As filed with the Securities and Exchange Commission on July 22, 1999.
Registration No._________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
---------------
PARADISE MUSIC & ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3906452
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
53 West 23rd Street
New York, NY 10010
(212) 590-2100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Richard Flynn, Chief Operating Officer
Paradise Music & Entertainment, Inc.
53 West 23rd Street - 11th Floor
New York, NY 10010
(212) 590-2100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Walter M. Epstein, Esq.
Davis & Gilbert LLP
1740 Broadway
New York, New York 10019
(212) 468-4911
-----------------------
Approximate date of commencement of proposed sale to the public: On such date as
the selling stockholders shall elect to commence sales to the public following
the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================
Proposed Proposed
maximum maximum
Title of each class of Amount to be offering price Aggregate Amount of
securities to be registered registered per share(1) offering price registration fee
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value
$.01 per share 1,237,380 shares $5.875 $7,269,608 $2,021
================================================================================================
</TABLE>
(1) Based on the average of the high and low sale prices of the Common
stock reported on the Nasdaq SmallCap Market on July 16, 1999 of
$5.875 per share, solely for the purpose of calculating the
registration fee pursuant to Rule 457(c).
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Prospectus
Paradise Music & Entertainment, Inc.
Common Stock
1,237,380 Shares
This is an offering of 1,237,380 shares by selling stockholders. We will
not receive any of the sale proceeds.
Our shares currently trade on the Nasdaq Small Cap Market and on the
Boston Stock Exchange. (Trading Symbols: Nasdaq Small Cap Market - PDSE; Boston
Stock Exchange - PMU). On July 16, 1999 the last sale price on Nasdaq was $5.875
per share.
Investing in our company involves a high degree of risk. You should
purchase shares only if you can afford a complete loss. You should carefully
read and review this prospectus including the "Risk Factors" beginning on page 5
before deciding whether to buy shares in this offering.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Prospectus dated July 22, 1999.
<PAGE>
Principal Executive Paradise Music & Entertainment, Inc.
Offices: 53 West 23rd Street, 11th Floor
New York, NY 10010
(212) 590-2100
There follows a summary of important information on our business and
recent developments.
Our Business: We engage in various music related businesses through
our subsidiaries, including:
o production of music videos and music
specials for television and cable through
Picture Vision, Inc.
o music artist management through All Access
Entertainment, Inc.
o production of original scores for
television, radio and advertising through
Rave Music, Inc.
o production and commercial release of
recorded music through PUSH Records, Inc.
Here are highlights of each business.
PICTURE VISION
Picture Vision produces:
o music videos used to promote music artists
o music specials for television and cable
featuring music artists.
These services are provided on a fixed budget basis
with profitability dependent on estimating and
managing budget costs. Picture Vision has produced
music videos and specials for many well-known artists
and has received numerous industry awards for its
work. Recent productions include Janet Jackson's
"Velvet Rope Concert" and Garth Brooks' "Live From
Central Park Concert" for HBO.
ALL ACCESS
All Access provides a full range of management
services to music artists. The number of artists
represented by All Access is limited and consists of
both well-known artists such as Daryl Hall and John
Oates and developing artists such as Sheppard (with
Mosh Productions, an affiliate of Sony Music), and
Kim Sozzi, a Columbia Records recording artist. All
Access receives a fixed percentage of artist
revenues. The fee percentage charged varies based on
an artist's prior commercial success.
RAVE
Rave creates for use on television, radio and film:
o original music scores, for the television
shows Pokemon, Mr. Men and Little Miss
o advertising themes for clients such as Downy
Fabric Softener, Pringles, JIF Peanut Butter
Rave produces original music at its in-house studios
and uses independent
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musicians, singers and engineers to produce final
soundtracks. A substantial portion of Rave's revenues
are generated from television commercials. Rave
retains the intellectual property rights to its
musical compositions.
PUSH
PUSH is a start-up record label launched by us in
early 1997. PUSH has the exclusive rights to records
by established artists such as Daryl Hall and John
Oates, Daryl Hall, Blessid Union of Souls, and by new
and emerging artists such as Luxx and kidneythieves.
Push has released three recordings to date through
BMG Music, a major distribution company.
In addition, in March 1999, Push entered into a joint
venture with V2 Records to distribute a current
release of Blessid Union of Souls and mutually
acceptable records. Under the terms of the joint
venture V2 advances the costs of promotion and
marketing in exchange for recoupment of advances plus
50% of revenues less their pro rata share of artist
royalty payments.
Push has also negotiated joint ventures to share in
the distribution, marketing and promotion of various
jazz recordings by artists such as Paul Hardcastle,
Jazzmasters and others in exchange for a negotiated
percentage of every record sold.
Our concept of We offer a broader range of services than most
combined services: independent music companies. This combination of
services has been structured to foster synergies
between the operating companies, more efficient
business operations, lower costs and greater
convenience to customers.
Expansion/Acquisitions: We have adopted a strategic plan to significantly
expand through acquisitions of related businesses and
key personnel. Our acquisition program will
concentrate on smaller complementary music
businesses. If more significant opportunities become
available we believe that through our consultants and
management contacts, we may be able to finance these
opportunities through joint ventures or otherwise. To
implement this plan, we have entered into the
transactions and the consulting agreements with the
persons described under "Recent Developments" who we
believe can provide us with acquisition talent and
financing opportunities.
Recent Developments: Since the beginning of 1999 we have gone through a
substantive restructuring including several key
management additions and the participation of The
Cassandra Group as a source for obtaining additional
financing.
In July 1999, investors represented by Cassandra
purchased an aggregate of 970,880 shares of Paradise
common stock at a price of $4.25 per share or
$4,126,240 in the aggregate. We agreed to file a Form
S-3 registering for resale these 970,880 shares
promptly following the receipt and acceptance by us
of the subscription agreements together with the
payment for these shares by the investors. If the
970,880 shares are not incorporated in a registration
statement that has been declared effective by the SEC
by November 19, 1999, each subscriber may cancel his
subscription and resell his shares to us for the
price paid by him.
We recently entered into a financial consulting
agreement with Dana Giacchetto, Cassandra's
President, pursuant to which Mr. Giacchetto will
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assist us through June 30, 2000 in a range of areas
including structuring transactions and financings to
support our growth. As compensation for his
consulting services 200,000 shares of restricted
common stock and three-year warrants to purchase
800,000 shares of common stock were issued to Mr.
Giacchetto, at the following prices: 100,000 at $5.00
per share, 150,000 at $6.00 per share, 150,000 at
$7.00 per share, 150,000 at $8.00 per share, 125,000
at $9.00 per share and 125,000 at $10.00 per share.
In April 1999 we entered into a letter of intent to
acquire all of the business and assets of (i)
Consolidated Entertainment, LLC, d/b/a Straw Dogs, a
Los Angeles-based television and commercial
production company owned and operated by Jesse Dylan,
who was named as our Chairman and Chief Executive
Officer in April 1999, and Craig Rodgers; and (ii)
Spur & Buckle, Inc., a company wholly owned by Jesse
Dylan, for an aggregate of 1,441,000 shares of
restricted common stock. The purchase is subject to
the completion of formal due diligence, execution of
definitive agreements, stockholder approval and other
customary closing conditions. Craig Rodgers will join
as Chief Executive Officer of the Straw Dogs
subsidiary after the acquisition of Straw Dogs is
completed. Mr. Dylan replaces John Loeffler as our
Chairman, who will now devote more of his time to his
role as Chief Executive Officer of Rave.
