SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 13D
Amendment No. 5
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)
February 26, 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
2,408,709
9. Sole Dispositive Power
5,000
10 Shared Dispositive Power
2,408,709
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,413,709
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
26.07%
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
182,932
9. Sole Dispositive Power
10,000
10 Shared Dispositive Power
182,932
11 Aggregate Amount Beneficially Owned by Each Reporting Person
192,932
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
1.96%
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
45,733
8 Shared Voting Power
9. Sole Dispositive Power
45,733
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
45,733
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
.49%
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
45,733
8 Shared Voting Power
9. Sole Dispositive Power
45,733
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
45,733
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
.49%
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
45,733
8 Shared Voting Power
9. Sole Dispositive Power
45,733
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
45,733
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
.49%
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
45,733
8 Shared Voting Power
9. Sole Dispositive Power
45,733
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
45,733
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
.49%
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
2,225,809
9 Sole Dispositive Power
10 Shared Dispositive Power
2,225,809
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,225,809
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
24.04%
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
2,225,809
9 Sole Dispositive Power
10 Shared Dispositive Power
2,225,809
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,225,809
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
24.04%
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
237,198
8 Shared Voting Power
1,988,611
9 Sole Dispositive Power
237,198
10 Shared Dispositive Power
1,988,611
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,225,809
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
24.04%
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
1,988,611
9 Sole Dispositive Power
10 Shared Dispositive Power
1,988,611
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,988,611
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
21.48%
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
1,988,611
9 Sole Dispositive Power
10 Shared Dispositive Power
1,988,611
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,988,611
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
21.48%
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
1,988,611
8 Shared Voting Power
9 Sole Dispositive Power
1,988,611
10 Shared Dispositive Power
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,988,611
12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
13 Percent of Class Represented by Amount in Row (11)
21.48%
14 Type of Reporting Person
CO
<PAGE>
SCHEDULE 13D
Amendment No. 5
This statement ("Statement") constitutes Amendment No. 5 to Schedule 13D
filed with the Securities and Exchange Commission (the "Commission") on March
15, 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 February 26, 1999, Wilmington Securities, Inc., the Henry L. Hillman
Trust, the JLHS 1976 Trust, the AHF 1976 Trust, the HLH Jr. 1976 Trust and
the WTH 1976 Trust (collectively the "Investors") entered into an Exchange
Agreement with the Issuer pursuant to which the Investors agreed to exchange
their Series A, A-1 and B Convertible Preferred Stock and related warrants
held by the Investors for shares of the Issuer's Series A-2, A-3 and B-1
Convertible Preferred Stock and replacement warrants and additional warrants
(collectively the "February Warrants") that are convertible into or
exercisable for shares of Common Stock, upon the terms and subject to the
limitations and conditions set forth in the Certificates of Designations,
Rights, Preferences, Privileges and Restrictions with respect to the Series
A-2, A-3 and B-1 Preferred Stock and in the February Warrants.
On March 5, 1999 Wilmington Securities, Inc. entered into a Stock
Purchase Agreement with the Issuer pursuant to which Wilmington Securities,
Inc. purchased 41,667 shares of Series C Preferred Stock for $3,000,000.
Wilmington Securities, Inc. also received a Warrant (the "March Warrant") for
120,000 shares of Common Stock.
The Series A-2, Series A-3, Series B-1 and Series C Preferred Stock of
the Company, and the February Warrants and March Warrants (collectively the
"Securities"), are not convertible into or exercisable for (as the case may
be) shares of Common Stock in excess of 1,533,709 shares (the "19.9% Cap" or
the "Allowed Conversion Shares"), unless the Company has received stockholder
approval to eliminate such 19.9% Cap at a duly held meeting of stockholders
in calendar 1999 (the "Stockholder Approval"). Until Stockholder Approval has
been obtained (or, if Stockholder Approval is not obtained, then continuing
thereafter) the 19.9% Cap shall apply and each Investor holding Securities
shall have the right to convert its Preferred Stock or exercise its Warrants
only up to its pro rata portion of the Allowed Conversion Shares. The table
below lists the number of shares of Common Stock which each Investor may
obtain by converting or exercising its Preferred Stock or Warrants, as the
case may be, prior to and after Shareholder Approval.
The Company has agreed in the Stock Purchase Agreement to use its best
efforts to obtain Stockholder Approval at the Company's 1999 Annual Meeting
of Stockholders to be held on or before June 2, 1999. Also, subject to
Stockholder Approval, the Company has agreed to appoint two designees of the
Investors to its Board of Directors at the first meeting of the Board
following the Annual Meeting, and to use its best efforts to obtain the
election of such designees at each subsequent Annual Meeting so long as
Wilmington Securities, Inc. holds at least 33,750 shares of Series C
Preferred Stock. The two designees of the Investors are Joseph C. Manzinger
and Richard M. Johnston, each a Vice President of The Hillman Company.
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. 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 and a Warrant for 120, 000 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 with and without giving effect
to the 19.9% Cap.
(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
1,988,611
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 237,198 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
182,932 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 Amended and Restated Registration Rights Agreement dated
February 26, 1999, the Issuer has agreed to prepare, and, on or prior to the
date which is sixty (60) days after the date of the Closing under and as
defined in the Exchange Agreement, file with the SEC a Registration Statement
on Form S-3 covering the resale of the Common Stock underlying the Series B-1
Preferred Stock and Warrants issued or issuable pursuant to the Securities
Purchase Agreement dated as of September 2, 1998, which Registration
Statement, to the extent allowable under the 1933 Act and the Rules
promulgated thereunder (including Rule 416), shall state that such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Series
B-1 Preferred Stock and exercise of the Warrants (i) to prevent dilution
resulting from stock splits, stock dividends or similar transactions or (ii)
by reason of changes in the Conversion Price of the Series B-1 Preferred
Stock in accordance with the terms thereof or the exercise price of the Warrants
in accordance with the terms thereof. The number of shares of Common Stock
initially included in such Registration Statement shall be no less than the
sum of the number of Conversion Shares and Warrant Shares that are then
issuable upon conversion of the Series B-1 Preferred Stock and the exercise
of the Warrants, without regard to any limitation on the Investor's ability to
convert the Preferred Stock or exercise the Warrants.
Pursuant to the Second Amended and Restated Stockholders Agreement dated
as of February 26, 1999, Wilmington Securities, Inc. is entitled to certain
demand and piggyback registration rights with respect to the Common Stock
underlying the Series A-2, A-3 and C Preferred Stock and associated Warrants,
and to certain rights of first refusal in connection with future issuances by
the Issuer of its Common Stock or securities convertible into Common Stock.
See Item 4 above for a description of certain covenants of the Company
relating to elimination of the 19.9% Cap and the election of two designees of
the Investors to the Board of Directors.
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 and C Preferred Stock
and Warrants under the 19.9% Cap.
Exhibit 3.Exchange Agreement
Exhibit 4.Series C Preferred Stock Purchase Agreement
Exhibit 5. Second Amended and Restated Stockholders Rights Agreement
Exhibit 6.Amended and Restated Registration 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
March 15, 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. McQuarrie Vice 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. McQuarrie Vice 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
<TABLE>
<CAPTION>
Superconductor Technologies, Inc.
Conversion of Preferred Stock
Number of Number of
Series/ Number of Common Shares Common Shares
Investor Warrant Shares Without the 19.9% Cap Under the 19.9% Cap
<S> <C> <C> <C> <C>
WSI Series A-2 64,584 1,291,680 513,699
Preferred
Series A-3 12,500 250,000 99,419
Preferred
Series B-1 15,000 300,000 119,303
Preferred
Series C 41,667 833,340 331,399
Preferred
Warrant for 120,000 120,000 47,721
Common
Warrant for 100,000 100,000 39,768
Common
Warrant for 66,667 66,667 26,512
Common
Warrant for 36,000 36,000 14,316
Common
Warrant for 54,000 54,000 21,474
Common
HLH Series B-1 15,000 300,000 119,303
Trust Preferred
Warrant for 36,000 36,000 14,316
Common
Warrant for 9,000 9,000 3,579
Common
JLHS 1976 Series B-1 5,000 100,000 39,768
Trust Preferred
Warrant for 12,000 12,000 4,772
Common
<PAGE>
Warrant for 3,000 3,000 1,193
Common
AHF 1976 Series B-1 5,000 100,000 39,768
Trust Preferred
Warrant for 12,000 12,000 4,772
Common
Warrant for 3,000 3,000 1,193
Common
HLH Jr. 197 Series B-1 5,000 100,000 39,768
Trust Preferred
Warrant for 12,000 12,000 4,772
Common
Warrant for 3,000 3,000 1,193
Common
WTH 1976 Series B-1 5,000 100,000 39,768
Trust Preferred
Warrant for 12,000 12,000 4,772
Common
Warrant for 3,000 3,000 1,193
Common
</TABLE>
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made and entered into as of
February 26, 1999, by and among Superconductor Technologies, Inc. a Delaware
corporation (the "Company"), and the current holders (each a "Holder," and
collectively, the "Holders") of the Company's Series A Convertible Preferred
Stock, Series A-1 Convertible Preferred Stock, and Series B Convertible
Stock
and the related warrants (collectively, the "Existing Securities") in the
amounts set forth on Exhibit A hereto.
Background
A. The Company anticipates consummating an equity financing in the
future
(the "Series C Preferred Financing").
B.In order to achieve compliance with NASDAQ Marketplace Rule 4460 and
to
meet NASDAQ's concerns regarding the past issuances of the Existing
Securities, and to avoid any concerns regarding the potential future issuance
of securities in a new financing, the Company's Board of Directors (the
"Board") has determined it to be in the best interests of the Company and its
stockholders to exchange the Existing Securities for new shares of Series
A-2, A-3 and B-1 Convertible Preferred Stock and related warrants
(collectively,
the "New Securities") that are substantially the same as the Existing
Securities except for the following features:
1.Conversion/exercise/anti-dilution features: Prior to the receipt
of Stockholder Approval (as defined below), the conversion, exercise and
price anti-dilution features of all the New Securities (plus: (i) the
securities to
be issued in the Series C Preferred Financing and (ii) the New Warrants (as
defined below)) would be limited to an aggregate of 1,533,709 shares of the
Company's Common Stock (the "19.9% Cap"), which represents 19.9% of the total
outstanding capital stock of the Company on March 25, 1998. The stockholders
will be requested to approve the elimination of the 19.9% Cap and the
issuance of additional securities. The requisite vote (the "Stockholder
Approval")
will be a majority of the shares present and voting at the meeting, excluding
any New Securities (and any securities issued in the Series C Preferred
Financing).
2.Dividend features: If Stockholder Approval is not obtained, the
New Securities would have a cumulative mandatory dividend equal to 20% per
annum, payable in cash. Such dividends would begin to accrue as of the dates
the Existing Securities were first issued.
3.Redemption Features: The New Securities will not have any
redemption features. In consideration for the elimination of the redemption
feature of the Existing Securities, the Company will issue warrants to
purchase 75,000 shares of the Company's Common Stock at an exercise price
equal to $7.00 per share (the "New Warrants"), subject to the 19.9% Cap.
4.Anti-dilution Features: The anti-dilution features will be
amended to exclude the securities to be issued in the Series C Preferred
Financing and to make certain other changes as set forth in the Certificates
of Designation (as defined below) attached as Exhibits B, C and D hereto.
C. The New Securities to be issued to the Holders in exchange for their
Existing Securities will be subject to the Second Amended and Restated
Stockholder Rights Agreement and the Amended Registration Rights Agreement,
both of which will be entered into by the Company and the Holders before the
Closing (as defined below).
NOW, THEREFORE, the parties agree as follows:
1. Authorization; Issuance of Securities; Closing.
(a) In connection with the transactions contemplated by
this Agreement, the Board has authorized (i) the filing of Certificates of
Designation of Rights, Preferences and Privileges of Series A-2, A-3 and B-1
Preferred Stock (collectively, the "Certificates of Designation") attached as
Exhibits B, C, and D hereto; (ii) the exchange of the Existing Securities for
the New Securities as described in Section 1(b) below; and (iii) the issuance
of the New Warrants as described in Section 1(b) below.
(b) Prior to the Closing (as defined below), the Company
shall cause the Certificates of Designation to be filed with the Delaware
Secretary of State. At the Closing, (i) the Holders shall have delivered the
stock certificates and warrants representing the Existing Securities and the
completed Letter of Transmittal attached as Exhibit E and; (ii) in exchange
therefor, the Company shall deliver to the Holders certificates representing
127,084 shares of its New Securities, the related warrants and the New
Warrants (in substantially the form attached as Exhibit F), allocated to the
Holders as indicated in the attached Exhibit A.
(c) The closing (the "Closing") of the transactions
contemplated hereby shall be held at the offices of Wilson Sonsini Goodrich &
Rosati, 650 Page Mill Road, Palo Alto, California on February 26, 1999,
subject to satisfaction or waiver of the conditions to Closing set forth in
Section 2 below.
2. Approval from Holders. By executing this Agreement, the
Holders: (i) approve the creation of Series C Preferred Stock with the
rights, preferences and privileges as set forth in the Certificate of
Designation
delivered to the Holders and the issuance of such shares and related warrants
all as set forth in the Series C Preferred Stock Purchase Agreement delivered
to the Holders (the "Series C Agreement"); (ii) waive their rights of first
refusal contained Section 2 of the Amended and Restated Stockholders
Agreement, dated August 11, 1998, and Section 4 of the Securities Purchase
Agreement, dated September 2, 1998 (the "Securities Purchase Agreement") with
respect to the shares of Series C Preferred Stock, the warrants to be issued
pursuant to the Series C Agreement, the Letter Agreement between the Company
and Tanner Unman Securities, Inc., dated as of August 10, 1998, and the New
Securities and the New Warrants pursuant to this Agreement; (iii) amend
Section 4(e) of the Securities Purchase Agreement to add an additional
exclusion from the definition of "Capital Raising Limitations" for the New
Securities and the securities issuable under the Series C Agreement; and (iv)
amend the Securities Purchase Agreement, dated September 2, 1998, to replace
the form of warrant attached thereto as Exhibit B with the form of warrant
attached as Exhibit I and change the references to "Series B Preferred Stock"
to "Series B-1 Preferred Stock."
3. Conditions to Closing. The obligations of the parties under
this Agreement are subject to the fulfillment or waiver on or before the
Closing of the following conditions:
(a) Covenants. All covenants, agreements and conditions
contained in this Agreement to be performed by the parties on or prior to the
Closing shall have been performed or complied with in all material respects.
(b) Second Amended and Restated Stockholder Rights
Agreement and Amended and Restated Registration Rights Agreement. The
parties shall have entered into the Second Amended and Restated Stockholders
Rights
Agreement and Amended Registration Rights Agreement in the forms attached as
Exhibit G and H, respectively.
(c) Receipt of all Existing Securities. The Company shall
have received from the Holders all the stock certificates and warrants
representing the Existing Securities as set forth on Exhibit A (or lost stock
or warrant affidavits for the same) and the related Letters of Transmittal
fully executed and delivered.
(d) Blue Sky. 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 offer and exchange of
the Shares.
(e) Opinion of Company Counsel. The Holders shall have
received from Wilson Sonsini Goodrich & Rosati, counsel to the Company, an
opinion addressed to the Holders, dated the day of the Closing and in
substantially the form attached as Exhibit J.
4. Investment Representations of the Holders. Each Holder of
Existing Securities represents and warrants to the Company as follows:
(a) The Holder is acquiring the New Securities for
investment for his or her own account only and not with a view to, or for
resale in connection with, any "distribution" thereof within the meaning of
the Securities Act of 1933, as amended (the "Securities Act").
(b) The Holder acknowledges and understands that the New
Securities constitute "restricted securities" under the Securities Act and
have not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of such Holder's investment intent as expressed herein. The
Holder is an "accredited investor" within the meaning of Regulation D, Rule
501(a), promulgated by the Securities and Exchange Commission.
(c) The certificates evidencing the New Securities will be
imprinted with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. 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 REQUIREMENTS OF SAID ACT.
5. Miscellaneous.
(a) Governing Law. This Agreement shall be governed in
all respects by the internal laws of the State of Delaware.
(b) Survival. The representations, warranties, covenants
and agreements made herein shall survive any investigation made by any of the
parties hereto and the closing of the transactions contemplated hereby.
(c) 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.
(d) Entire Agreement; Amendment. This Agreement and the
other documents delivered pursuant hereto at the 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
either (i) the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought or (ii) the Company and the Holders
holding a majority of the then outstanding New Securities.
(e) 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.
(f) 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 such provision; provided that no such severability shall
be effective if it materially changes the economic benefit of this Agreement
to any party.
(g) 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.
(h) Benefits of Agreement. Nothing in this Agreement,
express or implied, shall give to any person, other than the parties hereto
and their successors hereunder any benefit or any legal or equitable right,
remedy or claim under this Agreement.<PAGE>
IN WITNESS WHEREOF, the parties have executed this Exchange Agreement as
of the date first written above.
SUPERCONDUCTOR TECHNOLOGIES, INC.
By:
Name: Peter Thomas
Title: President and Chief Executive Officer
Sole Series A Preferred Stockholder:
Wilmington Securities, Inc.
By:____________________________
Name:
Title:
Sole Series A-1 Preferred Stockholder:
Wilmington Securities, Inc.
