The Marquee Group, Inc.
7,500,000 Shares
Common Stock
UNDERWRITING AGREEMENT
October 7, 1997
PRUDENTIAL SECURITIES INCORPORATED
XXXXX & COMPANY
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The Marquee Group, Inc., a Delaware corporation (the "Company"),
hereby confirms its agreement with the several underwriters named in Schedule
1 hereto (the "Underwriters"), for whom you have been duly authorized to act
as representatives (in such capacities, the "Representatives"), as set forth
below.
1. Securities. Subject to the terms and conditions herein contained,
the Company proposes to issue and sell to the several Underwriters an
aggregate of 7,500,000 shares (the "Firm Securities") of the Company's Common
Stock, par value $.01 per share ("Common Stock"). The Company also proposes to
issue and sell to the several Underwriters not more than 1,125,000 additional
shares of Common Stock if requested by the Representatives as provided in
Section 3 of this Agreement. Any and all shares of Common Stock to be
purchased by the Underwriters pursuant to such option are referred to herein
as the "Option Securities", and the Firm Securities and any Option Securities
are collectively referred to herein as the "Securities".
Simultaneously with closing on the Firm Securities by the
Underwriters, the Company will acquire the Acquired Subsidiaries (as
hereinafter defined), the consideration for which will be a combination of
cash and shares of the Company's Common Stock as described in the Registration
Statement (as hereinafter defined).
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the several Underwriters
that (it being understood that in making its representations and warranties
with respect to the Acquired Subsidiaries (as hereinafter defined), the
Company has relied on the representations and warranties provided
to it in the Purchase and Sale Agreement, dated June 25, 1997 by and among
ProServ, Inc., ProServ Television, Inc., Xxxxxx Xxxx and the Company (the
"ProServ Agreement"), and the Asset Purchase Agreement, dated July 2, 1997, by
and among QBQ Entertainment, Inc., Marquee Music, Inc., Xxxxxx Xxxx and the
Company (the "QBQ Agreement," and together with the ProServ Agreement, the
"Acquisition Agreements") and any exceptions to the representation and
warranties contained in the Acquisition Agreements shall be deemed to be
included in the applicable representation or warranty contained in this
Agreement):
(a) A registration statement on Form SB-2 (File No. 333-31879) with
respect to the Securities, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and
one or more amendments to such registration statement may have been so filed.
After the execution of this Agreement, the Company will file with the
Commission either (i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the Act,
either (A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall identify the
Preliminary Prospectus (as hereinafter defined) that it supplements containing
such information as is required or permitted by Rules 434, 430A and 424(b)
under the Act or (B) if the Company does not rely on Rule 434 under the Act, a
prospectus in the form most recently included in an amendment to such
registration statement (or, if no such amendment shall have been filed, in
such registration statement), with such changes or insertions as are required
by Rule 430A under the Act or permitted by Rule 424(b) under the Act, and in
the case of either clause (i)(A) or (i)(B) of this sentence as have been
provided to and approved by the Representatives prior to the execution of this
Agreement, or (ii) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under the
Act, an amendment to such registration statement, including a form of
prospectus, a copy of which amendment has been furnished to and approved by
the Representatives prior to the execution of this Agreement. The Company may
also file a related registration statement with the Commission pursuant to
Rule 462(b) under the Act for the purpose of registering certain additional
Securities, which registration shall be effective upon filing with the
Commission. As used in this Agreement, the term "Original Registration
Statement" means the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and including any
information omitted therefrom pursuant to Rule 430A under the Act and included
in the Prospectus (as hereinafter defined); the term "Rule 462(b) Registration
Statement" means any registration statement filed with the Commission pursuant
to Rule 462(b) under the Act (including the Registration Statement and any
Preliminary Prospectus or Prospectus incorporated therein at the time such
Registration Statement becomes effective); the term "Registration Statement"
includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means each
prospectus subject to completion filed with such registration statement or any
amendment thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto at the time it
was or is declared effective); the term "Prospectus" means:
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(A) if the Company relies on Rule 434 under the Act, the Term Sheet
relating to the Securities that is first filed pursuant to Rule
424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act; or
(C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the
Act, the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or suspending
use of any Preliminary Prospectus. When any Preliminary Prospectus was filed
with the Commission it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto was or is
declared effective, it (i) contained or will contain all statements required
to be stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When the Prospectus
or any Term Sheet that is a part thereof or any amendment or supplement to the
Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or part thereof or such amendment or supplement is not required to
be so filed, when the Registration Statement or the amendment thereto
containing such amendment or supplement to the Prospectus was or is declared
effective) and on the Firm Closing Date and any Option Closing Date (both as
hereinafter defined), the Prospectus, as amended or supplemented at any such
time, (i) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material
respects with the requirements of, the Act and the rules and regulations of
the Commission thereunder and (ii) did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The foregoing provisions of this
paragraph (b) do not apply to statements or omissions made in any Preliminary
Prospectus, the Registration Statement or any amendment thereto or the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective (i) the Company
has filed a Rule 462(b) Registration Statement in compliance with and that is
effective upon filing pursuant to Rule
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462(b) and has received confirmation of its receipt and (ii) the Company has
given irrevocable instructions for transmission of the applicable filing fee
in connection with the filing of the Rule 462(b) Registration Statement, in
compliance with Rule 111 promulgated under the Act or the Commission has
received payment of such filing fee.
(d) The Company, each of its subsidiaries and each of the Acquired
Subsidiaries, as hereinafter defined, has been duly organized and is validly
existing as a corporation in good standing under the laws of its respective
jurisdiction of incorporation and is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its respective properties or
the conduct of its respective business requires such qualification, except
where the failure to be so qualified would not constitute a material adverse
change, or any development involving a prospective material adverse change in
the condition (financial or otherwise), management, properties, assets,
liabilities, net worth or results of the operations of the Company, any of its
subsidiaries or any of the Acquired Subsidiaries, taken as a whole (a
"Material Adverse Change"). The "Acquired Subsidiaries" shall mean the
companies set forth on Schedule 3 hereto, specifically ProServ, Inc. and its
subsidiaries (collectively, "ProServ") and QBQ Entertainment, Inc.
("QBQ").
(e) The Company, each of its subsidiaries and each of the Acquired
Subsidiaries has full power (corporate and other) to own or lease its
respective properties and conduct its respective business as described in the
Registration Statement and the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus; and the Company has full
power (corporate and other) to enter into this Agreement and to carry out all
the terms and provisions hereof to be carried out by it.
(f) The issued shares of capital stock of each of the Company's
subsidiaries and ProServ have been duly authorized and validly issued, and are
fully paid and nonassessable. The issued shares of capital stock of each of
the Company's subsidiaries are owned beneficially by the Company free and
clear of any security interests, liens, encumbrances, equities or claims,
except as provided in the Prospectus and the Preliminary Prospectus. Upon the
acquisition of ProServ (which will occur simultaneously with the closing on
the Firm Securities by the Underwriters), the issued shares of capital stock
of ProServ will be owned beneficially by the Company free and clear of any
security interests, liens, encumbrances, equities or claims, except as
provided in the Prospectus and the Preliminary Prospectus.
