EXHIBIT 4.3
WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH THE
SECURITIES COMMISSION OF ANY APPLICABLE STATE UNDER SUCH STATE'S SECURITIES OR
BLUE SKY LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SUCH SECURITIES ACT AND THE APPLICABLE STATE SECURITIES OR BLUE
SKY LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE SECURITIES OR BLUE SKY LAWS.
WARRANT TO PURCHASE STOCK
OF
SUPERCONDUCTOR TECHNOLOGIES, INC.
WARRANT NO.: I-1 APRIL 28, 2004
This Warrant certifies that, as a material inducement for Agility Capital,
LLC, the original Holder (as defined below) to enter into that certain Loan and
Security Agreement (the "Loan Agreement"), dated April 28, 2004, by and between
Holder and Superconductor Technologies, Inc., a Delaware corporation (the
"Company"), the Holder is entitled, subject to the terms and conditions of this
Warrant, to purchase from the Company at any time prior to 5:00 p.m. Pacific
time on or before April 28, 2011 (the "Expiration Date") shares of Warrant Stock
(as defined below) equal to the Exercise Quantity (as defined below) at a price
per share equal to the Exercise Price (as defined below), upon surrender of this
Warrant at the principal offices of the Company, together with a duly executed
subscription form substantially in the form attached hereto as Exhibit 1 and, if
applicable, payment of the full Warrant Price for the shares of Warrant Stock so
purchased in lawful money of the United States. The Exercise Price and the
number and character of shares of Warrant Stock purchasable under this Warrant
are subject to adjustment as provided herein.
1. DEFINITIONS. The following definitions shall apply for purposes of
this Warrant:
1.1 "Common Stock Equivalents" means collectively any rights,
options or warrants to subscribe for or to purchase or otherwise acquire common
stock or other securities or rights convertible into or exercisable or
exchangeable for shares of the Company's common stock.
1.2 "Company" means the "Company" as defined above and includes
any Person (other than an individual) which shall succeed to or assume the
obligations of the Company under and in accordance this Warrant.
1.3 "Exercise Price" means: $1.85 per share of Warrant Stock;
provided that if at any time there is an Event of Default (as defined in the
Loan Agreement), Exercise Price means ninety percent (90%) of the average Fair
Market Value of a share of Warrant Stock for the five (5) trading day period,
beginning after the fifth (5(th)) trading day after the Events of Default,
or the events or occurrences which constitute the Events of Default, are
properly disclosed in a filing with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder by the SEC; provided further that if the
Automatic Registration Statement (as defined in Section 6.2) is not effective
prior to 5:00 p.m. Eastern Time on November 2, 2004 and continually effective
and current thereafter in accordance with Section 6.2, Exercise Price means the
lower of ninety percent (90%) of the average Fair Market Value of a share of
Warrant Stock for the five (5) trading day period ending on the date immediately
prior to the earlier of (i) the date thereafter that such registration actually
becomes effective and current and (ii) the date the Holder exercises this
Warrant with respect to such Warrant Stock.
1.4 "Exercise Quantity" means 500,000 of Warrant Stock which
amount shall be increased as follows: (i) upon the occurrence an Event of
Default under the Loan Agreement or a Registration Breach, by 50,000 shares of
Warrant Stock, (ii) on the thirty-first (31(st)) day after an Event of Default
or Registration Breach until (x) the Obligations (as defined in the Loan
Agreement) are paid in full indefeasibly and all Registration Breaches are fully
cured or (y) the written waiver by the Lender, if any, and the Holder, as
applicable, of all Events of Default and Registration Breaches, by an additional
100,000 shares of Warrant Stock; and (iii) on the first day of each thirty (30)
day period beginning on the sixty-first (61(st)) day after an Event of Default
or Registration Breach until (x) the Obligations are paid in full indefeasibly
and all Registration Breaches are fully cured or (y) the written waiver by the
Lender, if any, and the Holder, as applicable, of all Events of Default and
Registration Breaches, by an additional 300,000 shares of Warrant Stock.
1.5 "Fair Market Value" means, on any given date, if the items to
be valued are securities traded on a United States public market, the closing
price of such securities (or the securities into which such securities are
convertible) last reported sales price regular way or, in the case no reported
sales take place on such date, the average of the reported closing bid and asked
prices regular way on the principal U.S. securities exchange on which such
security is listed or, if not so listed, on the Nasdaq Stock Market or, if not
so quoted, the average of the closing bid and asked prices on the
over-the-counter market. If the items to be valued are securities not so traded
or are other property, assets or evidences of indebtedness, the "Fair Market
Value" means, on any given day, the fair market value of the securities or other
property, assets or evidences of indebtedness as reasonably determined in good
faith by the Board of Directors of the Company; provided, that if the Holder
advises the Company's Board of Directors in writing that the Holder disagrees
with such determination, then the Company and the Holder shall promptly agree
upon a nationally recognized investment banking firm to undertake such
valuation. If the valuation of such investment banking firm is greater than that
so originally determined by the Company's Board of Directors, then all fees and
expenses of such investment banking firm shall be paid by the Company. In all
other circumstances, such fees and expenses shall be paid by Holder.
1.6 "Holder" means any Person who shall at the time be the
registered holder of this Warrant.
1.7 "Person" means a natural person, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a trust, a
joint venture, an
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unincorporated organization or other entity, or a governmental entity or any
department, agency or political subdivision thereof.
1.8 "Registration Breach" means any breach of any obligation under
Section 6 hereof.
1.9 "SEC" means the Securities and Exchange Commission and any
successor thereto.
1.10 "Securities Act" means the Securities Exchange Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
1.11 "Termination Date" has the meaning set forth in Section 4.5.
1.12 "Warrant" means this Warrant and any warrant(s) delivered in
substitution or exchange therefor, as provided herein.
1.13 "Warrant Stock" means the Company's common stock, $.001 par
value. The number and character of shares of Warrant Stock are subject to
adjustment as provided herein and the term "Warrant Stock" shall include stock
and other securities, property and/or assets at any time receivable or issuable
upon exercise of this Warrant in accordance with its terms.
2. EXERCISE.
2.1 Exercise Quantity. Subject to the terms and conditions set
forth below (including, without limitation, the adjustment provided for herein),
this Warrant entitles the Holder to purchase from the Company up to that number
of shares of Warrant Stock equal to the Exercise Quantity.
2.2 Vesting. The shares underlying this Warrant shall vest and
become exercisable immediately on the date hereof.
2.3 Method of Exercise. Subject to the terms and conditions of
this Warrant, the Holder may exercise this Warrant in whole or in part, at any
time or from time to time, on any business day beginning on the date of this
Warrant through and including the Expiration Date by surrendering this Warrant
at the principal offices of the Company, with the subscription form attached
hereto duly executed by the Holder, and payment, as applicable, of an amount
equal to the product obtained by multiplying (i) the number of shares of Warrant
Stock to be purchased by the Holder by (ii) the Exercise Price as determined in
accordance with the terms hereof.
2.4 Form of Payment. Payment of the aggregate Exercise Price, as
required, may be made, as determined in the sole discretion of Holder, by (i) a
check payable to the Company's order, (ii) wire transfer of funds to the
Company, (iii) transfer of the Company's capital stock held by the Holder to the
Company (valued at the then Fair Market Value of such stock), (iv) cancellation
of undisputed indebtedness of the Company to Holder (if any) or (v) any
combination of the foregoing.
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2.5 Partial Exercise. Upon a partial exercise of this Warrant,
this Warrant shall be surrendered by the Holder and replaced with a new Warrant
of like tenor in which the maximum number of shares of Warrant Stock purchasable
by the Holder shall be the maximum number of shares of Warrant Stock purchasable
under the original Warrant minus the amount of shares of Warrant Stock purchased
in such partial exercise.
2.6 No Fractional Shares. No fractional shares may be issued upon
any exercise of this Warrant, and any fractions shall be rounded down to the
nearest whole number of shares to determine the number of shares to be issued
upon such exercise. If upon any exercise of this Warrant a fraction of a share
would otherwise result but for the prior sentence, the Company will pay the cash
value of any such fractional share, calculated on the basis of the Fair Market
Value of a share.
2.7 Net Exercise Election. The Holder may elect to convert all or
a portion of this Warrant, without the payment by the Holder of the Exercise
Price or of any other consideration, by the surrender of this Warrant or such
portion to the Company, with the net exercise election selected in the
subscription form attached hereto duly executed by the Holder, into up to the
number of shares of Warrant Stock that is obtained under the following formula:
X = Y (A-B)
-------
A
where X = the number of shares of Warrant Stock to be issued to the
Holder pursuant to this Section 2.7.
Y = the number of shares of Warrant Stock that could be acquired
upon a cash exercise of the portion of this Warrant being
surrendered at the time the net exercise election is made
pursuant to this Section 2.7.
A = the Fair Market Value of one share of Warrant Stock on the
date immediately prior to the date the net exercise election
is made pursuant to this Section 2.7.
B = the Exercise Price at the time the net exercise election is
made pursuant to this Section 2.7.
The Company will promptly respond in writing to an inquiry by the Holder
as to the then current Fair Market Value of one share of Warrant Stock.
3. ISSUANCE OF STOCK. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the Person entitled to receive the
shares of Warrant Stock issuable upon such exercise shall be treated for all
purposes as the holder of record of such shares as of the close of business on
such date. As soon as practicable on or after such date, but in no event less
than three business days thereafter, the Company shall issue and deliver, or
cause to be issued and delivered, to the Person or Persons entitled to receive
the same a certificate or certificates for the number of whole shares of Warrant
Stock issuable upon such exercise.
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4. ADJUSTMENT PROVISIONS. The Exercise Quantity, character of the
Warrant Stock issuable upon exercise of this Warrant (or any other securities,
property or assets at the time receivable or issuable upon exercise of this
Warrant or the exercise, exchange or conversion of any security receivable or
issuable upon exercise of this Warrant) and the Exercise Price therefor
(including the Exercise Price upon the occurrence of an Event of Default), are
subject to adjustment upon the occurrence of the following events during the
period beginning on the date this Warrant is issued and ending on the date this
Warrant is exercised:
4.1 Adjustment for Stock Splits. The Exercise Price, and the
Exercise Quantity shall each be proportionally adjusted to reflect any stock
split, or other subdivision, reverse stock split, combination of shares, or
other similar event affecting the number of outstanding shares of Warrant Stock
(or such other securities) immediately prior to such event.
4.2 Adjustment for Dividends and Distributions.
(a) If the Company shall make, issue, declare, pay, distribute or
set aside, or shall fix a record date for the determination of eligible holders
entitled to receive, a dividend or other distribution payable with respect to
the common stock or any Common Stock Equivalents that is payable in (i) common
stock or Common Stock Equivalents (other than issuances with respect to which
adjustment is made under Section 4.1), (ii) property or assets or (iii)
evidences of its indebtedness, then, and in each such case; (A) the Exercise
Price shall be adjusted so that the same shall equal the price determined by
multiplying the Exercise Price in effect immediately prior to the record date
mentioned above by (if there is no such date, then the date immediately prior to
the date the Company makes, issues, pays, distributes or sets aside such
dividend or distribution) a fraction, the numerator of which shall be equal to
the sum of (x) the total number of shares of common stock then outstanding
multiplied by the Fair Market Value per share of the common stock on the record
date mentioned below, minus (y) the Fair Market Value as of such record date of
said shares of common stock or Common Stock Equivalents, properties, assets or
evidences of indebtedness so made, issued, paid, distributed, declared or set
aside, plus (z) in the case of the issuance or distribution of Common Stock
Equivalents, the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion, exercise or exchange of such Common
Stock Equivalents, and the denominator of which shall be the total number of
shares of common stock then outstanding multiplied by the Fair Market Value per
share of common stock on the record date mentioned above (but in no event shall
such fraction be greater than 1.0) and (B) the Exercise Quantity shall be
adjusted to equal the number obtained by dividing (x) the Exercise Price in
effect immediately prior to such dividend or distribution multiplied by the
Exercise Quantity immediately prior to such dividend or distribution by (y) the
Exercise Price resulting from the adjustment made pursuant to clause (A) above.
Such adjustments shall be made whenever any such dividend or distribution is (or
if there is no such record date, immediately prior to the date the Company
makes, issues, pays, distributes or sets aside such dividend or distribution)
and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
(or if there is no such record date, immediately prior to the date the Company
makes, issues, pays, distributes or sets aside such dividend or distribution).
(b) In the event of a distribution by the Company of stock or
other securities of a subsidiary or securities convertible or exchangeable into
or exercisable for such stock, then
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in lieu of an adjustment in the Exercise Price, the Holder of this Warrant, upon
the exercise thereof at any time after such distribution, shall be entitled to
receive from the Company, such subsidiary or both, the stock or other securities
to which such Holder would have been entitled if such Holder had exercised such
Warrant immediately prior to the record date set for such dividend or
distribution, all subject to further adjustment as provided in this Warrant (or
if there is no such record date, immediately prior to the date the Company
makes, issues, pays, distributes or sets aside such dividend or distribution).
4.3 Adjustment for Reorganization, Consolidation or Merger. In
case of any reorganization, reclassification, recapitalization or similar
transaction involving the stock of the Company (or of any other entity, the
stock or other securities of which are at the time receivable upon the exercise
of this Warrant), after the date of this Warrant, or in case, after such date,
the Company (or any such corporation) shall consolidate with or merge into
another corporation, convey all or substantially all of its assets or stock to
another entity or undertake a similar transaction (a "Corporate Transaction"),
then, and in each such case, the Holder, upon the exercise of this Warrant at
any time after the record date for the holders of stock entitled to participate
in such Corporate Transaction (or if there is no such record date, immediately
after the consummation of the Corporate Transaction) shall be entitled to
receive, in lieu of the stock or other securities, property, assets, evidences
of indebtedness, or other rights, warrants or options receivable upon the
exercise of this Warrant prior to the consummation of such Corporate
Transaction, the stock or other securities, property, assets, evidence of
indebtedness, or other rights, warrants or options to which the Holder would
have been entitled upon the consummation of such Corporate Transaction if the
Holder had exercised this Warrant immediately prior thereto and assuming that
any adjustment under this Section 4 that would otherwise be made in connection
with the consummation of such Corporate Transaction had been made, all subject
to further adjustment as provided in this Warrant, as applicable, and the
successor or purchasing entity in such Corporate Transaction, (if other than the
Company) shall duly execute and deliver to the Holder a supplement hereto
acknowledging such entity's obligations under this Warrant; and in each such
case, the terms of this Warrant shall be applicable to the shares of stock or
other securities, property, assets, evidences of indebtedness, or other rights,
warrants or options receivable upon the exercise of this Warrant after the
consummation of such Corporate Transaction.
4.4 Price Adjustment.
(a) In each case where the Company, after the date of this
Warrant, sells, issues or grants or becomes obligated to sell, issue or grant
(i) additional shares of its common stock at a price per share less than the
Exercise Price in effect immediately prior to such sale, issuance, grant or
obligation or (ii) any Common Stock Equivalents that are convertible into or
exercisable or exchangeable for common stock at a price per share less than the
Exercise Price in effect immediately prior to such sale, issuance, grant or
obligation, then (A) the Exercise Price shall be reduced to a price determined
by multiplying the Exercise Price in effect immediately prior to such sale,
issuance, grant or obligation by a fraction, (1) the numerator of which is an
amount equal to the sum of (x) the number of shares of common stock outstanding
immediately prior to such sale, issuance, grant or obligation plus (y) (a) the
aggregate consideration, if any, received by the Company upon any such sale,
issuance, grant or obligation, plus, in the case of Common Stock Equivalents,
the minimum aggregate amount of additional consideration payable
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to the Company upon the conversion, exercise or exchange thereof divided by (b)
the then Exercise Price; and (2) the denominator of which is the total number of
shares of common stock outstanding (including, in the case of a sale, issuance
or grant of or becoming obligated to issue Common Stock Equivalents, the shares
of common stock issuable upon conversion, exercise and exchange of such Common
Stock Equivalents) immediately after such sale, issuance, grant or obligation;
and (B) the Exercise Quantity shall be adjusted to equal the number obtained by
dividing (1) the Exercise Price in effect immediately prior to such sale,
issuance, grant or obligation multiplied by the Exercise Quantity in effect
immediately prior to such sale, issuance, grant or obligation by (2) the
Exercise Price resulting from the adjustment made pursuant to clause (A) above.
(b) The provisions of Section 4.4(a) shall not apply to (i) the
issuance of shares of the Company's common stock upon exercise of this Warrant,
(ii) the issuance of shares of the Company's common stock upon the conversion or
exercise of convertible or exercisable securities issued and outstanding on the
date hereof as set forth in the notes to the Company's financial statement
contained in the Company's Form 10-K for the year ended December 31, 2003 filed
with the SEC on March 11, 2004 and (iii) the issuance by the Company of options
to acquire common stock issued to employees, officers, directors, consultants
and advisors pursuant to any stock option plan or other restricted stock plan
designated and approved by the Company's board of directors; provided that such
options do not represent the right to acquire more than shares of common stock
representing twenty percent (20%) of the Company's capital stock on a fully
diluted basis, subject to adjustment as provided in Section 4.1.
4.5 Exchange of Stock. In case all the authorized Warrant Stock of
the Company is exchanged into other securities or property, assets, evidence of
indebtedness or other rights, warrants, or options, or the Warrant Stock
otherwise ceases to exist as a result of conversion, exchange, redemption or
otherwise, then, in such case, the Holder, upon exercise of this Warrant at any
time after the date on which the Warrant Stock is so exchanged or ceases to
exist (the "Termination Date"), shall receive, in lieu of the Exercise Quantity
immediately prior to the Termination Date (the "Former Number of Shares of
Warrant Stock"), the stock and other securities and property to which the Holder
would have been entitled to receive upon the Termination Date if the Holder had
exercised this Warrant with respect to the Former Number of Shares of Warrant
Stock immediately prior to the Termination Date and assuming that any adjustment
under this Section 4 that would otherwise be made in connection with such
exchange has been made, all subject to further adjustment as provided in this
Warrant.
4.6 Notice of Adjustments. The Company shall promptly give written
notice of each adjustment or readjustment of the Exercise Price, the Exercise
Quantity or the Warrant Stock or other securities issuable upon exercise of this
Warrant. The notice shall describe the adjustment or readjustment and show in
reasonable detail the facts on which the adjustment or readjustment is based.
4.7 No Change Necessary. The form of this Warrant need not be
changed because of any adjustment in or change to the Exercise Price, the
Exercise Quantity or in the Warrant Stock issuable upon its exercise whether
pursuant to this Section 4, Section 1.4 or otherwise.
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4.8 Reservation of Stock. The Company shall at all times reserve
for issuance that number of shares of Warrant Stock then issuable hereunder. If
at any time the number of shares of Warrant Stock or other securities issuable
upon exercise of this Warrant shall not be sufficient to effect the exercise of
this Warrant, the Company will take such corporate action as may be necessary to
reserve such Warrant Stock, including, without limitation, if necessary
increasing its authorized but unissued shares of Warrant Stock or other
securities issuable upon exercise of this Warrant as shall be sufficient for
such purpose.
4.9 Statement of Shares. Upon the receipt by the Company of
Holder's request, the Company shall as promptly as reasonably practicable
prepare and deliver to the Holder a statement setting forth the Company's
calculation of the number of shares of Warrant Stock issuable upon exercise of
this Warrant.
4.10 Reissue of Warrants. Holder may, at its sole option, surrender
this Warrant to the Company and require that the Company execute and deliver new
Warrants containing identical terms and provisions to Holder and to its
participants in amounts that reflect their respective interests hereunder, as
provided to the Company by the Holder.
4.11 Most Favored Rights. The provisions of this Section 4 shall be
modified as necessary so that the Holder shall have the additional benefits, if
any, of the most favored provision of any other equity security, on a security
by security basis, as determined by the Holder from time to time.
5. REQUIRED NOTICES. The Company will give the Holder notice at least
twenty (20) days prior to the earlier of the effective date of or any applicable
record date with respect to any Corporate Transaction, or other record date for
any other transaction or action by the Company which could trigger any
adjustment under Section 4 herein or that could result in the conversion or
exchange of all outstanding shares of Warrant Stock into or for cash, any other
security or other property or assets.
6. REGISTRATION RIGHTS. The Holder shall have, with respect to the
Warrant Stock, registration rights set forth below and such rights shall be as
favorable as those granted to a holder of any of the Company's equity securities
from time to time. The rights granted to the Holder hereunder (and for the
issuance of security into which the Warrant Stock of other securities into which
the Warrant Stock or other security may be exercisable, exchangeable or
convertible) shall be transferable with this Warrant and/or the Warrant Stock.
6.1 Definitions. For purposes of this Section 6:
(a) Registration. 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 effectiveness of such registration statement.
(b) Registrable Securities. The term "Registrable Securities"
means: (x) the Warrant Stock and any securities of the Company issued as a
dividend or other distribution with respect to, or in exchange for or in
replacement of the Warrant Stock. The term "Registrable Securities" shall
include the securities, if any, that the Holder would be entitled to receive in
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exchange for Registrable Securities in any merger, consolidation, reorganization
or similar transaction.
(c) Registrable Securities Then Outstanding. The number of shares
of "Registrable Securities then outstanding" shall mean the number of Warrant
Stock and other securities that are Registrable Securities and are then issued
and outstanding.
(d) Form S-3. The term "Form S-3" means such form under the
Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC that permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC after the effective date of such
registration;
6.2 Automatic Registration. The Company agrees to cause the
Registrable Securities issuable to the Holder to be registered under the
Securities Act on an effective and current shelf registration on Form S-3 (the
"Automatic Registration Statement") by filing a registration statement with the
SEC prior to 5:00 p.m. Eastern Time on August 2, 2004 and as soon as reasonably
practicable after the date of this Warrant but in no event later than 5:00 p.m.
Eastern Time on November 2, 2004, shall cause the Automatic Registration
Statement to be declared effective. The Company shall keep such shelf
registration statement effective and current and shall obtain and maintain in
full force and effect all related qualifications, registrations or other
compliances that may be necessary under the laws of any applicable jurisdiction,
including, without limitation, state securities or "blue sky" laws, until such
time as all of the Registrable Securities have been sold or otherwise disposed
of.
(a) Expenses. All expenses incurred in connection with a
registration pursuant to this Section 6.2 (excluding underwriters' discounts and
commissions relating to shares sold by the Holder, which shall be borne by the
Holder), including, without limitation, all federal, state and "blue sky"
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of one counsel for the Holder, and fees and disbursements of
counsel for the Company, shall be borne by the Company.
(b) Not Demand Registration. Registration pursuant to this
Section 6.2 shall not be deemed to be a demand registration as described in
Section 6.3.
6.3 Demand Registration.
(a) Request by Holder. If at any time after the Automatic
Registration Statement has been suspended or is otherwise no longer effective,
the Company shall receive a written request from the Holder that the Company
file a registration statement under the Securities Act on Form S-3, or other
available form if Form S-3 shall not be available, covering the registration of
the Registrable Securities held by Holder, then the Company shall, as soon as
practicable, but in no event more than thirty (30) days after such request, file
such a registration statement for the registration under the Securities Act of
all Registrable Securities that the Holder requests to be registered and
included in such registration, as soon as reasonably practicable thereafter, but
in no event later than sixty (60) days after such filing shall cause such
registration statement to be declared effective and to obtain and maintain in
full force and effect all related
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qualifications, registrations or other compliances that may be necessary under
the laws of any applicable jurisdiction, including, without limitation, state
securities or "blue sky" laws.
(b) Expenses. All expenses incurred in connection with any
registration pursuant to this Section 6.3 (excluding underwriters' discounts and
commissions relating to shares sold by the Holder, which shall be borne by the
Holder) including, without limitation, all federal, state and "blue sky"
registration, filing and qualification fees, printer's and accounting fees, fees
and disbursements of one counsel for the Holder, and fees and disbursements of
counsel for the Company, shall be borne by the Company.
(c) Maintenance. The Company shall maintain the effectiveness of
any registration statement filed under this Section 6.3 until such time as all
of the Registrable Securities held by the Holder have been sold in accordance
therewith.
6.4 Piggyback Registrations. At any time after November 2, 2004
that a registration statement is not in effect under Section 6.2 or 6.3 hereof,
and the Holder owns Registrable Securities, the Company shall notify the Holder
in writing at least twenty (20) days prior to filing any registration statement
under the Securities Act for purposes of effecting a public offering of
securities of the Company (including registration statements relating to
secondary offerings of securities of the Company, but excluding registration
statements on Form S-8 relating to any employee benefit plan or on Form S-4
relating to any merger or other corporate reorganization) and will afford the
Holder an opportunity to include in such registration statement all or any part
of the Registrable Securities then held by the Holder. If the Holder desires to
include in any such registration statement all or any part of the Registrable
Securities the Holder shall, within ten (10) business days after receipt of the
above-described notice from the Company, so notify the Company in writing, and
in such notice shall inform the Company of the number of Registrable Securities
the Holder wishes to include in such registration statement. If the Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, the Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein and, in any event, the Holder shall have all of its
rights under Section 6 hereof.
(a) Underwriting. If a registration statement under which the
Company gives notice under this Section 6.4 is for an underwritten offering,
then the Company shall so advise the Holder. In such event, the right of the
Registrable Securities to be included in such a registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of the Holder's Registrable Securities in the underwriting to the
extent provided herein. The Holder proposes to distribute the Registrable
Securities through such underwriting the Holder shall enter into an underwriting
agreement in customary form with the managing underwriter or underwriters
selected for such underwriting; provided, however, that it shall not be
considered customary to require any of the Holder to provide representations and
warranties regarding the Company or indemnification of the underwriters for
material misstatements or omissions regarding the Company.
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(b) Expenses. All expenses incurred in connection with a
registration pursuant to this Section 6.4 (excluding underwriters' discounts and
commissions relating to shares sold by the Holder, which shall be borne by the
Holder), including, without limitation, all federal, state and "blue sky"
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of one counsel for the Holder, and fees and disbursements of
counsel for the Company, shall be borne by the Company.
(c) Not Demand Registration. Registration pursuant to this
Section 6.4 shall not be deemed to be a demand registration as described in
Section 6.3.
6.5 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) Registration Statement. Prepare and file with the SEC a
registration statement with respect to such Registrable Securities and shall
cause such registration statement to become effective.
(b) Amendments and Supplements. Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(c) Prospectuses. Furnish to the Holder such number of copies of a
prospectus, including, without limitation, a preliminary prospectus and any
applicable prospectus supplement, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by the Holder
that are included in such registration in accordance with the plan of
distribution described in the related prospectus or prospectus supplement.
(d) Effectiveness; Qualification. The Company shall avoid the
issuance of, or if issued, obtain the prompt withdrawal of, (i) any order
suspending the effectiveness or use of any registration statement covering
Registrable Securities or (ii) any suspension of the qualification or
registration for sale (or exemption from qualification or registration for sale)
of any of the Registrable Securities as soon as practicable.
(e) Blue Sky. Register and qualify the securities covered by such
registration statement as required under such other securities or blue sky laws
of such jurisdictions as shall be reasonably requested by the Holder, 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.
(f) Underwriting. In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, which agreement shall be in usual and customary form (including,
without limitation, customary indemnification of the underwriters by the
Company), with the managing underwriter(s) of such offering. The Holder shall
also enter into and perform its obligations under such an agreement.
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(g) Notification. Notify the Holder with respect to the
Registrable Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing, in which event the Holder shall not use such
prospectus in connection with any offer or sale of the Registrable Securities
until such prospectus has been appropriately amended (which the Company shall do
promptly under the circumstances and deliver new prospectuses to the Holder
promptly thereafter).
(h) Opinion and Comfort Letter. If such securities are being sold
through underwriters, furnish, at the request of the Holder, on the date that
the Registrable Securities are delivered to the underwriters for sale, (1) an
opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and in the same form and
substance as that provided to the underwriters of such offering, addressed to
the underwriters and to the Holder requesting registration of Registrable
Securities and (2) a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and in the same form and
substance as that provided to the underwriters of such offering, addressed to
the underwriters and to the Holder requesting registration of Registrable
Securities.
(i) Company's Right to Delay If the Company provides to the Holder
a certified resolution duly adopted by the Company's Board of Directors stating
that, in its reasonable business judgment, it would be materially
disadvantageous to the Company to disclose certain information because such
disclosure would materially interfere with or otherwise adversely affect in any
material respect any existing or reasonably likely acquisition, financing,
corporate reorganization or other material transaction or development (a
"Disadvantageous Condition"), then the Company may refrain from maintaining the
current prospectus contained in the applicable registration statement (and
suspend sales of Registrable Securities) until such Disadvantageous Condition no
longer exists. Any notice of a Disadvantageous Condition shall set forth in
general terms the reason for such determination. The Company shall promptly
notify the Holder when such Disadvantageous Condition no longer exists. The
Company may use its delay right under this Section 6.5(i) only once in any
twelve month period for a period of time not to exceed forty-five (45) days.
Notwithstanding the foregoing, the Company can only delay maintaining current
such prospectus (and such suspension of sales of Registrable Securities) only if
the Company shall concurrently prohibit sales by other security holders under
all other registration statements then outstanding and by all of the members of
the Company's Board of Directors, all of the officers of the Company and all of
the stockholders of the Company that own five percent (5%) or more (including
options, warrants and other exchangeable, exercisable or convertible securities
ultimately exchangeable or exercisable for or convertible into common stock of
the Company) of the Company's common stock.
6.6 Indemnification. In the event any Registrable Securities are
included in a registration statement under Section 6.2, 6.3 or 6.4:
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(a) By the Company. To the extent permitted by law, the Company
will indemnify and hold harmless the Holder, the partners, officers,
shareholders, employees, representatives and directors of the Holder, any
underwriter (as determined under the Securities Act) for the Holder and each
person, if any, who controls the Holder or such underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state securities or blue sky laws, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(x) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein, or any amendments
or supplements thereto;
(y) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or
(z) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any federal or state securities or blue sky
law or any rule or regulation promulgated under the Securities Act, the Exchange
Act or any federal or state securities or blue sky law in connection with the
offering covered by such registration statement;
and the Company will reimburse the Holder, and each partner, officer,
shareholder, employee, representative, director, underwriter and controlling
person of the Holder for any legal or other expenses reasonably incurred by
them, as incurred, in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company shall
not be liable in any such case for any such loss, claim, damage, liability or
action to the extent (and only to the extent) that it arises out of or is based
upon a Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
the Holder.
(b) By the Holder. To the extent permitted by law, the Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, and any
underwriter and each person, if any, who controls such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
officer, director, controlling person or underwriter may become subject under
the Securities Act, the Exchange Act or other federal or state securities or
blue sky law, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by the Holder
expressly for use in connection with such registration; and the Holder will
reimburse any legal or other expenses reasonably incurred by the Company or any
such officer, director, controlling person or underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this paragraph
shall not apply to
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amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld or delayed; and provided further, that the
total amounts payable in indemnity by the Holder under this subsection,
subsection (d) of this Section 6.7 or otherwise in respect of any and all
Violations shall not exceed in the aggregate the net proceeds received by the
Holder in the registered offering out of which such Violations arise.
(c) Notice. Promptly after receipt by an indemnified party of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this section, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, to the
extent that representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
conflict of interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of liability except to
the extent the indemnifying party is prejudiced as a result thereof.
(d) Contribution. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (1) the Holder exercising rights under this Agreement, or any controlling
person of the Holder, makes a claim for indemnification pursuant to this
section, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in full in such case notwithstanding the fact that this section
provides for indemnification in such case, or (2) contribution under the
Securities Act may be required on the part of the Holder or any such controlling
person in circumstances for which indemnification is provided under this
section; then, and in each such case, the Company and the Holder will contribute
to the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that the Holder
is responsible for the portion represented by the percentage that the public
offering price of the Registrable Securities offered by and sold by the Holder
under the registration statement bears to the public offering price of all
securities offered by and sold under such registration statement, and the
Company is responsible for the remaining portion. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, if the registration statement in question does not register thereon at
least a majority of securities other than the Registrable Securities or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
the relative benefits received (as described in the previous sentence of this
subsection (d)) but also the relative fault of the Company on the one hand and
the Holder on the other in connection with the applicable Violation or action
taken or not taken, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Holder on the
other shall be deemed to be in the same
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proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company on the one hand and the Holder on the other
hand. The relative fault shall be determined by reference to, among other
things, whether the applicable Violation relates to information supplied by or
action taken or not taken by the Company on the one hand or the Holder on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such Violation or to take or not to take such
action. The Company and the Holder agree that it would not be just and equitable
if contribution pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (d). In any
such case: (x) the Holder will not be required to contribute, indemnify or
otherwise pay any amount in excess of the net proceeds received by the Holder
from the public offering price of all the Registrable Securities offered and
sold by the Holder pursuant to such registration statement; and (y) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
6.7 Survival. The obligations of the Company and the Holder under
this Section 6.7 shall survive until the expiration of any statutes of
limitation including extensions thereof.
7. CERTAIN COMPANY REPRESENTATIONS, WARRANTIES AND COVENANTS.
7.1 The Company represents, warrants and covenants that:
(a) it will at all times reserve and set apart and have, free from
preemptive or stock purchase rights, a sufficient number of shares of authorized
but unissued common stock and the Warrant Stock, if applicable, to provide for
the issuance of the Warrant Stock upon the exercise of this Warrant (and for the
issuance of any security into which the Warrant Stock or other securities into
which the Warrant Stock or other security may be exercisable, exchangeable or
convertible) and will take any and all actions, including without limitation,
amending its Certificate of Incorporation, necessary to comply herewith;
(b) before taking any action that would cause an adjustment
reducing the Exercise Price below the then par value of the shares issuable upon
exercise of this Warrant, the Company will take any corporate action that may be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of such Warrant Stock or common stock at such adjusted
Exercise Price;
(c) the issuance of this Warrant shall constitute full authority
to the Company's officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the shares of
Warrant Stock issuable upon exercise of this Warrant;
(d) the Company has all requisite legal and corporate power to
execute and deliver this Warrant, to sell and issue the Warrant Stock issuable
upon exercise of this Warrant and to carry out and perform its obligations under
the terms of this Warrant;
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(e) all corporate action on the part of the Company, its directors
and stockholders necessary for the authorization, execution, delivery and
performance of this Warrant by the Company, the authorization, sale, issuance
and delivery of the Warrant Stock issuable upon exercise of this Warrant, and
the performance of the Company's obligations hereunder has been taken; and
(f) the Warrant Stock issuable upon exercise of this Warrant, when
issued in compliance with the provisions of this Warrant, will be legally and
validly issued, fully paid and nonassessable, and free of any preemptive or
stock purchase rights, liens, claims or any other encumbrances whatsoever, and
will be issued in compliance with all applicable federal and state securities
and blue sky laws;
7.2 So long as the Holder holds this Warrant and/or any of the
Warrant Stock, the Company shall deliver to the Holder: (a) promptly after
mailing, copies of all notices or other written communications to the
stockholders of the Company, (b) at such time, if any, as the Company is no
longer timely making filings with the SEC that are available on the World Wide
Web, within that number of days after the end of each fiscal year of the Company
as the Company would have had to make such SEC filing if it was still making
such filings, full year end financial statement audited by a certified
independent accounting firm reasonably acceptable to Holder, (c) at such time,
if any, as the Company is no longer timely making filings with the SEC that are
available on the World Wide Web, within that number of days after the end of
each fiscal quarter as the Company would have had to make such SEC filing if it
was still making such filings, full quarterly financial statements and (d)
within thirty (30) days after the end of each month, Company-prepared full
monthly financial statements.
7.3 No Stockholder Rights. This Warrant, by itself, as
distinguished from any Warrant Stock acquired hereunder, shall not entitle the
Holder to any rights of a stockholder of the Company, including, without
limitation, the right to vote or consent as a stockholder of the Company;
provided that nothing herein shall impair any rights granted to the Holder under
the Loan Agreement or in this Agreement (including, without limitation, in
Section 7.2 hereof).
8. REDEMPTION.
8.1 If, at any time after thirty (30) months following the issued
date of this Warrant and provided all of the shares of Warrant Stock issuable
hereunder are registered pursuant to an effective and current registration
statement (as contemplated by Section 6 above) which is available for sales of
such shares of Warrant Stock and such registration statement continues to be
effective and current for the entire Notice Period (as defined below), then upon
thirty (30) days prior written notice (the "Notice Period") to each Holder, the
Warrant may be redeemed, at the option of the Company, at $0.10 per share of
Warrant Stock provided the market price of the Warrant Stock shall exceed four
times the Exercise Price for the thirty (30) day period prior to the Notice
Period and during the Notice Period. Market price for the purpose of this
Section 8.1 shall mean the average closing bid price of the Warrant Stock as
reported by the principal exchange or market on which the Warrant Stock is then
traded. All Warrants must be redeemed if any are redeemed.
16
8.2 In case the Company shall exercise its right to redeem, it
shall mail a notice of redemption to each Holder of the Warrant to be redeemed,
first class, postage prepaid, not later than the thirtieth (30(th)) day before
the date fixed for redemption, at their last address known by the Company. Any
notice mailed in the manner provided herein shall be conclusively presumed to
have been duly given whether or not the Holder receives such notice.
8.3 The notice of redemption shall specify the redemption price,
date fixed for redemption (the "Redemption Date"), the place where the Warrant
shall be delivered and the redemption price shall be paid, and that the Holder
has the right to exercise the Warrant through and including 5:00 P.M. (Pacific
time) on the business day immediately preceding the Redemption Date. On and
after the Redemption Date, the Holder of the Warrant shall have no further
rights under the Warrant except to receive, upon surrender of the Warrant, the
redemption price of $0.10 per share of Warrant Stock.
9. NO IMPAIRMENT. The Company will not, by amendment of its Certificate
of Incorporation or Bylaws, or through reorganization, recapitalization,
reclassification, consolidation, merger, dissolution, issue or sale of
securities, conveyance of assets or similar transaction or any other voluntary
action, willfully avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all of the terms hereof and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Holder
against impairment. Without limiting the generality of the foregoing, the
Company will take all such action as may be necessary or appropriate in order
that the Company may duly and validly issue fully paid and nonassessable shares
of Warrant Stock upon the exercise of this Warrant. Further, the Company will
take all actions to apply the protections provided to Holder under Section 4 to
the Warrant Stock which is not common stock of the Company or Common Stock
Equivalents to prevent the dilution of Lender's ownership interest or impairment
of the Lender's rights or interest hereunder. The Company shall not effect any
reorganization, recapitalization, reclassification, consolidation, merger,
dissolution, issue or sale of securities, conveyance of assets or similar
transactions unless prior to or simultaneously with the consummation thereof the
survivor or successor entity (if other than the Company) resulting from such
transaction or the entity purchasing such assets or receiving such conveyance or
otherwise succeeding to the rights and/or assets of the Company shall assume by
written instrument satisfactory to the Holder executed and sent to such Holder,
the obligation to deliver to such Holder such shares of stock, securities,
assets (including cash), property, evidences of indebtedness or other rights,
warrants or options as such Holder may be entitled to receive hereunder, and
containing the express assumption by such successor entity of the due and
punctual performance and observance of every provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder.
10. ATTORNEYS' FEES. In the event any party engages the services of any
attorneys for the purpose of enforcing this Warrant, or any provision thereof,
the prevailing party shall be entitled to recover its reasonable expenses and
costs in enforcing this Warrant, including reasonable attorneys' fees and
expenses.
11. GOVERNING LAW. This Warrant shall be governed by and construed under
the internal laws of the State of California, without reference to principles of
conflict of laws thereof.
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12. HEADINGS. The headings and captions used in this Warrant are used
for convenience only and are not to be considered in construing or interpreting
this Warrant. All references in this Warrant to sections and exhibits shall,
unless otherwise provided, refer to sections hereof and exhibits attached
hereto, all of which exhibits are incorporated herein by this reference.
13. NOTICES. Any notice required or permitted under this Warrant shall
be given in accordance with the terms of Section 10 of the Loan Agreement and
such terms are herein incorporated by reference.
14. AMENDMENT; WAIVER. Any term of this Warrant may be amended, and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Holder. Any amendment or waiver effected
in accordance with this Section 14 shall be binding upon the Holder, each future
holder of such securities, the Company and the Company's successor and permitted
assigns.
15. SEVERABILITY. In case any provision of this Warrant shall be held to
be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as to most
nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Warrant, and in either case
the validity, legality and enforceability of the remaining provisions of this
Warrant and the future application of such provision shall not in any way be
affected or impaired thereby.
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16. SUCCESSORS AND ASSIGNS. This Warrant may not be assigned or
otherwise transferred by the Company without the written consent of the Holder.
The terms and provisions of this Warrant shall inure to the benefit of, and be
binding upon, the Company and the Holder hereof and their respective successors
and permitted assigns.
SUPERCONDUCTOR TECHNOLOGIES, INC.
By:__________________________________
Name: M. Xxxxx Xxxxxx
Title: Chief Executive Officer
Facsimile: (000) 000-0000
Attention: M. Xxxxx Xxxxxx
AGILITY CAPITAL, LLC
By:__________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
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EXHIBIT 1
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: Superconductor Technologies, Inc.
(1) [ ] The undersigned Holder hereby elects to purchase ________
shares of Warrant Stock, pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price for such shares in full.
- OR -
[ ] Net Exercise Election. The undersigned Holder elects to
convert the Warrant into ___________ shares of Warrant Stock by net exercise
election pursuant to Section 2.7 of the Warrant.
[CHECK PARAGRAPH ABOVE THAT APPLIES]
(2) Please issue a certificate representing _______________ shares of
Warrant Stock in the name of specified below:
_____________________________________
(Name)
_____________________________________
(Address)
_____________________________________
(City, State, Zip Code)
_____________________________________
(Federal Tax Identification Number)
_____________________________________
(Date)
_____________________________________
(Signature of Holder)
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