By:____________________________
Name:
Title:
Series B Preferred Stockholders:
Wilmington Securities, Inc.
By:_____________________________
Name:
Title:
Henry L. Hillman Trust Under Agreement of Trust
dated November 18, 1985
By:_____________________________
C.G. Grefenstette, Trustee
Juliet Lea Hillman Simonds Trust under
Agreement of Trust dated December 30, 1976
for Children of Juliet Lea Hillman Simonds
By:_________________________________
Thomas G. Bigley, Trustee
By:_________________________________
C.G. Grefenstette, Trustee
Audrey Hillman Fisher Trust under Agreement
of Trust dated December 30, 1976 for Children
of Audrey Hillman Fisher
By:_________________________________
Thomas G. Bigley, Trustee
By:_________________________________
C.G. Grefenstette, Trustee
Henry Lea Hillman, Jr. Trust under Agreement
of Trust dated December 30, 1976 for Children
of Henry Lea Hillman, Jr.
By:__________________________________
Thomas G. Bigley, Trustee
By:__________________________________
C.G. Grefenstette, Trustee
William Talbott Hillman Trust under Agreement
of Trust dated December 30, 1976 for Children
of William Talbott Hillman
By:__________________________________
Thomas G. Bigley, Trustee
By:__________________________________
C.G. Grefenstette
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Existing Securities to be Exchanged New Securities to be Issued
Holder Shares Warrants Shares Warrants New Warrants
<S> <C> <C> <C> <C> <C>
WSI 645,833 100,000 64,584 100,000
Series A Common Series A-2 Common
125,000 66,667 12,500 66,667
Series A-1 Common Series A-3 Common
150,000 36,000 15,000 36,000 54,000
Series B Common Series B-1 Common Common
HLH 150,000 36,000 15,000 6,000 9,000
Trust Series B Common Series B-1 Common Common
JLHS 50,000 12,000 5,000 12,000 3,000
1976 Series B Common Series B-1 Common Common
Trust
AHF 50,000 12,000 5,000 12,000 3,000
1976 Series B Common Series B-1 Common Common
Trust
HLHS Jr. 50,000 12,000 5,000 12,000 3,000
1976 Series B Common Series B-1 Common Common
Trust
WTH 50,000 12,000 5,000 12,000 3,000
1976 Series B Common Series B-1 Common Common
Trust
</TABLE>
Note: Each share of Preferred Stock to be issued as new securities is
initially convertible into 20 shares of Common Stock.
EXHIBIT B
CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND
PRIVILEGES OF SERIES A-2 PREFERRED STOCK
OF
SUPERCONDUCTOR TECHNOLOGIES INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
I, Peter Thomas, the Chief Executive Officer of Superconductor
Technologies, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), in accordance
with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation of the Corporation, the
Board of Directors on February 4, 1999 adopted the following resolution
creating a series of 64,584 shares of Preferred Stock designated as Series
A-2 Preferred Stock:
RESOLVED: That pursuant to the authority vested in the Board of
Directors of the Corporation by the Amended and Restated Certificate
of Incorporation, the Board of Directors does hereby provide for the issue
of a series of Preferred Stock, $0.001 par value, of the Corporation, to be
designated Series A-2 Preferred Stock (the "Series A-2 Preferred"), consisting
of 64,584 shares and to the extent that the designations, powers, preferences
and relative and other special rights and the qualifications, limitations and
restrictions of the Series A-2 Preferred are not stated and expressed in the
Amended and Restated Certificate of Incorporation, does hereby fix and
herein state and express such designations, powers, preferences and relative
and other special rights and the qualifications, limitations and restrictions
thereof, as follows (all terms used herein which are defined in the Amended
and Restated Certificate of Incorporation shall be deemed to have the meanings
provided therein):
SECTION 1. Designation and Amount. The shares of such series
shall be designated as "Series A-2 Preferred", par value $0.001 per share,
and the number of shares constituting such series shall be 64,584.
SECTION 2. Rank. Except as provided in Section 8, the Series
A-2 Preferred Stock shall rank (i) prior to the Corporation's common stock,
par value $.001 per share (the "Common Stock"); (ii) pari passu with the
Series A-3 Preferred Stock, the Series B-1 Preferred Stock, and with any
class or series of capital stock of the Corporation hereafter created
specifically
ranking, by its terms, on parity with the Series A-2 Preferred Stock; and
(iii) junior to any class or series of capital stock of the Corporation
hereafter created specifically ranking, by its terms, senior to the Series
A-2 Preferred Stock, in each case as to distribution of assets upon
liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary.
SECTION 3. Dividends. The holders of shares of Series A-2
Preferred shall be entitled to receive dividends, out of funds legally
available therefor, payable in preference and priority to any payment of any
dividend on Common Stock of the Corporation, at the rate of $3.60 per share
(adjusted for any recapitalization, stock combinations, stock dividends,
stock splits and the like (a "Recapitalization")) per annum for the Series
A-2
Preferred, provided however that in the event Stockholder Approval (as
defined in Section 6(h)) is not obtained, then effective as of March 26, 1998,
the
$3.60 dividend amount shall be increased to $12.00 per share (as adjusted for
Recapitalizations). Such dividends shall be cumulative, accrue daily
(beginning March 26, 1998) and be paid quarterly, in cash or as an addition
to the Series A-2 Liquidation Preference (as defined below). No dividend
shall
be paid on the Common Stock in any year, other than dividends payable solely
in Common Stock, until all dividends due and payable on the Preferred Stock
have been declared and paid, and then such dividends on the Common Stock
shall not be in excess of the dividends paid on the Preferred Stock unless
the
amount of such excess is also paid on the Preferred Stock on an as-converted
per share basis.
SECTION 4. Liquidation Preference. In the event of any
liquidation, dissolution or winding up of the Corporation, either voluntary
or involuntary (a "Liquidation Event"), distributions to the stockholders of
the
Corporation shall be made in the following manner:
(a) The holders of Series A-2 Preferred shall be entitled
to receive, on a pari passu basis with the holders of Series A-3, Series B-1
and any other series of Preferred Stock ranked pari passu with Series A-2
Preferred Stock but prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of any series of
Preferred Stock junior to Series A-2 Preferred Stock or holders of the Common
Stock by reason of their ownership of such stock, an amount per share equal
to the sum (the "Series A-2 Liquidation Preference") of (i) $60.00 for each
share of Series A-2 Preferred then held by them, adjusted for any
Recapitalizations with respect to such shares and (ii) an amount equal to all
unpaid dividends on the Series A-2 Preferred held by them; provided, however,
in the event of a Liquidation Event pursuant to Section 4(b) below that is
consummated on or before March 26, 2001, the Series A-2 Liquidation
Preference shall be the greater of (i) $72.00 or (ii) $60.00 plus all accrued
dividends for each share of Series A-2 Preferred, adjusted for any
Recapitalizations.
If the assets and funds thus distributed among the holders of the Preferred
Stock shall be insufficient to permit the payment to such holders of their
full preferential amount, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Preferred Stock on a pari passu basis in proportion to the
aggregate preferential amount of shares of Preferred Stock outstanding as of
the date of the distribution upon the occurrence of such event. After
payment has been made to the holders of the Preferred Stock of the full
preferential
amount to which they shall be entitled, the holders of the Common Stock shall
be entitled to share ratably in the remaining assets, based on the number of
shares of Common Stock held.
(b) For purposes of this Section 4, a merger or
consolidation of the Corporation with or into any other corporation or
corporations, or the merger of any other corporation or corporations into the
Corporation, or the sale of all or substantially all of the assets of the
Corporation, or any other corporate reorganization, in which consolidation,
merger, sale of assets or reorganization the stockholders of the Corporation
receive distributions in cash or securities of another corporation or
corporations as a result of such consolidation, merger, sale of assets or
reorganization, shall be treated as a Liquidation Event unless the
stockholders of this Corporation immediately prior to such consolidation,
merger, sale of assets or reorganization hold or control more than fifty
percent (50%) of the voting equity securities of the successor or surviving
corporation immediately following such consolidation, merger, sale of assets
or reorganization, in which case such consolidation, merger, sale of assets
or reorganization shall not be treated as a Liquidation Event.
SECTION 5. Voting Rights. Except as otherwise required by law,
the Amended and Restated Certificate of Incorporation or Bylaws of the
Corporation or this Certificate of Designation, the holder of each share of
Common Stock issued and outstanding shall have one vote and the holder of
each share of Preferred Stock shall be entitled to the number of votes equal
to
the number of shares of Common Stock into which such share of Preferred Stock
could be converted, subject to the limits in Section 6(h) below, at the
record date for determination of the stockholders entitled to vote on such
matters,
or, if no such record date is established, at the date such vote is taken or
any written consent of stockholders is solicited, such votes to be counted
together with all other shares of stock of the Corporation having general
voting power and not separately as a class. Holders of Common Stock and
Preferred Stock shall be entitled to notice of any stockholders' meeting in
accordance with the Bylaws of the Corporation. Fractional votes by the
holders of Preferred Stock shall not, however, be permitted and any
fractional voting rights shall (after aggregating all shares into which shares
of
Preferred Stock held by each holder could be converted) be rounded to the
nearest whole number.
SECTION 6. Conversion. The holders of Series A-2 Preferred
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Subject to the limits set forth in
Section 6(h) below, each share of Series A-2 Preferred shall be convertible,
at the option of the holder thereof, at any time after the date of issuance
of such share at the office of the Corporation or any transfer agent for the
Series A-2 Preferred into such number of fully paid and nonassessable shares
of Common Stock as is determined by dividing $60.00 by the Series A-2
Conversion Price, determined as hereinafter provided, in effect at the time
of conversion. The price at which shares of Common Stock shall be
deliverable
upon conversion of shares of Series A-2 Preferred shall initially be $3.00
with respect to each share of Series A-2 Preferred (the "Series A-2
Conversion Price"). The initial Series A-2 Conversion Price shall be subject
to
adjustment as hereinafter provided.
(b) Automatic Conversion. Subject to the limits set forth
in Section 6(h) below, each share of Series A-2 Preferred shall automatically
be converted into shares of Common Stock at the then effective Series A-2
Conversion Price for such series upon the election of holders of at least a
majority of the then outstanding shares of Series A-2 Preferred.
(c) Mechanics of Conversion. The mechanics of conversion
set forth in this Section 6(c) are subject to the limits set forth in Section
6(h) below. No fractional shares of Common Stock shall be issued upon
conversion of Series A-2 Preferred. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Corporation shall pay cash
equal to such fraction multiplied by the then effective Series A-2 Conversion
Price. Before any holder of Series A-2 Preferred shall be entitled to
convert the same into full shares of Common Stock and to receive certificates
therefor, the holder shall surrender the certificate or certificates therefor,
duly
endorsed, at the office of the Corporation or of any transfer agent for
the Series A-2 Preferred, and shall give written notice to the Corporation at
such office that the holder elects to convert the same; provided, however,
that in the event of an automatic conversion pursuant to Section 6(b), the
outstanding shares of Series A-2 Preferred shall be converted automatically
without any further action by the holders of such shares and whether or not
the certificates representing such shares are surrendered to the Corporation
or its transfer agent and provided further, that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock
issuable upon such automatic conversion unless the certificates evidencing
such shares of Series A-2 Preferred are either delivered to the Corporation or
its
transfer agent as provided above, or the holder notifies the Corporation or
its transfer agent that such certificates have been lost, stolen or destroyed
and executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such
certificates. The Corporation shall, as soon as practicable after such
delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Series A-2
Preferred, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid and a check payable
to the holder in the amount of any cash amounts payable as the result of a
conversion into fractional shares of Common Stock. Such conversion shall be
deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A-2 Preferred to be converted,
or in the case of automatic conversion then on the date of election by a
majority of the then outstanding shares of Series A-2 Preferred, and the
person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder
or
holders of such shares of Common Stock on such date.
(d) (1) Adjustment of Conversion Price of Series A-2
Preferred Stock. The Series A-2 Conversion Price shall be subject to
adjustment from time to time as follows:
(i) Adjustments for Subdivisions,
Combinations or
Consolidation of Common Stock. In the event the outstanding
shares of Common Stock shall be subdivided by stock split, stock dividends or
otherwise, into a greater number of shares of Common Stock, the Series A-2
Conversion Price then in effect shall, concurrently with the effectiveness of
such subdivision, be proportionately decreased. In the event the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of shares of Common Stock, the Series A-2
Conversion Price then in effect shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased.
(ii) Adjustments for Stock Dividends and
Other Distributions. In the event the Corporation at any time or from time
to time makes, or fixes a record date for the determination of holders of
Common
Stock entitled to receive any distribution (excluding any repurchases of
securities by the Corporation not made on a pro rata basis from all holders
of any class of the Corporation's securities) payable in property or in
securities of the Corporation other than shares of Common Stock, and other
than as otherwise adjusted in this Section 6 or as provided in Section 3,
then and in each such event the holders of Series A-2 Preferred shall receive
at
the time of such distribution, the amount of property or the number of
securities of the Corporation that they would have received had their Series
A-2 Preferred been converted into Common Stock on the date of such event.
(iii) Adjustments for Reclassification,
Exchange and Substitution. Except as provided in Section 3 upon any
liquidation, dissolution or winding up of the Corporation, if the Common
Stock issuable upon conversion of the Series A-2 Preferred shall be changed
into
the same or a different number of shares of any other class or classes of
stock,
whether by capital reorganization, reclassification or otherwise (other than
a subdivision or combination of shares provided for above), each share of
Series A-2 Preferred shall thereafter be convertible into the number of shares
of
stock or other securities or property to which a holder of the number of
shares of Common Stock of the Corporation deliverable upon conversion of such
share of Series A-2 Preferred shall have been entitled upon such
reorganization or reclassification.
(2) Adjustments of Series A-2 Conversion Price for
Diluting Issues. In addition to the adjustment of the Series A-2 Conversion
Price provided in Section 6(d)(1) above, the Series A-2 Conversion Price
shall be subject to further adjustment from time to time as follows:
(i) Special Definitions. For purposes of
this Section 6(d)(2), the following definitions shall apply:
(1) "Options" shall mean rights,
options or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities.
(2) "Original Issue Date" shall mean
March 26, 1998.
(3) "Convertible Securities" shall
mean
securities convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common
Stock"
shall mean all shares of Common Stock issued (or, pursuant to Section
6(d)(2)(iii), deemed to be issued) by the Corporation after the Original
Issue
Date other than shares of Common Stock issued or issuable:
(A) upon conversion of shares of
the Preferred Stock;
(B) to officers, directors and
employees of, and consultants to, the Corporation pursuant to plans and
arrangements approved by the Board of Directors;
(C) as a dividend or other
distribution on the Preferred Stock or pursuant to clause (i), (ii) or (iii)
of Section 6(d)(1);
(D) upon the exercise of options
issued prior to the Original Issue Date;
(E) to research or development
collaborators or to banks or other institutional lendors 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;
(F) upon exercise of warrants
outstanding on the Original Issue Date or warrants to be issued pursuant to
agreements outstanding on the Original Issue Date, including without
limitation the following warrants: warrant, dated as of November 22, 1997,
the warrant dated as of December 21, 1998, warrants issued or issuable
pursuant to the Letter Agreement between the Company and Tanner Unman
Securities, Inc., dated as August 10, 1998, the warrants issued or issuable
pursuant to the Exchange Agreement, any additional warrants to be issued
pursuant to the Securities Purchase Agreement dated as of September 2, 1998,
and any Preferred Stock purchase agreement entered into before Stockholder
Approval (as defined below);
(G) with the written approval of
the holders of a majority of the outstanding Series A-2 Preferred; or
(H) by way of dividend or other
distributions on securities referred to in clauses (A), (B), (C), (D), (E),
(F) and (G) above.
(ii) No Adjustment of Series A-2 Conversion
Price. No adjustment in the Series A-2 Conversion Price of a particular
share of Series A-2 Preferred shall be made in respect of the issuance of
Additional Shares of Common Stock unless the consideration per share for
an Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the Series A-2 Conversion Price in effect on the date
of, and immediately prior to such issue, for such share of Series A-2
Preferred.
(iii) Deemed Issue of Additional Shares of
Common Stock.
