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Item 1.01
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Entry into a Material Definitive Agreement
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Equity Financing
On March 20, 2015, Superconductor Technologies Inc. (the “Company”) entered into a Securities Purchase Agreement (“Purchase
Agreement”) by and among the Company and certain investors (the “Purchasers”), pursuant to which the Company agreed to issue to the Purchasers, in a registered offering, 3,062,790 shares of its common stock at a price of $1.6325 per
share. The closing of the registered offering and the concurrent private placement outlined below is expected to occur on or about March 25, 2015, subject to satisfaction of customary closing conditions set forth in the Purchase Agreement. The
net proceeds to the Company from the registered offering of the common stock, after deducting the Placement Agent fees and the Company’s estimated offering expenses, is expected to be approximately $4.59 million.
For each share of common stock purchased, Purchasers will also receive an unregistered warrant to purchase 0.5 of a share of common stock (the
“Warrants”). The Warrants are being issued in a concurrent private placement.
In connection with the registered offering and
the concurrent private placement, the Company engaged H.C. Wainwright & Co., LLC (the “Placement Agent”) to act as its exclusive placement agent. The Company agreed to pay the Placement Agent a cash placement fee equal to 7% of
the aggregate purchase price for the common stock sold in the registered offering, plus a non-accountable expense allowance equal to 1% of the gross proceeds of all the common stock sold in the registered offering. The Placement Agent will also
receive five-year warrants (the “Compensation Warrants”) equal to 5% of the aggregate number of shares of common stock sold in the registered offering, at an exercise price of $2.0406 (125% of the public offering price per share of common
stock). The Company also granted the Placement Agent a right of first refusal to act as its exclusive advisor, manager or underwriter or agent, as applicable, if the Company or its subsidiaries sells or acquires a business, finances any indebtedness
using an agent, or raises capital through a public or private offering of equity or debt securities at any time prior to December 19, 2015.
The offer and sale of the common stock in the registered offering is registered under the Securities Act of 1933, as amended (the
“Securities Act”), on a registration statement on Form S-3 (File No. 333-202702), which became effective on March 19, 2015, and a related prospectus supplement filed in connection with such offering.
In a concurrent private placement, each Purchaser will also receive Warrants to purchase 0.5 of a share of common stock for each share of
common stock purchased in the registered offering. The Warrants have an exercise price of $1.6325 per share, shall be exercisable immediately and will expire five years and six months from the date of issuance. The Warrants are exercisable for cash
or, solely in the absence of an effective registration statement or prospectus, by cashless exercise. The exercise price of the Warrants is not subject to a “price-based” anti-dilution adjustment. The exercise price of the Warrants is
subject to adjustment in the case of customary events such as stock dividends or other distributions on shares of common stock or any other equity or equity equivalent securities payable in shares of common stock, stock splits, stock combinations,
reclassifications or similar events affecting our common stock, and also, subject to limitations, upon any distribution of assets, including cash, stock or other property to our stockholders. The exercise of the Warrants is subject to certain
beneficial ownership and other limitations set forth in the Warrants.
The Company will receive proceeds from the concurrent private
placement transaction solely to the extent the Warrants are exercised for cash.
On March 20, 2015, the Company issued a press
release announcing the registered offering and the concurrent private placement. A copy of the press is filed as Exhibit 99.1 hereto and is incorporated herein by reference.
The foregoing summaries of the Purchase Agreement, Warrants and Compensation Warrants are
subject to, and qualified in their entirety by, such documents attached hereto as Exhibits 1.1, 4.1 and 4.2, respectively, which are incorporated herein by reference. Certain of these documents contain representations and warranties and other
statements which are not for the benefit of any party other than the parties to such document or agreement and are not intended as a document for investors (to the extent they are not a party to such agreement) or the public generally to obtain
factual information about us.
A copy of the opinion of Manatt, Phelps & Phillips, LLP relating to the legality of the
issuance of the shares of common stock is attached hereto as Exhibit 5.1.
Adjustment of Exercise Price of other Warrants
As a result of the registered offering and the concurrent private placement, the exercise price of the Term A and Term B warrants issued in the
Company’s underwritten public offering that closed on August 9, 2013, will each be adjusted to $1.6325 due to the price-based anti-dilution adjustment mechanisms in such warrants which provides that if the Company sells shares of common
stock or common stock equivalents at an effective per share price less than the then exercise price of such warrants, that the exercise price of the Term A and Term B warrants will be reset to such lower price. This feature will terminate when the
volume-weighted average price of our common stock as reported by our principal trading market exceeds 300% of the then exercise price of the warrant for thirty consecutive trading days and does not apply to certain exempt issuances, including, in
certain circumstances, issuances under equity incentive plans, securities issued upon exercise or conversion of existing securities or securities issued in connection with acquisitions or strategic transactions.
Each Term B warrant expires on August 9, 2015 and each Term A warrant expires on August 9, 2018.