On May 1, 1999, we appointed Jay Moloney as our
President and entered into a three-year employment
contract with him. Mr. Moloney's employment agreement
is at an annual salary of $500,000 per year plus a
sign-on bonus of $41,500. Mr. Moloney was granted an
aggregate of 1,200,000 five-year non-qualified
options vesting over a three-year period with
1,100,000 exercisable at $4.50 per share and 100,000
exercisable at $3 per share.
On June 7, 1999 we entered into a six-month
consulting agreement with Jay Walkingshaw at a
monthly salary of $33,333. Mr. Walkingshaw will
advise us on our structure and operations.
In addition, we have entered into several other
consulting agreements. In each of these consulting
agreements we have issued warrants to purchase common
stock as the only compensation for the consulting
services. Two of the consulting agreements are with
our outside directors, Jeffrey Rosen and Thomas
Edelman. Mr. Edelman and Mr. Rosen have each agreed
to provide business advice, in addition to their
services as directors, for the period from April 30,
1999 through June 30, 2000. Mr. Rosen will receive
200,000 three-year warrants and Mr. Edelman will
receive 100,000 three-year warrants which vest after
one year and which are exercisable at $5.00 per
share. In addition, an outside consultant, Burton
Goldstein was granted 125,000 two-year warrants in
exchange for consulting services commencing February
22, 1999 for a one year period. The warrants are
fully vested and provide for exercise prices of
50,000 warrants at $4.00 per share, 25,000 warrants
at $5.00 per share, 25,000 warrants at $6.00 per
share and 25,000 at $8.00 per share.
We are also considering granting warrants to other
consultants in exchange for their services.
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RISK FACTORS
You should carefully consider the following risk factors, among others,
before deciding to invest in our company.
Our history involves The company was incorporated in Delaware in July 1996
substantial losses and commenced operations in October 1996. We
originally combined the operations of three
established companies (Rave, Picture Vision and All
Access) in establishing the company. Following our
initial public offering in 1997, we launched PUSH,
our record label. We have not yet become profitable
on a combined basis and cannot assure you that we
will become profitable. In the meantime, we have
expended substantial capital to, among other things,
cover our operating losses.
We will need to raise We have for some time been actively seeking
more money in the additional financing for our business. In December
future. 1998 we raised approximately $2 million from the
Cassandra investors and in July 1999 raised an
additional $4.1 million from them. More funds will
have to be obtained in order to support our business
and acquisition plans. We anticipate raising an
additional $4 million from the Cassandra investors,
although we cannot assure you that this financing
will be completed. If we cannot get more funds, we
will have to curtail some of our plans. We cannot
assure you that we can obtain more capital. We also
don't know if the terms requested by future financing
sources will be acceptable to us.
We are a recently While our operating companies other than the record
combined business label have been individually in business for many
which has experienced years, we have only operated together since October
substantial losses 1996. We have not yet operated the combined business
since the combination. on a profitable basis. We cannot assure you when, if
ever, the combined business will be profitable.
PUSH Records is a high Although large amounts of money have been invested in
risk business which has PUSH it has not yet been profitable. We recently
never been profitable. entered into a joint venture relationship with V2
which reduces overhead and provides that V2 pay all
marketing and promotion costs. We can, however,
provide no assurance that PUSH will achieve
profitability.
We are dependent on the Our artist management business and our record label
success of independent business have relationships with a limited number of
artists with whom we artists. It is difficult to secure these
have relationships. relationships. Once they have been secured we depend
on the success of these artists, which success cannot
be predicted, in order to realize revenues.
has yet to be successful. Although we recently entered into a letter of intent
Our acquisition program to acquire Straw Dogs, there can be no assurance that
this acquisition or our acquisition program will
be successful. It will be difficult to fund and
finance other acquisitions unless we raise more
money or can issue stock for the purchase price.
Even if we complete acquisitions, we cannot be sure
that these acquisitions will benefit our operations.
Competition is intense Our record business competes with numerous other
in all our businesses. independent record labels, many of whom have greater
financial resources than we do. In addition, there
are six major companies with whom our record label
cannot compete directly due to the substantial
financial resources and talent pool of those
companies.
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Our artist management, video production and original
score/production businesses also compete with
numerous other similar businesses, many of whom have
greater financial resources than we do.
We are dependent on some One advertising agency/client generated approximately
large customers. $397,000 and $337,000 of commercial music production
revenues for the nine months ended March 31, 1999 and
1998, respectively.
Three music artists produced $342,000 and $370,000 of
music artist management revenues for the nine months
ended March 31, 1999 and 1998, respectively.
Approximately $3,988,000 and $3,542,000 respectively
of video production revenues were derived from three
artists and one artist, respectively, for the nine
months ended March 31, 1999 and March 31, 1998.
Approximately $521,000 and $1,852,000 of record label
revenues were derived from two customers and one
customer, respectively, for the nine months ended
March 31, 1999 and 1998.
The loss of a large customer or the loss of a
significant production would hurt our businesses.
No dividends have We have never declared or paid a cash dividend and we
been paid. do not expect to have available cash with which to
pay cash dividends in the foreseeable future. If we
have available cash, it is our policy to invest it in
the business.
A large block of Owners of large blocks of shares which were
previously restricted previously restricted can be sold at this time. The
shares can be sold at sale of a large number of these shares could lower
this time and could the price of our shares or make it harder to attract
lower the price of our new investors.
shares.
We must deal with Year We have conducted a review of our computer systems to
2000 Compliance Issues. identify the "Year 2000" problem. The year 2000
We cannot guarantee that problem is the result of computer programs being
the Year 2000 problem written using two digits rather than four to define
will not harm our the applicable year. Any programs that have
business. time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This
could result in a major systems failure or
miscalculations. We believe that our computer systems
and software products are fully year 2000 compatible.
However, computer systems or software products of our
suppliers or customers may not accept input of,
store, manipulate and output dates in the year 2000
or thereafter without error or interruption. We have
retained a consultant to help us with compliance. We
do not anticipate that the Year 2000 problem will
harm our business.
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Special Note Regarding Forward-Looking Statements
Some of the statements contained in this prospectus, including information
incorporated by reference, discuss future expectations, contain projections of
future results of operations or financial condition or provide other
"forward-looking" information. Those statements are subject to known and unknown
risks, uncertainties and other factors that could cause the actual results to
differ materially from those contemplated by the statements. The forward-looking
information is based on various factors and was derived using numerous
assumptions. Important factors that may cause actual results to differ from
projections include the risk factors set forth above.
WE HAVE INCORPORATED INFORMATION BY REFERENCE TO OUR OTHER SEC FILINGS; YOU
CAN OBTAIN MORE INFORMATION FROM US OR THE SEC
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
Commission will automatically update and supersede this information.
