
options, warrants, rights, agreements or commitments of any
character obligating Marquee contingently or otherwise to issue
any shares or to register any shares of its capital stock under
any applicable federal or state securities laws.
4.4 Financial Statements.
(a) Marquee's financial statements contained in its Form
10-KSB filing for the fiscal year ended September 30,
1998, as amended, its Form 10-QSB filings for the
periods ended December 31, 1998, and March 31, 1999,
(collectively "Marquee's Financial Statements") are
complete in material respects and have been prepared in
accordance with generally accepted accounting
principles applied on a consistent basis throughout the
24
<PAGE>
periods indicated. Marquee's Financial Statements
accurately set out and describe the financial condition
and operating results of Marquee as of the dates, and
for the periods indicated therein, subject to normal
year-end audit adjustments. Except as set forth in
Marquee's Financial Statements, Marquee has no
liabilities, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business
subsequent to March 31, 1999 and (ii) obligations under
contracts and commitments incurred in the ordinary
course of business and not required under generally
accepted accounting principles to be reflected in
Marquee's Financial Statements. Marquee maintains and
will continue to maintain a standard system of
accounting established and administered in accordance
with generally accepted accounting principles.
(b) The unaudited balance sheet of Marquee as of March 31,
1999 and related income statement for the six months
ended March 31, 1999 (the "Marquee's Interim Financial
Statements") are annexed hereto as Schedule 4.4.
Marquee's Interim Financial Statements were carefully
prepared from the books and records of Marquee, and
although Marquee's Interim Financial Statements are not
audited and do not contain the footnotes which would be
required in audited financial statements, present
fairly the financial position, assets and liabilities
of Marquee and the results of its operations, for the
respective periods indicated and reflect all necessary
accruals, all in conformity with GAAP applied on a
consistent basis. The Financial Statements contain all
adjustments (consisting of only normal recurring
accruals) required to be made by GAAP, subject to
normal year-end adjustments.
(c) Except as set forth in Schedule 4.4, since March 31,
1999 there has been (x) no material adverse change in
the assets or liabilities, or in the business or
condition, financial or otherwise, or in the results of
operations or prospects, of Marquee whether as a result
of any legislative or regulatory change, revocation of
any license or rights to do business, fire, explosion,
accident, casualty, labor trouble, flood, drought,
riot, storm, condemnation or act of God or other public
force or otherwise and (y) no material adverse change
in the assets or liabilities, or in the business or
condition, financial or otherwise, or in the results of
operations or prospects, of Marquee and to the best
knowledge, information and belief of Marquee, no fact
or condition exists or is contemplated or threatened
which might cause such a change in the future.
25
<PAGE>
4.5 Subsidiaries.
Marquee has no subsidiaries and no investments, directly or
indirectly, or other financial interest in any other corporation
or business organization, joint venture or partnership of any
kind whatsoever except set forth in Schedule 4.5.
4.6 Absence of Undisclosed Liabilities.
Except as and to the extent reflected or reserved against in
the most recent balance sheet included in the Company's Financial
Statements, Marquee has no liability(s) or obligation(s) (whether
accrued, to become due, contingent or otherwise) which
individually or in the aggregate could have a materially adverse
effect on the business, assets, properties, condition (financial
or otherwise) or prospects of Marquee. Except as disclosed on
Schedule 4.6 hereto, there are no material changes in the
business of Marquee.
4.7 No Pending Material Litigation or Proceedings.
Except as set forth on Schedule 4.7, there are no actions,
suits or proceedings pending or, to the best of Marquee's
knowledge, threatened against or affecting Marquee (including
actions, suits or proceedings where liabilities may be adequately
covered by insurance) at law or in equity or before or by any
federal, state, municipal or other governmental department,
commission, court, board, bureau, agency or instrumentality,
domestic or foreign, or affecting any of the officers or
directors of Marquee in connection with the business, operations
or affairs of Marquee, which might result in any adverse change
in the business, properties or assets, or in the condition
(financial or otherwise) of Marquee, or which might prevent the
sale of the transactions contemplated by this Agreement. Marquee
is not subject to any voluntary or involuntary proceeding under
the United States Bankruptcy Code and has not made an assignment
for the benefit of creditors.
4.8 Disclosure.
Neither this Agreement, nor any certificate, exhibit, or
other written document or statement, furnished to the
Shareholders by Marquee in connection with the transactions
contemplated by this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to
state a material fact necessary to be stated in order to make the
statements contained herein or therein not misleading.
26
<PAGE>
4.9 Tax Returns and Payments.
All tax returns and reports, including, without limitation,
all foreign returns and reports, of Marquee required by law to be
filed have been duly filed, and all taxes, assessments, fees and
other governmental charges heretofore levied upon any properties,
assets, income or franchises of Marquee which are due and payable
have been paid, except as otherwise reflected in the Financial
Statements. No extension of time for the assessment of
deficiencies in any federal or state tax has been requested of or
granted by Marquee.
4.10 Compliance with Law and Government Regulations.
Marquee is in compliance with all applicable statutes,
regulations, decrees, orders, restrictions, guidelines and
standards, whether mandatory or voluntary, imposed by the United
States of America, any state, county, municipality or agency of
any thereof, and any foreign country or government to which
Marquee is subject. Without limiting the generality of the
foregoing, Marquee has filed all reports and statements required
to be filed pursuant to the Securities Act of 1933 (the "1933
Act") and Securities Exchange Act of 1934 (the "1934 Act")
including all periodic reports required under the Section 13 or
15 of the Exchange Act and Form SR reports under Rule 463 of the
Securities Act of 1933. Each of such reports was complete, did
not contain any material misstatement of or omit to state any
material fact.
