Exhibit 99.4
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PURCHASE AGREEMENT
AGREEMENT effective as of September 21, 1999 between Xxxxxx X. Xxxxxxx,
with an address at c/o MDI Entertainment, Inc., 000 Xxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 (the "Stockholder"), and Scientific Games, Inc., a Delaware
corporation, with an address at 0000 Xxxxxxxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxx 00000 (the "Purchaser").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock. On the terms and conditions of this
Agreement, the Purchaser hereby irrevocably agrees to purchase from the
Stockholder three hundred thirty three thousand (333,333) shares of
Common Stock, par value $.001 per share("Common Stock"), of MDI
Entertainment, Inc., a Delaware corporation (the "Company"), for a
purchase price equal to $1.50 per share (an aggregate of $500,000). The
Purchaser herewith delivers to the Stockholder $500,000 as consideration
for the shares being acquired hereby (the "Shares").
2. Stockholder Representations. The Stockholder hereby represents and
warrants to the Purchaser that the Stockholder is the record and
beneficial owner and holder of the Shares, free and clear of any charge,
claim, community property interest, condition, equitable interest, lien,
option, pledge, security interest, right of first refusal, or
restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of
ownership. In addition, Stockholder hereby represents and warrants that
the execution, delivery and performance of this Agreement does not and
will not violate any law applicable to Stockholder or any agreement to
which Stockholder is a party, makes the same representations and
warranties to the Purchaser as are included in Sections 5.2, 5.3, 5.4
and 5.8 of the Convertible Subordinated Debenture Purchase Agreement
(the "Agreement"), dated as of even, date herewith, between the Company
and the Purchaser.
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3. Purchaser Representations. The Purchaser hereby represents and warrants
to the Stockholder that:
(a) the Purchaser is acquiring the Shares for its own account
(and not for the account of others), for investment and not with a view to the
distribution or resale thereof;
(b) The Purchaser understands that an investment in the Shares
involves substantial risks, including the potential loss of the entire value of
such investment;
(c) The Purchaser has access to publicly-available information
including, without limitation, the Company's filings with the Securities and
Exchange Commission, regarding the Company and such other information as may be
legally disclosed regarding the Company as the Purchaser may have requested;
(d) The Purchaser is a sophisticated investor and has such
knowledge and experience in financial, tax and business matters so as to enable
the Purchaser to utilize the information made available to the Purchaser in
connection with the investment in the Shares to evaluate the merits and risks of
an investment in the Shares, and to make an informed investment decision with
respect thereto;
(e) the Purchaser understands that it may not sell or otherwise
dispose of the Shares in the absence of either a registration statement under
the Securities Act of 1933 or an exemption form the registration provisions of
the Securities Act of 1933;
(f) the certificates representing the Shares may contain a legend
to the effect of (e) above;
(g) The Purchaser has full legal power and authority to execute
and deliver this Agreement and if the Purchaser is a corporation, partnership,
limited liability company or other entity the person executing and delivering
this Agreement on behalf of the Purchaser has the power to legally bind the
Purchaser, and such execution and delivery has been duly authorized by all
necessary action on behalf of such entity.
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(h) the Purchaser acknowledges that the Company, its counsel,
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP ("SEPS"), and its transfer agent,
Olde Monmouth Stock Transfer Co. ("Old Monmouth"), will rely on the completeness
and accuracy of the statements of the Purchaser contained herein. The Purchaser
will promptly notify such persons if it finds that any of such information
contained in this Agreement is no longer accurate or complete. The Purchaser
agrees to indemnify and hold harmless the Company, SEPS and Old Monmouth from
and against all losses, costs, liabilities and expenses that may arise out of
its purchase of the Shares in violation of the Act or any state securities laws
as a result of such information.
4. Co-Sale Right. Early Term Reg. St.
(a) For purposes of this Section 4, unless the context indicates
otherwise "Co-Sales Securities" shall mean (i) as to Purchaser, the Shares and
any other shares of Common Stock acquired by the Purchaser, and (ii) as to the
Stockholder, all Common Stock of the Company held by the Purchaser immediately
after the Closing of the sale of the Shares and any other shares of Common Stock
of the Company acquired by the Stockholder.
(b) Should Stockholder receive a bona fide offer from any person,
individual or entity ("Person") to purchase any of the Stockholder's Co-Sale
Securities, or should the Stockholder make such an offer to any Person to sell
any of the Stockholder's Co-Sale Securities (other than amounts permitted by
Rule 144(e) under the Act) then the Stockholder shall send to Purchaser written
notice thereof (the "Co-Sale Notice") setting forth the number of Stockholder's
Co-sale Securities to be sold, the purchase price (or the cash equivalent
thereof as determined in the good faith by the Stockholder), the proposed
closing date and any other material terms. Within fifteen (15) days after
delivery of the Co-Sale Notice, Purchaser may elect to sell up to its pro rata
share of the total number of securities to be purchased by the transferee
described in the Co-Sale Notice by giving written notice thereof to the
Stockholder and tendering to the Secretary of the Company a certificate
representing the Co-Sale Securities to be sold, properly endorsed for transfer,
with written instructions to transfer the Co-Sale Securities to the transferee
described in the Co-Sale notice upon receipt of payment for such Co-Sale
Securities at the price or prices set forth in the Co-Sale Notice from such
transferee for the benefit of Purchaser. The Stockholder shall thereupon notify
the transferee of the co-sale arrangements hereunder, and instruct the
transferee to deliver payment for the shares to be purchased from the Purchaser
to the Secretary of the Company, who shall transmit such payment to the
Purchaser. For the purpose of the co-sale right set forth in this Section 4, the
pro-rata share of the Purchaser shall be the ratio that (i) the number of shares
of Co-Sale Securities then held by the Purchaser bears to (ii) the sum of the
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total number of shares of Co-Sale Securities held by the Stockholder (in the
case of both (i) and (ii) assuming conversion of all outstanding convertible
securities and exercise of outstanding options and warrants held by such Persons
(and, in the case of the Purchaser, its affiliates) and the redemption or
exchange of all securities which are redeemable or exchangeable for Common Stock
of the Company). Purchaser shall not be required to give, in order to effect a
sale pursuant to this Section 4, any representations or warranties other than
those pertaining to authority to sell its Co-Sales Securities to be sold and
title to those Co-Sale Securities.
(c) In the event that the Purchaser elects not to sell or fails
to sell to the proposed transferee the full number of Co-Sale Securities subject
to the Co-Sale Notice, the Stockholder may, within ninety (90) days after the
expiration of the fifteen (15) day notice period provided for in Section 4 (b),
transfer such securities of the Stockholder which otherwise could not have been
so transferred, at a price and on terms no more favorable to the Stockholder
than specified in the Co-Sale Notice. After the expiration of such ninety (90)
day period, the Stockholder shall not thereafter transfer any of the
Stockholder's Co-Sale Securities without first complying with the provisions of
Section 4).
(d) No transfer in violation of Section 4 shall be valid, and the
Company shall refuse to recognize any such attempted transfer.
(e) The provisions of Section 4 shall not apply to (i) any sale
or transfer to immediate family members or trusts for the benefit of the
Stockholder or his immediate family members, or (ii) any sale or transfer by
Stockholder to Purchaser or to any affiliate of Purchaser, or (iii) any purchase
of the securities of the Company by the Company tendered by Stockholder to the
Company in payment of the exercise price of stock options granted to Stockholder
by the Board of Directors of the Company or any committee thereof, provided
that, in the case of Co-Sale Securities transferred pursuant to clause (i), all
such transferees shall agree in writing to be subject to this Section 4, with
respect to the Co-Sale Securities so transferred to them in reliance on this
Section 4 as fully as if such transferee was Stockholder.
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(f) If Stockholder shall transfer Co-Sale Securities in
accordance with the provisions of this Section 4 (other than clause (i) of
Section 4(e)), such Co-Sale Securities shall no longer be subject to the
restrictions set forth in this Section 4, and the provisions of this Section 4
shall survive the consummation of the purchase and sale of the Shares.
(g) This Section 4 shall terminate on the earlier of two years
after the date hereof or the date on which the sale of Shares has been
registered pursuant to an effective registration statement under the Securities
Act of 1933.
5. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, and each party may become a party
hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same
instrument. It shall not be necessary in making proof of this Agreement
or any counterpart hereof to produce or account for any of the other
counterparts.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
By:/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
SCIENTIFIC GAMES INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title:President and CEO
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