-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PiIgWz/rpj8jwG8DaB7MUo/0RhJv0fl3Pyy37R/K7P4MUVMYDfoma4U6VKivcKZ+ eeefjZHD5tGksXuV/kZuXg== 0001045080-01-500011.txt : 20010503 0001045080-01-500011.hdr.sgml : 20010503 ACCESSION NUMBER: 0001045080-01-500011 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010425 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010502 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MDI ENTERTAINMENT INC CENTRAL INDEX KEY: 0001045080 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AMUSEMENT & RECREATION SERVICES [7900] IRS NUMBER: 731515699 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-24919 FILM NUMBER: 1620068 BUSINESS ADDRESS: STREET 1: 201 ANN ST STREET 2: SUITE 210 CITY: HARTFORD STATE: CT ZIP: 06103 BUSINESS PHONE: 8605275359 MAIL ADDRESS: STREET 1: 201 ANN ST CITY: HARTFORD STATE: CT ZIP: 06103 8-K 1 file001.txt FORM 8-K OXFORD SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) April 25, 2001 MDI ENTERTAINMENT, INC. (Exact name of registrant as specified in its charter) Delaware 0-24919 73-1515699 (State or Other Jurisdiction (Commission File Number) (I.R.S. Employer of Incorporation) Identification No.) 201 Ann Street Hartford, Connecticut 06103 (Address of principal executive offices including zip code) (860) 527-5359 (Registrant's telephone number, including area code) N.A. (Former name or former address, if changed since last report) Item 5. Other Events. On April 25, 2001, MDI Entertainment, Inc. ("MDI") entered into a Stock Purchase Agreement with Oxford International, Inc. ("Oxford") pursuant to which MDI issued 2,100 shares of Series C Preferred Stock (the "Series C Stock") representing approximately 15.8% of the outstanding common stock of MDI on an as converted basis. The Series C Stock has a liquidation preference of $1,523.81 per share, pays a cumulative preferred dividend at the rate of 8% per annum, payable in cash or common stock at the discretion of MDI, and is convertible into an aggregate of 2,100,000 shares of common stock, subject to adjustment only for events such as stock splits, stock dividends and similar events and is not adjustable or resettable based on the market price of the common stock. If not previously converted by Oxford, five hundred twenty five (525) shares of the Series C Stock shall be automatically converted into common stock no later than 120 days from the issue date, and after a registration statement covering the full amount of the shares of common stock underlying the Series C Stock has been filed by MDI with the Securities and Exchange Commission, an aggregate of five hundred twenty five (525) shares of Series C Stock shall be automatically converted into common stock every ninety (90) days. MDI may not create or increase the authorized number of shares of any class or series of stock ranking prior to or on parity with the Series C Stock either as to dividends or liquidation without approval of the holders of at least a majority of the then outstanding shares of Series C Stock. So long as the sum of (i) the aggregate number of shares of common stock issuable upon conversion of the Series C Stock and (ii) aggregate number of shares of common stock owned by Oxford and its subsidiaries is equal to or greater than 2,100,000 and Oxford and its subsidiaries beneficially own greater than ten percent (10%) of the number of shares of common stock outstanding of MDI, Oxford shall have the option of nominating one member of MDI's Board of Directors reasonably acceptable to MDI. In addition, Oxford is entitled to a right of first refusal to provide additional financing to MDI, subject to certain exclusions and exceptions. In connection with the transaction, MDI issued an aggregate of 42,000 shares of common stock as an origination fee to persons affiliated with Oxford. MDI also paid Venture Partners Capital, LLC, a registered broker-dealer with which MDI's Executive Vice President of Finance is affiliated, a $256,000 cash fee. In addition, warrants previously issued to Venture Partners Capital, LLC became exercisable. Item 7. Financial Statements and Exhibits. (c) Exhibits. Exhibit No. Description 99.1 Stock Purchase Agreement, dated April 25, 2001, between MDI Entertainment, Inc. and Oxford International,Inc. 99.2 Certificate of Designations for Series C Preferred Stock of MDI Entertainment, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MDI ENTERTAINMENT, INC. (Registrant) Dated: May 2, 200 By: /s/ Steven M. Saferin Steven M. Saferin President and Chief Executive Officer EXHIBIT INDEX Exhibit No. Description 99.1 Stock Purchase Agreement, dated April 25, 2001, between MDI Entertainment, Inc. and Oxford International, Inc. 99.2 Certificate of Designations for Series C Preferred Stock of MDI Entertainment, Inc. EX-99.1 2 file002.txt STOCK PURCHASE AGREEMENT EXHIBIT 99.1 STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT AGREEMENT made as of April 25, 2001 by and between MDI ENTERTAINMENT, INC., a Delaware corporation with its principal office located in Hartford, Connecticut (hereafter referred to as "MDI") and OXFORD INTERNATIONAL, INC., a Maryland corporation with its principal office located in Easton, Maryland (hereafter referred to as "Investor"). WHEREAS, MDI is a growing company engaged in the field of marketing promotions and is desirous of securing additional working capital in order to promote, develop and expand its business, and WHEREAS, Investor is prepared to provide means of financing the operations of MDI by purchasing the Series C Convertible Preferred Stock of MDI hereinafter mentioned upon the terms and conditions set forth herein, NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereby agree as follows: SECTION 1. Purchase and Sale of Series C Convertible Preferred Stock. MDI agrees to sell to the Investor, and the Investor agrees to purchase from MDI, at the Closing (as hereafter defined) and subject to and in accordance with the terms, conditions and provisions of this Agreement, Two Thousand One Hundred (2,100) shares of Series C Convertible Preferred Stock (the "Series C Preferred Stock") for an aggregate purchase price of Three Million Two Hundred Thousand Dollars ($3,200,000). Investor shall, by the terms of the Series C Preferred Stock, have the option exercisable at any time, but subject to the mandatory conversion provisions hereinafter set forth, to exchange each share of Series C Preferred Stock for One Thousand (1,000) shares of MDI common stock, par value $.001 per share (the "Common Stock"). MDI has authorized and reserved and covenants to continue to reserve a sufficient number of its previously authorized but unreserved shares of Common Stock to satisfy the rights of conversion of the holders of Series C Preferred Stock. The voting powers, preferences and relative, participating, optional and other special rights of the shares of such Series C Preferred Stock shall be fixed as set forth in the Certificate of Designations, Preferences and Rights of Series C Preferred Stock of MDI (the "Certificate of Designations") attached hereto as Exhibit "A". SECTION 2. Preferred Dividends and Interest. 2.1 Preferred Dividentds. To the extent permitted by the General Corporation Law of the State of Delaware, MDI shall pay Preferred Dividends to the holders of the Series C Preferred Stock (until the conversion of all of the Series C Preferred Stock) at the rate of eight percent (8%) per annum on the $1,523.81 per share purchase price of the unconverted Series C Preferred Stock shares, payable quarterly, at the option of MDI, in either cash or Common Stock of MDI (the number of shares of Common Stock to be issued in-kind to be determined by dividing the dividend payable by a thirty-day average of the public share closing price prior to the date when such quarterly payments shall be due). 