(g) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus under the caption
"Capitalization." All of the issued shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable. The Firm Securities and the Option Securities have been duly
authorized and at the Firm Closing Date or the related Option Closing Date (as
the case may be), after payment therefor in accordance herewith, will be
validly issued, fully paid and nonassessable. No holders of outstanding shares
of capital stock of the Company are entitled as such to any preemptive or
other rights to subscribe for any of the Securities, and no holder of
securities of the Company has any right which has not been fully exercised or
waived to require the Company to register
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the offer or sale of any securities owned by such holder under the Act in the
public offering contemplated by this agreement.
(h) The capital stock of the Company conforms to the description
thereof contained in the Prospectus or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus.
(i) Except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there are no
outstanding (A) securities or obligations of the Company, any of its
subsidiaries or the Acquired Subsidiaries convertible into or exchangeable for
any capital stock of the Company or any such subsidiary, (B) warrants, rights
or options to subscribe for or purchase from the Company or any such
subsidiary any such capital stock or any such convertible or exchangeable
securities or obligations, or (C) obligations of the Company or any such
subsidiary to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or
options, except for options issuable pursuant to existing employment
agreements.
(j) The consolidated financial statements of the Company and its
consolidated subsidiaries, to the Company's best knowledge, the consolidated
financial statements of ProServ and the financial statements of QBQ, included
in the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) fairly present the
financial position of the Company and its consolidated subsidiaries, ProServ
and QBQ and the results of operations and changes in financial condition as of
the dates and periods therein specified. Such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise
noted therein). The selected financial data set forth under the caption
"Selected Consolidated Financial Data" in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) fairly
present, on the basis stated in the Prospectus (or such Preliminary
Prospectus), the information included therein. The pro forma financial data
included in the Registration Statement and the Prospectus present fairly the
information shown therein, comply in all material respects with the
requirements of the Act and the rules and regulations thereunder with respect
to pro forma financial statements, have been properly compiled on the pro
forma basis described therein and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to
give effect to the transactions or circumstances referred to therein.
(k) Each of Ernst & Young LLP, Coopers & Xxxxxxx L.L.P. and Xxxxx
Xxxxxx & Co. LLP, respectively, who has certified certain financial statements
of (i) the Company and its consolidated subsidiaries, (ii) ProServ and (iii)
QBQ, respectively, and delivered its report with respect to such respective
audited financial statements included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), is an independent public accountant as required by
the Act and the applicable rules and regulations thereunder.
(l) The execution and delivery of this Agreement have been duly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company, and constitutes the legal, valid and binding
agreement of the Company, enforceable against the
5
Company in accordance with its terms, except to the extent that (i) the same
may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, or other laws now or hereinafter in effect relating to
creditors' rights generally or by general principles of equity whether
asserted at law or equity, and (ii) rights to indemnity and contribution
hereunder may be limited by state or federal securities laws.
(m) No legal or governmental proceedings are pending to which the
Company, any of its subsidiaries or any of the Acquired Subsidiaries is a
party or to which the property of the Company, any of its subsidiaries or any
of the Acquired Subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not described therein
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), and, to the best knowledge of the Company, no such proceedings
have been threatened against the Company, any of its subsidiaries or any of
the Acquired Subsidiaries or with respect to any of their respective
properties; and no contract or other document is required to be described in
the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that is not described therein (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) or
filed as required.
(n) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by the
Company with the other provisions of this Agreement and the consummation of
the other transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as may be
required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act, or (ii)
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company, any of its
subsidiaries or any of the Acquired Subsidiaries is a party or by which the
Company, any of its subsidiaries or any of the Acquired Subsidiaries or any of
their respective properties are bound, or the charter documents or by-laws of
the Company, any of its subsidiaries or any of the Acquired Subsidiaries, or
any statute or any judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable to the Company, any
of its subsidiaries or any of the Acquired Subsidiaries.
(o) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus, neither the
Company, any of its subsidiaries nor, to the best knowledge of the Company,
any of the Acquired Subsidiaries has sustained any material loss or
interference with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding and there has
not been any occurrence which would constitute a Material Adverse Change,
except in each case as described in or contemplated by the Prospectus or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus.
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(p) No transaction has occurred between or among the Company and any
of its officers or directors or any affiliate or affiliates of any such
officer or director that is required to be described in and is not described
in the Registration Statement and the Prospectus.
(q) Except as disclosed in the Preliminary Prospectus, the Company
has not, directly or indirectly, (i) taken any action designed to cause or to
result in, or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities or (ii) since
the filing of the Registration Statement (A) sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of, the Securities or (B)
paid or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(r) The Company has not distributed and, prior to the later of (i)
the Firm Closing Date and (ii) the completion of the distribution of the
Securities, will not distribute any offering material in connection with the
offering and sale of the Securities other than the Registration Statement or
any amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or other materials, if any permitted by the
Act.
(s) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), (1) the Company,
its subsidiaries and, to the best knowledge of the Company, the Acquired
Subsidiaries have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary
course of business; (2) the Company, its subsidiaries and the Acquired
Subsidiaries have not purchased any of their outstanding capital stock, nor
declared, paid or otherwise made any dividend or distribution of any kind on
their capital stock; and (3) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
consolidated subsidiaries or any of the Acquired Subsidiaries, except in each
case as described in or contemplated by the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus).
(t) The Company, each of its subsidiaries and each of the Acquired
Subsidiaries has good and marketable title in fee simple to all items of real
property owned by it, in each case free and clear of any security interests,
liens, encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by the
Company or such subsidiary, and any real property and buildings held under
lease by the Company or any such subsidiary are held under valid, subsisting
and enforceable leases, with such exceptions as are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or such subsidiary, in each case except as described
in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus). The Company, each of its
subsidiaries and each of the Acquired Subsidiaries has good and marketable
title to all items of personal property owned by it, in each case free and
clear of any security interests, liens, encumbrances, equities, claims and
other defects, except such as do not result in a material liability or
disability to the Company, its subsidiaries and the Acquired Subsidiaries
taken as a whole.
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(u) No labor dispute with the employees of the Company, any of its
subsidiaries or any of the Acquired Subsidiaries exists or, to the best
knowledge of the Company, is threatened or imminent that could result in a
Material Adverse Change, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(v) The Company, its subsidiaries and, to the best knowledge of the
Company, the Acquired Subsidiaries own or possess adequate and enforceable
rights to use all material patents, patent applications, trademarks, service
marks, trade names, licenses, copyrights and proprietary or other confidential
information currently employed by them in connection with their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of infringement of or conflict with asserted rights of any third party
with respect to any of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Change, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). None of the Company, its subsidiaries and, to the
best knowledge of the Company, the Acquired Subsidiaries has received any
notice of infringement of any of the foregoing items of such intellectual
property by any third party, and none of the Company, its subsidiaries and the
Acquired Subsidiaries knows of any basis therefore.
(w) The Company, each of its subsidiaries and each of the Acquired
Subsidiaries is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management reasonably
believes are prudent and customary in the business in which it is engaged; and
neither the Company nor any such subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not result in a
Material Adverse Change, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(x) The Company, its subsidiaries and the Acquired Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Change, except as described in or contemplated by
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(y) The Company will conduct its operations in a manner that will not
subject it to registration as an investment company under the Investment
Company Act of 1940, as amended, and this transaction will not cause the
Company to become an investment company subject to registration under such
Act.
(z) The Company, each of its subsidiaries and each of the Acquired
Subsidiaries has filed all foreign, federal, state and local tax returns that
are required to be filed or has requested extensions thereof (except in any
case in which the failure so to file would not
8
constitute a Material Adverse Change) and has paid all taxes required to be
paid by it and any other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good faith or
as described in or contemplated by the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus).
(aa) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
(bb) The Company has obtained signed agreements as described in
Section 7(j) hereof from each person listed in the "Principal Stockholders"
table in the Registration Statement as well as from Xxxxxx Xxxx.
(cc) The Company, each of its subsidiaries and, to the best knowledge
of the Company, each of the Acquired Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that
(1) transactions are executed in accordance with management's general or
specific authorizations; (2) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (3) access to
assets is permitted only in accordance with management's general or specific
authorization; and (4) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(dd) No default exists, and no event has occurred which, with notice
or lapse of time or both, would constitute a default in the due performance
and observance of any term, covenant or condition of any indenture, mortgage,
deed of trust, lease or other agreement or instrument to which the Company,
any of its subsidiaries or any of the Acquired Subsidiaries is a party or by
which the Company, any of its subsidiaries or any of the Acquired Subsidiaries
or any of their respective properties is bound or may be affected in any
manner which would result in a Material Adverse Change.
3. Purchase, Sale and Delivery of the Securities. (a) On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters,
severally and not jointly, agrees to purchase from the Company, at a purchase
price of $4.675 per share, the number of Firm Securities set forth opposite
the name of such Underwriter in Schedule 1 hereto. One or more certificates in
definitive form for the Firm Securities that the several Underwriters have
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Representatives request upon notice to
the Company at least 48 hours prior to the Firm Closing Date, shall be
delivered by or on behalf of the Company to the Representatives for the
respective accounts of the Underwriters, against payment by or on behalf of
the Underwriters of the purchase price therefor by wire transfer in same-day
funds (the "Wired Funds") to the account of the Company. Such delivery of and
payment for the Firm Securities shall be made at the offices of Xxxxxx, Xxxxx
& Bockius LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:30 A.M., New
York time, on October 14, 1997, or at such other place, time or date as
9
the Representatives and the Company may agree upon or as the Representatives
may determine pursuant to Section 9 hereof, such time and date of delivery
against payment being herein referred to as the "Firm Closing Date". The
Company will make such certificate or certificates for the Firm Securities
available for checking and packaging by the Representatives at the offices in
New York, New York of the Company's transfer agent or registrar or of
Prudential Securities Incorporated at least 24 hours prior to the Firm Closing
Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities. The purchase price
to be paid for any Option Securities shall be the same price per share as the
price per share for the Firm Securities set forth above in paragraph (a) of
this Section 3. The option granted hereby may be exercised as to all or any
part of the Option Securities from time to time within thirty days after the
date of the Prospectus (or, if such 30th day shall be a Saturday or Sunday or
a holiday, on the next business day thereafter when the New York Stock
Exchange is open for trading). The Underwriters shall not be under any
obligation to purchase any of the Option Securities prior to the exercise of
such option. The Representatives may from time to time exercise the option
granted hereby by giving notice in writing or by telephone (confirmed in
writing) to the Company setting forth the aggregate number of Option
Securities as to which the several Underwriters are then exercising the option
and the date and time for delivery of and payment for such Option Securities.
Any such date of delivery shall be determined by the Representatives but shall
not be earlier than two business days or later than five business days after
such exercise of the option and, in any event, shall not be earlier than the
Firm Closing Date. The time and date set forth in such notice, or such other
time on such other date as the Representatives and Company may agree upon or
as the Representatives may determine pursuant to Section 9 hereof, is herein
called the "Option Closing Date" with respect to such Option Securities. Upon
exercise of the option as provided herein, the Company shall become obligated
to sell to each of the several Underwriters, and, subject to the terms and
conditions herein set forth, each of the Underwriters (severally and not
jointly) shall become obligated to purchase from the Company, the same
percentage of the total number of the Option Securities as to which the
several Underwriters are then exercising the option as such Underwriter is
obligated to purchase of the aggregate number of Firm Securities, as adjusted
by the Representatives in such manner as they deem advisable to avoid
fractional shares. If the option is exercised as to all or any portion of the
Option Securities, one or more certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the related Option
Closing Date in the manner, and upon the terms and conditions, set forth in
paragraph (a) of this Section 3, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) The Company hereby acknowledges that the wire transfer by or on
behalf of the Underwriters of the purchase price for any Securities does not
constitute closing of a purchase and sale of the Securities. Only execution
and delivery of a receipt for Securities by the Underwriters indicates
completion of the closing of a purchase of the Securities from the Company.
Furthermore, in the event that the Underwriters wire funds to the Company
prior to the completion of the closing of a purchase of Securities, the
Company hereby
10
acknowledges that until the Underwriters execute and deliver a receipt for the
Securities, by facsimile or otherwise, the Company will not be entitled to the
wired funds and shall return the wired funds to the Underwriters as soon as
practicable (by wire transfer of same-day funds) upon demand. In the event
that the closing of a purchase of Securities is not completed and the wire
funds are not returned by the Company to the Underwriters on the same day the
wired funds were received by the Company, the Company agrees to pay to the
Underwriters in respect of each day the wire funds are not returned by it, in
same-day funds, interest on the amount of such wire funds in an amount
representing the Underwriters' cost of financing as reasonably determined by
Prudential Securities Incorporated.
(d) It is understood that either of you, individually and not as one
of the Representatives, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall relieve
such Underwriter or Underwriters from any of its or their obligations
hereunder.
4. Offering by the Underwriters. Upon your authorization of the
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
5. Covenants of the Company. The Company covenants and agrees with
each of the Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the time of execution of this Agreement, and
any amendments thereto to become effective as promptly as possible. If
required, the Company will file the Prospectus or any Term Sheet that
constitutes a part thereof and any amendment or supplement thereto with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, the Company (i) will
comply with all requirements imposed upon it by the Act and the rules and
regulations of the Commission thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Securities in accordance with the
provisions hereof and of the Prospectus, as then amended or supplemented, and
(ii) will not file with the Commission the prospectus, Term Sheet or the
amendment referred to in the second sentence of Section 2(a) hereof, any
amendment or supplement to such Prospectus, Term Sheet or any amendment to the
Registration Statement or any Rule 462(b) Registration Statement of which the
Representatives previously have been advised and furnished with a copy for a
reasonable period of time prior to the proposed filing and as to which filing
the Representatives shall not have given their consent. The Company will
prepare and file with the Commission, in accordance with the rules and
regulations of the Commission, promptly upon request by the Representatives or
counsel for the Underwriters, any amendments to the Registration Statement or
amendments or supplements to the Prospectus that may be necessary or advisable
in connection with the distribution of the Securities by the several
Underwriters, and will use its best efforts to cause any such amendment to the
Registration Statement to be declared effective by the Commission as promptly
as possible. The Company will advise the Representatives, promptly after
receiving notice thereof, of the time when the Registration Statement or any
amendment thereto has been filed or declared effective or the
11
Prospectus or any amendment or supplement thereto has been filed and will
provide evidence satisfactory to the Representatives of each such filing or
effectiveness.
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, (iii) the institution, threatening or
contemplation of any proceeding for any such purpose or (iv) any request made
by the Commission for amending the Original Registration Statement or any Rule
462(b) Registration Statement, for amending or supplementing the Prospectus or
for additional information. The Company will use its best efforts to prevent
the issuance of any such stop order and, if any such stop order is issued, to
obtain the withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the Securities
for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representatives may designate and will continue such
qualifications in effect for as long as may be necessary to complete the
distribution of the Securities, provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction.
(d) If, at any time prior to the later of (i) the final date when a
prospectus relating to the Securities is required to be delivered under the
Act or (ii) the Option Closing Date, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Prospectus to comply with the
Act or the rules or regulations of the Commission thereunder, the Company will
promptly notify the Representatives thereof and, subject to Section 5(a)
hereof, will prepare and file with the Commission, at the Company's expense,
an amendment to the Registration Statement or an amendment or supplement to
the Prospectus that corrects such statement or omission or effects such
compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a conformed copy of the
registration statement originally filed with respect to the Securities and
each amendment thereto (in each case including exhibits thereto) or any Rule
462(b) Registration Statement, certified by the Secretary or an Assistant
Secretary of the Company to be true and complete copies thereof as filed with
the Commission by electronic transmission, (ii) to each other Underwriter, a
conformed copy of such registration statement or any Rule 462(b) Registration
Statement and each amendment thereto (in each case without exhibits thereto)
and (iii) so long as a prospectus relating to the Securities is required to be
delivered under the Act, as many copies of each Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto as the Representatives may
reasonably request; without limiting the application of clause (iii) of this
sentence, the Company, not later than (A) 6:00 PM, New York City time, on the
date of determination of the
12
public offering price, if such determination occurred at or prior to 10:00
A.M., New York City time, on such date or (B) 2:00 PM, New York City time, on
the business day following the date of determination of the public offering
price, if such determination occurred after 10:00 A.M., New York City time, on
such date, will deliver to the Underwriters, without charge, as many copies of
the Prospectus and any amendment or supplement thereto as the Representatives
may reasonably request for purposes of confirming orders that are expected to
settle on the Firm Closing Date.
(f) The Company, as soon as practicable, will make generally
available to its securityholders and to the Representatives a consolidated
earnings statement of the Company and its subsidiaries that satisfies the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will not, directly or indirectly, without the prior
written consent of Prudential Securities Incorporated, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock
for a period of 180 days after the date hereof, except (i) pursuant to this
Agreement, (ii) as contemplated in the Prospectus or Preliminary Prospectus
and (iii) for issuances pursuant to the grant and/or exercise of stock options
pursuant to plans described in the Prospectus or Preliminary Prospectus.
(i) The Company will not, directly or indirectly, (i) take any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities or (ii) (A) sell, bid for, purchase, or pay anyone any compensation
for soliciting purchases of, the Securities or (B) pay or agree to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company.
(j) The Company will deliver the agreements described in Section 7(j)
hereof prior to the Firm Closing Date.
(k) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date,
any rumor, publication or event relating to or affecting the Company shall
occur as a result of which in your opinion the market price of the Common
Stock has been or is likely to be materially affected (regardless of whether
such rumor, publication or event necessitates a supplement to or amendment of
the Prospectus), the Company will, after notice from you advising the Company
to the effect set forth above, forthwith prepare, consult with you concerning
the substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
13
(l) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule 111 promulgated under the Act by the earlier of (i) 10:00 P.M. Eastern
time on the date of this Agreement and (ii) the time confirmations are sent or
given, as specified by Rule 462(b)(2).
(m) The Company has caused the Securities to be duly authorized for
listing on the American Stock Exchange (the "AMEX") prior to the Firm Closing
Date and will use its best efforts to ensure that the Securities remain listed
on the AMEX following the Firm Closing Date.
(n) The Company will: (i) use its best efforts to satisfy all
conditions to the consummation of the acquisition of the Acquired Subsidiaries
as set forth in the agreements related thereto, (ii) use its best efforts to
cause each other party to such agreements to satisfy all conditions to the
consummation of the acquisition of the Acquired Subsidiaries, and (iii)
promptly notify the Representatives of the occurrence of any event which may
result in the non-consummation of the acquisition of the Acquired Subsidiaries
on the Firm Closing Date.
6. Expenses. The Company will pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto, any
Rule 462(b) Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto, this Agreement and any
blue sky memoranda, (ii) all arrangements relating to the delivery to the
Underwriters of copies of the foregoing documents, (iii) the fees and
disbursements of the counsel, the accountants and any other experts or
advisors retained by the Company, (iv) preparation, issuance and delivery to
the Underwriters of any certificates evidencing the Securities, including
transfer agent's and registrar's fees, (v) the qualification of the Securities
under state securities and blue sky laws, including filing fees and fees and
disbursements of counsel for the Underwriters relating thereto not to exceed
$25,000, (vi) the filing fees of the Commission and the National Association
of Securities Dealers, Inc. relating to the Securities, (vii) any listing of
the Securities on the AMEX, (viii) any meetings with prospective investors in
the Securities (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters) and (ix) advertising
relating to the offering of the Securities (other than as shall have been
specifically approved by the Representatives to be paid for by the
Underwriters). If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 7 hereof is not satisfied, because this Agreement is
terminated pursuant to Section 11 hereof or because of any failure, refusal or
inability on the part of the Company to perform all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder other than
by reason of a default by any of the Underwriters, the Company will reimburse
the Underwriters severally upon demand for all out-of-pocket expenses
(including counsel fees and disbursements) that shall have been reasonably
incurred by them in connection with the proposed purchase and sale of the
14
Securities. The Company shall not in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions covered
by this Agreement.
7. Conditions of the Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company (including those representations
and warranties which relate to the Company's subsidiaries and the Acquired
Subsidiaries) contained herein as of the date hereof and as of the Firm
Closing Date, as if made on and as of the Firm Closing Date, to the accuracy
of the statements of the Company's officers made pursuant to the provisions
hereof, to the performance by the Company of its covenants and agreements
hereunder and to the following additional conditions:
(a) If the Original Registration Statement or any amendment thereto
filed prior to the Firm Closing Date has not been declared effective as of the
time of execution hereof, the Original Registration Statement or such
amendment and, if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have been declared effective not later
than the earlier of (i) 11:00 A.M., New York time, on the date on which the
amendment to the registration statement originally filed with respect to the
Securities or to the Registration Statement, as the case may be, containing
information regarding the public offering price of the Securities has been
filed with the Commission and (ii) the time confirmations are sent or given as
specified by Rule 462(b)(2), or with respect to the Original Registration
Statement, or such later time and date as shall have been consented to by the
Representatives; if required, the Prospectus or any Term Sheet that
constitutes a part thereof and any amendment or supplement thereto shall have
been filed with the Commission in the manner and within the time period
required by Rules 434 and 424(b) under the Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto shall
have been issued, and no proceedings for that purpose shall have been
instituted or threatened or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission; and the Company
shall have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise).
