UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
MDI Entertainment, Inc.
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(Name of Issuer)
Common Stock, par value $0.001 per share
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(Title of Class of Securities)
552685109
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(CUSIP Number)
Kenneth R. Koch, Esq.
Mintz Levin Cohn Ferris Glovsky and Popeo, P.C.
666 Third Avenue, 25th Floor
New York, NY 10017
(212) 692-6800
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 19, 2002
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. /X/
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 10 pages
SCHEDULE 13D
13D
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CUSIP NO. 552685109
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1 NAMES OF REPORTING PERSONS
Steven M. Saferin
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
/ /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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NUMBER OF 7 SOLE VOTING POWER
SHARES 0
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 3,928,502
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,928,502
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PERSON 10 SHARED DISPOSITIVE POWER
WITH 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,928,502(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(See Instructions)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.7 %(2)
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14 TYPE OF REPORTING PERSON (See Instructions)
IN
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(1) Consists of 3,695,169 shares held by Steven Saferin and (ii) 233,333 shares
currently exercisable pursuant to an option agreement (the "Option").
(2) Based on a total of 11,763,829 shares outstanding as reported in the Form
10-Q filed by the Issuer with the Commission on November 19, 2002, as adjusted
upward to 11,997,162 shares to reflect 233,333 shares currently exercisable
under the Option.
Page 2 of 10 pages
INTRODUCTORY STATEMENT
This Amendment No. 2 (this "Amendment") relates to the common stock,
par value $0.001 per share, of MDI Entertainment, Inc., a Delaware
corporation (the "Issuer"). This Amendment amends and restates
information from the Statement on Schedule 13D originally filed by
Steven M. Saferin on February 7, 2000 with the Securities and Exchange
Commission (the "Commission").
Item 1. Security and Issuer
The title of the class of equity securities to which this Statement
relates is the common stock of the Issuer, par value $0.001 per share.
The principal executive offices of the Issuer are located at 201 Ann
Street, Hartford, Connecticut 06103.
Item 2. Identity and Background
This Statement is being filed by Steven M. Saferin (the "Reporting
Person"), a citizen of the United States with a business address of MDI
Entertainment, Inc., 201 Ann Street, Hartford, Connecticut 06103. Mr.
Saferin is President, Chief Executive Officer and a director of the
Company.
Item 3. Source and Amount of Funds or Other Consideration
On November 19, 2002, the Issuer entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Scientific Games International,
Inc., a Delaware corporation ("Parent"), and Blue Suede Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of Parent
("Purchaser"), which provides for, among other things: (i) the
commencement by Purchaser of a cash tender offer for all of the
outstanding shares of common stock of the Issuer at a purchase price of
$1.60 per share, net to the seller in cash (the "Offer"); and (ii)
following consummation of the Offer, the merger of Purchaser with and
into the Issuer (the "Merger"). The consummation of the Offer is
subject to certain conditions as set forth in the Merger Agreement,
including the condition that 75% of the Company's outstanding shares
(including the 708,333 shares which are currently owned by Parent and
the 3,695,169 shares owned by Mr. Saferin) are tendered in the Offer.
The consummation of the Merger and the transactions contemplated
thereby are subject to customary closing conditions as prescribed in
the Merger Agreement.
Mr. Saferin has agreed to sell his shares to Purchaser at a purchase
price of $1.40 per share within five business days after the closing of
the Offer pursuant to a stock purchase agreement (the "Stock Purchase
Agreement"). In addition, Mr. Saferin and Parent have entered into a
three-year employment agreement (the "Employment Agreement") and a
non-competition agreement (the "Non-Competition Agreement"), which are
both effective upon the closing of the Offer.