2.2 Interest. Accrued but unpaid Preferred Dividends shall bear interest at a rate of five percent (5%) of any quarterly Preferred Dividend payment due and payable in the event any such amounts remain unpaid for ten (10) days after such date. SECTION 3. Conversion Provisions. Each share of Series C Preferred Stock to be issued to the Investor pursuant to this Agreement shall be convertible into 1,000 shares of Common Stock at any time at the option of Investor or holder, subject to the following mandatory conversion provisions (on a pro rata basis if more than one holder): a) twenty-five percent (25%) of the Series C Preferred Stock to be issued to Investor (said 25% being equivalent to five hundred twenty five (525) shares of Series C Preferred Stock) shall be automatically converted no later than one hundred twenty (120) days from Closing, and b) after a registration statement covering the full amount of the shares of Common Stock underlying the Series C Preferred Stock has been filed by MDI with the Securities and Exchange Commission (the "SEC"), an aggregate of five hundred twenty five (525) shares of Series C Preferred Stock to Common Stock shall be automatically convertd every ninety (90) days. MDI shall file a registration statement covering the full amount of the shares of Common Stock underlying the Series C Preferred Stock within one hundred eighty (180) days of Closing. SECTION 4. Nomination of Member of MDI's Board of Directors. So long as the sum of (i) the aggregate number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock and (ii) aggregate number of shares of Common Stock owned by the Investor and its subsidiaries is equal to or greater than 2,100,000 and the Investor and its subsidiaries beneficially own greater than ten percent (10%) of the number of shares of Common Stock outstanding of MDI, the Investor shall have the option of nominating one member of MDI's Board of Directors reasonably acceptable to MDI. SECTION 5. MDI's Representations and Warranties. To induce the Investor to purchase the Series C Preferred Stock, MDI hereby makes the following representations and warranties to the Investor: 5.1 Good Standing. MDI (a) is a corporation duly organized, existing, and in good standing under the laws of the State of Delaware and (b) has the power to own its property and to carry on its business and is qualified to do business and is in good standing in each jurisdiction in which the character of properties owned by it or the transaction of its business makes such qualification necessary and in which the failure to so qualify or to be in good standing would have a materially adverse effect on MDI's operations or financial condition. 5.2 Authority. MDI has full power and authority to enter into this Agreement and carry out the transactions contemplated hereby, all of which have been duly authorized by all proper and necessary action of MDI. No consent or approval of the shareholders of MDI or of any governmental authority is required as a condition to the validity of this Agreement. 5.3 Binding Agreement. This Agreement constitutes the valid and legally binding obligations of MDI enforceable in accordance with its terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws effecting the enforcement of creditors' rights generally. 5.4 Litigation. There are no proceedings pending or, so far as any person signing below as or on behalf of MDI knows, threatened before any court or administrative agency a) against or affecting MDI; or b) which will materially adversely affect the financial condition or operations of MDI, other than as set forth in MDI's filings with the SEC (the "SEC Documents"). 5.5 No Conflicting Agreements. There are no provisions of MDI's Articles of Incorporation or Bylaws or provisions of any existing mortgage, deed of trust, indenture, contract, lease, or agreement binding on MDI or affecting its property which would conflict with or in any way prevent the execution, delivery, or carrying out of the terms of this Agreement or the transactions contemplated thereby. 5.6 Financial Condition. MDI's financial statements, copies of which have been furnished to the Investor or made available through the SEC's Electronic Gathering Analysis and Retrieval System ("EDGAR"), were prepared in accordance with generally accepted accounting principles consistently applied and are complete and correct and fairly and accurately present the financial condition of MDI as of their date and the results of its operations for the period then ended. Other than as disclosed in the SEC Documents, there has been no material adverse change in the financial condition of MDI or the results of it operations since the date of such financial statements. 5.7 Information. To the best of MDI's knowledge, all information contained in any financial statement, application, schedule, report, certificate, opinion, or any other document given by MDI is in all respects true and accurate as of the date thereof, and MDI has not omitted to state any material fact or any fact necessary to make such information not misleading. 5.8 Assets and Properties. MDI has good and merchantable title to all of its assets and properties, and there are no liens outstanding against any of these assets and properties, other than as previously disclosed in writing to Investor or as set forth in the SEC Documents. 5.9 Taxes. All taxes imposed upon MDI and its properties, operations, and income have been paid and discharged prior to the date when any interest or penalty would accrue for the nonpayment thereof except for those taxes being contested in good faith and by appropriate proceedings by MDI. 5.10 Names of MDI. MDI has never done business under any other name other than the name of MDI set forth in this Agreement, except under the name PUFF PROCESS INC. 5.11 Violation of Laws, etc. Neither the consummation of the transactions contemplated by this Agreement nor the use, directly or indirectly, of all or any portion of the proceeds from the sale of the Series C Preferred Stock will violate or result in a violation of any provision of any applicable statute, regulation, or order of, or any restriction imposed by, the State of Delaware, the State of Maryland, any other relevant state or the United States of America or by any authorized official, board, department, instrumentality, or agency thereof. 5.12 Capitalization. The entire authorized capital stock of MDI consists of: a) 25,000,000 shares of MDI Common Stock, of which (i) 11,172,306 shares have been duly and validly issued and are outstanding, fully paid and nonassessable, (ii) 444,444 shares have been reserved for issuance upon conversion of the Series B Preferred Stock, (iii) 2,100,000 shares have been reserved for issuance upon conversion of the Series C Preferred Stock, (iv) 2,383,656 shares have been reserved for issuance upon exercise of outstanding warrants and (v) 640,832 shares have been reserved for issuance under MDI's option plans. b) 5,000,000 shares of Preferred Stock, of which (i) 2,027 shares were designated Series A Preferred Stock, none of which remain outstanding, (ii) 444 shares of Series B Preferred Stock, of which 444 shares have been duly and validly issued and are outstanding, fully paid and nonassessable and (iii) 2,100 shares of Series C Preferred Stock, of which (a) prior to the Closing, no shares were issued and outstanding and (b) 2,100 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 non-assissable. SECTION 6. MDI's Covenants. So long as shares of Series C Preferred Stock remain outstanding: 6.1 Use of Proceeds. MDI will use the proceeds from the sale of the Series C Preferred Stock only for working and operating capital. 6.2 Annual Financial. MDI will furnish to the Investor or make available through EDGAR, as soon as available, but in no event more than ninety (90) days after the end of each fiscal year of MDI, consolidated financial statements of MDI prepared in accordance with generally accepted accounting principles, including balance sheet, statement of income, statement of members equity and statement of changes in financial position, fully certified by independent certified public accountants satisfactory to the Investor. 6.3 Interim Financial. MDI will furnish to the Investor or make available through EDGAR, as soon as available, but in no event more than forty-five (45) days after the end of each fiscal quarter of MDI (except the last), consolidated financial statements of MDI in the form of those required under the immediately preceding section of this Agreement prepared and certified by the chief financial officer of MDI. 6.4 Other Information. MDI will furnish to the Investor, promptly from time to time, such information concerning the operations, business affairs, and financial condition of MDI as the Investor may reasonably request; provided that the Investor enter into a confidentiality agreement prior to the receipt of such information. 6.5 Books, Records and Inspections. MDI will at all times (a) maintain complete and accurate books and records and (b) permit any person designated by the Investor to enter, examine, audit and inspect all properties, books, operations and records of MDI at any reasonable time and from time to time wherever such properties, books and records are located. 6.6 Litigation. MDI will promptly notify the Investor of any litigation or claim dispute instituted or threatened against MDI or the Property, and of the entry of any judgment or Lien against any of MDI's assets or properties where the claims against MDI exceed $50,000. 6.7 Preservation of Properties. MDI will at all times (a) maintain its properties, whether owned or leased, in good operating condition and from time to time will make all proper repairs, renewals, replacements, additions and improvements thereto needed to maintain such properties in good operating condition, (b) comply with the provisions of all material leases to which it is a party or under which it occupies property so as to prevent any loss or forfeiture thereof or thereunder, and (c) comply with all laws, rules, regulations and orders applicable to the properties or any thereof; provided, however, that nothing contained in this section shall require the making of any repair, renewal, replacement, addition, or improvement of or to a particular property or the continued maintenance of any property which would not be required in the exercise of sound business judgment. 6.8 Insurance. MDI will (a) at all times maintain with well-rated and responsible insurance companies such insurance as is required by applicable laws and such other insurance in such amounts, of such types, and against such risks, hazards, liabilities, casualties and contingencies as is customarily maintained by companies similarly situated, and (b) provide to the Investor upon request a detailed list of the insurance then in effect and stating the names of the insurance companies, the types, the amounts, and rates of the insurance, dates of the expiration thereof and the properties and risks covered thereby, and, at the sole discretion and election of MDI, obtain such additional insurance as the Investor may reasonably request. 6.9 Taxes. Except to the extent that the validity or amount thereof is being contested in good faith and by appropriate proceedings, MDI will use its best efforts to pay and discharge all taxes prior to the date when any interest or penalty would accrue for the nonpayment thereof. 6.10 Maintain Existence. MDI will at all times maintain in full force and effect its existence, rights, privileges and franchises and qualify and remain qualified in all jurisdictions where qualification is required and in which the failure to so qualify or to be in good standing would have a materially adverse effect on MDI's operations or financial condition.. 6.11 Compliance with Laws. MDI will at all times comply with all applicable federal, state and local laws, rules and regulations, and orders of any court or other governmental authority having jurisdiction, including all environmental laws and regulations. 6.12 Guaranties, Loans or Advances. Subject to prior obligations as of the Closing, without the prior written consent of the Investor, MDI will not become or be a guarantor or surety of, or otherwise become or be responsible in any manner (whether by agreement to purchase any obligations, stock, assets, goods, or services, or to supply or advance any funds, assets, goods, or services, or otherwise) with respect to, any undertaking of any other person or make or permit to exist any loans or advances to any other person or entity. 6.13 MDI will not issue any stock subsequent to the date hereof and prior to April 25, 2002, other than that contracted for hereunder or otherwise heretofore reserved for issuance, optioned, or committed, including with respect to outstanding options, warrants and the Series B Preferred Stock, except: a) For securities granted or to be granted under MDI's 1997 Stock Option and Award Plan, as amended by the Board of Directors (with such amendment to be submitted to stockholders for approved at the 2001 Annual Meeting of Stockholders), or b) For securities issued in the ordinary course, including, without limitation, in connection with licensing arrangements, or c) For securities issued in connection with joint ventures and strategic alliances, or d) For securities issued to MDI's consultants and advisors, or e) For securities issued in connection with financings where the price per share of Common Stock (on an as-converted basis with respect to convertible securities) is greater than $2.50 per share. f) For securities issued in connection with any stock split, stock dividend or recapitalization, or g) With the consent of Investor which shall not be unreasonably withheld, or h) Other than pursuant to Section 6.13(e), if additional financing is required by MDI, Investor will assist MDI in obtaining it. Should such financing involve the issuance of stock or convertible debentures, Investor shall have the first right to provide such financing on the same terms as those that MDI can obtain from others. In the event that Investor does not provide such additional financing within fifteen (15) days after receiving written notice from MDI setting forth the terms on which MDI can secure such additional financing, MDI shall then have the unrestricted right to enter into such financing with any third party or parties and to consummate the same, provided the terms thereof are no less favorable to MDI than those offered to and refused by Investor. 6.14 MDI will not enter into any merger or consolidation with a third party or any reorganization prior to April 25, 2002, except by and with the consent of Investor. SECTION 7. Negative Covenants. So long as shares of Series C Preferred Stock remain outstanding, MDI covenants and agrees with Investor as follows: 7.1 MDI will not permit or allow a substantial change in the management of MDI without the prior written approval of Investor, which approval shall not be unreasonably withheld. 7.2 MDI shall not permit a substantial change in the nature of the business of MDI. SECTION 8. Conditions to Closing by Investor. The obligation of Investor to purchase and pay for the Series C Preferred Stock being purchased by Investor is subject to satisfaction of the following conditions precedent at or before Closing: 8.1 Documents. MDI shall have delivered to the Investor the following: 8.1.1 MDI's Resolutions. A copy of all resolutions of the Board of Directors of MDI authorizing the execution and performance of this Agreement and the issuance of the Series C Preferred Stock, and a certificate of the Secretary of MDI, dated as of the Closing, certifying that such resolutions were duly adopted and continue in full force and effect without amendment or modification. 8.1.2 MDI's Articles of Incorporation and Bylaws. A copy, certified by MDI's secretary, of MDI's Articles of Incorporation and Bylaws, and all amendments thereto. 8.1.3 Incumbency Certificate. A certificate of MDI's secretary as to the incumbency and signatures of the officers of MDI signing this Agreement, and any other documents to be delivered pursuant hereto. 8.1.4 Other Certificate. A certificate (i) confirming compliance in all material respects with all covenants under the Agreement and (ii) that as of the latest SEC Document, no material adverse change in business or financial affairs of MDI have occurred. 8.1.5 Good Standing Certificates. A certificate as of a recent date from the Secretary of State or other appropriate official of the state of incorporation certifying to the due incorporation and continuing good standing of MDI and a similar certificate for each of the subsidiaries of MDI that are actively engaged in business. 8.2 Other Closing Conditions. 8.2.1 Investor's Counsel. All legal matters incident to this Agreement shall be satisfactory to counsel for the Investor and MDI shall have reimbursed the Investor for the fees and expenses of Investor's counsel in connection with the preparation of this Agreement and all matters incident thereto. 