EXHIBIT 10.24
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of March 6, 2002 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 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
3,714,286 shares (the "Shares") of the Company's common stock, par value $0.001
per share ("Common Stock"), at $3.50 per share and (ii) stock purchase warrants
in the form attached hereto as Exhibit A (the "Warrants") to purchase up to
557,143 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 execution and delivery of this Agreement,
the parties are executing and delivering a Registration Rights Agreement, in the
form attached hereto as Exhibit B (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act and the rules and regulations promulgated thereunder,
and applicable state securities laws.
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") by wire transfer of
immediately available funds to the Company, in accordance with the Company's
written wiring instructions, 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.
1.3 Closing Date. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 5 and 6, 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 Standard Time, on March 8, 2002 or such other
mutually agreed upon time. The closing of the transactions contemplated by this
Agreement (the "Closing") shall occur on the Closing Date at the offices of
Xxxx|Xxxxxxxxxxx LLP at 00000 Xxxxxxxx Xxxx. Xxxxx 0000 Xxx Xxxxxxx, Xxxxxxxxxx
00000, or at such other location as may be agreed to by the parties.
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, the Warrants and Warrant Shares (collectively the
"Securities") for its own account and not with a present view towards the public
sale or distribution thereof, 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 Accredited 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
Securities 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
Securities.
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 (excluding any material nonpublic information)
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested by
the Investor or its advisors. The Investor and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigation conducted by Investor or any of its
advisors or representatives shall modify, amend or affect Investor's right to
rely on the Company's representations and warranties contained in Section 3. The
Investor understands that its investment in the Securities involves a
significant degree of risk.
2.5 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.
2.6 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
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Securities may not be transferred unless (a) the Securities are sold pursuant to
an effective registration statement under the Securities Act, (b) the Investor
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 2.6 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 Securities and Exchange Commission 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.
2.7 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 may 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):
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.
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
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Securities, including those represented by a certificate(s) from which the
legend has been removed, in compliance with applicable prospectus delivery
requirements, if any.
2.8 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.
2.9 Residency. The Investor is a resident of the jurisdiction set
forth immediately next to such Investor's name on the signature pages hereto.
2.10 Trading Limitations. The Investor will conduct any sales of
Common Stock in compliance with all relevant securities laws and regulations,
will not create any daily low trading prices in the Common Stock and will not
engage in any "short sales" (as defined in Rule 3b-3 under the Securities Act).
The Investor has not engaged in any purchases or sales of Common Stock within
the past 30 trading days and will not engage in any such transactions prior to
the Closing Date.
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), if any, 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, if
any, 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 obligation 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
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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) 75,000,000 shares of Common Stock, of which
18,581,723 shares are issued and outstanding, 3,669,202 shares are reserved for
issuance pursuant to the Company's stock option plans, 7,555,508 shares are
reserved for issuance pursuant to securities (other than the Warrants and the
Placement Agent Warrants (defined below)) exercisable for, or convertible into
or exchangeable for shares of Common Stock, 557,143 shares are reserved for
issuance upon exercise of the Warrants and 213,571 shares are reserved for
issuance upon exercise of a warrant issuable to Xxxxx Fargo Securities, LLC for
services rendered as placement agent in connection with this Agreement (the
"Placement Agent Warrant"); and (ii) 2,000,000 shares of preferred stock, of
which 34,500 shares of Series E Preferred Stock 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 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) and (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. The Company has made
available to each Investor 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.
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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 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 a 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 is not in violation of the listing requirements of
the Nasdaq National Market and does not reasonably anticipate that the Common
Stock will be desisted from the Nasdaq National Market in the foreseeable
future. The Company and its Subsidiaries are unaware of any facts or
circumstances which might reasonably be expected to give rise to any of the
foregoing.
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 Securities and Exchange Commission
pursuant to the reporting requirements of the Securities Exchange Act of 1934,
as amended (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
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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 Investor or
not filed via the Securities and Exchange Commission's XXXXX database, except
for exhibits and incorporated documents, and the Company understands that
Investor has secured copies of the remainder of such SEC Documents from the
Securities and Exchange Commission's XXXXX database through the world wide web.
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 Securities and Exchange Commission promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they were filed
with the Securities and Exchange Commission, 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 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 Securities and
Exchange Commission 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 September 29, 2001, 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.
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
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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 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.
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 Xxxxx Fargo Securities, LLC whose
commissions and fees will be paid by the Company.
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
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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 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 of its
affiliates, nor any person acting on its or their behalf, has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this offering
of Securities to be integrated with any prior offering of securities of the
Company for purposes of the Securities Act. The offer, sale and delivery of
shares of Common Stock upon exercise of the Warrants will be exempt from the
registration requirements of Section 5 of the Securities Act. 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. All information relating to or concerning the
Company and its subsidiaries set forth in this Agreement or provided to the
Investors pursuant to Section 2.4 hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all material respects
and the Company has not omitted to state any material fact necessary in order to
make the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or its subsidiaries or their businesses,
properties, operations, prospects or financial conditions, which has not been
publicly disclosed but, under applicable law, rule or regulation, would be
required to be disclosed by the Company in a registration statement filed on the
date hereof by the Company under the Securities Act with respect to a primary
issuance of the Company's securities.
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.
9
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 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.
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 Securities as required under Regulation D and to provide a
copy thereof to each Investor 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, 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. The Company shall issue a press
release describing the materials terms of the transaction contemplated hereby
within one (1) business of the Closing Date and shall file with the SEC a
Current Report on Form 8-K describing the material terms of the transaction
contemplated hereby within three (3) business days of the Closing Date, which
press release and Form 8-K shall be subject to prior review by the Investors.