We incorporate by reference the following documents filed by us with the
SEC:
o Our Annual Report on Form 10-KSB for the year ended June 30, 1998 filed
with the SEC on October 8, 1998;
o Our Quarterly Report on Form 10-QSB for the quarter ended September 30,
1998 filed with the SEC on November 20, 1998;
o Our Quarterly Report on Form 10-QSB for the quarter ended December 31,
1998 filed with the SEC on February 16, 1999;
o Our Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999
filed with the SEC on May 17, 1999;
o All other reports and other documents filed by us pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 or the Exchange Act since
March 31, 1999;
o Our registration statement on Form 8-A filed on January 9, 1997 and
declared effective on January 22, 1997 registering the common stock under
Section 12(b) of the Exchange Act; and
o All documents and reports filed by us pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this prospectus and prior to
the filing of a post-effective amendment which indicates that all securities
which may be offered hereby have been sold or which deregisters all securities
then remaining unsold.
At your request, we will provide you, without charge, with a copy of any
information incorporated by reference in this prospectus. If you want more
information, write or call us at:
Paradise Music & Entertainment
53 West 23rd Street, 11th Floor
New York, New York 1010
(212) 590-2100
Attn: Richard Flynn
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We have filed a registration statement on Form S-3, which includes this
prospectus covering this offering, with the Securities and Exchange Commission.
This prospectus does not contain all the information included in the
registration statement. You can request a copy of the registration statement and
the exhibits from us to get a more complete description of our company and this
offering. We have provided our address and telephone number if you wish to
obtain free copies of the registration statement and exhibits.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information we file at the SEC's public reference room in Washington D.C., New
York, New York and Chicago, Illinois. You can also request copies of these
documents, upon payment of a duplicating fee, by writing to the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the SEC
Internet site at http\\www.sec.gov. The registration statement, of which this
prospectus forms a part, including all exhibits, has been filed in electronic
form with the SEC through EDGAR.
SELLING STOCKHOLDERS
The following table sets forth
o the number of shares currently beneficial owned by each selling
stockholder,
o the number of shares owned by each of them being offered for sale in
this prospectus, and
o the amount and percentage of shares to be owned by each selling
stockholder after the sale of all of the shares offered by this
prospectus.
The list of selling stockholders includes Dana Giacchetto, the President of
Cassandra and a consultant to the company. Except for Donald & Co., the
underwriter of our initial public offering, Mr. Giacchetto, and a member of our
outside legal counsel and certain current and former employees, none of the
other selling shareholders has had any position, office or other material
relationship with us within the past three years other than as a result of the
ownership of our shares or other securities of ours. The information included
below is based on information provided by the selling stockholders. The table
has been prepared on the assumption that all shares of common stock offered
hereby will be sold and is based on 6,318,596 shares of common stock outstanding
on July 14, 1999.
Shares Percentage
Shares Owned of Shares
Beneficially Shares After Owned After
Name Owned Offered Offering Offering
- ---- ----- ------- -------- --------
Raymond Ovetsky 10,000 2,000 8,000 *
Lawrence Bortoluzzi 15,000 6,500 8,500 *
Mike McVay 10,000 10,000 -0- *
Whole Oates 35,000 35,000 -0- *
Walter M. Epstein 49,658 10,000 39,658 *
Jaffoni & Collins 3,000 3,000 -0- *
Dana Giacchetto(1) 200,000 200,000 -0- 3.2%
Robert Jaffee 3,000 3,000 -0- *
Vincent Laresca 12,000 12,000 -0- *
Victoria Leacock 33,500 23,500 10,000 *
Joan Martin,
Irrevocable Trust
FBO O.J. Foschi 6,450 6,450 -0- *
Joan Martin,
Irrevocable Trust
FBO A.F. Foschi 6,450 6,450 -0- *
Popdetail 2,500 2,500 -0- *
John Paluska 25,000 25,000 -0- *
Gale Rapallo 2,500 2,500 -0- *
William Robinson 2,500 2,500 -0- *
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Mitchell Rosenwald 2,500 2,500 -0- *
Grace Sheppard
Revocable Trust 8,235 8,235 -0- *
Sandi Slone 5,000 5,000 -0- *
Ken Sunshine 2,500 2,500 -0- *
Stuart Ditsky 10,000 10,000 -0- *
Angela Harrington 2,500 2,500 -0- *
Margaret Martin 2,500 2,500 -0- *
Ben Stiller 23,500 23,500 -0- *
Andrew Sarno 23,529 23,529 -0- *
Tobey Maguire 73,500 73,500 -0- *
Jon Favreau 7,500 7,500 -0- *
Peter Emi 5,000 5,000 -0- *
William Russ &
Clare Wren 21,500 21,500 -0- *
Philip Morrison 12,500 12,500 -0- *
Gordon P. Baird 125,000 125,000 -0- *
Michael Besman 23,500 23,500 -0- *
Henry J. Bamberger 17,500 10,000 7,500 *
Kevin Bone 4,852 4,852 -0- *
George Condo 14,000 14,000 -0- *
Dalva, Ltd. 2,500 2,500 -0- *
Anna Dylan 2,500 2,500 -0- *
Michelle Gan 2,500 2,500 -0- *
Sarah Gilbert 9,400 9,400 -0- *
Mark Hankey 2,500 2,500 -0- *
Daniel W. Hillis 10,000 10,000 -0- *
Ross Bleckner 11,764 11,764 -0- *
Leonardo DiCaprio 50,000 50,000 -0- *
Amir Malin &
Karen Greene 20,000 10,000 10,000 *
Scott & Deseree Welch 50,000 50,000 -0- *
Karen Hope 2,500 2,500 -0- *
Marjorie Minkin 5,000 5,000 -0- *
Michael Feldman 6,000 6,000 -0- *
Kevin Connolly 2,500 2,500 -0- *
Margery Simkin 150,000 50,000 100,000 1.6%
Claudio Curzi 22,500 2,500 20,000 *
Stacey Sher 104,700 4,700 100,000 1.6%
Peter Braunstein 2,500 2,500 -0- *
Ventrue Entertainment 10,000 10,000 -0- *
Southfield Entertainment 25,000 25,000 -0- *
September
Productions, Inc. 5,000 5,000 -0- *
David Salle 20,000 20,000 -0- *
Cameron Diaz 45,000 25,000 20,000 *
Dan Cortese
Retirement Trust 32,500 12,500 20,000 *
Chris Kattan 12,500 12,500 -0- *
Ruth Bleckner 50,000 50,000 -0- *
20 Bucks, Inc.
Retirement Trust 2,500 2,500 -0- *
James W. Shepard
Revocable Trust 20,000 20,000 -0- *
Jay Faires 100,000 100,000 -0- *
- ------------
(1) Does not include 2,970,880 shares which may be deemed to be beneficially
owned by the Cassandra Group, Inc., a registered investment adviser
controlled by Mr. Giachetto. Cassandra does not directly own any shares
9
<PAGE>
of common stock, the shares are owned by Cassandra's various clients.
Cassandra has discretionary power to dispose of the securities held in its
clients accounts. Accordingly, by virtue of such discretionary power,
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended, Cassandra may be deemed to be the indirect beneficial
owner of the shares held by the various account holders.
