PREFERRED STOCK AND WARRANTS
PURCHASE AGREEMENT
DATED MARCH 29, 1998
BETWEEN TRM COPY CENTERS CORPORATION
AND READYCASH INVESTMENT PARTNERS, L.P.
TABLE OF CONTENTS
1. Authorization and Closing................................................ 1
1.1 Authorization of the Preferred Stock and the Warrants.............. 1
1.2 Purchase and Sale of the Preferred Stock and the Warrants.......... 1
1.3 The Closing........................................................ 1
2. Conditions of Purchaser's Obligation at the Closing...................... 2
2.1 Representations and Warranties; Covenants.......................... 2
2.2 Articles of Amendment.............................................. 2
2.3 Investor's Rights Agreement........................................ 2
2.4 Consents and Approvals............................................. 2
2.5 Shareholder Approval............................................... 2
2.6 Opinion of the Company's Counsel................................... 2
2.7 Closing Documents.................................................. 2
2.8 Proceedings........................................................ 3
2.9 Waiver............................................................. 3
3. Conditions of the Company's Obligations at Closing....................... 3
3.1 Representations and Warranties; Covenants.......................... 3
3.2 Consents and Approvals............................................. 3
3.3 Shareholder Approval............................................... 4
4. Transfer of Restricted Securities........................................ 4
4.1 General Provisions................................................. 4
4.2 Opinion Delivery................................................... 4
4.3 Legend Removal..................................................... 4
5. Representations and Warranties of the Company............................ 4
5.1 Organization, Corporate Power and Licenses......................... 4
5.2 Capital Stock and Related Matters.................................. 5
5.3 Subsidiaries; Investments.......................................... 6
5.4 Authorization; No Breach........................................... 6
5.5 Financial Statements............................................... 6
5.6 Absence of Undisclosed Liabilities................................. 7
5.7 No Material Adverse Change......................................... 7
5.8 Assets............................................................. 7
5.9 Tax Matters........................................................ 7
5.10 Contracts and Commitments.......................................... 8
5.11 Intellectual Property Rights....................................... 8
5.12 Litigation, etc.................................................... 9
5.13 Brokerage.......................................................... 9
5.14 Governmental Consent, etc.......................................... 9
5.15 Employees.......................................................... 9
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5.16 Employee Benefit Plans.............................................10
5.17 Compliance with Laws...............................................10
5.18 Reports with the Securities and Exchange Commission................10
5.19 Disclosure.........................................................10
5.20 Closing Date.......................................................10
5.21 Forward-Looking Information........................................11
6. Definitions..............................................................11
6.1 Definitions........................................................11
7. Covenants................................................................13
7.1 Covenant to Seek Shareholder Approval..............................13
7.2 Agreement by Directors to Vote Shares..............................13
7.3 Stock Option Agreement.............................................13
7.4 Covenant to Increase Authorized Capital Stock......................13
7.5 Capitalization of Purchaser.......................................14
7.6 Board of Directors.................................................14
8. Miscellaneous............................................................15
8.1 Purchaser's Representations........................................15
8.2 Survival of Representations and Warranties.........................16
8.3 Successors and Assigns.............................................16
8.4 Expenses...........................................................16
8.5 Severability.......................................................16
8.6 Counterparts.......................................................17
8.7 Descriptive Headings; Interpretation...............................17
8.8 Governing Law......................................................17
8.9 Notices............................................................17
8.10 Indemnification....................................................18
8.11 Termination........................................................19
8.12 Termination Fees and Expenses......................................19
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TRM COPY CENTERS CORPORATION
PREFERRED STOCK AND WARRANTS
PURCHASE AGREEMENT
THIS AGREEMENT is made as of March 29, 1998, between TRM Copy Centers
Corporation, an Oregon corporation (the "Company"), and ReadyCash Investment
Partners, L.P., a Delaware limited partnership ("Purchaser"). Except as
otherwise indicated herein, capitalized terms used herein are defined in Section
6 hereof.
The parties hereto agree as follows:
Section 1. Authorization and Closing.
1.1 Authorization of the Preferred Stock and the Warrants. The Company
shall authorize the issuance and sale to Purchaser of (i) 1,777,778 shares of
its Series A Preferred Stock (the "Series A Preferred"), having the rights and
preferences set forth in Exhibit A attached hereto, and (ii) the warrants to
purchase 500,000 shares of Company Common Stock in the forms attached hereto as
Exhibit B-1 and Exhibit B-2 (the "Warrants"). The Series A Preferred is
convertible into shares of the Company's Common Stock (the "Common Stock"). The
Series A Preferred is referred to herein as the "Preferred Stock."
1.2 Purchase and Sale of the Preferred Stock and the Warrants. At the
Closing, the Company shall sell to Purchaser and, subject to the terms and
conditions set forth herein, Purchaser shall purchase from the Company 1,777,778
shares of Series A Preferred and the Warrants at an aggregate price of
$20,000,000.
1.3 The Closing. The closing of the purchase and sale of the Preferred
Stock and the Warrants (the "Closing") shall take place at the offices of Stoel
Rives LLP, 000 X.X. Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxx at 2:00 p.m.
Pacific Time (1) on or before May 4, 1998, if no vote of the Company's
shareholders is required for the consummation of the transactions contemplated
by this Agreement, (2) on the day on which the Company's shareholders approve
the transactions contemplated by this Agreement, if a vote of the Company's
shareholders is required, or (3) at such other place or on such other date as
may be mutually agreeable to the Company and Purchaser. At the Closing, the
Company shall deliver to Purchaser a stock certificate evidencing the Preferred
Stock to be purchased by Purchaser and the Warrants to be purchased by
Purchaser, registered in Purchaser's name, upon payment of the purchase price
thereof by a cashier's or certified check, or by wire transfer of immediately
available funds pursuant to written instructions provided by the Company to
Purchaser prior to the Closing, in the total amount of $20,000,000.
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Section 2. Conditions of Purchaser's Obligation at the Closing.
The obligation of Purchaser to purchase and pay for the Preferred Stock and the
Warrants at the Closing is subject to the satisfaction as of the Closing of the
following conditions:
2.1 Representations and Warranties; Covenants. The representations and
warranties contained in Section 5 hereof shall be true and correct in all
material respects at and as of the Closing as though then made, except to the
extent of changes caused by the transactions expressly contemplated herein, and
the Company shall have performed in all material respects all of the covenants
required to be performed by it hereunder prior to the Closing.
2.2 Articles of Amendment. The Company shall have duly adopted, executed
and filed with the Secretary of State of Oregon Articles of Amendment to its
Restated Articles of Incorporation establishing the terms and the relative
rights and preferences of the Preferred Stock in the form set forth in Exhibit A
hereto (the "Articles of Amendment"), and the Company shall not have adopted or
filed any other document designating terms, relative rights or preferences of
its preferred stock. The Articles of Amendment shall be in full force and effect
as of the Closing under the laws of Oregon and shall not have been amended or
modified.
2.3 Investor's Rights Agreement. The Company and Purchaser shall have
entered into an investor's rights agreement in form and substance as set forth
in Exhibit C attached hereto (the "Investor's Rights Agreement"), and the
Investor's Rights Agreement shall be in full force and effect as of the Closing.
2.4 Consents and Approvals. The parties shall have made all filings and
received all approvals of any governmental or regulatory agency of competent
jurisdiction necessary in order to consummate the transactions contemplated by
this Agreement, including without limitation, expiration or termination of the
waiting period for any filing required under the Antitrust Improvements Act of
1976, as amended (the "HSR Filing"), and each of such approvals shall be in full
force and effect at the Closing and not subject to any condition which requires
the taking or refraining from taking of any action which would have a material
adverse effect on either of the parties.
2.5 Shareholder Approval. To the extent required by the Nasdaq Stock
Market, the transactions contemplated by this Agreement shall have been approved
by shareholders of the Company.
2.6 Opinion of the Company's Counsel. Purchaser shall have received from
Stoel Rives LLP, counsel for the Company, an opinion with respect to the matters
set forth in Exhibit D attached hereto, which shall be addressed to Purchaser,
dated the date of the Closing and in form and substance satisfactory to
Purchaser.
2.7 Closing Documents. The Company shall have delivered to Purchaser all of
the following documents:
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2.7.1 an Officer's Certificate, dated the date of the Closing, stating
that the conditions specified in Section 1 and paragraphs 2.1 through 2.5,
inclusive, have been fully satisfied;
2.7.2 certified copies of the resolutions duly adopted by the
Company's board of directors authorizing the execution, delivery and performance
of this Agreement, the Investor's Rights Agreement and each of the other
agreements contemplated hereby, the filing of the Articles of Amendment, the
issuance and sale of the Preferred Stock, the issuance and sale of the Warrants,
the reservation for issuance upon conversion of the Preferred Stock and exercise
of the Warrants an aggregate of 1,833,333 shares of Common Stock and the
consummation of all other transactions contemplated by this Agreement;
2.7.3 certified resolutions, duly adopted by the shareholders,
approving transactions contemplated by the Agreement, if such approval is
necessary;
2.7.4 certified copies of the Restated Articles of Incorporation, as
amended, the Articles of Amendment and the Company's bylaws, each as in effect
at the Closing; and
2.7.5 copies of all third party and governmental consents, approvals
and filings required in connection with the consummation of the transactions
hereunder (including, without limitation all blue sky law filings).
2.8 Proceedings. All corporate and other proceedings taken or required to
be taken by the Company in connection with the transactions contemplated hereby
to be consummated at or prior to the Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to Purchaser and its
counsel.
2.9 Waiver. Any condition specified in this Section 2 may be waived if
consented to by Purchaser; provided that no such waiver shall be effective
against Purchaser unless it is set forth in a writing executed by Purchaser.
Section 3. Conditions of the Company's Obligations at Closing
The obligation of the Company to issue and sell the Preferred Stock and the
Warrants at the Closing is subject to the satisfaction as of the Closing of the
following conditions:
3.1 Representations and Warranties; Covenants. The representations and
warranties contained in Section 8 hereof shall be true and correct in all
material respects at and as of Closing as though then made, except to the extent
of changes caused by the transactions expressly contemplated herein, and
Purchaser shall have performed in all material respects all of the covenants
required to be performed by it hereunder prior to the Closing.
3.2 Consents and Approvals. The parties shall have made all filings and
received all approvals of any governmental or regulatory agency of competent
jurisdiction necessary in order to consummate the transactions contemplated by
this Agreement, including without limitation,
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expiration or termination of the waiting period for the HSR Filing, and each of
such approvals shall be in full force and effect at the Closing and not subject
to any condition which requires the taking or refraining from taking of any
action which would have a material adverse effect on either of the parties.
3.3 Shareholder Approval. To the extent required by the Nasdaq Stock
Market, the transactions contemplated by this Agreement shall have been approved
by shareholders of the Company.
Section 4. Transfer of Restricted Securities.
4.1 General Provisions. Restricted Securities are transferable only
pursuant to (i) public offerings registered under the Securities Act, (ii) Rule
144 of the Securities and Exchange Commission (or any similar rule or rules then
in force) if such rule is available and (iii) subject to the conditions
specified in paragraph 4.2 below, any other legally available means of transfer.
4.2 Opinion Delivery. In connection with the transfer of any Restricted
Securities (other than a transfer described in paragraph 4.1 (i) or (ii) above),
the Purchaser shall deliver written notice to the Company describing in
reasonable detail the transfer or proposed transfer, together with an opinion of
counsel in form and substance satisfactory to the Company's counsel to the
effect that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act. In
addition, if the Purchaser delivers to the Company an opinion of counsel in form
and substance satisfactory to the Company's counsel that no subsequent transfer
of such Restricted Securities shall require registration under the Securities
Act, the Company shall promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the Securities Act
legend set forth in paragraph 7.1.8. If the Company is not required to deliver
new certificates for such Restricted Securities not bearing such legend, the
holder thereof shall not transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this paragraph and paragraph 7.1.7. The cost of obtaining any
opinion contemplated by this paragraph 4.2 (excluding fees paid to the Company's
Counsel) shall be borne by the holder of the Restricted Securities being
transferred.
4.3 Legend Removal. If any Restricted Securities become eligible for sale
pursuant to Rule 144(k), the Company shall, upon the request of the holder of
such Restricted Securities, remove the legend set forth in paragraph 8.1.8 from
the certificates for such Restricted Securities.
Section 5. Representations and Warranties of the Company.
As a material inducement to the Purchaser to enter into this Agreement and
purchase the Preferred Stock and the Warrants hereunder, the Company hereby
represents and warrants that:
5.1 Organization, Corporate Power and Licenses. The Company is a
corporation duly organized and validly existing under the laws of Oregon and is
qualified to do business in every
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jurisdiction in which its ownership of property or conduct of business requires
it to qualify. The Company possesses all requisite corporate power and authority
and all material licenses, permits and authorizations necessary to own and
operate its properties, to carry on its businesses as now conducted and to carry
out the transactions contemplated by this Agreement. The copies of the Company's
and each Subsidiary's charter documents and bylaws which have been furnished to
the Purchaser reflect all amendments made thereto at any time prior to the date
of this Agreement and are correct and complete.
5.2 Capital Stock and Related Matters.
5.2.1 As of the Closing and immediately thereafter, the authorized
capital stock of the Company shall consist of (a) 5,000,000 shares of
preferred stock, of which 1,777,778 shares shall be designated as Series A
Preferred, and (b) 10,000,000 shares of Common Stock, of which 6,984,141
shares shall be issued and outstanding and 1,833,333 shares shall be
reserved for issuance upon conversion of the Preferred Stock and exercise
of the Warrants. As of the Closing, neither the Company nor any Subsidiary
shall have outstanding any stock or securities convertible or exchangeable
for any shares of its capital stock or con taining any profit participation
features, nor shall it have outstanding any rights or options to subscribe
for or to purchase its capital stock or any stock or securities convertible
into or exchangeable for its capital stock or any stock appreciation rights
or phantom stock plans, except for the Preferred Stock and except as set
forth on the attached "Capitalization Schedule." The Capitalization
Schedule accurately sets forth the following information with respect to
all outstanding options and rights to acquire the Company's capital stock:
the holder, the number of shares covered, the exercise price and the
expiration date. As of the Closing, neither the Company nor any Subsidiary
shall be subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its capital stock or any
warrants, options or other rights to acquire its capital stock, except as
set forth on the Capitalization Schedule. As of the Closing and upon
payment of the purchase price for the Series A Preferred, all of the
outstanding shares of the Company's capital stock, including the Series A
Preferred and Common Stock issuable upon conversion thereof, shall be
validly issued, fully paid and nonassessable.
5.2.2 There are no statutory or, to the best of the Company's
knowledge, contractual shareholders' preemptive rights or rights of refusal
with respect to the issuance of the Preferred Stock or the Warrants
hereunder or the issuance of the Common Stock upon conversion of the
Preferred Stock or upon exercise of the Warrants. The Company has not
violated any applicable federal or state securities laws in connection with
the offer, sale or issuance of any of its capital stock, and the offer,
sale and issuance of the Preferred Stock or the Warrants hereunder, and the
issuance of Common Stock upon conversion of the Series A Preferred or upon
exercise of the Warrants, do not require registration under the Securities
Act or any applicable state securities laws. To the best of the Company's
knowledge, there are no agreements between the Company's shareholders with
respect to the voting or transfer of the Company's capital stock or with
respect to any other aspect of the Company's affairs.
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5.3 Subsidiaries; Investments. The attached "Subsidiary Schedule" correctly
sets forth the name of each Subsidiary, the jurisdiction of its organization and
the Persons owning the capital stock of such Subsidiary. Each Subsidiary is duly
organized and validly existing under the laws of the jurisdiction of its
organization, possesses all requisite corporate power and authority and all
material licenses, permits and authorizations necessary to own its properties
and to carry on its businesses as now being conducted and is qualified to do
business in every jurisdiction in which its ownership of property or the conduct
of business requires it to qualify except where the failure to be so qualified
would not have a material adverse effect on the Company. Except as set forth on
the Subsidiary Schedule, neither the Company nor any Subsidiary owns or holds
the right to acquire any shares of stock or any other security or interest in
any other Person.
5.4 Authorization; No Breach. The execution, delivery and performance of
this Agreement, the Warrants, the Investor's Rights Agreement and all other
agreements contemplated hereby to which the Company is a party and the filing of
the Articles of Amendment have been duly authorized by the Board of Directors of
the Company. This Agreement, the Warrants, the Investor's Rights Agreement, the
Restated Articles of Incorporation as amended by the Articles of Amendment and
each other agreement contemplated hereby to which the Company is a party each,
subject to shareholder approval, constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms except as such
enforceability may be limited by bankruptcy and similar laws and general
principles of equity. Except as disclosed on the Capitalization Schedule and the
Contracts Schedule, and except for the HSR Filing, the execution and delivery by
the Company of this Agreement, the Investor's Rights Agreement and all other
agreements contemplated hereby to which the Company is a party, the offering,
sale and issuance of the Preferred Stock and the Warrants hereunder, the
issuance of the Common Stock upon conversion of the Preferred Stock, the
issuance of Warrants hereunder, the issuance of Common Stock upon exercise of
Warrants, the filing of the Articles of Amendment and, subject to approval of
the Company's shareholders that may be required by the Nasdaq Stock Market, the
fulfillment of and compliance with the respective terms hereof and thereof by
the Company, do not and shall not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any lien, security interest, charge or encumbrance
upon the Company's or any Subsidiary's capital stock or assets pursuant to, (iv)
give any third party the right to modify, terminate or accelerate any obligation
under, (v) result in a violation of, or (vi) require any authorization, consent,
approval, exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency pursuant to,
the Articles of Amendment or the charter or bylaws of the Company or any
Subsidiary, or any law, statute, rule or regulation to which the Company or any
Subsidiary is subject, or any material agreement, instrument, order, judgment or
decree to which the Company or any Subsidiary is subject.
5.5 Financial Statements. Attached hereto as the "Financial Statements
Schedule" are the following financial statements:
5.5.1 the audited balance sheet of the Company as of June 30, 1997 and
the related statement of operations and cash flows (or the equivalent) for
the twelve-month period then ended; and
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5.5.2 the unaudited balance sheet of the Company as of December 31,
1997 (the "Latest Balance Sheet"), and the related statement of operations
and cash flows (or the equivalent) for the six-month period then ended.
Each of the foregoing financial statements (including in all cases the notes
thereto, if any) is accurate and complete in all material respects, is
consistent with the books and records of the Company (which, in turn, are
accurate and complete in all material respects) and has been prepared in
accordance with generally accepted accounting principles, consistently applied.
5.6 Absence of Undisclosed Liabilities. Except as set forth on the attached
"Liabilities Schedule," the Company and its Subsidiaries do not have any
material obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of when
asserted) arising out of transactions entered into at or prior to the Closing,
or any action or inaction at or prior to the Closing, or any state of facts
existing at or prior to the Closing other than: (i) liabilities set forth on the
Latest Balance Sheet (including any notes thereto), (ii) liabilities and
obligations which have arisen after the date of the Latest Balance Sheet in the
ordinary course of business (none of which is a liability resulting from breach
of contract, breach of warranty, tort, infringement, claim or lawsuit) and (iii)
other liabilities and obligations expressly disclosed in the other Schedules to
this Agreement.
5.7 No Material Adverse Change. Since the date of the Latest Balance Sheet,
there has been no material adverse change in the financial condition, operating
results, assets, operations, business prospects, employee relations or customer
or supplier relations of the Company and its Subsidiaries taken as a whole.
5.8 Assets. Except as set forth on the attached "Assets Schedule," the
Company and each Subsidiary have good and marketable title to, or a valid
leasehold interest in, all of the material properties and assets used by them,
located on their premises or shown on the Latest Balance Sheet or acquired
thereafter. Except as described on the Assets Schedule, the Company's and each
Subsidiary's material equipment and other tangible assets are in good operating
condition in all material respects and are fit for use in the ordinary course of
business. The Company and each Subsidiary own, or have a valid leasehold
interest in, all assets necessary for the conduct of their respective businesses
as presently conducted.
5.9 Tax Matters.
5.9.1 Except as set forth on the attached "Taxes Schedule": the
Company and each Subsidiary have filed all Tax Returns which they are
required to file under applicable laws and regulations; all such Tax
Returns are complete and correct in all material respects and have been
prepared in compliance with all applicable laws and regulations in all
material respects; the Company and each Subsidiary have paid in all
material respects all Taxes due and owing by them (whether or not such
Taxes are required to be shown on a Tax Return) and have withheld and paid
over to the appropriate taxing authority all Taxes which they are required
to withhold from amounts paid or owing to any employee, stockholder,
creditor or
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other third party; neither the Company nor any Subsidiary has waived any
statute of limitations with respect to any Taxes or agreed to any extension
of time with respect to any Tax assessment or deficiency; the accrual for
Taxes on the Latest Balance Sheet would be adequate to pay all Tax
liabilities of the Company and its Subsidiaries if their current tax year
were treated as ending on the date of the Latest Balance Sheet (excluding
any amount recorded which is attributable solely to timing differences
between book and Tax income); since the date of the Latest Balance Sheet,
the Company and its Subsidiaries have not incurred any liability for Taxes
other than in the ordinary course of business; the assessment of any
additional Taxes for periods for which Tax Returns have been filed by the
Company and each Subsidiary shall not exceed the recorded liability
therefor on the Latest Balance Sheet (excluding any amount recorded which
is attributable solely to timing differences between book and Tax income);
no foreign, federal, state or local tax audits or administrative or
judicial proceedings are pending or being conducted with respect to the
Company or any Subsidiary, and no written notice indicating an intent to
open an audit or other review has been received by the Company from any
foreign, federal, state or local taxing authority; and there are no
material unresolved questions or claims raised or made by any taxing
authority concerning the Company's or any Subsidiary's Tax liability.
5.9.2 "Tax" or "Taxes" means federal, state, county, local, foreign or
other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications,
real or personal property, capital stock, license, payroll, wage or other
withholding, employment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated and other taxes of any kind
whatsoever (including, without limitation, deficiencies, penalties,
additions to tax, and interest attributable thereto) whether disputed or
not. "Tax Return" means any return, information report or filing with
respect to Taxes, including any schedules attached thereto and including
any amendment thereof.
5.10 Contracts and Commitments. Except as set forth in the attached
"Contracts Schedule," all material agreements, contracts and instruments of the
Company (the "Contracts") have been filed with the Securities and Exchange
Commission as exhibits to the annual and periodic reports referred to in Section
5.18 of this Agreement. The Contracts are valid, binding and enforceable in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy or similar laws or general principles of equity. Except as
set forth in the "Contracts Schedule," the Company is not in material default
under or in material breach of, nor in receipt of any claim of material default
or material breach under, any of the Contracts.
5.11 Intellectual Property Rights.
5.11.1 Except as set forth on the attached "Intellectual Property
Schedule," (a) the Company or one of its Subsidiaries owns all right, title
and interest to, or has the right to use pursuant to a valid license, all
Intellectual Property Rights necessary for the operation of the businesses
of the Company and its Subsidiaries as presently conducted free and clear
of all Liens; (b) there have been no claims made against the Company or any
Subsidiary asserting
8
the invalidity, misuse or unenforceability of any of such Intellectual
Property Rights, and, to the best of the Company's knowledge, there are no
valid grounds for the same, (c) neither the Company nor any Subsidiary has
received any notices of, and is not aware of any facts which indicate a
likelihood of, any infringement or misappropriation by, or conflict with,
any third party with respect to such Intellectual Property Rights
(including, without limitation, any demand or request that the Company or
any Subsidiary license any rights from a third party) and (d) to the best
of the Company's knowledge, the conduct of the Company's and each
Subsidiary's business has not infringed, misappropriated or conflicted with
and does not infringe, misappropriate or conflict with any Intellectual
Property Rights of other Persons, nor would any future conduct as presently
contemplated infringe, misappropriate or conflict with any Intellectual
Property Rights of other Persons.
5.12 Litigation, etc. Except as set forth on the attached "Litigation
Schedule," there are no actions, suits, proceedings, orders, investigations or
claims pending or, to the best of the Company's knowledge, threatened against or
affecting the Company or any Subsidiary (or to the best of the Company's
knowledge, pending or threatened against or affecting any of the officers,
directors or employees of the Company and its Subsidiaries with respect to their
businesses or proposed business activities), at law or in equity, or before or
by any governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, any actions, suit, proceedings
or investigations with respect to the transactions contemplated by this
Agreement); neither the Company nor any Subsidiary is subject to any arbitration
proceedings under collective bargaining agreements or otherwise or, to the best
of the Company's knowledge, any governmental investigations or inquiries
(including, without limitation, inquiries as to the qualification to hold or
receive any license or permit); and, to the best of the Company's knowledge,
there is no basis for any of the foregoing. Neither the Company nor any
Subsidiary is subject to any judgment, order or decree of any court or other
governmental agency.
5.13 Brokerage. Except for the fees that will be payable by the Company to
Pacific Crest Securities, Inc. in connection with the transactions contemplated
by this Agreement, there are no claims for brokerage commissions, finders' fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement binding upon the Company or any
Subsidiary.
5.14 Governmental Consent, etc. Other than the HSR Filing, no permit,
consent, approval or authorization of, or declaration to or filing with, any
governmental authority is required in connection with the execution, delivery
and performance by the Company of this Agreement or the other agreements
contemplated hereby, or the consummation by the Company of any other
transactions contemplated hereby or thereby, except as expressly contemplated
herein or in the exhibits hereto.
5.15 Employees. The Company and each Subsidiary have complied in all
material respects with all laws relating to the employment of labor (including,
without limitation, provisions thereof relating to wages, hours, equal
opportunity, collective bargaining and the payment of social security and other
taxes), and the Company is not aware that it or any Subsidiary has any material
9
labor relations problems (including, without limitation, any union organization
activities, threatened or actual strikes or work stoppages or material
grievances). The Company is not a party to or otherwise subject to any
collective bargaining agreements governing the wages, hours or terms of
employment of its employees.
5.16 Employee Benefit Plans. The attached "Employee Benefits Schedule"
lists all pension, retirement, profit sharing, deferred compensation, bonus,
commission, incentive, life insurance, health and disability insurance,
hospitalization and all other employee benefit plans or arrangements (including,
without limitation, any contracts or agreements with trustees, insurance
companies or others relating to any such employee benefit plans or arrangements)
established or maintained by the Company (the "Plans"). Except as set forth in
the "Employee Benefits Schedule," none of the Plans is a defined benefit pension
plan under Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
5.17 Compliance with Laws. Neither the Company nor any Subsidiary has
violated any law or any governmental regulation or requirement which violation
has had or would reasonably be expected to have a material adverse effect upon
the financial condition, operating results, assets, operations or business
prospects of the Company and its Subsidiaries taken as a whole, and neither the
Company nor any Subsidiary has received written notice of any such violation.
5.18 Reports with the Securities and Exchange Commission. The Company has
furnished the Purchasers with complete and accurate copies of its annual report
on Form 10-K for its most recent fiscal year, all other reports or documents
required to be filed by the Company pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act since the filing of the most recent annual report on
Form 10-K and its most recent annual report to its shareholders. At their
respective times of filing with the Securities and Exchange Commission, such
reports and filings did not contain any material false statements or any
misstatement of any material fact and did not omit to state any fact necessary
to make the statements set forth therein not misleading. The Company has made
all filings with the Securities and Exchange Commission which it is required to
make, and the Company has not received any request from the Securities and
Exchange Commission to file any amendment or supplement to any of the reports
described in this paragraph.
5.19 Disclosure. Neither this Agreement nor any of the exhibits, schedules,
attachments, written statements, documents, certificates or other items prepared
or supplied to Purchaser by or on behalf of the Company with respect to the
transactions contemplated hereby (the "Disclosed Information") contain any
untrue statement of a material fact or omit a material fact necessary to make
each statement contained herein or therein not misleading; provided that with
respect to the financial projections furnished to Purchaser by the Company, the
Company represents and warrants only that such projections were based upon
assumptions reasonably believed by the Company to be reasonable and fair as of
the date of the projections.
5.20 Closing Date. The representations and warranties of the Company
contained in this Section 5 and elsewhere in this Agreement and all information
contained in any exhibit, schedule or attachment hereto or in any certificate or
other writing delivered by, or on behalf of, the Company
10
to Purchaser shall be true and correct in all material respects on the date of
the Closing as though then made, except as affected by the transactions
expressly contemplated by this Agreement.
5.21 Forward-Looking Information. The Company believes that the Disclosed
Information contains "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended. Certain factors that could cause
results to differ materially from those projected in the forward-looking
statements are set forth in the reports filed by the Company pursuant to the
Securities Exchange Act of 1934. Many of these factors are beyond the Company's
control, and they include competitive factors, consumer demand for the Company's
services, the Company's ability to execute its plans successfully, the impact of
year 2000 computer issues, the risk that NextGenTM copier performance may vary
significantly from expected results and from customer acceptance.
Section 6. Definitions.
6.1 Definitions. For the purposes of this Agreement, the following terms
have the meanings set forth below:
"Authority" means any Governmental Agency, or any other agency, group,
instrumentality or authority having contractual or mandatory authority in
respect of the business of the Company or any Subsidiary.
"Governmental Agency" means any federal, state, local, foreign or
other governmental agency, instrumentality, commission, authority, board or
body.
"Intellectual Property Rights" means all (i) patents, patent
applications, patent disclosures and inventions, (ii) trademarks, service marks,
trade dress, trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the goodwill
associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof,
(iv) computer software, data, data bases and documentation thereof, (v) trade
secrets and other confidential information (including, without limitation,
ideas, formulas, compositions, inventions (whether patentable or unpatentable
and whether or not reduced to practice), know-how, processes and techniques,
research and development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial and marketing plans
and customer and supplier lists and information), (vi) other intellectual
property rights and (vii) copies and tangible embodiments thereof (in whatever
form or medium).
"IRC" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"IRS" means the United States Internal Revenue Service.
11
"Liens" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Company, any Subsidiary or any Affiliate,
any filing or agreement to file a financing statement as debtor under the
Uniform Commercial Code or any similar statute other than to reflect ownership
by a third party of property leased to the Company or any Subsidiaries under a
lease which is not in the nature of a conditional sale or title retention
agreement, or any subordination arrangement in favor of another Person (other
than any subordination arising in the ordinary course of business).
"Officer's Certificate" means a certificate signed by the Company's
president or its chief financial officer on behalf of the Company, stating that
(i) the officer signing such certificate has made or has caused to be made such
investigations as are necessary in order to permit him to verify the accuracy of
the information set forth in such certificate and (ii) to the best of such
officer's knowledge, such certificate does not misstate any material fact and
does not omit to state any fact necessary to make the certificate not
misleading.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Restricted Securities" means (i) the Preferred Stock issued
hereunder, (ii) the Warrants issued hereunder, (iii) the Common Stock issued
upon conversion of Preferred Stock or upon exercise of the Warrants and (iv) any
securities issued with respect to the securities referred to in clauses (i),
(ii) or (iii) above by way of a stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Restricted Securities, such securities
shall cease to be Restricted Securities when they have (a) been effectively
registered under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) been distributed to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act or become eligible for sale pursuant to
Rule 144(k) (or any similar provision then in force) under the Securities Act or
(c) been otherwise transferred and new certificates for them not bearing the
Securities Act legend set forth in paragraph 7.1 have been delivered by the
Company in accordance with paragraph 4.2. Whenever any particular securities
cease to be Restricted Securities, the holder thereof shall be entitled to
receive from the Company, without expense, new securities of like tenor not
bearing a Securities Act legend of the character set forth in Section 7.1.8.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any similar federal law then in force.
12
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partnership, association or other business entity gains or losses or
shall be or control any managing director or general partner of such limited
liability company, partnership, association or other business entity.
Section 7. Covenants.
7.1 Covenant to Seek Shareholder Approval. If the Nasdaq Stock Market
requires that the Company obtain a vote of its shareholders prior to the
consummation of the transactions contemplated by this Agreement, the Company
shall, as promptly as possible, but in no event later than 100 days from the
date of this Agreement, hold a shareholder meeting for the purpose of (1)
approving the transactions contemplated by this Agreement, and (2) amending the
Company's Restated Articles of Incorporation to increase the number of
authorized shares of Common Stock to permit the issuance of all shares of Common
Stock issuable pursuant to exercise of the Warrant and all outstanding stock
options and pursuant to the conversion of the Series A Preferred (in addition to
any additional number of shares the Company's Board of Directors deems
advisable). The parties to this Agreement shall use their best efforts to obtain
evidence of Company shareholder support for the transactions contemplated by
this Agreement for the purposes of complying with Nasdaq Stock Market
shareholder approval requirements in lieu of a shareholder meeting, if any.
7.2 Agreement to Vote Shares. Within five business days following the
execution of this Agreement, the Company shall obtain from each shareholder of
the Company identified on Schedule 7.2 a written commitment (in a form
satisfactory to Purchaser) agreeing to vote all of such shareholder's shares in
favor of the transactions contemplated by this Agreement.
7.3 Stock Option Agreement. Concurrently with the execution of this
Agreement, the Company and Purchaser shall execute a Stock Option Agreement in
form and substance attached hereto as Exhibit E.
7.4 Covenant to Increase Authorized Capital Stock. If no shareholder vote
is required pursuant to Section 7.1, then following the Closing Date, the
Company will recommend to the Company's shareholders that the Company's Restated
Articles of Incorporation be amended to increase the number of authorized shares
of Common Stock to permit the issuance of all shares of Common Stock issuable
pursuant to exercise of the Warrant and all outstanding stock options and
13
pursuant to the conversion of the Series A Preferred. The Company will submit
such a proposed amendment for approval at the next meeting of the Company's
shareholders.
7.5 Capitalization of Purchaser. Prior to any vote of the Company's
shareholders required to approve the transactions contemplated by this
Agreement, Purchaser shall be fully capitalized in an amount sufficient for
Purchaser to perform its obligations under this Agreement.
7.6 Board of Directors.
7.6.1 Continuing Directors. Within five business days following the
signing of this Agreement, the Company shall obtain written commitments
from Xxxxx X. Xxxx, Xxxxxx X. Xxx Xxxxx and Xxxxxxx X. Xxx to resign from
the Company's Board of Directors effective upon the Closing. Xxxxxxxx X.
Xxxxxxxx, Xxxxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxx (together the
"Continuing Directors") will remain on the Board of Directors following the
Closing.
7.6.2 Purchaser's Directors. Effective upon the Closing, Xxxxxx X.
Xxxxx and Xxxxxx X. Xxxxx will become directors of the Company (the
"Purchaser's Directors").
7.6.3 Additional Directors. On or before April 30, 1998, the Company
will propose four additional individuals to serve as directors of the
Company following the Closing (the "Additional Directors"). The Company
shall also determine which class of directorship will be held by each of
these individuals. Purchaser shall have the right to terminate the
Agreement prior to 5 p.m. two business days following the Company's
proposal of the Additional Directors if Purchaser disapproves of the
Additional Directors. Effective upon the Closing, the Additional Directors
will become directors of the Company.
7.6.4 Chairman of the Board; Executive Committee. Simultaneously with
the Closing, the Board of Directors shall elect Xxxxxx X. Xxxxx as Chairman
of the Board and shall also designate an Executive Committee which shall
consist of Xxxxxx X. Xxxxx, chairman, Xxxxxx X. Xxxxx and Xxxxxxxx X.
Xxxxxxxx.
7.6.5 Board Membership at Closing. Effective upon the Closing, the
Company's Board of Directors will consist of only the Continuing Directors, the
Purchaser's Directors and the Additional Directors.
Section 8. Miscellaneous.
8.1 Purchaser's Representations.
8.1.1 Authorization. Purchaser has full power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement, and this Agreement constitutes its valid and legally binding
obligation, enforceable in accordance with its terms.
14
8.1.2 Purchase Entirely for Own Account. This Agreement is made with
Purchaser in reliance upon its representation to the Company that the
Restricted Securities to be received by Purchaser will be acquired for
investment for Purchaser's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that
Purchaser has no present intention of selling, granting any participation
in, or otherwise distributing the same. Purchaser further represents that
it does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Restricted Securities.
8.1.3 Disclosure of Information. Purchaser has completed its "due
diligence" investigation of the Company and it is not a condition to
Purchaser's obligations under this Agreement for Purchaser to complete any
further due diligence investigations. Accordingly, Purchaser believes it
has received all the information it considers necessary or appropriate for
deciding whether to purchase the Restricted Securities. Purchaser further
represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering
of the Restricted Securities and the business, properties, prospects and
financial condition of the Company. The foregoing, however, does not limit
or modify the representations and warranties of the Company in Section 5 of
this Agreement or the right of Purchaser to rely thereon.
8.1.4 Investment Experience. Purchaser acknowledges that it is able to
fend for itself, can bear the economic risk of its investment, and has such
knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the
Restricted Securities.
8.1.5 Accredited Investor. At the time of Closing, Purchaser will be
an "accredited investor" within the meaning of Securities and Exchange
Commission Rule 501 of Regulation D, as presently in effect.
8.1.6 Brokerage. Assuming the Company's representations in paragraph
5.13 are accurate, there are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement
binding upon Purchaser.
8.1.7 Restricted Securities. Purchaser understands that the Restricted
Securities it is purchasing are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from
the Company in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without
registration under the Securities Act of 1933 only in certain limited
circumstances. In this connection, Purchaser represents that it is familiar
with Securities and Exchange Commission Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the Act.
15
8.1.8 Legend. Each certificate or instrument representing Restricted
Securities shall be imprinted with a legend in substantially the following
form:
"The securities represented by this certificate were originally issued on
[DATE OF CLOSING TO BE INSERTED HERE] and have not been registered under
the Securities Act of 1933, as amended. The transfer of the securities
represented by this certificate is subject to the conditions specified in
the Preferred Stock and Warrants Purchase Agreement, dated as of [DATE OF
CLOSING TO BE INSERTED HERE] and as amended and modified from time to time,
between the issuer (the "Company") and ReadyCash Investment Partners, L.P.
and the Company reserves the right to refuse the transfer of such
securities until such conditions have been fulfilled with respect to such
transfer. A copy of such conditions shall be furnished by the Company to
the holder hereof upon written request and without charge."
8.2 Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any Purchaser or on its behalf.
8.3 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns;
provided that the right to purchase the Series A Preferred and the Warrants
under this Agreement shall not be assigned.
8.4 Expenses. Other than in the event of a breach of this Agreement by the
other party, each party shall be responsible for the costs and expenses incurred
by it in connection with the transactions contemplated by this Agreement.
8.5 Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
8.6 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
8.7 Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation.
8.8 Governing Law. The laws of the State of Oregon shall govern all issues
and questions concerning this Agreement and the exhibits and schedules hereto,
the relative rights and
16
obligations of the Company and its shareholders without giving effect to any
choice of law or conflict of law rules or provisions.
8.9 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to Purchaser and to the Company at the addresses
indicated below:
To Purchaser:
ReadyCash Investment Partners, L.P.
c/o ReadyCash GP, Inc.
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
With a copy to:
Ledgewood Law Firm, P.C.
Xxxxxxx X. Abt
0000 Xxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
To the Company:
Xxxx X. Xxxxx, Xx.
Chief Financial Officer
TRM Copy Centers Corporation
0000 XX 000xx Xxxxxx
Xxxxxxxx, XX 00000-0000
With a copy to:
Stoel Rives LLP
Attn: Xx. Xxxx X. Xxxxxx
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000-0000
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
17
8.10 Indemnification. In consideration of the Purchaser's execution and
delivery of this Agreement and acquiring the Preferred Stock and Warrants
hereunder and in addition to all of the Company's other obligations under this
Agreement, the Company shall defend, protect, indemnify and hold harmless
Purchaser and each other holder of Preferred Stock or Warrants and all of their
partners, shareholders, officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Indemnitees") from and
against any and all actions, causes of action, suits, claims, losses, costs,
penalties, fees, liabilities and damages, and reasonable expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification here under is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
the Indemnitees or any of them as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or warranty made by
the Company in this Agreement, the Warrants, the Investor's Rights Agreement or
any other certificate, instrument or document contemplated hereby or thereby,
(b) any breach of any covenant, agreement or obligation of the Company contained
in this Agreement, the Warrants, the Investor's Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby, or (c) any
cause of action, suit or claim brought or made against such Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Indemnitees, other than a cause of
action, suit or claim brought or made by a Person affiliated with the Indemnitee
or by or on behalf of the Company, except for any such Indemnified Liabilities
arising on account of the particular Indemnitee's gross negligence or willful
misconduct. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
8.11 Termination. This Agreement may be terminated by the Company if the
Closing does not occur (i) on or before May 4, 1998, if no vote of the Company's
shareholders is required for the consummation of the transactions contemplated
by this Agreement, except where the failure to close is due to a material breach
of this Agreement by the Company or (ii) if the closing does not occur on or
before July 10, 1998, and shareholders have approved the transactions
contemplated by the Agreement. If the Company elects to terminate this Agreement
pursuant to this Section 8.11, the Company shall promptly give written notice to
Purchaser of the Company's election. In the event of the termination of this
Agreement pursuant to this Section 8.11, the Letter Agreement dated February 6,
1998 to the Company shall concurrently, with no further action required by any
party, be terminated and of no further force or effect.
8.12 Termination Fees and Expenses. The Company agrees to pay Purchaser
promptly by wire transfer the sum of $1 million in immediately available funds
in the event that both (a) the transactions contemplated by this Agreement are
not consummated (except where such failure is due to a material breach of this
Agreement by Purchaser) and (b) any of the following events occur before
December 31, 1998 (provided that such transactions are completed): (1) the
Company becomes a party to a transaction in which an investor acquires 20% of
the Company's equity securities or (2) the Company becomes a party to a merger
(other than a merger with one of the
18
Company's subsidiaries), a transaction in which a majority of its Common Stock
is transferred, or a transaction in which substantially all of its assets are
sold. The right to the payment of the foregoing fee shall be the exclusive
remedy at law or in equity to which Purchaser shall be entitled upon termination
of this Agreement under the conditions described in this Section 8.12.
19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
TRM COPY CENTERS CORPORATION
By /s/ XXXXXXXX X. XXXXXXXX
----------------------------------------
Name Xxxxxxxx X. Xxxxxxxx
--------------------------------------
Title President and Chief Executive Officer
-------------------------------------
READYCASH INVESTMENT PARTNERS, L.P.
By /s/ XXXXXX X. XXXXX
----------------------------------------
Name Xxxxxx X. Xxxxx
--------------------------------------
Title
-------------------------------------
PREFERRED STOCK AND WARRANTS PURCHASE AGREEMENT
20
Exhibit A
ARTICLES OF AMENDMENT
OF
TRM COPY CENTERS CORPORATION
(Establishing Series A Preferred Stock)
1. The name of the Corporation is TRM COPY CENTERS CORPORATION.
2. The Restated Articles of Incorporation of the Corporation are amended to
amend Article III to read in its entirety as follows:
"2. Series A Preferred Stock. This Article III.2 sets forth the
designation, preferences, limitations and relative rights of a series of
Preferred Stock of the Corporation as determined by the Board of Directors of
the Corporation pursuant to its authority under ORS 60.134 and Article III.1
above. The shares of such series shall be designated Series A Preferred Stock
("Series A Preferred") and the number of shares constituting such series shall
be 1,777,778.
Section A. Dividends.
(i) When and as declared by the Corporation's Board of Directors
and to the extent permitted under the Oregon Business Corporation Act, the
Corporation will pay preferential cumulative dividends to the holders of the
Series A Preferred as provided in this Section A. Except as otherwise provided
herein, dividends on each share of Series A Preferred will accrue on a daily
basis at the rate of seven and one-half percent (7 1/2%) per annum of the
Liquidation Value thereof, determined on a quarterly basis, from and including
the date of issuance of such share of Series A Preferred to and including the
earlier of (a) the date on which the Liquidation Value of such share of Series A
Preferred plus any accrued and unpaid dividends thereon is paid to the holder
thereof upon any liquidation, dissolution or winding up of the Corporation (b)
the date on which such share of Series A Preferred is converted into Common
Stock. Such dividends will accrue whether or not they have been declared and
whether or not there are profits, surplus or other funds of the Corporation
legally available for the payment of dividends. The date on which the
Corporation initially issues any share of Series A Preferred will be deemed to
be its "date of issuance" regardless of the number of times transfer of such
share of Series A Preferred is made on the stock records maintained by or for
the Corporation and regardless of the number of certificates which may be issued
to evidence such share of Series A Preferred. To the extent not paid on March
31, June 30, September 30, and December 31 of each year beginning on June 30,
1998 (the "Dividend Payment Date"), all dividends which have accrued on each
share of Series A Preferred outstanding during the three-month period (or other
period in the case of the initial Dividend Payment Date) shall be accumulated
and shall remain accumulated dividends with respect to each such share of Series
A Preferred until paid. If at any time the Corporation pays less than the total
amount of dividends then accrued with respect to the
Series A Preferred, such payment will be distributed ratably among the holders
of the Series A Preferred on the basis of the amount of accrued and unpaid
dividends with respect to the shares of Series A Preferred owned by each such
holder.
(ii) The Corporation shall not pay dividends (other than
dividends payable in shares of Common Stock) upon the Common Stock unless and
until it has paid dividends upon the Series A Preferred as set forth in Section
A(i). In the event that the Corporation declares or pays any dividends upon the
Common Stock (whether payable in cash, securities or other property) other than
dividends payable in shares of Common Stock, the Corporation shall also declare
and pay to the holders of the Series A Preferred at the same time that it
declares and pays such dividends to the holders of the Common Stock the
dividends which would have been declared and paid with respect to the Common
Stock issuable upon conversion of the Series A Preferred had all of the
outstanding Series A Preferred been converted immediately prior to the record
date for such dividend, or, if no record date is fixed, the date as of which the
record holders of Common Stock entitled to such dividends are to be determined.
Section B. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation, each holder of Series A Preferred shall be entitled to be
paid, before any distribution or payment is made upon any Junior Securities, an
amount in cash equal to the aggregate Liquidation Value of all Series A
Preferred held by such holder (plus all accrued or declared dividends unpaid
thereon), and the holders of Series A Preferred shall not be entitled to any
further payment. If, upon any such liquidation, dissolution or winding up of the
Corporation, the Corporation's assets to be distributed among the holders of the
Series A Preferred are insufficient to permit payment to such holders of the
aggregate amount which they are entitled to be paid hereunder, then the entire
assets to be distributed to the Corporation's stockholders shall be distributed
pro rata among such Series A Preferred holders based upon the aggregate
Liquidation Value of all Series A Preferred held by each such holder (plus all
accrued or declared dividends unpaid thereon). At least 30 days prior to any
liquidation, dissolution or winding up of the Corporation, the Corporation shall
give written notice of such event to each record holder of Series A Preferred,
specifying the amount of liquidation proceeds per share to be distributed to the
holders of the Series A Preferred and to the holders of the Common Stock.
For purposes of this Section B, a liquidation, dissolution or winding
up of this Corporation shall be deemed to be occasioned by, or to include, (A)
the acquisition of this Corporation by another entity by means of any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation) that results in the transfer of
fifty percent (50%) or more of the outstanding voting power of this Corporation;
or (B) a sale of all or substantially all of the assets of this Corporation.
In any of such events, if the consideration received by this
corporation is other than cash, the value of such consideration will be deemed
its fair market value. Any securities shall be valued as follows:
2
(A) Securities not subject to investment letter or other similar
restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or through the Nasdaq
National Market, the value shall be deemed to be the average of the closing
prices of the securities on such quotation system over the thirty (30) day
period ending three (3) days prior to the closing;
(2) If 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 thirty (30) day period ending three (3) days prior to the
closing; and
(3) If there is no active public market, the value shall be
the fair market value thereof, as mutually determined by this Corporation and
the holders of at least a majority of the voting power of all then outstanding
shares of the Series A Preferred.
(B) The method of valuation of securities subject to investment
letter or other 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 as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as mutually determined by this corporation and the holders
of at least a majority of the voting power of all then outstanding shares of the
Series A Preferred.
This Corporation shall give each holder of record of Series A
Preferred written notice of such impending transaction not later than twenty
(20) days prior to the shareholders' meeting called to approve such transaction,
if any, or twenty (20) days prior to the closing of such transaction, whichever
is earlier, and shall also notify such holders in writing of the final approval
of such transaction. The first of such notices shall describe the material terms
and conditions of the impending transaction and the provisions of this Section
B, and this Corporation shall thereafter give such holders prompt notice of any
material changes. The transaction shall in no event take place sooner than
twenty (20) days after this Corporation has given the first notice provided for
herein or sooner than ten (10) days after this Corporation has given notice of
any material changes provided for herein; provided, however, that such periods
may be shortened upon the written consent of the holders of Series A Preferred
that are entitled to such notice rights or similar notice rights and that
represent at least a majority of the voting power of all then outstanding shares
of such Series A Preferred.
Section C. Voting Rights.
(i) The holders of Series A Preferred shall have no right to vote
on matters to be voted on by the stockholders of the Corporation except as
provided in this Section C and as otherwise expressly required by applicable
law; provided that in any event, each holder of Series A Preferred shall be
entitled to notice of all stockholder meetings at the
3
same time and in the same manner as notice is given to the stockholders entitled
to vote at any such meeting.
(ii) The holders of Series A Preferred shall be entitled to vote,
together as a single class with the holders of the Common Stock and the other
classes of the Corporation's capital stock voting with the Common Stock, on all
matters submitted to the stockholders for a vote with each share of Series A
Preferred having one vote and shall be entitled to notice of each stockholders
meeting in accordance with the Bylaws of the Corporation.
Section D. Conversion.
1. Right to Convert.
(i) Subject to the terms and conditions of this Section D, each
holder of Series A Preferred shall have the right, at its option, to convert
each share of the Series A Preferred held by such holder at any time into
.7499997 fully paid and nonassessable shares of Common Stock.
2. Conversion Procedure.
(i) Except as otherwise provided herein, each conversion of
Series A Preferred shall be deemed to have been effected as of the close of
business on the date on which the certificate or certificates representing the
Series A Preferred to be converted have been surrendered at the principal office
of the Corporation (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series A
Preferred). At such time as such conversion has been effected, the rights of the
holder of such Series A Preferred as such holder shall cease and the Person or
Persons in whose name or names any certificate or certificates for shares of
Conversion Stock are to be issued upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby.
(ii) The conversion rights of each share of Series A Preferred
shall terminate on the date the Corporation has paid to the holder of such share
the Liquidation Value thereof (plus all accrued or declared dividends unpaid
thereon).
(iii) As soon as possible after a conversion has been effected
(but in any event within three business days in the case of subparagraph (a)
below), the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such conversion in such
name or names and such denomination or denominations as the converting
holder has specified;
4
(b) payment in an amount equal to all accrued dividends
unpaid with respect to each share of Series A Preferred converted into
Conversion Stock, which have not been paid prior thereto, plus the amount
payable under subparagraph (vii) below with respect to such conversion; and
(c) a certificate representing any shares of Series A
Preferred which were represented by the certificate or certificates
delivered to the Corporation in connection with such conversion but which
were not converted.
(iv) If the Corporation is not permitted under applicable law to
pay any portion of the accrued dividends on the shares of Series A Preferred
being converted into Conversion Stock, the Corporation shall pay such dividends
to the converting holder as soon thereafter as funds of the Corporation are
legally available for such payment. At the request of any such converting
holder, the Corporation shall provide such holder with written evidence of its
obligation to such holder.
(v) The issuance of certificates for shares of Conversion Stock
upon any conversion of Series A Preferred shall be made without charge to the
holders thereof for any issuance tax in respect thereof or other cost incurred
by the Corporation in connection with such conversion and the related issuance
of shares; provided that the Corporation 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 the
shares which are being converted.
(vi) The Corporation shall not close its transfer books against
the transfer of Conversion Stock issued or issuable upon conversion of Series A
Preferred in any manner which interferes with the timely conversion of the
Series A Preferred. The Corporation shall assist and cooperate with any holder
of Series A Preferred required to make any governmental filings or obtain any
governmental approval prior to or in connection with any conversion of Series A
Preferred hereunder (including, without limitation, making any filings required
to be made by the Corporation).
(vii) If any fractional interest in a share of Conversion Stock
would, except for the provisions of this subparagraph, be deliverable upon any
conversion of Series A Preferred, the Corporation, in lieu of delivering the
fractional share therefor, shall pay an amount to the holder thereof equal to
the Market Price of such fractional interest as of the date of conversion.
(viii) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of issuance upon the conversion of the Series A Preferred, such
number of shares of Common Stock issuable upon conversion of all outstanding
Series A Preferred. All shares of stock which are so issuable shall, when
issued, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges. The Corporation shall take all such actions as may
be necessary to ensure that all such shares may be so issued without violation
of any
5
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of such stock may be listed (except for
official notice of issuance which shall be immediately delivered by the
Corporation upon each such issuance). The Corporation shall not take any action
which would cause the number of authorized but unissued shares of Common Stock
to be less than the required number of such shares to be reserved hereunder.
3. Conversion Adjustments.
(i) In order to prevent dilution of the conversion rights granted
hereunder, the conversion ratio provided for in Section D.1 shall be subject to
adjustment from time to time pursuant to this Section D.3.
(ii) Subdivision or Combination of Common Stock. If the Corpora
tion at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the conversion ratio provided for
in Section D.1 in effect immediately prior to such subdivision shall be
proportionately increased, and if the Corporation at any time combines (by
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the conversion ratio provided
for in Section D.1 in effect immediately prior to such combination shall be
proportionately decreased.
4. Notices.
(i) Immediately upon any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of Series A
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders of
Series A Preferred at least 20 days prior to the date on which the Corporation
closes its books or takes a record (a) with respect to any dividend or
distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock or (c) for determining rights to vote with
respect to any dissolution or liquidation.
5. Automatic Conversion. All of the outstanding Series A Preferred
shall be automatically converted into Conversion Stock upon the closing of the
date as of which the Share Price of the Common Stock for a period of 90
consecutive calendar days commencing after June 30, 1999 is at least $20.00 (as
appropriately adjusted for any combination or subdivision of shares, stock
dividend, stock split or other recapitalization).
Section E. Purchase Rights.
If at any time the Corporation grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then each holder of
6
Series A Preferred shall be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Conversion Stock
acquirable upon conversion of such holder's Series A Preferred immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights.
Section F. Registration of Transfer.
The Corporation shall keep at its principal office a register for the
registration of Series A Preferred. Upon the surrender of any certificate
representing shares of Series A Preferred at such place, the Corporation shall,
at the request of the record holder of such certificate, execute and deliver (at
the Corporation's expense) a new certificate or certificates in exchange
therefor representing in the aggregate the number of shares of Series A
Preferred represented by the surrendered certificate. Each such new certificate
shall be registered in such name and shall represent such number of shares of
Series A Preferred as is requested by the holder of the surrendered certificate
and shall be substantially identical in form to the surrendered certificate. The
issuance of new certificates shall be made without charge to the holders of the
surrendered certificates for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such issuance (but not including
any transfer taxes).
Section G. Replacement.
Upon receipt of evidence reasonably satisfactory to the Corporation
(an affidavit of the registered holder shall be satisfactory) of the ownership
and the loss, theft, destruction or mutilation of any certificate evidencing
shares of Series A Preferred, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of Series A Preferred
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
Section H. Definitions.
"Common Stock" means the Common Stock, no par value, of the
Corporation, and any capital stock of any class of the Corporation hereafter
authorized which is not limited to a fixed sum or percentage of any stated value
in respect to the rights of the holders thereof to participate in dividends or
in the distribution of assets upon any liquidation, dissolution or winding up of
the Corporation.
7
"Conversion Stock" means shares of Common Stock issuable upon
conversion of Series A Preferred; provided that if there is a change such that
the securities issuable upon conversion of Series A Preferred are issued by an
entity other than the Corporation or there is a change in the class of
securities so issuable, then the term "Conversion Stock" shall mean one share of
the security issuable upon conversion of the Series A Preferred if such security
is issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"Convertible Securities" means any stock or securities convertible
into or exchangeable for any equity securities of the Company.
"Junior Securities" means any of the Corporation's capital stock or
other equity securities other than the Series A Preferred.
"Liquidation Value" of any share of Series A Preferred as of any
particular date shall be equal to $8.51 (as such amount is equitably adjusted
for subsequent stock splits, stock combinations, stock dividends and
recapitalizations affecting the Series A Preferred).
"Market Price" of any security means the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which "Market Price" is being determined and the 20 consecutive business days
prior to such day. If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the
Corporation and the holders of a majority of the Series A Preferred. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an independent appraiser experienced in
valuing securities jointly selected by the Corporation and the holders of a
majority of the Series A Preferred. The determination of such appraiser shall be
final and binding upon the parties, and the Corporation shall pay the fees and
expenses of such appraiser.
"Options" means any rights or options to subscribe for or purchase
equity securities or Convertible Securities.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
8
"Share Price" means the closing price on a day of sales of the Common
Stock on the securities exchange on which the Common Stock may be listed, or if
on any day the Common Stock is not listed on any securities exchange, the last
bid price quoted in the NASDAQ System as of 4:00 P.M., New York time on such
day, or if on any day the Common Stock is not quoted in the NASDAQ System, the
last bid price on such day in the domestic over-the-counter market as reported
by the National Quotation Bureau, Incorporated, or any similar successor
organization.
Section I. Notices.
Except as otherwise expressly provided hereunder, all notices referred
to herein shall be in writing and shall be delivered by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when so
mailed or sent (i) to the Corporation, at its principal executive offices,
attention: Xxxx Xxxxx, Chief Financial Officer and (ii) to any stockholder, at
such holder's address as it appears in the stock records of the Corporation
(unless otherwise indicated by any such holder)."
3. These articles of amendment were adopted on ______________, 1998.
4. Shareholder action was not required to adopt these articles of
amendment. The articles of amendment were adopted by the Corporation's Board of
Directors without shareholder action.
5. The person to contact about this filing is:
Xxxxx Xxxxxxx
(000) 000-0000
Dated: ______________, 1998
TRM COPY CENTERS CORPORATION
By:
-------------------------------------
Xxxxxxxx X. Xxxxxxxx, President and
Chief Executive Officer
9
Exhibit B-1
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT IS BY ITS TERMS NONTRANSFERABLE AND THE COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SUCH ACT OR LAWS OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE
ISSUER STATING THAT SUCH REGISTRATION IS NOT REQUIRED.
No. CS-1 WARRANT TO PURCHASE 200,000
SHARES OF COMMON STOCK
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF TRM COPY CENTERS CORPORATION
For value received, TRM Copy Centers Corporation, an Oregon
corporation (the "Company"), grants to ReadyCash Investment Partners, L.P. (the
"Holder") the right, subject to the terms of this Warrant, to purchase at any
time during the period commencing on the "Initial Exercise Date" (as defined
below), and ending on the "Expiration Date" (as defined below), 200,000 fully
paid and nonassessable shares of Common Stock, without par value, of the Company
at the "Exercise Price" (as defined below). This Warrant is nontransferable
(except as provided in Section 8.1) and may be exercised for all or any part of
200,000 shares in increments of at least 75,000 shares. The number of shares
that may be purchased are subject to adjustment under the terms of this Warrant.
Section 1. Definitions. As used in this Warrant, unless the context otherwise
requires:
"Exercise Minimum" means the minimum increment for which this Warrant
may be exercised, which is 75,000 shares, (adjusted as necessary in accordance
with Section 7).
"Exercise Price" means the price at which the Warrant Shares may be
purchased upon exercise of this Warrant, which shall be $15 per share (adjusted
as necessary in accordance with Section 7).
"Common Stock" means the Common Stock, without par value, of the
Company.
"Company" has the meaning specified in the introductory paragraph.
"Exercise Date" means any date when this Warrant is exercised in the
manner indicated in Sections 2.1 and 2.2.
"Expiration Date" means 12:00 midnight (Portland time) on May __,
2001.
"Holder" has the meaning specified in the introductory paragraph.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"Person" means an individual, corporation, partnership, trust, joint
venture or other form of business entity.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and all rules and regulations promulgated thereunder, or any act,
rules or regulations which replace the Securities Act or any such rules and
regulations.
"Warrant Shares" means the shares of Common Stock issued or issuable
upon exercise of this Warrant, adjusted as necessary in accordance with Section
7.
Section 2. Duration and Exercise of Warrant.
2.1 Exercise Period. Subject to the provisions hereof, this
Warrant may be exercised at any time and from time to time
during the period ending on the Expiration Date for any
amount equal to or greater than the Exercise Minimum. After
the Expiration Date, this Warrant shall become void and all
rights to purchase Warrant Shares hereunder shall thereupon
cease.
2.2 Methods of Exercise. This Warrant may be exercised by the
Holder for any amount equal to or greater than the Exercise
Minimum by (i) surrendering this Warrant to the Secretary of
the Company, (ii) payment of any applicable consideration,
and (iii) executing and delivering to the Secretary of the
Company the attached Exercise Form, which must select one of
the following exercise methods, to be at the Holder's
option:
2.2.1 Exercise for Cash. If the Holder elects to exercise the
Warrant for cash, the Holder shall tender to the Company payment in full by
cash, check, or wire transfer of the Exercise Price for the Warrant Shares.
2.2.2 Exercise with Payment in Shares of Common Stock. If the
Holder elects to exercise the Warrant with payment in shares of Common Stock
(which may be registered or unregistered), the Holder shall deliver to the
Company a certificate or certificates for shares of Common Stock (duly endorsed
for transfer to the Company) with a fair market value equal to the Exercise
Price. Fair market value shall be equal to the average of the closing sale
prices (or, if no sales occur on a date, the average of the bid and asked prices
on that date) for the Common Stock for the five trading days immediately
preceding the Exercise Date.
2.2.3 Cashless Exercise. If the Holder elects to exercise the
Warrant on a cashless basis, the Holder shall not be required to pay the
Exercise Price and the Company shall issue to the Holder the number of shares of
Common Stock equal in value to the difference between the fair market value of
the Warrant Shares and the Exercise Price.
2
Fair market value shall be equal to the average of the closing sale prices (or,
if no sales occur on a date, the average of the bid and asked prices on that
date) for the Common Stock for the five trading days immediately preceding the
Exercise Date.
2.2.4 Same Day Sale Exercise. In lieu of exercising this Warrant
by payment of cash, by shares of Common Stock or by a cashless exercise, when
permitted by law and applicable regulations (including Nasdaq and NASD rules),
the Holder may pay the Exercise Price through a "same day sale" commitment from
the Holder and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD Dealer") whereby the Holder irrevocably elects to
exercise the Warrant and to sell a portion of the Warrant Shares so purchased to
pay for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Warrant Shares to forward the Exercise Price directly to the
Company.
2.3 HSR Restrictions. However, if the Holder is subject to HSR
Act Restrictions (as defined in Section 2.5 below), payment
of any applicable consideration as determined hereunder
shall be paid to the Company within five (5) business days
of termination of all HSR Act Restrictions.
2.4 Certificates. As soon as practicable after exercise of this
Warrant, certificates for Warrant Shares shall be delivered
to the Holder.
2.5 HSR Act. The Company hereby acknowledges that exercise of
this Warrant by the Holder may subject the Company and/or
the Holder to the filing requirements of the HSR Act and
that the Holder may be prevented from exercising this
Warrant until the expiration or early termination of all
waiting periods imposed by the HSR Act ("HSR Act
Restrictions"). If on or before the Expiration Date the
Holder has sent the Notice of Exercise to the Company and
the Holder has not been able to complete the exercise of
this Warrant prior to the Expiration Date because of the HSR
Act Restrictions, the Holder shall be entitled to complete
the process of exercising this Warrant (surrender of the
Warrant and payment of any applicable consideration) in
accordance with the procedures contained herein
notwithstanding the fact that completion of the exercise of
this Warrant would take place after the Expiration Date.
2.6 Partial Exercise: Effective Date of Exercise. In case of any
partial exercise of this Warrant, the Company shall cancel
this Warrant upon its surrender and shall execute and
deliver a new warrant of like tenor and date for the balance
of the Warrant Shares. This Warrant shall be deemed to have
been exercised immediately prior to the close of business on
the date of its surrender for exercise as provided above.
However, if the Holder is subject to HSR Act Restrictions,
this Warrant shall be
3
deemed to have been exercised on the date immediately
following the date of the expiration of all HSR Act
Restrictions. The person entitled to receive the Warrant
Shares shall be treated for all purposes as the holder of
record of such shares as of the close of business on the
date the Holder is deemed to have exercised this Warrant.
2.7 Securities Act Compliance. Unless the issuance of the
Warrant Shares shall have been registered under the
Securities Act, as a condition of its delivery of
certificates for the Warrant Shares, the Company may require
the Holder to deliver to the Company, in writing,
representations regarding the Holder's sophistication,
investment intent, acquisition for its own account and such
other matters as are reasonable and customary for purchasers
of securities in an unregistered private offering. The
Company may place conspicuously upon each certificate
representing the Warrant Shares a legend substantially in
the following form, the terms of which are agreed to by the
Holder:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SUCH ACT
OR LAWS OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE
ISSUER STATING THAT SUCH REGISTRATION IS NOT REQUIRED.
2.8 Taxes. The Company shall pay any tax and other governmental
charges which may be payable in respect of the issuance of
the Warrant Shares, provided, however, that in no case will
the Company pay any taxes relating to income to the Holder
resulting from the issuance or exercise of this Warrant.
Section 3. Warrant Shares.
3.1 Validity and Reservation. The Company covenants that all
Warrant Shares issued upon exercise of this Warrant will be
validly issued, fully paid, nonassessable, free and clear of
all liens, security interests, charges and other
encumbrances or restrictions on sale (except encumbrances or
restrictions arising under federal or state securities
laws), and not subject to preemptive rights. The Company
agrees that, as long as this Warrant may be exercised, the
Company will have duly authorized and reserved for issuance
upon exercise of this Warrant a sufficient number of shares
of Common Stock or other shares of capital stock of the
Company as are from time to time issuable upon exercise of
this Warrant and from time to time will take all steps
necessary to amend its Restated Articles of Incorporation to
provide sufficient reserves of Common Stock
4
issuable upon exercise of this Warrant. Issuance of this
Warrant shall constitute full authority to the Company's
officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates
for Common Stock upon the exercise of this Warrant.
3.2 Registration Rights. The Warrant Shares shall be
"Registrable Securities" under the Investor's Rights
Agreement dated as of even date hereof between the Holder
and the Company.
Section 4. Fractional Shares.
No fractional Warrant Shares shall be issued upon the exercise of this
Warrant, and the number of Warrant Shares to be issued shall be rounded to the
nearest whole number.
Section 5. Limited Rights of Warrantholder.
The Holder shall not, solely by virtue of being the Holder of this
Warrant, have any of the rights of a stockholder of the Company, either at law
or equity, until this Warrant shall have been exercised.
Section 6. Loss of Warrant.
Upon receipt by the Company of satisfactory evidence of the loss,
theft, destruction or mutilation of this Warrant and either (in the case of
loss, theft or destruction) reasonable indemnification and a bond satisfactory
to the Company if requested by the Company or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and deliver
to the Holder, without charge, a new warrant of like denomination.
Section 7. Certain Adjustments.
7.1 Adjustment of Warrant Shares. The number, class and Exercise
Price per share of securities for which this Warrant may be
exercised are subject to adjustment from time to time upon
the happening of certain events as hereinafter provided:
(a) Recapitalization. If the outstanding shares of the Company's
Common Stock are divided into a greater number of shares, the number of shares
of Common Stock purchasable upon the exercise of this Warrant shall be
proportionately increased and the Exercise Price per share shall be
proportionately reduced. Conversely, if the outstanding shares of Common Stock
are combined into a smaller number of shares of Common Stock, the number of
shares of Common Stock purchasable upon the exercise of this Warrant shall be
proportionately reduced and the Exercise Price per share shall be
proportionately increased. The increases and reductions provided for in this
Section 7.1(a) shall be made with the intent and, as nearly as practicable, the
effect that neither the percentage of the total equity of the Company obtainable
on exercise of this Warrant nor the
5
aggregate price payable for such percentage shall be affected by any event
described in this Section 7.1(a).
(b) Merger or Reorganization, Etc. In the event of any change in
the Common Stock through merger, consolidation, reclassification,
reorganization, partial or complete liquidation or other change in the capital
structure of the Company (not including the issuance of additional shares of
capital stock other than by stock dividend or stock split), then, as a condition
of such change in the capital structure of the Company, appropriate and adequate
provision shall be made so that the Holder of this Warrant will have the right
thereafter to receive upon the exercise of this Warrant the kind and amount of
shares of stock or other securities or property to which it would have been
entitled if, immediately before the merger, consolidation, reclassification,
reorganization, recapitalization or other change in the capital structure, it
had held the number of shares of Common Stock obtainable upon the exercise of
this Warrant. In any such case, appropriate adjustment shall be made in the
applications of the provisions set forth herein with respect to the rights and
interest thereafter of the Holder, to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of this Warrant.
(c) Adjustment for Dividends or Distributions of Stock or Other
Securities or Property. In case the Company shall make or issue, or shall fix a
record date for the determination of eligible holders entitled to receive a
dividend or other distribution with respect to the Warrant Shares (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in (i) securities of the Company of (ii) assets (excluding cash
dividends paid or payable solely out of retained earnings), then, in each such
case, upon exercise of this Warrant at any time after the consummation,
effective date or record date of such dividend or other distribution, the Holder
shall receive, in addition to the Warrant Shares (or such other stock or
securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section Section 7.
7.2 Notice of Adjustment. Whenever an event occurs requiring any
adjustment to be made pursuant to Section 7.1, the Company
shall promptly file with its Secretary or an assistant
secretary at its principal office and with its stock
transfer agent, if any, a certificate of its President
specifying such adjustment, setting forth in reasonable
detail the acts requiring such adjustment, and stating such
other facts as shall be necessary to show the manner and
figures used to compute such adjustment. Such President's
certificate shall be made available at all reasonable times
for inspection by the Holder. Promptly (but in no event more
than 30 days) after each such adjustment, the Company shall
give a copy of such certificate by certified mail to the
Holder.
6
Section 8. Miscellaneous.
8.1 Assignment. This Warrant may not be transferred or assigned
by the Holder, except to a single party that is an
"accredited investor" within the meaning of Securities and
Exchange Commission Rule 501 of Regulation D or any
successor rule thereto.
8.2 Notice. All notices required or permitted under this Warrant
shall be given in writing and shall be deemed effectively
given (a) upon personal delivery to the party to be
notified, (b) three days after deposit with the United
States Post Office, by registered or certified mail, postage
prepaid and addressed to the party to be notified at the
address for such party, (c) one day after deposit with a
nationally recognized air courier service such as DHL or
Federal Express, or (d) on the date of facsimile
transmission, with confirmed transmission.
Addresses for notices:
If to the Company:
Xxxx Xxxxx
Chief Financial Officer
TRM Copy Centers Corporation
0000 XX 000xx Xxxxxx
Xxxxxxxx, XX 00000-0000
If to the Holder:
ReadyCash Investment Partners, L.P.
c/o ReadyCash GP, Inc.
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
or such other address as such party may designate by 10 days' advance written
notice to the other party.
8.3 Governing Law. The validity, interpretation and performance
of this Warrant shall be governed by the laws of the State
of Oregon, exclusive of choice of law rules.
8.4 No Impairment. The Company will not, by amendment of its
Restated Articles of Incorporation or Bylaws, or through
reorganization, consolidation, merger, dissolution, issue or
sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times
in good faith assist in
7
the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against
impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value
of any shares of stock issuable upon the exercise of this
Warrant above the amount payable therefor upon such exercise
and (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and
legally issue fully paid and non-assessable Warrant Shares
upon exercise of this Warrant.
8.5 Notices of Record Date. In case:
8.5.1 the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities or to receive any other
right; or
8.5.2 of any consolidation or merger of the Company with or into
another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or
8.5.3 of any voluntary dissolution, liquidation or winding-up of
the Company; or
8.5.4 of any redemption or conversion of all outstanding Common
Stock;
then, and in each such case, the Company will mail or cause to be mailed to
the Holder of this Warrant a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation, winding-up,
redemption or conversion is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such stock or securities
as at the time are receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at least
thirty (30) days before the consummation of the applicable event.
8.6 No Inconsistent Agreements. The Company will not on or after
the date of this Warrant enter into any agreement with
respect to its securities which is inconsistent with the
rights granted to the Holder of this Warrant or otherwise
conflicts with the provisions hereof. The rights granted to
the Holder hereunder do not in any way conflict with the
rights granted to
8
holders of the Company's securities under any other
agreements, except rights that have been waived.
8.7 Headings. The headings herein are for convenience only and
shall not control or affect the meaning or construction of
this Warrant.
Dated as of: May __, 1998
TRM COPY CENTERS CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
9
EXERCISE FORM
(To Be Executed by the Warrant Holder
to Exercise the Warrant)
To: TRM COPY CENTERS CORPORATION
1. The undersigned hereby irrevocably elects to exercise the right of purchase
represented by Warrant No. _________ for 200,000 shares of Common Stock,
and to purchase _____ shares of Common Stock (must be at least 75,000
shares) provided for in the Warrant as follows [check one]:
[ ] Exercise for Cash: Pursuant to Section 2.2.1 of the Warrant, the Holder
hereby elects to exercise the Warrant for cash and tenders payment herewith (or
has made a wire transfer) to the order of TRM Copy Centers Corporation in the
amount of $-------------.
[ ] Exercise by Payment with Common Stock: Pursuant to Section 2.2.2 of the
Warrant, the Holder hereby elects to exercise the Warrant and pay the exercise
price with shares of Common Stock, and hereby tenders one or more certificates
representing ____ shares of Common Stock, duly endorsed for transfer to the
Company.
[ ] Cashless Exercise: Pursuant to Section 2.2.3 of the Warrant, the Holder
hereby elects to exercise the Warrant on a cashless basis.
[ ] Same Day Sale Exercise: Pursuant to Section 2.2.4 of the Warrant, the
Holder hereby elects to exercise the Warrant on a cashless basis.
2. The undersigned requests that certificates for such shares of Common Stock
be issued and delivered as follows:
Name: ______________________________________
Address: ___________________________________
Deliver to: ________________________________
Address: ___________________________________
3. In connection with the exercise of the Warrant, the undersigned hereby
represents and warrants to you as follows:
(a) Purchase Entirely for Own Account. The Common Stock will be acquired
for investment for the undersigned's own account and not with a view
to the resale or distribution of any part thereof, and the undersigned
has no intention of selling, granting any participation in, or
otherwise distributing the same.
(b) Restricted Securities. The undersigned understands the Common Stock
may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom and,
in the absence of an effective registration statement covering the
Common Stock or an available
exemption from registration under the Securities Act, the Common Stock
must be held indefinitely.
(c) Investment Experience. The undersigned is experienced in evaluating
and investing in companies in the development stage, can bear the
economic risk of an investment in the Common Stock, and has enough
knowledge and experience in financial and business matters to evaluate
the merits and risks of the investment in the Common Stock.
(d) Qualifications as an Accredited Investor. The undersigned is an
"accredited investor" within the meaning of Securities and Exchange
Commission Rule 501 of Regulation D.
(e) Opportunity to Review Documents and Ask Questions. The Company has
made available to the undersigned all documents and information
requested by the undersigned relating to an investment in the Company.
In addition, the undersigned has had adequate opportunity to ask
questions and to receive answers from the management of the Company
covering the terms and conditions of the offering and the Company's
business, management, and financial affairs.
4. The undersigned understands, agrees, and recognizes that:
(a) No federal or state agency has made any finding or determination as to
the fairness of the investment or any recommendation or endorsement of
the Common Stock.
(b) All certificates evidencing the Common Stock shall bear a legend
substantially similar to the legend set forth in Section 2.7 of the
Warrant regarding resale restrictions.
5. The undersigned is a resident of the state of ____________________.
Dated: ___________, 19__.
READYCASH INVESTMENT PARTNERS, L.P.
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Note: Signature must correspond with the
name as written upon the face of the
Warrant in every particular, without
alteration or enlargement or any change
whatsoever.
2
Exhibit B-2
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT IS BY ITS TERMS NONTRANSFERABLE AND THE COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SUCH ACT OR LAWS OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE
ISSUER STATING THAT SUCH REGISTRATION IS NOT REQUIRED.
No. CS-2 WARRANT TO PURCHASE 300,000
SHARES OF COMMON STOCK
STOCK PURCHASE WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF TRM COPY CENTERS CORPORATION
For value received, TRM Copy Centers Corporation, an Oregon
corporation (the "Company"), grants to ReadyCash Investment Partners, L.P. (the
"Holder") the right, subject to the terms of this Warrant, to purchase at any
time during the period commencing on the "Initial Exercise Date" (as defined
below), and ending on the "Expiration Date" (as defined below), 300,000 fully
paid and nonassessable shares of Common Stock, without par value, of the Company
at the "Exercise Price" (as defined below). This Warrant is nontransferable
(except as provided in Section 8.1) and may be exercised for all or any part of
300,000 shares in increments of at least 75,000 shares. The number of shares
that may be purchased are subject to adjustment under the terms of this Warrant.
Section 1. Definitions. As used in this Warrant, unless the context otherwise
requires:
"Exercise Minimum" means the minimum increment for which this Warrant may
be exercised, which is 75,000 shares, (adjusted as necessary in accordance with
Section 7).
"Exercise Price" means the price at which the Warrant Shares may be
purchased upon exercise of this Warrant, which shall be $15 per share (adjusted
as necessary in accordance with Section 7).
"Common Stock" means the Common Stock, without par value, of the Company.
"Company" has the meaning specified in the introductory paragraph.
"Exercise Date" means any date when this Warrant is exercised in the manner
indicated in Sections 2.1 and 2.2.
"Expiration Date" means 12:00 midnight (Portland time) on May __, 2005.
"Holder" has the meaning specified in the introductory paragraph.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
"Person" means an individual, corporation, partnership, trust, joint
venture or other form of business entity.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and all rules and regulations promulgated thereunder, or any act, rules or
regulations which replace the Securities Act or any such rules and regulations.
"Warrant Shares" means the shares of Common Stock issued or issuable upon
exercise of this Warrant, adjusted as necessary in accordance with Section 7.
Section 2. Duration and Exercise of Warrant.
2.1 Exercise Period. Subject to the provisions hereof, this
Warrant may be exercised at any time and from time to time
during the period ending on the Expiration Date for any
amount equal to or greater than the Exercise Minimum. After
the Expiration Date, this Warrant shall become void and all
rights to purchase Warrant Shares hereunder shall thereupon
cease.
2.2 Methods of Exercise. This Warrant may be exercised by the
Holder for any amount equal to or greater than the Exercise
Minimum by (i) surrendering this Warrant to the Secretary of
the Company, (ii) payment of any applicable consideration,
and (iii) executing and delivering to the Secretary of the
Company the attached Exercise Form, which must select one of
the following exercise methods, to be at the Holder's
option:
2.2.1 Exercise for Cash. If the Holder elects to exercise the
Warrant for cash, the Holder shall tender to the Company payment in full by
cash, check, or wire transfer of the Exercise Price for the Warrant Shares.
2.2.2 Exercise with Payment in Shares of Common Stock. If the
Holder elects to exercise the Warrant with payment in shares of Common Stock
(which may be registered or unregistered), the Holder shall deliver to the
Company a certificate or certificates for shares of Common Stock (duly endorsed
for transfer to the Company) with a fair market value equal to the Exercise
Price. Fair market value shall be equal to the average of the closing sale
prices (or, if no sales occur on a date, the average of the bid and asked prices
on that date) for the Common Stock for the five trading days immediately
preceding the Exercise Date.
2.2.3 Cashless Exercise. If the holder selects to exercise the
Warrant on a cashless basis, the Holder shall not be required to pay the
Exercise Price and the Company shall issue to the Holder the number of shares of
Common Stock equal in value to the difference between the fair market value of
the Warrant Shares and the Exercise Price.
2
Fair market value shall be equal to the average of the closing sale prices (or,
if no sales occur on a date, the average of the bid and asked prices on that
date) for the Common Stock for the five trading days immediately preceding the
Exercise Date.
2.2.4 Same Day Sale Exercise. In lieu of exercising this Warrant
by payment of cash, by shares of Common Stock or by a cashless exercise, when
permitted by law and applicable regulations (including Nasdaq and NASD rules),
the Holder may pay the Exercise Price through a "same day sale" commitment from
the Holder and a broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD Dealer") whereby the Holder irrevocably elects to
exercise the Warrant and to sell a portion of the Warrant Shares so purchased to
pay for the Exercise Price and whereby the NASD Dealer irrevocably commits upon
receipt of such Warrant Shares to forward the Exercise Price directly to the
Company.
2.3 HSR Restrictions. However, if the Holder is subject to HSR
Act Restrictions (as defined in Section 2.5 below), payment
of any applicable consideration as determined hereunder
shall be paid to the Company within five (5) business days
of termination of all HSR Act Restrictions.
2.4 Certificates. As soon as practicable after exercise of this
Warrant, certificates for Warrant Shares shall be delivered
to the Holder.
2.5 HSR Act. The Company hereby acknowledges that exercise of
this Warrant by the Holder may subject the Company and/or
the Holder to the filing requirements of the HSR Act and
that the Holder may be prevented from exercising this
Warrant until the expiration or early termination of all
waiting periods imposed by the HSR Act ("HSR Act
Restrictions"). If on or before the Expiration Date the
Holder has sent the Notice of Exercise to the Company and
the Holder has not been able to complete the exercise of
this Warrant prior to the Expiration Date because of the HSR
Act Restrictions, the Holder shall be entitled to complete
the process of exercising this Warrant (surrender of the
Warrant and payment of any applicable consideration) in
accordance with the procedures contained herein
notwithstanding the fact that completion of the exercise of
this Warrant would take place after the Expiration Date.
2.6 Partial Exercise: Effective Date of Exercise. In case of any
partial exercise of this Warrant, the Company shall cancel
this Warrant upon its surrender and shall execute and
deliver a new warrant of like tenor and date for the balance
of the Warrant Shares. This Warrant shall be deemed to have
been exercised immediately prior to the close of business on
the date of its surrender for exercise as provided above.
However, if the Holder is subject to HSR Act Restrictions,
this Warrant shall be
3
deemed to have been exercised on the date immediately
following the date of the expiration of all HSR Act
Restrictions. The person entitled to receive the Warrant
Shares shall be treated for all purposes as the holder of
record of such shares as of the close of business on the
date the Holder is deemed to have exercised this Warrant.
2.7 Securities Act Compliance. Unless the issuance of the
Warrant Shares shall have been registered under the
Securities Act, as a condition of its delivery of
certificates for the Warrant Shares, the Company may require
the Holder to deliver to the Company, in writing,
representations regarding the Holder's sophistication,
investment intent, acquisition for its own account and such
other matters as are reasonable and customary for purchasers
of securities in an unregistered private offering. The
Company may place conspicuously upon each certificate
representing the Warrant Shares a legend substantially in
the following form, the terms of which are agreed to by the
Holder:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SUCH ACT OR LAWS OR AN OPINION OF
COUNSEL FOR THE HOLDER SATISFACTORY TO THE ISSUER STATING THAT SUCH
REGISTRATION IS NOT REQUIRED.
2.8 Taxes. The Company shall pay any tax and other governmental
charges which may be payable in respect of the issuance of
the Warrant Shares, provided, however, that in no case will
the Company pay any taxes relating to income to the Holder
resulting from the issuance or exercise of this Warrant.
Section 3. Warrant Shares.
3.1 Validity and Reservation. The Company covenants that all
Warrant Shares issued upon exercise of this Warrant will be
validly issued, fully paid, nonassessable, free and clear of
all liens, security interests, charges and other
encumbrances or restrictions on sale (except encumbrances or
restrictions arising under federal or state securities
laws), and not subject to preemptive rights. The Company
agrees that, as long as this Warrant may be exercised, the
Company will have duly authorized and reserved for issuance
upon exercise of this Warrant a sufficient number of shares
of Common Stock or other shares of capital stock of the
Company as are from time to time issuable upon exercise of
this Warrant and from time to time will take all steps
necessary to amend its Restated Articles of Incorporation to
provide sufficient reserves of Common Stock
4
issuable upon exercise of this Warrant. Issuance of this
Warrant shall constitute full authority to the Company's
officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates
for Common Stock upon the exercise of this Warrant.
3.2 Registration Rights. The Warrant Shares shall be
"Registrable Securities" under the Investor's Rights
Agreement dated as of even date hereof between the Holder
and the Company.
Section 4. Fractional Shares.
No fractional Warrant Shares shall be issued upon the exercise of this
Warrant, and the number of Warrant Shares to be issued shall be rounded to the
nearest whole number.
Section 5. Limited Rights of Warrantholder.
The Holder shall not, solely by virtue of being the Holder of this
Warrant, have any of the rights of a stockholder of the Company, either at law
or equity, until this Warrant shall have been exercised.
Section 6. Loss of Warrant.
Upon receipt by the Company of satisfactory evidence of the loss,
theft, destruction or mutilation of this Warrant and either (in the case of
loss, theft or destruction) reasonable indemnification and a bond satisfactory
to the Company if requested by the Company or (in the case of mutilation) the
surrender of this Warrant for cancellation, the Company will execute and deliver
to the Holder, without charge, a new warrant of like denomination.
Section 7. Certain Adjustments.
7.1 Adjustment of Warrant Shares. The number, class and Exercise
Price per share of securities for which this Warrant may be
exercised are subject to adjustment from time to time upon
the happening of certain events as hereinafter provided:
(a) Recapitalization. If the outstanding shares of the Company's
Common Stock are divided into a greater number of shares, the number of shares
of Common Stock purchasable upon the exercise of this Warrant shall be
proportionately increased and the Exercise Price per share shall be
proportionately reduced. Conversely, if the outstanding shares of Common Stock
are combined into a smaller number of shares of Common Stock, the number of
shares of Common Stock purchasable upon the exercise of this Warrant shall be
proportionately reduced and the Exercise Price per share shall be
proportionately increased. The increases and reductions provided for in this
Section 7.1(a) shall be made with the intent and, as nearly as practicable, the
effect that neither the percentage of the total equity of the Company obtainable
on exercise of this Warrant nor the
5
aggregate price payable for such percentage shall be affected by any event
described in this Section 7.1(a).
(b) Merger or Reorganization, Etc. In the event of any change in
the Common Stock through merger, consolidation, reclassification,
reorganization, partial or complete liquidation or other change in the capital
structure of the Company (not including the issuance of additional shares of
capital stock other than by stock dividend or stock split), then, as a condition
of such change in the capital structure of the Company, appropriate and adequate
provision shall be made so that the Holder of this Warrant will have the right
thereafter to receive upon the exercise of this Warrant the kind and amount of
shares of stock or other securities or property to which it would have been
entitled if, immediately before the merger, consolidation, reclassification,
reorganization, recapitalization or other change in the capital structure, it
had held the number of shares of Common Stock obtainable upon the exercise of
this Warrant. In any such case, appropriate adjustment shall be made in the
applications of the provisions set forth herein with respect to the rights and
interest thereafter of the Holder, to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of this Warrant.
(c) Adjustment for Dividends or Distributions of Stock or Other
Securities or Property. In case the Company shall make or issue, or shall fix a
record date for the determination of eligible holders entitled to receive a
dividend or other distribution with respect to the Warrant Shares (or any shares
of stock or other securities at the time issuable upon exercise of the Warrant)
payable in (i) securities of the Company of (ii) assets (excluding cash
dividends paid or payable solely out of retained earnings), then, in each such
case, upon exercise of this Warrant at any time after the consummation,
effective date or record date of such dividend or other distribution, the Holder
shall receive, in addition to the Warrant Shares (or such other stock or
securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this Section Section 7.
7.2 Notice of Adjustment. Whenever an event occurs requiring any
adjustment to be made pursuant to Section 7.1, the Company
shall promptly file with its Secretary or an assistant
secretary at its principal office and with its stock
transfer agent, if any, a certificate of its President
specifying such adjustment, setting forth in reasonable
detail the acts requiring such adjustment, and stating such
other facts as shall be necessary to show the manner and
figures used to compute such adjustment. Such President's
certificate shall be made available at all reasonable times
for inspection by the Holder. Promptly (but in no event more
than 30 days) after each such adjustment, the Company shall
give a copy of such certificate by certified mail to the
Holder.
6
Section 8. Miscellaneous.
8.1 Assignment. This Warrant may not be transferred or assigned
by the Holder, except to a single party that is an
"accredited investor" within the meaning of Securities and
Exchange Commission Rule 501 of Regulation D or any
successor rule thereto.
8.2 Notice. All notices required or permitted under this Warrant
shall be given in writing and shall be deemed effectively
given (a) upon personal delivery to the party to be
notified, (b) three days after deposit with the United
States Post Office, by registered or certified mail, postage
prepaid and addressed to the party to be notified at the
address for such party, (c) one day after deposit with a
nationally recognized air courier service such as DHL or
Federal Express, or (d) on the date of facsimile
transmission, with confirmed transmission.
Addresses for notices:
If to the Company:
Xxxx Xxxxx
Chief Financial Officer
TRM Copy Centers Corporation
0000 XX 000xx Xxxxxx
Xxxxxxxx, XX 00000-0000
If to the Holder:
ReadyCash Investment Partners, L.P.
c/o ReadyCash GP, Inc.
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
or such other address as such party may designate by 10 days' advance written
notice to the other party.
8.3 Governing Law. The validity, interpretation and performance
of this Warrant shall be governed by the laws of the State
of Oregon, exclusive of choice of law rules.
8.4 No Impairment. The Company will not, by amendment of its
Restated Articles of Incorporation or Bylaws, or through
reorganization, consolidation, merger, dissolution, issue or
sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times
in good faith assist in
7
the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against
impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value
of any shares of stock issuable upon the exercise of this
Warrant above the amount payable therefor upon such exercise
and (b) will take all such action as may be necessary or
appropriate in order that the Company may validly and
legally issue fully paid and non-assessable Warrant Shares
upon exercise of this Warrant.
8.5 Notices of Record Date. In case:
8.5.1 the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) for the purpose of entitling them to receive any
dividend or other distribution, or any right to subscribe for or purchase any
shares of stock of any class or any other securities or to receive any other
right; or
8.5.2 of any consolidation or merger of the Company with or into
another corporation, any capital reorganization of the Company, any
reclassification of the capital stock of the Company, or any conveyance of all
or substantially all of the assets of the Company to another corporation in
which holders of the Company's stock are to receive stock, securities or
property of another corporation; or
8.5.3 of any voluntary dissolution, liquidation or winding-up of
the Company; or
8.5.4 of any redemption or conversion of all outstanding Common
Stock;
then, and in each such case, the Company will mail or cause to be mailed to
the Holder of this Warrant a notice specifying, as the case may be, (i) the date
on which a record is to be taken for the purpose of such dividend, distribution
or right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation, winding-up,
redemption or conversion is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such stock or securities
as at the time are receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at least
thirty (30) days before the consummation of the applicable event.
8.6 No Inconsistent Agreements. The Company will not on or after
the date of this Warrant enter into any agreement with
respect to its securities which is inconsistent with the
rights granted to the Holder of this Warrant or otherwise
conflicts with the provisions hereof. The rights granted to
the Holder hereunder do not in any way conflict with the
rights granted to
8
holders of the Company's securities under any other
agreements, except rights that have been waived.
8.7 Headings. The headings herein are for convenience only and
shall not control or affect the meaning or construction of
this Warrant.
Dated as of: May __, 1998
TRM COPY CENTERS CORPORATION
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
9
EXERCISE FORM
(To Be Executed by the Warrant Holder
to Exercise the Warrant)
To: TRM COPY CENTERS CORPORATION
1. The undersigned hereby irrevocably elects to exercise the right of purchase
represented by Warrant No. _________ for 300,000 shares of Common Stock,
and to purchase _____ shares of Common Stock (must be at least 75,000
shares) provided for in the Warrant as follows [check one]:
[ ] Exercise for Cash: Pursuant to Section 2.2.1 of the Warrant, the Holder
hereby elects to exercise the Warrant for cash and tenders payment herewith (or
has made a wire transfer) to the order of TRM Copy Centers Corporation in the
amount of $________________.
[ ] Exercise by Payment with Common Stock: Pursuant to Section 2.2.2 of the
Warrant, the Holder hereby elects to exercise the Warrant and pay the exercise
price with shares of Common Stock, and hereby tenders one or more certificates
representing ____ shares of Common Stock, duly endorsed for transfer to the
Company.
[ ] Cashless Exercise: Pursuant to Section 2.2.3 of the Warrant, the Holder
hereby elects to exercise the Warrant on a cashless basis.
[ ] Same Day Sale Exercise: Pursuant to Section 2.2.4 of the Warrant, the
Holder hereby elects to exercise the Warrant on a cashless basis.
2. The undersigned requests that certificates for such shares of Common Stock
be issued and delivered as follows:
Name: ______________________________________
Address: ___________________________________
Deliver to: ________________________________
Address: ___________________________________
3. In connection with the exercise of the Warrant, the undersigned hereby
represents and warrants to you as follows:
(a) Purchase Entirely for Own Account. The Common Stock will be acquired
for investment for the undersigned's own account and not with a view
to the resale or distribution of any part thereof, and the undersigned
has no intention of selling, granting any participation in, or
otherwise distributing the same.
(b) Restricted Securities. The undersigned understands the Common Stock
may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom and,
in the absence of an effective registration statement covering the
Common Stock or an available
exemption from registration under the Securities Act, the Common Stock
must be held indefinitely.
(c) Investment Experience. The undersigned is experienced in evaluating
and investing in companies in the development stage, can bear the
economic risk of an investment in the Common Stock, and has enough
knowledge and experience in financial and business matters to evaluate
the merits and risks of the investment in the Common Stock.
(d) Qualifications as an Accredited Investor. The undersigned is an
"accredited investor" within the meaning of Securities and Exchange
Commission Rule 501 of Regulation D.
(e) Opportunity to Review Documents and Ask Questions. The Company has
made available to the undersigned all documents and information
requested by the undersigned relating to an investment in the Company.
In addition, the undersigned has had adequate opportunity to ask
questions and to receive answers from the management of the Company
covering the terms and conditions of the offering and the Company's
business, management, and financial affairs.
4. The undersigned understands, agrees, and recognizes that:
(a) No federal or state agency has made any finding or determination as to
the fairness of the investment or any recommendation or endorsement of
the Common Stock.
(b) All certificates evidencing the Common Stock shall bear a legend
substantially similar to the legend set forth in Section 2.7 of the
Warrant regarding resale restrictions.
5. The undersigned is a resident of the state of ____________________.
Dated: ___________, 19__.
READYCASH INVESTMENT PARTNERS, L.P.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Note: Signature must correspond with the
name as written upon the face of the
Warrant in every particular, without
alteration or enlargement or any change
whatsoever.
2
Exhibit C
TRM COPY CENTERS CORPORATION
INVESTORS' RIGHTS AGREEMENT
____________, 1998
TABLE OF CONTENTS
1. Registration Rights......................................................1
1.1 Definitions................................................1
1.2 Request for Registration...................................2
1.3 Company Registration.......................................3
1.4 Obligations of the Company.................................4
1.5 Furnish Information........................................5
1.6 Expenses of Demand Registration............................5
1.7 Expenses of Company Registration...........................5
1.8 Underwriting Requirements..................................5
1.9 Delay of Registration......................................6
1.10 Indemnification............................................6
1.11 Reports Under Securities Exchange Act of 1934..............8
1.12 Form S-3 Registration......................................8
1.13 Termination of Registration Rights.........................9
2. Covenants of the Company.................................................9
2.1 Financial Statements and Other Information.................9
3. Miscellaneous...........................................................12
3.1 Assignment................................................12
3.2 Governing Law.............................................12
3.3 Counterparts..............................................12
3.4 Titles and Subtitles......................................12
3.5 Notices...................................................13
3.6 Expenses..................................................13
3.7 Amendments and Waivers....................................13
3.8 Severability..............................................13
i
INVESTORS' RIGHTS AGREEMENT
---------------------------
THIS INVESTORS' RIGHTS AGREEMENT is made as of ______, 1998, by and among
TRM COPY CENTERS CORPORATION, an Oregon corporation (the "Company"), and the
ReadyCash Investment Partners, L.P. ("Purchaser").
RECITALS
A. The Company and Purchaser are parties to the Preferred Stock and Warrant
Purchase Agreement (the "Series A Agreement") of even date herewith pursuant to
which Purchaser is acquiring shares of the Company's Series A Preferred Stock
(the "Series A Preferred") and warrants to purchase 500,000 shares of Company
Common Stock (the "Warrants");
B. In order to induce the Company to enter into the Series A Agreement and
to induce Purchaser to invest funds in the Company pursuant to the Series A
Agreement, Purchaser and the Company hereby agree that this Agreement shall
govern the rights of Purchaser to cause the Company to register shares of Common
Stock issuable to Purchaser and certain other matters as set forth herein;
AGREEMENT
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Agreement:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC that permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(c) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(d) The term "Holder" means any person owning or having the right
to acquire Registrable Securities.
(e) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in
1
compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement or document.
(f) The term "Registrable Securities" means the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock, any shares
of Common Stock issuable upon exercise of the Warrants, and any Common Stock of
the Company issued as a dividend or other distribution with respect to or in
exchange for the foregoing Registrable Securities.
(g) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Request for Registration.
(a) If the Company shall receive at any time a written request
from Holders of 50% of the Registrable Securities outstanding that the Company
file a registration statement under the Act covering the registration of at
least fifty percent (50%) of the Registrable Securities, then the Company shall
(i) within ten days of the receipt thereof, give written notice of such request
to all Holders; and (ii) effect, as soon as practicable, and in any event within
ninety (90) days of the receipt of such request, the registration under the Act
of all Registrable Securities such holders request to be registered on such
registration form as is available (including form S-1, or similar long form
registration), subject to the limitations of subsection 1.2(b), within twenty
days of mailing of such notice by the Company.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders@) intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to subsection 1.2(a) and the Company
shall include such information in the written notice referred to in subsection
1.2(a). The underwriter will be selected by the Company and shall be reasonably
acceptable to a majority in interest of the Initiating Holders. In such event,
the right of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities that would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders electing to include shares in
the offering,
2
including the Initiating Holders, in proportion (as nearly as practicable) to
the amount of Registrable Securities of the Company owned by each Holder;
provided, however, that the number of shares of Registrable Securities to be
included in such underwriting shall not be reduced unless all other are first
entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall furnish
to Holders requesting registration pursuant to this Section 1.2, a certificate
signed by the Chief Executive Officer (or, if there is no Chief Executive
Officer, the President) of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its stockholders for such registration statement to be filed and
it is therefore essential to defer the filing of such registration statement,
the Company shall have the right to defer taking action with respect to such
filing for a period of not more than one hundred eighty (180) days after receipt
of the request of Initiating Holders; provided, however, that the Company may
not utilize this right more than once in any twelve (12) month period.
(d) In addition, the Company shall not be obligated to effect, or
to take any action to effect, any registration pursuant to this Section 1.2:
(i) After the Company has effected three registrations
pursuant to this Section 1.2 and such registration has been declared or ordered
effective;
(ii) During the period starting with the date sixty (60)
days prior to the Company's good faith estimate of the date of filing of, and
ending on a date one hundred eighty (180) days after the effective date of, a
registration subject to Section 1.3 hereof, provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to be effective; or
(iii) If the Holders propose to dispose of shares of
Registrable Securities that may be promptly registered on Form S-3 pursuant to a
request made pursuant to Section 1.12 below and the Company promptly effects
such registration.
1.3 Company Registration. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give Holders
written notice of such registration. Upon the written request of each Holder
given within twenty (20) days after mailing of such notice by the Company in
accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, include in the registration statement all of the Registrable
Securities that each Holder has requested to be registered.
3
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of
Holders of a majority of Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to two years.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as it may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its 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 Holders;
provided 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.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Holders
participating in the offering shall also enter into and perform their
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities
participating in a public offering of the happening of any event as a result of
which the prospectus included in such registration statement covering the
Registrable Securities, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange or nationally
recognized quotation system on which similar securities issued by the Company
are then listed.
4
1.5 Furnish Information.
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities that each Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect
the registration of the Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of subsection 1.5(a), the number of shares of the Registrable
Securities to be included in the registration does not equal or exceed the
number of shares required to originally trigger the Company's obligation to
initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b)(2), whichever is applicable.
1.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, and fees and disbursements of counsel for the Company and
reasonable fees and expenses of counsel for Holders shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of Holders of a
majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses); provided, however, that if at
the time of such withdrawal, Holders have learned of a material adverse change
in the condition, business, or prospects of the Company from that known to
Holders at the time of its request and Holders have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then Holders shall not be required to pay any of such expenses
and shall retain their rights to demand registration pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3, including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto and the fees and disbursements of counsel for the Company
and reasonable fees and expenses of counsel for Holders, but excluding
underwriting discounts and commissions relating to Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as the underwriters determine in
5
their sole discretion will not, jeopardize the success of the offering by the
Company. If the total amount of securities, including Registrable Securities,
requested by Holders to be included in such offering exceeds the amount of
securities sold other than by the Company that the underwriters determine in
their sole discretion is compatible with the success of the offering, then the
Company shall be required to include in the offering only that number of
Registrable Securities which the underwriters determine in their sole discretion
will not jeopardize the success of the offering (the securities so included to
be apportioned pro rata among the Holders according to the total amount of
securities entitled to be included therein owned by each Holder or in such other
proportions as shall mutually be agreed to by such Holders); provided, however,
that the Company shall be required to include all Registrable Securities
requested by Holders to be included in the offering if any securities are to be
included for the account of a security holder other than a Holder.
1.9 Delay of Registration. Holders shall have no right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 Indemnification.
(a) To the extent permitted by law, the Company will indemnify
and hold harmless Holders, any underwriter (as defined in the Act) and each
person, if any, who controls such Holder or such underwriter within the meaning
of the Act or the 1934 Act, against any losses, claims, damages, or liabilities
joint or several) to which they may become subject under the Act, or the 1934
Act or other federal or state securities law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, or the 1934 Act or any state
securities law; and the Company will pay to such Holder, or such underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.10(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any Holder or such underwriter or controlling person.
6
(b) To the extent permitted by law, each Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Act, any underwriter, any other holder selling
securities in such registration statement and any controlling person of any such
underwriter or other holder, against any losses, claims, damages, or liabilities
joint or several) to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or other federal or state securities law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration; and each Holder will pay, as incurred, any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of such Holder, which consent shall not be unreasonably withheld; provided,
that, in no event shall any indemnity under this subsection 1.10(b) exceed the
net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the 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 actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.10.
(d) If the indemnification provided for herein is for any reason
held to be unenforceable by an indemnified party, the indemnifying party agrees
to contribute to the losses, claims, damages and liabilities for which such
indemnification is held
7
unenforceable in such proportion as is appropriate to reflect the relative fault
of the indemnified party and the indemnifying party, as well as any other
relevant equitable considerations.
(e) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view to
making available to Holders the benefits of Rule 144 promulgated under the Act
and any other rule or regulation of the SEC that may at any time permit a Holder
to sell securities of the Company to the public without registration or pursuant
to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144;
(b) take such action as is necessary to enable the Company to
utilize Form S-3 for the sale of Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Act and the 1934 Act, or that it qualifies as a registrant whose securities
may be resold pursuant to Form S-3 or (ii) such other information as may be
reasonably requested in availing Holders of any rule or regulation of the SEC
that permits the selling of any such securities without registration or pursuant
to such form.
1.12 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders a written request that the Company effect a registration on
Form S-3 and any related qualification or compliance with respect to all or a
part of the Registrable Securities, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request together with all or such portion of
the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within
8
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this section 1.12: (1) if
Form S-3 is not available to the Company for such offering; (2) if the Holders
propose to sell less than ten percent (10%) of the Registrable Securities; (3)
if the Company shall furnish to the Holders requesting registration a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such Form S-3 Registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than one hundred eighty (180) days after receipt of the request of Holders under
this Section 1.12; provided, however, that the Company shall not utilize this
right more than once in any twelve (12) month period; (4) if the Company has,
within the six (6) month period preceding the date of such request, already
effected one registration on Form S-3 for Holders pursuant to this Section 1.12;
(5) if the Company has already effected a total of six registrations on Form S-3
for Holders pursuant to this Section 1.12; or (6) in any particular jurisdiction
in which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request from Holders. All expenses incurred in connection with a registration
requested pursuant to Section 1.12, including (without limitation) all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the Company, but excluding any
underwriters' discounts or commissions associated with Registrable Securities,
shall be borne by the Company. Registrations effected pursuant to this Section
1.12 shall not be counted as demands for registration or registrations effected
pursuant to Sections 1.2 or 1.3, respectively.
1.13 Termination of Registration Rights. Holders shall not be entitled
to exercise any right provided for in this Section 1 with respect to any
Registrable Securities it wishes to sell that can otherwise be sold in any
three-month period without registration in compliance with Rule 144 of the Act.
2. Covenants of the Company.
2.1 Financial Statements and Other Information. The Company shall
deliver to Purchaser (so long as Purchaser holds any shares of the Series A
Preferred issued to Purchaser pursuant to the Series A Agreement):
2.1.1 Quarterly Statements. As soon as available and in any event
within 45 days after the end of each quarterly fiscal period (except the last)
of each fiscal year, if not theretofore supplied pursuant to paragraph 2.1.4
below, copies of:
9
(i) a balance sheet of the Company as of the close of such
period, and
(ii) statements of income and retained earnings and cash
flow of the Company for the portion of the fiscal year ending with such period,
in each case setting forth in comparative form the figures for the corresponding
period of the preceding fiscal year and, if the Company has one or more
subsidiaries, such financial statements shall be presented on a consolidated
basis for the company and all such subsidiaries, all in reasonable detail and
certified as complete and correct, subject to changes resulting from year-end
adjustments, by an authorized financial officer of the Company;
2.1.2 Annual Statements. As soon as available and in any event
within 90 days after the close of each fiscal year of the Company, if not
theretofore supplied pursuant to paragraph 2.1.4 below, copies of:
(i) a balance sheet of the Company as of the close of such
fiscal year, and
(ii) statements of income and retained earnings and cash
flow of the Company for such fiscal year,
in each case setting forth in comparative form the figures for the preceding
fiscal year and, if the Company has one or more subsidiaries such financial
statements shall be presented on a consolidated basis for the Company and all
such subsidiaries, all in reasonable detail and accompanied by an opinion
thereon of a firm of independent public accountants of recognized national
standing selected by the Company to the effect that the consolidated statements
have been prepared in accordance with generally accepted accounting principles
consistently maintained (except for changes in which such accountants concur)
and that the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and accordingly, included such tests of the accounting records and
such other auditing procedures as were considered necessary in the
circumstances;
2.1.3 Audit Reports. Promptly upon receipt thereof, one copy of
each interim or special audit made by independent accountants of the books of
the Company or any subsidiary; and
2.1.4 SEC and Other Reports. Promptly upon their becoming
available, one copy of each financial statement, report, notice or proxy
statement sent by the Company to stockholders generally and of each regular or
periodic report and any registration statement or prospectus filed by the
Company or any subsidiary with any securities exchange or the Securities and
Exchange Commission or any successor agency, and copies of any material orders
in any proceedings to which the Company or any of its
10
subsidiaries is a party issued by any governmental agency, federal or state,
having jurisdiction over the Company or any of its subsidiaries; provided,
however, that the Company shall not be required to provide copies of information
filed with the Securities and Exchange Commission or any other governmental
agency, Federal or state, which is treated as confidential under the Freedom of
Information Act or similar law.
2.1.5 Inspection of Property. The Company shall permit any
representatives designated by Purchaser (so long as Purchaser holds fifty
percent (50%) of the Preferred Stock or Common Stock issued upon conversion
thereof), upon reasonable notice and during normal business hours and at such
other times as any such holder may reasonably request, to (i) visit and inspect
any of the properties of the Company and its subsidiaries, (ii) examine the
corporate and financial records of the Company and its subsidiaries and make
copies thereof or extracts therefrom and (iii) discuss the affairs, finances and
accounts of any such corporations with the directors, executive officers and
independent accountants of the Company and its subsidiaries.
2.1.6 Confidentiality. Pursuant to this Section 2.1, the Company
may furnish Purchaser with certain information that is non-public, confidential
or proprietary in nature. As used herein, "Confidential Information" means (i)
any material, nonpublic information about the Company and its Subsidiaries and
(ii) any technical, nonfinancial information, data or know-how which is
identified in writing as confidential by the Company, in either case as
furnished by the Company to Purchaser pursuant to this paragraph but does not
include information (x) which was publicly known at the time of disclosure, (y)
which subsequently becomes publicly known through no act or omission by
Purchaser or (z) which otherwise becomes known to Purchaser, other than through
disclosure by the Company. Purchaser shall hold in confidence and not disclose
or use the Confidential Information, except (a) as may be required by law, (b)
to the officers, directors, employees, agents and professional consultants of
Purchaser or any subsidiary of Purchaser for the purposes of evaluating
Purchaser's investment in the Company. If Purchaser ceases to hold any Preferred
Stock, Purchaser will, if requested by the Company, return to the Company all
documents furnished by the Company containing Confidential Information which
have not theretofore been destroyed or returned to the Company.
2.2 Right of First Offer. If the Company proposes to offer for
sale additional shares of any class of stock (other than shares issued pursuant
to a compensation plan for employees, directors or consultants, or in connection
with the acquisition of all or a portion of another entity), the Company shall
first offer such shares to Purchaser. Purchaser shall have 30 days following
receipt of a notice of the offer to exercise the right to purchase all or a
portion of the shares the Company proposes to offer on the same price and terms
as those set forth in the notice of the offer. If Purchaser does not exercise
its right to purchase any portion of such shares within that 30-day period, then
the Company shall have 180 days thereafter to offer and sell the shares not
acquired by Purchaser, on the terms offered to Purchaser, to third parties. If
all the offered shares are not purchased by third parties within that 180-day
period, those unsold shares shall again be subject to the provisions of this
11
Section 2.3. This right of first offer shall terminate as to Purchaser, or any
assignee of Purchaser, whenever it holds less than 250,000 shares of the Series
A Preferred. To the extent more than one holder of Series A Preferred has a
right of first offer pursuant to this Section 2.3 and more than all of the
shares to be offered are requested to be purchased by such holders, then the
offered shares shall be allocated among such holders in proportion to the number
of shares each holder requests to purchase.
3. Miscellaneous.
3.1 Assignment. The rights to cause the Company to register
Registrable Securities pursuant to Section 1 may be assigned (but only with all
related obligations) by a Holder to a transferee or assignee of such securities
who (i) after such assignment or transfer, holds at least 250,000 shares of
Registrable Securities (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations), (ii) is a
partnership that is affiliated with the transferring Holder that is also a
partnership or (iii) is a majority-owned subsidiary of the transferring Holder;
provided (a) the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; (b) such transferee or assignee agrees in writing to be bound by
and subject to the terms and conditions of this Agreement; and (c) such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of a partnership who are partners or retired partners
of such partnership (including spouses and ancestors, lineal descendants and
siblings of such partners or spouses who acquire Registrable Securities by gift,
will or intestate succession) shall be aggregated together and with the
partnership; provided that all assignees and transferees who would not qualify
individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or
taking any action under Section 1. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities).
3.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Oregon as applied to agreements among Oregon
residents entered into and to be performed entirely within Oregon.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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3.5 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
delivery by confirmed facsimile transmission or nationally recognized overnight
courier service or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
3.6 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Purchaser.
3.8 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement, and the balance of the Agreement shall be interpreted as if such
provision were so excluded, and shall be enforceable in accordance with its
terms.
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE COMPANY:
TRM COPY CENTERS CORPORATION
By:
--------------------------------------
Address:
PURCHASER:
READYCASH INVESTMENT PARTNERS, L.P.
By:
--------------------------------------
Address:
14
Exhibit D
May 4, 1998
ReadyCash Investment Partners, L.P.
c/o ReadyCash, GP, Inc.
0000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Re: TRM Copy Centers Corporation
Gentlemen:
We have acted as counsel to TRM Copy Centers Corporation, an Oregon
corporation (the "Company"), in connection with the sale to you by the Company
of 2,350,000 shares of the Company's Series A Preferred Stock, no par value (the
"Series A Preferred"), and warrants to purchase 500,000 shares of the Company's
Common Stock (the "Warrants") pursuant to a Preferred Stock and Warrants
Purchase Agreement between you and the Company dated as of March __, 1998 (the
"Purchase Agreement"). This letter is delivered pursuant to Section 2.5 of the
Purchase Agreement. Capitalized terms used in this letter that are not otherwise
defined have the meaning given to them in the Purchase Agreement.
This Opinion Letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this Opinion Letter should be
read in conjunction therewith.
We have reviewed the corporate action of the Company in connection with
this matter and have examined the corporate records, certificates, and other
documents and questions of law we deemed necessary to enable us to render this
opinion.
In rendering this opinion, we have assumed the genuineness of all
signatures, the authenticity of all documents provided to us as originals and
the conformity to authentic original documents of all documents provided to us
as certified, conformed or photostatic copies. As to questions of fact material
to the following opinions, when relevant facts were not independently
established, we have relied on certificates and representations of officers of
the Company and certificates of public officials.
Based on the foregoing, it is our opinion that:
Ready Cash Investment Partners, L.P.
May 4, 1998
Page 2
1. The Company is a corporation duly organized and legally existing under
the laws of the State of Oregon, has full corporate power and corporate
authority to conduct the activities in which it is now engaged, as described in
reports filed by the Company pursuant to the Securities Exchange Act of 0000
(xxx "Xxxxxxxx Xxx"). The Company has full corporate power and corporate
authority to enter into and perform the Purchase Agreement, the Warrants and the
Investor's Rights Agreement and to issue and sell the Series A Preferred
pursuant to the Purchase Agreement.
2. Each of the Purchase Agreement, the Warrants and the Investor's Rights
Agreements is enforceable against the Company.
3. The authorized capital stock of the Company consists of 10,000,000
shares of Common Stock, no par value, and 5,000,000 shares of Preferred Stock,
no par value, 2,350,000 of which shares have been designated Series A Preferred
Stock. After giving effect to the sale of Series A Preferred and the Warrants
pursuant to the Purchase Agreement, (i) 1,333,333 shares of Common Stock are
reserved for issuance upon conversion of the Series A Preferred, (ii) 500,000
shares of Common Stock are reserved for issuance upon exercise of the Warrants
and (iii) 2,350,000 shares of Series A Preferred are outstanding.
4. The execution, delivery and performance of the Purchase Agreement, the
Warrants and the Investor's Rights Agreements and the issuance and sale of the
Series A Preferred pursuant to the Purchase Agreement have been duly authorized
by all necessary corporate action on the part of the Company, certificates for
the Series A Preferred have been duly executed and delivered by duly authorized
officers of the Company, and the shares evidenced by such certificates, when
issued and delivered to you against payment therefor in accordance with the
terms of the Purchase Agreement, will be validly issued, fully paid, and
nonassessable.
5. The issuance of Common Stock upon conversion of the Series A Preferred
and the issuance of Common Stock upon the exercise of the Warrants have been
duly authorized by all necessary corporate action on the part of the Company. If
and when issued upon conversion of the Series A Preferred in accordance with the
provisions of the Company's Restated Articles of Incorporation, as amended, or
upon the exercise of the Warrants in accordance with its terms, the shares of
Common Stock issued upon such conversion or exercise will be validly issued,
fully paid, and nonassessable.
6. The execution, delivery and performance by the Company of the Purchase
Agreement, the Warrants and the Investor's Rights Agreement, and the issuance
and sale of the Series A Preferred and the issuance of any shares of Common
Stock upon the conversion of the Series A Preferred or the exercise of the
Warrants will not (i) violate preemptive
Ready Cash Investment Partners, L.P.
May 4, 1998
Page 3
rights of other holders of capital stock of the Company existing under the
Company's Restated Articles of Incorporation, as amended, or Bylaws or under the
Oregon Business Corporation Act, (ii) violate the applicable provisions of any
statutory law or regulation, (iii) violate the Restated Articles of
Incorporation, as amended, or Bylaws of the Company, (iv) breach, or result in a
default under, any agreement or other instrument filed as an exhibit to any
report filed by the Company pursuant to the Exchange Act.
7. The Articles of Amendment containing the terms set forth in Exhibit A to
the Purchase Agreement have been duly approved by the Board of Directors of the
Company at a meeting duly called and held on _______________, 1998, and the
Articles of Amendment have been duly filed for record in the manner and place
required by law to effect an amendment of the Company's Restated Articles of
Incorporation. No other action is required for the Articles of Amendment to be
duly adopted and to become effective and constitute a valid and binding
obligation of the Company, enforceable in accordance with its terms.
8. The offer and sale of the Series A Preferred and the Warrants under the
circumstances contemplated by the Agreement are exempt from the registration
requirements of the Securities Act of 1933, as amended, and the Oregon
Securities Law.
9. The Oregon Control Share Act does not apply to the acquisition by
ReadyCash of Series A Preferred pursuant to the Purchase Agreement and shares of
Common Stock of the Company upon the conversion of the Series A Preferred
pursuant to the Articles of Amendment and the exercise of the Warrants.
10. The procedure described in Section 2.2 of the Investors' Rights
Agreement for increasing the size of the Company's Board of Directors and
electing certain individuals to the Board of Directors does not conflict with
Oregon law or the Company's Bylaws.
The General Qualifications, which include the Bankruptcy and Insolvency
Exception, the Equitable Principles Limitation and the Other Common
Qualifications (all as defined in the Accord) apply to the opinions set forth
above.
The opinions in paragraphs 2, 3, 4, 5 and 6, above, are qualified by the
fact that the sum of (i) the total outstanding shares of the Company's Common
Stock and (ii) the shares of the Company's Common Stock issuable pursuant to
previously granted options, the Series A Preferred and the Warrants, exceeds the
number of shares of Common Stock that the Company is currently authorized to
issue pursuant to its Restated Articles of Incorporation, as amended.
Ready Cash Investment Partners, L.P.
May 4, 1998
Page 4
The opinions expressed herein are limited to matters governed by the laws
of the United States of America and the State of Oregon, and we express no
opinion as to the law of any other jurisdiction.
This opinion is rendered solely for your information in connection with
this transaction and may not be relied on by any other person for any purpose
without our prior written consent.
Very truly yours,
STOEL RIVES LLP
Exhibit E
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 29, 1998, between ReadyCash
Investment Partners, L.P. ("Grantee"), and TRM Copy Centers Corporation
("Issuer").
WITNESSETH:
WHEREAS, on the date of this Agreement, Grantee and Issuer entered into a
Preferred Stock and Warrants Purchase Agreement (the "Purchase Agreement");
WHEREAS, as a condition and inducement to Grantee's execution of the
Purchase Agreement, Issuer has agreed to grant Grantee the Option (as
hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Purchase Agreement, the parties
hereto agree as follows:
1. Issuer hereby grants to Grantee an unconditional, irrevocable option
(the "Option") to purchase, on one occasion only and subject to the terms
hereof, up to an aggregate of 698,414 fully paid and nonassessable shares of the
common stock of Issuer ("Common Stock") at a price per share equal to $11.25
(the "Option Price"). The number of shares of Common Stock that may be received
upon the exercise of the Option and the Option Price is subject to adjustment as
herein set forth.
2. (a) The Grantee may exercise the Option, in whole or part, upon, but
only upon, the occurrence of one of the following events on or prior to the date
six months after the date hereof (a "Triggering Event"): the Company becomes a
party to (i) a merger in which it is not the surviving party; (ii) a transaction
in which it sells substantially all of its assets; or (iii) a transaction in
which a majority of its Common Stock is transferred to another party.
Notwithstanding anything to the contrary contained herein, the Option may not be
exercised at any time when Grantee shall be in material breach of any of its
covenants or agreements contained in the Purchase Agreement. The Option shall
terminate upon either (i) Closing of the sale of Series A Preferred Stock to
Grantee pursuant to the Purchase Agreement, or (ii) the passage of ten days
following the occurrence of a Triggering Event (an "Exercise Termination
Event").
(b) Issuer shall notify Grantee promptly in writing of the occurrence
of any Triggering Event, but the giving of such notice by Issuer shall not be a
condition to the right of the Grantee to exercise the Option.
1
(c) In the event the Grantee is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares it will purchase pursuant to such exercise and (ii) a
place and date not earlier than three business days nor later than 15 business
days from the Notice Date for the closing of such purchase (the "Closing Date");
provided, that if prior notification to or approval of any regulatory or
antitrust agency is required in connection with such purchase, the Grantee shall
promptly file the required notice or application for approval, shall promptly
notify Issuer of such filing, and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired or
been terminated or such approvals have been obtained and any requisite waiting
period or periods shall have passed. Any exercise of the Option shall be deemed
to occur on the Notice Date relating thereto.
(d) At the closing referred to in subsection (c) of this Section 2,
the Grantee shall (i) pay to Issuer the aggregate purchase price for the shares
of Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by wire transfer to a bank account designated by Issuer,
provided that failure or refusal of Issuer to designate such a bank account
shall not preclude the Grantee from exercising the Option and (ii) present and
surrender this Agreement to Issuer at its principal executive offices.
(e) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (d) of this Section 2, Issuer shall
deliver to the Grantee a certificate or certificates representing the number of
shares of Common Stock purchased by the Grantee.
(f) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
The securities represented by this certificate have been issued
without registration under the Securities Act of 1933 (the "Act") or
any state securities laws. They may not be sold, assigned, pledged or
otherwise transferred for value unless they are registered under the
Act and any applicable state securities laws or the Corporation
receives an opinion of counsel satisfactory to it, or otherwise
satisfies itself, that registration is not required.
(g) Upon the giving by the Grantee to Issuer of the written notice of
exercise of the Option provided for under subsection (c) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Grantee shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Grantee. Issuer shall
pay all expenses, and any and all United States federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of
2
stock certificates under this Section 2 in the name of the Grantee or its
assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including complying with all applicable premerger notification, reporting and
waiting period requirements specified in 15 U.S.C. Section 18a and regulations
promulgated thereunder) in order to permit the Grantee to exercise the Option
and Issuer duly and effectively to issue shares of Common Stock pursuant hereto;
and (iv) promptly to take all action provided herein to protect the rights of
the Grantee against dilution.
4. Upon receipt by Issuer of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Agreement, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Agreement, if mutilated, Issuer will execute
and deliver a new Agreement of like tenor and date.
5. The number of shares of Common Stock purchasable upon the exercise of
the Option and the Option Price shall be subject to adjustment from time to time
as provided in this Section 5.
(a) If the outstanding Common Stock of the Issuer is hereafter
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Issuer by reason of any stock split,
combination of shares or dividend payable in shares, recapitalization or
reclassification, then appropriate adjustment shall be made in the number and
kind of shares available pursuant to the Option such that Grantee's
proportionate interest in the Issuer before and after the occurrence of the
event is maintained.
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
3
6. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer's Board of Directors and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to permit it to issue, and at all times from the date hereof through
the termination of this Agreement in accordance with its terms will have
reserved for issuance upon the exercise of the Option, that number of shares of
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
7. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party.
8. Each of Grantee and Issuer will use its best efforts to make all filings
with, and to obtain consents of, all third parties and governmental authorities
necessary to the consummation of the transactions contemplated by this
Agreement.
9. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy, or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Purchase Agreement.
10. This Agreement shall be governed by and construed in accordance with
the laws of the State of Oregon, without regard to the conflict of law
principles thereof.
11. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
12. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
4
13. Except as otherwise expressly provided herein, and in the Purchase
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assignees.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors except as
assignees, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided herein.
14. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Purchase Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
ReadyCash Investment Partners, L.P.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
TRM Copy Centers Corporation
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
5
