Exhibit 99.3
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
AMONG TANISYS TECHNOLOGY, INC.
AND THE PERSONS AND ENTITIES LISTED ON THE
SCHEDULE OF PURCHASERS HERETO
TABLE OF CONTENTS
Page
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ARTICLE I
Investment and Purchase of Convertible Preferred Stock
1.1 Authorization 1
1.2 Sale of Series A Preferred 2
1.3 Adjustment of Purchase Price, Issuance of Additional Shares 2
1.4 Issuance of Additional Series A Preferred 2
1.5 Additional Consideration; Required Payments 3
1.6 Board Representation 3
1.7 Employee Stock Option Limitations 3
1.8 Special Information Rights 4
1.9 Security Interest 4
1.10 Registration Rights 4
1.11 Ordinary Course Operations 4
ARTICLE II
Closing and Delivery
2.1 The Closing 4
2.2 Delivery 4
ARTICLE III
Representations and Warranties of the Company
3.1 Organization 5
3.2 Corporate Power 5
3.3 Subsidiaries 5
3.4 Capitalization 5
3.5 Authorization 6
3.6 Consents and Approvals; No Violations 6
3.7 Financial Information 6
3.8 Changes 7
3.9 Absence of Undisclosed Liabilities 8
3.10 Title to Properties and Assets; Liens, etc 8
3.11 Legal Compliance; Compliance with Instruments 8
3.12 Intellectual Property Rights 8
3.13 Litigation 9
3.14 Registration Rights 9
3.15 Governmental Consents, etc. 9
3.16 Offering 9
3.17 Brokers or Finders; Other Offers 10
3.18 Tax Matters 10
3.19 Environmental and Safety Regulations 10
3.20 Disclosure 10
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ARTICLE IV
Representations and Warranties of the Purchasers
4.1 Authorization 11
4.2 Experience 11
4.3 Investment 11
4.4 Restrictive Legend/Rule 144 11
4.5 Access to Information 12
4.6 No Broker 12
4.7 Accredited Purchaser 13
ARTICLE V
Purchasers' Conditions to Closing
5.1 Representations and Warranties Correct 13
5.2 Covenants 13
5.3 Reservation of Shares 13
5.4 Deliveries 13
5.5 Corporate Proceedings; Consents, etc. 13
5.6 Amendment to Restated Certificate of Incorporation 13
5.7 Blue Sky Matters 14
5.8 Certificate of Secretary 14
5.9 Opinion of Counsel 14
5.10 Directors' and Officers' Liability Coverage 14
ARTICLE VI
Company's Conditions to Closing
6.1 Representations 14
6.2 Compliance with State Securities Laws 14
6.3 Amendment to Restated Certificate of Incorporation 15
6.4 Payment of Purchase Price 15
ARTICLE VII
Miscellaneous
7.1 Fees 15
7.2 Exchanges; Lost, Stolen or Mutilated Certificates 15
7.3 Survival of Representations, Warranties and Agreements, etc. 15
7.4 Indemnification 15
7.5 Remedies 16
7.6 Successors and Assigns; Parties in Interest 16
7.7 Entire Agreement 16
7.8 Notices 16
7.9 Changes 17
7.10 Counterparts 17
7.11 Headings 17
7.12 Governing Law 17
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7.13 Severability 18
7.14 Jurisdiction 18
7.15 Exculpation Among Purchasers 18
7.16 Definitions 18
Schedule A Schedule of Purchasers
Schedule B Schedule of Exceptions
Exhibit A Articles of Amendment of Certificate
Exhibit B Financial Performance Objectives
Exhibit C Promissory Note
Exhibit D Security Agreement
Exhibit E Registration Rights Agreement
Exhibit F Opinion of Company's Counsel
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TANISYS TECHNOLOGY, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement ("Agreement") is made and
entered into as of the 13th day of August 2001, by and among Tanisys Technology,
Inc., a Wyoming corporation ("Company") having its principal office at 00000
Xxxxxxxxxx Xxxx., Xxxxx 000, Xxxxxx, Xxxxx 00000; and New Century Equity
Holdings Corp., a Delaware corporation ("New Century"), and the persons and
entities listed on the Schedule of Purchasers attached hereto as Schedule A
(individually, New Century and all such persons and entities may be referred to
as "Purchaser," and, collectively, New Century and all such persons and entities
may be referred to as "Purchasers").
WITNESSETH:
WHEREAS, the Company is engaged in the business of designing, developing
and manufacturing production level automated test equipment for a wide variety
of semiconductor memory technologies;
WHEREAS, 24,147,534 shares of the Company's common stock, no par value per
share ("Common Stock"), and no shares of the Company's preferred stock, par
value $1.00 per share ("Preferred Stock") are currently issued and outstanding;
WHEREAS, the Company intends to authorize and issue shares of a Series A
Preferred Stock, par value $1.00 per share ("Series A Preferred"), and the
Purchasers desire to purchase such shares of Series A Preferred, pursuant and
subject to the terms and conditions contained herein; and
WHEREAS, the Company intends to file with the Office of the Secretary of
State of the State of Wyoming an amendment to its Certificate of Incorporation,
as amended ("Certificate") setting forth, among other things, the designations,
rights, preferences and privileges and the qualifications, limitations and
restrictions of the Series A Preferred;
NOW, THEREFORE, in consideration of the premises contained herein and other
good and valuable consideration, receipt of which is mutually acknowledged, the
parties hereto agree as follows:
ARTICLE I
Investment and Purchase of Convertible Preferred Stock
1.1 Authorization. Subject to the terms and conditions hereof, the Company
has (i) authorized the sale and issuance of up to 50,000,000 shares of its
Series A Preferred, having the rights, privileges, preferences and restrictions
as set forth in the Certificate of the Company
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attached hereto as Exhibit A, and (ii) agreed to amend its Certificate to
authorize an aggregate of 50,000,000 shares of Preferred Stock and 1,000,000,000
(One Billion) shares of Common Stock, and to reserve for issuance up to
50,000,000 shares of Preferred Stock and 1,000,000,000 (One Billion) shares of
Common Stock required for conversion of the Series A Preferred ("Reserved
Shares"). The shares of Common Stock into which the Series A Preferred will be
convertible are referred to herein as the "Conversion Stock." The Company shall
obtain from its shareholders prior to December 31, 2001 approval for the
authorization of the amended Certificate described above, except in the case of
any review of or comment on the Company's proxy statement by the Securities and
Exchange Commission, in which case the foregoing date shall be extended for the
period of review or comment.