PLAN OF DISTRIBUTION
The shares are being registered in order to facilitate their sale from
time to time by the selling stockholders, or by their transferees or other
successors, as market conditions may permit. The selling stockholders have not
entered into any underwriting arrangements. We are unable to predict when, if at
all, any of the selling stockholders will sell the shares, as sales will be made
solely at the discretion of each selling stockholder. The sale of the shares by
the selling stockholders and/or their transferees or other successors may be
effected in one or more transactions that may take place on the Nasdaq Small Cap
Market, the over-the-counter market, privately negotiated transactions or
through sales to one or more dealers for resale of the shares as principals, or
a combination of such methods of sale, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. The shares may be sold by one or more of the following methods:
o a block trade in which a broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such
broker or dealer for its account;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker-dealer.
In effecting sales, brokers or dealers engaged by the selling stockholder
may arrange for other brokers or dealers to participate. They may receive
commissions or discounts from the selling stockholders in amounts to be
negotiated immediately prior to the sale. The selling stockholders and brokers
and dealers engaged by them and any other participating brokers or dealers may
be deemed to be "underwriters" within the meaning of the Securities Act, in
connection with such sales.
We have agreed to pay the filing fees, costs and expenses associated with
the registration statement exclusive of fees of counsel to the selling
stockholders, or any of them, but inclusive of fees relating to compliance with
any state blue sky requirements.
We have agreed to indemnify the selling stockholders, or their transferees
or successors against certain liabilities, including liabilities under the
Securities Act.
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DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the General Corporation Law of Delaware grants each
Delaware corporation the power to indemnify its officers, directors, employees
and agents against liabilities arising out of any action or proceeding to which
any of them is a party by reason of being such officer, director, employee or
agent. Our certificate of incorporation provides for the indemnification of our
officers, directors, employees and agents to the fullest extent permitted by the
General Corporation Law of Delaware. Insofar as indemnification for liabilities
arising under the Securities Act, may be permitted to directors, officers or
persons controlling the company pursuant to the provisions of Delaware law and
our certificate of incorporation, we have been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
LEGAL MATTERS
The validity of the shares offered in this prospectus is being passed upon
for us by Davis & Gilbert LLP, 1740 Broadway, New York, New York, 10019. Walter
M. Epstein, Esq., a member of the firm, owns 49,658 shares of common stock and
Davis & Gilbert LLP owns 18,471 shares of common stock.
EXPERTS
The consolidated balance sheet as of June 30, 1998 and the consolidated
statements of operations, stockholders' equity and cash flows for the years
ended June 30, 1998 and 1997 incorporated by reference in this prospectus, have
been incorporated herein in reliance on the report, which contains an
explanatory paragraph relating to our ability to continue as a going concern, of
Rothstein, Kass & Company, P.C., independent accountants. They are experts in
auditing and accounting and they have authorized us to include the foregoing in
this prospectus.
11
<PAGE>
================================================================================
Until ___________, 1999, all dealers that effect transactions in these
securities may be required to deliver a prospectus.
We have not authorized any person to give any information or to make any
representations other than those contained in this prospectus. You must not rely
upon any information or representation not contained or incorporated by
reference in this prospectus as if we had authorized it. If any person does make
a statement that differs from what is in this prospectus, you should not rely on
it. This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the securities to which they relate nor
does this prospectus constitute an offer to sell or the solicitation of an offer
to buy securities in any state or other jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. The
information contained in this prospectus is accurate as of the date of its
cover. When we deliver this prospectus or make a sale pursuant to this
prospectus, we are not implying that the information is current as of the date
of the delivery of the sale.
------------------------
TABLE OF CONTENTS
Page
----
Prospectus Summary ........................................................ 2
Risk Factors .............................................................. 5
Selling Stockholders ...................................................... 8
Plan of Distribution ...................................................... 10
Disclosure of Commission Position on Indemnification For
Securities Act Liabilities .............................................. 10
Legal Matters ............................................................. 11
Experts ................................................................... 11
================================================================================
================================================================================
1,237,380 Shares
PARADISE MUSIC
&
ENTERTAINMENT,
INC.
Common stock
--------------
PROSPECTUS
--------------
July 22, 1999
================================================================================
<PAGE>
INFORMATION NOT REQUIRED IN THE PROSPECTUS
The company will bear no expenses in connection with any sale or other
distribution by the selling stockholders of the shares being registered other
than the expenses of preparation and distribution of this registration statement
and the prospectus included in this registration statement. Such expenses are
set forth in the following table. All of the amounts are estimates except the
Securities and Exchange Commission filing fee.
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee ....................... $ 1,852
Accounting fees and expenses................ $ 2,500
Legal fees and expenses .................... $10,000
Printing expenses .......................... $ 3,000
Miscellaneous .............................. $ 2,648
Total ................................... $20,000
- -----------
Item 15. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law (the "DGCL"),
the company has broad powers to indemnify its directors, officers and other
employees. This section (i) provides that the provisions of the DGCL relating to
the statutory indemnification and advancement of expenses are not exclusive,
provided that no indemnification may be made to or on behalf of any director or
officer if a judgment or other final adjudication adverse to the director or
officer establishes that his acts were committed in bad faith or were the result
of active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled, (ii) establishes procedures for
indemnification and advancement of expenses that may be contained in the
certificate of incorporation or by-laws, or, when authorized by either of the
foregoing, set forth in a resolution of the stockholders or directors or an
agreement providing for indemnification and advancement of expenses, (iii)
applies a single standard for statutory indemnification for third-party and
derivative suits by providing that indemnification is available if the director
or officer acted in good faith, for a purpose which he reasonably believed to be
in the best interests of the company, and, in criminal actions, had no
reasonable cause to believe that his conduct was unlawful, and (iv) permits the
advancement of litigation expenses upon receipt of an undertaking to repay such
advance if the director or officer is ultimately determined not to be entitled
to indemnification or to the extent the expenses advanced exceed the
indemnification to which the director or officer is entitled. Section 145(g) the
DGCL permits the purchase of insurance to indemnify a corporation or its
officers and directors to the extent permitted.
As permitted by Section 145(e) of the DGCL, the company's by-laws provide
that the company shall indemnify its officers and directors, as such, to the
fullest extent permitted by applicable law, and that expenses reasonably
incurred by any such officer or director in connection with a threatened or
actual action or proceeding shall be advanced or promptly reimbursed by the
company in advance of the final disposition of such action or proceeding upon
receipt of an undertaking by or on behalf of such officer or director to repay
such amount if and to the extent that it is ultimately determined that such
officer or director is not entitled to indemnification.
Article Seventh of the company's certificate of incorporation provides
that no director of the company shall be held personally liable to the company
or its stockholders for damage for any breach of duty in his capacity as a
director unless a judgment or other final adjudication adverse to him
establishes that (1) he breached his duty of loyalty to the company or its
stockholders, or (2) his acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law, or (3) he personally
gained in fact a financial profit or other advantage to which he was not legally
entitled, or (4) his acts violated Section 174 of the DGCL.
II-1
<PAGE>
The company's by-laws provide that the company will indemnify its
directors, officers and employees against judgments, fines, amounts paid in
settlement and reasonable expenses.
The company has obtained and intends to maintain in effect liability
insurance for the benefit of its directors and officers.
Item 16. Exhibits.
Exhibit Description
- ------- -----------
1 Not Applicable
2 Not Applicable
4 Instruments defining the rights of security holders, including
indentures:
(A) Certificate of Incorporation, as amended (Incorporated by
reference to the company's registration statement on Form SB-2
(File No: 333-13941) effective January 22, 1997).