Page 3 of 10 pages
Item 4. Purpose of Transaction
Except as reported in Item 3, Item 6 and in the Merger Agreement, the
Reporting Person does not have any plan or proposal which relates to,
or would result in:
(a) the acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) a sale or transfer of a material amount of assets of the Issuer or
any of its subsidiaries;
(d) any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term
of directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend
policy of the Issuer;
(f) any other material change in the Issuer's business or corporate
structure, including but not limited to, if the Issuer is a registered
closed-end investment company, any plans or proposals to make any
changes in its investment policy for which a vote is required by
Section 13 of the Investment Company Act of 1940;
(g) changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition
of control of the Issuer by any person;
(h) causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities
association;
(i) a class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Act of 1933; or
(j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer
(a) Based on a total of 11,763,829 shares outstanding on November 19,
2002, as adjusted upward to 11,997,162 shares to reflect 233,333 shares
currently exercisable under the Option, Mr. Saferin's beneficial
ownership of 3,928,502 shares of common stock constitutes beneficial
ownership of 32.7% of the total number of shares of outstanding common
stock of the Issuer.
Page 4 of 10 pages
(b) Mr. Saferin has the shared power to vote or to direct the vote of,
and sole power to dispose or direct the disposition of, the 3,928,502
shares of common stock. Pursuant to the Stock Purchase Agreement, Mr.
Saferin has granted an irrevocable proxy to the Parent and certain of
its officers as set forth in Item 6.
(c) Except as reported in Item 3, Item 6 and the Merger Agreement,
during the past sixty days, Mr. Saferin has not effected any
transactions in shares of common stock.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Stock Purchase Agreement
Steven M. Saferin, the Issuer's President, Chief Executive Officer and
a director, who in the aggregate holds voting and dispositive power
with respect to an aggregate of 3,695,169 Shares and holds options to
purchase 250,000 Shares, immediately following the execution and
delivery of the Merger Agreement entered into the Stock Purchase
Agreement, dated November 19, 2002, with Parent and the Purchaser.
Pursuant to the Stock Purchase Agreement, Mr. Saferin has agreed, among
other things, to sell the shares held by him to the Purchaser at a
purchase price of $1.40 per share, aggregating $5,173,236.60, within
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.
In addition, all options to purchase shares held by Mr. Saferin will be
cancelled and he will receive from Purchaser an amount equal to the
excess of $1.40 over the exercise price of each such option,
aggregating $242,750.
Pursuant to the Stock Purchase Agreement:
(i) Mr. Saferin has agreed to, vote (or cause to be voted) at any
meeting of the holders of the shares of the Issuer's common stock,
however called, or in connection with any written consent of the
holders of the shares of the Issuer's common stock all shares held by
Mr. Saferin (a) in favor of the Merger, the execution and delivery by
the Issuer of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger
Agreement and any actions required in furtherance thereof and hereof
and (b) against any Acquisition Proposal (as defined in the Merger
Agreement) and against any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or
any other obligation or agreement of the Issuer under the Merger
Agreement.
Page 5 of 10 pages
(ii) Mr. Saferin has covenanted and agreed that except as contemplated
or permitted by the Stock Purchase Agreement and the Merger Agreement,
he shall not (a) 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 shares held by Mr. Saferin, options,
warrants or other rights to receive shares of the Issuer's common
stock, or any interest therein, (b) enter into any contract, option or
other agreement or understanding with respect to any transfer of any or
all of the shares held by Mr. Saferin, options, warrants or other
rights to receive shares of the Issuer's common stock, or any interest
therein, (c) grant any proxy, power-of-attorney or other authorization
in or with respect to any of the shares held by Mr. Saferin, (d)
deposit any of the shares held by Mr. Saferin into a voting trust or
enter into a voting agreement or arrangement with respect to any of the
shares held by Mr. Saferin, (e) exercise any of the options pursuant to
which shares are issuable pursuant to the Option or (f) take any other
action that would in any way restrict, limit or interfere with the
performance of his obligations hereunder or the transactions
contemplated by the Stock Purchase Agreement or by the Merger
Agreement.
