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Item 1.01
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Entry into a Material Definitive Agreement
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Equity Financing
On December 9, 2016, Superconductor Technologies Inc. (the “Company”), announced the pricing of a public offering of common
stock (and common stock equivalents) with expected total gross proceeds of approximately $10.2 million. The closing of the registered public offering is expected to occur on or about December 14, 2016, subject to satisfaction of customary
closing conditions as set forth in the Purchase Agreement (as defined below). The net proceeds to the Company from the registered offering, after deducting the placement agent fees and the Company’s estimated offering expenses, is expected to
be approximately $9.2 million.
In connection with the offering, the Company will issue 1,798,787 shares of its common stock at a
price of $1.50 per share, with each share of common stock coupled with a five year warrant to purchase one share of common stock, at an exercise price of $2.00 (the “Warrants”). These securities were offered in the form of a Class A
Unit but are immediately separable and will be issued separately at the closing.
For certain investors who would otherwise hold more than
4.99% of the Company’s common stock following the registered offering, the Company agreed to issue to such investors in the form of Class B Units, shares of a new class of preferred stock designated Series D Convertible Preferred Stock (as
outlined below) (the “Series D Preferred Stock”) with a stated value of $1,000 and which are convertible into the Company’s common stock at a conversion price equal to $1.50 per share of common stock, together with an equivalent
number of Warrants in the same form and economic terms based on the related purchase price as the purchasers of the Class A Units (the “Class B Units” and together with the “Class A Units”, the “Units”).
These securities offered in the form of a Class B Unit are immediately separable and will be issued separately at the closing. The rights and obligations associated with Class A Units and Class B Units consist only in the constituent
parts of each such unit, except that the Company has approved the sale of the constituent parts as units on the terms and conditions described in the prospectus filed in the Registration Statement (as defined below).
In connection with the offering, the Company entered into a Securities Purchase Agreement (“Purchase Agreement”) with certain of the
investors in the offering purchasing the Class B Units and engaged Rodman & Renshaw, a unit of H.C. Wainwright & Co. (the “Placement Agent”) to act as placement agent. The Company agreed to pay the Placement Agent a
cash placement fee equal to 7% of the gross proceeds from the sales of the Units sold in the registered offering, a management fee equal to 1% of the gross proceeds of the registered offering, reimbursement of $100,000 for the Placement Agent’s
legal fees and expenses, and an accountable expense allowance up to $50,000. 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 the twelve month anniversary of the date of commencement of
sales in the offering.
The offer and sale of the Units in the registered offering is registered under the Securities Act of 1933, as
amended, on a Registration Statement on Form
S-1
(File
No. 333-214433),
as amended, which became effective on December 8, 2016, a related prospectus filed in
connection with such offering, and a Form
S-1MEF
(File
No. 333-214996)
(adding securities to the aforementioned effective registration statement) (the
“Registration Statement”).
On December 9, 2016, the Company issued a press release announcing the registered offering. A
copy of the press release is filed as Exhibit 99.1 hereto and is incorporated herein by reference.
The foregoing summaries of the
Purchase Agreement and Warrants are subject to, and qualified in their entirety by, such documents included as Exhibits 4.23 and 4.24 to the Registration Statement, 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.
Adjustment of Exercise Price of other Warrants
As a result of the registered offering described above, the exercise price of the Term A warrants issued in the Company’s underwritten
public offering that closed on August 9, 2013, will each be adjusted to $1.50 per share due to the price-based anti-dilution adjustment mechanisms in such warrants. This adjustment mechanism 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 warrants will be reset to such lower price. This feature will terminate when the
volume-weighted average price of the Company’s common stock as reported by its 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 A warrant
expires on August 9, 2018.