(B) By-Laws (Incorporated by reference to the company's
registration statement on Form SB-2 (File No: 333-13941)
effective January 22, 1997).
(C) Specimen Common stock certificate (Incorporated by reference
to the company's registration statement on Form SB-2 (File No:
333-13941) effective January 22, 1997).
(D) Specimen Warrant certificate (Incorporated by reference to the
company's registration statement on Form SB-2 (file No.
333-13941) effective January 22, 1997).
(E) Form of Warrant Agreement including form of Warrant
(Incorporated by reference to the company's registration
statement on Form SB-2 (file No. 333-13941) effective January
22, 1997).
(F) Form of Warrant Agreement between the company and Continental
Stock Transfer and Trust company (Incorporated by reference to
the company's registration statement on form SB-2 (file
No.333-13941) effective January 22, 1997).
(G) Form of Subscription Agreement covering the purchase of shares
by Cassandra investors at $4.25 per share.
5 Opinion of Davis & Gilbert LLP, filed herewith
8 Not Applicable
15 Not Applicable
23.1 Consent of Rothstein, Kass & Company, P.C., filed herewith
23.2 Consent of Davis & Gilbert LLP (included in the opinion filed as
Exhibit No. 5)
II-2
<PAGE>
24 Reference is made to the signature page
25 Not Applicable
26 Not Applicable
27 Not Applicable
99.1 Letter Agreement dated April 15, 1999 between the company and The
Cassandra Group, Inc.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any additional or changed material information with
respect to the plan of distribution:
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required in a post-effective amendment is incorporated by reference
from periodic reports filed with the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act").
(2) That, for the purpose of determining any liability under the
Securities Act, the undersigned will treat each such post-effective amendment as
a new registration statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering thereof.
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the company's
annual report pursuant to section 13(a) or section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the company, pursuant to the provisions described in Item 15 above, or
otherwise, the company has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the company of expenses incurred or paid by a director, officer or
controlling person of the company in the successful defense of any action, suit
or proceeding) is asserted by any such director, officer or controlling person
in connection with the securities being registered, the company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether or not
such indemnification is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be the initial bona fide
offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York in the State of
New York on July 19, 1999.
PARADISE MUSIC & ENTERTAINMENT, INC.
By /s/ Jesse Dylan
--------------------------------------
Jesse Dylan
Chairman of the Board and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each whose signature appears below
hereby severally constitutes and appoints Jesse Dylan and Richard Flynn and each
of them, his true and lawful attorneys-in-fact and agents, each acting alone,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign this registration statement
and any and all amendments (including post-effective amendments) to this
registration statement and all documents relating thereto, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone full power and authority to do and perform each and
every act and thing necessary or advisable to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or his
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ JESSE DYLAN Chairman of the Board and July 19, 1999
- --------------------------- Chief Executive Officer
Jesse Dylan and Director
/s/ RICHARD FLYNN Chief Operating Officer, Chief July 19, 1999
- --------------------------- Financial Officer, Treasurer,
Richard Flynn Secretary (Principal Financial
and Accounting Officer) and
Director
/s/ JAY MOLONEY President July 19, 1999
- ---------------------------
Jay Moloney
<PAGE>
/s/ JOHN LOEFFLER Chairman Emeritus July 19, 1999
- --------------------------- and Director
John Loeffler
/s/ JON SMALL Executive Vice President July 19, 1999
- --------------------------- and Director
Jon Small
/s/ BRIAN DOYLE Director July 19, 1999
- ---------------------------
Brian Doyle
Director July 19, 1999
- ---------------------------
Thomas J. Edelman
/s/ JEFFREY ROSEN Director July 19, 1999
- ---------------------------
Jeffrey Rosen
Paradise Music & Entertainment, Inc.
SUBSCRIPTION AGREEMENT
1. Subscription. The undersigned hereby subscribes for the number of
shares of common stock, $0.01 par value ("Common Stock"), of Paradise Music &
Entertainment, Inc. (the "Company"), designated in Annex A hereto (the
"Shares"), at a price of $4.25 per Share. Subject to the terms of this
Subscription Agreement, the undersigned hereby agrees to wire the purchase price
to an account specified by the Company immediately following acceptance of this
Subscription. This Subscription Agreement will only be accepted by the Company
in the event of receipt by the Company prior to May 30, 1999 of executed
Subscription Agreements by "accredited investors" (as defined below) to purchase
an aggregate of 942,000 shares at a purchase price of $4.25 per share
(collectively the "Requisite Subscriptions"). This date may be extended at the
sole option of the Company for up to an additional 60 days. This Subscription
Agreement, upon its execution by the undersigned and acceptance by the Company,
shall constitute an irrevocable binding agreement by the undersigned to
purchase, and the Company to issue, to the undersigned, the number of Shares set
forth herein on the terms and conditions set forth herein.
2. Risk Factors. The undersigned acknowledges receipt of the following
information (collectively, the "Offering Materials"): (i) the Risk Factors
attached as Annex B hereto; (ii) the Company's most recent Annual Report on Form
10-KSB, for the fiscal year ended June 30, 1998 (the "Form 10-K"); (iii) the
Company's most recent Quarterly Report on Form 10-QSB, for the fiscal quarter
ended December 31, 1998 (the Form 10-Q"); (iv) the Proxy Statement for the
Annual Meeting of Stockholders held on April 6, 1999 and (v) the Company's Press
Releases, dated April 23, 1999 and April 28, 1999. The undersigned acknowledges
and agrees that the Shares are being sold exclusively to "accredited investors."
The undersigned understands and acknowledges that the purchase of the Shares is
a highly speculative investment that involves a high degree of risk of loss due
to a number of significant risk factors, including those set forth on Annex B
attached hereto.
3. Representations, Warranties and Covenants of the Company. The Company
represents, warrants and covenants to the undersigned as follows:
(a) The Company agrees to promptly file a Registration Statement on Form
S-3 ("S-3") with the Securities and Exchange Commission (the "SEC" or the
"Commission") to register the Shares represented by this subscription promptly
following receipt by the Company of the Requisite Subscriptions. In the event
that the shares of Common Stock evidenced by this subscription have not been
effectively registered (i.e., so as to become freely tradable and unrestricted)
by the 120th day after the S-3 has been filed with the Commission, the Company
agrees that you can cancel this Subscription Agreement and resell the shares to
the Company, in which case the proceeds of your subscription will be returned to
you and you will have no further obligation to the Company.
(b) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, and has
all requisite corporate power and authority to (i) own, lease and operate its
properties and to carry on its business as described in the Offering Materials
and as currently conducted and (ii) to execute, deliver and perform its
obligations under this Subscription Agreement and to consummate the transactions
contemplated hereby.
(c) The Company is duly qualified to do business as a foreign corporation
and is in good standing in all jurisdictions where failure so to qualify could
have a material adverse effect on the
<PAGE>
business, properties, operations, condition (financial or other), results of
operations or, to the best of the Company's knowledge after due inquiry,
prospects of the Company.
(d) Since June 30, 1998, the Company has not sustained any loss or
interference with its business or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, which loss or
interference would be material to the business, properties, operations,
condition (financial or other), results of operations or, to the best of the
Company's knowledge after due inquiry, prospects of the Company.