(1) Options and Convertible
Securities. Except as otherwise provided in Section 6(d)(2)(i) above, in the
event the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of any holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon the exercise
of such Options or, in the case of Convertible Securities and Options
therefor,
the conversion or exchange of such Convertible Securities, shall be deemed to
be Additional Shares of Common Stock issued as of the time of such issue or,
in case such a record date shall have been fixed, as of the close of business
on
such record date, provided that Additional Shares of Common Stock shall not
be deemed to have been issued unless the consideration per share (determined
pursuant to Section 6(d)(2)(v) below) of such Additional Shares of Common
Stock would be less than the Series A-2 Conversion Price in effect on the date
of and immediately prior to such issue, or such record date, as the case may
be,
and provided further that in any such case in which additional shares of
Common
Stock are deemed to be issued:
(A) no further adjustment in the
Series A-2 Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities;
(B) if such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise,
for any increase or decrease in the consideration payable to the Corporation,
or
increase or decrease in the number of shares of Common Stock issuable, upon
the exercise, conversion or exchange thereof, the Series A-2 Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed
to reflect such increase or decrease insofar as it affects such Options or
the
rights of conversion or exchange under such Convertible Securities;
(C) upon the expiration of any
such Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Series A-2 Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration, be recomputed as if:
(I) in the case of
Convertible Securities or
Options for Common Stock, the only additional shares of Common Stock
issued were shares of Common Stock, if any, actually issued
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, and the consideration received therefor was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration actually received
by the Corporation upon such exercise, or for the issue of all such
Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation upon such
conversion or exchange, and
(II) in the case of Options
for Convertible Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such
Options and the consideration received by the Corporation for the Additional
Shares of Common Stock deemed to have been then issued was the consideration
actually received by the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration deemed to have been received
by the Corporation upon the issue of the Convertible Securities with respect
to which such Options were actually exercised;
(D) no readjustment pursuant to
clause (B) or (C) above shall have the effect of increasing the Series A-2
Conversion Price to an amount which exceeds the lower of (i) the Series A-2
Conversion Price on the original adjustment date, or (ii) the Series A-2
Conversion Price that would have resulted from any issuance of Additional
Shares of Common Stock between the original adjustment date and such
readjustment date; and
(E) in the case of any Options
which expire by their terms not more than thirty (30) days after the date of
issue thereof, no adjustment of the Series A-2 Conversion Price shall be made
until the expiration or exercise of all such Options.
(iv) Adjustment of Series A-2 Conversion
Price Upon Issuance of Additional Shares of Common Stock. In the event the
Corporation shall issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section
6(d)(2)(iii), but excluding stock dividends, subdivisions or split-ups that
are the subject of adjustment pursuant to Section 6(d)(i)) without
consideration or for a consideration per share less than the Series A-2
Conversion Price, in effect on the date of, and immediately prior to such
issue, then and in such event, such Series A-2 Conversion Price shall be
reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying such Series A-2 Conversion Price by a fraction, the
numerator of which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue, (ii) the number of shares
of Common Stock issuable upon conversion of the Preferred Stock outstanding
immediately prior to such issue and (iii) the number of shares of Common
Stock which the aggregate consideration received by the Corporation for the
total
number of Additional Shares of Common Stock so issued would purchase at such
Series A-2 Conversion Price; and the denominator of which shall be the sum of
(i) the number of shares of Common Stock outstanding immediately prior to
such issue, (ii) the number of shares of Common Stock issuable upon conversion
of
the Preferred Stock outstanding immediately prior to such issue and (iii)
the number of such Additional Shares of Common Stock so issued; and provided
further that, for the purposes of this Section 6(d)(2)(iv), all shares of
Common Stock issuable upon exercise of outstanding Options or conversion of
outstanding Convertible Securities shall be deemed to be outstanding, and
immediately after any Additional Shares of Common Stock are deemed issued
pursuant to Section 6(d)(2)(iii), such Additional Shares of Common Stock
shall be deemed to be outstanding.
(v) Determination of Consideration. For
purposes of this Section 6(d)(2), the consideration received by the
Corporation for the issue of any Additional Shares of Common Stock shall be
computed as follows:
(1) Cash and Property: Such
consideration shall:
(A) insofar as it consists of
cash, be computed at the
aggregate amount of cash received by the Corporation (excluding amounts paid
or payable for accrued interest or accrued dividends);
(B) insofar as it consists of
property other than cash,
be computed at the fair value thereof at the time of such issue, as determined
in
good faith by the Board of Directors; and
(C) in the event Additional
Shares
of Common Stock are issued together with other shares or securities or other
assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(A) and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities.
The consideration per share received by the Corporation for Additional Shares
of
Common Stock deemed to have been issued pursuant to Section 6(d)(2)(iii)(1),
relating to Options and Convertible Securities, shall be determined by
dividing
(x) the total amount, if any, received
or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment
of such consideration) payable to the Corporation upon the exercise of such
Option or the conversion or exchange of such Convertible Securities, or in
the case of Options for Convertible Securities, the exercise of such Options
for
Convertible Securities and the conversion or exchange of such Convertible
Securities by
(y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion or
exchange of
such Convertible Securities.
(e) No Impairment. Except as provided in Section 8, the
Corporation will not, by amendment of its Amended and Restated Certificate of
Incorporation or this Certificate of Designation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Corporation but will at all times in good faith assist in
the carrying out of all the provisions of this Section 6 and in the taking of
all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A-2 Preferred Stock against
impairment.
(f) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Series A-2 Conversion Price pursuant
to this Section 6, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Series A-2 Preferred a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series A-2 Preferred, furnish or cause
to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Series A-2 Conversion Price at the
time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon
the conversion of Series A-2 Preferred.
(g) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon
its Common Stock, whether in cash, property, stock or other securities,
whether or not a regular cash dividend and whether or not out of earnings or
earned surplus;
(ii) to effect any reclassification or
capitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iii) to merge or consolidate with or into any
other person or entity, or sell, lease or convey all or substantially all its
property or business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the
holders of Series A-2 Preferred:
(1) at least twenty (20) days' prior
written notice of the date on which a record shall be taken for such
dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights
to vote in respect of the matters referred to in (ii) and (iii) above; and
(2) in the case of the matters referred to
in (ii) and (iii) above, at least twenty (20) days' prior written notice of
the date when the same shall take place (and specifying the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such event).
Each such written notice shall be delivered personally or given by first
class mail, postage prepaid, addressed to the holders of the Series A-2
Preferred at the address for each such holder as shown on the books of the
Corporation. The above written notice requirement may be waived by the
holders of a majority of the then outstanding Series A-2 Preferred Stock.
(h) Limits on Conversion. Notwithstanding anything
herein to the contrary, the Series A-2, Series A-3, and Series B-1 Preferred
Stock of the Corporation and any additional shares of Preferred Stock issued
by the Corporation prior to Stockholder Approval (as defined below), and the
outstanding warrants to purchase Common Stock of the Corporation (issued or
issuable to holders of such shares of Preferred Stock pursuant to agreements
outstanding as of February 26, 1999 or entered into prior to Stockholder
Approval) (collectively, the "Securities") shall not be convertible into or
exercisable for (as the case may be) shares of Common Stock in excess of
1,533,709 shares (as adjusted for Recapitalizations and the like) (the "19.9%
Cap" or the "Allowed Conversion Shares"), unless the Corporation has received
stockholder approval to eliminate such 19.9% Cap at a duly held meeting of
the stockholders in calendar 1999 (the "Stockholder Approval"). Until
Stockholder Approval has been obtained (or, if Stockholder Approval is not
obtained, then continuing thereafter) the 19.9% Cap shall apply and each
holder of Securities (each a "Holder") shall have the right to convert its
Preferred Stock or exercise its warrants only up to its pro rata portion of
the Allowed Conversion Shares. A Holder may waive in writing its right to
convert or exercise (or transfer to another Holder) its pro rata portion of
the Allowed Conversion Shares. In the event that a Holder converts or
exercises its Securities, then the number of Allowed Conversion Shares will
be reduced by such amount.
SECTION 7. Status of Converted Stock. In case any shares of
Series A-2 Preferred shall be repurchased or converted pursuant to Section 6,
the shares so repurchased or converted shall be canceled and shall not be
issued by the Corporation as Series A-2 Preferred and this Certificate of
Designation shall be appropriately amended to effect the corresponding
reduction in the Corporation's authorized Series A-2 Preferred.
SECTION 8. Covenants. In addition to any other rights provided
by law, so long as at least twenty-five percent (25%) of the authorized
Series A-2 Preferred shall be outstanding, the Corporation shall not, without
first
obtaining the affirmative vote or written consent of the holders of not less
than a majority of the outstanding shares of Series A-2 Preferred:
(a) amend or repeal any provision of the Corporation's
Amended or Restated Certificate of Incorporation, certificates of designation
or Bylaws if such action would materially and adversely alter or change the
preferences, rights, privileges or powers of, or the restrictions provided
for the benefit of, the Series A-2 Preferred; or
(b) authorize or issue shares of any class or series of
stock having any preference or priority as to dividends or assets superior to
or on parity with any such preference or priority of the Series A-2 Preferred.
IN WITNESS WHEREOF, Superconductor Technologies Inc. has caused this
Certificate to be signed by Peter Thomas, its Chief Executive Officer, this
__th day of February, 1999.
Peter Thomas
Chief Executive Officer
<PAGE>
EXHIBIT C
CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND
PRIVILEGES OF SERIES A-3 PREFERRED STOCK
OF
SUPERCONDUCTOR TECHNOLOGIES INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
I, Peter Thomas, the Chief Executive Officer of Superconductor
Technologies, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), in accordance
with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation of the Corporation, the
Board of Directors on February 4, 1999 adopted the following resolution
creating a series of 12,500 shares of Preferred Stock designated as Series
A-3
Preferred Stock:
RESOLVED: That pursuant to the authority vested in the Board of
Directors of the Corporation by the Amended and Restated Certificate of
Incorporation, the Board of Directors does hereby provide for the issue of a
series of Preferred Stock, $0.001 par value, of the Corporation, to be
designated
Series A-3 Preferred Stock ("Series A-3 Preferred"), consisting of 12,500
shares
and to the extent that the designations, powers, preferences and relative and
other special rights and the qualifications, limitations and restrictions of
the Series A-3 Preferred are not stated and expressed in the Amended and
Restated Certificate of Incorporation, does hereby fix and herein state and
express such designations, powers, preferences and relative and other special
rights and the qualifications, limitations and restrictions thereof, as
follows (all terms used herein which are defined in the Amended and Restated
Certificate of Incorporation shall be deemed to have the meanings provided
therein):
SECTION (1) Designation and Amount. The shares of such
series shall be designated as "Series A-3 Preferred", par value $0.001 per
share, and the number of shares constituting such series shall be 12,500.
SECTION 2. Rank. Except as provided in Section 8, the Series
A-3 Preferred Stock shall rank (i) prior to the Corporation's common stock,
par value $.001 per share (the "Common Stock"); (ii) pari passu with the
Series A-2 Preferred Stock, the Series B-1 Preferred Stock, and with any
class or series of capital stock of the Corporation hereafter created
specifically
ranking, by its terms, on parity with the Series A-3 Preferred Stock; and
(iii)
junior to any class or series of capital stock of the Corporation hereafter
created specifically ranking, by its terms, senior to the Series A-3
Preferred Stock, in each case as to distribution of assets upon liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary.
SECTION 3. Dividends. The holders of shares of Series A-3
Preferred shall be entitled to receive dividends, out of funds legally
available therefor, payable in preference and priority to any payment of any
dividend on Common Stock of the Corporation, at the rate of $4.80 per share
(adjusted for any recapitalization, stock combinations, stock dividends,
stock splits and the like (a "Recapitalization")) per annum for the Series
A-3
Preferred, provided however, that in the event Stockholder Approval (as
defined in Section 6(h)) is not obtained, then effective as of August 11,
1998, the $4.80 dividend shall be increased to $16.00 per share (as adjusted
for Recapitalizations). Such dividends shall be cumulative, accrue daily
(beginning August 11, 1998) and be paid quarterly in cash or as an addition
to the Series A-3 Liquidation Preference (as defined below). No dividend
shall
be paid on the Common Stock in any year, other than dividends payable solely
in Common Stock, until all dividends due and payable on the Preferred Stock
have been declared and paid, and then such dividends on the Common Stock
shall not be in excess of the dividends paid on the Preferred Stock unless
the
amount of such excess is also paid on the Preferred Stock on an as-converted
per share basis.
SECTION 4. Liquidation Preference. In the event of any
liquidation, dissolution or winding up of the Corporation, either voluntary
or involuntary (a "Liquidation Event"), distributions to the stockholders of
the
Corporation shall be made in the following manner:
(c) The holders of Series A-3 Preferred shall be entitled
to receive, on a pari passu basis with the holders of Series A-2, Series B-1
and any series of Preferred Stock ranked pari passu with Series A-3 Preferred
Stock, but prior and in preference to any distribution of any of the assets
or surplus funds of the Corporation to the holders of any series of Preferred
Stock ranked junior to series A-3 Preferred Stock or holders of the Common
Stock by reason of their ownership of such stock, an amount per share equal
to the sum (the "Series A-3 Liquidation Preference") of (i) $80.00 for each
share of Series A-3 Preferred (the "Original Purchase Price") then held by
them, adjusted for any Recapitalizations with respect to such shares and,
(ii) an amount equal to all unpaid dividends on the Series A-3 Preferred held
by
them; provided however, in the event of a Liquidation Event pursuant to
Section 4(b) below that is consummated on or before March 26, 2001, the
Liquidation Preference shall be the greater of (i) $96.00 or (ii) $80.00 plus
all accrued dividends for each share of Series A-3 Preferred, adjusted for
any Recapitalizations. If the assets and funds thus distributed among the
holders of the Preferred Stock shall be insufficient to permit the payment to
such
holders of their full preferential amount, then the entire assets and funds
of the Corporation legally available for distribution shall be distributed
ratably among the holders of the Preferred Stock on a pari passu basis in
proportion to the aggregate preferential amount of shares of Preferred Stock
outstanding as of the date of the distribution upon the occurrence of such
event. After payment has been made to the holders of the Preferred Stock of
the full preferential amounts to which they shall be entitled, the holders of
the Common Stock shall be entitled to share ratably in the remaining assets,
based on the number of shares of Common Stock held.
(d) For purposes of this Section 4, a merger or
consolidation of the Corporation with or into any other corporation or
corporations, or the merger of any other corporation or corporations into the
Corporation, or the sale of all or substantially all of the assets of the
Corporation, or any other corporate reorganization, in which consolidation,
merger, sale of assets or reorganization the stockholders of the Corporation
receive distributions in cash or securities of another corporation or
corporations as a result of such consolidation, merger, sale of assets or
reorganization, shall be treated as a Liquidation Event unless the
stockholders of this Corporation immediately prior to such consolidation,
merger, sale of assets or reorganization hold or control more than fifty
percent (50%) of the voting equity securities of the successor or surviving
corporation immediately following such consolidation, merger, sale of assets
or reorganization, in which case such consolidation, merger, sale of assets
or reorganization shall not be treated as a Liquidation Event.
SECTION 5. Voting Rights. Except as otherwise required by law,
the Amended and Restated Certificate of Incorporation or Bylaws of the
Corporation or this Certificate of Designation, the holder of each share of
Common Stock issued and outstanding shall have one vote and the holder of
each share of Preferred Stock shall be entitled to the number of votes equal
to
the number of shares of Common Stock into which such share of Preferred Stock
could be converted, subject to the limits set forth in Section 6(h) below, at
the record date for determination of the stockholders entitled to vote on
such matters, or, if no such record date is established, at the date such vote
is
taken or any written consent of stockholders is solicited, such votes to be
counted together with all other shares of stock of the Corporation having
general voting power and not separately as a class. Holders of Common Stock
and Preferred Stock shall be entitled to notice of any stockholders' meeting
in accordance with the Bylaws of the Corporation. Fractional votes by the
holders of Preferred Stock shall not, however, be permitted and any
fractional voting rights shall (after aggregating all shares into which shares
of
Preferred Stock held by each holder could be converted) be rounded to the
nearest whole number.
SECTION 6. Conversion. The holders of Series A-3 Preferred
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Subject to the limits set forth in
Section 6(h) below, each share of Series A-3 Preferred shall be convertible,
at the option of the holder thereof, at any time after the date of issuance
of
such share at the office of the Corporation or any transfer agent for the
Series A-3 Preferred into such number of fully paid and nonassessable shares
of Common Stock as is determined by dividing $80.00 by the Series A-3
Conversion Price, determined as hereinafter provided, in effect at the time
of conversion. The price at which shares of Common Stock shall be
deliverable
upon conversion of shares of Series A-3 Preferred shall initially be $4.00
with respect to each share of Series A-3 Preferred (the "Series A-3
Conversion Price"). The initial Series A-3 Conversion Price shall be subject
to
adjustment as hereinafter provided.
(b) Automatic Conversion. Subject to the limits set forth
in Section 6(h) below, each share of Series A-3 Preferred shall automatically
be converted into shares of Common Stock at the then effective Series A-3
Conversion Price for such series upon the election of holders of at least a
majority of the then outstanding shares of Series A-3 Preferred.
(e) Mechanics of Conversion. The mechanics of conversion
set forth in this Section 6(c) are subject to the limits set forth in Section
5(h) below. No fractional shares of Common Stock shall be issued upon
conversion of Series A-3 Preferred. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Corporation shall pay cash
equal
to such fraction multiplied by the then effective Series A-3 Conversion
Price. Before any holder of Series A-3 Preferred shall be entitled to
convert the same into full shares of Common Stock and to receive certificates
therefor, the holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for
the Series A-3 Preferred, and shall give written notice to the Corporation at
such office that the holder elects to convert the same; provided, however,
that in the event of an automatic conversion pursuant to Section 6(b), the
outstanding shares of Series A-3 Preferred shall be converted automatically
without any further action by the holders of such shares and whether or not
the certificates representing such shares are surrendered to the Corporation
or its transfer agent and provided further, that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock
issuable upon such automatic conversion unless the certificates evidencing
such shares
of Series A-3 Preferred are either delivered to the Corporation or its
transfer agent as provided above, or the holder notifies the Corporation or
its transfer agent that such certificates have been lost, stolen or destroyed
and executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such
certificates. The Corporation shall, as soon as practicable after such
delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Series A-3
Preferred, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid and a check payable
to the holder in the amount of any cash amounts payable as the result of a
conversion into fractional shares of Common Stock. Such conversion shall be
deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A-3 Preferred to be converted,
or in the case of automatic conversion then on the date of election by a
majority of the then outstanding shares of Series A-3 Preferred, and the
person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder
or
holders of such shares of Common Stock on such date.