4.11 Broker's or Finder's Fees. No agent, broker, person
or firm acting on behalf of Marquee is, or will be, entitled to
any commission or broker's or finder's fees from Progressive or
from any Person controlling, controlled by or under common
control with any of the parties hereto, in connection with any of
the transactions contemplated herein.
ARTICLE 5
CONDITIONS TO MARQUEE'S OBLIGATIONS
-----------------------------------
The exchange of the Progressive Shares by Marquee on the
Closing Date is conditioned upon satisfaction, on or prior to
such date, of the following conditions:
5.1 Opinion of Progressive's Counsel. Progressive shall
have furnished Marquee with a favorable opinion, dated the
Closing Date, of Progressive's counsel, in form and substance
satisfactory to Marquee and their counsel, to the effect set
forth in Exhibit 1 attached hereto.
27
<PAGE>
5.2 Good Standing and Other Certificates. Progressive and
each member of its consolidated group, as the case may be, shall
have delivered to Marquee:
(a) copies of certificates of incorporation, all amendments
thereto, in each case certified by the Secretary of
State or other appropriate official of its jurisdiction
of incorporation;
(b) a certificate from the Secretary of State or other
appropriate official of their respective jurisdictions
of incorporation to the effect that Progressive and
each member of its consolidated group are in good
standing or subsisting in such jurisdiction and listing
all charter documents including all amendments thereto,
on file;
(c) a copy of the By-Laws each of Progressive and each
member of its consolidated group, certified by the
respective Secretary of each entity as being true and
correct and in effect on the Closing Date.
(d) a resolution of Progressive's Board of Directors
certified by their respective Secretary approving the
transactions contemplated hereby and authorizing the
President and Secretary of each entity to execute this
Agreement and all documents necessary to consummate the
sale of the Shares.
5.3 Officer Certificate. Progressive shall deliver a
certificate of its President stating the following:
(a) Certain Agreements. Except as listed on Schedule 3.9
hereto there are no management or consulting agreements
with any third parties to provide these services to
Progressive or any member of its consolidated group.
(b) No Material Adverse Change. Prior to the Closing Date,
there shall be no material adverse change in the assets
or liabilities, the business or condition, financial or
otherwise, the results of operations, or prospects of
Progressive or any member of its consolidated group,
whether as a result of any legislative or regulatory
change, revocation of any license or rights to do
business, fire, explosion, accident, casualty, labor
trouble, flood, drought, riot, storm, condemnation or
act of God or other public force or otherwise.
(c) Truth of Representations and Warranties. The
representations and warranties of Progressive contained
in this Agreement or in any Schedule attached hereto
28
<PAGE>
shall be true and correct on and as of the Closing Date
with the same effect as though such representations and
warranties had been made on and as of such date.
(d) Performance of Agreements. All of the agreements of
each of Progressive or any member of its consolidated
group to be performed on or before the Closing Date
pursuant to the terms hereof shall have been duly
performed.
(e) No Litigation Threatened. No action or proceedings
shall have been instituted or threatened before a court
or other government body or by any public authority to
restrain or prohibit any of the transactions
contemplated hereby.
5.4 Chief Financial Officer's Letter. Marquee shall have
received a letter, dated the Closing Date, from Progressive's
Chief Financial Officer, in form and substance satisfactory to
them, to the effect set forth in Exhibit 2 attached hereto.
5.5 Governmental Approvals. Except with respect to
telecommunications licenses, all governmental and other consents
and approvals, if any, necessary to permit the consummation of
the transactions contemplated by this Agreement shall have been
received.
5.6 Proceedings. All proceedings to be taken in connection
with the transactions contemplated by this Agreement and all
documents incident thereto shall be satisfactory in form and
substance to Marquee and their counsel, and Marquee shall have
received copies of all such documents and other evidences as they
or their counsel may reasonably request in order to establish the
consummation of such transactions and the taking of all
proceedings in connection therewith.
5.7 Audited Financial Statements. The completion and
delivery of Progressive's consolidated financial statements
together with an unqualified auditors report (except as to going
concern).
5.8 Forgiveness of Smith Indebtedness. The estate of Ralph
Smith shall have waived all right, title and interest for the
indebtedness due by Marquee to Mr. Smith for unpaid salary
($255,634.33) through July 29, 1998.
5.9 Forgiveness of Brown Indebtedness and Cancellation of
Employment Agreement. Marquee's Board of Directors shall have
approved the sale of the Company's film library to Mr. Harold
Brown in exchange for forgiveness of Mr. Brown's unpaid salary
through the date of closing and the cancellation of Mr. Brown's
employment contract.
29
<PAGE>
5.10 Lock-Up Agreement and Issuance of Warrants. Marquee
shall have received a one-year lock-up agreement to the effect as
set forth in Exhibit 3 attached hereto. In connection therewith,
Marquee shall have issued Harold Brown 100,000 two-year warrants
exercisable at $2.50 per share. The warrants shall contain
piggy-back registration rights and standard anti-dilution
provisions.
5.11 Conversion of Outstanding Convertible Debentures.
Marquee shall have caused the conversion of an aggregate of
$555,856.72 of outstanding 8% Convertible Debentures into an
aggregate of pre-split 2,223,427 shares of Marquee's Common
Stock.
5.12 Closing. The transactions contemplated by this
Agreement shall have been consummated by June 30, 1999.
