UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
MDI Entertainment, Inc.
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(Name of Issuer)
Common Stock, $0.001 par value
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(Title of Class of Securities)
552685109
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(CUSIP Number)
David A. Broadwin, Esq.
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, MA 02109
(617) 832-1000
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 4, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 552685109 PAGE 2 OF 6 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
International Capital Partners LLC 043451613
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO (investment funds)
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
number of
2,027,000
shares ------------------------------------------------------
8 SHARED VOTING POWER
beneficially
owned by 0
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each 9 SOLE DISPOSITIVE POWER
reporting
2,027,000
person ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
with
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,027,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.7%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP NO. 552685109 PAGE 3 OF 6 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jean Luc Dormoy
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(D) OR 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
France
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7 SOLE VOTING POWER
number of
2,027,000
shares ------------------------------------------------------
8 SHARED VOTING POWER
beneficially
owned by 0
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each 9 SOLE DISPOSITIVE POWER
reporting
2,027,000
person ------------------------------------------------------
10 SHARED DISPOSITIVE POWER
with
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,027,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.7%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
ITEM 1. SECURITY AND ISSUER
This statement relates to the common stock, $0.001 par value, of MDI
Entertainment, Inc., a Delaware corporation (the "Company"). The address of the
Company's principal executive offices is 201 Ann Street, Hartford, CT 06103.
ITEM 2. IDENTITY AND BACKGROUND
The persons filing this statement are International Capital Partners,
LLC, a limited liability company organized under the laws of Delaware ("ICP")
and Mr. Jean Luc Dormoy, the beneficial owner of the 2,027 shares of the Series
A Preferred Stock, $0.01 par value per share, of the Company (the "Preferred
Stock"). The address of ICP's principal executive offices is 50 Feeeral Street,
Suite 500, Boston, MA 02110 and the address for Mr. Dormoy is the same. Mr.
Dormoy is a citizen of France. Neither Mr. Dormoy nor ICP has been convicted in
any proceeding of the character identified in Item 2(d) nor been a party to a
civil proceeding of the character described in Item 2(e).
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The sources of funds for the purchase of the stock described herein are
the personal funds of Mr. Dormoy.
ITEM 4. PURPOSE OF TRANSACTION
ICP purchased 2,027 shares of Series A Preferred Stock of the Company
pursuant to a Stock Purchase Agreement entered into by and between ICP and the
Company dated August 4, 1999. The shares of the Preferred Stock are purchased
for investment purposes. Mr. Dormoy and ICP will continue to review this
investment and may at some future time either increase or decrease the level of
investment, depending on investment objectives, the performance of the Company,
the regional economy and other factors. Except as stated above, none of Mr.
Dormoy and ICP has any present plans or proposals that would relate to or result
in any of the changes or actions described in this Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
ICP owns 2,027 shares of Preferred Stock of the Company, which are
convertible at any time at the option of ICP into 2,027,000 shares of Common
Stock of the Company, subject to adjustments for stock splits, stock
combination, stock dividends, recapitalization and the like and certain other
events. Based on the Company's 10-QSB for the quarterly period ended February
28, 1999, there are 7,776,500 shares of Common Stock issued and outstanding as
of April 14, 1999. The 2,027 shares of Preferred Stock therefore would account
for approximately 20.7% of of the Common Stock of the Company as of April 14,
1999 on a as converted basis. Mr. Dormoy, as beneficial owner of 2,027 shares of
the Preferred Stock of ICP has sole voting and dispositive power with respect to
such shares.
Page 4 of 6
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER
ICP has entered into a Stock Purchase Agreement and a Registration
Rights Agreement with the Company, pursuant to which ICP acquired 2,027 shares
of the Preferred Stock of the Company. The 2,027 shares are convertible into
2,027,000 shares of the Common Stock of the Company, subject to adjustments for
stock splits, stock combination, stock dividends and recapitalization and the
like and certain other events. The shares of the Preferred Stock and the
underlying Common Stock are not registered under the Securities Act of 1933, as
amended, but ICP was granted certain rights pursuant to the Registration Rights
Agreement to cause the Company to register shares of the Common Stock into which
the shares of the Preferred Stock are convertible.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT 1. Stock Purchase Agreement dated August 4, 1999 by and between
International Capital Partners and MDI Entertainment, Inc.
EXHIBIT 2. Registration Rights Agreement dated August 4, 1999 by and between
International Capital Partners and MDI Entertainment, Inc.
Page 5 of 6
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
August 26, 1999
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(Date)
INTERNATIONAL CAPITAL PARTNERS LLC
By: Mack Obiaha, Managing Director
/s/ Mack Obioha
-----------------------------------
/s/ Jean Luc Dormoy
Page 6 of 6
EXHIBIT 1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of the 4th day of
August, 1999, by and between MDI Entertainment, Inc., a Delaware corporation
(the "Corporation"), with its principal place of business located at 201 Ann
Street, Suite 210, Hartford, Connecticut 06103, and International Capital
Partners, LLC (the "Investor").
WHEREAS, the Investor wishes to purchase from the Corporation, and the
Corporation wishes to sell to the Investor, certain shares of the Corporation's
Series A Preferred Stock; and
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
SECTION 1. Filing of Certificate of Designation; Reservation of Shares
of Common Stock.
(a) Immediately prior to the execution and delivery of this
Agreement, the Corporation filed with the Secretary of State of Delaware a
Certificate of Designation, Preferences and Rights of Series A Preferred Stock
of the Corporation (the "Certificate of Designation"), a copy of which is
included in Exhibit 1.1 hereto (the Certificate of Incorporation of the
Corporation, as amended by the Certificate of Designation and in effect on the
date hereof, being hereinafter referred to as the "Certificate of
Incorporation").
(b) The Corporation has authorized and reserved and covenants
to continue to reserve, free and clear of preemptive and other preferential
rights, a sufficient number of its previously authorized but unreserved shares
of Common Stock, par value $.001 per share (the "Common Stock"), to satisfy the
rights of conversion of the holders of the Series A Preferred Stock.
SECTION 2. Purchase and Sale of the Series A Preferred Stock. The
Corporation agrees to sell to the Investor, and the Investor agrees to purchase
from the Corporation, at the Closing (as hereinafter defined) and upon the terms
and conditions hereinafter set forth, 2,027 number of shares of Series A
Preferred Stock (the "Shares"). The purchase price for the Shares to be sold
pursuant to this Agreement shall be $863.33 per share so purchased.
SECTION 3. Delivery of the Shares and Other Documents. The closing
hereunder with respect to the transactions with the Investor contemplated hereby
(the "Closing") shall take place at the offices of Foley, Hoag & Eliot LLP, One
Post Office Square, Boston, Massachusetts 02109, on July 28, 1999 at 10:00 a.m.
Boston Time or at such other mutually agreed to time. At the Closing, the
Corporation shall deliver to the Investor a stock certificate,
<PAGE>
registered in the name of the Investor, representing the Shares. Delivery to the
Investor shall be made against receipt by the Corporation of the full amount of
the purchase price for the Shares being purchased by the Investor hereunder by
check payable to the order of the Corporation or by wire transfer of immediately
available funds to an account specified in writing by the Corporation.
SECTION 4. Use of Proceeds. The Corporation shall use the proceeds from
the sale of the Shares to fund operating losses, to purchase capital equipment
necessary for operations and to fund the Corporation's general working capital
needs.
