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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)
MARKETING SERVICES GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE 570907105
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(Title of class of securities) (CUSIP number)
NANCY E. BARTON, ESQ., GENERAL ELECTRIC CAPITAL CORPORATION,
260 LONG RIDGE ROAD, STAMFORD, CONNECTICUT 06927 (203) 357-4000
- --------------------------------------------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
May 18, 1999
- --------------------------------------------------------------------------------
(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 which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[_].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 7 Pages)
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CUSIP No. 570907105 13D Page 2 of 7
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1 NAMES OF REPORTING PERSONS: GENERAL ELECTRIC CAPITAL CORPORATION
I.R.S. IDENTIFICATION NOS. 13-1500700
OF ABOVE PERSONS:
- ------------------- ----------------------------------------------------------------------------------------- ----------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [_]
(B) [X]
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3 SEC USE ONLY
- ------------------- ------------------------------ ---------------------------------------------------------------------------------
4 SOURCE OF FUNDS: OO
- ------------------- ----------------------------------------------------------------------------------------- ----------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [X]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION: NEW YORK
- ---------------------------- ------- --------------------------------------------- -------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 4,560,720 (SEE ITEM 3)
SHARES
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BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
------- --------------------------------------------- -------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 4,560,720 (SEE ITEM 3)
REPORTING
------- --------------------------------------------- -------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
- ------------------- -------------------------------------------------------------- -------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 4,560,720 (SEE ITEM 3)
- ------------------- ----------------------------------------------------------------------------------------- ----------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [X]
- ------------------- ----------------------------------------------------------------------------------------- ----------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 20.59% (SEE ITEM 3)
- ------------------- ------------------------------------------------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
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CUSIP No. 570907105 13D Page 3 of 7
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1 NAME OF REPORTING PERSON: GENERAL ELECTRIC CAPITAL SERVICES, INC.
S.S. OR I.R.S. IDENTIFICATION NO. 06-1109503
OF ABOVE PERSON:
- ------------------- -------------------------------------------------------------------------------------------- -------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [_]
(B) [X]
- ------------------- ----------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------- ------------------------------ ---------------------------------------------------------------------------------
4 SOURCE OF FUNDS: NOT APPLICABLE
- ------------------- -------------------------------------------------------------------------------------------- -------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [X]
- ------------------- ------------------------------------------------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: DELAWARE
- ---------------------------- ------- --------------------------------------------- -------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: DISCLAIMED (SEE 11 BELOW)
SHARES
------- --------------------------------------------- -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
------- --------------------------------------------- -------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: DISCLAIMED (SEE 11 BELOW)
REPORTING
------- --------------------------------------------- -------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
- ------------------- -------------------------------------------------------------- -------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: BENEFICIAL OWNERSHIP OF ALL SHARES DISCLAIMED BY
GENERAL ELECTRIC CAPITAL SERVICES, INC.
- ------------------- -------------------------------------------------------------------------------------------- -------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [_]
- ------------------- -------------------------------------------------------------------------------------------- -------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): NOT APPLICABLE
(SEE 11 ABOVE)
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14 TYPE OF REPORTING PERSON: CO
- ------------------- ------------------------------------------------- --------------------------------------------------------------
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CUSIP No. 570907105 13D Page 4 of 7
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1 NAME OF REPORTING PERSON: GENERAL ELECTRIC COMPANY
S.S. OR I.R.S. IDENTIFICATION NO. 14-0689340
OF ABOVE PERSON:
- ------------------- -------------------------------------------------------------------------------------------- -------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [_]
(B) [X]
- ------------------- ----------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------- ------------------------------ ---------------------------------------------------------------------------------
4 SOURCE OF FUNDS: NOT APPLICABLE
- ------------------- -------------------------------------------------------------------------------------------- -------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [X]
- ------------------- ------------------------------------------------- --------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION: NEW YORK
- ---------------------------- ------- --------------------------------------------- -------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: DISCLAIMED (SEE 11 BELOW)
SHARES
------- --------------------------------------------- -------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: 0
OWNED BY
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EACH 9 SOLE DISPOSITIVE POWER: DISCLAIMED (SEE 11 BELOW)
REPORTING
------- --------------------------------------------- -------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
- ------------------- -------------------------------------------------------------- -------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: BENEFICIAL OWNERSHIP OF ALL SHARES DISCLAIMED BY
GENERAL ELECTRIC COMPANY
- ------------------- -------------------------------------------------------------------------------------------- -------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [_]
- ------------------- -------------------------------------------------------------------------------------------- -------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): NOT APPLICABLE
(SEE 11 ABOVE)
- ------------------- ------------------------------------------------- --------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
- ------------------- ------------------------------------------------- --------------------------------------------------------------
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This Amendment No. 3 ("Amendment No. 3") amends the statement
on Schedule 13D, as amended (the "Schedule 13D") filed on January 5, 1998, by
and on behalf of General Electric Capital Corporation ("GE Capital"), General
Electric Capital Services, Inc. ("GECS") and General Electric Company ("GE").
Unless otherwise indicated, capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Schedule
13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On May 18, 1999, the Company borrowed $10,000,000 from GE
Capital pursuant to the terms of a note (the "Note") issued by the Company in
favor of GE Capital. In consideration thereof, the Company issued to GE Capital
a warrant to purchase up to 300,000 shares of Company Common Stock, subject to
cancellation if the Company consummates a public offering of Company Common
Stock, meeting certain criteria (a "Qualified Offering"), on or before December
31, 1999.
On May 17, 1999, the Company and GE Capital entered into the
First Amendment which amended the provisions of the warrant, issued December 24,
1997, to purchase Company Common Stock (the "Original Warrant"), to provide that
the Original Warrant will be cancelled if the Company consummates a Qualified
Offering on or before December 31, 1999.
Since May 17, 1999, GE Capital has sold an aggregate of
150,500 shares of Common Stock pursuant to Rule 144 under the Securities Act of
1934, as amended.
The foregoing transactions result in the beneficial ownership
by GE Capital of an aggregate of 4,560,720 shares of Common Stock which
represents approximately 20.59% of the issued and outstanding shares of Common
Stock.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date of this statement, the aggregate number and
percentage of shares of Common Stock beneficially owned by GE Capital are
4,560,720 and approximately 20.59%, respectively.
5
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Except as disclosed in this Item 5(a) and in Item 3 above,
none of GE Capital, GECS, GE, nor, to the best of their knowledge, any of their
executive officers and directors, beneficially owns any securities of the
Company or presently has a right to acquire any securities of the Company.
(b) GE Capital has the sole power to vote or direct the vote
of all 4,560,720 shares of Common Stock that it beneficially owns and the sole
power to dispose or to direct the disposition of such shares.
Except as disclosed in this Item 5(b), none of GECS, GE, nor,
to the best of their knowledge, any of their executive officers or directors
presently has the power to vote or to direct the vote or to dispose of or direct
the disposition of any of the securities which they may be deemed to
beneficially own.
(c) Except as set forth above and in Amendment No. 2, neither
GE Capital, GECS, GE, nor, to the best of their knowledge, any of their
executive officers or directors, has effected any transaction in any securities
of the Company during the past 60 days.
(d) No person except for GE Capital is known to have the right
to receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, securities covered by this statement.
(e) Not applicable.
Neither the filing of this Amendment No. 3 nor anything
contained herein is intended as, or should be construed as, an admission that
GECS or GE is the "beneficial owner" of any shares of Common Stock or Warrants.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Form of Warrant, dated as of May 18, 1999, to purchase shares of
Company Common Stock.
Exhibit 2. Form of First Amendment, dated May 18, 1999, to Warrant, dated
December 24, 1997, to purchase shares of Company Common Stock.
6
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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.
Dated: May 21, 1999
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Michael E. Pralle
-------------------------------------
Name: Michael E. Pralle
Title: Vice President
GENERAL ELECTRIC CAPITAL SERVICES, INC.
By: /s/ Michael E. Pralle
-------------------------------------
Name: Michael E. Pralle
Title: Attorney-in-Fact
GENERAL ELECTRIC COMPANY
By: /s/ Michael E. Pralle
-------------------------------------
Name: Michael E. Pralle
Title: Attorney-in-Fact
7
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Exhibit Index
-------------
Exhibit 1. Form of Warrant, dated as of May 18, 1999, to purchase shares of
Company Common Stock.
Exhibit 2. Form of First Amendment, dated May 18, 1999, to Warrant, dated
December 24, 1997, to purchase shares of Company Common Stock.
Exhibit 1
WARRANT
To Purchase Common Stock of
MARKETING SERVICES GROUP, INC.
Warrant No. A-1
No. of Shares of Common Stock: 300,000
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TABLE OF CONTENTS
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SECTION PAGE
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1. DEFINITIONS....................................................................................1
2. EXERCISE OF WARRANT............................................................................4
2.1. Manner of Exercise....................................................................4
2.2. Payment of Taxes......................................................................5
2.3. Fractional Shares.....................................................................5
2.4. Continued Validity....................................................................5
3. TRANSFER, DIVISION AND COMBINATION.............................................................6
3.1. Transfer..............................................................................6
3.2. Division and Combination..............................................................6
3.3. Expenses..............................................................................6
3.4. Maintenance of Books..................................................................6
4. ADJUSTMENTS....................................................................................6
4.1. Cancellation of Shares Subject to Warrant.............................................7
4.2. Stock Dividends, Subdivisions and Combinations........................................7
4.3. Certain Other Distributions and Adjustments...........................................7
4.4. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets......8
4.5. Other Action Affecting Common Stock...................................................9
5. NOTICES TO WARRANT HOLDERS.....................................................................9
5.1. Notice of Adjustments.................................................................9
5.2. Notice of Corporate Action............................................................9
6. NO IMPAIRMENT.................................................................................10
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR APPROVAL OF ANY
GOVERNMENTAL AUTHORITY........................................................................11
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS............................................11
9. RESTRICTIONS ON TRANSFERABILITY...............................................................11
9.1. Restrictive Legend...................................................................11
9.2. Termination of Restrictions..........................................................12
9.3. Listing on Securities Exchange.......................................................12
10. SUPPLYING INFORMATION.........................................................................12
i
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TABLE OF CONTENTS
(Continued)
SECTION PAGE
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11. LOSS OR MUTILATION............................................................................13
12. OFFICE OF COMPANY.............................................................................13
13. FINANCIAL AND BUSINESS INFORMATION............................................................13
13.1. Quarterly Information................................................................13
13.2. Annual Information...................................................................13
13.3. Filings..............................................................................14
14. LIMITATION OF LIABILITY.......................................................................14
15. MISCELLANEOUS.................................................................................14
15.1. Nonwaiver and Expenses...............................................................14
15.2. Notice Generally.....................................................................14
15.3. Remedies.............................................................................15
15.4. Successors and Assigns...............................................................15
15.5. Amendment............................................................................15
15.6. Severability.........................................................................16
15.7. Headings.............................................................................16
15.8. Governing Law........................................................................16
</TABLE>
ii
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THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR
THE PROVISIONS OF THIS WARRANT.
No. of Shares of Common Stock: 300,000 Warrant No. A-1
WARRANT
To Purchase Common Stock of
MARKETING SERVICES GROUP, INC.
THIS IS TO CERTIFY THAT GENERAL ELECTRIC CAPITAL CORPORATION,
or registered assigns, is entitled, at any time during the Exercise Period (as
hereinafter defined), to purchase from MARKETING SERVICES GROUP, INC., a Nevada
corporation ("Company"), 300,000 shares of Common Stock (as hereinafter defined
and subject to adjustment as provided herein), in whole or in part, including
fractional parts, at a per share purchase price equal to the Adjusted Offering
Price (subject to adjustment as provided herein) all on the terms and conditions
and pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
Terms used in this Warrant which are defined in the Purchase
Agreement (as defined below) are used herein as defined therein unless otherwise
provided, and the following terms have the respective meanings set forth below:
"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 in a Qualified Secondary Offering.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Closing Date" shall mean the date set forth on the signature
page hereof.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $0.01 par value, of Company as constituted on the
Closing Date, and any capital stock into which such Common Stock may thereafter
be changed, and shall also include (i) capital stock of Company of any other
class (regardless of how denominated) issued to the holders of shares of Common
Stock upon any reclassification thereof which is also not preferred as to
<PAGE>
dividends or assets over any other class of stock of Company and which is not
subject to redemption and (ii) shares of common stock of any successor or
acquiring corporation (as defined in Section 4.4) received by or distributed to
the holders of Common Stock of Company in the circumstances contemplated by
Section 4.4.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the average of the daily market
prices for 20 consecutive Business Days commencing 30 days before such date. The
daily market price for each such Business Day shall be (i) the last sale price
on such day on the principal stock exchange or NASDAQ National Market System or
NASDAQ Small Cap Market ("NASDAQ") on which such Common Stock is then listed or
admitted to trading, (ii) if no sale takes place on such day on any such
exchange or NASDAQ, the average of the last reported closing bid and asked
prices on such day as officially quoted on any such exchange or NASDAQ, (iii) if
the Common Stock is not then listed or admitted to trading on any stock exchange
or NASDAQ, the average of the last reported closing bid and asked prices on such
day in the over-the-counter market, as furnished by the National Association of
Securities Dealers Automatic Quotation System or the National Quotation Bureau,
Inc., (iv) if neither such corporation at the time is engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business, or (v) if there is no such firm, as furnished by any member of the
NASD selected mutually by the Majority Holders and Company or, if they cannot
agree upon such selection, as selected by two such members of the NASD, one of
which shall be selected by the Majority Holders and one of which shall be
selected by Company.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect from time to
time.
"Exercise Period" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" shall mean December 31, 2007.
"Fully Diluted Outstanding" shall mean, when used with
reference to Common Stock, at any date as of which the number of shares thereof
is to be determined, all shares of Common Stock Outstanding at such date and all
shares of Common Stock issuable in respect of this Warrant outstanding on such
date, and other options or warrants to purchase, or securities convertible into,
shares of Common Stock outstanding on such date which would be deemed
outstanding in accordance with GAAP for purposes of determining book value or
net income per share on a fully diluted basis.
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"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"GE Capital" shall mean General Electric Capital Corporation,
a New York corporation.
"Holder" shall mean the Person in whose name the Warrant set
forth herein is registered on the books of Company maintained for such purpose.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of shares of Common
Stock then purchasable upon exercise of all Warrants, whether or not then
exercisable.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
"Other Property" shall have the meaning set forth in Section
4.4.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of Company or any subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
"Purchase Agreement" shall mean the Purchase Agreement dated
as of December 24, 1997 by and between Company and GE Capital, or any successor
agreement between such parties.
"Qualified Secondary Offering" means a sale of Company's
Common Stock pursuant to a public offering of 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, which is consummated on or before December
31, 1999, pursuant to which the Common Stock is offered (whether or not for
Company's account) for at least $8.75 per share, subject to appropriate
adjustment if any of the events set forth in Section 4.2 shall occur and
pursuant to which GE Capital has the ability to sell at least 1,766,245 shares
of Common Stock.
"Restricted Common Stock" shall mean shares of Common Stock
which are, or which upon their issuance on the exercise of this Warrant would
be, evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
3
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Transfer" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would constitute a
sale thereof within the meaning of the Securities Act.
"Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may be
exercised.
"Warrant Price" shall mean an amount equal to (i) the number
of shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.
"Warrant Stock" shall mean the shares of Common Stock
purchased by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. Manner of Exercise. From and after the consummation of a Qualified
Secondary Offering and until 5:00 P.M., New York time, on the Expiration Date
(the "Exercise Period"), Holder may exercise this Warrant, on any Business Day,
for all or any part of the number of shares of Common Stock purchasable
hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to Company at its principal office at 333 Seventh Avenue, 20th
Floor, New York, New York 10001 or at the office or agency designated by Company
pursuant to Section 12, (i) a written notice of Holder's election to exercise
this Warrant, which notice shall specify the number of shares of Common Stock to
be purchased, (ii) payment of the Warrant Price and (iii) this Warrant. Such
notice shall be substantially in the form of the subscription form appearing at
the end of this Warrant as Exhibit A, duly executed by Holder or its agent or
attorney. Upon receipt thereof, Company shall, as promptly as practicable, and
in any event within ten (10) Business Days thereafter, execute or cause to be
executed and deliver or cause to be delivered to Holder a certificate or
certificates representing the aggregate number of full shares of Common Stock
issuable upon such exercise, together with cash in lieu of any fraction of a
share, as hereinafter provided. The stock certificate or certificates so
delivered shall be, to the extent possible, in such denomination or
denominations as such Holder shall request in the notice and shall be registered
in the name of Holder or, subject to Section 9, such other name as shall be
designated in the notice. This Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and
Holder or any other Person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the notice, together with the cash or check or other payment as provided below
4
<PAGE>
and this Warrant, is received by Company as described above and all taxes
required to be paid by Holder, if any, pursuant to Section 2.2 prior to the
issuance of such shares have been paid. If this Warrant shall have been
exercised in part, Company shall, at the time of delivery of the certificate or
certificates representing Warrant Stock, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant, or, at the request of Holder, appropriate
notation may be made on this Warrant and the same returned to Holder.
Notwithstanding any provision herein to the contrary, Company shall not be
required to register shares in the name of any Person who acquired this Warrant
(or part hereof) or any Warrant Stock otherwise than in accordance with this
Warrant.
Payment of the Warrant Price shall be made at the option of
the Holder by (i) certified or official bank check, and/or (ii) the Holder's
surrender to Company of that number of shares of Warrant Stock (or the right to
receive such number of shares) or shares of Common Stock having an aggregate
Current Market Price equal to or greater than the Current Warrant Price for all
shares then being purchased (including those being surrendered), or (iii) any
combination thereof, duly endorsed by or accompanied by appropriate instruments
of transfer duly executed by Holder or by Holder's attorney duly authorized in
writing.
2.2. Payment of Taxes. All shares of Common Stock issuable
upon the exercise of this Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable and without any preemptive rights. Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Common Stock issuable
upon exercise of this Warrant in any name other than that of Holder, and in such
case Company shall not be required to issue or deliver any stock certificate
until such tax or other charge has been paid or it has been established to the
satisfaction of Company that no such tax or other charge is due.
2.3. Fractional Shares. Company shall not be required to issue
a fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, except as otherwise provided in Section 2.1,
Company shall pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the Current Market Price per share of
Common Stock on the date of exercise.
2.4. Continued Validity. A holder of shares of Common Stock
issued upon the exercise of this Warrant, in whole or in part (other than a
holder who acquires such shares after the same have been publicly sold pursuant
to a Registration Statement under the Securities Act or sold pursuant to Rule
144 thereunder), shall continue to be entitled with respect to such shares to
5
<PAGE>
all rights to which it would have been entitled as Holder under Sections 9, 10
and 15 of this Warrant. Company will, at the time of each exercise of this
Warrant, in whole or in part, upon the request of the holder of the shares of
Common Stock issued upon such exercise hereof, acknowledge in writing, in form
reasonably satisfactory to such holder, its continuing obligation to afford to
such holder all such rights; provided, however, that if such holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. Transfer. Subject to compliance with Section 9 hereof,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of Company referred to in
Section 2.1 or the office or agency designated by Company pursuant to Section
12, together with a written assignment of this Warrant substantially in the form
of Exhibit B hereto duly executed by Holder or its agent or attorney, and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, Company shall, subject to
Section 9, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned in compliance with Section 9, may be exercised by
a new Holder for the purchase of shares of Common Stock without having a new
Warrant issued.
3.2. Division and Combination. Subject to Section 9, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3. Expenses. Company shall prepare, issue and deliver at its
own expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4. Maintenance of Books. Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
6
<PAGE>
this Section 4. Company shall give each Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at the time of
such event.
4.1. Cancellation of Shares Subject to Warrant. If Company
does not consummate a Qualified Secondary Offering, this Warrant shall be
cancelled effective January 1, 2000.
4.2. Stock Dividends, Subdivisions and Combinations. If at any
time Company shall:
(a) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in, or other
distribution of, additional shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such adjustment.
4.3. Certain Other Distributions and Adjustments. (a) If at
any time Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive any dividend or other distribution of:
(i) cash,
(ii) any evidences of its indebtedness, any shares of its stock
or any other securities or property of any nature whatsoever
(other than cash, convertible securities or additional
shares of Common Stock), or
(iii) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness, any shares of its stock
or any other securities or property of any nature whatsoever
(other than cash, convertible securities or additional
shares of Common Stock),
7
<PAGE>
then Holder shall be entitled to receive such dividend or distribution as if
Holder had exercised this Warrant.
If pursuant to Section 4.1 above (i) the number of shares of
Common Stock for which this Warrant is exercisable shall be reduced, or (ii)
this Warrant shall be cancelled, any dividend or distribution made with respect
to any such reduced or cancelled Warrants shall be promptly returned to Company
by Holder.
(b) A reclassification of the Common Stock (other than a
change in par value, or from par value to no par value or from no par value to
par value) into shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by Company to the holders of its Common Stock of
such shares of such other class of stock within the meaning of paragraph (a)
above and, if the outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock within the meaning of
Section 4.2.
4.4. Reorganization, Reclassification, Merger, Consolidation
or Disposition of Assets. In case Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where Company is not the surviving corporation or where there is a
change in or distribution with respect to the Common Stock of Company), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of Company, then each Holder shall have the right thereafter to receive, upon
exercise of such Warrant, the number of shares of common stock of the successor
or acquiring corporation or of Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than Company) shall expressly assume the due
and punctual observance and performance of each and every covenant and condition
of this Warrant to be performed and observed by Company and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of Company)
in order to provide for adjustments of shares of Common Stock for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.4,
"common stock of the successor or acquiring corporation" shall include stock of
8
<PAGE>
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 4.4 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.
4.5. Other Action Affecting Common Stock. In case at any time
or from time to time Company shall take any action in respect of its Common
Stock, other than any action described in this Section 4, then, unless such
action will not have a materially adverse effect upon the rights of the Holders,
the number of shares of Common Stock or other stock for which this Warrant is
exercisable and/or the purchase price thereof shall be adjusted in such manner
as may be equitable in the circumstances.
5. NOTICES TO WARRANT HOLDERS
5.1. Notice of Adjustments. Whenever the number of shares of
Common Stock for which this Warrant is exercisable, or whenever the price at
which a share of such Common Stock may be purchased upon exercise of the
Warrants, shall be adjusted pursuant to Section 4, Company shall forthwith
prepare a certificate to be executed by the chief financial officer of Company
setting forth, in reasonable detail, the event requiring the adjustment and the
method by which such adjustment was calculated, specifying the number of shares
of Common Stock for which this Warrant is exercisable and (if such adjustment
was made pursuant to Section 4.4 or 4.5) describing the number and kind of any
other shares of stock or Other Property for which this Warrant is exercisable,
and any change in the purchase price or prices thereof, after giving effect to
such adjustment or change. Company shall promptly cause a signed copy of such
certificate to be delivered to each Holder in accordance with Section 15.2.
Company shall keep at its office or agency designated pursuant to Section 12
copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by any Holder or any
prospective purchaser of a Warrant designated by a Holder thereof.
5.2. Notice of Corporate Action. If at any time
(a) Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to
receive a dividend or other distribution, or any right
to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any
other securities or property, or to receive any other
right, or
(b) there shall be any capital reorganization of Company,
any reclassification or recapitalization of the capital
stock of Company or any consolidation or merger of
Company with, or any sale, transfer or other
9
<PAGE>
disposition of all or substantially all the property,
assets or business of Company to, another corporation,
or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of Company;
then, in any one or more of such cases, Company shall give to Holder (i) at
least 30 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 30 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of Company and delivered in
accordance with Section 15.2.
6. NO IMPAIRMENT
Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder against impairment. Without limiting the generality of the
foregoing, Company will take all such action as may be necessary or appropriate
in order that Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant, including taking such
action as is necessary for the Current Warrant Price to be not less than the par
value of the shares of Common Stock issuable upon exercise of this Warrant, and
(b) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable Company to perform its obligations under this Warrant.
Upon the request of Holder, Company will at any times during
the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of Company hereunder.
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<PAGE>
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of all outstanding Warrants. All shares of Common
Stock which shall be so issuable, when issued upon exercise of any Warrant and
payment therefor in accordance with the terms of such Warrant, shall be duly and
validly issued and fully paid and nonassessable, and not subject to preemptive
rights.
Before taking any action which would result in an adjustment
in the number of shares of Common Stock for which this Warrant is exercisable or
in the Current Warrant Price, Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for
issuance upon exercise of Warrants require registration or qualification with
any governmental authority or other governmental approval or filing under any
federal or state law (otherwise than as provided in Section 9) before such
shares may be so issued, Company will in good faith and as expeditiously as
possible and at its expense endeavor to cause such shares to be duly registered
or such approval to be obtained or filing made.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by Company
to the holders of its Common Stock with respect to which any provision of
Section 4 refers to the taking of a record of such holders, Company will in each
such case take such a record and will take such record as of the close of
business on a Business Day. Company will not at any time, except upon
dissolution, liquidation or winding up of Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1. Restrictive Legend. (a) as otherwise provided in this
Section 9, each certificate for Warrant Stock initially issued upon the exercise
of this Warrant, and each certificate for Warrant Stock issued to any subsequent
11
<PAGE>
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as amended,
and may not be transferred in violation of such Act or the
rules and regulations thereunder."
(b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and the securities represented hereby
have not been registered under the Securities Act of 1933, as
amended, and may not be transferred in violation of such Act,
the rules and regulations thereunder or the provisions of this
Warrant."
9.2. Termination of Restrictions. Notwithstanding the
foregoing provisions of Section 9, the restrictions imposed by this Section upon
the transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of Section 9.1 shall terminate as to any particular Warrant
or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable
upon the exercise of the Warrants) (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when Company shall have received an opinion of counsel
reasonably satisfactory to it that such shares may be transferred without
registration thereof under the Securities Act. Whenever the restrictions imposed
by Section 9 shall terminate as to this Warrant, as hereinabove provided, the
Holder hereof shall be entitled to receive from Company, at the expense of
Company, a new Warrant without the restrictive legend set forth in Section
9.1(b). Whenever the restrictions imposed by this Section shall terminate as to
any share of Restricted Common Stock, as hereinabove provided, the holder
thereof shall be entitled to receive from Company, at Company's expense, a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in Section 9.1(a).
9.3. Listing on Securities Exchange. If Company shall list any
shares of Common Stock on any securities exchange or NASDAQ, it will, at its
expense, list thereon, maintain and, when necessary, increase such listing of,
all shares of Common Stock issued or, to the extent permissible under the
applicable securities exchange or NASDAQ rules, issuable upon the exercise of
this Warrant so long as any shares of Common Stock shall be so listed during the
Exercise Period.
10. SUPPLYING INFORMATION
Company shall cooperate with each Holder of a Warrant and each
holder of Restricted Common Stock in supplying such information as may be
reasonably necessary for such holder to complete and file any information
12
<PAGE>
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of GE Capital shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation hereof,
Company will execute and deliver in lieu hereof a new Warrant of like tenor to
such Holder; provided, in the case of mutilation, no indemnity shall be required
if this Warrant in identifiable form is surrendered to Company for cancellation.
12. OFFICE OF COMPANY
As long as any of the Warrants remain outstanding, Company
shall maintain an office or agency (which may be the principal executive offices
of Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION
13.1. Quarterly Information. Company will deliver to each
Holder, as soon as practicable after the end of each of the first three quarters
of Company, and in any event within 45 days thereafter, one copy of an unaudited
consolidated balance sheet of Company and its subsidiaries as at the close of
such quarter, and the related unaudited consolidated statements of income and
cash flows of Company for such quarter and, in the case of the second and third
quarters, for the portion of the fiscal year ending with such quarter, setting
forth in each case in comparative form the figures for the corresponding periods
in the previous fiscal year. Such financial statements shall be prepared by
Company in accordance with GAAP and accompanied by the certification of
Company's chief executive officer or chief financial officer that such financial
statements present fairly in all material respects the consolidated financial
position, results of operations and cash flows of Company and its subsidiaries
as at the end of such quarter and for such year-to-date period, as the case may
be.
13.2. Annual Information. Company will deliver to each Holder
as soon as practicable after the end of each fiscal year of Company, and in any
event within 90 days thereafter, one copy of:
(i) an audited consolidated balance sheet of Company and
its subsidiaries as at the end of such year, and
13
<PAGE>
(ii) audited consolidated statements of income and cash
flows of Company and its subsidiaries for such year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
Company, or any other firm of independent certified public accountants of
recognized national standing selected by Company and (ii) a report of such
independent certified public accountants confirming any adjustment made pursuant
to Section 4 during such year.
13.3. Filings. Company will file on or before the required
date all regular or periodic reports (pursuant to the Exchange Act) with the
Commission and will deliver to Holder promptly upon their becoming available one
copy of each report, notice or proxy statement sent by Company to its
stockholders generally, and of each regular or periodic report (pursuant to the
Exchange Act) and any Registration Statement, prospectus or written
communication (other than transmittal letters) (pursuant to the Securities Act),
filed by Company with (i) the Commission or (ii) any securities exchange or
NASDAQ on which shares of Common Stock are listed.
14. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of Holder hereof, shall give rise to any liability of such
Holder for the purchase price of any Common Stock or as a stockholder of
Company, whether such liability is asserted by Company or by creditors of
Company.
15. MISCELLANEOUS
15.1. Nonwaiver and Expenses. No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies. If Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, Company
shall pay to Holder such amounts as shall be sufficient to cover any costs and
expenses including, but not limited to, reasonable attorneys' fees, including
those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
15.2. Notice Generally. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid, or
by telecopy and confirmed by telecopy answerback, addressed as follows:
14
<PAGE>
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of Company maintained
for such purpose.
(b) If to Company at
Marketing Services Group, Inc.
333 Seventh Avenue, 20th Floor
New York, New York 10001
Attention: Chief Financial Officer
Telecopy Number: (212) 465-8877
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three (3) Business Days after the same shall have been deposited
in the United States mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
15.3. Remedies. Each holder of Warrants and Warrant Stock, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under Section 9 of this Warrant. Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of Section 9 of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
15.4. Successors and Assigns. Subject to the provisions of
Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure to
the benefit of and be binding upon the successors of Company and the successors
and assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant and, with respect to
Section 9 hereof, holders of Warrant Stock, and shall be enforceable by any such
Holder or holder of Warrant Stock. Notwithstanding the foregoing, the rights
provided by Section 9.3 hereof may only be transferred along with the transfer
of at least 50% of the Warrants and/or Warrant Stock, taken as a whole.
15.5. Amendment. This Warrant and all other Warrants may be
modified or amended or the provisions hereof waived with the written consent of
Company and the Majority Holders, provided that no such Warrant may be modified
or amended to reduce the number of shares of Common Stock for which such Warrant
is exercisable or to increase the price at which such shares may be purchased
upon exercise of such Warrant (before giving effect to any adjustment as
15
<PAGE>
provided therein) without the prior written consent of the Holder thereof.
15.6. Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
15.7. Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
15.8. Governing Law. This Warrant shall be governed by the
laws of the State of New York, without regard to the provisions thereof relating
to conflict of laws.
16
<PAGE>
IN WITNESS WHEREOF, Company has caused this Warrant to be duly
executed and attested by its Secretary or an Assistant Secretary.
Dated: May 17, 1999
MARKETING SERVICES GROUP, INC.
By:
------------------------------------
Name:
Title:
Attest:
By:
--------------------------------
Name:
Title:
17
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ Shares of Common Stock of
MARKETING SERVICES GROUP, INC. and herewith makes payment therefor, all at the
price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to _____________ whose address is _________________ and, if
such shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and date
for the balance of the shares of Common Stock issuable hereunder be delivered to
the undersigned.
-------------------------------
(Name of Registered Owner)
-------------------------------
(Signature of Registered Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of
Common Stock
and does hereby irrevocably constitute and appoint _______ ________________
attorney-in-fact to register such transfer on the books of MARKETING SERVICES
GROUP, INC. maintained for the purpose, with full power of substitution in the
premises.
Dated:__________________ Print Name:___________________
Signature:____________________
Witness:______________________
NOTICE: The signature on this assignment must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
Exhibit 2
FIRST AMENDMENT
First Amendment (this "Amendment"), dated May 17, 1999,
between Marketing Services Group, Inc., a Nevada corporation ("Company"), and
General Electric Capital Corporation ("GE Capital"), a New York corporation.
W I T N E S S E T H:
WHEREAS, Company issued a warrant, dated December 24, 1997, to
purchase shares of common stock, par value $.01 per share, of Company (the
"Common Stock") to GE Capital (the "Original Warrant"); and
WHEREAS, Company and GE Capital entered into a Registration
Rights Agreement, dated as of December 24, 1997 (the "Registration Rights
Agreement"); and
WHEREAS, Company is issuing a warrant, dated the date hereof,
to purchase shares of Common Stock to GE Capital (the "New Warrant"); and
WHEREAS, Company and GE Capital desire to amend the terms of
each of the Original Warrant and the Registration Rights Agreement as set forth
herein;
NOW, THEREFORE, in consideration of the premises hereinafter
contained, it is agreed as follows:
1. Amendment of Original Warrant. The Original Warrant is
hereby amended as follows:
(a) Section 4.1(b) of the Original Warrant is hereby deleted
in its entirety and replaced with the following:
"(b) Notwithstanding the foregoing, if 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
before December 31, 1999, this Warrant shall be cancelled upon such
consummation."
2. Amendment of Registration Rights Agreement. The
Registration Rights Agreement is hereby amended so that the term "Warrant", as
used therein, is deemed to refer to the Original Warrant, as amended hereby, and
the New Warrant, collectively.
3. Full Force and Effect. Except as specifically amended
hereby, all of the terms and provisions of each of the Original Warrant and the
Registration Rights Agreement shall remain in full force and effect.
4. Counterparts. 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.
NY2:\521989\01\B6RP01!.DOC\47660.1420
<PAGE>
IN WITNESS WHEREOF, Company and GE Capital have executed this
Amendment as of the day and year first above written.
MARKETING SERVICES GROUP, INC.
By:
------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
------------------------------------
Name:
Title:
2