ARTICLE 6
CONDITIONS TO THE OBLIGATIONS OF
THE SHAREHOLDERS AND PROGRESSIVE
--------------------------------
The obligations of the Shareholders and Progressive on the
Closing Date are conditioned upon satisfaction, on or prior to
such date, of the following conditions:
6.1 Opinion of Marquee's Counsel. Marquee shall have
furnished the Shareholders and Progressive with an opinion, dated
the Closing Date, of Sommer & Schneider LLP; to the effect set
forth in Exhibit 4 attached hereto.
6.2 Good Standing Certificates. Marquee shall have
delivered to the Shareholders:
(a) copies of the Certificate of Incorporation of Marquee,
including all amendments thereto, certified by the
Secretary of State of the State of Nevada; and
(b) certificates from the Secretary of State of the State
of Nevada to the effect that Marquee is in good
standing in such State and listing all charter
documents, including all amendments thereto, of Marquee
on file.
6.3 Truth of Representations and Warranties. The
representations and warranties of Marquee contained in this
Agreement shall be true and correct on and as of the Closing Date
with the same effect as though such representations and
30
<PAGE>
warranties had been made on and as of such date, and Marquee
shall have delivered to Progressive a certificate, dated the
Closing Date, to such effect.
6.4 Governmental Approvals. Except with respect to
telecommunications licenses, all governmental consents and
approvals, if any, necessary to permit the consummation of the
transactions contemplated by this Agreement shall have been
received. It is understood that Marquee will be required to
cooperate with Progressive to seek necessary regulatory approvals
for the change in ownership and control of Progressive and its
subsidiaries.
6.5 Performance of Agreements. All of the agreements of
Marquee to be performed on or before the Closing Date pursuant to
the terms hereof shall have been duly performed, and Marquee
shall have delivered to Progressive a certificate, dated the
Closing Date, to such effect.
6.6 Proceedings. All proceedings to be taken in connection
with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in
form and substance to Progressive and its counsel, and
Progressive shall have received copies of all such documents and
other evidences as they or their counsel may reasonably request
in order to establish the consummation of such transactions and
the taking of all proceedings in connection therewith.
6.7 Forgiveness of Smith Indebtedness. Forgiveness of the
debt set forth in Section 5.8.
6.8 Forgiveness of Brown Indebtedness and Cancellation of
Employment Contract. The transactions contemplated by Section
5.9 shall have been consummated.
6.9 Lock-Up Agreement and Issuance of Warrants. The
transactions contemplated by Section 5.10 shall have been
consummated.
6.10 Board Representation. At Closing all present
directors of Marquee shall resign and not less than five persons
designated by Progressive shall be appointed to the Board of
Directors of Marquee.
6.11 Closing. The transactions contemplated by this
Agreement shall have been consummated by June 30, 1999.
31
<PAGE>
ARTICLE 7
COVENANTS OF OFFICERS AND DIRECTORS OF PROGRESSIVE
--------------------------------------------------
7.1 Non-Competition, Non-Interference. In consideration of
the exchange of the Progressive Stock by Marquee, Barry Shevlin,
Dr. Howard Tackett, Tom Chubokas and James C. Watson, each being
an officer and/or director of Progressive (the "Progressive
Parties") will not, whether for their own account or for the
account of any other person, directly or indirectly:
(a) except as referenced in Schedule 3.20, engage or invest
in, own, manage, operate, control or participate in the
ownership, management, operation or control of, be
employed by, associated or in any manner connected with
or render services or advise to, any business, the
products or services of which compete, in whole or in
part, with the products or activities of Progressive
within the geographical territories in which
Progressive or a member of its consolidated group at
the time up to the Closing Date has conducted its
business.
(b) solicit any potential customer or client to which
Progressive or a member of its consolidated group has
made a presentation, or with which Progressive or a
member of its consolidated group has been in contact,
not to hire Progressive or a member of its consolidated
group, or to hire another company whether or not such
Progressive Party had personal contact with such person
during or by reason of his or its association with
Progressive or a member of its consolidated group; or
(c) solicit the business of any company which is a customer
or client of Progressive or a member of its
consolidated group or was its customer or client within
two years prior to the date of this Agreement;
(d) persuade or attempt to persuade any employee of
Progressive or a member of its consolidated group, or
any individual who was its employee during the two
years prior to the date of this Agreement, to leave
Progressive or a member of its consolidated group's
employ, or to become employed by or otherwise be
engaged as an independent consultant or otherwise for,
any person other than Progressive or a member of its
consolidated group; or
(e) disclosure or use any confidential information of
Progressive or any of their clients and customers. For
purposes of this section "confidential information"
32
<PAGE>
with respect to any entity shall mean trade secrets
concerning such entity's operations, future plans,
projected and historical sales, marketing, costs,
production growth and distribution, any customer lists,
customer information or other information relating to
the products or services, whether patentable or not,
concerning the business of such entity as conducted
prior to the Closing Date.
(f) this section shall be construed in accordance with each
individuals' respective employment agreement. In case
of a conflict, the individuals' employment agreement
will be controlling.
7.2 Construction. It is the desire and intent of the
parties to this Agreement that the provisions of Section 7.1
shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which
enforcement is sought. If any particular provisions or portion
of Section 7.1 shall be adjudicated to be invalid or
unenforceable, for any reason, including, without limitation, the
geographic or business scope or duration thereof, such provision
shall be construed in such a way, with court approval, as to make
it valid and enforceable to the maximum extent possible. Any
validity or unenforceability of any provision of this Agreement
shall attach only to such provision and shall not effect or
render invalid any other provision of this Agreement or any other
agreement or instrument.
