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EXHIBIT 10.3
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXCEPT AS OTHERWISE SET FORTH HEREIN OR IN A SECURITIES PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 29, 2000, NEITHER THIS WARRANT NOR ANY OF SUCH
SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR AN OPINION OF
COUNSEL, IN FORM, SUBSTANCE AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN
COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
Right to
Purchase
313,370
Shares of
Common
Stock, par
value $0.001
per share
STOCK PURCHASE WARRANT (INITIAL WARRANT)
THIS CERTIFIES THAT, for value received, RGC International Investors, LDC
or its registered assigns, is entitled to purchase from Superconductor
Technologies Inc., a Delaware corporation (the "Company"), at any time or from
time to time during the period specified in Paragraph 2 hereof, Three Hundred
Thirteen Thousand, Three Hundred Seventy (313,370) fully paid and nonassessable
shares of the Company's Common Stock, par value $0.001 per share (the "Common
Stock"), at an exercise price of $21.54 per share (the "Exercise Price"). The
Company hereby confirms to the holder that the Exercise Price is greater than
both the book value of a share of Common Stock and the average closing bid price
of the Common Stock for the five (5) consecutive trading days ending on the
trading day immediately prior to the date of this Warrant. The term "Warrant
Shares," as used herein, refers to the shares of Common Stock purchasable
hereunder. The Warrant Shares and the Exercise Price are subject to adjustment
as provided in Paragraph 4 hereof. The term Warrants means this Warrant and the
other warrants issued pursuant to that certain Securities Purchase Agreement,
dated September 29, 2000, by and among the Company and the Buyers listed on the
execution page thereof (the "Securities Purchase Agreement").
This Warrant is subject to the following terms, provisions, and
conditions:
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1. MANNER OF EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.
Subject to the provisions hereof, this Warrant may be exercised by the holder
hereof, in whole or in part, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any trading day at
the Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") (or, after the registration statement covering the Warrant
Shares is declared effective, sales of the Warrant Shares may not be made
thereunder for any reason other than a breach by the holder of its obligations
under Section 4(a) or 4(b) of the Registration Rights Agreement), delivery to
the Company of a written notice of an election to effect a "Cashless Exercise"
(as defined in Section 13(c) below) for the Warrant Shares specified in the
Exercise Agreement. The Warrant Shares so purchased shall be deemed to be issued
to the holder hereof or such holder's designee, as the record owner of such
shares, as of the close of business on the date on which this Warrant shall have
been surrendered, the completed Exercise Agreement shall have been delivered,
and payment shall have been made for such shares (or an election to effect a
Cashless Exercise has been made) as set forth above. Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding two (2) trading days, after this Warrant
shall have been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of such holder or such other name as shall be designated by such
holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised.
Notwithstanding anything in this Warrant to the contrary, in no event
shall the Holder of this Warrant be entitled to exercise a number of Warrants
(or portions thereof) in excess of the number of Warrants (or portions thereof)
upon exercise of which the sum of (i) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unexercised Warrants and the unexercised or unconverted portion of any other
securities of the Company (including the shares of Series E Preferred Stock (as
defined in the Securities Purchase Agreement)) subject to a limitation on
conversion or exercise analogous to the limitation contained herein) and (ii)
the number of shares of Common Stock issuable upon exercise of the Warrants (or
portions thereof) with respect to which the determination described herein is
being made, would result in beneficial ownership by the Holder and its
affiliates of more than 4.9% of the outstanding shares of Common Stock. For
purposes of the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13D-G thereunder, except
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as otherwise provided in clause (i) hereof. Notwithstanding anything to the
contrary contained herein, the limitation on exercise of this Warrant set forth
herein may not be amended without (i) the written consent of the holder hereof
and the Company and (ii) the approval of a majority of shareholders of the
Company.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time or from
time to time on or after the date on which this Warrant is issued and delivered
pursuant to the terms of the Securities Purchase Agreement (the "Issue Date")
and before 5:00 p.m., New York City time, on the fifth (5th) anniversary of the
Issue Date (the "Exercise Period").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid, and
nonassessable and free from all taxes, liens, and charges with respect to the
issue thereof.
(b) RESERVATION OF SHARES. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing of the
shares of Common Stock issuable upon exercise of the Warrant upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance upon
exercise of this Warrant) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all shares of Common Stock from
time to time issuable upon the exercise of this Warrant; and the Company shall
so list on each national securities exchange or automated quotation system, as
the case may be, and shall maintain such listing of, any other shares of capital
stock of the Company issuable upon the exercise of this Warrant if and so long
as any shares of the same class shall be listed on such national securities
exchange or automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment of
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions as may be necessary or appropriate in order that the
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Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all the Company's assets.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise Price
and the number of Warrant Shares shall be subject to adjustment from time to
time as provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as required herein
results in a fraction of a cent, such Exercise Price shall be rounded up to the
nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON ISSUANCE OF
COMMON STOCK. Except as otherwise provided in Paragraphs 4(c) and 4(e) hereof,
if and whenever on or after the Issue Date of this Warrant, the Company issues
or sells, or in accordance with Paragraph 4(b) hereof is deemed to have issued
or sold, any shares of Common Stock for no consideration or for a consideration
per share (before deduction of reasonable expenses or commissions or
underwriting discounts or allowances in connection therewith) less than the
Market Price (as hereinafter defined) in effect on the date of issuance (or
deemed issuance) of such Common Stock (a "Dilutive Issuance"), then immediately
upon the Dilutive Issuance, the Exercise Price will be reduced to a price
determined by multiplying the Exercise Price in effect immediately prior to the
Dilutive Issuance by a fraction, (i) the numerator of which is an amount equal
to the sum of (x) the number of shares of Common Stock actually outstanding
immediately prior to the Dilutive Issuance, plus (y) the quotient of the
aggregate consideration, calculated as set forth in Paragraph 4(b) hereof,
received by the Company upon such Dilutive Issuance divided by the Market Price
in effect immediately prior to the Dilutive Issuance, and (ii) the denominator
of which is the total number of shares of Common Stock Deemed Outstanding (as
defined below) immediately after the Dilutive Issuance. Notwithstanding the
foregoing, in no event shall the Exercise Price be reduced below $18.91 per
share (the average closing bid price of the Common Stock for the five (5)
consecutive trading days ending on the trading day immediately prior to the date
of this Warrant) (subject to adjustment for stock splits, stock dividends,
combinations, capital reorganizations and similar events, the "Minimum Exercise
Price") under this Paragraph 4(a) or Paragraph 4(b).
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Paragraph 4(a) hereof, the
following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any manner
issues or grants any warrants, rights or options, whether or not immediately
exercisable, to subscribe for or to purchase Common Stock or other securities
convertible into or exchangeable for Common Stock ("Convertible Securities")
(such warrants, rights and options to
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purchase Common Stock or Convertible Securities are hereinafter referred to as
"Options") and the price per share for which Common Stock is issuable upon the
exercise of such Options is less than the Market Price in effect on the date of
issuance or grant of such Options, then the maximum total number of shares of
Common Stock issuable upon the exercise of all such Options will, as of the date
of the issuance or grant of such Options, be deemed to be outstanding and to
have been issued and sold by the Company for such price per share. For purposes
of the preceding sentence, the "price per share for which Common Stock is
issuable upon the exercise of such Options" is determined by dividing (i) the
total amount, if any, received or receivable by the Company as consideration for
the issuance or granting of all such Options, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the exercise of
all such Options, plus, in the case of Convertible Securities issuable upon the
exercise of such Options, the minimum aggregate amount of additional
consideration payable upon the conversion or exchange thereof at the time such
Convertible Securities first become convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the exercise of all
such Options (assuming full conversion of Convertible Securities, if
applicable). No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon the exercise of such Options or upon
the conversion or exchange of Convertible Securities issuable upon exercise of
such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Company in any
manner issues or sells any Convertible Securities, whether or not immediately
convertible (other than where the same are issuable upon the exercise of
Options) and the price per share for which Common Stock is issuable upon such
conversion or exchange is less than the Market Price in effect on the date of
issuance of such Convertible Securities, then the maximum total number of shares
of Common Stock issuable upon the conversion or exchange of all such Convertible
Securities will, as of the date of the issuance of such Convertible Securities,
be deemed to be outstanding and to have been issued and sold by the Company for
such price per share. For the purposes of the preceding sentence, the "price per
share for which Common Stock is issuable upon such conversion or exchange" is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable, by (ii)
the maximum total number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities. No further adjustment to the
Exercise Price will be made upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If there is a
change at any time in (i) the amount of additional consideration payable to the
Company upon the exercise of any Options; (ii) the amount of additional
consideration, if any, payable to the Company upon the conversion or exchange of
any Convertible Securities; or (iii) the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been
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in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. If, in any case, the total number of shares of Common Stock issuable
upon exercise of any Option or upon conversion or exchange of any Convertible
Securities is not, in fact, issued and the rights to exercise such Option or to
convert or exchange such Convertible Securities shall have expired or
terminated, the Exercise Price then in effect will be readjusted to the Exercise
Price which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in respect of
the actual number of shares of Common Stock issued upon exercise or conversion
thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock,
Options or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Warrant will be the amount
received by the Company therefor, before deduction of reasonable commissions,
underwriting discounts or allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant or sale. In case
any Common Stock, Options or Convertible Securities are issued or sold for a
consideration part or all of which shall be other than cash, the amount of the
consideration other than cash received by the Company will be the fair value of
such consideration, except where such consideration consists of securities, in
which case the amount of consideration received by the Company will be the
Market Price thereof as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued in connection with any acquisition,
merger or consolidation in which the Company is the surviving corporation, the
amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving corporation as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair value of any consideration other than cash or securities
will be determined in good faith by (a) the Board of Directors of the Company or
(b) at the option of a majority-in-interest of the holders of outstanding
Warrants, an independent investment bank of nationally recognized standing.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No adjustment to
the Exercise Price will be made (i) upon the exercise of any warrants, options
or convertible securities granted, issued and outstanding on the date of
issuance of this Warrant; (ii) upon the grant or exercise of any stock or
options which may hereafter be granted or exercised under any employee benefit
plan of the Company now existing or to be implemented in the future, so long as
the issuance of such stock or options is approved by a majority of the
independent members of the Board of Directors of the Company or a majority of
the members of a committee of independent directors established for such
purpose; (iii) upon the exercise of the Warrants; or (iv) upon the issuance of
securities in a firm commitment underwritten public offering (excluding a
continuous offering pursuant to Rule 415 under the Securities Act).
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(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any
time combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable hereunder
into a smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF SHARES. Upon each event requiring an
adjustment of the Exercise Price pursuant to the provisions of this Paragraph 4
(or each event which would require such adjustment but for the provisions of
Section 4(a) hereof relating to the Minimum Exercise Price), the number of
shares of Common Stock issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price (or the amount which such
adjusted Exercise Price would equal but for the provisions of Section 4(a)
hereof relating to the Minimum Exercise Price).
(e) CONSOLIDATION, MERGER OR SALE. If, at any time when this Warrant
is issued and outstanding and prior to the full exercise thereof, any capital
reorganization, reclassification or similar transaction involving the capital
stock of the Company, or any consolidation, merger or business combination of
the Company with another Person (as defined below), or the sale, conveyance or
disposition of all or substantially all of the assets of the Company, shall be
effected in such a way that holders of Common Stock shall be entitled to receive
stock or securities of the Company or another entity or assets (including cash)
with respect to or in exchange for shares of the Common Stock (a "Reorganization
Event"), then, prior to and as a condition of such Reorganization Event, lawful
and adequate provision shall be made whereby the holder shall thereafter have
the right to receive upon exercise of this Warrant, upon the basis and upon the
terms and conditions specified herein, and in lieu of the shares of Common Stock
immediately theretofore issuable upon exercise of this Warrant, such shares of
stock, securities or assets (including cash) which the holder would have been
entitled to receive in such Reorganization Event had the Warrant been exercised
in full immediately prior to such Reorganization Event (without regard to any
limitations on exercise set forth herein other than the provisions of Section
4(a) hereof relating to the Minimum Exercise Price, as such Minimum Exercise
Price may be adjusted pursuant to Section 4(c) and Section 4(e)). In any such
case, appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Exercise Price
and the number of shares of Common Stock issuable upon exercise of this Warrant)
shall thereafter be applicable, as nearly as may be practicable, in relation to
any stock, securities or assets thereafter deliverable upon the exercise of this
Warrant. The Company shall not effect any such Reorganization Event unless prior
to or simultaneously with the consummation thereof the resulting successor or
acquiring entity (if other than the
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Company) and, if an entity different from the successor or acquiring entity, the
entity (if other than the Company) whose capital stock or assets the holders of
Common Stock are entitled to receive as a result of such Reorganization Event,
shall assume by written instrument executed and sent to each holder, the
obligations under this Warrant including an express assumption by such required
entity or entities, as applicable, of the due and punctual performance and
observance of every provision herein to be performed and observed by the Company
and of all liabilities and obligations of the Company under this Warrant. The
Company shall also not effect any such Reorganization Event if the Company, as
opposed to another party to the Reorganization Event, shall be required under
any circumstances to make a cash payment at any time to any holder of Warrants,
including, without limitation, in connection with the exercise of any applicable
dissenter's rights. The Company shall not effect any such Reorganization Event
unless it first gives, to the extent practical, thirty (30) days' prior written
notice (but in any event at least fifteen (15) business days prior written
notice) of the record date of the special meeting of stockholders to approve, or
if there is no such record date, the consummation of, such Reorganization Event
(during which time the holder shall be entitled to exercise this Warrant). The
above provisions shall similarly apply to successive Reorganization Events.
"Person" means any individual, corporation, limited liability company,
partnership, association, trust or other entity or organization.
(f) DISTRIBUTION OF ASSETS. In case the Company shall declare or make
any distribution of its assets (including cash) to holders of Common Stock as a
partial liquidating dividend, by way of return of capital or otherwise, then,
after the date of record for determining stockholders entitled to such
distribution, but prior to the date of distribution, the holder of this Warrant
shall be entitled upon exercise of this Warrant for the purchase of any or all
of the shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to the holder had such holder been the
holder of such shares of Common Stock on the record date for the determination
of stockholders entitled to such distribution.
(g) NOTICE OF ADJUSTMENT. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
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(i) NO FRACTIONAL SHARES. No fractional shares of Common Stock are to
be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock on the date of such exercise.
(j) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution
(including dividends or distributions payable in cash out of retained earnings)
to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization of the Company,
or reclassification of the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substantially all its assets to, another
corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for determining the holders of Common Stock entitled to receive
any such dividend, distribution, or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up and (b) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, notice of
the date (or, if not then known, a reasonable approximation thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings referred to in clauses (i), (ii), (iii)
and (iv) above.
(k) CERTAIN EVENTS. If any event occurs of the type contemplated by
the adjustment provisions of this Paragraph 4 but not expressly provided for by
such provisions, the Company will give notice of such event as provided in
Paragraph 4(g) hereof, and the Company's Board of Directors will make an
appropriate adjustment in the Exercise Price and the number of shares of Common
Stock acquirable upon exercise of this Warrant so that the rights of the Holder
shall be neither enhanced nor diminished by such event.
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(l) CERTAIN DEFINITIONS.
(i) "COMMON STOCK DEEMED OUTSTANDING" shall mean the number of
shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) pursuant to Paragraph
4(b)(i) hereof, the maximum total number of shares of Common Stock issuable upon
the exercise of Options, as of the date of such issuance or grant of such
Options, if any, and (y) pursuant to Paragraph 4(b)(ii) hereof, the maximum
total number of shares of Common Stock issuable upon conversion or exchange of
Convertible Securities, as of the date of issuance of such Convertible
Securities, if any.
(ii) "MARKET PRICE," as of any date, (i) means the average of the
last reported sale prices for the shares of Common Stock on the Nasdaq National
Market (the "NNM") for the five (5) trading days immediately preceding such date
as reported by Bloomberg Financial Markets or an equivalent reliable reporting
service mutually acceptable to and hereafter designated by the holder of this
Warrant and the Company ("Bloomberg"), or (ii) if the NNM is not the principal
trading market for the shares of Common Stock, the average of the last reported
sale prices on the principal trading market for the Common Stock during the same
period as reported by Bloomberg, or (iii) if market value cannot be calculated
as of such date on any of the foregoing bases, the Market Price shall be the
fair market value as reasonably determined in good faith by (a) the Board of
Directors of the Corporation or (b) at the option of a majority-in-interest of
the holders of the outstanding Warrants, an independent investment bank of
nationally recognized standing in the valuation of businesses similar to the
business of the corporation. The manner of determining the Market Price of the
Common Stock set forth in the foregoing definition shall apply with respect to
any other security in respect of which a determination as to market value must
be made hereunder.
(iii) "COMMON STOCK," for purposes of this Paragraph 4, includes
the Common Stock, par value $0.001 per share, and any additional class of stock
of the Company having no preference as to dividends or distributions on
liquidation, provided that the shares purchasable pursuant to this Warrant shall
include only shares of Common Stock, par value $0.001 per share, in respect of
which this Warrant is exercisable, or shares resulting from any subdivision or
combination of such Common Stock, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character referred to in
Paragraph 4(e) hereof, the stock or other securities or property provided for in
such Paragraph.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company. No
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provision of this Warrant, in the absence of affirmative action by the holder
hereof to purchase Warrant Shares, and no mere enumeration herein of the rights
or privileges of the holder hereof, shall give rise to any liability of such
holder for the Exercise Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights granted to
the holder hereof are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Paragraph 7(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Paragraph 7(f) hereof and to the applicable
provisions of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary. Notwithstanding
anything to the contrary contained herein, the registration rights described in
Paragraph 8 are assignable only in accordance with the provisions of that
certain Registration Rights Agreement, dated as of September 29, 2000, by and
among the Company and the other signatories thereto (the "Registration Rights
Agreement").
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Paragraph 7(e) below, for new Warrants of
like tenor representing in the aggregate the right to purchase the number of
shares of Common Stock which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of shares as shall be
designated by the holder hereof at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Paragraph 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all other
expenses (other than legal expenses, if any, incurred by the Holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Paragraph 7.
(e) REGISTER. The Company shall maintain, at its principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the holder hereof), a register for this Warrant, in which the Company
shall record the name and
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address of the person in whose name this Warrant has been issued, as well as the
name and address of each transferee and each prior owner of this Warrant.
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time of the
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares issuable hereunder), shall not be registered under the Securities Act and
under applicable state securities or blue sky laws, the Company may require, as
a condition of allowing such exercise, transfer, or exchange, (i) that the
holder or transferee of this Warrant, as the case may be, furnish to the Company
a written opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that such
exercise, transfer, or exchange may be made without registration under said Act
and under applicable state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter or status as an "accredited investor"
shall be required in connection with a transfer pursuant to Rule 144 under the
Securities Act. The first holder of this Warrant, by taking and holding the
same, represents to the Company that such holder is acquiring this Warrant for
investment and not with a view to the distribution thereof.
8. REGISTRATION RIGHTS. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in Section 2 of the Registration
Rights Agreement.
9. FORCED EXERCISE. Subject to the limitations on exercise set forth in
Section 1 and so long as for at all times during the period beginning thirty
(30) trading days prior to the Forced Exercise Trigger Date (as defined below)
and ending on the Company Exercise Date (as defined below) (i) all of the shares
of Common Stock issuable upon exercise of this Warrant are then (x) authorized
and reserved for issuance, (y) registered for re-sale under the Securities Act
by the holder of this Warrant and sales of such shares may be made thereunder
(or such shares may otherwise be resold publicly without restriction (including
without limitation as to volume)) and (z) eligible to be traded on the NNM, the
NYSE, the AMEX or Nasdaq SmallCap (each as defined in the Securities Purchase
Agreement) and (ii) there is not then a continuing Redemption Event (as defined
in the Certificate of Designation (as defined in the Securities Purchase
Agreement) (the "Certificate of Designation")), then, at any time after the
twenty-four (24) month anniversary of the date the Registration Statement
required to be filed pursuant to Section 2(a) of the Registration Rights
Agreement is declared effective by the SEC (subject to extension for each
trading day following effectiveness that sales of all of the Registrable
Securities (as defined in the Registration Rights Agreement) cannot be made
pursuant to the Registration Statement (whether by reason of the Company's
failure to properly supplement or amend the prospectus included therein in
accordance with the terms of the Registration Rights Agreement, during an
Allowed Delay (as defined in the Registration Rights Agreement) or otherwise)),
the Company shall have the right within five (5) trading days of any trading day
(a "Forced Exercise Trigger Date") on which, and for a period of thirty (30)
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consecutive trading days prior thereto, the Closing Bid Price (as defined in the
Certificate of Designation) of the Common Stock is greater than 175% of the
Exercise Price (subject to adjustment for stock splits, stock dividends and
similar transactions), to deliver written notice (the "Company Exercise Notice")
to the holder of this Warrant (which notice may not be sent to the holders of
this Warrant (a) until the Company is permitted to exercise this Warrant
pursuant to this Section 9 and (b) during any period of time in which the
Company is in possession of any information, the disclosure of which could cause
a material increase in the Market Price of the Company's Common Stock) of its
intention to exercise this Warrant in accordance with this Section 9 and Section
1; provided, however, that a Company Exercise shall not be permitted if during
the period beginning on the date the Company Exercise Notice is delivered to the
holder of this Warrant and ending on the trading day prior to the Company
Exercise Date the average Closing Bid Price of the Common Stock during such
period is not greater than 175% of the Exercise Price (subject to adjustment for
stock splits, stock dividends and similar transactions). Any exercise hereunder
(a "Company Exercise") shall be as of the date (the "Company Exercise Date")
specified in the Company Exercise Notice (but in no event prior to the thirtieth
(30) trading day following the date of such notice). The Company Exercise Notice
shall be delivered to the holder of this Warrant at its registered addresses
appearing on the books and records of the Company, which notice shall contain
substantially the same information as the Exercise Agreement described in
Section 1.
10. MAJOR TRANSACTION REDEMPTION. So long as for all times during the
period beginning thirty (30) trading days prior to the date of the Major
Transaction Redemption Notice (as defined below) and ending on the Major
Transaction Redemption Date (as defined below) (i) all of the shares of Common
Stock issuable upon exercise of this Warrant are then (x) authorized and
reserved for issuance, (y) registered for resale under the Securities Act by the
holder and sales of such shares may be made thereunder (or such shares may
otherwise be resold publicly without restriction (including without limitation
as to volume)) and (z) eligible to be traded on the Nasdaq, the Nasdaq SmallCap,
the NYSE or the AMEX and (ii) no Redemption Event (as defined in the Certificate
of Designation) shall have occurred and be continuing, then, in the event the
Company publicly announces its intention to consummate a Major Transaction (as
defined below), the Company shall have the right to deliver written notice to
the holder of its intention to redeem this Warrant in accordance with this
Section 10. Any notice (the "Major Transaction Redemption Notice") of redemption
hereunder (a "Major Transaction Redemption") shall be delivered to the holder at
its registered address appearing on the books and records of the Company and
shall state (1) that the Company is exercising its right to redeem this Warrant
and (2) the date of redemption (the "Major Transaction Redemption Date") , which
date shall be (A) at least twenty (20) trading days after the date of delivery
of the Major Transaction Redemption Notice and (B) the date of consummation of
the Major Transaction. In the event that the Major Transaction Notice is
delivered to the holder but the Major Transaction is not consummated, the Major
Transaction Notice shall be deemed to be withdrawn as to such holder. On the
Major Transaction Redemption Date, the Company shall make payment of the Major
Transaction Redemption Amount (as defined below) to or upon the order of the
holder as specified by the holder in writing to the Company at least one (1)
business day prior to the Major Transaction Redemption Date. If the Company
exercises its right to redeem this Warrant pursuant to this
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Section 10, the Company shall make payment to the holder of an amount in cash
(the "Major Transaction Redemption Amount") equal to the Black-Scholes Amount
(as defined below) for the number of shares of Common Stock subject to this
Warrant. Notwithstanding notice of a Major Transaction Redemption, the holder
shall at all times prior to the Major Transaction Redemption Date maintain the
right to exercise this Warrant at the Exercise Price then in effect (including
any adjustments pursuant to Section 4) and any portion of this Warrant so
exercised after receipt of a Major Transaction Redemption Notice and prior to
the Major Transaction Redemption Date set forth in such notice and payment of
the aggregate Major Transaction Redemption Amount shall be deducted from the
number of Warrants which are otherwise subject to redemption pursuant to such
notice. If the Company delivers a Major Transaction Redemption Notice, the Major
Transaction is consummated and the Company fails to pay the Major Transaction
Redemption Amount due to the holder on the Major Transaction Redemption Date,
the Company (and any successor or acquiring entity) shall forever forfeit its
right to redeem this Warrant pursuant to this Section 10 and such successor or
acquiring entity and, if an entity different from the successor or acquiring
entity, the entity whose capital stock or assets the holders of Common Stock are
entitled to receive as a result of such Major Transaction, shall be required to
assume the obligations of the Company under this Warrant in accordance with
Section 4(e). "Major Transaction" means a consolidation or merger of the Company
with or into any other corporation or entity (other than a merger in which the
Company is the surviving or continuing corporation and its capital stock is
unchanged) or the sale or transfer of all or substantially all of the assets of
the Company, in each case where the consideration for such transaction consists
entirely of cash or in which the entity whose capital stock or assets the
holders of Common Stock are entitled to receive as a result of such Major
Transaction is not a publicly traded corporation (i.e., the common stock of such
corporation is not traded on Nasdaq, the Nasdaq SmallCap, the NYSE or the AMEX).
"Black-Scholes Amount," as of any date, means the amount determined by
calculating the "Black-Scholes" value of an option to purchase one share of
Common Stock on the applicable page on the Bloomberg online page, using the
following variable values: (i) the current market price of the Common Stock
equal to the closing trade price on the last trading day before the date for
which such amount is being determined (the "Applicable Date"); (ii) volatility
of the Common Stock equal to the volatility of the Common Stock during the
100-trading day period preceding the Applicable Date; (iii) a risk free rate
equal to the yield of the United States treasury xxxx or treasury note with a
maturity corresponding to the remaining term of the Warrants on the Applicable
Date; and (iv) an exercise price equal to the Exercise Price on the Applicable
Date. In the event such calculation function is no longer available utilizing
the Bloomberg online page, such calculation shall be made using the closest
available alternative mechanism and variable values to those available utilizing
the Bloomberg online page for such calculation function. For purposes of this
Section 10, the "Applicable Date" shall be the Major Transaction Redemption
Date.
11. NOTICES. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by certified
or registered mail or by recognized overnight mail courier, postage prepaid and
addressed, to such holder at the address shown for such holder on the books of
the Company, or at such other address as shall have been furnished
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to the Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed, to the office of the Company at 000 Xxxx Xxxxx, Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000, Attention: President and Chief Executive
Officer, or at such other address as shall have been furnished to the holder of
this Warrant by notice from the Company. Any such notice, request, or other
communication may be sent by facsimile, but shall in such case be subsequently
confirmed by a writing personally delivered or sent by certified or registered
mail or by recognized overnight mail courier as provided above. All notices,
requests, and other communications shall be deemed to have been given either at
the time of the receipt thereof by the person entitled to receive such notice at
the address of such person for purposes of this Paragraph 11, or, if mailed by
registered or certified mail or with a recognized overnight mail courier upon
deposit with the United States Post Office or such overnight mail courier, if
postage is prepaid and the mailing is properly addressed, as the case may be.
12. GOVERNING LAW. THIS WARRANT 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.
BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE 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. BOTH PARTIES AGREE 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.
13. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the holder hereof.
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(b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for purposes of reference only, and
shall not affect the meaning or construction of any of the provisions hereof.
(c) CASHLESS EXERCISE. Notwithstanding anything to the contrary
contained in this Warrant, if the resale of the Warrant Shares by the holder is
not then registered pursuant to an effective registration statement under the
Securities Act (or, after the registration statement covering the Warrant Shares
is declared effective, sales of the Warrant Shares may not be made thereunder
for any reason other than a breach by the holder of its obligations under
Section 4(a) or 4(b) of the Registration Rights Agreement), this Warrant may be
exercised by presentation and surrender of this Warrant to the Company at its
principal executive offices with a written notice of the holder's intention to
effect a cashless exercise, including a calculation of the number of shares of
Common Stock to be issued upon such exercise in accordance with the terms hereof
(a "Cashless Exercise"). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying the number of Warrant
Shares to which it would otherwise be entitled by a fraction, the numerator of
which shall be the difference between the then current Market Price per share of
the Common Stock and the Exercise Price, and the denominator of which shall be
the then current Market Price per share of Common Stock.
(d) REMEDIES. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Warrant will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Warrant, that the
holder shall be entitled, in addition to all other available remedies at law or
in equity, to an injunction or injunctions restraining, preventing or curing any
breach of this Warrant and to enforce specifically the terms and provisions
thereof, without the necessity of showing economic loss and without any bond or
other security being required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
SUPERCONDUCTOR TECHNOLOGIES INC.
By: /s/ M. Xxxxx Xxxxxx
------------------------------------
M. Xxxxx Xxxxxx
President and Chief Executive Officer
Dated as of September 29, 2000
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FORM OF EXERCISE AGREEMENT
Dated: ________ __, 200_
To: Superconductor Technologies Inc.
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to purchase ________ shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant in cash or by certified or official bank check in the
amount of, or, if the resale of such Common Stock by the undersigned is not
currently registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended (or, after the registration statement
covering the Warrant Shares is declared effective, sales of the Warrant Shares
may not be made thereunder for any reason other than a breach by the holder of
its obligations under Section 4(a) or 4(b) of the Registration Rights
Agreement), by surrender of securities issued by the Company (including a
portion of the Warrant) having a market value (in the case of a portion of this
Warrant, determined in accordance with Section 13(c) of the Warrant) equal to
$_________. Please issue a certificate or certificates for such shares of Common
Stock in the name of and pay any cash for any fractional share to:
Name:
----------------------------------
Signature:
-----------------------------
Address:
-------------------------------
Note: The above signature should correspond exactly with the
name on the face of the within Warrant.
and, if said number of shares of Common Stock shall not be all the shares
purchasable under the within Warrant, a new Warrant is to be issued in the name
of said undersigned covering the balance of the shares purchasable thereunder
less any fraction of a share paid in cash.
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable to the undersigned upon exercise of the
within Warrant shall be made pursuant to registration of the securities under
the Securities Act of 1933, as amended (the "Act"), or pursuant to an exception
from registration under the Act, and shall be made in compliance with applicable
prospectus delivery requirements.
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No of Shares
---------------- ------- ------------
, and hereby irrevocably constitutes and appoints ______________
________________________ as agent and attorney-in-fact to transfer said Warrant
on the books of the within-named corporation, with full power of substitution in
the premises.
Dated: , 200
------------ -
In the presence of:
----------------------------------------
Name:
----------------------------------
Signature:
-----------------------------
Title of Signing Officer or Agent (if any):
----------------------------------------
Address:
-------------------------------
----------------------------------------
Note: The above signature should correspond exactly with the
name on the face of the within Warrant.
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