SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 (Date of earliest event reported): November 1, 1999
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THCG, INC.
(Exact name of registrant as specified in its charter)
Utah 0-26072 87-0415597
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification No.)
650 Madison Avenue, 21st Floor, New York, NY 10022
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 223-0440
Walnut Financial Services, Inc., 8000 Towers Crescent Drive, Suite 1070, Vienna,
Virginia 22182
(Former Name or Former Address, if Changed Since Last Report)
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Item 1. Changes in Control of Registrant.
On November 1, 1999, the Registrant consummated the transactions
contemplated by the Amended and Restated Agreement and Plan of Merger, dated as
of August 5, 1999 (the "Merger Agreement"), by and among the Registrant, Tower
Hill Acquisition Corp., a New York corporation and a wholly-owned subsidiary of
the Registrant, and Tower Hill Securities, Inc., a New York corporation ("Tower
Hill"). Pursuant to the Merger Agreement, Newco merged with and into Tower Hill,
with Tower Hill surviving as a wholly-owned subsidiary of the Registrant (the
"Merger").
In connection with the Merger, (i) each share of common stock, par value
$0.10 per share, of Tower Hill (the "Tower Hill Common Stock") issued and
outstanding immediately prior the Merger was converted into and exchanged for
37,228.145 shares of common stock, par value $0.01 per share, of the Registrant
(the "Common Stock"); and (ii) an officer of Tower Hill was granted 372,281
shares of restricted common stock. A total of 4,095,098 shares of Common Stock
were issued to the former stockholders and a former officer of Tower Hill upon
consummation of the Merger. In addition, two of the former stockholders of Tower
Hill were granted options (the "Options") to purchase 900,000 shares of Common
Stock. Including the Options, a total of 4,995,098 shares of Common Stock were
issued to the former stockholders and a former officer of Tower Hill upon
consummation of the Merger.
In addition, pursuant to the Merger Agreement, the Registrant issued
2,500,000 shares of Common Stock and warrants to purchase an aggregate of
2,000,000 shares of Common Stock to Greenwich Street Capital Partners II, L.P.
("GSCP") and certain of its affiliates in a private placement transaction (the
"Private Placement"), representing approximately 34.40% of the Common Stock
issued and outstanding upon consummation of the Merger. In connection with the
Private Placement, the Registrant entered into a voting agreement pursuant to
which GSCP has the right to appoint one individual to the Registrant's Board of
Directors so long as GSCP is the holder of Common Stock or warrants to purchase
Common Stock which equal at least 5%, in the aggregate, of the outstanding
shares of Common Stock of the Registrant on a fully diluted basis. The
Registrant also agreed to use its best efforts to cause the nominee of GSCP to
be appointed to the Compensation Committee of the Board of Directors.
In addition to the Private Placement, the Registrant completed two
additional private placements of 932,500 shares of Common Stock, in the
aggregate: one to an outside investor group and one to an investor group
consisting of former Tower Hill employees.
Upon consummation of the Merger, the Board of Directors of the
Registrant was increased from seven to nine directors and was classified into
three classes. Concurrently therewith, all of the directors of the Registrant
immediately prior to the Merger, with the exception of Gene Burleson, Burton W.
Kanter and Joel S. Kanter, resigned. Five of the six vacancies created thereby
were filled with directors nominated by Tower Hill, including Joseph D. Mark and
Adi Raviv; the sixth vacancy was filled by Keith Abell, a nominee of GSCP. In
addition, upon consummation of
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the Merger, the officers of the Registrant immediately prior to the Merger
resigned, and individuals designated by Tower Hill assumed the management of the
Registrant.
The foregoing description of the terms and provisions of the Merger
Agreement is qualified in its entirety by reference to the full text of the
Merger Agreement which is filed herewith and incorporated herein by reference.
The following table sets forth information, as of November 5, 1999,
concerning the Common Stock of the Registrant beneficially owned by the former
stockholders and a former officer of Tower Hill:
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Name Number of Shares Percentage of Shares
Beneficially Owned Beneficially Owned
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Joseph D. Mark 1,599,652.66 (1) 14.06%
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Adi Raviv 2,158,074.66(2) 18.97%
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Shai Novik 397,281(3) 3.59%
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Total 4,155,008.32 35.60%
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(1) Includes 296,666.66 shares of Common Stock subject to options
exercisable within 60 days. Does not include 558,423 shares of Common
Stock held by trusts for the benefit of Mr. Mark's children, for which
trusts Mr. Mark's wife serves as trustee. Mr. Mark disclaims any
beneficial interest in the securities held by the trusts.
(2) Includes 296,666.66 shares of Common Stock subject to options
exercisable within 60 days. Also includes 465,352 shares of Common Stock
held by Mr. Raviv in a grantor retained annuity trust, for which trust
Mr. Raviv's wife serves as trustee.
(3) Includes 25,000 shares of Common Stock acquired by Mr. Novik in one of
the additional private placements.
Item 2. Acquisition or Disposition of Assets
On November 1, 1999, the Registrant announced the consummation of the
Merger pursuant to the Merger Agreement. As of November 1, 1999, the effective
date of the Merger, (i) each outstanding share of Tower Hill Common Stock issued
and outstanding immediately prior the Merger was converted into and exchanged
for 37,228.145 shares of the Common Stock, and (ii) an officer of Tower Hill was
granted 372,281 shares of restricted common stock. A total of 4,095,098 shares
of the Registrant's Common Stock were issued to the former stockholders and a
former officer of Tower Hill in connection with the Merger, excluding the
Options. A total of 4,995,098 shares of the Registrant's Common Stock were
issued to the former stockholders and a former officer of Tower Hill, including
the Options.
The Merger is intended to be a tax-free transaction under the Internal
Revenue Code of 1986, as amended, and will be accounted for as a reverse
acquisition. Tower Hill provides investment banking services and related general
financial advisory services encompassing three principal areas: (i) capital
raising through private
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placements of corporate debt and equity securities, (ii) mergers and
acquisitions, and (iii) recapitalizations and refinancings. The Registrant
intends to continue the business currently performed by Tower Hill as a
subsidiary of the Registrant.
The foregoing description of the terms and provisions of the Merger
Agreement is qualified in its entirety by reference to the full text of the
Merger Agreement which is filed herewith and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of business acquired. It is presently
impracticable to provide the financial statements required to be included in
this Current Report on Form 8-K with respect to the business acquired. Such
financial statements will be filed by amendment as soon as practicable, but in
any event within 75 days after the consummation of the Merger.
(b) Pro forma financial information. It is presently impracticable to
provide the pro forma financial information required to be included in this
Current Report on Form 8-K. Such pro forma financial statement will be filed by
amendment as soon as practicable, but in any event within 75 days after the
consummation of the Merger.
(c) Exhibits
Exhibit No. Description
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2.1 Amended and Restated Agreement and Plan of Merger
dated as of August 5, 1999, by and among the
Registrant, Tower Hill Acquisition Corp. and Tower
Hill Securities, Inc. (incorporated herein by
reference to Exhibit A of the Registrant's Definitive
Proxy Statement filed on September 30, 1999).
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SIGNATURE
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.
Dated: November 10, 1999
THCG, INC.
By: /s/ Shai Novik
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Name: Shai Novik
Title: Chief Operating Officer