(iii) Mr. Saferin has irrevocably granted to, and appointed, 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, Mr. Saferin's proxy and attorney-in-fact (with full power
of substitution), for and in the name, place and stead of Mr. Saferin,
to vote the shares held by Mr. Saferin, or grant a consent or approval
in respect of the shares held by Mr. Saferin the manner described in
the Stock Purchase Agreement.
Employment and Severance Benefits Agreement
On November 19, 2002, Steven M. Saferin entered into an Employment and
Severance Benefits Agreement with Parent and Purchaser (the "Employment
Agreement"). Pursuant to the agreement, Mr. Saferin's title with the
Parent will be Senior Vice President-MDI and he will also be the
President and Chief Executive Officer of the Issuer. The agreement
commences on the date of consummation of the Offer (the "Commencement
Date") and expires on December 31, 2005. The agreement provides for an
annual base salary of $250,000, subject to annual review by the board
of the Parent and raises each year by an amount equal to the percentage
increases in base salary generally provided to the executive officers
of the Parent (the "Base Salary"). In calendar year 2003 and
thereafter, Mr. Saferin shall be eligible for annual performance
bonuses of up to 50% of his Base Salary based on the attainment of
performance objectives established by the board of directors of the
Parent and Mr. Saferin's contributions to the attainment of those
objectives. In addition, the agreement states that after the closing of
the Offer, Mr. Saferin is entitled to receive a bonus of $125,000 for
services provided to the Issuer in 2002 prior to, and in connection
with, the Offer.
Page 6 of 10 pages
Pursuant to the agreement, Mr. Saferin is eligible to be considered for
an annual grant of stock options entitling him to purchase shares of
Parent common stock. In addition, the Parent will recommend to its
Compensation Committee that Mr. Saferin be granted, as of the
Commencement Date, options to acquire 100,000 shares of Class A Common
Stock of Parent; such options to be awarded pursuant to a stock option
award agreement of Parent containing the same terms as are generally
applicable to other executive officers of the Issuer. The Parent has
also agreed to reimburse Mr. Saferin for certain expenses incurred in
relocating from Fort Worth, Texas, to Atlanta, Georgia.
Either party may terminate the agreement on sixty days' prior written
notice or upon the occurrence of certain events constituting cause or
constructive termination. In the event the agreement is terminated
without cause or for constructive termination, Mr. Saferin would be
entitled to: (i) a lump sum severance payment equal to Mr. Saferin's
annual Base Salary, to the extent that such Base Salary has not
previously been paid through such date and any bonus or award payments
theretofore made to Mr. Saferin; plus (ii) that pro rata portion of any
bonus or award which would have been payable to Mr. Saferin had Mr.
Saferin remained in employment with the Parent during the entire year
in which the date of termination occurred; plus (iii) (a) if such
termination without cause or constructive termination occurs after the
date of the Employment Agreement, but on or prior to the date of the
first anniversary thereof, a sum each month for a period of three years
after the date of termination equal to one-twelfth of Mr. Saferin's
Base Salary then in effect; or (b) if such termination without cause or
constructive termination occurs after the date of the first anniversary
of the Employment Agreement, but on or before the date of the second
anniversary thereof, a sum each month for a period of two years after
the date of termination, equal to one-twelfth of Mr. Saferin's Base
Salary then in effect; or (c) if such termination without cause or
constructive termination occurs after the date of the second
anniversary of the Employment Agreement but on or before the date of
the third anniversary thereof, a sum each month for a period of one
year after the date of termination, equal to one-twelfth of Mr.
Saferin's Base Salary then in effect; plus (iv) with certain
exceptions, the continuation of life, accident, medical and dental
insurance benefits.
If Mr. Saferin is terminated because of disability, he is entitled to
12 months' Base Salary, the continuation of medical and other benefits
and a ratable portion of bonuses earned through the date of
termination.