7.3 Enforcement. The parties recognize that the
performance of the obligations under Section 7 by Progressive
Parties is special, unique and extraordinary in character, and
that in the event of the breach by such Progressive Party of the
terms and conditions of Section 7.1 to be performed, Progressive
and/or Marquee would suffer irreparable harm for which there
would be no adequate remedy at law. Accordingly, Progressive
Parties agree that in such event, in addition to any other
remedies which Progressive and/or Marquee may have in law or
equity for money damages or other relief, Progressive and Marquee
shall be entitled to temporary and/or injunctive relief, with the
necessity of posting a bond in the amount of not less than
$100,000 therefore but without proving damages, to enforce the
provisions hereof.
7.4 Certain Registrations. Progressive agrees to file
and/or maintain effective registration statements under the
Securities Act of 1933 with respect to shares of Marquee's Common
Stock issued or issuable:
(a) to former officers and directors pursuant to the
exercise of stock options or warrants;
33
<PAGE>
(b) to employees pursuant to other stock plans which are in
effect on the date of the Agreement.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS; INDEMNITY; SET-OFF
-----------------------------------------------
8.1 Survival of Covenants and Agreements. The respective
representations, warranties, covenants and agreements of the
Shareholders, Progressive and Marquee contained in this
Agreement, or any Schedule attached hereto or any agreement or
document delivered pursuant to this Agreement shall survive for a
period of two years from the consummation of the transactions
contemplated hereby; provided, however, that the representations,
warranties and agreements made with regard to taxes and ERISA
matters shall survive until the applicable statutes of
limitations have expired; and provided further, however, that
with respect to any covenant, term or provision to be performed
hereunder or in any of the Schedules hereto or any documents or
agreements delivered hereunder, the right of indemnification
under this Article 8 shall survive until such covenant, term or
provision has been fully paid, performed or discharged.
8.2 Indemnification.
(a) Progressive agrees to indemnify and hold Marquee and
their officers, directors, shareholders, employees,
affiliates and agents harmless from damages, losses,
liabilities, assessments, judgments, costs or expenses
(including, without limitation, penalties, interest and
reasonable counsel fees and expenses), (each a
"Claim"), in excess of $100,000 in the aggregate, as a
result of or arising out of the breach of any
representation or warranty made by the Shareholders
and/or Progressive or the failure of any representation
or warranty made by Shareholders and/or Progressive in
this Agreement or in any Schedule attached hereto or
any document or agreement delivered hereunder to be
true and correct in all respects as of the date of this
Agreement and as of the Closing Date or the
non-performance by The Shareholders and/or Progressive
of any covenant, term or provision to be performed by
it hereunder or in any of the documents or agreements
delivered hereunder which may be imposed or sought to
be imposed on Marquee or Progressive.
(b) Marquee agrees to indemnify and hold the Shareholders
and Progressive and each of their officers, directors,
shareholders, employees, affiliates and agents harmless
34
<PAGE>
from damages, losses or expenses (including, without
limitation, reasonable counsel fees and expenses) in
excess of $100,000, in the aggregate, suffered or paid,
directly or indirectly, as a result of or arising out
of the failure of any representation or warranty made
by Marquee in this Agreement to be true and correct in
all respects as of the date of this Agreement and as of
the Closing Date.
(c) Marquee's and Progressive's right to indemnification as
provided in this Section 8.2 shall not be eliminated,
reduced or modified in any way as a result of the fact
that (i) Marquee or Progressive has notice of a breach
or inaccuracy of any representation, warranty or
covenant contained herein; (ii) Marquee has been
provided with access, as requested by Marquee, to
officers and employees of Progressive or any member of
its consolidated group and such of Progressive's books,
documents, contracts and records as has been provided
to Marquee in response to Marquee's requests.
8.3 Conditions of Indemnification.
(a) A party entitled to indemnification hereunder (the
"Indemnified Party") shall notify the party or parties
liable for such indemnification (the "Indemnified
Party") in writing of any Claim or potential liability
for Taxes ("Tax Claim") which the Indemnified Party has
determined has given or could give rise to a right of
indemnification under this Agreement. Such notice
shall be given within a reasonable (taking into account
the nature of the Claim or Tax Claim) period of time
after the Indemnified Party has actual knowledge
thereof. The Indemnifying Party shall satisfy its
obligations under this Article 8 within forty days
after receipt of subsequent written notice from the
Indemnified Party if an amount is specified therein, or
promptly following receipt of subsequent written notice
or notices specifying the amount of such Claim or Tax
Claim additions thereto; provided, however, that for so
long as the Indemnifying Party is in good faith
defending a Claim or Tax Claim pursuant to Section
8.3(b) hereof, its obligation to indemnify the
Indemnified Party with respect thereto shall be
suspended (other than with respect to any costs,
expenses or other liabilities incurred by the
Indemnified Party prior to the assumption of the
defense by the Indemnifying Party). Failure to provide
a notice of Claim or Tax Claim within the time period
referred to above shall not constitute a defense to a
35
<PAGE>
Claim or Tax Claim or release the Indemnifying Party
from any obligation hereunder to the extent that such
failure does not prejudice the position of the
Indemnifying Party.