1.2 Sale of Series A Preferred. Subject to the terms and conditions hereof,
the Company hereby agrees to severally issue and sell and each Purchaser hereby
agrees to severally purchase from the Company at the Closing the number of
shares of Series A Preferred set forth beside such Purchaser's name in the
Schedule of Purchasers at a price of $1.00 per share (the "Purchase Price").
1.3 Adjustment of Purchase Price, Issuance of Additional Shares. So long as
any Series A Preferred is issued and outstanding, if the Company shall issue any
shares of Common Stock, Preferred Stock, any other shares convertible into
Common Stock, or common stock equivalents, including but not limited to any
options, warrants or other rights to subscribe for or acquire any Common Stock,
without consideration or for consideration less than the Purchase Price, then
and in each such event the Company shall issue additional shares of Series A
Preferred to the Purchasers, pro rata, within ten (10) days of the issuance of
other securities sold for no consideration or for consideration per share less
than the Purchase Price as provided in the Certificate.
1.4 Issuance of Additional Series A Preferred. The Company and Purchasers
acknowledge that the Purchase Price has been negotiated based upon certain
financial performance projections proposed by the Company. If the Company's
actual financial performance, as determined by Generally Accepted Accounting
Principles, consistently applied, in any quarterly or semi-annual period does
not meet or exceed all of the financial performance objectives described in
Exhibit B (calculated prior to any expenses or costs incurred by the Company in
order to comply with the Company's various obligations or undertakings under
this Agreement or other agreements related to this Agreement) ("Financial
Performance Objectives"), the Company shall issue to the Purchasers, pro rata,
additional Series A Preferred equal in number to twenty-five percent (25%) of
the then outstanding Common Stock, Preferred Stock (including the outstanding
Series A Preferred) and any common stock equivalents, including but not limited
to any options, warrants or other rights to subscribe for or acquire any Common
Stock, on an as-if converted and fully diluted basis. Any issuance of additional
Series A Preferred pursuant to the provisions of this Section 1.4 shall be made
not later than thirty (30) days after the applicable quarterly or semi-annual
period referred to in Exhibit B.
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1.5 Promissory Note; Required Payments. A sum equal to the aggregate amount
set forth in Schedule A ("Additional Consideration") shall be paid by the
Company, in accordance with the provisions of that certain promissory note
attached hereto as Exhibit C, (the "Note") in quarterly installments to the
holders of Series A Preferred, commencing March 31, 2002.
The payments required hereinabove in Section 1.5 shall be calculated by
multiplying the excess of the quarterly EBITDA for the Company (as defined
hereinafter) less quarterly capital expenditures over $300,000, by .5 (or 50%).
Such payments shall be paid until the Additional Consideration has been repaid
in full. The affirmative consent of New Century shall be required and sufficient
to approve any capital expenditures that would exceed the budget contained in
Exhibit B.
At the sole option of New Century, the payments required hereinabove in
Section 1.5 may be converted into Series A Preferred, in lieu of cash, at a
price equal to the Series A Preferred Purchase Price (or as such Price may be
adjusted as provided above in Section 1.3). If New Century does not elect to
convert such required payments into Series A Preferred, the required payments
shall be paid in cash in accordance with the foregoing provisions.
If the Additional Consideration is not repaid in full to the Purchasers on or
before July 15, 2003, the Company shall issue to the Purchasers, pro rata,
additional Series A Preferred equal in number to fifty percent (50%) of the then
outstanding Common Stock and Preferred Stock (including the outstanding Series A
Preferred), and any Common Stock equivalents, including but not limited to any
options, warrants or other rights to subscribe for any Common Stock, on an as-if
converted and fully diluted basis.
1.6 Board Representation. On the Closing Date, the Board of Directors of
the Company shall be reconstituted to a total of five (5) directors, and New
Century shall appoint two (2) such directors. Thereafter, upon compliance with
applicable law relating to appropriate information to or solicitation of the
Company's stockholders, and in accordance with the Certificate, New Century
shall be entitled to appoint three (3) such directors. All such directors shall
have all rights, including voting rights and access to information, as are then
held by the members of the Company's Board of Directors.
1.7 Employee Stock Option Limitations. As of and after the Closing Date,
the Company may issue or grant stock options, warrants or other securities in
favor of eligible employees or consultants in an aggregate amount not to exceed,
as of the Closing Date, fifteen percent (15%) of the total issued and
outstanding Common Stock of the Company, and the Common Stock into which the
Series A Preferred and any other issued and outstanding securities of the
Company are convertible (it being understood that such options may not be
exercised prior to shareholder approval of the amendment of the Company
Certificate pursuant to Section 1.1). The terms and conditions of any such
issuances or grants shall be fixed by the Board of Directors, as the same is
reconstituted on the Closing Date; and the Company's Registration Statement on
Form S-8 shall be amended to cover all of the shares that may be issued pursuant
to the option plan, or a new Form S-8 shall be filed covering such shares.
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1.8 Special Information Rights. So long as any shares of Series A Preferred
remain outstanding having a value of Five Hundred Thousand Dollars ($500,000),
calculated by reference to the Purchase Price, the Company shall provide all
holders of Series A Preferred: (i) audited annual financial statements within
ninety (90) days after the end of each fiscal year; (ii) monthly financial and
operating statements compared against the Company's operating plan or budget,
within thirty (30) days after the end of each month, or forty-five (45) days
after the end of each fiscal quarter; (iii) an annual operating plan or budget,
not later than thirty (30) days prior to the beginning of each fiscal year; (iv)
inspection and visitation rights, as reasonably requested; and (v) any other
Company information (operational, financial or otherwise), as reasonably
requested.
1.9 Security Interest. The obligations of the Company in favor of the
Series A Preferred shall be secured by the grant of a lien upon all tangible and
intangible assets of the Company, including but not limited to all cash and
equivalents, accounts receivable, inventory, equipment and general intangibles
(including all Intellectual Property Rights of any kind held by the Company), as
further set forth in the Security Agreement, attached hereto as Exhibit D. The
lien shall be subordinate to the lien granted by the Company in connection with
its existing credit agreement with Silicon Valley Bank and shall be structured
so as to avoid any breach of, or default under, such credit agreement.
1.10 Registration Rights. In connection with the execution of this
Agreement, the Company and the Purchasers shall enter into a Registration Rights
Agreement by which the Company will grant the Purchasers certain registration
rights for the shares of Series A Preferred and any other securities of the
Company that the Purchasers acquire under this Agreement or any related
agreement. The Company shall execute and deliver to the Purchasers at Closing a
Registration Rights Agreement substantially in the form attached hereto as
Exhibit E.
1.11 Ordinary Course Operations. From and after the Closing Date, the
Company shall obtain the Board of Directors' approval for any and all
transactions not in the ordinary course of business of the Company.
ARTICLE II
Closing and Delivery
2.1 The Closing. The closing of the purchase and sale of the Series A
Preferred shall be held at the offices of Xxxxxxxx, Xxxxx & Xxxxxx, LLP at 10:00
a.m. local time on August 13, 2001 ("Closing Date") or at such other time and
place upon which the Company and the Purchasers shall agree ("Closing").
2.2 Delivery. At the Closing the Company will deliver to each Purchaser a
certificate or certificates, registered in such Purchaser's name as set forth on
the Schedule of Purchasers, representing the number of shares of Series A
Preferred purchased by such Purchaser. Delivery of the certificates will be made
against payment of the Purchase Price by the Purchasers,
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by certified check or checks payable to the order of the Company or by wire
transfer funds to the account of the Company per the Company's instructions.
ARTICLE III
Representations and Warranties of the Company
Except as set forth on the Schedule of Exceptions attached hereto as
Schedule B, the Company represents and warrants to the Purchasers as follows:
3.1 Organization. The Company is a corporation duly continued and existing
under the laws of the State of Wyoming. The Company has requisite corporate
power and authority to own and operate its properties and assets, and to carry
on its business as presently conducted and as proposed to be conducted. The
Company is duly qualified as a foreign corporation and in good standing to do
business in all such jurisdictions in which the conduct of its business or its
ownership, leasing or operation of property requires such qualification, except
for those jurisdictions in which failure to so qualify would not have a material
adverse effect on the Company's business as now conducted or proposed to be
conducted. The Company has furnished each Purchaser or its counsel with copies
of its Certificate and Bylaws, as amended. Said copies are true, correct and
complete and contain all amendments through the Closing Date.
3.2 Corporate Power. The Company has all requisite legal and corporate
power and authority to execute and deliver this Agreement, to sell and issue the
Series A Preferred hereunder, and to carry out and perform its obligations under
the terms of this Agreement. After the amendment of the Company's Certificate to
authorize additional shares of Common Stock and Preferred Stock as contemplated
by Section 1.1, the Company will have the requisite legal and corporate power
and authority to increase the number of shares of authorized preferred and
common stock.
3.3 Subsidiaries. The Company has no subsidiaries or affiliated companies
and does not otherwise own or control, directly or indirectly, any equity
interest in any corporation, association or business entity.
3.4 Capitalization. Immediately prior to the Closing, the authorized
capital stock of the Company consists of 50,000,000 shares of Common Stock, of
which 24,147,534 shares are issued and outstanding, and 10,000,000 shares of
Preferred Stock, of which no shares are outstanding. The outstanding shares have
been duly authorized and validly issued, and are fully paid and nonassessable.
As of the Closing Date, the Company has reserved or agreed to reserve 50,000,000
shares of Series A Preferred for issuance hereunder, 1,000,000,000 (One Billion)
shares of Common Stock for issuance upon conversion of the Series A Preferred,
and the number of shares of Common Stock described in Schedule B for issuance to
employees, consultants or directors under stock plans or arrangements approved
by the Board of Directors. Options to purchase 4,810,450 shares of Common Stock
are issued and outstanding under the Company's employee stock option plan, and
383,334 shares of Common Stock are issued and outstanding under warrants issued
by the Company.
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All outstanding securities of the Company were issued in compliance with
applicable state and federal securities laws. The Series A Preferred shall have
the rights, preferences, privileges and restrictions set forth in the
Certificate.
3.5 Authorization. The Company has full corporate power and authority to
issue the Series A Preferred and to execute and deliver this Agreement, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the Company and the consummation of the transactions
contemplated hereby have been duly authorized and approved by the Board of
Directors of the Company and, except as described in Section 1.1, no other
corporate governance action on the part of the Company is necessary to authorize
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by an authorized officer of the Company and is a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except to the extent that its respective enforceability may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally or by general equitable
principles.
3.6 Consents and Approvals; No Violations. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby will not, with or without
the giving of notice or the lapse of time or both (i) violate, conflict with, or
result in a breach or default under any provision of the charter or bylaws of
the Company, (ii) violate any statute, ordinance, rule, regulation, order,
judgment or decree of any court or of any governmental or regulatory body,
agency or authority applicable to the Company or by which any of its properties
or assets may be bound, (iii) require any filing by the Company with, or require
the Company to obtain any permit of, or require the Company to give any notice
to, any governmental or regulatory body, agency or authority or (iv) result in a
violation or breach by the Company of, conflict with, constitute (with or
without due notice or lapse of time or both) a default by the Company (or give
rise to any right of termination, cancellation, payment or acceleration) under
or result in the creation of any encumbrance upon any of the assets or
properties of the Company under any of the terms, conditions, or provisions of
any note, bond, mortgage, indenture, permit, contract, lease or other
instrument, agreement or obligation to which the Company is a party, or by which
it or any of its assets or properties may be bound.
3.7 Financial Information. (a) Since May 15, 2001, the Company has filed
with the SEC all required reports, schedules, forms, statements and other
documents (including exhibits and all other information incorporated therein)
required under the Securities Act of 1933, the Securities Exchange Act of 1934,
and the rules and regulations promulgated under the Securities Act and the
Exchange Act (the "Company SEC Documents"). As of their respective dates, the
Company SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Documents, and none of the Company SEC Documents at the time they were filed
contained any untrue statement of a material fact or
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omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the Company SEC Documents comply as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, and have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company as of the dates thereof and the consolidated
results of the Company's operations, stockholders' equity and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
recurring year-end audit adjustments) and are consistent in all material
respects with the books and records of the Company. Since May 15, 2001, there
has been no change in any of the significant accounting (including tax
accounting) policies, practices or procedures of the Company. Except for
liabilities or obligations that are accrued or reserved against the Company's
financial statements included in the Company SEC Documents, the Company has no
liabilities or obligations (whether absolute, accrued, contingent or otherwise,
and whether due or to become due) that would be required by GAAP to be reflected
on a consolidated balance sheet, or the notes thereto.
(b) Except for liabilities or obligations (i) reflected in the
financial statements or in the notes thereto included in the Company SEC
Documents, (ii) incurred in the ordinary course of business consistent with
past practice since the date of the most recent audited financial
statements of the Company contained in the Company SEC Documents or (iii)
incurred in connection with this Agreement or the transactions contemplated
hereby, the Company has no liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature which, individually or in
the aggregate, would have material adverse effect on the Company's
financial condition of operations.
3.8 Changes. Since May 15, 2001, (i) the Company has not entered into any
transaction which was not in the ordinary course of business, (ii) there has
been no material adverse change, individually or in the aggregate, in the
condition (financial or otherwise), business, property, assets or liabilities of
the Company other than changes in the ordinary course of business, (iii) there
has been no damage to, destruction of or loss of physical property materially
and adversely affecting the business or operations of the Company, (iv) the
Company has not declared or paid any dividend or made any distribution on its
stock or redeemed, purchased or otherwise acquired any of its stock, (v) the
Company has not increased the compensation of any of its officers, or the rate
of pay of its employees as a group, except as part of regular compensation
increases in the ordinary course of business, (vi) there has been no resignation
or termination of employment of any key officer, consultant or employee of the
Company and the Company does not know of the impending resignation or
termination of employment of any key officer, consultant or employee of the
Company that if consummated would have a materially adverse effect on its
business, (vii) there has not been any change other than in the ordinary course
of business in the contingent obligations of the Company by way of
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guaranty, endorsement, indemnity, warranty or otherwise, (viii) there have not
been any loans made by the Company to any of its employees, officers or
directors other than in the ordinary course of business and (ix) to the best
knowledge of the Company, there has not been any other event or condition of any
character pertaining to and materially and adversely affecting the assets or
business of the Company.
3.9 Absence of Undisclosed Liabilities. On the Closing Date, except as
disclosed in the Company SEC Documents (i) the Company had no liability in
excess of $25,000, in the aggregate, of any nature (matured or unmatured, fixed
or contingent) which was not provided for or disclosed, and (ii) all liability
reserves established by the Company were adequate in all material respects.
There were no loss contingencies (as such term is used in Statement of Financial
Accounting Standards No. 5 issued by the Financial Accounting Standards Board)
which were not adequately provided for in all material respects.
3.10 Title to Properties and Assets; Liens, etc. The Company has good and
marketable title to its properties and assets and has good title to all its
leasehold interests, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than the lien of current taxes not yet due and
payable and liens and pledges pertaining to debt instruments presented on the
Balance Sheet.
3.11 Legal Compliance; Compliance with Instruments. The Company is not in
violation of any provision of its Certificate or Bylaws, as amended, or of any
loan agreement or other agreement to which it is a party, other than violations
which singly or in the aggregate will not have a material adverse effect on the
business, condition (financial or otherwise), assets, properties or operations
or prospects of the Company or any of its subsidiaries taken as a whole. The
Company is not, nor is it alleged to be, in violation or default of any
applicable law, statute, order, rule or regulation promulgated thereunder,
relating to or affecting the operation, conduct or ownership of the property or
business of the Company, which violation or default or alleged violation or
default would, individually or in the aggregate, have a material adverse effect
on the business of the Company or any of its properties or assets. There are no
adverse orders, judgments, writs, injunctions, decrees or demands of any court
or administrative body, domestic or foreign, or of any other governmental agency
or instrumentality, domestic or foreign, outstanding against the Company or any
of its subsidiaries.
3.12 Intellectual Property Rights. To the best knowledge of the Company,
the Company owns or has the right to use all Intellectual Property Rights (as
such term is defined in Section 7.16) that are required to carry out the
Company's business plan. Except with respect to regulatory approvals which may
in the future be required with respect to products or services offered or to be
offered by the Company, the Company has all governmental approvals,
authorizations, consents and permits necessary or required to conduct its
business as presently conducted or as presently proposed to be conducted. To the
best knowledge of the Company, no product or service presently proposed to be
manufactured, marketed or sold by the Company will violate any license or
infringe any legally valid Intellectual Property Right or the assumed name of
another. There are no outstanding options, licenses or agreements of any kind
relating to such
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Intellectual Property Rights. The Company has not received any communications
alleging that the Company has violated or, by conducting its business as
proposed, would violate any of the Intellectual Property Rights of any other
person or entity. The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
the Company or that would conflict with the Company's business as proposed to be
conducted. Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company's business as proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any employee is now obligated. The Company does not
believe it is or will be necessary to utilize any inventions, trade secrets or
proprietary information of any of its employees made prior to their employment
by the Company, except for inventions, trade secrets or proprietary information
that have been assigned or licensed to the Company.
3.13 Litigation. There is no action, suit, proceeding at law or in equity,
arbitration or administrative or other proceeding by or before (or any
investigation by) any governmental or other instrumentality or agency, pending,
or, to the best knowledge of the Company, threatened, against or affecting the
properties or rights of the Company, and the Company does not know of any valid
basis for any such action, proceeding or investigation. There are no such suits,
actions, claims, proceedings or investigations pending or to the best knowledge
of the Company, threatened, seeking to prevent or challenge the transactions
contemplated by this Agreement.
3.14 Registration Rights. Except as set forth in the Registration Rights
Agreement attached hereto as Exhibit E, the Company is not under any contractual
obligation to register any of its presently outstanding securities or any of its
securities which may hereafter be issued.
3.15 Governmental Consents; etc. No consent, approval or authorization of
(or designation, declaration or filing with) any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of this Agreement, or the offer, sale or issuance of the Series A
Preferred and the Conversion Stock, or the consummation of any other transaction
contemplated hereby, except qualification (or taking such action as may be
necessary to secure an exemption from qualification, if available) of the offer
and sale of the Series A Preferred and the Conversion Stock under applicable
federal and state securities laws, which filings and qualifications, if
required, will be accomplished in a timely manner.
3.16 Offering. Subject to the accuracy of the Purchasers' representations
in Article IV hereof, the offer, sale and issuance of the Series A Preferred to
be issued in conformity with the terms of this Agreement and the issuance of the
Conversion Stock upon conversion of the Series A Preferred constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended ("Securities Act").
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3.17 Brokers or Finders; Other Offers. The Company has not incurred and
will not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions or
similar charges in connection with this Agreement.
3.18 Tax Matters. The Company (i) has timely filed all required tax returns
with all appropriate federal, state, county and local governmental agencies (and
all such returns fairly reflect the Company's operations for tax purposes), (ii)
has timely paid all taxes owed by it for which it is obligated to withhold from
amounts owing to any employee (including without limitation social security
taxes), creditor or third party (other than taxes the validity of which are
being contested in good faith by appropriate proceedings) and (iii) has not
waived any statute of limitations with respect to taxes or agreed to any
extension of time with respect to a tax assessment or deficiency. The assessment
of any additional taxes for periods for which returns have been filed is not
expected to exceed the recorded liability therefor, and to the best of the
Company's knowledge, there are no material unresolved questions or claims
concerning the Company's tax liability. The Company's tax returns have not been
reviewed or audited by any federal, state, local or county taxing authority.
There is no pending dispute with any taxing authority relating to any of said
returns which, if determined adversely to the Company, would result in the
assertion by any taxing authority of any valid deficiency in any material amount
for taxes.
3.19 Environmental and Safety Regulations. The Company knows of no
violation or violations by the Company, its employees or agents of any
environmental or safety statute, law or regulation that in the aggregate would
have a material adverse effect on the business, properties, prospects or
financial condition of the Company, and to the best of the Company's knowledge
no material expenditures are or will be required in order to comply with any
such existing statute, law or regulation. No action, proceeding, permit
revocation, writ, injunction or claim is pending or, to the best knowledge of
the Company threatened, concerning the Company's facilities and the Company is
not aware of any fact or circumstance which could involve the Company in any
environmental litigation or impose any material environmental liability upon the
Company.
3.20 Disclosure. This Agreement and the Exhibits and Schedules hereto, when
taken as a whole, do not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements contained
herein and therein not misleading in light of the circumstances under which they
were made.
ARTICLE IV
Representations and Warranties of the Purchasers
Each Purchaser hereby severally represents and warrants to the Company with
respect to the purchase of shares of Series A Preferred as follows:
10
4.1 Authorization. The execution, delivery and performance by it of this
Agreement has been duly authorized by all requisite action by it and constitutes
a valid and binding obligation, enforceable in accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting the enforcement of creditor's
rights, and (ii) general principles of equity that restrict the availability of
equitable remedies.
4.2 Experience. It has substantial experience in evaluating and investing
in private placement transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of its
investment and has the capacity to protect its own interests.
4.3 Investment. It is acquiring the Series A Preferred and the Conversion
Stock for investment for its own account, not as a nominee or agent and not with
the view to or for resale in connection with any distribution thereof. It
understands that the Series A Preferred and the Conversion Stock have not been,
and will not be registered under the Securities Act by reason of specific
exemption from the registration provisions of the Securities Act and applicable
state securities laws, the availability of which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Purchasers' representations as expressed herein.
4.4 Restrictive Legend/Rule 144. Each certificate for the Series A
Preferred and any shares of capital stock received in respect thereof, whether
by reason of a stock split or share reclassification thereof, a stock dividend
thereon or otherwise and each certificate for any such securities issued to
subsequent transferees of any such certificate shall (unless otherwise permitted
by the provisions of other written agreement executed by the Company and
Purchasers) be stamped or otherwise imprinted with legends in substantially the
following form:
[remainder of page left blank intentionally]
11
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. UNLESS OTHERWISE
PERMISSIBLE UNDER THE SECURITIES ACT OF 1933, THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
ADDITIONALLY, THE TRANSFER OF THESE SECURITIES IS SUBJECT TO
THE CONDITIONS SPECIFIED IN SERIES A PREFERRED STOCK
PURCHASE AGREEMENT DATED AUGUST 6, 2001, AMONG THE ISSUER
AND CERTAIN OTHER SIGNATORIES THERETO, AND NO TRANSFER OF
THESE SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED. UPON THE FULFILLMENT OF
CERTAIN OF SUCH CONDITIONS, THE ISSUER HAS AGREED TO DELIVER
TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT BEARING THIS
LEGEND, FOR THE SECURITIES REPRESENTED HEREBY REGISTERED IN
THE NAME OF THE HOLDER HEREOF. COPIES OF SUCH AGREEMENT MAY
BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
ISSUER.
The Purchaser understands that the exemption from registration afforded by Rule
144 (the provisions of which are known to the Purchasers) promulgated under the
Securities Act depends on the satisfaction of various conditions and is not
currently available to the Purchaser, and that, if and when applicable, Rule 144
may afford the basis for sales by a Purchaser only in limited amounts.
4.5 Access to Information. The Purchaser has had an opportunity to discuss
the Company's business, management and financial affairs with directors,
officers and management of the Company, to review the Company's operations and
facilities and has received all information as such Purchaser has deemed
necessary or appropriate as a prudent and knowledgeable Purchaser in evaluating
its purchase of the Securities being purchased by the Purchaser.
4.6 No Broker. The Purchaser has not employed any broker or finder in
connection with the transactions contemplated by this Agreement. Neither the
Purchaser nor any affiliate of the Purchaser has or will assert any right or
claim to any broker's fee, finder's fee or other commission or payment of any
nature whatsoever in connection with, or as a result of, the transaction
contemplated by this Agreement, and Purchaser hereby indemnifies the Company and
12
the Company's affiliates against any and all damages, losses, and expenses they
or any of them may incur in the event Purchaser or any affiliate of Purchaser
asserts any such right or claim.
4.7 Accredited Purchaser. The Purchaser is an "Accredited Investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
ARTICLE V
Purchasers' Conditions to Closing
The Purchasers' obligations to purchase the Series A Preferred at the
Closing or at any Additional Closings are subject to the fulfillment of the
following conditions, any of which may be waived or modified with the written
consent of New Century:
5.1 Representations and Warranties Correct. The representations and
warranties made by the Company in Article III hereof shall be true, correct and
complete when made and upon the Closing Date.
5.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
5.3 Reservation of Shares. The shares issuable upon conversion of the
Series A Preferred shall have been duly authorized by the Board of Directors and
reserved for issuance upon such conversion, subject only to stockholder
approval. At closing the holders of Series A Preferred shall be entitled to vote
upon such reservation on an as if converted basis.
5.4 Deliveries. Each Purchaser shall have received a stock certificate
evidencing its ownership of duly authorized and issued shares of Series A
Preferred in the amount of shares of Series A Preferred set forth beside such
Purchasers name in the Schedule of Purchasers. The Purchasers shall have also
received the Note and Security Agreement, duly executed by the authorized
representative of the Company.
5.5 Corporate Proceedings: Consents, etc. All corporate and other
proceedings to be taken and all waivers, permits and consents to be obtained in
connection with the transactions and all documents incident thereto shall be
satisfactory in form and substance to the Purchasers and their counsel, and the
Purchasers shall have received all such originals or certified or other copies
of such documents either may reasonably request.
5.6 Amendment to Restated Certificate of Incorporation. The amendment to
the Certificate attached hereto as Exhibit A shall have duly set forth, in form
acceptable to the Investors, the designations, rights, preferences, privileges
and restrictions of the Series A Preferred and evidence of filing of the
foregoing with the Secretary of State of Wyoming in form satisfactory to the
Purchasers shall have been delivered to the Purchasers.
13
5.7 Blue Sky Matters. All consents, approvals, qualifications and
registrations required to be obtained, if any, or effected under any applicable
state securities or "blue sky" laws in connection with the designation,
issuance, sale and delivery of the Series A Preferred and the issuance, sale and
delivery of the Conversion Stock shall have been obtained or effected (except
for the filing of any notice subsequent to the Closing or any Additional
Closings which may be required under applicable state securities laws which, if
required, shall be filed on a timely basis as may be so required) and copies of
the same delivered to the Purchasers.
5.8 Certificate of Secretary. The Purchasers shall have received a
certificate of the Secretary of the Company, dated the Closing Date, to the
effect that: (i) attached thereto is a true and complete copy of the Certificate
(as amended through such date) and the Bylaws of the Company as in effect on the
date thereof; (ii) the Restated Certificate and the Bylaws, each as amended, are
sufficient in form and substance to permit the transactions contemplated in this
Agreement with respect to the voting rights and powers of the Series A
Preferred; (iii) attached thereto is a true and complete copy of resolutions
adopted by the Board of Directors of the Company authorizing the execution,
delivery and performance of this Agreement, the issuance of the Series A
Preferred and reserving the Conversion Stock for issuance upon conversion of the
Series A Preferred; (iv) the Company is in good standing in reliance upon a good
standing certificate from the Office of the Secretary of State of the State of
Wyoming, as of a recent date; and (v) such other matters as may be reasonably
requested by the Purchasers.
5.9 Opinion of Counsel. At the Closing, the Purchasers shall have received,
from counsel for the Company, its opinion addressed to the Company and the
Purchasers, dated as of the Closing Date and substantially in the form of
Exhibit F attached hereto.
5.10 Directors' and Officers' Liability Coverage. At the Closing, New
Century shall have received from the Company evidence satisfactory to New
Century, at its sole discretion, of adequate directors' and officers' liability
coverage.
ARTICLE VI
Company's Conditions to Closing
The Company's obligation to sell and issue the Series A Preferred at the
Closing Date is, at the sole option and discretion of the Company, subject to
the fulfillment as of the Closing Date of the following conditions:
6.1 Representations. The representations made by the Purchasers in Article
IV hereof shall be true, complete and correct when made and on the Closing Date.
6.2 Compliance with State Securities Laws. The Company shall have obtained
all permits and qualifications required by any state for the offer and sale of
the Series A Preferred and the Conversion Stock, or shall have the availability
of exemption therefrom.
14
6.3 Amendment to Certificate of Incorporation. The Company shall have
received the necessary consents required to effect the amendment to the
Certificate, to the extent of designation of the rights of the Series A
Preferred.
6.4 Payment of Purchase Price. The Company shall have received payment of
100% of the aggregate Purchase Price of the shares of the Series A Preferred to
be issued and sold at the Closing.
ARTICLE VII
Miscellaneous
7.1 Fees. The Company will (i) pay, and save the Purchasers harmless
against all liability for the payment of, all costs and other expenses incurred
in connection with the Company's performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, and (ii) pay, up to a maximum of $45,000, the fees and
disbursements of special counsel selected by the Purchasers, for its services in
connection with the transactions contemplated by this Agreement, which fees and
disbursements will be paid by the Company at the Closing.
7.2 Exchanges, Lost, Stolen or Mutilated Certificates. Upon surrender by a
Purchaser to the Company of any certificate representing Series A Preferred or
Conversion Stock purchased or acquired hereunder, the Company at its expense
will issue in exchange therefor and deliver to such Purchaser, a new certificate
or certificates representing such shares in such denominations as may be
requested by the Purchasers. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any certificate
representing any Series A Preferred or Conversion Stock purchased or acquired by
the Purchasers hereunder, and in case of any such loss, theft or destruction,
upon delivery of any indemnity agreement satisfactory to the Company, or in case
of any such mutilation, upon surrender and cancellation of such certificate, the
Company at its expense will issue and deliver to the Purchasers a new
certificate for such Series A Preferred or Conversion Stock of like tenor, in
lieu of such lost, stolen, destroyed or mutilated certificate.
7.3 Survival of Representations, Warranties and Agreements; etc. All
representations, warranties and covenants made hereunder shall survive any
investigation made by any Purchaser and the Closing for a period of two years,
provided that any representation or warranty which was fraudulently made shall
survive indefinitely. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company through the date hereof
pursuant to this Agreement or in connection with the transactions contemplated
by this Agreement shall constitute representations and warranties by the Company
under this Agreement. All covenants contained herein shall survive indefinitely
until, by their respective terms, they are no longer operative.
7.4 Indemnification. The Company shall, with respect to the
representations, warranties, covenants and agreements made by the Company
herein, indemnify, defend and hold
15
the Purchasers harmless against all liability, loss or damage, together with all
reasonable costs and expenses related thereto (including legal and accounting
fees and expenses), arising from the untruth, inaccuracy or breach of any such
representations, warranties, covenants or agreements of the Company. Without
limiting the generality of the foregoing, the Purchasers shall be deemed to have
suffered liability, loss or damage as a result of the untruth, inaccuracy or
breach of any such representations, warranties, covenants or agreements if such
liability, loss or damage shall be suffered by the Company as a result of, or in
connection with, such untruth, inaccuracy or breach or any facts or
circumstances constituting such untruth, inaccuracy or breach.
The Purchasers shall with respect to the representations, warranties,
covenants and agreements made by the Purchasers herein, indemnify, defend and
hold the Company harmless against all liability, loss or damage, together with
all reasonable costs and expenses related thereto (including legal and
accounting fees and expenses), arising from the untruth, inaccuracy or breach of
any such representations, warranties, covenants or agreements of the Purchasers.
7.5 Remedies. In case any one or more of the covenants and agreements set
forth in this Agreement shall have been breached by any party, or any other
party may proceed to protect and enforce its rights either by suit in equity or
by action at law, including, but not limited to, an action for damages as a
result of any such breach or an action for specific performance of any such
covenant or agreement contained in this Agreement. A party acting pursuant to
this Section 7.5 shall be indemnified against all liability, loss or damage,
together with all reasonable costs and expenses related thereto (including legal
and accounting fees and expenses) in accordance with Section 7.4 hereof.
7.6 Successors and Assigns; Parties in Interest. This Agreement shall bind
and inure to the benefit of the Company, its successors and assigns and the
Purchasers.
7.7 Entire Agreement. This Agreement and the other writings referred to
herein or delivered pursuant hereto contain the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior and
contemporaneous arrangements or understandings with respect to the purchase of
the Series A Preferred.
7.8 Notices. All notices, requests, consents and other communications made
to any party shall be deemed to be sufficient if contained in a written
instrument delivered by courier, sent by facsimile transmission to the telephone
number set forth below or such other number as may hereinafter be designated in
writing by the recipient to the sender listing all parties, or duly sent by
first class registered or certified mail, return receipt requested, postage
prepaid, addressed to such party at the address set forth below or such other
address as may hereafter be designated in writing by the addressee to the
addressor listing all parties:
16
(a) If to the Company, to:
Tanisys Technology, Inc.
00000 Xxxxxxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile No: (000) 000-0000
(b) If to the Purchasers, to the addresses and fax numbers
listed on Schedule A.
with a copy to:
Xxxxxxxx, Xxxxx & Xxxxxx, LLP
000 X. Xx. Xxxx'x Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Facsimile: (000)000-0000
Attn: Xxxxxxx X. Xxxxxx
All such notices, requests, consents and other communications shall be deemed to
have been received (i) in the case of personal delivery, on the date of such
delivery, (ii) in the case of facsimile transmission, on the date of
transmission if sent during normal business hours of the recipient, if not, then
on the next business day or (iii) in the case of mailing, on the third day after
the posting thereof.
7.9 Changes. The terms and provisions of this Agreement may not be modified
or amended or any of the provisions hereof waived, temporarily or permanently,
except pursuant to the written consent of the Company and the holders of at
least a majority of the total number of shares of Series A Preferred (and Common
Stock into which any shares of Series A Preferred are converted) held by the
Purchasers, provided, however, that New Century shall be authorized to modify
any provision of this Agreement so long as any such modification shall not
materially and adversely affect the rights of other Purchasers.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement. Signatures to the Agreement may be facsimile signatures.
7.11 Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
7.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICT OF LAWS, EXCEPT TO THE EXTENT FEDERAL LAW APPLIES AND, TO THE EXTENT
REQUIRED BY LAW, MATTERS OF CORPORATE LAW WILL BE GOVERNED BY THE WYOMING
GENERAL CORPORATION LAW.
17
7.13 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
7.14 Jurisdiction. The parties hereto agree that any suit, action or
proceeding instituted against one or more of them with respect to this Agreement
(including any exhibits hereto) may be brought in any federal or state court
located in the State of Texas. The parties hereto, by the execution and delivery
of this Agreement, irrevocably waive any obligation or any right of immunity on
the ground of venue, the convenience of the forum or the jurisdiction of such
courts, or from the execution of judgments resulting therefrom, and the parties
hereto irrevocably accept and submit to the jurisdiction of the aforesaid courts
in any suit, action or proceeding and consent to the service of process by
certified mail at the address set forth in Section 7.8 hereof
7.15 Exculpation Among Purchasers. Each Purchaser acknowledges that it is
not relying upon any person, firm or company other than the Company, in making
its investment or decision to invest in the Company. Each Purchaser agrees that
no Purchaser nor the respective controlling persons, officers, directors,
partners, agents of employees of any Purchaser shall be liable for any action
heretofore or hereafter taken or omitted to be taken by any of them in
connection with the shares of Series A Preferred and Conversion Stock.
7.16 Definitions. For the purposes of this Agreement:
"EBITDA" shall mean earnings of the Company before deductions for
interest, taxes, depreciation and amortization in accordance with generally
accepted accounting principles, consistently applied.
"Intellectual Property Rights" shall mean all intellectual property
rights, including, without limitation, trade secrets, know-how, patents and
patent applications, mask works, trademark and trademark applications,
copyrights and notices of intent to use copyrights, Proprietary
Information, trade names, service marks, service xxxx applications,
certificates of public convenience and necessity, franchises, licenses,
proprietary processes and formulae.
"Proprietary Information" shall mean the Company's Intellectual
Property Rights and all customer lists, source and object code, algorithms,
architecture, structure, display screens, layouts, processes, inventions,
know-how, development tools and other proprietary rights owned by the
Company pertaining to the identification, research and development of
technologies, methods and know-how for use in producing semiconductors
testing equipment and used, employed or exploited in the development,
license, sale, marketing or distribution or maintenance thereof, and all
documentation and media constituting, describing or relating to the above,
including without limitation, manuals, memoranda, notebooks, records and
disclosures.
18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed on their behalf.
THE COMPANY
TANISYS TECHNOLOGY, INC.
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, President
and Chief Executive Officer
THE PURCHASERS
BY THEIR EXECUTION OF THE
SUBSCRIPTION AGREEMENT
19
SCHEDULE A
SCHEDULE OF PURCHASERS
--------------------------------------------------------------------------------
Name Address Preferred Stock
--------------------------------------------------------------------------------
TOTAL 2,575,000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
20
SCHEDULE B
SCHEDULE OF EXCEPTIONS
EXHIBIT A
ARTICLES OF AMENDMENT OF CERTIFICATE
EXHIBIT B
FINANCIAL PERFORMANCE OBJECTIVES
Below find a summary of the forecast of key financial items, as further detailed
in Exhibit A (000's):
Quarter Gross EBITDA
Ended Revenues Profit Less Cap. Exp.
----- -------- ------ --------------
9/30/01 $1,600 $ 959 $ (295)
12/31/01 $2,391 $ 1,598 $ 215
Six Months Gross EBITDA
Ended Revenue Profit Less Cap. Exp.
----- ------- ------ --------------
6/30/02 $ 7,899 $ 5,626 $2,463
12/31/02 $10,125 $ 7,061 $3,560
6/30/03 $17,206 $10,525 $6,384
12/31/03 $20,988 $11,861 $7,444
Should the Company not meet any one of the three financial goals in any
performance period noted above, the Series A holders will be issued additional
Series A shares equal to 25% of the fully diluted shares of the Company at the
end of each such determination period.
The foregoing is based upon financial performance objectives developed by the
Company, as set forth on the attachment hereto.
