UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 15, 2007

 

TheStreet.com, Inc.


(Exact Name of Registrant as Specified in Charter)


 

 

 

DE

0-25779

06-1515824




(State of Incorporation)

(Commission

(IRS Employer

 

File Number)

Identification No.)


 

 

14 Wall Street, 15 th Floor
New York, NY

10005



(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (212) 321–5000

 

Not Applicable


Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8–K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a–12 under the Exchange Act (17 CFR 240.14a–12)

[ ] Pre–commencement communications pursuant to Rule 14d–2(b) under the Exchange Act (17 CFR 240.14d–2(b))

[ ] Pre–commencement communications pursuant to Rule 13e–4(c) under the Exchange Act (17 CFR 240.13e–4(c))



 

 

Item 1.01

Entry Into a Material Definitive Agreement.

 

 

Item 3.02

Unregistered Sales of Equity Securities.

 

 

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Securities Purchase Agreement

          On November 15, 2007, TheStreet.com, Inc., a Delaware corporation (the “Company”), entered into a Securities Purchase Agreement (the “Purchase Agreement”) with TCV VI, L.P., a Delaware limited partnership, and TCV Member Fund, L.P., a Delaware limited partnership. TCV VI, L.P. and TCV Member Fund, L.P. are referred to as the “Purchasers.”

          Pursuant to the Purchase Agreement the Company sold the Purchasers an aggregate of 5,500 shares of its newly-created Series B preferred stock, par value $0.01 per share (“Series B Preferred Stock”), that are convertible into an aggregate of 3,856,942 shares of its common stock, par value $0.01 per share (“Common Stock”) at a conversion price of $14.26 per share, and warrants (the “Warrants”) to purchase an aggregate of 1,157,083 shares of Common Stock for $15.69 per share. The consideration paid for the Series B Preferred Stock and the Warrants was $55 million.

          The issuance of the Series B Preferred Stock and Warrants to the Purchasers was completed through a private placement to accredited investors and is exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”). The shares of the Series B Preferred Stock, the shares of the Common Stock issuable upon the conversion of the Series B Preferred Stock, the Warrants and the shares of the Common Stock issuable upon the exercise of the Warrants have not been registered under the Securities Act or any state securities laws. Unless so registered, such securities may not be offered or sold in the United States absent an exemption from, or in a transaction not subject to, the registration requirement of the Securities Act and any applicable state securities laws.

          The foregoing description of the Purchase Agreement is only a summary, does not purport to be complete, and is qualified in its entirety by reference to the Purchase Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Investor Rights Agreement

          On November 15, 2007, the Company also entered into an Investor Rights Agreement with the Purchasers (the “Investor Rights Agreement”) pursuant to which, among other things, the Company has agreed grant the Purchasers certain registration rights including the right to require the Company to file a registration statement to register the Common Stock issuable upon conversion of the Series B Preferred Stock and upon exercise of the Warrants.

          The foregoing description of the Investor Rights Agreement is only a summary, does not purport to be complete, and is qualified in its entirety by reference to the Investor Rights Agreement, which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.

Certificate of Designation

          On November 15, 2007, the Company also filed a Certificate of Designation for the Series B Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware. The

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Certificate of Designation authorizes the Company to issue 5,500 of its 10,000,000 authorized shares of preferred stock as shares of Series B Preferred Stock.

          The Series B Preferred Stock has a purchase price per share equal to $10,000 (the “Original Issue Price”). In the event of any Liquidation Event (as defined in the Certificate of Designation), the holders of shares of Series B Preferred Stock are entitled to receive, prior to any distribution to the holders of the Common Stock, an amount per share equal to the Original Issue Price, plus any declared and unpaid dividends.

          The holders of the Series B Preferred Stock have the right to vote on any matter submitted to a vote of the stockholders of the Company and are entitled to vote that number of votes equal to the aggregate number of shares of Common Stock issuable upon the conversion of such holders’ shares of Series B Preferred Stock. For so long as 40% of the shares of Series B Preferred Stock remain outstanding, the holders of a majority of such shares will have the right to elect one person to the Company’s board of directors.

          The Series B Preferred Stock automatically converts into an aggregate of 3,856,942 shares of Common Stock in the event that the Common Stock trades on a trading market at or above a closing price equal to $28.52 per share for 90 consecutive trading days and any demand registration previously requested by the holders of the Series B Preferred Stock has become effective.

          The foregoing description of the Certificate of Designation is only a summary, does not purport to be complete, and is qualified in its entirety by reference to the Certificate of Designation, which is attached hereto as Exhibit 3.1 and is incorporated herein by reference.

Warrants

          As discussed above, the Warrants entitle the Purchasers to purchase an aggregate of 1,157,083 shares of Common Stock for $15.69 per share. The Warrants expire on the fifth anniversary of the date they were first issued, or earlier in certain circumstances.

          The foregoing description of the Warrants is only a summary, does not purport to be complete, and is qualified in its entirety by reference to the Warrants, which are attached hereto as Exhibits 4.2 and 4.3, respectively, and are incorporated herein by reference.

Amendment to Rights Agreement

          Prior to the execution of the Purchase Agreement, the Company entered into Amendment No. 2 to Rights Agreement (the “Rights Agreement Amendment”) with American Stock Transfer & Trust Company, as Rights Agent (the “Rights Agent”). The Rights Agreement Amendment amends the Rights Agreement dated May 14, 1999 (as amended by an Amendment to Rights Agreement dated as of August 7, 2000, as amended, the “Rights Agreement”), between the Company and the Rights Agent, for the purpose of amending the Rights Agreement to exclude the Purchasers and their respective affiliates and associates from the definition of “exempt person” until they acquire shares of the Company’s capital stock (x) other than the Series B Preferred Stock or shares of Common Stock issuable upon conversion of the Series B Preferred Stock or upon exercise of the Warrants or (y) that would result in their breach of certain provisions of the Purchase Agreement.

          The foregoing description of the Rights Agreement Amendment is only a summary, does not purport to be complete, and is qualified in its entirety by reference to the Rights Agreement Amendment, which is attached hereto as Exhibit 4.4 and is incorporated herein by reference.

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Item 8.01. Other Events

          On November 15, 2007, the Company issued a press release announcing that it had issued the Series B Preferred Stock and the Warrants.

 

 

Item 9.01

Financial Statements and Exhibits.

(c)     Exhibits .

 

 

 

Exhibit
Number

 

Description


 


 

 

 

3.1

 

Certificate of Designation of the Company’s Series B Preferred Stock, as filed with the Secretary of State of Delaware on November 15, 2007

 

 

 

4.1

 

Investor Rights Agreement dated as of November 15, 2007 among TheStreet.com, Inc., TCV VI, L.P. and TCV Member Fund, L.P.

 

 

 

4.2

 

Warrant dated as of November 15, 2007 issued by TheStreet.com, Inc. to TCV VI, L.P.

 

 

 

4.3

 

Warrant dated as of November 15, 2007 issued by TheStreet.com, Inc. to TCV Member Fund, L.P.

 

 

 

4.4

 

Amendment No. 2 to Rights Agreement dated as of November 15, 2007 between TheStreet.com, Inc. and American Stock Transfer & Trust Company, as Rights Agent

 

 

 

10.1

 

Securities Purchase Agreement dated as of November 15, 2007 among TheStreet.com, Inc., TCV VI, L.P. and TCV Member Fund, L.P.

 

 

 

99.1

 

Press Release of TheStreet.com, Inc. dated November 15, 2007.

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SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 20, 2007

 

 

 

 

THESTREET.COM, INC.

 

 

 

 

By:

/s/ Thomas J. Clarke, Jr.

 

 


 

 

Name: Thomas J. Clarke, Jr.

 

 

Title: Chief Executive Officer

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EXHIBIT INDEX

 

 

 

Exhibit
Number

 

Description


 


 

 

 

3.1

 

Certificate of Designation of the Company’s Series B Preferred Stock, as filed with the Secretary of State of Delaware on November 15, 2007

 

 

 

4.1

 

Investor Rights Agreement dated as of November 15, 2007 among TheStreet.com, Inc., TCV VI, L.P. and TCV Member Fund, L.P.

 

 

 

4.2

 

Warrant dated as of November 15, 2007 issued by TheStreet.com, Inc. to TCV VI, L.P.

 

 

 

4.3

 

Warrant dated as of November 15, 2007 issued by TheStreet.com, Inc. to TCV Member Fund, L.P.

 

 

 

4.4

 

Amendment No. 2 to Rights Agreement dated as of November 15, 2007 between TheStreet.com, Inc. and American Stock Transfer & Trust Company, as Rights Agent

 

 

 

10.1

 

Securities Purchase Agreement dated as of November 15, 2007 among TheStreet.com, Inc., TCV VI, L.P. and TCV Member Fund, L.P.

 

 

 

99.1

 

Press Release of TheStreet.com, Inc. dated November 15, 2007.



Exhibit 3.1

THESTREET.COM, INC.
CERTIFICATE OF DESIGNATION OF SERIES B PREFERRED STOCK

          Pursuant to Section 151 of the Delaware General Company Law, TheStreet.com, Inc., a Delaware corporation (the “Company” ), DOES HEREBY CERTIFY:

          That pursuant to the authority conferred upon the board of directors of the Company by the Company’s certificate of incorporation, the board of directors of the Company has duly adopted the following resolution creating a series of preferred stock designated as Series B Preferred Stock, and such resolution has not been modified and is in full force and effect on the date hereof:

          RESOLVED that a series of the Company’s authorized preferred stock, par value $0.01 per share, is hereby created and that the designation and number of shares thereof and the voting rights, powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations and restrictions thereof are as follows:

          Section 1. Designation and Number . The shares of such series shall be designated as Series B Preferred Stock (the “Series B Preferred Stock” ). The number of shares initially constituting the Series B Preferred Stock shall be 5,500, which number may be, subject to Section 5, increased or decreased by the Board of Directors; provided , however , that such number may not be decreased below the number of then outstanding shares of Series B Preferred Stock. Capitalized terms used but not defined elsewhere herein have the meanings assigned to them in Section 9.

          Section. 2. Dividends .

                    (a) Whenever the Company shall pay a dividend or distribution on the Common Stock, each holder of a share of Series B Preferred Stock shall be entitled to receive, at the same time the dividend or distribution is paid on the Common Stock, out of the assets of the Company legally available therefor, a dividend or distribution equal to the amount that would have been paid in respect of the Common Stock issuable upon conversion of such share of Series B Preferred Stock immediately prior to the close of business on the record date for determining the holders entitled to receive such dividend or distribution on the Common Stock, or, if no such record is taken, the date on which the record holders of Common Stock entitled to such dividend or distribution is determined.

                    (b) The holders of shares of Series B Preferred Stock shall not be entitled to receive any dividends except as provided herein.

          Section 3. Liquidation, Dissolution or Winding-up .

                    (a) Upon the occurrence of a Liquidation Event, the holders of Series B Preferred Stock shall be entitled to be paid out of the assets of the Company legally available for distribution an amount equal to the Liquidation Preference as of the day of payment of the Liquidation Preference for each share of Series B Preferred Stock held by each such holder (it is understood and agreed that the consideration paid to the holders of the Series B Preferred Stock


will be in the same form ( i.e. , cash, securities or other property) as the consideration received by the Company’s other stockholders in such Liquidation Event). If, upon the occurrence of a Liquidation Event, the assets of the Company shall be insufficient to make payment in full of the Liquidation Preference to all holders of the Series B Preferred Stock and all other now or hereafter authorized capital stock of the Company ranking on a parity with (upon liquidation, dissolution or winding up) the Series B Preferred Stock, then such assets shall be distributed among the holders of Series B Preferred Stock and the holders of such other capital stock of the Company ranking on a parity with (upon dissolution, liquidation or winding up) the Series B Preferred Stock at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled.

                    (b) No distribution shall be made in respect of any shares of Series B Preferred Stock pursuant to Section 3(a) unless, at the time of such distribution, all amounts due in respect of any shares of any now or hereafter authorized capital stock of the Company ranking senior to (upon liquidation, dissolution or winding-up) the Series B Preferred Stock have been paid in full.

                    (c) Upon the occurrence of a Liquidation Event, no distribution shall be made in respect of any shares of Common Stock, Series A Preferred Stock or any other now or hereafter authorized capital stock of the Company ranking junior to (upon liquidation, dissolution or winding-up) the Series B Preferred Stock unless, at the time of such distribution, the holders of shares of Series B Preferred Stock shall have received the full Liquidation Preference with respect to each share.

                    (d) If, upon the occurrence of a Liquidation Event, payment shall have been made to the holders of the Series B Preferred Stock of the full preferential amount to which they are entitled pursuant to Section 3(a), then, the holders of the Series B Preferred Stock shall not thereafter be entitled to receive any amounts in respect of such Liquidation Event or otherwise.

                    (e) In any Liquidation Event, if the consideration received by the Company or its stockholders is other than cash, its value will be deemed its fair market value as determined in good faith by the Board of Directors. Any such consideration shall be valued as follows:

 

 

 

          (i) if such consideration consists of securities traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the securities on such quotation system over the 30-day period ending three days prior to the effective date of such Liquidation Event;

 

 

 

          (ii) if such consideration consists of securities that are actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the 30-day period ending three days prior to the effective date of such Liquidation Event;

 

 

 

          (iii) if such consideration is not valued pursuant to the preceding clauses (i) or (ii), the value shall be the fair market value thereof, as determined in good faith by the Board of Directors; and

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          (iv) The method of valuation of securities subject to restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined in Section 3(e)(i), (ii) or (iii) above to reflect the approximate fair market value thereof, as determined in good faith by the Board of Directors.

                    (f) Notwithstanding any other provision of this Section 3, if any Acquisition or Asset Sale is approved by both (x) the vote of the holders of at least a majority of the Series B Preferred Stock, voting as a single class, and (y) a vote sufficient under the Delaware General Corporation Law, the Company’s certificate of incorporation (as in effect at the time of such vote) and the Company’s bylaws (as in effect at the time of such vote), then such Acquisition or Asset Sale and the rights of the holders of Common Stock and Preferred Stock in connection with such Acquisition or Asset Sale will be governed by the documents to be entered into in connection with such Acquisition or Asset Sale.

                    Section 4. Conversion .

                    4.1 Conversion into Common Stock .

                    (a) Each share of Series B Preferred Stock shall be convertible, without the payment of additional consideration, into a number of shares of Common Stock determined by dividing the Liquidation Preference by the Conversion Price.

                    (b) From and after any conversion hereunder: (i) any shares of Series B Preferred Stock that shall have been so converted shall cease to be deemed to be outstanding or be transferrable on the books of the Company or the stock transfer agent, if any, for the Series B Preferred Stock; and (ii) the holder of such shares, as such, shall not be entitled to receive any dividends or distributions (except for any previously declared but unpaid dividends that such holder of Series B Preferred Stock was entitled to receive), to receive notices or to vote such shares or to exercise or to enjoy any other powers, preferences or rights in respect thereof, other than the right, upon surrender of the certificate or certificates representing such shares, to receive a certificate or certificates for the number of shares of Common Stock into which such shares shall have been converted. On the Conversion Date, all such shares shall be retired and canceled and shall not be reissued, except in accordance with Section 6.

                    (c) Whenever this Section 4 requires one or more certificates representing shares of Series B Preferred Stock to be surrendered to the Company, such certificates shall be duly endorsed for transfer (or accompanied by duly endorsed blank stock powers) together with such guarantees and evidence of the authenticity and authority of the signatory as the Company may reasonably request; provided , however , that if such certificate(s) shall have been lost, stolen or destroyed, the holder of such shares shall instead deliver to the Company an affidavit and indemnity in form and substance reasonably acceptable to the Company and, if required by the Company, an indemnity bond in form and substance reasonably acceptable to the Company.

                    4.2 Adjustment to Conversion Price for Stock Splits, Etc . If at any time the number of outstanding shares of Common Stock shall increase by virtue of or in connection with

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any dividend on the Common Stock or any stock split or other subdivision of the outstanding shares of Common Stock or a reclassification, then the Conversion Price shall be adjusted, concurrently with the effectiveness of such increase, to a Conversion Price that would entitle each holder of Series B Preferred Stock to receive on conversion thereof the same percentage of the outstanding shares of Common Stock that such holder would have received on conversion thereof immediately prior to such increase. If the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock (including, without limitation, pursuant to a reverse stock split), the Conversion Price in effect immediately prior to such combination or consolidation shall be adjusted, concurrently with the effectiveness of such decrease, to a Conversion Price that would entitle each holder of Series B Preferred Stock to receive on conversion thereof the same percentage of the outstanding shares of Common Stock that such holder would have received on conversion thereof immediately prior to such combination or consolidation.

                    4.3 Adjustment for Certain Transactions . If at any time or from time to time after the date the Series B Preferred Stock is originally issued the Company shall be a party to any Transaction (other than an increase or decrease in the number of outstanding shares of Common Stock by reason of which an adjustment to the Conversion Price is made under Section 4.2), then immediately following consummation of the Transaction, and without any action on the part of the holder of any share of Series B Preferred Stock, each holder’s Series B Preferred Stock shall upon conversion and in lieu of the Common Stock or other securities issuable upon conversion thereof immediately prior to such consummation, convert into the amount of securities, cash or other property to which such holder would actually have been entitled as a stockholder upon the consummation of the Transaction if such holder had converted those shares of Series B Preferred Stock immediately prior thereto, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4.3 with respect to the rights of the holders of Series B Preferred Stock after such Transaction so that the provisions of this Section 4.3 shall be applicable after the Transaction and be as nearly equivalent as practicable. Notwithstanding the foregoing, if the Transaction is approved by both (x) the vote of the holders of at least a majority of the Series B Preferred Stock, voting as a single class, and (y) a vote sufficient under the Delaware General Corporation Law, the Company’s certificate of incorporation (as in effect at the time of such vote) and the Company’s bylaws (as in effect at the time of such vote), then the rights of the holders of Series B Preferred Stock in connection with such Transaction will be governed by the documents to be entered into in connection with such Transaction.

                    4.4 Report or Certificate as to Adjustments . In each case of any adjustment or readjustment pursuant to Section 4.2 or 4.3, the Company at its expense will promptly prepare a certificate of its Chief Financial Officer showing in reasonable detail the computation of such adjustment or readjustment in accordance with the terms of this Certificate of Designation. The Company will forthwith send a copy of each such report to each holder of Series B Preferred Stock, and will, upon the written request at any time of a holder, furnish to such holder a like report setting forth the Conversion Price at the time in effect and showing how it was calculated.

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                    4.5 Optional Conversion .

                    (a) Any holder of shares of Series B Preferred Stock may, at any time, convert such stock, in whole or in part, by making written demand for such conversion (an “Optional Conversion Demand” ) upon the Company at its principal executive offices setting forth therein: (i) the number of shares of Series B Preferred Stock to be converted; and (ii) the proposed date of such conversion, which shall be the Business Day after such Optional Conversion Demand is actually received by the Company (the “Optional Conversion Date” ); provided , however , in the event such Optional Conversion Demand is actually received by the Company prior to 10 a.m. (New York time), the Optional Conversion Date shall be the date of such receipt. Such demand shall be accompanied by one or more certificates representing the shares to be converted. Thererafter, within three Business Days after the Optional Conversion Date, the Company shall issue and deliver to such holder one or more certificates for the number of whole shares of Common Stock issuable upon conversion in accordance with the provisions hereof.

                    (b) If a conversion is in connection with a bona fide public offering of shares of Common Stock pursuant to an effective registration statement under the Securities Act or under similar laws of other jurisdictions (a “Public Offering” ), the conversion shall be conditioned upon the closing of the sale of Common Stock pursuant to such Public Offering, and the conversion shall not be deemed to have occurred until immediately prior to the closing of such sale of Common Stock.

                    (c) Upon surrender of certificates of Series B Preferred Stock to be converted in part, the Company shall issue a balance certificate representing the number of full shares of Series B Preferred Stock not so converted.

                    4.6 Mandatory Conversion .

                    (a) Upon a Mandatory Conversion Event, all of the Series B Preferred Stock shall be automatically converted as of the Mandatory Conversion Date in respect of such conversion.

                    (b) Promptly following a conversion pursuant to this Section 4.6, the Company shall send each holder of Series B Preferred Stock a written notice thereof. Thereafter, as soon as practicable following the surrender of one or more certificates representing the Series B Preferred Stock that is so converted, the Company shall issue and deliver to such holder one or more certificates for the number of whole shares of Common Stock issuable upon conversion in accordance with the provisions hereof.

                    4.7 Fractional of Shares . No fractional shares of Common Stock shall be issued by the Company upon conversion of the Series B Preferred Stock. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series B Preferred Stock represented by a single certificate shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of any fractional share, the Company shall, in lieu of issuing any fractional share, pay cash in an amount equal to the product of such fraction multiplied by the Common Stock’s fair market value (as determined

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by the Board of Directors) on the date of conversion (such amount shall be paid by the Company concurrently with the delivery of certificates representing the shares of Common Stock issued upon such conversion).

                    4.8 Successive Adjustments . The provision for adjustments in Sections 4.2 and 4.3 shall apply in each successive instance in which an adjustment is required thereby.

                    4.9. Reservation of Common Stock . The Company shall at all times when any shares of Series B Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series B Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series B Preferred Stock, the Company will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

                    4.10 Payment of Taxes . The Company will pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed with respect to the issue of shares of Common Stock upon conversion of shares of Series B Preferred Stock, excluding any tax or other charge imposed in connection with any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series B Preferred Stock so converted were registered.

                    4.11 No Impairment . The Company shall not avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but shall at all times in good faith assist in carrying out all such actions as may be reasonably necessary or appropriate in order to protect the conversion rights of the holders of the Series B Preferred Stock against impairment. Notwithstanding the foregoing, nothing in this Section 4.11 shall prohibit the Company from amending its certificate of incorporation with the requisite consent of its stockholders and the Board of Directors.

          Section 5. Voting Rights .

                    (a) Each share of Series B Preferred Stock shall entitle the holder thereof to vote, in person or by proxy, at a special or annual meeting of the stockholders of the Company, on all matters, voted on by holders of Common Stock, voting together as a single class with the holders of the Common Stock and all other shares entitled to vote thereon as a single class with the Common Stock. With respect to all such matters, each issued and outstanding share of Series B Preferred Stock shall entitle the holder thereof to cast that number of votes per share as is equal to the number of votes that such holder would be entitled to cast had such holder converted such holder’s Series B Preferred Stock into Common Stock on the record date for determining the stockholders of the Company eligible to vote on any such matters.

                    (b) For so long as 2,200 shares of Series B Preferred Stock remain outstanding, one member of the board of Directors shall be subject to election and removal by the holders of a majority of the outstanding shares of Series B Preferred Stock voting as a

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separate class (the “Series B Designee” ). In the case of any vacancy in the office of a director elected by the holders of the Series B Preferred Stock, the holders of a majority of the outstanding shares of Series B Preferred Stock may elect a successor to hold office for the unexpired term of the director whose place shall be vacant. Any director who shall have been elected by the holders of the Series B Preferred Stock may be removed during the aforesaid term of office, either with or without cause, by, and only by, the affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock, given either at an annual meeting of the Company’s stockholders or at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of such stockholders. Any such act shall become effective on the date fixed in the notice to the Company thereof, or upon the delivery thereof to the Company, whichever is later, without the need for any other corporate procedure or action. For avoidance of any doubt, the appointment of a director as aforesaid, the dismissal or replacement of any director so appointed, shall be by written notice given to the Company by the party or parties designating the director pursuant to the procedures set forth above.

                    (c) For so long as at least 1,650 shares of Series B Preferred Stock shall be outstanding, the affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock, voting separately as a single class, shall be necessary to take any of the following actions, however effected, whether by amendment, merger, consolidation or otherwise:

 

 

 

          (i) authorize, create or issue any class or classes of any now or hereafter authorized capital stock of the Company ranking senior to, or on a parity with (as to dividends or upon a Liquidation Event) the Series B Preferred Stock or any securities exercisable or exchangeable for, or convertible into, any now or hereafter authorized capital stock of the Company ranking senior to, or on a parity with (as to dividends or upon a Liquidation Event) the Series B Preferred Stock (including, without limitation, the issuance of any shares of Series B Preferred Stock (other than shares of Series B Preferred Stock issued as a stock dividend or in a stock split) after the date the Series B Preferred Stock is originally issued); provided , however , that the affirmative vote of the holders of a majority of the outstanding shares of Series B Preferred Stock shall not be required for the authorization, creation or issuance of any Common Stock (or any hereafter authorized class of the Company’s common stock) or a class or series of any now or hereafter authorized capital stock of the Company that permits the holders thereof to participate in any dividends paid to the holders of the Common Stock on an as-converted basis;

 

 

 

          (ii) any increase or (except pursuant to Section 6) decrease in the authorized number of shares of Series B Preferred Stock;

 

 

 

          (iii) any amendment, waiver, alteration or repeal of the Company’s certificate of incorporation or bylaws in a way that adversely affects the rights, preferences or privileges of the Series B Preferred Stock;

 

 

 

          (iv) the payment of any dividends (other than dividends paid in the capital stock of the Company or any of its subsidiaries) in excess of $0.10 per share per annum (such amount per share shall be appropriately adjusted for any

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transaction referred to in Section 4.2 or 4.3) on the Common Stock unless after the payment of such dividends the Company will have Unrestricted Cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) in an amount equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the Liquidation Preference; and

 

 

          (v) the purchase or redemption of: (A) any Common Stock (except for the purchase or redemption from employee, directors and consultants pursuant to agreements providing the Company with repurchase rights upon termination of their service with the Company) unless after such purchase or redemption the Company will have Unrestricted Cash (net of all indebtedness for borrowed money, purchase money obligations, promissory notes or bonds) equal to at least two times the product obtained by multiplying the number of shares of Series B Preferred Stock outstanding at the time such dividend is paid by the Liquidation Preference; or (B) any class or series of now or hereafter authorized capital stock of the Company that ranks junior to (upon a Liquidation Event) the Series B Preferred Stock.

          Section 6. Cancellation of Shares . Any shares of Series B Preferred Stock converted, exchanged, redeemed, purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares of Series B Preferred Stock shall upon their cancellation become authorized but unissued shares of preferred stock, par value $0.01 per share, of the Company and, upon the filing of an appropriate certificate of designation with the Secretary of State of the State of Delaware, may be reissued as part of another class or series of preferred stock, par value $0.01 per share, of the Company, including, without limitation, Series B Preferred Stock, all subject to the conditions or restrictions on issuance set forth herein.

          Section 7. No Other Rights . Except as expressly set forth in this Certificate of Designation of Series B Preferred Stock or as required by law, the holders of the Series B Preferred Stock shall not have any voting powers, preferences or relative, participating, optional or other special rights.

          Section 8. Notices .

                    (a) Notices of Record Date. Upon (i) any taking by the Company of a record of the holders of the Common Stock for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution (other than the Company’s regular quarterly dividend), or (ii) any Liquidation Event, the Company shall mail to each holder of Series B Preferred Stock at least 10 days prior to the record date specified therein (or such shorter period approved by the holders of a majority of the outstanding Series B Preferred Stock) a notice specifying (x) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution and (y) the date on which any such Liquidation Event is expected to become effective.

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                    (b) General. Any notice required by the provisions of this Certificate of Designation shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile, on the next Business Day, (iii) five days after having been sent by registered or certified U.S. mail, return receipt requested, postage prepaid, or (iv) one Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with verification of receipt. All notices shall be addressed to each holder of record at the address of such holder appearing on the books of the Company.

          Section 9. Definitions, Etc . The definitions in this Section 9 shall apply equally to both the singular and plural form of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter form. The words include, includes, and including shall be deemed to be followed by the phrase without limitation. Unless the context otherwise requires: (x) all references to Sections, paragraphs, subparagraphs and clauses are to Sections, paragraphs, subparagraphs and clauses in this Certificate of Designation; and (y) the terms herein, hereof, hereto and hereunder and words of similar import refer to this Certificate of Designation. For the purposes of this Certificate of Designation of Series B Preferred Stock, the following terms shall have the meanings indicated:

                    (a) “Acquisition” is defined in Section 9(e)(i).

                    (b) “Asset Sale” is defined in Section 9(e)(ii).

                    (c) “Board of Directors” means the Company’s board of directors or any committee thereof.

                    (d) “Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions in the City of New York, New York are authorized or required by law to be closed.

                    (e) “Change of Control” of the Company means such time as:

 

 

 

          (i) (A) the Company shall consummate a merger, consolidation or similar transaction approved by the Board of Directors in which a Person or group (as such term is defined in Rule 13d-5 under the Exchange Act) of Persons become the beneficial owners (as determined pursuant to Rule 13d-3 under the Exchange Act), directly or indirectly, of a majority of the outstanding shares of Common Stock or (B) there shall occur the consummation of a tender offer for, or other acquisition of, Common Stock approved by the Board of Directors in which a Person or group of Persons become the beneficial owners (as determined pursuant to Rule 13d-3 under the Exchange Act), directly or indirectly, of a majority of the outstanding shares of Common Stock (each transaction referred to in clauses (A) and (B), an “Acquisition” ); or

 

 

 

          (ii) the direct or indirect sale, lease or other disposition of all or substantially all of the Company’s assets (each an “Asset Sale” ).

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                    (f) “Common Stock” means the Company’s common stock, par value $0.01 per share.

                    (g) “Conversion Price” means $14.26, subject to adjustment as provided in Section 4.

                    (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

                    (i) “Investor Rights Agreement” means the Investor Rights Agreement dated as of the date the Series B Preferred Stock is first issued among the Company and the Original Investors, as it may be amended, restated, modified or supplemented from time to time.

                    (j) “Liquidation Event” means the liquidation, dissolution or winding-up of the Company. A Change of Control shall also be a Liquidation Event.

                    (k) “Liquidation Preference” with respect to a share of Series B Preferred Stock means the Original Series B Issue Price plus all declared but unpaid dividends thereon, as such may be adjusted for stock splits, combinations and the like of the Series B Preferred Stock.

                    (l) “Mandatory Conversion Event” means such time as (i) after the closing price per share of Common Stock sold on the Nasdaq Stock Market shall have been equal to or greater than 200% of the Conversion Price for a period of 90 consecutive trading days; and (ii) subsequent to the exercise by the holders of the Series B Preferred Stock of their demand registration rights granted under the Investor Rights Agreement, the registration statement covering the underlying Common Stock becomes effective and thereafter (x) the holders of the Series B Preferred Stock will not be restricted from selling their shares of Common Stock received upon conversion of their shares of Series B Preferred Stock or (y) all such shares of Common Stock received upon conversion of shares of Series B Preferred Stock will be saleable under Rule 144(k) promulgated under the Securities Act.

                    (m) “Mandatory Conversion Date” means the date on which a Mandatory Conversion Event first occurs.

                    (n) “Optional Conversion Date” is defined in Section 4.5.

                    (o) “Optional Conversion Demand” is defined in Section 4.5.

                    (p) “Original Investors” means TCV VI, L.P., a Delaware limited partnership, and TCV Member Fund, L.P., a Delaware limited partnership.

                    (q) “Original Series B Issue Price” with respect to a share of Series B Preferred Stock means $10,000.

                    (r) “Person” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization or a government or agency or political subdivision thereof.

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                    (s) “Public Offering” is defined in Section 4.5(b).

                    (t) “Securities Act” means the Securities Act of 1933, as amended.

                    (u) “Series B Designee” is defined in Section 5(b).

                    (v) “Series B Preferred Stock” is defined in Section 1.

                    (w) “Transaction” means any transaction (including, without limitation, a merger, consolidation, sale of all or substantially all of the Company’s assets, liquidation, recapitalization or reorganization) in which previously outstanding Common Stock shall be changed into or exchanged for different securities of the Company (other than by subdivision of its outstanding shares of Common Stock by reason of which an adjustment to the Conversion Price is made under Section 4.2) or common stock or other securities of another corporation or interests in a noncorporate entity or other property (including cash) or any combination of any of the foregoing.

                    (x) “Unrestricted Cash” means cash and cash equivalents whose use is not expressly prohibited by the terms of any contract to which the Company or any of its subsidiaries is a party.

[The next page is the signature page]

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          The Company has caused this Certificate of Designation to be duly executed as of the 15th day of November, 2007.

 

 

 

 

 

THESTREET.COM, INC.

 

 

By:

/s/

 Thomas J. Clarke, Jr.

 

 



 

 

Name:

       Thomas J. Clarke, Jr.

 

 

Title:

       Chairman of the Board

 

 

 

       and Chief Executive Officer

S-1


Exhibit 4.1

INVESTOR RIGHTS AGREEMENT

          THIS INVESTOR RIGHTS AGREEMENT (the “ Agreement ”) is entered into as of November 15, 2007, by and among TheStreet.com, Inc., a Delaware corporation (the “ Company ”), TCV VI, L.P., a Delaware limited partnership (“ TCV VI ”), and TCV Member Fund, L.P., a Delaware limited partnership (“ TCV Member Fund ” and, together with TCV VI, the “ Investors ”). Capitalized terms used but not defined elsewhere herein are defined in Section 1.

RECITALS

          1. The Company has entered into a Securities Purchase Agreement, dated as of the date hereof (the “ Purchase Agreement ”), with each of the Investors pursuant to which the Company has sold to the Investors, and the Investors have purchased from the Company, (i) shares of the Company’s Series B Preferred Stock, par value $0.01 per share (“ Series B Preferred Stock ”), which is convertible into shares of the company’s common stock, par value $0.01 per share (“ Common Stock ”), and (ii) warrants to purchase Common Stock (the “ Warrants ”).

          2. As a condition to each of the Investors’ obligations under the Purchase Agreement, the Company and the Investors will enter into this Agreement for the purpose of granting certain registration and other rights to the Investors, as well as imposing certain restrictions on the ability of the Investors to Transfer their Shares.

          NOW, THEREFORE, in consideration of the covenants and promises set forth herein, and for other good and valuable consideration, intending to be legally bound hereby the parties agree as follows:

          SECTION 1. Certain Definitions. As used in this Agreement, the capitalized terms identified in the Preamble and the Recitals shall have the meanings identified therein and the following terms shall have the following respective meanings:

                    “ Agreement ” shall have the meaning set forth in the Preamble hereof.

                    “ Commission ” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act.

                    “ Common Stock ” shall have the meaning set forth in the Recitals hereof.

                    “ Company ” shall have the meaning set forth in the Preamble hereof.

                    “ Company Indemnified Parties ” shall have the meaning set forth in Section 10(a) hereof.

                    “ Demand Notice ” shall have the meaning set forth in Section 5(a) hereof.


                    “ Demand Shelf Registration ” shall have the meaning set forth in Section 5(a) hereof.

                    “ Effectiveness Period ” shall have the meaning set forth in Section 5(b) hereof.

                    “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, or any similar successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

                    “ Holder ” shall mean (i) any Investor holding Registrable Securities and (ii) any general or limited partner of an Investor or other Person to whom the rights under this Agreement have been transferred in accordance with Section 13 hereof.

                    “ Holder Indemnified Parties ” shall have the meaning set forth in Section 10(b) hereof.

                    “ Indemnified Party ” shall have the meaning set forth in Section 10(c) hereof.

                    “ Indemnifying Party ” shall have the meaning set forth in Section 10(c) hereof.

                    “ Investors ” shall have the meaning set forth in the Preamble hereof.

                    “ person ” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, other legal entity, or any government or governmental agency or authority.

                    “ Purchase Agreement ” shall have the meaning set forth in the Recitals hereof.

                    “ register ”, “ registered ” and “ registration ” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

                    “ Registration Expenses ” shall mean all expenses incurred by the Company in complying with Sections 5 and 6 hereof, including, without limitation, all registration, qualification, listing and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration, provided , however , that Registration Expenses shall not be deemed to include any Selling Expenses.

                    “ Registrable Securities ” shall mean (i) any shares of Common Stock paid as a dividend on Series B Preferred Stock or issuable upon conversion of the Series B Preferred Stock, (ii) any shares of Common Stock issuable upon exercise of the Warrants and (iii) any securities issued or issuable in respect of the securities described in clauses (i) and (ii) above upon any stock split, stock dividend, recapitalization or similar event; provided, however , that such securities shall only be treated as Registrable Securities until the earliest of: (w) the date on which such security has been registered under the Securities Act and disposed of in accordance with an effective Registration Statement relating thereto; (x) the date on which such security has been publicly sold pursuant to Rule 144; (y) the date on which all Registrable Securities owned

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by the Holder thereof may be resold without volume restrictions during any and all three-month periods pursuant to Rule 144; or (z) the date on which such security is transferred in a transaction pursuant to which the registration rights are not also assigned in accordance with Section 13 hereof.

                    “ Restricted Securities ” shall mean the Shares required to bear the first legend set forth in Section 3 hereof.

                    “ Rule 144 ” shall mean Rule 144 promulgated under the Securities Act and any successor provision.

                    “ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

                    “ Selling Expenses ” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the Holders, as well as all fees and expenses incurred by the Holders in connection therewith (including, without limitation, all fees and expenses of their counsel).

                    “ Series B Preferred Stock ” shall have the meaning set forth in the Recitals hereof.

                    “ Shares ” shall mean all shares of Series B Preferred Stock purchased by the Investors pursuant to the Purchase Agreement, all shares of Series B Preferred Stock issued to the Investors as dividends, the Warrants, all shares of Common Stock issuable upon exercise of the Warrants and all shares of Common Stock issued or issuable in respect of the foregoing.

                    “ Shelf Registration ” shall mean a Demand Shelf Registration or a Subsequent Shelf Registration, as applicable.

                    “ Subsequent Holder Notice ” shall have the meaning set forth in Section 5(e) hereof.

                    “ Subsequent Shelf Registration ” shall have the meaning set forth in Section 5(c) hereof.

                    “ TCV VI ” shall have the meaning set forth in the Preamble hereof.

                    “ TCV Member Fund ” shall have the meaning set forth in the Preamble hereof.

                    “ Transfer ” shall mean (i) any offer, pledge, sale, contract to sell, assignment, distribution, encumbrance, sale or purchaser of any option or contract to sell or purchase or loan or other disposition or transfer, (ii) the entering into or establishment of any arrangement constituting a “put equivalent position,” as defined by Rule 16a-1(h) promulgated under the Exchange Act, (iii) the entering into of any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Registrable Securities, whether any such swap or transaction is to be settled by delivery of

3


Common Stock or other securities, in cash or otherwise, or (iv) the announcement of any intent to do any of the foregoing.

                    “ Warrants ” shall have the meaning set forth in the Recitals hereof.

          SECTION 2. Transfer Restrictions . Until the date that is 180 days after the date of this Agreement, the Investors shall not Transfer any Shares without the prior written consent of the Company. In any event, the Shares shall not be Transferred except upon the conditions specified in Section 4, which conditions are intended to ensure compliance with the provisions of the Securities Act. (It is understood and agreed that nothing in this Section 2 will limit any restrictions on Transfer of any Shares to which the Investors have otherwise agreed.)

          SECTION 3. Restrictive Legend . Each certificate representing the Shares (unless otherwise permitted by the provisions of Section 4 below) shall be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws):

 

 

 

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT THEREUNDER OR AN EXEMPTION FROM SUCH REGISTRATION.”

 

                    In addition, for so long as the Shares are subject to the restrictions set forth in the first sentence of Section 2, each certificate representing the Shares shall be stamped or otherwise imprinted with a legend in the following form:

 

 

 

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN AN INVESTOR RIGHTS AGREEMENT. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF SUCH INVESTOR RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING, WITHOUT CHARGE, PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR.”

 

                    In addition, each certificate representing Common Stock issuable upon conversion of the Series B Preferred Stock shall be stamped or otherwise imprinted with a legend in the following form:

 

 

 

 

“THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN THE COMPANY AND THE RIGHTS AGENT THEREUNDER (THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS

 

4


 

 

 

 

AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT ON THE DATE OF MAILING, WITHOUT CHARGE, PROMPTLY AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.”

 

                    Each Investor consents to the Company making a notation on its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in Section 2.

          SECTION 4. Notice of Proposed Transfers . Each Holder shall comply in all respects with the provisions of this Section 4. Prior to any proposed Transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed Transfer, a Holder shall give written notice to the Company of such Holder’s intention to effect such Transfer. Each such notice shall describe the manner and circumstances of the proposed Transfer in sufficient detail, and shall be accompanied by either (a) an opinion of legal counsel reasonably satisfactory to the Company to the effect that the proposed Transfer of the Restricted Securities may be effected without registration under the Securities Act, (b) a “no action” letter from the Commission to the effect that the Transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto or (c) any other evidence reasonably satisfactory to counsel to the Company, whereupon such Investor shall be entitled to Transfer such Restricted Securities in accordance with the terms of the notice delivered by such Investor to the Company. Notwithstanding the foregoing, in the event a Holder shall give the Company a representation letter containing such representations as the Company shall reasonably request, the Company will not require such a notice or legal opinion or “no action” letter or such other evidence (x) in any transaction in compliance with Rule 144, (y) in any transaction in which a Holder that is a corporation distributes Restricted Securities solely to its majority owned subsidiaries or Affiliates for no consideration or (z) in any transaction in which a Holder that is a partnership or limited liability company distributes Restricted Securities solely to its Affiliates (including affiliated fund partnerships), or partners or members of such Holder or its Affiliates for no consideration. Each certificate evidencing the Restricted Securities transferred shall bear the appropriate restrictive legend set forth in Section 3 above, except that such certificate shall not bear the first such restrictive legend if such legend is not required in order to establish compliance with any provisions of the Securities Act and such certificate shall not bear the second such restrictive legend after the date that is 180 days after the date of this Agreement. Upon the request of a Holder of a certificate bearing the first such restrictive legend and, if necessary, the appropriate evidence as required by clause (a), (b) or (c) of the third sentence of this Section 4, the Company shall remove the first such restrictive legend from such certificate if such legend is not required in order to establish compliance with any provisions of the Securities Act. Upon the request of a Holder of a certificate bearing the second

5


such restrictive legend, the Company shall remove the second such restrictive legend from such certificate after the date that is 180 days after the date of this Agreement.

          SECTION 5. Demand Registration .

                    (a) Upon written notice (a “ Demand Notice ”) on one occasion by Holders owning a majority of the then outstanding Registrable Securities on or after the date that is 120 days after the date of this Agreement, the Company shall file a registration statement covering the sale or distribution by the Holders, on a delayed or continuous basis pursuant to Rule 415 of the Securities Act, including without limitation, by way of underwritten offering, block sale or other distribution plan designated by the Holders of a majority of the Registrable Securities from time to time, of all of the Registrable Securities requested to be registered in the Demand Notice on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form and shall provide for the registration of such Registrable Securities for resale by such Holders in accordance with any reasonable method of distribution elected by the Holders) (the “ Demand Shelf Registration ”) within 30 days after the date of the Demand Notice and shall use its reasonable best efforts to cause such Shelf Registration to be declared effective by the Commission as promptly as possible after the filing thereof, but in any event within 90 days after the date such Shelf Registration is filed.

                    (b) Once declared effective, the Company shall, subject to Section 9(j), use its reasonable best efforts to cause the Demand Shelf Registration to be continuously effective until the earlier of (i) such time as there are no longer any Registrable Securities or (ii) such as all Registrable Securities can be resold without restriction as to volume in any and all three month periods under Rule 144 (the “ Effectiveness Period ”).

                    (c) If any Shelf Registration ceases to be effective under the Securities Act for any reason at any time during the Effectiveness Period, the Company shall use its reasonable best efforts to promptly cause such Shelf Registration to again become effective under the Securities Act (including obtaining the prompt withdrawal of any order suspending the effectiveness of such Shelf Registration), and in any event shall use its reasonable best efforts to, within 30 days of such cessation of effectiveness, amend such Shelf Registration in a manner reasonably expected to obtain the withdrawal of any order suspending the effectiveness of such Shelf Registration or (ii) at the option of the Company, file an additional registration statement (a “ Subsequent Shelf Registration ”) for an offering to be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act registering the resale from time to time by Holders thereof of all securities that are Registrable Securities as of the time of such filing. If a Subsequent Shelf Registration is filed, the Company shall use its reasonable best efforts to (x) cause such Subsequent Shelf Registration to become effective under the Securities Act as promptly as is reasonably practicable after such filing, but in no event later than the date that is 90 days after such Subsequent Shelf Registration is filed and (y) keep such Subsequent Shelf Registration (or another Subsequent Shelf Registration) continuously effective until the end of the Effectiveness Period. Any such Subsequent Shelf Registration shall be a Registration Statement on Form S-3 to the extent that the Company is eligible to use such form. Otherwise, such Subsequent Shelf Registration shall be on another appropriate form and shall provide for

6


the registration of such Registrable Securities for resale by such Holders in accordance with any reasonable method of distribution elected by the Holders.

                    (d) The Company shall supplement and amend any Shelf Registration if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration if required by the Securities Act or as reasonably requested by the Holders covered by such Shelf Registration.

                    (e) If a person becomes a Holder of Registrable Securities after the Shelf Registration becomes effective under the Securities Act, the Company shall, as promptly as is reasonably practicable following delivery of written notice to the Company of such person becoming a Holder and requesting for its name to be included as a selling securityholder in the prospectus related to the Shelf Registration (a “ Subsequent Holder Notice ”), and in any event within 15 days after such date:

                              (i) if required and permitted by applicable law, file with the Commission a supplement to the related prospectus or a post-effective amendment to the Shelf Registration and any necessary supplement or amendment to any document incorporated therein by reference and file any other required document with the Commission so that such Holder is named as a selling securityholder in a Shelf Registration and the related prospectus in such a manner as to permit such Holder to deliver a prospectus to purchasers of the Registrable Securities in accordance with applicable law; provided , however , that if a post-effective amendment is required by the rules and regulations of the Commission in order to permit resales by such Holder, the Company shall not be required to file more than one post-effective amendment or a supplement to the related prospectus for such purpose in any 60-day period;

                              (ii) if, pursuant to Section 5(e)(i), the Company shall have filed a post-effective amendment to the Shelf Registration, the Company shall use its reasonable best efforts to cause such post-effective amendment to become effective under the Securities Act as promptly as is reasonably practicable, but in any event by the date that is 60 days after the date such post-effective amendment is required by this Section 5(e) to be filed; and

                              (iii) the Company shall notify such Holder as promptly as is reasonably practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to clause (i) above.

                    (f) If a Demand Notice delivered in accordance with Section 5(a) specifies that the sale of the Registrable Securities is intended to be conducted through an underwritten offering, the Holders of a majority of Registrable Securities included in such Demand Notice shall have the right to select the managing underwriter or underwriters to administer the offering; provided , however, that such managing underwriter or underwriters shall be reasonably acceptable to the Company. The Holders of Registrable Securities included in such Demand Notice and the Company shall enter into an underwriting agreement in such customary form as shall have been negotiated and agreed to by the Company with the underwriter or underwriters selected for such underwriting.

7


                    (g) Notwithstanding any other provision of this Section 5, if the managing underwriter or underwriters of a proposed underwritten offering of the Registrable Securities advise the Board of Directors of the Company that in its or their opinion the number of Registrable Securities requested to be included in such Shelf Registration and all other securities proposed to be sold in the offering contemplated thereby exceeds the number which can be sold in such underwritten offering in light of market conditions, the Registrable Securities and such other securities to be included in such underwritten Shelf Registration shall be allocated, (i) first, up to the total number of securities the Holders have requested to be included in such Shelf Registration ( pro rata based upon the number of securities that each of them shall have requested to be included in such offering), (ii) second, and only if all the Registrable Securities referred to in clause (i) have been included, up to the total number of securities that the holders of piggyback registration rights have requested to be included in such Shelf Registration ( pro rata based upon the number of securities that each of them shall have requested to be included in such Shelf Registration) and (iii) third, and only if all the securities referred to in clause (ii) have been included, the number of securities that the Company and other holders have proposed to include in such Shelf Registration that, in the opinion of the managing underwriter or underwriters can be sold without having such adverse effect. To facilitate the allocation of shares in accordance with the above provisions, the Company or the managing underwriters may round the number of shares allocated to any Holder or other holder to the nearest 100 shares. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter or underwriters. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

                    (h) In the event any Holder requests to participate in a Shelf Registration pursuant to this Section 5 in connection with a distribution of Registrable Securities to its partners or members, the Shelf Registration shall in the event such distribution and subsequent resale is permitted by applicable law provide for resale by such partners or members, if requested by such Holder.

                    (i) The Investors shall have the right to have any registration initiated by them under Section 5(a) terminated or withdrawn prior to the effectiveness thereof; provided , however , that the Investors shall pay all Selling Expenses incurred by them in connection therewith and, unless such termination or withdrawal was effected by the Investors primarily as a result of the Company taking, or failing to take, any action that would be reasonably expected to cause the Investors to effect such termination or withdrawal under this Section 5(i), shall promptly reimburse to the Company any Registration Expenses incurred by the Company in connection therewith. If the Investors cause a registration to be terminated or withdrawn in accordance with this Section 5(i), they shall again be entitled to exercise their demand rights pursuant to Section 5(a).

          SECTION 6. Company Registration .

                    (a) Notice of Registration . If at any time or from time to time until the fourth anniversary of the date of this Agreement, the Company shall determine to file a registration statement for an underwritten public offering of its equity securities (for the avoidance of doubt, the following will not apply to any registration statement filed on a Form S-4, Form S-8 or any successor forms), the Company will:

8


                              (i) promptly give to each Holder written notice thereof; and

                              (ii) subject to Section 6(b) below, include in such registration (and any related qualification under blue sky laws or other compliance) all the Registrable Securities specified in a written request or requests made within 7 days after receipt of such written notice from the Company by any Holder.

                    (b) Underwriting . The right of any Holder to registration pursuant to this Section 6 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein. Each Holder proposing to distribute its securities through such underwriting shall (together with the Company and the other holders distributing their securities through such underwriting) enter into and perform such Holder’s obligations under an underwriting agreement with the managing underwriter selected for such underwriting by the Company or by the stockholders of the Company who have the right to select the underwriters (such underwriting agreement to be in the form negotiated by the Company or such stockholders, as the case may be). Notwithstanding any other provision of this Section 6, if the managing underwriter or underwriters of a proposed underwritten offering with respect to which Holders of Registrable Securities have exercised their piggyback registration rights advise the Board of Directors of the Company that in its or their opinion the number of Registrable Securities requested to be included in the offering thereby and all other securities proposed to be sold in the offering exceeds the number which can be sold in such underwritten offering in light of market conditions the Registrable Securities and such other securities to be included in such underwritten offering shall be allocated, (i) first, (x) in the event such offering was initiated by the Company, up to the total number of securities that the Company has requested to be included in such registration and (y) in the event such offering was initiated by the holders of securities (other than the Holders) who have exercised their demand registration rights, up to the total number of securities that such holders of such securities have requested to be included in such offering ( pro rata based upon the number of securities that each of them shall have requested to be included in such offering), (ii) second, and only if all the securities referred to in clause (i) have been included, up to the total number of securities that the Holders that have requested to be included in such offering ( pro rata based upon the number of securities that each of them shall have requested to be included in such offering) and (iii) third, and only if all the securities referred to in clause (ii) have been included, all other securities proposed to be included in such offering that, in the opinion of the managing underwriter or underwriters can be sold without having such adverse effect. To facilitate the allocation of shares in accordance with the above provisions, the Company or the managing underwriters may round the number of shares allocated to any Holder or other holder to the nearest 100 shares. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter or underwriters. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

                    (c) Right to Terminate Registration . The Company or the holders of securities who have caused a registration statement to be filed as contemplated by this Section 6, as the case may be, shall have the right to have any registration initiated by it or them under this Section 6 terminated or withdrawn prior to the effectiveness thereof, whether or not any Holder

9


has elected to include securities in such registration; provided , however , that such Holder shall again be entitled to exercise its demand rights pursuant to this Section 6.

          SECTION 7. Limitations on Subsequent Registration Rights . From and after the date hereof, the Company shall not enter into any agreement granting any holder or prospective holder of any securities of the Company registration rights with respect to such securities that conflict with the rights granted to the Holders herein, without the consent of Holders of at least a majority of the Registrable Securities.

          SECTION 8. Expenses of Registration . Except as provided in Section 5(i), all Registration Expenses incurred in connection with any registration pursuant to Sections 5 and 6 shall be borne by the Company. All Selling Expenses relating to securities registered on behalf of the Holders shall be borne by the Holders of the registered securities included in such registration pro rata on the basis of the number of shares so registered, except that the Company will pay the reasonable fees and expenses (not to exceed $25,000 in the aggregate) of one counsel to the Holders in connection with the exercise by the Holders of the demand registration rights pursuant to Section 5.

          SECTION 9. Registration Procedures . In the case of each registration effected by the Company pursuant to Sections 5 and 6, the Company will keep each Holder participating in such registration reasonably informed as to the status thereof and, at its expense, the Company will:

                    (a) prepare and file with the Commission a registration statement with respect to such securities in accordance with the applicable provisions of this Agreement;

                    (b) prepare and file with the Commission such amendments, including post-effective amendments, and supplements to such registration statement and the prospectus used in connection with such registration statements as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement and as may be necessary to keep the registration statement continuously effective for the period set forth in this Agreement;

                    (c) furnish to the Holders participating in such registration and to their legal counsel copies of the registration statement proposed to be filed, and provide such Holders and their legal counsel the reasonable opportunity to review and comment on such registration statement;

                    (d) furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities;

                    (e) use reasonable best efforts to notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the Company’s knowledge of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be

10


stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing, and, subject to Section 9(j), at the request of any such Holder, prepare promptly and furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchaser of such shares, such prospectus shall not include 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 not misleading or incomplete in the light of the circumstances then existing;

                    (f) use reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

                    (g) make available for inspection by any Holder participating in such registration, any underwriter participating in any disposition pursuant to such registration, and any attorney or accountant retained by any such Holder or underwriter, all relevant financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers and directors to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such registration statement; provided, however , that such Holder or underwriter shall agree to hold in confidence and trust all information so provided pursuant to a confidentiality agreement in form and substance customary under the circumstances (such confidentiality agreement to include a provision that such Holder or underwriter, as the case may be, shall be responsible for any unauthorized disclosure by the attorneys or accountants of such Holder or underwriter unless such Holder did not use commercially reasonable efforts to cause such underwriter to execute such a confidentiality agreement);

                    (h) in the event that the Registrable Securities are being offered in an underwritten public offering, enter into any perform its obligations under an underwriting agreement in accordance with the applicable provisions of this Agreement and participate and cooperate with the underwriters in connection with any road show or marketing activities customary for an underwritten public offering;

                    (i) use reasonable best efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the legal counsel representing the Company (which may be in-house counsel, if acceptable to the managing underwriters selected for such underwritten offering) for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters; and

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                    (j) notwithstanding any other provision of this Agreement, if the Board of Directors of the Company has determined in good faith that the disclosure necessary for continued use of the prospectus and registration statement by the Holders could be materially detrimental to the Company, the Company shall have the right not to file or not to cause the effectiveness of any registration covering any Registrable Securities and to suspend the use of the prospectus and the registration statement covering any Registrable Security for such period of time as its use would be materially detrimental to the Company by delivering written notice of such suspension to all Holders listed on the Company’s records; provided, however , that in any 12-month period the Company may exercise the right to such suspension not more than twice and for not more than an aggregate of 120 days. From and after the date of a notice of suspension under this Section 9(j), each Holder agrees not to use the prospectus or registration statement until the earlier of (1) notice from the Company that such suspension has been lifted or (2) the day following the 120 th day of suspension within any 12-month period.

          SECTION 10. Indemnification .

                    (a) The Company will, with respect to any Registrable Securities as to which registration or qualification or compliance under applicable “blue sky” laws has been effected pursuant to this Agreement, indemnify each Holder, each Holder’s current and former officers, directors, partners and members, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, and each underwriter thereof, if any, and each person who controls any such underwriter within the meaning of Section 15 of the Securities Act (collectively, the “ Company Indemnified Parties ”), against all expenses, claims, losses, damages and liabilities, joint or several, (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, preliminary prospectus, offering circular or other document, or any amendment or supplement thereto incident to any such registration, qualification or compliance or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act, Exchange Act or state securities laws applicable to the Company in connection with any such registration, and the Company will reimburse each of the Company Indemnified Parties for any reasonable legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, as such expenses are incurred. The indemnity agreement contained in this section shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable to a Holder in any such case for any such loss, claim, damage, liability or action (1) to the extent that it arises out of or is based upon a violation or alleged violation of any state or federal law (including any claim arising out of or based on any untrue statement or alleged untrue statement or omission or alleged omission in the registration statement or prospectus) which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by or on behalf of such Holder or (2) in the case of a sale directly by a Holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such Holder engaging in a distribution solely on behalf of such Holder), such untrue statement or alleged untrue statement or omission or alleged omission was corrected in a final or

12


amended prospectus, and such Holder failed to deliver a copy of the final or amended prospectus at or prior to the confirmation of the sale of the Registrable Securities to the person asserting any such loss, claim, damage or liability in any case in which such delivery is required by the Securities Act.

                    (b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration or qualification or compliance under applicable “blue sky” laws is being effected, indemnify, severally and not jointly, the Company, each of its directors, officers, partners and members, each underwriter, if any, of the Company’s securities covered by such a registration, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other Holder and each of such Holder’s officers, directors, partners and members and each person controlling such Holder within the meaning of Section 15 of the Securities Act (collectively, the “ Holder Indemnified Parties ”), against all expenses, claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, preliminary prospectus, offering circular or other document, or any amendment or supplement thereto incident to any such registration, qualification or compliance or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by such Holder of any rule or regulation promulgated under the Securities Act, Exchange Act or state securities law applicable to such Holder and will reimburse each of the Holder Indemnified Parties for any reasonable legal or any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, as such expenses are incurred, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein, provided, however , that in no event shall any indemnity under this subparagraph 10(b) payable by a Holder exceed the amount by which the net proceeds actually received by such Holder from the sale of Registrable Securities included in such registration exceeds the amount of any other losses, expenses, settlements, damages, claims and liabilities that such Holder has been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The indemnity agreement contained in this section shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the applicable Holder (which consent shall not be unreasonably withheld or delayed), nor shall the Holder be liable for any such loss, claim, damage, liability or action where such untrue statement or alleged untrue statement or omission or alleged omission was corrected in a final or amended prospectus, and the Company or the underwriters failed to deliver a copy of the final or amended prospectus at or prior to the confirmation of the sale of the Registrable Securities to the person asserting any such loss, claim, damage or liability in any case in which such delivery is required by the Securities Act

                    (c) Each party entitled to indemnification under this Section 10 (the “ Indemnified Party ”) shall give notice to the party required to provide indemnification (the “ Indemnifying Party ”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the

13


defense of any such claim or any litigation resulting therefrom, provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld or delayed; it is understood and agreed that Hughes Hubbard & Reed LLP is reasonably acceptable to the Holders), and the Indemnified Party may participate in such defense at such party’s expense; provided, further, however , that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to conflicting interests between such Indemnified Party and any other party represented by such counsel in such proceeding. The failure of any Indemnified Party to give notice as provided herein shall relieve the Indemnifying Party of its obligations under this Section 10 if, but only to the extent that, the failure to give such notice is materially prejudicial or harmful to an Indemnifying Party’s ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (which consent shall not be unreasonably withheld or delayed), 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 to such claim or litigation. The indemnity agreements contained in this Section 10 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

                    (d) If the indemnification provided for in this Section 10 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party, other than pursuant to its terms, with respect to any claim, loss, damage, liability or action referred to therein, then, subject to the limitations contained in Section 10(e), the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such claim, loss, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnified Party on the other in connection with the actions that resulted in such claims, loss, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact related to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 10(d) were based solely upon the number of entities from whom contribution was requested or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 10(d). In no event shall any Holder’s contribution obligation under this Section 10(d) exceed the amount of the net proceeds actually received by such Holder from the sale of Registrable Securities included in such registration.

                    (e) No person guilty of fraudulent misrepresentation (within the meaning of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

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          SECTION 11. Information by Holders, Etc . The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders and their Affiliates, the Registrable Securities held by them and the distribution proposed by such Holder or Holders and their Affiliates as the Company may reasonably request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement. It is understood and agreed that the obligations of the Company under Section 5 and Section 6 are conditioned on the timely provisions of the foregoing information by such Holder or Holders and, without limitation of the foregoing, will be conditioned on compliance by such Holder or Holders with the following:

                    (a) such Holder or Holders will, and will cause their respective Affiliates to, cooperate with the Company in connection with the preparation of the applicable registration statement, and for so long as the Company is obligated to keep such registration statement effective, such Holder or Holders will and will cause their respective Affiliates to, provide to the Company, in writing and in a timely manner, for use in such registration statement (and expressly identified in writing as such), all information regarding themselves and their respective Affiliates and such other information as may be required by applicable law to enable the Company to prepare such registration statement and the related prospectus covering the applicable Registrable Securities owned by such Holder or Holders and to maintain the currency and effectiveness thereof;

                    (b) during such time as such Holder or Holders and their respective Affiliates may be engaged in a distribution of the Registrable Securities, such Holder or Holders will, and they will cause their respective Affiliates to, comply with all laws applicable to such distribution, including Regulation M promulgated under the Exchange Act, and, to the extent required by such laws, will, and will cause their respective Affiliates to, among other things: (i) not engage in any stabilization activity in connection with the securities of the Company in contravention of such laws; (ii) distribute the Registrable Securities acquired by it solely in the manner described in the applicable registration statement; and (iii) if required by applicable law, cause to be furnished to each agent or broker-dealer to or through whom such Registrable Securities may be offered, or to the offeree if an offer is made directly by such Holder or Holders or their respective Affiliates, such copies of the applicable prospectus (as amended and supplemented to such date) and documents incorporated by reference therein as may be required by such agent, broker-dealer or offeree, provided, however , that the Company shall have provided such Holder or Holders with an adequate number of copies thereof;

                    (c) such Holder or Holders shall, and they shall cause their respective Affiliates to, permit the Company and its representatives and agents to examine such documents and records and will supply in a timely manner any information as they may be reasonably request to provide in connection with the offering or other distribution of Registrable Securities by such Holder or Holders; and

                    (d) on receipt of written notice from the Company of the happening of any of the events specified in Section 9(j), or that requires the suspension by such Holder or Holders and their respective Affiliates of the distribution of any of the Registrable Securities owned by such Holder or Holders, then such Holders shall, and they shall cause their respective Affiliates to, cease offering or distributing the Registrable Securities owned by such Holder or Holders

15


until the offering and distribution of the Registrable Securities owned by such Holder or Holders may recommence in accordance with the terms hereof and applicable law.

          SECTION 12. Rule 144 Reporting . With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, the Company agrees that, for so long as a Holder owns Registrable Securities, the Company will use its reasonable best efforts to:

                    (a) make and keep public information available, as those terms are understood and defined in Rule 144;

                    (b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

                    (c) so long as a Holder owns any Restricted Securities, to furnish to the Holder forthwith upon written request a written statement by the Company as to its compliance with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration.

          SECTION 13. Transfer of Registration Rights . The rights to cause the Company to register securities granted to a Holder under this Agreement may be assigned to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by such party; provided, however , that (a) such transfer may otherwise be effected in accordance with applicable securities laws, (b) prior written notice of such assignment is given to the Company, (c) such transferee or assignee is (i) a general or limited partner or member of such Holder, (ii) a member of a limited liability company that is a general or limited partner or member of such Holder, (iii) any retired partner of any of the foregoing and (iv) any spouse, ancestor, lineal descendant or sibling of any of the foregoing who acquires Registrable Securities by gift, will or intestate succession, and (d) such transferee or assignee agrees in writing to be bound by, and subject to, this Agreement as a Holder pursuant to a written instrument in form and substance reasonably acceptable to the Company.

          SECTION 14. Termination of Rights . The rights of any particular Holder to cause the Company to register securities under Sections 5 and 6 shall terminate with respect to such Holder upon the date upon which all of such Holder’s shares are no longer Registrable Securities.

          SECTION 15. Miscellaneous .

                    15.1. Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and will become effective when one or more counterparts have been signed by a party and delivered to the other parties. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 15.1, provided that receipt of copies of such counterparts is confirmed.

16


                    15.2. Governing Law .

                    (a) This Agreement and any disputes arising hereunder or controversies related hereto shall be governed by and construed in accordance with the internal laws, and not the laws of conflicts, of the State of New York that apply to contracts made and performed entirely within such state.

                    (b) Any action, suit or other proceeding with respect to this Agreement and any matter arising out of or in connection with this Agreement shall be brought exclusively in the state courts sitting in the State of Delaware or federal courts sitting in the State of Delaware. By execution and delivery of this Agreement, each party hereto hereby accepts for itself and in respect of such person’s property, generally and unconditionally, the sole and exclusive jurisdiction of the aforesaid courts and appellate courts thereof. Each party hereto irrevocably consents to service of process in any action, suit or other proceeding in any of the aforementioned courts by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized overnight delivery service, to such party at such party’s address referred to in Section 15.5. Each party hereto hereby irrevocably and unconditionally waives any objection which such person may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to above and hereby further irrevocably waives and agrees, to the extent permitted by applicable law, not to plead or claim in any such court that any such action, suit or other proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of any party hereto to serve process in any other manner permitted by law. Notwithstanding anything in this Section 15.2(b) to the contrary, each party agrees that a final judgment in any such action, suit or other proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

                    (c) To the extent that any party hereto has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself, or to such person’s property, each such party hereto hereby irrevocably waives such immunity in respect of such person’s obligations with respect to this Agreement.

                    (d) Waiver of Jury Trial . EACH PARTY HERETO, FOR ITSELF AND ITS AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES PURSUANT TO THIS AGREEMENT OR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

                    15.3. Entire Agreement; No Third Party Beneficiary . This Agreement and the Related Agreements (as defined in the Purchase Agreement) contain the entire agreement by and among the parties with respect to the subject matter hereof and all prior negotiations, writings and understandings relating to the subject matter of this Agreement, including the letter of intent dated October 9, 2007 between the Company and TCV VI and the Confidentiality Letter dated

17


July 11, 2007 between the Company and TCMI, Inc. are merged in and are superseded and canceled by, this Agreement and the Related Agreements. Except as provided in Section 10, this Agreement is not intended to confer upon any person not a party hereto (or their successors and permitted assigns) any rights or remedies hereunder.

                    15.4. Expenses . Except as provided in Sections 5(i) and 8, all fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including accounting and legal fees shall be paid by the party incurring such expenses.

                    15.5. Notices . All notices and other communications hereunder will be in writing and given by certified or registered mail, return receipt requested, nationally recognized overnight delivery service, such as Federal Express or facsimile (or like transmission) with confirmation of transmission by the transmitting equipment or personal delivery against receipt to the party to whom it is given, in each case, at such party’s address or facsimile number set forth below or such other address or facsimile number as such party may hereafter specify by notice to the other parties hereto given in accordance herewith. Any such notice or other communication shall be deemed to have been given as of the date so personally delivered or transmitted by facsimile or like transmission, on the next business day when sent by overnight delivery services or five days after the date so mailed if by certified or registered mail.

 

 

 

If to the Company, to:

 

 

 

TheStreet.com, Inc.

 

14 Wall Street, 14th Floor

 

New York, NY 10005

 

Fax No.: (212) 321-5013

 

Attention: Chief Executive Officer

 

 

 

with a copy to:

 

 

 

Hughes Hubbard & Reed LLP

 

One Battery Park Plaza

 

New York, NY 10004

 

Fax No.: (212) 422-4726

 

Attention: Kenneth A. Lefkowitz

 

 

 

If to an Investor, to:

 

 

 

528 Ramona Street

 

Palo Alto, CA 94301

 

Fax No.: (650) 614-8222

 

Attention: Carla S. Newell

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with a copy to:

 

 

 

Latham & Watkins LLP

 

140 Scott Drive

 

Menlo Park, CA 94025

 

Fax No.: (650) 463-2600

 

Attention: Peter Kerman

                    15.6. Successors and Assigns . This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Any purported assignment or delegation in violation of this Agreement shall be null and void ab initio .

                    15.7. Headings . The Section, Article and other headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement.

                    15.8. Amendments and Waivers . This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the Company and the holders of a majority of the Registrable Securities outstanding at the time of such amendment. Any party hereto may, only by an instrument in writing, waive compliance by any other party or parties hereto with any term or provision hereof on the part of such other party or parties hereto to be performed or complied with. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor will any single or partial exercise of any right or power, or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The waiver by any party hereto of a breach of any term or provision hereof shall not be construed as a waiver of any subsequent breach. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.

                    15.9. Interpretation; Absence of Presumption .

                    (a) For the purposes hereof: (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and paragraph references are to the Sections and paragraphs in this Agreement unless otherwise specified; (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified; and (iv) the word “or” shall not be exclusive.

                    (b) With regard to each and every term and condition of this Agreement and any and all agreements and instruments subject to the terms hereof, the parties hereto understand and agree that the same have or has been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition

19


or any agreement or instrument subject hereto, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement or any agreement or instrument subject hereto.

                    15.10. Severability . Any provision hereof that is held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, shall be ineffective only to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof, provided , however , that the parties will attempt in good faith to reform this Agreement in a manner consistent with the intent of any such ineffective provision for the purpose of carrying out such intent.

                    15.11. Rights of Holders . Each party to this Agreement shall have the absolute right to exercise or refrain from exercising any right or rights that such party may have by reason of this Agreement, including, without limitation, the right to consent to the waiver or modification of any obligation under this Agreement, and such party shall not incur any liability to any other party or other Holder of any securities of the Company as a result of exercising or refraining from exercising any such right or rights.

[The next page is the signature page]

20


          IN WITNESS WHEREOF, the parties have executed this Investor Rights Agreement as of the date first above written.

 

 

 

 

THE STREET.COM, INC.

 

 

 

 

By:

 

 

 


 

 

Name: Thomas J. Clarke, Jr.

 

 

Title:   Chairman of the Board
            and Chief Executive Officer

 

 

 

 

 

 

TCV VI, L.P.

 

By: Technology Crossover Management VI, L.L.C.

 

Its:      General Partner

 

 

 

 

By:

 

 

 


 

 

Name: Robert Bensky

 

 

Title:   Attorney-in-Fact

 

 

 

 

TCV MEMBER FUND, L.P.

 

By: Technology Crossover Management VI, L.L.C.

 

Its: General Partner

 

 

 

 

By:

 

 

 


 

 

Name: Robert Bensky

 

 

Title:   Attorney-in-Fact



The Street.com, Inc.

INVESTOR RIGHTS AGREEMENT

November 15, 2007


Exhibit 4.2

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT THEREUNDER OR AN EXEMPTION FROM SUCH REGISTRATION.

THESTREET . COM, INC .

WARRANT

TO PURCHASE COMMON STOCK

 

 

Certificate Number: TCV-1

Dated: November 15, 2007

                    For value received, TCV VI, L.P. (the “ Investor ”) is entitled to purchase from TheStreet.com, Inc., a Delaware corporation (together with its successors and assigns, the “ Company ”), at any time and from time to time after the date set forth above and prior to 5:00 p.m., New York time, on the Expiration Date (as defined in Section 2.1 below), at the purchase price of $15.69 per share (as such price may be adjusted pursuant to Section 3, the “ Exercise Price ”), an aggregate of One Million One Hundred Forty Seven Thousand Eight Hundred Sixteen (1,147,816) shares (as such number of shares may be adjusted pursuant to Section 3 below, the “ Warrant Shares ”) of the Company’s common stock, par value $0.01 per share (“ Common Stock ”). Certain terms used but not defined elsewhere herein have the meanings assigned to them in Section 16 below.

                    This Warrant (“ Warrant ”) is being issued to the holder in accordance with the Securities Purchase Agreement of even date herewith (the “ Purchase Agreement ”) among the Company, the Investor and TCV VI, L.P.

          Section 1. Warrant Holder; Transferability .

                    1.1 Warrant Holder . The Company and the Secretary of the Company shall be entitled to treat the Investor or any TCV Affiliate to which this Warrant has, in whole or in part, been transferred in accordance with Section 1.2 below, as the owner in fact for all purposes of this Warrant (the Investor or such transferee also being herein referred to as the “ holder ” of this Warrant) and shall not be bound to recognize any equitable or other claim to or interest in this Warrant on the part of any other person.

                    1.2 Transfer Restrictions . This Warrant shall not be transferable except that the holder may transfer this Warrant, in whole or in part, to any TCV Affiliate upon providing a Notice of Transfer attached hereto duly completed and executed by the holder and the transferee.


          Section 2. Term and Exercise of Warrant; Acceleration and Termination .

                    2.1 Term of Warrant . Subject to the last sentence of Section 3.1(c) below, the holder shall have the right, at any time before 5:00 p.m., New York time, on the fifth anniversary of the date hereof, or, if such date is not a Business Day, the next Business Day (the “ Expiration Date ”) to exercise this Warrant in accordance with the terms hereof.

                    2.2 Exercise of Warrant .

                              (a) Cash Exercise . This Warrant may be exercised, in whole or in part, upon surrender to the Company, in care of the Secretary of the Company, together with the duly completed and signed form of Notice of Exercise (designating thereon the holder’s election to cash exercise) in the form attached hereto (the “ Exercise Notice ”), and payment to the Company of the Exercise Price for the number of Warrant Shares in respect of which this Warrant is then being exercised. Payment of the aggregate Exercise Price upon exercise pursuant to this Section 2.2(a) shall be made by delivery of a good check to the principal executive offices of the Company or, at the holder’s discretion, by wire transfer of immediately available funds in accordance with written wire transfer instructions to be provided by the Company at the holder’s request.

                              (b) Net-Issue Exercise . In lieu of exercising this Warrant pursuant to Section 2.2(a), the holder may elect to exercise this Warrant, in whole or in part, on a net-issue basis by electing to surrender a number of Warrant Shares that are equal in value to the exercise price for the number of Warrant Shares in respect of which this Warrant is then being exercised at the time of any such net-issue exercise, by surrender of this Warrant, together with the duly completed and signed Notice of Exercise in the form attached hereto (designating the holder’s election to exercise this Warrant on a net-issue basis), to the Company, in care of the Secretary of the Company, at the principal executive offices of the Company. The Exercise Notice shall be properly marked to indicate (i) the number of Warrant Shares to be delivered to the holder in connection with such net-issue exercise, (ii) the number of Warrant Shares in respect of which this Warrant is being surrendered in payment of the Exercise Price for the number of Warrant Shares in respect of which this Warrant is then being exercised in connection with such net-issue exercise, calculated as of the Determination Date (as defined below) and (iii) the number of Warrant Shares which remain subject to this Warrant after such net-issue exercise, if any (each as determined in accordance with this Section 2.2(b)). In the event that the holder elects to exercise this Warrant in whole or in part on a net-issue basis pursuant to this Section 2.2(b), the Company will issue to the holder the number of Warrant Shares determined in accordance with the following formula:

X = Y (A-B) / A

where:

 

 

 

 

X ” is the number of Warrant Shares to be issued to the holder in connection with such net-issue exercise;

-2-



 

 

 

 

Y ” is the number of Warrant Shares to be exercised, up to the number of Warrant Shares subject to this Warrant;

 

 

 

 

A ” is the Fair Market Value of one share of Common Stock; and

 

 

 

 

B ” is the Exercise Price in effect as of the date of such net-issue exercise (as adjusted pursuant to Section 3.1 below).

For purposes of this Section 2.2(b), the “ Fair Market Value ” of one share of Common Stock will have the following meanings: (i) if the Common Stock is listed for trading on a national securities exchange or admitted for trading on a national market or other quotation system, then the Fair Market Value of Common Stock will be deemed to be the average of the Closing Sales Price for the ten (10) Trading Days immediately preceding, but not including the Determination Date or (ii) if the Common Stock is not listed for trading on a national securities exchange or admitted for trading on a national market or other quotation system, then the Fair Market Value of Common Stock will be deemed to be the fair market value of Common Stock as determined in good faith from time to time by the Company’s board of directors or a committee thereof (the “ Board of Directors ”) as of the Determination Date, and receipt and acknowledgment of this Warrant by the holder will be deemed to be an acknowledgment and acceptance of any such determination by the Board of Directors as the final and binding determination of such Fair Market Value for purposes of Section 2.2(b) of this Warrant. The “ Determination Date ” of Fair Market Value will be the date indicated on the Exercise Notice; provided, however , that if the Company does not receive the Exercise Notice within five (5) business days of the date indicated thereon, the Determination Date will be the date the Company receives such Exercise Notice.

                              (c) Fractional Interests . No fractional shares shall be issued upon the exercise of this Warrant, but in lieu thereof the Company shall pay therefor in cash an amount equal to the product obtained by multiplying the Closing Sales Price of the Common Stock (or if the Common Stock is not listed for trading on a national securities exchange or admitted for trading on a national market or other quotation system, then the Fair Market Value of the Common Stock as determined by the Board of Directors in the manner set forth in clause (ii) of the penultimate sentence of Section 2.2(b)) on the Trading Day immediately preceding the date of exercise of this Warrant times such fraction (rounded to the nearest cent).

                              (d) Deemed Issuance . Subject to Section 2.2(c) hereof, upon such surrender of this Warrant, delivery of the Exercise Notice and, in the case of a cash exercise pursuant to Section 2.2(a), payment of the Exercise Price, the Company shall, subject to the last sentence of this Section 2.2(d), issue and cause to be delivered with all reasonable dispatch to the holder a certificate or certificates for the number of full Warrant Shares so purchased upon the exercise of this Warrant, together with a check or cash in respect of any fractional shares otherwise deliverable upon such exercise, as provided in Section 2.2(c). Such certificate or certificates shall be deemed to have been issued as of the date of the surrender of this Warrant and payment of the Exercise Price (payment of such exercise price shall be deemed satisfied by use of the net-issue exercise procedures in Section 2.2(b)). Notwithstanding the foregoing, the Warrant Shares purchased upon exercise of this Warrant and the check or cash in respect of any fractional share shall not be issued until, and a holder shall not be deemed to have become a holder of record of any Warrant Shares until, HSR Clearance with respect to such exercise has

-3-


occurred. The holder shall use his, her or its reasonable best efforts to obtain HSR Clearance, if required, and shall keep the Company informed of the status thereof.

                              (e) Warrant Exercisable in Whole or in Part . The rights of purchase represented by this Warrant shall be exercisable, at the election of the holder, either in full or from time to time in part. If this Warrant is exercised in respect of less than all of the Warrant Shares purchasable on such exercise at any time prior to the Expiration Date, a new Warrant of like tenor exercisable for the remaining Warrant Shares may be issued and delivered to the holder by the Company. This Warrant or any part thereof surrendered in the exercise of the rights thereby evidenced shall thereupon be cancelled by the Company and retired.

          Section 3. Adjustment of Exercise Price and Number of Warrant Shares .

                    3.1 Mechanical Adjustments . The number of Warrant Shares purchasable upon the exercise of this Warrant and the Exercise Price payable in connection therewith shall be subject to adjustment from time to time as follows:

                              (a) Stock Splits, Combinations and Dividends. If the Company shall at any time pay a dividend on the Common Stock in shares of the Common Stock (including, if applicable, in shares of Common Stock held by the Company in treasury or by a subsidiary), subdivide or split its outstanding shares of Common Stock into a larger number of shares or combine or consolidate its outstanding shares of Common Stock into a smaller number of shares, then, in each such case, the number of Warrant Shares thereafter issuable upon exercise of this Warrant shall be adjusted so that this Warrant shall thereafter be exercisable for the number of Warrant Shares equal to the number of shares of Common Stock which the holder would have held after the occurrence of any of the events described above had this Warrant been exercised in full immediately prior to the occurrence of such event. An adjustment made pursuant to this Section 3.1(a) shall become effective retroactively to the related record date in the case of a dividend and shall become effective on the related effective date in the case of a subdivision, split, combination or consolidation.

                              (b) Reclassifications . In the event of a reclassification of the Common Stock other than by stock split, subdivision, consolidation or combination thereof, the Company will execute a new Warrant, the terms of which provide that the holder of this Warrant will have the right to exercise the rights represented by such new Warrant, and procure upon such exercise and payment of the same aggregate Exercise Price then in effect, in lieu of the shares of Common Stock previously issuable upon exercise of the rights represented by this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification by a holder of an equivalent number of shares of Common Stock at the time of such reclassification. Such new Warrant will provide for adjustments which are as equivalent as practicable to the adjust­ments provided for in this Section 3.1 The provisions of this Section 3.1(b) will apply with equal force and effect to all successive reclassifi­cations of the Common Stock.

                              (c) Merger or Consolidation . If at any time there will be effected a merger or consolidation of the Company with or into another corporation in such a way that holders of Common Stock will be entitled to receive stock, other securities, money or other

-4-


property with respect to or in exchange for their shares of Common Stock, then, as a part of such merger or consolidation, in lieu of Common Stock the holder will thereafter be entitled to receive upon exercise of this Warrant the number of shares of stock, other securities, money or other property resulting from such merger or consolidation to which such holder would have been entitled in such merger or consolidation if this Warrant had been exercised immediately prior to such transaction. In any such case, appropriate adjustment (as determined in good faith by the Board of Directors) will be made in the application of the provisions of this Warrant with respect to the rights and interests of the holder after the merger or consolidation to the end that the provisions of this Warrant (including adjustments of the Exercise Price and number of shares of Common Stock purchasable pursuant to the terms and conditions of this Warrant) will be applicable after the transaction, as near as reasonably may be, in relation to any shares, other securities, money or other property deliverable after that transaction upon the exercise of this Warrant. If, after taking into account and as a result of the provisions of this Section 3.1(c), this Warrant is only exercisable for cash, this Warrant shall terminate and be of no further force or effect.

                              (d) Whenever the number of Warrant Shares issuable upon the exercise of this Warrant is adjusted or readjusted pursuant to Section 3.1, the Exercise Price payable upon exercise of this Warrant shall be adjusted or readjusted by multiplying such Exercise Price in effect immediately prior to such adjustment by a fraction, the numerator of which shall be the number of Warrant Shares purchasable upon the exercise of this Warrant immediately preceding such adjustment, and the denominator of which shall be the number of Warrant Shares so purchasable immediately thereafter. All calculations under this Section 3 shall be made to the nearest one-thousandth of a share of Common Stock.

                              (e) In the event that at any time, as a result of an adjustment made pursuant to this Section 3.1, the holder shall become entitled to receive any shares of the Company other than shares of Common Stock or shares of any other person, thereafter the number of such other shares so receivable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Section 3.1, and the provisions of Sections 3.2, 3.3, 3.4 and 3.5, inclusive, with respect to the Warrant Shares, shall apply on like terms to any such other shares.

                    3.2 Time of Adjustments . Except as otherwise expressly provided in Section 3.1, each adjustment required by Section 3.1 shall be effective as and when the event requiring such adjustment occurs.

                    3.3 Notice of Adjustment . Whenever the number of Warrant Shares purchasable upon the exercise of this Warrant or the Exercise Price is adjusted as herein provided, the Company shall as soon as practicable mail by first class mail, postage prepaid, to the holder, a certificate of an officer of the Company setting forth the number of Warrant Shares (or other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

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                    3.4 No Adjustment for Cash Dividends . Except as provided in Section 3.1, no adjustment shall be made during the term of this Warrant or upon the exercise of this Warrant in respect of any dividends declared or paid on the Common Stock.

                    3.5 Statement on Warrant . Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon the exercise of this Warrant, any Warrant theretofore or thereafter issued may continue to express the same Exercise Price and number and kind of shares issuable upon exercise of this Warrant as are stated in the initial Warrant.

          Section 4. Taxes . The issuance of certificates for Warrant Shares of Common Stock upon the exercise of the rights represented by this Warrant will be made without charge to the holder of this Warrant for any issuance tax in respect thereof; provided, however , that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the holder of this Warrant.

          Section 5. Reservation of Warrant Shares . There have been reserved, and the Company shall at all times during the term of this Warrant reserve and keep available, out of its authorized and unissued Common Stock, solely for the purpose of effecting the exercise of this Warrant, the number of shares of Common Stock that shall from time to time be sufficient to provide for the exercise of the rights of purchase represented by the outstanding Warrant. All shares of Common Stock or other securities issued upon exercise of this Warrant will, upon issuance in accordance with the terms hereof, be validly issued, fully paid and nonassessable.

          Section 6. Restrictions on Warrant Shares . The holder acknowledges and agrees that the shares of Common Stock or other securities issued upon exercise of this Warrant may not be sold, and that the holder will not directly or indirectly offer or sell any of such Common Stock or right to acquire Common Stock, other than in compliance with the Securities Act and all other applicable state or foreign securities laws. Each certificate representing the Warrant Shares shall be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws):

 

 

 

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT THEREUNDER OR AN EXEMPTION FROM SUCH REGISTRATION.”

 

          Section 7. Mutilated or Missing Warrant . If this Warrant shall be mutilated, lost, stolen or destroyed and the Company shall receive evidence thereof and (except with respect to mutilated Warrants returned to the Company) indemnity reasonably satisfactory to it, then the Company shall issue and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of and substitution for this Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing an equivalent right or interest. An applicant for such a

-6-


substitute Warrant shall comply with such other reasonable requirements and pay such reasonable charges as the Company may prescribe, including, without limitation, the execution and delivery of a lost Warrant affidavit and indemnification agreement in a form reasonably satisfactory to the Company and its counsel.

          Section 8. No Rights as Stockholder . Except as provided in the second sentence of Section 2.2(d) hereof, nothing contained in this Warrant shall be construed as conferring upon the holder the right to vote or to receive dividends or to consent or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or any other matter, or any rights whatsoever as stockholders of the Company.

          Section 9. Notice to Holder . At any time prior to the Expiration Date and prior to its exercise, if any of the following events shall occur:

 

 

 

 

(i)

the Company shall declare any dividend or other distribution on the Common Stock (other than (x) a stock split by way of a stock dividend and (y) the Company’s regular quarterly dividend); or

 

 

 

 

(ii)

the Company shall take a record of the holders of Common Stock for the purpose of entitling them to subscribe for or purchase shares of Common Stock;

then, to the extent practicable and subject to any confidentiality restrictions, the Company shall give notice in writing of such event to the holder of this Warrant at least seven (7) Business Days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend or other distribution or subscription rights. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice.

          Section 10. Notices . All notices and other communications required or permitted to be given with respect to this Warrant shall be in writing signed by the sender, and shall be considered given: (w) on the date delivered, if personally delivered during normal business hours, or on the next Business Day if delivered after normal business hours of the recipient; (x) on the date sent by telecopier with automatic confirmation of the transmitting machine showing the proper number of pages were transmitted without error, if sent during normal business hours of the recipient, or on the next Business Day if sent after normal business hours; (y) on the Business Day after being sent by Federal Express or another recognized overnight delivery service in time for and specifying next day or next business day delivery; or (z) five (5) Business Days after mailing, if mailed by United States postage-paid certified or registered mail, return receipt requested, in each instance referred to in the preceding clauses (y) and (z) only if all delivery charges are pre-paid. Each such notice or other communication shall be given to the holder at the address in a Warrant register to be created and maintained by the Company and to the Company at its principal executive offices.

          Section 11. No Waivers; Remedies . Prior to the Expiration Date, no failure or delay by the holder in exercising any right, power or privilege with respect to this Warrant shall operate as a waiver of the right, power or privilege. A single or partial exercise of any right, power or privilege shall not preclude any other or further exercise of the right, power or privilege

-7-


or the exercise of any other right, power or privilege. The rights and remedies provided in this Warrant shall be cumulative and not exclusive of any rights or remedies provided by law.

          Section 12. Amendments . No amendment, modification, termination or waiver of any provision of this Warrant, and no consent to any departure from any provision of this Warrant, shall be effective unless it shall be in writing and signed and delivered by the Company and the holder, and then it shall be effective only in the specific instance and for the specific purpose for which it is given.

          Section 13. Governing Law . This Warrant shall be governed by and construed in accordance with the laws of the state of Delaware that apply to contracts made and performed entirely within such state.

          Section 14. Severability of Provisions . Any provision of this Warrant that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or unenforceability without invalidating the remaining provisions of this Warrant or affecting the validity or enforceability of the provision in any other jurisdiction.

          Section 15. Headings and References . Headings in this Warrant are included for the convenience of reference only and do not constitute a part of this Warrant for any other purpose. References to sections in this Warrant are references to the sections of this Warrant, unless the context shall require otherwise.

          Section 16. Definitions . For purposes of this Warrant, the following terms have the following meanings:

                              (a) “ Business Day ” means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close.

                              (b) “ Closing Sales Price ” means the closing sales price of the Common Stock, as quoted on the principal securities exchange on which the Common Stock is listed for trading, or if not so listed, the average of the closing bid and asked prices for Common Stock quoted on the national market or other quotation system on which Common Stock is admitted for trading, each as published in The Wall Street Journal (New York edition) or, if such prices are not published in The Wall Street Journal (New York edition), as reported by the applicable authority or association governing trading of the Common Stock.

                              (c) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

                              (d) “ HSR Clearance ” means the expiration or termination or any waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended applicable to the exercise of this Warrant and the issuance of the Warrant Shares.

                              (e) “ person ” means a “person” within the meaning of Section 3(a)(9) of the Exchange Act.

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                              (f) “ TCV Affiliate ” means (i) any general or limited partner or member of a holder, (ii) a member of a limited liability company that is a general or limited partner or member of a holder, (iii) any retired partner of any of the foregoing and (iv) any spouse, ancestor, lineal descendant or sibling of any of the foregoing who acquires the all or part of this Warrant by gift, will or intestate succession.

                              (g) “ Trading Day ” means, as applied to any class of stock, any day on which NASDAQ or, if such stock is not listed on NASDAQ, the exchange or market which is the primary market for the stock, is open for the trading of securities generally and with respect to which information regarding the sale of securities included therein, or with respect to which sales information is reported, is generally available.

[The next page is the signature page]

-9-


                     The Company has executed and delivered this Warrant as of the date set forth above.

 

 

 

 

 

THESTREET.COM, INC.

 

 

By:

 

 

 


 

 

Name:

Thomas J. Clarke, Jr.

 

 

Title:

Chairman of the Board

 

 

 

and Chief Executive Officer

 

 

 

 

Accepted:

 

 

 

 

 

 

 

TCV VI, L.P.

 

 

 

 

 

 

 

By: Technology Crossover Management VI,
L.L.C., its General Partner

 

 

 

 

 

 

 


 

 

 

By: Robert Bensky

 

 

 

Title: Attorney-in-Fact

 

 

 

S-1


NOTICE OF EXERCISE
(To Be Completed Only Upon Exercise)

 

 

TO:

TheStreet.com, Inc.

 

14 Wall Street, 14 th Floor

 

New York, New York 10005

 

Attention: Chief Executive Officer

1. The undersigned hereby irrevocably elects to purchase ______________________ shares of Common Stock of TheStreet.com, Inc. pursuant to the terms of this Warrant.

          2. If Cash Exercise, check this box ¨ : The undersigned tenders herewith full payment of the aggregate cash exercise price equal to $_____________ U.S. Dollars for such shares in accordance with the terms of this Warrant.

          3. If Net-Issue Exercise, check this box ¨ : The undersigned exercises this Warrant on a net-issue basis pursuant to the terms set forth in this Warrant. Net-Issue Information:

          (a) Number of Shares of Common Stock to be Delivered:  ________________________________________________

          (b) Number of Shares of Common Stock Surrendered: ___________________________________________________

          (c) Number of Shares Remaining Subject to Warrant, if any: ______________________________________________

          4. In accordance with Section 2.2(d) of this Warrant, by checking this box ¨ , the holder hereby exercises its right to delay the issuance of Warrant Shares until the Company receives written notice from the holder that such holder has obtained HSR Clearance and provides the Company with evidence thereof that is reasonably satisfactory to the Company.

          5. The undersigned acknowledges that if the undersigned is deemed to be an affiliate of the Company under the federal securities laws, the undersigned may be subject to certain restrictions on, or subject to certain procedural requirements in connection with, any transfer of the shares of Common Stock issued upon exercise of this Warrant.

          6. The undersigned hereby represents and warrants to the Company as follows: (i) the undersigned is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act; (ii) the undersigned has been advised by the Company that such Common Stock has not been registered under the Securities Act; (iii) the undersigned acknowledges that he, she or it has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of securities; (iv) the undersigned is acquiring such Common Stock for his, her or its own account and not with a view to, or for sale in connection with, any distribution thereof in violation of federal or state securities laws; (v) by reason of his, her or its business or financial experience, the undersigned has the capacity to protect his, her or its own interest in connection with the issuance of such Common Stock; (vi) the undersigned recognizes that investing in the Company involves substantial risks, and has taken full cognizance of and understands all of the risk factors related to the acquisition of such Common Stock; (vii) the undersigned has carefully considered and has, to the extent he, she or it believes such discussion necessary, discussed with such transferee’s professional legal, tax and financial advisers the suitability of an investment in the


Company, and such transferee has determined that the acquisition of such Common Stock is a suitable investment for the undersigned; (viii) the undersigned has not relied on the Company for any tax or legal advice in connection with the exercise of this Warrant; and (ix) in evaluating the suitability of an investment in the Company, such transferee has not relied upon any representations or other information from the Company or any of its agents.

 

 

 

 

Dated:  

 

By:  

 

 


 


(Signature must conform in all respects to name of the holder as set forth on the face of this Warrant)


NOTICE OF TRANSFER
(To Be Completed Only Upon Transfer)

 

 

TO:

TheStreet.com, Inc.

 

14 Wall Street, 14 th Floor

 

New York, New York 10005

 

Attention: Chief Executive Officer

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ______________________________ the right represented by this Warrant, to purchase ______________________ shares of Common Stock of The Street.com, Inc.

Please issue a certificate or certificates representing said Warrant in such name or names as specified below:

 


(Name(s) and Address(es))

 


 


The undersigned transferor requests the Company, by written order to exchange or register the transfer of an Warrant or Warrants, and, to the extent the transfer contemplated by this notice is not for the entire number of shares represented by this Warrant, to issue a replacement Warrant Certificate in the name of the undersigned representing the balance of such shares.

The undersigned transferee hereby represents, warrants, covenants and agrees with the Company as follows: (i) Such transferee is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act; (ii) such transferee has been advised by the Company that this Warrant has not been registered under the Securities Act; (iii) such transferee acknowledges that he, she or it has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of securities; (iv) such transferee is acquiring this Warrant for his, her or its own account and not with a view to, or for sale in connection with, any distribution thereof in violation of federal or state securities laws; (v) by reason of his, her or its business or financial experience, such transferee has the capacity to protect his, her or its own interest in connection with the issuance of this Warrant; (vi) such transferee recognizes that investing in the Company involves substantial risks, and has taken full cognizance of and understands all of the risk factors related to the acquisition of this Warrant; (vii) such transferee has carefully considered and has, to the extent he, she or it believes such discussion necessary, discussed with such transferee’s professional legal, tax and financial advisers the suitability of an investment in the Company, and such transferee has determined that the acquisition of this Warrant is a suitable investment for such transferee; (viii) such transferee has not


relied on the Company for any tax or legal advice in connection with the purchase of this Warrant; (ix) in evaluating the suitability of an investment in the Company, such transferee has not relied upon any representations or other information from the Company or any of its agents; and (x) for so long as such transferee owns this Warrant or any Warrant Shares, he, she or it shall not, and shall not permit any of its controlled affiliates to, engage in any Short Sales (as defined in the Purchase Agreement).

 

 

 

 

Dated:  

 

By:  

 

 


 


(Signature must conform in all respects to name of the holder as set forth on the face of this Warrant)


Exhibit 4.3

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT THEREUNDER OR AN EXEMPTION FROM SUCH REGISTRATION.

THESTREET . COM, INC .

WARRANT

TO PURCHASE COMMON STOCK

 

 

 

Certificate Number: TCV-2

 

Dated: November 15, 2007

                    For value received, TCV Member Fund, L.P. (the “ Investor ”) is entitled to purchase from TheStreet.com, Inc., a Delaware corporation (together with its successors and assigns, the “ Company ”), at any time and from time to time after the date set forth above and prior to 5:00 p.m., New York time, on the Expiration Date (as defined in Section 2.1 below), at the purchase price of $15.69 per share (as such price may be adjusted pursuant to Section 3, the “ Exercise Price ”), an aggregate of Nine Thousand Two Hundred Sixty Seven (9,267) shares (as such number of shares may be adjusted pursuant to Section 3 below, the “ Warrant Shares ”) of the Company’s common stock, par value $0.01 per share (“ Common Stock ”). Certain terms used but not defined elsewhere herein have the meanings assigned to them in Section 16 below.

                    This Warrant (“ Warrant ”) is being issued to the holder in accordance with the Securities Purchase Agreement of even date herewith (the “ Purchase Agreement ”) among the Company, the Investor and TCV Member Fund, L.P.

           Section 1. Warrant Holder; Transferability .

                     1.1 Warrant Holder . The Company and the Secretary of the Company shall be entitled to treat the Investor or any TCV Affiliate to which this Warrant has, in whole or in part, been transferred in accordance with Section 1.2 below, as the owner in fact for all purposes of this Warrant (the Investor or such transferee also being herein referred to as the “ holder ” of this Warrant) and shall not be bound to recognize any equitable or other claim to or interest in this Warrant on the part of any other person.

                     1.2 Transfer Restrictions . This Warrant shall not be transferable except that the holder may transfer this Warrant, in whole or in part, to any TCV Affiliate upon providing a Notice of Transfer attached hereto duly completed and executed by the holder and the transferee.

           Section 2. Term and Exercise of Warrant; Acceleration and Termination .


                    2.1 Term of Warrant . Subject to the last sentence of Section 3.1(c) below, the holder shall have the right, at any time before 5:00 p.m., New York time, on the fifth anniversary of the date hereof, or, if such date is not a Business Day, the next Business Day (the “ Expiration Date ”) to exercise this Warrant in accordance with the terms hereof.

                     2.2 Exercise of Warrant .

                              (a) Cash Exercise . This Warrant may be exercised, in whole or in part, upon surrender to the Company, in care of the Secretary of the Company, together with the duly completed and signed form of Notice of Exercise (designating thereon the holder’s election to cash exercise) in the form attached hereto (the “ Exercise Notice ”), and payment to the Company of the Exercise Price for the number of Warrant Shares in respect of which this Warrant is then being exercised. Payment of the aggregate Exercise Price upon exercise pursuant to this Section 2.2(a) shall be made by delivery of a good check to the principal executive offices of the Company or, at the holder’s discretion, by wire transfer of immediately available funds in accordance with written wire transfer instructions to be provided by the Company at the holder’s request.

                              (b) Net-Issue Exercise . In lieu of exercising this Warrant pursuant to Section 2.2(a), the holder may elect to exercise this Warrant, in whole or in part, on a net-issue basis by electing to surrender a number of Warrant Shares that are equal in value to the exercise price for the number of Warrant Shares in respect of which this Warrant is then being exercised at the time of any such net-issue exercise, by surrender of this Warrant, together with the duly completed and signed Notice of Exercise in the form attached hereto (designating the holder’s election to exercise this Warrant on a net-issue basis), to the Company, in care of the Secretary of the Company, at the principal executive offices of the Company. The Exercise Notice shall be properly marked to indicate (i) the number of Warrant Shares to be delivered to the holder in connection with such net-issue exercise, (ii) the number of Warrant Shares in respect of which this Warrant is being surrendered in payment of the Exercise Price for the number of Warrant Shares in respect of which this Warrant is then being exercised in connection with such net-issue exercise, calculated as of the Determination Date (as defined below) and (iii) the number of Warrant Shares which remain subject to this Warrant after such net-issue exercise, if any (each as determined in accordance with this Section 2.2(b)). In the event that the holder elects to exercise this Warrant in whole or in part on a net-issue basis pursuant to this Section 2.2(b), the Company will issue to the holder the number of Warrant Shares determined in accordance with the following formula:

X = Y (A-B) / A

where:

 

 

 

 

X ” is the number of Warrant Shares to be issued to the holder in connection with such net-issue exercise;

 

 

 

 

Y ” is the number of Warrant Shares to be exercised, up to the number of Warrant Shares subject to this Warrant;

-2-


 

 

 

 

A ” is the Fair Market Value of one share of Common Stock; and

 

 

 

 

B ” is the Exercise Price in effect as of the date of such net-issue exercise (as adjusted pursuant to Section 3.1 below).