(b) If the facts giving rise to any such indemnification
involve any actual, threatened or possible Claim or
demand or Tax Claim by any person not a party to this
Agreement against the Indemnified Party, the
Indemnifying Party shall be entitled to contest or
defend such Claim or demand Tax Claim at its expense
and through counsel of its own choosing, which counsel
shall be reasonably acceptable to the Indemnified
Party, such right to contest or defend shall only apply
if the Indemnifying Party gave written notice of its
intention to assume the contest and defense of such
Claim or demand Tax Claim to the Indemnified Party as
soon as practicable, but in no event more than thirty
days after receipt of the notice of Claims or Tax
Claim, and provided the Indemnified Party with
appropriate assurances as to the creditworthiness of
the Indemnifying Party, and that the Indemnifying Party
will be in a position to pay all fees, expenses and
judgments that might arise out of such Claim or demand
Tax Claim. The Indemnified Party shall have the
obligation to cooperate in the defense of any such
Claim or demand Tax Claim and the right, at its own
expense, to participate in the defense of any Claim or
Tax Claim. So long as the Indemnifying Party is
defending in good faith any such Claim or demand Tax
Claim asserted by a third party against the Indemnified
Party, the Indemnified Party shall not settle or
compromise such Claim or demand Tax Claim. The
Indemnifying Party shall have the right to settle or
compromise any such Claim or demand Tax Claim without
the consent of the Indemnified Party at any time
utilizing its own funds to do so if in connection with
such settlement or compromise the Indemnified Party is
fully released by the third party and is paid in full
any indemnification amounts due hereunder. The
Indemnified Party shall make available to the
Indemnifying Party or its agents all records and other
materials in the Indemnified Party's possession
reasonably required by it for its use in contesting any
third party Claim or demand Tax Claim and shall
otherwise cooperate, at the expense of the Indemnifying
Party, in the defense thereof in such manner as the
Indemnifying Party may reasonably request. Whether or
not the Indemnifying Party elects to defend such Claim
or demand Tax Claim, the Indemnified Party shall have
no obligation to do so.
36
<PAGE>
ARTICLE 9
MISCELLANEOUS
-------------
9.1 Knowledge of the Shareholders, Progressive or Marquee.
Where any representation or warranty contained in this Agreement
is expressly qualified by reference to the knowledge, information
and belief of the Shareholders, Progressive or Marquee and the
Shareholders and Marquee, as the case may be, confirm that they
have made due and diligent inquiry as to the matters that are the
subject of such representations and warranties.
9.2 Expenses. The parties hereto shall pay all of their
own expenses relating to the transactions contemplated by this
Agreement, including, without limitation, the fees and expenses
of their respective counsel and financial advisers.
9.3 Governing Law. The interpretation and construction of
this Agreement, and all matters relating hereto, shall be
governed by the laws of the State of Florida applicable to
agreements executed and to be performed solely within such State
without regard to conflicts of laws.
9.4 Jurisdiction. Any judicial proceeding brought against
any of the parties to this Agreement on any dispute arising out
of this Agreement or any matter related hereto may be brought in
the courts of the State of Florida, or in the United States
District Court for the Tampa-Clearwater area, and, by execution
and delivery of this Agreement, each of the parties to this
Agreement accepts the exclusive jurisdiction of such courts, and
irrevocably agrees to be bound by any judgment rendered thereby
in connection with this Agreement. The prevailing party or
parties in any such litigation shall be entitled to receive from
the losing party or parties all costs and expenses, including
reasonable counsel fees, incurred by the prevailing party or
parties.
9.5 Captions. The Article and Section captions used herein
for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
9.6 Publicity. Except as otherwise required by law, none
of the parties hereto shall issue any press release or make any
other public statement, in each case relating to, connected with
or arising out of this Agreement or the matters contained herein,
without obtaining the prior approval of Marquee and Progressive
to the contents and the manner of presentation and publication
thereof. The parties hereto agree that the execution of this
Agreement requires the release of information to the financial
37
<PAGE>
press concerning this acquisition and accordingly agree to
promptly issue a press release mutually acceptable to Progressive
and Marquee and to file a Form 8-K report with the Securities and
Exchange Commission containing this agreement and all exhibits
and schedules hereto.
9.7 Notices. Any notice or other communication required or
permitted hereunder shall be deemed sufficiently given when
delivered in person, one business day after delivery to a
reputable overnight carrier, four business days if delivered by
registered or certified mail, postage prepaid or when sent by
telecopy with a copy following by hand or overnight carrier or
mailed, certified or registered mail, postage prepaid, addressed
as follows:
If to Marquee:
Marquee Entertainment, Inc.
6404 Wilshire Boulevard, Suite 550
Los Angeles, CA 90048
with a required copy to:
Sommer & Schneider LLP
600 Old Country Road, Suite 535
Garden City, NY 11530
If to Progressive:
Progressive Telecommunications Corporation
601 Cleveland Street, Suite 930
Clearwater, FL 33755
With a copy to:
Lee Young, Esq.
P.O. Box 548
Union, MO 63084
9.8 Parties in Interest. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party
hereto, other than by operation of law. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective heirs, executors, administrators, successors
and assigns.
9.9 Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute
one instrument.
38
<PAGE>
9.10 Entire Agreement. This Agreement, including the
Schedules hereto and the other documents referred to herein which
form a part hereof, contain the entire understanding of the
parties hereto with respect to the subject matter contained
herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to
such subject matter.
9.11 Amendments. This Agreement may not be changed orally,
but only by an agreement in writing signed by Marquee, the
Shareholders and Progressive.
9.12 Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof
will not in any way be affected or impaired thereby.
9.13 Third Party Beneficiaries. Each party hereto intends
that this Agreement shall not benefit or create any right or
cause of action in or on behalf of any Person other than the
parties hereof.
9.14 Cooperation After Closing. From and after the Closing
Date, each of the parties hereto shall execute such documents and
other papers and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the
transactions contemplated hereby.
ARTICLE 10
COVENANTS
---------
10.1 Access to Information. Each of Progressive and
Marquee agrees that, prior to the Closing Date, the other party
hereto shall be entitled, through its officers, employees and
representatives (including, without limitation, its legal and
financial advisors and accountants), to make such investigation
of the properties, businesses and operations of Progressive or
Marquee and their respective subsidiaries, as applicable, and
such examination of the books, records and financial condition of
Progressive or Marquee (and their respective subsidiaries), as
applicable, as such other party reasonably requests and to make
copies of such books and records. Any such investigation and
examination shall be conducted during regular business hours and
under reasonable circumstances, and each of Progressive and
Marquee shall cooperate, and shall cause their respective
subsidiaries to cooperate, fully therein. No investigation by
Progressive or Marquee prior to or after the date of this
Agreement shall diminish or obviate any of the representations,
39
<PAGE>
warranties, covenants or agreements of the other party thereto
contained in this Agreement or any other agreements or
certificates in connection with the transactions contemplated by
this Agreement. In order that each of Marquee and Progressive
may have full opportunity to make such physical, business,
accounting and legal review, examination or investigation as it
may reasonably request of the affairs of Progressive or Marquee
(and their respective subsidiaries), as applicable, Progressive
and Marquee shall cause the officers, employees, consultants,
agents, accountants, attorneys and other representatives of
Progressive or Marquee, as applicable, to cooperate fully with
such representatives in connection with such review and
examination.
10.2 Conduct of Marquee's and Progressive's Respective
Businesses Pending the Closing.
(a) Prior to the Closing Date, except as otherwise
expressly contemplated by this Agreement, Progressive
and the members of its consolidated group shall and
Marquee shall, and shall cause its subsidiaries to:
(i) conduct its business only in the ordinary course
consistent with past practice;
(ii) use its best efforts to (A) preserve its present
business operations, organization (including,
without limitation, management and the sales
force) and goodwill, (B) preserve its present
relationship with Persons having business
dealings with it, and (C) take such actions as
may be reasonably necessary to maintain in good
standing all FCC licenses with respect to any
Systems, permits or authorizations, as
applicable;
(iii) maintain (A) all its assets and properties in
their current condition, ordinary wear and tear
excepted, and (B) insurance upon all of its
properties and assets in such amounts and of
such kinds comparable to that in effect on the
date of this Agreement;
(iv) (A) maintain its books, accounts and records in
the ordinary course of business consistent with
past practices, (B) continue to collect accounts
receivable and pay accounts payable utilizing
normal procedures and without discounting or
accelerating payment of such accounts (other
than in the ordinary course of business), and
(C) comply with all contractual and other
obligations applicable to its operations; and
40
<PAGE>
(v) comply in all material respects with applicable
Laws.
(b) Prior to the Closing Date, except as otherwise
expressly contemplated by this Agreement, Progressive
and the members of its consolidated group shall not and
Marquee shall not, and shall cause its subsidiaries not
to:
(i) declare, set aside, make or pay any dividend
or other distribution in respect of its
capital stock;
(ii) (A) in the case of Marquee, transfer, issue
(except issuances of shares upon the exercise
of outstanding warrants, options and
convertible debentures), sell or dispose of
any shares of its capital stock or other
securities of itself or its subsidiaries or
grant options, warrants, calls or other rights
to purchase or otherwise acquire shares of the
capital stock or other securities of itself or
any of its subsidiaries; (B) in the case of
Progressive, issue, sell or dispose of any
shares of its capital stock or other
securities of itself or its subsidiaries for a
consideration of less than $2.25 per share or
grant options, warrants, calls or other rights
to purchase any capital stock of itself or any
of its subsidiaries.
(iii) effect any recapitalization, reclassification,
stock split or like change in its
capitalization except, in the case of Marquee,
as may be required to authorize the issuance
of the Shares (including securities
convertible into shares of Marquee Stock);
(iv) amend its certificate of incorporation,
by-laws, memorandum or articles of association
or similar organizational documents, except
that Marquee may amend its certificate of
incorporation solely for the purposes of
reverse splitting and authorizing the Shares
as contemplated by this Agreement, or changing
the name of Marquee so as to add the words
"Progressive Telecommunications" thereto and
Marquee may amend its certificate of
incorporation to increase the number of
authorized shares as necessary to permit
Marquee to consummate the transactions
contemplated hereby;
41
<PAGE>
(v) (A) materially increase the annual level of
compensation of nay employee, (B) increase the
annual level of compensation payable or to
become payable by it or any of its subsidiaries
to any of their respective executive officers,
(C) grant any bonus, benefit or other direct or
indirect compensation to any employee, director
or consultant, other than in the ordinary
course consistent with past practice, (D)
increase the coverage or benefits available
under any (or create any new) severance pay,
termination pay, vacation pay, company awards,
salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive
compensation, insurance, pension or other
employee benefit plan or arrangement made to,
for, or with any of its or its subsidiaries'
directors, officers, employees, agents or
representatives or otherwise modify or amend or
terminate any such plan or arrangement;
(vi) except (A) for trade payables and (B) for
pledges of assets and indebtedness for borrowed
money which do not exceed, individually or in
the aggregate, $1,000,000 (it being understood
that(1) such amount shall not include
indebtedness existing or assets pledged prior
to the date of this Agreement and (2) the
transaction value of any asset pledges shall be
deemed to be equal to the fair market value of
the assets pledged in such transaction), borrow
monies of any reason or draw down on any line
of credit or debt obligation, or become the
guarantor, surety, endorser or otherwise liable
for any debt, obligation or liability
(contingent or otherwise) of any other Person;
(vii) except as may be permitted pursuant to clause
(vi) above, subject to any lien (except for
leases that do not materially impair the use of
the property subject thereto in their
respective businesses as presently conducted
and in the ordinary course of business), any of
its properties or assets (whether tangible or
intangible);
(viii) acquire any material properties or assets or
sell, assign, transfer, convey, lease or
otherwise dispose of any of its FCC
authorizations, FCC licenses, or material
properties or assets, or its rights to any of
42
<PAGE>
the foregoing or to any FCC licenses issued to
or held by other Persons (except for fair
consideration in the ordinary course of
business consistent with past practice), or in
the case of Progressive, take any action, other
than in the exercise of its reasonable business
judgment, that causes, or take any action that
could reasonably be expected to cause, the FCC
licensees with respect to any System to cancel,
assign, transfer or otherwise dispose of their
FCC license in a manner that would be adverse
to Marquee;
(ix) cancel or compromise any debt or claim or waive
or release any material right except in the
ordinary course of business consistent with
past practice;
(x) other than, in the case of Progressive, capital
expenditures necessary for the build-out of
telecommunication systems pursuant to
Progressive's contractual obligations, enter
into any commitment for capital expenditures in
excess of $250,000 for any individual
commitment and $1,000,000 for all commitments
in the aggregate;
(xi) enter into, modify or terminate any labor or
collective bargaining agreement or, through
negotiation or otherwise, make any commitment
or incur any liability to any labor
organization;
(xii) enter into any transaction or make or enter
into any Contract which by reason of its size
or otherwise is not in the ordinary course of
business consistent with past practice;
(xiii) transfer any funds or assets to any of its
officers and directors, which funds and assets
are, in the aggregate, worth in excess of
$25,000, except for the purchase of goods and
services from any such officer or director in
the ordinary course of business at the fair
market value for such goods and services;
(xiv) agree to do anything prohibited by this Section
10.2 or anything which would make any of the
representations and warranties of Marquee or
the Progressive in this Agreement or Marquee
43
<PAGE>
Documents or Progressive Documents untrue or
incorrect in any material respect as of any
time through and including the Closing Date.
10.3 Consents and Approvals.
(a) Progressive and Marquee shall use their respective best
efforts, and shall cooperate with each other, to obtain
at the earliest practicable date all consents and
approvals required to consummate the transactions
contemplated by this Agreement; provided, however, that
neither Progressive nor Marquee shall be obligated to
pay any consideration (except for filing fees)
therefore to any third party from whom consent or
approval is requested.
(b) Promptly following the date of this Agreement, Marquee
shall prepare and file with the Securities and Exchange
Commission an information statement and related
solicitation materials relating to taking corporate
actions without the benefit of a meeting to approve the
issuance of Marquee Shares pursuant hereto (such
information statement, as amended or supplemented from
time to time, being hereinafter referred to as the
"Information Statement"), and shall use its best
efforts to cause the Information Statement to be mailed
to its stockholders at such time and in such manner as
permits the notification to be sent as promptly as
practicable. Progressive shall furnish all information
as may be reasonably requested by Marquee and, in any
case, as required with respect to Marquee by Regulation
14A under the Securities Exchange Act of 1934, as
amended, for inclusion in the Information Statement.
The information provided by Marquee and Progressive,
respectively, for use in the Information Statement
shall, on the date when the Information Statement is
first mailed to Marquee's stockholders, be true and
correct in all material respects and shall not omit to
state any material fact required to be stated therein
or necessary in order to make the statements contained
therein not misleading, and Marquee and Progressive
each agree to promptly correct any information provided
by it for use in the Information Statement which shall
have become false or misleading.
(c) Marquee shall notify its shareholders that the Board of
Directors have approved, among other matters, the
issuance of the Marquee Shares pursuant hereto.
Marquee, through its Board of Directors, shall vote its
stock for approval of the foregoing; provided, however,
that if Marquee's Board of Directors determines, in its
44
<PAGE>
good faith judgment after consultation with independent
legal counsel, that it is necessary to do so in order
to comply with its fiduciary duties to stockholders
under applicable law, Marquee's Board of Directors may
withdraw their votes. The Information Statement shall
comply as to form in all material respects with all
applicable requirements of the Securities Exchange Act
of 1934, as amended, and no amendment or supplement to
the Information Statement shall be made by Marquee
without the prior written approval of Progressive
unless Marquee determines such amendment or supplement
is required by law.
10.4 Other Actions.
(a) Each of Progressive and Marquee shall use its best
efforts to (i) take all actions necessary or
appropriate to consummate the transactions contemplated
by this Agreement and (ii) cause the fulfillment at the
earliest practicable date of all of the conditions to
their respective obligations to consummate the
transactions contemplated by this Agreement.
(b) Marquee shall use its best efforts to assure that,
prior to the Closing, the Marquee Shares have remained
quoted on the NASDAQ OTC-Bulletin Board, subject to
official notice of issuance.
10.5 Publicity. Neither Progressive nor Marquee shall
issue any press release or public announcement concerning this
Agreement or the transactions contemplated hereby without
obtaining the prior written approval of the other party hereto,
which approval will not be unreasonably withheld or delayed,
unless, in the sole judgement of Marquee or Progressive,
disclosure is otherwise required by applicable Law or by the
applicable rules of any stock exchange on which Marquee or
Progressive (or any Affiliates thereof) lists securities;
provided that, to the extent required by applicable Law, the
party intending to make such release shall use commercially
reasonable efforts consistent with such applicable Law to consult
wit the other party with respect to the text thereof.
10.6 Tax and Accounting Matters. Within 60 days following
the date hereof, Progressive will deliver to Marquee (i) the
Interim Statements, together with an unqualified audit report
thereon by Progressive's independent public accountants and (ii)
an unaudited pro forma consolidated balance sheet of Progressive
and its subsidiaries as at May 30, 1999 after giving effect to
the transactions contemplated by this Agreement.
[SIGNATURE PAGE TO FOLLOW]
45
<PAGE>
IN WITNESS WHEREOF, each of Marquee, the Shareholders and
Progressive have executed this Agreement, all as of the day and
year first above written.
MARQUEE ENTERTAINMENT, INC.
By: /s/ Harold Brown
-----------------------
Title: President
-----------------------
PROGRESSIVE TELECOMMUNICATIONS CORPORATION
By: /s/ Tom Chubokas
-----------------------
Title: President
-----------------------
THE SHAREHOLDERS: No. of Shares of
Progressive
/s/ Tom Chubokas 1,174,749
- -------------------------
Tom Chubokas
/s/ James C. Watson 644,679
- -------------------------
James C. Watson
/s/ Jon Gilbert 143,262
- -------------------------
Jon Gilbert
/s/ Tony Ciancaglini 143,262
- -------------------------
Tony Ciancaglini
/s/ Dale Lewis 143,262
- -------------------------
Dale Lewis
46
<PAGE>
THE SHAREHOLDERS: No. of Shares of
Progressive
/s/ Lee Young 286,524
- -------------------------
Lee Young
/s/ Barry Shevlin 700,000
- -------------------------
Barry Shevlin
/s/ Robert Thompson 512,000
- -------------------------
Robert Thompson
First Dominion Venture Trust 400,000
By: /s/ Dan L. Wey
----------------------
Name: Dan L. Wey
----------------------
Millennium Media Ltd. 217,995
By: /s/ David Antoniac
----------------------
Name: David Antoniac
----------------------
/s/ Dr. Howard C. Tackett 188,000
- -------------------------
Dr. Howard C. Tackett
/s/ Barry Greenwood 150,000
- -------------------------
Barry Greenwood
/s/ Mark Goodman 150,000
- -------------------------
Mark Goodman
47
<PAGE>
THE SHAREHOLDERS: No. of Shares of
Progressive
I.R. Firm, Inc. 40,000
By: /s/ Eric B. Wey
----------------------
Name: Eric B. Wey
----------------------
/s/ Scott Hooten 20,240
- -------------------------
Scott Hooten
/s/ David Yates 20,000
- -------------------------
David Yates
Total 4,933,973
=========
48
<PAGE>
EXHIBIT 99.1
------------
<PAGE>
FOR IMMEDIATE RELEASE
Contact: Harold Brown of Marquee Entertainment, Inc. (323)
782-0090
Barry Shevlin of Progressive Telecommunications
Corporation (727) 466-9898
Los Angeles, California - June 8, 1999 - Marquee Entertainment,
Inc. (OTC - Bulletin Board - MQUE) and Progressive
Telecommunications Corporation announced today that they have
entered into a definitive Securities and Exchange Agreement,
providing for the acquisition by Marquee Entertainment of all of
the shares of Progressive Telecommunications for an aggregate of
45,000,000 common shares and common share equivalents of Marquee
Entertainment.
The agreement, which was approved by Marquee Entertainment's and
Progressive Telecommunication's board of directors, provides for
Marquee Entertainment to amend its certificate of incorporation
to change its name to Progressive Telecommunications and
authorize a 1 for 5 reverse split. Accordingly, after the
amendment, the new combined entity will have approximately
10,000,000 shares issued and outstanding.
The transaction will be two-tiered, with shareholders owning in
excess of 80% of Progressive exchanging their shares for Marquee
shares at the first closing. Thereafter Marquee will file a
registration statement under the Securities Act of 1933 and Proxy
Statement to offer the remaining shareholders of Progressive and
its majority owned subsidiary, CCC Communications Corp., shares
of the combined entity's stock in statutory consolidation on the
same exchange ratio as was provided for the shareholders owning
80% of Progressive. No offer can be made to the remaining
shareholders until the registration is effective.
Progressive Telecommunications is a certified reseller of local,
long distance and international telecommunication services,
offering a complete array of communications and enhanced
computer-telephone services to carriers and other participants in
telecommunications service distribution and resale, and to
commercial and residential customers in the form of long
distance, calling card, virtual office and wireless service, such
as cellular and paging. The Company, as a switched-based
carrier, has established an objective to become a global provider
of integrated telecommunications services to wholesale and
commercial markets. From personal communications management to
global connectivity, Progressive will utilize intelligent
technologies such as computer-telephony integration, to fashion
its existing and future capabilities, services and technologies
into customized, high-value solutions to meet the specific needs
of its customer. Progressive's consolidated revenues for the
year ended December 31, 1998 was approximately $6,000,000.
<PAGE>
Statements that are not historical facts, including statements
about confidence and strategies and business expectations
relating thereto are forward looking statements that involve
risks and uncertainties that could significantly impact Marquee.
These include the factors that are discussed from time to time in
Marquee's filing with the Securities and Exchange Commission.
