Second Amended and Restated Stockholders Agreement
SUPERCONDUCTOR TECHNOLOGIES INC.
SECOND AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
This Second Amended and Restated Stockholder Rights Agreement (the
"Agreement") is made as of February 26, 1999 between Superconductor
Technologies Inc., a Delaware corporation (the "Company"), the holders of the
Company's Series A and A-1 Preferred Stock (the "Series A and A-1 Holders"),
the holders of the Company's Series A-2 and A-3 Preferred Stock pursuant to
the Exchange Agreement, dated as of February 26, 1999, (the "Exchange
Agreement") and, upon the consummation of the Series C Preferred Stock
financing, the holders of the Company's Series C Preferred Stock. The holders
of the Company's Series A-2 and A-3 Preferred Stock, together with the
purchasers of the Company's Series C Preferred Stock after the Closing (as
defined in the Series C Preferred Stock Purchase Agreement) are, collectively,
the "New Holders."
RECITALS
A. The Company and the Series A and A-1 Holders entered into that
certain Amended and Restated Stockholder Rights Agreement, dated as of August
11, 1998 (the "Existing Agreement"), which established certain terms and
conditions upon which the Company's Series A and A-1 Preferred Stock and
certain warrants are held by such holders, as set forth more particularly in
the Existing Agreement.
B. In connection with the Exchange Agreement, the Company and the
Series A and A-1 Holders have agreed, upon the terms and subject to the
conditions contained therein, to exchange their shares of the Company's Series
A and A-1 Preferred Stock and related warrants held by the Holders for shares
of the Company's Series A-2 and A-3 Convertible Preferred Stock and related
warrants that are convertible into the Conversion Stock (as defined below),
upon the terms and subject to the limitations and conditions set forth in the
Certificates of Designations, Rights, Preferences, Privileges and Restrictions
with respect to the Series A-2 and A-3 Preferred Stock (the "Certificates of
Designation").
C. To induce the Series A and A-1 Holders to execute and deliver the
Exchange Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statue (collectively, the
"1933 Act"), and applicable state securities laws.
D. Because the Company anticipates consummating an equity financing
in the future with a proposed new Series C Preferred Stock, the Company
desires to provide a further inducement to the potential purchasers to
purchase the Series C Preferred Stock by establishing certain terms and
conditions upon which such Series C Preferred Stock and related warrants would
be held by such purchasers.
E. The Company and the Series A and A-1 Holders desire to amend and
restate the Existing Agreement in its entirety, as set forth herein, to make
the New Holders party thereto.
NOW, THEREFORE, the parties amend and restate the Existing Agreement in
its entirety to read as follows:
SECTION 1
Restrictions on Transferability of Securities;
Compliance with Securities Act; Registration Rights
1.1 Restrictions on Transferability. The Preferred Stock, the
Conversion Stock (as defined below) and the Warrants (as defined below) shall
not be sold, assigned, transferred or pledged except upon the conditions
specified in this Section 1, which conditions are intended to ensure
compliance with the provisions of the Securities Act (as defined below). The
Holders will cause any proposed purchaser, assignee, transferee, or pledgee of
any such securities held by the Holders to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Section 1.
1.2 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Closing Date" shall mean, (i) as to the holders of Series A-2 and
A-3 Preferred Stock, the date of the Exchange Agreement and (ii) as to the
holders of Series C Preferred Stock, the date of the first purchase and sale
of Series C Preferred Stock and issuance of warrants pursuant to the Series C
Stock Purchase Agreement.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Conversion Stock" means the Common Stock issued or issuable
pursuant to conversion of the Preferred Stock and exercise of the Warrants.
"Holder" shall mean (i) any New Holder holding Registrable
Securities and (ii) any person holding Registrable Securities to whom the
rights under this Section 1 have been transferred in accordance with Section
1.13 hereof.
"Initiating Holders" shall mean New Holders in the aggregate of
greater than 50% of the Registrable Securities.