(e) The Shares have been duly authorized and, when issued and delivered
against payment therefor as provided in the Subscription Agreement, will be duly
and validly issued, fully paid and non-assessable and will not subject the
holder thereof to personal liability by reason of being such holder. No holders
of outstanding shares of Common Stock are entitled to preemptive or other rights
to subscribe for the Shares. The Common Stock is listed for trading on the
Nasdaq Small Cap Market ("Nasdaq") and on the Boston Stock Exchange (the "BSE")
and (i) the Company and the Common Stock meet the criteria for continued listing
and trading on Nasdaq, (ii) the Company has not been notified since February 18,
1999 by the National Association of Security Dealers, Inc. of any failure or
potential failure to meet the criteria for continued listing and trading on
Nasdaq and (iii) no suspension of trading in the Common Stock is in effect. To
the Company's knowledge after due inquiry, the Shares are eligible for listing
on Nasdaq. No approval of stockholders is required for the sale or issuance of
the Shares.
(f) This Subscription Agreement has been duly and validly authorized by
the Company; this Subscription Agreement has been duly executed and delivered by
the Company and, assuming due execution and delivery by the undersigned, this
Subscription Agreement is a valid and binding obligation of the Company
enforceable in accordance with its terms.
(g) The execution and delivery of this Subscription Agreement by the
Company, the issuance of the Shares and the consummation by the Company of the
other transactions contemplated by this Subscription Agreement do not and will
not, with or without the giving of notice of the lapse of time, or both, (i)
result in any violation of any term of the certificate of incorporation or
by-laws of the Company, (ii) result in a material breach by the Company of any
of the terms or provisions of, or constitute a default under, or result in the
modification of, or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to, any indenture, mortgage, deed of trust or other agreement
or instrument to which the Company is a party or by which the Company or any of
its properties or assets are bound or affected, (iii) violate or contravene any
applicable law, rule or regulation or any applicable decree, judgment or order
of any court, United States federal or state regulatory body, administrative
agency or other governmental body having jurisdiction over the Company or any of
its properties or assets or (iv) have any material adverse effect on any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company to own or lease and operate any of its properties and to conduct
any of its businesses or the ability of the Company to make use thereof.
(h) No authorization, approval or consent of, or filing with, any court,
governmental body, regulatory agency self-regulatory organization, or stock
exchange or market is required to be obtained or made by the Company in
connection with the execution, delivery and performance of this Subscription
Agreement, other than (i) listing of the Shares on Nasdaq and the Boston Stock
Exchange, (ii) registration of the resale of the Shares under the Securities Act
as contemplated by Section 3(a) of this Subscription Agreement, (iii) as may be
required under applicable state securities or "blue sky" laws and (iv) filing of
one or more Forms D with respect to the Shares as required under Regulation D of
the Securities Act.
2
<PAGE>
(i) The Offering Materials do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, it being understood that for purposes of this Section 3(i), any
statement contained in such information shall be deemed to be modified or
superseded for purposes of this Section 3(i) to the extent that a statement in
any document included in such information which was prepared or filed with the
SEC on a later date modifies or replaces such statement, whether or not such
later prepared or filed statement so states.
(j) Except as set forth in the Offering Materials, since December 31,
1998, the Company has not (i) incurred any material obligation or liability
(absolute or contingent) other than in the ordinary course of business; (ii)
canceled, without payment in full, any material notes, loans or other
obligations receivable or other debts or claims held by it other than in the
ordinary course of business; (iii) sold, assigned, transferred, abandoned,
mortgaged, pledged or subjected to lien any of its material properties, tangible
or intangible, or rights under any material contract, permit, license or
franchise other than in the ordinary course of business; (iv) conducted its
business in a manner materially different from its business as conducted on such
date; or (v) declared, made or paid or set aside for payment any cash or
non-cash distribution on any shares of Common Stock. Except as disclosed in the
Offering Materials, the Company owns, possesses or has obtained all
governmental, administrative and third party licenses, permits, certificates,
registrations, approvals, consents and other authorizations necessary to own or
lease (as the case may be) and operate its properties, whether tangible or
intangible, and to conduct its business or operations as currently conducted,
except such licenses, permits, certificates, registrations, approvals, consents
and authorizations the failure of which to obtain would not have a material
adverse effect on the business, properties, operations, condition (financial or
other), results of operations or, to the best of the Company's knowledge after
due inquiry, prospects of the Company.
(k) The Company has timely filed all reports required to be filed under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
any other material reports or documents required to be filed with the SEC during
the one year period prior to the date hereof. All of such reports and documents
complied, when filed, in all material respects, with all applicable requirements
of the Securities Act and the Exchange Act. The Company meets the requirements
for the use of Form S-3 for the registration of the resale of the Shares by the
undersigned and any other investor.
(l) Except as described in the Offering Materials, there is no action,
suit, proceeding, inquiry or investigation before or by any court, public board
or body pending or, to the knowledge of the Company after due inquiry,
threatened against or affecting the Company wherein an unfavorable decision,
ruling or finding could have a material adverse effect on the business,
properties, operations, condition (financial or other), results of operations
or, to the best of the Company's knowledge after due inquiry, prospects of the
Company or the transactions contemplated by this Subscription Agreement or which
could adversely affect the validity or enforceability of, or the authority or
ability of the Company to perform its obligations under, this Subscription
Agreement; the Company does not have pending before the SEC any request for
confidential treatment of information and, to the best of the Company's
knowledge after due inquiry, there is not pending or contemplated, and there has
been no, investigation by the SEC involving the Company or any director or
officer of the Company.
(m) Except as and to the extent disclosed, reflected or reserved against
in the financial statements of the Company as of December 31, 1998 and the notes
thereto included in the Offering Materials, the Company does not have any
material (individually or in the aggregate) liabilities, debts or obligations
whether accrued, absolute, contingent or otherwise, and whether due or to become
due. Subsequent to December 31, 1998, the Company has not incurred any
liabilities, debts or obligations of any nature whatsoever which are
individually or in the aggregate material to the Company, other than those
incurred in the ordinary course of its business.
3
<PAGE>
(n) Since December 31, 1998, there has been no material adverse change and
no material adverse development in the business, properties, operations,
condition (financial or other), results of operations or, to the best of the
Company's knowledge after due inquiry, prospects of the Company, except as
disclosed in the Offering Materials.
(o) The Company maintains a system of internal accounting controls meeting
the requirements of Section 13(b)(2) of the Exchange Act in all material
respects.
(p) The Company is not in violation of any statute, law, rule, regulation,
ordinance, decision or order of any governmental agency or body or any court,
domestic or foreign, including, without limitation, those relating to the use,
operation, handling, transportation, disposal or release of hazardous or toxic
substances or wastes or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances or wastes, except
where such violation would not individually or in the aggregate have a material
adverse effect on the business, properties, operations, condition (financial or
other), results of operations or, to the best of the Company's knowledge after
due inquiry, prospects of the Company; and the Company is not aware of any
pending investigation which would reasonably be expected to lead to such a
claim.