8.2.2 Opinion of Counsel of MDI. An opinion of Mintz Levin Cohn Ferris Glovsky and Popeo, PC, counsel for MDI, in the form attached hereto as Exhibit B. SECTION 9. Events of Default. The occurrence of any one or more of the following events (the "Events of Default") shall constitute an event of default hereunder: 9.1 Failure to Pay Interest. If MDI shall fail to pay preferred dividends in accordance with the provisions of Section 2.1 of this Agreement when and as due and payable, and such failure shall remain uncured for a period of twenty (20) days after the date of written notice from the Investor to MDI; or 9.2 Failure to Convert Stock. If MDI shall fail to convert the Series C Convertible Preferred Stock in accordance with the terms and provisions of this Agreement and such Stock, and such failure shall remain uncured for a period of twenty (20) days after the date of written notice from the Investor to MDI; or 9.3 Terms, Conditions and Covenants of this Agreement. If MDI shall fail to duly perform, comply with, or observe any of the other terms, conditions, or covenants contained in this Agreement, and such failure shall remain uncured for a period of twenty (20) days after the date of written notice from the Investor to MDI; or 9.4 Representations and Warranties. If any representation and warranty or any statement or representation made in writing on behalf of MDI herein shall prove to be false or uncured in any material respect on the date as of which made and the same shall remain uncured for a period of twenty (20) days after the date of written notice from the Investor to MDI; or 9.5 Bankruptcy, Insolvency, etc. If MDI becomes insolvent or generally does not pay its debts as they become due, or if a petition for relief in a bankruptcy court is filed by MDI, or if MDI applies for, consents to, or acquiesces in the appointment of a trustee, custodian, or receiver for MDI or any of its assets and property, or makes a general assignment for the benefit of creditors; or, in the absence of such application, consent, or acquiescence, a trustee, custodian, or receiver is appointed for MDI or for a substantial part of the assets and property of MDI and is not discharged within thirty (30) days; or any bankruptcy, reorganization, debt arrangement, or other proceeding or case under any bankruptcy or insolvency law or any dissolution or liquidation proceeding is instituted against MDI and is consented to or acquiesced in by MDI or remains for sixty (60) days undismissed; or MDI takes any action to authorize any of the actions described in this subsection. SECTION 10. Rights and Remedies. If any one or more Events of Default shall occur and be continuing, then in each and every such case, the Investor at its option may at any time thereafter exercise and/or enforce any or all of the following rights and remedies: 10.1 Exercise of Rights and Remedies. Investor may proceed to protect and enforce the rights of a holder of such Series C Preferred Stock by an action at law, suit in equity, or other appropriate proceeding, whether for the specific performance of any agreement contained herein or pursuant to such Series C Preferred Stock, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law. If any holder of any Series C Preferred Stock shall give any notice or take any other action in respect of a claimed default, MDI shall forthwith give written notice thereof to all other holders of the Series C Preferred Stock at the time outstanding, describing the notice or action and the nature of the claimed default. 10.2 Collection Costs. MDI shall reimburse and pay to the Investor upon demand all costs and expenses (the "Collection Costs"), including, without limitation, attorneys' fees and expenses, advanced, incurred by, or on behalf of the Investor in collecting any preferred dividends required to be paid, but not paid, by MDI and enforcing its rights and pursuing its remedies in the event of any Event of Default as set forth in Section 9 of this Agreement. 10.3 Remedies, etc., Cumulative. Each right, power, and remedy of the Investor as provided for in this Agreement or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by the Investor of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by the Investor of any or all such other rights, powers, or remedies. 10.4 No Waiver, etc. No failure or delay by the Investor to insist upon the strict performance of any term, condition, covenant, or agreement of this Agreement, or to exercise any right, power, or remedy consequent upon a breach thereof, shall constitute a waiver of any such term, condition, covenant, or agreement or of any such breach, or preclude the Investor from exercising any such right, power, or remedy at any later time or times. By accepting payment after the due date of any preferred dividend or any other amount payable under this Agreement, the Investor shall not be deemed to waive the right either to require prompt payment when due of all of preferred dividends or any other amounts payable under this Agreement, or to declare an Event of Default for failure to effect such prompt payment of any such other amount. SECTION 11. Representations and Agreements of Investor. Investor makes the following representations and agreements all of which shall survive the Closing: 11.1 Investor may assign the right to receive portions of the securities being purchased hereunder to not more than ten corporations affiliated with it or individuals employed by it or by such affiliated corporations. Investor represents that the securities being purchased by it are being purchased for investment and with no present intention of making any disposition or sale thereof. Investor warrants that any portions of such securities received by such affiliated corporations or persons will be similarly held for investment by such corporations or persons. 11.2 The Investor understands that the shares of Series C Preferred Stock and the shares underlying the Series C Preferred Stock have not been registered under the Securities Act of 1933 or any state securities law, by reason of their issuance in a transaction exempt from the registration requirments of the Securities Act and such laws, and that such shares must be held indefinitely unless they are subsequently registered under the Securities Act of 1933 and such laws or a subsequent disposition thereof is exempt from registration. The certificates for the Shares shall bear a legend to such effect. 11.3 The Investor understands that the exemption from registration afforded by Rule 144 promulgated by the SEC under the Securities Act of 1933 depends upon the satisfaction of various conditions and that, if applicable, Rule 144 affords the basis for sales only in limited amounts. 11.4 The Investor (i) has sufficient knowledge and experience in busines and financial matters and with respect to investment in securities of companies comparable to MDI so as to enable it to analyze and evaluate the merits and risks of such investment contemplated hereby and (ii) is able to bear the economic risk of such investment. The Investor is an "accredited investor" within the meaning of Regulation D under the Securities Act of 1933. 11.5 This Agreement has been duly and validly authorized, executed and delivered on behalf of 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 effecting the enforcement of creditors' rights generally. SECTION 12. Conditions to Closing by MDI. The obligation of MDI to sell the Series C Preferred Stock to the Investor is subject to satisfaction of the following conditions precedent at or before Closing: 12.1 Investor, at the Closing, shall deliver to MDI the following documents: 12.1.1 A certificate as of a recent date from the Secretary of State or other appropriate official certifying to the due incorporation and continuing good standing of Investor. 12.1.2 A copy of all resolutions of the Board of Directors of Investor authorizing the execution and performance of this Agreement, and a certificate of the Secretary of Investor, dated as of the Closing, certifying that such resolutions were duly adopted and continue in full force and effect without amendment or modification. 