(b) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Xxxxx & XxXxxxxx, counsel for the Company, to the effect
that:
(i) each of the Company and its subsidiaries listed in
Exhibit 21 to the Registration Statement and Marquee Music, Inc. (the
"Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of its respective
jurisdiction of incorporation and is duly qualified to transact
business as a foreign corporation and is in good standing under the
laws of all of the jurisdictions listed on Schedule 2 hereto, except
where the failure to be so qualified would not result in a material
adverse change, or any development involving a prospective material
adverse change in the condition (financial or otherwise), management,
properties, assets, liabilities, net worth or results of the
operations of the Company, the Subsidiaries, ProServ, Inc. and its
subsidiaries (collectively, "ProServ") and QBQ
15
Entertainment, Inc. ("QBQ," and together with ProServ, the "Acquired
Subsidiaries"), taken as a whole (a "Material Adverse Change");
(ii) each of the Company and the Subsidiaries has corporate
power to own or lease its respective properties and conduct its
respective businesses as described in the Registration Statement and
the Prospectus, and the Company has corporate power to enter into
this Agreement and to carry out all the terms and provisions hereof
to be carried out by it;
(iii) the issued shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and are owned beneficially by the Company, to
the knowledge of such counsel, free and clear of any perfected
security interests or any other security interests, liens,
encumbrances, equities or claims, except as disclosed in the
Prospectus;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus under the caption
"Capitalization"; all of the issued shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid and nonassessable, have been issued in compliance with all
applicable federal securities laws and were not issued in violation
of or subject to any preemptive rights or other rights to subscribe
for or purchase securities under statute or the Company's certificate
of incorporation or, to such counsel's knowledge, any other
agreement; the Firm Securities have been duly authorized by all
necessary corporate action of the Company and, when issued and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be validly issued, fully paid and nonassessable; the
Securities have been duly authorized for listing on the AMEX; no
holders of outstanding shares of capital stock of the Company are
entitled under statute or the Company's certificate of incorporation
or, to such counsel's knowledge, any other agreement, as such to any
preemptive or other rights to subscribe for any of the Securities;
and, to such counsel's knowledge, no holders of securities of the
Company are entitled to have such securities registered under the
Registration Statement;
(v) the statements set forth under the headings "Risk
Factors--Shares Eligible for Future Sale and Registration Rights;"
"Description of Securities;" and "Shares Eligible for Future Sale" in
the Prospectus, insofar as such statements purport to summarize
certain provisions of the capital stock of the Company, provide a
fair summary of such provisions; and the statements relating to the
Company, the Subsidiaries and the Acquired Subsidiaries set forth
under the headings "Risk Factors--Possible Adverse Effects of
Authorization of Preferred Stock;" "Business--Agreements Related to
the Pending Acquisitions;" "--Employment Agreements;" "--Stock Option
Plans;" and "Certain Relationships and Related Transactions" in the
Prospectus, insofar as such statements constitute a summary of the
legal matters, documents or transactions referred to therein, provide
a fair summary of such legal matters, documents and proceedings;
16
(vi) the execution and delivery of this Agreement have been
duly authorized by all necessary corporate action of the Company and
this Agreement has been duly executed and delivered by the Company;
(vii) to the knowledge of such counsel, (A) no legal or
governmental proceedings are pending to which the Company or any of
the Subsidiaries is a party or to which the property of the Company
or any of the Subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not
described therein, and no such proceedings have been threatened
against the Company or any of the Subsidiaries or with respect to any
of their respective properties and (B) no contract or other document
is required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that is not described or incorporated therein or filed as required;
(viii) the issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement
and the consummation of the other transactions herein contemplated
(other than the acquisition of the Acquired Subsidiaries) do not (A)
require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as
have been obtained and such as may be required under state securities
or blue sky laws, or (B) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, lease or other
agreement or instrument, known to such counsel, to which the Company
or any of the Subsidiaries is a party or by which the Company or any
of the Subsidiaries or any of their respective properties are bound,
or the charter documents or by-laws of the Company or any of the
Subsidiaries or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any
arbitrator known to such counsel and applicable to the Company or any
of the Subsidiaries;
(ix) the Registration Statement is effective under the Act;
any required filing of the Prospectus, or any Term Sheet that
constitutes a part thereof, pursuant to Rules 434 and 424(b) has been
made in the manner and within the time period required by Rules 434
and 424(b); and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or any
amendment thereto has been issued, and no proceedings for that
purpose have been instituted or threatened or, to the knowledge of
such counsel, are contemplated by the Commission;
(x) the Registration Statement when declared effective and
any amendment thereto, any Rule 462(b) Registration Statement and the
Prospectus (in each case, other than the financial statements and
other financial, statistical, numerical and accounting information
contained therein, as to which such counsel need express no opinion)
comply as to form in all material respects with the applicable
requirements of the Act and the rules and regulations of the
Commission thereunder on the date of filing thereof with the
Commission and on the Firm Closing Date; and
17
(xi) if the Company elects to rely on Rule 434, the
Prospectus is not "materially different", as such term is used in
Rule 434, from the prospectus included in the Registration Statement
at the time of its effectiveness or an effective post-effective
amendment thereto (including such information that is permitted to be
omitted pursuant to Rule 430A).
Such counsel shall also state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, the
Representatives and counsel to the Underwriters at which the contents of the
Registration Statement and Prospectus and related matters were discussed and,
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as otherwise
expressly set forth in its opinion), on the basis of the foregoing no facts
have come to the attention of such counsel that caused them to believe that
any part of the Registration Statement (other than the financial statements
and notes thereto and other financial, statistical, numerical and accounting
data included therein, or omitted therefrom, as to which it expresses no
opinion), as amended or supplemented, at the time such part of the
Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (other than
information omitted therefrom in reliance on Rule 430A under the Act), or the
Prospectus (other than the financial statements and notes thereto and other
financial, statistical, numerical and accounting data included therein, or
omitted therefrom, as to which it expresses no opinion) as amended or
supplemented, on the date of filing thereof with the Commission and on the
Firm Closing Date, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters
of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company, the Subsidiaries and the Acquired
Subsidiaries and public officials. Such counsel may also state that in
rendering such opinion, any statement or opinion set forth therein that is
qualified by the phrase "to our knowledge" or any similar phrase, is intended
to indicate that, during the course of such counsel's representation of the
Company in the subject transaction, no information that would give current
actual knowledge of the inaccuracy of such statement or opinion has come to
the attention of the lawyer who is the current primary contact for the Company
or any lawyer who has devoted substantive attention to matters on behalf of
the Company during the preceding twelve months and who is still currently
employed by or a member of Xxxxx & XxXxxxxx. Further, such counsel may state
that Xxxxxx X. Xxxxx, a director of the Company and a stockholder of The
Sillerman Companies, Inc., a principal stockholder of the Company, is a
director, Executive Vice President and General Counsel of Sillerman
Communications Management Corporation ("SCMC") and Executive Vice President
and General Counsel of the Sillerman Companies, Inc. ("TSC"), each of which is
a principal financial advisor and consultant to the Company, is of Counsel to
Xxxxx & XxXxxxxx, and that no assumption should be made that Xxxxx & XxXxxxxx
is privy to information and knowledge which is available to and known by Xx.