(f) (1) Adjustment of Conversion Price of Series A-3
Preferred Stock. The Series A-3 Conversion Price shall be subject to
adjustment from time to time as follows:
(i) Adjustments for Subdivisions,
Combinations or Consolidation of Common Stock. In the event the outstanding
shares of Common Stock shall be subdivided by stock split, stock dividends or
otherwise, into a greater number of shares of Common Stock, the Series A-3
Conversion Price then in effect shall, concurrently with the effectiveness of
such subdivision, be proportionately decreased. In the event the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of shares of Common Stock, the Series A-3
Conversion Price then in effect shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased.
(ii) Adjustments for Stock Dividends and
Other Distributions. In the event the Corporation at any time or from time
to time makes, or fixes a record date for the determination of holders of
Common
Stock entitled to receive any distribution (excluding any repurchases of
securities by the Corporation not made on a pro rata basis from all holders
of any class of the Corporation's securities) payable in property or in
securities of the Corporation other than shares of Common Stock, and other
than as otherwise adjusted in this Section 6 or as provided in Section 3,
then and in each such event the holders of Series A-3 Preferred shall receive
at
the time of such distribution, the amount of property or the number of
securities of the Corporation that they would have received had their Series
A-3 Preferred been converted into Common Stock on the date of such event.
(iii) Adjustments for Reclassification,
Exchange and Substitution. Except as provided in Section 4 upon any
liquidation, dissolution or winding up of the Corporation, if the Common
Stock issuable upon conversion of the Series A-3 Preferred shall be changed
into the
same or a different number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other than
a subdivision or combination of shares provided for above), each share of
Series A-3 Preferred shall thereafter be convertible into the number of shares
of
stock or other securities or property to which a holder of the number of
shares of Common Stock of the Corporation deliverable upon conversion of such
share of Series A-3 Preferred shall have been entitled upon such
reorganization or reclassification.
(d) (2) Adjustments of Series A-3 Conversion Price for
Diluting Issues. In addition to the adjustment of the Series A-3 Conversion
Price provided in Section 6(d)(1) above, the Series A-3 Conversion Price
shall be subject to further adjustment from time to time as follows:
(i) Special Definitions. For purposes of
this Section 6(d)(2), the following definitions shall apply:
(1) "Options" shall mean rights,
options or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities.
(2) "Original Issue Date" shall mean
August 11, 1998.
(3) "Convertible Securities" shall
mean
securities convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common
Stock" shall mean all shares of Common Stock issued (or, pursuant to Section
6(d)(2)(iii), deemed to be issued) by the Corporation after the Original
Issue Date other than shares of Common Stock issued or issuable:
(A) upon conversion of shares of
the Preferred Stock;
(B) to officers, directors and
employees of, and consultants to, the Corporation pursuant to plans and
arrangements approved by the Board of Directors;
(C) as a dividend or other
distribution on the Preferred Stock or pursuant to clause (i), (ii) or (iii)
of Section 6(d)(1);
(D) upon the exercise of options
issued prior to the Original Issue Date;
(E) to research or development
collaborators or to banks or other institutional lendors 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;
(F) upon exercise of warrants
outstanding on the Original Issue Date or warrants to be issued pursuant to
agreements outstanding on the Original Issue Date, including without
limitation the following warrants: warrant, dated as of November 22, 1997,
the warrant dated as of December 21, 1998 and warrants issued or issuable
pursuant to the Letter Agreement between the Company and Tanner Unman
Securities, Inc., dated as August 10, 1998, warrants issued or issuable
pursuant to the Exchange Agreement, any additional warrants to be issued
pursuant to the Securities Purchase Agreement dated as of September 2, 1998,
and any Preferred Stock purchase agreement entered into before Stockholder
Approval (as defined below);
(G) with the written approval of
the holders of a majority of the outstanding Series A-3 Preferred; or
(H) by way of dividend or other
distributions on securities referred to in clauses (A), (B), (C), (D) (E),
(F) and (G) above.
(ii) No Adjustment of Series A-3 Conversion
Price. No adjustment in the Series A-3 Conversion Price of a particular
share of Series A-3 Preferred shall be made in respect of the issuance of
Additional Shares of Common Stock unless the consideration per share for an
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the Series A-3 Conversion Price in effect on the date
of, and immediately prior to such issue, for such share of Series A-3
Preferred.
(iii) Deemed Issue of Additional Shares of
Common Stock.
(1) Options and Convertible
Securities. Except as otherwise provided in Section 6(d)(2)(i) above, in the
event the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of any holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon the exercise of
such Options or, in the case of Convertible Securities and Options therefor,
the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of business on
such
record date, provided that Additional Shares of Common Stock shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 6(d)(2)(v) below) of such Additional Shares of Common
Stock would be less than the Series A-3 Conversion Price in effect on the date
of
and immediately prior to such issue, or such record date, as the case may be,
and
provided further that in any such case in which additional shares of Common
Stock are deemed to be issued:
(A) no further adjustment in the
Series A-3 Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities;
(B) if such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise,
for any increase or decrease in the consideration payable to the Corporation,
or
increase or decrease in the number of shares of Common Stock issuable, upon
the exercise, conversion or exchange thereof, the Series A-3 Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed
to reflect such increase or decrease insofar as it affects such Options or
the
rights of conversion or exchange under such Convertible Securities;
(C) upon the expiration of any
such Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Series A-3 Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration, be recomputed as if:
(I) in the case of
Convertible Securities or Options for Common Stock, the only additional
shares of Common Stock issued were shares of Common Stock, if any, actually
issued upon the exercise of such Options or the conversion or exchange of
such
Convertible Securities, and the consideration received therefor was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration actually received
by the Corporation upon such exercise, or for the issue of all such
Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation upon such
conversion or exchange, and
(II) in the case of Options
for Convertible Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such
Options and the consideration received by the Corporation for the Additional
Shares of Common Stock deemed to have been then issued was the consideration
actually received by the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration deemed to have been received
by the Corporation upon the issue of the Convertible Securities with respect
to which such Options were actually exercised;
(D) no readjustment pursuant to
clause (B) or (C) above shall have the effect of increasing the Series A-3
Conversion Price to an amount which exceeds the lower of (i) the Series A-3
Conversion Price on the original adjustment date, or (ii) the Series A-3
Conversion Price that would have resulted from any issuance of Additional
Shares of Common Stock between the original adjustment date and such
readjustment date; and
(E) in the case of any Options
which expire by their terms not more than thirty (30) days after the date of
issue thereof, no adjustment of the Series A-3 Conversion Price shall be made
until the expiration or exercise of all such Options.
(iv) Adjustment of Series A-3 Conversion
Price Upon Issuance of Additional Shares of Common Stock. In the event the
Corporation shall issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section
6(d)(2)(iii), but excluding stock dividends, subdivisions or split-ups that
are the subject of adjustment pursuant to Section 6(d)(i)) without
consideration or for a consideration per share less than the Series A-3
Conversion Price, in effect on the date of, and immediately prior to such
issue, then and in such event, such Series A-3 Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Series A-3 Conversion Price by a
fraction, the numerator of which shall be the sum of (i) the number of shares
of Common Stock outstanding immediately prior to such issue, (ii) the number
of shares of Common Stock issuable upon conversion of the Preferred Stock
outstanding immediately prior to such issue and (iii) the number of shares of
Common Stock which the aggregate consideration received by the Corporation
for the total number of Additional Shares of Common Stock so issued would
purchase at such Series A-3 Conversion Price; and the denominator of which
shall be
the sum of (i) the number of shares of Common Stock outstanding immediately
prior
to such issue, (ii) the number of shares of Common Stock issuable upon
conversion of the Preferred Stock outstanding immediately prior to such issue
and (iii) the number of such Additional Shares of Common Stock so issued;
and provided further that, for the purposes of this Section 6(d)(2)(iv), all
shares of Common Stock issuable upon exercise of outstanding Options or
conversion of outstanding Convertible Securities shall be deemed to be
outstanding, and immediately after any Additional Shares of Common Stock are
deemed issued pursuant to Section 6(d)(2)(iii), such Additional Shares of
Common Stock shall be deemed to be outstanding.
(v) Determination of Consideration. For
purposes of this Section 6(d)(2), the consideration received by the
Corporation for the issue of any Additional Shares of Common Stock shall be
computed as follows:
(1) Cash and Property: Such
consideration shall:
(A) insofar as it consists of
cash, be computed at the aggregate amount of cash received by the Corporation
(excluding amounts paid or payable for accrued interest or accrued dividends);
(B) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time
of such issue, as determined in good faith by the Board of Directors; and
(C) in the event Additional
Shares
of Common Stock are issued together with other shares or securities or other
assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(A) and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities.
The consideration per share received by the Corporation for Additional Shares
of
Common Stock deemed to have been issued pursuant to Section 6(d)(2)(iii)(1),
relating to Options and Convertible Securities, shall be determined by
dividing
(x) the total amount, if any, received
or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment
of such consideration) payable to the Corporation upon the exercise of such
Option or the conversion or exchange of such Convertible Securities, or in
the case of Options for Convertible Securities, the exercise of such Options
for
Convertible Securities and the conversion or exchange of such Convertible
Securities by
(y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion or
exchange of
such Convertible Securities.
(g) No Impairment. Except as provided in Section 8, the
Corporation will not, by amendment of its Amended and Restated Certificate of
Incorporation or this Certificate of Designation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Corporation but will at all times in good faith assist in
the carrying out of all the provisions of this Section 6 and in the taking of
all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A-3 Preferred Stock against
impairment.
(h) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Series A-3 Conversion Price pursuant
to this Section 6, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Series A-3 Preferred a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series A-3 Preferred, furnish or cause
to be furnished to such holder a like certificate setting forth (i) such
adjustments and readjustments, (ii) the Series A-3 Conversion Price at the
time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon
the
conversion of Series A-3 Preferred.
(i) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon
its Common Stock, whether in cash, property, stock or other securities,
whether or not a regular cash dividend and whether or not out of earnings or
earned surplus;
(ii) to effect any reclassification or
capitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iii) to merge or consolidate with or into any
other person or entity, or sell, lease or convey all or substantially all its
property or business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the
holders of Series A-3 Preferred:
(1) at least twenty (20) days' prior
written notice of the date on which a record shall be taken for such
dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights
to vote in respect of the matters referred to in (ii) and (iii) above; and
(2) in the case of the matters referred to
in (ii) and (iii) above, at least twenty (20) days' prior written notice of
the date when the same shall take place (and specifying the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such event).
Each such written notice shall be delivered personally or given by first
class mail, postage prepaid, addressed to the holders of the Series A-3
Preferred at the address for each such holder as shown on the books of the
Corporation. The above written notice requirement may be waived by the
holders of a majority of the then outstanding Series A-3 Preferred Stock.
(h) Limits on Conversion. Notwithstanding anything
herein to the contrary, the Series A-2, Series A-3, and Series B-1 Preferred
Stock of the Corporation and any additional shares of Preferred Stock issued
by the Corporation prior to Stockholder Approval (as defined below), and the
outstanding warrants to purchase Common Stock of the Corporation (issued or
issuable to holders of such shares of Preferred Stock pursuant to agreements
outstanding as of February 26, 1999 or entered into prior to Stockholder
Approval) (collectively, the "Securities") shall not be convertible into or
exercisable for (as the case may be) shares of Common Stock in excess of
1,533,709 shares (as adjusted for Recapitalizations and the like) (the "19.9%
Cap" or the "Allowed Conversion Shares"), unless the Corporation has received
stockholder approval to eliminate such 19.9% Cap at a duly held meeting of
the stockholders in calendar 1999 (the "Stockholder Approval"). Until
Stockholder Approval has been obtained (or, if Stockholder Approval is not
obtained, then continuing thereafter) the 19.9% Cap shall apply and each
holder of Securities (each a "Holder") shall have the right to convert its
Preferred Stock or exercise its warrants only up to its pro rata portion of
the Allowed Conversion Shares. A Holder may waive in writing its right to
convert or exercise (or transfer to another Holder) its pro rata portion of
the Allowed Conversion Shares. In the event that a Holder converts or
exercises its Securities, then the number of Allowed Conversion Shares will
be reduced by such amount.
SECTION 7. Status of Converted Stock. In case any shares of
Series A-3 Preferred shall be repurchased or converted pursuant to Section 6,
the shares so repurchased or converted shall be canceled and shall not be
issued by the Corporation as Series A-3 Preferred and this Certificate of
Designation shall be appropriately amended to effect the corresponding
reduction in the Corporation's authorized Series A-3 Preferred.
SECTION 8. Covenants. In addition to any other rights provided
by law, so long as at least twenty-five percent (25%) of the authorized
Series A-3 Preferred shall be outstanding, the Corporation shall not, without
first
obtaining the affirmative vote or written consent of the holders of not less
than a majority of the outstanding shares of Series A-3 Preferred:
(j) amend or repeal any provision of the Corporation's
Amended or Restated Certificate of Incorporation, certificates of designation
or Bylaws if such action would materially and adversely alter or change the
preferences, rights, privileges or powers of, or the restrictions provided
for the benefit of, the Series A-3 Preferred; or
(k) authorize or issue shares of any class or series of
stock having any preference or priority as to dividends or assets superior to
or on parity with any such preference or priority of the Series A-3 Preferred.
[Remainder of page intentionally left blank]<PAGE>
IN WITNESS WHEREOF, Superconductor Technologies Inc. has caused this
Certificate to be signed by Peter Thomas, its Chief Executive Officer, this
__th day of February, 1999.
Peter Thomas
Chief Executive Officer
<PAGE>EXHIBIT D
CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND
PRIVILEGES OF SERIES B-1 PREFERRED STOCK
OF
SUPERCONDUCTOR TECHNOLOGIES INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
I, Peter Thomas, the Chief Executive Officer of Superconductor
Technologies Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), in accordance
with the provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Amended and Restated Certificate of Incorporation of the Corporation, the
Board of Directors on February 4, 1999 adopted the following resolution
creating a series of 50,000 shares of Preferred Stock designated as Series
B-1
Preferred Stock.
RESOLVED: That pursuant to the authority vested in the Board of
Directors of the Corporation by the Amended and Restated Certificate of
Incorporation, the Board of Directors does hereby provide for the issue of a
series of Preferred Stock, par value $0.001 per share, of the Corporation, to
be
designated Series B-1 Preferred Stock (the "Series B-1 Preferred Stock"),
consisting of 50,000 shares, and to the extent that the designations, powers,
preferences and relative and other special rights and the qualifications,
limitations and restrictions of the Series B-1 Preferred Stock are not stated
and expressed in the Amended and Restated Certificate of Incorporation, does
hereby fix and herein state and express such designations, powers,
preferences and relative and other special rights and the qualifications,
limitations
and restrictions thereof, as follows (all terms used herein which are defined
in
the Amended and Restated Certificate of Incorporation shall be deemed to have
the meanings provided therein):
SECTION 1. Designation and Amount. The shares of such Series
B-1 Preferred Stock shall be designated as "Series B-1 Preferred Stock", par
value $0.001 per share, and the number of shares constituting such series
shall be 50,000.
SECTION 2. Rank. Except as provided in Section 8, the Series
B-1 Preferred Stock shall rank (i) prior to the Corporation's common stock,
par value $.001 per share (the "Common Stock"); (ii) pari passu with the
Series A-2 Preferred Stock, the Series A-3 Preferred Stock, and with any
class or series of capital stock of the Corporation hereafter created
specifically
ranking, by its terms, on parity with the Series B-1 Preferred Stock; and
(iii) junior to any class or series of capital stock of the Corporation
hereafter created specifically ranking, by its terms, senior to the Series
B-1 Preferred Stock, in each case as to distribution of assets upon
liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary.
SECTION 3. Dividends. The holders of shares of Series B-1
Preferred Stock shall be entitled to receive dividends, out of funds legally
available therefor, payable in preference and priority to any payment of any
dividend on Common Stock of the Corporation, at the rate of $5.60 per share
(adjusted for any recapitalization, stock combinations, stock dividends,
stock splits and the like ("Recapitalizations")) per annum for the Series B-1
Preferred Stock; provided, however, that in the event Stockholder Approval
(as defined in Section 6(h) below) is not obtained, then effective as of
September 2, 1998, the $5.60 dividend amount shall be increased to $16.00 per
share (adjusted for Recapitalizations). Such dividends shall be cumulative,
accrue
daily (effective September 2, 1998), and be paid quarterly in cash or as an
addition to the Series B-1 Liquidation Preference (as defined below). No
dividend shall be paid on the Common Stock in any year, other than dividends
payable solely in Common Stock, until all dividends due and payable on the
Preferred Stock have been declared and paid, and then such dividends on the
Common Stock shall not be in excess of the dividends paid on the Preferred
Stock unless the amount of such excess is also paid on the Preferred Stock on
an as-converted per share basis.
SECTION 4. Liquidation Preference. In the event of any
liquidation, dissolution or winding up of the Corporation, either voluntary
or involuntary (a "Liquidation Event"), distributions to the stockholders of
the
Corporation shall be made in the following manner:
(a) The holders of Series B-1 Preferred Stock shall be
entitled to receive, on a pari passu basis with the holders of Series A-2,
Series A-3 and Series C Preferred Stock and any other series of Preferred
Stock ranked pari passu with the Series B-1 Preferred Stock but prior and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of any series of Preferred Stock junior to Series
B-1 Preferred Stock or holders of the Common Stock by reason of their
ownership of such stock, an amount per share equal to the sum (the "Series
B-1 Liquidation Preference") of (i) $80.00 for each share of Series B-1
Preferred
Stock (the "Original Purchase Price") then held by them, adjusted for any
Recapitalizations with respect to such shares and (ii) an amount equal to all
unpaid dividends on the Series B-1 Preferred Stock held by them. If the
assets and funds thus distributed among the holders of the Preferred Stock
shall be insufficient to permit the payment to such holders of their full
preferential amount, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Preferred Stock in proportion to the aggregate preferential
amount of shares of Preferred Stock outstanding as of the date of the
distribution upon the occurrence of such event. After payment has been made
to the holders of the Preferred Stock of the full preferential amounts to
which they shall be entitled, the holders of the Common Stock shall be
entitled to share ratably in the remaining assets, based on the number of
shares of Common Stock held.
(b) For purposes of this Section 4, a merger or
consolidation of the Corporation with or into any other corporation or
corporations, or the merger of any other corporation or corporations into the
Corporation, or the sale of all or substantially all of the assets of the
Corporation, or any other corporate reorganization, in which consolidation,
merger, sale of assets or reorganization the stockholders of the Corporation
receive distributions in cash or securities of another corporation or
corporations as a result of such consolidation, merger, sale of assets or
reorganization, shall be treated as a Liquidation Event unless the
stockholders of this Corporation immediately prior to such consolidation,
merger, sale of assets or reorganization hold or control more than fifty
percent (50%) of the voting equity securities of the successor or surviving
corporation immediately following such consolidation, merger, sale of assets
or reorganization, in which case such consolidation, merger, sale of assets
or reorganization shall not be treated as a Liquidation Event.
SECTION 5. Voting Rights. Except as otherwise required by law,
the Amended and Restated Certificate of Incorporation or Bylaws of the
Corporation or this Certificate of Designation, the holder of each share of
Common Stock issued and outstanding shall have one vote and the holder of
each share of Series B-1 Preferred Stock shall be entitled to the number of
votes
equal to the number of shares of Common Stock into which such share of Series
B-1 Preferred Stock could be converted, subject to the limits set forth in
Section 6(h) below, at the record date for determination of the stockholders
entitled to vote on such matters, or, if no such record date is established,
at the date such vote is taken or any written consent of stockholders is
solicited, such votes to be counted together with all other shares of stock
of the Corporation having general voting power and not separately as a class.
Holders of Common Stock and Series B-1 Preferred Stock shall be entitled to
notice of any stockholders' meeting in accordance with the Bylaws of the
Corporation. Fractional votes by the holders of Series B-1 Preferred Stock
shall not, however, be permitted and any fractional voting rights shall
(after aggregating all shares into which shares of Series B-1 Preferred Stock
held
by each holder could be converted) be rounded to the nearest whole number.
SECTION 6. Conversion. The holders of Series B-1 Preferred
Stock have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Subject to the limits set forth in
Section 6(h) below, each share of Series B-1 Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date
of issuance of such share at the office of the Corporation or any transfer
agent for the Series B-1 Preferred Stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing $80.00 by
the initial Series B-1 Conversion Price. The term "Series B-1 Conversion
Price" as used herein shall mean initially $4.00 and shall be subject to
adjustment as provided below.
(b) Automatic Conversion. Subject to the limits set forth
in Section 6(h) below, each share of Series B-1 Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Series B-1 Conversion Price for such series upon the election of holders of
at least a majority of the then outstanding shares of Series B-1 Preferred
Stock.
(c) Mechanics of Conversion. The mechanics of conversion
set forth in this Section 6(c) are subject to the limits set forth in Section
6(h) below. No fractional shares of Common Stock shall be issued upon
conversion of Series B-1 Preferred Stock. In lieu of any fractional shares
to which the holder would otherwise be entitled, the Corporation shall pay
cash
equal to such fraction multiplied by the then effective Series B-1 Conversion
Price. Before any holder of Series B-1 Preferred Stock shall be entitled to
convert the same into full shares of Common Stock and to receive certificates
therefor, the holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for
the Series B-1 Preferred Stock, and shall give written notice (in the form of
Exhibit A attached hereto) to the Corporation (the "Notice of Conversion") at
such office that the holder elects to convert the same and specifying the
date of conversion (the "Conversion Date"); provided, however, that in the
event
of an automatic conversion pursuant to Section 6(b), the outstanding shares
of
Series B-1 Preferred Stock shall be converted automatically without any
further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or
its transfer agent and provided further, that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common Stock
issuable upon such automatic conversion unless the certificates evidencing
such shares
of Series B-1 Preferred Stock are either delivered to the Corporation or its
transfer agent as provided above, or the holder notifies the Corporation or
its transfer agent that such certificates have been lost, stolen or destroyed
and executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such
certificates. The Corporation shall, as soon as practicable after such
delivery, or such agreement and indemnification in the case of a lost
certificate, issue and deliver at such office to such holder of Series B-1
Preferred Stock, a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable as the result
of a conversion into fractional shares of Common Stock. Such conversion
shall be deemed to have been made immediately prior to the close of business
on the
date of such surrender of the shares of Series B-1 Preferred Stock to be
converted, or in the case of automatic conversion then on the date of
election by a majority of the then outstanding shares of Series B-1 Preferred
Stock,
and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
(d) (1) Adjustment of Conversion Price of Series B-1
Preferred Stock. The Series B-1 Conversion Price shall be subject to
adjustment from time to time as follows:
(i) Adjustments for Subdivisions,
Combinations or Consolidation of Common Stock. In the event the outstanding
shares of Common Stock shall be subdivided by stock split, stock dividends or
otherwise, into a greater number of shares of Common Stock, the Series B-1
Conversion Price then in effect shall, concurrently with the effectiveness of
such subdivision, be proportionately decreased. In the event the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification
or otherwise, into a lesser number of shares of Common Stock, the Series B-1
Conversion Price then in effect shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased.
(ii) Adjustments for Stock Dividends and
Other Distributions. In the event the Corporation at any time or from time
to time makes, or fixes a record date for the determination of holders of
Common
Stock entitled to receive any distribution (excluding any repurchases of
securities by the Corporation not made on a pro rata basis from all holders
of any class of the Corporation's securities) payable in property or in
securities of the Corporation other than shares of Common Stock, and other
than as otherwise adjusted in this Section 6 or as provided in Section 3,
then and in each such event the holders of Series B-1 Preferred Stock shall
receive at the time of such distribution, the amount of property or the number
of
securities of the Corporation that they would have received had their Series
B-1 Preferred Stock been converted into Common Stock on the date of such
event.
(iii) Adjustments for Reclassification,
Exchange and Substitution. Except as provided in Section 4 upon any
liquidation, dissolution or winding up of the Corporation, if the Common
Stock issuable upon conversion of the Series B-1 Preferred Stock shall be
changed
into the same or a different number of shares of any other class or classes
of stock, whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares provided for above), each
share
of Series B-1 Preferred Stock shall thereafter be convertible into the number
of
shares of stock or other securities or property to which a holder of the
number of shares of Common Stock of the Corporation deliverable upon
conversion of such share of Series B-1 Preferred Stock shall have been
entitled upon such reorganization or reclassification.
(2) Adjustments of Series B-1 Conversion Price for
Diluting Issues. In addition to the adjustment of the Series B-1 Conversion
Price provided in Section 6(d)(1) above, the Series B-1 Conversion Price
shall be subject to further adjustment from time to time as follows:
(i) Special Definitions. For purposes of this
Section 6(e)(2), the following definitions shall apply:
(1) "Options" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.
(2) "Original Issue Date" shall mean September 2,
1998.
(3) "Convertible Securities" shall mean
securities convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall
mean all shares of Common Stock issued (or, pursuant to Section 6(d)(2)(iii),
deemed to be issued) by the Corporation after the Original Issue Date other
than shares of Common Stock issued or issuable:
(A) upon conversion of shares of the
Preferred Stock;
(B) to officers, directors and employees
of,
and consultants to, the Corporation pursuant to plans and arrangements
approved by the Board of Directors;
(C) as a dividend or other distribution on
the Preferred Stock or pursuant to clause (i), (ii) or (iii) of Section
6(d)(1);
(D) upon the exercise of options issued
prior to the Original Issue Date;
(E) to research or development
collaborators
or to banks or other institutional lendors 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; or
(F) upon exercise of warrants
outstanding on the Original Issue Date or warrants to be issued pursuant to
agreements outstanding on the Original Issue Date (including without
limitation the following warrants: warrant, dated as of November 22, 1997,
the warrants issued or issuable pursuant to the Exchange Agreement dated as
of
February __, 1999, the Securities Purchase Agreement dated as of September 2,
1998 and the Series C Preferred Stock Purchase Agreement, the warrant, dated
as of December 21, 1998 and any securities issued or issuable pursuant to the
Letter Agreement between the Company and Tanner Unman Securities, Inc., dated
as August 10, 1998;
(G) with the written approval of the
holders
of a majority of the outstanding Series B-1 Preferred;
(H) by way of dividend or other
distributions on securities referred to in clauses (A), (B), (C), (D), (E),
(F) and (G) above.
(ii) No Adjustment of Series B-1 Conversion Price.
No
adjustment in the Series B-1 Conversion Price of a particular share of Series
B-1 Preferred Stock shall be made in respect of the issuance of Additional
Shares of Common Stock unless the consideration per share for an Additional
Share of Common Stock issued or deemed to be issued by the Corporation is
less
than the Series B-1 Conversion Price in effect on the date of, and
immediately
prior to such issue, for such share of Series B-1 Preferred Stock.
(iii) Deemed Issue of Additional Shares of
Common Stock.
(1) Options and Convertible
Securities. Except as otherwise provided in Section 6(d)(2)(i) above, in the
event the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of any holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for a subsequent
adjustment
of such number) of Common Stock issuable upon the exercise of such Options
or,
in the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business on such record
date, provided that Additional Shares of Common Stock shall not be deemed to
have been issued unless the consideration per share (determined pursuant to
Section 6(d)(2)(v) below) of such Additional Shares of Common Stock would be
less than the Series B-1 Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may be, and
provided further that in any such case in which additional shares of Common
Stock are deemed to be issued:
(A) no further adjustment in the
Series B-1 Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities;
(B) if such Options or
Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the Corporation, or
increase or decrease in the number of shares of Common Stock issuable, upon
the exercise, conversion or exchange thereof, the Series B-1 Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed
to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities;
(C) upon the expiration of any
such Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Series B-1 Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon such expiration, be recomputed as if:
(I) in the case of
Convertible Securities or Options for Common Stock, the only additional
shares
of Common Stock issued were shares of Common Stock, if any, actually issued
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, and the consideration received therefor was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration actually received
by
the Corporation upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation upon such
conversion or exchange, and
(II) in the case of Options
for Convertible Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such
Options and the consideration received by the Corporation for the Additional
Shares of Common Stock deemed to have been then issued was the consideration
actually received by the Corporation for the issue of all such Options,
whether or not exercised, plus the consideration deemed to have been received
by the Corporation upon the issue of the Convertible Securities with respect
to which such Options were actually exercised;
(D) no readjustment pursuant to
clause (B) or (C) above shall have the effect of increasing the Series B-1
Conversion Price to an amount which exceeds the lower of (i) the Series B-1
Conversion Price on the original adjustment date, or (ii) the Series B-1
Conversion Price that would have resulted from any issuance of Additional
Shares of Common Stock between the original adjustment date and such
readjustment date; and
(E) in the case of any Options
which expire by their terms not more than thirty (30) days after the date of
issue thereof, no adjustment of the Series B-1 Conversion Price shall be made
until the expiration or exercise of all such Options.
(iv) Adjustment of Series B-1 Conversion
Price Upon Issuance of Additional Shares of Common Stock. In the event the
Corporation shall issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section
6(d)(2)(iii), but excluding stock dividends, subdivisions or split-ups that
are the subject of adjustment pursuant to Section 6(d)(i)) without
consideration or for a consideration per share less than the Series B-1
Conversion Price, in effect on the date of, and immediately prior to such
issue, then and in such event, such Series B-1 Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Series B-1 Conversion Price by a
fraction, the numerator of which shall be the sum of (i) the number of shares
of Common Stock outstanding immediately prior to such issue, (ii) the number
of shares of Common Stock issuable upon conversion of the Preferred Stock
outstanding immediately prior to such issue and (iii) the number of shares of
Common Stock which the aggregate consideration received by the Corporation
for
the total number of Additional Shares of Common Stock so issued would
purchase
at such Series B-1 Conversion Price; and the denominator of which shall be
the
sum of (i) the number of shares of Common Stock outstanding immediately prior
to such issue, (ii) the number of shares of Common Stock issuable upon
conversion of the Preferred Stock outstanding immediately prior to such issue
and (iii) the number of such Additional Shares of Common Stock so issued;
and
provided further that, for the purposes of this Section 6(d)(2)(iv), all
shares of Common Stock issuable upon exercise of outstanding Options or
conversion of outstanding Convertible Securities shall be deemed to be
outstanding, and immediately after any Additional Shares of Common Stock are
deemed issued pursuant to Section 6(d)(2)(iii), such Additional Shares of
Common Stock shall be deemed to be outstanding.
(v) Determination of Consideration. For
purposes of this Section 6(d)(2), the consideration received by the
Corporation for the issue of any Additional Shares of Common Stock shall be
computed as follows:
(1) Cash and Property: Such
consideration shall:
(A) insofar as it consists of
cash, be computed at the aggregate amount of cash received by the Corporation
(excluding amounts paid or payable for accrued interest or accrued dividends);
(B) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time
of
such issue, as determined in good faith by the Board of Directors; and
(C) in the event Additional
Shares
of Common Stock are issued together with other shares or securities or other
assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(A) and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities.
The consideration per share received by the Corporation for Additional Shares
of
Common Stock deemed to have been issued pursuant to Section 6(d)(2)(iii)(1),
relating to Options and Convertible Securities, shall be determined by
dividing
(x) the total amount, if any, received
or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment
of such consideration) payable to the Corporation upon the exercise of such
Option or the conversion or exchange of such Convertible Securities, or in
the
case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities by
(y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without
regard
to any provision contained therein for a subsequent adjustment of such
number)
issuable upon the exercise of such Options or the conversion or exchange of
such Convertible Securities.
(e) No Impairment. Except as provided in Section 8, the
Corporation will not, by amendment of its Amended and Restated Certificate of
Incorporation or this Certificate of Designation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Corporation but will at all times in good faith assist in
the
carrying out of all the provisions of this Section 6 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series B-1 Preferred Stock against
impairment.
(f) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Series B-1 Conversion Price pursuant
to
this Section 6, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Series B-1 Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series B-1 Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (i)
such
adjustments and readjustments, (ii) the Series B-1 Conversion Price at the
time in effect, and (iii) the number of shares of Common Stock and the
amount,
if any, of other property which at the time would be received upon the
conversion of Series B-1 Preferred Stock.
(g) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon
its Common Stock, whether in cash, property, stock or other securities,
whether or not a regular cash dividend and whether or not out of earnings or
earned surplus;
(ii) to effect any reclassification or
capitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iii) to merge or consolidate with or into any
other person or entity, or sell, lease or convey all or substantially all its
property or business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the
holders of Series B-1 Preferred Stock:
(1) at least twenty (20) days' prior
written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining rights
to vote in respect of the matters referred to in (ii) and (iii) above; and
(2) in the case of the matters referred to
in (ii) and (iii) above, at least twenty (20) days' prior written notice of
the date when the same shall take place (and specifying the date on which the
holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such event).
Each such written notice shall be delivered personally or given by first
class mail, postage prepaid, addressed to the holders of the Series B-1
Preferred Stock at the address for each such holder as shown on the books of
the Corporation.
(h) Limits on Conversion. Notwithstanding anything
herein to the contrary, the Series A-2, Series A-3, Series B-1 and Series C
Preferred Stock of the Company and the outstanding warrants to purchase
Common
Stock of the Company (issued or issuable to holders of such shares of
Preferred Stock pursuant to agreements outstanding as of February __, 1999)
(collectively, the "Securities") shall not be convertible into or exercisable
for (as the case may be) shares of Common Stock in excess of 1,533,709 shares
(the "19.9% Cap" or the "Allowed Conversion Shares"), unless the Company has
received stockholder approval to eliminate such 19.9% Cap at a duly held
meeting of the stockholders in calendar 1999 (the "Stockholder Approval").
