-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FnFQ3MdpwXYrgbMNBjRvLGKdQsOw1Iv6R+0HvwdN+j+tZPZ9imoEBsyggTHBI8ON jRV2GsgMgVx0LDyo9qOd2Q== 0000911420-03-000009.txt : 20030114 0000911420-03-000009.hdr.sgml : 20030114 20030110170031 ACCESSION NUMBER: 0000911420-03-000009 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030103 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MKTG SERVICES INC CENTRAL INDEX KEY: 0000014280 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 880085608 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-01768 FILM NUMBER: 03511165 BUSINESS ADDRESS: STREET 1: 333 SEVENTH AVENUE STREET 2: 20TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10001 BUSINESS PHONE: 917-339-7200 MAIL ADDRESS: STREET 1: 333 SEVENTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10001 FORMER COMPANY: FORMER CONFORMED NAME: SPORTS TECH INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ALL-COMM MEDIA CORP DATE OF NAME CHANGE: 19950823 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL HOLDINGS INC DATE OF NAME CHANGE: 19920518 FORMER COMPANY: FORMER CONFORMED NAME: MARKETING SERVICES GROUP INC DATE OF NAME CHANGE: 19970707 8-K 1 d862998.txt CURRENT REPORT, MKTG SERVICES INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 --------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: January 3, 2003 MKTG SERVICES, INC. -------------------------------------------------- (Exact name of Registrant as specified in charter) Nevada 0-16730 88-0085608 - ---------------------------------------------------------------------------------------------------------------- (State or other (Commission (I.R.S. Employer jurisdiction of File No.) Identification No.) incorporation)
333 Seventh Avenue New York, New York 10001 ---------------------------------------- (Address of Principal Executive Offices) 917-339-7100 (Registrant's telephone number, including area code) ITEM 5. OTHER EVENTS On January 3, 2003 MKTG Services, Inc. (the "Company") closed on the repurchase of all of its outstanding convertible Series E Preferred stock in exchange for the payment of approximately $6 million in cash plus common stock equal to approximately 19.9% of its outstanding common shares, pursuant to separate exchange agreements with both Series E holders dated as of December 31, 2002. The Company also announced that it received a Nasdaq Staff Determination indicating that the Company fails to comply with certain requirements for continued listing and that its securities are, therefore, subject to delisting from The Nasdaq SmallCap Market. The delisting has been stayed following the Company's request for a hearing to reveiw the determination. The foregoing summaries are qualified in their entirety by the Exchange Agreements and the Press Release incorporated herein as Exhibit 10.1, Exhibit 10.2 and Exhibit 99.1, respectively. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) Not applicable (b) Not applicable (c) The following documents are filed herewith as exhibits to this Form 8-K: 10.1 Exchange Agreement between MKTG Services, Inc. and Castle Creek Technology Partners LLC dated as of December 31, 2002 (all Exhibits and Schedules are omitted from this filing, but will be filed with the Commission supplementally upon request). 10.2 Exchange Agreement between MKTG Services, Inc. and RGC International Investors, LDC dated as of December 31, 2002 (all Exhibits and Schedules are omitted from this filing, but will be filed with the Commission supplementally upon request). 99.1 Press Release issued by the Registrant dated January 6, 2003. -2- 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. MKTG SERVICES, INC. Date: January 10, 2003 By: /s/ Cindy H. Hill ----------------------------- Title: Chief Accounting Officer EXHIBIT INDEX Exhibit No. 10.1 Exchange Agreement between MKTG Services, Inc. and Castle Creek Technology Partners LLC dated as of December 31, 2002 (all Exhibits and Schedules are omitted from this filing, but will be filed with the Commission supplementally upon request). 10.2 Exchange Agreement between MKTG Services, Inc. and RGC International Investors, LDC dated as of December 31, 2002 (all Exhibits and Schedules are omitted from this filing, but will be filed with the Commission supplementally upon request). 99.1 Press Release issued by the Registrant dated January 6, 2003. EX-10.1 3 e863003.txt EXCHANGE AGREEMENT (CASTLE CREEK) EXHIBIT 10.1 EXCHANGE AGREEMENT BETWEEN MKTG SERVICES, INC. AND CASTLE CREEK TECHNOLOGY PARTNERS LLC DATED AS OF DECEMBER 31, 2002 This Exchange Agreement (this "Agreement"), is entered into as of December 31, 2002 between MKTG Services, Inc., a Nevada corporation (the "Company"), and Castle Creek Technology Partners LLC, a Delaware limited liability company ("CCP"). Whereas, CCP owns 11,045 shares of Series E Convertible Preferred Stock of the Company, having an aggregate stated value of $11,045,000.00 and a current Liquidation Preference in excess of such amount (the "Series E Preferred Stock"); and Whereas, CCP and the Company desire to exchange all of the Series E Preferred Stock held by CCP, on the terms set forth herein; and Whereas, the Company and CCP agree that it is in their mutual interests to enter into this Agreement as hereinafter described: Now, therefore, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties hereto covenant and agree as follows: 1. Exchange of Series E Preferred Stock. CCP hereby agrees to deliver to the Company 11,045 shares (the "Exchanged Shares") of Series E Preferred Stock held by CCP in exchange for (i) the payment by the Company to CCP of $3,021,840 in cash payable by wire transfer to an account designated by CCP (the "Cash Consideration") and (ii) the issuance by the Company to CCP of 725,203 shares of common stock of the Company (the "Stock Consideration"), which shares represent 9.9% of the 7,288,473 shares of common stock of the Company as currently outstanding. 2. Representations of CCP. CCP represents and warrants to the Company as follows: (a) CCP has not sold, pledged, hypothecated or otherwise granted anyone an interest in the Exchanged Shares, that it is the record and beneficial owner of the Exchanged Shares and acquired the Exchanged Shares directly from the Company and owns the Exchanged Shares free and clear of all liens, claims and encumbrances of whatever nature, kind or description. The Exchanged Shares shall be transferred by CCP to the Company, free and clear of all liens, claims, equities, and encumbrances. (b) CCP has full and complete authority to enter into this Agreement and to perform its obligations hereunder. CCP represents that it is familiar with the Company, has reviewed the Company's public filings, and has been given ample opportunity to ask questions of the management of the Company with respect to its decision to sell the Exchanged Shares. (c) This Agreement constitutes a valid and binding agreement of CCP enforceable in accordance with its terms. (d) There are no arrangements, agreements, or understandings between CCP and any other person regarding ownership or voting of securities of the Company. (e) CCP understands that the Stock Consideration has not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the accuracy of CCP's representations as expressed herein. (f) CCP represents that (i) it is not an affiliate of the Company, (ii) upon the simultaneous closing of the transactions contemplated herein and in the RGC Agreement (as defined herein), it will not be an affiliate of the Company, (iii) it was not an affiliate within the three preceding months, and (iv) the holding period of the Exchanged Shares as determined in accordance with Rule 144(d)(3) is at least two years. (g) It is understood that the certificates for the Stock Consideration may bear the following legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE LOCK-UP PROVISIONS CONTAINED IN THAT CERTAIN EXCHANGE AGREEMENT DATED AS OF DECEMBER 31, 2002." 3. Representations of the Company. The Company represents and warrants to CCP as follows: (a) The Company has full and complete authority to enter into this Agreement and to perform its obligations hereunder. This Agreement constitutes a valid and binding agreement of the Company enforceable in accordance with its terms. (b) The execution, delivery and performance of this Agreement by the Company will not conflict with or result in a breach, violation or default under the Company's Certificate of Incorporation or Bylaws or any agreement, contract or instrument to which the Company is a party. (c) The Company is not required to obtain any consent, authorization or order of any court, governmental authority, regulatory agency or third parties in order to execute, deliver or perform its obligations under this Agreement. (d) The Company has sufficient capital available to fulfill its obligations set forth in Section 1 herein. Following the consummation of the transactions contemplated by this Agreement, the Company will have sufficient capital to continue its operations as currently conducted, and to pay its debts and liabilities as they become due and payable and shall be solvent. (e) The Exchanged Shares are being exchanged in reliance upon CCP's representations to the Company contained in Section 2 above. (f) The Company is issuing the Stock Consideration pursuant to an exemption from registration under Section 3(a)(9) of the Securities Act. The Company hereby acknowledges that, based upon CCP's representations contained herein, the Exchanged Shares will be issued without a restrictive legend (excluding the legend described in Section 2(g) above) and may be sold by CCP without registration or the restrictions set forth in paragraphs (c), (e), (f) and (h) of Rule 144 of the Securities Act. The Company agrees that it shall remove the legend described in Section 2(g) above from the Exchanged Shares in accordance with Section 4 herein. (g) The Company hereby represents, that although it has conducted in the past and expects to continue discussions with third parties that could result in a Change of Control (as defined below), it has no present plans or intentions to enter into any agreement which would result in a Change of Control. Solely for purposes of this paragraph, a Change of Control shall have deemed to occur upon a sale, conveyance or 2 disposition of all or substantially all of the assets of the Company, the effectuation by the Company of a transaction or series of related transactions in which more than 50% of the voting power of the Company is disposed of, or the merger, consolidation or other business combination of the Company with or into any other entity or entities. 4. Lock-up. (a) For the period of twelve months from the date hereof, without the prior written consent of the Company, CCP shall not, alone or through or with any other person or entity, in any manner: (i) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) the common stock of the Company; or (ii) make any short sales, enter into any hedging, derivative or similar transactions regarding the Company's common stock. (b) Notwithstanding anything contained herein to the contrary, CCP may sell or otherwise transfer the Company's common stock to an affiliate (as such term is defined in Rule 144 promulgated under the Securities Act) of CCP (an "CCP Affiliate") without the prior written consent of the Company; provided, however that the CCP Affiliate agrees to be bound by the provisions of this Section 4. (c) Notwithstanding anything contained herein to the contrary, CCP may, upon the prior written consent of the Company (which approval shall not be unreasonably withheld), sell or otherwise transfer the Company's common stock in a private transaction to a third party which: (i) agrees to be bound by the provisions of this Section 4, and (ii) is not an CCP Affiliate. (d) Notwithstanding anything contained herein to the contrary, CCP shall be entitled, at any time, to engage in a disposition of the Company's common stock, if the Trading Price (as defined below) of the Company's common stock exceeds $1.00 (to be proportionately adjusted in the event of any subdivision or combination of the Company's common stock) during each Trading Day in any Trading Period (as defined below). "Trading Price" means an amount equal to the average of the closing bid and ask prices on a Trading Day (as defined below) as reported by the Nasdaq SmallCap Market (the "NasdaqSC") or such other securities exchange on which the Company's common stock is publicly traded ("Other Exchange"). "Trading Day" means a day on which the Company's common stock is traded on the Nasdaq or such Other Exchange, as applicable. "Trading Period" means the five Trading Days immediately preceding the date of disposition. (e) Notwithstanding anything contained herein to the contrary, CCP shall be entitled to engage in a disposition of the Company's common stock upon the public announcement by the Company of a sale, conveyance or disposition of all or substantially all of the assets of the Company, the effectuation by the Company of a transaction or series of related transactions in which more than 50% of the voting power of the Company is disposed of, or the merger, consolidation or other business combination of the Company with or into any other entity or entities or the filing or commencement of bankruptcy, insolvency or similar proceedings by or against the Company. (f) The Company hereby acknowledges that its executive officers and directors ("MKTG Insiders") shall be bound by the same restrictions as contained in this Section 4. Notwithstanding anything contained herein to the contrary, in the event that any MKTG Insider is in breach of such provisions, or the application of such provisions is being waived by the Company, the application of Section 4(a) to CCP shall automatically be null and void. (g) The Company hereby acknowledges that if prior to the expiration of the restrictions contained in this Section 4, it issues any additional shares of common stock of the Company (other than issuances pursuant to currently outstanding derivative securities, and/or issuances pursuant to the exercise of any employee stock options other than issuances to MKTG Insiders), the holders of such new securities 3 ("New Stockholders") shall be bound by the same restrictions as contained in this Section 4. Notwithstanding anything contained herein to the contrary, in the event that any New Stockholder is in breach of such provisions, the application of Section 4(a) to CCP shall automatically be null and void. 5. Mutual General Release. (a) CCP does hereby release, discharge and acquit forever the Company, its subsidiaries and affiliates, each of its respective officers, directors and employees and each of their respective heirs, administrators, successors and assigns, from any and all actions, causes of action, suits, debts, accounts, bonds, bills, covenants, contracts, controversies, agreements, liabilities, damages, costs, expenses, demands, judgments, executions, variances, claims and other obligations of whatever kind or nature, in law or in equity, known or unknown, suspected or unsuspected, arising from, connected or related to, or caused by any event, occurrence, cause or thing, of any type, whatsoever, arising or existing, or occurring, in whole or in part, at any time from the beginning of the world through the date hereof, except for any claims arising solely under this Agreement (collectively, the "Subject Claims"). CCP acknowledges that it has considered the possibility that it may not fully know the number or magnitude of all the Subject Claims or other claims which it has or may have against the Company, its subsidiaries and affiliates, each of its respective officers, directors and employees and each of their respective heirs, administrators, successors and assigns, but nevertheless, intends to assume the risk that it is releasing such unknown claims and agrees that this Agreement is a full and final release of any and all Subject Claims, subject to the provisions of subparagraph (d) below. (b) The Company does hereby release, discharge and acquit forever CCP, its subsidiaries and affiliates, each of its respective officers, directors, partners, agents and employees and each of their respective heirs, administrators, successors and assigns, from any and all Subject Claims. The Company acknowledges that it has considered the possibility that it may not fully know the number or magnitude of all the Subject Claims or other claims which it has or may have against CCP, its subsidiaries and affiliates, each of its respective officers, directors, partners, agents and employees and each of their respective heirs, administrators, successors and assigns, but nevertheless, intends to assume the risk that it is releasing such unknown claims and agrees that this Agreement is a full and final release of any and all Subject Claims, subject to the provisions of subparagraph (d) below. (c) This mutual general release is given for good and valuable consideration and to provide a material inducement to the Company and CCP to consummate the transactions described in this Agreement from which the Company and CCP will receive substantial direct and indirect benefit. This release shall remain in full force and effect without regard to the expiration provisions under this Agreement. (d) In the event that the transactions contemplated by this Agreement are set aside or avoided, any applicable rights to pursue any Subject Claims would revert to the Company and CCP, as the case may be, and the releases given in this Section 5 shall automatically be null and void. 6. Other Series E Preferred Stockholders. The Company hereby acknowledges that this Agreement confers economic benefits upon CCP that are not materially less beneficial as the Company has conferred upon RGC International Investors, LDC pursuant to an exchange agreement dated of even date herewith ("RGC Agreement"). The Company further acknowledges that the RGC Agreement contains provisions which are not materially different from Sections 4 and 5 of this Agreement. The per share consideration found in Section 1 of this Agreement and/or the provisions of Sections 4 and 5 of this Agreement, shall be automatically amended to reflect any additional consideration or modifications made to such sections in the RGC Agreement, without any further action. 7. Closing. Upon the delivery to the Company by CCP of all of the Series E Preferred Stock owned by CCP, the Company shall instruct its transfer agent to issue the shares of its common stock issuable pursuant to Section 1 and shall deliver the Cash Consideration as instructed by CCP. 8. Governing Law. This Agreement shall be governed by and construed in accordance with the substantive law of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Both CCP and the Company consent to personal and exclusive 4 jurisdiction and venue in the federal courts sitting in New York City, New York. CCP waives any local or international law, convention or regulation that might provide an alternative law or construction. 9. Prior Agreements. Except to the extent required by the terms hereof, this Agreement supersedes all agreements between the Company and CCP with respect to the subject matter contained herein, entered into prior to the date hereof, whether oral or written. 10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument. 11. Effect of Headings. The paragraph headings herein are for convenience only and shall not affect the construction thereof. 