(q) Except as disclosed in the Offering Materials, the Company has good
title to all property real and personal (tangible and intangible) and other
assets owned by it, free and clear of all security interests, charges,
mortgages, liens or other encumbrances, except such as are described in the
Offering Materials or such as do not materially interfere with the use of such
property made, or proposed to be made, by the Company. The leases, licenses or
other contracts or instruments under which the Company leases, holds or is
entitled to use any property, real or personal, are valid, subsisting and
enforceable with only such exceptions as do not materially interfere with the
use of such property made, or proposed to be made by the Company. The Company
has not received notice of any material violation of any applicable law,
ordinance, regulation, order or requirement relating to its owned or leased
properties.
(r) No material labor problem exists or, to the knowledge of the Company,
is imminent with respect to any of the employees of the Company.
(s) The Company maintains insurance against loss or damage by fire or
other casualty and such other insurance in such amounts and covering such risks
as is customarily maintained by companies of comparable size engaged in the same
or a similar business and in the same geographic region as the Company.
(t) The Company has filed all federal, state and local income and
franchise tax returns required to be filed and has paid all taxes shown by such
returns to be due, and no tax deficiency has been determined adversely to the
Company which has had (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company, might have) a material
adverse effect on the business, properties, operations, conditions (financial or
other), results of operations, or, to the best of the Company's knowledge after
due inquiry, prospects of the Company.
(u) The Company is not an "investment company" within the meaning of such
term under the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
4. Representations and Warranties of the Undersigned. The undersigned
represents and warrants to the Company as follows:
4
<PAGE>
(a) The undersigned acknowledges and agrees that the issuance of the
Shares has not been registered under the Securities Act and that the Shares are
being offered exclusively to "accredited investors," as such term is defined in
Regulation D promulgated under the Securities Act, in reliance on Rule 506 of
Regulation D promulgated thereunder. The undersigned is an "accredited investor"
for the reasons included in Annex C attached hereto. Either the undersigned or
its representative has been supplied with or has sufficient access to all
information, including financial statements and other financial information of
the Company including, its most recent Form 10-KSB for the fiscal year ended
June 30, 1998 and Form 10-QSB for the quarter ended December 31, 1998, and has
been afforded with an opportunity to ask questions of and receive answers from
any officer of the Company concerning information which a reasonable investor
would attach significance in making investment decisions.
(b) The undersigned will not sell or otherwise transfer any Shares until
after the effective date of the S-3 provided for in Section 3(a) above or unless
and until an exemption therefrom is available. The undersigned understands and
agrees that the undersigned must bear the economic risk of the undersigned's
purchase for an indefinite period of time because, among other reasons, the
Shares have not currently been registered under the Securities Act or under the
securities laws of any states and, therefore, cannot be resold, pledged,
assigned or otherwise disposed of unless the securities are subsequently
registered under the Securities Act and qualified under applicable securities
laws of such states or unless an exemption from such registration is available.
The undersigned is purchasing the Shares for the undersigned's own account, for
investment and not with a view to resale or distribution except in compliance
with the Securities Act. The undersigned is aware that an exemption from the
registration requirements of the Securities Act pursuant to Rule 144 promulgated
thereunder is not currently available; that the Company has no obligation to
make available an exemption from the registration requirements pursuant to such
Rule 144 or any successor rule for resale of the Shares; and that even if an
exemption under Rule 144 were available, Rule 144 permits only routine sales of
securities in limited amounts in accordance with the terms and conditions of
such Rule 144.
(c) The undersigned agrees that, prior to the effectiveness of the S-3
registering the resale of the shares of Shares being purchased hereunder, a
legend may be placed on any certificate or other document evidencing the Shares
stating that they have not been registered under the Securities Act (and a stop
transfer order may be placed with respect thereto).
(d) If the undersigned is a corporation, partnership, or other entity:
(i) it was not organized or reorganized for the purpose of
purchasing the shares, and
(ii) it is authorized, empowered and qualified to execute this
Subscription Agreement and to make the commitment as herein
contemplated.
(e) The undersigned has, alone or together with his, her or its purchaser
representative, if any, such knowledge and experience in financial and business
matters so that the undersigned is capable of evaluating the relative merits and
risks of purchasing the Shares. The undersigned has adequate means of providing
for his, her or its current economic needs and possible personal contingencies.
5. Covenants of the Company. In the event of any registration of any of
the Shares under the Securities Act pursuant to this Subscription Agreement, the
Company will indemnify and hold harmless the undersigned against any losses,
claims, damages, liabilities or expenses to which the undersigned may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material
5
<PAGE>
fact contained in any Registration Statement under which such Shares were
registered under the Securities Act, any Prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon any untrue statement or
omission made in such Registration Statement, Prospectus, or any such amendment
or supplement, in reliance upon and in conformity with information furnished to
the Company, by or on behalf of the undersigned, for use in the preparation
thereof.
6. Conditions to Obligations of Subscriber. The obligation of the
undersigned to pay the purchase price is subject to receipt by The Cassandra
Group, Inc. on behalf of the undersigned of (i) an opinion of Davis & Gilbert
LLP with respect to the matters referred to in Annex D attached hereto and (ii)
a certificate of an officer of the Company stating that (a) the representations
and warranties of the Company set forth in this Subscription Agreement are true
and correct as of the closing date with the same effect as though such
representations and warranties had been made on the closing date and (b) all
covenants of the Company set forth in this Subscription Agreement required to
have been performed prior to the closing shall have been duly performed.
7. General. This Subscription Agreement (i) may only be modified by a
written instrument executed by the undersigned and the Company; (ii) sets forth
the entire agreement of the undersigned and the Company with respect to the
subject matter hereof; (iii) supersedes all prior communications between the
undersigned and the Company, whether oral or written; (iv) shall be governed by
the laws of the State of New York applicable to contracts made and to be wholly
performed therein; and (v) shall inure to the benefit of, and be binding upon
the Company and the undersigned and their respective heirs, legal
representatives, successors and assigns. Unless the context otherwise requires,
all personal pronouns used in this Subscription Agreement, whether in the
masculine, feminine or neuter gender, shall include all other genders.
Descriptive headings are for convenience only and shall not control or affect
the meaning or construction of any provision of this Subscription Agreement.
8. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
mailed by certified or registered mail, return receipt requested, postage
prepaid, as follows: if to the undersigned, to the address set forth in Annex A
hereto; and if to the Company, to Paradise Music & Entertainment, Inc., 53 West
23rd Street, New York, New York 10010.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as the date first stated above.
SUBSCRIBER:
If by an individual:
------------------------------------
Print Name:
If by a corporation, partnership or other entity:
------------------------------------
Insert name of entity
By
----------------------------------
Print Name:
Print Title:
This Subscription is accepted by Paradise Music & Entertainment, Inc. as of
this ___ day of ______, 1999.
PARADISE MUSIC & ENTERTAINMENT, INC.
By
----------------------------------
Print Name:
Print Title:
7
<PAGE>
Annex A
Name and Address of Subscriber:
[Cassandra to insert]
Minimum Subscription: _____________ Shares ($___ total investment)
Maximum Subscription: _____________ Shares ($___ total investment)*
* If you wish to designate a
lower or higher maximum
subscription, please indicate as
follows:________________________
* * *
The Subscription Agreement to which this Annex A is attached is one of several
subscription agreements mailed to clients of The Cassandra Group, Inc.
