Exhibit 10.1
SECOND AMENDMENT
Second Amendment (the "Amendment"), dated August 30, 1999, between
Marketing Services Group, Inc., a Nevada corporation, and General Electric
Capital Corporation ("GE Capital"), a New York corporation.
WITNESSETH:
WHEREAS, Company is in the process of arranging a private placement
(the "1999 Private Placement") of a minimum of 2,250,000 shares of its common
stock, par value $.01 per share (the "Common Stock"), up to a maximum of
4,000,000 shares of Common Stock;
WHEREAS, Company issued a $10,000,000 promissory note to GE Capital
on May 17, 1999 at an interest rate of twelve percent (12%) per annum, maturing
on November 17, 1999 (the "Note");
WHEREAS, Company issued a warrant (the "Original Warrant") to GE
Capital, dated December 24, 1997, to purchase up to 10,670,000 shares of common
stock, par value $.01 per share, of the Company (the "Common Stock");
WHEREAS, Company and GE Capital entered into a Registration Rights
Agreement, dated as of December 24, 1997 (the "Registration Rights Agreement");
WHEREAS, Company issued a warrant to GE Capital, dated May 17, 1999,
to purchase 300,000 shares of Common Stock (the "New Warrant," together with the
Original Warrant, the "Warrants");
WHEREAS, Company and GE Capital entered into an amendment, dated May
17, 1999, amending the terms of the terms of the Original Warrant and the
Registration Rights Agreement; and,
WHEREAS, Company and GE Capital desire to amend the terms of each of
the Original Warrant, the New Warrant, the Registration Rights Agreement and the
Note as set forth herein;
NOW, THEREFORE, in consideration of the premises and agreements
hereinafter contained, it is agreed as follows:
1. Amendment of Original Warrant.
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The Original Warrant is hereby amended as follows:
(a) The definition of "Qualified Secondary Offering" in
Section 1 of the Original Warrant is hereby deleted in its entirety
and replaced with the following:
"Qualified Secondary Offering" means a sale of the Company's Common
Stock pursuant to (i) a public offering of the Company's Common
Stock on Form S-1 (or any other appropriate general or short
registration form under the Securities Act of 1933, as amended)
pursuant to which the Common Stock is offered (whether or not for
the Company's account) for at least $8.75 per share or (ii) a
Qualified Private Placement for at least $8.75 per share, in each
case such $8.75 price shall be subject to appropriate adjustment if
any of the events set forth in Section 4.2 shall occur.
(b) The following definition shall be inserted after the
definition of "Purchase Agreement" in Section 1:
"Qualified Private Placement" means a sale of Common Stock by GE
Capital in a private placement which shall occur contemporaneously
with a private placement by the Company whereby the Common Stock is
sold on behalf of GE Capital at the price per share of Common Stock
received by the Company less placement agent fees applicable to such
shares (which shall not exceed 6%); provided that GE Capital shall
not be required to make any representations or warranties or
indemnify any party with respect to the sale of its shares other
than customary representations and warranties regarding its
ownership of its shares of Common Stock sold thereunder, its
authority to sell such shares, and that such shares are being sold
free and clear of all liens and encumbrances, except as provided by
applicable securities laws.
(c) Section 4.1(b) of the Original Warrant is hereby deleted
in its entirety and replaced with the following:
"(b) Notwithstanding the foregoing, if the Company consummates
a Qualified Secondary Offering pursuant to which GE Capital has the
ability to sell at least 1,766,245 shares of Common Stock on or
after December 20, 1999 and on or before April 30, 2000, this
Warrant shall be cancelled upon such consummation."
2. Amendment of the New Warrant. The New Warrant is hereby amended as follows:
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(a) The definition of "Qualified Secondary Offering" in
Section 1 of the New Warrant is hereby deleted in its entirety and
replaced with the following:
"Qualified Secondary Offering" means a sale of the Company's Common
Stock pursuant to (i) a public offering of the Company's Common
Stock on Form S-1 (or any other appropriate general or short
registration form under the Securities Act of 1933, as amended),
pursuant to which the Common Stock is offered (whether or not for
the Company's account) for at least $8.75 per share or (ii) a
Qualified Private Placement for at least $8.75 per share, in each
case such $8.75 price shall be subject to appropriate adjustment if
any of the events set forth in Section 4.2 shall occur, which in
each case shall be consummated on or after December 20, 1999 and on
or before April 30, 2000 and in each case pursuant to which GE
Capital has the ability to sell at least 1,766,245 shares of Common
Stock.
(b) The following definition shall be inserted after the
definition of "Purchase Agreement" in Section 1:
"Qualified Private Placement" means a sale of Common Stock by GE
Capital in a private placement which shall occur contemporaneously
with a private placement by the Company whereby (i) the Common Stock
is sold on behalf of GE Capital at the price per share of Common
Stock received by the Company less placement agent fees applicable
to such shares (which shall not exceed 6%) and (ii) GE Capital shall
not be required to make any representations or warranties or
indemnify any party with respect to the sale of its shares other
than customary representations and warranties regarding its
ownership of its shares of Common Stock sold thereunder, its
authority to sell such shares, and that such shares are being sold
free and clear of all liens and encumbrances, except as provided by
applicable securities laws.
