SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 13D
Amendment No. 7
Under the Securities Exchange Act of 1934
SUPERCONDUCTOR TECHNOLOGIES, INC.
(Name of Issuer)
Common Stock, $0.001 par value
(Title of Class of Securities)
867931107
(CUSIP Number)
H. Vaughan Blaxter, III
1900 Grant Building
Pittsburgh, Pennsylvania 15219
(412) 281-2620
(Name, address and telephone number of person
authorized to receive notices and communications)
June 24, 1999
Date of Event which Requires Filing of this Statement
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this statement, and is filing
this statement because of Rule 13d-1(e), 13d-1(f) or 13(d)-1(g), check the
following box [ X ]
<PAGE>
<PAGE>CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
C. G. GREFENSTETTE, Trustee for Various Trusts I.D. ####-##-####
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
U.S.
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
5,000
8 Shared Voting Power
5,534,632
9. Sole Dispositive Power
5,000
10 Shared Dispositive Power
5,534,632
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,539,632
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
44.91%
14 Type of Reporting Person
IN
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
THOMAS G. BIGLEY, Trustee for Various Trusts I.D. #
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
U.S.
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
10,000
8 Shared Voting Power
480,783
9. Sole Dispositive Power
10,000
10 Shared Dispositive Power
480,783
11 Aggregate Amount Beneficially Owned by Each Reporting Person
490,783
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
3.98%
14 Type of Reporting Person
IN
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
THOMAS G. BIGLEY AND C. G. GREFENSTETTE, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR THE CHILDREN OF JULIET
LEA HILLMAN SIMONDS I.D. #25-6193084
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Pennsylvania
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
120,196
8 Shared Voting Power
9. Sole Dispositive Power
120,196
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
120,196
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
.97
14 Type of Reporting Person
OO
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
THOMAS G. BIGLEY AND C. G. GREFENSTETTE, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR THE CHILDREN OF AUDREY
HILLMAN FISHER I.D. #25-6193085
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Pennsylvania
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
120,196
8 Shared Voting Power
9. Sole Dispositive Power
120,196
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
120,196
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
.97
14 Type of Reporting Person
OO
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
THOMAS G. BIGLEY AND C. G. GREFENSTETTE, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR THE CHILDREN OF HENRY
LEA HILLMAN, JR. I.D. #26-6193086
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Pennsylvania
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
120,196
8 Shared Voting Power
9. Sole Dispositive Power
120,196
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
120,196
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
.97
14 Type of Reporting Person
OO
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
THOMAS G. BIGLEY AND C. G. GREFENSTETTE, TRUSTEES UNDER
AGREEMENT OF TRUST DATED 12/30/76 FOR THE CHILDREN OF WILLIAM
TALBOTT HILLMAN I.D. #25-6193087
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Pennsylvania
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
120,196
8 Shared Voting Power
9. Sole Dispositive Power
120,196
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
120,196
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
.97
14 Type of Reporting Person
OO
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
HENRY L. HILLMAN I.D. ####-##-####
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
U.S.
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
8 Shared Voting Power
5,053,849
9 Sole Dispositive Power
10 Shared Dispositive Power
5,053,849
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,053,849
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
40.97%
14 Type of Reporting Person
IN
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
ELSIE HILLIARD HILLMAN I.D. ####-##-####
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
U.S.
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
8 Shared Voting Power
5,053,849
9 Sole Dispositive Power
10 Shared Dispositive Power
5,053,849
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,053,849
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
40.97%
14 Type of Reporting Person
IN
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
HENRY L. HILLMAN, ELSIE HILLIARD HILLMAN & C. G. GREFENSTETTE,
TRUSTEES OF THE HENRY L. HILLMAN TRUST U/A DATED NOVEMBER
18, 1985I.D. #18-2145466
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Pennsylvania
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
460,587
8 Shared Voting Power
4,593,262
9 Sole Dispositive Power
460,587
10 Shared Dispositive Power
4,593,262
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,053,849
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
40.97%
14 Type of Reporting Person
OO
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
THE HILLMAN COMPANY I.D. #25-1011286
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Pennsylvania
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
8 Shared Voting Power
4,593,262
9 Sole Dispositive Power
10 Shared Dispositive Power
4,593,262
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,593,262
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
37.24%
14 Type of Reporting Person
CO
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
WILMINGTON INVESTMENTS, INC. I.D. #51-0344688
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
8 Shared Voting Power
4,593,262
9 Sole Dispositive Power
10 Shared Dispositive Power
4,593,262
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,593,262
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
37.24%
14 Type of Reporting Person
CO
<PAGE>
CUSIP NO. 867931107
1 Name of Reporting Person S.S. or I.R.S. Identification No. of above
Person
WILMINGTON SECURITIES, INC. I.D. #51-0114700
2 Check the Appropriate Box if Member of a Group (a) [ X
] (b) [ ]
3 SEC Use Only
4 Source of Funds
OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With
7 Sole Voting Power
4,593,262
8 Shared Voting Power
9 Sole Dispositive Power
4,593,262
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,593,262
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
37.24%
14 Type of Reporting Person
CO
<PAGE>
SCHEDULE 13D
Amendment No. 7
This statement ("Statement") constitutes Amendment No. 7 to Schedule 13D
filed with the Securities and Exchange Commission (the "Commission") on July
7, 1999 (the "Filing").
Item 1. Security and Issuer
This Statement relates to the Common Stock, $0.001 par value, of
Superconductor Technologies, Inc., a Delaware corporation (the "Issuer"). The
address of the principal executive offices of the Issuer is 460 Ward Drive,
Suite F, Santa Barbara, California 93111-2310. The Common Stock is quoted on
the Nasdaq National Market under the symbol "SCON".
Item 2. Identity and Background
(a) Names of persons filing (individually, the "Registrant" and
collectively, the "Registrants"):
Wilmington Securities, Inc., a wholly-owned subsidiary of
Wilmington Investments, Inc.
Wilmington Investments, Inc., a wholly-owned subsidiary of
The Hillman Company.
The Hillman Company, a corporation controlled by Henry L.
Hillman, Elsie Hilliard Hillman and C. G. Grefenstette,
as Trustees of the Henry L. Hillman Trust U/A dated
November 18, 1985.
Henry L. Hillman, Elsie Hilliard Hillman and C. G.
Grefenstette, Trustees of the Henry L. Hillman Trust U/A
dated November 18, 1985 (the "Henry L. Hillman Trust").
Thomas G. Bigley and C. G. Grefenstette, Trustees Under Agreement
of Trust Dated 12/30/76 for the Children of Juliet Lea Hillman
Simonds (the " JLHS 1976 Trust").
Thomas G. Bigley and C. G. Grefenstette, Trustees Under Agreement
of Trust Dated 12/30/76 for the Children of Audrey Hillman Fisher
(the "AHF 1976 Trust").
Thomas G. Bigley and C. G. Grefenstette, Trustees Under Agreement
of Trust Dated 12/30/76 for the Children of Henry Lea Hillman, Jr.
(the "HLH Jr. 1976 Trust")
Thomas G. Bigley and C. G. Grefenstette, Trustees Under Agreement
of Trust Dated 12/30/76 for the Children of William Talbott Hillman
(the "WTH 1976 Trust").
C. G. Grefenstette
Thomas G. Bigley
Henry L. Hillman
Elsie Hilliard Hillman
The name, position, business address and citizenship of each director and
executive officer of the entities listed above, each controlling person of
such entities and each director and executive officer of any person or
corporation in control of said entities, is attached hereto as Exhibit 1.
(b) Business Address
The addresses of the Registrants are as follows:
The Hillman Company, the Henry L. Hillman Trust, the JLHS 1976
Trust, the AHF 1976 Trust, the HLH Jr. 1976 Trust and the WTH 1976
Trust are each located at:
1900 Grant Building
Pittsburgh, Pennsylvania 15219
Wilmington Securities, Inc. and Wilmington Investments, Inc.
are each located at:
824 Market Street, Suite 900
Wilmington, Delaware 19801
C. G. Grefenstette
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Thomas G. Bigley
One Oxford Centre
28th Floor
Pittsburgh, Pennsylvania 15219
Henry L. Hillman
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Elsie Hilliard Hillman
2000 Grant Building
Pittsburgh, Pennsylvania 15219
(c) Principal occupation or employment
The principal occupations of the corporations, listed in response to Item
2(a) are: diversified investments and operations.
The principal occupation of the Henry L. Hillman Trust is: diversified
investments and operations.
The principal occupation of the JLHS 1976 Trust is: diversified
investments and operations.
The principal occupation of the AHF 1976 Trust is: diversified
investments and operations.
The principal occupation of the HLH Jr. 1976 Trust is: diversified
investments and operations.
The principal occupation of the WTH 1976 Trust is: diversified
investments and operations.
C. G. Grefenstette
See Exhibit 1
Thomas G. Bigley
See Exhibit 1
Henry L. Hillman
See Exhibit 1
Elsie Hilliard Hillman
See Exhibit 1
(d) Criminal convictions
None of the persons named in Item 2(a)(including Exhibit 1) have been
convicted in a criminal proceeding in the last five years.
(e) Civil proceedings
None of the persons listed in response to Item 2(a) (including Exhibit 1)
have in the last five years been subject to a judgment, decree or final order
as described in Item 2, subsection (e) of Schedule 13D.
(f) Citizenship
Wilmington Securities, Inc. and Wilmington Investments, Inc. are Delaware
corporations.
The Hillman Company is a Pennsylvania corporation.
The Henry L. Hillman Trust, the JLHS 1976 Trust, the AHF 1976 Trust,
the HLH Jr. 1976 Trust and the WTH 1976 Trust are Pennsylvania
trusts.
C. G. Grefenstette, Thomas G. Bigley, Henry L. Hillman and Elsie
Hilliard Hillman are U.S. citizens.
Item 3. Source and Amount of Funds or Other Consideration
None.
Item 4. Purpose of Transaction
On June 24, 1999 Wilmington Securities, Inc. entered into a Stock
Purchase Agreement with the Issuer pursuant to which Wilmington Securities,
Inc. purchased 30,918 shares of Series D Preferred Stock for $1,545,900. Such
shares of Series D Preferred Stock are initially convertible into 618,360
shares of Common Stock. Wilmington Securities, Inc. also received a Warrant
for 61,836 shares of Common Stock. As a result of the issuance of the Series
D Preferred Stock to Wilmington Securities, Inc. and another investor, the
conversion rates of the Series A-2, Series A-3, Series B-1 and Series C
Preferred Stock have been adjusted. The results of such adjustment are
reflected in Exhibit 2.
Except as set forth above and in Item 6 below, the Registrants have
no present plans or proposals which relate to or would result in (a) the
acquisition by any person of additional securities of the Issuer or the
disposition of securities of the Issuer, (b) an extraordinary corporate
transaction, such as a merger, reorganization, or liquidation involving the
Issuer or any of its subsidiaries, (c) a sale or transfer of a material amount
of the assets of the Issuer or any of its subsidiaries, (d) any change in the
present Board of Directors or Management of the Issuer including any plans or
proposals to change the number or term of Directors or to fill any existing
vacancies on the Board, (e) any material change in the present capitalization
or dividend policy of the Issuer, (f) any other material change in the
Issuer's business or corporate structure, (g) changes in the Issuer's charter,
by-laws or instruments corresponding thereto or other actions which may impede
the acquisition of control of the Issuer by any person, (h) causing a class of
securities of the Issuer to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of
a registered national securities association, (i) a class of equity securities
of the Issuer becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Act of 1933, or (j) any action similar to those
enumerated above.
Item 5. Interest in Securities of the Issuer
(a) Beneficial Ownership
5,000 shares of Common Stock are owned of record and
beneficially by C. G. Grefenstette.
10,000 shares of Common Stock are owned of record and
beneficially by Thomas G. Bigley.
775,000 shares of Common Stock are owned of record and
beneficially by Wilmington Securities, Inc. Wilmington
Securities, Inc. also owns 64,584 shares of Series A-2 Preferred
Stock, 12,500 shares of Series A-3 Preferred Stock, 15,000 shares of
Series B-1 Preferred Stock, 41,667 shares of Series C Preferred Stock
and 30,918 shares of Series D Preferred Stock. Wilmington Securities,
Inc. also owns a Warrant for 100,000 shares of Common, Stock, a
Warrant for 66,667 shares of Common Stock, a Warrant for 36,000 shares
of Common Stock, a Warrant for 54,000 shares of Common Stock, a
Warrant for 120, 000 shares of Common Stock, and a Warrant for 61,836
shares of Common Stock.
100,000 shares of Common Stock are owned of record and beneficially
by the Henry L. Hillman Trust. The Henry L. Hillman Trust also owns
15,000 shares of Series B-1 Preferred Stock, a Warrant for 36,000
shares of Common Stock and a Warrant for 9,000 shares of Common Stock.
The JLHS 1976 Trust owns 5,000 shares of Series B-1 Preferred Stock,
a Warrant for 12,000 shares of Common Stock and a Warrant for 3,000
shares of Common Stock.
The AHF 1976 Trust owns 5,000 shares of Series B-1 Preferred Stock,
a Warrant for 12,000 shares of Common Stock and a Warrant for 3,000
shares of Common Stock.
The HLH Jr. 1976 Trust owns 5,000 shares of Series B-1 Preferred
Stock, a Warrant for 12,000 shares of Common Stock and a Warrant for
3,000 shares of Common Stock.
The WTH 1976 Trust owns 5,000 shares of Series B-1 Preferred Stock,
a Warrant for 12,000 shares of Common Stock and a Warrant for 3,000
shares of Common Stock.
See Exhibit 2 for the number of shares of Common Stock for which the
above Securities may be converted or exercised.
(b) Power to Vote or Dispose of Shares
Each person listed above in response to Item 5(a) has the sole power to
vote and to direct the vote and the sole power to dispose of and direct the
disposition of those shares except as follows:
(i)Wilmington Investments, Inc., The Hillman Company, Henry L.
Hillman, as settlor and Trustee of the Henry L. Hillman Trust, and Elsie
Hilliard Hillman and C. G. Grefenstette, as Trustees of the Henry L. Hillman
Trust, may be deemed to share voting and disposition power regarding 4,593,262
shares of Common Stock held beneficially by Wilmington Securities, Inc.
(ii)Henry L. Hillman, as settlor and Trustee of the Henry L. Hillman
Trust, and Elsie Hilliard Hillman and C. G. Grefenstette, as Trustees of the
Henry L. Hillman Trust, may be deemed to share voting and disposition power
regarding 460,587 shares of Common Stock held beneficially by the Henry L.
Hillman Trust.
(iii)As trustees of the JLHS 1976 Trust, the AHF 1976 Trust, the HLH
Jr. 1976 Trust and the WTH 1976 Trust Thomas G. Bigley and C. G. Grefenstette
may be deemed to share voting and disposition power regarding 480,783 shares
of Common Stock held beneficially by the JLHS 1976 Trust, the AHF 1976 Trust,
the HLH Jr. 1976 Trust and the WTH 1976 Trust.
(c), (d) and (e). Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer
Pursuant to the Third Amended and Restated Stockholder Rights Agreement
dated as of June 24, 1999 (the "Third Amendment"), the Issuer has requested,
and the parties to the Prior Rights Agreements have agreed, that upon
execution of the Third Amendment, the Prior Rights Agreements shall be of no
further force and effect, that Wilmington Securities, Inc. will waive its
right of first refusal set forth in Section 2 of the Second Amended and
Restated Stockholder Rights Agreement with respect to the purchase of the
Series D Preferred Stock and related warrants being issued pursuant to the
Series D Agreement.
Item 7. Material to be Filed as Exhibits
Exhibit 1.Information concerning officers and directors of reporting
persons and certain affiliates thereof.
Exhibit 2.Conversion of the Series A-2, A-3, B-1, C and D Preferred Stock
and Warrants.
Exhibit 3Series D Preferred Stock Purchase Agreement
Exhibit 4.Third Amended and Restated Stockholder Rights Agreement
<PAGE>SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
WILMINGTON SECURITIES, INC.
/s/ Andrew H. McQuarrie
By _________________________________________
Andrew H. McQuarrie, Vice President
WILMINGTON INVESTMENTS, INC.
/s/ Andrew H. McQuarrie
By _________________________________________
Andrew H. McQuarrie, Vice President
THE HILLMAN COMPANY
/s/ Lawrence M. Wagner
By _________________________________________
Lawrence M. Wagner, President
HENRY L. HILLMAN, ELSIE HILLIARD HILLMAN
& C. G. GREFENSTETTE, TRUSTEES OF THE HENRY
L. HILLMAN TRUST U/A DATED NOVEMBER 18, 1985
/s/ C. G. Grefenstette
By _________________________________________
C. G. Grefenstette, Trustee
<PAGE>
THOMAS G. BIGLEY AND C. G. GREFENSTETTE,
TRUSTEES UNDER AGREEMENT OF TRUST DATED
12/30/76 FOR THE CHILDREN OF JULIET LEA
HILLMAN SIMONDS, AUDREY HILLIARD HILLMAN
HENRY LEA HILLMAN, JR., AND WILLIAM
TALBOTT HILLMAN
/s/ Thomas G. Bigley
____________________________________________
Thomas G. Bigley, Trustee
/s/ C. G. Grefenstette
____________________________________________
C. G. Grefenstette, Trustee
/s/ C. G. Grefenstette
____________________________________________
C. G. Grefenstette
/s/ Thomas G. Bigley
____________________________________________
Thomas G. Bigley
/s/ Henry L. Hillman
____________________________________________
Henry L. Hillman
/s/ Elsie Hilliard Hillman
____________________________________________
Elsie Hilliard Hillman
July 7, 1999
Date
EXHIBIT 1
PRINCIPAL OFFICERS AND DIRECTORS OF
THE HILLMAN COMPANY, ALL OF WHOM ARE U.S. CITIZENS
Name and Address Title
Henry L. Hillman Chairman of the Executive Committee
2000 Grant Building and Director
Pittsburgh, Pennsylvania 15219
C. G. Grefenstette Chairman of the Board and
2000 Grant Building Director
Pittsburgh, Pennsylvania 15219
Lawrence M. Wagner President, Chief Executive Officer
2000 Grant Building and Director
Pittsburgh, Pennsylvania 15219
H. Vaughan Blaxter, III Vice President, Secretary, General
1900 Grant Building Counsel and Director
Pittsburgh, Pennsylvania 15219
Mark J. Laskow Vice President and Director
1900 Grant Building
Pittsburgh, Pennsylvania 15219
Anthony J. Burlando Vice President - Risk Management
1900 Grant Building
Pittsburgh, Pennsylvania 15219
James R. Philp Vice President - Personnel and
2000 Grant Building Administration
Pittsburgh, Pennsylvania 15219
Richard M. Johnston Vice President - Investments and
2000 Grant Building Director
Pittsburgh, Pennsylvania 15219
John W. Hall Vice President - Accounting and
1800 Grant Building Information Services
Pittsburgh, Pennsylvania 15219
<PAGE>
Timothy O. Fisher Vice President
1900 Grant Building
Pittsburgh, Pennsylvania 15219
Bruce I. Crocker Vice President
1800 Grant Building
Pittsburgh, Pennsylvania 15219
Denis P. McCarthy Vice President
1900 Grant Building
Pittsburgh, Pennsylvania 15219
Timothy P. Hall Vice President
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Joseph C. Manzinger Vice President
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Maurice J. White Vice President, Shareholder Services
1800 Grant Building
Pittsburgh, Pennsylvania 15219
Charles H. Bracken, Jr. Vice President
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Eric C. Johnson Treasurer
2000 Grant Building
Pittsburgh, Pennsylvania 15219
D. Richard Roesch Assistant Treasurer
1800 Grant Building
Pittsburgh, Pennsylvania 15219
Michael S. Adamcyk Assistant Secretary and
2000 Grant Building Assistant Treasurer
Pittsburgh, Pennsylvania 15219
Carol J. Cusick Riley Vice President, Associate General
1900 Grant Building Counsel and Assistant Secretary
Pittsburgh, Pennsylvania 15219
Cornel Conley Controller - Corporate
1800 Grant Building
Pittsburgh, Pennsylvania 15219
Mark M. Poljak Controller - Taxes
1800 Grant Building
Pittsburgh, Pennsylvania 15219
Elsie H. Hillman Director
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Audrey H. Fisher Director
2000 Grant Building
Pittsburgh, Pennsylvania 15219
PRINCIPAL OFFICERS AND DIRECTORS OF
WILMINGTON INVESTMENTS, INC., ALL OF WHOM ARE U.S. CITIZENS
H. Vaughan Blaxter, III President and Secretary
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Lario M. Marini Senior Vice President and Director
100 South Road
Wilmington, Delaware 19809
Andrew H. McQuarrieVice President, Chief Financial
824 Market Street, Suite 900 Officer, Treasurer and Director
Wilmington, Delaware 19801
Richard H. Brown Assistant Vice President and
824 Market Street, Suite 900 Assistant Secretary
Wilmington, Delaware 19801
Eric C. Johnson Assistant Secretary and
2000 Grant Building Assistant Treasurer
Pittsburgh, Pennsylvania 15219
Jody B. Cosner Assistant Secretary
824 Market Street, Suite 900
Wilmington, Delaware 19801
Joan E. Bachner Assistant Treasurer
824 Market Street, Suite 900
Wilmington, Delaware 19801
Darlene Clarke Director
4911 Birch Circle
Wilmington, Delaware 19808
PRINCIPAL OFFICERS AND DIRECTORS OF
WILMINGTON SECURITIES, INC., ALL OF WHOM ARE U.S. CITIZENS
H. Vaughan Blaxter, III President and Secretary
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Lario M. Marini Senior Vice President and Director
100 South Road
Wilmington, Delaware 19809
Andrew H. McQuarrieVice President, Chief Financial
824 Market Street, Suite 900 Officer, Treasurer and Director
Wilmington, Delaware 19801
Richard H. Brown Assistant Vice President and
824 Market Street, Suite 900 Assistant Secretary
Wilmington, Delaware 19801
Eric C. Johnson . Assistant Secretary and
2000 Grant Building Assistant Treasurer
Pittsburgh, Pennsylvania 15219
Jody B. Cosner Assistant Secretary
824 Market Street, Suite 900
Wilmington, Delaware 19801
Joan E. Bachner Assistant Treasurer
824 Market Street, Suite 900
Wilmington, Delaware 19801
Darlene Clarke Director
4911 Birch Circle
Wilmington, Delaware 19808
TRUSTEES OF THE HENRY L. HILLMAN TRUST U/A TRUST
DATED NOVEMBER 18, 1985, ALL OF WHOM ARE U.S. CITIZENS
Henry L. Hillman
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Elsie Hilliard Hillman
2000 Grant Building
Pittsburgh, Pennsylvania 15219
C. G. Grefenstette
2000 Grant Building
Pittsburgh, Pennsylvania 15219
Exhibit 2
<TABLE>
<CAPTION>
Superconductor Technologies, Inc.
Conversion of Preferred Stock
Number of Common Stock
Investor Series/Warrant Shares Equivalent Adjustment
<S> <C> <C> <C> <C>
WSI Series A-2 64,584 1,291,680 25,646
Preferred
Series A-3 12,500 250,000 12,363
Preferred
Series B-1 15,000 300,000 14,835
Preferred
Series C 41,667 833,340 32,783
Preferred
Series D 30,918 618,360 N/A
Preferred
Warrant for 120,000 120,000 N/A
Common
Warrant for 100,000 100,000 N/A
Common
Warrant for 66,667 66,667 N/A
Common
Warrant for 36,000 36,000 752
Common
Warrant for 54,000 54,000 N/A
Common
Warrant for 61,836 61,836 N/A
Common
<PAGE>
HLH Trust Series B-1 15,000 300,000 14,835
Preferred
Warrant for 36,000 36,000 752
Common
Warrant for 9,000 9,000 N/A
Common
JLHS 1976 Series B-1 5,000 100,000 4,945
Trust Preferred
Warrant for 12,000 12,000 251
Common
Warrant for 3,000 3,000 N/A
Common
AHF 1976 Series B-1 5,000 1000,000 4,945
Trust Preferred
Warrant for 12,000 12,000 251
Common
Warrant for 3,000 3,000 N/A
Common
HLH Jr. 1976 Series B-1 5,000 1000,000 4,945
Trust Preferred
Warrant for 12,000 12,000 251
Common
Warrant for 3,000 3,000 N/A
Common
WTH 1976 Series B-1 5,000 100,000 4,945
Trust Preferred
Warrant for 12,000 12,00 0251
Common
<PAGE>
Warrant for 3,000 3,000 N/A
Common
</TABLE>
Exhibit 3
TABLE OF CONTENTS
Page
Section 1 Authorization and Sale of Preferred Stock; Issuance of Warrants
1.1 Authorization1
1.2 Sale of Shares; Issuance of Warrants1
Section 2 Closing Dates; Delivery
2.1 Closing1
2.2 Delivery2
Section 3 Representations and Warranties of the Company
3.1 Organization and Standing; Certificate and Bylaws2
3.2 Corporate Power2
3.3 Subsidiaries3
3.4 Capitalization3
3.5 Authorization4
3.6 Financial Statements4
3.7 Changes5
3.8 Material Obligations5
3.9 Material Contracts and Commitments6
3.10Intellectual Property, Trademarks, etc6
3.11Title to Properties and Assets; Liens, etc 6
3.12Compliance with Other Instruments, None Burdensome, etc 7
3.13Litigation, etc 7
3.14Registration Rights 7
3.15Governmental Consent, etc 7
3.16Offering 8
3.17Brokers or Finders 8
3.18Tax Returns and Payments 8
3.19Employee Matters 8
3.20Disclosure. 9
3.21Related-Party Transactions 9
3.22Permits. 9
3.23Proprietary Information and Inventions Agreements. 9
3.24Minute Books 9
3.25Material Agreements, Wilmington and Hillman.. 10
TABLE OF CONTENTS
(continued)
Page
3.26 Stockholder Approval. 10
Section 4 Representations and Warranties of the Purchasers
4.1 Experience; Speculative Nature of Investment10
4.2 Investment10
4.3 Rule 14410
4.4 No Public Market11
4.5 Access to Data11
4.6 Authorization11
4.7 Brokers or Finders11
4.8 Tax Liability12
Section 5 Conditions to Purchaser's Obligations to Close
5.1 Representations and Warranties Correct12
5.2 Covenants12
5.3 Blue Sky12
5.4 Certificate of Designation12
5.5 Rights Agreement12
5.6 Compliance Certificate13
5.7 Compliance with Law13
5.8 Opinion of Company's Counsel13
5.9 Stockholder Approval13
5.10 Acknowledgment of Total Anti-Dilution Rights by Existing Holders
of
Preferred Stock 13
5.11 Silicon Valley Bank 13
Section 6 Conditions to Company's Obligations to Close
6.1 Representations13
6.2 Covenants14
6.3 Blue Sky14
6.4 Certificate of Designation14
6.5 Rights Agreement14
6.6 Compliance with Law14
6.7 Stockholder Approval14
Section 7 Covenants
7.1 Board of Directors Observer Rights14
7.2 Stockholder Approval15
7.3 Termination of Cryo-Asia Pte Ltd.15
Section 8 Miscellaneous
8.1 Governing Law15
8.2 Survival15
8.3 Successors and Assigns15
8.4 Entire Agreement; Amendment16
8.5 Notices, etc16
8.6 Delays or Omissions16
8.7 California Corporate Securities Law17
8.8 Counterparts17
8.9 Severability17
8.10 Titles and Subtitles 17
8.11 Expenses 17
8.12 Exculpation Among Purchasers 17
8.13 Finders Fees 18
<PAGE>
EXHIBITS
A Schedule of Purchasers
B Certificate of Designation for Series D Preferred Stock
C Warrants
D Third Amended and Restated Stockholder Rights Agreement
E Compliance Certificate
F Opinion of Counsel
<PAGE>
SUPERCONDUCTOR TECHNOLOGIES, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of June ___, 1999 by and among Superconductor Technologies Inc., a
Delaware corporation (the "Company"), and the purchasers identified on
Exhibit
A hereto (the "Purchasers").
Section 1
Authorization and Sale of Preferred Stock; Issuance of Warrants
. The Company will, prior to the Initial Closing (as defined below),
authorize the sale and issuance of (i) 130,000 shares (the "Shares") of the
Company's Series D Preferred Stock ("Series D Preferred"), having the
rights,
privileges and preferences as set forth in the Series D Preferred Stock
Certificate of Designation (the "Certificate") in the form attached to this
Agreement as Exhibit B and (ii) the warrants in the form attached to this
Agreement as Exhibit C (the "Warrants") to purchase up to 260,000 shares of
the Company=s Common Stock at a price of $3.00 per share.
. Subject to the terms and conditions of this Agreement, each of the
Purchasers agrees to purchase, and the Company agrees to sell and issue to
each Purchaser, the number of Shares and number of Warrants set forth next to
such Purchaser=s name on Exhibit A, for the purchase price set forth opposite
such Purchaser=s on Exhibit A. The Company=s agreement with each Purchaser
is
a separate agreement, and the sale of the Shares and Warrants to each
Purchaser is a separate sale.
Section 2
Closing Dates; Delivery
. The closing for the purchase and sale of the Shares and the issuance
of the
-2-
Warrants hereunder shall take place at two closings (each of which is
referred
to in this Agreement as a AClosing@). The initial closing (the AInitial
Closing@) shall take place as soon as practical following satisfaction of the
closing conditions, and a second closing (the ASecond Closing@) shall take
place as early as practical following receipt by the Company of Stockholder
approval of the Series D Preferred Stock financing as required by the rules
of
the Nasdaq Stock Market (AStockholder Approval@). Absent review by the
Securities and Exchange Commission (the ASEC@) of the Company=s proxy
statement relating to the Stockholder Approval, the Second Closing shall
occur
on or before August 1, 1999. The Company may sell in the Second Closing up
to
the balance of the authorized shares of Series D Preferred and Warrants not
sold at the Initial Closing to such purchasers as may be approved by the
Company=s Board of Directors (the "Board"). All such sales shall be made on
the terms and conditions set forth in this Agreement. Any shares of Series D
Preferred sold at each Closing shall be deemed to be "Shares" for all
purposes
under this Agreement and any purchasers thereof shall be deemed to be
"Purchasers" for all purposes under this Agreement. Each Closing shall be
held at the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road,
Palo Alto, California, at 2:00 p.m. local time, on each Closing Date, or at
such other time and place upon which the Company and the Purchasers shall
agree.
. At each Closing, the Company will deliver to each Purchaser a
certificate registered in such Purchaser's name representing the number of
Shares set forth next to such Purchasers' name on Exhibit A and a Warrant for
the purchase of the number of shares of Common Stock set forth next to such
Purchaser=s name on Exhibit A, against payment of the purchase price set
forth
next to such Purchaser's name of Exhibit A (the "Purchase Price") by
cashier's
or certified check payable to the Company, cancellation of indebtedness, or
wire transfer of immediately available funds per the Company's instructions.
Section 3
Representations and Warranties of the Company
Except as set forth on Schedule of Exceptions provided to the
Purchasers,
the Company represents and warrants to the Purchasers at each Closing as
follows:
. The Company is a corporation duly organized and existing under, and
by
virtue of, the laws of the State of Delaware and is in good standing under
such laws. The Company has requisite corporate power and authority to own
and
operate its properties and assets, and to carry on its business. The Company
is presently qualified to do business as a foreign corporation in each
jurisdiction where the failure to be so qualified would have a material
adverse effect on the Company's business, operating results or financial
condition (a "Material Adverse Effect").
. The Company has all requisite legal and corporate power and authority
to execute and deliver this Agreement and that certain Third Amended and
Restated Stockholder Rights Agreement substantially in the form attached
hereto as Exhibit C (the "Rights Agreement"), to sell and issue the Warrants
and Shares hereunder, to issue the shares of the common stock of the Company
(the "Common Stock") issuable upon conversion of the Shares, to issue the
Common Stock issuable on exercise of the Warrants and to carry out and
perform
its obligations under the terms of this Agreement and the Rights Agreement
(together the "Agreements").
. Except for Cryo-Asia Pte Ltd., a joint venture with Alantac in
Singapore, the Company has no subsidiaries and does not otherwise own or
control, directly or indirectly, any equity interest in any corporation,
association or business entity.
. (a) The authorized capital stock of the Company consists or
will, upon the filing prior to the Closing of the Certificate, consist of (i)
30,000,000 shares of Common Stock, par value $0.001 per share, of which
7,737,216 shares are issued and outstanding as of June ___, 1999, and (ii)
2,000,000 shares of Preferred Stock, of which (1) 64,584 shares have been
designated "Series A-2 Preferred," all of which are issued and outstanding,
(2) 12,500 shares have been designated "Series A-3 Preferred," all of which
are issued and outstanding, (3) 50,000 shares have been designated "Series
B-1
Preferred", all of which are issued and outstanding, and (4) 41,667 shares
have been designated "Series C Preferred," all of which were issued and
outstanding, and (5) 130,000 shares have been designated "Series D
Preferred,"
none of which were issued and outstanding prior to the Initial Closing. The
outstanding shares have been duly authorized and validly issued in compliance
with applicable laws, and are fully paid and nonassessable.
(b) As of the date of the Closing, the Company has reserved (i)
130,000 shares of Series D Preferred Stock for issuance hereunder, (ii)
6,170,130 shares of Common Stock for issuance upon conversion of all shares
of
Company Preferred Stock to be issued and outstanding following the Closings,
consisting of (1) 1,333,031 shares for issuance upon conversion of Series A-2
Preferred Stock, (2) 270,116 shares for issuance upon conversion of Series
A-3
Preferred Stock, (3) 1,080,465 shares for issuance upon conversion of Series
B-1 Preferred Stock, (4) 886,518 shares for issuance upon conversion of
Series
C Preferred Stock, and (5) 2,600,000 shares for issuance upon conversion of
Series D Preferred Stock, (iii) 410,580 shares of Common Stock for issuance
upon exercise of warrants issued in connection with the Company's prior
Preferred Stock financings, (iv) 260,000 shares of Common Stock for issuance
upon exercise of the Warrants, (v) 75,000 shares of Common Stock for issuance
upon exercise of Warrants issued in connection with the Exchange Agreement
(the "Exchange Agreement") entered into between the Company and holders of
Company Preferred Stock as of February 26, 1999, (vii) 2,918,293 shares of
its
Common Stock for issuance to employees, consultants or directors pursuant to
its 1992 Director Option Plan, 1992 Stock Option Plan, Amended and Restated
1988 Stock Option Plan, 1998 Nonstatutory Option Plan and 1999 Stock Plan of
which options to purchase 1,884,851 shares are issued and outstanding and
(viii) a total of 281,431 shares of Common Stock for issuance upon exercise
of
certain outstanding warrants as identified in the Schedule of Exceptions.
The Common Stock, the Series A-2, Series A-3, Series B-1 and Series
C Preferred shall have the rights, preferences, privileges and restrictions
set forth in the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation"), copies of which have been provided to the
Purchasers. The Series D Preferred shall have the rights set forth in the
Certificate. Except as set forth above, and in the Schedule of Exceptions,
there are no options, warrants, or other rights to purchase any of the
Company's authorized and unissued capital stock.
Except as set forth on the Schedule of Exceptions, no stock plan,
stock purchase, stock option or other agreement or understanding between the
Company and any holder of any equity securities or rights to purchase equity
securities provides for acceleration or other changes in the vesting
provisions or other terms of such agreement or understanding as the result of
any merger, consolidated sale of stock or assets, change in control or any
other transaction(s) by the Company.
. All corporate action on the part of the Company and its directors
necessary for the authorization, execution, delivery and performance of the
Agreements by the Company, the authorization, sale, issuance and delivery of
the Warrants, Shares and the Common Stock issuable upon conversion of the
Shares and upon exercise of the Warrants, and the performance of all of the
Company's obligations under the Agreements has been taken or will be taken
prior to the Initial Closing. The Agreements, when executed and delivered by
the Company, shall constitute valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies, except that the indemnification provisions of Section
1.11
of the Rights Agreement may further be limited by principles of public
policy. The Warrants and Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, will be fully paid and
nonassessable, and will have the rights, preferences and privileges described
in the certificate representing the Warrants and the Certificate; the Common
Stock issuable upon conversion of the Shares and upon exercise of the
Warrants
has been duly and validly reserved and, when issued in compliance with the
provisions of this Agreement, the Certificate of Incorporation of the
Company,
the Certificate and the certificate representing the Warrants will be validly
issued, and will be fully paid and nonassessable; and the Shares and the
Common Stock issued upon conversion of the Shares and upon exercise of the
Warrants, will be free of any liens or encumbrances, other than any liens or
encumbrances created by or imposed upon the Purchaser; provided, however,
that
the Shares, and the Common Stock issuable upon conversion of the Shares and
upon exercise of the Warrants, are subject to restrictions on transfer under
state and/or federal securities laws as set forth herein and in the Rights
Agreement.
. The Company has made available to each Purchaser copies of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 and the Quarterly Report on Form 10-Q for the fiscal quarter ended April
3, 1999 (the "Reports"). The financial statements included within the Reports
are complete and correct in all material respects and accurately set out and
describe the financial condition and operating results of the Company as of
the dates and during the periods indicated therein, subject only, in the case
of financial statements included in the Quarterly Report, to footnotes and
normal year-end adjustments.
. Since the date of the Company's last Quarterly Report on Form 10-Q,
there has not been:
(a) Any change in the assets, liabilities, financial condition,
or operations of the Company except changes in the ordinary course of
business
which have not been in any case materially adverse;
(b) Any damage, destruction, or loss, whether or not covered by
insurance, materially and adversely affecting the properties or business of
the Company;
(c) Any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;
(d) Any loans made by the Company to its employees, officers or
directors other than travel advances made in the ordinary course of business;
(e) Any declaration or payment of any dividend or other
distribution by the Company; or
(f) To the best of the Company's knowledge, any other event or
condition of any character which has materially and adversely affected the
business operations, assets or financial condition of the Company;
(g) Any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the
ordinary course of business and that is not material to the business,
properties, or financial condition of the Company (as such business is
presently conducted and as it is presently proposed to be conducted);
(h) Any material change to a material contract or arrangement
by
which the Company or any of its assets is bound or subject;
(i) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(j) Any sale, assignment, or transfer of any patents,
trademarks, copyrights, trade secrets, or other intangible assets;
(k) Any resignation or termination of employment of any key
officer of the Company; and the Company, to the best of its knowledge, does
not know of the impending resignation or termination of employment of any
such
officer;
(l) Any agreement or commitment by the Company to do any of the
things described in items (a) through (k) above.
. The Company has no material liabilities or obligations, absolute or
contingent (individually or in the aggregate), except (i) the liabilities and
obligations set forth in the Reports, and (ii) liabilities and obligations
which have been incurred subsequent to April 3, 1999, in the ordinary course
of business which have not been, either in any case or in the aggregate,
material.
. To the best of the Company's knowledge, all of the contracts,
agreements and instruments to which the Company is a party and which are set
forth or incorporated by reference in the Reports and all such contracts,
agreements and instruments which would be required to be set forth in the
Reports, if such Reports were dated as of the Closing (the "Material
Agreements") are valid, binding and in full force and effect in all material
respects, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.
. To the best of its knowledge (but without having conducted any
special
investigation or patent search), the Company owns or possesses sufficient
legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, and proprietary rights and
processes necessary for its business as now conducted and as proposed to be
conducted without any conflict with, or infringement of the rights of,
others. Except for agreements with its own employees or consultants,
substantially in the form referenced in Section 3.23 below, and standard
end-user license agreements, there are no outstanding options, licenses, or
agreements of any kind relating to the foregoing, nor is the Company bound by
or a party to any options, licenses, or agreements of any kind with respect
to
the patents, trademarks, service marks, trade names, copyrights, trade
secrets, licenses, information, and proprietary rights and processes of any
other person or entity. 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 patents, trademarks, service marks, trade
names, copyrights, trade secrets, or other proprietary rights or processes 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 the use of such employee=s best efforts to promote the interests of 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 by the employees of the Company, nor
the
conduct of the Company=s business as proposed, will, to the best of 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 of such employees is now obligated.
The Company does not believe it is or will be necessary to use any inventions
of any of its employees (or persons it currently intends to hire) made prior
to their employment by the Company.
. 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
(i) the lien of current taxes not yet due and payable, and (ii) possible
minor
liens and encumbrances which do not in any case materially detract from the
value of the property subject thereto or materially impair the operations of
the Company, and which have not arisen otherwise than in the ordinary course
of business.
. The Company is not in violation of any term of the Certificate of
Incorporation or Bylaws, each as amended to date, or in any material respect
of any term or provision of any Material Agreement, judgment, decree, order,
statute, rule or regulation applicable to the Company in any respect that
could reasonably be expected to have a Material Adverse Effect. The
execution, delivery and performance of this Agreement, and the issuance of
the
Warrants, Shares and the Common Stock issuable upon conversion of the Shares
and upon exercise of the Warrants, have not resulted and will not result in
any material violation of, or conflict with, or constitute a material default
under, the Certificate of Incorporation or Bylaws, as amended, nor any of the
Material Agreements, nor result in the creation of, any mortgage, pledge,
lien, encumbrance or charge upon any of the properties or assets of the
Company.
. There are no actions, suits, proceedings or investigations pending
against the Company or its properties before any court or governmental agency
(nor, to the best of the Company's knowledge, is there any reasonable basis
therefor or threat thereof) which, if adversely determined, would have a
Material Adverse Effect. The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality.
. Except as set forth in the Rights Agreement attached hereto as
Exhibit
D, and the Amended and Restated Registration Rights Agreement entered into
between the Company and the holders of Company Series B-1 Preferred Stock,
the
Company is not under any contractual obligation to register (as defined in
Section 1.2 of the Rights Agreement) any of its presently outstanding
securities or any of its securities which may hereafter be issued.
. 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 the
Agreements, or the offer, sale or issuance of the Warrants, Shares and the
Common Stock issuable upon conversion of the Shares and upon exercise of the
Warrants, or the consummation of any other transaction contemplated hereby or
thereby, except (a) filing of the Certificate in the office of the Delaware
Secretary of State, and (b) qualification (or taking such action as may be
necessary to secure an exemption from qualification, if available) of the
offer, sale and issuance of the Warrants and Shares (and the Common Stock
issuable upon conversion of the Shares and upon exercise of the Warrants)
under the California Corporate Securities Law of 1968, as amended, and other
applicable Blue Sky laws, which filings and qualifications, if required, will
be accomplished in a timely manner.
. Subject to the accuracy of the Purchaser's representations in Section
4 hereof, the offer, sale and issuance of the Warrants and Shares to be
issued
in conformity with the terms of this Agreement, and the issuance of the
Common
Stock to be issued upon conversion of the Shares and upon exercise of the
Warrants, constitute transactions exempt from the registration requirements
of
Section 5 of the Securities Act of 1933, as amended (the "Securities Act").
. Except as disclosed in the Disclosure Schedule, the Company has not
engaged any brokers, finders or agents, and the Purchasers have 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 any similar charges in connection with the Agreements.
. The Company has timely filed all tax returns (federal, state and
local) required to be filed by it. All taxes shown to be due and payable on
such returns, any assessments imposed, and to the Company's knowledge all
other taxes due and payable by the Company on or before the date hereof have
been paid or will be paid prior to the time they become delinquent. The
Company has not been advised (a) that any of its returns, federal, state or
other, have been or are being audited as of the date hereof, or (b) of any
deficiency in assessment or proposed judgment to its federal, state or other
taxes. The Company has no knowledge of any liability of any tax to be
imposed
upon its properties or assets as of the date of this Agreement that is not
adequately provided for.
. To the best of the Company=s knowledge, there is no strike, labor
dispute or union organization activities pending or threatened between it and
its employees. None of the Company=s employees belongs to any union or
collective bargaining unit. To the best of its knowledge, the Company has
complied in all material respects with all applicable state and federal equal
opportunity and other laws related to employment. To the best of the
Company=s knowledge, no employee of the Company is or will be in violation of
any judgment, decree, or order, or any term of any employment contract,
patent
disclosure agreement, or other contract or agreement relating to the
relationship of any such employee with the Company, or any other party
because
of the nature of the business conducted or presently proposed to be conducted
by the Company or to the use by the employee of his or her best efforts with
respect to such business. The Company is not a party to or bound by any
currently effective employment contract, deferred compensation agreement,
bonus plan, incentive plan, profit sharing plan, retirement agreement, or
other employee compensation agreement. The Company is not aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a
present intention to terminate the employment of any of the foregoing.
Subject to general principles related to wrongful termination of employees,
the employment of each officer and employee of the Company is terminable at
the will of the Company.
3.20 Disclosure. The Company has provided each Purchaser with all
the information reasonably available to it without undue expense that such
Purchaser has requested for deciding whether to purchase the Series D
Preferred Stock and all information that the Company believes is reasonably
necessary to enable such Purchaser to make such decision. To the best of the
Company=s knowledge after reasonable investigation, neither this Agreement
nor
any other agreements, written statements or certificates made or delivered in
connection herewith contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements herein or therein
not misleading.
3.21 Related-Party Transactions. No employee, officer, stockholder
or
director of the Company or member of his or her immediate family is indebted
to the Company, nor is the Company indebted (or committed to make loans or
extend or guarantee credit) to any of them, other than (i) for payment of
salary for services rendered, (ii) reimbursement for reasonable expenses
incurred on behalf of the Company, and (iii) for other standard employee
benefits made generally available to all employees (including stock option
agreements outstanding under any stock option plan approved by the Board of
Directors of the Company). To the best of the Company=s knowledge, none of
such persons has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company
has
a business relationship, or any firm or corporation that competes with the
Company, except that employees, stockholders, officers, or directors of the
Company and members of their immediate families may own stock in publicly
traded companies that may compete with the Company. To the best of the
Company=s knowledge, no officer, director, or stockholder or any member of
their immediate families is, directly or indirectly, interested in any
material contract with the Company (other than such contracts as relate to
any
such person=s ownership of capital stock or other securities of the Company).
3.22 Permits. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company, and
believes it can obtain, without undue burden or expense, any similar
authority
for the conduct of its business as presently planned to be conducted. The
Company is not in default in any material respect under any of such
franchises, permits, licenses or other similar authority.
3.23 Proprietary Information and Inventions Agreements. Each
employee
and officer of the Company has executed a Proprietary Information and
Inventions Agreement substantially in the form or forms which have been
delivered to special counsel for the Purchasers.
3.24 Minute Books. The copy of the minute books of the Company
provided to the Purchasers= special counsel contains minutes of all meetings
of directors and stockholders and all actions by written consent without a
meeting by the directors and stockholders since the date of incorporation and
accurately reflects all actions by the directors (and any committee of
directors) and stockholders with respect to all transactions referred to in
such minutes in all material respects.
3.25 Material Agreements, Wilmington and Hillman. The Company has
provided true and accurate copies of all Material Agreements not currently
set
forth or incorporated by reference in the Reports and all agreements between
the Company and Wilmington Securities, Inc. or any affiliate of the Hillman
Company.
3.26 Stockholder Approval. The Company has obtained stockholder
approval of Proposal Two (as described in the Company=s 1999 Annual Meeting
Proxy Statement) at the Annual Meeting of Stockholders held on June 2, 1999.
Section 4
Representations and Warranties of the Purchasers
Each Purchaser severally represents and warrants to the Company with
respect to the purchase of Shares by and the issuance of the Warrants to such
Purchaser, as follows:
. The Purchaser (or its principals or advisors) 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 in the Company and has the
capacity to protect its own interests. The Purchaser acknowledges that its
investment in the Company is highly speculative and entails a substantial
degree of risk and the Purchaser is in a position to lose the entire amount
of
such investment.
. The Purchaser is acquiring the Warrants, Shares and the underlying
Common 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. The Purchaser understands that the Warrants and Series D Preferred
to be purchased hereby and the underlying Common Stock have not been, and
will
not be, registered under the Securities Act by reason of a specific exemption
from the registration provisions of the Securities Act, the availability of
which depends upon, among other things, the bona fide nature of the
investment
intent and the accuracy of the Purchaser's representations as expressed
herein. The Purchaser is an "accredited investor" within the meaning of
Regulation D, Rule 501(a), promulgated by the Securities and Exchange
Commission.
. The Purchaser acknowledges that the Warrants, Shares and the
underlying Common Stock must be held indefinitely unless subsequently
registered under the Securities Act or unless an exemption from such
registration is available. The Purchaser is aware of the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of
shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market
for the shares, the availability of certain current public information about
the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being effected
through a "broker's transaction" or in transactions directly with a "market
maker" and the number of shares being sold during any three-month period not
exceeding specified limitations. The Purchaser understands that the
certificates evidencing the Warrants and Shares will be imprinted with a
legend that prohibits the transfer of such securities unless they are
registered or such registration is not required.
. The Purchaser understands that no public market now exists for the
Warrants and the Series D Preferred to be issued by the Company and that the
Company has made no assurances that a public market will ever exist for the
Warrants and the Series D Preferred.
. The Purchaser has had an opportunity to discuss the Company's
business, management and financial affairs with its management. The Purchaser
has also had an opportunity to ask questions of officers of the Company,
which
questions were answered to its satisfaction. The Purchaser understands that
such discussions, as well as any written information issued by the Company,
were intended to describe certain aspects of the Company's business and
prospects but were not a thorough or exhaustive description.
. The Agreements, when executed and delivered by the Purchaser, will
constitute valid and legally binding obligations of the Purchaser,
enforceable
in accordance with their terms, except as the indemnification provisions of
Section 1.10 of the Rights Agreement may be limited by principles of public
policy, and subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.
. The Purchaser has not engaged any brokers, finders or agents, and the
Company has not, and will not, incur, directly or indirectly, as a result of
any action taken by Purchaser, any liability for brokerage or finders' fees
or
agents' commissions or any similar charges in connection with the
Agreements.
In the event that the preceding sentence is in any way inaccurate, such
Purchaser agrees to indemnify and hold harmless the Company and each other
Purchaser from any liability for any commission or compensation in the nature
of a finder's fee (and the costs and expenses of defending against such
liability) for which the Company, any other Purchaser, or any of their
officers, directors, employees or representatives, is responsible.
. The Purchaser has reviewed with its own tax advisors the federal,
state, local and foreign tax consequences of this investment and the
transactions contemplated by the Agreements. With respect to such matters,
the Purchaser relies solely on such advisors and not on any statements or
representations of the Company or any of its agents other than the
representations and warranties set forth herein. The Purchaser understands
that it (and not the Company) shall be responsible for its own tax liability
that may arise as a result of this investment or the transactions
contemplated
by the Agreements.
Section 5
Conditions to Purchaser's Obligations to Close
The Purchasers= obligations to purchase the Shares and Warrants at the
Closing are, unless waived by the Purchasers, subject to the fulfillment of
the following conditions:
. The representations and warranties made by the Company in Section 3
hereof shall be true and correct in all material respects as of the Closing
Date.
. All covenants, agreements and conditions contained in the Agreements
to be performed by the Company on or prior to the Closing shall have been
performed or complied with in all material respects.
. The Company shall have obtained all necessary Blue Sky law permits
and
qualifications, or have the availability of exemptions therefrom, required by
any state for the issuance of the Warrants, offer and sale of the Shares and
the Common Stock issuable upon conversion of the Shares and upon exercise of
the Warrants.
. The Certificate shall have been duly authorized, executed and filed
with the Secretary of State of the State of Delaware.
. The Company, the Purchasers and the holders of at least a majority of
the ARegistrable Securities@ (as defined in the Second Amended and Restated
Stockholder Rights Agreement, dated as of February 26, 1999, and the Amended
and Restated Registration Rights Agreement, dated as of February 26, 1999,
the
APrior Rights Agreements@) shall have executed and delivered the Rights
Agreement.
. The Chief Executive Officer of the Company shall have executed a
Compliance Certificate, in the form of Exhibit D hereto, certifying the
satisfaction of the conditions to closing listed in Sections 5.1, 5.2, 5.3,
5.5, 5.7, and 5.11 hereof, and in the Second Closing, all of the foregoing
conditions, plus 5.9.
. No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the sale and issuance of the
Warrants, Shares and the Common Stock issuable upon conversion of the Shares
and upon exercise of the Warrants and the consummation of the transactions
contemplated hereby.
. The Purchasers shall have received from Wilson Sonsini Goodrich &
Rosati, counsel to the Company, an opinion addressed to the Purchaser, dated
the Closing Date and in substantially the form attached as Exhibit F.
. The obligations of the Purchasers to purchase Shares and Warrants in
the Second Closing shall be conditioned upon receipt by the Company of
Stockholder Approval.
5.10 Acknowledgment of Total Anti-Dilution Rights by Existing
Holders
of Preferred Stock. The obligation of the Purchasers to purchase Shares and
Warrants in either Closing shall be conditioned upon receipt by the Company
of
a certificate signed by a majority of the holders of each of the Company=s
outstanding Series A-2, Series A-3, Series B-1 and Series C Preferred Stock
and related warrants acknowledging the total anti-dilution effect of the
issuance of the Shares and Warrants and waiving, pursuant to Article IV,
Section 6(d)(2)(i)(G) of the Certificate of Incorporation, any claims to
additional anti-dilution adjustments by virtue of the issuance of the Shares
and Warrants and any other securities issuances by the Company prior to the
date of the Agreement.
5.11 Silicon Valley Bank. The obligations of the Purchasers to
purchase Shares and Warrants shall be conditioned upon replacement of the
Company=s existing line of credit with Silicon Valley Bank with a line of
credit facility with PNC Bank, N.A.
Section 6
Conditions to Company's Obligations to Close
The Company's obligation to sell and issue the Shares at the Closing is,
unless waived by the Company, subject to the fulfillment of the following
conditions:
. The representations and warranties made by the Purchaser in Section 4
hereof shall be true and correct as of the Closing Date.
. All covenants, agreements and conditions contained in the Agreements
to be performed by Purchaser on or prior to the Closing Date shall have been
performed or complied with in all material respects.
. The Company shall have obtained all necessary Blue Sky law permits
and
qualifications, or have the availability of exemptions therefrom, required by
any state for the issuance of the Warrants, offer and sale of the Shares and
the Common Stock issuable upon conversion of the Shares and upon exercise of
the Warrants.
. The Certificate shall have been duly authorized, executed and filed
with the Secretary of State of the State of Delaware.
. The Company, the Purchasers and the holders of at least a majority of
the ARegistrable Securities@ (as defined in the Prior Rights Agreements)
shall
have executed and delivered the Rights Agreement.
. No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the sale and issuance of the
Warrants, Shares and the Common Stock issuable upon conversion of the Shares
and upon exercise of the Warrants and the consummation of the transactions
contemplated hereby.
. The Company=s obligation to sell and issue the Shares and Warrants at
the Second Closing shall be conditioned upon receipt of Stockholder Approval.
Section 7
Covenants
. The Company agrees that, during such time as there are no persons
serving on the Board that are representatives of Tredegar, or entities
affiliated with Tredegar, and so long as Tredegar, together with its
affiliates, hold at least 20,000 shares of Series D Preferred, Tredegar shall
be entitled to designate one individual (the "Designee") (which Designee
shall
be reasonably acceptable to the Company) who shall be entitled to attend all
meetings of the Board as an observer on behalf of Tredegar. The Designee
shall have no right to vote as a director. The Company shall provide the
Designee with copies of notices of all Board meetings, and all minutes,
consents and all other materials that the Company provides to its directors
in
connection with Board meetings. Notwithstanding the foregoing, neither
Tredegar, nor any of its members, directors, officers, employees, agents or
representatives (including without limitation the Designee) (collectively,
the
"Representatives") shall disclose any confidential or non-public information
received by the Designee in its capacity as an observer. The use of any such
confidential or non-public information by Tredegar or any Representative
shall
be solely for purposes of Tredegar's investment in the Company. Tredegar
shall, at the Company's request, execute a reasonable nondisclosure agreement
provided by the Company. The Company shall have the right to withhold any
information from the Designee and to exclude the Designee from any meeting or
portion thereof if the Company believes upon advice of counsel that such
exclusion is reasonably necessary to preserve the attorney-client privilege,
to protect highly confidential proprietary information or for other similar
reasons. Tredegar=s rights under this Section 7.1 are not assignable or
transferable except to Aaffiliated persons or entities,@ which shall include,
partners, members, former members of a limited partnership or limited
liability company, or an affiliated entity managed by the same manager or
managing partner or management company, or managed or owned by an entity
controlling, controlled by, or under common control with, such manager or
managing partner or management company.
. The Company shall use its best efforts to obtain Stockholder Approval
at a special Meeting of Stockholders to be held as soon as practicable
following the Closing.
7.3 Termination of Cryo-Asia Pte Ltd. The Company shall continue to
use commercially reasonably efforts to terminate and dissolve Cryo-Asia Pte
Ltd.
Section 8
Miscellaneous
. This Agreement shall be governed in all respects by the internal laws
of the State of Delaware.
. The representations, warranties, covenants and agreements made herein
shall survive any investigation made by the Purchaser and the closing of the
transactions contemplated hereby.
. Except as otherwise provided herein, the provisions hereof shall
inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto; provided, however, that
the rights of the Purchasers to purchase the Shares and obtain the Warrants
on
such purchase shall not be assignable without the prior written consent of
the
Company.
. This Agreement and the other documents delivered pursuant hereto at
each Closing constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof, and no
party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth
herein or therein. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or
terminated
other than by a written instrument signed by the Company and by Purchasers
holding at least sixty percent (60%) of the Shares.
. All notices and other communications required or permitted hereunder
shall be in writing and shall be mailed by registered or certified mail,
postage prepaid, or otherwise delivered by hand or by messenger, addressed
(a)
if to a Purchaser, at such Purchaser's address, on Exhibit A of the
Agreement,
or at such other address as the Purchaser shall have furnished to the Company
in writing, or (b) if to any other holder of any Shares, at such address as
such holder shall have furnished the Company in writing, or, until any such
holder so furnishes an address to the Company, then to and at the address of
the last holder of such Shares who has so furnished an address to the
Company,
or (c) if to the Company, one copy should be sent to its address set forth on
the cover page of this Agreement and addressed to the attention of the Chief
Executive Officer, or at such other address as the Company shall have
furnished to the Purchaser.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or
72
hours after the same has been deposited in a regularly maintained receptacle
for the deposit of the United States mail, addressed and mailed as aforesaid.
. Except as expressly provided herein, no delay or omission to exercise
any right, power or remedy accruing to any party to this Agreement upon any
breach or default of any other party under this Agreement, shall impair any
such right, power or remedy of such non-defaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any party
of any breach or default under this Agreement, or any waiver on the part of
any party of any provisions or conditions of this agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement or by law or
otherwise afforded to any party to this Agreement, shall be cumulative and
not
alternative.
. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT
HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF
ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION
25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL
PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION
BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
. This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
. In the event that any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
. The titles and subtitles used in this Agreement are used for
convenience only and are not considered in construing or interpreting this
Agreement.
. The Company and the Purchaser shall each bear their own fees, costs
and expenses incurred on their behalf with respect to the agreement and the
transactions contemplated hereby and any amendments or waiver thereto.
. Each Purchaser acknowledges that such Purchaser is not relying upon
any
person, firm, or corporation, other than the Company and its officers and
directors, 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, or 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 Series D Preferred Stock (and
Common Stock issued upon conversion thereof).
. Each party represents that it neither is nor will be obligated for any
finder=s fee or commission in connection with this transaction. Each
Purchaser
agrees to indemnify and to hold harmless the Company from any liability for
any commission or compensation in the nature of a finder=s fee (and the cost
and expenses of defending against such liability or asserted liability) for
which the Purchaser or any of its officers, partners, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless each Purchaser from any liability for any commission or compensation
in the nature of a finder=s fee (and the costs and expenses of defending
against such liability or asserted liability) for which the Company or any of
its officers, employees, or representatives is responsible.
[Signature Page Follows]<PAGE> The foregoing Agreement is hereby executed
as of the date first above
written.
"COMPANY"
SUPERCONDUCTOR TECHNOLOGIES INC.
a Delaware corporation
By:
Name: Peter Thomas
Title: Chief Executive Officer
"PURCHASERS"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title: Vice President
TGI FUND III, LLC
By: Tredegar Investments, Inc., its Manager
By:
Name:
Title:
[Signature Page to Purchase Agreement]
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
SCHEDULE OF PURCHASERS
Purchaser Number of Series Number of Purchase Price
D Shares Warrants
<S> <C> <C> <C>
Initial Closing
Wilmington 30,918 61,836 $1,545,900
Securities, Inc.
824 Market St.
Suite 900
Wilmington, DE
19801
TGI Fund III, LLC 46,378 92,756 $2,318,900
6501 Columbia Cntr
701 Fifth Ave.
Seattle, WA 98104
Initial Closing Totals 77,297 154,592 $3,864,800
Second Closing
Wilmington 9,082 18,164 $454,100
Securities, Inc.
TGI Fund II, LLC 13,622 27,244 $681,100
Third Closing Totals 22,704 45,408 $1,135,200
Cumulative Totals 100,000 200,000 $5,000,000
</TABLE>
Exhibit 4
SUPERCONDUCTOR TECHNOLOGIES INC.
THIRD AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
This Third Amended and Restated Stockholder Rights Agreement (the
"Agreement") is made as of June __, 1999 between Superconductor Technologies
Inc., a Delaware corporation (the "Company"), the persons on Exhibit A to
this
Agreement (the "Securityholders").
RECITALS
A. Wilmington Securities, Inc. ("Wilmington") and certain trusts for
the benefit of members of the Hillman family (as identified on Exhibit A)
hold
shares of the Company's Series A-2, Series A-3, Series B-1 and Series C
Preferred Stock (the "Outstanding Preferred") and warrants for the purchase
of
Company Common Stock obtained in connection with the purchase of the
Outstanding Preferred and possess registration rights and rights of first
refusal pursuant to the Second Amended and Restated Stockholder Rights
Agreement dated as of February 26, 1999 between the Company and Wilmington
(the "Rights Agreement") or registration rights pursuant to the Amended and
Restated Registration Rights Agreement dated as of February 26, 1999 (the
"Registration Rights Agreement" and together with the Rights Agreement, the
"Prior Rights Agreements").
B. Wilmington as the holder of a majority of the Preferred Stock (as
such term is defined in the Rights Agreement) together with the Company may
amend the Rights Agreement pursuant to Section 3.4 of the Rights Agreement,
and Wilmington and the Henry L. Hillman Trust under Agreement of Trust dated
November 18, 1985 (the "Trust") as the holders of a majority of the
Registrable Securities (as defined in the Registration Rights Agreement)
together with the Company may amend the Registration Rights Agreement
pursuant
to Section 10 of the Registration Rights Agreement.
C. The Company proposes to sell shares of Series D Preferred Stock
pursuant to a Series D Stock Purchase Agreement dated as of the date hereof
(the "Series D Agreement") between the Company and certain of the
Securityholders (the "Purchasers"), and the completion of such sale is
conditioned upon, among other things, the grant by the Company to the
Securityholders of certain registration rights and rights of first refusal.
D. The Company, Wilmington, the Trust and the other holders of
Registrable Securities (as defined in the Registration Rights Agreement)
desire to amend and restate the Prior Rights Agreements into this Agreement
and desire to provide the Purchasers with the rights set forth in this
Agreement.
E. The Company has requested, and the parties to the Prior Rights
Agreements have agreed, that upon execution of the Agreement, the Prior
Rights
Agreements shall be of no further force and effect, that Wilmington will
waive
its right of first refusal set forth in Section 2 of the Rights Agreement
with
respect to the purchase of the Series D Preferred Stock and related warrants
(and the shares of Common Stock underlying the Series D Preferred Stock and
related warrants) being issued pursuant to the Series D Agreement.
F. The Company has requested and the parties to the Registration
Rights Agreement have agreed to hereby expressly waive any and all rights to
any penalty payments from the Company under Section 2(b) of the Registration
Rights Agreement.
NOW, THEREFORE, in consideration of the promises of the parties set
forth
herein, the parties agree as follows:
SECTION 1
Restrictions on Transferability of Securities;
Compliance with Securities Act; Registration Rights
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Affiliated Persons or Entities" shall mean partners, members,
former members of a limited partnership or limited liability company, or an
affiliated entity managed by the same manager or managing partner or
management company, or managed or owned by an entity controlling, controlled
by, or under common control with, such manager or managing partner or
management company.
"Closing Date" shall mean, (i) as to the holders of Series A-2 and
A-3 Preferred Stock, February 26, 1999, (ii) as to the holders of Series C
Preferred Stock, March 5, 1999, and (iii) as to the holders of Series D
Preferred Stock, June 3, 1999.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Conversion Stock" means the Common Stock issued or issuable
pursuant to conversion of the Preferred Stock and exercise of the Warrants.
"Holder" shall mean (i) any Securityholder holding Registrable
Securities and (ii) any person holding Registrable Securities to whom the
rights under this Section 1 have been transferred in accordance with Section
1.13 hereof.
"Initiating Holders" shall mean Holders in the aggregate of greater
than 50% of the Registrable Securities issued as a result of the Series D
Agreement.
"Preferred Stock" shall, collectively, mean the Series A-2, Series
A-3 and Series B-1 Preferred Stock issued pursuant to the Exchange Agreement
dated as of February 26, 1999 (the "Exchange Agreement"), the Series C
Preferred Stock issued pursuant to the Series C Stock Purchase Agreement
dated
as of March 5, 1999 (the "Series C Agreement"), and the Series D Preferred
Stock issued pursuant to the Series D Agreement.
"Registrable Securities" shall mean (i) the Conversion Stock, (ii)
any Common Stock acquired pursuant to the exercise of the right of first
refusal in Section 2 of this Agreement (including any shares issued by virtue
of such shares upon any stock split, stock dividend, recapitalization or
similar event), and (iii) any Common Stock of the Company issued or issuable
in respect of the Conversion Stock upon any stock split, stock dividend,
recapitalization or similar event, or any Common Stock otherwise issued or
issuable in respect of the Conversion Stock; provided, however, that shares
of
Common Stock or other securities shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or through a
broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold or are, in the opinion of counsel for the
Company, available for sale in a single transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so
that all transfer restrictions and restrictive legends with respect thereto
are removed upon the consummation of such sale.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as
otherwise
stated below, incurred by the Company in complying with Sections 1.5, 1.6 and
1.7 hereof, including, without limitation, all registration, qualification
and
filing fees, printing expenses, escrow fees, fees and disbursements of
counsel
for the Company, blue sky fees and expenses, the expense of any special
audits
incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company) and the reasonable fees and disbursements of one
counsel
for all Holders.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the
Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered
by the Holders and, except as set forth above, all reasonable fees and
disbursements of counsel for any Holder.
"Series D Holders" shall mean holders of Series D Registrable
Securities attributable to the Series D Agreement.
"Series D Registrable Securities" shall mean Registrable Securities
attributable to the Series D Agreement.
"Warrants" shall mean, collectively, the warrants issued pursuant
to
the Exchange Agreement, the Series C Agreement and the Series D Agreement.
1.2 Restrictions on Transferability. The Preferred Stock, the
Conversion Stock and the Warrants shall not be sold, assigned, transferred or
pledged except upon the conditions specified in this Section 1, which
conditions are intended to ensure compliance with the provisions of the
Securities Act. The Holders will cause any proposed purchaser, assignee,
transferee, or pledgee of any such securities held by the Holders to agree to
take and hold such securities subject to the provisions and upon the
conditions specified in this Section 1.
1.3 Restrictive Legend. Each certificate representing (i) the
Preferred Stock, (ii) the Warrants, (iii) the Conversion Stock and (iv) any
other securities issued in respect of the Preferred Stock or the Conversion
Stock upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 1.4 below) be stamped or otherwise imprinted with a
legend substantially in the following form (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE
COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT.
Each Holder consents to the Company making a notation on its
records
and giving instructions to any transfer agent of the Preferred Stock, the
Warrants or the Conversion Stock in order to implement the restrictions on
transfer established in this Section 1.
1.4 Restrictions on Transfer; Notice of Proposed Transfers. The
holder of each certificate representing Restricted Securities by acceptance
thereof agrees to comply in all respects with the provisions of this Section
1.4. Prior to any proposed sale, assignment, transfer or pledge of any
Restricted Securities (other than (i) a transfer not involving a change in
beneficial ownership, (ii) in transactions involving the distribution without
consideration of Restricted Securities by the Holder to any of its partners,
or retired partners, or to the estate of any of its partners or retired
partners, or to the estate of any of its members or former members, (iii) any
transfer by any Holder to (A) any Affiliated Persons or Entities, (B) any
individual or entity controlled by, controlling, or under common control
with,
such Holder or (C) any individual or entity with respect to which such Holder
(or any person controlled by, controlling, or under common control with, such
Holder) has the power to direct investment decisions, or (iv) in transactions
in compliance with Rule 144), and unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's intention
to
effect such transfer, sale, assignment or pledge. Each such notice shall
describe the manner and circumstances of the proposed transfer, sale,
assignment or pledge in sufficient detail, and shall be accompanied, at such
holder's expense by either (i) an unqualified written opinion of legal
counsel
who shall be, and whose legal opinion shall be, reasonably satisfactory to
the
Company addressed to the Company, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act, or (ii) a "no action" letter from the Commission to the
effect
that the transfer of such securities without registration will not result in
a
recommendation by the staff of the Commission that action be taken with
respect thereto, whereupon the holder of such Restricted Securities shall be
entitled to transfer such Restricted Securities in accordance with the terms
of the notice delivered by the holder to the Company. Each certificate
evidencing the Restricted Securities transferred as above provided shall
bear,
except if such transfer is made pursuant to Rule 144, the appropriate
restrictive legend set forth in Section 1.3 above, except that such
certificate shall not bear such restrictive legend if in the opinion of
counsel for such holder and the Company such legend is not required in order
to establish compliance with any provision of the Securities Act.
1.5 Requested Registration.
(a) Request for Registration. In case the Company shall
receive
from Initiating Holders a written request that the Company effect any
registrati
on, qualification or compliance with respect to (1) at least fifty percent
(50%) of the issued and outstanding Registrable Securities or (2) not less
than that number of shares of Registrable Securities which would result in an
anticipated aggregate offering price, net of underwriting discounts and
commissions, greater than five million dollars ($5,000,000), the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other
state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or
regulations) 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 Holder or Holders joining in such request as
are
specified in a written request received by the Company within twenty (20)
days
after receipt of such written notice from the Company;
Provided, however, that the Company shall not be obligated to
take any action to effect any such registration, qualification or compliance
pursuant to this Section 2.5:
(A) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance unless the
Company
is already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(B) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and
ending
on the date six (6) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective;
(C) After the Company has effected one (1) such
registration pursuant to this subparagraph 1.5(a), and such registration has
been declared or ordered effective;
(D) If the Company shall furnish to such Holders
a certificate signed by the Chief Executive Officer of the Company stating
that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its stockholders for a registration
statement to be filed in the near future, then the Company's obligation to
use
its best efforts to register, qualify or comply under this Section 1.5 shall
be deferred for a period not to exceed one hundred eighty (180) days from the
date of receipt of written request from the Initiating Holders; provided that
the Company may not exercise this deferral right more than once per twelve
(12) month period.
Subject to the foregoing clauses (A) through (D), the Company
shall file a registration statement covering the Registrable Securities so
requested to be registered as soon as practicable, after receipt of the
request or requests of the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
Section 1.5 is for a registered public offering involving an underwriting,
the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). In such event, the right of any Holder to registration
pursuant to Section 1.5 shall be conditioned upon such Holder's participation
in the underwriting arrangements required by this Section 1.5, and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent requested shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter
selected for such underwriting by a majority in interest of the Initiating
Holders, but subject to the Company's reasonable approval. Notwithstanding
any other provision of this Section 1.5, if the managing underwriter advises
the Initiating Holders in writing that marketing factors require a limitation
of the number of shares to be underwritten, then the Company shall so advise
all holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated first to the Series D Holders to the extent of the Series D
Registrable Securities held by such Series D Holders, and then among all
other
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement. If the number of Registrable Securities to be
underwritten shall be less than the number of Series D Registrable
Securities,
then the then the number of Registrable Securities that may be included in
the
registration and underwriting shall be allocated among the Series D Holders
in
proportion, as nearly as practicable, to the respective amounts of Series D
Registrable Securities held by such Series D Holders at the time of filing
the
registration statement. For purposes of such allocations, the amount of
Registrable Securities allocated to a Holder and its Affiliated Persons or
Entities shall be determined by aggregating all Registrable Securities held
by
such Holder and its Affiliated Persons or Entities. No Registrable
Securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or
the underwriters may round the number of shares allocated to any Holder to
the
nearest 100 shares, as adjusted for any recapitalization, stock combinations,
stock dividends, stock splits and the like.
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Securities and/or other securities so withdrawn
shall also be withdrawn from registration, and such Registrable Securities
shall not be transferred in a public distribution prior to one hundred eighty
(180) days after the effective date of such registration, or such other
shorter period of time as the underwriters may require.
1.6 Company Registration.
(a) Notice of Registration. If at any time or from time to
time
the Company shall determine to register any of its securities, either for its
own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, or (ii) a
registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice
thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within twenty (20) days after receipt of
such written notice from the Company, by any Holder.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting,
the Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable
Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with
the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 1.6, if the managing
underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, the managing underwriter and the Company
may reduce the Registrable Securities to be included in such registration to
the extent the underwriters deem necessary. The Company shall so advise all
Holders and other holders distributing their securities through such
underwriting and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated first to the
Series D Holders to the extent of the Series D Registrable Securities held by
such Series D Holders, and then among all other Holders in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities
held by such Holders at the time of filing the registration statement. If
the
number of Registrable Securities to be underwritten shall be less than the
number of Series D Registrable Securities, then the then the number of
Registrable Securities that may be included in the registration and
underwriting shall be allocated among the Series D Holders in proportion, as
nearly as practicable, to the respective amounts of Series D Registrable
Securities held by such Series D Holders at the time of filing the
registration statement. For purposes of such allocations, the amount of
Registrable Securities allocated to a Holder and its Affiliated Persons or
Entities shall be determined by aggregating all Registrable Securities held
by
such Holder and its Affiliated Persons or Entities. To facilitate the
allocation of shares in accordance with the above provisions, the Company may
round the number of shares allocated to any Holder or holder to the nearest
100 shares, as adjusted for any recapitalization, stock combinations, stock
dividends, stock splits and the like.
If any Holder or holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration, and shall
not be transferred in a public distribution prior to one hundred eighty (180)
days after the effective date of the registration statement relating thereto,
or such other shorter period of time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall have
the
right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration whether or not
any
Holder has elected to include securities in such registration.
1.7 Registration on Form S-3 .
(a) If any Holder or Holders hold Registrable Securities equal
or convertible in the aggregate to not less than 2% of the then outstanding
Common Stock request that the Company file a registration statement on Form
S-3 (or any successor form to Form S-3) for a public offering of shares of
the
Registrable Securities the reasonably anticipated aggregate price to the
public of which, net of underwriting discounts and commissions, would exceed
$1,000,000, and the Company is a registrant entitled to use Form S-3 (or any
successor form to Form S-3) to register the Registrable Securities for such
an
offering, the Company shall use its best efforts to cause such Registrable
Securities to be registered for the offering on such form and to cause such
Registrable Securities to be qualified in such jurisdictions as such Holder
or
Holders may reasonably request; provided, however, that the Company shall not
be required to effect more than one registration pursuant to this Section 1.7
in any six (6) month period. The Company shall inform other Holders of the
proposed registration and offer them the opportunity to participate. The
substantive provisions of Section 1.5(b) shall be applicable to each
registration initiated under this Section 1.7.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.7 (i) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;
(ii)
if the Company, within ten (10) days of the receipt of the request of the
Holders, gives notice of its bona fide intention to effect the filing of a
registration statement with the Commission within ninety (90) days of receipt
of such request (other than with respect to a registration statement relating
to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities); (iii) during the period starting with the date sixty (60) days
prior to the Company's estimated date of filing of, and ending on the date
six
(6) months immediately following, the effective date of any registration
statement pertaining to securities of the Company (other than a registration
of securities in a Rule 145 transaction or with respect to an employee
benefit
plan), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective;
or (iv) if the Company shall furnish to such Holder a certificate signed by
the President of the Company stating that in the good faith judgment of the
Board of Directors it would be seriously detrimental to the Company or its
shareholders for registration statements to be filed in the near future, then
the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a period not to exceed ninety (90) days from
the receipt of the request to file such registration by such Holder; provided
that the Company may not exercise this deferral right more than once per
twelve (12) month period.
1.8 Limitations on Subsequent Registration Rights. From and after
the date hereof, the Company shall not enter into any agreement granting any
holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless such new registration rights,
including standoff obligations, are subordinate to the registration rights
granted Holders hereunder.
1.9 Expenses of Registration. All Registration Expenses incurred in
connection with (i) one (1) registration pursuant to Section 1.5, (ii) all
registrations pursuant to Section 1.6, and (iii) all registrations pursuant
to
Section 1.7 shall be borne by the Company. Unless otherwise stated, all
Selling Expenses relating to securities registered on behalf of the Holders
and all other Registration Expenses shall be borne by the Holders of such
securities pro rata on the basis of the number of shares so registered.
1.10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section
1, the Company will keep each Holder advised in writing as to the initiation
of each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for at least one
hundred eighty (180) days or until the distribution described in the
Registration Statement has been completed;
(b) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably
request in order to facilitate the public offering of such securities;
(c) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statements as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement;
(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 the 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; and
(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. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
1.11 Indemnification.
(a) The Company will indemnify each Holder, each of its
officers
and directors, members and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 1, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against
all expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or
any amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission)
to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, or any violation by the Company of the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), state
securities law or any rule or regulation promulgated under such laws
applicable to the Company in connection with any such registration,
qualification or compliance, and within a reasonable period the Company will
reimburse each such Holder, each of its officers and directors, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action; provided that the Company will not
be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and
in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, controlling person or underwriter and stated to
be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and
directors
and each person controlling such Holder within the meaning of Section 15 of
the Securities Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or
any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and within a reasonable period will reimburse the Company, such
Holders, such directors, officers, persons, underwriters or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue
statement
(or alleged untrue statement) or omission (or alleged omission) is made in
such registration statement, prospectus, offering circular or other document
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein.
(c) Each party entitled to indemnification under this Section
1.11 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the failure
of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 1.11 unless the
failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action and provided further, that the
Indemnifying Party shall not assume the defense for matters as to which there
is a conflict of interest or separate and different defenses. No
Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a
release
from all liability in respect to such claim or litigation. No Indemnifying
Party shall be liable for indemnification hereunder with respect to any
settlement or consent to judgment, in connection with any claim or litigation
to which these indemnification provisions apply, that has been entered into
without the prior consent of the Indemnifying Party (which consent will not
be
unreasonably withheld)
(d) If the indemnification provided for in this Section 1.11 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable
by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the
other in connection with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations; provided, that, in no event shall any contribution
by a Holder under this Subsection 1.1(d) exceed the net proceeds from the
offering received by such Holder. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct
or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering
are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.11 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.12 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held
by them and the distribution proposed by such Holder or Holders as the
Company
may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Section 1.12.
1.13 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) Use its best efforts to file with the Commission in a
timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) So long as a Holder owns any Restricted Securities to
furnish to the Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule
144,
and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as the Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing the
Holder to sell any such securities without registration.
1.14 Transfer of Registration Rights. The rights to cause the
Company to register securities granted Holders under Sections 1.5, 1.6 and
1.7
may be assigned to Affiliated Persons or Entities, or other transferees or
assignees reasonably acceptable to the Company, in connection with any
transfer or assignment of Registrable Securities by the Holder, provided that
(a) such transfer may otherwise be effected in accordance with applicable
securities laws and Section 1.3 and 1.4, and (b) such assignees or
transferees
that are not Affiliated Persons or Entities acquire at least 100,000 shares
of
Registrable Securities.
1.15 Standoff Agreement. In connection with any public offering of
the Company's securities, the Holder agrees, upon request of the Company or
the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Registrable Securities (other
than those included in the registration) without the prior written consent of
the Company or such underwriters, as the case may be, for such period of time
(not to exceed one hundred eighty (180) days) from the effective date of such
registration as may be requested by the underwriters; provided that the
officers and directors of the Company who own stock of the Company and each
holder representing at least one percent (1%) of the Company's outstanding
voting securities also agrees to such restrictions.
1.16 Termination of Registration Rights. The registration rights
granted pursuant to Section 1 shall terminate as to each Holder at such time
as all Registrable Securities held by such Holder may, in the opinion of
counsel to the Company (which opinion shall be addressed and rendered to
Holder), be sold within a given three month period pursuant to Rule 144 or
any
other applicable exemption that allows for a resale free of registration.
SECTION 2
Right of First Refusal
2.1 Grant of Right of First Refusal. Subject to compliance with all
applicable federal and state securities laws, the Company grants to the
Holders the right of first refusal to purchase, pro rata, all or any part of
New Securities (as defined in this Section 2) which the Company may, from
time
to time after the date of this Agreement, propose to sell and issue. A pro
rata share, for purposes of this right of first refusal, is the ratio that
the
sum of the number of shares of Conversion Stock then held by a Holder bears
to
the total outstanding Common Stock of the Company (assuming conversion of all
convertible securities and the exercise of all outstanding options and
warrants).
2.2 Definition of New Securities. Except as set forth below, "New
Securities" shall mean any shares of capital stock of the Company, including
Common Stock and Preferred Stock, whether now authorized or not, and rights,
options or warrants to purchase said shares of Common Stock or Preferred
Stock, and securities of any type whatsoever that are, or may become,
convertible into said shares of Common Stock or Preferred Stock.
Notwithstanding the foregoing, "New Securities" does not include (i) the
Preferred Stock, the Warrants or the Conversion Stock, (ii) securities
offered
to the public generally pursuant to a registration statement under the
Securities Act, (iii) securities issued pursuant to the acquisition of
another
corporation by the Company by merger, purchase of all or substantially all of
the assets or other reorganization, (iv) securities issuable upon exercise or
conversion of currently outstanding securities, (v) securities issued in
connection with any stock split, stock dividend or recapitalization by the
Company, (vi) securities issued to the Company's employees, officers,
directors, and consultants pursuant to any arrangement approved by the Board
of Directors of the Company, and (vii) securities issued to research or
development collaborators or issued to banks or other institutional lenders
or
lessors in connection with capital asset leases or borrowings for the
acquisition of capital assets, pursuant to any arrangement approved by the
Board of Directors of the Company (including securities issued upon exercise
or conversion of any such securities).
2.3 Notice of Intent to Issue New Securities; Notice Period. In the
event the Company proposes to undertake an issuance of New Securities, it
shall give each Holder written notice of its intention, describing the type
of
New Securities and the price and terms upon which the Company proposes to
issue the same. Each Holder shall have 15 days from the date of receipt of
any such notice to agree to purchase up to its pro rata share of such New
Securities for the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of New
Securities to be purchased.
2.4 Offers to Third Parties. In the event a Holder fails to
exercise
the right of first refusal within said 15 day period, the Company shall have
90 days thereafter to sell or enter into an agreement (pursuant to which the
sale of New Securities covered thereby shall be closed, if at all, within 60
days from the date of said agreement) to sell the New Securities not elected
to be purchased by the Holder at the price and upon the terms no more
favorable to the Holders of such securities than specified in the Company's
notice. In the event the Company has not sold the New Securities or entered
into an agreement to sell the New Securities in accordance with the foregoing
within 60 days from the date of said agreement, the Company shall not
thereafter issue or sell any New Securities without first offering such
securities in the manner provided above.
2.5 Assignment. The right of first refusal granted under this
Agreement is not assignable except by each of such Holders to any "affiliated
persons or entities," which shall include, partners, members, former members
of a limited partnership or limited liability company, or an affiliated
entity
managed by the same manager or managing partner or management company, or
managed or owned by an entity controlling, controlled by, or under common
control with, such manager or managing partner or management company.
2.6 Termination of Right of First Refusal. The right of first
refusal granted under this Agreement shall terminate upon the first to occur
of the following:
(i) if a Holder at any time holds less than 250,000
shares of Conversion Stock (appropriately adjusted for any stock split, stock
dividend or any other recapitalization), the right of first refusal shall
terminate as to such Holder;
(ii) if a Holder converts or has at any time converted
all of the Preferred Stock owned by such Holder, the right of first refusal
shall terminate as to such Holder;
(iii) the liquidation, dissolution or indefinite
cessation of business operations of the Company; or
(iv) the execution by the Company of a general
assignment for the benefit of creditors or the appointment of a receiver or
trustee to take possession of the property and assets of the Company.
SECTION 3
Miscellaneous
3.1 Governing Law. This Agreement shall be governed in all respects
by the internal laws of the State of California.
3.2 Survival. The covenants and agreements made herein shall
survive
any investigation made by the Holders and the closing of the transactions
contemplated hereby.
3.3 Successors and Assigns. Except as otherwise provided herein,
the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties
hereto.
3.4 Entire Agreement; Amendment. This Agreement, the Exchange
Agreement, the Series C Agreement, the Series D Agreement and the other
documents delivered pursuant hereto or delivered on the Closing Date for each
of the Exchange Agreement, the Series C Agreement, and the Series D Agreement
constitute the full and entire understanding and agreement between the
parties
with regard to the subjects hereof and thereof, and no party shall be liable
or bound to any other party in any manner by any warranties, representations
or covenants except as specifically set forth herein or therein. The
provisions of this Agreement amend and supersede any rights or obligations
under the Prior Rights Agreements. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought; provided, however, that holders of a majority of the issued or
outstanding shares of the Preferred Stock (which majority shall include at
least sixty percent (60%) of the voting power of the holders of Series D
Preferred Stock) may, with the Company's prior written consent, waive, modify
or amend on behalf of all holders, any provisions hereof.
3.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by
messenger, addressed (a) if to a Holder, at such Holder's address, as shown
on
the stock records of the Company, or at such other address as such Holder
shall have furnished to the Company in writing, or (b) if to any other holder
of Preferred Stock, at such address as such holder shall have furnished the
Company in writing, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Preferred
Stock
who has so furnished an address to the Company, or (c) if to the Company, one
copy should be sent to its address set forth on the cover page of this
Agreement and addressed to the attention of the Chief Executive Officer, or
at
such other address as the Company shall have furnished to the Holders.
Each such notice or other communication shall for all purposes of
this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or
72
hours after the same has been deposited in a regularly maintained receptacle
for the deposit of the United States mail, addressed and mailed as aforesaid.
3.6 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any
party
to this Agreement upon any breach or default of any other party under this
Agreement, shall impair any such right, power or remedy of such nondefaulting
party nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character
on the part of any party of any breach or default under this Agreement, or
any
waiver on the part of any holder of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any party to this Agreement,
shall be cumulative and not alternative.
3.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
3.8 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective
if it materially changes the economic benefit of this Agreement to any party.
3.9 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing
or interpreting this Agreement.
3.10 Waiver of Rights. In consideration of the rights granted
herein, (i) all rights granted to, and any obligations of, the parties to the
Prior Rights Agreements are amended and restated in full to read as set forth
in this Agreement; (ii) Wilmington waives its right of first refusal as set
forth in Section 2 of the Rights Agreement with respect to the issuance of
Series D Preferred Stock and related warrants (and the shares of Common Stock
underlying the Series D Preferred Stock and related warrants) pursuant to the
Series D Agreement; (iii) Wilimington, the Trust, and other parties to the
Registration Rights Agreement hereby waive any and all rights to payments by
the Company under Section 2(b) of the Registration Rights Agreement.
[Signature Pages Follow]<PAGE>The foregoing agreement is hereby executed as of
the date first above written.
"COMPANY"
SUPERCONDUCTOR TECHNOLOGIES INC.
a Delaware corporation
By:
Name: Peter Thomas,
Title: Chief Executive Officer
"SERIES A-2 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title: Vice President
"SERIES A-3 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title: Vice President
"SERIES B-1 HOLDERS"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title: Vice President
Henry L. Hillman, Elsie Hilliard Hillman and
C.G. Grefenstette, Trustees of the Henry L.
Hillman Trust U/A dated November 18, 1985
By:
Name: C.G. Grefenstette
Thomas G. Bigley and C.G.Grefenstette, Trustees under Agreement of Trust
dated
12/30/76 for the children of Juliet Lea Hillman Simonds
By:
Name: C.G. Grefenstette
By:
Name: Thomas G. Bigley
Thomas G. Bigley and C.G.Grefenstette, Trustees under Agreement of Trust
dated
12/30/76 for the children of Audrey Hilliard Hillman
By:
Name: C.G. Grefenstette
By:
Name: Thomas G. Bigley
<PAGE>Thomas G. Bigley and C.G.Grefenstette, Trustees under Agreement of Trust
dated
12/30/76 for the children of Henry Lea Hillman, Jr.
By:
Name: C.G. Grefenstette
By:
Name: Thomas G. Bigley
Thomas G. Bigley and C.G.Grefenstette, Trustees under Agreement of Trust
dated
12/30/76 for the children of William Talbott Hillman.
By:
Name: C.G. Grefenstette
By:
Name: Thomas G. Bigley
"SERIES C HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title: Vice President
<PAGE>"SERIES D HOLDERS"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title: Vice President
TGI FUND III, LLC
By: Tredegar Investments, Inc., its Manager
By:
Name:
Title:
<PAGE>
EXHIBIT A
TO THE SUPERCONDUCTOR TECHNOLOGIES INC.
THIRD AMENDED AND RESTATED STOCKHOLDER RIGHTS AGREEMENT
Securityholder Securities held that are subject to the Agreement
Wilmington Securities, Inc. Series A-2 Preferred Stock and related
warrants
Series A-3 Preferred Stock and related warrants
Series B-1 Preferred Stock and related warrants
Series C Preferred Stock and related warrants
Series D Preferred Stock and related warrants
Warrants received in connection with the Exchange Agreement
Henry L. Hillman, Elsie Hilliard Hillman Series B-1 Preferred Stock and
related warrants
and C. G. Grefenstette, Warrants received in connection with the
Trustees of the Henry L. Hillman Exchange Agreement
Trust U/A Dated November 18, 1985
Thomas G. Bigley and C.G. Grefenstette, Series B-1 Preferred Stock and
related warrants
Trustees Under Agreement of Trust Warrants received in connection with
the
Dated 12/30/76 for Children of Exchange Agreement
Juliet Lea Hillman Simonds
Thomas G. Bigley and C.G. Grefenstette, Series B-1 Preferred Stock and
related warrants
Trustees Under Agreement of Trust Warrants received in connection with
the
Dated 12/30/76 for Children of Exchange Agreement
Audrey Hillman Fisher
Thomas G. Bigley and C.G. Grefenstette, Series B-1 Preferred Stock and
related warrants
Trustees Under Agreement of Trust Warrants received in connection with
the
Dated 12/30/76 for Children of Exchange Agreement
Henry Lea Hillman, Jr.
Thomas G. Bigley and C.G. Grefenstette, Series B-1 Preferred Stock and
related warrants
Trustees Under Agreement of Trust Warrants received in connection with
the
Dated 12/30/76 for Children of Exchange Agreement
William Talbott Hillman
TGI Fund III, LLC Series D Preferred Stock and related warrants
