EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of November 19, 2002,
among Scientific Games International, Inc., a company organized under the laws
of the State of Delaware ("Parent"), Blue Suede Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent (the "Merger Sub"), and
Steven M. Saferin, an individual residing in the State of Texas ("Saferin").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent, the Merger Sub and MDI Entertainment, Inc., a Delaware corporation (the
"Company"), have entered into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "Merger Agreement"), pursuant to
which the Merger Sub will be merged with and into the Company, with MDI being
the surviving corporation of the merger (the "Merger");
WHEREAS, as provided in the Merger Agreement, Merger Sub shall make a cash
tender offer (the "Offer") to holders of all of the issued and outstanding
shares of common stock, par value $0.001 of MDI (the "Shares"), for $1.60 per
share net to the seller (such price, or any higher price per share as may be
paid in the Offer is referred to herein as the "Offer Price");
WHEREAS, Saferin is the owner of record and beneficially of 3,795,169
Shares which, pursuant to this Agreement he has agreed to sell them to Merger
Sub five business days after the closing of the Offer, any extension thereof and
any subsequent offering period for a price of $1.40 per Share and to refrain
from tendering the Shares pursuant to the Offer;
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and Merger Sub have required that Saferin agree, and Saferin
has agreed, to enter into this Agreement; and
WHEREAS, the Merger Agreement provides that simultaneously with the
execution and delivery of the Merger Agreement, this Agreement will be executed
and delivered.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Affiliates" means any Person that directly, or indirectly through one
of more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning ten
percent (10%) or more of the voting securities of another Person shall be deemed
to control that Person.
(b) "Beneficially Own," "Beneficially Owned," Beneficial Owner" or
"Beneficial Ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" as within the meaning of Section 13(d)(3) of the Exchange Act.
(c) "Existing Shares" means the Shares Beneficially Owned by Saferin and
outstanding as of the date of this Agreement as set forth on Schedule I or
hereafter acquired prior to the consummation of the stock purchase contemplated
hereby.
(d) "Option Shares" means the shares purchasable by Saferin under currently
exercisable options, which are separately identified on Schedule I.
(e) "Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(f) Capitalized terms used and not defined herein have the respective
meanings ascribed to them in the Merger Agreement.
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2. Agreements.
(a) Existing Stock Purchase. Saferin agrees to sell and Merger Sub agrees
to purchase all of the Existing Shares from Saferin for a price of $1.40 per
Share, resulting in an aggregate consideration for the Existing Shares of
$5,313,236.60. Parent guarantees the payment of the foregoing amount.
(b) Option Cancellation. Concurrently with the closing of the stock
purchase under this Agreement, all options to purchase Option Shares held by
Saferin shall be cancelled and he shall receive the consideration therefor as
described in Section 2.4 of the Merger Agreement; provided, however, that the
term "Offer Price" contained in such Section 2.4 shall be replaced by the term
"$1.40." Accordingly, he will receive aggregate consideration for the cancelled
options of $242,750 (less any amount equal to the applicable withholding taxes,
which amount shall be paid directly to the Company by Merger Sub). Parent
guarantees the payment of the foregoing amount.
(c) Closing of Stock Purchase. The closing of the stock purchase described
in Section 2(a) above shall occur five business days after the purchase by
Merger Sub of all shares duly tendered in the Offer (and not withdrawn), any
extension thereof and any subsequent offering period under Rule 14d-11 in the
offices of Smith, Gambrell & Russell, LLP, Suite 3100, Promenade II, 1230
Peachtree Street, N. E., Atlanta, Georgia 30309 at 10:00 a.m. or at such time
and place as the parties may agree. Saferin shall deliver certificates
representing the Existing Shares duly endorsed for transfer or accompanied by a
stock power executed in blank and Merger Sub shall deliver the purchase price
for the Existing Shares by wire transfer to the account identified on Schedule
II. In the event that Saferin is not the record owner of any of the Existing
Shares, Saferin shall deliver such additional documentation of transfer as
Merger Sub may request.
(d) No Tender By Saferin . Saferin shall not tender the Existing Shares
pursuant to the Offer, any extension thereof or any subsequent offering period
under Rule 14d-11.
(e) Voting Agreement. Saferin shall, at any meeting of the holders of the
Shares, however called, or in connection with any written consent of the holders
of the Shares (each, a "Shareholder Action"), vote (or cause to be voted) all
Existing Shares (i) in favor of the Merger, the execution and delivery by MDI of
the Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof and (ii) against any Acquisition
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of MDI
under the Merger Agreement.
(f) No Inconsistent Arrangements. Saferin hereby covenants and agrees that,
except as contemplated or permitted by this Agreement and the Merger Agreement,
he shall not (i) transfer (which term shall include, without limitation, any
sale, gift, pledge or other disposition), or consent to any transfer of, any or
all of the Existing Shares, options, warrants or other rights to receive Shares,
or any interest therein, (ii) enter into any contract, option or other agreement
or understanding with respect to any transfer of any or all of the Existing
Shares, options, warrants or other rights to receive Shares, or any interest
therein, (iii) grant any proxy, power-of-attorney or other authorization in or
with respect to any of the Existing Shares, (iv) deposit any of the Existing
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to any of the Existing Shares, (v) exercise any of the options pursuant
to which Option Shares are issuable or (vi) take any other action that would in
any way restrict, limit or interfere with the performance of his obligations
hereunder or the transactions contemplated hereby or by the Merger Agreement.
(g) Grant of Irrevocable Proxy; Appointment of Proxy.
(i) Saferin hereby irrevocably grants to, and appoints, Parent and Martin
E. Schloss and C. Gray Bethea, or either of them, in their respective capacities
as officers of Parent, and any individual who shall hereafter succeed to any
such office of Parent, and each of them individually, Saferin's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Saferin, to vote the Existing Shares, or grant a consent or
approval in respect of the Existing Shares in the manner described in Section
2(e) of this Agreement.
(ii) Saferin represents that there are no existing options, warrants,
calls, pre-emptive rights, irrevocable proxies, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to Saferin 's
Shares, and any proxies heretofore given in respect of Saferin 's Shares (which
are revocable) are hereby revoked.
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(iii) Saferin understands and acknowledges that Parent is entering into the
Merger Agreement in reliance upon Saferin 's execution and delivery of this
Agreement. Saferin hereby affirms that the irrevocable proxy set forth in this
Section 2(g) is given in connection with the execution of the Merger Agreement,
and that such irrevocable proxy is given to secure the performance of the duties
of Saferin under this Agreement. Saferin hereby further affirms that the
irrevocable proxy is coupled with an interest and may under no circumstances be
revoked, except that such proxy will automatically be revoked upon termination
of this Agreement pursuant to Section 7 hereof. Saferin hereby ratifies and
confirms all that such irrevocable proxy may lawfully do or cause to be done by
virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable
in accordance with the provisions of Section 212(e) of the Delaware General
Corporation Law.
(h) No Solicitation. Saferin hereby agrees, in his capacity as a
stockholder of the Company, that neither he nor any of his Affiliates shall (and
Saferin shall cause his representatives and agents, including, but not limited
to, investment bankers, attorneys and accountants not to), directly or
indirectly, knowingly encourage, solicit, participate in (except for immaterial
contact not willfully initiated and promptly terminated once the prohibited
nature of such contact is known) or initiate discussions or negotiations with,
or provide any information to, (except for non-material information provided as
a result of immaterial contact not willfully initiated and promptly terminated
after the prohibited nature of such contact is known), any Person or group
(other than Parent, any of its Affiliates, representatives or agents) concerning
any Acquisition Proposal, except that nothing contained herein shall prohibit
Saferin or his representatives from (1) taking and disclosing to the Company's
stockholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or
(2) making any disclosure to the Company's stockholders if, in the good faith
judgment of the board of directors of the Company, after consultation with
outside counsel, failure to make such disclosures would be contrary to his
obligations under applicable law, provided that Saferin may not, except as
permitted by Section 5.9(c) of the Merger Agreement, withdraw or modify, or
propose to withdraw or modify, his position with respect to the Offer and the
Merger contemplated by the Merger Agreement. Saferin will immediately cease any
existing activities, discussions or negotiations with any Persons other than
Parent and Acquisition Sub conducted heretofore with respect to any of the
foregoing. Notwithstanding the foregoing, any action taken by the Company,
Saferin in his capacity as an officer of MDI or as a member of the Board of
Directors of the Company, or by any other member of the Board of Directors of
MDI in accordance with Section 5.9 of the Merger Agreement shall be deemed not
to violate this Section 2(h).
(i) Waiver of Certain Claims. Saferin hereby waives any claim he may have
under Rule 14d-10 and Rule 14e-5 promulgated under the Exchange Act arising out
of the Merger Agreement and the Offer thereunder, and agrees that the provisions
and terms of this Agreement do not violate such rules.
(j) Delivery of Certificates. If requested by Parent, after the
commencement of the Offer Saferin shall promptly deliver the certificate(s)
evidencing the Existing Shares to his legal counsel to be held by such counsel
until the closing of this Agreement and shall provide Parent with a photocopy of
such certificates.
3. Adjustments; Additional Shares. In the event (i) of any stock dividend,
stock split, recapitalization, reclassification, combination or exchange of
shares of capital stock of MDI on, of, or affecting the Shares, or (ii) Saferin
shall become the Beneficial Owner of any additional Shares or other securities
entitling the holder thereof to vote or give consent with respect to any matter,
then the terms of this Agreement shall apply to the Shares held by Saferin
immediately following the effectiveness of the events described in clause (i) of
this Section 3 or Saferin becoming the Beneficial Owner of such additional
Shares, as described in clause (ii) of this Section 3, as though they were
Existing Shares hereunder.
4. Representations and Warranties of Saferin. Saferin hereby represents and
warrants to Parent and Merger Sub as follows:
(a) Ownership of Shares. Saferin is the record and Beneficial Owner of the
Existing Shares and Option Shares, as set forth on Schedule I. On the date
hereof, the Existing Shares and Option Shares constitute all of the Shares owned
of record or Beneficially Owned by Saferin. Saferin has sole voting power and
sole power to issue instructions with respect to the matters set forth in
Section 2 hereof, sole power of disposition and sole power to agree to all of
the matters set forth in this Agreement, in each case with respect to all of the
Existing Shares, with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this Agreement.
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(b) Power; Binding Agreement. Saferin has full power and authority to enter
into and perform all of Saferin 's obligations under this Agreement. The
execution, delivery and performance of this Agreement by Saferin will not
violate any other agreement to which Saferin is a party including, without
limitation, any voting agreement, proxy arrangement, pledge agreement or voting
trust. This Agreement has been duly and validly executed and delivered by
Saferin and constitutes the valid and binding agreement of Saferin , enforceable
against Saferin in accordance with its terms. There is no beneficiary or holder
of a voting trust certificate or other interest of any trust of which Saferin is
a trustee whose consent is required for the execution and delivery of this
Agreement or the consummation by Saferin of the transactions contemplated
hereby.
(c) No Conflicts. Except for filings under the Exchange Act, no filing
with, and no permit, authorization, consent or approval of, any Governmental
Entity is necessary for the execution of this Agreement by Saferin and the
consummation by Saferin of the transactions contemplated hereby and none of the
execution and delivery of this Agreement by Saferin , the consummation by
Saferin of the transactions contemplated hereby or compliance by Saferin with
any of the provisions hereof shall (A) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which Saferin is a party or by which Saferin or any of
his properties or assets may be bound, or (B) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
Saferin or any of his properties or assets.
(d) No Liens. Except as permitted by this Agreement, the Existing Shares
and the certificates representing such Existing Shares are now, and at all times
during the term hereof will be, held by Saferin, or by a nominee or custodian
for the benefit of Saferin, free and clear of all Liens, except for any Liens
hereunder and any Liens in respect of his spouse arising under the community
property laws of the State of Texas, which Liens are hereby waived by her, as
evidenced by her signature on the Signature Page of this Agreement with respect
to this Section 4(d).
(e) No Finder's Fees. No broker, investment banker, financial advisor or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of Saferin .
5. Further Assurances. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
6. Stop Transfer. Saferin shall not request that MDI register the transfer
(book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement.
7. Termination. The agreements and proxy contained in Section 2 hereof
shall terminate upon the earlier to occur of (i) the termination of the Merger
Agreement prior to the consummation of the Offer contemplated thereby and (ii)
the date the parties agree in writing to such termination; provided, however,
that no such termination shall relieve a party for liability for any breach by
such party occurring prior to such termination.
8. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations hereunder shall
attach to the Shares and shall be binding upon any person or entity to which
legal or beneficial ownership of the Shares shall pass, whether by operation of
law or otherwise, including, without limitation, Saferin 's administrators or
successors. Notwithstanding any transfer of Shares, the transferor shall remain
liable for the performance of all obligations of the transferor under this
Agreement.
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(c) Assignment. This Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of Parent and Merger Sub, provided
that Parent or Merger Sub may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent or the Merger Sub of its
obligations hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by the parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Saferin:
Mr. Steven M. Saferin
4041 Shadow Drive
Fort Worth. Texas 76116
with a copy to:
Peter Ziemba, Esq.
Graubard Miller
600 Third Avenue
New York, NY 10016
Telephone: (212) 818-8667
Fax: (646) 227-5400
If to Linda Saferin:
Ms. Linda Saferin
4041 Shadow Drive
Fort Worth. Texas 76116
If to Parent or Merger Sub:
Scientific Games International, Inc.
750 Lexington Avenue
25th Floor
New York, New York 10022
Attn: Martin E. Schloss, Esq.
Vice President and General Counsel
Telephone: (212) 754-2233
Fax: (212) 754-2372
with a copy to:
Smith, Gambrell & Russell, LLP
1230 Peachtree Street, N.E.
Suite 3100, Promenade II
Atlanta, Georgia 30309-3592
Attn: M. Timothy Elder, Esq.
Direct Telephone: (404) 815-3532
Direct Fax: (404) 685-6832
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore in the event
of any such breach the aggrieved party shall be entitled to the remedy of
specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at
law or in equity.
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(h) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) Governing Law; Consent to Service of Process.
(i) This Agreement shall be governed and construed in accordance with the
laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof; provided, however, that the laws of the respective
jurisdictions of incorporation of each of the parties shall govern the relative
rights, obligations, powers, duties and other internal affairs of such party and
its board of directors.
(ii) Each party agrees, by execution and delivery of this Agreement, that
any legal action or proceeding against such party relating to or arising out of
or under this Agreement or creation or termination hereof, may be brought in any
court of competent jurisdiction in the State of New York or of the United States
of America for the Southern District of New York, and that such party accepts
with regard to any such action or proceeding generally and unconditionally the
jurisdiction of the aforesaid courts. Each party further irrevocably consents to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
U.S. mail, postage prepaid, to such party at his or its address provided in
Section 8 hereof, such service to become effective upon receipt or thirty (30)
days after such mailing, whichever shall first occur. Nothing herein contained
shall affect the right of any party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
any other party in any other jurisdiction in which such other party may be
subject to suit.
(l) Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN CONNECTION WITH ANY ACTION, SUIT OR PROCEEDING BROUGHT IN
CONNECTION WITH THIS AGREEMENT.
(m) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, Parent, Merger Sub and Saferin have caused this
Agreement to be duly executed as of the day and year first above written.
SCIENTIFIC GAMES INTERNATIONAL, INC.
By: /s/ Martin E. Schloss
---------------------
Name: Martin E. Schloss
Title: Vice President and General Counsel
BLUE SUEDE ACQUISITION CORP.
By: /s/ Martin E. Schloss
---------------------
Name: Martin E. Schloss
Title: Vice President
SAFERIN :
By: /s/ Steven M. Saferin
---------------------
Name: Steven M. Saferin
Spousal Consent:
The undersigned hereby acknowledges and agrees to Section 4(d), waives any
community property interest in the Existing Shares or Option Shares, and hereby
waives any right she may have to contest the provisions of this Agreement or
claim any Lien on the Existing Shares or Option Shares. She further agrees to be
subject to Section 8(e), (k) and (l) as if she were a party hereto.
SAFERIN :
By: /s/ Linda Saferin
---------------------
Name: Linda Safern
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SCHEDULE I
Existing Shares
---------------
Number of Shares Payout
---------------- ------
3,795,169 shares $5,313,236.60
Option Shares
-------------
Number of Shares Payout
---------------- ------
225,000 shares @ $.033 exercise price $240,750 (less any applicable withholding)
25,000 shares @$1.32 exercise price $2,000 (less any applicable withholding)
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SCHEDULE II
WIRING INSTRUCTIONS
Chase Manhattan Bank (Chase NYC)
ABA #021000021
Account 066296390
Further credit to:
Steven Saferin
Prudential Securities Account OHF-450981
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