SECTION 5. Representations and Warranties of the Corporation. The
Corporation hereby represents and warrants to the Investor as follows:
5.1 Organization. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and lease
its properties, to carry on its business as presently conducted and as proposed
to be conducted and to carry out the transactions contemplated hereby. The
Corporation is duly qualified as a foreign corporation and is in good standing
in all such other jurisdictions (which jurisdictions are listed in Exhibit 5.1)
in which the conduct of its business or its ownership or leasing of property
requires such qualification and in which the failure so to qualify or so to be
in good standing would have a materially adverse effect on the Corporation's
operations or financial condition.
5.2 Capitalization. The entire authorized capital stock of the
Corporation and the rights to acquire capital stock of the Corporation consists
of:
(a) 25,000,000 shares of Common Stock of which 7,776,500
shares have been duly and validly issued and are outstanding, fully
paid and nonassessable, (ii) 2,027,000 shares have been reserved for
issuance upon conversion of the Series A Preferred Stock, and (iii) no
shares are held as treasury shares;
(b) 2,027 shares of Series A Preferred Stock of which (i)
prior to the Closing, no shares were issued and outstanding and (ii)
2,027 shares will be held by the Investor after the Closing and will,
upon issuance in accordance with this Agreement, have been duly and
validly issued and be outstanding, fully paid and nonassessable; and
(c) Exhibit 5.2(c)
5.3 Equity Investments. Except as disclosed in Exhibit 5.3,
the Corporation has never had, nor does it currently own, any capital stock or
other proprietary interest, directly or indirectly, in any corporation,
association, trust, partnership, joint venture or other entity.
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5.4 Reporting Company Status. The Corporation has registered
its Common Stock pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the Common Stock is listed and traded on
the NASDAQ/OTC Bulletin Board. The Company has timely filed all material
required to be filed pursuant to all reporting obligations under either Section
13(a) or 15(d) of the Exchange Act, and has received no notice, either oral or
written, with respect to the continued eligibility of the Common Stock for such
listing.
5.5 SEC Filings. None of the documents filed by the
Corporation with the Securities and Exchange Commission (the "SEC") pursuant to
the Securities Act of 1933, as amended (the "Securities Act") and the Exchange
Act since September 28, 1998 (collectively, the "SEC Documents") at the time
they were filed, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The Corporation has timely filed all requisite forms,
reports and exhibits thereto with the SEC.
5.6 Financial Statements. The Corporation has furnished to the
Investor the audited balance sheet of the Corporation as of May 31, 1998 and the
related statements of operation, stockholders' equity and cash flow of the
Corporation, together with related schedules and notes, if any, for the year
ended May 31, 1998, and the unaudited balance sheet of the Corporation as of
February 28, 1999 (the "Balance Sheet") and the related unaudited statements of
operation, stockholders' equity and statements of cash flow of the Corporation
for the 9 months then ended ("Statement of Operations"). The Balance Sheet and
the Statement of Operations (the "Financial Statements") have been prepared in
accordance with generally accepted accounting principles consistently applied.
The Balance Sheet fairly presents, in all material respects, the financial
position of the Corporation as of its date, and the Statement of Operations
fairly presents the results of operations of the Company for the period therein
set forth.
5.7 Absence of Liabilities. Except as set forth in the Balance
Sheet or disclosed in the SEC documents and except for obligations and
liabilities incurred since February 28, 1999 in the ordinary course of business,
the Corporation has no material obligation or liability (absolute, accrued or
contingent) as of the date hereof.
5.8 Absence of Changes. Except as disclosed in the SEC
Documents, since February 28, 1999 there has not been (a) any material adverse
change in the financial condition, results of operations, assets, liabilities,
business or prospects of the Corporation, (b) any material asset or property of
the Corporation made subject to a lien of any kind, (c) any waiver of any
valuable right of the Corporation, or the cancellation of any material debt or
claim held by the Corporation, (d) any payment of dividends on, or other
distribution with respect to, or any direct or indirect redemption or
acquisition of, any shares of the capital stock of the Corporation, or any
agreement or commitment therefor, (e) any mortgage, pledge or hypothecation of
any tangible or intangible asset of the Corporation, except in the ordinary
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course of business, (f) any sale or assignment of any tangible asset of the
Corporation having a book value in excess of $10,000, except in the ordinary
course of business, (g) any loan by the Corporation to, or any loan to the
Corporation from, any officer, director, employee or stockholder of the
Corporation, or any agreement or commitment therefor, (h) any damage,
destruction or loss (whether or not covered by insurance) materially and
adversely affecting the assets, property or business of the Corporation, or (i)
any change in the accounting methods or practices followed by the Corporation.
5.9 Intellectual Property Rights. Except in each case as set
forth in Exhibit 5.9:
(a) the Corporation has the right to use the Intellectual
Property Rights (as hereinafter defined) necessary or required for the
conduct of its business as presently conducted or as proposed to be
conducted, free and clear of all rights of others. A complete list of
all Intellectual Property Rights, including all licenses, contract
rights and registrations or applications therefor, is set forth in
Exhibit 5.9;
(b) no royalties or other amounts are payable by the
Corporation to other persons by reason of the ownership or use of said
Intellectual Property Rights;
(c) to the best of the Corporation's knowledge, no product
marketed or sold or proposed to be marketed or sold by the Corporation
violates or will violate any license or infringes any Intellectual
Property Rights of another;
(d) the Corporation has not received any notice that any of
such Intellectual Property Rights or the operation or proposed
operation of the Corporation's business conflicts or will conflict with
the rights of others, nor is the Corporation aware of any reasonable
basis to believe that any such violation, infringement or conflict will
or may exist; and
(e) the Corporation has taken reasonable measures to protect
and preserve the security, confidentiality and value of its
Intellectual Property Rights, including its trade secrets and other
confidential information. To the best knowledge of the Corporation, all
trade secrets and other confidential information of the Corporation are
presently valid and protectible and are not part of the public domain
or knowledge, nor, to the best knowledge of the Corporation, have they
been used, divulged or appropriated for the benefit of any person other
than the Corporation or otherwise to the detriment of the Corporation.
As used herein, the term "Intellectual Property Rights" means all
patents, trademarks, service marks, trade names, copyrights, inventions, trade
secrets, proprietary processes and formulae, applications for patents,
trademarks, service marks and copyrights, and other industrial and intellectual
property rights.
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<PAGE>
5.10 Proprietary Information of Third Parties. To the best of
the Corporation's knowledge, no third party has claimed or has reason to claim
that any person employed by or affiliated with the Corporation has (a) violated
or may be violating any of the terms or conditions of his or her employment,
non-competition, non-disclosure or inventions agreement with such third party,
(b) disclosed or may be disclosing or utilized or may be utilizing any trade
secret or proprietary information or documentation of such third party or (c)
interfered or may be interfering in the employment relationship between such
third party and any of its present or former employees. No third party has
requested information from the Corporation which suggests that such a claim
might be contemplated. To the best of the Corporation's knowledge, no person
employed by or affiliated with the Corporation has employed or proposes to
employ any trade secret or any information or documentation proprietary to any
former employer, and, to the best of the Corporation's knowledge, no person
employed by or affiliated with the Corporation has violated any confidential
relationship which such person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of the Corporation,
and the Corporation has no reason to believe there will be any such employment
or violation.