Xxxxx solely in his capacities with the Company, SCMC or TSC. Such counsel may
further state that they have not undertaken any independent
18
investigation to determine the accuracy of such statement or opinion and no
inference as to their knowledge of any matters bearing on the accuracy of any
such statement or opinion should be drawn from the fact of their
representation of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(c) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx, counsel for the Underwriters, with respect to the issuance and sale
of the Firm Securities, the Registration Statement and the Prospectus, and
such other related matters as the Representatives may reasonably require, and
the Company shall have furnished to such counsel such documents as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(d) The Representatives shall have received from Ernst & Young LLP a
letter or letters dated, respectively, the date hereof and the Firm Closing
Date, in form and substance satisfactory to the Representatives, to the effect
that:
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries within the meaning of the
Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules and pro forma financial statements examined
by them and included in the Registration Statement and the Prospectus
comply in form in all material respects with the applicable
accounting requirements of the Act and the related published rules
and regulations and are in conformity with generally accepted
accounting principles;
(iii) on the basis of their limited review in accordance
with standards established by the American Institute of Certified
Public Accountants of any interim unaudited consolidated financial
statements of the Company and its consolidated subsidiaries as
indicated in their reports included in the Registration Statement and
the Prospectus, a reading of the minute books of the shareholders,
the board of directors and any committees thereof of the Company and
its consolidated subsidiaries, and inquiries of certain officials of
the Company and its consolidated subsidiaries who have responsibility
for financial and accounting matters, nothing came to their attention
that caused them to believe that:
(A) the unaudited consolidated financial statements of the Company,
and its consolidated subsidiaries included in the Registration
Statement and the Prospectus do not comply in form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations thereunder or are not in
conformity with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement and the
Prospectus;
19
(B) at a specific date not more than five business days prior to the
date of such letter, there were any changes in the capital stock or
long-term debt of the Company and its consolidated subsidiaries or
any decreases in net current assets or stockholders' equity of the
Company and its consolidated subsidiaries, in each case compared with
amounts shown on the June 30, 1997 unaudited consolidated balance
sheets of such companies included in the Registration Statement and
the Prospectus, or for the period from July 1, 1997 to such specified
date there were any decreases, in sales, net revenues, net income
before income taxes or total or per share amounts of net income of
the Company and its consolidated subsidiaries, except in all
instances for changes, decreases or increases set forth in such
letter;
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general
accounting records of the Company and its consolidated subsidiaries
and the Acquired Subsidiaries and are included in the Registration
Statement and the Prospectus, and have compared such amounts,
percentages and financial information with such records of the
Company and its consolidated subsidiaries and the Acquired
Subsidiaries with information derived from such records and have
found them to be in agreement, excluding any questions of legal
interpretation;
(v) on the basis of a reading of the unaudited pro forma
consolidated financial statements included in the Registration
Statement and the Prospectus, carrying out certain specified
procedures that would not necessarily reveal matters of significance
with respect to the comments set forth in this paragraph (v),
inquiries of certain officials of the Company and its consolidated
subsidiaries and the Acquired Subsidiaries who have responsibility
for financial and accounting matters and proving the arithmetic
accuracy of the application of the pro forma adjustments to the
historical amounts in the unaudited pro forma consolidated condensed
financial statements, nothing came to their attention that caused
them to believe that the unaudited pro forma consolidated condensed
financial statements do not comply in form in all material respects
with the applicable accounting requirements of Rule 11-02 of
Regulation S-X or that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of such
statements.
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by
a written explanation of the Company as to the significance thereof, unless
the Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives,
make it impractical or inadvisable to proceed with the purchase and delivery
of the Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include
any amendment or supplement thereto at the date of such letter.
20
(e) The Representatives shall have received from Coopers & Xxxxxxx
LLP a letter or letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Representatives, to
the effect that:
(i) they are independent accountants with respect to ProServ
within the meaning of the Act and the applicable rules and
regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules examined by them and included in the
Registration Statement and the Prospectus comply in form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations and are in
conformity with generally accepted accounting principles;
(iii) on the basis of their limited review in accordance
with standards established by the American Institute of Certified
Public Accountants of any interim unaudited consolidated financial
statements of ProServ as indicated in their reports included in the
Registration Statement and the Prospectus, a reading of the minute
books of the shareholders, the board of directors and any committees
thereof of ProServ, and inquiries of certain officials of ProServ who
have responsibility for financial and accounting matters, nothing
came to their attention that caused them to believe that:
(A) the unaudited consolidated financial statements of ProServ
included in the Registration Statement and the Prospectus do not
comply in form in all material respects with the applicable
accounting requirements of the Act and the related published rules
and regulations thereunder or are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited consolidated financial statements
included in the Registration Statement and the Prospectus;
(B) at a specific date not more than five business days prior to the
date of such letter, there were any changes in the capital stock or
long-term debt of ProServ or any decreases in net current assets or
stockholders' equity of ProServ, in each case compared with amounts
shown on the June 30, 1997 unaudited consolidated balance sheets of
ProServ included in the Registration Statement and the Prospectus, or
for the period from July 1, 1997 to such specified date there were
any decreases, in sales, net revenues, net income before income taxes
or total or per share amounts of net income of ProServ, except in all
instances for changes, decreases or increases set forth in such
letter;
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general
accounting records of ProServ and are included in the Registration
Statement and the Prospectus, and have compared such amounts,
percentages and financial information with such records of ProServ
with information derived from such records and have found them to be
in agreement, excluding any questions of legal interpretation;
21
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by
a written explanation of the Company as to the significance thereof, unless
the Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives,
make it impractical or inadvisable to proceed with the purchase and delivery
of the Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (e) with respect to either letter referred to above shall include
any amendment or supplement thereto at the date of such letter.
(f) The Representatives shall have received from Xxxxx Xxxxxx & Co.
