REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of February
19, 2004 (this "Agreement"), by and among Thinking Tools, Inc., a Delaware
corporation (the "Company"), and each of the stockholders of the Company listed
on Schedule 1 attached hereto (individually, a "Stockholder" and, collectively,
the "Stockholders").
WHEREAS, the Company has entered into a certain Agreement and Plan of
Merger dated as of February 19, 2004 (the "Merger Agreement") by and among the
Company, GVI Security, Inc., a Delaware corporation and GVI Security Acquisition
Corp., a Delaware corporation; and
WHEREAS, the Company has agreed to enter into this Agreement pursuant to
the terms of the Merger Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Merger Agreement shall have the meanings given such
terms in the Merger Agreement. As used in this Agreement, the following terms
shall have the following meanings:
"Black Out Period" shall have the meaning set forth in Section 2(a).
"Business Day" shall mean any day that is not a Saturday or a Sunday
or a day on which banks located in New York City are authorized or
required to be closed.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the Company's common stock, par value $.001 per
share, or any other securities of the Company into which such common stock
is reclassified or reconstituted.
"Effectiveness Period" shall have the meaning set forth in Section
2(a).
"Effective Time" shall mean the date and time of the consummation of
the Merger, as evidenced by the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means, with respect to the Registration Statement
required to be filed hereunder and subject to the Company's right to
suspend the Registration Statement in Section 2(a), the 120th calendar day
following the Effective Time; provided, however, that the Filing Date may
be extended with the consent of the Holders of a majority of the
Registrable Securities.
"Holder" or "Holders" means the holder or holders, as the case may
be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section
5(c).
"Indemnifying Party" shall have the meaning set forth in Section
5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Preferred Stock" means any shares of any series of preferred stock
issued by the Company and held by a Stockholder as of the date hereof as
set forth on Schedule 1.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and all
other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such Prospectus.
"Registrable Securities" means (i) any and all shares of Common
Stock owned by the Stockholders as of the date hereof, (ii) any and all
shares of Common Stock issuable to the Stockholders upon the exercise,
exchange or conversion of shares of Preferred Stock owned by the
Stockholders as of the date hereof, (iii) any and all shares of Common
Stock issuable to the Stockholders upon the exercise, exchange or
conversion of Warrants owned by the Stockholders as of the date hereof,
and (iv) any and all shares of Common Stock or other capital stock
issuable upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event with respect to any of the foregoing after
the date hereof, provided, however, that any securities deemed Registrable
Securities in accordance herewith shall cease to be Registrable Securities
(i) upon the sale of such securities pursuant to the Registration
Statement, (ii) upon the sale of such securities pursuant to Rule 144
promulgated under the Securities Act or (iii) on the date on which such
securities become eligible for sale under Rule 144(k) promulgated under
the Securities Act.
"Registration Statement" means the registration statement required
to be filed hereunder, including (in each case) the Prospectus, amendments
and supplements to the registration statement or Prospectus, including
pre- and post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in the
registration statement.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
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"Rule 424" means Rule 424 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
2. Registration.
(a) On or prior to the Filing Date, the Company shall prepare and
file with the Commission the Registration Statement covering the resale of all
of the Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement required hereunder shall
contain (except if otherwise directed by the Holders or required by the
Commission) the "Plan of Distribution" attached hereto as Annex A. The Company
shall use its commercially reasonable efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, and shall use its commercially reasonable
efforts to keep the Registration Statement continuously effective under the
Securities Act until the date which is two (2) years after the date the
Registration Statement was declared effective or such earlier date when all
Registrable Securities covered by the Registration Statement have been sold or
may be sold without volume restrictions pursuant to Rule 144(k) as determined by
the counsel to the Company pursuant to a written opinion letter to such effect
(the "Effectiveness Period"); provided, however, that the Company may postpone
the filing of the Registration Statement and suspend the effectiveness of any
Registration Statement, suspend the use of any Prospectus and shall not be
required to amend or supplement the Registration Statement, any related
Prospectus or any document incorporated therein by reference) for a period not
to exceed an aggregate of 90 days (a "Black Out Period") in the event that (1)
an event or circumstance occurs and is continuing as a result of which the
Registration Statement, any related Prospectus or any document incorporated
therein by reference as then amended or supplemented would, in the good faith
judgment of the Board of Directors of the Company, contain an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, and (2) the disclosure relates to a material business
transaction which has not yet been publicly disclosed and the disclosure of
which, in the good faith judgment of the Board of Directors of the Company,
could reasonably be expected to have a material adverse effect on the business,
operations or prospects of the Company; provided, further that the Effectiveness
Period shall be extended by the number of days in any Black Out Period occurring
during the Effectiveness Period. In the event of the occurrence of any Black Out
Period, the Company will promptly notify the Holders of Registrable Securities
thereof in writing. The Company shall not effect more than one Black Out Period
pursuant to the terms hereof in any consecutive 365 day period.
(b) Registrations under this Section 2 shall be on such appropriate
registration form of the Commission as shall be selected by the Company. In the
event that Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall register the resale of the
Registrable Securities on Form S-3 as soon as such form is available, provided
that the Company shall use its best efforts to maintain the effectiveness of the
Registration Statement then in effect until such time (but only until such time)
as a Registration Statement on Form S-3 covering the Registrable Securities has
been declared effective by the Commission.
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3. Registration Procedures
In connection with the Company's registration obligations hereunder,
the Company shall:
(a) (i) Prior to the filing of the Registration Statement, furnish
the Holders with the sections of the Registration Statement which are applicable
to the Holders, and (ii) not file any document containing information relating
to a Holder which such Holder reasonably objects.
(b) (i) Other than during a Black Out Period, prepare and file with
the Commission such amendments, including post-effective amendments, to the
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period; (ii) other than
during a Black Out Period, cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so supplemented or
amended to be filed pursuant to Rule 424; (iii) respond as promptly as
commercially practicable to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto; and (iv) comply
in all material respects with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in accordance
with the intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold as
promptly as commercially practicable (i)(A) when any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
and (B) with respect to the Registration Statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the
Commission or any other Federal or state governmental authority during the
period of effectiveness of the Registration Statement for amendments or
supplements to the Registration Statement or Prospectus or for additional
information; (iii) of the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement covering any or all of the Registrable Securities or
the initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in the Registration Statement ineligible for
inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
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(d) Use its commercially reasonable efforts to avoid the issuance
of, or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
(e) Promptly deliver to each Holder, without charge, as many copies
of the Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may reasonably request in
connection with resales by the Holder of Registrable Securities. The Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders in connection with the offering and sale
of the Registrable Securities covered by such Prospectus and any amendment or
supplement thereto, except after the giving of any notice pursuant to Section
3(c) and other than during a Black Out Period.
(f) Prior to any resale of Registrable Securities by a Holder, use
its commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the Registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each of the Registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified, subject
the Company to any material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.
(g) If requested by the Holders, cooperate with the Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by the Merger Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as any such Holders may request.
(h) Upon the occurrence of any event contemplated by Section
3(c)(v), other than during a Black Out Period, as promptly as commercially
practicable, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will contain
an 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, in light of
the circumstances under which they were made, not misleading.
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(i) Comply with all applicable rules and regulations of the
Commission.
(j) The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and the Person that has voting and dispositive
control over the Shares. Each Holder agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of the Registration Statement, unless such Holder has notified the
Company in writing of such Holder's election to exclude all of such Holder's
Registrable Securities from the Registration Statement, including the furnishing
to the Company of such information regarding such Holder, the Registrable
Securities held by it, and the intended method of disposition of such
Registrable Securities to effect the registration of such Registrable
Securities. The Company shall have no responsibility to any selling Holder, to
the extent such selling Holder fails to provide such information in a timely
manner, and if the Company, acting reasonably, determines it appropriate, the
Company may delay the filing of any such Registration Statement until the Holder
provides such information or exclude the Holder's securities from the
registration.
4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with any exchange or trading market on which the Common
Stock is then listed for trading, and (B) in compliance with applicable state
securities or Blue Sky laws), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is reasonably requested by
the holders of a majority of the Registrable Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder.
Notwithstanding the foregoing, all underwriting discounts and commissions, if
any, and transfer taxes relating to Registrable Securities included in any
registration effected pursuant to this Agreement will be borne and paid ratably
by the Holders of such Registrable Securities.
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5. Indemnification
(a) Indemnification by the Company. The Company shall indemnify and
hold harmless each Holder, the officers, directors, agents and employees of each
of them, each Person who controls any such Holder (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorneys' fees) and expenses (collectively, "Losses"), as incurred, to the
extent arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (1) such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose), or (2) in the case of an occurrence
of a Black Out Period or an event of the type specified in Section 3(c)(ii)-(v),
the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or defective
or of the occurrence of a Black Out Period, and prior to the receipt by such
Holder of the Advice contemplated in Section 7(c) or the termination of the such
Black Out Period, as applicable. The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, to the extent arising out of or based upon: (x) such Holder's failure
to comply with the prospectus delivery requirements of the Securities Act or (y)
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein not misleading
(i) to the extent, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by such Holder
to the Company specifically for inclusion in the Registration Statement or such
Prospectus, or (ii) to the extent that (1) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in writing to
the Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (2) in the case of an occurrence of a Black Out Period or an event of
the type specified in Section 3(c)(ii)-(v), the use by such Holder of an
outdated or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective or of the occurrence of a
Black Out Period, and prior to the receipt by such Holder of the Advice
contemplated in Section 7(c) or the termination of the such Black Out Period, as
applicable. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
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(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have prejudiced
the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of one
separate counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding in respect of
which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All reasonable fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten (10) Business Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is not entitled to
indemnification hereunder, determined based upon the relative faults of the
parties.
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(d) Contribution. If a claim for indemnification under Section 5(a)
or 5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 5(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, except in the case of fraud by
such Holder.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Lock-Up. Each Holder hereby represents, covenants and agrees, that
during the Effectiveness Period, such Holder will not, in any 90-day period,
sell, assign, or transfer shares of Common Stock in excess of ten percent (10%)
of the number of shares of Common Stock held by such Holder (on an as converted
basis) as of the date hereof. The sale by a Holder of less than such number of
shares in any 90-day period shall not permit such Holder to sell in excess of
such amount as a result thereof in a succeeding 90-day period. The Company may
impose stop-transfer instructions with respect to shares of Common Stock now or
hereafter held by a Holder to enforce a Holder's obligations under this Section
6.
7. Miscellaneous
(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
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(b) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it in connection with sales of Registrable Securities pursuant to the
Registration Statement.
(c) Discontinued Disposition. Each Holder agrees by its acquisition
of such Registrable Securities that, upon receipt of a notice from the Company
of the occurrence of a Black Out Period or of any event of the kind described in
Section 3(c), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing (the "Advice") by the Company that
the use of the applicable Prospectus may be resumed or that the Black Out Period
has terminated, as applicable, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.
(d) Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering
all of the Registrable Securities and the Company shall determine to prepare and
file with the Commission a registration statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under
the Securities Act) 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 the stock option or other employee
benefit plans, then the Company shall send to each Holder a written notice of
such determination and, if within fifteen (15) days after the date of such
notice, any such Holder shall so request in writing, the Company shall include
in such registration statement all or any part of such Registrable Securities
such Holder requests to be registered, subject to customary underwriter cutbacks
applicable to all holders of registration rights.
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of a majority of the then outstanding Registrable Securities.
Any such amendment, modification, supplement, waiver or consent duly authorized
by the Company and the Holders of a majority of the then outstanding Registrable
Securities shall be binding upon all remaining Holders.
(f) Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if in writing and delivered in
Person, transmitted by facsimile transmission (fax) or sent by registered or
certified mail (return receipt requested) or recognized overnight delivery
service, postage pre-paid, addressed (a) if to a Holder to such address as such
Holder shall have furnished the Company in writing, or, until any such Holder so
furnishes an address to the Company, then to and at the address of the last
Holder of such securities who has so furnished an address to the Company or (b)
if to the Company, to Thinking Tools, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, to the attention of the Corporate Secretary, or to such
other address has such party may notify to the other parties in writing. A
notice or communication will be effective (i) if delivered in Person or by
overnight courier, on the Business Day it is delivered, (ii) if transmitted by
telecopier, on the Business Day of actual confirmed receipt by the addressee
thereof, and (iii) if sent by registered or certified mail, three (3) Business
Days after dispatch.
10
(g) Binding Effect; Assignment. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and permitted assigns. The rights to cause the Company to register
Registrable Securities pursuant to this Agreement, may be assigned by any Holder
without limitation to an affiliate (as such term is defined in the Exchange
Act). In addition, the rights to cause the Company to register Registrable
Securities pursuant to this Agreement, may be assigned by a transferee to a
subsequent permitted transferee provided, however, that such transfer does not
constitute a distribution within the meaning of the Securities Act and is
otherwise effected in accordance with all applicable securities laws. Any
transferee to which rights under this Agreement are transferred, including an
affiliate of a Holder, shall: (i) as a condition to such transfer, deliver to
the Company a written instrument by which such transferee agrees to be bound by
the obligations imposed upon Holders under this Agreement to the same extent as
if such transferee were a Holder under this Agreement; and (ii) be deemed to be
a Holder.