5 IN WITNESS WHEREOF, MKTG Services, Inc. and Castle Creek Technology Partners LLC have caused this Agreement to be duly executed as of the day and year first above written. MKTG SERVICES, INC. By: /s/ Jeremy Barbera ------------------------ J. Jeremy Barbera Chairman of the Board and Chief Executive Officer CASTLE CREEK TECHNOLOGY PARTNERS LLC By: /s/ Allan Weine -------------------- Allan Weine 6 EX-10.2 4 e863006.txt EXCHANGE AGREEMENT (RGC) EXHIBIT 10.2 EXCHANGE AGREEMENT BETWEEN MKTG SERVICES, INC. AND RGC INTERNATIONAL INVESTORS, LDC DATED AS OF DECEMBER 31, 2002 This Exchange Agreement (this "Agreement"), is entered into as of December 31, 2002 between MKTG Services, Inc., a Nevada corporation (the "Company"), and RGC International Investors, LDC, a Cayman Islands limited duration company ("RGC"). Whereas, RGC owns 10,965.17274 shares of Series E Convertible Preferred Stock of the Company, having an aggregate stated value of $10,965,172.74 and a current Liquidation Preference in excess of such amount (the "Series E Preferred Stock"); and Whereas, RGC and the Company desire to exchange all of the Series E Preferred Stock held by RGC, on the terms set forth herein; and Whereas, the Company and RGC agree that it is in their mutual interests to enter into this Agreement as hereinafter described: Now, therefore, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties hereto covenant and agree as follows: 1. Exchange of Series E Preferred Stock. RGC hereby agrees to deliver to the Company 10,965.17274 shares (the "Exchanged Shares") of Series E Preferred Stock held by RGC in exchange for (i) the payment by the Company to RGC of $3,000,000 in cash payable by wire transfer to an account designated by RGC (the "Cash Consideration") and (ii) the issuance by the Company to RGC of 725,203 shares of common stock of the Company (the "Stock Consideration"), which shares represent 9.9% of the 7,288,473 shares of common stock of the Company as currently outstanding. 2. Representations of RGC. RGC represents and warrants to the Company as follows: (a) RGC has not sold, pledged, hypothecated or otherwise granted anyone an interest in the Exchanged Shares, that it is the record and beneficial owner of the Exchanged Shares and acquired the Exchanged Shares directly from the Company and owns the Exchanged Shares free and clear of all liens, claims and encumbrances of whatever nature, kind or description. The Exchanged Shares shall be transferred by RGC to the Company, free and clear of all liens, claims, equities, and encumbrances. (b) RGC has full and complete authority to enter into this Agreement and to perform its obligations hereunder. RGC represents that it is familiar with the Company, has reviewed the Company's public filings, and has been given ample opportunity to ask questions of the management of the Company with respect to its decision to sell the Exchanged Shares. (c) This Agreement constitutes a valid and binding agreement of RGC enforceable in accordance with its terms. (d) There are no arrangements, agreements, or understandings between RGC and any other person regarding ownership or voting of securities of the Company. (e) RGC understands that the Stock Consideration has not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the accuracy of RGC's representations as expressed herein. (f) RGC represents that based upon information provided by the Company relating to the number of shares of common stock of the Company which will be outstanding following the consummation of the transactions contemplated by this Agreement and the CCP Agreement (as defined herein) (i) it is not an affiliate of the Company, (ii) upon the simultaneous closing of the transactions contemplated herein and in the CCP Agreement, it will not be an affiliate of the Company, (iii) it was not an affiliate within the three preceding months, and (iv) it has held the Exchanged Shares for at least two years. (g) It is understood that the certificates for the Stock Consideration may bear the following legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE LOCK-UP PROVISIONS CONTAINED IN THAT CERTAIN EXCHANGE AGREEMENT DATED AS OF DECEMBER 31, 2002." 3. Representations of the Company. The Company represents and warrants to RGC as follows: (a) The Company has full and complete authority to enter into this Agreement and to perform its obligations hereunder. This Agreement constitutes a valid and binding agreement of the Company enforceable in accordance with its terms. (b) The execution, delivery and performance of this Agreement by the Company will not conflict with or result in a breach, violation or default under the Company's Certificate of Incorporation or Bylaws or any agreement, contract or instrument to which the Company is a party. (c) The Company is not required to obtain any consent, authorization or order of any court, governmental authority, regulatory agency or third parties in order to execute, deliver or perform its obligations under this Agreement. (d) The Company has sufficient capital available to fulfill its obligations set forth in Section 1 herein. Following the consummation of the transactions contemplated by this Agreement, the Company will have sufficient capital to continue its operations as currently conducted, and to pay its debts and liabilities as they become due and payable and shall be solvent. (e) The Exchanged Shares are being exchanged in reliance upon RGC's representations to the Company contained in Section 2 above. (f) The Company is issuing the Stock Consideration pursuant to an exemption from registration under Section 3(a)(9) of the Securities Act. The Company hereby acknowledges that, based upon RGC's representations contained herein, the Exchanged Shares will be issued without a restrictive legend (excluding the legend described in Section 2(g) above) and may be sold by RGC without registration or the restrictions set forth in paragraphs (c), (e), (f) and (h) of Rule 144 of the Securities Act. The Company agrees that it shall remove the legend described in Section 2(g) above from the Exchanged Shares in accordance with Section 4 herein. (g) The Company hereby represents, that although it has conducted in the past and expects to continue discussions with third parties that could result in a Change of Control (as defined below), it has no present plans or intentions to enter into any agreement which would result in a Change of Control. Solely for purposes of this paragraph, a Change of Control shall have deemed to occur upon a sale, conveyance or disposition of all or substantially all of the assets of the Company, the effectuation by the Company of a transaction or series of related transactions in which more than 50% of the voting power of the Company is disposed of, or the merger, consolidation or other business combination of the Company with or into any other entity or entities. 2 4. Lock-up. (a) For the period of twelve months from the date hereof, without the prior written consent of the Company, RGC shall not, alone or through or with any other person or entity, in any manner: (i) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) the common stock of the Company; or (ii) make any short sales, enter into any hedging, derivative or similar transactions regarding the Company's common stock. (b) Notwithstanding anything contained herein to the contrary, RGC may sell or otherwise transfer the Company's common stock to an affiliate (as such term is defined in Rule 144 promulgated under the Securities Act) of RGC (an "RGC Affiliate") without the prior written consent of the Company; provided, however that the RGC Affiliate agrees to be bound by the provisions of this Section 4. (c) Notwithstanding anything contained herein to the contrary, RGC may, upon the prior written consent of the Company (which approval shall not be unreasonably withheld), sell or otherwise transfer the Company's common stock in a private transaction to a third party which: (i) agrees to be bound by the provisions of this Section 4, and (ii) is not an RGC Affiliate. (d) Notwithstanding anything contained herein to the contrary, RGC shall be entitled, at any time, to engage in a disposition of the Company's common stock, if the Trading Price (as defined below) of the Company's common stock exceeds $1.00 (to be proportionately adjusted in the event of any subdivision or combination of the Company's common stock) during each Trading Day in any Trading Period (as defined below). "Trading Price" means an amount equal to the average of the closing bid and ask prices on a Trading Day (as defined below) as reported by the Nasdaq SmallCap Market (the "NasdaqSC") or such other securities exchange on which the Company's common stock is publicly traded ("Other Exchange"). "Trading Day" means a day on which the Company's common stock is traded on the Nasdaq or such Other Exchange, as applicable. "Trading Period" means the five Trading Days immediately preceding the date of disposition. (e) Notwithstanding anything contained herein to the contrary, RGC shall be entitled to engage in a disposition of the Company's common stock upon the public announcement by the Company of a sale, conveyance or disposition of all or substantially all of the assets of the Company, the effectuation by the Company of a transaction or series of related transactions in which more than 50% of the voting power of the Company is disposed of, or the merger, consolidation or other business combination of the Company with or into any other entity or entities or the filing or commencement of bankruptcy, insolvency or similar proceedings by or against the Company. (f) The Company hereby acknowledges that its executive officers and directors ("MKTG Insiders") shall be bound by the same restrictions as contained in this Section 4. Notwithstanding anything contained herein to the contrary, in the event that any MKTG Insider is in breach of such provisions, or the application of such provisions is being waived by the Company, the application of Section 4(a) to RGC shall automatically be null and void. (g) The