("Cassandra") with respect to an aggregate offering of 942,000 Shares. In the
event that any such client does not subscribe for the minimum number of Shares
allocated to such client for whatever reason, Cassandra shall have the right to
reallocate all or a portion of such Shares to the above-named Subscriber, up to
the maximum subscription specified above. The amount of the above-named
Subscriber's subscription, if it is to be above the minimum subscription
specified above, will be finally determined by Cassandra.
Exhibit 5.1
[Letterhead of Davis & Gilbert LLP]
July 20, 1999
VIA FEDERAL EXPRESS
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: Paradise Music and Entertainment, Inc.
Ladies and Gentlemen:
We have acted as counsel to Paradise Music & Entertainment, Inc., a
Delaware corporation (the "Company") in connection with the registration
pursuant to a Registration Statement on Form S-3 (the "Registration Statement")
under the Securities Act of 1933, as amended, of an aggregate of 1,237,380
shares of Common Stock of the Company, par value $.01 per share ("Common
Stock").
In connection with this opinion, we have examined originals, or
copies certified to our satisfaction, of the certificate of incorporation of the
Company, as amended, the By-Laws of the Company, as amended, the minutes and
other records of the proceedings of the Board of Directors and of the
stockholders of the Company, and such other documents, corporate and public
records, agreements, and certificates of officers of the Company and of public
and other officials, and we have considered such questions of law, as we have
deemed necessary as a basis for the opinions hereinafter expressed. In such
examination we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as certified or photostatic
copies.
Based on and subject to the foregoing, we hereby advise you that, in
our opinion, the shares of Common Stock to be sold pursuant to the Registration
Statement have been duly authorized and validly issued, and following receipt of
the purchase price, will be fully-paid and nonassessable.
Please be advised that this law firm owns 18,471 shares, and Walter
Epstein, a partner of this firm, owns 49,658 shares, of the Common Stock.
We hereby consent to the use and filing of this opinion in
connection with the Registration Statement and to the reference to our firm
under the caption "Legal Matters" in the Registration Statement and in the
related prospectus.
Very truly yours,
Davis & Gilbert LLP
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Paradise Music & Entertainment, Inc. on Form S-3 of our report, which contains
an explanatory paragraph relating to the company's ability to continue as a
going concern, dated July 28, 1998 except as to Notes 6 and 13 which are as of
August 6, 1998 and October 6, 1998, respectively, on our audits of the
consolidated financial statements of Paradise Music & Entertainment, Inc. as of
June 30, 1998 and for the years ended June 30, 1998 and 1997. We also consent to
the reference to our firm under the caption "Experts."
Rothstein, Kass & Company, P.C.
Roseland, New Jersey
July 20, 1999
The Cassandra Group, Inc.
561 Broadway, Suite 8C
New York, New York 10012-3918
April 15, 1999
Board of Directors
Paradise Music & Entertainment, Inc.
53 West 23rd Street, 11th Floor
New York, New York 10010
Gentlemen:
Re: Purchase of Paradise Music & Entertainment, Inc. ("Paradise") Common Stock
This letter contains the material business terms to be incorporated into
definitive common stock subscription agreement(s) (the "Definitive
Agreement(s)") pursuant to which we have agreed to purchase, for the benefit of
our clients (the "Investors") 942,000 Paradise Shares at $4.25 per Paradise
Share. This letter sets forth our mutual intent and understanding, but is not
meant to be binding upon either party (except for Sections 3(a) and (b) which
shall be binding) unless and until we both execute and deliver Definitive
Agreements covering the subject matter discussed below. If either party decides
that it no longer wishes to pursue the transaction contemplated hereunder for
any reason, such terminating party shall give the other party prompt written
notice to such effect. The Definitive Agreements will cover the following
material terms:
Section 1: Sale of Paradise Shares.
Paradise, a Delaware corporation, will sell the Investors an aggregate of
942,000 Paradise Shares at $4.25 per Paradise Share for an aggregate of
$4,003,500. Such sale shall be on the terms set forth in the term sheet annexed
hereto which is incorporated herein by reference with the same force and effect
as if recited herein its entirety. The Paradise Shares shall be sold in such
increments and in the names of the Investors as we direct. The Paradise Shares
will be sold to Investors pursuant to an exemption under Section 4(2) of the
Securities Act of 1933, as amended (the "Act"). All Investors will qualify as
"Accredited Investors". We will provide you with the names of the Investors, the
amounts of their subscriptions, their addresses and social security numbers. As
soon as you have received irrevocable Definitive Agreements for $4,003,500 in
the aggregate, documentation evidencing the qualification of all such Investors
as Accredited Investors
<PAGE>
and payment in the amount of $4,003,500 you will promptly file a registration
statement on Form S-3 relating to the Paradise Shares being sold thereunder
("Registration Statement"). You shall use your best efforts to have the
Registration Statement declared effective as promptly as possible. Upon the
effective date of the Registration, the full amount subscribed under the
Definitive Agreements will be paid by the Investors and the Paradise Shares will
be delivered to the Investors. This financing is conditioned upon the receipt of
irrevocable subscriptions having been received by Paradise from investors of The
Cassandra Group covering the purchase of 572,000 Paradise shares at $7 per
share.
Section 3: Miscellaneous.
(a) The parties represent, warrant and covenant to each other that no
party is entitled to any broker's or finder's fee in connection with the
transaction contemplated hereby. Paradise (and each of its executive officers
and directors, regardless of whether they are executing counterparts of this
letter), agree that they will not, jointly or severally, undertake or engage in
any discussions or negotiations with any third party or otherwise solicit
interest with respect to the sale or financing of Paradise, its assets, its
businesses, or any transaction involving the sale of all or substantially all of
the stock or assets of Paradise, or any other arrangement or understanding which
would adversely effect the ability of paradise to consummate the transaction as
contemplated hereunder or diminish the worth of its business or assets in any
way for a period of five(5) months from the date of the execution of this letter
agreement.
(b) The parties agree that they shall not issue any press releases or make
any public statements relating to the execution of this letter or the
transactions contemplated hereby without first receiving the consent of the
other party hereto, such consent not to be unreasonably withheld. The content of
any such press release or statement shall be subject to the reasonable prior
review and comment by the other party and their counsel.
(c) Except as set forth in the attached term sheet, the parties agree to
bear all of their respective expenses in connection herewith and in consummating
the transactions contemplated hereby.
(d) This letter (including the term sheet annexed hereto) sets forth the
entire agreement among the parties with respect to the subject matter hereof,
and supersedes all prior consistent and inconsistent agreements, written or
oral, with respect thereto.
(d) This letter may be amended, modified, superseded, canceled, renewed or
extended, and the terms and conditions hereof may be waived, only by a written
instrument signed by each of the parties hereto, or in the case of a waiver,
signed by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial
2
<PAGE>
exercise of any right, power or privilege hereunder, preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
(f) This letter shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles of conflicts
of law.
(g) This letter is not assignable except by operation of law or as
specifically set forth herein.
(h) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the identity of the person or persons
may require.
(i) This letter 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.
(j) Paradise will provide the Investors with any information they may
request concerning this investment.
If the above is satisfactory to you and adequately reflects our understanding,
please acknowledge by executing in the space below provided.
THE CASSANDRA GROUP, INC.
By:
------------------------------
Dana Giacchetto, President
AGREED TO AND ACCEPTED BY:
PARADISE MUSIC & ENTERTAINMENT, INC.
By:
------------------------------
Name:
Title:
