-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C5XTTPbVE7Y+rROnmZYUzyve2VIQrqAZsaEegFQ8Xipw1wONL6gaIiFJkQkNI/aK qC7Oh+D3KSU1JpsMynmbSQ== 0001036288-98-000031.txt : 19980915 0001036288-98-000031.hdr.sgml : 19980915 ACCESSION NUMBER: 0001036288-98-000031 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19980914 SROS: NASD GROUP MEMBERS: C. G. GREFENSTETTE GROUP MEMBERS: ELSIE HILLIARD HILLMAN GROUP MEMBERS: HENRY L. HILLMAN GROUP MEMBERS: HILLMAN CO GROUP MEMBERS: THE AHF 1976 TRUST GROUP MEMBERS: THE HENRY L. HILLMAN TRUST GROUP MEMBERS: THE HILLMAN COMPANY GROUP MEMBERS: THE HLH JR. 1976 TRUST GROUP MEMBERS: THE JLHS 1976 TRUST GROUP MEMBERS: THE WTH 1976 TRUST GROUP MEMBERS: THOMAS G. BIGLEY GROUP MEMBERS: WILMINGTON INVESTMENTS, INC. GROUP MEMBERS: WILMINGTON SECURITIES, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SUPERCONDUCTOR TECHNOLOGIES INC CENTRAL INDEX KEY: 0000895665 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 770153076 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-42893 FILM NUMBER: 98708408 BUSINESS ADDRESS: STREET 1: 460 WARD DR STREET 2: STE F CITY: SANTA BARBARA STATE: CA ZIP: 93111 BUSINESS PHONE: 8056837646 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HILLMAN CO CENTRAL INDEX KEY: 0001036288 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 310 GRANT ST STREET 2: 1900 GRANT BUILDING CITY: PITTSBURGH STATE: PA ZIP: 15219 MAIL ADDRESS: STREET 1: 310 GRANT ST STREET 2: 1900 GRANT BUILDING CITY: PITTSBURGH STATE: PA ZIP: 15219 SC 13D/A 1 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 SCHEDULE 13D Amendment No. 3 Under the Securities Exchange Act of 1934 SUPERCONDUCTOR TECHNOLOGIES, INC. (Name of Issuer) Common Stock, $0.001 par value (Title of Class of Securities) 867931107 (CUSIP Number) H. Vaughan Blaxter, III 1900 Grant Building Pittsburgh, Pennsylvania 15219 (412) 281-2620 (Name, address and telephone number of person authorized to receive notices and communications) September 2, 1998 Date of Event which Requires Filing of this Statement If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this statement, and is filing this statement because of Rule 13d-1(e), 13d-1(f) or 13(d)-1(g), check the following box [ X ] CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person C. G. GREFENSTETTE, Trustee for Various Trusts I.D. ####-##-#### 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization U.S. Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 5,000 8 Shared Voting Power 3,703,333 9. Sole Dispositive Power 5,000 10 Shared Dispositive Power 3,703,333 11 Aggregate Amount Beneficially Owned by Each Reporting Person 3,708,333 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 35.17% 14 Type of Reporting Person IN CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person THOMAS G. BIGLEY, Trustee for Various Trusts I.D. # 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization U.S. Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 8 Shared Voting Power 248,000 9. Sole Dispositive Power 10 Shared Dispositive Power 248,000 11 Aggregate Amount Beneficially Owned by Each Reporting Person 248,000 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 2.35% 14 Type of Reporting Person IN CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person THOMAS G. BIGLEY AND C. G. GREFENSTETTE, TRUSTEES UNDER AGREEMENT OF TRUST DATED 12/30/76 FOR THE CHILDREN OF JULIET LEA HILLMAN SIMONDS I.D. #25-6193084 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Pennsylvania Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 112,000 8 Shared Voting Power 9. Sole Dispositive Power 112,000 10 Shared Dispositive Power 11 Aggregate Amount Beneficially Owned by Each Reporting Person 112,000 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 1.06% 14 Type of Reporting Person OO CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person THOMAS G. BIGLEY AND C. G. GREFENSTETTE, TRUSTEES UNDER AGREEMENT OF TRUST DATED 12/30/76 FOR THE CHILDREN OF AUDREY HILLMAN FISHER I.D. #25-6193085 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Pennsylvania Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 112,000 8 Shared Voting Power 9. Sole Dispositive Power 112,000 10 Shared Dispositive Power 11 Aggregate Amount Beneficially Owned by Each Reporting Person 112,000 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 1.06% 14 Type of Reporting Person OO CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person THOMAS G. BIGLEY AND C. G. GREFENSTETTE, TRUSTEES UNDER AGREEMENT OF TRUST DATED 12/30/76 FOR THE CHILDREN OF HENRY LEA HILLMAN, JR. I.D. #26=6193086 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Pennsylvania Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 112,000 8 Shared Voting Power 9. Sole Dispositive Power 112,000 10 Shared Dispositive Power 11 Aggregate Amount Beneficially Owned by Each Reporting Person 112,000 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 1.06% 14 Type of Reporting Person OO CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person THOMAS G. BIGLEY AND C. G. GREFENSTETTE, TRUSTEES UNDER AGREEMENT OF TRUST DATED 12/30/76 FOR THE CHILDREN OF WILLIAM TALBOTT HILLMAN I.D. #25-6193087 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Pennsylvania Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 112,000 8 Shared Voting Power 9. Sole Dispositive Power 112,000 10 Shared Dispositive Power 11 Aggregate Amount Beneficially Owned by Each Reporting Person 112,000 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 1.06% 14 Type of Reporting Person OO CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person HENRY L. HILLMAN I.D. ####-##-#### 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization U.S. Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 8 Shared Voting Power 3,255,333 9 Sole Dispositive Power 10 Shared Dispositive Power 3,255,333 11 Aggregate Amount Beneficially Owned by Each Reporting Person 3,255,333 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 30.88% 14 Type of Reporting Person IN CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person ELSIE HILLIARD HILLMAN I.D. ####-##-#### 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization U.S. Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 8 Shared Voting Power 3,255,333 9 Sole Dispositive Power 10 Shared Dispositive Power 3,255,333 11 Aggregate Amount Beneficially Owned by Each Reporting Person 3,255,333 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 30.88% 14 Type of Reporting Person IN CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person HENRY L. HILLMAN, ELSIE HILLIARD HILLMAN & C. G. GREFENSTETTE, TRUSTEES OF THE HENRY L. HILLMAN TRUST U/A DATED NOVEMBER 18, 1985 I.D. #18-2145466 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Pennsylvania Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 8 Shared Voting Power 3,255,333 9 Sole Dispositive Power 10 Shared Dispositive Power 3,255,333 11 Aggregate Amount Beneficially Owned by Each Reporting Person 3,255,333 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 30.88% 14 Type of Reporting Person OO CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person THE HILLMAN COMPANY I.D. #25-1011286 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Pennsylvania Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 8 Shared Voting Power 2,819,333 9 Sole Dispositive Power 10 Shared Dispositive Power 2,819,333 11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,819,333 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 26.74% 14 Type of Reporting Person CO CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person WILMINGTON INVESTMENTS, INC. I.D. #51-0344688 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Delaware Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 8 Shared Voting Power 2,819,333 9 Sole Dispositive Power 10 Shared Dispositive Power 2,819,333 11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,819,333 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 26.74% 14 Type of Reporting Person CO CUSIP NO. 867931107 1 Name of Reporting Person S.S. or I.R.S. Identification No. of above Person WILMINGTON SECURITIES, INC. I.D. #51-0114700 2 Check the Appropriate Box if Member of a Group (a) [ X ] (b) [ ] 3 SEC Use Only 4 Source of Funds OO 5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] 6 Citizenship or Place of Organization Delaware Number of Shares Beneficially Owned by Each Reporting Person With 7 Sole Voting Power 2,819,333 8 Shared Voting Power 9 Sole Dispositive Power 2,819,333 10 Shared Dispositive Power 11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,819,333 12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13 Percent of Class Represented by Amount in Row (11) 26.74% 14 Type of Reporting Person CO SCHEDULE 13D This statement ("Statement") constitutes the Schedule 13D filed with the Securities and Exchange Commission (the "Commission") on September 11, 1998 (the "Filing"). Item 1. Security and Issuer This Statement relates to the Common Stock, $0.001 par value, of Superconductor Technologies, Inc., a Delaware corporation (the "Issuer"). The address of the principal executive offices of the Issuer is 460 Ward Drive, Suite F, Santa Barbara, California 93111-2310. The Common Stock is quoted on the Nasdaq National Market under the symbol "SCON". Item 2. Identity and Background (a) Names of persons filing (individually, the "Registrant" and collectively, the "Registrants"): Wilmington Securities, Inc., a wholly-owned subsidiary of Wilmington Investments, Inc. Wilmington Investments, Inc., a wholly-owned subsidiary of The Hillman Company. The Hillman Company, a corporation controlled by Henry L. Hillman, Elsie Hilliard Hillman and C. G. Grefenstette, as Trustees of the Henry L. Hillman Trust U/A dated November 18, 1985. Henry L. Hillman, Elsie Hilliard Hillman and C. G. Grefenstette, Trustees of the Henry L. Hillman Trust U/A dated November 18, 1985 (the "Henry L. Hillman Trust"). Thomas G. Bigley and C. G. Grefenstette, Trustees Under Agreement of Trust Dated 12/30/76 for the Children of Juliet Lea Hillman Simonds (the " JLHS 1976 Trust"). Thomas G. Bigley and C. G. Grefenstette, Trustees Under Agreement of Trust Dated 12/30/76 for the Children of Audrey Hillman Fisher (the "AHF 1976 Trust"). Thomas G. Bigley and C. G. Grefenstette, Trustees Under Agreement of Trust Dated 12/30/76 for the Children of Henry Lea Hillman, Jr. (the "HLH Jr. 1976 Trust") Thomas G. Bigley and C. G. Grefenstette, Trustees Under Agreement of Trust Dated 12/30/76 for the Children of William Talbott Hillman (the "WTH 1976 Trust"). C. G. Grefenstette Thomas G. Bigley Henry L. Hillman Elsie Hilliard Hillman The name, position, business address and citizenship of each director and executive officer of the entities listed above, each controlling person of such entities and each director and executive officer of any person or corporation in control of said entities, is attached hereto as Exhibit 1. (b) Business Address The addresses of the Registrants are as follows: The Hillman Company, the Henry L. Hillman Trust, the JLHS 1976 Trust, the AHF 1976 Trust, the HLH Jr. 1976 Trust and the WTH 1976 Trust are each located at: 1900 Grant Building Pittsburgh, Pennsylvania 15219 Wilmington Securities, Inc. and Wilmington Investments, Inc. are each located at: 824 Market Street, Suite 900 Wilmington, Delaware 19801 C. G. Grefenstette 2000 Grant Building Pittsburgh, Pennsylvania 15219 Thomas G. Bigley One Oxford Centre 28th Floor Pittsburgh, Pennsylvania 15219 Henry L. Hillman 2000 Grant Building Pittsburgh, Pennsylvania 15219 Elsie Hilliard Hillman 2000 Grant Building Pittsburgh, Pennsylvania 15219 (c) Principal occupation or employment The principal occupations of the corporations, listed in response to Item 2(a) are: diversified investments and operations. The principal occupation of the Henry L. Hillman Trust is: diversified investments and operations. The principal occupation of the JLHS 1976 Trust is: diversified investments and operations. The principal occupation of the AHF 1976 Trust is: diversified investments and operations. The principal occupation of the HLH Jr. 1976 Trust is: diversified investments and operations. The principal occupation of the WTH 1976 Trust is: diversified investments and operations. C. G. Grefenstette See Exhibit 1 Thomas G. Bigley See Exhibit 1 Henry L. Hillman See Exhibit 1 Elsie Hilliard Hillman See Exhibit 1 (d) Criminal convictions None of the persons named in Item 2(a)(including Exhibit 1) have been convicted in a criminal proceeding in the last five years. (e) Civil proceedings None of the persons listed in response to Item 2(a) (including Exhibit 1) have in the last five years been subject to a judgment, decree or final order as described in Item 2, subsection (e) of Schedule 13D. (f) Citizenship Wilmington Securities, Inc. and Wilmington Investments, Inc. are Delaware corporations. The Hillman Company is a Pennsylvania corporation. The Henry L. Hillman Trust, the JLHS 1976 Trust, the AHF 1976 Trust, the HLH Jr. 1976 Trust and the WTH 1976 Trust are Pennsylvania trusts. C. G. Grefenstette, Thomas G. Bigley, Henry L. Hillman and Elsie Hilliard Hillman are U.S. citizens. Item 3. Source and Amount of Funds or Other Consideration None. Item 4. Purpose of Transaction On September 2, 1998, Wilmington Securities, Inc. purchased 500,000 shares of Series B Preferred Stock which are convertible into 1,000,000 shares of Common Stock and a Warrant for 120,000 shares of Common Stock from the Issuer in a private transaction for $4,000,000. On September 3, 1998, Wilmington Securities, Inc. purchased 145,833 shares of Series A Preferred Stock which are convertible into 291,666 shares of Common Stock for $875,000 pursuant to Section 1.3, Put Option Clause, of the Series A Preferred Stock Purchase Agreement dated March 26, 1998. On September 11, 1998, Wilmington Securities, Inc. sold 350,000 shares of the Series B Preferred Stock and 84,000 Warrants for Common Stock to the following: Number Number Purchase Name of Purchaser of Shares of Warrants Price Henry L. Hillman Trust 150,000 36,000 $1,200,000 JLHS 1976 Trust 50,000 12,000 $ 400,000 AHF 1976 Trust 50,000 12,000 $ 400,000 HLH Jr. 1976 Trust 50,000 12,000 $ 400,000 WTH 1976 Trust 50,000 12,000 $ 400,000 Except as set forth above and in Item 6 below, the Registrants have no present plans or proposals which relate to or would result in (a) the acquisition by any person of additional securities of the Issuer or the disposition of securities of the Issuer, (b) an extraordinary corporate transaction, such as a merger, reorganization, or liquidation involving the Issuer or any of its subsidiaries, (c) a sale or transfer of a material amount of the assets of the Issuer or any of its subsidiaries, (d) any change in the present Board of Directors or Management of the Issuer including any plans or proposals to change the number or term of Directors or to fill any existing vacancies on the Board, (e) any material change in the present capitalization or dividend policy of the Issuer, (f) any other material change in the Issuer's business or corporate structure, (g) changes in the Issuer's charter, by-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person, (h) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association, (i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act of 1933, or (j) any action similar to those enumerated above. Item 5. Interest in Securities of the Issuer (a) Beneficial Ownership 5,000 shares of Common Stock are owned of record and beneficially by C. G. Grefenstette. 775,000 shares of Common Stock are owned of record and beneficially by Wilmington Securities, Inc. Wilmington Securities, Inc. also owns 645,833 shares of Series A Preferred Stock which are convertible into 1,291,666 shares of Common Stock. Wilmington Securities, Inc. owns 125,000 shares of Series A-1 Preferred Stock which are convertible into 250,000 shares of Common Stock. Wilmington Securities, Inc. owns 150,000 shares of Series B Preferred Stock which are convertible into 300,000 shares of Common Stock. Wilmington Securities, Inc. owns a Warrant for 100,000 shares of Common Stock, a Warrant for 66,667 shares of Common Stock and a Warrant for 36,000 shares of Common Stock. 100,000 shares of Common Stock are owned of record and beneficially by the Henry L. Hillman Trust. The Henry L Hillman Trust owns 150,000 shares of Series B Preferred Stock which are convertible into 300,000 shares of Common Stock and a Warrant for 36,000 shares of Common Stock. The JLHS 1976 Trust owns 50,000 shares of Series B Preferred Stock which are convertible into 100,000 shares of Common Stock and a Warrant for 12,000 shares of Common Stock. The AHF 1976 Trust owns 50,000 shares of Series B Preferred Stock which are convertible into 100,000 shares of Common Stock and a Warrant for 12,000 shares of Common Stock. The HLH Jr. 1976 Trust owns 50,000 shares of Series B Preferred Stock which are convertible into 100,000 shares of Common Stock and a Warrant for 12,000 shares of Common Stock. The WTH 1976 Trust owns 50,000 shares of Series B Preferred Stock which are convertible into 100,000 shares of Common Stock and a Warrant for 12,000 shares of Common Stock. (b) Power to Vote or Dispose of Shares Each person listed above in response to Item 5(a) has the sole power to vote and to direct the vote and the sole power to dispose of and direct the disposition of those shares except as follows: (i) Wilmington Investments, Inc., The Hillman Company, Henry L. Hillman, as settlor and Trustee of the Henry L. Hillman Trust, and Elsie Hilliard Hillman and C. G. Grefenstette, as Trustees of the Henry L. Hillman Trust, may be deemed to share voting and disposition power regarding 2,819,333 shares of Common Stock held beneficially by Wilmington Securities, Inc. (ii) Henry L. Hillman, as settlor and Trustee of the Henry L. Hillman Trust, and Elsie Hilliard Hillman and C. G. Grefenstette, as Trustees of the Henry L. Hillman Trust, may be deemed to share voting and disposition power regarding 436,000 shares of Common Stock held beneficially by the Henry L. Hillman Trust. (iii) As trustees of the JLHS 1976 Trust, the AHF 1976 Trust, the HLH Jr. 1976 Trust and the WTH 1976 Trust Thomas G. Bigley and C. G. Grefenstette may be deemed to share voting and disposition power regarding 448,000 shares of Common Stock held beneficially by the JLHS 1976 Trust, the AHF 1976 Trust, the HLH Jr. 1976 Trust and the WTH 1976 Trust. (c), (d) and (e). Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer Wilmington Securities, Inc. entered into a Series A Preferred Stock Purchase Agreement dated as of March 26, 1998 pursuant to which the Issuer had an option to require Wilmington Securities, Inc. to purchase up to 333,333 additional shares of the Issuer's Series A Preferred Stock under certain circumstances. Pursuant to the Series A-1 Preferred Stock Purchase Agreement dated August 11, 1998 by and between Wilmington Securities, Inc. and the Issuer, the Issuer's right to exercise such option was terminated. By subsequent agreement between the Issuer and Wilmington Securities, Inc., the Put Option Clause was reinstated in full as of September 3, 1998 except that (i) such option by the Issuer to require Wilmington Securities, Inc. to purchase additional shares ("Additional Shares") was limited to 145,883 rather than 333,333 shares of the Issuer's Series A Preferred Stock and (ii) paragraph (b) of the Put Option Clause requiring the Issuer to issue additional warrants to purchase shares of the Issuer's Common Stock in connection with the sale and issuance of such Additional Shares remains null and void. Pursuant to the Series B Preferred Stock Purchase Agreement dated as of September 2, 1998 (the "Securities Purchase Agreement'), the Issuer is obligated to issue, in the event that the average closing bid price of the Issuer's Common Stock on the ten trading days ending on March 2, 1999, is less than $4.00 per share, such number of additional warrants to purchase Common Stock (up to a maximum of 454,545 shares) determined in accordance with the formula set forth in the Securities Purchase Agreement. The additional warrants will have an exercise price of $.01 per share. Wilmington Securities, Inc. entered into a Registration Rights Agreement, dated as of September 2, 1998 (the "Registration Rights Agreement") pursuant to which the Issuer agreed to file a registration statement or Form S-3 covering the resale of the Common Stock underlying the Series B Convertible Preferred Stock and the 120,000 Common Stock Warrants issued in connection therewith. The rights of Wilmington Securities, Inc. under the Securities Purchase Agreement and the Registration Rights Agreement have been assigned to the Henry L. Hillman Trust, the JLHS 1976 Trust, the AHF 1976 Trust, the HLH Jr. 1976 Trust and the WTH 1976 Trust to the extent such rights relate to the shares and warrants purchased by such Trusts from Wilmington Securities, Inc. Item 7. Material to be Filed as Exhibits Exhibit 1. Information concerning officers and directors of reporting persons and certain affiliates thereof. Exhibit 2. Series B Preferred Stock Purchase Agreement. Exhibit 3. Registration Rights Agreement. SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. WILMINGTON SECURITIES, INC. /s/ Andrew H. McQuarrie By _________________________________________ Andrew H. McQuarrie, Vice President WILMINGTON INVESTMENTS, INC. /s/ Andrew H. McQuarrie By _________________________________________ Andrew H. McQuarrie, Vice President THE HILLMAN COMPANY /s/ Lawrence M. Wagner By _________________________________________ Lawrence M. Wagner, President HENRY L. HILLMAN, ELSIE HILLIARD HILLMAN & C. G. GREFENSTETTE, TRUSTEES OF THE HENRY L. HILLMAN TRUST U/A DATED NOVEMBER 18, 1985 /s/ C. G. Grefenstette By _________________________________________ C. G. Grefenstette, Trustee THOMAS G. BIGLEY AND C. G. GREFENSTETTE, TRUSTEES UNDER AGREEMENT OF TRUST DATED 12/30/76 FOR THE CHILDREN OF JULIET LEA HILLMAN SIMONDS, AUDREY HILLIARD HILLMAN HENRY LEA HILLMAN, JR., AND WILLIAM TALBOTT HILLMAN /s/ Thomas G. Bigley ____________________________________________ Thomas G. Bigley, Trustee /s/ C. G. Grefenstette ____________________________________________ C. G. Grefenstette, Trustee /s/ C. G. Grefenstette ____________________________________________ C. G. Grefenstette /s/ Thomas G. Bigley ____________________________________________ Thomas G. Bigley /s/ Henry L. Hillman ____________________________________________ Henry L. Hillman /s/ Elsie Hilliard Hillman ____________________________________________ Elsie Hilliard Hillman September 11, 1998 Date EX-1 2 EXHIBIT 1 PRINCIPAL OFFICERS AND DIRECTORS OF THE HILLMAN COMPANY, ALL OF WHOM ARE U.S. CITIZENS Name and Address Title Henry L. Hillman Chairman of the Executive Committee 2000 Grant Building and Director Pittsburgh, Pennsylvania 15219 C. G. Grefenstette Chairman of the Board and 2000 Grant Building Director Pittsburgh, Pennsylvania 15219 Lawrence M. Wagner President, Chief Executive Officer 2000 Grant Building and Director Pittsburgh, Pennsylvania 15219 H. Vaughan Blaxter, III Vice President, Secretary, General 1900 Grant Building Counsel and Director Pittsburgh, Pennsylvania 15219 Mark J. Laskow Vice President and Director 1900 Grant Building Pittsburgh, Pennsylvania 15219 Anthony J. Burlando Vice President - Risk Management 1900 Grant Building Pittsburgh, Pennsylvania 15219 James R. Philp Vice President - Personnel and 2000 Grant Building Administration Pittsburgh, Pennsylvania 15219 Richard M. Johnston Vice President - Investments and 2000 Grant Building Director Pittsburgh, Pennsylvania 15219 John W. Hall Vice President - Accounting and 1800 Grant Building Information Services Pittsburgh, Pennsylvania 15219 Timothy O. Fisher Vice President 1900 Grant Building Pittsburgh, Pennsylvania 15219 Bruce I. Crocker Vice President 1800 Grant Building Pittsburgh, Pennsylvania 15219 Denis P. McCarthy Vice President 1900 Grant Building Pittsburgh, Pennsylvania 15219 Timothy P. Hall Vice President 2000 Grant Building Pittsburgh, Pennsylvania 15219 Joseph C. Manzinger Vice President 2000 Grant Building Pittsburgh, Pennsylvania 15219 Maurice J. White Vice President, Shareholder Services 1800 Grant Building Pittsburgh, Pennsylvania 15219 Charles H. Bracken, Jr. Treasurer 2000 Grant Building Pittsburgh, Pennsylvania 15219 D. Richard Roesch Assistant Treasurer 1800 Grant Building Pittsburgh, Pennsylvania 15219 Michael S. Adamcyk Assistant Secretary and 2000 Grant Building Assistant Treasurer Pittsburgh, Pennsylvania 15219 Mary Black Strong Assistant Treasurer 2000 Grant Building Pittsburgh, Pennsylvania 15219 Carol J. Cusick Riley Vice President, Associate General 1900 Grant Building Counsel and Assistant Secretary Pittsburgh, Pennsylvania 15219 Cornel Conley Controller - Corporate 1800 Grant Building Pittsburgh, Pennsylvania 15219 Mark M. Poljak Controller - Taxes 1800 Grant Building Pittsburgh, Pennsylvania 15219 Elsie H. Hillman Director 2000 Grant Building Pittsburgh, Pennsylvania 15219 William Talbott Hillman Director 2000 Grant Building Pittsburgh, Pennsylvania 15219 PRINCIPAL OFFICERS AND DIRECTORS OF WILMINGTON INVESTMENTS, INC., ALL OF WHOM ARE U.S. CITIZENS H. Vaughan Blaxter, III President and Secretary 2000 Grant Building Pittsburgh, Pennsylvania 15219 Lario M. Marini Senior Vice President and Director 100 South Road Wilmington, Delaware 19809 Andrew H. McQuarrie Vice President, Chief Financial 824 Market Street, Suite 900 Officer, Treasurer and Director Wilmington, Delaware 19801 Richard H. Brown Assistant Vice President and 824 Market Street, Suite 900 Assistant Secretary Wilmington, Delaware 19801 Charles H. Bracken, Jr. Assistant Secretary and 2000 Grant Building Assistant Treasurer Pittsburgh, Pennsylvania 15219 Jody B. Cosner Assistant Secretary 824 Market Street, Suite 900 Wilmington, Delaware 19801 Joan E. Bachner Assistant Treasurer 824 Market Street, Suite 900 Wilmington, Delaware 19801 Darlene Clarke Director 4911 Birch Circle Wilmington, Delaware 19808 PRINCIPAL OFFICERS AND DIRECTORS OF WILMINGTON SECURITIES, INC., ALL OF WHOM ARE U.S. CITIZENS H. Vaughan Blaxter, III President and Secretary 2000 Grant Building Pittsburgh, Pennsylvania 15219 Lario M. Marini Senior Vice President and Director 100 South Road Wilmington, Delaware 19809 Andrew H. McQuarrie Vice President, Chief Financial 824 Market Street, Suite 900 Officer, Treasurer and Director Wilmington, Delaware 19801 Richard H. Brown Assistant Vice President and 824 Market Street, Suite 900 Assistant Secretary Wilmington, Delaware 19801 Charles H. Bracken, Jr. Assistant Secretary and 2000 Grant Building Assistant Treasurer Pittsburgh, Pennsylvania 15219 Jody B. Cosner Assistant Secretary 824 Market Street, Suite 900 Wilmington, Delaware 19801 Joan E. Bachner Assistant Treasurer 824 Market Street, Suite 900 Wilmington, Delaware 19801 Darlene Clarke Director 4911 Birch Circle Wilmington, Delaware 19808 TRUSTEES OF THE HENRY L. HILLMAN TRUST U/A TRUST DATED NOVEMBER 18, 1985, ALL OF WHOM ARE U.S. CITIZENS Henry L. Hillman 2000 Grant Building Pittsburgh, Pennsylvania 15219 Elsie Hilliard Hillman 2000 Grant Building Pittsburgh, Pennsylvania 15219 C. G. Grefenstette 2000 Grant Building Pittsburgh, Pennsylvania 15219 TRUSTEES OF THE 1976 JLHS TRUST DATED 12/30/76, THE 1976 AHF TRUST DATED 12/30/76, THE 1976 HLH TRUST DATED 12/30/76 AND THE 1976 WTH TRUST DATED 12/30/76 ALL OF WHOM ARE U.S. CITIZENS Thomas G. Bigley One Oxford Centre 28th Floor Pittsburgh, Pennsylvania 15219 C. G. Grefenstette 2000 Grant Building Pittsburgh, Pennsylvania 15219 EX-2 3 EXHIBIT 2 SECURITIES PURCHASE AGREEMENT SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of September 2, 1998, by and among Superconductor Technologies Inc., a Delaware corporation, with headquarters located at 460 Ward Drive, Suite F, Santa Barbara, California 93111-2310 ("Company"), and each of the purchasers set forth on the signature pages hereto (the "Buyers"). WHEREAS: A. The Company and the Buyers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Rule 506 under Regulation D ("Regulation D") as promulgated by the United States Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933 Act"); B. The Company has authorized a new series of preferred stock, designated as Series B Preferred Stock (the "Preferred Stock"), having the rights, preferences and privileges set forth in the Certificate of Designations, Rights and Preferences attached hereto as Exhibit "A" (the "Certificate of Designation"); C. The Preferred Stock is convertible into shares of common stock, $.001 par value per share, of the Company (the "Common Stock"), upon the terms and subject to the limitations and conditions set forth in the Certificate of Designation; D. The Company has authorized the issuance to the Buyers of warrants, in the form attached hereto as Exhibit "B", to purchase an aggregate of One Hundred Twenty Thousand (120,000) shares of Common Stock (the "Warrants"); E. The Buyers desire to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, (i) an aggregate of 500,000 shares of Preferred Stock, subject to adjustment as set forth herein and in the Certificate of Designation and (ii) Warrants to purchase One Hundred Twenty Thousand (120,000) shares of Common Stock, for an aggregate purchase price of Four Million Dollars ($4,000,000). F. Each Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, the number of shares of Preferred Stock and number of Warrants as is set forth immediately below its name on the signature pages hereto; and G. Contemporaneous with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, in the form attached hereto as Exhibit "C" (the "Registration Rights Agreement"), pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws. NOW THEREFORE, the Company and each of the Buyers severally (and not jointly) hereby agree as follows: 1. PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS. a. Purchase of Preferred Shares and Warrants. The Company shall issue and sell to each Buyer and each Buyer severally agrees to purchase from the Company such number of shares of Preferred Stock (collectively, together with any Preferred Stock issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the "Preferred Shares") and number of Warrants as is set forth immediately below such Buyer's name on the signature pages hereto. The aggregate number of Preferred Shares to be issued at the Closing is 500,000 shares and the aggregate number of Warrants to be issued at the Closing is One Hundred Twenty Thousand (120,000) for an aggregate purchase price of Four Million Dollars ($4,000,000), subject to the satisfaction (or waiver) of the conditions thereto set forth in Sections 6 and 7 below. The aggregate purchase price (the "Purchase Price") payable by each Buyer in respect of the Preferred Stock and Warrants to be purchased by such Buyer at the Closing is as set forth below such Buyer=s name on the signature pages hereto. b. Form of Payment. On the Closing Date (as defined below), (i) each Buyer shall pay the Purchase Price for the Preferred Shares and the Warrants, if any, to be issued and sold to it at the applicable Closing (as defined below) by wire transfer of immediately available funds to the Company, in accordance with the Company's written wiring instructions, against delivery of duly executed certificates representing such number of Preferred Shares and Warrants which such Buyer is purchasing and (ii) the Company shall deliver such certificates and Warrants duly executed on behalf of the Company, to the Buyer, against delivery of such Purchase Price. c. Closing Date. Subject to the satisfaction (or waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Preferred Shares and the Warrants pursuant to this Agreement (the "Closing Date") shall be 12:00 noon Eastern Standard Time on September 2, 1998 or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the "Closing") shall occur on the Closing Date at the offices of the Company, or at such other location as may be agreed to by the parties. 2. BUYERS' REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and not jointly) represents and warrants to the Company solely as to such Buyer that: a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Preferred Shares and the shares of Common Stock issuable upon conversion thereof (the "Conversion Shares") and the Warrants and the shares of Common Stock issuable upon exercise thereof (the "Warrant Shares" and, collectively with the Preferred Shares, Warrants and Conversion Shares the "Securities") for its own account for investment only and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act. b. Accredited Investor Status. The Buyer is an "accredited investor" as that term is defined in Rule 501(a) of Regulation D. c. Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities. d. Information. The Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer's right to rely on the Company's representations and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk. e. Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities. f. Transfer or Resale. The Buyer understands that (i) except as provided in the Registration Rights Agreement, the Securities have not been and are not being registered under the 1933 Act or any applicable state securities laws, and may not be transferred unless (a) subsequently included in an effective registration statement thereunder, (b) the Buyer shall have delivered to the Company an opinion of counsel (which opinion shall be reasonably acceptable to the Company) to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, (c) sold or transferred to on "affiliate" (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) ("Rule 144")) or (d) sold pursuant to Rule 144; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case, other than pursuant to the Registration Rights Agreement). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or other lending arrangement. g. Legends. The Buyer understands that the Preferred Shares and the Warrants and, until such time as the Conversion Shares and Warrant Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement, the Conversion Shares and Warrant Shares, may bear a restrictive legend in substantially the following form (and a stop- transfer order may be placed against transfer of the certificates for such Securities): "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 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" The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope reasonably acceptable to the Company, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act and such sale or transfer is effected or (c) such holder provides the Company with reasonable assurances that such Security can be sold pursuant to Rule 144 under the 1933 Act (or a successor rule thereto) without any restriction as to the number of Securities acquired as of a particular date that can then be immediately sold. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. h. Authorization; Enforcement. This Agreement and the Registration Rights Agreement have been duly and validly authorized, executed and delivered on behalf of the Buyer and are valid and binding agreements of the Buyer enforceable in accordance with their terms. i. Residency. The Buyer is a resident of the jurisdiction set forth immediately below such Buyer's name on the signature pages hereto. j. Tax Liability. The Buyer has reviewed with its own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by the Agreements. With respect to such matters, the Buyer relies solely on such advisors and not on any statements or representations of the Company or any of its agents other than the representations and warranties set forth herein. The Buyer understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement. 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each Buyer that: a. Organization and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not reasonably be expected have a Material Adverse Effect. "Material Adverse Effect" means any material adverse effect on the business, operating results or financial condition of the Company or on the transactions contemplated hereby or by the a agreements or instruments to be entered into in connection herewith. Except for Cryo-Asia Pte Ltd., a joint venture with Alantac in Singapore, the Company has no subsidiaries and does not otherwise own or control, directly or indirectly, any equity interest in any corporation, association or business entity. b. Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to file and perform its obligations under the Certificate of Designation and to enter into and perform this Agreement, the Registration Rights Agreement and the Warrants and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Registration Rights Agreement and the Warrants by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Preferred Shares and the Warrants and the issuance and reservation for issuance of the Conversion Shares and Warrant Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company's Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered and the Certificate of Designation has been duly filed by the Company, and (iv) each of this Agreement and the Certificate of Designation constitutes, and upon execution and delivery by the Company of the Registration Rights Agreement and the Warrants, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. c. Capitalization. The authorized capital stock of the Company consists or will, upon the filing of the Certificate of Designations, consist of (a) 30,000,000 shares of Common Stock, par value $0.001 per share, of which 7,715,081 shares are issued and outstanding as of the date of this Agreement, and (b) 2,000,000 shares of Preferred Stock, of which (i) 500,000 shares have been designated "Series A Preferred", all of which are issued and outstanding, (ii) 125,000 shares have been designated "Series A-1 Preferred", all of which are issued and outstanding, and (iii) 1,000,000 shares have been designated "Series B Preferred", none of which were issued and outstanding prior to the Closing. The outstanding shares have been duly authorized and validly issued in compliance with applicable laws, and are fully paid and nonassessable. The Company has reserved (a) 500,000 shares of Preferred Stock for issuance hereunder, (b) 2,250,000 shares of Common Stock for issuance upon conversion of the Series A Preferred Stock, the Series A-1 Preferred Stock and the Preferred Stock, (c) 166,667 shares of Common stock for issuance upon exercise of the warrants issued in connection with the Series A Preferred Stock financings, (d) 574,545 shares of Common Stock for issuance upon exercise of the Warrants and the Additional Warrants (as defined herein), (e) 2,078,909 shares of its Common Stock for issuance to employees, consultants or directors pursuant to its 1992 Director Option Plan, 1992 Stock Option Plan, Amended and Restated 1988 Stock Option Plan and 1998 Nonstatutory Option Plan, of which options to purchase 1,809,093 shares are issued and outstanding and (f) a total of 150,000 shares of Common Stock for issuance upon exercise of certain outstanding warrants. All of such outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the stockholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Section 3(c) of the Schedule of Exceptions, as of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Preferred Shares, the Warrants, the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company's Certificate of Incorporation as in effect on the date hereof ("Certificate of Incorporation"), the Company's By-laws, as in effect on the date hereof (the "By-laws"), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. d. Issuance of Shares. The Preferred Shares, Conversion Shares and Warrant Shares are duly authorized and, upon issuance in accordance with the terms of this Agreement (including the issuance of the Conversion Shares upon conversion of the Preferred Shares in accordance with the Certificate of Designation and the Warrant Shares upon exercise of the Warrants in accordance with the terms thereof) will be validly issued, fully paid and non-assessable, and free from all taxes, liens and charges with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of stockholders of the Company. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance of the Conversion Shares and Warrant Shares upon conversion or exercise of the Preferred Shares or Warrants. The Company further acknowledges that its obligation to issue Conversion Shares and Warrant Shares upon conversion of the Preferred Shares or exercise of the Warrants in accordance with this Agreement, the Certificate of Designation and the Warrants is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company. e. Series of Preferred Stock. The terms, designations, powers, preferences and relative, participating and optional or special rights, and the qualifications, limitations and restrictions of each series of preferred stock of the Company (other than the Preferred Stock) are as stated in the Certificate of Incorporation, filed on or prior to the date hereof, and the Bylaws. The terms, designations, powers, preferences and relative, participating and optional or special rights, and the qualifications, limitations and restrictions of the Preferred Stock are as stated in the Certificate of Designation. f. No Conflicts. The execution, delivery and performance of this Agreement, the Registration Rights Agreement and the Warrants by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the filing of the Certificate of Designation and the issuance and reservation for issuance of the Conversion Shares and Warrant Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party and which is set forth or incorporated by reference in the Company=s reports files with the SEC pursuant to the reporting requirements of the 1934 Act (as hereinafter defined) (the A Material Agreements), or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect). The Company of is not in violation of its Certificate of Incorporation, By-laws or other organizational documents and the Company is not in default (and no event has occurred which with notice or lapse of time or both could put the Company in default) in any material respect under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any Material Agreement, except for possible defaults as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The business of the Company is not being conducted, and shall not be conducted so long as a Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or any regulatory or self regulatory agency in order for it to execute, deliver or perform any of its obligations under this Agreement, the Registration Rights Agreement or the Warrants in accordance with the terms hereof or thereof. Except as disclosed in Section 3(f) of the Schedule of Exceptions, all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the Nasdaq National Market ("Nasdaq") and does not reasonably anticipate that the Common Stock will be delisted by the Nasdaq in the foreseeable future. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing. g. SEC Documents; Financial Statements. Since December 31, 1996, the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act of 1934, as amended (the "1934 Act") (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits) incorporated by reference therein, being hereinafter referred to herein as the "SEC Documents"). As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to December 31, 1997 and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company or have been disclosed to the Buyers. h. Absence of Certain Changes. Since December 31, 1997, there has been no Material Adverse Effect, except as disclosed in Section 3(h) of the Schedule of Exceptions. i. Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company threatened against or affecting the Company, or its officers or directors in their capacity as such, that, if adversely determined, could reasonably be expected to have a Material Adverse Effect. Section 3(i) of the Schedule of Exceptions contains a complete list and summary description of any pending or threatened proceeding against or affecting the Company, without regard to whether it would have a Material Adverse Effect. The Company is unaware of any facts or circumstances which might give rise to any of the foregoing. j. Patents, Copyrights, etc. The Company owns or possesses the requisite licenses or rights to use all patents, patent rights, inventions, know-how, trade secrets, trademarks, service marks, service names, trade names and copyrights ("Intellectual Property") necessary to enable it to conduct its business as now operated, except to the extent that a Material Adverse Effect could not reasonably be expected to result; or to the Company's knowledge, there is no claim or action by any person pertaining to, or proceeding pending, threatened which challenges the right of the Company with respect to any Intellectual Property necessary to enable it to conduct its business as now operated; to the best of the Company's knowledge, the Company's, current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company has taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property. k. No Materially Adverse Contracts, Etc. The Company is not subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company's officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company's officers has or is expected to have a Material Adverse Effect. l. Tax Status. Except as set forth on Section 3(l) of the Schedule of Exceptions, the Company has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. m. Certain Transactions. Except as set forth on Section 3(m) of the Schedule of Exceptions and except for arm's length transactions pursuant to which the Company makes payments in the ordinary course of business upon terms no less favorable than the Company could obtain from third parties and other than the grant of stock options disclosed on Section 3(c) of the Schedule of Exceptions, none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. n. Disclosure. To the best of the Company=s knowledge, all information relating to or concerning the Company set forth in this Agreement and provided to the Buyers pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. Except for the transactions contemplated by this Agreement, no event or circumstance has occurred or exists with respect to the Company or its business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purposes that the Company's reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act). o. Acknowledgment Regarding Buyers' Purchase of Securities. The Company acknowledges and agrees that the Buyers are acting solely in the capacity of arm's length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Buyer or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Buyers' purchase of the Securities. The Company further represents to each Buyer that the Company's decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives. p. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyers. The issuance of the Securities to the Buyers will not be integrated with any other issuance of the Company's securities (past, current or future) which requires stockholder approval under the rules of the Nasdaq Stock Market. q. No Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, finder's fees or similar payments relating to this Agreement or the transactions contemplated hereby, except for dealings with Tanner Unman Securities ("Tanner Unman"), whose commissions and fees will be paid for by the Company. r. Permits; Compliance. The Company is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted , except to the extent that a Material Adverse Effect could not reasonably be expected to result (collectively, the "Company Permits"), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. The Company is not in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Since December 31, 1997, the Company has not received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect. s. Environmental Matters. (i) Except as set forth in Section 3(s) of the Schedule of Exceptions, there are, to the Company's knowledge, with respect to the Company or any or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and the Company has not received any notice with respect to any of the foregoing, nor is any action pending or, to the Company's knowledge, threatened in connection with any of the foregoing. The term "Environmental Laws" means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, "Hazardous Materials") into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder. (ii) To the Company=s knowledge, other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about any real property currently owned, leased or used by the Company, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company during the period the property was owned, leased or used by the Company, except in the normal course of the Company's business. (iii) To the Company=s knowledge, except as set forth in Section 3(s) of the Schedule of Exceptions, there are no underground storage tanks on or under any real property owned, leased or used by the Company that are not in compliance with applicable law. t. Title to Property. The Company owns no real property. The Company has good and marketable title to all personal property owned by it which is material to the business of the Company, in each case free and clear of all liens, encumbrances and defects except such as are described in Section 3(t) of the Schedule of Exceptions or such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect. u. Insurance. The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company is engaged. The Company has not any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. v. Internal Accounting Controls. The Company maintains a system of internal accounting controls sufficient, in the judgment of the Company's board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. w. Foreign Corrupt Practices. Neither the Company, nor any director, officer, agent, employee or other person acting on behalf of the Company has, in the course of his actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee. 4. COVENANTS. a. Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement. b. Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyers at the applicable closing pursuant to this Agreement under applicable securities or "blue sky" laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to each Buyer on or prior to the Closing Date. c. Reporting Status; Eligibility to Use Form S-3. The Company's Common Stock is registered under Section 12(g) of the 1934 Act. So long as any Buyer beneficially owns any of the Securities, the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination. The Company currently meets, and will take all necessary action to continue to meet, the "registrant eligibility" requirements set forth in Part I.A. of the general instructions to Form S-3. d. Use of Proceeds. The Company shall use the proceeds from the sale of the Preferred Shares and the Warrants for working capital and general corporate purposes. e. Additional Equity Capital; Right of First Refusal. Subject to the exceptions described below, the Company will not, without the prior written consent of a majority-in-interest of the Buyers, negotiate or contract with any party to obtain additional equity financing (including debt financing with an equity component) that involves (A) the issuance of Common Stock at a discount to the market price of the Common Stock on the date of issuance (taking into account the value of any warrants or options to acquire Common Stock issued in connection therewith) or (B) the issuance of convertible securities that are convertible into an indeterminate number of shares of Common Stock during the period (the "Lock-up Period") beginning on the Closing Date and ending on the later of (i) ninety (90) days from the Closing Date and (ii) thirty (30) days from the date the Registration Statement (as defined in the Registration Rights Agreement) is declared effective (plus any days in which sales cannot be made thereunder). In addition, subject to the exceptions described below, the Company will not conduct any equity financing (including debt with an equity component) ("Future Offerings") during the period beginning on the Closing Date and ending one hundred eighty (180) days after the end of the Lock-up Period, unless it shall have first delivered to each Buyer, at least fifteen (15) business days prior to the closing of such Future Offering, written notice describing the proposed Future Offering, including the terms and conditions thereof and proposed definitive documentation to be entered into in connection therewith, and providing each Buyer an option during the ten (10) day period following delivery of such notice to purchase its pro rata share (based on the ratio that the number of Conversion Shares held by such Buyer bears to the total outstanding Common Stock of the Company) of the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations referred to in this sentence are collectively referred to as the "Capital Raising Limitations"). In the event the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyers concerning the proposed Future Offering, the Company shall deliver a new notice to each Buyer describing the amended terms and conditions of the proposed Future Offering and each Buyer thereafter shall have an option during the ten (10) day period following delivery of such new notice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed Future Offering, as amended. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Offering. The Capital Raising Limitations shall not apply to any transaction involving (i) the Preferred Stock, the Warrants or the Conversion Shares, (ii) securities offered to the public generally in an underwritten offering 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). f. Expenses. The Company shall reimburse Tanner Unman for all reasonable expenses incurred by it in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith, including, without limitation, attorneys= and consultants= fees and expenses. The Company=s obligation to reimburse Tanner Unman=s expenses under this Section 4(f) shall be limited to Thirty Thousand Dollars ($30,000), of which Fifteen Thousand Dollars ($15,000) has previously been paid. g. Financial Information. The Company agrees to send the following reports to each Buyer until such Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the stockholders of the Company, copies of any notices or other information the Company makes available or gives to such stockholders. h. Reservation of Shares. The Company shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of shares of Common Stock to provide for the full conversion or exercise of the outstanding Preferred Shares and Warrants and issuance of the Conversion Shares and Warrant Shares in connection therewith (based on the Conversion Price of the Preferred Shares or Exercise Price of the Warrants in effect from time to time). The Company shall not reduce the number of shares of Common Stock reserved for issuance upon conversion of Preferred Shares and exercise of the Warrants without the consent of each Buyer. The Company shall use its best efforts at all times to maintain the number of shares of Common Stock so reserved for issuance at no less than the sum of: (i) the number that is then actually issuable upon full conversion of the Preferred Shares (based on the Conversion Price of the Preferred Shares) and (ii) the number of shares of Common Stock issuable upon exercise of the Warrants (based on the Exercise Price of the Warrants in effect from time to time). If at any time the number of shares of Common Stock authorized and reserved for issuance is below the number of Conversion Shares and Warrant Shares issued and issuable upon conversion of the Preferred Shares and exercise of the Warrants (based on the Conversion Price of the Preferred Shares or Exercise price of the Warrants then in effect), the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders to authorize additional shares to meet the Company's obligations under this Section 4(h), in the case of an insufficient number of authorized shares, and using its best efforts to obtain shareholder approval of an increase in such authorized number of shares. i. Listing. The Company shall use its best efforts to promptly secure the listing of the Conversion Shares and Warrant Shares upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Conversion Shares and Warrant Shares from time to time issuable upon conversion of the Preferred Shares or exercise of the Warrants. The Company will obtain and maintain the listing and trading of its Common Stock on Nasdaq, the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the New York Stock Exchange ("NYSE"), or the American Stock Exchange ("AMEX") and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers ("NASD") and such exchanges, as applicable. j. Corporate Existence. So long as a Buyer beneficially owns any Preferred Shares or Warrants, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company's assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company's assets, where the surviving or successor entity in such transaction (i) assumes the Company's obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on Nasdaq, Nasdaq SmallCap, NYSE or AMEX. k. No Integration. The Company will not conduct any future offering that will be integrated with the issuance of the Securities solely for purposes of Rule 4460(i) of the Nasdaq Stock Market. l. Solvency. The Company (both before and after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not have, nor does it intend to take any action that would impair, its ability to pay its debts from time to time incurred in connection therewith as such debts mature. The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and does not anticipate or know of any basis upon which its auditors might issue a qualified opinion in respect of its current fiscal year. m. Additional Warrants. In the event that the Determination Price (as defined herein) is less than $4.00 per share, the Company shall be obligated to issue such number of additional warrants ("Additional Warrants") determined in accordance with the calculation set forth below, which Additional Warrants will have an exercise price of $.01 per share. The Determination Price means the greater of (i) $2.75 per share of Common Stock or (ii) average closing bid price of the Common Stock on the ten (10) trading days ending on March 2, 1999. N = ($4.00 - DP) x (I )$4.00) DP N = Number of Additional Warrants DP = Determination Price I = Amount of Investment The Additional Warrants will be in the form attached hereto as Exhibit AD. The shares of Common Stock issuable upon conversion of the Additional Warrants shall be considered Warrant Shares for purposes hereof and Registrable Securities for purposes of the Registration Rights Agreement. 5 TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of each Buyer or its nominee, for the Conversion Shares and Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Preferred Shares or exercise of the Warrants in accordance with the terms thereof (the "Irrevocable Transfer Agent Instructions"). Prior to registration of the Conversion Shares and Warrant Shares under the 1933 Act, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares and Warrant Shares, prior to registration of the Conversion Shares and Warrant Shares under the 1933 Act), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Registration Rights Agreement. Nothing in this Section shall affect in any way the Buyer's obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon resale of the Securities. If a Buyer provides the Company with an opinion of counsel, reasonably satisfactory to the Company in form, substance and scope, that registration of a resale by such Buyer of any of the Securities is not required under the 1933 Act, the Company shall permit the transfer, and, in the case of the Conversion Shares and Warrant Shares, promptly instruct its transfer agent to issue one or more certificates in such name and in such denominations as specified by such Buyer. 6 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of the Company hereunder to issue and sell the Preferred Shares and Warrants to a Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions thereto, provided that these conditions are for the Company's sole benefit and may be waived by the Company at any time in its sole discretion: a. The applicable Buyer shall have executed this Agreement and the Registration Rights Agreement, and delivered the same to the Company. b. The applicable Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above. c. The Certificate of Designation shall have been accepted for filing with the Secretary of State of the State of Delaware. d. The representations and warranties of the applicable Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the applicable Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the applicable Buyer at or prior to the Closing Date. e. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement. f. The Company shall have received an amendment to its Amended and Restated Stockholders Agreement dated as of August 11, 1998, in the form of Exhibit AE hereto, duly executed by the "Purchasers" named therein. 7. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE. The obligation of each Buyer hereunder to purchase the Preferred Shares and Warrants at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions, provided that these conditions are for such Buyer's sole benefit and may be waived by such Buyer at any time in its sole discretion: a. The Company shall have executed this Agreement and the Registration Rights Agreement, and delivered the same to the Buyer. b. The Company shall have delivered to such Buyer duly executed certificates (in such denominations as the Buyer shall request) representing the Preferred Shares and Warrants in accordance with Section 1(b) above. c. The Certificate of Designation shall have been accepted for filing with the Secretary of State of the State of Delaware, and a facsimile copy thereof certified by such Secretary of State shall have been delivered to such Buyer. d. The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a majority-in-interest of the Buyers, shall have been delivered to and acknowledged in writing by the Company's Transfer Agent. e. The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer including, but not limited to certificates with respect to the Company's Certificate of Incorporation, By-laws and Board of Directors' resolutions relating to the transactions contemplated hereby. f. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement. g. The Conversion Shares and the Warrant Shares shall have been authorized for quotation on Nasdaq and trading in the Common Stock on Nasdaq shall not have been suspended by the SEC or Nasdaq. h. The Buyer shall have received an opinion of the Company's counsel, dated as of the Closing Date, in form, scope and substance reasonably satisfactory to the Buyer and in substantially the same form as Exhibit "F" attached hereto. i. The Buyer shall have received an officer's certificate described in Section 3(c) above, dated as of the Closing Date. 8. GOVERNING LAW; MISCELLANEOUS. a. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware without regard to the principles of conflict of laws. The parties hereto hereby submit to the exclusive jurisdiction of the United States Federal Courts located in Delaware with respect to any dispute arising under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby. b. Counterparts; Signatures by Facsimile. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. c. Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. d. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. e. Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. f. Notices. Any notices required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier (including a recognized overnight delivery service) or by facsimile and shall be effective five days after being placed in the mail, if mailed by regular U.S. mail, or upon receipt, if delivered personally or by courier (including a recognized overnight delivery service) or by facsimile, in each case addressed to a party. The addresses for such communications shall be: If to the Company: Superconductor Technologies Inc. 460 Ward Drive Suite F Santa Barbara, California 93111-2310 Attention: Chief Executive Officer Facsimile: (805) 967-0342 With copy to: Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, California 94304-1050 Attention: John V. Roos, Esq. Facsimile: (650) 493-6811 If to a Buyer: To the address set forth immediately below such Buyer's name on the signature pages hereto. Each party shall provide notice to the other party of any change of its address. g. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor any Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from a Buyer or to any of its "affiliates," as that term is defined under the 1934 Act, without the consent of the Company. h. Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person. i. Survival. The representations and warranties of the Company and the agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyers. The Company agrees to indemnify and hold harmless each of the Buyers and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in Sections 3 and 4 hereof or any of its covenants and obligations under this Agreement or the Registration Rights Agreement, including advancement of expenses as they are incurred. j. Publicity. The Company and each of the Buyers shall have the right to review a reasonable period of time before issuance of any press releases, SEC, Nasdaq or NASD filings, or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of each of the Buyers, to make any press release or SEC, Nasdaq or NASD filings with respect to such transactions as is required by applicable law and regulations (although each of the Buyers shall be consulted by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon). k. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. l. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. m. Confidential Business Information. The Buyers covenant and agree that they shall maintain the confidentiality of all non-public information related to the business of the company made available to them and/or any of their representatives by the Company ("Confidential Business Information") and shall not utilize any Confidential Business Information in connection with purchases or sales of the Company=s securities except in compliance with applicable state and federal anti-fraud statutes. The Buyers further covenant and agree that they shall not disclose any Confidential Business Information to any person or entity without the prior written consent of the Company. The term "Buyers" as used in this subsection includes all partners, officers, directors, affiliates, employees, attorneys, accountants and other agents and representatives of the Purchaser. Notwithstanding the above, Confidential Business Information shall not include (i) information known to the public generally, (ii) information known to the Buyers from an independent source prior to the receipt of such information from the Company and (iii) information required to be disclosed by the Buyers by court order or otherwise required by law, provided, however, that in the event of a required disclosure pursuant to this clause (iii), the Buyers shall give the Company prompt written notice of any such requirement so that the Company may seek a protective order or other appropriate remedy. The Buyers agree that violation of this subsection would cause immediate and irreparable damage to the business of the Company, and consent to the entry of immediate and permanent injunctive relief for any violation hereof. IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused this Agreement to be duly executed as of the date first above written. SUPERCONDUCTOR TECHNOLOGIES INC. By: Name: Title: WILMINGTON SECURITIES, INC. 824 Market Street Suite 900 Wilmington, Delaware 19801 By: Name: Andrew McQuarrie Title: Vice President RESIDENCE: Delaware AGGREGATE SUBSCRIPTION AMOUNT: Number of Shares of Preferred Stock: 500,000 Number of Warrants: 120,000 Aggregate Purchase Price: $4,000,000 EX-3 4 Exhibit 3 REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of September 2,1998, by and among Superconductor Technologies Inc., a Delaware corporation, with its headquarters located at 460 Ward Drive, Suite F, Santa Barbara, California 93111-2310 (the "Company"), and each of the undersigned (together with their respective affiliates and any assignee or transferee of all of their respective rights hereunder, the "Initial Investors"). WHEREAS: A. In connection with the Securities Purchase Agreement by and among the parties hereto of even date herewith (the "Securities Purchase Agreement"), the Company has agreed, upon the terms and subject to the conditions contained therein, to issue and sell to the Initial Investors (i) shares of its Series B Convertible Preferred Stock (the "Preferred Stock") that are convertible into shares (the "Conversion Shares") of the Company's common stock, par value $.001 per share (the "Common Stock"), upon the terms and subject to the limitations and conditions set forth in the Certificate of Designations, Rights, Preferences, Privileges and Restrictions with respect to the Preferred Stock (the "Certificate of Designation") and (ii) warrants (the "Warrants") to acquire an aggregate of 120,000 shares of Common Stock (the "Warrant Shares"), upon the terms and conditions and subject to the limitations and conditions set forth in the Warrants dated September 2, 1998 plus any Additional Warrants (as defined in the Securities Purchase Agreement) (collectively, the AWarrant Shares@); and B. To induce the Initial Investors to execute and deliver the Securities Purchase 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 statute (collectively, the "1933 Act"), and applicable state securities laws; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each of the Initial Investors hereby agree as follows: 1. DEFINITIONS. a. As used in this Agreement, the following terms shall have the following meanings: (i) "Investors" means the Initial Investors and any transferee or assignee who becomes bound by the provisions of this Agreement in accordance with Section 9 hereof. (ii) "register," "registered," and "registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the United States Securities and Exchange Commission (the "SEC"). (iii) "Registrable Securities" means the Conversion Shares (including any additional shares that may be issued pursuant to the Certificate of Designation) and Warrant Shares issued or issuable and any shares of capital stock issued or issuable as a dividend on or in exchange for or otherwise with respect to any of the foregoing, provided, however, that such 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 1933 Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation such sale. (iv) "Registration Statement" means a registration statement of the Company under the 1933 Act. b. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement. 2. REGISTRATION. a. Mandatory Registration. The Company shall prepare, and, on or prior to the date which is sixty (60) days after the date of the Closing under and as defined in the Securities Purchase Agreement (the "Closing Date"), file with the SEC a Registration Statement on Form S-3 (or, if Form S-3 is not then available, on such form of Registration Statement as is then available to effect a registration of the Registrable Securities) covering the resale of the Registrable Securities underlying the Preferred Stock and Warrants issued or issuable pursuant to the Securities Purchase Agreement, which Registration Statement, to the extent allowable under the 1933 Act and the Rules promulgated thereunder (including Rule 416), shall state that such Registration Statement also covers such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of the Preferred Stock and exercise of the Warrants (i) to prevent dilution resulting from stock splits, stock dividends or similar transactions or (ii) by reason of changes in the Conversion Price of the Preferred Stock in accordance with the terms thereof or the exercise price of the Warrants in accordance with the terms thereof. The number of shares of Common Stock initially included in such Registration Statement shall be no less than the sum of the number of Conversion Shares and Warrant Shares that are then issuable upon conversion of the Preferred Stock and the exercise of the Warrants, without regard to any limitation on the Investor's ability to convert the Preferred Stock or exercise the Warrants. The Company acknowledges that the number of shares initially included in the Registration Statement represents a good faith estimate of the maximum number of shares issuable upon conversion of the Preferred Stock and exercise of the Warrants. b. Payments by the Company. The Company shall use its best efforts to obtain effectiveness of the Registration Statement as soon as practicable. If (i) the Registration Statement(s) covering the Registrable Securities required to be filed by the Company pursuant to Section 2(a) hereof is not filed within sixty (60) days after the Closing Date or declared effective by the SEC within one hundred twenty (120) days after the Closing Date or if, after the Registration Statement has been declared effective by the SEC, sales cannot be made pursuant to the Registration Statement (except as a result of an Allowed Delay (as defined in section 3(f)), or (ii) the Common Stock is not listed or included for quotation on the Nasdaq National Market ("Nasdaq"), the Nasdaq SmallCap Market ("Nasdaq SmallCap"), the New York Stock Exchange (the "NYSE") or the American Stock Exchange (the "AMEX") after being so listed or included for quotation, then the Company will make payments to the Investors in such amounts and at such times as shall be determined pursuant to this Section 2(b) as partial relief for the damages to the Investors by reason of any such delay in or reduction of their ability to sell the Registrable Securities (which remedy shall not be exclusive of any other remedies available at law or in equity). The Company shall not have any obligation to pay to the Investors any amounts provided for in this Section 2(b) during an Allowe d Delay. The Company shall pay to each holder of the Preferred Stock or Registerable Securities an amount equal to the Purchase Price under and as defined in the Securities Purchase Agreement paid in respect of such Preferred Stock (and, in the case of holders of Registerable Securities, the purchase price for the Preferred Stock from which such Registerable Securities were converted) ("Aggregate Share Price") multiplied by the Applicable Percentage (as defined below) multiplied by the number of months (without duplication), prorated for partial months during (1) which the events described in clauses (i) or (ii) above have occurred and are continuing, (2) sales cannot be made pursuant to the Registration Statement after the Registration Statement has been declared effective (including, without limitation, when sales cannot be made by reason of the Company's failure to properly supplement or amend the prospectus included therein in accordance with the terms of this Agreement, but excluding any days during an Allowed Delay (as defined in Section 3(f)), or (3) that the Common Stock is not listed or included for quotation on the Nasdaq, Nasdaq SmallCap, NYSE or AMEX or that trading thereon is halted after the Registration Statement has been declared effective. The term "Applicable Percentage" means 2 hundredths (.02). Such amounts shall be paid in cash or, at the Company=s option, paid in shares of Preferred Stock, calculated based on the Purchase Price applicable to such shares and thereafter be convertible into Common Stock at the "Conversion Price" (as defined in the Certificate of Designation) in accordance with the terms of the Preferred Stock. Any shares of Common Stock issued upon conversion of such amounts shall be Registrable Securities. Payments of cash pursuant hereto shall be made within ten (10) days after the end of each period that gives rise to such obligation, provided that, if any such period extends for more than thirty (30) days, interim payments shall be made for each such thirty (30) day period. c. Piggy-Back Registrations. Subject to the last sentence of this Section 2(c), if at any time prior to the expiration of the Registration Period (as hereinafter defined) the Company shall file with the SEC a Registration Statement relating to an offering for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8 or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), the Company shall send to each Investor who is entitled to registration rights under this Section 2(c) written notice of such determination and, if within twenty (20) days after the effective date of such notice, such Investor shall so request in writing, the Company shall include in such Registration Statement all or any part of the Registrable Securities such Investor requests to be registered, except that if, in connection with any underwritten public offering for the account of the Company the managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in such underwriter(s)' judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which such Investor has requested inclusion hereunder as the underwriter shall permit. Any exclusion of Registrable Securities shall be made pro rata among the Investors seeking to include Registrable Securities in proportion to the number of Registrable Securities sought to be included by such Investor s; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such securities in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities; and provided, further, however, that, after giving effect to the immediately preceding proviso, any exclusion of Registrable Securities shall be made pro rata with holders of other securities having the right to include such securities in the Registration Statement other than holders of securities entitled to inclusion of their securities in such Registration Statement by reason of demand registration rights. No right to registration of Registrable Securities under this Section 2(c) shall be construed to limit any registration required under Section 2(a) hereof. If an offering in connection with which an Investor is entitled to registration under this Section 2(c) is an underwritten offering, then each Investor whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering. Notwithstanding anything to the contrary set forth herein, the registration rights of the Investors pursuant to this Section 2(c) shall only be available in the event the Company fails to timely file, obtain effectiveness or maintain effectiveness of the Registration Statement to be filed pursuantto Section 2(a) in accordance with the terms of this Agreement. d. Eligibility for Form S-3. The Company represents and warrants that it meetsthe registrant eligibility and transaction requirements for the use of Form S-3 for registration of thesale by the Initial Investors and any other Investors of the Registrable Securities and the Companyshall file all reports required to be filed by the Company with the SEC in a timely manner so as tomaintain such eligibility for the use of Form S-3. 3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the Registrable Securities, the Company shall have thefollowing obligations: a. The Company shall prepare promptly, and file with the SEC not later than sixty(60) days after the Closing Date, a Registration Statement with respect to the number of RegistrableSecurities provided in Section 2(a), and thereafter use its best efforts to cause such RegistrationStatement relating to Registrable Securities to become effective as soon as possible after the filingthereof, and keep the Registration Statement effective pursuant to Rule 415 at all times until suchdate as is the earlier of (i) the date on which all of the Registrable Securities have been sold and (ii)the date on which the Registrable Securities (in the opinion of counsel to the Initial Investors) maybe immediately sold without restriction (including without limitation as to volume by each holderthereof) without registration under the 1933 Act (the "Registration Period"). b. The Company shall prepare and file with the SEC such amendments (includingpost-effective amendments) and supplements to the Registration Statement and the prospectus usedin connection with the Registration Statement as may be necessary to keep the Registration Statementeffective at all times during the Registration Period, and, during such period, comply with theprovisions of the 1933 Act with respect to the disposition of all Registrable Securities of theCompany covered by the Registration Statement until such time as all of such Registrable Securitieshave been disposed of in accordance with the intended methods of disposition by the seller or sellersthereof as set forth in the Registration Statement. In the event the number of shares available undera Registration Statement filed pursuant to this Agreement is insufficient to cover all of the RegistrableSecurities issued or issuable upon conversion of the Preferred Stock and exercise of the Warrants,the Company shall amend the Registration Statement, or file a new Registration Statement (on theshort form available therefore, if applicable), or both, so as to cover all of the Registrable Securities,in each case, as soon as practicable, but in any event within twenty (20) business days after thenecessity therefor arises (based on the market price of the Common Stock and other relevant factorson which the Company reasonably elects to rely). The Company shall use its commercially reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon aspracticable following the filing thereof. The provisions of Section 2(c) above shall be applicable with respect to such obligation, with the sixty (60) or one hundred twenty (120) days running from the day after the date on which the Company reasonably first determines (or reasonably should have determined) the need therefor. c. The Company shall furnish to each Investor whose Registrable Securities are included in the Registration Statement (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of the Registration Statement and any amendment thereto, each preliminary prospectus and prospectus and each amendment or supplement thereto and (ii) such number of copies of a prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor. The Company will immediately notify each Investor by facsimile of the effectiveness of the Registration Statement or any post-effective amendment. The Company will promptly file an acceleration request as soon as practicable following the resolution or clearance of all SEC comments or, if applicable, following notification by the SEC that the Registration Statement or any amendment thereto will not be subject to review. d. The Company shall use reasonable efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or "blue sky" laws of such jurisdictions in the United States as the Investors who hold a majority in interest of the Registrable Securities being offered reasonably request, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (a) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (b) subject itself to general taxation in any such jurisdiction, (c) file a general consent to service of process in any such jurisdiction, (d) provide any undertakings that cause the Company undue expense or burden, or (e) make any change in its charter or bylaws. e. In the event Investors who hold a majority-in-interest of the Registrable Securities being offered in the offering select underwriters for the offering, the Company shall enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the underwriters of such offering. f. As promptly as practicable after becoming aware of such event, the Company shall notify each Investor of (x) the issuance by the SEC of a stop order suspending the effectiveness of the Registration Statement, (y) the happening of any event, of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (z) the occurrence or existence of any pending corporate development that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of the Registration Statement and use its best efforts promptly to prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to each Investor as such Investor may reasonably request; provided that, for not more than twenty (20) consecutive trading days (or a total of not more than thirty (30) trading days in any twelve (12) month period) (or 60 trading days in any 12 month period, in the case of an event described in clause (z) above that arises from an acquisition or a probable acquisition or financing, recapitalization, business combination or other similar transaction), the Company may delay the disclosure of material non- public information concerning the Company (as well as prospectus or Registration Statement updating) the disclosure of which at the time is not, in the good faith opinion of the Company,the best interests of the Company (an "Allowed Delay"); provided, further, that the Company shall promptly (i) notify the Investors in writing of the existence of (but in no event, without the prior written consent of an Investor, shall the Company disclose to such investor any of the facts or circumstances regarding) material non-public information giving rise to an Allowed Delay and (ii) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay. Upon expiration of the Allowed Delay, the Company shall again be bound by the first sentence of this Section 3(f) with respect to the information giving rise thereto, and shall be obligated to pay to the Investors any amounts provided for in Section 2(b). g. The Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, and, if such an order is issued, to obtain the withdrawal of such order at the earliest possible moment and to notify each Investor who holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance of such order and the resolution thereof. h. The Company shall permit a single firm of counsel designated by the Initial Investors to review the Registration Statement and all amendments and supplements thereto (as well as all requests for acceleration or effectiveness thereof) a reasonable period of time prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects and will not request acceleration of the Registration Statement without prior notice to such counsel. The sections of the Registration Statement covering information with respect to the Investors, the Investor's beneficial ownership of securities of the Company or the Investors intended method of disposition of Registrable Securities shall conform to the information provided to the Company by each of the Investors. i. The Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering a twelve- month period beginning not later than the first day of the Company's fiscal quarter next following the effective date of the Registration Statement. j. At the request of any Investor, the Company shall furnish, on the date that Registrable Securities are delivered to an underwriter, if any, for sale in connection with the Registration Statement or, if such securities are not being sold by an underwriter, on the date of effectiveness thereof (i) an opinion, dated as of such date, from counsel representing the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the underwriters, if any, and the Investors and (ii) a letter, dated such date, from the Company's independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and the Investors. k. The Company shall make available for inspection during normal business hours by (i) any Investor and (ii) one firm of attorneys and one firm of accountants or other agents retained by the Initial Investors, (collectively, the "Inspectors") all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collectively, the "Records"), as shall be reasonably deemed necessary by each Inspector to enable each Inspector to exercise its due diligence responsibility, and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request for purposes of such due diligence; provided, however, that each Inspector shall hold in confidence and shall not make any disclosure (except to an Investor) of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement, (b) the release of such Records is ordered pursuant to a subpoena or other order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company shall not be required to disclose any confidential information in such Records to any Inspector until and unless such Inspector shall have entered into confidentiality agreements (in form and substance satisfactory to the Company) with the Company with respect thereto, substantially in the form of this Section 3(k). Each Investor agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and any Investor) shall be deemed to limit the Investor's ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations. l. The Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to such Investor prior to making such disclosure, and allow the Investor, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. m. The Company shall (i) cause all the Registrable Securities covered by the Registration Statement to be listed on each national securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the rules of such exchange, or (ii) secure the designation and quotation, of all the Registrable Securities covered by the Registration Statement on the Nasdaq or, if not eligible for the Nasdaq on the Nasdaq SmallCap and, without limiting the generality of the foregoing, to arrange for at least two market makers to register with the National Association of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable Securities. n. The Company shall provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the effective date of the Registration Statement. o. The Company shall cooperate with the Investors who hold Registrable Securities being offered and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the managing underwriter or underwriters, if any, or the Investors may reasonably request and registered in such names as the managing underwriter or underwriters, if any, or the Investors may request, and, within five (5) business days after a Registration Statement which includes Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the Investors whose Registrable Securities are included in such Registration Statement) an instruction in the form attached hereto as Exhibit 1and an opinion of such counsel in the form attached hereto as Exhibit 2. p. Except for registration rights previously disclosed to the Buyers prior to the execution of this Agreement, from and after the date of this Agreement, the Company shall not, and shall not agree to, allow the holders of any securities of the Company to include any of their securities in any Registration Statement under Section 2(a) hereof or any amendment or supplement thereto under Section 3(b) hereof without the consent of the holders of a majority-in-interest of the Registrable Securities. q. The Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investors of Registrable Securities pursuant to the Registration Statement. 4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of the Registrable Securities, the Investors shall have the following obligations: a. It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request. At least three (3) business days prior to the first anticipated filing date of the Registration Statement, the Company shall notify each Investor of the information the Company requires from each such Investor. b. Each Investor, by such Investor's acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement. c. In the event Investors holding a majority-in-interest of the Registrable Securities being registered (with the approval of the Initial Investors) determine to engage the services of an underwriter, each Investor agrees to enter into and perform such Investor's obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the Registration Statement. d. Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f) or 3(g), such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f) or 3(g) and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in such Investor's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. e. No Investor may participate in any underwritten registration hereunder unless such Investor (i) agrees to sell such Investor's Registrable Securities on the basis provided in any underwriting arrangements in usual and customary form entered into by the Company, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions and any expenses in excess of those payable by the Company pursuant to Section 5 below. 5. EXPENSES OF REGISTRATION. All reasonable expenses, other than underwriting discounts and commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without limitation, all registration, listing and qualification fees, printers and accounting fees, the fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one counsel selected by the Initial Investors pursuant to Sections 2(b) and 3(h) hereof shall be borne by the Company. 6. INDEMNIFICATION. In the event any Registrable Securities are included in a Registration Statement under this Agreement: a. To the extent permitted by law, the Company will indemnify, hold harmless and defend (i) each Investor who holds such Registrable Securities, (ii) the directors, officers, partners, employees, agents and each person who controls any Investor within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"), if any, (iii) any underwriter (as defined in the 1933 Act) for the Investors, and (iv) the directors, officers, partners, employees and each person who controls any such underwriter within the meaning of the 1933 Act or the 1934 Act, if any (each, an "Indemnified Person"), against any joint or several losses, claims, damages, liabilities or expenses (collectively, together with actions, proceedings or inquiries by any regulatory or self-regulatory organization, whether commenced or threatened, in respect thereof, "Claims") to which any of them may become subject insofar as such Claims arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or the omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein not misleading; (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading; or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). Subject to the restrictions set forth in Section 6(c) with respect to the number of legal counsel, the Company shall reimburse the Indemnified Person, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by any Indemnified Person or underwriter for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(c) hereof; (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld; and (iii) with respect to any preliminary prospectus, shall not inure to the benefit of any Indemnified Person if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, such corrected prospectus was timely made available by the Company pursuant to Section 3(c) hereof, and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a Violation and such Indemnified Person, notwithstanding such advice, used it. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. b. In connection with any Registration Statement in which an Investor is participating, each such Investor agrees severally and not jointly to indemnify, hold harmless and defend, to the same extent and in the same manner set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement, each person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act, any underwriter and any other stockholder selling securities pursuant to the Registration Statement or any of its directors or officers or any person who controls such stockholder or underwriter within the meaning of the 1933 Act or the 1934 Act (collectively and together with an Indemnified Person, an "Indemnified Party"), against any Claim to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim arises out of or is based upon any Violation by such Investor, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and subject to Section 6(c) such Investor will reimburse any legal or other expenses (promptly as such expenses are incurred and are due and payable) reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld; provided, further, however, that the Investor shall be liable under this Agreement (including this Section 6(b) and Section 7) for only that amount as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section 9. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented. c. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding. The indemnifying party shall pay for only one separate legal counsel for the Indemnified Persons or the Indemnified Parties, as applicable, and such legal counsel shall be selected by Investors holding a majority-in-interest of the Registrable Securities included in the Registration Statement to which the Claim relates (with the approval of a majority-in- interest of the Initial Investors), if the Investors are entitled to indemnification hereunder, or the Company, if the Company is entitled to indemnification hereunder, as applicable. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is actually prejudiced in its ability to defend such action. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. 7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6, (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation, and (iii) contribution (together with any indemnification or other obligations under this Agreement) by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities. 8. REPORTS UNDER THE 1934 ACT. With a view to making available to the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the investors to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to: a. make and keep public information available, as those terms are understood and defined in Rule 144; b. file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit the Company's obligations under Section 4(c) of the Securities Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and c. furnish to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (ii) such other information as may be reasonably requested to permit the Investors to sell such securities pursuant to Rule 144 without registration. 9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights under this Agreement shall be automatically assignable by the Investors to any transferee of all or any portion of Registrable Securities if: (i) the Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment, (ii) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such transferee or assignee, and (b) the securities with respect to which such registration rights are being transferred or assigned, (iii) following such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act and applicable state securities laws, (iv) at or before the time the Company receives the written notice contemplated by clause (ii) of this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein, (v) such transfer shall have been made in accordance with the applicable requirements of the Securities Purchase Agreement, and (vi) such transferee shall be an "accredited investor" as that term defined in Rule 501 of Regulation D promulgated under the 1933 Act. 10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with written consent of the Company, and Investors who hold a majority interest of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company. 11. MISCELLANEOUS. a. A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. b. Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier (including a recognized overnight delivery service) or by facsimile and shall be effective five days after being placed in the mail, if mailed by regular U.S. mail, or upon receipt, if delivered personally or by courier (including a recognized overnight delivery service) or by facsimile, in each case addressed to a party. The addresses for such communications shall be: If to the Company: Superconductor Technologies Inc. 460 Ward Drive Suite F Santa Barbara, California 93111-2310 Attention: Chief Executive Officer Facsimile: (805) 967-0342 With copy to: Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, California 94304-1050 Attention: John V. Roos, Esq. Facsimile: (650) 493-6811 If to an Investor: to the address set forth immediately below such Investor's name on the signature pages to the Securities Purchase Agreement. Each party shall provide notice to the other party of any change of its address. c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. d. This Agreement shall be enforced, governed by and construed in accordance with the laws of the State of Delaware applicable to agreements made and to be performed entirely within such State. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof. The parties hereto hereby submit to the exclusive jurisdiction of the United States Federal Courts located in Delaware with respect to any dispute arising under this Agreement or the transactions contemplated hereby. e. This Agreement and the Securities Purchase Agreement (including all schedules and exhibits thereto) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement and the Securities Purchase Agreement supersede all prior agreements and understandings among the parties hereto with respect to the subject matter hereof and thereof. f. Subject to the requirements of Section 9 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. g. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. h. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. i. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. j. Except as otherwise provided herein, all consents and other determinations to be made by the Investors pursuant to this Agreement shall be made by Investors holding a majority of the Registrable Securities, determined as if the all of the shares of Preferred Stock then outstanding have been converted into for Registrable Securities. k. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Company and the undersigned Initial Investors have caused this Agreement to be duly executed as of the date first above written. SUPERCONDUCTOR TECHNOLOGIES INC. By: Name: Title: WILMINGTON SECURITIES, INC. By: Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----