Form 8-K for THINK PARTNERSHIP INC
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22-Mar-2006
Entry into a Material Definitive Agreement, Financial Statements and Exhibi
Item 1.01 Entry into a Material Definitive Agreement.
On March 20, 2006, Think Partnership Inc. f/k/a CGI Holding Corporation (the "Company") entered into a definitive Securities Purchase Agreement with institutional investors, to sell in a private placement, $26.5 million of Series A Convertible Preferred Shares. The Securities Purchase Agreement is included with this Current Report on Form 8-K as Exhibit 10.1.
As described below, the preferred stock is convertible into shares of the Company's common stock upon the occurrence of certain events. If not converted, the Company will be required to redeem the preferred stock on the second anniversary of its issuance. The holders of the preferred stock will initially be paid dividends on the preferred stock equal to 10% of the face value of the preferred stock. The holders of the preferred stock will have the right to convert their holdings into shares of common stock at a price of $2.00 per share subject to possible adjustments from time to time. The Company anticipates filing the Certificate of Designations for the preferred stock with the State of Nevada at or immediately prior to the closing of the transactions contemplated by the Securities Purchase Agreement. The Certificate of Designations for the preferred stock is included with this Current Report on Form 8-K as Exhibit 10.2.
In connection with the preferred stock offering, the Company will also issue warrants to the institutional investors, exercisable for five years, to purchase up to 5,300,000 shares of common stock at an initial exercise price of $2.50 per share, subject to adjustments from time to time if the Company issues common stock, other than in connection with acquisitions or pursuant to a shareholder-approved incentive plan, at a price less than $2.50 per share. The form of warrant which will be delivered to each of the institutional investors at the closing of the transactions contemplated by the Securities Purchase Agreement is included with this Current Report on Form 8-K as Exhibit 10.4.
In connection with the Securities Purchase Agreement, the Company also granted to the institutional investors registration rights pursuant to a definitive Registration Rights Agreement. Under the Registration Rights Agreement, the Company will be obligated to file, within 45 business days following the closing of the transactions contemplated by the Securities Purchase Agreement, a registration statement covering the shares of common stock issuable upon conversion of the preferred stock, and the shares of common stock issuable upon the exercise of the warrants. If the registration statement does not become effective within 120 days following the closing, then the dividend rate on the preferred stock will increase to 15%. The maximum potential damages payable by the Company in regard to a default, including the increase in the amount of the dividends payable if the registration statement does not become effective within 120 days following the closing, are capped at 10% of the aggregate purchase price of the preferred stock, or $2.65 million. If the registration statement does not become effective within 180 days following the closing, the Company will be deemed to be in default and the preferred stock will be subject to mandatory redemption at the option of the holders. If the registration statement becomes effective within the required timeframe, the dividend rate on the preferred stock will be reduced to 6% per annum. The Registration Rights Agreement is included with this Current Report on Form 8-K as Exhibit 10.3.
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The preferred stock will be subject to mandatory conversion at the option of the Company, if among other things, the registration statement is effective, and the closing price of the Company's common stock is $5 or higher for 20 consecutive trading days with an average daily trading volume of at least 100,000 shares during the twenty day period.
The Company intends to use the net proceeds of the private placement, estimated to be $24.8 million, to complete the previously announced purchase of Litmus Media, Inc. and for general corporate purposes. The closing of the transactions contemplated by the Securities Purchase Agreement is subject to approval of the AMEX to list the common stock issuable upon conversion of the preferred stock and the shares of common stock issuable upon the exercise of the warrants, as well as customary closing conditions. As a result, there can be no assurances that the transactions contemplated by the Securities Purchase Agreement and described herein will close on the terms described herein, if at all.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of the Businesses Acquired.
(b) Pro Forma Financial Information
(d) Exhibits
10.1 Securities Purchase Agreement dated as of March 20, 2006 by and among Think Partnership Inc. and the investors listed on the Schedule of Buyers attached thereto
10.2 Certificate of Designations, Preferences and Rights of the Series A Convertible Preferred Stock of Think Partnership Inc.
10.3 Registration Rights Agreement dated as of March 20, 2006, by and among Think Partnership Inc. and the schedule of Buyers attached thereto
10.4 Form of Warrant
99.1 Press Release Announcing Think Partnership Inc. Signs $26.5 Million Private Financing of Convertible Preferred