5.11 Litigation. Except as set forth in Exhibit 5.11, there is
no action, suit, claim, proceeding or investigation, at law, in equity or
otherwise, or by or before any governmental instrumentality or other agency, now
pending, or, to the Corporation's knowledge, threatened against or affecting the
Corporation, nor, to the Corporation's knowledge, does there exist any
reasonable basis therefor, which in either case could reasonably be expected to
have a material effect on the Corporation.
5.12 No Defaults. The Corporation is not in violation or
breach of, or in default under, any provision of (a) the Certificate of
Incorporation or the By-Laws or any note, indenture, mortgage, lease, contract,
purchase order or other instrument, document or agreement to which the
Corporation is a party or by which it or any of its property is bound or
affected or (b) any ruling, writ, injunction, order, judgment or decree of any
court, administrative agency or other governmental body, which breach could
reasonably be expected to have a material adverse effect on the corporation. To
the best knowledge of the Corporation, there exists no condition, event or act
which after notice, lapse of time, or both, could constitute a violation or
breach of, or a default under, any of the foregoing.
5.13 Authorization of this Agreement and Registration Rights
Agreement. The execution, delivery and performance by the Corporation of this
Agreement and the Registration Rights Agreement dated of the even date herewith
by and between the Corporation and the Investor (the "Registration Rights
Agreement") have been duly authorized by all requisite corporate action. This
Agreement and the Registration Rights Agreement have been duly executed and
delivered on behalf of the Corporation and constitute the valid and binding
obligations of the Corporation, enforceable in accordance with their respective
terms. The execution, delivery and performance of this Agreement and the
Registration Rights Agreement, the issuance, sale and delivery of the Shares,
and the shares of Common Stock issuable upon
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<PAGE>
conversion of the Series A Preferred Stock (the "Reserved Shares"), and
compliance with the provisions hereof and thereof by the Corporation, do not and
will not, with or without the passage of time or the giving of notice or both,
(a) violate any provision of law, statute, ordinance, rule or regulation or any
ruling, writ, injunction, order, judgment or decree of any court, administrative
agency or other governmental body or (b) conflict with or result in any breach
of any of the terms, conditions or provisions of, or constitute a default (or
give rise to any right of termination, cancellation or acceleration) under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Corporation under, the Certificate
of Incorporation or By-Laws or any note, indenture, mortgage, lease, contract,
purchase order or other instrument, document or agreement to which the
Corporation is a party or by which it or any of its property is bound or
affected.
5.14 Authorization of Shares. The issuance, sale and delivery
hereunder by the Corporation of the Shares have been duly authorized by all
requisite corporate action of the Corporation, and when so issued, sold and
delivered, the Shares will be validly issued and outstanding, fully paid and
nonassessable, and not subject to preemptive or any other similar rights of the
stockholders of the Corporation or others.
5.15 Authorization of Reserved Shares. The issuance, sale and
delivery by the Corporation of the Reserved Shares have been duly authorized by
all requisite corporate action of the Corporation, and the Reserved Shares have
been duly reserved for issuance upon conversion of all or any of the shares of
Series A Preferred Stock, and when so issued and delivered upon conversion of
any of the Shares, the Reserved Shares will be validly issued and outstanding,
fully paid and nonassessable, and not subject to preemptive or any other similar
rights of the stockholders of the Corporation or others.
5.16 No Governmental Consent or Approval Required. No
authorization, consent, approval or other order of, declaration to, or filing
with, any governmental agency or body is required for or in connection with the
valid and lawful authorization, execution, delivery and performance by the
Corporation of this Agreement or the Registration Rights Agreement, for or in
connection with the valid and lawful authorization, issuance, sale and delivery
of the Shares or for or in connection with the valid and lawful authorization,
reservation, issuance, sale and delivery of the Reserved Shares except for SEC
approvals and "blue sky" approvals and filings contemplated by the Registration
Rights Agreement.
5.17 Registration Rights. Except as contemplated by the
Registration Rights Agreement, no person has any right to cause the Corporation
to effect the registration under the Securities Act of any shares of Common
Stock or any other securities of the Corporation.
5.18 Exemptions from Securities Laws. Subject to the accuracy
of the representations and warranties of the Investor set forth in Section 6
hereof, the provisions of Section 5 of the Securities Act are inapplicable to
the offering, issuance, sale and delivery of the Shares and the Reserved Shares
by virtue of the exemption afforded by Section 4(2) of the
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<PAGE>
Securities Act, and no consent, approval, qualification or registration or
filing under any state securities or blue sky laws is required in connection
therewith.
5.19 Compliance. The Corporation has (a) complied in all
material respects with all Federal, state, local or foreign laws, statutes,
ordinances, rules, regulations and orders applicable to its business and (b) all
Federal, state, local and foreign governmental licenses, registrations and
permits material to or necessary for the conduct of its business, and such
licenses, registrations and permits are in full force and effect except for
those which failure to comply would not have a material adverse effect. No
proceeding is pending or, to the Corporation's knowledge, threatened to revoke
or limit any thereof.
5.20 Taxes. The Corporation has filed all Federal, state,
local and foreign tax returns which are required to be filed by it and all such
returns are true and correct in all material respects. The Corporation has paid
all taxes pursuant to such returns or pursuant to any assessments received by it
or which it is obligated to withhold from amounts owing to any employee,
creditor or third party, except, in each case, for those which are not yet due
and payable pursuant to such returns. The income tax returns of the Corporation
have never been audited by state or Federal authorities. The Corporation has not
waived any statute of limitations with respect to taxes or agreed to any
extension of time with respect to any tax assessment or deficiency. Neither the
Corporation nor, to its knowledge, any of its stockholders, has ever filed a
consent pursuant to Section 341(f) of the Internal Revenue Code of 1986, as
amended (the "Code"), relating to collapsible corporations.
5.21 Disclosure. Neither this Agreement nor any other
document, certificate or written statement furnished to the Investor by or on
behalf of the Corporation contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor represents and warrants to the Corporation that:
(a) The Investor is acquiring the Shares, and, in the event an
Investor should acquire Reserved Shares upon conversion of the Shares, such
Investor will be acquiring the Reserved Shares, for its own account, for
investment and not for, with a view to or in connection with the distribution
thereof.
(b) The Investor understands that the Shares have not been
registered under the Securities Act or any state securities law, by reason of
their issuance in a transaction exempt from the registration requirements of the
Securities Act and such laws, and that the Shares must be held indefinitely
unless they are subsequently registered under the Securities Act and such laws
or a subsequent disposition thereof is exempt from registration. The
certificates for the Shares shall bear a legend to such effect, and appropriate
stock transfer instructions shall be issued.
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(c) The Investor understands that the exemption from
registration afforded by Rule 144 promulgated by the Securities and Exchange
Commission (the "Commission") under the Securities Act depends upon the
satisfaction of various conditions and that, if applicable, Rule 144 affords the
basis for sales only in limited amounts.
(d) The Investor (i) has sufficient knowledge and experience
in business and financial matters and with respect to investment in securities
of companies comparable to the Corporation so as to enable it to analyze and
evaluate the merits and risks of the investment contemplated hereby and (ii) is
able to bear the economic risk of such investment. The Investor is an
"accredited investor" with the meaning of Regulation D under the Securities Act.
(e) The Investor and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Corporation and materials relating to the offer and sale of the Preferred Stock
which have been requested by the Investor. The Investor and its advisors, if
any, have been afforded the opportunity to ask questions of the Corporation and
have received complete and satisfactory answers to any such inquiries. Without
limiting the generality of the foregoing, the Investor has also had the
opportunity to obtain and to review the Corporation's (1) Registration Statement
on Form 10-SB filed on September 28, 1999 as amended; (2) Quarterly Reports on
Form 10-QSB for the fiscal quarters ended August 31, 1998, November 30, 1998 and
February 28, 1999; (3) The Corporation's Proxy Statement for its Annual Meeting
of Stockholders held February 9, 1999.
(f) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Investor and is a valid and binding
agreement of the Investor enforceable in accordance with its terms, subject as
to enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.
None of the representations and warranties contained in this Section 6
shall in any way affect the right of the Investor to rely fully on the
representations, warranties and covenants of the Corporation in this Agreement
or otherwise.
SECTION 7. Conditions Precedent to Closing by the Investor. The
obligation of the Investor to purchase and pay for the Shares being purchased by
the Investor is subject to satisfaction of the following conditions precedent at
or before the Closing:
7.1 Corporate Proceedings. All corporate and other proceedings
to be taken and all waivers and consents to be obtained in connection with the
transactions contemplated by this Agreement shall have been taken or obtained
and all documents incident to such transactions shall be satisfactory in form
and substance to the Investor and its counsel, who shall have received all such
originals or certified or other copies of such documents as they may reasonably
request.
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7.2 Representations and Warranties Correct. The
representations and warranties made by the Corporation in Section 5 hereof shall
be true and correct when made, and shall be true and correct at the time of the
Closing, with the same force and effect as if they had been made at and as of
the time of the Closing.
7.3 Compliance with Covenants. The Corporation shall have duly
complied with and performed all covenants and agreements of the Corporation
herein which are required to be complied with and performed at or before the
Closing.
7.4 Certificate of President. The Corporation shall have
provided to the Investor a certificate, signed by its President and dated the
date of the Closing, in form and substance reasonably satisfactory to the
Investor and its counsel, confirming compliance with the conditions set forth in
Sections 7.1 through 7.3.
7.5 Opinion of Counsel. At the Closing, the Investor shall
have received from Squadron Ellenoff Plesent & Sheinfeld LLP for the
Corporation, their opinion addressed to the Investor, dated the date of the
Closing, to the effect set forth in Exhibit 7.5.
7.6 Registration Rights Agreement and Documents. At or before
the Closing, the Corporation and the Investor shall have executed and delivered
the Registration Rights Agreement and the Corporation shall have delivered to
the Investor such other documents as any of them shall reasonably request.
SECTION 8. Additional Agreements of the Corporation.
8.1 Board of Directors; Indemnification.
(a) Following the Closing, the Board of Directors shall
consist of not more than nine (9) directors to be elected in the manner provided
in the Certificate of Incorporation. The Corporation shall hold meetings of the
Board of Directors not less frequently then one time every 3 months.
(b) The Certificate of Incorporation or By-laws of the
Corporation shall at all times provide for the indemnification of the members of
the Board of Directors of the Corporation to the full extent provided by the law
of the jurisdiction in which the Corporation is organized and the Corporation
shall, promptly after the Closing and in no event later than 90 days after the
Closing, obtain and maintain, with a financially sound and responsible insurer,
insurance coverage in an amount not less than $2 million for indemnification of
the members of the Board of Directors.
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8.2 Right of First Refusal.
(a) The Corporation hereby grants to the Investor and any
assignee of the Investor (each, a "Right Holder") a right of first refusal to
purchase, pro rata, all (or any part) of any New Securities (as defined in this
Section 8.2) that the Corporation may, from time to time, propose to sell or
issue. Each such Right Holder's pro rata share, for purposes of this right of
first refusal, is the ratio of (i) the number of shares of Common Stock then
held of record by, or issuable on conversion of Series A Preferred Stock then
held of record by, such Right Holder to (ii) the sum of the total number of
shares of the Common Stock then held of record by, or issuable on conversion of
Series A Preferred Stock then held of record by, all Right Holders at such time.
Such right shall terminate upon a Qualifying Public Offering (as defined in the
Certificate of Designations).
(b) "New Securities" shall mean any equity securities of the
Corporation, whether now authorized or not, and rights, options, or warrants to
purchase said equity securities, and securities of any type whatsoever that are,
or may become, convertible into said equity securities; provided, however, that
"New Securities" does not include (i) up to 1,130,000 shares (appropriately
adjusted to take account of any stock split, stock dividend, combination of
shares, recapitalization or the like) of Common Stock (or options, warrants or
other rights to purchase Common Stock) issued or to be issued to employees,
officers or other persons performing services for the Corporation pursuant to
any stock offering, plan or arrangement approved by the Board of Directors of
the Corporation; (ii) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Corporation; (iii) shares of
Common Stock issued upon conversion of shares of Series A Preferred Stock
including any shares issued as a dividend; (iv) shares of Common Stock to be
sold in a Qualifying Public Offering; (v) securities issued in connection with
the acquisition of another corporation by the Corporation by merger or by
purchase of substantially all the stock or assets of such corporation; and (vi)
securities issued in connection with a strategic alliance or acquisition with an
entity with which the Corporation will have executed non-disclosure agreements
prior to the date hereof.
(c) In the event that the Corporation proposes to issue New
Securities, at least 20 days before such issuance, it shall give to each Right
Holder written notice of its intention, describing in such notice the type of
New Securities, the price, and the terms upon which the Corporation proposes to
issue the same (the "Offer Notice"). Each Right Holder shall have 10 days from
the date of its receipt of any such Offer Notice to agree to purchase all or a
part of its pro rata share of such New Securities for the price and upon the
terms specified in the Offer Notice by giving written notice to the Corporation
and stating therein the quantity of New Securities to be purchased. Upon the
earlier of (x) the expiration of such 10-day period or (y) receipt by the
Corporation of notices from all Right Holders pursuant to the immediately
preceding sentence, the Corporation shall give to all Right Holders exercising
in full their right to purchase their respective pro rata shares of such New
Securities a written notice setting forth the number of New Securities
subscribed to be purchased pursuant to the exercise of such rights by all Right
Holders and the number of New Securities that have not been subscribed to
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<PAGE>
be so purchased. If any Right Holder fails to exercise its right hereunder to
purchase all of its pro rata portion of New Securities, the other Right Holders
may agree to purchase the nonpurchasing Right Holder's unpurchased portion on a
pro rata basis, up to and including all the New Securities proposed to be sold
by the Corporation, within 10 days from the Corporation's giving of the notice
referred to in the immediately preceding sentence. Any agreement by a Right
Holder to purchase New Securities shall, subject to the provision of Section
8.2(d)(ii) below, be binding on such Right Holder. In the event that Right
Holders have agreed to purchase or otherwise acquire all of the New Securities
proposed to be issued, the Corporation shall designate by written notice to
Right Holders a date for the closing of the issuance and sale of such New
Securities to occur not earlier than five (5) days nor later than fifteen (15)
days following the expiration of such 10 plus 10 day period.
