EXHIBIT II TO SCHEDULE 13D
REGISTRATION RIGHTS AGREEMENT dated as of November 1, 1999 (the
"Agreement"), by and among:
(i) THCG, Inc., a Utah corporation and formerly known as Walnut
Financial Services, Inc. (the "Company"); and
(ii) Greenwich Street Capital Partners II, L.P., a Delaware limited
partnership ("Greenwich II"), GSCP Offshore Fund, L.P., a Cayman Islands
limited partnership ("GSCP Offshore"), Greenwich Fund, L.P., a Delaware
limited partnership ("GF"), Greenwich Street Employees Fund, L.P., a
Delaware limited partnership ("GSEF"), and TRV Executive Fund, L.P., a
Delaware limited partnership ("TRV," and together with Greenwich II, GSCP
Offshore, GF and GSEF, each a "Purchaser" and collectively, "Greenwich" or
the "Purchasers").
W I T N E S S E T H:
The Company and Greenwich have entered into a Securities Purchase Agreement
dated as of October 29, 1999 (the "Purchase Agreement") pursuant to which
Greenwich is purchasing from the Company (i) 2,500,000 shares (the "Shares") of
the Company's Common Stock, $.01 par value per share (the "Common Stock"), (ii)
Warrants to purchase 1,000,000 shares of the Common Stock at a per share
exercise price of $5.4375 (the "Initial Warrants") and (iii) Warrants to
purchase 1,000,000 shares of the Common Stock at a per share exercise price of
$7.2500 (the "Additional Warrants" and, together with the Initial Warrants, the
"Warrants").
Capitalized terms used in this Agreement without definition have the
meanings assigned to such terms in the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, Greenwich and the Company hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
"Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in New York City are
authorized or required by law, regulation or executive order to close.
"Delay Notice" shall have the meaning set forth in Section 6(b) hereof.
"Demand Participation Notice" shall have the meaning set forth in Section
3(a) hereof.
"Demand Registration" shall have the meaning set forth in Section 3(a)
hereof.
"Demand Registration Notice" shall have the meaning set forth in Section
3(a) hereof.
"Holder" shall mean any Person that owns Registrable Securities. For
purposes of this Agreement, the Company may deem the registered holder of a
Registrable Security as the Holder thereof, regardless of any notice to the
Company.
"Material Development Condition" shall have the meaning set forth in
Section 6(b) hereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by a prospectus supplement with respect to
the terms of the offering of any portion of the Registrable Securities covered
by such Registration Statement and by all other amendments and supplements to
the prospectus, including post-effective amendments and all materials
incorporated by reference in such prospectus.
"Registrable Securities" shall mean (i) the Shares, (ii) the Warrant
Shares, and (iii) any other securities issued or issuable as a result of or in
connection with any stock dividend, stock split or reverse stock split,
combination, recapitalization, reclassification, merger or consolidation,
exchange or distribution in respect of such Common Stock.
"Registration Expenses" shall have the definition set forth in Section 7
hereof.
"Registration Period" shall have the definition set forth in Section 3(b)
hereof.
"Registration Statement" shall mean any registration statement which covers
any of the Registrable Securities pursuant to the provisions of this Agreement,
including the Prospectus included therein, all amendments and supplements to
such registration statement, including post-effective amendments, all exhibits
and all materials incorporated by reference in such registration statement.
"Requesting Securityholder" shall have the meaning set forth in Section 4
hereof.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 415" shall mean Rule 415 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 903" shall mean Rule 903 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
"Rule 904" shall mean Rule 904 promulgated under the Securities Act, as
amended from time to time, or any similar successor rule thereto that may be
promulgated by the SEC.
84
"SEC" shall mean the United States Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended (or any
similar successor federal statute), and the rules and regulations thereunder, as
the same are in effect from time to time.
"Underwritten Offering" shall mean a registered offering in which
securities of the Company are sold to an underwriter on a firm commitment basis
for reoffering to the public.
"Warrant Shares" shall mean the shares of Common Stock issuable upon
exercise of the Warrants.
2. Securities Subject to this Agreement. The securities entitled to the
benefits of this Agreement are the Registrable Securities but, with respect to
any particular Registrable Security, only so long as Greenwich or their
Affiliates or Related Persons continue to be the Holder of such Registerable
Security. A Registrable Security that has ceased to be a Registrable Security
cannot thereafter become a Registrable Security.
