Stockholders' Equity

6 Months Ended

Jun. 30, 2011

Stockholders' Equity

Stockholders' Equity

Note 10— Stockholders' Equity

Series A and Series B Preference Shares

As a condition to restructuring the Company's credit facilities in January 2011, its lenders required three significant shareholders (who are also key members of management, herein after "Management Shareholders") to agree to provide up to $10.0 million of new equity in the form of preference shares.  On January 28, 2011, in partial satisfaction of this requirement, these Management Shareholders purchased 30,000 Series B Preference Shares directly from the Company in a private placement at a purchase price of $100 per share for aggregate consideration of $3.0 million.  Each Series B Preference Share is initially convertible into 25 Class A ordinary shares, subject to adjustments to reflect semiannual increases in liquidation value, as well as stock splits and reclassifications.  Liquidation value applicable to each Series B Preference Share will increase at a rate of 6.0% per annum, compounded semiannually on June 30 and December 31 of each year through December 31, 2014.  No cash dividends will accrue on the Series B Preference Shares through December 31, 2014; however, beginning January 1, 2015, cash dividends will accrue at a rate of 6.0% of the liquidation value, payable semiannually in arrears.  In the event that dividends are not paid, they would accumulate as unpaid dividends and, in the event of insolvency, would be added to the liquidation preference.  Subject to the availability of distributable reserves, the Company may, at its option, redeem the Series B Preference Shares, in whole or in part, on or after December 31, 2014 at a redemption price equal to the then applicable liquidation preference, plus accrued and unpaid dividends.

In May 2011, the Company conducted a rights offering, which entitled holders of the Company's Class A and Class B ordinary shares to one non-transferable subscription right to purchase the Company's Series A Preference Shares for each ordinary share held on the record date for the rights offering.  As an integral component of the rights offering, the Management Shareholders were to act as standby purchasers and purchase up to 70,000 Series A Preference Shares.  The Series A Preference Shares are identical to the Series B Preference Shares described above, except that the Series A Preference Shares are convertible only into Series A ordinary shares at an initial conversion rate of 50 Class A ordinary shares per Series A Preference Share and the Series B Preference Shares are convertible only into Class B ordinary shares at an initial conversion rate of 25 Class B ordinary shares per Series B Preference Share.

On May 31, 2011, the Company concluded the rights offering and, upon exercise of 826,000 subscription rights, issued 8,260 Series A Preference Shares for aggregate consideration of $0.8 million.  In addition, the Management Shareholders purchased 70,000 Series A Preference Shares for aggregate consideration of $7.0 million.

Class A and Class B Ordinary Shares

The Company has two classes of ordinary shares that are issued and outstanding: (i) Class A ordinary shares, which are listed on the NASDAQ Global Select Market under the symbol "TBSI", and (ii) Class B ordinary shares.  The Class A ordinary shares and Class B ordinary shares have identical rights to dividends, surplus and assets on liquidation; however, the holders of Class A ordinary shares are entitled to one vote on all matters submitted to a vote of holders of ordinary shares, while holders of Class B ordinary shares are entitled to one-half of one vote.

The holders of Class A ordinary shares can convert their shares into Class B ordinary shares, and the holders of Class B ordinary shares can convert their shares into Class A ordinary shares at any time on a 1:1 basis.  Further, the Class B ordinary shares will automatically convert into Class A ordinary shares upon their transfer to any person other than another holder of Class B ordinary shares, in each case as long as the conversion will not cause the Company to become a controlled foreign corporation, as defined in the Internal Revenue Code of 1986, as amended ("Code"), or the Class A ordinary shares cease to be regularly traded on an established securities market for purposes of Section 883 of the Code.  On January 21, 2011, certain holders of Class B ordinary shares converted 1,456,156 Class B ordinary shares into 1,456,156 Class A ordinary shares.

Warrants

At June 30, 2011 and December 31, 2010, warrants were outstanding for the purchase of 151,734 and 108,525, respectively, Class A ordinary shares and 228,140 and 241,065, respectively, Class B ordinary shares.  Such warrants are being held by parties not affiliated with existing shareholders.  The warrants are exercisable until February 8, 2015, at a price of $0.01 per share.   The warrant agreement includes an anti-dilution provision that adjusts the number of shares issuable upon exercise of the warrants whenever the Company issues additional ordinary shares or other forms of equity.

Treasury Stock

The Company's Equity Incentive Plan permits stock grant recipients to elect a net settlement.  Under the terms of a net settlement, the Company retains a specified number of shares to cover the recipients' estimated statutory minimum tax liability.  Such retained shares are retained by the Company as treasury stock.  During the six months ended June 30, 2011, 114,876 Class A ordinary shares having a cost of $0.2 million were acquired to cover employees' estimated payroll tax liabilities.  At June 30, 2011, there were 248,440 shares of treasury stock held by the Company at a cost of $1.4 million.