(h) Course of Dealing; Amendments, Waivers and Consents. No course
of dealing between the parties shall operate as a waiver of any party's rights
under this Agreement. Each party acknowledges that if any party, without being
required to do so by this Agreement, gives any notice or information to, or
obtains any consent from, the other party, such party shall not by implication
have amended, waived or modified any provision of this Agreement, or created any
duty to give any such notice or information or to obtain any such consent on any
future occasion. No delay or omission on the part of any party in exercising any
right under this Agreement shall operate as a waiver of such right or any other
right hereunder or thereunder. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future occasion.
No amendment, waiver or consent with respect to this Agreement shall be binding
unless it is in writing and signed by each of the Company and the holders of a
majority of the Registrable Securities then outstanding.
(i) Miscellaneous. If any provision of this Agreement shall be found
by any court of competent jurisdiction to be invalid or unenforceable, the
parties hereby waive such provision to the extent that it is found to be invalid
or unenforceable. Such provision shall, to the maximum extent allowable by law,
be modified by such court so that it becomes enforceable, and, as modified,
shall be enforced as any other provision hereof, all the other provisions hereof
continuing in full force and effect. The headings contained in this Agreement
are for reference purposes only and shall not in any way affect the meaning or
interpretation hereof. This Agreement constitutes the entire understanding of
the parties with respect to the subject matter hereof and supersedes any and all
prior understandings and agreements, whether written or oral, with respect to
such subject matter. This Agreement may be executed in counterparts, which
together shall constitute one and the same instrument. This Agreement shall be
governed by and construed in accordance with the laws (other than the conflict
of laws rules) of the State of Delaware.
11
IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
THINKING TOOLS, INC.
By:_____________________________________
Name:
Title:
STOCKHOLDER:
If Individual:
Print Name:_____________________________
Signature:______________________________
If Corporation, Partnership, Limited
Liability Company or Other Entity:
Print Name of Entity:___________________
Signature: By:__________________________
Print Name and Title:___________________
12
STOCKHOLDER:
If Individual:
Print Name:_____________________________
Signature:______________________________
If Corporation, Partnership, Limited
Liability Company or Other Entity:
Print Name of Entity:___________________
Signature: By:__________________________
Print Name and Title:___________________
STOCKHOLDER:
If Individual:
Print Name:_____________________________
Signature:______________________________
If Corporation, Partnership, Limited
Liability Company or Other Entity:
Print Name of Entity:___________________
Signature: By:__________________________
Print Name and Title:___________________
SCHEDULE 1 TO
REGISTRATION RIGHTS AGREEMENT
Names and
Addresses
Of Stockholders Number and Type of Securities
--------------- -----------------------------
▇▇▇▇▇▇ ▇▇▇▇ 86,956.52 Shares of Series E Preferred Stock
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 478,260.86 Shares of Series E Preferred Stock
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
GVI Acquisition, LLC 382,608.68 Shares of Series E Preferred Stock
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ 8,695.65 Shares of Series E Preferred Stock
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ 30,434.77 Shares of Series E Preferred Stock
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 2,173.91 Shares of Series E Preferred Stock
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FBO ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ 10,869.56 Shares of Series E Preferred Stock
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Europa International, Inc. 10,000 Shares of Series D Preferred Stock
c/o Knoll Capital Management
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Thinking Technologies, L.P. 3,850,414 shares of Common Stock
c/o Knoll Capital Management
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ANNEX A
Plan of Distribution
The Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Stockholders may use any one or more of the following
methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales;
o broker-dealers may agree with the Stockholders to sell a specified
number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Broker-dealers engaged by the Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Stockholders (or, if any broker-dealer acts as agent for
the purchaser of shares, from the purchaser) in amounts to be negotiated. The
Stockholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved.
The Stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
Stockholders to include the pledgee, transferee or other successors in interest
as Stockholders under this prospectus.
Annex A-1
The Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. The Stockholders have informed the Company
that it does not have any agreement or understanding, directly or indirectly,
with any person to distribute the Registrable Securities.
The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
Annex A-2