(d) In the event that the Right Holders fail to exercise in
full the above-described right of first refusal within said 10 plus 10 day
period or to purchase in a timely manner all New Securities respecting which
such right was exercised or such purchase made, (i) the Corporation shall have
120 days thereafter to issue or sell to one or more third parties the New
Securities respecting which such right was not exercised or such purchase was
not made, at a price and upon terms no more favorable to the purchasers thereof
than specified in the Offer Notice and (ii) no Right Holder that has agreed to
purchase or otherwise acquire any New Securities pursuant to the exercise of the
right of first refusal set forth in this Section 8.2 shall be obligated to
consummate such purchase or acquisition unless and until New Securities
available for issuance or sale to one or more third parties have actually been
issued or sold in accordance with the terms set forth in the Offer Notice, in
which event a closing with respect to both the purchase by such Right Holder and
such third party or parties shall occur simultaneously. In the event the
Corporation has not so sold the New Securities within said 120 day period, the
Corporation shall not thereafter issue or sell any New Securities without first
offering such New Securities to the Right Holders in the manner provided above.
(e) This Right of First Refusal may be assigned, in whole or
in part, (i) to a partner, stockholder or Affiliate (as hereinafter defined) of
any Right Holder who acquires not less than 200,000 shares of Common Stock, or
(ii) to any assignee who acquires not less than 200,000 shares of Common Stock
(including in each case such number of shares of Common Stock issuable upon
conversion of Series A Preferred Stock), appropriately adjusted to take account
of any stock split, stock dividend, combination of shares, or the like; provided
that any such assignment under (i) or (ii) is not to a competitor of the
Corporation in the reasonable opinion of the Corporation.
(f) As used in this Section, an Affiliate of a Right Holder
shall mean any partner of the Right Holder or any person or entity that,
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Right Holder.
8.3 Insurance. The Corporation either has obtained or shall
obtain promptly, and shall maintain, with a financially sound and responsible
insurer (a) term life insurance,
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<PAGE>
payable to the Investor until three years after the Closing or until the
conversion of all the shares of Series A Preferred Stock, whichever is earlier,
on the life of Steven Saferin in the amount of $1,500,000, which insurance shall
remain in force for so long as such employee is employed by the Corporation; and
(b) such other insurance as may be satisfactory to the Board of Directors.
8.4 Reporting Status. So long as the Investor beneficially
owns any of the Preferred Stock, the Corporation shall file all reports required
to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange Act,
and the Corporation shall not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.
8.5 Transfer Agent Instructions.
(a) Promptly following the delivery by the Investor of the
aggregate purchase price for the Preferred Stock in accordance with
Section 2 hereof, the Corporation will irrevocably instruct its
transfer agent to issue Common Stock from time to time upon conversion
of the Preferred Stock in such amounts as specified from time to time
by the Corporation to the transfer agent registered in the name of the
Investor or its nominee and in such denominations to be specified by
the Investor in connection with each conversion of the Preferred Stock.
The Corporation warrants that no instruction other than such
instructions referred to in this Section 8.5, and the Registration
Rights Agreement prior to registration and sale of the Shares under the
1933 Act will be given by the Corporation to the transfer agent and
that the Shares shall otherwise be freely transferable on the books and
records of the Corporation as to the extent provided in the Agreement,
the Registration Rights Agreement, and applicable law. Nothing in this
Section shall affect in any way the Investor's obligations and
agreement to comply with all applicable securities laws upon resale of
the Shares. If the Investor provides the Corporation with an opinion of
counsel reasonably satisfactory to the Corporation that registration of
a resale by the Investor of any of the Shares is not required under the
Securities Act, the Corporation shall permit the transfer of the Shares
and promptly instruct the Corporation's transfer agent to issue one or
more certificates for Common Stock in such name and in such
denominations as specified by the Investor.
(b) The Corporation will permit the Investor to exercise its
right to convert the Preferred Stock by telecopying an executed and
completed Notice of Conversion to the Corporation with copies to
Squadron, Ellenoff, Plesent & Sheinfield, and delivering within three
business days thereafter, the original Notice of Conversion and the
certificate for the Preferred Stock representing the Shares to the
Corporation by express courier. Each date on which a Notice of
Conversion is telecopied to and received by the Corporation in
accordance with the provisions hereof shall be deemed a Conversion
Date. The Corporation will immediately confirm receipt of such notice
by telecopy and
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<PAGE>
transmit the certificates representing the Shares of Common Stock
issuable upon conversion of any Preferred Stock (together with the
Preferred Stock representing the Shares not so converted) to the
Investor via express courier, within three business days after receipt
by the Corporation of the original Notice of Conversion and the
certificate for the Preferred Stock representing the Shares to be
converted (the "Delivery Date").
(c) The Corporation understands that a delay in the issuance
of the Shares of Common Stock beyond the Delivery Date could result in
economic loss to the Investor. As compensation to the Investor for such
loss, the Corporation agrees to pay late payments, not exceeding
$200,000 per tranche, to the Investor for late issuance of Shares upon
Conversion in accordance with the following schedule (where "No.
Business Days Late" is defined as the number of business days beyond
three (3) business days from Delivery Date:
Late Payment for Each $10,000 of Preferred Stock
No. Business Days Late Principal Amount Being Converted
---------------------- --------------------------------
1 $ 0
2 $ 0
3 $ 100
4 $ 200
5 $ 300
6 $ 400
7 $ 500
8 $ 600
9 $ 700
10 $ 800
10 $ 800 + $200 for each Business
Day Late beyond 10 days
The Corporation shall pay any payments incurred under this Section in
immediately available funds upon demand. Nothing herein shall limit a Investor's
right to pursue actual damages for the Corporation's failure to issue and
deliver Common Stock to the Investor. Furthermore, in addition to any other
remedies which may be available to the Investor, in the event that the
Corporation fails for any reason to effect delivery of such shares of Common
Stock within five business days after the Delivery Date, the Investor will be
entitled to revoke the relevant Notice of Conversion by delivering a notice to
such effect to the Corporation whereupon the Corporation and the Investor shall
each be restored to their respective positions immediately prior to delivery of
such Notice of Conversion (and in such event, the late payments described above
shall not be due and payable).
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<PAGE>
8.6 Intellectual Property. The Corporation shall use its
reasonable efforts to possess, obtain the right to use and maintain all
Intellectual Property Rights necessary to the conduct of its business, without
any known conflict with or infringement of the Intellectual Property Rights of
others.
8.7 License Agreements. The Corporation shall use its best
efforts to negotiate changes in the license agreements between the Corporation
and Harley-Davidson Motor Company, AM General Corporation, and The Rock and Roll
Hall of Fame and Museum, Inc. such that changes in the direct or indirect
ownership or operating management of the Corporation shall not give rise to
termination rights for Harley-Davidson Motor Company, AM General Corporation, or
The Rock and Roll Hall of Fame and Museum, Inc..
SECTION 9. Fees. The Corporation shall pay, and save the Investor
harmless against all liability for the payment of, (a) all costs and other
expenses incurred in connection with the Corporation's performance of and
compliance with all agreements and conditions contained herein on its part to be
performed or complied with, and (b) the reasonable fees and disbursements of
Foley, Hoag & Eliot LLP, counsel for the Investor, for their services in
connection with this financing not to exceed $25,000. The Corporation further
agrees that it shall pay, and shall save the Investor harmless from, any and all
liability with respect to any stamp, issue or similar taxes which may be
determined to be payable in connection with the execution, delivery and
performance of this Agreement, the conversion of shares of Series A Preferred
Stock or any modification, amendment or alteration of the terms or provisions of
this Agreement. In addition, the Corporation shall pay, and save the Investor
harmless from, all liability for the payment of the reasonable fees and
disbursements of counsel for the Investor in connection with any modification,
amendment or alteration of, or waiver with respect to, this Agreement or the
Registration Rights Agreement, or in connection with enforcement of their
respective rights hereunder or thereunder.
SECTION 10. Exchanges; Lost, Stolen or Mutilated Certificates. Upon
surrender by any Investor to the Corporation of a certificate or certificates
representing shares of Series A Preferred Stock purchased or acquired by such
Investor hereunder or Reserved Shares received upon conversion or exercise of
any such shares of Series A Preferred Stock, the Corporation at its expense
shall issue in exchange therefor, and deliver to such Investor, a new
certificate or certificates representing such shares, in such denomination or
denominations as may be requested by such Investor. Upon receipt of evidence
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
any certificate representing any shares of Series A Preferred Stock purchased or
acquired by the Investor hereunder or Reserved Shares received upon conversion
or exercise of any such shares of Series A Preferred Stock and in case of any
such loss, theft or destruction, upon delivery of any indemnity agreement
reasonably satisfactory to the Corporation, or in case of any such mutilation,
upon surrender and cancellation of such certificate, the Corporation at its
expense shall issue and deliver to such Investor a new certificate for such
shares of Series A Preferred Stock or Reserved Shares, of like tenor, in lieu of
such lost, stolen or mutilated certificate. The provisions of this Section 10
shall control, any provision of the Corporation's By-laws to the contrary
notwithstanding.
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<PAGE>
SECTION 11. Survival of Representations, Warranties and Agreements. The
covenants, representations and warranties of the Investor and the Corporation
contained herein shall survive the Closing. The Investor and the Corporation may
rely on such covenants, representations and warranties, irrespective of any
investigation made, or notice or knowledge held by, it or any other person. All
statements contained in any certificate or other instrument delivered by the
Corporation pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement shall constitute representations and warranties
by the Corporation under this Agreement.
SECTION 12. Indemnification. The Corporation shall indemnify, defend
and hold harmless the Investor from and against all liabilities, losses, and
damages, together with all reasonable costs and expenses related thereto
(including, without limitation, legal and accounting fees and expenses), which
would not have been incurred if (a) all of the representations and warranties of
the Corporation herein had been true and correct when made or (b) all of the
covenants and agreements of the Corporation herein had been duly and timely
complied with and performed.
SECTION 13. Remedies. The parties agree and acknowledge that money
damages are not an adequate remedy for any breach of the provisions of this
Agreement and that, in addition to any other remedy a party may have for a
breach of this Agreement, that party shall be entitled to an injunction
restraining any such breach or threatened breach, or a decree of specific
performance, without posting any bond or security. The remedy in this Section 13
is in addition to, and not in lieu of, any other rights or remedies a party may
have.
SECTION 14. Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, each of the parties hereto and, except as
otherwise expressly provided herein, each other person who shall become a
registered holder named in any certificate evidencing shares of Common Stock or
Series A Preferred Stock transferred to such holder by any of the Investor or
their permitted transferees, and (except as aforesaid) their respective legal
representatives, successors and assigns.
SECTION 15. Entire Agreement; Effect on Prior Documents. This Agreement
and the other documents referred to herein or delivered pursuant hereto contain
the entire agreement among the parties with respect to the financing
transactions contemplated hereby and supersede all prior negotiations,
commitments, agreements and understandings among them with respect thereto.
SECTION 16. Notices. Any notice or communication given pursuant to this
Agreement by any party to any other party shall be in writing and shall be
sufficiently given if personally delivered, sent by facsimile or other means of
electronic transmission or sent by mail, postage prepaid to the parties at the
following addresses or to such other address as either party may hereafter
designate to the others by like notice:
(i) if to the Corporation, to:
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<PAGE>
201 Ann Street
Suite 210
Hartford, CT 06103
Attention: President
Telephone: (860) 527-5359
Telecopy: (860) 527-5920
with a copy to:
Squadron, Ellenoff, Plesent & Sheinfeld LLP
551 Fifth Avenue
New York, NY 10176
Attention: Kenneth R. Koch, Esq.
Tel: (212) 661-6500
Fax: (212) 697-6686
(ii) if to the Investor, to its address set forth on the signature
page hereto, with a copy to:
David Broadwin, Esq.
Foley, Hoag & Eliot LLP
One Post Office Square
Boston, Massachusetts 02109
Telephone: (617) 832-1000
Telecopy: (617) 832-7000
SECTION 17. Amendments; Waivers. Except as otherwise provided herein,
this Agreement may be amended, and compliance with any provision of this
Agreement may be omitted or waived, only by the written agreement of the
Corporation and the Investor.
SECTION 18. Counterparts. This Agreement may be executed in any number
of counterparts, each such counterpart shall be deemed to be an original
instrument, and all such counterparts together shall constitute but one
agreement.
SECTION 19. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 20. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
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<PAGE>
SECTION 21. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of The State of
Delaware without regard to its principles of conflicts of laws.
SECTION 22. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 23. Brokerage Fee. The Corporation and the Investor each
represent that no broker other than Venture Partners Ltd. and its affiliates
(the "Broker") has been involved in this transaction and each party agrees to
indemnify and hold the others harmless from payment of any brokerage fee,
finder's fee, or commission claimed by any party who claims to have been
involved because of association with such party; provided that the Corporation
shall (pursuant to an agreement between the Corporation and Broker) pay all fees
owed to the Broker in connection with the transaction.
[Remainder of the Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written.
MDI ENTERTAINMENT, INC.
By:_______________________________
Name:
Title:
INTERNATIONAL CAPITAL PARTNERS LLC
By:_______________________________
Name:
Title:
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of August 4, 1999 (this
"Agreement") is made by and between MDI Entertainment, Inc., a Delaware
corporation (the "Company"), and International Capital Partners, LLC (the
"Initial Investor").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the Stock
Purchase Agreement, dated as of August 4, 1999, between the Initial Investor and
the Company (the "Stock Purchase Agreement"), the Company has agreed to issue
and sell to the Initial Investor shares of Series A Preferred Stock of the
Company (the "Preferred Stock"), which Preferred Stock will be convertible into
shares of the common stock, $.001 par value (the "Common Stock"), of the Company
(the "Conversion Shares") upon the terms and subject to the conditions of such
Preferred Stock; and
WHEREAS, to induce the Initial Investor to execute and deliver the
Stock Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Conversion Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agrees as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any permitted
transferee or assignee who holds Registrable Securities (as defined
below) and agrees to become bound by the provisions of this Agreement
in accordance with Section 9 hereof.
(ii) "Potential Material Event" means any of the following:
(a) the possession by the Company of material information not ripe for
disclosure in a registration statement, which shall be evidenced by
determinations in good faith by the Board of Directors of the Company
that disclosure of such information in the registration statement would
be detrimental to the business and affairs of the Company; or (b) any
material engagement or activity by the Company which would, in the good
faith determination of the Board of Directors of the Company, be
adversely affected by disclosure in a registration statement at such
time, which determination shall be accompanied by a good faith
determination by the
<PAGE>
Board of Directors of the Company that the registration statement would
be materially misleading absent the inclusion of such information.
(iii) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a registration statement
or statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for
offering securities on a continuous basis ("Rule 415"), and the
declaration or ordering of effectiveness of such registration statement
by the United States Securities and Exchange Commission (the "SEC").
(iv) "Registrable Securities" means (1) the Conversion Shares,
(2) any Common Stock issued as a dividend or other distribution with
respect to, or in exchange or replacement of, such Series A Preferred
Stock or Common Stock, or (3) any Common Stock of the Company issuable
upon conversion, exercise or exchange of convertible securities,
warrants, options or similar rights issued as a dividend or other
distribution with respect to, or in exchange or replacement of such
Series A Preferred Stock or Common Stock.
(v) "Registration Statement" means a registration statement of
the Company under the Securities Act.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Stock Purchase Agreement.
2. REGISTRATION.
(a) MANDATORY REGISTRATION. The Company shall prepare and file with the
SEC, no later than forty-five (45) days following the Closing Date under the
Stock Purchase Agreement, a Registration Statement on Form SB-2, or other
applicable form, registering for resale a sufficient number of shares of Common
Stock by the Initial Investor (or such lesser number as may be required by the
SEC, but in no event less than the number of shares into which the Preferred
Stock would be convertible at the time of filing of the Form SB-2 or other
applicable form, and such Registration Statement shall state that, in accordance
with Rule 416 and 457 under the Securities Act, it also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Preferred Stock resulting from adjustment in the
Conversion Price, or to prevent dilution resulting from stock splits, or stock
dividends). Such Registration Statement shall also provide for offering of the
securities on a continuous basis in accordance with Rule 415. If at any time the
number of shares of Common Stock into which the Preferred Stock may be converted
exceeds the aggregate number of shares of Common Stock then registered, the
Company shall, within fifteen (15) business days after receipt of a written
notice from any Investor, either (i) amend the Registration Statement filed by
the Company pursuant to the preceding sentence, if such Registration Statement
has not been declared effective by the SEC at that time, to register all shares
of Common Stock into which the Preferred Stock may be converted, or (ii) if such
Registration Statement has been declared effective by the SEC at that time, file
with the SEC an additional Registration Statement on Form SB-2, or other
applicable form, to register the shares of Common Stock into which the Preferred
Stock may be converted that exceed the aggregate number of shares
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<PAGE>
of Common Stock already registered. If the staff of the SEC determines that all
of the Conversion Shares cannot be registered by the Company for resale by the
Investor because, in the view of the staff, such registration would constitute a
primary offering the Company, then the Company shall have an additional sixty
(60) days in which to amend such Registration Statement to another available
form.
(b) PAYMENTS BY THE COMPANY.
(i) If the Registration Statement covering the Registrable
Securities is not filed in proper form with the SEC within forty-five
(45) days after the Closing, the Company will make payment to the
Initial Investor in the amount of $500 per day for each $10,000 in
principal amount of Preferred Stock outstanding for each day thereafter
until such Registration Statement, in proper form, is filed with the
SEC.
(ii) If the Registration Statement covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a)
hereof is not effective (x) on the earlier of (i) five days after
notice from the SEC that the Registration Statement may be declared
effective, or (ii) one hundred twenty (120) days following the initial
Closing Date (the "Initial Date"), (except as provided by the last
sentence of Section 2(a)), or (y) on the conclusion of a Suspension
Period (as defined in Section 3(f)), then the Company will make
payments to the Initial Investor in such amounts and at such times as
shall be determined pursuant to this Section 2(b); provided that the
one hundred twenty (120) day period set forth in the preceding clause
shall be extended by (A) the number of days in excess of thirty (30)
after filing of the Registration Statement by which the Company
receives the SEC's first round of comments on the Registration
Statement, plus (B) the number of days in excess of fourteen (14) after
the Company's response to the prior round of SEC comments by which the
Company receives the SEC's second and third rounds of comments on the
Registration Statement. There shall be no extension for other rounds of
SEC comments. The amount to be paid by the Company to the Initial
Investor shall be determined as of each Computation Date, and such
amount shall be equal to one and three-quarters (1 3/4 %) percent of
the purchase price paid by the Initial Investor for all Preferred Stock
then purchased and outstanding pursuant to the Stock Purchase Agreement
for any period from the Initial Date (as extended in accordance with
the preceding sentence) to the first Computation Date, and shall
increase by 1/4% for each computation period thereafter to a maximum of
2 1/2%, to the date the Registration Statement is declared effective by
the SEC (pro rated for partial periods) (the "Periodic Amount"). The
Company will use its best efforts to cause the Registration Statement
to be declared effective and to keep it effective and will respond as
promptly as practicable upon receipt of comments from the SEC. The
Company will respond to the first three rounds of comments from the SEC
within ten business days of receiving such comments; provided, however,
that if the SEC does not send first round comments within thirty (30)
days of receipt of the initial filing of the Registration Statement
then the Company shall have one (1) extra day to respond to SEC
comments for each day over thirty (30) days that it takes the SEC to
comment. The Company shall respond to any further rounds of comments
within ten (10) business days regardless of the amount of days it takes
the SEC to send comments. The amount to be paid by the Company to
Initial Investor if the
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Company fails to respond within the time limits set out above shall be
$25,000 per day for each day in excess of the amount of days allowed by
this provision; provided that if the Registration Statement shall be
declared effective within one hundred twenty (120) days of the date
hereof, all amounts paid in accordance with this sentence shall be
refunded to the Company within five (5) business days of the effective
date of the Registration Statement. The full Periodic Amount shall be
paid by the Company in immediately available funds within three
business days after each Computation Date. Notwithstanding the
foregoing, the amounts payable by the Company pursuant to this
provision shall not be payable to the extent any delay in the
effectiveness of the Registration Statement occurs because of an act
of, or a failure to act or to act timely by the Investor or its
counsel, or in the event all of the Registrable Securities may be sold
pursuant to Rule 144 or another available exemption under the
Securities Act.
As used in this Section 2(b), the following terms shall have the
following meanings:
"Computation Date" means the date which is the earlier of (i) five days
after notice from the SEC that the Registration Statement may be declared
effective, or (ii) one hundred twenty (120) days after the initial Closing Date
(except as provided by the last sentence of Section 2(a)), and, if the
Registration Statement required to be filed by the Company pursuant to Section
2(a) has not theretofore been declared effective by the SEC or a Suspension
Period is in effect, each date which is thirty (30) days after the previous
Computation Date (pro rated for partial periods) until such Registration
Statement is so declared effective.
3. OBLIGATIONS OF THE COMPANY. In connection with the registration of
the Registrable Securities, the Company shall do each of the following:
(a) Prepare promptly, and file with the SEC by forty-five (45) days
after the initial Closing Date, a Registration Statement with respect to not
less than the number of Registrable Securities provided in Section 2(a) above,
and thereafter used its best efforts to cause each Registration Statement
relating to Registrable Securities to become effective on the earlier of (i)
five days after notice from the SEC that the Registration Statement may be
declared effective, or (b) one hundred twenty (120) days after the Closing Date,
and keep the Registration Statements effective at all times until the earliest
(the "Registration Period") of (i) the date that is one year after the Closing
Date (ii) the date when the Investors may sell all Registrable Securities under
Rule 144 or (iii) the date the Investors no longer own any of the Registrable
Securities, which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the
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Company covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement;
(c) The Company shall permit a single firm of counsel designated by the
Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects;
(d) Furnish to each Investor whose Registrable Securities are included
in the Registration Statement and its legal counsel identified to the Company
(i) promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;
(e) As promptly as practicable after becoming aware of such event,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request;
(f) Notwithstanding the foregoing, if at any time or from time to time
after the date of effectiveness of the Registration Statement, the Company
notifies the Investors in writing of the existence of a Potential Material
Event, the Investors shall not offer or sell any Registrable Securities, or
engage in any other transaction involving or relating to the Registrable
Securities, from the time of the giving of notice with respect to a Potential
Material Event until such Investor receives written notice from the Company that
such Potential Material Event either has been disclosed to the public or no
longer constitutes a Potential Material Event; provided, however, that the
Company may not so suspend the right to such holders of Registrable Securities
for more than two (2) twenty (20) day periods in the aggregate during any
12-month period (the "Suspension Period") with at least a ten (10) business day
interval between such periods, during the period the Registration Statement is
required to be in effect. The Company may extend one (1) of the twenty (20) day
periods for (a) up to ninety (90) days if the Potential Material Event involves
an acquisition which requires pro forma financial information to be filed in
accordance with Item 7 of Form 8-K pursuant to the Securities Exchange Act of
1934 and the acquired company does not have audited financial statements; or (b)
up to forty-five (45) days if the Potential Material Event involves an
acquisition which requires pro forma financial information to be filed in
accordance with Item 7 of Form 8-K pursuant to the Securities and Exchange Act
of 1934 and the acquired company has audited financial statements.
