EXHIBIT 10.1
STANDSTILL AGREEMENT
BETWEEN
MARKETING SERVICES GROUP, INC.
AND
CASTLE CREEK TECHNOLOGY PARTNERS LLC
DATED AS OF FEBRUARY 19, 2002
Agreement dated as of February 19, 2002 between Marketing Services Group,
Inc., a Nevada corporation (the "Company"), and Castle Creek Technology Partners
LLC, a Delaware limited liability company ("CCP").
Whereas, CCP owns 14,101.44 shares of Series E Convertible Preferred Stock
of the Company, stated value $1,000 per share (the "Series E Preferred Stock");
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. REPRESENTATIONS OF CCP. CCP represents and warrants to the Company as
follows:
(a) CCP beneficially owns 14,101.44 shares of Series E Preferred Stock
as of the date of this Agreement, and does not have a right to vote or
direct the vote of any securities of the Company other than to the extent
that shares of the Company's common stock are issued to and held by CCP
upon conversion of shares of Series E Preferred Stock in accordance with
the terms of the Certificate of Designations (as defined below).
(b) CCP 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 CCP enforceable in accordance with its
terms.
(c) There are no arrangements, agreements, or understandings between
CCP and any other person regarding ownership or voting of securities of
the Company.
2. 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 Company has sufficient capital available to fulfill its
payment obligations set forth in Section 4(a) herein.
(c) 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.
(d) 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.
3. OBLIGATIONS OF CCP. During the term of this Agreement (as defined in
Paragraph 5 below), CCP hereby agrees that:
(a) CCP will not, without the prior consent of the board of directors
of the Company (the "Board of Directors") (specifically expressed in a
resolution adopted by a majority of the Board of Directors):
(i) acquire, or permit any affiliate (as such term is defined by
Rule 12b-2 of Regulation 12B under the Securities Exchange Act of
1934, as amended (the "Act")) of CCP acting under CCP's direction or
control to acquire (other than through stock splits or stock
dividends), directly or indirectly or in conjunction with or through
any other person, by purchase or otherwise, beneficial ownership of
any additional securities of the Company;
(ii) make any short sales, enter into any hedging, derivative or
similar transactions regarding securities of the Company;
(iii) directly or indirectly or through any other person, solicit
or permit any affiliate of CCP acting under CCP's direction or control
to solicit proxies under any circumstance; or become a "participant,"
or permit any affiliate of CCP to become a "participant," in any
"election contest" relating to the election of directors of the
Company (as such terms are used in Rule 14a-11 of Regulation 14A under
the Act);
(iv) deposit, or permit any affiliate of CCP acting under CCP's
direction or control to deposit securities of the Company in a voting
trust, or subject, or permit any affiliate of CCP to subject, any
securities of the Company to a voting or similar agreement;
(v) directly or indirectly or through or in conjunction with any
other person, engage in a tender or exchange offer for the securities
of the Company made by any other person or entity;
(vi) take any action alone or in concert with any other person to
acquire or affect the control of the Company or, directly or
indirectly, participate in, or encourage the formation of, any group
seeking to obtain or take control of the Company;
(vii) except as otherwise provided herein, sell, transfer, pledge
or otherwise dispose of or encumber any securities of the Company; or
(viii) publicly announce an intention to do any of the actions
restricted or prohibited under clauses (i) through (vii) of this
Section 3(a).
Notwithstanding anything in this Agreement to the contrary, CCP shall not
be prohibited or restricted from selling, assigning or transferring any shares
of Series E Preferred Stock; provided that the buyer, assignee or transferee
agrees to be bound by the terms of this Agreement.
(b) CCP hereby waives such rights as it may have to require the
Company to effect a Trading Market Redemption as described in Article V.B
of the Certificate of Designations, Preferences, and Rights of Series E
Convertible Preferred Stock of the Company (the "Certificate of
Designations")) as a result of the Company's failure to obtain Stockholder
Approval (as defined in Article VI.A(b) of the Certificate of
Designations; provided, however, that such waiver shall expire, and CCP
shall have, and the Company hereby acknowledges, the right to require the
Company to effect a Trading Market Redemption in the event that: (i) the
Company has not filed a preliminary prospectus on or before July 31, 2002;
(ii) the Company has not obtained Stockholder Approval on or before
September 17, 2002 or (iii) this Agreement is terminated pursuant to
paragraph 5 hereof.