12.1.3 An opinion of John H. Harman, Esquire, counsel for Investor, that Investor is a duly organized and validly existing corporation in good standing; that Investor has taken all corporate action under all applicable provisions of the law, its Certificate of Incorporation, and its Bylaws to authorize the execution and carrying out of this Agreement; and that this Agreement constitutes the legally binding obligation of Investor in accordance with its terms. 12.1.4 A statement by each corporation or person, if any, to whom Investor assigns the right to receive a portion of the securities being purchased hereunder, stating that such securities are being purchased by such corporation or person for investment and with no present intention of making any disposition or sale thereof. 12.2 MDI's Counsel. All legal matters incident to this Agreement shall be satisfactory to counsel for MDI. SECTION 13. Closing. The Closing provided for by this Agreement shall take place at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 666 Third Avenue, New York, New York 10017, on or about April 25, 2001. SECTION 14. Benefit. This Agreement shall be binding and inure to the benefit of and be enforceable by the respective successors and assigns of MDI and Investor. All representations, covenants, and agreements in this Agreement or any statement, certificate, or other document delivered in connection with this Agreement or pursuant hereto shall survive the Closing. The terms of this Agreement cannot be varied or modified orally but only by an agreement in writing signed by MDI and Investor. This contract may not be assigned by either party without the written consent of the other party hereto. SECTION 15. Notices. Any notices or demands required by this Agreement shall be in writing and delivered personally or mailed by registered mail to the party entitled to such notice or demand at the address set forth below opposite the name of such party may notify the other in writing: If to MDI, to: MDI Entertainment, Inc. Attn: Steve Saferin 201 Ann Street Hartford, CT 06103 with a copy to: Mintz, Levin, Cohn, Ferris and Glovsky, P.C. Attn: Kenneth R. Koch, Esq. 666 Third Avenue New York, NY 10017 If to Investor, to: Oxford International, Inc. Attn: Gregory C. Dutcher 125 N. West Street Easton, MD 21601 SECTION 16. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed and original, but which together shall constitute one and the same instrument. SECTION 17. Miscellaneous. 17.1 Survival. All covenants, agreements, representations, and warranties made herein and in any other instruments or documents delivered pursuant hereto shall continue in full force and effect so long as any of the Liabilities are outstanding and unpaid. 17.2 Change, etc. Neither this Agreement nor any term, condition, representation, warranty, covenant, or agreement hereof may be changed, waived, discharged, or terminated orally but only by an instrument in writing by the party against whom such change, waiver, discharge, or termination is sought. 17.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. 17.4 Terms Binding. All of the terms, conditions, stipulations, warranties, representations, and covenants of this Agreement shall apply to and be binding upon, and shall inure to the benefit of, MDI and the Investor and each of their respective heirs, personal representatives, successors, and assigns. 17.5 Arbitration: The parties acknowledge and agree that any claim or controversy arising out of or relating to this Agreement or the breach thereof shall be submitted to arbitration in the State of Delaware using the services and rules and regulations of the American Arbitration Association, which decision shall be binding upon both parties. The parties agree that any judgment upon such award may be entered in any Court in the State of Delaware having jurisdiction. 17.6 WAIVER OF TRIAL BY JURY: MDI hereby unconditionally and irrevocably waives any and all right by a jury under any local, state, federal or foreign law, in any action, proceeding, suit, counterclaim or cross claim to which MDI and Investor may be parties, arising in conjunction with, out of, or in any way pertaining to this Agreement, any investment documents or commitment to be provided pursuant to this Agreement, or any other transaction related to this Agreement. It is agreed and understood that this waiver constitutes a waiver of trial by jury of all claims against parties who are not parties to this Agreement. This waiver is knowingly, willing and voluntarily made by MDI and MDI hereby represents that no representations of fact or opinion have been made by any individual to induce this waiver of trail by jury or to in any way modify or nullify its effect. MDI further represents that it has been represented or has had the opportunity to be represented in the signing of this Agreement and in making this waiver by independent legal counsel selected of its own free will and that it has had the opportunity to discuss this waiver with counsel. 17.7 Gender, etc. Wherever used herein, the singular number shall include the plural, the plural the singular, and the use of the masculine, feminine, or neuter general shall include all genders. 17.8 Headings. The section and subsection headings in the Agreement are for convenience only and shall not limit or otherwise affect any of the terms hereof. 17.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument. 17.10 Consent to Jurisdiction; Service of Process. MDI hereby agrees and consents that any action or proceeding arising out of or brought to enforce the provisions of this Agreement and/or any transactions contemplated by the Agrement may be brought in any appropriate court in the State of Delaware, and by the execution of this Agreement, MDI irrevocably consents to the jurisdiction of such court. MDI hereby irrevocably appoints the Delaware Secretary of State as its agent to accept service of process for it and on its behalf in any proceeding brought pursuant to the provisions of this subsection. 17.11 Further Assurances and Corrective Instruments. The parties hereto agree that they will, from time to time, execute and deliver, or cause to be executed and delivered, such supplements hereto and such further instruments as may reasonably be required for carrying out the intention of the parties to, or facilitating the performance of, this Agreement. 17.12 Illegality. If fulfillment of any provision hereof or any transaction related hereto, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity; and if any clause or provision herein contained operates or would prospectively operate to invalidate this Agreement in whole or in part, then such clause or provision only shall be void, as though not herein contained, and the reminder of the Agreement shall remain operative and in full force and effect. In witness whereof the parties have caused this Agreement to be executed by their duly authorized officers and their corporate seals to be hereunto affixed as of the day and year first above written. (SEAL) MDI ENTERTAINMENT, INC. Attest: /s/ Kenneth M. Przysiecki By: /s/ Steven M. Saferin - --------------------------------------- -------------------------------------------- Secretary Steven M. Saferin, President and Chief Executive Officer (SEAL) OXFORD INTERNATIONAL, INC. Attest: /s/ By: /s/ Gregory C. Dutcher - ------------------------------------------------------ -------------------------------------------- Secretary Gregory C. Dutcher, President