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(g) As promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the SEC of a Notice of Effectiveness or any stop order or other suspension of
the effectiveness of the Registration Statement at the earliest possible time;
(h) Use its reasonable efforts as soon as it qualifies to secure
designation of all the Registrable Securities covered by the Registration
Statement as a National Association of Securities Dealers Automated Quotations
System ("NASDAQ") "Small Capitalization" within the meaning of Rule 11Aa2-1 of
the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the quotation of the Registrable Securities of the NASDAQ Small Cap
Market; or if, despite the Company's reasonable efforts to satisfy the preceding
clause, the Company is unsuccessful in doing so, to secure NASDAQ/OTC Bulletin
Board authorization and quotation for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities;
(i) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(j) Cooperate with the Investors who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of certificates for
the Registrable Securities to be offered pursuant to the Registration Statement
and enable such certificates for the Registrable Securities to be in such
denominations or amounts as the case may be, as the Investors may reasonably
request, and, within three (3) business days after a Registration Statement
which includes Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel selected by the Company to
deliver to the transfer agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) an appropriate instruction and opinion of such counsel; and
(k) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investors of the Registrable Securities pursuant
to the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS. In connection with the registration
the Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of the Registrable Securities
held by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5) days prior
to the first anticipated filing date of the Registration Statement, the Company
shall notify each Investor of the information the Company requires from each
such Investor (the "Requested Investment") if such Investor elects to have any
of such Investor's Registrable Securities included in the Registration
Statement. If at least two (2) business
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days prior to the filing date the Company has not received the Requested
Information from an Investor (a "Non-Responsive Investor"), then the Company may
file the Registration Statement without including Registrable Securities of such
Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), above, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or 3(f) and, if
so directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
5. EXPENSES OF REGISTRATION. All reasonable expenses (other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualification pursuant to Section 3), but including,
without limitation, all registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company and
one counsel for the Investors, shall be borne by the Company.
6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities, the directors, if
any, of such Investor, the officers, if any, of such Investor, each person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, liabilities or expenses
(joint or several) incurred (collectively, "Claims") to which any of them may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any post-effective
amendment thereof, or any prospectus included therein: (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading or (iii) any violation or alleged violation by the Company
of the Securities Act, the
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Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing clauses (i) through (iii) being, collectively, "Violations"). The
Company shall reimburse the Investors, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigation or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) shall not (I) apply to a Claim arising
out of or based upon a Violation with respect to an Investor which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such Investor expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(b) hereof; (II) be available to the extent such Claim is
based on a failure of the Investor to deliver or cause to be delivered the
prospectus made available by the Company; or (III) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Each
Investor will indemnify the Company and its officers, directors and agents
against any claims arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company, by or on behalf of such Investor, expressly for use in connection with
the preparation of the Registration Statement, subject to such limitations and
conditions as are applicable to the indemnification provided by the Company
pursuant to this Section 6. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
(b) Promptly after receipt by an indemnified person or indemnified
party under this Section 6 of notice of the commencement of any action
(including any governmental action), such indemnified person or indemnified
party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the indemnified person or the indemnified party, as the
case may be; provided, however, that an indemnified person or indemnified party
shall have the right to retain its own counsel with the reasonable fees and
expenses to be paid by the indemnifying party, if, in the reasonable opinion of
counsel retained by the indemnifying party, the representation by such counsel
of the indemnified person or indemnified party and the indemnifying party would
be inappropriate due to actual or potential differing interests between such
indemnified person or indemnified party and any other party represented by such
counsel in such proceeding. In such event, the Company shall pay for only one
separate legal counsel for the Investors; such legal counsel shall be selected
by the Investors holding a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of
any liability to the indemnified person or indemnified party under this Section
6, except to the extent that the indemnifying party is prejudiced in its ability
to defend such action. The indemnification required by this Section 6 shall be
made by periodic payments of the amount
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thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation; and (c)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by Initial Investors and the Investors to any transferee
of at least 25% of the Registrable Securities only if: (a) the Investor agrees
in writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (i) the name and address of such
transferee or assignee and (ii) the securities with respect to which such
registration rights are being transferred or assigned, (c) immediately following
such transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, and (d) at or before the time the Company received the
written notice contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein. In the event of any delay in filing or effectiveness of the
Registration Statement
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as a result of such assignment, the Company shall not be liable for any damages
arising from such delay, or the payments set forth in Section 2(c) hereof.
10. (A) AMENDMENT OF REGISTRATION RIGHTS. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
hold a fifty-one percent (51%) interest of the Registrable Securities. Any
amendment or waiver effective in accordance with this Section 10 shall be
binding upon each Investor and the Company.
11. MISCELLANEOUS.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be in
writing and shall be deemed to be sufficiently given when personally delivered
(by hand, by courier, by telephone line facsimile transmission, receipt
confirmed, or other means) or sent by certified mail, return receipt requested,
properly addressed and with proper postage pre-paid (i) if to the Company, MDI
Entertainment, Inc., 201 Ann Street, Suite 210, Hartford, Connecticut 06103,
with a copy to Squardron, Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue,
New York, NY 10176; (ii) if to the Initial Investor, at the address set forth
under its name in the Stock Purchase Agreement, with a copy to David A.
Broadwin, Esquire, Foley, Hoag & Eliot LLP, One Post Office Square, Boston,
Massachusetts 02109; and (iii) if to any other Investor, at such address as such
Investor shall have provided in writing to the Company, or at such other address
as each such party furnishes by notice given in accordance with this Section
11(b), and shall be effective, when personally delivered, upon receipt and, when
so sent by certified mail, four (4) calendar days after deposit with the United
States Postal Service.
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Delaware. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
County of Lancaster or the state courts of the State of Delaware sitting in the
County of Lancaster in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions.
(e) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the
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remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
(f) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
(g) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(h) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(i) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning thereof.
(j) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
(k) The Company acknowledges that any failure by the Company to perform
its obligations under Section 3(a), or any delay in such performance could
result in harm to the Investors and the Company agrees that, in addition to any
other liability of the Company may have by reason of any such failure or delay,
the Company shall be liable for all direct damages caused by any such failure or
delay, unless same is the result of force majeure. Neither party shall be liable
for consequential damages.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
MDI ENTERTAINMENT, INC.
By:____________________________________
Name:
Title:
INTERNATIONAL CAPITAL PARTNERS, LLC
By:____________________________________
Name:
Title:
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