MADISON SQUARE GARDEN SPORTS CORP. Item 1.01 Entry into a Material Definitive Agreement.
Following the Distribution, MSG Entertainment Spinco will be a public company and the Registrant will have no continuing common stock ownership interest in MSG Entertainment Spinco. For purposes of governing the ongoing relationships between the Registrant and MSG Entertainment Spinco after the Distribution and to provide for an orderly transition, the Registrant and MSG Entertainment Spinco have entered or will enter into a number of agreements prior to the Distribution. The principal agreements are described below.
The agreements summarized in this Item 1.01 are included as Exhibits 2.1 and 10.1 through 10.8 to this Current Report on Form 8-K, and the following summaries of those agreements are qualified in their entirety by reference to the agreements as so filed, which are incorporated into this Item 1.01 by reference.
Distribution Agreement
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Under the Distribution Agreement, as further described in the Introductory Note
above, the Registrant will distribute
Under the Distribution Agreement, the Registrant provides MSG Entertainment
Spinco with indemnities with respect to liabilities, damages, costs and expenses
arising out of any of: (i) the Registrant's businesses (other than businesses of
MSG Entertainment Spinco); (ii) certain identified claims or proceedings;
(iii) any breach by the Registrant of its obligations under the Distribution
Agreement; (iv) any untrue statement or omission in the Form 10 or in the
information statement relating to the Registrant and its subsidiaries; and
(v) indemnification obligations MSG Entertainment Spinco may have to the NBA or
NHL that result from acts or omissions of the Registrant. MSG Entertainment
Spinco provides the Registrant with indemnities with respect to liabilities,
damages, costs and expenses arising out of any of: (i)
In the Distribution Agreement, MSG Entertainment Spinco released the Registrant
from any claims it might have arising out of: (i) the management of the
businesses and affairs of MSG Entertainment Spinco on or prior to the
Distribution; (ii) the terms of the Distribution,
Additionally, in the Distribution Agreement, the Registrant released MSG Entertainment Spinco from any claims it might have arising out of: (i) the management of the businesses and affairs of the Registrant on or prior to the Distribution; (ii) the terms of the Distribution and the other agreements entered into in connection with the Distribution; and (iii) any decisions that have been made, or actions taken, relating to the Distribution.
The Distribution Agreement also provides for access to records and information, cooperation in defending litigation, as well as methods of resolution for certain disputes.
Contribution Agreement
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Transition Services Agreement
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
In connection with the Distribution, there will be changes to the executive officers and directors of the Registrant. The Registrant entered into employment agreements with certain of the executive officers, the material terms of which are described below.
Changes in Executive Officers
Effective on the Distribution date, the following executive officers of the
Registrant will, in connection with their becoming executive officers of MSG
Entertainment Spinco, cease to serve as executive officers of the Registrant:
Also effective on the Distribution date,
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In addition, effective on the Distribution date,
Changes in Directors
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Item 7.01 Regulation FD Disclosure.
Update on COVID-19 Impacts
The Registrant's operations and operating results have been, and continue to be,
materially impacted by the COVID-19 pandemic and government actions taken in
response. As of the date of this Current Report on Form 8-K, virtually all of
the Registrant's business operations are shut down and it is not clear when
those operations will resume. As of
We are unable to predict when the Registrant will be permitted or able to resume normal business operations and what the longer-term effects, if any, of these events will be.
The Registrant is currently building a state-of-the-art venue in
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Distribution Press Release
On
The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Exchange Act.
Note Regarding Forward-Looking Statements
Statements and other information included in this Current Report on Form 8-K
that are not historical facts, including statements about the Registrant's
plans, strategies, beliefs and expectations, as well as certain estimates and
assumptions used by the Registrant's management, may constitute forward-looking
statements. Forward-looking statements are subject to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995, as amended.
Forward-looking statements speak only as of the date they are made and, except
for the Registrant's ongoing obligations under the
Forward-looking statements are subject to known and unknown risks and
uncertainties and are based on estimates and assumptions that are subject to
change or revision, including the expected timing of the closing of the proposed
transaction, that could cause actual results to differ materially from those
expected or implied by the forward-looking statements or the estimates or
assumptions used. Such forward-looking statements include, without limitation,
the failure to obtain governmental and regulatory approvals required for the
closing of the proposed transaction; the failure to satisfy the conditions to
the closing of the proposed transaction; unexpected costs, liabilities or delays
in connection with or with respect to the proposed transaction, including but
not limited to changes due to general economic, political and business
conditions, and the ongoing COVID-19 pandemic; potential legal proceedings
relating to the proposed transaction and the outcome of any such legal
proceeding; the occurrence of any event, change or other circumstances that
could give rise to the termination of the MIPA; and other risks to the
consummation of the proposed transaction, including the risk that the proposed
transaction will not be consummated within the expected time period or at all.
Additional factors that may affect the Registrant's future results are
identified in the Registrant's most recently filed Annual Report on Form 10-K,
subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other
filings with the
Item 8.01 Other Events.
The information set forth in the Introductory Note is incorporated into this Item 8.01 by reference.
Certain Relationships and Potential Conflicts of Interest
As noted under Item 5.02 above, following the Distribution, there will be an
overlap between certain officers of the Registrant, MSG Entertainment Spinco and
MSG Networks.
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The overlapping directors and officers may have actual or apparent conflicts of interest with respect to matters involving or affecting each company. For example, there will be the potential for a conflict of interest when the Registrant or MSG Entertainment Spinco, MSG Networks, and/or AMC Networks and their respective subsidiaries and successors (each of the foregoing an "Other Entity") look at certain acquisitions and other corporate opportunities that may be suitable for more than one of the companies. Also, conflicts may arise if there are issues or disputes under the commercial arrangements that will exist between an Other Entity on the one hand and the Registrant on the other hand. In addition, after the Distribution, certain of the Registrant's directors and officers will continue to own stock and/or stock options or other equity awards of an Other Entity. These ownership interests could create actual, apparent or potential conflicts of interest when these individuals are faced with decisions that could have different implications for the Registrant and an Other Entity.
The Registrant's amended and restated certificate of incorporation acknowledges that directors and officers of the Registrant may also be serving as directors, officers, employees or agents of MSG Networks or AMC Networks (the "Overlap Persons"), and that the Registrant may engage in material business transactions with such entities and provides that no Overlap Person will be liable to the Registrant or its stockholders for breach of any fiduciary duty that would otherwise occur by reason of the fact that any such individual directs a corporate opportunity (other than certain limited types of restricted corporate opportunities set forth in the Registrant's amended and restated certificate of incorporation, provided that the Registrant is directly engaged in such business at the relevant time) to MSG Networks or AMC Networks instead of the Registrant, or does not refer or communicate information regarding such corporate opportunities to the Registrant. These provisions in our amended and restated certificate of incorporation also expressly validate certain contracts, agreements, arrangements and transactions (and amendments, modifications or terminations thereof) between the Registrant and MSG Networks or AMC Networks and, to the fullest extent permitted by law, provide that the actions of the Overlap Persons in connection therewith are not breaches of fiduciary duties owed to the Registrant, any of its subsidiaries or their respective stockholders.
In connection with the Distribution, the Board of Directors of the Registrant
has adopted a policy (the "Overlap Policy") to extend the foregoing provisions
to directors and officers of the Registrant who serve as directors, officers,
employees or agents of MSG Entertainment Spinco or its subsidiaries. Under the
Overlap Policy, the types of restricted corporate opportunities have been
revised to reflect the Registrant's business following the Distribution and will
now include an opportunity that relates exclusively to the ownership of a
franchise in the NBA, the NHL, the
Related Party Transaction Approval Policy
In connection with the Distribution, the Registrant will amend its Related Party
Transaction Approval Policy to include MSG Entertainment Spinco as an affiliate
under that policy. As a result, transactions with MSG Entertainment Spinco will
be subject to approval by an independent committee of the Registrant's Board of
Directors if in excess of the dollar threshold set forth in Item 404 of
Regulation S-K (currently
Treatment of Outstanding Options, Restricted Stock Units and Other Awards
The Registrant has previously issued options to purchase Registrant Class A Common Stock. In connection with the Distribution, each Registrant option will become two options: one will be an option to acquire Registrant Class A Common Stock and one an option to acquire Spinco Class A Common Stock. The existing exercise price will be allocated between the existing Registrant options and the new MSG Entertainment Spinco options based upon the volume weighted average price of each of the Registrant Class A Common Stock and Spinco Class A Common Stock over the ten trading days immediately following the Distribution as reported by Bloomberg, and the underlying share amount will take into account . . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
2.1 Distribution Agreement, dated as ofMarch 31, 2020 , betweenThe Madison Square Garden Company (to be renamedMadison Square Garden Sports Corp. ) andMSG Entertainment Spinco, Inc. (to be renamedMadison Square Garden Entertainment Corp. ). 13
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10.1 Contribution Agreement, dated as ofMarch 31, 2020 , betweenThe Madison Square Garden Company (to be renamedMadison Square Garden Sports Corp. ),MSG Sports & Entertainment, LLC (to be renamedMSG Entertainment Group, LLC ) andMSG Entertainment Spinco, Inc. (to be renamedMadison Square Garden Entertainment Corp. ). 10.2 Transition Services Agreement, dated as ofMarch 31, 2020 , betweenMSG Sports, LLC andMSG Sports & Entertainment, LLC (to be renamedMSG Entertainment Group, LLC ). 10.3 Tax Disaffiliation Agreement, dated as ofMarch 31, 2020 , betweenThe Madison Square Garden Company (to be renamedMadison Square Garden Sports Corp. ) andMSG Entertainment Spinco, Inc. (to be renamedMadison Square Garden Entertainment Corp. ). 10.4 Employee Matters Agreement, datedMarch 31, 2020 , betweenThe Madison Square Garden Company (to be renamedMadison Square Garden Sports Corp. ) andMSG Entertainment Spinco, Inc. (to be renamedMadison Square Garden Entertainment Corp. ). 10.5 Form of Arena License Agreement betweenMSG Arena, LLC andNew York Knicks, LLC .* 10.6 Form of Arena License Agreement betweenMSG Arena, LLC andNew York Rangers, LLC .* 10.7 Form of NBA Transaction Agreement. 10.8 Form of NHL Transaction Agreement. 10.9 Employment Agreement dated as ofMarch 31, 2020 betweenThe Madison Square Garden Company (to be renamedMadison Square Garden Sports Corp. ) andJames L. Dolan . 10.10 Employment Agreement dated as ofMarch 31, 2020 betweenThe Madison Square Garden Company (to be renamedMadison Square Garden Sports Corp. ) andAndrew Lustgarten . 99.1 Press Release, datedMarch 31, 2020 , issued by the Registrant. 104 Cover Page Interactive Data File (embedded within the inline XRBL document).
* Certain confidential information - identified by bracketed asterisks "[*****]"
- has been omitted from this exhibit pursuant to Item 601(b)(10) of Regulation
S-K because it is both (i) not material and (ii) would be competitively harmful
to the Registrant if publicly disclosed.
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