Company hereby acknowledges that if prior to the expiration of the restrictions contained in this Section 4, it issues any additional shares of common stock of the Company (other than issuances pursuant to currently outstanding derivative securities, and/or issuances pursuant to the exercise of any employee stock options other than issuances to MKTG Insiders), the holders of such new securities ("New Stockholders") shall be bound by the same restrictions as contained in this Section 4. Notwithstanding anything contained herein to the contrary, in the event that any New Stockholder is in breach of such provisions, the application of Section 4(a) to RGC shall automatically be null and void. 5. Mutual General Release. (a) RGC does hereby release, discharge and acquit forever the Company, its subsidiaries and affiliates, each of its respective officers, directors and employees and each of their respective heirs, administrators, successors and assigns, from any and all actions, causes of action, suits, debts, accounts, bonds, bills, covenants, contracts, controversies, agreements, liabilities, damages, costs, expenses, demands, judgments, executions, variances, claims and other obligations of whatever kind or nature, in law or in equity, known or unknown, suspected or unsuspected, arising from, connected or related to, or caused by any event, occurrence, cause or thing, of any type, whatsoever, arising or existing, or occurring, in 3 whole or in part, at any time from the beginning of the world through the date hereof, except for any claims arising solely under this Agreement (collectively, the "Subject Claims"). RGC acknowledges that it has considered the possibility that it may not fully know the number or magnitude of all the Subject Claims or other claims which it has or may have against the Company, its subsidiaries and affiliates, each of its respective officers, directors and employees and each of their respective heirs, administrators, successors and assigns, but nevertheless, intends to assume the risk that it is releasing such unknown claims and agrees that this Agreement is a full and final release of any and all Subject Claims, subject to the provisions of subparagraph (d) below. (b) The Company does hereby release, discharge and acquit forever RGC, its subsidiaries and affiliates, each of its respective officers, directors, partners, agents and employees and each of their respective heirs, administrators, successors and assigns, from any and all Subject Claims. The Company acknowledges that it has considered the possibility that it may not fully know the number or magnitude of all the Subject Claims or other claims which it has or may have against RGC, its subsidiaries and affiliates, each of its respective officers, directors, partners, agents and employees and each of their respective heirs, administrators, successors and assigns, but nevertheless, intends to assume the risk that it is releasing such unknown claims and agrees that this Agreement is a full and final release of any and all Subject Claims, subject to the provisions of subparagraph (d) below. (c) This mutual general release is given for good and valuable consideration and to provide a material inducement to the Company and RGC to consummate the transactions described in this Agreement from which the Company and RGC will receive substantial direct and indirect benefit. This release shall remain in full force and effect without regard to the expiration provisions under this Agreement. (d) In the event that the transactions contemplated by this Agreement are set aside or avoided, any applicable rights to pursue any Subject Claims would revert to the Company and RGC, as the case may be, and the releases given in this Section 5 shall automatically be null and void. 6. Other Series E Preferred Stockholders. The Company hereby acknowledges that this Agreement confers economic benefits upon RGC that are not materially less beneficial as the Company has conferred upon Castle Creek Technology Partners LLC pursuant to an exchange agreement dated of even date herewith ("CCP Agreement"). The Company further acknowledges that the CCP Agreement contains provisions which are not materially different from Sections 4 and 5 of this Agreement. The per share consideration found in Section 1 of this Agreement and/or the provisions of Sections 4 and 5 of this Agreement, shall be automatically amended to reflect any additional consideration or modifications made to such sections in the CCP Agreement, without any further action. 7. Closing. Upon the delivery to the Company by RGC of all of the Series E Preferred Stock owned by RGC, the Company shall instruct its transfer agent to issue the shares of its common stock issuable pursuant to Section 1 and shall deliver the Cash Consideration as instructed by RGC. 8. Governing Law. This Agreement shall be governed by and construed in accordance with the substantive law of the State of New York without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Both RGC and the Company consent to personal and exclusive jurisdiction and venue in the federal courts sitting in New York City, New York. RGC waives any local or international law, convention or regulation that might provide an alternative law or construction. 9. Prior Agreements. Except to the extent required by the terms hereof, this Agreement supersedes all agreements between the Company and RGC with respect to the subject matter contained herein, entered into prior to the date hereof, whether oral or written. 10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument. 11. Effect of Headings. The paragraph headings herein are for convenience only and shall not affect the construction thereof. 4 IN WITNESS WHEREOF, MKTG Services, Inc. and RGC International Investors, LDC have caused this Agreement to be duly executed as of the day and year first above written. MKTG SERVICES, INC. By:/s/ Jeremy Barbera ------------------------- J. Jeremy Barbera Chairman of the Board and Chief Executive Officer RGC INTERNATIONAL INVESTORS, LDC By: Rose Glen Capital Management, L.P., Investment Manager By: RGC General Partner Corp. as General Partner By: /s/ Gerald F. Stahlecker -------------------------- Gerald F. Stahlecker Managing Director 5 EX-99.1 5 e863013.txt PRESS RELEASE EXHIBIT 99.1 MKTG SERVICES REPORTS ON CONSUMMATION OF REPURCHASE OF PREFERRED STOCK AND STATUS OF CONTINUED NASDAQ LISTING NEW YORK, NEW YORK JAN. 6, 2003 -- MKTG Services, Inc. (Nasdaq: MKTG - News), a leading relationship marketing company, today announced that on Friday the Company completed the repurchase of all of its outstanding convertible Series E Preferred stock in exchange for the payment of approximately $6 million in cash plus common stock equal to approximately 19.9% of its outstanding common shares. Furthermore, under the terms of the exchange agreements, and subject to the conditions specified therein, each former Preferred Stockholder, and each executive officer and director of the Company has entered into a lock up, which extends until December 31, 2003. The Company also announced that it received a Nasdaq Staff Determination indicating that the Company fails to comply with the "Minimum Bid Price" and the "Stockholders' Equity" requirements for continued listing set forth in Marketplace Rules 4310(c)(4) and 4310(c)(2)(B) and that its securities are, therefore, subject to delisting from The Nasdaq SmallCap Market. Such non-compliance was previously disclosed in the Company's recent Annual Report on Form 10-K. The Company has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. The hearing request will stay the delisting of the Company's securities pending the Panel's decision. There can be no assurance the Panel will grant the Company's request for continued listing. The request for such a hearing will cause its listing on Nasdaq to be maintained pending a final determination. Jeremy Barbera, Chairman and CEO commented, "We are very pleased to have completed the buy-back of our Preferred stock which had a face value of approximately $30 million. MKTG has been able to simplify our capital structure and reduce the substantial dilution and overhang associated with the Preferred Stock, while retaining adequate working capital to function as a going concern. As previously indicated, our principal business strategy is now focused on creating value from our historically profitable teleservices operations, and on increasing shareholder value in the near term." Commenting on the Nasdaq notice, Mr. Barbera noted, "This has been a difficult environment for many SmallCap public companies. At our hearing we hope to be successful in presenting a plan that will lead to continued listing." About MKTG Services, Inc. MKTG Services, Inc. (Nasdaq: MKTG - News) is a leading relationship marketing company focused on assisting corporations with customer acquisition and retention strategies and solutions. Our highly customized teleservices operations deliver campaigns, which, strengthen brands, increase customer loyalty, and consistently yield a high net return for our clients. General Electric Company has been the largest shareholder of the Company since 1997. The corporate headquarters is located at 333 Seventh Avenue, New York, NY 10001. Telephone: 917-339-7100. Additional information is available on the Company's website: http://www.mktgservices.com. The information contained in this news release, other than historical information, consists of forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements may involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors, including general economic conditions, consumer spending levels, adverse weather conditions and other factors could cause actual results to differ materially from the Company's expectations. [GRAPHIC OMITTED] Source: MKTG Services, Inc. -----END PRIVACY-ENHANCED MESSAGE-----