The Xxxxxxxxx Group, Inc.
000 Xxxxxxxx, Xxxxx 0X
Xxx Xxxx, Xxx Xxxx 00000-0000
April 15, 1999
Board of Directors
Paradise Music & Entertainment, Inc.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
Re: Purchase of Paradise Music & Entertainment, Inc. ("Paradise") Common Stock
This letter contains the material business terms to be incorporated into
definitive common stock subscription agreement(s) (the "Definitive
Agreement(s)") pursuant to which we have agreed to purchase, for the benefit of
our clients (the "Investors") 942,000 Paradise Shares at $4.25 per Paradise
Share. This letter sets forth our mutual intent and understanding, but is not
meant to be binding upon either party (except for Sections 3(a) and (b) which
shall be binding) unless and until we both execute and deliver Definitive
Agreements covering the subject matter discussed below. If either party decides
that it no longer wishes to pursue the transaction contemplated hereunder for
any reason, such terminating party shall give the other party prompt written
notice to such effect. The Definitive Agreements will cover the following
material terms:
Section 1: Sale of Paradise Shares.
Paradise, a Delaware corporation, will sell the Investors an aggregate of
942,000 Paradise Shares at $4.25 per Paradise Share for an aggregate of
$4,003,500. Such sale shall be on the terms set forth in the term sheet annexed
hereto which is incorporated herein by reference with the same force and effect
as if recited herein its entirety. The Paradise Shares shall be sold in such
increments and in the names of the Investors as we direct. The Paradise Shares
will be sold to Investors pursuant to an exemption under Section 4(2) of the
Securities Act of 1933, as amended (the "Act"). All Investors will qualify as
"Accredited Investors". We will provide you with the names of the Investors, the
amounts of their subscriptions, their addresses and social security numbers. As
soon as you have received irrevocable Definitive Agreements for $4,003,500 in
the aggregate, documentation evidencing the qualification of all such Investors
as Accredited Investors
and payment in the amount of $4,003,500 you will promptly file a registration
statement on Form S-3 relating to the Paradise Shares being sold thereunder
("Registration Statement"). You shall use your best efforts to have the
Registration Statement declared effective as promptly as possible. Upon the
effective date of the Registration, the full amount subscribed under the
Definitive Agreements will be paid by the Investors and the Paradise Shares will
be delivered to the Investors. This financing is conditioned upon the receipt of
irrevocable subscriptions having been received by Paradise from investors of The
Xxxxxxxxx Group covering the purchase of 572,000 Paradise shares at $7 per
share.
Section 3: Miscellaneous.
(a) The parties represent, warrant and covenant to each other that no
party is entitled to any broker's or finder's fee in connection with the
transaction contemplated hereby. Paradise (and each of its executive officers
and directors, regardless of whether they are executing counterparts of this
letter), agree that they will not, jointly or severally, undertake or engage in
any discussions or negotiations with any third party or otherwise solicit
interest with respect to the sale or financing of Paradise, its assets, its
businesses, or any transaction involving the sale of all or substantially all of
the stock or assets of Paradise, or any other arrangement or understanding which
would adversely effect the ability of paradise to consummate the transaction as
contemplated hereunder or diminish the worth of its business or assets in any
way for a period of five(5) months from the date of the execution of this letter
agreement.
(b) The parties agree that they shall not issue any press releases or make
any public statements relating to the execution of this letter or the
transactions contemplated hereby without first receiving the consent of the
other party hereto, such consent not to be unreasonably withheld. The content of
any such press release or statement shall be subject to the reasonable prior
review and comment by the other party and their counsel.
(c) Except as set forth in the attached term sheet, the parties agree to
bear all of their respective expenses in connection herewith and in consummating
the transactions contemplated hereby.
(d) This letter (including the term sheet annexed hereto) sets forth the
entire agreement among the parties with respect to the subject matter hereof,
and supersedes all prior consistent and inconsistent agreements, written or
oral, with respect thereto.
(d) This letter may be amended, modified, superseded, canceled, renewed or
extended, and the terms and conditions hereof may be waived, only by a written
instrument signed by each of the parties hereto, or in the case of a waiver,
signed by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege hereunder, nor any single or partial
2
exercise of any right, power or privilege hereunder, preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
(f) This letter shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles of conflicts
of law.
(g) This letter is not assignable except by operation of law or as
specifically set forth herein.
(h) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the identity of the person or persons
may require.
(i) This letter may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.
(j) Paradise will provide the Investors with any information they may
request concerning this investment.
If the above is satisfactory to you and adequately reflects our understanding,
please acknowledge by executing in the space below provided.
THE XXXXXXXXX GROUP, INC.
By:
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Xxxx Xxxxxxxxxx, President
AGREED TO AND ACCEPTED BY:
PARADISE MUSIC & ENTERTAINMENT, INC.
By:
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Name:
Title:
