EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of June 23, 2003 by and among Superconductor Technologies Inc.,
a Delaware corporation (the "Company"), and each of the purchasers set forth on
the signature pages of this Agreement (the "Investors") with reference to the
following facts:
A. The Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act").
B. The Investors desire to purchase, and the Company desires to
issue and sell, upon the terms and conditions in this Agreement, (i) an
aggregate of 5,116,278 shares (the "Shares") of the Company's common stock, par
value $0.001 per share ("Common Stock"), at $2.15 per share and (ii) stock
purchase warrants in the form attached hereto as Exhibit A (the "Warrants") to
purchase up to an aggregate of 1,279,069 additional shares of Common Stock (the
"Warrant Shares").
D. Each Investor wishes to purchase, upon the terms and
conditions in this Agreement, the number of Shares and the number of Warrants
set forth immediately next to its name on the signature pages of this Agreement.
E. Contemporaneous with the closing of the transactions
contemplated by this Agreement, the parties will be executing and delivering a
Registration Rights Agreement, in the form attached hereto as Exhibit B (the
"Registration Rights Agreement"), pursuant to which the Company will agree to
provide certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws. This
Agreement, the Warrants and the Registration Rights Agreement are collectively
referred to as the "Transaction Documents".
NOW, THEREFORE, the Company and each of the Investors severally (and
not jointly) hereby agree as follows:
1. Purchase and Sale of Shares and Warrants.
1.1 Purchase of Shares and Warrants. On the Closing Date
(as defined below), the Company shall issue and sell to each Investor, and each
Investor severally agrees to purchase from the Company, the number of Shares and
Warrants set forth immediately next to such Investor's name on the signature
pages to this Agreement.
1.2 Form of Payment. On the Closing Date, (i) each
Investor shall pay the purchase price for the Shares and the Warrants to be
issued and sold to it at the Closing (as defined below) (the "Purchase Price")
against delivery of duly executed certificates representing the Shares and duly
executed Warrants which such Investor is purchasing and (ii) the Company shall
deliver such certificates and Warrants duly executed on behalf of the Company,
to such Investor, against delivery of such Purchase Price. Payment of the
Purchase Price shall be made by wire transfer of immediately available funds
through an escrow agent on terms and instructions set forth in an Escrow
Agreement dated the date hereof among the Company, RBC
Xxxx Xxxxxxxx Inc., as agent of the Company in connection with the placement of
the Shares and Warrants to be issued and sold pursuant hereto (the "Placement
Agent"), and Xxxxxxxx & Ilsley Trust Company N.A., as escrow agent.
1.3 Closing Date. Subject to the satisfaction (or waiver)
of the conditions set forth in Sections 5 and 6 of this Agreement, the date and
time of the issuance and sale of the Shares and the Warrants pursuant to this
Agreement (the "Closing Date") shall be 9:00 a.m., Pacific Time, on June 25,
2003 or such other time as may be agreed between the Company and the Placement
Agent in writing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall occur on the Closing Date at the offices of
Xxxx|Xxxxxxxxxxx LLP, 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx, or at such other location as may be agreed between the Company and
the Placement Agent in writing.
1.4 Adjustments. If at any time prior to the Closing the
outstanding shares of Common Stock are subdivided into a greater number of
shares or consolidated into a lesser number of shares, then proportionate
adjustments shall be made to the per share purchase price and number of shares
of Common Stock purchased hereunder and under the form of Warrant attached
hereto in order to prevent dilution and maintain the same aggregate
consideration hereunder and thereunder.
2. Investors' Representations, Warranties and Covenants. Each
Investor severally (and not jointly) represents, warrants and covenants to the
Company solely as to such Investor that:
2.1 Investment Purpose. As of the date hereof, the
Investor is purchasing the Shares and the Warrants for its own account and
without a present view towards the public sale or distribution of the Shares,
Warrants or Warrant Shares (collectively the "Securities"), except pursuant to
sales registered or exempted from registration under the Securities Act;
provided, however, that by making the representations herein, the Investor does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the
Securities Act.
2.2 Investor Status. The Investor is an "accredited
investor" as defined in Rule 501(a) of Regulation D. In the normal course of its
business, the Investor invests in or purchases securities similar to the Shares
and Warrants and it has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of purchasing the
Shares and Warrants.
2.3 Reliance on Exemptions. The Investor understands that
the Securities are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
2.4 Information. The Investor and its advisors, if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Shares and Warrants which have been requested by the Investor or its advisors.
The Investor and its advisors, if any, have been afforded the
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opportunity to ask questions of the Company. The Investor understands that its
investment in the Shares and Warrants involves a significant degree of risk.
2.5 Other Matters. The Investor has read the confidential
disclosure set forth under the heading "Other Matters" on the term sheet dated
June 5, 2003 for the offering of securities under this Agreement (the "Term
Sheet"). The Investor has been presented with an opportunity to ask questions
concerning such matters and has received all information concerning such matters
considered material by that Investor to its decision to purchase the securities
offered hereby.
2.6 Governmental Review. The Investor understands that no
United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Securities.
2.7 Transfer or Re-sale. The Investor understands that
(i) except as provided in the Registration Rights Agreement, the sale or re-sale
of the Securities has not been and is not being registered under the Securities
Act or any applicable state securities laws, and the Securities may not be
transferred unless (a) the Securities are sold pursuant to an effective
registration statement under the Securities Act, (b) the Securities are sold or
transferred pursuant to an exemption from such registration provided that with
respect to a transfer or sale pursuant to this clause (b) only, the Investor,
upon the reasonable request of the Company, shall have delivered to the Company
an opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration, (c) the Securities are sold or transferred
to an "affiliate" (as defined in Rule 144 promulgated under the Securities Act
(or a successor rule) ("Rule 144")) of the Investor who agrees to sell or
otherwise transfer the Securities only in accordance with this Section 2.7 and
who is an "accredited investor" (as defined in Rule 501(a) of Regulation D) or
(d) the Securities are sold pursuant to Rule 144; (ii) any sale of such
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of said Rule and further, if said Rule is not applicable, any re-sale of
such Securities under circumstances in which the seller (or the person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC thereunder; and
(iii) neither the Company nor any other person is under any obligation to
register such Securities under the Securities Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder (in each
case, other than pursuant to the Registration Rights Agreement). Notwithstanding
the foregoing or anything else contained herein to the contrary, the Securities
may be pledged as collateral in connection with a bona fide margin account or
other lending arrangement; provided, however, that upon execution on any such
pledge, the pledgee shall be subject to the restrictions on transfer of the
Securities contained in this Agreement.
2.8 Legends. The Investor understands that the Shares and
the Warrants and, until such time as the Warrant Shares have been registered
under the Securities Act as contemplated by the Registration Rights Agreement or
otherwise may be sold pursuant to Rule 144 without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
the certificates for the Shares and Warrant Shares shall bear a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of the certificates for such Securities):
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The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any state of the United States. The securities represented hereby may
not be offered or sold in the absence of an effective registration
statement for the securities under applicable securities laws unless
offered, sold or transferred under an available exemption from the
registration requirements of those laws. Notwithstanding the foregoing,
the securities represented by this certificate [and the securities
issuable upon exercise of these securities] may be pledged in
connection with a bona fide margin account or other loan or financing
arrangement secured by such securities.
The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws, (a)
such Security is registered for resale under an effective registration statement
filed under the Securities Act or otherwise may be sold pursuant to Rule 144(k)
without any restriction as to the number of securities as of a particular date
that can then be immediately sold, or (b) such holder provides the Company with
an opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions, to the effect that a public sale or transfer
of such Security may be made without registration under the Securities Act and
such sale or transfer is effected or (c) such holder provides the Company with
reasonable and customary assurances that such Security can be sold pursuant to
Rule 144 and such sale or transfer is effected. The Investor agrees to sell all
Securities, including those represented by a certificate(s) from which the
legend has been removed, in compliance with applicable prospectus delivery
requirements, if any.
The Company shall cause its counsel to issue a legal opinion to the
company's transfer agent within 1 trading day after the date on which a
registration statement under which the securities may be sold is declared
effective by the SEC (the "Effective Date") to the effect that a registration
statement with respect to such securities has become effective under the
Securities Act and that such shares may be transferred without restriction under
the Securities Act. Following the Effective Date or at such earlier time as a
legend is no longer required for certain Securities, the Company will no later
than two trading days following the delivery by an Investor to the Company or
the Company's transfer agent of a legended certificate representing such
Securities, deliver or cause to be delivered to such Investor a certificate
representing such Securities that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.
2.9 Authorization; Enforcement. This Agreement and the
Registration Rights Agreement have been duly and validly authorized. This
Agreement has been duly executed and delivered on behalf of the Investor, and
this Agreement constitutes, and upon execution and delivery by the Investor of
the Registration Rights Agreement, such agreement will constitute, valid and
binding agreements of the Investor enforceable in accordance with their terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
rights affecting or relating to creditors' rights generally and general
principles of equity.
2.10 Residency. The Investor is a resident of the
jurisdiction set forth immediately next to such Investor's name on the signature
pages hereto.
2.11 Trading Limitations. The Investor will not directly
or indirectly sell, offer to sell, solicit offers to buy, dispose of, loan,
pledge or grant any right with respect to shares of
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Common Stock, except in compliance with all relevant securities laws and
regulations. The Investor has not engaged in any sales of Common Stock within
the past ten (10) trading days
3. Representations and Warranties of the Company. The Company
represents and warrants to each Investor that:
3.1 Organization and Qualification. The Company and each
of its Subsidiaries (as defined below) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. Schedule 3.1 sets forth a list of
all of the Subsidiaries of the Company and the jurisdiction in which each is
incorporated. The Company and each of its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which its ownership or use of property or the nature of the business
conducted by it makes such qualification necessary except where the failure to
be so qualified or in good standing would not have a Material Adverse Effect.
"Material Adverse Effect" means any material adverse effect on (i) the holder's
rights relating to the Securities, (ii) the business, operations, assets,
financial condition or prospects of the Company and its Subsidiaries taken as a
whole, (iii) the transactions contemplated hereby or by the agreements or
instruments to be entered into in connection herewith or (iv) the authority or
the ability of the Company to perform its obligations under this Agreement, the
Registration Rights Agreement or the Warrants. "Subsidiaries" means any
corporation or other organization, whether incorporated or unincorporated, in
which the Company owns, directly or indirectly, any equity or other ownership
interest.
3.2 Authorization; Enforcement. (i) The Company has all
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement and the Warrants and to consummate
the transactions contemplated hereby and thereby and to issue the Securities, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
this Agreement, the Registration Rights Agreement and the Warrants by the
Company, and the consummation by it of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Warrants and the
issuance and reservation for issuance of the Warrant Shares issuable upon
exercise of the Warrants) have been duly authorized by the Company's Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its stockholders is required, (iii) this Agreement has been duly
executed and delivered by the Company, and (iv) this Agreement constitutes, and
upon execution and delivery by the Company of the Registration Rights Agreement
and the Warrants, each of such agreements and instruments will constitute, a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar rights affecting or relating to
creditors' rights generally and general principles of equity.
3.3 Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 125,000,000 shares of Common Stock,
of which 59,823,553 shares are issued and outstanding, 11,355,458 shares are
reserved for issuance pursuant to the Company's stock option plans, 10,294,420
shares are reserved for issuance pursuant to securities (other than the
Warrants) exercisable or exchangeable for, or convertible into, shares of Common
Stock, 1,258,247 shares are reserved for issuance upon exercise of the Warrants;
and (ii) 2,000,000 shares of preferred stock, of which no shares are issued and
outstanding. All of such outstanding shares of capital stock are, or upon
issuance will be, duly authorized, validly issued, fully paid and nonassessable.
No shares of capital stock of the Company are subject to preemptive rights or
any other similar rights of the stockholders of the Company or any liens or
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encumbrances imposed through the actions or failure to act of the Company.
Except as disclosed in Schedule 3.3, as of the date of this Agreement, (i) there
are no outstanding options, warrants, scrip, rights to subscribe for, puts,
calls, rights of first refusal, agreements, understandings, claims or other
commitments or rights of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for any shares of capital stock of the
Company or any of its Subsidiaries, or arrangements by which the Company or any
of its Subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its Subsidiaries, (ii) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the Securities Act
(except the Registration Rights Agreement), (iii) there are no anti-dilution or
price adjustment provisions contained in any security issued by the Company (or
in any agreement providing rights to security holders) that will be triggered by
the issuance of the Shares, the Warrants or Warrant Shares, and (iv) there are
no stockholders agreements, voting agreements or other similar agreements with
respect to the Common Stock to which the Company is a party. The Company has
made available to counsel for the Investors true and correct copies of the
Company's Restated Certificate of Incorporation as in effect on the date hereof
("Certificate of Incorporation"), the Company's Bylaws, as in effect on the date
hereof (the "Bylaws"), and the terms of all securities convertible into or
exercisable for Common Stock of the Company and the material rights of the
holders thereof in respect thereto except for stock options granted under any
benefit plan of the Company.
3.4 Issuance of Shares. The Shares are duly authorized
and, upon issuance in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances with respect to the issue thereof and shall not be
subject to preemptive rights or other similar rights of stockholders of the
Company and will not impose personal liability upon the holder thereof. The
Warrant Shares are duly authorized and reserved for issuance and, upon exercise
of the Warrants in accordance with the terms thereof, will be validly issued,
fully paid and non-assessable, and free from all taxes, liens, claims and
encumbrances and will not be subject to preemptive rights or other similar
rights of stockholders of the Company and will not impose personal liability
upon the holder thereof.
3.5 No Conflicts. The execution, delivery and performance
of this Agreement, the Registration Rights Agreement and the Warrants by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance, as applicable, of the Warrant Shares) will not (i) conflict with
or result in a violation of any provision of the Certificate of Incorporation or
Bylaws or (ii) except as set forth on Schedule 3.5, violate or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both could become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture, patent, patent license or instrument
to which the Company or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries
is in violation of its Certificate of Incorporation, Bylaws or other
organizational documents and neither the Company nor any of its Subsidiaries is
in default (and no event has occurred which with notice or lapse of time or both
could put the Company or
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any of its Subsidiaries in default) under, and neither the Company nor any of
its Subsidiaries has taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party or by which any property or assets of the
Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse
Effect. The businesses of the Company and its Subsidiaries, if any, are not
being conducted, and shall not be conducted so long as the Investor owns any of
the Securities, in violation of any law, ordinance or regulation of any
governmental entity, except for possible or actual violations, if any, the
sanctions for which would not, individually or in the aggregate, have a Material
Adverse Effect. Except as specifically contemplated by this Agreement, except as
set forth on Schedule 3.5 hereto, and except as required under the Securities
Act and any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under this Agreement, the
Registration Rights Agreement or the Warrants in accordance with the terms
hereof or thereof or to issue and sell the Shares and Warrants in accordance
with the terms hereof and to issue the Warrant Shares upon exercise of the
Warrants. Except as disclosed in Schedule 3.5, all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company has taken no action designed to, or which to its
knowledge is likely to have the effect of, terminating the registration of
Common Stock under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or delisting the Common Stock from the Nasdaq National Market.
The issuance of the Securities does not require shareholder approval, including,
without limitation, pursuant to the Nasdaq Marketplace Rules. The Company has
not in the two years preceding the date hereof received notice (written or oral)
from the NASDAQ, any stock exchange, market or trading facility on which the
Common Stock is or has been listed (or on which it has been quoted) to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such exchange, market or trading facility. The Company is, and
has no reason to believe that it will not in the foreseeable future continue to
be, in compliance with all such listing and maintenance requirements.
3.6 SEC Documents; Financial Statements. Since January 1,
2000, the Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Exchange Act (all of the foregoing filed prior to
the date hereof and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits to such documents)
incorporated by reference therein, being hereinafter referred to herein as the
"SEC Documents"). The Company has delivered to each Investor true and complete
copies of any SEC Documents specifically requested by the Investor which are not
available from the SEC's XXXXX database, except for exhibits and incorporated
documents, and the Company understands that the Investor has secured copies of
the remainder of such SEC Documents from the SEC's XXXXX database. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as
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have been amended or updated in subsequent filings prior to the date hereof). As
of their respective dates, the financial statements of the Company included in
the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
SEC Documents, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to
the date of such SEC Documents and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such SEC Documents,
which liabilities and obligations referred to in clauses (i) and (ii),
individually or in the aggregate, would not have a Material Adverse Effect.
3.7 Absence of Certain Changes. Except as disclosed in
the SEC Documents, since December 31, 2002, there has been no change or
development which individually or in the aggregate has had or could reasonably
be expected to have a Material Adverse Effect. Since the date of the latest
audited financial statements included within the SEC Documents, except as
specifically disclosed in the SEC Documents, (i) there has been no event,
occurrence or development that, individually or in the aggregate, has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not altered its method of accounting or the identity of its
auditors, (iii) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, and (iv) the Company has not issued any equity securities to any officer,
director or other affiliate, except pursuant to existing Company stock option
plans.
3.8 Absence of Litigation. Except as disclosed in the SEC
Documents, there is no action, suit, claim, proceeding or, to the knowledge of
the Company and its Subsidiaries, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, or their
officers or directors in their capacity as such, that could have a Material
Adverse Effect.
3.9 Intellectual Property. The Company and each of its
subsidiaries owns or is licensed to use all patents, patent applications,
trademarks, trademark applications, trade names, service marks, copyrights,
copyright applications, licenses, permits, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) and other similar rights and proprietary knowledge
(collectively, "Intellectual Property") necessary for the conduct of its
business as now being conducted and as proposed to be conducted. Except as
disclosed in the SEC Documents, neither the Company nor any of its subsidiaries
has received written notice that it is infringing upon or in conflict with any
third party Intellectual Property. Except as set forth on Schedule 3.9, neither
the Company nor any of its subsidiaries has entered into any consent,
indemnification, forbearance to xxx or settlement agreements with respect to the
validity of the Company's or such subsidiary's ownership or right to use its
Intellectual Property. The Company's Intellectual
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Property is valid and enforceable, and no registration relating thereto has
lapsed, expired or been abandoned or canceled or is the subject of cancellation
or other adversarial proceedings, and all applications therefor are pending and
in good standing. The Company has complied with its contractual obligations
relating to the protection of the Intellectual Property used pursuant to
licenses. To the Company's knowledge, no person is infringing on or violating
the Intellectual Property owned or used by the Company.
3.10 Environment. (i) There is no environmental liability,
nor factors likely to give rise to any environmental liability, affecting any of
the properties of the Company or any of its subsidiaries that, individually or
in the aggregate, would have a Material Adverse Effect and (ii) neither the
Company nor any of the subsidiaries has violated any environmental law
applicable to it now or previously in effect, other than such violations or
infringements that, individually or in the aggregate, have not had and will not
have a Material Adverse Effect.
3.11 Title. The Company and each of its subsidiaries has
good title in fee simple to all real property and good title to all personal
property owned by it which is material to its business, free and clear of all
liens, encumbrances and defects except for such defects in title that,
individually or in the aggregate, could not have a Material Adverse Effect. Any
real property and facilities held under lease by the Company or any of its
subsidiaries are held by the Company or such subsidiary under valid, subsisting
and enforceable leases with such exceptions which have not had and will not have
a Material Adverse Effect.
3.12 Insurance. The Company and its subsidiaries maintain
such insurance relating to their business, operations and assets as is
appropriate to their business, assets and operations, in such amounts and
against such risks as are customarily carried and insured against by owners of
comparable businesses, assets and operations, and such insurance coverages will
be continued in full force and effect to and including the Closing Date other
than those insurance coverages in respect of which the failure to continue in
full force and effect could not reasonably be expected to have a Material
Adverse Effect. The Company and its Subsidiaries are in compliance with the
terms of such policies in all material respects. There are no claims by the
Company or any of its Subsidiaries under any such policy or instrument as to
which an insurance company is denying liability or defending under a reservation
of rights clause.
3.13 No Brokers. The Company has not engaged any person to
which or to whom brokerage commissions, finder's fees, financial advisory fees
or similar payments are or will become due in connection with this Agreement or
the transactions contemplated hereby except for the Placement Agent, to whom the
Company will pay a fee in respect of the sale of the Shares and Warrants to the
Investors.
3.14 Tax Status. The Company and each of its subsidiaries
has made or filed all material federal, state and local income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Company or the applicable
subsidiary has set aside on its books provisions adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provisions adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no material unpaid taxes claimed to be due by
the taxing authority of any jurisdiction. The Company has not executed a waiver
with respect to any statute of limitations relating to the assessment or
collection of any
13
federal, state or local tax. None of the Company's tax returns have been or is
being audited by any taxing authority.
3.15 No General Solicitation. Neither the Company nor any
person participating on the Company's behalf in the transactions contemplated
hereby has conducted any "general solicitation" or "general advertising" as such
terms are used in Regulation D, with respect to any of the Securities being
offered hereby.
3.16 Securities Laws. Neither the Company, nor any person
acting on its or their behalf the Company's behalf, has sold or offered to sell
or solicited any offer to buy the Securities by means of any form of general
solicitation or advertising. Neither the Company nor any of its Affiliates nor
any person acting on the Company's behalf has, directly or indirectly, at any
time within the past six months, made any offer or sale of any security or
solicitation of any offer to buy any security under circumstances that would (i)
eliminate the availability of the exemption from registration under Regulation D
under the Securities Act in connection with the offer and sale of the Securities
as contemplated hereby or (ii) cause the offering of the Securities pursuant to
the Transaction Documents to be integrated with prior offerings by the Company
for purposes of any applicable law (except as would not result in a violation of
applicable law), regulation or stockholder approval provisions, including,
without limitation, under the rules and regulations of The Nasdaq Stock Market.
Assuming the truth and accuracy of the representations and warranties of the
Investors set forth in Section 2 of this Agreement, the Investors will not be
statutory underwriters within the meaning of Section 2(a)11 of the Securities
Act.
3.17 Form S-3 Eligibility. The Company is currently
eligible to register the resale of its Common Stock on a registration statement
on Form S-3 under the Securities Act. Except for obtaining the waivers disclosed
on Schedule 3.5, there exist no facts or circumstances (including without
limitation any required approvals or waivers of any circumstances that may delay
or prevent the obtaining of accountant's consents) that would prohibit or delay
the preparation and filing of a registration statement on Form S-3 with respect
to the Registrable Securities (as defined in the Registration Rights Agreement).
3.18 Disclosure. The Company confirms that neither it nor
any other Person acting on its behalf has provided any of the Investors or their
agents or counsel with any information that constitutes or might constitute
material, nonpublic information, except the information which will be disclosed
in the press release issued pursuant to Section 4.3. The Company understands and
confirms that each of the Investors will rely on the foregoing representations
in effecting transactions in securities of the Company. All disclosure provided
to the Investors regarding the Company, its business and the transactions
contemplated hereby, including the Schedules to this Agreement, furnished by or
on behalf of the Company are true and correct and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No event or circumstance has
occurred or information exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed (assuming for this purpose that the Company's
reports filed under the Exchange Act are being incorporated into an effective
registration statement filed by the Company under the Securities Act). The
Company acknowledges and agrees that no Investor makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.
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3.19 Foreign Corrupt Practices. Neither the Company, nor
any of its Subsidiaries, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any Subsidiary has, in the course of
his actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
3.20 No Investment Company. The Company is not, and upon
the issuance and sale of the Securities as contemplated by this Agreement and
the Warrants, and the application of the proceeds therefrom, will not be, an
"investment company" required to be registered under the Investment Company Act
of 1940 (an "Investment Company"). The Company is not controlled by an
Investment Company.
3.21 Form of Shares. The form of certificates for the
Shares conforms to the requirements of the corporate law of the State of
Delaware.
3.22 Permits. The Company and each of its Subsidiaries has
all material licenses, certifications, permits, franchises, approvals,
clearances and other regulatory authorizations ("Permits") from governmental
authorities as are necessary to conduct their respective businesses as currently
conducted and to own, lease and operate their respective properties in the
manner described in the SEC Documents, except where the failure to have any such
Permit would not have a Material Adverse Effect. There is no claim, proceeding
or controversy, pending or, to the knowledge of the Company, threatened,
involving the status of or sanctions under any of the Permits. The Company and
each of the Subsidiaries has fulfilled and performed all of its material
obligations with respect to the Permits, and no event has occurred which allows,
or after notice or lapse of time would allow, the revocation, termination,
modification or other impairment of the rights of the Company or any of its
Subsidiaries under any such Permit.
3.23 Stabilization. Neither the Company, nor to the
Company's knowledge, any of its affiliates, has taken or may take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares.
3.24 Material Contracts. Except for matters which are
specifically disclosed in the SEC Documents, the contracts listed as exhibits to
the SEC Documents, other than those contracts that are substantially performed
or expired by their terms, are in full force and effect on the date hereof, and
none of the Company, its Subsidiaries and, to the Company's knowledge, any other
party, is in material breach of or default under any such contract. Neither the
Company nor any of the Subsidiaries has sent or received any notice indicating
the termination of or intention to terminate any such contract, and no such
termination has been threatened by the Company, any of its Subsidiaries, or, to
the Company's knowledge, any other party.
3.25 Xxxxxxxx-Xxxxx Act. The Company is in compliance in
all material respects with the applicable provisions of the Xxxxxxxx-Xxxxx Act
of 2002 (the "Xxxxxxxx-Xxxxx Act"), and the rules and regulations promulgated
thereunder, that are effective and intends to
15
comply in all material respects with other applicable provisions of the
Xxxxxxxx-Xxxxx Act, and the rules and regulations promulgated thereunder, upon
the effectiveness of such provisions.
3.26 Internal Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.27 Forward-Looking Statements. The information contained
in the SEC Documents regarding the Company's expectations, plans and intentions,
and any other information that constitutes "forward-looking" information within
the meaning of the Securities Act and the Exchange Act were made by the Company
on a reasonable basis and reflected the Company's good faith belief and/or
estimate of the matters described therein, in each case as of the date of the
SEC Document containing such information.
3.28 Acknowledgment Regarding Investors' Purchase of
Securities. The Company acknowledges and agrees that each of the Investors is
acting solely in the capacity of an arm's length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that no Investor is acting as a financial advisor or fiduciary of
the Company or any other Investor (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereby and any advice given by
any Investor or any of their respective representatives or agents in connection
with this Agreement and the transactions contemplated hereby is merely
incidental to the Investors' purchase of the Securities. The Company further
represents to each Investor that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.
4. Covenants.
4.1 Best Efforts. The parties shall use their best
efforts to satisfy timely each of the conditions described in Sections 5 and 6
of this Agreement.
4.2 Form D; Blue Sky Laws. The Company agrees to file a
Form D with respect to the Shares and Warrants as required under Regulation D
and to provide a copy thereof to counsel for the Investors promptly after such
filing. The Company shall, on or before the Closing Date, take such action as
the Company shall reasonably determine is necessary to qualify the Securities
for sale to the Investors at the Closing pursuant to this Agreement under
applicable securities or "blue sky" laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to each Investor on or prior to the Closing Date.
4.3 Reporting Status; Eligibility to Use Form S-3. The
Company's Common Stock is registered under Section 12(g) of the Exchange Act. So
long as any Investor beneficially owns any of the Securities, the Company shall
timely file all reports required to be filed with the SEC pursuant to the
Exchange Act, and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination. The Company
currently meets,
16
and will take all necessary action to continue to meet, the "registrant
eligibility" requirements set forth in the general instructions to Form S-3 for
the resale of Common Stock by the Investors. On or before 9:30 a.m., Eastern
Daylight time, on the Closing Date, the Company shall issue a press release and,
within one (1) business day of the Closing Date, the Company shall file with the
SEC a Current Report on Form 8-K, in each case, describing the material terms of
the transactions contemplated hereby and disclosing any other material,
nonpublic information provided by or through the Company to any Investor in
connection with the issuance and sale of the Shares and Warrants (except the
information referred to under the heading "Other Matters" in the Term Sheet).
Such press release and Form 8-K shall be subject to prior review by counsel for
each Investor. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Investor, or include the name of any Investor in any
filing with the Commission or any regulatory agency or The Nasdaq Stock Market,
without the prior written consent of such Investor, except to the extent such
disclosure (but not any disclosure as to the controlling persons thereof) is
required by law or the regulations of The Nasdaq Stock Market, in which case the
Company shall provide such Investor with prior notice of such disclosure. The
Company shall not, and shall cause each of its Subsidiaries and its and each of
their respective officers, directors, employees and agents not to, provide any
Investor with any material, nonpublic information regarding the Company or any
of its Subsidiaries from and after the filing of the Form 8-K described above
without the express written consent of such Investor. Each press release
disseminated during the three years preceding the date of this Agreement did not
at the time of release contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
4.4 Use of Proceeds. The Company shall use the proceeds
from the sale of the Shares and the Warrants in the manner set forth in Schedule
4.4.
4.5 Reservation of Shares. The Company shall at all times
have authorized, and reserved for the purpose of issuance, a sufficient number
of shares of Common Stock to provide for the full exercise of the Warrants. The
Company shall not reduce the number of shares of Common Stock reserved for
issuance upon exercise of the Warrants (except as a result of the issue of the
Warrant Shares upon the exercise of the Warrants) without the consent of the
Investors
4.6 Listing. On the Closing Date, the Company shall have
applied for the listing of the Shares and Warrant Shares, in each case, upon
each national securities exchange and automated quotation system, if any, upon
which shares of Common Stock are then listed or quoted and shall maintain, so
long as any other shares of Common Stock shall be so listed, such listing of all
Shares from time to time issuable hereunder and all Warrant Shares from time to
time issuable upon exercise of the Warrants. The Company shall use its best
efforts to keep its shares of Common Stock listed on The Nasdaq National Market
and will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of The Nasdaq Stock Market.
4.7 No Integration. The Company shall not make any offers
or sales of any security (other than the Securities) under circumstances that
would require registration of the Securities being offered or sold hereunder
under the Securities Act or cause the offering of Securities to be integrated
with any other offering of securities by the Company for the purpose of any
stockholder approval provision applicable to the Company or its securities.
17
4.8 Furnishing of Information. As long as any Investor
owns Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act. Upon the request of any Investor, the Company shall deliver to
such Investor a written certification of a duly authorized officer as to whether
it has complied with the preceding sentence. As long as any Investor owns
Securities, if the Company is not required to file reports pursuant to such
laws, it will prepare and furnish to the Investors and make publicly available
in accordance with paragraph (c) of Rule 144 such information as is required for
the Investors to sell the Securities under Rule 144. The Company further
covenants that it will take such further action as any holder of Securities may
reasonably request to satisfy the provisions of Rule 144 applicable to the
issuer of securities relating to transactions for the sale of securities
pursuant to Rule 144.
4.9 Reimbursement. If any Investor or any of its
affiliates or any officer, director, partner, controlling person, employee,
broker or agent of a Investor or any of its affiliates (a "Related Person")
becomes involved in any capacity in any action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened (a
"Proceeding") brought by or against any person in connection with or as a result
of the transactions contemplated by the Transaction Documents other than
relating to the Registration Statement, Prospectus or other matter contemplated
by Section 6.1 of the Registration Rights Agreement, the Company will indemnify
and hold harmless such Investor or Related Person for its reasonable legal and
other expenses (including the reasonable costs of any investigation, preparation
and travel) and for any losses, claims, damages, liabilities, settlement costs
and expenses, including, without limitation, costs of preparation and reasonable
attorneys' fees (collectively, "Losses") incurred in connection therewith, as
such expenses or Losses are incurred, excluding only Losses that result directly
from such Investor's or Related Person's gross negligence or willful misconduct.
In addition, the Company shall indemnify and hold harmless each Investor and
Related Person from and against any and all Losses, as incurred, arising out of
or relating to any breach by the Company of any of the representations,
warranties or covenants made by the Company in this Agreement or any other
Transaction Document, or any allegation by a third party that, if true, would
constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
6.3 of the Registration Rights Agreement. The indemnification obligations of the
Company under this paragraph shall be in addition to any liability that the
Company may otherwise have and shall be binding upon and inure to the benefit of
any successors, assigns, heirs and personal representatives of the Investors and
any such Related Persons. The Company also agrees that neither the Investors nor
any Related Persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the transactions contemplated by the Transaction Documents,
except to the extent that any losses, claims, damages, liabilities or expenses
incurred by the Company arise out of or result from the bad faith, gross
negligence or willful misconduct of the applicable Investor or Related Person in
connection with such transactions or arise out of or relate to any breach by a
Investor of any of the representations, warranties or covenants made by a
Investor in this Agreement or any other Transaction Document. If the Company
breaches its obligations under any Transaction Document, then, in addition to
any other liabilities the Company may have under any Transaction Document or
applicable law, the Company shall pay or reimburse the Investors on demand for
all costs of collection and enforcement (including reasonable attorneys fees and
expenses). Without limiting the generality of the foregoing, the Company
specifically agrees to reimburse the Investors on demand for all reasonable
costs of enforcing the indemnification obligations in this Section 4.9.
18
5. Conditions to the Company's Obligation to Sell. The obligation
of the Company hereunder to issue and sell the Shares and Warrants to the
Investors at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived in writing by
the Company at any time in its sole discretion:
5.1 All of the Investors shall have executed this
Agreement and the Registration Rights Agreement, and delivered the same to the
Company.
5.2 All of the Investors shall have delivered the
Purchase Price in accordance with Section 1.2 above.
5.3 The representations and warranties of all of the
Investors shall be true and correct in all material respects as of the date when
made and as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date, which
representations and warranties shall be true and correct as of such date), and
all of the Investors shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Investors at or
prior to the Closing Date.
5.4 No litigation, statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
6. Conditions to Each Investor's Obligation to Purchase. The
obligation of each Investor hereunder to purchase the Shares and Warrants at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for such
Investor's sole benefit and may be waived in writing by such Investor at any
time in its sole discretion:
6.1 The Company shall have executed this Agreement and
the Registration Rights Agreement, and delivered the same to the Investor.
6.2 The Company shall have delivered to such Investor
duly executed certificates (in such denominations as the Investor shall request)
representing the Shares and duly executed Warrants in accordance with Section
1.2 above.
6.3 The Shares shall be authorized for quotation on The
Nasdaq National Market and trading in the Common Stock or The Nasdaq National
Market generally shall not have been suspended or be under threat of suspension
by the SEC or any governing body of The Nasdaq Stock Market.
6.4 The representations and warranties of the Company
shall be true and correct in all material respects as of the date when made and
as of the Closing Date as though made at such time (except for representations
and warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. The Investor
shall have received
19
a certificate or certificates, executed by the chief executive officer and chief
financial officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by such
Investor including, but not limited to, certificates with respect to the
Company's Certificate of Incorporation, Bylaws and Board of Directors'
resolutions relating to the transactions contemplated hereby.
6.5 No litigation, statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
6.6 The Company shall have provided advance notice to The
Nasdaq Stock Market of the issuance of the Shares and Warrant Shares if so
required by the rules applicable thereto.
6.7 The Investor shall have received an opinion of the
Company's counsel, dated as of the Closing Date, in form, scope and substance
reasonably satisfactory to the Investor and in substantially the same form as
Exhibit C attached hereto.
6.8 From the date of this Agreement through the Closing
Date, there shall not have occurred any Material Adverse Effect.
7. Governing Law; Miscellaneous.
7.1 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed in the State of Delaware (without regard to
principles of conflict of laws). Both parties irrevocably consent to the
exclusive jurisdiction of the United States federal courts and the state courts
located in Delaware with respect to any suit or proceeding based on or arising
under this Agreement, the agreements entered into in connection herewith or the
transactions contemplated hereby or thereby and irrevocably agree that all
claims in respect of such suit or proceeding may be determined in such courts.
The Company and each Investor irrevocably waives the defense of an inconvenient
forum to the maintenance of such suit or proceeding. The Company and each
Investor further agrees that service of process upon a party mailed by first
class mail shall be deemed in every respect effective service of process upon
the party in any such suit or proceeding. Nothing herein shall affect either
party's right to serve process in any other manner permitted by law. Each of the
parties agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
7.2 Counterparts; Signatures by Facsimile. This Agreement
may be executed in two or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. This Agreement, once
executed by a party, may be delivered to the other parties hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement. In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause the manually
executed signature page to be physically delivered to the other parties within
five (5) days of its execution.
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7.3 Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
7.4 Severability. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.
7.5 Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the parties
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Investors
make any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by
an instrument in writing signed by the Company and, by the Investors as provided
in Section 7.14.
7.6 Notices. Any notices required or permitted to be
given under the terms of this Agreement 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 United States
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.
000 Xxxx Xxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: President and Chief Executive Officer
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With copy to:
Xxxx|Xxxxxxxxxxx LLP
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to an Investor: To the address set forth immediately next to such
Investor's name on the signature pages hereto.
Each party shall provide notice to the other party of any change in
address.
7.7 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns. Neither the Company nor any Investor shall assign this Agreement or any
rights or obligations hereunder without the prior
21
written consent of the other. Notwithstanding the foregoing, subject to Section
2.7, the rights and obligations of an Investor under this Agreement shall be
automatically assigned by such Investor to any transferee of all or any portion
of such Investor's Shares in any private transfer of such Shares. Upon any
transfer permitted by this Section 7.7 and made in accordance with Section 2.7,
the Company shall be obligated to such transferee to perform all of its
covenants under this Agreement as if such transferee were named as an Investor
herein. Notwithstanding anything to the contrary herein, Securities may be
assigned to any Person in connection with a bona fide margin account or other
loan or financing arrangement secured by such Securities.
7.8 Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
7.9 Survival. The representations and warranties of the
Company and the agreements and covenants of the Company shall survive the
Closing notwithstanding any due diligence investigation conducted by or on
behalf of the Investors; provided that the representations and warranties made
to any Investor in Section 3 shall terminate on the earlier of (i) two (2) years
from the date of discovery by such Investor of a breach thereof and (ii) three
(3) years from the Closing Date.
7.10 Further Assurances. 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.
7.11 No Strict Construction. 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. With respect to the Company, "knowledge" shall mean the actual
knowledge of the Company's directors, its Chief Executive Officer, Chief
Financial Officer, Chief Technology Officer or any Vice President.
7.12 Equitable Relief. Each party acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
other parties by vitiating the intent and purpose of the transactions
contemplated hereby. Accordingly, each party acknowledges that the remedy at law
for a breach of its obligations hereunder will be inadequate and agrees, in the
event of a breach or threatened breach by such party of the provisions of this
Agreement, that the other parties shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.
7.13 Termination. In the event that the Closing Date shall
not have occurred on or before June 30, 2003, unless the Company and the
Investors agree otherwise in writing, this Agreement shall terminate at the
close of business on such date. Notwithstanding any termination of this
Agreement, any party not in breach of this Agreement shall preserve all rights
and remedies it may have against another party hereto for a breach of this
Agreement prior to or relating to the termination hereof.
7.14 Determinations. Except as otherwise expressly
provided herein, all consents, approvals and other determinations to be made by
the Investors pursuant to this
22
Agreement and all waivers and amendments to or of any provisions in this
Agreement to be binding upon an Investor shall be made by such Investor.
7.15 Expenses. The parties hereto shall pay their own
costs and expenses in connection herewith, except that the Company shall (a) pay
at the Closing the reasonable fees and expenses of counsel to each Investor (not
to exceed $30,000 in the aggregate for the work performed up to and including
the date hereof) related to the negotiation of this Agreement and the other
Transaction Documents, and (b) reimburse the Investors upon demand for all
reasonable out-of-pocket expenses incurred by the Investors, including without
limitation reimbursement of attorneys' fees and disbursements, in connection
with any amendment, modification or waiver of this Agreement or the other
Transaction Documents.
7.16 Independent Nature of Investors' Obligations and
Rights. The obligations of each Investor under any Transaction Document are
several and not joint with the obligations of any other Investor, and no
Investor shall be responsible in any way for the performance of the obligations
of any other Investor under any Transaction Document. The decision of each
Investor to purchase Shares and Warrants pursuant to this Agreement has been
made by such Investor independently of any other Investor and independently of
any information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any of its Subsidiaries
which may have been made or given by any other Investor or by any agent or
employee of any other Investor, and no Investor or any of its agents or
employees shall have any liability to any other Investor (or any other person)
relating to or arising from any such information, materials, statements or
opinions. Nothing contained herein or in any other Transaction Document, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Investor acknowledges that no
other Investor has acted as agent for such Investor in connection with making
its investment hereunder and that no other Investor will be acting as agent of
such Investor in connection with monitoring its investment hereunder. Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose.
*** [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] ***
23
Signature Page to Securities Purchase Agreement
IN WITNESS WHEREOF, the undersigned Investors and the Company have
caused this Agreement to be duly executed as of the date first above written.
"COMPANY"
SUPERCONDUCTOR TECHNOLOGIES INC.
By:_____________________________________
M. Xxxxx Xxxxxx
President and Chief Executive Officer
"INVESTORS"
RESIDENCE:________________
_________________________________
Investment Amount: $
-------------
Common Shares:_________________
Warrant Shares:________________
By:_____________________________________
Address for Notice:
Mr._______________________ Title:__________________________________
__________________________
__________________________
__________________________
Ph:_______________________
Fx:_______________________
B-1