3. Demand Registration.
(a) Demand. At any time and from time to time during the term of this
Agreement, Greenwich II may demand, in writing (a "Demand Registration Notice"),
that the Company effect the registration of all or part of such Registrable
Securities held by one or more of the Holders (and in the amounts specified by
Greenwich II in the Demand Registration Notice) in the following manner: (i)
only one demand may be made with respect to the Shares, (ii) only one demand may
be made with respect to the Warrant Shares issuable upon exercise of the Initial
Warrants and (iii) only one demand may be made with respect to the Warrant
Shares issuable upon exercise of the Additional Warrants. In other words,
Holders shall have a total of three demands exercisable by Greenwich II which
shall be exercised as provided in the foregoing clauses (i)-(iii); however, any
demand made under clauses (ii) and (iii) may include any Registrable Securities
that might not have been covered by any previous "Demand Registration" (as
hereinafter defined). The Company shall have no obligation to effect any Demand
Registration unless the Demand Registration Notice covers Registrable Securities
having a "Market Price" (as defined in the Warrants) of at least $500,000 in the
aggregate. Greenwich II may, at any time up to five (5) Business Days before the
filing date of the applicable Registration Statement relating to the Demand
Registration, request that Registrable Securities of any Holder not be included
therein by providing a written notice to that effect to the Company, which
request shall be final and irrevocable. If Greenwich II shall give such notice
with respect to all of the Registrable Securities included in the Demand
Registration Notice, the Demand Registration Notice shall be deemed not to have
been made or count towards any demand rights hereunder provided that Greenwich
II (or Holders) shall reimburse the Company for its out-of-pocket costs and
expenses incurred in connection with the preparation and filing of the
Registration Statement and provided that Greenwich II has not exercised such
withdrawal right with respect to all Registrable Securities included in the
Demand Registration Notice with respect to any previously proposed Demand
Registration.
Upon receipt of a Demand Registration Notice, the Company shall use its
reasonable best efforts to file a Registration Statement on Form S-1 or, if then
available to the
85
Company, Form S-2 or Form S-3 (or any successor forms), or any other available
form under the Securities Act, covering all Registrable Securities which the
Company has been so requested to register (the "Demand Registration"), as
expeditiously as possible, but in any event no later than: (i) sixty days in the
case of a Registration Statement on Form S-1 or a Registration Statement on Form
S-2 or S-3 which will be an Underwritten Offering, or (ii) forty-five (45) days
in the case of a Registration Statement on Form S-2 or S-3 which is not an
Underwritten Offering.
(b) Effectiveness of Registration Statement. Subject to the provisions of
Section 6(b) hereof, the Company agrees to use its best efforts to (i) cause the
Registration Statement(s) relating to the Demand Registration described in
Section 3(a) hereof to become effective as promptly as practicable, and (ii)
thereafter keep each such Registration Statement effective continuously for the
period (the "Registration Period") ending, subject to the second sentence of
Section 5(b) hereof and clauses (ii) and (iii) of the last sentence of Section
6(b) hereof, on the earlier of (i) 120 days after such Registration Statement is
declared effective by the SEC, and (ii) the date on which all Registrable
Securities covered by each such Registration Statement have been sold and the
distribution contemplated thereby has been completed.
(c) Inclusion of Other Securities. The Company and any other holder of the
Company's securities who has registration rights may include its securities in
the Demand Registration effected pursuant to this Section 3 subject to the
provisions of Section 5(d)(ii) of the Securities Purchase Agreement and;
provided, the Holders shall have priority sale rights over the Company and such
other holders with respect to all Registrable Securities requested by them to be
included in such Demand Registration.
(d) Underwriter. Upon the request of the Company or Greenwich II, and the
identification by the Company of a managing underwriter reasonably satisfactory
to the Holders who have submitted the Demand Registration Notice, the Demand
Registration Statement shall provide for an Underwritten Offering. The Company
and the Holders whose Registrable Securities are covered by the Demand
Registration Statement shall enter into customary purchase and underwriting
agreements with such underwriter in connection with any Underwritten Offering
and take all such other actions as such Holders of the Registrable Securities
shall reasonably request in order to facilitate or expedite the disposition of
the Registrable Securities, including without limitation the furnishing of
information regarding the Company and its subsidiaries and their businesses,
assets, liabilities, financial condition and results of operations and causing
the officers and employees of the Company and its subsidiaries to be available
to discuss and answer questions regarding such information.
4. Piggyback Registration. If, during the term of this Agreement, the
Company at any time proposes to file a registration statement with respect to
any class of equity securities, other than for the registration of securities
for sale on a continuous or delayed basis pursuant to Rule 415, whether (i) for
its own account (other than in connection with the Registration Statement
contemplated by Section 3 hereof or a registration statement on Form S-4 or S-8
(or any successor or substantially similar form), and other than in connection
with (x) an employee stock option, stock purchase or compensation plan or of
securities issued or issuable pursuant to any such plan or (y) a dividend
reinvestment plan), or (ii) for the account of a holder of securities of the
Company pursuant to demand registration rights granted by the Company in a
manner and on terms which satisfy the requirements of, and only to the extent
permitted by Section 5(d)(ii) of the Securities Purchase Agreement (a
"Requesting Securityholder"), then the Company shall in each case give written
notice of such proposed filing to all Holders of Registrable Securities at
86
least thirty (30) days before the anticipated filing date of any such
registration statement by the Company, and such notice shall offer to all
Holders the opportunity to have any or all of the Registrable Securities held by
such Holders included in such registration statement. Each Holder of Registrable
Securities desiring to have its Registrable Securities registered under this
Section 4 shall so advise the Company in writing within fifteen (15) days after
the date of receipt of such notice (which request shall set forth the amount of
Registrable Securities for which registration is requested), and the Company
shall use its best efforts to include in such registration statement all such
Registrable Securities so requested to be included therein. Notwithstanding the
foregoing, if the managing underwriter or underwriters of any such proposed
public offering reasonably advises the Company that the total amount or kind of
securities which the Company, the Holders of Registrable Securities and any
other Persons or entities intended to be included in such proposed public
offering is sufficiently large to adversely affect the success of such proposed
public offering, then the amount or kind of securities to be offered for the
accounts of any person intended to be included in the proposed offering, other
than the Company, the Requesting Securityholders and the Holders of Registrable
Securities, shall be reduced (to zero if necessary) to the extent necessary to
reduce the total amount or kind of securities to be included in such proposed
public offering to the amount or kind recommended by such managing underwriter
or underwriters, and if such reduction is not sufficient, then the amount or
kind of securities to be offered for the accounts of the Requesting
Securityholders and the Holders of Registrable Securities shall be reduced pro
rata, based on the aggregate number of securities to be offered for the accounts
of all Requesting Securityholders and all Holders of Registrable Securities,
before any reduction in the number or kind of securities to be offered by the
Company. Anything to the contrary in this Agreement notwithstanding, the Company
may withdraw or postpone a registration statement referred to in this Section 4
at any time before it becomes effective or withdraw, postpone or terminate the
offering after it becomes effective without obligation to the Holder or Holders
of the Registrable Securities.