EX-99.2 3 file003.txt CERTIFICATE OF DESIGNATION EXHIBIT 99.2 CERTIFICATE OF DESIGNATIONS MDI ENTERTAINMENT, INC. CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES C PREFERRED STOCK The undersigned officer of MDI Entertainment, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that, pursuant to authority conferred by the Certificate of Incorporation, as amended to date, and pursuant to the provisions of Section 151(g) of the General Corporation Law of the State of Delaware, the Board of Directors of MDI Entertainment, Inc., on April 11, 2001, adopted a resolution providing for certain powers, designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of certain shares of Series C Preferred Stock, $.001 par value, of the Corporation, which resolution are as follows: RESOLVED: That a series of Preferred Stock, par value $.001 per share, to be known as "Series C Preferred Stock," of the Corporation be hereby created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof shall be fixed as set forth in the Certificate of Designations, Preferences and Rights of Series C Preferred Stock of the Corporation (the "Certificate of Designations") substantially in the form presented to the Board of Directors; and it is further Designation of Series C Preferred Stock is attached as follows. RESOLVED: That the appropriate officer or officers of the Corporation be, and they hereby are, authorized pursuant to the authority conferred upon them by the Certificate of Incorporation, and pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, to file such Certificate of Designations with the Secretary of State of the State of Delaware. EXECUTED as of this 23rd day of April, 2001. MDI ENTERTAINMENT, INC. By: /s/ /Steven M. Saferin ----------------------------------------- Steven M. Saferin President DESCRIPTION AND DESIGNATION OF SERIES C PREFERRED STOCK 1. Designation and Definitions. (a) Designation. A total of 2,100 shares of the Corporation's previously undesignated Preferred Stock, $.001 par value, shall be designated as the "Series C Preferred Stock." The original issue price per share of the Series C Preferred Stock shall be $1,523.81 (the "Original Issue Price"). (b) Certain Definitions. As used herein, the following terms, unless the context otherwise requires, have the following respective meanings: (i) "Common Stock" means the common stock, par value $.001 per share, of the Corporation. (ii) "Conversion Date" means each date on which the Corporation receives by telecopy written notice in accordance with Section 5(g) hereof from a holder of Series C Preferred Stock that such holder elects to convert shares of its Series C Preferred Stock. (iii) "Issue Date" means, with respect to each share of Series C Preferred Stock held by any holder, the date on which the Corporation originally issued such share to a holder (regardless of the number of times transfer of such share is made on the stock transfer books maintained by or for the Corporation, and regardless of the number of certificates which may be issued to evidence such share, and irrespective of any subsequent transfer or other disposition of such share to any other holder). 2. Dividends. (a) Preferred Dividend - Cash and/or In-Kind. When and as declared by the Board of Directors and to the extent permitted by the General Corporation Law of the State of Delaware, the Corporation shall pay preferential dividends to the holders of the Series B Preferred Stock as provided in this Section 2(a). (i) Preferred Dividend. Except as otherwise provided herein, dividends on each share of Series C Preferred Stock shall accrue at the rate of eight percent (8%) per annum of the Original Issue Price, from and including the Issue Date of such share to and including the date on which the Liquidation Value of such share is paid or such share is converted in accordance with the provisions hereof (the "Preferred Dividend"). Such Preferred Dividend will accrue whether or not it has been declared and whether or not there are profits, surplus or other funds of the Corporation legally available for its payment. (ii) Quarterly Payments. Commencing on April 25, 2001, the Preferred Dividend shall be payable in cash subject to Section 2(a)(v) below quarterly, for the actual number of days elapsed, on each March 31, June 30, September 30 and December 31, to the holders of record of shares of Series C Preferred Stock as of the tenth (10th) trading day preceding the applicable dividend payment date. (iii) Interest. Accrued but unpaid Preferred Dividends shall bear interest at a rate of five percent (5%) of any quarterly payment due and payable in the event any such amounts remain unpaid for ten (10) days after such payment due date. Preferred Dividends paid in cash in an amount less than the total amount of such dividends at the time accrued and payable shall be allocated on a share-by-share basis among all shares of Series C Preferred Stock at the time outstanding. (iv) Payment Upon Conversion. On the date on which any holder's shares of Series C Preferred Stock are converted into Common Stock pursuant to Section 5 hereof, the accrued Preferred Dividends with respect to the shares so converted shall be paid to such holder. All accrued Preferred Dividends also shall be payable upon the liquidation, dissolution or winding up of the Corporation. (v) Payment in Common Stock. The Corporation, at its sole discretion, may pay the Preferred Dividends in cash or in shares of Common Stock at the then fair market value per share of Common Stock as of the date on which the Preferred Dividend is payable. For purposes of this Section 2(a)(v), fair market value shall be the average of the closing bid price of the Common Stock of the Corporation as reported by the Nasdaq/OTC Bulletin Board, the Nasdaq SmallCap Market or the Nasdaq National Market or, if the Corporation's Common Stock is no longer traded on a Nasdaq market, such other exchange on which the Corporation's Common Stock is then traded, for thirty (30) Trading Days immediately preceding the date on which the Preferred Dividend is payable. (vi) Fractional Shares. Notwithstanding anything herein to the contrary, no fractional shares shall be issued pursuant to this Section 2, and the number of shares of Common Stock issued upon the payment of the Preferred Dividend shall be rounded up or down to the nearest whole share. (b) If the Board of Directors shall declare any dividend or distribution payable upon the then outstanding shares of Common Stock, the holders of the Series C Preferred Stock shall be entitled to the amount of dividends and distributions on the Series C Preferred Stock as would be declared payable on the largest number of whole shares of Common Stock into which the shares of Series C Preferred Stock held by each holder thereof could be converted pursuant to the provisions of Section 5 hereof, such number determined as of the record date for the determination of holders of Common Stock entitled to receive such dividend. Such determination of "whole shares" shall be based upon the aggregate number of shares of Series C Preferred Stock held by each holder, and not upon each share of Series C Preferred Stock so held by the holder. (c) Subject to the foregoing provisions of this Section 2, the Board of Directors may declare and the Corporation may pay or set apart for payment, or cause the accrual of, stated or cumulative dividends and other distributions on any other series of preferred stock hereafter designated, and may purchase or otherwise redeem any of the same (or any warrants, rights, options or other securities exercisable therefor or convertible or exchangeable thereinto), andthe holders of Series C Preferred Stock shall not be entitled to share therein. 3. Liquidation, Dissolution Or Winding Up. (a) Treatment At Liquidation, Dissolution or Winding Up. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or in the event of its insolvency, before any distribution or payment is made to any holders of Common Stock or any other class or series of capital stock of the Corporation designated to be junior to the Series C Preferred Stock (including the Series B Preferred Stock of the Corporation), and subject to the liquidation rights and preferences of any class or series of Preferred Stock designated by the Board of Directors in the future to be senior ("Senior Stock") to or on a parity ("Pari Passu Stock") with the Series C Preferred Stock with respect to liquidation preferences, the holder of each share of Series C Preferred Stock shall be entitled to be paid first out of the assets of the Corporation available for distribution to holders of the Corporation's capital stock of all classes, whether such assets are capital, surplus or earnings, an amount equal to $1,523.81 per share (the "LiquidationValue"). If, upon liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to its stockholders after appropriate deduction is made for payment in full of the liquidation preference of all Senior Stock shall be insufficient to pay the holders of the Series C Preferred Stock and any Pari Passu Stock the full amount to which they otherwise would be entitled, the holders of Series C Preferred Stock and any Pari Passu Stock shall share ratably in any distribution of available assets pro rata in proportion to the respective liquidation preference amounts which would otherwise be payable upon liquidation with respect to the outstanding shares of the Series C Preferred Stock and any Pari Passu Stock if all liquidation preference amounts with respect to such shares were paid in full, based upon the aggregate Liquidation Value payable upon all shares of Series C Preferred Stock and Pari Passu Stock then outstanding. After such payment shall have been made in full to the holders of the Senior Stock, Series C Preferred Stock and any Pari Passu Stock, or funds necessary for such payment shall have been set aside by the Corporation in trust for the account of holders of the Series C Preferred Stock so as to be available for such payment, the remaining assets available for distribution shall be distributed ratably among the holders of the Common Stock and any class or series of capital stock designated to be junior to the Series C Preferred Stock (if any) in right of payment upon any liquidation, dissolution or winding up of the Corporation. The amounts set forth above shall be subject to equitable adjustment by the Board of Directors whenever there shall occur a stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Series C Preferred Stock. (b) Distributions Other Than Cash. Whenever the distributions provided for in this Section shall be payable in property other than cash, the value of such distribution shall be the fair market value of such property as determined in good faith by the Board of Directors. All distributions (including distributions other than cash) made hereunder shall be made pro rata to the holders of Series C Preferred Stock. (c) Merger. If any merger or consolidation of the Corporation into or with another corporation shall occur and in such merger or consolidation, the Corporation's Common Stock shall be converted or exchanged into stock, securities or other property, the Series C Preferred Stock shall be converted into the same such stock, securities or property in an amount per share equal to the largest number of whole shares of Common Stock into which such holder's shares of Series C Preferred Stock could be converted on the date of such transaction. 4. Voting Power. (a) General. Except as otherwise expressly provided in this Section 4 or as otherwise required by the General Corporation Law of the State of Delaware, each holder of Series C Preferred Stock shall be entitled to vote on all matters and shall be entitled to that number of votes equal to the largest number of whole shares of Common Stock into which such holder's shares of Series C Preferred Stock could be converted, pursuant to the provisions of Section 5 hereof, at the record date for the determination of stockholders entitled to vote on any matter or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. Except as otherwise expressly required by law, the holders of shares of Series C Preferred Stock and Common Stock shall vote together (or render written consents in lieu of a vote) as a single class on all matters submitted to the stockholders of the Corporation. Such determination of "whole shares" shall be based upon the aggregate number of shares of Series C Preferred Stock held by each holder, and not upon each share of Series C Preferred Stock so held by the holder. (b) Amendments To Charter. For so long as there are any shares of Series C Preferred Stock outstanding, the Corporation shall not amend its Certificate of Incorporation or this Certificate of Designation in any manner adverse to the holders of Series C Preferred Stock (including, without limitation, pursuant to or as a result of any merger, consolidation or otherwise) without the approval, by vote or written consent, of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock, voting together as a class, each share of Series C Preferred Stock to be entitled to one vote in each instance. Without limiting the generality of the foregoing, the creation, or increase in the authorized number of shares, of any class or series of stock ranking senior to or on a parity with the Series C Preferred Stock either as to dividends or upon liquidation shall be deemed to adversely affect the rights of the holders of Series C Preferred Stock for purposes of this Section 4(b). 5. Conversion Rights. (a) Conversion. Each holder of Series C Preferred Stock shall have the right, at such holder's option, to convert at any time any of the shares of Series C Preferred Stock held by such holder into such number of fully paid and nonassessable shares of Common Stock as shall be determined by multiplying the number of shares of Series C Preferred Stock to be converted by the Conversion Ratio (as defined below). (b) Conversion Ratio. The conversion ratio (the "Conversion Ratio") shall initially be 1,000. The initial Conversion Ratio shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series C Preferred Stock is convertible, as hereinafter provided. (c) Automatic Conversion. The Series C Preferred Stock shall be automatically converted (on a pro rata basis if more than one holder) at the then effective Conversion Ratio as follows: (i) twenty-five percent (25%) of the Series C Preferred Stock (said 25% being equivalent to five hundred twenty five (525) shares of Series C Preferred Stock) shall be automatically converted no later than one hundred twenty (120) days from the Issue Date, and (ii) after a registration statement covering the full amount of the shares of Common Stock underlying the Series C Preferred Stock has been filed by the Corporation with the Securities and Exchange Commission, an aggregate of five hundred twenty five (525) shares of Series C Preferred Stock shall be automatically converted into Common Stock every ninety (90) days. Upon the happening of such automatic conversions, the Series C Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation; provided, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon any such conversion unless certificates evidencing such shares of Series C Preferred Stock being converted are either delivered to the Corporation, or the holder of such shares notifies the Corporation that such certificates have been lost, stolen, or destroyed and executes an agreement reasonably satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith. (d) Adjustment for Subdivisions, Combinations or Consolidations of Common Stock. In the event of a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), the Conversion Ratio in effect immediately prior to the record date or effectiveness, as the case may be, of such subdivision shall, concurrently with such record date or effectiveness, be proportionately increased. In the event the outstanding shares of Common Stock shall be combined or consolidated (by reclassification or otherwise) into a lesser number of shares of Common Stock, the Conversion Ratio in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately decreased. (e) Adjustment For Reclassification, Exchange, or Substitution. In the event that at any time or from time to time after the Issue Date, the Common Stock issuable upon the conversion of the Series C Preferred Stock shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for above or stock dividend, or a merger, consolidation, or sale of assets provided for below), then and in each such event the holder of each such share of Series C Preferred Stock shall have the right thereafter to convert such share into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by a holder of the number of shares of Common Stock into which such share of Series C Preferred Stock might have been converted immediately prior to such reorganization, reclassification or change, all subject to further adjustment as provided herein. (f) Certificate As To Adjustments; Notice By Corporation. In each case of an adjustment or readjustment of the Conversion Ratio, the Corporation at its expense will furnish each holder of Series C Preferred Stock so affected with a certificate prepared by an officer of the Corporation, showing such adjustment or