If Mr. Saferin terminates his employment voluntarily, subject to
certain limited exceptions, he shall not be entitled to any severance
pay or severance benefits, but shall be entitled to all other
consideration, compensation and reimbursement otherwise due to him
under the terms of the agreement but only through the date of such
termination. The agreement also contains customary provisions with
respect to benefits, reimbursement of expenses, and confidentiality.
Page 7 of 10 pages
Non-Competition Agreement
On November 19, 2002, Steven M. Saferin entered into a Non-Competition
Agreement (the "Non-Compete Agreement") with the Parent. The term of
the agreement begins on the date of the consummation of the Offer and
expires on December 31, 2005 (the "Term"). In addition, the agreement
contains an additional period of restriction consisting of the period
of time equal to the Term plus the period equal to the longer of either
(i) one year after termination of the agreement for any reason, or (ii)
any period after the Term during which Mr. Saferin receives any
compensation or other remuneration (including any severance benefits
payments) from the Parent or its affiliates (the "Restricted Period").
Until the Term expires, Mr. Saferin's non-compete obligation applies to
any geographical area in the United States in which Parent or its
affiliates has business or operations which are performed, supervised
by or assisted in by Mr. Saferin, or in which Parent or its affiliates
have customers or have actively sought prospective customers, in each
case, with whom Mr. Saferin has or had material contact while employed
by Parent or any of its affiliates. After the Term and during the
remainder of the Restricted Period, this obligation shall apply to any
geographical area in the United States in which the Parent or any
affiliate thereof (i) either continues to have business or operations
or previously had business or operations within five years prior to the
end of the Term, which, in each case, were performed, supervised by or
assisted in by Mr. Saferin, or (ii) had customers within such five-year
period or had actively sought prospective customers, in each case, with
whom Mr. Saferin had material contact within five years prior to the
end of the Term.
Pursuant to the agreement, Mr. Saferin has agreed that he will not: (i)
during the Term, engage in any business that is competitive with the
Company or its affiliates; (ii) during the Term, recruit or hire, or
attempt to recruit or hire, any employee who is employed by the Parent
or its affiliates; (iii) after the Term and during the remainder of the
Restricted Period, recruit or hire or attempt to recruit or hire, any
employee who is employed by the Parent or its affiliates to become an
employee of any other person or entity whose products or services
compete with those of the Parent or its affiliates; (iv) during the
Term, solicit, entice or induce any customer or potential customer of
the Parent or its affiliates to become a customer of any person or
entity whose products or services compete with those of the Parent or
its affiliates; and (v) after the Term and during the remainder of the
Restricted Period, solicit, entice or induce any customer as of the end
of the Term or as of any date during the Term, to become a customer of
any person or entity whose products or services compete with those of
the Parent or its affiliates.
Item 7. Material to be Filed as Exhibits
1. Agreement and Plan of Merger, dated as of November 19, 2002,
by and among Scientific Games International, Inc., MDI
Entertainment, Inc. and Blue Suede Acquisition Corp.
(incorporated by reference to the Current Report on Form 8-K
filed by the Issuer on November 20, 2002).
Page 8 of 10 pages
2. Stock Purchase Agreement, dated as of November 19, 2002, by
and among Scientific Games International, Inc. and Steven M.
Saferin of MDI Entertainment, Inc. (incorporated by reference
to the Current Report on Form 8-K filed by the Issuer on
November 20, 2002).
3. Employment and Severance Benefits Agreement, dated as of
November 19, 2002, among Parent and Steven M. Saferin
(incorporated by reference to the Current Report on Form 8-K
filed the Issuer on November 20 , 2002).
4. Non-Competition Agreement, dated as of November 19, 2002,
among Parent and Steven M. Saferin (incorporated by reference
to the Current Report on Form 8-K filed the Issuer on November
20 , 2002).
Page 9 of 10 pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Steven M. Saferin
November 27, 2002
(Date)
/s/ Steven M. Saferin
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(Signature)
Page 10 of 10 pages