For purposes of this Section 2.2(b), the “ Fair Market Value ” of one share of Common Stock will have the following meanings: (i) if the Common Stock is listed for trading on a national securities exchange or admitted for trading on a national market or other quotation system, then the Fair Market Value of Common Stock will be deemed to be the average of the Closing Sales Price for the ten (10) Trading Days immediately preceding, but not including the Determination Date or (ii) if the Common Stock is not listed for trading on a national securities exchange or admitted for trading on a national market or other quotation system, then the Fair Market Value of Common Stock will be deemed to be the fair market value of Common Stock as determined in good faith from time to time by the Company’s board of directors or a committee thereof (the “ Board of Directors ”) as of the Determination Date, and receipt and acknowledgment of this Warrant by the holder will be deemed to be an acknowledgment and acceptance of any such determination by the Board of Directors as the final and binding determination of such Fair Market Value for purposes of Section 2.2(b) of this Warrant. The “ Determination Date ” of Fair Market Value will be the date indicated on the Exercise Notice; provided, however , that if the Company does not receive the Exercise Notice within five (5) business days of the date indicated thereon, the Determination Date will be the date the Company receives such Exercise Notice.

                              (c) Fractional Interests . No fractional shares shall be issued upon the exercise of this Warrant, but in lieu thereof the Company shall pay therefor in cash an amount equal to the product obtained by multiplying the Closing Sales Price of the Common Stock (or if the Common Stock is not listed for trading on a national securities exchange or admitted for trading on a national market or other quotation system, then the Fair Market Value of the Common Stock as determined by the Board of Directors in the manner set forth in clause (ii) of the penultimate sentence of Section 2.2(b)) on the Trading Day immediately preceding the date of exercise of this Warrant times such fraction (rounded to the nearest cent).

                              (d) Deemed Issuance . Subject to Section 2.2(c) hereof, upon such surrender of this Warrant, delivery of the Exercise Notice and, in the case of a cash exercise pursuant to Section 2.2(a), payment of the Exercise Price, the Company shall, subject to the last sentence of this Section 2.2(d), issue and cause to be delivered with all reasonable dispatch to the holder a certificate or certificates for the number of full Warrant Shares so purchased upon the exercise of this Warrant, together with a check or cash in respect of any fractional shares otherwise deliverable upon such exercise, as provided in Section 2.2(c). Such certificate or certificates shall be deemed to have been issued as of the date of the surrender of this Warrant and payment of the Exercise Price (payment of such exercise price shall be deemed satisfied by use of the net-issue exercise procedures in Section 2.2(b)). Notwithstanding the foregoing, the Warrant Shares purchased upon exercise of this Warrant and the check or cash in respect of any fractional share shall not be issued until, and a holder shall not be deemed to have become a holder of record of any Warrant Shares until, HSR Clearance with respect to such exercise has occurred. The holder shall use his, her or its reasonable best efforts to obtain HSR Clearance, if required, and shall keep the Company informed of the status thereof.

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                              (e) Warrant Exercisable in Whole or in Part . The rights of purchase represented by this Warrant shall be exercisable, at the election of the holder, either in full or from time to time in part. If this Warrant is exercised in respect of less than all of the Warrant Shares purchasable on such exercise at any time prior to the Expiration Date, a new Warrant of like tenor exercisable for the remaining Warrant Shares may be issued and delivered to the holder by the Company. This Warrant or any part thereof surrendered in the exercise of the rights thereby evidenced shall thereupon be cancelled by the Company and retired.

           Section 3. Adjustment of Exercise Price and Number of Warrant Shares .

                     3.1 Mechanical Adjustments . The number of Warrant Shares purchasable upon the exercise of this Warrant and the Exercise Price payable in connection therewith shall be subject to adjustment from time to time as follows:

                              (a) Stock Splits, Combinations and Dividends. If the Company shall at any time pay a dividend on the Common Stock in shares of the Common Stock (including, if applicable, in shares of Common Stock held by the Company in treasury or by a subsidiary), subdivide or split its outstanding shares of Common Stock into a larger number of shares or combine or consolidate its outstanding shares of Common Stock into a smaller number of shares, then, in each such case, the number of Warrant Shares thereafter issuable upon exercise of this Warrant shall be adjusted so that this Warrant shall thereafter be exercisable for the number of Warrant Shares equal to the number of shares of Common Stock which the holder would have held after the occurrence of any of the events described above had this Warrant been exercised in full immediately prior to the occurrence of such event. An adjustment made pursuant to this Section 3.1(a) shall become effective retroactively to the related record date in the case of a dividend and shall become effective on the related effective date in the case of a subdivision, split, combination or consolidation.

                              (b) Reclassifications . In the event of a reclassification of the Common Stock other than by stock split, subdivision, consolidation or combination thereof, the Company will execute a new Warrant, the terms of which provide that the holder of this Warrant will have the right to exercise the rights represented by such new Warrant, and procure upon such exercise and payment of the same aggregate Exercise Price then in effect, in lieu of the shares of Common Stock previously issuable upon exercise of the rights represented by this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification by a holder of an equivalent number of shares of Common Stock at the time of such reclassification. Such new Warrant will provide for adjustments which are as equivalent as practicable to the adjust­ments provided for in this Section 3.1 The provisions of this Section 3.1(b) will apply with equal force and effect to all successive reclassifi­cations of the Common Stock.

                              (c) Merger or Consolidation . If at any time there will be effected a merger or consolidation of the Company with or into another corporation in such a way that holders of Common Stock will be entitled to receive stock, other securities, money or other property with respect to or in exchange for their shares of Common Stock, then, as a part of such merger or consolidation, in lieu of Common Stock the holder will thereafter be entitled to receive upon exercise of this Warrant the number of shares of stock, other securities, money or other

-4-


property resulting from such merger or consolidation to which such holder would have been entitled in such merger or consolidation if this Warrant had been exercised immediately prior to such transaction. In any such case, appropriate adjustment (as determined in good faith by the Board of Directors) will be made in the application of the provisions of this Warrant with respect to the rights and interests of the holder after the merger or consolidation to the end that the provisions of this Warrant (including adjustments of the Exercise Price and number of shares of Common Stock purchasable pursuant to the terms and conditions of this Warrant) will be applicable after the transaction, as near as reasonably may be, in relation to any shares, other securities, money or other property deliverable after that transaction upon the exercise of this Warrant. If, after taking into account and as a result of the provisions of this Section 3.1(c), this Warrant is only exercisable for cash, this Warrant shall terminate and be of no further force or effect.

                              (d) Whenever the number of Warrant Shares issuable upon the exercise of this Warrant is adjusted or readjusted pursuant to Section 3.1, the Exercise Price payable upon exercise of this Warrant shall be adjusted or readjusted by multiplying such Exercise Price in effect immediately prior to such adjustment by a fraction, the numerator of which shall be the number of Warrant Shares purchasable upon the exercise of this Warrant immediately preceding such adjustment, and the denominator of which shall be the number of Warrant Shares so purchasable immediately thereafter. All calculations under this Section 3 shall be made to the nearest one-thousandth of a share of Common Stock.

                              (e) In the event that at any time, as a result of an adjustment made pursuant to this Section 3.1, the holder shall become entitled to receive any shares of the Company other than shares of Common Stock or shares of any other person, thereafter the number of such other shares so receivable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Section 3.1, and the provisions of Sections 3.2, 3.3, 3.4 and 3.5, inclusive, with respect to the Warrant Shares, shall apply on like terms to any such other shares.

                     3.2 Time of Adjustments . Except as otherwise expressly provided in Section 3.1, each adjustment required by Section 3.1 shall be effective as and when the event requiring such adjustment occurs.

                     3.3 Notice of Adjustment . Whenever the number of Warrant Shares purchasable upon the exercise of this Warrant or the Exercise Price is adjusted as herein provided, the Company shall as soon as practicable mail by first class mail, postage prepaid, to the holder, a certificate of an officer of the Company setting forth the number of Warrant Shares (or other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

                     3.4 No Adjustment for Cash Dividends . Except as provided in Section 3.1, no adjustment shall be made during the term of this Warrant or upon the exercise of this Warrant in respect of any dividends declared or paid on the Common Stock.

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                     3.5 Statement on Warrant . Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon the exercise of this Warrant, any Warrant theretofore or thereafter issued may continue to express the same Exercise Price and number and kind of shares issuable upon exercise of this Warrant as are stated in the initial Warrant.

          Section 4. Taxes . The issuance of certificates for Warrant Shares of Common Stock upon the exercise of the rights represented by this Warrant will be made without charge to the holder of this Warrant for any issuance tax in respect thereof; provided, however , that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the holder of this Warrant.

          Section 5. Reservation of Warrant Shares . There have been reserved, and the Company shall at all times during the term of this Warrant reserve and keep available, out of its authorized and unissued Common Stock, solely for the purpose of effecting the exercise of this Warrant, the number of shares of Common Stock that shall from time to time be sufficient to provide for the exercise of the rights of purchase represented by the outstanding Warrant. All shares of Common Stock or other securities issued upon exercise of this Warrant will, upon issuance in accordance with the terms hereof, be validly issued, fully paid and nonassessable.

          Section 6. Restrictions on Warrant Shares . The holder acknowledges and agrees that the shares of Common Stock or other securities issued upon exercise of this Warrant may not be sold, and that the holder will not directly or indirectly offer or sell any of such Common Stock or right to acquire Common Stock, other than in compliance with the Securities Act and all other applicable state or foreign securities laws. Each certificate representing the Warrant Shares shall be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws):

 

 

 

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT THEREUNDER OR AN EXEMPTION FROM SUCH REGISTRATION.”

 

          Section 7. Mutilated or Missing Warrant . If this Warrant shall be mutilated, lost, stolen or destroyed and the Company shall receive evidence thereof and (except with respect to mutilated Warrants returned to the Company) indemnity reasonably satisfactory to it, then the Company shall issue and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of and substitution for this Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing an equivalent right or interest. An applicant for such a substitute Warrant shall comply with such other reasonable requirements and pay such reasonable charges as the Company may prescribe, including, without limitation, the execution and delivery of a lost Warrant affidavit and indemnification agreement in a form reasonably satisfactory to the Company and its counsel.

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          Section 8. No Rights as Stockholder . Except as provided in the second sentence of Section 2.2(d) hereof, nothing contained in this Warrant shall be construed as conferring upon the holder the right to vote or to receive dividends or to consent or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the Company or any other matter, or any rights whatsoever as stockholders of the Company.

          Section 9. Notice to Holder . At any time prior to the Expiration Date and prior to its exercise, if any of the following events shall occur:

 

 

 

 

(i)

the Company shall declare any dividend or other distribution on the Common Stock (other than (x) a stock split by way of a stock dividend and (y) the Company’s regular quarterly dividend); or

 

 

 

 

(ii)

the Company shall take a record of the holders of Common Stock for the purpose of entitling them to subscribe for or purchase shares of Common Stock;

then, to the extent practicable and subject to any confidentiality restrictions, the Company shall give notice in writing of such event to the holder of this Warrant at least seven (7) Business Days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend or other distribution or subscription rights. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the corporate action required to be specified in such notice.

           Section 10. Notices . All notices and other communications required or permitted to be given with respect to this Warrant shall be in writing signed by the sender, and shall be considered given: (w) on the date delivered, if personally delivered during normal business hours, or on the next Business Day if delivered after normal business hours of the recipient; (x) on the date sent by telecopier with automatic confirmation of the transmitting machine showing the proper number of pages were transmitted without error, if sent during normal business hours of the recipient, or on the next Business Day if sent after normal business hours; (y) on the Business Day after being sent by Federal Express or another recognized overnight delivery service in time for and specifying next day or next business day delivery; or (z) five (5) Business Days after mailing, if mailed by United States postage-paid certified or registered mail, return receipt requested, in each instance referred to in the preceding clauses (y) and (z) only if all delivery charges are pre-paid. Each such notice or other communication shall be given to the holder at the address in a Warrant register to be created and maintained by the Company and to the Company at its principal executive offices.

          Section 11. No Waivers; Remedies . Prior to the Expiration Date, no failure or delay by the holder in exercising any right, power or privilege with respect to this Warrant shall operate as a waiver of the right, power or privilege. A single or partial exercise of any right, power or privilege shall not preclude any other or further exercise of the right, power or privilege or the exercise of any other right, power or privilege. The rights and remedies provided in this Warrant shall be cumulative and not exclusive of any rights or remedies provided by law.

           Section 12. Amendments . No amendment, modification, termination or waiver of any provision of this Warrant, and no consent to any departure from any provision of this

-7-


Warrant, shall be effective unless it shall be in writing and signed and delivered by the Company and the holder, and then it shall be effective only in the specific instance and for the specific purpose for which it is given.

           Section 13. Governing Law . This Warrant shall be governed by and construed in accordance with the laws of the state of Delaware that apply to contracts made and performed entirely within such state.

           Section 14. Severability of Provisions . Any provision of this Warrant that is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or unenforceability without invalidating the remaining provisions of this Warrant or affecting the validity or enforceability of the provision in any other jurisdiction.

           Section 15. Headings and References . Headings in this Warrant are included for the convenience of reference only and do not constitute a part of this Warrant for any other purpose. References to sections in this Warrant are references to the sections of this Warrant, unless the context shall require otherwise.

          Section 16. Definitions . For purposes of this Warrant, the following terms have the following meanings:

                              (a) “ Business Day ” means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close.

                              (b) “ Closing Sales Price ” means the closing sales price of the Common Stock, as quoted on the principal securities exchange on which the Common Stock is listed for trading, or if not so listed, the average of the closing bid and asked prices for Common Stock quoted on the national market or other quotation system on which Common Stock is admitted for trading, each as published in The Wall Street Journal (New York edition) or, if such prices are not published in The Wall Street Journal (New York edition), as reported by the applicable authority or association governing trading of the Common Stock.

                              (c) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

                               (d) “ HSR Clearance ” means the expiration or termination or any waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended applicable to the exercise of this Warrant and the issuance of the Warrant Shares.

                              (e) “ person ” means a “person” within the meaning of Section 3(a)(9) of the Exchange Act.

                              (f) “ TCV Affiliate ” means (i) any general or limited partner or member of a holder, (ii) a member of a limited liability company that is a general or limited partner or member of a holder, (iii) any retired partner of any of the foregoing and (iv) any

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spouse, ancestor, lineal descendant or sibling of any of the foregoing who acquires the all or part of this Warrant by gift, will or intestate succession.

                              (g) “ Trading Day ” means, as applied to any class of stock, any day on which NASDAQ or, if such stock is not listed on NASDAQ, the exchange or market which is the primary market for the stock, is open for the trading of securities generally and with respect to which information regarding the sale of securities included therein, or with respect to which sales information is reported, is generally available.

[The next page is the signature page]

-9-


          The Company has executed and delivered this Warrant as of the date set forth above.

 

 

 

 

 

THESTREET.COM, INC.

 

 

 

 

 

By:

 

 


 

 

Name:

Thomas J. Clarke, Jr.

 

 

Title:

Chairman of the Board
and Chief Executive Officer

 

 

 

 

Accepted:

 

 

 

 

 

 

 

TCV Member Fund, L.P.

 

 

 

 

 

 

 

By: Technology Crossover Management VI,
L.L.C., its General Partner

 

 

 

 

 

 

 


 

 

 

By: Robert Bensky

 

 

 

Title: Attorney-in-Fact

 

 

 

S-1


NOTICE OF EXERCISE
(To Be Completed Only Upon Exercise)

 

 

TO:

TheStreet.com, Inc.

 

14 Wall Street, 14 th Floor

 

New York, New York 10005

 

Attention: Chief Executive Officer


 

 

 

1. The undersigned hereby irrevocably elects to purchase ______________________ shares of Common Stock of The Street. com, Inc. pursuant to the terms of this Warrant.

          2. If Cash Exercise , check this box ¨ : The undersigned tenders herewith full payment of the aggregate cash exercise price equal to $_____________ U.S. Dollars for such shares in accordance with the terms of this Warrant.

          3. If Net-Issue Exercise , check this box ¨ : The undersigned exercises this Warrant on a net-issue basis pursuant to the terms set forth in this Warrant. Net-Issue Information:

          (a) Number of Shares of Common Stock to be Delivered: ______________________________________

          (b) Number of Shares of Common Stock Surrendered: _________________________________________

          (c) Number of Shares Remaining Subject to Warrant, if any: ____________________________________

          4. In accordance with Section 2.2(d) of this Warrant, by checking this box ¨ , the holder hereby exercises its right to delay the issuance of Warrant Shares until the Company receives written notice from the holder that such holder has obtained HSR Clearance and provides the Company with evidence thereof that is reasonably satisfactory to the Company.

          5. The undersigned acknowledges that if the undersigned is deemed to be an affiliate of the Company under the federal securities laws, the undersigned may be subject to certain restrictions on, or subject to certain procedural requirements in connection with, any transfer of the shares of Common Stock issued upon exercise of this Warrant.

          6. The undersigned hereby represents and warrants to the Company as follows: (i) the undersigned is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act; (ii) the undersigned has been advised by the Company that such Common Stock has not been registered under the Securities Act; (iii) the undersigned acknowledges that he, she or it has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of securities; (iv) the undersigned is acquiring such Common Stock for his, her or its own account and not with a view to, or for sale in connection with, any distribution thereof in violation of federal or state securities laws; (v) by reason of his, her or its business or financial experience, the undersigned has the capacity to protect his, her or its own interest in connection with the issuance of such Common Stock; (vi) the undersigned recognizes that investing in the Company involves substantial risks, and has taken full cognizance of and understands all of the risk factors related to the acquisition of such Common Stock; (vii) the undersigned has carefully considered and has, to the extent he, she or it believes such discussion necessary, discussed with such transferee’s professional legal, tax and financial advisers the suitability of an investment in the


Company, and such transferee has determined that the acquisition of such Common Stock is a suitable investment for the undersigned; (viii) the undersigned has not relied on the Company for any tax or legal advice in connection with the exercise of this Warrant; and (ix) in evaluating the suitability of an investment in the Company, such transferee has not relied upon any representations or other information from the Company or any of its agents.

 

 

 

 

 

Dated:

 

 

By:

 

 


 

 


(Signature must conform in all respects to name of the holder as set forth on the face of this Warrant)


NOTICE OF TRANSFER
(To Be Completed Only Upon Transfer)

 

 

TO:

TheStreet.com, Inc.

 

14 Wall Street, 14 th Floor

 

New York, New York 10005

 

Attention: Chief Executive Officer

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ______________________________ the right represented by this Warrant, to purchase ______________________ shares of Common Stock of The Street.com, Inc.

Please issue a certificate or certificates representing said Warrant in such name or names as specified below:

 


(Name(s) and Address(es))


 


The undersigned transferor requests the Company, by written order to exchange or register the transfer of an Warrant or Warrants, and, to the extent the transfer contemplated by this notice is not for the entire number of shares represented by this Warrant, to issue a replacement Warrant Certificate in the name of the undersigned representing the balance of such shares.

The undersigned transferee hereby represents, warrants, covenants and agrees with the Company as follows: (i) Such transferee is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act; (ii) such transferee has been advised by the Company that this Warrant has not been registered under the Securities Act; (iii) such transferee acknowledges that he, she or it has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of securities; (iv) such transferee is acquiring this Warrant for his, her or its own account and not with a view to, or for sale in connection with, any distribution thereof in violation of federal or state securities laws; (v) by reason of his, her or its business or financial experience, such transferee has the capacity to protect his, her or its own interest in connection with the issuance of this Warrant; (vi) such transferee recognizes that investing in the Company involves substantial risks, and has taken full cognizance of and understands all of the risk factors related to the acquisition of this Warrant; (vii) such transferee has carefully considered and has, to the extent he, she or it believes such discussion necessary, discussed with such transferee’s professional legal, tax and financial advisers the suitability of an investment in the Company, and such transferee has determined that the acquisition of this Warrant is a suitable investment for such transferee; (viii) such transferee has not


relied on the Company for any tax or legal advice in connection with the purchase of this Warrant; (ix) in evaluating the suitability of an investment in the Company, such transferee has not relied upon any representations or other information from the Company or any of its agents; and (x) for so long as such transferee owns this Warrant or any Warrant Shares, he, she or it shall not, and shall not permit any of its controlled affiliates to, engage in any Short Sales (as defined in the Purchase Agreement).

 

 

 

 

 

Dated:

 

 

By:

 

 


 

 


(Signature must conform in all respects to name of the holder as set forth on the face of this Warrant)


Exhibit 4.4

AMENDMENT NO. 2 TO RIGHTS AGREEMENT

                    Amendment No. 2, dated as of November 15, 2007 (this “ Amendment ”), between THESTREET.COM, INC., a Delaware corporation (the “ Company ”), and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York banking corporation, as Rights Agent (the “ Rights Agent ”).

                    WHEREAS, the Company and the Rights Agent entered into a Rights Agreement, dated as of May 14, 1999;

                    WHEREAS, the Company and the Rights Agent entered into Amendment No. 1 to Rights Agreement, dated as of August 7, 2000 (as so amended, the “Rights Agreement”);

                    WHEREAS, there is not as of the date hereof any Acquiring Person (as defined in the Rights Agreement); and

                    WHEREAS, the Company desires to further amend the Rights Agreement in accordance with Section 27 of the Rights Agreement.

                    NOW, THEREFORE, in consideration of the premises and mutual agreements set forth in the Rights Agreement and this Amendment, the parties hereby agree as follows:

                    Section 1. Definition of “Exempt Person.” Section 1(kk) of the Rights Agreement is amended and restated to read in its entirety as follows:

 

 

 

“(kk) “Exempt Person” shall mean: (i) Go2Net, Inc., a Delaware corporation, and Vulcan Ventures, Inc., a Washington corporation, and their respective Affiliates and Associates until such time as (x) any one of them becomes the Beneficial Owner of any shares of Common Stock other than shares of Common Stock issued pursuant to the Securities Purchase Agreement or (y) any one of them is in breach of Section 9.11 of the Securities Purchase Agreement which breach is not waived by the Company in accordance with the requirements of the Securities Purchase Agreement, in each case as determined by the Board of Directors of the Company in its sole and absolute discretion; and (ii) TCV VI, L.P., a Delaware limited partnership, (“TCV VI”) and TCV Member Fund, L.P., a Delaware limited partnership (“TCV Member Fund”), and their respective Affiliates and Associates until such time as any one of them becomes the Beneficial Owner of any shares of the Company’s capital stock (A) other than shares of Series B Preferred Stock or Warrants issued pursuant to the TCV Purchase Agreement or shares of Common Stock received upon conversion of shares of Series B Preferred Stock or upon exercise of the Warrants, or (B) that would result in a breach of Section 4.2(a) of the TCV Purchase Agreement.”

                    Section 2. Definition of “Series B Preferred Stock” and “TCV Purchase Agreement.” Section 1 of the Rights Agreement is amended to insert after subsection (ll) thereof the following:


2

 

 

 

“(mm) “Series B Preferred Stock” shall mean the Company’s Series B Convertible Preferred Stock, par value $0.01 per share.

 

 

 

“(nn) “TCV Purchase Agreement” shall mean that certain Securities Purchase Agreement dated as of November 15, 2007 among the Company, TCV VI, L.P., a Delaware limited partnership, and TCV Member Fund, L.P., a Delaware limited partnership.

 

 

 

“(oo) “Warrants” shall mean the warrants to purchase Common Stock issued pursuant to the TCV Purchase Agreement.”

                    Section 3. Rights Agreement as Amended . The term “Agreement” as used in the Rights Agreement shall be deemed to refer to the Rights Agreement as amended hereby. The foregoing amendments shall be effective as of the date hereof and, except as set forth herein, the Rights Agreement shall remain in full force and effect and shall be otherwise unaffected hereby.

                    Section 4. Counterparts . This Amendment may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed an original, but all such counterparts shall together constitute but one and the same instrument.

                    Section 5. Governing Law . This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State.

                    Section 6. Descriptive Headings . Descriptive headings of the several Sections of the Amendment are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.


3

                    IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written.

 

 

 

 

 

THESTREET.COM, INC.

 

 

 

By:

 

 

 

 


 

 

Name:

Thomas J. Clarke, Jr.

 

 

Title:

Chairman of the Board

 

 

 

and Chief Executive Officer

 

 

 

 

 

AMERICAN STOCK TRANSFER &

 

 

TRUST COMPANY, as Rights Agent

 

 

 

 

By:

 

 

 

 


 

 

Name:

 

 

 

Title:

 



Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

Dated as of November 15, 2007

AMONG

THESTREET.COM, INC.

TCV VI, L.P.

AND

TCV MEMBER FUND, L.P.


TABLE OF CONTENTS

 

 

 

 

 

 

ARTICLE I

PURCHASE AND SALE OF SHARES

 

1

 

 

 

 

 

 

1.1

 

P URCHASE AND S ALE

 

1

 

1.2

 

C LOSING

 

1

 

 

 

 

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

1

 

 

 

 

 

 

2.1

 

O RGANIZATION AND C ORPORATE P OWER

 

2

 

2.2

 

A UTHORIZATION , E TC .

 

2

 

2.3

 

G OVERNMENT A PPROVALS

 

3

 

2.4

 

A UTHORIZED AND O UTSTANDING S TOCK

 

3

 

2.5

 

S UBSIDIARIES

 

4

 

2.6

 

S ECURITIES L AW C OMPLIANCE

 

4

 

2.7

 

SEC D OCUMENTS ; F INANCIAL I NFORMATION

 

4

 

2.8

 

I NTERNAL C ONTROLS

 

5

 

2.9

 

D ISCLOSURE C ONTROLS

 

5

 

2.10

 

A BSENCE OF C ERTAIN E VENTS ; N O M ATERIAL A DVERSE C HANGE

 

5

 

2.11

 

L ITIGATION

 

7

 

2.12

 

C OMPLIANCE WITH L AWS ; P ERMITS

 

7

 

2.13

 

T AXES

 

7

 

2.14

 

I NTELLECTUAL P ROPERTY

 

7

 

2.15

 

C ONTRACTS AND C OMMITMENTS

 

8

 

2.16

 

E MPLOYEE M ATTERS

 

8

 

2.17

 

N O B ROKERS OR F INDERS

 

8

 

2.18

 

T RANSACTIONS WITH A FFILIATES

 

9

 

2.19

 

I NSURANCE

 

9

 

2.20

 

I NVESTMENT C OMPANY A CT

 

9

 

2.21

 

I NVESTMENT C OMPANY A CT

 

9

 

2.22

 

N ASDAQ

 

9

 

2.23

 

D ELAWARE S ECTION 203

 

9

 

 

 

 

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

 

10

 

 

 

 

 

 

3.1

 

O RGANIZATION AND P OWER

 

10

 

3.2

 

A UTHORIZATION , E TC .

 

10

 

3.3

 

G OVERNMENT A PPROVALS

 

10

 

3.4

 

I NVESTMENT R EPRESENTATIONS

 

11

 

3.5

 

N O B ROKERS OR F INDERS

 

11

 

3.6

 

S HORT S ALES

 

11

 

3.7

 

N O B ENEFICIAL O WNERSHIP

 

12

 

 

 

 

 

ARTICLE IV

COVENANTS OF THE PARTIES

 

12

 

 

 

 

 

 

4.1

 

L EGENDS

 

12

 

4.2

 

R ESTRICTIONS O N A CTIONS

 

12

 

4.3

 

S HORT S ALES

 

13

i



 

 

 

 

 

 

 

4.4

 

C ONFIDENTIAL I NFORMATION

 

13

 

4.5

 

S PECIFIC P ERFORMANCE

 

14

 

4.6

 

B OARD OF D IRECTORS

 

14

 

 

 

 

 

ARTICLE V

CONDITIONS TO THE PURCHASERS’ OBLIGATION

 

15

 

 

 

 

 

 

5.1

 

R EPRESENTATIONS AND W ARRANTIES

 

15

 

5.2

 

C OVENANTS

 

15

 

5.3

 

C ERTIFIED B YLAWS

 

15

 

5.4

 

S ERIES B P REFERRED S TOCK C ERTIFICATES

 

15

 

5.5

 

A MENDMENT N O . 2 TO R IGHTS A GREEMENT

 

15

 

5.6

 

I NVESTOR R IGHTS A GREEMENT

 

15

 

5.7

 

L EGAL O PINION

 

15

 

5.8

 

C ERTIFICATE OF D ESIGNATION

 

15

 

5.9

 

W ARRANTS

 

15

 

 

 

 

 

ARTICLE VI

CONDITIONS TO THE COMPANY’S OBLIGATION

 

16

 

 

 

 

 

 

6.1

 

R EPRESENTATIONS AND W ARRANTIES ; P ERFORMANCE

 

16

 

6.2

 

C OVENANTS

 

16

 

6.3

 

C ONSIDERATION FOR THE S HARES

 

16

 

6.4

 

I NVESTOR R IGHTS A GREEMENT

 

16

 

6.5

 

C ERTIFICATE OF D ESIGNATION

 

16

 

6.6

 

W ARRANTS

 

16

 

 

 

 

 

ARTICLE VII

MISCELLANEOUS

 

16

 

 

 

 

 

 

7.1

 

S URVIVAL OF R EPRESENTATIONS

 

16

 

7.2

 

S HARES O WNED BY A FFILIATES

 

16

 

7.3

 

C OUNTERPARTS

 

17

 

7.4

 

G OVERNING L AW

 

17

 

7.5

 

E NTIRE A GREEMENT ; N O T HIRD P ARTY B ENEFICIARY

 

18

 

7.6

 

E XPENSES

 

18

 

7.7

 

N OTICES

 

18

 

7.8

 

S UCCESSORS AND A SSIGNS

 

19

 

7.9

 

H EADINGS

 

19

 

7.10

 

A MENDMENTS AND W AIVERS

 

19

 

7.11

 

I NTERPRETATION ; ABSENCE OF P RESUMPTION

 

19

 

7.12

 

S EVERABILITY

 

20

 

7.13

 

S CHEDULES

 

20

ii



 

 

 

SCHEDULES

 

Schedule 1.1

 

Purchased Shares and Warrant Shares

Schedule of Exceptions

 

EXHIBITS

 

 

 

Exhibit A

 

Definitions

Exhibit B-1

 

Form of Certificate of Designation, Preferences and Rights of the Series B Preferred Stock

Exhibit B-2

 

Form of Warrant

Exhibit C

 

Investor Rights Agreement

Exhibit D

 

Amendment No. 2 to Rights Agreement

Exhibit E

 

Form of Opinion of Company Counsel

iii


SECURITIES PURCHASE AGREEMENT

          This Securities Purchase Agreement dated as of November 15, 2007 (this “ Agreement ”) is among TheStreet.com, Inc., a Delaware corporation (the “ Company ”), TCV VI, L.P., a Delaware limited partnership (“ TCV VI ”), and TCV Member Fund, L.P., a Delaware limited partnership (“ TCV Member Fund ” and, together with TCV VI, the “ Purchasers ”). Capitalized terms used but not defined herein have the meanings assigned to them in Exhibit A .

          The Purchasers desire to purchase from the Company, and the Company desires to issue and sell to the Purchasers, (i) an aggregate of 5,500 shares (the “ Purchased Shares ”) of the Company’s Series B Preferred Stock, par value $0.01 per share (“ Series B Preferred Stock ”), and (ii) one or more warrants (the “ Warrants” ) to purchase an aggregate of 1,157,083 shares (the “ Warrant Shares” ) of Common Stock all on the terms and subject to the conditions hereinafter set forth.

          In consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE I
PURCHASE AND SALE OF SHARES

          Section 1.1 Purchase and Sale . Subject to the terms and conditions hereinafter set forth, at the Closing the Company shall issue and sell the Purchased Shares and the Warrants to the Purchasers and the Purchasers shall purchase the Purchased Shares and the Warrants from the Company for the aggregate purchase price set forth on Schedule 1.1 . The number of Purchased Shares and the number of Warrant Shares to be purchased by each Purchaser is set forth opposite each Purchaser’s name on Schedule 1.1 . The Series B Preferred Stock shall have the rights, terms and privileges set forth in the Certificate of Designation, Preferences and Rights of the Series B Preferred Stock (the “ Certificate of Designation ”) attached as Exhibit B-1 and the Warrants shall be in the form attached as Exhibit B-2 .

          Section 1.2 Closing . On the terms and subject to the satisfaction or waiver of the conditions set forth in this Agreement, the closing of the sale and purchase of the Purchased Shares and the Warrants (the “ Closing ”) shall take place at the offices of Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, New York, at 10:00 A.M., on November 15, 2007. The date on which the Closing is to occur is herein referred to as the “ Closing Date. ” At the Closing, the Company will deliver the Purchased Shares and the Warrants being acquired by each Purchaser in the form of one or more certificates issued in such Purchaser’s name upon receipt by the Company of payment of the full purchase price therefor by or on behalf of such Purchaser to the Company by certified check or by wire transfer of immediately available funds to an account designated in writing by the Company.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company represents and warrants to the Purchasers that, except as set forth in the SEC Documents or on the Schedule of Exceptions to this Agreement:


          Section 2.1 Organization and Power . The Company and each of its Subsidiaries is a corporation or limited liability company duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation and has all requisite corporate or limited liability company power and authority to own its properties and to carry on its business as presently conducted and as proposed to be conducted. The Company and each of its Subsidiaries is duly licensed or qualified to do business as a foreign corporation or limited liability company in each jurisdiction wherein the character of its property or the nature of the activities presently conducted by it, makes such qualification necessary, except where the failure to so qualify has not had and would not individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.

          Section 2.2 Authorization, Etc . The Company has all necessary corporate power and authority and has taken all necessary corporate action required for the due authorization, execution, delivery and performance by the Company of this Agreement and the Investor Rights Agreement and any other agreements or instruments executed by the Company in connection herewith or therewith (collectively, the “ Related Agreements ”), and the consummation by the Company of the transactions contemplated hereby and thereby, the filing of the Certificate of Designation with the Secretary of State of the State of Delaware and for the due authorization, issuance, sale and delivery of the Purchased Shares and the Warrants and the reservation, issuance and delivery of the Conversion Shares and the Warrant Shares. The authorization, execution, delivery and performance by the Company of this Agreement and the Related Agreements to which it is or will be a party, and the consummation by the Company of the transactions contemplated hereby and thereby, including the filing of the Certificate of Designation and the issuance of the Purchased Shares, the Conversion Shares and the Warrant Shares do not and will not: (a) violate or result in the breach of any provision of the certificate of incorporation and bylaws of the Company; or (b) with such exceptions that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect, whether after the giving of notice or the lapse of time or both: (i) violate any provision of, constitute a breach of, or default under, or result in or permit the cancellation, termination or acceleration of any material judgment, order, writ, decree or contract required to be filed as an exhibit to one of the SEC Documents; (ii) other than in connection with or in compliance with the provisions of the HSR Act in connection with any exercise of the Warrants, violate any provision of, constitute a breach of, or default under, any applicable state, federal or local law, rule or regulation; or (iii) result in the creation of any Lien upon any assets of the Company or any of its Subsidiaries or the suspension, revocation, material impairment, forfeiture or nonrenewal of any franchise, permit, license or other right granted by a governmental authority to the Company or any of its Subsidiaries, other than Liens under federal or state securities laws. The issuance of the Purchased Shares does not require any further corporate action and is not subject to any preemptive right under the Company’s certificate of incorporation or any contract to which the Company is a party. This Agreement has been, and each of the Related Agreements to which the Company will, at the Closing be party will be, duly executed and delivered by the Company. Assuming due execution and delivery thereof by each of the other parties thereto, this Agreement and the Related Agreements to which the Company is a party will each be a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar legal requirement relating to or affecting creditors’

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rights generally and except as such enforceability is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

          Section 2.3 Government Approvals . No consent, approval, license or authorization of, or designation, declaration or filing with, any court or governmental authority is or will be required on the part of the Company in connection with the execution, delivery and performance by the Company of this Agreement and the Related Agreements to which the Company is a party, or in connection with the issuance of the Purchased Shares, the Warrants, the Conversions Shares or the Warrant Shares, except for (a) the filing of the Certificate of Designation with the Secretary of State of the State of Delaware; (b) those which have already been made or granted; (c) the filing of a current report on Form 8-K with the SEC; (d) filings with applicable state securities commissions; (e) the listing of the Conversion Shares and the Warrant Shares with the Nasdaq Stock Market; (f) in compliance with the provisions of the HSR Act in connection with any exercise of the Warrants; and (g) those where the failure to obtain such consent, approval or license or make such filings would not be material to the Company and its Subsidiaries taken as a whole.

          Section 2.4 Authorized and Outstanding Stock .

                    (a) The authorized capital stock of the Company (immediately prior to the Closing) consists of 100,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, par value $0.01 per share (“ Preferred Stock ”), and 5,500 shares of Preferred Stock have been designated as the Series B Preferred Stock and 1,000,000 shares of Preferred Stock have been designated as Series A Junior Participating Preferred Stock.

                    (b) As of November 13, 2007, the issued and outstanding capital stock of the Company consists of 30,097,473 shares of Common Stock. There are no outstanding shares of Preferred Stock. In addition, options to purchase an aggregate of 1,816,009 shares of Common Stock have been granted and are unexercised under the Stock Plans, and unvested restricted stock units (or RSUs) for an aggregate of 264,046 shares have been granted under the Stock Plans. All of the issued and outstanding shares of capital stock of the Company are, and when issued in accordance with the terms hereof, the Purchased Shares will be, duly authorized and validly issued and fully paid and non-assessable. The shares of Common Stock issuable upon conversion of the Purchased Shares (the “ Conversion Shares ”) and upon exercise of the Warrants have been reserved for issuance and, when issued upon conversion thereof in accordance with the terms of the Certificate of Designation or the Warrants, as the case may be, will be validly issued and fully paid and non-assessable and will not be subject to any preemptive right or any restrictions on transfer under applicable law or any contract to which the Company is a party, other than those under applicable state and federal securities and antitakeover laws, the Investor Rights Agreement and the Rights Agreement. When issued in accordance with the terms hereof, the Purchased Shares will be free and clear of all Liens imposed by or through the Company, except for restrictions imposed by Federal or state securities or “blue sky” laws and except for those imposed pursuant to this Agreement or the Investor Rights Agreement. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class or series of capital stock of the Company are as set forth in the Company’s restated certificate of incorporation, as amended.

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                    (c) Except as provided in this Agreement: (i) no subscription, warrant, option, convertible security or other right issued by the Company to purchase or acquire any shares of capital stock of the Company is authorized or outstanding; (ii) there is not any commitment of the Company to issue any subscription, warrant, option, convertible security or other such right or to issue or distribute to holders of any shares of its capital stock any evidences of indebtedness or assets of the Company; (iii) the Company has no obligation to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof; and (iv) there are no agreements between the Company and any holder of its capital stock relating to the acquisition, disposition or voting of the capital stock of the Company. No person or entity is entitled to any preemptive right granted by the Company with respect to the issuance of any capital stock of the Company. Except as provided in the Investor Rights Agreement, no person or entity has been granted rights by the Company with respect to the registration of any capital stock of the Company under the Securities Act of 1933, as amended (the “ Securities Act ”).

          Section 2.5 Subsidiaries . The Company has no subsidiaries nor any investment or other interest in, or any outstanding loan or advance equal to or greater than $1,000,000 to or from, any Person. The Company owns of record and beneficially, free and clear of all Liens of any nature, all of the issued and outstanding capital stock of each of the Material Subsidiaries. All of the issued and outstanding capital stock or equity interests of the Material Subsidiaries has been duly authorized and validly issued, and in the case of corporations, is fully paid and non-assessable. There are no outstanding rights, options, warrants, preemptive rights, conversion rights, rights of first refusal or similar rights for the purchase or acquisition from any Material Subsidiary of any securities of the Material Subsidiaries nor are there any commitments to issue or execute any such rights, options, warrants, preemptive rights, conversion rights or rights of first refusal.

          Section 2.6 Securities Law Compliance . Assuming the accuracy of the representations and warranties of the Purchasers set forth in Section 3.4 (Investment Representations), the offer and sale of the Purchased Shares pursuant to this Agreement will be exempt from the registration requirements of the Securities Act. The Company has not, in connection with the transactions contemplated by this Agreement, engaged in: (a) any form of general solicitation or general advertising (as those terms are used within the meaning of Rule 502(c) promulgated under the Securities Act); (b) any action involving a “public offering” within the meaning of Section 4(2) of the Securities Act; or (c) any action that would require the registration under the Securities Act of the offering and sale of the Purchased Shares or the Warrants pursuant to this Agreement. As used herein, the terms “offer” and “sale” have the meanings specified in Section 2(3) of the Securities Act.

          Section 2.7 SEC Documents; Financial Information . Since January 1, 2006, the Company has timely filed all reports, schedules, registration statements and other documents (including all amendments, exhibits and schedules thereto) required to be filed by the Company with the SEC pursuant to the Exchange Act and the Securities Act. As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the Securities Act, the Exchange Act and the rules and regulations of the SEC thereunder applicable to such SEC Documents, and as of their respective dates none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated

-4-


therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company and its Subsidiaries included in the SEC Documents (the “ Financial Statements ”) comply as of their respective dates in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Form 10-Q promulgated by the SEC), and present fairly in all material respects as of their respective dates the consolidated financial position of the Company and its Subsidiaries as at the dates thereof and the consolidated results of their operations and their consolidated cash flows for each of the respective periods, in conformity with GAAP. The Company satisfies the “registrant requirements” for use of Form S-3 set forth in General Instruction I.A to Form S-3 promulgated by the SEC.

          Section 2.8 Internal Controls . The Company and each of its Subsidiaries maintains a system of internal control over financial reporting that the Company believes are sufficient to provide reasonable assurance that: (a) transactions are executed in accordance with management’s general or specific authorization; (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; and (c) access to assets is permitted only in accordance with management’s general or specific authorization. The Company believes that its auditors and the Audit Committee of the Board of Directors have been advised of: (x) any significant deficiencies in the design or operation of the Company’s internal control over financial reporting that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial data; and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. Any material weaknesses in the Company’s internal control over financial reporting as of the date the last evaluation was conducted have been identified for the Company’s auditors.

          Section 2.9 Disclosure Controls . The Company has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act). Such disclosure controls and procedures are designed to provide reasonable assurance that material information relating to the Company, including its Subsidiaries, that is required to be disclosed by the Company in the reports that it furnishes or files under the Exchange Act is reported within the time periods specified in the rules and forms of the SEC and that such material information is communicated to the Company’s management to allow timely decisions regarding required disclosure.

          Section 2.10 Absence of Certain Events; No Material Adverse Change . Since September 30, 2007, the Company and its Subsidiaries each has conducted its business operations in the ordinary course and there has not occurred any event, development, circumstance or condition that, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect. Without limiting the generality of the foregoing, since September 30, 2007 there has not occurred:

                    (a) any purchase, sale, transfer, assignment, conveyance or pledge of the assets or properties of the Company or any of its Subsidiaries, except in the ordinary course of business;

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                    (b) any incurrence of indebtedness for borrowed money, notes, mortgages or purchase money indebtedness of the Company or its Subsidiaries in excess of $1,000,000 in the aggregate;

                    (c) any waiver or modification by the Company or any of its Subsidiaries of any right or rights of substantial value or of a material debt owed to it other than in the ordinary course of business;

                    (d) any material change in the accounting principles, methods, practices or procedures followed by the Company in connection with the business of the Company and its Subsidiaries or any material change in the depreciation or amortization policies or rates theretofore adopted by the Company in connection with the business of the Company and its Subsidiaries, any change in the Company’s independent public accounting firm, disagreement with its independent public accounting firm over the Company’s and its Subsidiaries’ application of accounting principles or with the preparation of any of their financial statements that was required to be disclosed in the SEC Documents, notification to the Company’s audit committee of any irregularity with respect to the Company’s or its Subsidiaries’ financial statements, books and records or method of accounting;

                    (e) except as contemplated by this Agreement, any declaration, setting aside or payment of any dividends (or, in the case of a limited liability company, other distributions) in respect of the outstanding shares of capital stock (or, in the case of a limited liability company, other equity interests) of the Company or any of its Subsidiaries (other than (i) the Company’s regular quarterly dividend of $0.025 per share and (ii) dividends declared or paid by wholly-owned Subsidiaries to the Company or another wholly-owned Subsidiary of the Company) or any other change in the authorized capitalization of the Company or any of its Subsidiaries or any direct or indirect redemption, purchase or other acquisition of any such stock by the Company;

                    (f) any written notice from the SEC in connection with any investigation or action by the SEC that seeks to, or could reasonably be expected to result in, the restatement by the Company of any of its current or previously disclosed financial statements, and to the actual knowledge of any of the executive officers of the Company, no such investigation or action has been threatened by the SEC;

                    (g) any material change in any compensation agreement or arrangement with any executive officer or director of the Company, other than in the ordinary course of business;

                    (h) any resignation or termination of employment of Mr. James Cramer or any of the Company’s other executive officers;

                    (i) any loans or guarantees made by the Company or any of its Subsidiaries to or for the benefit of their employees, officers or directors or any members of their immediate families, other than (i) travel advances and other advances made in the ordinary course of business and (ii) loans to employees, officers or directors in connection with the exercise of stock options granted pursuant to the Stock Plans; or

                    (j) any arrangement, contract or commitment to do any of the foregoing.

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          Section 2.11 Litigation . With such exceptions that, individually or in the aggregate, are not reasonably expected to have a Material Adverse Effect, there is no litigation or governmental proceeding pending or, to the knowledge of the Company, threatened, against the Company or any of its Subsidiaries or affecting any of the properties or assets of the Company or any of its Subsidiaries. Neither the Company nor any Subsidiary is in default with respect to any order, writ, injunction, decree, ruling or decision of any court, commission, board or other government agency that is expressly applicable to the Company or any Subsidiary or any of their assets or property.

          Section 2.12 Compliance with Laws; Permits . The Company is not, and will not at the Closing be, in violation of or default under any provision of its restated certificate of incorporation or bylaws, each as in effect at the Closing. With such exceptions that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect the Company and its Subsidiaries are in compliance with each judgment, decree, judicial order, statute and regulation (whether issued under domestic, foreign or international law) by which any of them is bound or to which any of them or any of their respective properties are subject. The Company and each of its Subsidiaries has all franchises, permits, licenses and other rights granted by governmental authorities that are required to permit it to own its property and to conduct its business as it is presently conducted other than franchises, permits, licenses and other privileges granted by governmental authorities that if not held by the Company or such Subsidiary have not had and would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. All such franchises, permits, licenses and other rights and privileges granted by governmental authorities are in full force and effect and, to the knowledge of the Company, no suspension or cancellation of any of them is threatened.

          Section 2.13 Taxes . The Company and each of its Subsidiaries has filed all Tax returns required to be filed within the applicable periods for such filings (with due regard to any extension) and has paid all Taxes required to be paid, except for any such failures to file or pay that would not individually or in the aggregate have a Material Adverse Effect. No material deficiencies for any Tax are currently assessed against the Company or any of its Subsidiaries, and no Tax returns of the Company or any of its Subsidiaries have been audited during the last three years, and, there is no such audit pending or, to the knowledge of the Company, contemplated. There is no outstanding claim by an authority in a jurisdiction where the Company does not file tax returns that it is or may be subject to the imposition of any material tax by that jurisdiction.

          Section 2.14 Intellectual Property . All Intellectual Property Rights purported to be owned by the Company or any of its Subsidiaries that were developed, worked on or otherwise held by any employee, officer, consultant or otherwise are owned free and clear by the Company or one of its Subsidiaries (as the case may be) by operation of law or have been validly assigned to the Company one of its Subsidiaries (as the case may be) other than those Intellectual Property Rights where the failure to own or assign such rights would not, individually or in its aggregate be reasonably likely to have a Material Adverse Effect. The Intellectual Property Rights are sufficient in all material respects to carry on the business of the Company and each of its Subsidiaries as presently conducted and as proposed to be conducted. To the knowledge of the Company, with such exceptions as are not, individually or in the aggregate reasonably likely to have a Material Adverse Effect, the Intellectual Property Rights purported to be owned by the

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Company or any of its Subsidiaries do not infringe the intellectual property rights of any third party. Neither the Company nor any of its Subsidiaries has received since the later of January 1, 2005 and (with respect to each Subsidiary of the Company that was acquired from one or more third parties) the date such Subsidiary was acquired from such third party(ies) any written notice or other written claim from any third party: (i) asserting that any of the Intellectual Property Rights purported to be owned by the Company or any of its Subsidiaries infringe any intellectual property rights of such third party; (ii) challenging the validity, effectiveness or ownership by the Company or its Subsidiaries of any of the Intellectual Property Rights; or (iii) asserting that the Company or its Subsidiaries is in material default with respect to any license granting Intellectual Property Rights to the Company or its Subsidiaries.

          Section 2.15 Contracts and Commitments . All of the material contracts of the Company or any of its Subsidiaries that are required to be described in the SEC Documents, or to be filed as exhibits thereto, are in full force and effect and upon consummation of the transactions contemplated by this Agreement and the Related Agreements, shall continue in full force and effect, without penalty or adverse consequence. Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any other party is in material breach of or in material default under any such contract.

          Section 2.16 Employee Matters . The Company has described in, or filed as an exhibit to, the SEC Documents filed prior to the date of this Agreement all of the following types of documents, agreements, plans or arrangements that are required by federal securities laws to be described in, or filed as an exhibit to, the SEC Documents: employment agreements, consulting agreements, deferred compensation, pension or retirement agreements or arrangements (including all “employee pension benefit plans” as defined in Section 3(2) of ERISA, bonus, incentive or profit-sharing plans or arrangements, or labor or collective bargaining agreements in effect by the Company and its Subsidiaries) (the “ ERISA Documents ”). Except for any compliance failures that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect, (a) the Company and its Subsidiaries are in compliance in all material respects with all applicable laws and regulations relating to labor, employment, fair employment practices, terms and conditions of employment, and wages and hours, and with the terms of the ERISA Documents; and (b) each such ERISA Document is in compliance in all material respects with all applicable requirements of ERISA. To the Company’s knowledge, none of the Company’s or its Subsidiaries’ employees are obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her employment obligations to the Company or its Subsidiaries or that would conflict with the Company’s and its Subsidiaries’ business as now conducted or proposed to be conducted, except for such contracts and other agreements, judgments, decrees and orders that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          Section 2.17 No Brokers or Finders . No Person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or claim against or upon the Company, any of its Subsidiaries or any Purchaser for any commission, fee or other compensation as a finder or broker because of any act or omission by the Company or any of its Subsidiaries.

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          Section 2.18 Transactions with Affiliates . Except as disclosed in the Proxy Statement, as of April 23, 2007 (the date the Proxy Statement was filed with the SEC), there were no loans, leases or other agreements, understandings or continuing transactions between the Company or any of its Subsidiaries, on the one hand, and any officer or director of the Company or any of its Subsidiaries or any Person that the Company believes is the owner of five percent or more of the outstanding Common Stock or any respective family member or Affiliate of such officer, director or stockholder, on the other hand, that were required by federal securities laws to be disclosed in the Proxy Statement.

          Section 2.19 Insurance . The Company and each of its Subsidiaries maintains insurance covering its properties, operations, personnel and businesses as the Company deems adequate. All such insurance is fully in force, except where the failure to be in full force has not had and would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.

          Section 2.20 Investment Company Act . The Company is not, and immediately after giving effect to the sale of the Purchased Shares in accordance with this Agreement and the application of the proceeds thereof will not be required to be registered as, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act.

          Section 2.21 Investment Advisers Act . The Company is not ineligible pursuant to Section 9(a) or 9(b) of the Investment Company Act to serve as an investment adviser to a registered investment company. As of the date of the Company’s most recent Uniform Application for Investment Adviser Registration on Form ADV and, to the knowledge of the Company, since that date, no “affiliated person” (as defined in the Investment Company Act) of the Company is or was ineligible pursuant to Section 9(a) or 9(b) of the Investment Company Act to serve as an “affiliated person” of an investment adviser to a registered investment company. No “associated person” (as defined in the Advisers Act) of the Company is ineligible pursuant to Section 203 of the Advisers Act to serve as an “associated person” of a registered investment adviser. As of the date of the Company’s most recent Uniform Application for Investment Adviser Registration on Form ADV and, to the knowledge of the Company, since that date, each “investment advisory representative” (as defined in the Advisers Act) of the Company is or was licensed under all applicable state securities or “blue sky” laws.

          Section 2.22 Nasdaq . As of the date hereof, the Company’s Common Stock is listed on the Nasdaq Global Market, and no event has occurred, and the Company is not aware of any event that is reasonably likely to occur, that would result in the Common Stock being delisted from the Nasdaq Global Market.

          Section 2.23 Delaware Section 203 . The Board of Directors of the Company (or a committee thereof), at a meeting duly called and held on November 15, 2007, has approved for purposes of Section 203 of the Delaware General Corporation Law: (a) the sale and issuance of the Purchased Shares and the Warrants to the Purchasers hereunder and the issuance of the Conversion Shares upon conversion of the Purchased Shares and the issuance of the Warrant Shares upon exercise of the Warrants; and (b) in the event the Purchasers are not “interested stockholders” (as defined in Section 203 of the Delaware General Corporation Law) immediately

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after giving effect to their acquisition of the Purchased Shares, a transaction in compliance with Section 4.2(a) in which either (or both) of the Purchasers become “interested stockholders.”

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

          Each Purchaser, severally and not jointly, represents and warrants to the Company that:

          Section 3.1 Organization and Power . Such Purchaser is a limited partnership duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite limited partnership power and authority to own its properties and to carry on its business as presently conducted.

          Section 3.2 Authorization, Etc. Such Purchaser has all necessary limited partnership power and authority, and has taken all necessary limited partnership action required for the due authorization, execution, delivery and performance by such Purchaser of this Agreement and the Related Agreements to which it is a party and the consummation by such Purchaser of the transactions contemplated hereby and thereby. The authorization, execution, delivery and performance by such Purchaser of this Agreement and the Related Agreements to which it is or will be a party, and the consummation by such Purchaser of the transactions contemplated hereby and thereby do not and will not: (a) violate or result in the breach of any provision of the certificate of limited partnership and limited partnership agreement of such Purchaser; or (b) with such exceptions that, individually or in the aggregate, are not reasonably likely to have a material adverse effect on its ability to perform its obligations under this Agreement and the Related Agreements to which it is a party, whether after the giving of notice or the lapse of time or both: (i) violate any provision of, constitute a breach of, or default under, or result in or permit the cancellation, termination or acceleration of any material contract to which such Purchaser is a party; or (ii) violate any provision of, constitute a breach of, or default under, any applicable law. This Agreement has been, and each of the Related Agreements to which such Purchaser will, at the Closing be party will be, duly executed and delivered by such Purchaser. Assuming due execution and delivery thereof by the other Persons contemplated to be party thereto, this Agreement and the Related Agreements will each be a valid and binding obligation of such Purchaser enforceable against such Purchaser in accordance with its terms, except as such enforceability may be limited by applicable laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar legal requirement relating to or affecting creditors’ rights generally and except as such enforceability is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

          Section 3.3 Government Approvals . No consent, approval, license or authorization of, or designation, declaration or filing with, any court or governmental authority is or will be required on the part of such Purchaser in connection with the execution, delivery and performance by such Purchaser of this Agreement and the Related Agreements to which it is a party, except for: (a) those which have already been made or granted; (b) the filing with the SEC of a Schedule 13D or Schedule 13G and a Form 3 to report such Purchaser’s ownership of the Purchased Shares; and (c) those where the failure to obtain such consent, approval or license would not have a material adverse effect on the ability of the Purchasers to perform their obligations hereunder.

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          Section 3.4 Investment Representations .

                    (a) Such Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

                    (b) Such Purchaser has been advised by the Company that neither the Purchased Shares nor the Warrants have been registered under the Securities Act, that the Purchased Shares and the Warrants will be issued on the basis of the statutory exemption provided by Section 4(2) under the Securities Act or Regulation D promulgated thereunder, or both, relating to transactions by an issuer not involving any public offering and under similar exemptions under certain state securities laws, that this transaction has not been reviewed by, passed on or submitted to any federal or state agency or self-regulatory organization where an exemption is being relied upon, and that the Company’s reliance thereon is based in part upon the representations made by such Purchaser in this Agreement and the Related Agreements. Such Purchaser acknowledges that it has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of securities.

                    (d) Such Purchaser is purchasing the Purchased Shares and the Warrants for its own account and not with a view to, or for sale in connection with, any distribution thereof in violation of federal or state securities laws.

                    (e) By reason of its business or financial experience, such Purchaser has the capacity to protect its own interest in connection with the transactions contemplated hereunder.

                    (f) The Company has provided to such Purchaser all documents and information that such Purchaser has requested relating to an investment in the Company. Such Purchaser recognizes that investing in the Company involves substantial risks, and has taken full cognizance of and understands all of the risk factors related to the acquisition of the Purchased Shares and the Warrants. Such Purchaser has carefully considered and has, to the extent it believes such discussion necessary, discussed with the Purchaser’s professional legal, tax and financial advisers the suitability of an investment in the Company, and such Purchaser has determined that the acquisition of the Purchased Shares and the Warrants is a suitable investment for the Purchaser. Such Purchaser has not relied on the Company for any tax or legal advice in connection with the purchase of the Purchased Shares or the Warrants. In evaluating the suitability of an investment in the Company, such Purchaser has not relied upon any representations (other than the representations and warranties of the Company set forth in Article II) or other information from the Company or any of its agents.

          Section 3.5 No Brokers or Finders . No Person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or claim against or upon the Company, any of its Subsidiaries or any Purchaser for any commission, fee or other compensation as a finder or broker because of any act or omission by such Purchaser.

          Section 3.6 Short Sales . Neither such Purchaser nor any of its Restricted Affiliates has engaged in any Short Sales since June 7, 2007.

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          Section 3.7 No Beneficial Ownership . Neither Purchaser beneficially owns (as such term is defined in Rule 13d-3 under the Exchange Act) any Common Stock or is the record owner of any Common Stock.

ARTICLE IV
COVENANTS OF THE PARTIES

          Section 4.1 Legends . Each Purchaser acknowledges and agrees that the Purchased Shares and the Warrants will bear a legend in substantially the following form:

 

 

 

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, and have been acquired for investment and not with a view to, or in connection with, the sale or distribution thereof. Such shares may not be sold, offered for sale, pledged or hypothecated in the absence of an effective registration statement thereunder or an exemption from such registration.”

          Section 4.2 Restrictions on Actions .

                    (a) Each Purchaser agrees that until the earlier of the seventh anniversary of the date of this Agreement and the date on which such Purchaser no longer owns any Purchased Shares, Conversion Shares, Warrants or Warrant Shares (the “Restricted Period” ), without the prior written consent of the Board of Directors of the Company, it will not at any time, nor will it cause, suffer or permit any of its Restricted Affiliates to, acquire directly or indirectly, by purchase or otherwise, record ownership or beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act ) more than 35% the Company’s outstanding Common Stock; provided , however , that a Purchaser becoming a beneficial owner of more than 35% as a result of the Company taking any direct or indirect action that results in the number of outstanding shares of capital stock being reduced (e.g. stock repurchases) shall not be a breach of this Section 4.2.

                    (b) The Purchasers agree that, during the Restricted Period without the prior written consent of the Board of Directors of the Company, neither of them will at any time, nor will a Purchaser cause, suffer or permit any of its Restricted Affiliates to, directly or indirectly: (i) make, or in any way participate in, any solicitation of proxies to vote any securities of the Company under any circumstances for a change in the directors or management of the Company, or in connection with a merger or acquisition of the Company, or deposit any securities of the Company in a voting trust or subject them to a voting agreement or other agreement of similar effect (it is understood and agreed that this clause (i) shall not prohibit any Purchaser or any of their respective Restricted Affiliates from voting any securities of the Company in their discretion); (ii) form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any of securities of the Company that describes any plans or proposals required to be disclosed in response to any of clauses (a) through (j) of Item 4 of any Schedule 13D (or any amendment thereto); (iii) publicly propose to enter into, directly or indirectly, any merger, consolidation, business combination or other similar transaction involving the Company; (iv) formulate or disclose any intention, plan or arrangement to change the directors or management of the Company; or (v) advise, assist or encourage any other Persons in connection with any of the foregoing. (It is understood and agreed that nothing

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in this Section 4.2(b) shall prohibit the Series B Designee from taking any action, or refraining from taking any action, required in connection with his or her fiduciary duties.)

                    (c) The provisions of Section 4.2(a) and (b) shall terminate in the event that the Board of Directors of the Company shall: (i) approve a tender offer for a majority of the outstanding capital stock of the Company; (ii) liquidate the Company or sell all or substantially all of the assets of the Company to another Person; (iii) approve a merger or consolidation of the Company with any other Person that would result in the voting securities of the Company outstanding immediately prior thereto representing less than a majority of the voting power to elect a majority of the board of directors or similar body of the Person surviving such merger or resulting from such consolidation; or (iv) sell or otherwise issue to any Person voting securities of the Company that would result in such Person having a majority of the combined voting power of the voting securities of the Company. For purposes hereof, “voting power” means the power to vote in the election of directors generally.

                    (d) The provisions of Section 4.2(a) and (b) be reinstated and shall apply in full force according to their terms in the event that: (i) if the provisions of Section 4.2(a) and (b) shall have terminated as a result of a tender offer under clause (c)(i) above, such tender offer (as originally made or as extended or modified) shall have terminated (without any securities being accepted thereunder for purchase) prior to the commencement of a tender offer by any Purchaser or any of its Restricted Affiliates that would have been permitted pursuant to clause (c)(i) as a result of such third-party tender offer; (ii) any tender offer by any Purchaser or any of its Restricted Affiliates (as originally made or as extended or modified) that was permitted to be made pursuant to clause (c)(ii) through (iv) shall have terminated (without any securities being accepted thereunder for purchase); or (iii) if the provisions of Section 4.2(a) and (b) shall have terminated as a result of clause (c)(i), (iii) or (iv), the Board of Directors of the Company shall have determined to rescind or abandon the previous action described in clause (c)(ii) through (iv) (and no such action shall have closed). Upon reinstatement of the provisions of Section 4.2(a) and (b), the preceding provisions of this Section 4.2 shall continue to govern, including, without limitation, those that provide for the termination of any of the provisions of this Section 4.3 in the event that any of the events described in clause (c) shall occur.

          Section 4.3 Short Sales . Each Purchaser agrees that, for so long as such Purchaser or any of its Restricted Affiliates owns any Purchased Shares, Conversion Shares, Warrants or Warrant Shares it will not, and it will not cause, suffer or permit any of its Restricted Affiliates to, enter into any Short Sales.

          Section 4.4 Confidential Information .

                    (a) From and after the consummation of the Closing, each Purchaser shall, and shall use its commercially reasonable efforts to cause its Affiliates, Representatives and Permitted Disclosees to, maintain the confidentiality of, and not use for the benefit of itself or others, any confidential financial, business-related and other information concerning the Company or its Subsidiaries, whether furnished before or after the Closing Date, whether oral or written, and regardless of the manner or form in which it is furnished, together with notes, analyses, compilations, studies or other documents prepared by the Company or any of its Subsidiaries or any of their Representatives (collectively, the “ Confidential Information ”);

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provided , however , that: (i) each Purchaser shall be liable in the event any of its Affiliates, Representatives or Permitted Disclosees shall not maintain the confidentiality of, or use for the benefit of itself or others, any Confidential Information even though such Purchaser is only required to use commercially reasonable efforts to cause them to comply herewith; and (ii) this Section 4.4(a) shall not restrict: (A) any disclosure of information required to be disclosed by applicable law, rule, regulation or court or other governmental order (but only such portion of the Confidential Information that they are legally required to disclose), but if permitted by applicable law, the Purchasers shall give the Company notice and a reasonable opportunity to contest such disclosure or seek an appropriate protective order; or (B) any disclosure of information that: (I) is publicly available as of the Closing Date; (II) after the Closing Date, becomes publicly available through no fault of any of the Purchasers or their Affiliates or Representatives; (III) is received by the Purchasers from a third party not, to the knowledge of the Purchasers, subject to any obligation of confidentiality with respect to such information; or (IV) was known by such Purchaser on a non-confidential basis from a source that was entitled to disclose it to such Purchaser. Notwithstanding the foregoing, each Purchaser will advise its Affiliates, Representatives and Permitted Disclosees that such Confidential Information is confidential and that by receiving such Confidential Information such Affiliate, Representative or Permitted Disclosee is agreeing to maintain the confidentiality of, and not to use for the benefit of itself or others, any Confidential Information.

                    (b) Nothing contained in this Section 4.4 shall prevent any Purchaser or any Permitted Disclosee from entering into any business, entering into any agreement with a third party, or investing in or engaging in investment discussions with any other Person (whether or not competitive with the Company); provided , however , that neither such Purchaser nor any of its Affiliates, Representatives or Permitted Disclosee discloses or otherwise makes use of, except as permitted in accordance with this Section 4.4, any Confidential Information in connection with such activities.

          Section 4.5 Specific Performance . The Purchasers agree that irreparable damage would occur and that the Company would not have any adequate remedy at law in the event that any of the provisions of Sections 4.2 (Restrictions on Actions), 4.3 (Short Sales) or 4.4 (Confidential Information) were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the Purchasers agree that the Company shall without the necessity of proving the inadequacy of money damages or posting a bond be entitled to an injunction or injunctions to prevent breaches of such Sections and to enforce specifically the terms, provisions and covenants contained therein, this being in addition to any other remedy to which they are entitled at law or in equity.

          Section 4.6 Board of Directors . Promptly after the Closing, once Jay Hoag shall become a member of the Board of Directors of the Company as the Series B Designee (as such term is defined in the Certificate of Designation), the Company shall cause the Series B Designee to be covered by any directors and officers insurance policy maintained by the Company from time to time at all times that a Series B Designee serves on the Company’s Board of Directors.

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ARTICLE V
CONDITIONS TO THE PURCHASERS’ OBLIGATION

          The obligations of the Purchasers to consummate the transactions contemplated hereby are subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions precedent:

          Section 5.1 Representations and Warranties . Each of the representations and warranties of the Company contained in Article II of this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time other than the Closing Date (which need only be true and correct in all material respects as of such date or time); provided , however , that if a representation or warranty is qualified by “materiality” or “Material Adverse Effect” or similar qualifier, such representation or warranty (as so qualified) shall be true and correct in all respects.

          Section 5.2 Covenants . The Company shall have performed and complied in all material respects with all other covenants and agreements required by this Agreement to be performed or complied with by it at or prior to the Closing.

          Section 5.3 Certified Bylaws . The Purchasers shall have received a copy of the Company’s bylaws, certified by its Secretary.

          Section 5.4 Series B Preferred Stock Certificates . The Company shall have delivered one or more stock certificates to each Purchaser representing the portion of the Purchased Shares to be purchased by such Purchaser.

          Section 5.5 Amendment No. 2 to Rights Agreement . The Company and American Stock Transfer & Trust Company shall have executed Amendment No. 2 to Rights Agreement in the form attached as Exhibit D .

          Section 5.6 Investor Rights Agreement . The Company shall have entered into the Investor Rights Agreement.

          Section 5.7 Legal Opinion . The Company shall have provided an opinion addressed to the Purchasers rendered by its General Counsel in form and substance reasonably satisfactory to the Purchasers, in substantially the form attached hereto as Exhibit E .

          Section 5.8 Certificate of Designation . The Certificate of Designation shall have been duly filed with the Secretary of State of the State of Delaware.

          Section 5.9 Warrants . The Company shall have entered into and delivered the Warrants to the Purchasers.

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ARTICLE VI
CONDITIONS TO THE COMPANY’S OBLIGATION

          The obligations of the Company to consummate the transactions contemplated hereby are subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions precedent:

          Section 6.1 Representations and Warranties; Performance . Each of the representations and warranties of the Purchasers contained in Article III of this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, except for representations and warranties that speak as of a specific date or time other than the Closing Date (which need only be true and correct in all material respects as of such date or time); provided , however , that if a representation or warranty is qualified by “materiality” or “material adverse effect” or similar qualifier, such representation or warranty (as so qualified) shall be true and correct in all respects.

          Section 6.2 Covenants . The Purchasers shall have performed and complied in all material respects with all other covenants and agreements required by this Agreement to be performed or complied with by them at or prior to the Closing.

          Section 6.3 Consideration for the Shares . Each Purchaser shall have paid the purchase price of the Purchased Shares to be purchased by such Purchaser in full at the Closing either by certified check or by wire transfer of immediately available funds to an account designated in writing by the Company.

          Section 6.4 Investor Rights Agreement . The Purchasers shall have entered into the Investor Rights Agreement.

          Section 6.5 Certificate of Designation . The Certificate of Designation shall have been duly filed with the Secretary of State of the State of Delaware.

          Section 6.6 Warrants . The Purchasers shall have entered into and delivered the Warrants to the Company.

ARTICLE VII
MISCELLANEOUS

          Section 7.1 Survival of Representations . The representations, warranties, covenants and agreements made herein or in any certificates or documents executed in connection herewith shall survive the execution and delivery hereof and the Closing of the transactions contemplated hereby. Notwithstanding the foregoing, the representations and warranties contained in or made pursuant to this Agreement shall terminate on, and no claim or action with respect thereto may be brought after, the date that is 10 days after the date on which the Company files with the SEC its annual report on Form 10-K for the year ending December 31, 2008.

          Section 7.2 Shares Owned by Affiliates . For the purposes of applying all provisions of this Agreement which condition the receipt of information or access to information or exercise

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of any rights upon ownership of a specified number or percentage of shares, the shares owned of record by any Affiliate of a Purchaser shall be deemed to be owned by such Purchaser.

          Section 7.3 Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and will become effective when one or more counterparts have been signed by a party and delivered to the other parties. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 7.3, provided that receipt of copies of such counterparts is confirmed.

          Section 7.4 Governing Law .

                    (a) Except to the extent the DGCL is mandatorily applicable, this Agreement and any disputes arising hereunder or controversies related hereto shall be governed by and construed in accordance with the internal laws, and not the laws of conflicts, of the State of New York that apply to contracts made and performed entirely within such state.

                    (b) Any action, suit or other proceeding with respect to this Agreement and any matter arising out of or in connection with this Agreement shall be brought exclusively in the state courts sitting in the State of Delaware or federal courts sitting in the State of Delaware. By execution and delivery of this Agreement, each party hereto hereby accepts for itself and in respect of such Person’s property, generally and unconditionally, the sole and exclusive jurisdiction of the aforesaid courts and appellate courts thereof. Each party hereto irrevocably consents to service of process in any action, suit or other proceeding in any of the aforementioned courts by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized overnight delivery service, to such party at such party’s address referred to in Section 7.7. Each party hereto hereby irrevocably and unconditionally waives any objection which such Person may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to above and hereby further irrevocably waives and agrees, to the extent permitted by applicable law, not to plead or claim in any such court that any such action, suit or other proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of any party hereto to serve process in any other manner permitted by law. Notwithstanding anything in this Section 7.4(b) to the contrary, each party agrees that a final judgment in any such action, suit or other proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

                    (c) To the extent that any party hereto has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself, or to such Person’s property, each such party hereto hereby irrevocably waives such immunity in respect of such Person’s obligations with respect to this Agreement.

                    (d) Waiver of Jury Trial . EACH PARTY HERETO, FOR ITSELF AND ITS AFFILIATES, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING (WHETHER BASED ON

-17-


CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE ACTIONS OF THE PARTIES HERETO OR THEIR RESPECTIVE AFFILIATES PURSUANT TO THIS AGREEMENT OR IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

          Section 7.5 Entire Agreement; No Third Party Beneficiary . This Agreement and the Related Agreements contain the entire agreement by and among the parties with respect to the subject matter hereof and all prior negotiations, writings and understandings relating to the subject matter of this Agreement, including the letter of intent dated October 9, 2007 between the Company and TCV VI and the Confidentiality Letter dated July 11, 2007 between the Company and TCMI, Inc. are merged in and are superseded and canceled by, this Agreement and the Related Agreements. This Agreement is not intended to confer upon any Person not a party hereto (or their successors and permitted assigns) any rights or remedies hereunder.

          Section 7.6 Expenses . Whether or not the Closing shall occur, all fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby, including accounting and legal fees shall be paid by the party incurring such expenses, except that the Company shall pay up to $125,000 of the reasonable and documented out-of-pocket fees and expenses incurred by the Purchasers, including, without limitation, the reasonable and documented fees and expenses of counsel for the Purchasers.

          Section 7.7 Notices . All notices and other communications hereunder will be in writing and given by certified or registered mail, return receipt requested, nationally recognized overnight delivery service, such as Federal Express or facsimile (or like transmission) with confirmation of transmission by the transmitting equipment or personal delivery against receipt to the party to whom it is given, in each case, at such party’s address or facsimile number set forth below or such other address or facsimile number as such party may hereafter specify by notice to the other parties hereto given in accordance herewith. Any such notice or other communication shall be deemed to have been given as of the date so personally delivered or transmitted by facsimile or like transmission, on the next business day when sent by overnight delivery services or five days after the date so mailed if by certified or registered mail.

 

 

 

If to the Company, to:

 

 

 

TheStreet.com, Inc.

 

14 Wall Street, 14th Floor

 

New York, NY 10005

 

Fax No.: (212) 321-5013

 

Attention: Chief Executive Officer

 

 

 

with a copy to:

 

 

 

Hughes Hubbard & Reed LLP

 

One Battery Park Plaza

 

New York, NY 10004

 

Fax No.: (212) 422-4726

 

Attention: Kenneth A. Lefkowitz

-18-



 

 

 

If to a Purchaser, to:

 

 

 

Technology Crossover Ventures

 

528 Ramona Street

 

Palo Alto, CA 94301

 

Fax No.: (650) 614-8222

 

Attention: Carla S. Newell

 

 

 

with a copy to:

 

 

 

Latham & Watkins LLP

 

140 Scott Drive

 

Menlo Park, CA 94025

 

Fax No.: (650) 463-2600

 

Attention: Peter F. Kerman

          Section 7.8 Successors and Assigns . This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Any purported assignment or delegation in violation of this Agreement shall be null and void ab initio .

          Section 7.9 Headings . The Section, Article and other headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement.

          Section 7.10 Amendments and Waivers . This Agreement may not be modified or amended except by an instrument or instruments in writing signed by each party hereto. Any party hereto may, only by an instrument in writing, waive compliance by any other party or parties hereto with any term or provision hereof on the part of such other party or parties hereto to be performed or complied with. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor will any single or partial exercise of any right or power, or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The waiver by any party hereto of a breach of any term or provision hereof shall not be construed as a waiver of any subsequent breach. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.

          Section 7.11 Interpretation; Absence of Presumption .

                    (a) For the purposes hereof: (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits) and not to any particular provision of this Agreement, and Article, Section, paragraph, Exhibit and Schedule references are to the Articles, Sections, paragraphs, Exhibits, and Schedules to this Agreement unless otherwise specified; (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without

-19-


limitation,” unless the context otherwise requires or unless otherwise specified; and (iv) the word “or” shall not be exclusive.

                    (b) With regard to each and every term and condition of this Agreement and any and all agreements and instruments subject to the terms hereof, the parties hereto understand and agree that the same have or has been mutually negotiated, prepared and drafted, and if at any time the parties hereto desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration will be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement or any agreement or instrument subject hereto.

          Section 7.12 Severability . Any provision hereof that is held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, shall be ineffective only to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof, provided , however , that the parties will attempt in good faith to reform this Agreement in a manner consistent with the intent of any such ineffective provision for the purpose of carrying out such intent.

          Section 7.13 Schedules . The Schedule of Exceptions to this Agreement (the “Schedule of Exceptions” ) shall be arranged in sections and subsections corresponding to the numbered section and lettered subsections of this Agreement. Any information disclosed in any such section or subsection shall be deemed fully disclosed for the purposes of all of the other such sections and subsections and shall be deemed to qualify all representations and warranties of the Company if the applicability of such information to such other section or subsection is reasonably apparent on its face. Neither the specification (directly or indirectly by reference to a defined term hereof) of any dollar amount in the representations and warranties set forth in Article II nor the inclusion of any items in the Schedule of Exceptions shall be deemed to constitute an admission by the Company or the Purchasers, or otherwise imply, that any such amount or such items so included are material for the purposes of this Agreement. The inclusion of, or reference to, any item within any particular section or subsection to the Schedule of Exceptions does not constitute an admission by the Company or the Purchasers that such item meets any or all of the criteria set forth in this Agreement for inclusion in such section or subsection.

[The next page is the signature page]

-20-


          The parties have caused this Securities Purchase Agreement to be executed as of the date first written above.

 

 

 

 

THESTREET.COM, INC.

 

 

 

 

By:

 

 

 


 

 

Name:  Thomas J. Clarke, Jr.

 

 

Title:    Chairman of the Board

 

 

             and Chief Executive Officer

 

 

 

 

TCV VI, L.P.

 

 

 

 

By:

   Technology Crossover Management

 

 

   VI, L.L.C.

 

Its:

   General Partner

 

 

 

 

By:

 

 

 


 

 

Name:

 

 

Title:

 

 

 

 

TCV MEMBER FUND, L.P.

 

 

 

 

By:

  Technology Crossover Management

 

 

  VI, L.L.C.

 

Its:

  General Partner

 

 

 

 

By:

 

 

 


 

 

Name:

 

 

Title:

S-1


EXHIBIT A
DEFINED TERMS

          1. The following capitalized terms have the meanings indicated:

          “ Advisers Act ” means the Investment Advisers Act of 1940, as amended.

          “ Affiliate ” of any Person means any Person, directly or indirectly, controlling, controlled by or under common control with such Person.

          “ Code ” means the Internal Revenue Code of 1986, as amended.

          “ Common Stock ” means the Company’s common stock, $0.01 par value per share.

          “ DGCL” means the Delaware General Corporation Law.

          “ ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

          “ Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “ GAAP ” means generally accepted accounting principles as in effect in the United States.

          “ HSR Act ” means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and rules and regulations promulgated thereunder.

          “ Intellectual Property Rights ” means all registered copyrights, copyright registrations and copyright applications, trademark registrations and applications for registration, patents and patent applications, trademarks, service marks, trade names and Internet domain names that are used by the Company or any of its Subsidiaries in their business as presently conducted, including all (i) databases, computer programs and other computer software user interfaces, know-how, trade secrets, customer lists, proprietary technology, processes and formulae, source code, object code, algorithms, development tools, instructions and templates created by or on behalf of the Company or any of its Subsidiaries and (ii) inventions, trade dress, logos and designs created by or on behalf or any of the Company or any of its Subsidiaries.

          “ Investment Company Act ” mean the Investment Company Act of 1940, as amended.

          “ Investor Rights Agreement” means the Investor Rights Agreement among the Company and each of the Purchasers in the form attached to the Agreement as Exhibit C .

          “ Lien ” means any mortgage, pledge, security interest or other encumbrance.

          “ Material Adverse Effect ” means a material adverse effect upon the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole.

          “ Material Subsidiaries” means Promotions.com LLC, a Delaware limited liability company, Corsis Technology Group II, LLC, a New York limited liability company, SP-TSC

A-1


Holdings LLC, a Delaware limited liability company, Stockpickr LLC, a Delaware limited liability company, BFPC Newco LLC, a Delaware limited liability company, Bankers Financial Products Corporation, a Wisconsin corporation, and BankingMyWay.com LLC, a Wisconsin limited liability company.

          “ Permitted Disclosee” means any former partners of a Purchaser who retained an economic interest in such Purchaser, and any current or prospective partner, limited partner, general partner or management company of such Purchaser (or any employee or representative of any of the foregoing).

          “ Person ” means an individual, corporation, partnership, limited liability company, joint venture, trust or unincorporated organization or a government or agency or political subdivision thereof.

          “ Proxy Statement” means the Company’s definitive proxy statement for its 2007 annual meeting of stockholders, as filed with the SEC on April 23, 2007.

          “ Restricted Affiliate” means: (a) any Person who is directly or indirectly responsible for the formation, management, operations, oversight or administration of the Purchasers (including, without limitation, any principals, partners or employees of any such Person); (b) any investment fund directly or indirectly formed or controlled by any one or more Persons referred to in the preceding clause (a); and (c) any direct or indirect Subsidiary of any Person referred to in the preceding clauses (a) or (b) in which any one or more such Persons have the right to elect (directly or indirectly) a majority of the board of directors (or a comparable governing body with a different name) of such Subsidiary or own a majority of the voting securities entitled to elect the board of directors (or comparable governing body with a different name) of such Subsidiary.

          “ Representative” means, with respect to a particular Person, any director, officer, manager, partner, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.

          “ Rights Agreement” means the Rights Agreement dated as of May 14, 1999 (as amended on August 7, 2000) between the Company and American Stock Transfer & Trust Company, a New York banking corporation, as rights agent.

          “ SEC” means the United States Securities and Exchange Commission.

          “ SEC Documents ” means all reports, schedules, registration statements and other documents (including all amendments, exhibits and schedules thereto) filed by the Company with the SEC on or after January 1, 2006.

          “ Short Sale” means: (a) a sale of Common Stock that is marked as a short sale; (b) any entering into or establishment of any arrangement constituting a “put equivalent position,” as defined by Rule 16a-1(h) promulgated under the Exchange Act; (c) entering into any swap, option or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of Common Stock, whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, in cash or otherwise; or (d) the announcement of any intent to do any of the foregoing. Notwithstanding

A-2


the foregoing, the parties agree that, except as otherwise provided in this Agreement, nothing in Section 4.3 shall restrict the ability of a Purchaser or any of its Restricted Affiliates to outright sell, distribute or transfer the Purchased Shares, the Conversion Shares and the Warrant Shares.

          “ Stock Plans” means the Company’s Amended and Restated 1998 Stock Incentive Plan and the Company’s 2007 Performance Incentive Plan.

          “ Subsidiary” has the meaning assigned to such term in Rule 1-02(x) of Regulation S-X promulgated by the SEC.

          “ Tax ” and “ Taxes ” means all federal, state, local and foreign taxes, including, without limitation, income, franchise, property, sales, withholding, payroll and employment taxes.

A-3


 

 

 

 

 

2.

The following terms are defined in the Sections of the Agreement indicated:

INDEX OF TERMS

 

 

 

 

 

Term

 

 

Page

 


 

 


 

Agreement

 

 

Preamble

 

Certificate of Designation

 

 

1.1

 

Closing

 

 

1.2

 

Closing Date

 

 

1.2

 

Company

 

 

Preamble

 

Confidential Information

 

 

4.4

(a)

Conversion Shares

 

 

2.4

(b)

ERISA Documents

 

 

2.16

 

Financial Statements

 

 

2.7

 

Preferred Stock

 

 

2.4

(a)

Purchased Shares

 

 

Recitals

 

Purchasers

 

 

Preamble

 

Related Agreements

 

 

2.2

 

Restricted Period

 

 

4.2

 

Schedule of Exceptions

 

 

7.13

 

Securities Act

 

 

2.4

(c)

Series B Preferred Stock

 

 

Recitals

 

TCV IV

 

 

Preamble

 

TCV Member Fund

 

 

Preamble

 

Warrant Shares

 

 

Recitals

 

Warrants

 

 

Recitals

 

A-4


SCHEDULE 1.1
PURCHASED SHARES AND WARRANT SHARES

 

 

 

 

 

 

 

 

 

 

 

Purchaser

 

Number of
Purchased Shares

 

Number of
Warrant Shares

 

Aggregate
Purchase Price

 


 


 


 


 

 

TCV VI, L.P.

 

 

5,455.95095

 

 

1,147,816

 

$

54,559,509.50

 

 

 

 

 

 

 

 

 

 

 

 

TCV Member Fund, L.P.

 

 

44.04905

 

 

9,267

 

$

440,490.50

 

 

 



 



 



 

Total

 

 

5,500.00000

 

 

1,157,083

 

$

55,000,000.00

 

 

 



 



 



 



Schedule of Exceptions

          This is the “Schedule of Exceptions” referred to in the Securities Purchase Agreement dated as of November 15, 2007 (the “Purchase Agreement”) among TheStreet.com, Inc., a Delaware corporation, TCV VI, L.P., a Delaware limited partnership, and TCV Member Fund, L.P., a Delaware limited partnership. Capitalized terms used but not defined herein have the meanings assigned to them in the Purchase Agreement.

 

 

 

Section 2.2

Authorization, Etc.

 

 

 

 

1.

The Amended and Restated Registration Rights Agreement dated as of December 21, 1998 among TheStreet.com, Inc. and the several persons named therein, as amended on August 7, 2000, requires the consent of the parties thereto with respect to the transactions contemplated by the Purchase Agreement. The Company has obtained such consents.

 

 

 

 

2.

See Section 2.3(a) through (g) of the Purchase Agreement.

 

 

Section 2.4

Authorized and Outstanding Stock

 

 

 

 

1.

TheStreet.com 2007 Performance Incentive Plan approved by shareholders May 24, 2007.

 

 

 

 

2.

TheStreet.com, Inc. Option to Purchase Common Stock dated November 1, 2007 (Investor Larry Starkweather; 175,600 shares at $12.57).

 

 

 

 

3.

The Amended and Restated Registration Rights Agreement dated December 21, 1998, as amended.

 

 

 

 

4.

Shares issued pursuant to (i) Membership Interest Purchase Agreement, dated as of April 25, 2007 between SP-TSC Holdings LLC and A.R. Partners LLC, (ii) Membership Interest Purchase Agreement, dated as of August 2, 2007, among TP Newco LLC, David Barnett and Gregg Alwine, and (iii) Stock Purchase Agreement, dated as of November 1, 2007, among BFPC Newco LLC, Larry Starkweather, Kyle Selberg, Rachelle Zorn and Robert Quinn (the “BFPC Purchase Agreement”).

 

 

 

 

5.

Escrow Agreement, dated as of August 2, 2007, among TP Newco LLC, Gregg Alwine and JP Morgan Chase Bank, N.A., as escrow agent

 

 

 

 

6.

Go2Net, Inc. and Vulcan Ventures Inc. were each granted rights by the Company with respect to the registration of Common Stock under the Securities Act pursuant to the Securities Purchase Agreement, dated as of August 7, 2000, among the Company, Go2Net, Inc. and Vulcan Ventures Inc. To the Company’s knowledge, as of the date of the Purchase Agreement, Go2Net, Inc. and Vulcan Ventures Inc. do not beneficially own any capital stock of the Company.

 

 

 

 

7.

The Options and other securities referenced in Section 2.4(a) and (b) of the Purchase Agreement.

 

Section 2.5

Subsidiaries

Schedule Exceptions to SPA (executed)


 

 

 

 

1.

Subsidiaries of the Company:

 

 

 

Promotions.com LLC, a Delaware limited liability company;

 

 

Corsis Technology Group II, LLC, a New York limited liability company;
SP-TSC Holdings LLC, a Delaware limited liability company;

 

 

Stockpickr LLC, a Delaware limited liability company;

 

 

BFPC Newco LLC, a Delaware limited liability company;

 

 

Bankers Financial Products Corporation, a Wisconsin corporation;
BankingMyWay.com LLC, a Wisconsin limited liability company;

 

 

TheStreet.com Ratings, Inc., a Delaware corporation;

 

 

SmartPortfolio.com, Inc., a Delaware corporation; and

 

 

Independent Research Group LLC, a Delaware limited liability company.


 

 

 

 

Section 2.10    Absence of Certain Events; No Material Adverse Change

 

 

 

 

 

1.

Resignation of President and Chief Operating Officer James Lonergan effective October 12, 2007.

 

 

 

 

2.

The transactions contemplated by the following:

 

 

 

 

 

 

a.

The BFPC Purchase Agreement;

 

 

 

 

 

 

b.

Escrow Agreement, by and among the BFPC Newco LLC (“BFPC”), Larry Starkweather, as the Agent, and JP Morgan Chase Bank, N.A., as the escrow agent;

 

 

 

 

 

 

c.

Employment Agreement, dated as of November 1, 2007, between the Company and Larry Starkweather;

 

 

 

 

 

 

d.

Assignment, Assumption, and Amendment to Employment Agreement, by and among the Company, BFPC, and Kyle Selberg;

 

 

 

 

 

 

e.

Assignment, Assumption, and Amendment to Employment Agreement, by and among the Company, BFPC and Rachelle Zorn;

 

 

 

 

 

 

f.

Assignment, Assumption, and Amendment to Employment Agreement, by and among the Company, BFPC and Robert Quinn;

 

 

 

 

 

 

g.

Option to Purchase Common Stock in the Company, granted to Larry Starkweather;

 

 

 

 

 

 

h.

Stock Subscription Agreement, by and between BFPC and Kyle Selberg, dated as of October 31, 2007;

 

 

 

 

 

 

i.

Stock Subscription Agreement, by and between BFPC and Rachelle Zorn, dated as of October 31, 2007; and

 

 

 

 

 

 

j.

Stock Subscription Agreement, by and between BFPC and Robert Quinn, dated as of October 31, 2007.

 

 

Section 2.11    Litigation

           1. IPO Securities Litigation

          In December 2001, the Company was named as a defendant in a securities class action filed in United States District Court for the Southern District of New York related to its initial public offering (“IPO”) in May 1999. The lawsuit also named as individual defendants certain of


its former officers and directors, James J. Cramer, a current director, and certain of the underwriters of the IPO, including The Goldman Sachs Group, Inc., Hambrecht & Quist LLC (now part of JP Morgan Chase & Co.), Thomas Weisel Partners LLC, Robertson Stephens Inc. (an investment banking subsidiary of BankBoston Corp., later FleetBoston Corp., which ceased operations in 2002), and Merrill Lynch Pierce Fenner & Smith, Inc. Approximately 300 other issuers and their underwriters have had similar suits filed against them, all of which are included in a single coordinated proceeding in the District (the “IPO Litigations”). The complaints allege that the prospectus and the registration statement for the IPO failed to disclose that the underwriters allegedly solicited and received “excessive” commissions from investors and that some investors in the IPO allegedly agreed with the underwriters to buy additional shares in the aftermarket in order to inflate the price of the Company’s stock. An amended complaint was filed April 19, 2002. The Company and the officers and directors were named in the suits pursuant to Section 11 of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934, and other related provisions. The complaints seek unspecified damages, attorney and expert fees, and other unspecified litigation costs.

          On July 1, 2002, the underwriter defendants in the consolidated actions moved to dismiss all of the IPO Litigations, including the action involving the Company. On July 15, 2002, the Company, along with other non-underwriter defendants in the coordinated cases, also moved to dismiss the litigation. On February 19, 2003, the district court ruled on the motions. The district court granted the Company’s motion to dismiss the claims against it under Rule 10b-5, due to the insufficiency of the allegations against the Company. The motions to dismiss the claims under Section 11 of the Securities Act were denied as to virtually all of the defendants in the consolidated cases, including the Company. In addition, the individual defendants in the IPO Litigations, including Mr. Cramer, signed a tolling agreement and were dismissed from the action without prejudice on October 9, 2002.

          In June 2003, a proposed collective settlement of this litigation was structured between the plaintiffs, the issuer defendants in the consolidated actions, the issuer officers and directors named as defendants, and the issuers’ insurance companies. On or about June 25, 2003, a committee of the Company’s Board of Directors conditionally approved the proposed settlement. The settlement agreements collectively provide as follows:

          The Company and the other issuer defendants would assign their interests in claims against the underwriters for excess compensation in connection with their IPOs to the plaintiffs, and agree not to assert certain other claims against the underwriters, such as underpricing, indemnification and antitrust claims, except in certain defined circumstances. A number of issuers’ assigned claims have been asserted already; these were dismissed by the district court on February 24, 2006. The dismissal is currently on appeal to the Second Circuit Court of Appeals, although the plaintiffs have indicated their intent to withdraw the appeal in light of recent events, detailed below. The Company and the other issuer defendants would also cooperate with the plaintiffs to provide the plaintiffs with informal discovery as the litigation continues as to the underwriter defendants. Further, the plaintiffs would receive an undertaking from the insurers of the Company and the other issuer defendants guaranteeing that the plaintiff class would recover, in the aggregate, $1 billion from their various suits against the underwriters (including the claims assigned by the issuer defendants). The Company’s per capita portion of the maximum amount payable to the plaintiffs under the settlement, assuming the entire $1 billion is payable, would be approximately $3–4 million. The plaintiffs’ actual recoveries from the underwriter defendants (through settlements or damages assessed as a result of litigation) would be applied against the guarantee; and to the extent that the underwriter defendants settle all of the cases for at least $1 billion, no payment would be required under the issuer defendants’ settlement. In exchange for


the consideration described above, the plaintiffs would release the non-bankrupt issuer defendants from all claims against them (the bankrupt issuers would receive a covenant not to sue) and their individual defendants. Under the terms of the settlement agreements, all costs and expenses of the settlement (including legal expenses after June 1, 2003) would be borne by the insurance carriers of the Company and the other issuer defendants using each issuer defendant’s existing insurance coverage, with deductibles waived.

          The plaintiffs have continued to litigate against the underwriter defendants. The district court directed that the litigation proceed within a number of “focus cases” rather than in all of the 310 cases that have been consolidated. The Company’s case is not one of these focus cases. On October 13, 2004, the district court certified the focus cases as class actions. The underwriter defendants appealed that ruling, and on December 5, 2006, the Court of Appeals for the Second Circuit reversed the district court’s class certification decision. On April 6, 2007, the Second Circuit denied plaintiffs’ petition for rehearing. In light of the Second Circuit opinion, counsel to the issuers has informed the district court that the settlement with the plaintiffs described above cannot be approved because the defined settlement class, like the litigation class, cannot be certified with the Court of Appeals. Because the Company’s settlement with the plaintiffs involves the certification of the case as a class action as part of the approval process, the impact of this ruling on the Company’s settlement is unclear. The settlement was terminated pursuant to a Stipulation and Order dated June 25, 2007.

          We cannot predict whether we will be able to renegotiate a settlement that complies with the Second Circuit’s mandate. If we cannot, we intend to defend the action vigorously. Any unfavorable outcome of this litigation could have an adverse impact on the Company’s business, financial condition, results of operations, and cash flows.

          2. IPO Securities Litigation Section 16(b) Claim

          On August 1, 2007, the Company received a letter from counsel to Vanessa Simmonds demanding that the Company’s Board of Directors prosecute a claim against the Company’s IPO underwriters, in addition to certain of its officers, directors and principal shareholders as identified in the IPO prospectus, for violations of Section 16(b) of the Securities Exchange Act of 1934. The letter alleges that these entities and individuals, by coordinating their efforts to acquire and dispose of the Company ’s securities in connection with its IPO, constituted a group owning in excess of 10% of the Company ’s outstanding common stock under Exchange Act rules, and were therefore subject to short swing trading prohibition of Section 16(b) during the period from May 11, 1999 (the date of the IPO) through May 10, 2000. Accordingly, the letter alleges, the group members should be compelled to disgorge the profits they made through purchases and sales of Company stock during the period.

          Statutorily, 60 days after issuing the demand letter, a cause of action automatically vested in Ms. Simmonds to bring this suit derivatively if the Company did not bring suit. After considering the demand, the Special Litigation Committee of the Company’s Board of Directors determined that the claim was without merit and that it was not in the best interest of the Company to bring suit against the underwriters and directors as demanded by Ms. Simmonds. On its face, the claim appears to be quite weak: (i) the underlying conduct took place more than seven years ago, and therefore may be time-barred, (ii) underwriters are specifically exempted from the provisions of Section 16(b), and (iii) shares held by the Company’s directors and officers were locked up for at least six months following the date of the IPO, and therefore could not have been used to obtain short-swing profits.


          On October 10, 2007, the Company received a formal Complaint filed by Vanessa Simmonds in the United States District Court in the Western District of Washington. The Complaint does not specify the amount of damages claimed. In addition, as described above, the claims are weak and the Company is named only as a Nominal Defendant. For these reasons, a loss contingency for potential damages or settlement costs relating to this potential claim is not probable or reasonably estimable under the guidance of SFAS No. 5.

          3. Groves Employment Litigation

          On December 8, 2005, Judy Groves, a former employee of the Company’s registered broker-dealer subsidiary, Independent Research Group LLC (“IRG”), brought a lawsuit in New York State Supreme Court against IRG and the Company, alleging the breach of her employment agreement with IRG. Plaintiff Groves seeks $212,500, plus interest, costs and attorneys’ fees. Both IRG and the Company intend to defend the action vigorously. Currently, the action is in the discovery phase.

Section 2.16    Employee Matters

 

 

 

 

1.

TheStreet.com, Inc. 401(k) Savings Plan: Effective 01/01/1997.

 

 

 

 

2.

Corsis Technology Group 401(k) Plan: Effective 01/01/2002.

 

 

 

 

3.

Simple IRA Bankers Financial Products Corp.: Effective: 03/01/04.



Exhibit 99.1

November 15, 2007 04:01 PM Eastern Time
TCV to Invest $55M in TheStreet.com to Accelerate Growth

NEW YORK—(BUSINESS WIRE)—TheStreet.com, Inc. (NASDAQ: TSCM), a leading financial media company, today announced that Technology Crossover Ventures (TCV), a leading provider of growth capital to late-stage private and public companies, has agreed to purchase a minority stake in TheStreet.com to support the Company’s accelerated expansion strategy.

The investment of $55 million represents the purchase of preferred stock and warrants to purchase shares of common stock. The preferred stock converts into common stock at $14.26 per share. The five-year warrants permit TCV to purchase approximately 1.1 million shares of common stock at an exercise price of $15.686, or a premium of 10%. The preferred stock receives dividends at the same rate as the underlying company’s common shares, and has a one-time liquidation preference.

TheStreet.com’s growth strategy focuses on broadening its content and reach through both organic growth and strategic accretive acquisitions as it seeks to become the premier online destination for money. This investment will accelerate growth and provide TheStreet.com with additional Board expertise, as Jay Hoag, founding general partner of TCV, will join TheStreet.com board.

“TCV is one of the largest private equity and venture capital firms, with a strong reputation and history of success,” said Tom Clarke, chairman and CEO of TheStreet.com. “The confidence TCV has shown in our current and future business models is a firm endorsement of TheStreet.com’s strategy. Our alignment with TCV is a clear indicator of our intention to aggressively move forward with our expansion plans as a leading player in the online financial media sector, and I look forward to working with them on our future strategy.”

The Company has aggressively redefined itself in the online media landscape with such acquisitions as Stockpickr.com - the fastest growing financial social networking Web site; BankingMyWay.com – providing consumers nationwide with the best rates on CDs, savings accounts, interest checking, money markets, mortgage/home equity and auto loans; and Rate-Watch.com – one of the nation’s largest providers of pricing solutions for banks and credit unions. The Company also acquired Promotions.com - a premier one-stop shop for advertisers, advertising agencies and corporations in search of a broad spectrum of innovative, interactive advertising solutions. In the coming months, TheStreet.com will launch a new site, Mainstreet.com and will re-launch its free sites, TheStreet.com and Stockpickr.com, as it enhances its position as the premier destination for money.

“We at TCV view TheStreet.com as a premier financial media company and an industry pioneer,” said Jay Hoag. “Our confidence in TheStreet.com’s growth strategy is based on an appreciation of its strong historical execution and an ability to intuitively navigate marketplace trends. Our investment in the company should further that strategy, allowing TheStreet.com to achieve its full potential. I look forward to working with Tom and entire TheStreet.com Board.”

About TCV

Technology Crossover Ventures (TCV), founded in 1995, is a leading growth equity investor focused on investing in premier later stage technology companies. With $7.7 billion in capital under management, TCV has made growth equity, PIPE and recapitalization investments in over 150 companies leading to 44 initial public offerings and more than 30 strategic sales. Representative investments include Alteon Websystems, Altiris, Automated Trading Desk, CNET, Capella Education Company, eHarmony, Expedia, Fandango, InPhonic, INFONXX, iVillage, Liquidnet, Netflix, RealNetworks, Redback Networks, RiskMetrics Group, Solect Technology,


TradingScreen, Travelport, Webroot and Xylan. TCV has eight partners and is headquartered in Palo Alto, California. For more information about TCV, visit www.tcv.com .

About TheStreet.com, Inc.

TheStreet.com, Inc. (Nasdaq: TSCM) is a leading independent producer of financial news and ratings, business and investment content, and innovative custom advertising solutions. The Company meets a broad scope of consumer, professional, and advertiser demands through multimedia distribution of advertising supported content and services and paid subscriptions. Founded in 1996, TheStreet.com, Inc. pioneered the electronic publishing of financial information on the Internet. Today, TheStreet.com’s proprietary network includes RealMoney.com, Stockpickr.com, TheStreet.com Ratings, BankingMyWay.com and Rate-Watch.com, TheStreet.com TV and Promotions.com, reaching one of the most affluent, influential audiences on the Web. TheStreet.com’s expanding interactive network is revolutionizing the way individuals make financial decisions and the way advertisers engage in online promotions.

Statements contained in this news release not related to historical facts may be deemed forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties (described in the Company’s SEC filings) that could cause actual results to differ.