readjustment, and stating in detail the facts upon which such adjustment or readjustment is based. (g) Exercise of Conversion Privilege. To exercise its conversion privilege, a holder of Series C Preferred Stock shall give written notice by telecopy to the Corporation at its principal office that such holder elects to convert shares of its Series C Preferred Stock and shall thereafter surrender the original certificate(s) representing the shares being converted to the Corporation at its principal office together with an originally executed copy of such notice. Such notice shall also state the name or names (with its address or addresses, as well as the address(es) for delivery) in which the certificate(s) for shares of Common Stock issuable upon such conversion shall be issued. The certificate(s) for the shares of Series C Preferred Stock surrendered for conversion shall be accompanied by proper assignment thereof to the Corporation or in blank. As promptly as practicable after the Corporation receives the original certificate(s) for the shares of Series C Preferred Stock surrendered for conversion, the proper assignment thereof to the Corporation or in blank and the original notice of conversion (collectively, the "Original Documentation"), but in no event more than three (3) business days after the Corporation's receipt of the Original Documentation, the Corporation shall issue and shall deliver to the holder of the shares of Series C Preferred Stock being converted, at the addresses set forth therefor by the holder, such certificate(s) as it may request for the number of whole shares of Common Stock issuable upon the conversion of such shares of Series C Preferred Stock in accordance with the provisions of this Section 5, and cash, as provided in Section 5(h), in respect of any fraction of a share of Common Stock issuable upon such conversion. Such conversion shall be deemed to have been effected immediately prior to the close of business on the Conversion Date, and at such time the rights of the holder as holder of the converted shares of Series C Preferred Stock shall cease and the person(s) in whose name(s) any certificate(s) for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder(s) of record of the shares of Common Stock represented thereby. (h) Cash In Lieu of Fractional Shares. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon the conversion of shares of Series C Preferred Stock. Instead of any fractional shares of Common Stock that would otherwise be issuable upon conversion of Series C Preferred Stock, the Corporation shall pay to the holder of the shares of Series C Preferred Stock being converted a cash adjustment in respect of such fractional shares in an amount equal to the same fraction of the market price per share of the Common Stock (as determined in a reasonable manner prescribed by the Board of Directors) at the close of business on the Conversion Date. The determination as to whether or not any fractional shares are issuable shall be based upon the aggregate number of shares of Series C Preferred Stock being converted at any one time by any holder thereof, not upon each share of Series C Preferred Stock being converted. (i) Partial Conversion. In the event some but not all of the shares of Series C Preferred Stock represented by a certificate(s) surrendered by a holder are converted, the Corporation shall execute and deliver to or on the order of the holder, at the expense of the Corporation, a new certificate representing the number of shares of Series C Preferred Stock which were not converted. Such new certificate shall be so delivered on or prior to the date set forth in Section 5(h) for the delivery of certificates for shares of Common Stock. (j) Reservation of Common Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series C Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series C Preferred Stock, and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series C Preferred Stock, then the Corporation shall be deemed to be in breach and default of its obligations hereunder, and in addition to all charges, claims and rights at law or in equity that each holder shall be entitled to, the Corporation shall use all means reasonably available to it, and promptly take any and all actions as may be necessary, to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. 6. Redemption and Repurchase Rights. The Corporation shall have no right to redeem, and holders of shares of Series C Preferred Stock shall have no right to cause the Corporation to redeem, any or all of the outstanding shares of Series B Preferred Stock. 7. Notices of Record Date. In the event of any: (a) taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of capital stock of any class or any other securities or property, or to receive any other right, or (b) capital reorganization of the Corporation, any reclassification or recapitalization of the capital stock of the Corporation, any merger or consolidation of the Corporation, or any transfer of all or substantially all of the assets of the Corporation to any other Corporation, or any other entity or person, or (c) voluntary or involuntary dissolution, liquidation or winding up of the Corporation, then and in each such event the Corporation shall telecopy and thereafter mail or cause to be mailed to each holder of Series C Preferred Stock a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right and a description of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (iii) the time, if any, that is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding up. Such notice shall be telecopied and thereafter mailed by first class mail, postage prepaid, or by express overnight courier service, at least ten (10) days prior to the date specified in such notice on which such action is to be taken. 8. General. (a) Replacement of Certificates. Upon the Corporation's receipt, from the holder of any certificate evidencing shares of Series C Preferred Stock, of evidence reasonably satisfactory to the Corporation (an affidavit of such holder will be satisfactory) of the ownership and the loss, theft, destruction or mutilation of such certificate, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation, and in the case of any such mutilation, upon surrender of such certificate, the Corporation (at its expense) shall execute and deliver to such holder, in lieu of such certificate, a new certificate that represents the number of shares represented by, is dated the date of, is issued in the name of the holder of, and is substantially identical in form of, such lost, stolen, destroyed or mutilated certificate. (b) Payment of Taxes. The Corporation shall pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed in connection with the issuance or delivery of any shares of Common Stock (or other of the Corporation's securities) that results from the conversion of shares of Series C Preferred Stock pursuant to this Certificate of Designation. Notwithstanding the foregoing, if the Corporation, pursuant to a notice from a holder of any shares of Series C Preferred Stock, effects the issuance or delivery of any shares of Common Stock (or other of the Corporation's securities) in any name(s) other than such holder's name, then such holder shall deliver to the Corporation with the aforesaid notice (A) all transfer taxes and other governmental charges payable upon the issuance or delivery of securities in such other name(s) or (B) evidence satisfactory to the Corporation that such taxes and charges have been or shall be paid in full. (c) Status of Converted Shares. Shares of Series C Preferred Stock that are converted or otherwise acquired by the Corporation in any manner (including by purchase or exchange) shall be canceled and upon cancellation (i) shall no longer be deemed to be outstanding, (ii) shall become authorized but unissued shares of preferred stock undesignated as to series and (iii) may be reissued as part of another series of preferred stock. (d) Waiver. Any provision of the Certificate of Designations may be amended and observance thereof may be waived only with the written consent of the holders of not less than fifty-one percent (51%) of the outstanding shares of the Series C Preferred Stock. -----END PRIVACY-ENHANCED MESSAGE-----