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EXHIBIT 10.4
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
731,198
Shares of
Common
Stock, par
value $0.001
per share
STOCK PURCHASE WARRANT (INCENTIVE 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, Seven Hundred
Thirty-One Thousand, One Hundred Ninety-Eight (731,198) 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"); provided, however, that the number of shares of Common Stock issuable
upon exercise of this Warrant shall be adjusted on the one-year anniversary of
the Issue Date (as defined below) to equal (x) the aggregate Stated Value (as
defined in the Certificate of Designations, Preferences and Rights of the
Company's Series E Convertible Preferred Stock) of the shares of Series E
Convertible Preferred Stock held by the holder hereof on the one-year
anniversary of the Issue Date, divided by (y) the Fixed Conversion Price (as
defined in Certificate of Designations, Preferences and Rights of the Company's
Series E Convertible Preferred Stock), multiplied by (z) 35%. 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
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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:
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
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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 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 one-year anniversary of 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
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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 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:
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(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 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
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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 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 the (a) 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 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
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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.
(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.
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(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 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,
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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 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.
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(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)
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
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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 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
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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
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
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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.
(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
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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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