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EXHIBIT 4.13
SUPERCONDUCTOR TECHNOLOGIES INC.
000 XXXX XXXXX
XXXXX X
XXXXX XXXXXXX, XXXXXXXXXX 00000
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
MARCH 5, 1999
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TABLE OF CONTENTS
Page
Section 1 Authorization and Sale of Preferred Stock; Issuance of Warrants.........1
1.1 Authorization......................................................1
1.2 Sale of Shares; Issuance of Warrants...............................1
Section 2 Closing Dates; Delivery.................................................1
2.1 Closing............................................................1
2.2 Delivery...........................................................1
Section 3 Representations and Warranties of the Company...........................2
3.1 Organization and Standing; Certificate and Bylaws..................2
3.2 Corporate Power....................................................2
3.3 Subsidiaries.......................................................2
3.4 Capitalization.....................................................2
3.5 Authorization......................................................3
3.6 Financial Statements...............................................4
3.7 Changes............................................................4
3.8 Material Obligations...............................................4
3.9 Material Contracts and Commitments.................................5
3.10 Intellectual Property, Trademarks, etc.............................5
3.11 Title to Properties and Assets; Liens, etc.........................5
3.12 Compliance with Other Instruments, None Burdensome, etc............5
3.13 Litigation, etc....................................................5
3.14 Registration Rights................................................5
3.15 Governmental Consent, etc..........................................6
3.16 Offering...........................................................6
3.17 Brokers or Finders.................................................6
3.18 Tax Returns and Payments...........................................6
3.19 Employee Matters...................................................6
3.20 Disclosure.........................................................6
Section 4 Representations and Warranties of the Purchaser.........................7
4.1 Experience; Speculative Nature of Investment.......................7
4.2 Investment.........................................................7
4.3 Rule 144...........................................................7
4.4 No Public Market...................................................7
4.5 Access to Data.....................................................7
4.6 Authorization......................................................8
4.7 Brokers or Finders.................................................8
4.8 Tax Liability......................................................8
Section 5 Conditions to Purchaser's Obligations to Close..........................8
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TABLE OF CONTENTS
(CONTINUED)
Page
5.1 Representations and Warranties Correct.............................8
5.2 Covenants..........................................................8
5.3 Blue Sky...........................................................8
5.4 Certificate of Designation.........................................9
5.5 Rights Agreement...................................................9
5.6 Compliance Certificate.............................................9
5.7 Compliance with Law................................................9
5.8 Opinion of Company's Counsel.......................................9
Section 6 Conditions to Company's Obligations to Close............................9
6.1 Representations....................................................9
6.2 Covenants..........................................................9
6.3 Blue Sky...........................................................9
6.4 Certificate of Designation.........................................9
6.5 Rights Agreement...................................................9
6.6 Compliance with Law................................................9
6.7 Surrender of Promissory Notes.....................................10
Section 7 Covenants..............................................................10
7.1 Board of Directors................................................10
7.2 Stockholder Approval..............................................10
Section 8 Confidential Information...............................................10
8.1 Confidential Business Information.................................10
Section 9 Miscellaneous..........................................................11
9.1 Governing Law.....................................................11
9.2 Survival..........................................................11
9.3 Successors and Assigns............................................11
9.4 Entire Agreement; Amendment.......................................11
9.5 Notices, etc......................................................11
9.6 Delays or Omissions...............................................12
9.7 California Corporate Securities Law...............................12
9.8 Counterparts......................................................12
9.9 Severability......................................................12
9.10 Titles and Subtitles..............................................12
9.11 Expenses..........................................................13
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EXHIBITS
A Certificate of Designation
B Warrant
C Second Amended and Restated Stockholder Rights Agreement
D Compliance Certificate
E Opinion of Counsel
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SUPERCONDUCTOR TECHNOLOGIES, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
made as of March 5, 1999 by and among Superconductor Technologies Inc., a
Delaware corporation (the "COMPANY"), and Wilmington Securities, Inc. (the
"PURCHASER").
SECTION 1
AUTHORIZATION AND SALE OF PREFERRED STOCK; ISSUANCE OF WARRANTS
1.1 Authorization. The Company will, prior to the Closing (as defined
below), authorize the sale and issuance of (i) 41,667 shares (the "SHARES") of
the Company's Series C Preferred Stock ("SERIES C PREFERRED"), having the
rights, privileges and preferences as set forth in the Series C Preferred Stock
Certificate of Designation (the "CERTIFICATE") in the form attached to this
Agreement as EXHIBIT A and (ii) the Warrants (as defined below) to purchase up
to 120,000 shares of the Common Stock (as defined below) at a price of $4.50 per
share.
1.2 SALE OF SHARES; ISSUANCE OF WARRANTS. Subject to the terms and
conditions of this Agreement, the Purchaser agrees to purchase and the Company
agrees to sell and issue to the Purchaser:
(a) 41,667 Shares, at a cash price of $72.00 per share; and
(b) a warrant or warrants in the form attached to this Agreement
as EXHIBIT B (the "WARRANTS") which shall permit the Purchaser to initially
purchase 120,000 shares of Company Common Stock, at an exercise price of $4.50
per share.
SECTION 2
CLOSING DATES; DELIVERY
2.1 CLOSING. The closing (the "Closing") for the purchase and sale of
the Shares and the issuance of the Warrants hereunder shall take place on March
5, 1999. The Closing shall be held at the offices of Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, or at such other time and
place upon which the Company and the Purchaser shall agree.
2.2 DELIVERY. At the Closing, the Company will deliver to the Purchaser
a certificate registered in the Purchaser's name representing the number of
Shares that the Purchaser is purchasing against payment of $3,000,000 (the
"Purchase Price") by cashier's or certified check payable to the Company or wire
transfer of immediately available funds per the Company's instructions. Partial
payment of the Purchase Price shall be made by surrender of the Demand
Promissory Notes issued by the Company to the Purchaser dated February 17, 1999
and February
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25, 1999 (the "Promissory Notes"). At the Closing, the Company will deliver to
the Purchaser a Warrant evidencing the right to purchase 120,000 shares of
Company Common Stock in the form attached as Exhibit B.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on Schedule of Exceptions provided to the Purchaser,
the Company represents and warrants to the Purchaser as of the date of this
Agreement as follows:
3.1 ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS. The Company is a
corporation duly organized and existing under, and by virtue of, the laws of the
State of Delaware and is in good standing under such laws. The Company has
requisite corporate power and authority to own and operate its properties and
assets, and to carry on its business. The Company is presently qualified to do
business as a foreign corporation in each jurisdiction where the failure to be
so qualified would have a material adverse effect on the Company's business,
operating results or financial condition (a "Material Adverse Effect").
3.2 CORPORATE POWER. The Company has all requisite legal and corporate
power and authority to execute and deliver this Agreement and that certain
Second Amended and Restated Stockholder Rights Agreement substantially in the
form attached hereto as Exhibit C (the "Rights Agreement"), to sell and issue
the Warrants and Shares hereunder, to issue the shares of the common stock of
the Company (the "Common Stock") issuable upon conversion of the Shares, to
issue the Common Stock issuable on exercise of the Warrants and to carry out and
perform its obligations under the terms of this Agreement and the Rights
Agreement (together the "Agreements").
3.3 SUBSIDIARIES. Except for Cryo-Asia Pte Ltd., a joint venture with
Alantac in Singapore, the Company has no subsidiaries and does not otherwise own
or control, directly or indirectly, any equity interest in any corporation,
association or business entity.
3.4 CAPITALIZATION. (a) The authorized capital stock of the Company
consists or will, upon the filing prior to the Closing of the Certificate,
consist of (i) 30,000,000 shares of Common Stock, par value $0.001 per share, of
which 7,724,841 shares are issued and outstanding as of March 5, 1999, and (ii)
2,000,000 shares of Preferred Stock, of which (1) 645,833 shares have been
designated "Series A Preferred," none of which are issued and outstanding, (2)
125,000 shares have been designated "Series A-1 Preferred," none of which are
issued and outstanding, (3) 64,584 shares have been designated "Series A-2
Preferred," all of which are issued and outstanding, (4) 12,500 shares have been
designated "Series A-3 Preferred," all of which are issued and outstanding, (5)
1,000,000 shares have been designated "Series B Preferred", none of which are
issued and outstanding, (6) 50,000 shares have been designated "Series B-1
Preferred", all of which are issued and outstanding, and (7) 41,667 shares have
been designated "Series C Preferred," none of which were issued and outstanding
prior to the Closing. The Company by action of its Board of Directors will
eliminate the series of Preferred Stock designated "Series A Preferred Stock,"
"Series A-1 Preferred Stock," and "Series B Preferred Stock" and all shares of
Preferred Stock so designated
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shall revert to authorized and undesignated shares of Company Preferred Stock.
The outstanding shares have been duly authorized and validly issued in
compliance with applicable laws, and are fully paid and nonassessable.
(b) As of the date of the Closing, the Company has reserved (i)
41,667 shares of Series C Preferred Stock for issuance hereunder, (ii) 3,375,020
shares of Common Stock for issuance upon conversion of all shares of Company
Preferred Stock to be issued and outstanding following the Closing, consisting
of (1) 1,291,680 shares for issuance upon conversion of Series A-2 Preferred
Stock, (2) 250,000 shares for issuance upon conversion of Series A-3 Preferred
Stock, (3) 1,000,000 shares for issuance upon conversion of Series B-1 Preferred
Stock, and (4) 833,340 shares for issuance upon conversion of Series C Preferred
Stock, (iii) 166,667 shares of Common Stock for issuance upon exercise of
warrants issued in connection with the Series A Preferred Stock financings, (iv)
120,000 shares of Common Stock for issuance upon exercise of the Warrants issued
in connection with the Series B Preferred Stock financing, (v) 120,000 shares of
Common Stock for issuance upon exercise of the Warrants, (vi) 75,000 shares of
Common Stock for issuance upon exercise of Warrants issued in connection with
the Exchange Agreement (the "EXCHANGE AGREEMENT") entered into between the
Company and holders of Company Preferred Stock as of February 26, 1999, (vii)
1,969,690 shares of its Common Stock for issuance to employees, consultants or
directors pursuant to its 1992 Director Option Plan, 1992 Stock Option Plan,
Amended and Restated 1988 Stock Option Plan and 1998 Nonstatutory Option Plan,
of which options to purchase 1,868,248 shares are issued and outstanding and
(viii) a total of 150,000 shares of Common Stock for issuance upon exercise of
certain outstanding warrants as identified in the Schedule of Exceptions.
(c) The Common Stock, the Series A-2, Series A-3, Series B-1 and
Series C Preferred shall have the rights, preferences, privileges and
restrictions set forth in the Company's Amended and Restated Certificate of
Incorporation (the "CERTIFICATE OF INCORPORATION"), a copy of which was provided
to the Purchaser in connection with the Company's Series B Preferred Stock
financing, the Certificate and the Certificates of Designations filed in
connection with the Exchange Agreement. Except as set forth above, and in the
Schedule of Exceptions, there are no options, warrants, or other rights to
purchase any of the Company's authorized and unissued capital stock.
3.5 AUTHORIZATION. All corporate action on the part of the Company and
its directors necessary for the authorization, execution, delivery and
performance of the Agreements by the Company, the authorization, sale, issuance
and delivery of the Warrants, Shares and the Common Stock issuable upon
conversion of the Shares and upon exercise of the Warrants, and the performance
of all of the Company's obligations under the Agreements has been taken or will
be taken prior to the Closing. The Agreements, when executed and delivered by
the Company, shall constitute valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies, except that the indemnification provisions of Section 1.10
of the Rights Agreement may further be limited by principles of public policy.
The Warrants and Shares, when issued in compliance with the provisions of this
Agreement, will be validly issued, will be fully paid and nonassessable, and
will have the rights, preferences and privileges described in the certificate
representing the Warrants and the Certificate; the Common Stock issuable upon
conversion of the Shares and upon exercise of the
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Warrants has been duly and validly reserved and, when issued in compliance with
the provisions of this Agreement, the Certificate of Incorporation of the
Company, the Certificate and the certificate representing the Warrants will be
validly issued, and will be fully paid and nonassessable; and the Shares and the
Common Stock issued upon conversion of the Shares and upon exercise of the
Warrants, will be free of any liens or encumbrances, other than any liens or
encumbrances created by or imposed upon the Purchaser; provided, however, that
the Shares, and the Common Stock issuable upon conversion of the Shares and upon
exercise of the Warrants, are subject to restrictions on transfer under state
and/or federal securities laws as set forth herein and in the Rights Agreement.
3.6 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser
copies of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and Quarterly Reports on Form 10-Q for the fiscal quarters
ended March 28, 1998, June 27, 1998, and September 26, 1998 (the "Reports"). The
financial statements included within the Reports are complete and correct in all
material respects and accurately set out and describe the financial condition
and operating results of the Company as of the dates and during the periods
indicated therein, subject only, in the case of financial statements included in
the Quarterly Reports, to footnotes and normal year-end adjustments.
3.7 CHANGES. Since the date of the Company's last Quarterly Report on
Form 10-Q, there has not been:
(a) Any change in the assets, liabilities, financial condition,
or operations of the Company except changes in the ordinary course of business
which have not been in any case materially adverse;
(b) Any damage, destruction, or loss, whether or not covered by
insurance, materially and adversely affecting the properties or business of the
Company;
(c) Any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;
(d) Any loans made by the Company to its employees, officers or
directors other than travel advances made in the ordinary course of business;
(e) Any declaration or payment of any dividend or other
distribution by the Company; or
(f) To the best of the Company's knowledge, any other event or
condition of any character which has materially and adversely affected the
business operations, assets or financial condition of the Company.
3.8 MATERIAL OBLIGATIONS. The Company has no material liabilities or
obligations, absolute or contingent (individually or in the aggregate), except
(i) the liabilities and obligations set forth in the Reports, and (ii)
liabilities and obligations which have been incurred subsequent to September 26,
1998, in the ordinary course of business which have not been, either in any case
or in the aggregate, material.
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3.9 MATERIAL CONTRACTS AND COMMITMENTS. To the best of the Company's
knowledge, all of the contracts, agreements and instruments to which the Company
is a party and which are set forth or incorporated by reference in the Reports
(the "Material Agreements") are valid, binding and in full force and effect in
all material respects, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
3.10 INTELLECTUAL PROPERTY, TRADEMARKS, ETC. The Company has the right
to use, free and clear of all liens, charges, claims and restrictions, all
intellectual property, patents, trademarks, service marks, trade names,
copyrights, licenses and rights necessary to the business of the Company as
presently conducted, except to the extent that a Material Adverse Effect could
not reasonably be expected to result. To the Company's knowledge, the Company is
not infringing upon or otherwise acting adversely to the right or claimed right
of any other person under or with respect to any such intellectual property,
patents, trademarks, service marks, trade names, copyrights, licenses or rights.
3.11 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good
and marketable title to its properties and assets, and has good title to all its
leasehold interests, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than (i) the lien of current taxes not yet due and
payable, and (ii) possible minor liens and encumbrances which do not in any case
materially detract from the value of the property subject thereto or materially
impair the operations of the Company, and which have not arisen otherwise than
in the ordinary course of business.
3.12 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC. The
Company is not in violation of any term of the Certificate of Incorporation or
Bylaws, each as amended to date, or in any material respect of any term or
provision of any Material Agreement, judgment, decree, order, statute, rule or
regulation applicable to the Company in any respect that could reasonably be
expected to have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, and the issuance of the Warrants, Shares and the
Common Stock issuable upon conversion of the Shares and upon exercise of the
Warrants, have not resulted and will not result in any material violation of, or
conflict with, or constitute a material default under, the Certificate of
Incorporation or Bylaws, as amended, nor any of the Material Agreements, nor
result in the creation of, any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company.
3.13 LITIGATION, ETC. There are no actions, suits, proceedings or
investigations pending against the Company or its properties before any court or
governmental agency (nor, to the best of the Company's knowledge, is there any
reasonable basis therefor or threat thereof) which, if adversely determined,
would have a Material Adverse Effect. The Company is not a party or subject to
the provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality.
3.14 REGISTRATION RIGHTS. Except as set forth in the Rights Agreement
attached hereto as Exhibit C, and the Amended and Restated Registration Rights
Agreement entered into between the Company and the holders of Company Series B-1
Preferred Stock, the Company is not under any contractual obligation to register
(as defined in Section 1.2 of the Rights Agreement) any of its presently
outstanding securities or any of its securities which may hereafter be issued.
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3.15 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization of
or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Warrants,
Shares and the Common Stock issuable upon conversion of the Shares and upon
exercise of the Warrants, or the consummation of any other transaction
contemplated hereby or thereby, except (a) filing of the Certificate in the
office of the Delaware Secretary of State, and (b) qualification (or taking such
action as may be necessary to secure an exemption from qualification, if
available) of the offer, sale and issuance of the Warrants and Shares (and the
Common Stock issuable upon conversion of the Shares and upon exercise of the
Warrants) under the California Corporate Securities Law of 1968, as amended, and
other applicable Blue Sky laws, which filings and qualifications, if required,
will be accomplished in a timely manner.
3.16 OFFERING. Subject to the accuracy of the Purchaser's
representations in Section 4 hereof, the offer, sale and issuance of the
Warrants and Shares to be issued in conformity with the terms of this Agreement,
and the issuance of the Common Stock to be issued upon conversion of the Shares
and upon exercise of the Warrants, constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as amended
(the "Securities Act").
3.17 BROKERS OR FINDERS. Except as disclosed in the Disclosure Schedule,
the Company has not engaged any brokers, finders or agents, and the Purchaser
has not incurred, and will not incur, directly or indirectly, as a result of any
action taken by the Company, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with the Agreements.
3.18 TAX RETURNS AND PAYMENTS. The Company has timely filed all tax
returns (federal, state and local) required to be filed by it. All taxes shown
to be due and payable on such returns, any assessments imposed, and to the
Company's knowledge all other taxes due and payable by the Company on or before
the date hereof have been paid or will be paid prior to the time they become
delinquent. The Company has not been advised (a) that any of its returns,
federal, state or other, have been or are being audited as of the date hereof,
or (b) of any deficiency in assessment or proposed judgment to its federal,
state or other taxes. The Company has no knowledge of any liability of any tax
to be imposed upon its properties or assets as of the date of this Agreement
that is not adequately provided for.
3.19 EMPLOYEE MATTERS. The Company does not have any collective
bargaining agreements with any of its employees and no labor union organizing
activity is pending or threatened with respect to the Company.
3.20 DISCLOSURE. To the best of the Company's knowledge, this Agreement
(including the Exhibits hereto) does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein not misleading in light of the circumstances under
which they were made.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company with respect
to the purchase of Shares by and the issuance of the Warrants to such Purchaser,
as follows:
4.1 EXPERIENCE; SPECULATIVE NATURE OF INVESTMENT. The Purchaser (or its
principals or advisors) has substantial experience in evaluating and investing
in private placement transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of its
investment in the Company and has the capacity to protect its own interests. The
Purchaser acknowledges that its investment in the Company is highly speculative
and entails a substantial degree of risk and the Purchaser is in a position to
lose the entire amount of such investment.
4.2 INVESTMENT. The Purchaser is acquiring the Warrants, Shares and the
underlying Common Stock for investment for its own account, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof. The Purchaser understands that the Warrants and Series C
Preferred to be purchased hereby and the underlying Common Stock have not been,
and will not be, registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act, the
availability of which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser is an "accredited investor" within the meaning
of Regulation D, Rule 501(a), promulgated by the Securities and Exchange
Commission.
4.3 RULE 144. The Purchaser acknowledges that the Warrants, Shares and
the underlying Common Stock must be held indefinitely unless subsequently
registered under the Securities Act or unless an exemption from such
registration is available. The Purchaser is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being effected through a
"broker's transaction" or in transactions directly with a "market maker" and the
number of shares being sold during any three-month period not exceeding
specified limitations. The Purchaser understands that the certificates
evidencing the Warrants and Shares will be imprinted with a legend that
prohibits the transfer of such securities unless they are registered or such
registration is not required.
4.4 NO PUBLIC MARKET. The Purchaser understands that no public market
now exists for the Warrants and the Series C Preferred to be issued by the
Company and that the Company has made no assurances that a public market will
ever exist for the Warrants and the Series C Preferred.
4.5 ACCESS TO DATA. The Purchaser has had an opportunity to discuss the
Company's business, management and financial affairs with its management. The
Purchaser has also had an opportunity to ask questions of officers of the
Company, which questions were answered to its satisfaction. The Purchaser
understands that such discussions, as well as any written information
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issued by the Company, were intended to describe certain aspects of the
Company's business and prospects but were not a thorough or exhaustive
description.
4.6 AUTHORIZATION. The Agreements, when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except as the
indemnification provisions of Section 1.10 of the Rights Agreement may be
limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
4.7 BROKERS OR FINDERS. The Purchaser has not engaged any brokers,
finders or agents, and the Company has not, and will not, incur, directly or
indirectly, as a result of any action taken by Purchaser, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Agreements. In the event that the preceding sentence is in
any way inaccurate, such Purchaser agrees to indemnify and hold harmless the
Company and each other Purchaser from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability) for which the Company, any other Purchaser, or
any of their officers, directors, employees or representatives, is responsible.
4.8 TAX LIABILITY. The Purchaser has reviewed with its own tax advisors
the federal, state, local and foreign tax consequences of this investment and
the transactions contemplated by the Agreements. With respect to such matters,
the Purchaser relies solely on such advisors and not on any statements or
representations of the Company or any of its agents other than the
representations and warranties set forth herein. The Purchaser understands that
it (and not the Company) shall be responsible for its own tax liability that may
arise as a result of this investment or the transactions contemplated by the
Agreements.
SECTION 5
CONDITIONS TO PURCHASER'S OBLIGATIONS TO CLOSE
The Purchaser's obligations to purchase the Shares at the Closing are,
unless waived by the Purchaser, subject to the fulfillment of the following
conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of the Closing Date.
5.2 COVENANTS. All covenants, agreements and conditions contained in the
Agreements to be performed by the Company on or prior to the Closing shall have
been performed or complied with in all material respects.
5.3 BLUE SKY. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or have the availability of exemptions therefrom,
required by any state for the issuance of the Warrants, offer and sale of the
Shares and the Common Stock issuable upon conversion of the Shares and upon
exercise of the Warrants.
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5.4 CERTIFICATE OF DESIGNATION. The Certificate shall have been duly
authorized, executed and filed with the Secretary of State of the State of
Delaware.
5.5 RIGHTS AGREEMENT. The Company and the Purchaser shall have executed
and delivered the Rights Agreement.
5.6 COMPLIANCE CERTIFICATE. The Chief Executive Officer of the Company
shall have executed a Compliance Certificate, in the form of Exhibit D hereto,
certifying the satisfaction of the conditions to closing listed in Sections 5.1
and 5.2 hereof.
5.7 COMPLIANCE WITH LAW. No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the sale
and issuance of the Warrants, Shares and the Common Stock issuable upon
conversion of the Shares and upon exercise of the Warrants and the consummation
of the transactions contemplated hereby.
5.8 OPINION OF COMPANY'S COUNSEL. Purchaser shall have received from
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, counsel to the Company, an opinion addressed
to the Purchaser, dated the Closing Date and in substantially the form attached
as Exhibit E.
SECTION 6
CONDITIONS TO COMPANY'S OBLIGATIONS TO CLOSE
The Company's obligation to sell and issue the Shares at the Closing is,
unless waived by the Company, subject to the fulfillment of the following
conditions:
6.1 REPRESENTATIONS. The representations and warranties made by the
Purchaser in Section 4 hereof shall be true and correct as of the Closing Date.
6.2 COVENANTS. All covenants, agreements and conditions contained in the
Agreements to be performed by Purchaser on or prior to the Closing Date shall
have been performed or complied with in all material respects.
6.3 BLUE SKY. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or have the availability of exemptions therefrom,
required by any state for the issuance of the Warrants, offer and sale of the
Shares and the Common Stock issuable upon conversion of the Shares and upon
exercise of the Warrants.
6.4 CERTIFICATE OF DESIGNATION. The Certificate shall have been duly
authorized, executed and filed with the Secretary of State of the State of
Delaware.
6.5 RIGHTS AGREEMENT. The Company and the Purchaser shall have executed
and delivered the Rights Agreement.
6.6 COMPLIANCE WITH LAW. No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the sale
and issuance of the Warrants, Shares and
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the Common Stock issuable upon conversion of the Shares and upon exercise of the
Warrants and the consummation of the transactions contemplated hereby.
6.7 SURRENDER OF PROMISSORY NOTES. The Purchaser shall surrender the
Promissory Notes upon its terms as partial payment of the Purchase Price.
SECTION 7
COVENANTS
7.1 BOARD OF DIRECTORS. The Company agrees that, provided that the
Company has received Stockholder Approval (as defined in Section 6(h) of the
Certificate), at the first meeting of the Company's Board of Directors following
the 1999 Annual Meeting of Stockholders, the Board of Directors shall expand its
size by two directors and appoint Xxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxx
(or such other designees of the Purchaser who shall be reasonably acceptable to
the Company) (the "PURCHASER DESIGNEES") to fill the vacancies created by such
expansion. The Company further agrees, provided the Company has received
Stockholder Approval and provided that the Purchaser then holds at least 33,750
shares of Preferred Stock of the Company, that the Company shall, subject to
applicable law, use its reasonable best efforts to obtain the election of the
Purchaser Designees at the next Annual Stockholder Meeting of the Company to
serve until such person's successor has been duly appointed. In connection with
their service on the Company's Board of Directors, the Purchaser Designees shall
be subject to and comply with the confidentiality provisions of the Purchaser
under Section 8 of this Agreement. The Purchaser Designees shall also be subject
to the same general conflicts-of-interest rules applicable to all other members
of the Board of Directors and under such rules their access to information and
participation in discussions may be reasonably restricted where a majority of
non-interested directors deem a conflict or potential conflict to exist. At any
time the Purchaser is no longer entitled to Board representation pursuant to
this Section 7.1, then at the request of the Company, the Purchaser Designees
shall immediately resign and shall immediately cease attending any meetings of
the Board of Directors.
7.2 STOCKHOLDER APPROVAL. The Company shall use its best efforts to
obtain Stockholder Approval (as defined Section 6(h) of the Certificate) and to
obtain approval by the Company's stockholders of the obligations of the Company
under Section 7.1 of this Agreement at the Company's 1999 Annual Meeting of
Stockholders to be held on or before June 2, 1999.
SECTION 8
CONFIDENTIAL INFORMATION
8.1 CONFIDENTIAL BUSINESS INFORMATION. The Purchaser covenants and
agrees that it shall maintain the confidentiality of all non-public information
related to the business of the Company made available to it and/or any of its
representatives by the Company ("Confidential Business Information") and shall
not utilize any Confidential Business Information in connection with purchases
or sales of the Company's securities except in compliance with applicable state
and
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federal anti-fraud statutes. The Purchaser further covenants and agrees that it
shall not disclose any Confidential Business Information to any person or entity
without the prior written consent of the Company. The term "Purchaser" as used
in this Section 8.1 includes all partners, officers, directors, affiliates,
employees, attorneys, accountants and other agents and representatives of the
Purchaser. Notwithstanding the above, Confidential Business Information shall
not include (i) information known to the public generally, (ii) information
known to the Purchaser from an independent source prior to the receipt of such
information from the Company and (iii) information required to be disclosed by
the Purchaser by court order or otherwise required by law, provided, however,
that in the event of a required disclosure pursuant to this clause (iii), the
Purchaser shall give the Company prompt written notice of any such requirement
so that the Company may seek a protective order or other appropriate remedy. The
Purchaser agrees that violation of this Section 8.1 would cause immediate and
irreparable damage to the business of the Company, and consent to the entry of
immediate and permanent injunctive relief for any violation hereof.
SECTION 9
MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of Delaware.
9.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby.
9.3 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto;
provided, however, that the rights of the Purchaser to purchase the Shares and
obtain the Warrants on such purchase shall not be assignable without the prior
written consent of the Company.
9.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents
delivered pursuant hereto at each Closing constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that the Purchaser may, with the Company's prior written
consent, waive, modify, or amend any provision hereof.
9.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to the Purchaser, at such Purchaser's address, on the signature
page of the Agreement, or at such other address as the Purchaser shall have
furnished
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to the Company in writing, or (b) if to any other holder of any Shares, at such
address as such holder shall have furnished the Company in writing, or, until
any such holder so furnishes an address to the Company, then to and at the
address of the last holder of such Shares who has so furnished an address to the
Company, or (c) if to the Company, one copy should be sent to its address set
forth on the cover page of this Agreement and addressed to the attention of the
Chief Executive Officer, or at such other address as the Company shall have
furnished to the Purchaser.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
9.6 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any party to this
Agreement upon any breach or default of any other party under this Agreement,
shall impair any such right, power or remedy of such non-defaulting party nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party to this Agreement, shall be cumulative and not
alternative.
9.7 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
9.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
9.9 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
9.10 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
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9.11 EXPENSES. The Company and the Purchaser shall each bear their own
fees, costs and expenses incurred on their behalf with respect to the agreement
and the transactions contemplated hereby and any amendments or waiver thereto.
[Signature Page Follows]
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The foregoing Agreement is hereby executed as of the date first above
written.
"COMPANY"
SUPERCONDUCTOR TECHNOLOGIES INC.
a Delaware corporation
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
"PURCHASER"
WILMINGTON SECURITIES, INC.
By: /s/ Xxxxxx X. XxXxxxxxx
-----------------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
Wilmington Securities, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. XxXxxxxxx
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
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