>>TMSR SEC FORM 8K [Filed 02/16/99] ISSUES OF FACTS, Pt II
"...(ii) At the Tranche 2 Closing, (i) the Company shall deliver
to or cause to be delivered to each Purchaser (1) a stock certificate,
registered in the name of such Purchaser or such Purchaser's Designee
representing such number of Tranche 2 Shares equal to the Tranche 2 Purchase
Price (or 50% of the Tranche 2 Purchase Price if there has been an Early
Tranche 2 Closing pursuant to Section 1.3(b)(i) above) paid by such Purchaser
or such Purchaser's Designee divided by the Per Share Market Value of the
Common Stock on the trading day immediately preceding the Tranche 2 Closing
Date, (2) the legal opinion referred to in Section 4.1(xi), and (3) all other
documents, instruments and writings required to have been delivered at or
prior to the Tranche 2 Closing Date by the Company pursuant to this
Agreement, including the Transfer Agent Instructions referenced in Section
4.1(xvi), and (b) the Purchasers shall deliver or cause to be delivered to
the Company (1) the Tranche 2 Purchase Price (or 50% of the Tranche 2
Purchase Price if there has been an Early Tranche 2 Closing pursuant to
Section 1.3(b)(i) above), in immediately available funds by wire transfer to
an account designated in writing by the Company for such purpose on or prior
to the Tranche 2 Closing Date, and (2) all documents, instruments and
writings required to have been delivered at or prior to the Tranche 2 Closing
Date by the Purchasers pursuant to this Agreement.
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1.4 THE TRANCHE 3 CLOSING. (a) Subject to the terms and conditions
set forth in this Agreement, the Company shall have the right to deliver a
Subsequent Financing Notice requiring the Purchasers to purchase such number
of shares of Common Stock (the "TRANCHE 3 SHARES"), for an aggregate purchase
price of no less than $1,000,000 and no more than $6,000,000 (the "TRANCHE 3
PURCHASE PRICE"), equal to the Tranche 3 Purchase Price divided by the Per
Share Market Value of the Common Stock on the trading day immediately
preceding the Tranche 3 Closing Date, PROVIDED, HOWEVER that the Tranche 3
Purchase Price shall not be in excess of (i) $1,000,000 if the Per Share
Market Value on the trading day immediately preceding the Tranche 3 Closing
Date is less than or equal to $8.00, (ii) $2,000,000 if the Per Share Market
Value on the trading day immediately preceding the Tranche 3 Closing Date is
greater than $8.00 but less than or equal to $9.00, (iii) $3,000,000 if the
Per Share Market Value on the trading day immediately preceding the Tranche 3
Closing Date is greater than $9.00 but less than or equal to $10.00, (iv)
$4,000,000 if the Per Share Market Value on the trading day immediately
preceding the Tranche 3 Closing Date is greater than $10.00 but less than or
equal to $17.00, (v) $4,500,000 if the Per Share Market Value on the trading
day immediately preceding the Tranche 3 Closing Date is greater than $17.00
but less than or equal to $18.00, (vi) $5,000,000 if the Per Share Market
Value on the trading day immediately preceding the Tranche 3 Closing Date is
greater than $18.00 but less than or equal to $19.00, (vii) $5,500,000 if the
Per Share Market Value on the trading day immediately preceding the Tranche 3
Closing Date is greater than $19.00 but less than or equal to $20.00, and
(viii) $6,000,000 if the Per Share Market Value on the trading day
immediately preceding the Tranche 3 Closing Date is greater than $20.00. The
Company may not deliver the Subsequent Financing Notice relating to the
Tranche 3 Shares earlier than 5 Business Days after the earlier to occur of
the Tranche 2 Closing Expiration Date or the Second Tranche 2 Adjustment Date
or, if such day is not a Business Day, the next succeeding Business Day. The
closing of the purchase and sale of the Tranche 3 Shares (the "TRANCHE 3
CLOSING") shall take place at the offices of RSPAB on the fifth Business Day
after the Subsequent Financing Notice is deemed delivered hereunder or on
such other date as otherwise agreed to by the parties; PROVIDED, HOWEVER,
that in no case shall the Tranche 3 Closing take place unless and until the
conditions listed in SECTION 4.2 have been satisfied by the Company or waived
by the Purchasers and in no event shall the Tranche 3 Closing occur
subsequent to the 150th day after the earlier to occur of the Tranche 2
Closing Expiration Date or the Tranche 2 Closing Date or, if such day is not
a Business Day, the next succeeding Business Day (such date, the "TRANCHE 3
CLOSING EXPIRATION DATE"). The date of the Tranche 3 Closing is hereinafter
referred to as the "TRANCHE 3 CLOSING DATE."
(b) At the Tranche 3 Closing, (i) the Company shall deliver
to or cause to be delivered to each Purchaser (1) a stock certificate,
registered in the name of such Purchaser or such Purchaser's Designee
representing such number of Tranche 3 Shares equal to the Tranche 3 Purchase
Price paid by such Purchaser or such Purchaser's Designee divided by the Per
Share Market Value of the Common Stock on the trading day immediately
preceding the Tranche 3 Closing Date to be acquired at the Tranche 3 Closing
by the Purchasers, (2) a common stock purchase warrant (the "FIRST TRANCHE 3
WARRANT"), in the form of EXHIBIT E-1, registered in the name of each
Purchaser or the name of each Purchaser's Designee, entitling the Purchasers
to acquire an aggregate number of shares of Common Stock equal to 6.25% of
the quotient obtained
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by dividing (A) (1) the sum of (i) the Tranche 1 Purchase Price, (ii) the
Tranche 2 Purchase Price and (iii) the Tranche 3 Purchase Price less (2)
$12,000,000, by (B) 132.5% times the Per Share Market Value of the Common
Stock on the trading day immediately preceding the Tranche 3 Closing Date, at
an exercise price equal to 125% of the Per Share Market Value of the Common
Stock on the trading day immediately preceding the Tranche 3 Closing Date,
upon the terms set forth therein, (3) a common stock purchase warrant (the
"SECOND TRANCHE 3 WARRANT"), in the form of EXHIBIT E-2, registered in the
name of each Purchaser or the name of each Purchaser's Designee, entitling
the Purchasers to acquire an aggregate number of shares of Common Stock equal
to 6.25% of the quotient obtained by dividing (A) (1) the sum of (i) the
Tranche 1 Purchase Price, (ii) the Tranche 2 Purchase Price and (iii) the
Tranche 3 Purchase Price less (2) $12,000,000, by (B) 132.5% times the Per
Share Market Value of the Common Stock on the trading day immediately
preceding the Tranche 3 Closing Date, at an exercise price equal to 140% of
the Per Share Market Value of the Common Stock on the trading day immediately
preceding the Tranche 3 Closing Date upon the terms set forth therein, (4)
the legal opinion referred to in Section 4.2(xi), and (5) all other
documents, instruments and writings required to have been delivered at or
prior to the Tranche 3 Closing Date by the Company pursuant to this
Agreement, including the Transfer Agent Instructions referenced in Section
4.1(xvi), and (b) the Purchasers shall deliver or cause to be delivered to
the Company (1) the Tranche 3 Purchase Price, in immediately available funds
by wire transfer to an account designated in writing by the Company for such
purpose on or prior to the Tranche 3 Closing Date, and (2) all documents,
instruments and writings required to have been delivered at or prior to the
Tranche 3 Closing Date by the Purchasers pursuant to this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The
Company hereby makes the following representations and warranties to the
Purchasers:
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation,
duly incorporated and validly existing under the laws of the jurisdiction of
its incorporation, with the requisite corporate power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries other than those set forth on
Schedule 2.1(a) (collectively the "SUBSIDIARIES"). Each of the Subsidiaries
is an entity, duly incorporated or otherwise organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. Each of the Company and the Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not, individually or
in the aggregate, be reasonably expected to have or result in a material
adverse effect on the results of operations,
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assets, prospects, or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT").
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by each of this Agreement, the Registration Rights
Agreement and the Warrants (collectively, the "TRANSACTION DOCUMENTS"), and
otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of the Company and
no further corporate action is required by the Company. Each of the
Transaction Documents has been duly executed by the Company and, when
delivered (or filed, as the case may be) in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. Neither the Company nor
any Subsidiary is in violation of any of the provisions of its respective
articles of incorporation, by-laws or other charter documents.
(c) CAPITALIZATION. The number of authorized, issued and
outstanding capital stock of the Company is set forth in SCHEDULE 2.1(c). No
shares of Common Stock are entitled to statutory preemptive or similar
rights, nor is any holder of the Common Stock entitled to preemptive or
similar rights arising out of any agreement or understanding with the Company
by virtue of any of the Transaction Documents. Except as disclosed in
SCHEDULE 2.1(c), there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to,
or, except as a result of the purchase and sale of the Securities, rights or
obligations convertible into or exchangeable for, or giving any Person any
right to subscribe for or acquire any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or securities or rights convertible or exchangeable into shares of Common
Stock. To the knowledge of the Company, except as specifically disclosed in
the SEC Reports (as defined below) or SCHEDULE 2.1(c), no Person or group of
related Persons beneficially owns (as determined pursuant to Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")) or has the right to acquire by agreement with or by
obligation binding upon the Company beneficial ownership of in excess of 5%
of the Common Shares. A "PERSON" means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint
venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
(d) ISSUANCE OF THE SECURITIES The Securities are duly
authorized, and, when issued and paid for in accordance with the terms
hereof, shall have been validly issued, fully paid and nonassessable, free
and clear of all liens, encumbrances and rights of first refusal of any kind
created by the Company (collectively, "LIENS"). The Company has on the date
hereof and will on each Closing Date, at all times while the Warrants are
outstanding, maintain an adequate reserve of duly authorized Common Stock, to
enable it to perform its exercise and other obligations under this Agreement
and the Warrants on each such Closing Date. With respect to the Securities
to be issued at or in connection with each Closing hereunder, such number of
reserved and available
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shares of Common Stock is not less than the sum (i) the maximum number of
shares of Common Stock which may be issued to the Purchasers pursuant to
Section 1.3 on the Tranche 2 Closing Date and pursuant to Section 1.4 on the
Tranche 3 Closing Date, respectively, assuming, that each of the Tranche 2
Purchase Price and the Tranche 3 Purchase Price equals $6,000,000, (ii) the
maximum number of Adjustment Shares which may be issued to the Purchasers
pursuant to Section 3.15 at any time after the Tranche 1 Closing Date, the
Tranche 2 Closing Date and Tranche 3 Closing Date, respectively, assuming
that the Per Share Market Value of the Common Stock utilized to determine any
such Adjustment Price on each such date is 50% of the Per Share Market Value
on the trading day immediately preceding the Tranche 1 Closing Date and (iii)
the number of shares of Common Stock issuable upon exercise of the First
Tranche 1 Warrants and Second Tranche 1 Warrants and (iv) the number of
shares of Common Stock issuable upon exercise of the First Tranche 3 Warrants
and Second Tranche 3 Warrants assuming that the Tranche 2 Purchase Price is
equal to $6,000,000 and the Tranche 3 Purchase Price is equal to $6,000,000
and the Per Share Market Value of the Common Stock on the trading day
immediately preceding the Tranche 3 Closing Date is $20.01 (such number of
shares of Common Stock to be reserved prior to each Closing Date shall be
referred to as the "INITIAL MINIMUM"). All such authorized shares of Common
Stock shall be duly reserved for issuance to the holders of the Shares,
Adjustment Shares and the Warrants. The shares of Common Stock issuable upon
exercise of the Warrants are referred to herein as the "UNDERLYING SHARES".
The Shares, the Adjustment Shares, the Warrants and the Underlying Shares are
collectively referred to as, the "SECURITIES."
(e) NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with
or violate any provision of its Articles of Incorporation (as amended through
the date hereof), or (ii) subject to obtaining the Required Approvals (as
defined below), conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, indenture or instrument (evidencing a Company debt or otherwise)
to which the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which
the Company is subject (including federal and state securities laws and
regulations and the rules and regulations of the principal market or exchange
on which the Common Stock is listed or traded), or by which any property or
asset of the Company is bound or affected, except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect. The
business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental authority, except for violations
which, individually or in the aggregate, could not reasonably be expected to
have or result in a Material Adverse Effect.
(f) FILINGS, CONSENTS AND APPROVALS. Neither the Company nor any
Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make
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any filing or registration with, any court or other federal, state, local or
other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filing of the registration statements with the
Commission meeting the requirements set forth in the Registration Rights
Agreement and covering the resale of the Shares, the Adjustment Shares and
the Underlying Shares by the Purchasers, (ii) the application(s) to the
Nasdaq National Market (the "NASDAQ") for the listing of the Shares, the
Adjustment Shares and the Underlying Shares with the NASDAQ (and with any
other national securities exchange or market on which the Common Stock is
then listed), (iii) applicable Blue Sky filings, (iv) the filing of Current
Reports on Form 8-K with the Commission disclosing the transaction
contemplated hereby, (v) the filing of Forms D with the Commission as
required by Regulation D promulgated under the Securities Act and (vi) in all
other cases where the failure to obtain such consent, waiver, authorization
or order, or to give such notice or make such filing or registration could
not have or result in, individually or in the aggregate, a Material Adverse
Effect (the consents, waivers, authorizations, orders, notices and filings
referred to in (i)-(iv) of this Section are, collectively, the "REQUIRED
APPROVALS").
(g) LITIGATION; PROCEEDINGS. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents
or the Securities or (ii) could, individually or in the aggregate, be
reasonably expected to have or result in a Material Adverse Effect.
(h) NO DEFAULT OR VIOLATION. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has
occurred which has not been waived which, with notice or lapse of time or
both, would result in a default by the Company or any Subsidiary under), nor
has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound, (ii) is in violation of any order
of any court, arbitrator or governmental body, or (iii) is in violation of
any statute, rule or regulation of any governmental authority, except, in
each case as could not individually or in the aggregate, reasonably be
expected to, have or result in a Material Adverse Effect.
(i) PRIVATE OFFERING. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Sections
2.2(b)-(g), the offer, issuance and sale of the Securities to the Purchasers
as contemplated hereby are exempt from the registration requirements of the
Securities Act of 1933, as amended (the "SECURITIES ACT"). Neither the
Company nor, to the Company's knowledge, any Person acting on its behalf has
taken any action which could subject the offering, issuance or sale of the
Securities to the registration requirements of the Securities Act. Neither
the Company nor, to the Company's knowledge, any Person acting on the
Company's behalf has solicited any offer to buy or sell the Securities by
means of any form of general solicitation or advertising..."
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