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 in The Nasdaq Stock Market and will
comply in all respects
10
with the Company's reporting, filing and other obligations under the bylaws or
rules of The Nasdaq Stock Market.
4.7 Additional Financings. The Company agrees that during the
period beginning on the date hereof and ending on the date which is one hundred
eighty (180) days following the Closing Date (the "Lock-Up Period"), the Company
will not, without the prior written consent of the Investors or their designees,
contract with any party to obtain additional financing (an "Additional
Financing"). If the Investors consent to such Additional Financing, the Company
will not conduct any Additional Financing during the Lock-Up Period unless it
shall have first delivered to each Investor, at least ten (10) business days
prior to the closing of such Additional Financing, written notice describing the
proposed Additional Financing, including the terms and conditions thereof, and
providing the Investors and their affiliates an option during the ten (10)
business day period following delivery of such notice to purchase any or all of
the securities being offered in the Additional Financing on the same terms as
contemplated by such Additional Financing. Such option shall be exercised by
each applicable Investor giving written notice to the Company within such period
of its agreement to buy a specified amount of the offered securities. Closing of
such sale shall be contemporaneous with the closing of the offering with
investors other than the Investors (or, if there are no other such investors, on
a date specified by the Company), provided that the Company shall provide
written notice to each applicable Investor at least five (5) business days prior
to any such closing. To the extent that the Investors, in the aggregate, elect
to purchase more than all of such securities, the amount that each Investor
shall be entitled to purchase shall be pro rated based on the Investor's Pro
Rata Percentage. "Pro Rata Percentage" shall mean, with respect to any Investor,
a percentage computed by dividing the Purchase Price paid hereunder by such
Investor by the aggregate Purchase Price paid hereunder by all of the Investors.
To the extent that the terms of an Additional Financing are changed in a manner
that is at least partially favorable to prospective investors, the Company shall
notify the Investors of all changes in such terms and the Investors shall have
another ten (10) business day option to purchase on the revised terms and
otherwise in accordance with the provisions hereof. The limitations referred to
in this Section 4.7 shall not apply to (i) any transaction involving issuances
of securities as consideration in a merger, consolidation or acquisition of
assets, or in connection with any strategic partnership, collaboration or joint
venture (the primary purpose of which is not to raise capital), or as
consideration for the acquisition of a business, product or license by the
Company, (ii) the issuance of securities pursuant to widely distributed
underwritten public offering, (iii) the issuance of securities upon exercise or
conversion of the Company's options, warrants or other convertible securities
outstanding as of the date hereof or issued pursuant to this Agreement, (iv) the
issuance of warrants or shares of Common Stock upon exercise thereof to Xxxxx
Fargo Securities, LLC or its assigns at the Closing in consideration of its
services to the Company as placement agent for the financing contemplated by
this Agreement, (v) the grant of additional options or warrants, or the issuance
of additional securities, under any duly authorized Company stock option, stock
purchase or restricted stock plan for the benefit of the Company's employees,
consultants or directors; (vi) the issuance of securities in connection with the
settlement of litigation; or (vii) any financing with no equity or equity-linked
securities made to the Company by a financial institution engaged in the
business of lending money such as a bank, trust company, insurance company or
other institutional lender.
4.8 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.
11
4.9 Trading Limitations. Each Investor agrees that it will
conduct any sales of Common Stock in compliance with all relevant securities
laws and regulations and will not create any daily low trading prices in the
Common Stock. Prior to the Closing Date, no Investor has engaged in any
purchases or sales of any shares of Common Stock of the Company.
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 thereto, 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
Stock Market and trading in the Common Stock or The Nasdaq Stock 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
12
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 a certificate or
certificates, executed by the chief executive officer or 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
13
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.
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 a Investor: To the address set forth immediately next to such
Investor's name on the signature pages hereto.
14
With copy to:
Xxxxx Fargo Securities, LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxx, Vice President
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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 written consent of the other.
Notwithstanding the foregoing, subject to Section 2.6, any Investor may assign
its rights hereunder to any person that purchases Securities in a private
transaction from a Investor or to any of its "affiliates," as that term is
defined under the Exchange Act, without the consent of the Company.
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. The Company agrees to indemnify and hold harmless each
Investor and each of such Investor's officers, directors, employees, partners,
members, agents and affiliates for loss or damage relating to the Securities
purchased hereunder arising as a result of or related to any breach by the
Company of any of its representations or covenants set forth herein.
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
15
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 March 15, 2002, unless the parties agree otherwise,
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 Agreement and all waivers and amendments to or of any
provisions in this Agreement prior to the Closing Date to be binding upon a
Investors shall be made by such Investor and except as otherwise expressly
provided herein, all consents, approvals and other determinations (other than
amendments to the terms and provisions of this Agreement) to be made by the
Investors pursuant to this Agreement and all waivers and amendments to or of any
provisions in this Agreement after the Closing Date shall be made by Investors
(excluding Investors who are affiliates of the Company) that have invested more
than fifty percent (50%) of the aggregate Investment Amounts invested by all
Investors (excluding Investors who are affiliates of the Company).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
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"
[NAMES OMITTED]
S-1
Index of Schedules to Securities Purchase Agreement
Schedule 3.1......................................List of Subsidiaries
Schedule 3.3......................................Capitalization
Schedule 3.5......................................Required Consents
Schedule 3.9......................................Intellectual Property Matters
Schedule 4.4......................................Use of Proceeds
[Schedules Omitted]