"Preferred Stock" shall, collectively, mean the Series A-2 and A-3
Preferred Stock issued pursuant to the Exchange Agreement and, after the
Closing (as defined in the Series C Preferred Stock Purchase Agreement), the
Series C Preferred Stock issued pursuant to the Series C Preferred Stock
Purchase Agreement.
"Registrable Securities" shall mean (i) the Conversion Stock, (ii)
any Common Stock acquired pursuant to the exercise of the right of first
refusal in Section 2 of this Agreement (including any shares issued by virtue
of such shares upon any stock split, stock dividend, recapitalization or
similar event), and (iii) any Common Stock of the Company issued or issuable
in respect of the Conversion Stock upon any stock split, stock dividend,
recapitalization or similar event, or any Common Stock otherwise issued or
issuable in respect of the Conversion Stock; provided, however, that shares of
Common Stock or other securities shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or through a
broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold or are, in the opinion of counsel for the
Company, available for sale in a single transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so
that all transfer restrictions and restrictive legends with respect thereto
are removed upon the consummation of such sale.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 1.5 and 1.6
hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company) and the reasonable fees and disbursements of one counsel
for all Holders.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered
by the Holders and, except as set forth above, all reasonable fees and
disbursements of counsel for any Holder.
"Warrants" shall mean, collectively, the warrants issued pursuant to
the Exchange Agreement and the Series C Preferred Stock Purchase Agreement.
1.3 Restrictive Legend. Each certificate representing (i) the
Preferred Stock, (ii) the Warrants, (iii) the Conversion Stock and (iv) any
other securities issued in respect of the Preferred Stock or the Conversion
Stock upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 1.4 below) be stamped or otherwise imprinted with a
legend substantially in the following form (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE
COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT.
Each New Holder and Holder consents to the Company making a notation
on its records and giving instructions to any transfer agent of the Preferred
Stock, the Warrants or the Conversion Stock in order to implement the
restrictions on transfer established in this Section 1.
1.4 Restrictions on Transfer; Notice of Proposed Transfers. The
holder of each certificate representing Restricted Securities by acceptance
thereof agrees to comply in all respects with the provisions of this Section
1.4. Prior to any proposed sale, assignment, transfer or pledge of any
Restricted Securities (other than (i) a transfer not involving a change in
beneficial ownership, (ii) in transactions involving the distribution without
consideration of Restricted Securities by the Holder to any of its partners,
or retired partners, or to the estate of any of its partners or retired
partners, (iii) any transfer by any Holder to (A) any individual or entity
controlled by, controlling, or under common control with, such Holder or (B)
any individual or entity with respect to which such Holder (or any person
controlled by, controlling, or under common control with, such Holder) has the
power to direct investment decisions, or (iv) in transactions in compliance
with Rule 144), and unless there is in effect a registration statement under
the Securities Act covering the proposed transfer, the holder thereof shall
give written notice to the Company of such holder's intention to effect such
transfer, sale, assignment or pledge. Each such notice shall describe the
manner and circumstances of the proposed transfer, sale, assignment or pledge
in sufficient detail, and shall be accompanied, at such holder's expense by
either (i) an unqualified written opinion of legal counsel who shall be, and
whose legal opinion shall be, reasonably satisfactory to the Company addressed
to the Company, to the effect that the proposed transfer of the Restricted
Securities may be effected without registration under the Securities Act, or
(ii) a "no action" letter from the Commission to the effect that the transfer
of such securities without registration will not result in a recommendation by
the staff of the Commission that action be taken with respect thereto,
whereupon the holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by the holder to the Company. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144, the appropriate restrictive legend set
forth in Section 1.3 above, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for such holder and the
Company such legend is not required in order to establish compliance with any
provision of the Securities Act.
1.5 Requested Registration.
(a) Request for Registration. In case the Company shall receive
from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to (1) at least fifty
percent (50%) of the issued and outstanding Registrable Securities or (2) not
less than that number of shares of Registrable Securities which would result
in an anticipated aggregate offering price, net of underwriting discounts and
commissions, greater than five million dollars ($5,000,000), the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as are
specified in a written request received by the Company within twenty (20) days
after receipt of such written notice from the Company;
Provided, however, that the Company shall not be obligated to
take any action to effect any such registration, qualification or compliance
pursuant to this Section 2.5:
(A) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance unless the Company
is already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(B) Prior to September 26, 1999;
(C) During the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date six (6) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective;
(D) After the Company has effected one (1) such
registration pursuant to this subparagraph 1.5(a), and such registration has
been declared or ordered effective;
(E) If the Company shall furnish to such Holders
a certificate signed by the Chief Executive Officer of the Company stating
that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its stockholders for a registration
statement to be filed in the near future, then the Company's obligation to use
its best efforts to register, qualify or comply under this Section 1.5 shall
be deferred for a period not to exceed one hundred eighty (180) days from the
date of receipt of written request from the Initiating Holders; provided that
the Company may not exercise this deferral right more than once per twelve
(12) month period.
Subject to the foregoing clauses (A) through (E), the Company
shall file a registration statement covering the Registrable Securities so
requested to be registered as soon as practicable, after receipt of the
request or requests of the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). In such event, the right of any Holder to registration
pursuant to Section 1.5 shall be conditioned upon such Holder's participation
in the underwriting arrangements required by this Section 1.5, and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent requested shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter
selected for such underwriting by a majority in interest of the Initiating
Holders, but subject to the Company's reasonable approval. Notwithstanding
any other provision of this Section 1.5, if the managing underwriter advises
the Initiating Holders in writing that marketing factors require a limitation
of the number of shares to be underwritten, then the Company shall so advise
all holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders at the time
of filing the registration statement. No Registrable Securities excluded from
the underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may
round the number of shares allocated to any Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Securities and/or other securities so withdrawn
shall also be withdrawn from registration, and such Registrable Securities
shall not be transferred in a public distribution prior to one hundred eighty
(180) days after the effective date of such registration, or such other
shorter period of time as the underwriters may require.
1.6 Company Registration.
(a) Notice of Registration. If at any time or from time to time
the Company shall determine to register any of its securities, either for its
own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within twenty (20) days after receipt of
such written notice from the Company, by any Holder.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting,
the Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 1.6, if the managing
underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, the managing underwriter and the Company
may reduce the Registrable Securities to be included in such registration to
the extent the underwriters deem necessary. The Company shall so advise all
Holders and other holders distributing their securities through such
underwriting and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all the
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holder at the time of filing the
Registration Statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company may round the number of shares
allocated to any Holder or holder to the nearest 100 shares. If any Holder or
holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration, and shall not be transferred in a
public distribution prior to one hundred eighty (180) days after the effective
date of the registration statement relating thereto, or such other shorter
period of time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
1.7 Limitations on Subsequent Registration Rights. From and after
the Closing Date, the Company shall not enter into any agreement granting any
holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless (i) such new registration
rights, including standoff obligations, are on a pari passu basis with those
rights of the Holders hereunder, or (ii) such new registration rights,
including standoff obligations, are subordinate to the registration rights
granted Holders hereunder.
1.8 Expenses of Registration. All Registration Expenses incurred in
connection with (i) one (1) registration pursuant to Section 1.5, (ii) all
registrations pursuant to Section 1.6, shall be borne by the Company. Unless
otherwise stated, all Selling Expenses relating to securities registered on
behalf of the Holders and all other Registration Expenses shall be borne by
the Holders of such securities pro rata on the basis of the number of shares
so registered.
1.9 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section
1, the Company will keep each Holder advised in writing as to the initiation
of each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for at least one
hundred eighty (180) days or until the distribution described in the
Registration Statement has been completed;
(b) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably
request in order to facilitate the public offering of such securities;
(c) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statements as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement;
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as
a condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions; and
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
1.10 Indemnification.
(a) The Company will indemnify each Holder, each of its officers
and directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 1, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against
all expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or
any amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, or any violation by the Company of the Securities Act,
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), state
securities law or any rule or regulation promulgated under such laws
applicable to the Company in connection with any such registration,
qualification or compliance, and within a reasonable period the Company will
reimburse each such Holder, each of its officers and directors, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action; provided that the Company will not
be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, controlling person or underwriter and stated to
be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of
the Securities Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or
any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and within a reasonable period will reimburse the Company, such
Holders, such directors, officers, persons, underwriters or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in
such registration statement, prospectus, offering circular or other document
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein.
(c) Each party entitled to indemnification under this Section
1.10 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 1.10 unless the
failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action and provided further, that the
Indemnifying Party shall not assume the defense for matters as to which there
is a conflict of interest or separate and different defenses. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation. No Indemnifying
Party shall be liable for indemnification hereunder with respect to any
settlement or consent to judgment, in connection with any claim or litigation
to which these indemnification provisions apply, that has been entered into
without the prior consent of the Indemnifying Party (which consent will not be
unreasonably withheld).
1.11 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held
by them and the distribution proposed by such Holder or Holders as the Company
may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Section 1.11.
1.12 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) So long as a Holder owns any Restricted Securities to
furnish to the Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144,
and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as the Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing the
Holder to sell any such securities without registration.
1.13 Transfer of Registration Rights. The rights to cause the
Company to register securities granted Holders under Sections 1.5 and 1.6 may
be assigned to a transferee or assignee reasonably acceptable to the Company
in connection with any transfer or assignment of Registrable Securities by the
Holder, provided that (a) such transfer may otherwise be effected in
accordance with applicable securities laws and Section 1.3 and 1.4, and (b)
such assignee or transferee acquires at least 100,000 shares of Registrable
Securities.
1.14 Standoff Agreement. In connection with any public offering of
the Company's securities, the Holder agrees, upon request of the Company or
the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any Registrable Securities (other
than those included in the registration) without the prior written consent of
the Company or such underwriters, as the case may be, for such period of time
(not to exceed one hundred eighty (180) days) from the effective date of such
registration as may be requested by the underwriters; provided that the
officers and directors of the Company who own stock of the Company also agree
to such restrictions.
1.15 Termination of Registration Rights. The registration rights
granted pursuant to Section 1 shall terminate as to each Holder at such time
as all Registrable Securities held by such Holder may, in the opinion of
counsel to the Company (which opinion shall be addressed and rendered to
Holder), be sold within a given three month period pursuant to Rule 144 or any
other applicable exemption that allows for a resale free of registration.
SECTION 2
Right of First Refusal
2.1 Grant of Right of First Refusal. Subject to compliance with all
applicable federal and state securities laws, the Company grants to the
Holders the right of first refusal to purchase, pro rata, all or any part of
New Securities (as defined in this Section 2) which the Company may, from time
to time after the date of this Agreement, propose to sell and issue. A pro
rata share, for purposes of this right of first refusal, is the ratio that the
sum of the number of shares of Conversion Stock then held by a Purchaser bears
to the total outstanding Common Stock of the Company (assuming conversion of
all convertible securities and the exercise of all outstanding options and
warrants).
2.2 Definition of New Securities. Except as set forth below, "New
Securities" shall mean any shares of capital stock of the Company, including
Common Stock and Preferred Stock, whether now authorized or not, and rights,
options or warrants to purchase said shares of Common Stock or Preferred
Stock, and securities of any type whatsoever that are, or may become,
convertible into said shares of Common Stock or Preferred Stock.
Notwithstanding the foregoing, "New Securities" does not include (i) the
Preferred Stock, the Warrants or the Conversion Stock, (ii) securities offered
to the public generally pursuant to a registration statement under the
Securities Act, (iii) securities issued pursuant to the acquisition of another
corporation by the Company by merger, purchase of all or substantially all of
the assets or other reorganization, (iv) securities issuable upon exercise or
conversion of currently outstanding securities, (v) securities issued in
connection with any stock split, stock dividend or recapitalization by the
Company, (vi) securities issued to the Company's employees, officers,
directors, and consultants pursuant to any arrangement approved by the Board
of Directors of the Company, and (vii) securities issued to research or
development collaborators or issued to banks or other institutional lenders or
lessors in connection with capital asset leases or borrowings for the
acquisition of capital assets, pursuant to any arrangement approved by the
Board of Directors of the Company (including securities issued upon exercise
or conversion of any such securities).
