SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 30, 1999
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MARKETING SERVICES GROUP, INC.
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(Exact name of Registrant as specified in charter)
Nevada 0-16730 88-0085608
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(State or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation)
333 Seventh Avenue
New York, New York 10001
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(Address of Principal Executive Offices)
212/594-7688
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(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other
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GE Capital Warrant Amendment
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On August 30, 1999 we entered into the second amendment to the original GE
Capital warrant, dated December 24, 1997, and amended the $10,000,000 promissory
note and a new warrant, dated May 17, 1999. The second amendment changes the
date a registration statement must become effective with respect to the offering
of 1,766,245 of the shares of our common stock owned by GE Capital, from the
period ending December 31, 1999, to the period beginning on December 20, 1999
and ending on April 30, 2000. The effect of such offering will be to
substantially reduce the number of shares of our common stock GE Capital can
acquire by canceling the original warrant and replacing it with the new warrant.
The Second Amendment also provides that we may arrange for a resale of our
common stock owned by GE Capital in connection with a private placement in
addition to a registered offering. GE Capital has also agreed not to sell any
shares of our common stock for 90 days after the closing of a sale of the stock
it owns under such private placement.
The Second Amendment also amended the following material terms of the
$10,000,000 note: (i) the maturity date is extended to October 15, 2000, unless
we receive $30,000,000 or more in net proceeds from a private placement in
calendar year 1999, in which case the maturity date will be July 1, 2000; (ii)
if we receive $20,000,000 or more in net proceeds from a private offering,
$5,000,000 in principal amount, together with all accrued interest thereon, will
be pre-paid by us with the proceeds of this offering; and (iii) the interest
rate will remain at 12% per annum until April 30, 2000. Should the note remain
unpaid as of May 1, 2000, the interest rate will increase periodically until the
note has been paid down in full. In addition, GE Capital will not sell any of
our common stock from August 30, 1999 until the earlier of 90 days from the
final closing of a private placement occurring in calendar year 1999 or December
20, 1999.
GE Capital has also agreed to waive their incidental registration rights with
respect to the common stock that will be registered under an offering of our
common stock in connection with a private placement during calendar year 1999.
Private Placement
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On September 3, 1999, we closed on a private placement of 2,441,086 shares of
common stock representing $25,631,404 in gross proceeds. The funds were
primarily purchased by institutions, which were solicited during a nationwide
road show. The securities purchased have not been registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the United
States absent registration or an applicable exemption from registration
requirements. Although the securities purchased have not yet been registered,
the shares are subject to certain registration rights.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) n/a
(b) n/a
(c) The following documents are filed herewith as exhibits to this Form
8-K:
10.1 Second Amendment Agreement dated August 30, 1999.
20.1 Press Release of the Registrant dated August 31, 1999
20.2 Press Release of the Registrant dated September 7, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MARKETING SERVICES GROUP, INC.
Date: September 7, 1999 By: /s/ Cindy H. Hill
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Title: Chief Fiancial Officer
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/ Jeremy Barbera
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Name: J. Jeremy Barbera
Title: Chairman & CEO
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Michael Pralle
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Name: Michael Pralle
Title: Vice President
Exhibit 20.1
MSGI Amends Warrant Agreement With GE Capital Business Editors
NEW YORK--(BUSINESS WIRE)--August 31, 1999--Marketing Services Group, Inc.
(Nasdaq: MSGI), an integrated marketing and Internet services industry leader,
today announced that they have signed an amendment to the December 24, 1997
warrant with GE Capital to extend the deadline for a secondary offering for
which MSGI is obligated to register shares held by GE Capital for resale from
December 31, 1999 to April 30, 2000. Provided MSGI consummates a qualified
secondary offering or a qualified private placement, no later than April 30,
2000, pursuant to which GE Capital has the ability to sell 1,766,245 shares, the
original warrant to purchase 10,670,000 shares of common stock will be cancelled
and replaced with a new warrant to purchase 300,000 shares of our common stock.
Jeremy Barbera, Chairman & CEO of MSGI stated, "GE Capital who has been both a
loyal shareholder and client of the Company has eliminated the pressure to
complete a secondary offering by calendar year end. We can now spend the rest of
the year concentrating on the execution of our business model and plan for a
secondary offering sometime next year."
About MSGI
Marketing Services Group, Inc. is a leader in the Internet and marketing
services industries. MSGI's revenues have grown from $16 million in fiscal 1996
to in excess of $100 million on an annualized basis. GE Capital is the owner of
a 22 percent stockholder position in MSGI and CMGI is the owner of a 10 percent
stockholder position in MSGI.
MSGI is organized into two business divisions: the Internet Group and the
Marketing Services Group. The Internet Group's mission is to acquire, invest in
and incubate Internet companies. Its preliminary focus is on WiredEmpire, and
its Marketing Agent technology. MSGI plans to expand into other strategic areas.
The MSGI Internet Group provides Internet marketing, e-commerce applications,
Web development and hosting, online ad sales and consulting. Its Marketing
Services Group provides strategic planning, direct marketing and database
marketing, telemarketing and telefundraising, media planning and buying and
fulfillment. Through this business segment, MSGI will continue to grow by
leveraging the synergies it has across all its companies in marketing,
technology, and capabilities.
Thousands of clients worldwide are provided services by MSGI, which has offices
throughout the United States and in London. Corporate headquarters are located
at 333 Seventh Ave., New York, NY 10001. Telephone: 212-594-7688. Additional
information is available on the company's Website: http://www.msginet.com.
Matters discussed in this release include forward-looking statements that
involve risks and uncertainties, and actual results may be materially different.
Factors that could cause actual results to differ are stated in the companys
reports to the Securities and Exchange Commission including it s 10-Q for the
period ended March 31, 1999 and the annual report on Form 10-KSB for the year
ended June 30, 1998.
CONTACT: MSGI
Jamie Shaber
Director, Corporate Services
212-594-7688
or
Morgen-Walke Associates
Andrea Kaimowitz/Cheryl Olson
Press: Eileen King/Stacey Reed
212-850-5600
Exhibit 20.2
MSGI Closes Private Placement
NEW YORK--(BUSINESS WIRE)--September 7, 1999--Marketing Services Group, Inc.
(Nasdaq: MSGI), an integrated marketing and Internet services industry leader,
today announced that they have closed on a private placement of common stock in
an amount equal to $25 million. The funds were primarily purchased by
institutions, which were solicited during a nationwide road show. The securities
purchased were not registered under the Securities Act of 1933, as amended, and
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements. With the close of this
private placement, MSGI will have a total of 24,595,703 shares of common stock
outstanding.
Jeremy Barbera, Chairman and CEO of MSGI stated, "The proceeds of the private
placement will be used to retire debt of the company as well as to provide
general working capital. With ten months of the fiscal year in front of us, we
wanted to strengthen our balance sheet and improve our maneuverability as our
enterprise continues to grow."
About MSGI
Marketing Services Group, Inc. is a leader in the Internet and marketing
services industries. MSGI's revenues have grown from $16 million in fiscal 1996
to in excess of $100 million on an annualized basis. GE Capital is the owner of
a 22 percent stockholder position in MSGI and CMGI is the owner of a 10 percent
stockholder position in MSGI.
MSGI is organized into two business divisions: the Internet Group and the
Marketing Services Group. The Internet Group's mission is to acquire, invest in
and incubate Internet companies. Its preliminary focus is on WiredEmpire, and
its Marketing Agent technology. MSGI plans to expand into other strategic areas.
The MSGI Internet Group provides Internet marketing, e-commerce applications,
Web development and hosting, online ad sales and consulting. Its Marketing
Services Group provides strategic planning, direct marketing and database
marketing, telemarketing and telefundraising, media planning and buying and
fulfillment. Through this business segment, MSGI will continue to grow by
leveraging the synergies it has across all its companies in marketing,
technology, and capabilities.
Thousands of clients worldwide are provided services by MSGI, which has offices
throughout the United States and in London. Corporate headquarters are located
at 333 Seventh Ave., New York, NY 10001. Telephone: 212-594-7688. Additional
information is available on the company's Website: http://www.msginet.com.
Matters discussed in this release include forward-looking statements that
involve risks and uncertainties, and actual results may be materially different.
Factors that could cause actual results to differ are stated in the company's
reports to the Securities and Exchange Commission including its 10-Q for the
period ended March 31, 1999 and the annual report on Form 10-KSB for the year
ended June 30, 1998.
CONTACT: MSGI
Jamie Shaber
917-339-7100
or
Morgen-Walke Associates
Andrea Kaimowitz/ Cheryl Olson
Press: Eileen King/ Stacey Reed
212-850-5600