4. OBLIGATIONS OF THE COMPANY. The Company hereby agrees:
(a) to repurchase 2,500 shares of Series E Preferred Stock on the date
of execution of this Agreement at a purchase price of $2,500,000 (the
"Payment"); and
(b) to file with the Securities and Exchange Commission, on or before
July 31, 2002 a preliminary proxy statement mutually acceptable to both
parties pursuant to Regulation 14A of the Act that seeks to obtain and
recommends Stockholder Approval, and to hold the stockholder meeting
described therein on or before September 17, 2002. CCP acknowledges that,
if Stockholder Approval is obtained on or before such date, CCP shall have
no right to effect a Trading Market Redemption.
5. TERM. The term of this Agreement shall commence upon the occurrence of
each of the following: (a) the receipt by CCP of the Payment and (b) the
execution by the Company and RGC International Investors, LDC of a standstill
agreement in the form of this Agreement, and terminate on July 31, 2002;
provided, however, (i) this Agreement may be terminated by the Company upon a
breach by CCP of Section 3(a) hereof, and (ii) this Agreement may be terminated
by CCP upon (x) a breach by the Company of any of its obligations hereunder
(including Section 7(a)), (y) a material adverse change in the business,
operations, assets, financial condition or prospects of the Company or its
subsidiaries, or (z) the public announcement of the 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
consolidation, merger or other business combination of the Company with or into
any other entity or entities when the Company is not the survivor. Upon any such
termination, the parties shall have no further obligations under this Agreement.
6. SPECIFIC ENFORCEMENT. The parties hereto recognize and agree that, in
the event that any of the terms of paragraphs 3 and 4 were not performed in
accordance with their specific terms or were otherwise breached, immediate
irreparable injury would be caused, for which there is no adequate remedy at
law. It is accordingly agreed that in the event of a failure by either party to
perform its obligations hereunder, any other party shall be entitled to specific
performance through injunctive relief to prevent breaches of the terms of such
paragraphs and to specifically enforce such paragraphs and the terms and
provisions thereof in any action instituted in any court of the United States or
any state thereof having subject matter jurisdiction, without the posting of any
bond or other security, in addition to any other remedy to which the party may
be entitled, at law or in equity.
7. MISCELLANEOUS.
(a) STANDSTILL AGREEMENT WITH RGC INTERNATIONAL INVESTORS, LDC. 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 a standstill
agreement dated of even date herewith ("RGC Standstill"). The Company
further acknowledges that the RGC Standstill contains provisions which are
not materially different from this Agreement with respect to events of
termination.
(b) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions
without including any of such which may be hereafter declared invalid,
void or unenforceable.
(c) EXPENSES. Each party hereto shall pay its own expenses incurred in
connection with this Agreement.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the successors and
assigns, and transferees by operation of law, of the parties hereto or
otherwise bound hereby, whether or not any such person is a party hereto.
Except as otherwise expressly provided for herein, this Agreement shall
not inure to the benefit of, be enforceable by or create any right or
cause of action in any person, including without limitation any
shareholder of the Company, other than the parties hereto.
(e) SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. All
representations, warranties, covenants and agreements made herein shall
survive the execution and delivery of this Agreement.
(f) ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties hereto with respect to the subject matter hereof. No oral
understandings, statements, promises or inducements contrary to the terms
of this Agreement exist.
(g) AMENDMENTS. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto. However, a party may (but is
under no obligation to) waive in writing any condition to the obligations
of the other party hereunder.
(h) PUBLICITY. Neither party shall use, directly or indirectly, the
other party's name or the name of any of its affiliates in any
advertisement, announcement, press release or other similar communication
unless it has received the prior written consent of such other party for
the specific use contemplated or as otherwise required by applicable law
or regulation.
(i) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly delivered when received) by hand delivery, by
verifiable facsimile, by overnight delivery or by mail (registered or
certified mail, postage prepaid, return receipt requested) to the
respective parties as follows:
If to the Company:
Marketing Services Group, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: J. Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxx Traurig, LLP
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Annex, Esq.
Facsimile: (000) 000-0000
If to CCP:
Castle Creek Technology Partners LLC
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention:
Facsimile: (000) 000-0000
with a copy to:
Solomon, Zauderer, Ellenhorn, Xxxxxxxx & Xxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
(j) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive law of the State of Delaware without
giving effect to the principles of conflict of laws thereof.
(k) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
(l) EFFECT OF HEADINGS. The paragraph headings herein are for
convenience only and shall not affect the construction thereof.
In Witness Whereof, Marketing Services Group, Inc. and Castle Creek
Technology Partners LLC have caused this Agreement to be duly executed as of the
day and year first above written.
MARKETING SERVICES GROUP, INC.
By: /s/ J. XXXXXX XXXXXXX
---------------------------------
J. Xxxxxx Xxxxxxx
Chairman of the Board and
Chief Executive Officer
CASTLE CREEK TECHNOLOGY PARTNERS LLC
By: /s/ XXXX XXXXX
---------------------------------
Xxxx Xxxxx