(c) The definition of "Adjusted Offering Price" in Section 1
of the New Warrant is hereby deleted in its entirety and replaced
with the following:
"Adjusted Offering Price" shall be an amount equal to the product of
(x) 1/3, and (y) the price per share at which the Common Stock is
offered to the public or sold in private placement of Common Stock
owned by GE Capital in a Qualified Secondary Offering."
(d) The following new section shall be inserted as Section
9.4:
"9.4. Lockup Arrangements. Upon the closing of a Qualified
Secondary Offering which is a Qualified Private Placement, GE
Capital and the Company shall enter into a Lock-up Agreement,
providing, in part, that GE Capital, directly or indirectly, shall
not sell, transfer, pledge, hypothecate or otherwise encumber or
dispose of (a "Restricted Transfer") any shares of Common Stock for
a period of 90 days from such closing, unless consented to by the
placement agents for such offering and the Company. GE Capital
hereby also agrees not to engage in a Restricted Transfer with
respect to any shares of Common Stock of the Company prior to the
earlier of 90 days following the final closing of the 1999 Private
Placement or December 20, 1999."
3. Amendments to the Note. The Note is hereby amended as follows:
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(a) The words "November 17, 1999" in the ninth line of the
Note shall be deleted and replaced with the phrase "October 15,
2000" and all references to the Maturity Date in the Note shall mean
October 15, 2000.
(b) The following sentences shall be inserted after the last
sentence of the first paragraph of the Note: "In the event that the
Company completes a private placement occurring on or before
December 20, 1999 (the "1999 Private Placement") whereby $20,000,000
of net proceeds from the sale of its common stock, par value $.01
per share (the "Common Stock"), are received by the Company, the
Company shall pay $5,000,000 of principal on this Note, together
with accrued and unpaid interest thereon, with the proceeds thereof
within five business days of the closing of such offering. In the
event that the Company completes the 1999 Private Placement whereby
$30,000,000 of net proceeds from the sale of the Common Stock are
received by the Company, the Maturity Date shall be July 1, 2000,
and all references to the Maturity Date in the Note shall mean July
1, 2000. Upon consummation of a Qualified Secondary Offering (as
such term is defined in the Warrant, dated May 17, 1999, issued by
the Company to GE Capital, as amended, to purchase 300,000 shares of
Common Stock), other than the 1999 Private Placement, the Company
shall pay the entire remaining principal balance of this Note,
together with accrued and unpaid interest thereon, with the proceeds
thereof within five business days of the closing of such offering."
(c) The first sentence of Section 1(a) of the Note is deleted
in its entirety and replaced by the following:
"Company shall pay interest to Holder in arrears quarterly,
commencing on August 17, 1999, and on the Maturity Date (each an
"Interest Payment Date"), at a rate equal to (i) for the period
commencing from the date hereof to April 30, 2000, twelve percent
(12%) per annum, (ii) for the period commencing May 1, 2000 to
August 31, 2000, fourteen percent (14%) per annum and (iii) for the
period commencing September 1, 2000 to the Maturity Date, sixteen
percent (16%) per annum, each such rate based on a year of 360 days
for the actual number of days elapsed, and based on the amounts
outstanding from time to time under this Note."
4. Amendment of Registration Rights Agreement.
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The Registration Rights Agreement is hereby amended so that the term
"Warrant", as used therein, is deemed to refer to each of the Original
Warrant and New Warrant as amended hereby, or as hereafter amended or
modified. GE Capital hereby waives its rights to an incidental
registration as contemplated by Section 3 of the Registration Rights
Agreement in connection with any registration rights granted to
purchasers of Common Stock issued to them in connection with the 1999
Private Placement, but only as to a registration statement filed in
calendar year 1999.
5. Other Agreements.
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The Company hereby agrees that the indemnification and contribution
provisions of the Registration Rights Agreement shall apply with
respect to a Qualified Private Placement (as defined in the Warrants)
as if the shares had been sold pursuant to a registration statement
filed with the Securities and Exchange Commission. The Company further
represents, warrants and covenants that such Qualified Private
Placement and any private placement contemporaneously conducted by the
Company will be exempt from registration under Section 5 of the
Securities Act of 1933, as amended, pursuant to the provisions of
Section 4(2) and Regulation D thereunder. The Company shall deliver to
GE Capital a copy of the opinion of its counsel to the placement
agents for such Company private placement with a letter from such
counsel stating GE Capital may rely on such opinion and which shall
confirm the forgoing representation.
6. Full Force and Effect.
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Except as specifically amended hereby, all of the terms and provisions
of the Original Warrant, New Warrant, Registration Rights Agreement
and the Note shall remain in full force and effect.
7. Counterparts.
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This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together shall be
deemed to be one and the same instrument.
IN WHITNESS WHEREOF, Company and GE Capital have executed this Amendment
as of the day and year first written above.
MARKETING SERVICES GROUP, INC.
By: /s/ Xxxxxx Xxxxxxx
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Name: J. Xxxxxx Xxxxxxx
Title: Chairman & CEO
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Vice President
