Exhibit 10
MARKETING SERVICES GROUP, INC.
FOURTH MEMORANDUM OF UNDERSTANDING
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This is to confirm our understanding that we hereby agree to amend for a
fourth time, effective as of November 19, 1997 and in memorialization of the
agreements reached as of such date, certain of the provisions of that certain
Stock Purchase Agreement, dated January 31, 1997 (the "Purchase Agreement"),
between Marketing Services Group, Inc. (formerly All-Comm Media Corporation and
prior thereto Alliance Media Corporation) (hereinafter "MSGI") and ▇▇▇▇▇▇▇ ▇▇▇▇
(hereinafter "▇▇▇▇") in each of the following respects:
1. MSGI and ▇▇▇▇ hereby agree that, for purposes of Section 2(b) of
the Purchase Agreement, the "Pre-Tax Earnings" for ▇▇▇▇▇▇▇ ▇▇▇▇ &
Associates, Inc. ("SDA") for the first "Post-Closing Year" ended
June 30, 1996 and for the second "Post-Closing Year" ended June
30, 1997 shall be deemed to be $1,571,135 and $500,523,
respectively.
2. As a result of the agreements set forth in Section 1 hereof, MSGI
and ▇▇▇▇ hereby agree that ▇▇▇▇ shall be entitled to the full
$850,000 earn out payable in respect of the second "Post-Closing
Year" ending June 30, 1997 and MSGI hereby agrees that such
$850,000 earn out shall be paid $425,000 in cash and $425,000 in
shares of MSGI's common stock as soon as reasonably practicable
after the execution and delivery of this Fourth Memorandum of
Understanding by the parties. MSGI and ▇▇▇▇ hereby further agree
that ▇▇▇▇ shall be entitled to receive the payment of interest on
the $425,000 cash portion of the earn out at the rate of 8% per
annum from October 1, 1997 through the date that such $425,000
cash portion of the earn out is actually paid by MSGI. If the
$425,000 cash portion of the earn out is paid on November 30,
1997, the amount of interest due to ▇▇▇▇ from MSGI will be
$5,567. ▇▇▇▇ and ▇▇▇▇ hereby further agree that the number of
shares of MSGI's common stock to be delivered to ▇▇▇▇ is 139,178
as calculated by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of MSGI in his June 30, 1997
memorandum to ▇▇▇▇.
3. For purposes of calculating SDA's "Pre-tax Earnings" for purposes
of the earn out due in respect of the third "Post-Closing Year"
ending June 30, 1998, MSGI and ▇▇▇▇ hereby agree that,
notwithstanding any contrary provisions contained in the Purchase
Agreement, as heretofore amended, the following amounts shall be
added to, or subtracted from, SDA's "Pre-Tax Earnings" for such
third "Post-Closing Year":
(a) SDA's "Pre-Tax Earnings" for such third "Post-Closing Year" shall
be adjusted by adding back into SDA's "Pre-Tax Earnings" the sum
of $18,000 representing approximately 50% of the costs paid or
incurred by SDA in respect of the person recently hired by SDA as
a bookkeeper to monitor and handle SDA's accounts receivable
financing arrangement with its institutional lender, which
accounts receivable financing arrangement was instituted at the
behest of MSGI.
(b) SDA's "Pre-Tax Earnings" for such third "Post-Closing Year" shall
be further adjusted by adding back into SDA's "Pre-Tax Earnings"
all interest, fees and other costs in excess of $12,000 paid or
accrued in respect of the accounts receivable financing
arrangement referred to in Section 3(a) above during the third
"Post-Closing Year" ending June 30, 1998.
(c) SDA's "Pre-Tax Earnings" for such third "Post-Closing Year"
ending June 30, 1998 shall also be adjusted as provided in the
second sentence of Section 5 hereof.
(d) SDA's "Pre-Tax Earnings" for such third "Post-Closing Year" shall
be further adjusted by subtracting the amount of $25,000 for the
third "Post-Closing Year" for the accounting and related services
provided by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and his staff at MSGI to SDA in
connection with SDA's preparation of its accounting books and
records for the third "Post-Closing Year" ending June 30, 1998
provided such accounting services are actually rendered by ▇▇▇▇▇
▇▇▇▇▇▇▇▇ and his staff in a manner similar to such services
provided during the first and second "Post-Closing Years" ended
June 30, 1996 and June 30, 1997. Except as provided in this
Section 3(d), MSGI shall not be entitled to any other adjustments
of any kind whatsoever related to allocation of MSGI's overhead
or any other expenses incurred by MSGI to or on behalf of SDA for
the third "Post-Closing Year" ending June 30, 1998.
4. In consideration of MSGI's agreements set forth in Sections 1
through 3 hereof, ▇▇▇▇ hereby agrees that he will cease to serve
as a director, officer and employee of SDA effective on and as of
the close of business on December 31, 1997. ▇▇▇▇ further agrees
that, during the period from January 1, 1998 through April 24,
1998, he will continue to serve SDA as a consultant for up to a
maximum average of 20 hours per week as requested by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and/or ▇▇▇ ▇▇▇▇▇▇ at SDA. In consideration of such
consulting services, MSGI hereby agrees that SDA shall be
obligated to pay, and shall pay, ▇▇▇▇ the sum of $125 for each
hour of consulting services actually rendered by ▇▇▇▇ during such
6-month time period. All services rendered by ▇▇▇▇ pursuant to
the foregoing consulting arrangement shall be performed at times
and at places as are reasonably agreed to between SDA and ▇▇▇▇
and shall be billed to SDA by ▇▇▇▇ in minimum increments of 1/10
of an hour.
5. MSGI and ▇▇▇▇ hereby reaffirm their prior agreement that SDA
shall be responsible for paying ▇▇▇▇ for all legal and accounting
fees and expenses incurred by ▇▇▇▇ which relate to any
calculations, accountings, discussions and/or negotiations
resulting in any amendments or any proposed amendments to the
Purchase Agreement including, but not limited to, the discussions
and/or negotiations relating to this Fourth Memorandum of
Understanding. Moreover, such legal and accounting fees and
expenses shall be added back to SDA's "Pre-Tax Earnings" for
purposes of determining the earn out for the third "Post-Closing
Year" ending June 30, 1998.
6. MSGI represents that this Fourth Memorandum of Understanding has
been duly authorized by all necessary corporate action on its
part.
7. Except as set forth herein, all of the terms and provisions of
the Purchase Agreement, as heretofore amended, between MSGI and
▇▇▇▇ shall remain in full force and effect. MSGI and ▇▇▇▇ hereby
further agree that, in the event that any of the provisions of
this Fourth Memorandum of Understanding are deemed to be
inconsistent with the provisions of the Purchase Agreement, as
heretofore amended, the provisions of this Fourth Memorandum of
Understanding shall prevail over any such inconsistent provisions
of the Purchase Agreement, as heretofore amended.
"MSGI" "▇▇▇▇"
MARKETING SERVICES GROUP, INC.
(formerly All-Comm Media Corporation and
prior thereto Alliance Media Corporation)
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
President and
Chief Executive Officer