Until Stockholder Approval has been obtained (or, if Stockholder Approval is
not obtained, then continuing thereafter) the 19.9% Cap shall apply and each
holder of Securities (each a "Holder") shall have the right to convert or
exercise its Securities only up to its pro rata portion of the Allowed
Conversion Shares. A Holder may waive in writing its right to convert or
exercise its pro rata portion of the Allowed Conversion Shares. In the event
that a Holder converts or exercises its Securities, then the number of
Allowed
Conversion Shares will be reduced by such amount.
SECTION 7. Status of Converted Stock. In case any shares of
Series B-1 Preferred Stock shall be repurchased or converted pursuant to
Section 6, the shares so repurchased or converted shall be cancelled and
shall
not be issued by the Corporation as Series B-1 Preferred and this Certificate
of Designation shall be appropriately amended to effect the corresponding
reduction in the Corporation's authorized Series B-1 Preferred Stock.
SECTION 8. Covenants. In addition to any other rights provided
by law, so long as at least twenty-five percent (25%) of the authorized
Series
B-1 Preferred Stock shall be outstanding, the Corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of not
less than a majority of the outstanding shares of Series B-1 Preferred Stock:
(a) amend or repeal any provision of the Corporation's
Amended or Restated Certificate of Incorporation, certificates of designation
or Bylaws if such action would materially and adversely alter or change the
preferences, rights, privileges or powers of, or the restrictions provided
for
the benefit of, the Series B-1 Preferred Stock; or
(b) authorize or issue shares of any class or series of
stock having any preference or priority as to dividends or assets superior to
or on parity with any such preference or priority of the Series B-1 Preferred
Stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> IN WITNESS WHEREOF, Superconductor Technologies Inc. has caused
this
Certificate to be signed by Peter Thomas, its Chief Executive Officer, this
_____ day of February, 1999.
M. Peter Thomas
Chief Executive Officer
<PAGE>EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Series B-1 Preferred Stock)
The undersigned hereby irrevocably elects to convert ______ shares
of Series B-1 Preferred Stock, represented by stock certificate No(s).
__________ (the "Preferred Stock Certificates") into shares of common stock
("Common Stock") of Superconductor Technologies Inc. (the "Corporation")
according to the conditions of the Certificate of Designation of Series B-1
Preferred Stock, as of the date written below. If securities are to be
issued
in the name of a person other than the undersigned, the undersigned will pay
all transfer taxes payable with respect thereto and is delivering herewith
such certificates. No fee will be charged to the Holder for any conversion,
except for transfer taxes, if any. A copy of each Preferred Stock Certificate
is attached hereto (or evidence of loss, theft or destruction thereof).
The undersigned represents and warrants that all offers and sales
by
the undersigned of the securities issuable to the undersigned upon conversion
of the Series B-1 Preferred Stock shall be made pursuant to registration of
the securities under the Securities Act of 1933, as amended (the "Act"), or
pursuant to an exemption from registration under the Act.
Date of Conversion:___________________________
Applicable Series B-1 Conversion Price:____________________
Number of Shares of
Common Stock to be Issued:_____________________
Signature:____________________________________
Name:_______________________________________
Address:______________________________________
*The Corporation is not required to issue shares of Common Stock until the
original Series B-1 Preferred Stock Certificate(s) (or evidence of loss,
theft
or destruction thereof) to be converted are received by the Corporation or
its
Transfer Agent.
<PAGE>EXHIBIT E
SUPERCONDUCTOR TECHNOLOGIES, INC.
LETTER OF TRANSMITTAL
TO: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Jay Hansen
Telephone: (650) 493-9300
February 26, 1999
Ladies and Gentlemen:
The undersigned hereby surrenders all enclosed stock certificates
representing shares of the Series A, A-1, and B Preferred Stock (the
"Preferred Stock") of Superconductor Technologies, Inc. (the "Company") and
warrants to purchase Common Stock of the Company for exchange and
cancellation
pursuant to that certain Exchange Agreement dated as of February 26, 1999.
Enclosed herewith are the following stock certificate(s) and/or warrant(s) of
the Company:
Registered Holder(s):
Cert. Number Class or Series of Stock or Warrant
Number of Shares
Signatures
Stockholder Signature Stockholder Signature
Print Stockholder Name Print Stockholder Name
Taxpayer Identification No. Taxpayer Identification
No.
Date Daytime telephone number,
including area code
INSTRUCTIONS
1. If this Letter of Transmittal is signed by the Registered
Holder(s) of the certificate(s) and/or warrant(s) surrendered hereby, the
signature(s) must correspond with the name as written on the face of the
certificate(s) without alteration, enlargement or any change whatsoever.
2 If any shares or warrants are owned of record by two or more joint
owners, all such owners must sign the Letter of Transmittal.
3 If any shares or warrants are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate copies of this Letter of Transmittal and any necessary or
required documents as there are different registrations of certificates.
4 If the Letter of Transmittal or any certificates or warrants are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing.
5. Letter of Transmittal Required: Lost Certificate(s). You will
not
receive the exchange certificate for your shares and/or warrants unless and
until the Letter of Transmittal, duly completed and signed, is delivered
together with the certificate(s) and/or warrant(s) and any required
accompanying evidence of authority. If the certificate(s) and/or warrant(s)
have been lost or destroyed, such should be indicated on the face of the
Letter of Transmittal. In such event, please complete, sign and return with
the Letter of Transmittal the attached Affidavit of Lost Stock Certificate in
order to effectively surrender the certificate(s) and/or warrant(s)
represented by such lost or destroyed certificate(s) and/or warrant(s). Note
that a separate Lost Stock/Warrant Affidavit must be completed and signed for
each lost or destroyed stock certificate and/or warrant.
<PAGE>LOST STOCK/WARRANT AFFIDAVIT
1. The undersigned is the holder of: (i) _________ shares of Series
____
Preferred Stock of Superconductor Technologies, Inc. (the "Company"), issued
on ____________, 19___ represented by Certificate Number ______ (the
"Certificate") and/or (ii) a warrant to purchase ___________ shares of the
Company's Common Stock.
2. The undersigned has examined his or her records and, after diligent
search, is unable to find the Certificate and/or Warrant and believes said
Certificate and/or Warrant to be lost. Accordingly, the undersigned
certifies
that the Certificate and/or Warrant shall be deemed surrendered for
cancellation from this day forth.
3. The undersigned has not assigned, transferred, sold or pledged all
or
any part of the Certificate and/or Warrant.
4. The undersigned releases the Company from any and all liability
relating to the loss of the Certificate and/or Warrant, or the issuance of a
new certificate and/or warrant. The undersigned agrees to defend and
indemnify and hold the Company harmless from any damage or loss caused by or
in any way relating to the loss of the Certificate and/or Warrant, or the
issuance of a new certificate and/or warrant.
5. In the event of discovery of the original Certificate and/or
Warrant,
the undersigned agrees to return it promptly to the Company, marked
"canceled."
6. The undersigned hereby authorizes any officer of the Company to
issue
(i) a new stock certificate for _________ shares of Series _____ Preferred
Stock to replace said lost Certificate and/or (ii) a new warrant to replace
said lost Warrant.
DATE:
(signature)
(print name)
(address)
<PAGE>EXHIBIT F
NEW WARRANT
<PAGE>
EXHIBIT G
SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT<PAGE>EXHIBIT H
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
<PAGE>EXHIBIT I
FORM OF WARRANT
<PAGE>EXHIBIT J
OPINION OF COUNSEL
SUPERCONDUCTOR. TECHNOLOGIES, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of March 5, 1999 by and among Superconductor Technologies Inc., a
Delaware corporation (the "Company"), and Wilmington Securities, Inc. (the
"Purchaser").
Section 1 Authorization and Sale of Preferred Stock; Issuance of Warrants
1.1 Authorization
. The Company will, prior to the Closing (as defined below), authorize the
sale and issuance of (i) 41,667 shares (the "Shares") of the Company's Series
C Preferred Stock ("Series C Preferred"), having the rights, privileges and
preferences as set forth in the Series C Preferred Stock Certificate of
Designation (the "Certificate") in the form attached to this Agreement as
Exhibit A and (ii) the Warrants (as defined below) to purchase up to 120,000
shares of the Common Stock (as defined below) at a price of $4.50 per share.
1.2 Sale of Shares; Issuance of Warrants. Subject to the terms and
conditions of this Agreement, the Purchaser agrees to purchase and the Company
agrees to sell and issue to the Purchaser: (a) 41,667 Shares, at a cash
price of $72.00 per share; and (b) a warrant or warrants in the form
attached to this Agreement as Exhibit B (the "Warrants") which shall permit the
Purchaser to initially purchase 120,000 shares of Company Common Stock, at an
exercise price of $4.50 per share.
Section 2 Closing Dates; Delivery
2.1 Closing
. The closing (the "Closing") for the purchase and sale of the Shares and the
issuance of the Warrants hereunder shall take place on March __, 1999. The
Closing shall be held at the offices of Wilson Sonsini Goodrich & Rosati, 650
Page Mill Road, Palo Alto, California, or at such other time and place upon
which the Company and the Purchaser shall agree.
2.2 Delivery
. At the Closing, the Company will deliver to the Purchaser a certificate
registered in the Purchaser's name representing the number of Shares that the
Purchaser is purchasing against payment of $3,000,000 (the "Purchase Price")
by cashier's or certified check payable to the Company or wire transfer of
immediately available funds per the Company's instructions. Partial payment
of the Purchase Price shall be made by surrender of the Demand Promissory
Notes issued by the Company to the Purchaser dated February 17, 1999 and
February 25, 1999 (the "Promissory Notes"). At the Closing, the Company will
deliver to the Purchaser a Warrant evidencing the right to purchase 120,000
shares of Company Common Stock in the form attached as Exhibit B.
Section 3 Representations and Warranties of the Company
Except as set forth on Schedule of Exceptions provided to the Purchaser, the
Company represents and warrants to the Purchaser as of the date of this
Agreement as follows:
3.1 Organization and Standing; Certificate and Bylaws
. 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").
3.2 Corporate Power
. The Company has all requisite legal and corporate power and authority to
execute and deliver this Agreement and that certain Second 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").
3.3 Subsidiaries
. 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.
3.4 Capitalization
. (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
7,724,841 shares are issued and outstanding as of March __ 1999, and (ii)
2,000,000 shares of Preferred Stock, of which (1) 645,833 shares have been
designated "Series A Preferred," none of which are issued and outstanding, (2)
125,000 shares have been designated "Series A-1 Preferred," none of which are
issued and outstanding, (3) 64,584 shares have been designated "Series A-2
Preferred," all of which are issued and outstanding, (4) 12,500 shares have
been designated "Series A-3 Preferred," all of which are issued and
outstanding, (5) 1,000,000 shares have been designated "Series B Preferred",
none of which are issued and outstanding, (6) 50,000 shares have been
designated "Series B-1 Preferred", all of which are issued and outstanding,
and (7) 41,667 shares have been designated "Series C Preferred," none of which
were issued and outstanding prior to the Closing. The Company by action of
its Board of Directors will eliminate the series of Preferred Stock designated
"Series A Preferred Stock," "Series A-1 Preferred Stock," and "Series B
Preferred Stock" and all shares of Preferred Stock so designated shall revert
to authorized and undesignated shares of Company Preferred Stock. 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)
41,667 shares of Series C Preferred Stock for issuance hereunder, (ii)
3,375,020 shares of Common Stock for issuance upon conversion of all shares of
Company Preferred Stock to be issued and outstanding following the Closing,
consisting of (1) 1,291,680 shares for issuance upon conversion of Series A-2
Preferred Stock, (2) 250,000 shares for issuance upon conversion of Series A-3
Preferred Stock, (3) 1,000,000 shares for issuance upon conversion of Series
B-1 Preferred Stock, and (4) 833,340 shares for issuance upon conversion of
Series C Preferred Stock, (iii) 166,667 shares of Common Stock for issuance
upon exercise of warrants issued in connection with the Series A Preferred
Stock financings, (iv) 120,000 shares of Common Stock for issuance upon
exercise of the Warrants issued in connection with the Series B Preferred
Stock financing, (v) 120,000 shares of Common Stock for issuance upon exercise
of the Warrants, (vi) 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) 1,969,690 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 and 1998 Nonstatutory Option Plan, of which options to purchase 1,868,248
shares are issued and outstanding and (viii) a total of 150,000 shares of
Common Stock for issuance upon exercise of certain outstanding warrants as
identified in the Schedule of Exceptions.
(c) 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 Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation"), a copy of which was
provided to the Purchaser in connection with the Company's Series B Preferred
Stock financing, the Certificate and the Certificates of Designations filed in
connection with the Exchange Agreement. 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.
3.5 Authorization
. 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
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 1.10 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.
3.6 Financial Statements
. The Company has delivered to the Purchaser copies of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 and Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 28, 1998, June 27,
1998, and September 26, 1998 (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 Reports, to footnotes and normal year-end adjustments.
3.7 Changes
. 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.
3.8 Material Obligations
. 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 September 26, 1998, in the ordinary
course of business which have not been, either in any case or in the
aggregate, material.
3.9 Material Contracts and Commitments
. 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 (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.
3.10 Intellectual Property, Trademarks, etc
. The Company has the right to use, free and clear of all liens, charges,
claims and restrictions, all intellectual property, patents, trademarks,
service marks, trade names, copyrights, licenses and rights necessary to the
business of the Company as presently conducted, except to the extent that a
Material Adverse Effect could not reasonably be expected to result. To the
Company's knowledge, the Company is not infringing upon or otherwise acting
adversely to the right or claimed right of any other person under or with
respect to any such intellectual property, patents, trademarks, service marks,
trade names, copyrights, licenses or rights.
3.11 Title to Properties and Assets; Liens, etc
. The Company has good and marketable title to its properties and assets, and
has good title to all its leasehold interests, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (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.
3.12 Compliance with Other Instruments, None Burdensome, etc
. 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.
3.13 Litigation, etc
. 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.
3.14 Registration Rights
. Except as set forth in the Rights Agreement attached hereto as Exhibit C,
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.
3.15 Governmental Consent, etc
. No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required
in connection with the valid execution and delivery of 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.
3.16 Offering
. 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").
3.17 Brokers or Finders
. Except as disclosed in the Disclosure Schedule, the Company has not engaged
any brokers, finders or agents, and the Purchaser has not incurred, and will
not incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with the Agreements.
3.18 Tax Returns and Payments
. 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.
3.19 Employee Matters
. The Company does not have any collective bargaining agreements with any of
its employees and no labor union organizing activity is pending or threatened
with respect to the Company.
3.20 Disclosure
. To the best of the Company's knowledge, this Agreement (including the
Exhibits hereto) does not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained herein not misleading in light of the circumstances under which they
were made.
Section 4 Representations and Warranties of the Purchaser
The Purchaser hereby 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:
4.1 Experience; Speculative Nature of Investment
. 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.
4.2 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 C 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.
4.3 Rule 144
. 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.
4.4 No Public Market
. The Purchaser understands that no public market now exists for the Warrants
and the Series C 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 C Preferred.
4.5 Access to Data
. 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.
4.6 Authorization
. 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.
4.7 Brokers or Finders
. 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.
4.8 Tax Liability
. 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 Purchaser's obligations to purchase the Shares at the Closing are, unless
waived by the Purchaser, subject to the fulfillment of the following
conditions:
5.1 Representations and Warranties Correct
. 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.
5.2 Covenants
. 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.
5.3 Blue Sky
. 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.
5.4 Certificate of Designation
. The Certificate shall have been duly authorized, executed and filed with
the Secretary of State of the State of Delaware.
5.5 Rights Agreement
. The Company and the Purchaser shall have executed and delivered the Rights
Agreement.
5.6 Compliance Certificate
. 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 and 5.2 hereof.
5.7 Compliance with Law
. 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.
5.8 Opinion of Company's Counsel
. Purchaser 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 E.
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:
6.1 Representations
. The representations and warranties made by the Purchaser in Section 4
hereof shall be true and correct as of the Closing Date.
6.2 Covenants
. 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.
6.3 Blue Sky
. 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.
6.4 Certificate of Designation
. The Certificate shall have been duly authorized, executed and filed with
the Secretary of State of the State of Delaware.
6.5 Rights Agreement
. The Company and the Purchaser shall have executed and delivered the Rights
Agreement.
6.6 Compliance with Law
. 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.
6.7 Surrender of Promissory Notes
. The Purchaser shall surrender the Promissory Notes upon its terms as
partial payment of the Purchase Price.
Section 7 Covenants
7.1 Board of Directors
. The Company agrees that, provided that the Company has received Stockholder
Approval (as defined in Section 6(h) of the Certificate), at the first meeting
of the Company's Board of Directors following the 1999 Annual Meeting of
Stockholders, the Board of Directors shall expand its size by two directors
and appoint Joseph C. Manzinger and Richard M. Johnston (or such other
designees of the Purchaser who shall be reasonably acceptable to the Company)
(the "Purchaser Designees") to fill the vacancies created by such expansion.
The Company further agrees, provided the Company has received Stockholder
Approval and provided that the Purchaser then holds at least 33,750 shares of
Preferred Stock of the Company, that the Company shall, subject to applicable
law, use its reasonable best efforts to obtain the election of the Purchaser
Designees at the next Annual Stockholder Meeting of the Company to serve until
such person's successor has been duly appointed. In connection with their
service on the Company's Board of Directors, the Purchaser Designees shall be su
bject to and comply with the confidentiality provisions of the Purchaser under
Section 8 of this Agreement. The Purchaser Designees shall also be subject to
the same general conflicts-of-interest rules applicable to all other members
of the Board of Directors and under such rules their access to information and
participation in discussions may be reasonably restricted where a majority of
non-interested directors deem a conflict or potential conflict to exist. At
any time the Purchaser is no longer entitled to Board representation pursuant
to this Section 7.1, then at the request of the Company, the Purchaser
Designees shall immediately resign and shall immediately cease attending any
meetings of the Board of Directors.
7.2 Stockholder Approval
. The Company shall use its best efforts to obtain Stockholder Approval (as
defined Section 6(h) of the Certificate) and to obtain approval by the
Company's stockholders of the obligations of the Company under Section 7.1 of
this Agreement at the Company's 1999 Annual Meeting of Stockholders to be held
on or before June 2, 1999.
Section 8 Confidential Information
8.1 Confidential Business Information
. The Purchaser covenants and agrees that it shall maintain the
confidentiality of all non-public information related to the business of the
Company made available to it and/or any of its representatives by the Company
("Confidential Business Information") and shall not utilize any Confidential
Business Information in connection with purchases or sales of the Company's
securities except in compliance with applicable state and federal anti-fraud
statutes. The Purchaser further covenants and agrees that it shall not
disclose any Confidential Business Information to any person or entity without
the prior written consent of the Company. The term "Purchaser" as used in
this Section 8.1 includes all partners, officers, directors, affiliates,
employees, attorneys, accountants and other agents and representatives of the
Purchaser. Notwithstanding the above, Confidential Business Information shall
not include (i) information known to the public generally, (ii) information
known to the Purchaser from an independent source prior to the receipt of such
information from the Company and (iii) information required to be disclosed by
the Purchaser by court order or otherwise required by law, provided, however,
that in the event of a required disclosure pursuant to this clause (iii), the
Purchaser shall give the Company prompt written notice of any such requirement
so that the Company may seek a protective order or other appropriate remedy.
The Purchaser agrees that violation of this Section 8.1 would cause immediate
and irreparable damage to the business of the Company, and consent to the
entry of immediate and permanent injunctive relief for any violation hereof.
Section 9 Miscellaneous
9.1 Governing Law
. This Agreement shall be governed in all respects by the internal laws of
the State of Delaware.
9.2 Survival
. The representations, warranties, covenants and agreements made herein shall
survive any investigation made by the Purchaser and the closing of the
transactions contemplated hereby.
9.3 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; provided, however, that the rights
of the Purchaser to purchase the Shares and obtain the Warrants on such
purchase shall not be assignable without the prior written consent of the
Company.
9.4 Entire Agreement; Amendment
. 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 party against whom enforcement of any such
amendment, waiver, discharge or termination is sought; provided, however, that
the Purchaser may, with the Company's prior written consent, waive, modify, or
amend any provision hereof.
9.5 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
the Purchaser, at such Purchaser's address, on the signature page 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.
9.6 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 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.
9.7 California Corporate Securities Law
. 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.
9.8 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.
9.9 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.
9.10 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.
9.11 Expenses
. 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.
[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
"PURCHASER"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title:
Wilmington Securities, Inc.
824 Market Street, Suite 900
Wilmington, DE 19801
Attn: Andrew H. McQuarrie
[Signature Page to Purchase Agreement] <PAGE>
SUPERCONDUCTOR TECHNOLOGIES INC.
460 Ward Drive
Suite F
Santa Barbara, California 93111
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
March 5, 1999
Second Amended and Restated Stockholders Agreement
SUPERCONDUCTOR TECHNOLOGIES INC.
SECOND AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
This Second Amended and Restated Stockholder Rights Agreement (the
"Agreement") is made as of February 26, 1999 between Superconductor
Technologies Inc., a Delaware corporation (the "Company"), the holders of the
Company's Series A and A-1 Preferred Stock (the "Series A and A-1 Holders"),
the holders of the Company's Series A-2 and A-3 Preferred Stock pursuant to
the Exchange Agreement, dated as of February 26, 1999, (the "Exchange
Agreement") and, upon the consummation of the Series C Preferred Stock
financing, the holders of the Company's Series C Preferred Stock. The holders
of the Company's Series A-2 and A-3 Preferred Stock, together with the
purchasers of the Company's Series C Preferred Stock after the Closing (as
defined in the Series C Preferred Stock Purchase Agreement) are, collectively,
the "New Holders."
RECITALS
A. The Company and the Series A and A-1 Holders entered into that
certain Amended and Restated Stockholder Rights Agreement, dated as of August
11, 1998 (the "Existing Agreement"), which established certain terms and
conditions upon which the Company's Series A and A-1 Preferred Stock and
certain warrants are held by such holders, as set forth more particularly in
the Existing Agreement.
B. In connection with the Exchange Agreement, the Company and the
Series A and A-1 Holders have agreed, upon the terms and subject to the
conditions contained therein, to exchange their shares of the Company's Series
A and A-1 Preferred Stock and related warrants held by the Holders for shares
of the Company's Series A-2 and A-3 Convertible Preferred Stock and related
warrants that are convertible into the Conversion Stock (as defined below),
upon the terms and subject to the limitations and conditions set forth in the
Certificates of Designations, Rights, Preferences, Privileges and Restrictions
with respect to the Series A-2 and A-3 Preferred Stock (the "Certificates of
Designation").
C. To induce the Series A and A-1 Holders to execute and deliver the
Exchange Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statue (collectively, the
"1933 Act"), and applicable state securities laws.
D. Because the Company anticipates consummating an equity financing
in the future with a proposed new Series C Preferred Stock, the Company
desires to provide a further inducement to the potential purchasers to
purchase the Series C Preferred Stock by establishing certain terms and
conditions upon which such Series C Preferred Stock and related warrants would
be held by such purchasers.
E. The Company and the Series A and A-1 Holders desire to amend and
restate the Existing Agreement in its entirety, as set forth herein, to make
the New Holders party thereto.
NOW, THEREFORE, the parties amend and restate the Existing Agreement in
its entirety to read as follows:
SECTION 1
Restrictions on Transferability of Securities;
Compliance with Securities Act; Registration Rights
1.1 Restrictions on Transferability. The Preferred Stock, the
Conversion Stock (as defined below) and the Warrants (as defined below) 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 (as defined below). 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.
1.2 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Closing Date" shall mean, (i) as to the holders of Series A-2 and
A-3 Preferred Stock, the date of the Exchange Agreement and (ii) as to the
holders of Series C Preferred Stock, the date of the first purchase and sale
of Series C Preferred Stock and issuance of warrants pursuant to the Series C
Stock Purchase Agreement.
"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 New Holder 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 New Holders in the aggregate of
greater than 50% of the Registrable Securities.
"Preferred Stock" shall, collectively, mean the Series A-2 and A-3
Preferred Stock issued pursuant to the Exchange Agreement and, after the
Closing (as defined in the Series C Preferred Stock Purchase Agreement), the
Series C Preferred Stock issued pursuant to the Series C Preferred Stock
Purchase 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 and 1.6
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.
"Warrants" shall mean, collectively, the warrants issued pursuant to
the Exchange Agreement and the Series C Preferred Stock Purchase Agreement.
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 New Holder and 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, (iii) any transfer by any Holder to (A) any individual or entity
controlled by, controlling, or under common control with, such Holder or (B)
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
registration, 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) Prior to September 26, 1999;
(C) 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;
(D) 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;
(E) 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 (E), 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 among all 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. 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.
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 among all the
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holder at the time of filing the
Registration Statement. 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. 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 Limitations on Subsequent Registration Rights. From and after
the Closing Date, 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 (i) such new registration
rights, including standoff obligations, are on a pari passu basis with those
rights of the Holders hereunder, or (ii) such new registration rights,
including standoff obligations, are subordinate to the registration rights
granted Holders hereunder.
1.8 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, 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.
1.9 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.
1.10 Indemnification.
(a) The Company will indemnify each Holder, each of its officers
and directors 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
1.10 (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 1.10 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).
1.11 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 1.11.
1.12 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.
1.13 Transfer of Registration Rights. The rights to cause the
Company to register securities granted Holders under Sections 1.5 and 1.6 may
be assigned to a transferee or assignee 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 assignee or transferee acquires at least 100,000 shares of Registrable
Securities.
1.14 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 also agree
to such restrictions.
1.15 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 Purchaser 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 Purchaser 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 Purchaser 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 Purchaser 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 Purchaser 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
partnership or corporation or to a partner or retired partner of such S
Purchaser or affiliated partnership or corporation.
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 Purchaser at any time holds less than 500,000
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 Purchaser;
(ii) if a Purchaser converts or has at any time
converted all of the Preferred Stock owned by such Purchaser, the right of
first refusal shall terminate as to such Purchaser;
(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 Series A
Agreement, the Series A-1 Agreement and the other documents delivered pursuant
hereto on the Closing Date for each of the Series A Agreement and the Series
A-1 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. 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 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 Purchaser, at such Purchaser's address, as
shown on the stock records of the Company, or at such other address as such
Purchaser 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.
[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 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title:
"SERIES A-1 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title:
"SERIES A-2 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title:
"SERIES A-3 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Andrew H. McQuarrie
Title:
"SERIES C HOLDER"
By:
Name: Andrew H. McQuarrie
Title:
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Amended and Restated Registration Rights Agreement ("Agreement"), dated
as of February 26, 1999, by and among Superconductor Technologies Inc., a
Delaware corporation, with its headquarters located at 460 Ward Drive, Suite
F, Santa Barbara, California 93111-2310 (the "Company"), and each of the
undersigned (together with their respective affiliates and any assignee or
transferee of all of their respective rights hereunder, the "Initial
Investors") pursuant to the Exchange Agreement by and among the parties hereto
and the holders of the Company's Series A-2 and Series A-3 Preferred Stock of
even date herewith (the "Exchange Agreement").
BACKGROUND
A. The Company and the Initial Investors entered into that certain
Registration Rights Agreement dated as of September 2, 1998 (the "Existing
Agreement"), which established certain terms and conditions upon which the
Company's Series B Preferred Stock and certain warrants are held by the
Initial Investors, as set forth more particularly in the Existing Agreement.
B. In connection with the Exchange Agreement, the Company and the Initial
Investors have agreed, upon the terms and subject to the conditions contained
therein, to exchange the shares of the Company's Series B Convertible
Preferred Stock and related warrants held by the Initial Investors for shares
of the Company's Series B-1 Convertible Preferred Stock (the "Preferred
Stock") and related warrants that are convertible into shares (the "Conversion
Shares") of the Company's common stock, par value $.001 per share (the "Common
Stock"), upon the terms and subject to the limitations and conditions set
forth in the Certificate of Designations, Rights, Preferences, Privileges and
Restrictions with respect to the Preferred Stock (the "Certificate of
Designation").
C. To induce the Initial Investors to execute and deliver the Exchange
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"),
and applicable state securities laws;
D. The Company and the Initial Investors desire to amend and restate the
Existing Agreement in its entirety, as set forth herein, to make the holders
of the Company's Series B-1 Preferred Stock party thereto.
NOW, THEREFORE, the parties amend and restate the Existing Agreemenet in its
entirety to read as follows:
1. DEFINITIONS.
a. As used in this Agreement, the following terms shall have the following
meanings:
(i) "Investors" means the Initial Investors and any transferee or assignee
who becomes bound by the provisions of this Agreement in accordance with
Section 9 hereof.
(ii) "register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or
any successor rule providing for offering securities on a continuous basis
("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").
(iii) "Registrable Securities" means the Conversion Shares (including any
additional shares that may be issued pursuant to the Certificate of
Designation) and Warrant Shares issued or issuable and any shares of capital
stock issued or issuable as a dividend on or in exchange for or otherwise with
respect to any of the foregoing, provided, however, that such 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 1933
Act so that all transfer restrictions and restrictive legends with respect
thereto are removed upon the consummation such sale.
(iv) "Registration Statement" means a registration statement of the
Company under the 1933 Act.
b. Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Securities Purchase Agreement
(the "Securities Purchase Agreement") dated as of September 2, 1999 entered
into between the Company and the purchasers identified therein.
2. REGISTRATION.
a. Mandatory Registration. The Company shall prepare, and, on or prior to
the date which is sixty (60) days after the date of the Closing under and as
defined in the Exchange Agreement (the "Closing Date"), file with the SEC a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of the Registrable Securities) covering the resale of the
Registrable Securities underlying the Preferred Stock and Warrants issued or
issuable pursuant to the Securities Purchase Agreement, which Registration
Statement, to the extent allowable under the 1933 Act and the Rules
promulgated thereunder (including Rule 416), shall state that such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Preferred
Stock and exercise of the Warrants (i) to prevent dilution resulting from
stock splits, stock dividends or similar transactions or (ii) by reason of
changes in the Conversion Price of the Preferred Stock in accordance with the
terms thereof or the exercise price of the Warrants in accordance with the
terms thereof. The number of shares of Common Stock initially included in
such Registration Statement shall be no less than the sum of the number of
Conversion Shares and Warrant Shares that are then issuable upon conversion of
the Preferred Stock and the exercise of the Warrants, without regard to any
limitation on the Investor's ability to convert the Preferred Stock or
exercise the Warrants. The Company acknowledges that the number of shares
initially included in the Registration Statement represents a good faith
estimate of the maximum number of shares issuable upon conversion of the
Preferred Stock and exercise of the Warrants.
b. Payments by the Company. The Company shall use its best
efforts to obtain effectiveness of the Registration Statement as soon as
practicable. If (i) the Registration Statement(s) covering the Registrable
Securities required to be filed by the Company pursuant to Section 2(a) hereof
is not filed within sixty (60) days after the Closing Date or declared
effective by the SEC within one hundred twenty (120) days after the Closing
Date or if, after the Registration Statement has been declared effective by
the SEC, sales cannot be made pursuant to the Registration Statement (except
as a result of an Allowed Delay (as defined in section 3(f)), or (ii) the
Common Stock is not listed or included for quotation on the Nasdaq National
Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the New
York Stock Exchange (the "NYSE") or the American Stock Exchange (the "AMEX")
after being so listed or included for quotation, then the Company will make
payments to the Investors in such amounts and at such times as shall be
determined pursuant to this Section 2(b) as partial relief for the damages to
the Investors by reason of any such delay in or reduction of their ability to
sell the Registrable Securities (which remedy shall not be exclusive of any
other remedies available at law or in equity). The Company shall not have any
obligation to pay to the Investors any amounts provided for in this Section
2(b) during an Allowed Delay. The Company shall pay to each holder of the
Preferred Stock or Registerable Securities an amount equal to the Purchase
Price under and as defined in the Securities Purchase Agreement paid in
respect of such Preferred Stock (and, in the case of holders of Registerable
Securities, the purchase price for the Preferred Stock from which such
Registerable Securities were converted) ("Aggregate Share Price") multiplied
by the Applicable Percentage (as defined below) multiplied by the number of
months (without duplication), prorated for partial months during (1) which the
events described in clauses (i) or (ii) above have occurred and are
continuing, (2) sales cannot be made pursuant to the Registration Statement
after the Registration Statement has been declared effective (including,
without limitation, when sales cannot be made by reason of the Company's
failure to properly supplement or amend the prospectus included therein in
accordance with the terms of this Agreement, but excluding any days during an
Allowed Delay (as defined in Section 3(f)), or (3) that the Common Stock is
not listed or included for quotation on the Nasdaq, Nasdaq SmallCap, NYSE or
AMEX or that trading thereon is halted after the Registration Statement has
been declared effective. The term "Applicable Percentage" means 2 hundredths
(.02). Such amounts shall be paid in cash or, at the Company=s option, paid
in shares of Preferred Stock, calculated based on the Purchase Price
applicable to such shares and thereafter be convertible into Common Stock at
the "Conversion Price" (as defined in the Certificate of Designation) in
accordance with the terms of the Preferred Stock. Any shares of Common Stock
issued upon conversion of such amounts shall be Registrable Securities.
Payments of cash pursuant hereto shall be made within ten (10) days after the
end of each period that gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) days, interim payments shall be
made for each such thirty (30) day period.
c. Piggy-Back Registrations. Subject to the last sentence of this Section
2(c), if at any time prior to the expiration of the Registration Period (as
hereinafter defined) the Company shall file with the SEC a Registration
Statement relating to an offering for its own account or the account of others
under the 1933 Act of any of its equity securities (other than on Form S-4 or
Form S-8 or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans), the Company shall send to each Investor who is entitled to
registration rights under this Section 2(c) written notice of such
determination and, if within twenty (20) days after the effective date of such
notice, such Investor shall so request in writing, the Company shall include
in such Registration Statement all or any part of the Registrable Securities
such Investor requests to be registered, except that if, in connection with
any underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which such Investor has
requested inclusion hereunder as the underwriter shall permit. Any exclusion
of Registrable Securities shall be made pro rata among the Investors seeking
to include Registrable Securities in proportion to the number of Registrable
Securities sought to be included by such Investors; provided, however, that
the Company shall not exclude any Registrable Securities unless the Company
has first excluded all outstanding securities, the holders of which are not
entitled to inclusion of such securities in such Registration Statement or are
not entitled to pro rata inclusion with the Registrable Securities; and
provided, further, however, that, after giving effect to the immediately
preceding proviso, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the right to include such
securities in the Registration Statement other than holders of securities
entitled to inclusion of their securities in such Registration Statement by
reason of demand registration rights. No right to registration of Registrable
Securities under this Section 2(c) shall be construed to limit any
registration required under Section 2(a) hereof. If an offering in connection
with which an Investor is entitled to registration under this Section 2(c) is
an underwritten offering, then each Investor whose Registrable Securities are
included in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to the
provisions of this Agreement, on the same terms and conditions as other shares
of Common Stock included in such underwritten offering. Notwithstanding
anything to the contrary set forth herein, the registration rights of the
Investors pursuant to this Section 2(c) shall only be available in the event
the Company fails to timely file, obtain effectiveness or maintain
effectiveness of the Registration Statement to be filed pursuant to Section
2(a) in accordance with the terms of this Agreement.
d. Eligibility for Form S-3. The Company represents and warrants that it
meets the registrant eligibility and transaction requirements for the use of
Form S-3 for registration of the sale by the Initial Investors and any other
Investors of the Registrable Securities and the Company shall file all reports
required to be filed by the Company with the SEC in a timely manner so as to
maintain such eligibility for the use of Form S-3.
3. OBLIGATIONS OF THE COMPANY.
In connection with the registration of the Registrable Securities, the Company
shall have the following obligations:
a. The Company shall prepare promptly, and file with the SEC not later
than sixty (60) days after the Closing Date, a Registration Statement with
respect to the number of Registrable Securities provided in Section 2(a), and
thereafter use its best efforts to cause such Registration Statement relating
to Registrable Securities to become effective as soon as possible after the
filing thereof, and keep the Registration Statement effective pursuant to Rule
415 at all times until such date as is the earlier of (i) the date on which
all of the Registrable Securities have been sold and (ii) the date on which
the Registrable Securities (in the opinion of counsel to the Initial
Investors) may be immediately sold without restriction (including without
limitation as to volume by each holder thereof) without registration under the
1933 Act (the "Registration Period").
b. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration
Statement as may be necessary to keep the Registration Statement effective at
all times during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement. In the event the number
of shares available under a Registration Statement filed pursuant to this
Agreement is insufficient to cover all of the Registrable Securities issued or
issuable upon conversion of the Preferred Stock and exercise of the Warrants,
the Company shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefore, if applicable), or both, so
as to cover all of the Registrable Securities, in each case, as soon as
practicable, but in any event within twenty (20) business days after the
necessity therefor arises (based on the market price of the Common Stock and
other relevant factors on which the Company reasonably elects to rely). The
Company shall use its commercially reasonable efforts to cause such amendment
and/or new Registration Statement to become effective as soon as practicable
following the filing thereof. The provisions of Section 2(c) above shall be
applicable with respect to such obligation, with the sixty (60) or one hundred
twenty (120) days running from the day after the date on which the Company
reasonably first determines (or reasonably should have determined) the need
therefor.
c. The Company shall furnish to each Investor whose Registrable Securities
are included in the Registration Statement (i) promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, one copy of the Registration Statement and any amendment thereto,
each preliminary prospectus and prospectus and each amendment or supplement
thereto and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other
documents as such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor. The Company
will immediately notify each Investor by facsimile of the effectiveness of the
Registration Statement or any post-effective amendment. The Company will
promptly file an acceleration request as soon as practicable following the
resolution or clearance of all SEC comments or, if applicable, following
notification by the SEC that the Registration Statement or any amendment
thereto will not be subject to review.
d. The Company shall use reasonable efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as the Investors who hold a majority in interest of the Registrable Securities
being offered reasonably request, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications
in effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (a)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (b) subject itself to general
taxation in any such jurisdiction, (c) file a general consent to service of
process in any such jurisdiction, (d) provide any undertakings that cause the
Company undue expense or burden, or (e) make any change in its charter or
bylaws.
e. In the event Investors who hold a majority-in-interest of the
Registrable Securities being offered in the offering select underwriters for
the offering, the Company shall enter into and perform its obligations under
an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
f. As promptly as practicable after becoming aware of such event, the
Company shall notify each Investor of (x) the issuance by the SEC of a stop
order suspending the effectiveness of the Registration Statement, (y) the
happening of any event, of which the Company has knowledge, as a result of
which the prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (z) the occurrence or existence of any
pending corporate development that, in the reasonable discretion of the
Company, makes it appropriate to suspend the availability of the Registration
Statement and use its best efforts promptly to prepare a supplement or
amendment to the Registration Statement to correct such untrue statement or
omission, and deliver such number of copies of such supplement or amendment to
each Investor as such Investor may reasonably request; provided that, for not
more than twenty (20) consecutive trading days (or a total of not more than
thirty (30) trading days in any twelve (12) month period) (or 60 trading days
in any 12 month period, in the case of an event described in clause (z) above
that arises from an acquisition or a probable acquisition or financing,
recapitalization, business combination or other similar transaction), the
Company may delay the disclosure of material non-public information concerning
the Company (as well as prospectus or Registration Statement updating) the
disclosure of which at the time is not, in the good faith opinion of the
Company, the best interests of the Company (an "Allowed Delay"); provided,
further, that the Company shall promptly (i) notify the Investors in writing
of the existence of (but in no event, without the prior written consent of an
Investor, shall the Company disclose to such investor any of the facts or
circumstances regarding) material non-public information giving rise to an
Allowed Delay and (ii) advise the Investors in writing to cease all sales
under the Registration Statement until the end of the Allowed Delay. Upon
expiration of the Allowed Delay, the Company shall again be bound by the first
sentence of this Section 3(f) with respect to the information giving rise
thereto, and shall be obligated to pay to the Investors any amounts provided
for in Section 2(b).
g. The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest possible moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution
thereof.
h. The Company shall permit a single firm of counsel designated by the
Initial Investors to review the Registration Statement and all amendments and
supplements thereto (as well as all requests for acceleration or effectiveness
thereof) a reasonable period of time prior to their filing with the SEC, and
not file any document in a form to which such counsel reasonably objects and
will not request acceleration of the Registration Statement without prior
notice to such counsel. The sections of the Registration Statement covering
information with respect to the Investors, the Investor's beneficial ownership
of securities of the Company or the Investors intended method of disposition
of Registrable Securities shall conform to the information provided to the
Company by each of the Investors.
i. The Company shall make generally available to its security holders as
soon as practical, but not later than ninety (90) days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
j. At the request of any Investor, the Company shall furnish, on the date
that Registrable Securities are delivered to an underwriter, if any, for sale
in connection with the Registration Statement or, if such securities are not
being sold by an underwriter, on the date of effectiveness thereof (i) an
opinion, dated as of such date, from counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters, if any, and the Investors and (ii) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and the Investors.
k. The Company shall make available for inspection during normal business
hours by (i) any Investor and (ii) one firm of attorneys and one firm of
accountants or other agents retained by the Initial Investors, (collectively,
the "Inspectors") all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably deemed necessary by each Inspector to
enable each Inspector to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all information
which any Inspector may reasonably request for purposes of such due diligence;
provided, however, that each Inspector shall hold in confidence and shall not
make any disclosure (except to an Investor) of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement, (b) the release of such Records is ordered
pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of
this or any other agreement. The Company shall not be required to disclose
any confidential information in such Records to any Inspector until and unless
such Inspector shall have entered into confidentiality agreements (in form and
substance satisfactory to the Company) with the Company with respect thereto,
substantially in the form of this Section 3(k). Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing herein (or in
any other confidentiality agreement between the Company and any Investor)
shall be deemed to limit the Investor's ability to sell Registrable Securities
in a manner which is otherwise consistent with applicable laws and
regulations.
l. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees
that it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor prior
to making such disclosure, and allow the Investor, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information.
m. The Company shall (i) cause all the Registrable Securities covered by
the Registration Statement to be listed on each national securities exchange
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) secure the designation and
quotation, of all the Registrable Securities covered by the Registration
Statement on the Nasdaq or, if not eligible for the Nasdaq on the Nasdaq
SmallCap and, without limiting the generality of the foregoing, to arrange for
at least two market makers to register with the National Association of
Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities.
n. The Company shall provide a transfer agent and registrar, which may be
a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
o. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing Registrable Securities to be offered
pursuant to the Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the managing underwriter
or underwriters, if any, or the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters, if any,
or the Investors may request, and, within five (5) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) an instruction in the form attached
hereto as Exhibit 1 and an opinion of such counsel in the form attached hereto
as Exhibit 2.
p. Except for registration rights previously disclosed to the Buyers prior
to the execution of this Agreement, from and after the date of this Agreement,
the Company shall not, and shall not agree to, allow the holders of any
securities of the Company to include any of their securities in any
Registration Statement under Section 2(a) hereof or any amendment or
supplement thereto under Section 3(b) hereof without the consent of the
holders of a majority-in-interest of the Registrable Securities.
q. The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Investors of Registrable Securities
pursuant to the Registration Statement.
4. OBLIGATIONS OF THE INVESTORS.
In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:
a. It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect
the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably
request. At least three (3) business days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify each
Investor of the information the Company requires from each such Investor.
b. Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by
the Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing
of such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
c. In the event Investors holding a majority-in-interest of the
Registrable Securities being registered (with the approval of the Initial
Investors) determine to engage the services of an underwriter, each Investor
agrees to enter into and perform such Investor's obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities, unless such Investor has notified the Company in
writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
d. Each Investor agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(f) or 3(g),
such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
e. No Investor may participate in any underwritten registration hereunder
unless such Investor (i) agrees to sell such Investor's Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below.
5. EXPENSES OF REGISTRATION.
All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant
to Sections 2 and 3, including, without limitation, all registration, listing
and qualification fees, printers and accounting fees, the fees and
disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel selected by the Initial Investors pursuant to
Sections 2(b) and 3(h) hereof shall be borne by the Company.
6. INDEMNIFICATION.
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
a. To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable Securities,
(ii) the directors, officers, partners, employees, agents and each person who
controls any Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), if any, (iii) any
underwriter (as defined in the 1933 Act) for the Investors, and (iv) the
directors, officers, partners, employees and each person who controls any such
underwriter within the meaning of the 1933 Act or the 1934 Act, if any (each,
an "Indemnified Person"), against any joint or several losses, claims,
damages, liabilities or expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, in respect thereof, "Claims") to which any of
them may become subject insofar as such Claims arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or the omission or alleged omission to state therein a
material fact required to be stated or necessary to make the statements
therein not misleading; (ii) any untrue statement or alleged untrue statement
of a material fact contained in any preliminary prospectus if used prior to
the effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading; or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in
the foregoing clauses (i) through (iii) being, collectively, "Violations").
Subject to the restrictions set forth in Section 6(c) with respect to the
number of legal counsel, the Company shall reimburse the Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person or
underwriter for such Indemnified Person expressly for use in connection with
the preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the
Company pursuant to Section 3(c) hereof; (ii) shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld; and (iii) with respect to any preliminary prospectus, shall not
inure to the benefit of any Indemnified Person if the untrue statement or
omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or
supplemented, such corrected prospectus was timely made available by the
Company pursuant to Section 3(c) hereof, and the Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior to the
use giving rise to a Violation and such Indemnified Person, notwithstanding
such advice, used it. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.
b. In connection with any Registration Statement in which an Investor is
participating, each such Investor agrees severally and not jointly to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, each person, if any, who
controls the Company within the meaning of the 1933 Act or the 1934 Act, any
underwriter and any other stockholder selling securities pursuant to the
Registration Statement or any of its directors or officers or any person who
controls such stockholder or underwriter within the meaning of the 1933 Act or
the 1934 Act (collectively and together with an Indemnified Person, an
"Indemnified Party"), against any Claim to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
arises out of or is based upon any Violation by such Investor, in each case to
the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished to the Company by
such Investor expressly for use in connection with such Registration
Statement; and subject to Section 6(c) such Investor will reimburse any legal
or other expenses (promptly as such expenses are incurred and are due and
payable) reasonably incurred by them in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent
of such Investor, which consent shall not be unreasonably withheld; provided,
further, however, that the Investor shall be liable under this Agreement
(including this Section 6(b) and Section 7) for only that amount as does not
exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive
the transfer of the Registrable Securities by the Investors pursuant to
Section 9. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
c. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action (including
any governmental action), such Indemnified Person or Indemnified Party shall,
if a Claim in respect thereof is to be made against any indemnifying party
under this Section 6, deliver to the indemnifying party a written notice of
the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party
and the Indemnified Person or the Indemnified Party, as the case may be;
provided, however, that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person
or Indemnified Party and any other party represented by such counsel in such
proceeding. The indemnifying party shall pay for only one separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as
applicable, and such legal counsel shall be selected by Investors holding a
majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of a
majority-in-interest of the Initial Investors), if the Investors are entitled
to indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party under this Section 6, except to
the extent that the indemnifying party is actually prejudiced in its ability
to defend such action. The indemnification required by this Section 6 shall
be made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. CONTRIBUTION.
To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however, that (i)
no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any seller of Registrable Securities who was
not guilty of such fraudulent misrepresentation, and (iii) contribution
(together with any indemnification or other obligations under this Agreement)
by any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.
8. REPORTS UNDER THE 1934 ACT.
With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the investors to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees
to:
a. make and keep public information available, as those terms are
understood and defined in Rule 144;
b. file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements (it being understood that nothing
herein shall limit the Company's obligations under Section 4(c) of the
Securities Purchase Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and
c. furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company, and (ii) such other information as may be reasonably requested
to permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS.
The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of all or any portion of Registrable Securities
if: (i) the Investor agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (ii) the Company is, within a
reasonable time after such transfer or assignment, furnished with written
notice of (a) the name and address of such transferee or assignee, and (b) the
securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws, (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein, (v) such
transfer shall have been made in accordance with the applicable requirements
of the Securities Purchase Agreement, and (vi) such transferee shall be an
"accredited investor" as that term defined in Rule 501 of Regulation D
promulgated under the 1933 Act.
10. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, and Investors who
hold a majority interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. MISCELLANEOUS.
a. A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two
or more persons or entities with respect to the same Registrable Securities,
the Company shall act upon the basis of instructions, notice or election
received from the registered owner of such Registrable Securities.
b. Any notices required or permitted to be given under the terms hereof
shall be sent by certified or registered mail (return receipt requested) or
delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile and shall be effective five days after being placed
in the mail, if mailed by regular U.S. mail, or upon receipt, if delivered
personally or by courier (including a recognized overnight delivery service)
or by facsimile, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Superconductor Technologies Inc.
460 Ward Drive
Suite F
Santa Barbara, California 93111-2310
Attention: Chief Executive Officer
Facsimile: (805) 967-0342
With copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: John V. Roos, Esq.
Facsimile: (650) 493-6811
If to an Investor: to the address set forth immediately below such Investor's
name on the signature pages to the Securities Purchase Agreement. Each party
shall provide notice to the other party of any change of its address.
c. Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
d. This Agreement shall be enforced, governed by and construed
in accordance with the laws of the State of Delaware applicable to agreements
made and to be performed entirely within such State. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof. The parties hereto hereby
submit to the exclusive jurisdiction of the United States Federal Courts
located in Delaware with respect to any dispute arising under this Agreement
or the transactions contemplated hereby.
e. This Agreement and the Securities Purchase Agreement (including all
schedules and exhibits thereto) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There
are no restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein and therein. This Agreement and the
Securities Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.
f. Subject to the requirements of Section 9 hereof, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties hereto.
g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
h. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
i. Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions
contemplated hereby.
j. Except as otherwise provided herein, all consents and other
determinations to be made by the Investors pursuant to this Agreement shall be
made by Investors holding a majority of the Registrable Securities, determined
as if the all of the shares of Preferred Stock then outstanding have been
converted into for Registrable Securities.
k. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
[Signature Pages Follow]]
IN WITNESS WHEREOF, the Company and the undersigned Initial Investors have
caused this Agreement to be duly executed as of the date first above written.
SUPERCONDUCTOR TECHNOLOGIES INC.
By:
Name:
Title:
WILMINGTON SECURITIES, INC.
By:
Name:
Title:
Henry L. Hillman Trust Under Agreement of
Trust dated November 18, 1985
By:
C.G. Grefenstette, Trustee
Juliet Lea Hillman Simonds Trust under Agreement
of Trust dated December 30, 1976 for Children of Juliet
Lea Hillman Simonds
By:
Thomas G. Bigley, Trustee
By:
C.G. Grefenstette, Trustee
Audrey Hillman Fisher Trust under Agreement of
Trust dated December 30, 1976 for Children of
Audrey Hillman Fisher
By:
Thomas G. Bigley, Trustee
By:
C.G. Grefenstette, Trustee
Henry Lea Hillman, Jr. Trust under Agreement of
Trust dated December 30, 1976 for Children of
Henry Lea Hillman, Jr.
By:
Thomas G. Bigley, Trustee
By:
C.G. Grefenstette, Trustee
William Talbott Hillman Trust under Agreement of
Trust dated December 30, 1976 for Children of
William Talbott Hillman
By:
Thomas G. Bigley, Trustee
By:
C.G. Grefenstette, Trustee
