Exhibit 4
SUPERCONDUCTOR TECHNOLOGIES INC.
THIRD AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
This Third Amended and Restated Stockholder Rights Agreement (the
"Agreement") is made as of June __, 1999 between Superconductor Technologies
Inc., a Delaware corporation (the "Company"), the persons on Exhibit A to
this
Agreement (the "Securityholders").
RECITALS
A. Wilmington Securities, Inc. ("Wilmington") and certain trusts for
the benefit of members of the Xxxxxxx family (as identified on Exhibit A)
hold
shares of the Company's Series A-2, Series A-3, Series B-1 and Series C
Preferred Stock (the "Outstanding Preferred") and warrants for the purchase
of
Company Common Stock obtained in connection with the purchase of the
Outstanding Preferred and possess registration rights and rights of first
refusal pursuant to the Second Amended and Restated Stockholder Rights
Agreement dated as of February 26, 1999 between the Company and Wilmington
(the "Rights Agreement") or registration rights pursuant to the Amended and
Restated Registration Rights Agreement dated as of February 26, 1999 (the
"Registration Rights Agreement" and together with the Rights Agreement, the
"Prior Rights Agreements").
B. Wilmington as the holder of a majority of the Preferred Stock (as
such term is defined in the Rights Agreement) together with the Company may
amend the Rights Agreement pursuant to Section 3.4 of the Rights Agreement,
and Wilmington and the Xxxxx X. Xxxxxxx Trust under Agreement of Trust dated
November 18, 1985 (the "Trust") as the holders of a majority of the
Registrable Securities (as defined in the Registration Rights Agreement)
together with the Company may amend the Registration Rights Agreement
pursuant
to Section 10 of the Registration Rights Agreement.
C. The Company proposes to sell shares of Series D Preferred Stock
pursuant to a Series D Stock Purchase Agreement dated as of the date hereof
(the "Series D Agreement") between the Company and certain of the
Securityholders (the "Purchasers"), and the completion of such sale is
conditioned upon, among other things, the grant by the Company to the
Securityholders of certain registration rights and rights of first refusal.
D. The Company, Wilmington, the Trust and the other holders of
Registrable Securities (as defined in the Registration Rights Agreement)
desire to amend and restate the Prior Rights Agreements into this Agreement
and desire to provide the Purchasers with the rights set forth in this
Agreement.
E. The Company has requested, and the parties to the Prior Rights
Agreements have agreed, that upon execution of the Agreement, the Prior
Rights
Agreements shall be of no further force and effect, that Wilmington will
waive
its right of first refusal set forth in Section 2 of the Rights Agreement
with
respect to the purchase of the Series D Preferred Stock and related warrants
(and the shares of Common Stock underlying the Series D Preferred Stock and
related warrants) being issued pursuant to the Series D Agreement.
F. The Company has requested and the parties to the Registration
Rights Agreement have agreed to hereby expressly waive any and all rights to
any penalty payments from the Company under Section 2(b) of the Registration
Rights Agreement.
NOW, THEREFORE, in consideration of the promises of the parties set
forth
herein, the parties agree as follows:
SECTION 1
Restrictions on Transferability of Securities;
Compliance with Securities Act; Registration Rights
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Affiliated Persons or Entities" shall mean partners, members,
former members of a limited partnership or limited liability company, or an
affiliated entity managed by the same manager or managing partner or
management company, or managed or owned by an entity controlling, controlled
by, or under common control with, such manager or managing partner or
management company.
"Closing Date" shall mean, (i) as to the holders of Series A-2 and
X-0 Xxxxxxxxx Xxxxx, Xxxxxxxx 00, 0000, (xx) as to the holders of Series C
Preferred Stock, March 5, 1999, and (iii) as to the holders of Series D
Preferred Stock, June 3, 1999.
"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 Securityholder 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 Holders in the aggregate of greater
than 50% of the Registrable Securities issued as a result of the Series D
Agreement.
"Preferred Stock" shall, collectively, mean the Series A-2, Series
A-3 and Series B-1 Preferred Stock issued pursuant to the Exchange Agreement
dated as of February 26, 1999 (the "Exchange Agreement"), the Series C
Preferred Stock issued pursuant to the Series C Stock Purchase Agreement
dated
as of March 5, 1999 (the "Series C Agreement"), and the Series D Preferred
Stock issued pursuant to the Series D 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, 1.6 and
1.7 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.
"Series D Holders" shall mean holders of Series D Registrable
Securities attributable to the Series D Agreement.
"Series D Registrable Securities" shall mean Registrable Securities
attributable to the Series D Agreement.
"Warrants" shall mean, collectively, the warrants issued pursuant
to
the Exchange Agreement, the Series C Agreement and the Series D Agreement.
1.2 Restrictions on Transferability. The Preferred Stock, the
Conversion Stock and the Warrants 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. 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.
1.3 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 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, or to the estate of any of its members or former members, (iii) any
transfer by any Holder to (A) any Affiliated Persons or Entities, (B) any
individual or entity controlled by, controlling, or under common control
with,
such Holder or (C) 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
registrati
on, 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) 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;
(C) 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;
(D) 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 (D), 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 first to the Series D Holders to the extent of the Series D
Registrable Securities held by such Series D Holders, and then among all
other
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. If the number of Registrable Securities to be
underwritten shall be less than the number of Series D Registrable
Securities,
then the then the number of Registrable Securities that may be included in
the
registration and underwriting shall be allocated among the Series D Holders
in
proportion, as nearly as practicable, to the respective amounts of Series D
Registrable Securities held by such Series D Holders at the time of filing
the
registration statement. For purposes of such allocations, the amount of
Registrable Securities allocated to a Holder and its Affiliated Persons or
Entities shall be determined by aggregating all Registrable Securities held
by
such Holder and its Affiliated Persons or Entities. 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, as adjusted for any recapitalization, stock combinations,
stock dividends, stock splits and the like.
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 first to the
Series D Holders to the extent of the Series D Registrable Securities held by
such Series D Holders, and then among all other 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. If
the
number of Registrable Securities to be underwritten shall be less than the
number of Series D Registrable Securities, then the then the number of
Registrable Securities that may be included in the registration and
underwriting shall be allocated among the Series D Holders in proportion, as
nearly as practicable, to the respective amounts of Series D Registrable
Securities held by such Series D Holders at the time of filing the
registration statement. For purposes of such allocations, the amount of
Registrable Securities allocated to a Holder and its Affiliated Persons or
Entities shall be determined by aggregating all Registrable Securities held
by
such Holder and its Affiliated Persons or Entities. 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, as adjusted for any recapitalization, stock combinations, stock
dividends, stock splits and the like.
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 Registration on Form S-3 .
(a) If any Holder or Holders hold Registrable Securities equal
or convertible in the aggregate to not less than 2% of the then outstanding
Common Stock request that the Company file a registration statement on Form
S-3 (or any successor form to Form S-3) for a public offering of shares of
the
Registrable Securities the reasonably anticipated aggregate price to the
public of which, net of underwriting discounts and commissions, would exceed
$1,000,000, and the Company is a registrant entitled to use Form S-3 (or any
successor form to Form S-3) to register the Registrable Securities for such
an
offering, the Company shall use its best efforts to cause such Registrable
Securities to be registered for the offering on such form and to cause such
Registrable Securities to be qualified in such jurisdictions as such Holder
or
Holders may reasonably request; provided, however, that the Company shall not
be required to effect more than one registration pursuant to this Section 1.7
in any six (6) month period. The Company shall inform other Holders of the
proposed registration and offer them the opportunity to participate. The
substantive provisions of Section 1.5(b) shall be applicable to each
registration initiated under this Section 1.7.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.7 (i) 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;
(ii)
if the Company, within ten (10) days of the receipt of the request of the
Holders, gives notice of its bona fide intention to effect the filing of a
registration statement with the Commission within ninety (90) days of receipt
of such request (other than with respect to a registration statement relating
to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities); (iii) 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;
or (iv) if the Company shall furnish to such Holder a certificate signed by
the President 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
shareholders for registration statements to be filed in the near future, then
the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a period not to exceed ninety (90) days from
the receipt of the request to file such registration by such Holder; provided
that the Company may not exercise this deferral right more than once per
twelve (12) month period.
1.8 Limitations on Subsequent Registration Rights. From and after
the date hereof, 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 such new registration rights,
including standoff obligations, are subordinate to the registration rights
granted Holders hereunder.
1.9 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, and (iii) all registrations pursuant
to
Section 1.7 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.
1.10 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.
1.11 Indemnification.
(a) The Company will indemnify each Holder, each of its
officers
and directors, members 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
1.11 (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 1.11 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)
(d) If the indemnification provided for in this Section 1.11 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred
to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable
by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the
other in connection with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations; provided, that, in no event shall any contribution
by a Holder under this Subsection 1.1(d) exceed the net proceeds from the
offering received by such Holder. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct
or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering
are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.11 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.12 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 1.12.
1.13 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.
1.14 Transfer of Registration Rights. The rights to cause the
Company to register securities granted Holders under Sections 1.5, 1.6 and
1.7
may be assigned to Affiliated Persons or Entities, or other transferees or
assignees 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 assignees or
transferees
that are not Affiliated Persons or Entities acquire at least 100,000 shares
of
Registrable Securities.
1.15 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 and each
holder representing at least one percent (1%) of the Company's outstanding
voting securities also agrees to such restrictions.
1.16 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 Holder 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 Holder 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 Holder 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 Holder 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 Holder 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
persons or entities," which shall include, partners, members, former members
of a limited partnership or limited liability company, or an affiliated
entity
managed by the same manager or managing partner or management company, or
managed or owned by an entity controlling, controlled by, or under common
control with, such manager or managing partner or management company.
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 Holder at any time holds less than 250,000
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 Holder;
(ii) if a Holder converts or has at any time converted
all of the Preferred Stock owned by such Holder, the right of first refusal
shall terminate as to such Holder;
(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 Exchange
Agreement, the Series C Agreement, the Series D Agreement and the other
documents delivered pursuant hereto or delivered on the Closing Date for each
of the Exchange Agreement, the Series C Agreement, and the Series D 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. The
provisions of this Agreement amend and supersede any rights or obligations
under the Prior Rights Agreements. 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 (which majority shall include at
least sixty percent (60%) of the voting power of the holders of Series D
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 Holder, at such Holder's address, as shown
on
the stock records of the Company, or at such other address as such Holder
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.
3.10 Waiver of Rights. In consideration of the rights granted
herein, (i) all rights granted to, and any obligations of, the parties to the
Prior Rights Agreements are amended and restated in full to read as set forth
in this Agreement; (ii) Wilmington waives its right of first refusal as set
forth in Section 2 of the Rights Agreement with respect to the issuance of
Series D Preferred Stock and related warrants (and the shares of Common Stock
underlying the Series D Preferred Stock and related warrants) pursuant to the
Series D Agreement; (iii) Wilimington, the Trust, and other parties to the
Registration Rights Agreement hereby waive any and all rights to payments by
the Company under Section 2(b) of the Registration Rights 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: Xxxxx Xxxxxx,
Title: Chief Executive Officer
"SERIES A-2 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
"SERIES A-3 HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
"SERIES B-1 HOLDERS"
WILMINGTON SECURITIES, INC.
By:
Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
Xxxxx X. Xxxxxxx, Xxxxx Xxxxxxxx Xxxxxxx and
X.X. Xxxxxxxxxxxx, Trustees of the Xxxxx X.
Xxxxxxx Trust U/A dated November 18, 1985
By:
Name: X.X. Xxxxxxxxxxxx
Xxxxxx X. Xxxxxx and X.X.Xxxxxxxxxxxx, Trustees under Agreement of Trust
dated
12/30/76 for the children of Juliet Xxx Xxxxxxx Xxxxxxx
By:
Name: X.X. Xxxxxxxxxxxx
By:
Name: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx and X.X.Xxxxxxxxxxxx, Trustees under Agreement of Trust
dated
12/30/76 for the children of Xxxxxx Xxxxxxxx Xxxxxxx
By:
Name: X.X. Xxxxxxxxxxxx
By:
Name: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx and X.X.Xxxxxxxxxxxx, Trustees under Agreement of Trust
dated
12/30/76 for the children of Xxxxx Xxx Xxxxxxx, Xx.
By:
Name: X.X. Xxxxxxxxxxxx
By:
Name: Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx and X.X.Xxxxxxxxxxxx, Trustees under Agreement of Trust
dated
12/30/76 for the children of Xxxxxxx Xxxxxxx Xxxxxxx.
By:
Name: X.X. Xxxxxxxxxxxx
By:
Name: Xxxxxx X. Xxxxxx
"SERIES C HOLDER"
WILMINGTON SECURITIES, INC.
By:
Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
"SERIES D HOLDERS"
WILMINGTON SECURITIES, INC.
By:
Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
TGI FUND III, LLC
By: Tredegar Investments, Inc., its Manager
By:
Name:
Title:
EXHIBIT A
TO THE SUPERCONDUCTOR TECHNOLOGIES INC.
THIRD AMENDED AND RESTATED STOCKHOLDER RIGHTS AGREEMENT
Securityholder Securities held that are subject to the Agreement
Wilmington Securities, Inc. Series A-2 Preferred Stock and related
warrants
Series A-3 Preferred Stock and related warrants
Series B-1 Preferred Stock and related warrants
Series C Preferred Stock and related warrants
Series D Preferred Stock and related warrants
Warrants received in connection with the Exchange Agreement
Xxxxx X. Xxxxxxx, Xxxxx Xxxxxxxx Xxxxxxx Series B-1 Preferred Stock and
related warrants
and X. X. Xxxxxxxxxxxx, Warrants received in connection with the
Trustees of the Xxxxx X. Xxxxxxx Exchange Agreement
Trust U/A Dated November 18, 1985
Xxxxxx X. Xxxxxx and X.X. Xxxxxxxxxxxx, Series B-1 Preferred Stock and
related warrants
Trustees Under Agreement of Trust Warrants received in connection with
the
Dated 12/30/76 for Children of Exchange Agreement
Juliet Xxx Xxxxxxx Xxxxxxx
Xxxxxx X. Xxxxxx and X.X. Xxxxxxxxxxxx, Series B-1 Preferred Stock and
related warrants
Trustees Under Agreement of Trust Warrants received in connection with
the
Dated 12/30/76 for Children of Exchange Agreement
Xxxxxx Xxxxxxx Xxxxxx
Xxxxxx X. Xxxxxx and X.X. Xxxxxxxxxxxx, Series B-1 Preferred Stock and
related warrants
Trustees Under Agreement of Trust Warrants received in connection with
the
Dated 12/30/76 for Children of Exchange Agreement
Xxxxx Xxx Xxxxxxx, Xx.
Xxxxxx X. Xxxxxx and X.X. Xxxxxxxxxxxx, Series B-1 Preferred Stock and
related warrants
Trustees Under Agreement of Trust Warrants received in connection with
the
Dated 12/30/76 for Children of Exchange Agreement
Xxxxxxx Xxxxxxx Xxxxxxx
TGI Fund III, LLC Series D Preferred Stock and related warrants