5. Registration Procedures.
(a) General. In connection with the Company's registration obligations
pursuant to Section 3 hereof and, to the extent applicable, Section 4 hereof,
the Company will:
(i) subject to the provisions of Section 6(b) hereof, prepare and file with
the SEC a new Registration Statement or such amendments and post-effective
amendments to an existing Registration Statement as may be necessary to keep
such Registration Statement effective for the time periods set forth in Section
3(b) hereof, provided that no Registration Statement shall be required to remain
in effect after all Registrable Securities covered by such Registration
Statement have been sold and distributed as contemplated by such Registration
Statement, and, provided, further, that as soon as practicable, but in no event
later than three (3) Business Days before filing such Registration Statement,
any related Prospectus or any amendment or supplement thereto, other than any
amendment or supplement made solely as a result of incorporation by reference of
documents filed with the SEC subsequent to the filing of such Registration
Statement, the Company shall furnish to the Holders of the Registrable
Securities covered by such Registration Statement and the managing underwriters,
if any, copies of all such documents proposed to be filed, which documents shall
be subject to the review of such Holders and underwriters;
(ii) notify the selling Holders of Registrable Securities and the managing
underwriters, if any, promptly (u) when a new Registration Statement, Prospectus
or any
87
Prospectus supplement or post-effective amendment has been filed, and, with
respect to any new Registration Statement or post-effective amendment, when it
has become effective, (v) of any request by the SEC for amendments or
supplements to any Registration Statement or Prospectus or for additional
information, (w) of the issuance by the SEC of any comments with respect to any
filing, (x) of any stop order suspending the effectiveness of any Registration
Statement or the initiation of any proceedings for that purpose, (y) of any
suspension of the qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and (z) if there is a misstatement, untrue statement or omission of a
material fact in any Registration Statement, Prospectus or any document
incorporated therein by reference or if any event occurs which requires the
making of any changes in any Registration Statement, Prospectus or any document
incorporated therein by reference in order to make the statements therein (in
the case of any Prospectus, in the light of the circumstances under which they
were made) not misleading;
(iii) if reasonably requested by the managing underwriter or underwriters
or a Holder of Registrable Securities being sold in connection with an
Underwritten Offering, promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing underwriters and the
Holders of a majority of the Registrable Securities being sold in such
Underwritten Offering agree should be included therein relating to the sale of
the Registrable Securities, including information with respect to the aggregate
number of shares of Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and with respect to any
other terms of the Underwritten Offering of the Registrable Securities to be
sold in such offering; and promptly make all required filings of such Prospectus
supplement or post-effective amendment;
(iv) furnish to each selling Holder of Registrable Securities and each
managing underwriter, if any, without charge, as many conformed copies as may
reasonably be requested of the then effective Registration Statement and any
post-effective amendments thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(v) deliver to each selling Holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the then effective
Prospectus (including each prospectus subject to completion) and any amendments
or supplements thereto as such Persons may reasonably request;
(vi) use its reasonable best efforts to register or qualify or cooperate
with the selling Holders of Registrable Securities, the underwriters, if any,
and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or "blue sky" laws of such jurisdictions as any selling Holder of
Registrable Securities or underwriter reasonably requests in writing; provided,
however, that the Company will not be required to (1) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify, but for
this paragraph (vi), (2) subject itself to general taxation in any such
jurisdiction, or (3) file a general consent to service of process in any such
jurisdiction;
(vii) cooperate with the selling Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the
88
managing underwriters if any may request at least two (2) Business Days prior to
any sale of Registrable Securities to the underwriters;
(viii) cause all Registrable Securities covered by the Registration
Statement to be listed on each securities exchange (or quotation system operated
by a national securities association) on which identical securities issued by
the Company are then listed if requested by the Holders of a majority of the
Registrable Securities covered by such Registration Statement or the managing
underwriters, if any, and enter into customary agreements including, if
necessary, a listing application and indemnification agreement in customary
form, and provide a transfer agent for such Registrable Securities no later than
the effective date of such Registration Statement;
(ix) otherwise use its best efforts to comply in all material respects with
all applicable rules and regulations of the SEC relating to such registration
and the distribution of the securities being offered and make generally
available to its securities holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act;
(x) use its reasonable best efforts to list Registrable Securities on any
securities exchange (including without limitation Nasdaq) on which the Common
Stock is then listed for trading, and cooperate and assist in any filings
required to be made with the National Association of Securities Dealers, Inc.
(the "NASD");
(xi) subject to the proviso in Section 5(a)(vi) hereof, if the transfer or
sale of any shares of the Common Stock or other securities of the Company is
required to be registered with or approved by any governmental agencies or
authorities (other than the SEC or the NASD) to enable a transferor or seller
thereof to effect a transfer or sale, and if such registration or approval
requirements are then applicable to the transfer or sale of the Registrable
Securities, then the Company shall use its reasonable best efforts to cause the
Registrable Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriters, if any,
to consummate the disposition of such Registrable Securities (other than as may
be required by the governmental agencies or authorities of any foreign
jurisdiction and other than as may be required by a law applicable to a selling
Holder by reason of its own activities or business other than the sale of
Registrable Securities);
(xii) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(xiii) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related Prospectus or suspending the qualification of
any Common Stock included in such Registration Statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of each order;
(xiv) use its reasonable best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Securities, if
the disposition or transfer of any shares of the Common Stock or other
securities of the Company are required to be registered with or approved
89
by any governmental authority under any federal or state law before any
disposition or transfer of such shares may be effected and if such registration
or approval requirements are then applicable to the disposition of such
Registrable Securities (other than as may be required by the governmental
agencies or authorities of any foreign jurisdiction and other than as may be
required by a law applicable to a selling Holder by reason of its own activities
or business other than the sale of Registrable Securities); and
(xv) obtain a "cold comfort" letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by "cold comfort" letters as the holders of a majority of the
Registrable Securities covered by the Registration Statement reasonably request.
As a condition precedent to the participation in any registration
hereunder, the Company may require each seller of Registrable Securities as to
which any such registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request to comply with the applicable
provisions of the Securities Act.
(b) Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(a)(ii) hereof, such
Holder will forthwith discontinue disposition of Registrable Securities pursuant
to the then current Prospectus until (i) such Holder is advised in writing by
the Company that a new Registration Statement covering the offer of Registrable
Securities has become effective under the Securities Act or (ii) such Holder
receives copies of any required supplemented or amended Prospectus, or until
such Holder is advised in writing by the Company that the use of the Prospectus
may be resumed. If the Company shall have given any such notice during a period
when a Demand Registration is in effect, the Company shall extend the period
during which such Registration Statement shall be maintained effective pursuant
to this Agreement by the number of days during which any such disposition of
Registrable Securities is discontinued pursuant to this Section 5(b). If so
directed by the Company, on the happening of such event, the Holder will deliver
to the Company (at the Company's expense) all copies, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
6. Holdback Agreements.
(a) Hold-Back Election. In the case of the registration of any Underwritten
Offering initiated by the Company (other than any registration by the Company on
Form S-4 or Form S-8 (or any successor or substantially similar form), and other
than in connection with (i) an employee stock option, stock purchase or
compensation plan or of securities issued or issuable pursuant to any such plan,
or (ii) a dividend reinvestment plan) or any underwritten secondary offering
initiated at the request of a Requesting Securityholder, each Holder agrees that
if it is reasonably requested to do so by the managing underwriter or the
underwriters, then such Holder shall not effect any public sale or distribution
of securities of the Company, except as part of such underwritten registration,
during the period beginning twenty (20) days prior to the closing date of such
Underwritten Offering and ending ninety (90) days after such closing date (or
such longer period as may be reasonably requested by the managing underwriter or
underwriters).
90
The Company agrees not to effect any public sale or distribution of its
Common Stock, or any securities convertible into or exchangeable or exercisable
for Common Stock (but the mere issuance of shares of Common Stock upon any
conversion, exercise or exchange of outstanding options, warrants or other
convertible securities shall not itself be deemed to be a public sale or
distribution for purposes of this sentence), (i) during the 10 days prior to and
during the forty-five (45) day period following the effective date of any Demand
Registration or Piggyback Registration, or (ii) if an Underwritten Offering,
such longer period as any underwriter in the Underwritten Offering shall
require, or such shorter period as the underwriter in the Underwritten Offering
shall permit, but in no event longer than 90 days following the effective date
of any Demand Registration or Piggyback Registration.
(b) Material Development Condition. With respect to any Registration
Statement filed or to be filed pursuant to Section 3 hereof, if the Company
determines that, in its good faith judgment, (i) 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 for purposes of disclosure to the stockholders or
potential investors of the Company) be materially disadvantageous (a "Material
Development Condition") to the Company or any subsidiary or its stockholders for
such a Material Development Condition to be publicly disclosed, and (ii) the
Company reasonably believes it would be required under the Securities Act to
disclose such Material Development Condition in such Registration Statement,
then the Company shall, notwithstanding any other provision of this Agreement,
be entitled, upon the giving of a written notice that a Material Development
Condition has occurred (a "Delay Notice") from an officer of the Company to any
Holder of Registrable Securities included or to be included in such Registration
Statement, (x) to cause sales of Registrable Securities by such Holder pursuant
to such Registration Statement to cease, (y) to cause such Registration
Statement to be withdrawn and the effectiveness of such Registration Statement
terminated, or (z) in the event no such Registration Statement has yet been
filed or declared effective, to delay filing or effectiveness of any such
Registration Statement until, in the good faith judgment of the Company, such
Material Development Condition may be disclosed or no longer exists (notice of
which the Company shall promptly deliver to any Holder of Registrable Securities
with respect to which any such Registration Statement has been filed).
Notwithstanding the foregoing provisions of this Section 6(b): (i) in no event
may such cessation or delay be, for each such Registration Statement, for a
period of more than ninety (90) consecutive days from the giving of its Delay
Notice to a Holder or Holders with respect to such Material Development
Condition, as above provided; (ii) in the event a Registration Statement is
filed and subsequently withdrawn by reason of any existing or anticipated
Material Development Condition, the Company shall cause a new Registration
Statement covering the Registrable Securities to be filed with the SEC as soon
as practicable after such Material Development Condition may be discharged or no
longer exists or, if sooner, as soon as practicable after the expiration of such
ninety (90) day period and the Registration Period for such new Registration
Statement shall be the greater of thirty (30) days or the number of days that
remained in such Registration Period with respect to the withdrawn Registration
Statement at the time it was withdrawn; and (iii) in the event the Company
elects not to withdraw or terminate the effectiveness of any such Registration
Statement but to cause a Holder or Holders to refrain from selling Registrable
Securities for any period during the Registration Period, the Registration
Period with respect to such Holders shall be extended by the number of days
91
during the Registration Period that such Holders are required to refrain from
selling Registrable Securities.
7. Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement, including all registration and
filing fees, fees and expenses of compliance with securities or "blue sky" laws
(including reasonable fees and disbursements of counsel in connection with "blue
sky" qualifications or registrations (or the obtaining of exemptions therefrom)
of the Registrable Securities), printing expenses (including expenses of
printing Prospectuses), messenger and delivery expenses, fees and disbursements
of its counsel and its independent certified public accountants, securities acts
liability insurance (if the Company elects to obtain such insurance), fees and
expenses of any special experts retained by the Company in connection with any
registration hereunder, fees and expenses of other Persons retained by the
Company and fees and expenses in connection with any review of the underwriting
arrangements by the NASD (all such expenses being referred to as "Registration
Expenses"), shall be borne by the Company; provided, that Registration Expenses
shall not include any fees and expenses of counsel for the Holders,
out-of-pocket expenses incurred by the Holders and underwriting discounts,
commissions or fees attributable to the sale of the Registrable Securities.
8. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, but without duplication,
each Holder of Registrable Securities (and its Affiliates, partners,
shareholders, officers and directors), and each Person who controls such Holder
(within the meaning of the Securities Act), against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and
reasonable legal fees and expenses) resulting from any untrue statement or
alleged untrue statement of a material fact in, or any omission or alleged
omission of a material fact required to be stated in, any Registration Statement
or Prospectus or necessary to make the statements therein (in the case of a
Prospectus in light of the circumstances under which they were made) not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by any Holder or any
underwriters expressly for use therein. The Company will also indemnify
underwriters participating in the distribution, their officers, directors,
employees, partners and agents, and each Person who controls such underwriters
(within the meaning of the Securities Act), to the same extent as provided above
in this Section 8(a) with respect to the indemnification of the Holders of
Registrable Securities, if so requested.
(b) Indemnification by Holders of Registrable Securities. In connection
with any Registration Statement in which a Holder of Registrable Securities is
participating, each such Holder will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such Registration Statement or Prospectus and agrees to
indemnify and hold harmless, to the full extent permitted by law, but without
duplication, the Company, its Affiliates, officers, directors, stockholders,
employees, advisors and agents, and each Person who controls the Company (within
the meaning of the Securities Act), against all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and
reasonable legal fees and expenses) resulting from any untrue statement or
alleged untrue statement of material fact in, or any omission or alleged
omission of a material fact required to be stated in, the Registration Statement
or Prospectus or necessary to make the statements therein (in the case of a
Prospectus in light of the circumstances under which they
92
were made) not misleading, to the extent, but only to the extent, that such
untrue statement or alleged untrue statement, or omission or alleged omission,
is contained in any information or affidavit so furnished in writing by such
Holder to the Company specifically for inclusion therein. The Company and the
other Persons described above in this Section 8(b) shall be entitled to receive
indemnities from underwriters participating in the distribution to the same
extent as provided above with respect to information furnished in writing by
such Persons specifically for inclusion in any Prospectus or Registration
Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel of such
indemnifying party's choice; provided, however, that any Person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in (but not control) the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such indemnified Person
unless (A) the indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to the indemnified party
in a timely manner or (B) in the reasonable judgment of any such Person, based
upon a written opinion of its counsel, a conflict of interest may exist between
such Person and the indemnifying party with respect to such claims (in which
case, if the Person notifies the indemnifying party in writing that such Person
elects to employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such claim
on behalf of such Person). No indemnifying party will be subject to any
liability for any settlement made without its consent. No indemnified party will
be required to consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation. An indemnifying party who is not
entitled to, or elects not to, assume the defense of the claim will not be
obligated to pay the fees and expenses of more than one counsel (except one
local counsel if required in a specific instance) for all parties indemnified by
such indemnifying party with respect to such claim.
(d) Contribution. If for any reason the indemnification provided for in
Section 8(a) or Section 8(b) hereof is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by Section 8(a) and Section
8(b) hereof, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage,
liability or expense in such proportion as is appropriate to reflect not only
the relative benefits received by the indemnifying party and the indemnified
party, but also the relative fault of the indemnifying party and the indemnified
party, as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement or the omission or alleged omission relates
to information supplied by the indemnifying party or parties on the one hand, or
the indemnified party or parties on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. 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 who was not guilty of such
fraudulent misrepresentations. In no event shall any participating Holder be
required to contribute any amount in excess of the proceeds received by such
Holder from the Registrable Securities offered and sold by such Holder pursuant
to such Registration Statement.
93
9. Participation in Underwritten Registrations. No Person may participate
in any Underwritten Offering hereunder unless such Person (i) agrees to sell
such Person's Registrable Securities on the basis provided in any customary
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements. Nothing in this Section 9
shall be construed to create any additional rights regarding the registration of
Registrable Securities in any Person otherwise than as set forth herein.
10. Term of Agreement. This Agreement may be terminated at any time by a
written instrument signed by Holders of all of the Registrable Securities then
outstanding. Unless sooner terminated in accordance with the preceding sentence,
this Agreement shall terminate in its entirety on such date as Greenwich or
their Affiliates or Related Persons shall cease to be the Holders of all
Registrable Securities.
11. Entire Agreement; Assignment. This Agreement (a) constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise.
12. Amendment. The provisions of this Agreement, including the provisions
of this Section 12, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given unless the
Company has obtained the written consent of Holders of a majority of the
Registrable Securities then outstanding, and any such consent so obtained shall
be binding on all Holders of Registrable Securities.
13. 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 given upon receipt) by delivery in Person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
if to the Purchasers: Greenwich Street Capital Partners II, L.P.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx and Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to: Dechert Price & Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
94
if to the Company to: THCG, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to: Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address, facsimile number or Person's attention as the Person
to whom notice is given may have previously furnished to the other in writing in
the manner set forth above.
14. Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and its successors and permitted
assigns, and except in regard to the parties indemnified pursuant to Section 8
hereof, nothing in this Agreement, express or implied, is intended to or shall
confer upon any other Person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement; however, any Affiliate or
Related Person of Greenwich which becomes a Holder of Registrable Securities
shall be entitled to the benefits of this Agreement.
15. Severability. If any term or other provision of this Agreement is
invalid, illegal or unenforceable, all other provisions of this Agreement shall
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
17. Interpretation. The headings herein are for convenience of reference
only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section, Article, Schedule or Exhibit, such reference
shall be to a Section or Article of or Schedule or Exhibit to this Agreement
unless otherwise indicated. Where the reference "hereof," "hereby" or "herein"
appears in this Agreement, such reference shall be deemed to be a reference to
this Agreement as a whole. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." Words denoting the singular include the plural,
and vice versa, and references to it or its or words denoting any gender shall
include all genders.
18. Governing Law and Venue. THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN
AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT
OF LAW PRINCIPLES THEREOF.
95
19. Waiver of Jury Trial. THE PURCHASERS AND THE COMPANY IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.
* * *
96
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
Greenwich Street Capital Partners
II, L.P.
GSCP Offshore Fund, L.P.
Greenwich Fund, L.P.
Greenwich Street Employees Fund, L.P.
TRV Executive Fund, L.P.
THCG, Inc. (formerly Walnut Financial) By: Greenwich Street Investments
Services, Inc. II, L.L.C., their general
partner
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxx Xxxxx
------------------------------------ ----------------------------------
Xxxx X. Xxxxxx Xxxxx Xxxxx
President Managing Member
97