LLP a letter or letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Representatives, to
the effect that:
(i) they are independent accountants with respect to QBQ
within the meaning of the Act and the applicable rules and
regulations thereunder;
(ii) in their opinion, the audited financial statements and
schedules examined by them and included in the Registration Statement
and the Prospectus comply in form in all material respects with the
applicable accounting requirements of the Act and the related
published rules and regulations and are in conformity with generally
accepted accounting principles;
(iii) on the basis of their limited review in accordance
with standards established by the American Institute of Certified
Public Accountants of any interim unaudited financial statements of
QBQ as indicated in their reports included in the Registration
Statement and the Prospectus, a reading of the minute books of the
shareholders, the board of directors and any committees thereof of
QBQ, and inquiries of certain officials of QBQ who have
responsibility for financial and accounting matters, nothing came to
their attention that caused them to believe that:
(A) the unaudited financial statements of QBQ included in the
Registration Statement and the Prospectus do not comply in form in
all material respects with the applicable accounting requirements of
the Act and the related published rules and regulations thereunder or
are not in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements included in the Registration Statement and the
Prospectus;
(B) at a specific date not more than five business days prior to the
date of such letter, there were any changes in the capital stock or
long-term debt of QBQ or any decreases in net current assets or
stockholders' equity of QBQ, in each case compared with amounts shown
on the June 30, 1997 unaudited balance sheets of QBQ included in the
Registration Statement and the Prospectus, or for the period from
July 1, 1997 to such specified date there were any decreases, in
sales, net revenues, net income
22
before income taxes or total or per share amounts of net income of
QBQ, except in all instances for changes, decreases or increases set
forth in such letter;
(iv) they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information that are derived from the general
accounting records of QBQ and are included in the Registration
Statement and the Prospectus, and have compared such amounts,
percentages and financial information with such records of QBQ with
information derived from such records and have found them to be in
agreement, excluding any questions of legal interpretation;
In the event that the letters referred to above set forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by
a written explanation of the Company as to the significance thereof, unless
the Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives,
make it impractical or inadvisable to proceed with the purchase and delivery
of the Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (f) with respect to either letter referred to above shall include
any amendment or supplement thereto at the date of such letter.
(g) The Representatives shall have received a certificate, dated the
Firm Closing Date, of the principal executive officer and the principal
financial or accounting officer of the Company to the effect that:
(i) the representations and warranties of the Company
(including those representations and warranties which relate to the
Company's subsidiaries and the Acquired Subsidiaries) in this
Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented as of the Firm Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and the
Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to
the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and
no proceedings for that purpose have been instituted or threatened
or, to the best of the Company's knowledge, are contemplated by the
Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, neither the Company nor any of its
23
subsidiaries nor, to such officer's best knowledge, any of the
Acquired Subsidiaries has sustained any material loss or interference
with their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or
any development involving a prospective material adverse change, in
the condition (financial or otherwise), management, business
prospects, net worth or results of operations of the Company, any of
its subsidiaries or, to such officer's best knowledge, any of the
Acquired Subsidiaries, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto).
(iv) the acquisition of ProServ shall have been completed
upon the terms set forth in the Prospectus simultaneously with the
closing of the purchase of the Firm Securities by the Underwriters.
(h) The Representatives shall have received a certificate, dated the
Firm Closing Date, of the principal executive officer and the principal
financial or accounting officer of ProServ to the effect that:
(i) solely with respect to information pertaining to
ProServ, the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading, and the Prospectus, as amended or
supplemented as of the Firm Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, ProServ has not sustained any material loss or
interference with respect to its business or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental
proceeding, and there has not been any material adverse change, or
any development involving a prospective material adverse change, in
the condition (financial or otherwise), management, business
prospects, net worth or results of operations of ProServ, except in
each case as described in or contemplated by the Prospectus
(exclusive of any amendment or supplement thereto).
(iii) the acquisition of ProServ shall have been completed
upon the terms set forth in the Prospectus simultaneously with the
closing of the purchase of the Firm Securities by the Underwriters.
(i) The Representatives shall have received a certificate, dated the
Firm Closing Date, of the principal executive officer of QBQ to the effect
that:
(i) solely with respect to information pertaining to QBQ,
the Registration Statement, as amended as of the Firm Closing Date,
does not include any untrue statement of a material fact or omit to
state any material fact necessary to make the
24
statements therein not misleading, and the Prospectus, as amended or
supplemented as of the Firm Closing Date, does not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
(ii) subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, QBQ has not sustained any material loss or interference
with respect to its business or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, and, to the best of such officer's knowledge after due
inquiry, there has not been any material adverse change in the
condition (financial or otherwise), management, net worth or results
of operations of QBQ, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto) or such changes as may occur in the ordinary
course of QBQ's business.
(j) The Representatives shall have received from each person listed
in the "Principal Stockholders" table in the Registration Statement as well as
from Xxxxxx Xxxx an agreement to the effect that such person will not,
directly or indirectly, without the prior written consent of Prudential
Securities Incorporated, on behalf of the Underwriters, offer, sell, offer to
sell, contract to sell, pledge, grant any option to purchase or otherwise sell
or dispose (or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of an option to purchase or other sale or disposition) of any
shares of Common Stock or any securities convertible into, or exchangeable or
exercisable for, shares of Common Stock for a period of 180 days after the
date of this Agreement, except for (i) bona fide gifts of Common Stock,
provided that any donee receiving such a gift agrees to be bound by the terms
of such lock-up agreement, (ii) the exercise of options or warrants for shares
of Common Stock, provided that the shares issued thereunder shall be bound by
the terms of such lock-up agreement and (iii) with respect to Xxxxxx Xxxx, as
contemplated in the Prospectus or the Preliminary Prospectus.
(k) On or before the Firm Closing Date, the Representatives and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(l) Prior to the commencement of the offering of the Securities, the
Securities shall have been approved for listing on the AMEX and shall remain
listed thereon as of the Firm Closing Date.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase
and pay for any Option Securities shall be subject, in their discretion, to
each of the foregoing conditions to
25
purchase the Firm Securities, except that all references to the Firm
Securities and the Firm Closing Date shall be deemed to refer to such Option
Securities and the related Option Closing Date, respectively.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934 (the "Exchange Act"),
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter or such controlling person may become subject under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made by
the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or
any amendment or supplement thereto or (B) any application or other
document, or any amendment or supplement thereto, executed by the
Company or based upon written information furnished by or on behalf
of the Company filed in any jurisdiction in order to qualify the
Securities under the securities or blue sky laws thereof or filed
with the Commission or any securities association or securities
exchange (each an "Application"),
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto,
or any Application a material fact required to be stated therein or
necessary to make the statements therein not misleading or
(iv) any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including without
limitation, slides, videos, films, tape recordings,
and will reimburse, as incurred, each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto or any Application in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein; and provided, further, that the Company will not be liable to any
Underwriter or any person controlling such Underwriter with respect to any
such untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased
26
Securities from such Underwriter but was not sent or given a copy of the
Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by
the Act, unless such failure to deliver the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with Section 5(d)
and (e) of this Agreement. This indemnity agreement will be in addition to any
liability which the Company may otherwise have. The Company will not, without
the prior written consent of the Underwriter or Underwriters purchasing, in
the aggregate, more than fifty percent (50%) of the Securities, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Underwriter
or any person who controls any such Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of all of the Underwriters and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or any Application or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or any Application or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein: and,
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or any
action in respect thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 8, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
27
indemnified party; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or
more legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to direct the defense of such
action on behalf of such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel to defend
such action on behalf of such indemnified party or parties. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in
any one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this Section
8, representing the indemnified parties under such paragraph (a) who are
parties to such action or actions) or (ii) the indemnifying party does not
promptly retain counsel satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient, for
any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions
received by the Underwriters. The relative fault of the parties shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters, the parties' relative intents, knowledge, access to information
and opportunity to correct or prevent such statement or omission, and any
other equitable
28
considerations appropriate in the circumstances. The Company and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (d). Notwithstanding any
other provision of this paragraph (d), no Underwriter shall be obligated to
make contributions hereunder that in the aggregate exceed the total public
offering price of the Securities purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages that such Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, and no person guilty of fraudulent misrepresentation (within
the meaning of Section II (f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute hereunder are several in proportion to
their respective underwriting obligations and not joint, and contributions
among Underwriters shall be governed by the provisions of the Prudential
Securities Incorporated Master Agreement Among Underwriters. For purposes of
this paragraph (d), each person, if any, who controls an Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act shall
have the same rights to contribution as such Underwriter, and each director of
the Company, each officer of the Company who signed the Registration Statement
and each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company.
9. Default of Underwriters. If one or more Underwriters default in
their obligations to purchase Firm Securities or Option Securities hereunder
and the aggregate number of such Securities that such defaulting Underwriter
or Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by
all of the Underwriters at such time hereunder, the other Underwriters may
make arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or
Option Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase. If one or more Underwriters so default with respect to an
aggregate number of Securities that is more than ten percent of the aggregate
number of Firm Securities or Option Securities, as the case may be, to be
purchased by all of the Underwriters at such time hereunder, and if
arrangements satisfactory to the Representatives are not made within 36 hours
after such default for the purchase by other persons (who may include one or
more of the non-defaulting Underwriters, including the Representatives) of the
Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company other than as provided in Section 10 hereof. In the event of any
default by one or more Underwriters as described in this Section 9, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 3
hereof for not more than seven business days in order that any necessary
changes may be made in the arrangements or documents for the purchase and
delivery of the Firm Securities or Option Securities, as the case may be. As
used in this Agreement, the term "Underwriter" includes any person
29
substituted for an Underwriter under this Section 9. Nothing herein shall
relieve any defaulting Underwriter from liability for its default.
10. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company (including those
which relate to the Company's subsidiaries and the Acquired Subsidiaries), its
officers and the several Underwriters set forth in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement shall remain in
full force and effect, regardless of (i) any investigation made by or on
behalf of the Company, any of its officers or directors, any Underwriter or
any controlling person referred to in Section 8 hereof and (ii) delivery of
and payment for the Securities. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6 and 8 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
11. Termination. (a) This Agreement may be terminated with respect to
the Firm Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date
or the related Option Closing Date, respectively, in the event that the
Company shall have failed, refused or been unable to perform all obligations
and satisfy all conditions on its part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Firm Closing Date or such Option
Closing Date, respectively,
(i) the Company, any of its subsidiaries or any of the
Acquired Subsidiaries shall have, in the sole judgment of the
Representatives, sustained any material loss or interference with
their respective businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding or there shall have been any material adverse change, or
any development involving a prospective material adverse change
(including without limitation a change in management or control of
the Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company, its
subsidiaries and the Acquired Subsidiaries, except in each case as
described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended
by the Commission or the AMEX or trading in securities generally on
the New York Stock Exchange shall have been suspended or minimum or
maximum prices shall have been established on any such exchange or
market system;
(iii) a banking moratorium shall have been declared by New
York or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in
the sole judgment of the
30
Representatives, makes it impractical or inadvisable to proceed with
the public offering or the delivery of the Securities as contemplated
by the Registration Statement, as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by Underwriters. The statements set forth in
the last paragraph on the front cover page and under the heading
"Underwriting" in any Preliminary Prospectus or the Prospectus (to the extent
such statements relate to the Underwriters) constitute the only information
furnished by any Underwriter through the Representatives to the Company for
the purposes of Sections 2(b) and 8 hereof. The Underwriters confirm that such
statements (to such extent) are correct.
13. Notices. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission and confirmed in writing to Prudential Securities
Incorporated, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity
Transactions Group; and if sent to the Company, shall be delivered or sent by
mail, telex or facsimile transmission and confirmed in writing to the Company
at The Marquee Group, Inc., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000.
14. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such persons and for the benefit of no other person
except that (i) the indemnities of the Company contained in Section 8 of this
Agreement shall also be for the benefit of any person or persons who control
any Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and (ii) the indemnities of the Underwriters contained in
Section 8 of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Securities from any Underwriter shall be deemed a successor because of such
purchase.
15. Applicable Law. The validity and interpretation of this
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws.
16. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of New York and
by execution and delivery of this Agreement, the Company accepts for itself
and in connection with its properties, generally and unconditionally,
31
the nonexclusive jurisdiction of the aforesaid courts and waives any defense
of forum non conveniens and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement.
17. Counterparts. This Agreement may be executed in two or more
counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
32
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and
each of the several Underwriters.
Very truly yours,
THE MARQUEE GROUP, INC.
By /s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxxx
Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
XXXXX & COMPANY
By PRUDENTIAL SECURITIES INCORPORATED
By /s/ Xxxx-Xxxxxx Canfin
------------------------------------
Xxxx-Xxxxxx Canfin
Managing Director
For itself and on behalf of the Representatives.
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SCHEDULE 1
UNDERWRITERS
Number of Firm
Securities to
Underwriter be Purchased
----------- ------------
Prudential Securities Incorporated ............................2,975,000
Xxxxx & Company................................................2,975,000
Bear, Xxxxxxx & Co. Inc........................................ 200,000
BT Alex. Xxxxx Incorporated.................................... 200,000
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation............ 200,000
Xxxxxx Brothers Inc............................................ 200,000
Xxxxxxxxxxx & Co., Inc. ....................................... 200,000
Xxxxx Xxxxxx Inc............................................... 200,000
Xxxxxx Xxxx LLC................................................ 100,000
Sutro & Co. Incorporated....................................... 100,000
Chatsworth Securities LLC...................................... 50,000
Royce Investment Group, Inc.................................... 50,000
The Xxxxxxx Companies Incorporated............................. 50,000
---------
Total........................................7,500,000
=========
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SCHEDULE 2
SUBSIDIARIES
Jurisdictions Where Jurisdiction
Name Qualified of Incorporation
---- ------------------- ----------------
The Marquee Group, Inc. New York Delaware
Athletes & Artists, Inc. None New York
Marquee Music, Inc. New York Delaware
Sports Marketing & None Connecticut
Television, Inc.
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SCHEDULE 3
ACQUIRED SUBSIDIARIES
Name Jurisdiction of Incorporation
---- -----------------------------
ProServ, Inc. Delaware
ProServ Television, Inc. Delaware
ProServ UK, Inc. Delaware
ProServ Europe, S.A. France
ProServ Financial Services, Inc. Delaware
36