2.3 Notice of Intent to Issue New Securities; Notice Period. In the
event the Company proposes to undertake an issuance of New Securities, it
shall give each Purchaser written notice of its intention, describing the type
of New Securities and the price and terms upon which the Company proposes to
issue the same. Each Purchaser shall have 15 days from the date of receipt of
any such notice to agree to purchase up to its pro rata share of such New
Securities for the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of New
Securities to be purchased.
2.4 Offers to Third Parties. In the event a Purchaser fails to
exercise the right of first refusal within said 15 day period, the Company
shall have 90 days thereafter to sell or enter into an agreement (pursuant to
which the sale of New Securities covered thereby shall be closed, if at all,
within 60 days from the date of said agreement) to sell the New Securities not
elected to be purchased by the Purchaser at the price and upon the terms no
more favorable to the Holders of such securities than specified in the
Company's notice. In the event the Company has not sold the New Securities or
entered into an agreement to sell the New Securities in accordance with the
foregoing within 60 days from the date of said agreement, the Company shall
not thereafter issue or sell any New Securities without first offering such
securities in the manner provided above.
2.5 Assignment. The right of first refusal granted under this
Agreement is not assignable except by each of such Holders to any affiliated
partnership or corporation or to a partner or retired partner of such S
Purchaser or affiliated partnership or corporation.
2.6 Termination of Right of First Refusal. The right of first
refusal granted under this Agreement shall terminate upon the first to occur
of the following:
(i) if a Purchaser at any time holds less than 500,000
shares of Conversion Stock (appropriately adjusted for any stock split, stock
dividend or any other recapitalization), the right of first refusal shall
terminate as to such Purchaser;
(ii) if a Purchaser converts or has at any time
converted all of the Preferred Stock owned by such Purchaser, the right of
first refusal shall terminate as to such Purchaser;
(iii) the liquidation, dissolution or indefinite
cessation of business operations of the Company; or
(iv) the execution by the Company of a general
assignment for the benefit of creditors or the appointment of a receiver or
trustee to take possession of the property and assets of the Company.
SECTION 3
Miscellaneous
3.1 Governing Law. This Agreement shall be governed in all respects
by the internal laws of the State of California.
3.2 Survival. The covenants and agreements made herein shall survive
any investigation made by the Holders and the closing of the transactions
contemplated hereby.
3.3 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.
3.4 Entire Agreement; Amendment. This Agreement, the Series A
Agreement, the Series A-1 Agreement and the other documents delivered pursuant
hereto on the Closing Date for each of the Series A Agreement and the Series
A-1 Agreement 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 holders of a majority of the issued or outstanding shares of the
Preferred Stock may, with the Company's prior written consent, waive, modify
or amend on behalf of all holders, any provisions hereof.
3.5 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 a Purchaser, at such Purchaser's address, as
shown on the stock records of the Company, or at such other address as such
Purchaser shall have furnished to the Company in writing, or (b) if to any
other holder of Preferred Stock, 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
Preferred Stock 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
Holders.
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.
3.6 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 nondefaulting
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 holder 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.
3.7 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.
3.8 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.
3.9 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.
[Signature Pages Follow]
The foregoing agreement is hereby executed as of the date first
above written.
"COMPANY"
SUPERCONDUCTOR TECHNOLOGIES INC.
a Delaware corporation
By:
Name: ▇▇▇▇▇ ▇▇▇▇▇▇,
Title: Chief Executive Officer
"SERIES A HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:
"SERIES A-1 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:
"SERIES A-2 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:
"SERIES A-3 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title:
"SERIES C HOLDER"
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: