Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of
August 2, 2000, by and among THCG, Inc., a Delaware corporation (the "Company"),
with principal executive office located at 650 Madison Avenue, 21st Floor, New
York, NY 10022, and Castle Creek Technology Partners LLC, an Illinois limited
liability company (the "Initial Purchaser").
RECITALS
A. In connection with the Securities Purchase Agreement dated of even
date herewith by and between the Company and the Initial Purchaser (the
"Securities Purchase Agreement"), the Company has agreed, upon the terms and
subject to the conditions contained therein, to issue and sell to the Initial
Purchaser (i) an amount of the Company's Series A Preferred Stock (the
"Preferred Stock") which is convertible into shares of the Company's Common
Stock, $.01 par value (the "Common Stock") and (ii) a warrant (the "Warrant")
entitling the holder thereof to purchase the number of shares (the "Warrant
Shares") of Common Stock as set forth therein. The shares of Common Stock
issuable upon conversion of or otherwise pursuant to the Preferred Stock are
referred to herein as the "Conversion Shares." The Preferred Stock, the Warrant,
the Conversion Shares and the Warrant Shares are collectively referred to herein
as the "Securities."
B. To induce the Initial Purchaser to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Purchasers" means the Initial Purchaser and any
permitted transferees or assignees who agree to become bound by the provisions
of this Agreement in accordance with Article IX hereof.
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(b) "register," "registered," and "registration"
refer to a registration effected by preparing and filing a Registration
Statement or Statements in compliance with the Securities Act and pursuant to
Rule 415 under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or ordering
of effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the "SEC").
(c) "Registrable Securities" means the Conversion
Shares (including any Conversion Shares issuable with respect to payments under
the terms of the Preferred Stock) issued or issuable with respect to the
Preferred Stock, the Warrant Shares issued or issuable with respect to the
Warrant (without regard to any limitations on conversion or exercise) and any
shares of capital stock or other securities issued or issuable, from time to
time (with any adjustments), on or in exchange for or otherwise with respect to
the Conversion Shares or the Warrant Shares or any other Registrable Securities.
(d) "Registration Statement" means a registration
statement of the Company under the Securities Act pursuant to the provisions of
this Agreement.
1.2 Capitalized Terms. Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Securities
Purchase Agreement.
ARTICLE II
REGISTRATION
2.1 Mandatory Registration. The Company shall prepare and file as soon
as practicable (but in any event on or prior to twenty (20) business days after
the date of the Closing) with the SEC a Registration Statement on Form S-3
covering the resale of all of the Registrable Securities issuable upon full
conversion of the Preferred Stock and full exercise of the Warrants purchased
and sold at the Closing, without regard to any limitation on any conversion or
exercise, but limited to the Cap Amount (as defined in the Certificate of
Designation) with respect to the Preferred Stock. The Registration Statement
(and each amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the approval of
(which approval shall not be unreasonably withheld or denied)) the Initial
Purchaser and its counsel. If the Initial Purchaser and its counsel do not
approve such documents within five (5) business days, the Registration Deadline
(as set forth in Section 2.3) shall be extended for the number of days by which
the time to grant such approval exceeds five (5) business days prior to its
filing or other submission. The Company shall also prepare and file such
amendments to registration statements and such additional registration
statements as may from time to time be required by this Agreement.
2.2 Intentionally omitted.
2.3 Payments by the Company.
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(a) The Company shall use its best efforts to cause the Registration
Statement required to be filed pursuant to Section 2.1 hereof to become
effective as soon as practicable, but in no event later than the ninetieth
(90th) day (120 days if reviewed in writing by the SEC) following the Closing
Date. If such Registration Statement is not effective by the 90th day following
the Closing Date, the Company shall thereafter continue to use its best efforts
to cause such Registration Statement to become effective. If the Registration
Statement covering the Registrable Securities required to be filed by the
Company pursuant to Section 2.1 hereof is not declared effective by the SEC on
or before the applicable Registration Deadline (as defined herein) (a
"Registration Failure"), or if after such Registration Statement has been
declared effective by the SEC, sales of all the Registrable Securities covered
thereby cannot be made pursuant to such Registration Statement (by reason of a
stop order, the Company's failure to update the registration statement, the
failure of any post-effective amendment to the registration statement to be
promptly declared effective or any other reason outside the control of the
Purchasers) (a "Registration Suspension"), then the Company will make payments
to the Purchasers in such amounts and at such times as shall be determined
pursuant to this Section 2.3, as partial relief for the damages to the
Purchasers by reason of any such delay in or reduction of their ability to sell
the Registrable Securities (which remedy shall not be exclusive of any other
remedies available at law or in equity); provided, however, that if the Company
establishes that it has used its best efforts, as required hereunder, acted in
good faith and has not acted or failed to act in a negligent or reckless manner,
then this remedy shall be exclusive of other remedies available at law or in
equity, other than the remedies set forth in Section VII. D of the Certificate
of Designation. For purposes hereof, the "Registration Deadline" shall mean the
ninetieth (90th) day following the Closing Date or, if the SEC reviews such
Registration Statement, the one hundred twentieth (120th) day following the
Closing Date.
(b) In the event of a Registration Failure, the Company shall pay to
the Purchasers an amount equal to (A) the Multiplier (as defined herein) times
(B) the Funded Amount (as defined below) times (C) the number of months
(prorated per day for partial months) following the applicable Registration
Deadline prior to the date the applicable Registration Statement filed pursuant
to Section 2.1 or Section 3.2 is declared effective by the SEC. In addition, in
the event of a Registration Suspension, the Company shall pay to the Purchasers
an amount equal to (D) the Multiplier times (E) the Funded Amount times (F) the
number of months (prorated per day for partial months) from (x) the date on
which sales of all the Registrable Securities first cannot be made to (y) the
date on which sales of all such Registrable Securities can again be made;
Amounts to be paid pursuant to this Section 2.3 shall be paid pro rata to
Purchasers based upon the number of Conversion Shares and Warrant Shares owned
by them (including, for these purposes, Conversion Shares issuable upon full
conversion of the Preferred Stock and Warrant Shares issuable upon full exercise
of the Warrant by each Purchaser, in each case without regard to any limitations
upon exercise and conversion contained therein) and shall be paid in cash. Such
payments shall be made within five (5) days after the end of each period that
gives rise to such obligation, provided that, if any such period extends for
more than thirty (30) days, payments shall be made for each such thirty (30) day
period within five (5) days after the end of such thirty (30) day period.
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(c) For any given date, the "Multiplier" shall mean, (i) during the
first thirty days following the Registration Deadline during which there is a
Registration Failure or a Registration Suspension, 0.015, and (ii) after the
thirtieth day of a Registration Failure or Registration Suspension, 0.02. With
respect to any given Registration Statement, the "Funded Amount" means the
aggregate purchase price of the Preferred Stock and the Warrant relating to the
Common Stock registered (or to be registered) on such Registration Statement.
Notwithstanding the foregoing, a Registration Suspension effected by the Company
pursuant to a Permitted Blackout shall not give rise to an obligation to make
such payments. For purposes hereof, "Permitted Blackout" shall mean the period
of any Registration Suspension which is caused by (a) a good faith determination
by the Company's Board of Directors that it would (because of the existence of,
or in reasonable anticipation of, any acquisition or corporate reorganization or
other transaction, financing activity, stock repurchase or other development
involving the Company or any subsidiary, or the unavailability for reasons
substantially beyond the Company's control of any required financial statements,
or any other event or condition of similar significance to the Company or any
subsidiary) be materially disadvantageous for the Company to proceed with such
Registration Statement; provided, however, that (i) no more than two (2) such
Permitted Blackouts may be imposed pursuant to this clause (a) during any period
of twelve (12) consecutive months; and (ii) the aggregate duration of all such
Permitted Blackouts pursuant to this clause (a) during any period of twelve (12)
consecutive months shall be no more than thirty (30) business days, or (b) a
determination by a nationally recognized underwriting firm which is the managing
underwriter(s) of an underwritten public offering for the account of the Company
and other stockholders that, in such underwriter(s)' judgment, marketing or
other factors dictate such Registration Suspension is necessary to facilitate
public distribution; provided, however, that (i) no Registration Suspension
shall be a Permitted Blackout under this clause (b) unless on the date such
Registration Suspension commences, each of the conditions set forth in clauses
(a) through (g) of Section IV. H (ii) of the Certificate of Designation with
respect to the Preferred Stock is satisfied; (ii) the duration of such Permitted
Blackouts pursuant to this clause (b) shall be no more than thirty (30) business
days in any 12 month period; and (iii) if the Company exercises any of its
rights pursuant to any of Section IV. H(ii) of such Certificate of Designation
or Section 8(g) of the Warrant, then no Registration Suspension during the
thirty (30) business day period beginning on the Effective Time of the Forced
Conversion (as defined in the Certificate of Designation) or the Redemption
Effective Time (as defined in the Warrant), as the case may be, shall be a
Permitted Blackout pursuant to this clause (b).
2.4 Piggy-Back Registrations . If at any time prior to the expiration
of the Registration Period (as hereinafter defined) (except any time during
which the Registration Statement filed pursuant to Section 2.1 is effective and
there is no Registration Suspension in effect with respect thereto), the Company
shall file with the SEC a Registration Statement relating to an offering for its
own account or the account of others (other than any GSCP Entity (as defined
below)) under the Securities Act of any of its equity securities (other than on
Form S-4 or Form S-8 or their then equivalents relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans), then the Company shall send to each Purchaser who has a right
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to have Registrable Securities covered by a Registration Statement pursuant to
this Agreement written notice of such determination and, if within fifteen (15)
days after the date of such notice, such Purchaser shall so request in writing,
the Company shall include in such Registration Statement all or any part of the
Registrable Securities such Purchaser requests to be registered, except that if,
in connection with any underwritten public offering for the account of the
Company the managing underwriter(s) thereof shall impose a limitation on the
number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Purchaser has requested inclusion hereunder as the underwriter shall permit. Any
exclusion of Registrable Securities shall be made pro rata among the Purchasers
seeking to include Registrable Securities, in proportion to the number of
Registrable Securities sought to be included by such Purchasers; provided,
however, that the Company shall not exclude any Registrable Securities unless
the Company has first excluded all outstanding securities, the holders of which
are not entitled to inclusion of such securities in such Registration Statement
or are not entitled to pro rata inclusion with the Registrable Securities; and
provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the right to include such
securities in the Registration Statement (other than securities offered by
Greenwich Street Capital Partners II L. P., GSCP Offshore Fund, L.P., Greenwich
Fund, L. P., Greenwich Street Employees Fund, L.P. and TRV Executive Fund, L.P.
and their transferees (each, a "GSCP Entity") exercising rights pursuant to
section 4 of that certain Registration Rights Agreement dated November 1, 1999,
as amended from time to time, which shall have priority over all Registrable
Securities hereunder). No right to registration of Registrable Securities under
this Section 2.4 shall be construed to limit any registration required under
Section 2.1 or 3.2 hereof. If an offering in connection with which a Purchaser
is entitled to registration under this Section 2.4 is an underwritten offering,
then each Purchaser whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Common Stock included in such
underwritten offering. So long as a Registration Statement is effective and
immediately available for use so that all of the Registrable Securities may be
sold in reliance thereon, the provisions of this Section shall not apply.
2.5 Eligibility for Form S-3. The Company represents and warrants that
it is currently eligible to register the resale of the Conversion Shares,
Warrant Shares and all Registrable Securities by the Purchasers on a
Registration Statement on Form S-3 under the Securities Act for the account of
Purchasers (and not for or on behalf of Company). The Company shall file all
reports required to be filed by the Company with the SEC in a timely manner and
take all other actions which may be required so as to maintain such eligibility
for the use of Form S-3.
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ARTICLE III
OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the Company
shall have the following obligations, including with respect to each
Registration Statement required to be filed hereunder:
3.1 Subject to the provisions of Section 2.1 hereof, the Company shall
prepare promptly and file with the SEC the Registration Statement required by
Section 2.1, and cause such Registration Statement relating to Registrable
Securities to become effective as soon as practicable after such filing, and
keep the Registration Statement effective pursuant to Rule 415 and immediately
available for use at all times until such date as is the earlier of (i) the date
on which all of the Registrable Securities have been sold (and no further
Registrable Securities may be issued in the future) and (ii) the date on which
all of the Registrable Securities (in the reasonable opinion of counsel to the
Company addressed to the Initial Purchaser, and upon which the Initial Purchaser
shall be entitled to rely) may be immediately sold to the public without
registration and without restriction as to the number of Registrable Securities
to be sold, whether pursuant to Rule 144 or otherwise (the "Registration
Period"). The Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein and all documents incorporated by
reference therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein not misleading.
3.2 The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective and immediately
available for use at all times during the Registration Period.
3.3 The Company shall furnish to each Purchaser whose Registrable
Securities are included in the Registration Statement and its legal counsel (a)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement referred
to in Section 2.1 hereof, each letter written by or on behalf of the Company to
the SEC or the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion, if any, thereof which contains information for which
the Company has sought confidential treatment), and (b) such number of copies of
a prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as such Purchaser may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned (or to be owned) by such Purchaser.
3.4 The Company shall (a) register and qualify the Registrable
Securities covered by the Registration Statement under securities laws of such
jurisdictions in the United States as the
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Purchaser who holds (or has the right to hold) Registrable Securities being
offered reasonably requests, (b) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof and availability for use during the Registration Period,
(c) take such other actions as may be necessary to maintain such registrations
and qualifications in effect at all times during the Registration Period, and
(d) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3.4, (ii) subject itself
to general taxation in any such jurisdiction, (iii) file a general consent to
service of process in any such jurisdiction, or (iv) make any change in its
charter or by-laws, which in any case the board of directors of the Company
determines to be contrary to the best interests of the Company and its
stockholders.
3.5 In the event of an offering pursuant to a Registration Statement or
any amendment or supplement thereto under Section 2.1 or Section 3.2 hereof
which is proposed to be an underwritten public offering, the Company shall
select the managing underwriter(s) for the offering, which shall be reasonably
acceptable to the Purchasers, and the Company shall enter into and perform its
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering.
3.6 As soon as practicable after becoming aware of such event, the
Company shall notify (by telephone and also by facsimile and reputable overnight
courier) each Purchaser who holds Registrable Securities being sold pursuant to
the Registration Statement of the happening of any event, of which the Company
has knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which the
statement is made, not misleading. Subject to the provisions of Section 2.3
hereof, the Company shall use its best efforts as soon as possible (but in any
event within thirty (30) days) to prepare a supplement or amendment to the
Registration Statement (and make all required filings with the SEC) to correct
such untrue statement or omission, and the Company shall simultaneously (and
thereafter as requested) deliver such number of copies of such supplement or
amendment (or other applicable document) to each Purchaser as such Purchaser may
request in writing.
3.7 The Company shall use commercially reasonable efforts to prevent
the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable time and the Company shall
immediately notify by facsimile each Purchaser (at the facsimile number for such
Purchaser set forth on the signature page hereto) who holds Registrable
Securities being sold pursuant to the Registration Statement (or, in the event
of an underwritten offering, the managing underwriters) of the issuance of such
order and the resolution thereof.
3.8 The Company shall make generally available to its security holders
as soon as
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practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month period beginning not
later than the first day of the Company's fiscal quarter next following the
effective date of the Registration Statement.
3.9 Intentionally omitted.
3.10 The Company shall make available for inspection by (i) any
Purchaser, (ii) any underwriter participating in any disposition pursuant to the
Registration Statement, (iii) attorneys and accountants retained by any
Purchaser, and (iv) attorneys retained by such underwriters (collectively, the
"Inspectors") all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably deemed necessary by each Inspector and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to a Purchaser) of any
Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified in
writing, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required to be disclosed in such Registration Statement to permit Purchaser to
sell under such Registration Statement, (b) the release of such Records is
ordered pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or is otherwise required by applicable law or legal
process or (c) the information in such Records has been made generally available
to the public other than by disclosure in violation of this or any other
agreement (to the knowledge of the relevant Purchaser). The Company shall not be
required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and reasonable substance satisfactory to the
Company) with the Company with respect thereto, substantially in the form of
this Section 3.11. Each Purchaser agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein shall be deemed to limit a Purchaser's ability to
sell Registrable Securities in a manner which is consistent with applicable laws
and regulations.
3.11 The Company shall hold in confidence and not make any disclosure
of information concerning a Purchaser provided to the Company unless (a)
disclosure of such information is necessary to comply with federal or state
securities laws, (b) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (c) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or is otherwise
required by applicable law or legal process, (d) such information has been made
generally available to the public other than by disclosure in violation of this
or any other agreement (to the knowledge of the Company), or (e) such Purchaser
consents to the form and content of any such disclosure.
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The Company agrees that it shall, upon learning that disclosure of such
information concerning a Purchaser is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice to
such Purchaser prior to making such disclosure, and allow the Purchaser, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.
3.12 From and after Closing, the Company shall cause the listing and
the continuation of listing of all the Registrable Securities on the Nasdaq
National Market System or the New York Stock Exchange, and cause the Registrable
Securities to be quoted or listed on each additional national securities
exchange or quotation system upon which the Common Stock is then listed or
quoted.
3.13 The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.
3.14 The Company shall cooperate with the Purchasers who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Purchasers may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Purchasers may request, and, within one (1)
business day after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall cause legal
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the Purchasers whose Registrable
Securities are included in such Registration Statement), an opinion of such
counsel in the form attached hereto as Exhibit 1.
3.15 At the request of any Purchaser, the Company shall promptly
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with the Registration Statement as may be necessary in order to
change the plan of distribution set forth in such Registration Statement.
3.16 Intentionally omitted.
3.17 The Company shall take all such other actions as any Purchaser or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities.
3.18 From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company
(other than Purchasers with respect to Registrable Securities) to include any of
their securities in any Registration Statement or any
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amendment or supplement thereto under Section 2.1 or 3.2 hereof without the
consent of the Initial Purchaser, subject to the existing registration rights
granted by the Company, which are listed on the Schedules to the Securities
Purchase Agreement.
3.19 The Registration Statement shall state that it covers such
indeterminate number of additional shares as may be issuable upon conversion of
the Preferred Stock or exercise of the Warrant to prevent dilution resulting
from stock splits, stock dividends and other similar transactions.
ARTICLE IV
OBLIGATIONS OF THE PURCHASERS
In connection with the registration of the Registrable Securities, each
Purchaser shall have the following obligations:
4.1 Purchaser shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be required to
effect the registration of such Registrable Securities. At least five (5)
business days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Purchaser of the information the
Company requires from each such Purchaser.
4.2 Each Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statements hereunder, unless such Purchaser has notified the Company in writing
of such Purchaser's election to exclude all of such Purchaser's Registrable
Securities from the Registration Statement.
4.3 Each Purchaser whose Registrable Securities are included in a
Registration Statement understands that the Securities Act may require delivery
of a prospectus relating thereto in connection with any sale thereof pursuant to
such Registration Statement, and each such Purchaser shall comply with the
applicable prospectus delivery requirements of the Securities Act in connection
with any such sale and shall sell such Registrable Securities in accordance with
the plan of distribution described in such Registration Statement.
4.4 Intentionally omitted.
4.5 Each Purchaser agrees that, upon receipt of written notice from the
Company of the happening of any event of the kind described in Section 3.6
hereof or the commencement of a Registration Suspension under Section 2.3
hereof, such Purchaser will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Purchaser's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3.6 or advice that a supplement or
amendment is not required, or receipt of notice of the termination of such
Registration Suspension, as the case
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may be, and, if so directed by the Company, such Purchaser shall deliver to the
Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Purchaser's possession (other
than a limited number of permanent file copies), of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
Purchaser's obligations under this paragraph shall in no way limit the Company's
obligations under this Agreement or Purchaser's rights or remedies against the
Company with respect to any breach or threatened breach by the Company of any
such obligations.
4.6 Without limiting a Purchaser's rights under Section 2.1 or 3.2
hereof, no Purchaser may participate in any underwritten distribution hereunder
unless such Purchaser (a) agrees to sell such Purchaser's Registrable Securities
on the basis provided in any underwriting agreements in usual and customary form
entered into by the Company pursuant to Section 3.5 hereof, (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (c) agrees to pay its pro rata share of all
underwriting discounts and commissions and any expenses in excess of those
payable by the Company pursuant to Article V hereof. Without implication that
the contrary would otherwise be true, it is expressly understood and agreed that
no Purchaser shall be required to participate in any such underwritten
distribution.
ARTICLE V
EXPENSES OF REGISTRATION
All expenses, other than underwriting discounts and commissions, incurred in
connection with registrations, filings or qualifications pursuant to Articles II
and III, including, without limitation, all registration, listing and
qualification fees, printers and accounting fees, the fees and disbursements of
counsel for the Company, shall be borne by the Company.
ARTICLE VI
INDEMNIFICATION
In the event any Registrable Securities are included in a Registration Statement
under this Agreement:
6.1 To the extent permitted by law, the Company will indemnify, hold
harmless and defend (a) each Purchaser who holds such Registrable Securities,
(b) each underwriter of Registrable Securities and (c) the directors, officers,
partners, members, employees, agents and persons who control any Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, if any, (each, an "Indemnified Person"), against any losses,
claims, damages, liabilities or expenses (collectively, together with actions,
proceedings or inquiries whether or not in any court, before any administrative
body or by any regulatory or self-regulatory organization, whether commenced or
threatened, in respect thereof, "Claims ") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or
<PAGE>
the omission or alleged omission to state therein a material fact required to be
stated or necessary to make the statements therein not misleading, or (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading (the matters in the foregoing
clauses (i) and (ii) being, collectively, "Violations"). The Company shall
reimburse each such Indemnified Person, promptly as such expenses are incurred
and are due and payable, for any reasonable legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6.1: (x) shall not apply to
an Indemnified Person with respect to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person expressly for use
in the Registration Statement or any such amendment thereof or supplement
thereto; (y) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld; and (z) with respect to any
preliminary prospectus, shall not inure to the benefit of any Indemnified Person
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, if such corrected prospectus was timely made
available by the Company pursuant to Section 3.3 hereof, and the Indemnified
Person was promptly advised in writing not to use the incorrect prospectus prior
to the use giving rise to a Violation and such Indemnified Person,
notwithstanding such advice, used it. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by a Purchaser pursuant to Article IX.
6.2 In connection with any Registration Statement in which a Purchaser
is participating, each such Purchaser agrees to indemnify, hold harmless and
defend, to the same extent and in the same manner set forth in Section 6.1, the
Company, each of its directors, each of its officers who signs the Registration
Statement, its employees, agents and persons, if any, who control the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and any other stockholder selling securities pursuant to the
Registration Statement, together with its directors, officers and members, any
underwriter, and any person who controls such stockholder or underwriter within
the meaning of the Securities Act or the Exchange Act (such an "Indemnified
Party"), against any Claim to which any of them may become subject, insofar as
such Claim arises out of or is based upon a Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such
Purchaser expressly for use in connection with such Registration Statement; and
such Purchaser will reimburse any such Indemnified Party (promptly as such
expenses are incurred and are due and payable) for any reasonable legal fee or
other reasonable expenses incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
<PAGE>
contained in this Section 6.2 shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
such Purchaser, which consent shall not be unreasonably withheld; provided,
further, however, that a Purchaser shall be liable under this Agreement
(including this Section 6.2 and Article VII) for only that amount as does not
exceed the net proceeds actually received by such Purchaser as a result of the
sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the transfer of
the Registrable Securities by a Purchaser pursuant to Article IX.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6.2 with respect to any preliminary
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected on a timely basis in the prospectus, as then amended or
supplemented, and the Indemnified Party was required, but failed, to utilize
such corrected prospectus.
6.3 Promptly after receipt by an Indemnified Person or Indemnified
Party under this Article VI of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Article VI, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that such indemnifying party shall diligently
pursue such defense and that such indemnifying party shall not be entitled to
assume such defense and an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the reasonable fees and expenses to be
paid by the indemnifying party, if the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential conflicts of interest as to all or
certain discrete issues between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding or the actual or
potential defendants in, or targets of, any such action include both the
Indemnified Person and an Indemnified Party; and provided further, that if the
Indemnified Party and any such Indemnified Person or Indemnified Party
reasonably determine that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are different from or in addition
to those available to such indemnifying party, the indemnifying party shall not
be entitled to assume control of such different or additional defense. The
indemnifying party shall pay for only one separate legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such legal
counsel shall be selected by Purchasers holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates (with the approval of each Initial Purchaser which holds Registrable
Securities included in such Registration Statement), if the Purchasers are
entitled to indemnification hereunder, or by the Company, if the Company is
entitled to indemnification hereunder, as applicable. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such
<PAGE>
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Article VI, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Article VI shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
ARTICLE VII
CONTRIBUTION
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Article
VI hereof to the fullest extent permitted by law; provided, however, that (i) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
of Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (ii) contribution (together with any indemnification or
other obligations under this Agreement) by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
ARTICLE VIII
REPORTS UNDER THE EXCHANGE ACT
With a view to making available to the Purchasers the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or regulation of
the SEC that may at any time permit the Purchasers to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to
so long as such Purchaser holds Preferred Stock, the Warrant or Registrable
Securities :
8.1 File with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Securities Act
and the Exchange Act so long as the Company remains subject to such requirements
(it being understood that nothing herein shall limit the Company's obligations
under Section 4.3 of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and
8.2 Furnish to each Purchaser promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Purchasers to sell such securities pursuant
to Rule 144 without registration.
<PAGE>
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Purchasers hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assigned by each Purchaser to any transferee of all or any portion
of the Preferred Stock if: (a) the transferee (which shall be an accredited
investor as defined in Regulation D under the Securities Act) is a permitted
transferee under Section XIV. K of the Certificate of Designation, (b) the
transferring Purchaser agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (c) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice
of (i) the name and address of such transferee or assignee, and (ii) the
securities with respect to which such registration rights are being transferred
or assigned, (d) following such transfer or assignment, the further disposition
of such securities by the transferee or assignee is restricted under the
Securities Act or applicable state securities laws, and (e) at or before the
time the Company receives the written notice contemplated by clause (c)(ii) of
this sentence, the transferee or assignee agrees in writing for the benefit of
the Company to be bound by all of the provisions contained herein. The rights of
a Purchaser hereunder with respect to any Registrable Securities not transferred
(and not represented by Preferred Stock or the Warrant transferred) shall not be
assigned by virtue of the transfer of other Registrable Securities or
transferred Preferred Stock or the Warrant representing other Registrable
Securities. Any such transferee who succeeds to rights hereunder shall be deemed
to have a separate agreement with the Company independent of this Agreement.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with written consent of the Company and the Purchasers then
holding at least two thirds of the Registrable Securities. In the event of the
assignment of rights hereunder pursuant to Article IX, the Company shall not
take any action pursuant to such assignment rights that would adversely affect
any Purchaser's rights hereunder without such Purchaser's consent.
ARTICLE XI
MISCELLANEOUS
11.1 A person or entity is deemed to be a holder (or a holder in
interest) of Registrable Securities whenever such person or entity owns of
record such Registrable Securities (or the Preferred Stock or the Warrant which
may be converted into or exercised for Registrable Securities). If the Company
receives conflicting instructions, notices or elections from two or more persons
or entities with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities (or Preferred Stock or the
Warrant, as the case may be).
<PAGE>
11.2 Any notices herein required or permitted to be given shall be in
writing and may be personally served or delivered by courier or by
machine-generated confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
THCG, Inc.
650 Madison Avenue, 21st Floor
New York, NY 10022
Telecopy: (212)223-0161
Attention: Adi Raviv
with a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York NY 10022
Telecopy: (212)715-8000
Attention: Peter S. Kolevzon, Esq.
If to any Purchaser at such address as such Purchaser shall have provided in
writing to the Company, or at such other address, telecopy number or person's
attention as any as each such party furnishes by notice given in accordance with
this Section 11.2.
11.3 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
11.4 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The Company and each Purchaser irrevocably
consent to the jurisdiction of the federal courts located in the State of New
York and the state courts of the State of New York located in the County of New
York in the State of New York in any suit or proceeding based on or arising
under this Agreement and irrevocably agrees that all claims in respect of such
suit or proceeding may be determined in such courts. The Company and each
Purchaser irrevocably waive the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The parties hereto further agree that
service of process upon the parties hereto mailed by first class mail shall be
deemed in every respect effective service of process upon each such party in any
such suit or proceeding. Nothing herein shall affect either party's right to
serve process in any other manner permitted by law. The parties hereto agree
that a final non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on such judgment
<PAGE>
or in any other lawful manner.
11.5 This Agreement, the Preferred Stock, the Warrant and the
Securities Purchase Agreement (including all schedules and exhibits thereto and
all certificates and opinions required thereby) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the Preferred
Stock, the Warrant and the Securities Purchase Agreement supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
11.6 Subject to the requirements of Article IX hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto. Notwithstanding anything to the contrary contained
herein, including, without limitation, Article IX, the rights of a Purchaser
hereunder shall be assignable to and exercisable by a bona fide pledgee of the
Registrable Securities, provided that the pledgee shall be bound by this
Agreement.
11.7 The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
11.8 This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto, by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
11.9 Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
11.10 Intentionally omitted.
11.11 In the event Purchaser shall sell or otherwise transfer any of
such Purchaser's Registrable Securities as permitted under Article IX hereof,
each transferee shall be allocated a pro rata portion of the number of
Registrable Securities included on a Registration Statement for such transferor,
subject to any filing under federal and state securities law required to effect
such allocation.
11.12 If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement.
* * *
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
THCG, Inc.
By:
Name:
Title:
<PAGE>
INITIAL PURCHASER:
CASTLE CREEK TECHNOLOGY PARTNERS LLC
By: Castle Creek Partners, L.L.C.
Its: Investment Manager
By:
Name: Michael L. Spolan
Title:
Address: 77 W. Wacker Drive, Suite 4040
Chicago, Illinois 60601
Facsimile: (312)499-6999
Copy to:
Altheimer & Gray
10 S. Wacker Drive Ste. 4000
Chicago, Illinois 60606
Facsimile: (312)715-4800
Attn: Michael H. Altman, Esq.
<PAGE>
EXHIBIT 1
to Registration
Rights Agreement
[Date]
[Name and address
of transfer agent]
RE: THCG, INC.
Ladies and Gentlemen:
We are counsel to THCG, Inc., a Delaware corporation (the "Company"),
and we understand that [Name of Purchaser] (the "Holder") has purchased from the
Company an amount of the Company's Series A Preferred Stock (the "Preferred
Stock") convertible into shares of the Company's common stock, $0.01 per share
(the "Common Stock") and warrant to purchase the Common Stock of the Company
(the "Warrant"). The Preferred Stock and Warrant was purchased by the Holder
pursuant to a Securities Purchase Agreement, dated as of August 1, 2000, by and
among the Company and the signatories thereto (the "Agreement"). Pursuant to a
Registration Rights Agreement, dated as of August 2, 2000, by and among the
Company and the signatories thereto (the "Registration Rights Agreement"), the
Company agreed with the Holder, among other things, to register the Registrable
Securities (as that term is defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the "Securities Act"), upon the terms
provided in the Registration Rights Agreement. In connection with the Company's
obligations under the Registration Rights Agreement, on ____, __, 2000, the
Company filed a Registration Statement on Form S-3 (File No. 333- __________)
(the "Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the Registrable Securities, which names the Holder as a
selling stockholder thereunder.
[Other customary introductory and scope of examination language to be
inserted]
Based on the foregoing, we are of the opinion that the sale of the
Registrable Securities by the holders thereof in accordance with the "Plan of
Distribution" described in the Registration Statement has been registered under
the Securities Act.
[Other appropriate customary language reasonably acceptable to holder
to be included.]
Very truly yours,
cc: [Name of Purchaser]
