Document:

Exhibit 10.1

 

MUNICIPAL MORTGAGE & EQUITY, LLC

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”)
is effective as of the 1st day of January, 2013, by and between Municipal Mortgage & Equity, LLC, a Delaware
limited liability company (“Employer”) and Michael L. Falcone (“Employee”).

 

WHEREAS, Employer is engaged in the business
of providing real estate finance services, with a particular emphasis on tax exempt bonds for the multi-family housing segment;

 

WHEREAS, Employee has particular skill,
experience and background in real estate finance services of the type in which the Employer primarily engages; and

 

WHEREAS, Employer and Employee desire to
enter into an employment relationship, the terms of which are to be set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the
foregoing, the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Employer and Employee hereby agree as follows:

 

1.Employment and Duties. Employer
agrees to hire Employee, and Employee agrees to be employed by Employer, as Chief Executive Officer on the terms and conditions
provided in this Agreement. Employee shall perform the duties and responsibilities reasonably determined from time to time by the
Board of Directors (“Board”) of the Employer consistent with the types of duties and responsibilities typically performed
by a person serving as Chief Executive Officer of businesses similar to that of Employer. Employee agrees to devote Employee’s
best efforts and full time attention and skill in performing the duties of this position. Provided that such activity shall not
violate any provision of this Agreement (including the noncompetition provisions of Section 8 below) or materially interfere
with his/her performance of Employee’s duties hereunder, nothing herein shall prohibit Employee (a) from participating in
any other business activities approved in advance by the (“Board”) in accordance with any terms and conditions of such
approval, such approval not to be unreasonably withheld or delayed, (b) from engaging in charitable, civic, fraternal or trade
group activities, or (c) from investing in other non-competitive entities or business ventures.

 

2.Compensation. As compensation
for performing the services required by this Agreement, and during the term of this Agreement, Employee shall be compensated as
follows:

 

(a)Base Compensation. Employer
shall pay to Employee a salary (“Base Compensation”) at the annual rate of $530,000 for calendar year 2012 and
$555,000 for calendar year 2013, payable in accordance with the general policies and procedures of Employer for payment of salaries
to executive personnel, but in any event no less frequently than every two weeks, in substantially equal installments, subject
to withholding for applicable federal, state and local taxes. Increases in Base Compensation, if any, shall be determined by the
Compensation Committee of the Board of Directors (the “Board”). During the term of this Agreement, Employee’s
annual Base Compensation shall not be reduced below the initial Base Compensation set forth above.

 

    	

    	 

    
 

(b)Incentive Compensation. In addition
to Employee’s Base Compensation, Employee shall be eligible to receive additional compensation (“Incentive Compensation”),
pursuant to this Agreement payable in cash, shares, options or otherwise as determined by the Compensation Committee based on individual
and company performance.

 

3.Employee Benefits. During the
Term of this Agreement, Employee and his/her eligible dependents shall have the right to participate in any retirement, pension,
insurance, health or other benefit plan or program adopted by Employer (or in which Employer participates) to the same extent as
any other officer of the Employer, subject, in the case of a plan or program, to all of the terms and conditions thereof, and to
any limitations imposed by law.

 

4.Vacation, Sickness and Leaves of
Absence. Employee shall be entitled to the normal and customary amount of paid vacation provided to officers of Employer, but
in any event not more than five (5) weeks paid vacation during each fiscal year. Employee shall provide Employer with reasonable
notice of anticipated vacation dates. Any vacation days that are not taken in a given fiscal year shall not accrue and carryover
from year to year. In addition, Employee shall be entitled to such sick leave and holidays, with pay, as Employer provides to other
officers. Unused sick leave shall not be carried forward or compensated upon termination of employment.

 

5.Expenses. Employee shall be
entitled to receive, within a reasonable period of time after Employee has delivered to Employer an itemized statement thereof,
and after presentation of such invoices or similar records as the Employer may reasonably require, reimbursement for all necessary
and reasonable expenses incurred by Employee in connection with the performance of his/her duties.

 

6.Term. The term of this Agreement
shall be for three (3) years (the “Term”), commencing on January 1, 2013 (the “Effective Date”) and ending
on December 31, 2015. The term of this Agreement in effect at any given time is herein referred to as the “Term”. Any
termination of this Agreement shall be subject to Section 7 below.

 

7.Termination and Termination Benefits.

 

(a)Termination by Employer.

 

(i)Without Cause. Employer may
terminate this Agreement and Employee’s employment at any time upon ninety (90) days prior written notice to Employee, during
which period Employer shall have the option to require Employee to continue to perform his duties under this Agreement. Employee
shall be paid (at a time consistent with the payment terms for compensation under this Agreement) his Base Compensation and all
other benefits to which he is entitled under this Agreement up through the effective date of termination. In addition, Employee
shall become fully vested in any and all outstanding or deferred share awards, share options or other type of award made to Employee
but not yet vested at the time of such termination under the Employer’s Share Incentive Plans.

 

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(ii)With Cause. Employer may terminate
this Agreement with “Cause” upon written notice to Employee. In such event, Employee shall be paid (at a time consistent
with the payment terms for compensation under this Agreement) his/her Base Compensation and all other benefits to which he/she
is entitled under this Agreement up through the effective date of termination. For purposes of this Section, termination for “Cause”
shall mean (A) acts or omissions by the Employee with respect to the Employer which constitute intentional misconduct or a knowing
violation of law; (B) receipt by the Employee, in knowing violation of the law, of more than de minimis money, property
or services from the Employer or from another person dealing with Employer in violation of law or this Agreement, provided, however
that inadvertent expense account errors shall not constitute a violation of this clause, (C) breach by Employee of the noncompetition
provisions of this Agreement, (D) breach by the Employee of his/her duty of loyalty to the Employer as set forth in the policy
statements of Employer, (E) gross negligence by the Employee in the performance of his/her duties, (F) repeated failure by Employee
to perform services that have been reasonably requested of him by the Board and that are ordinarily within the scope of Employee’s
duties, (G) unappealable conviction of a crime (other than traffic violations). Before terminating Employee’s employment
for Cause under clauses (A) – (G) above, Employer will specify in writing to Employee the nature of the act, omission, refusal
or failure that it deems to constitute Cause.

 

(iii)Disability. If due to illness,
physical or mental disability, or other incapacity, Employee shall fail to perform the duties required by this Agreement, Employer
may terminate this Agreement upon 30 days written notice to Employee. In such event, Employee shall be paid (at a time consistent
with the payment terms for compensation under this Agreement) his Base Compensation and receive all benefits owing to him under
this Agreement through the effective date of termination. In addition, Employee shall become fully vested in any and all outstanding
restricted or deferred share awards, share options or other type of award made to Employee, but not yet vested at the time of such
termination under the Employer’s Share Incentive Plans. Employee shall be considered disabled under this paragraph if he
is unable to work due to disability for a total of 120 or more business days during any 12-month period. Nothing in this paragraph
shall be construed to limit Employee’s rights to the benefits of any disability insurance policy provided by Employer and
this Section shall not be construed as varying the terms of any such policy in any manner adverse to Employee.

 

(iv)Change in Control. Notwithstanding
the foregoing, any termination of Employee during the first six (6) months following a Change in Control shall be deemed to be
without Cause for all purposes under this Agreement, unless the reason for such termination is a violation of Section 7(a)(ii)(A),
(B), (C) or (G). As used herein, Change in Control shall have the meaning given such term in the Municipal Mortgage & Equity,
LLC 2010 Share Incentive Plan; provided, however, that this Section 7(a)(iv) shall not apply to any Change in Control approved
by the Board of Directors of the Company as constituted immediately prior to the date such Change in Control occurs, or is deemed
to occur (whichever is earlier).

 

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(b)Termination by Employee. Employee
may terminate this Agreement for good reason upon 30 days prior written notice to Employer. In such event, Employee shall be paid
(at a time consistent with the payment terms for compensation under this Agreement) his Base Compensation and shall receive all
benefits through the date of termination. Employee shall become fully vested in any and all outstanding restricted or deferred
share awards, share options or other type of award made to Employee, but not yet vested at the time of such termination under the
Employer’s Share Incentive Plans. Employee shall have “good reason” to terminate his employment if (i) Employee’s
Base Compensation, as in effect at any given time, shall be reduced without Employee’s consent, (ii) Employer shall fail
to provide any of the material payments or benefits provided for under this Agreement; (iii) Employer shall require Employee to
take any action which would be a violation of federal, state or local criminal law. Notwithstanding the foregoing provisions of
the definition of “good reason”, (i) good reason shall not be deemed to exist unless the Employee provides notice of
the good reason event or condition within 60 days of the occurrence of such event or condition; and (ii) if there exists (without
regard to this clause (ii)) an event or condition that constitutes good reason, the Employer shall have 30 days from the date that
notice of such a termination is given to cure such event or condition and, if the Employer does so, such event or condition shall
not constitute good reason under the Agreement.

 

(c)Termination Compensation for Termination
Without Cause or for Good Reason. In the event of a termination of this Agreement prior to the end of the Term, pursuant to
Section 7(a)(i), 7(a)(iii) or 7(b), Employer, in addition to the Base Compensation and benefits (if any) payable as provided in
such sections, shall pay to Employee additional compensation (“Termination Compensation”) of $1,000,000. Subject to
Section 10(f), Termination Compensation shall be paid in four equal quarterly payments beginning on the first day of the first
calendar month following the termination date. In addition, Employee shall become fully vested in any and all outstanding deferred
share awards, share options or any other type of award made to Employee.

 

(d)Death Benefit. Notwithstanding
any other provision of this Agreement, this Agreement shall terminate on the date of Employee’s death. In such event, Employee’s
estate shall be paid $1,000,000 (the “Death Benefit”). To the extent of any insurance carried by Employer on Employee’s
life, the lesser of the Death Benefit or the full amount of the insurance shall be payable in a lump sum within five (5) business
days of Employer’s receipt of the insurance proceeds; twenty-five percent (25%) of any portion of the Death Benefit not covered
by insurance shall be paid immediately upon the Employee’s death, but in no event later than 90 days following the date of
such death, and the remaining seventy-five percent (75%) of the Death Benefit shall be paid in equal installments payable on the
first day of each calendar quarter following Employee’s death. Employer shall carry as much life insurance on Employee’s
life as the Board may from time to time determine, but shall not be obligated to carry any insurance. In addition, upon Employee’s
death, all outstanding restricted or deferred share awards, share options or other type of award made to Employee, but not yet
vested at the time of death under the Employer’s Share Incentive Plans shall be considered vested and paid out to Employee’s
estate. Employer shall use reasonable efforts to structure any such insurance policy so as to minimize taxes on the Death Benefit,
but the failure to do so shall not entitle Employee’s estate or any beneficiary to make any claim against Employer for any
tax payment or loss.

 

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8.Covenant Not to Compete.

 

(a)Noncompetition. From and after
the Effective Date and continuing for the longer of (i) twelve (12) months following the expiration or termination of this Agreement
or (ii) the remainder of the Term of this Agreement, Employee shall not without the prior written consent of the Board (w) become
employed by, or undertake to work for, directly or indirectly, whether as an advisor, principal, agent, partner, officer, director,
employee, shareholder, associate or consultant of or to, any person, partnership, corporation or other business entity which is
in the business of investing in or providing Asset Management services on debt and equity investments in multifamily real estate
(“Business of the Company”), (x) solicit any employee of Employer to change employment or (y) solicit in connection
with any matter that relates to the Business of the Company any client, customer or investor of Employer or any of its subsidiaries
which closed (in any capacity) a transaction with Employer or any of its subsidiaries during the thirty-six (36) months preceding
Employee’s termination, or (z) disclose proprietary or confidential information of the Employer or its subsidiaries, including
without limitation, tax, deal structuring, pricing, customer, client, revenue, expense, or other similar information; provided,
however, if Employer terminates Employee without cause under Section 7(a)(i) or as a result of a disability under Section 7(a)(iii),
or if Employee terminates his employment for good reason under Section 7(b), clause (w) of this paragraph (a) shall not apply.

 

(b)Reasonable Restrictions. Employee
acknowledges that the restrictions of subparagraph (a) above are reasonable, fair and equitable in scope, term and duration, are
necessary to protect the legitimate business interests of Employer, and are a material inducement to Employer to enter into this
Agreement. Employer and Employee both agree that in the event a court shall determine any portion of the restrictions in subparagraph
(a) are not reasonable, the court may change such restrictions, including without limitation the geographical restrictions and
the duration restrictions, to reflect a restriction which the court will enforce as reasonable.

 

(c)Specific Performance. Employee
acknowledges that the obligations undertaken by him/her pursuant to this Agreement are unique and that if Employee shall fail to
abide by any of the restrictions set forth in subparagraph (a), Employer will suffer harm for which there is no adequate remedy
at law. Employee therefore confirms that Employer shall have the right, in the event of a violation of subparagraph (a), to injunctive
relief to enforce the terms of this Section 8 in addition to any other remedies available at law or in equity.

 

9.Indemnification and Liability Insurance.
Employer hereby agrees to defend, indemnify and hold Employee harmless, to the maximum extent allowed by law, from any and all
liability for acts or omissions of Employee performed in the course of Employee’s employment (or reasonably believed by Employee
to be within the scope of his/her employment). Employer shall at all times carry Director and Officer liability insurance in commercially
reasonable amounts, but in any event not less than Five Million Dollars ($5,000,000).

 

10.Miscellaneous.

 

(a)Complete Agreement. This Agreement
constitutes the entire agreement among the parties with respect to the matters set forth herein and supersedes all prior understandings
and agreements between the parties as to such matters. No amendments or modifications shall be binding unless set forth in writing
and signed by both parties.

 

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(b)Successors and Assigns. Neither
party may assign its rights or interest under this Agreement without the prior written consent of the other party, except that
Employer’s interest in this Agreement may be assigned to a successor by operation of law or to a purchaser purchasing substantially
all of Employer’s business, and Employee’s benefits under this Agreement may be assigned by operation of law to Employee’s
heirs, devisees and personal representatives. This Agreement shall be binding upon and shall inure to the benefit of each of the
parties and their respective permitted successors and assigns.

 

(c)Severability. Each provision
of this Agreement is severable, such that if any part of this Agreement shall be deemed invalid or unenforceable, the balance of
this Agreement shall be enforced so as to give effect as to the intent of the parties.

 

(d)Representations of Employer.
Employer represents and warrants to Employee that it has the requisite limited liability company power to enter into this Agreement
and perform the terms hereof and that the execution, delivery and performance of this Agreement have been duly authorized by all
appropriate company action.

 

(e)Construction. This Agreement
shall be governed in all respects by the internal laws of the State of Maryland (excluding reference to principles of conflicts
of law). As used herein, the singular shall include the plural, the plural shall include the singular, and the use of any pronoun
shall be construed to refer to the masculine, feminine or neuter, all as the context may require.

 

(f)Compliance with Section 409A.
Notwithstanding any other provision in this Agreement to the contrary, the Employee shall not be entitled to any payment pursuant
to this Agreement prior to the earliest date permitted under Section 409A of the Code. To the extent that any severance amount
payable in this Agreement constitutes deferred compensation that is subject to Section 409A of the Code, payments shall commence
on the first day of the first calendar month following the Employee’s “Separation form Service”, as defined below.
To the extent such payments are required to be delayed six months pursuant to the special rules of Section 409A of the Code related
to “specified employees,” each affected payment shall be delayed until six months after the Employee’s termination
of employment, with the first such payment being a lump sum equal to the aggregate payments the Employee would have received during
such six-month period if no payment delay had been imposed. Any such delayed payments or distributions shall be paid to the Employee
on the first business day of the seventh month following the Employee’s termination of employment. A “Separation from
Service” means an anticipated permanent reduction in the level of services performed by the Employee to 20% or less of the
average level of services performed by the Employee over the immediately preceding 36 month period (or the full period during which
the Employee performed services for the Employer, if that is less than 36 months) (treating all members of the controlled group
of corporations or group of trades or business under common control with the Employer as a single employer for this purpose).

 

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(g)Other Awards, Options or Equity
Based Compensation. To the extent Employee shall become vested in outstanding deferred share awards, options or other equity-based
compensation in connection with certain terminations of employment, unless otherwise specified in this Agreement, such awards shall
remain payable or exercisable under the terms of the applicable award agreement.

 

(h)Notices. All notices required
or permitted under this Agreement shall be in writing and shall be deemed given on the date sent if delivered by hand or by facsimile,
and on the next business day if sent by overnight courier or by United States mail, postage prepaid, to each party at the following
address (or at such other address as a party may specify by notice under this section):

  

If to Employer:

 

Municipal Mortgage & Equity, LLC

621 East Pratt Street

Suite 300

Baltimore, Maryland 21202

Facsimile: (410) 727-5387

Attention: Chairman of the Board

 

If to Employee:

 

Michael L. Falcone

8 Edgewood Road

Baltimore, Maryland 21210

 

(i)Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute
one instrument.

 

 

(Signatures appear on following page)

 

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IN WITNESS WHEREOF, and intending to be
legally bound, the parties have executed this Agreement on the date and year written below.

 

	 	EMPLOYER:
	 	 
	 	MUNICIPAL MORTGAGE & EQUITY, LLC
	 	 
	 	By:	/s/ Lisa M. Roberts
	 	Name:	Lisa M. Roberts
	 	Title:	Chief Financial Officer
	 	 	 
	 	Date:	November 26, 2012
	 	 	 
	 	 	 
	 	EMPLOYEE:
	 	 
	 	By:	/s/ Michael L. Falcone
	 	Name:	Michael L. Falcone
	 	 	 
	 	Date:	November 26, 2012

 

 

    	8exh_41.htm

Exhibit 4.1

 

 

Form of Representative’s Warrant Agreement

THE REGISTERED HOLDER OF THIS PURCHASE WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A PERIOD OF ONE YEAR FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER THAN (I) AEGIS CAPITAL CORP. OR AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER OF AEGIS CAPITAL CORP. OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER IN ACCORDANCE WITH FINRA CONDUCT RULE 5110 (g)(1)

THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO NOVEMBER 26, 2013. VOID AFTER 5:00 P.M., EASTERN TIME, NOVEMBER 25, 2016.

COMMON STOCK PURCHASE WARRANT

For the Purchase of 100,000 Shares of Common Stock

of

SUPERCONDUCTOR TECHNOLOGIES INC.

 

1. Purchase Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of [_________________] (“Holder”), as registered owner of this Purchase Warrant, to Superconductor Technologies Inc., a Delaware corporation (the “Company”), Holder is entitled, at any time or from time to time from November 26, 2013 (the “Commencement Date”), and at or before 5:00 p.m., Eastern time, November 25, 2016  (the “Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to 100,000  shares of common stock of the Company, par value $0.001 per share (the “Shares”), subject to adjustment as provided in Section 6 hereof.  If the Expiration Date is a day on which banking institutions are authorized by law to close, then this Purchase Warrant may be exercised on the next succeeding day which is not such a day in accordance with the terms herein.  This Purchase Warrant is initially exercisable at $0.375 per Share (125% of the price of the Shares sold in the Offering); provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified.  The term “Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context.

 

	
2.  

	
Exercise. 
 

2.1 Exercise Form. In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.

 

2.2 Legend. Each certificate for the securities purchased under this Purchase Warrant shall bear a legend as follows unless such securities have been registered under the Securities Act of 1933, as amended (the “Act”):

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or applicable state law. Neither the securities nor any interest therein may be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act and applicable state law which, in the opinion of counsel to the Company, is available.”

 

 

1

 

	
3.  

	
Transfer.

 

3.1 General Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder will not: (a) sell, transfer, assign, pledge or  hypothecate this Purchase Warrant for a period of one year following the date of effectiveness or commencement of sales of the public offering (such date of effectiveness or commencement of sales of the public offering is referred to as the “Effective Date”) to anyone other than: (i) Aegis Capital Corp. (“Aegis”) or an underwriter or a selected dealer participating in the Offering, or (ii) a bona fide officer or partner of Aegis or of any such underwriter or selected dealer, in each case in accordance with FINRA Conduct Rule 5110(g)(1), or (b) cause this Purchase Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Purchase Warrant or the securities hereunder, except as provided for in FINRA Rule 5110(g)(2). On and after that date that is one year after the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) Business Days transfer this Purchase Warrant on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.

 

3.2 Restrictions Imposed by the Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until: (i) the Company has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption from registration under the Act and applicable state securities laws, the availability of which is established to the reasonable satisfaction of the Company, or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to the offer and sale of such securities has been filed by the Company and declared effective by the U.S. Securities and Exchange Commission (the “Commission”) and compliance with applicable state securities law has been established.

 

	
4.  

	
Registration Rights.

 

4.1 “Piggy-Back” Registration.

 

4.1.1. Grant of Right. The Company shall include the Shares (registered for re-sale on a secondary basis) in the next registration statement it files for primary underwritten offering for which Aegis Capital Corp. serves as an underwriter.

 

4.1.2. Terms. The Company shall bear all fees and expenses attendant to registering the Shares pursuant to Section 4.2.1 hereof.

 

4.2 General Terms.

 

4.2.1. Indemnification. The Company shall indemnify the Holder(s) of the Shares to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20 (a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify the Underwriters contained in Section 7(a) of the Underwriting Agreement between the Underwriters and the Company, dated as of November 20, 2012. The Holder(s) of the Shares to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions contained in Section 7(b) of the Underwriting Agreement pursuant to which the Underwriters have agreed to indemnify the Company.

 

 

2

 

4.2.2. Exercise of Purchase Warrants. Nothing contained in this Purchase Warrant shall be construed as requiring the Holder(s) to exercise their Purchase Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof.

 

	
5.  

	
New Purchase Warrants to be Issued.

 

5.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if exercised pursuant to Section 2.1 hereof, the Company shall cause to be delivered to the Holder without charge a new Purchase Warrant of like tenor to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder as to which this Purchase Warrant has not been exercised or assigned.

 

5.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver a new Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.

 

	
6.  

	
Adjustments.

 

6.1 Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Purchase Warrant shall be subject to adjustment from time to time as hereinafter set forth:

 

6.1.1. Share Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding shares, and the Exercise Price shall be proportionately decreased.

 

6.1.2. Aggregation of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date thereof, the number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding shares, and the Exercise Price shall be proportionately increased.

 

6.1.3. Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than a change covered by Section 6.1.1 or Section 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share reconstruction or amalgamation or consolidation of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) (“Consideration”) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in Shares covered by Section 6.1.1 or Section 6.1.2, then such adjustment shall be made pursuant to Section 6.1.1, Section 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers. Notwithstanding the foregoing, in any case covered by this Section 6.1.3 in which the Consideration is solely cash and/or securities registered under the Act on Form S-4 or other appropriate SEC form and which securities are listed for trading on any national securities exchange, then the unexercised portion of this Purchase Warrant will (unless it has already expired) be deemed automatically exercised in full (and this Purchase Warrant shall be terminated) in connection with the transaction 

 

 

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giving rise to the payment of the Consideration, the resulting Shares shall receive (and be converted into) the applicable per Share Consideration, and the applicable Exercise Price shall be netted against such Consideration in the manner provided for in the applicable transaction agreements.

 

6.1.4. Changes in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section 6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the computation thereof.

 

6.2 Substitute Purchase Warrant. Except when the last sentence of Section 6.1.3 applies, in case of any consolidation of the Company with, or share reconstruction or amalgamation of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation which does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to receive, upon exercise of such Purchase Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Shares of the Company for which such Purchase Warrant might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation, sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section 6 shall similarly apply to successive consolidations or share reconstructions or amalgamations.

 

6.3 Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest whole number of Shares or other securities, properties or rights.

 

7. Reservation and Listing. The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose of issuance upon exercise of the Purchase Warrants, such number of Shares or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder.  As long as the Purchase Warrants shall be outstanding, the Company shall use its commercially reasonable efforts to cause all Shares issuable upon exercise of the Purchase Warrants to be listed (subject to official notice of issuance) on all national securities exchanges (or, if applicable, on the OTC Bulletin Board or any successor trading market) on which the Shares issued to the public in the Offering may then be listed and/or quoted.

 

	
8.  

	
Certain Notice Requirements.

 

8.1 Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least fifteen days prior to the date fixed as a record date or the date of closing the transfer books (the “Notice Date”) for the determination of the shareholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be. Notwithstanding the foregoing, the Company shall deliver to each Holder a copy of each notice given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders.

 

8.2 Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a 

 

 

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cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, (ii) the Company shall offer to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor, or (iii) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or share reconstruction or amalgamation) or a sale of all or substantially all of its property, assets and business shall be proposed.

 

8.3 Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by the Company’s Chief Financial Officer.

 

8.4 Transmittal of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall be deemed to have been duly made (1) when hand delivered, (2) when mailed by express mail or private courier service or (3) when the event requiring notice is disclosed in all material respects and filed in a current report on Form 8-K or in a definitive proxy statement on Schedule 14A prior to the Notice Date: (i) if to the registered Holder of the Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to following address or to such other address as the Company may designate by notice to the Holders:

If to the Holder:

Aegis Capital Corp.

810 Seventh Avenue, 11th Floor

New York, New York 10019

Attn: Mr. David Bocchi, Managing Director of

Investment Banking

Fax No.: (212) 813-1047

With a copy (which shall not constitute notice) to:

Blank Rome LLP

405 Lexington Avenue

New York, NY 10174

Attn: Brad L. Shiffman, Esq.

Fax: (917) 332-3725

If to the Company:

Superconductor Technologies

9101 Wall Street

Austin, Texas 78754

Attention: Jeff Quiram, President and Chief Executive Officer,

Fax No.: (805) 967-0342

With a copy (which shall not constitute notice) to:

Mannatt, Phelps & Phillips, LLP

11355 West Olympic Boulevard

Los Angeles, California, 90064

Attention: Ben Orlanski, Esq. and Matthew O’Loughlin, Esq.

Fax No.: (310) 312-4224

 

 

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9.  

	
Miscellaneous.

 

9.1 Amendments. The Company and Aegis may from time to time supplement or amend this Purchase Warrant without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Aegis may deem necessary or desirable and that the Company and Aegis deem shall not adversely affect the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by the party against whom enforcement of the modification or amendment is sought.

 

9.2 Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Warrant.

 

9.3 Entire Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

 

9.4 Binding Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions herein contained.

 

9.5 Governing Law; Submission to Jurisdiction. This Purchase Warrant shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor.

 

9.6 Waiver, etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

 

9.7 Execution in Counterparts. This Purchase Warrant may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Such counterparts may be delivered by facsimile transmission or other electronic transmission.

 

9.8 Exchange Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and Aegis enter into an agreement (“Exchange Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.

 

 

  

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IN WITNESS WHEREOF, the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of the 26th day of November, 2012.

SUPERCONDUCTOR TECHNOLOGIES, INC.

By:_________________________________

Name:

Title:

  

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Form to be used to exercise Purchase Warrant:

Date:  __________, 201_

The undersigned hereby elects irrevocably to exercise the Purchase Warrant for ______ Shares of Superconductor Technologies Inc., a Delaware corporation (the “Company”) and hereby makes payment of $____ (at the rate of $____ per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been exercised.

Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been converted.

Signature

Signature Guaranteed

  

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INSTRUCTIONS FOR REGISTRATION OF SECURITIES

Name:

(Print in Block Letters)

Address:

NOTICE: The signature to this form must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

  

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Form to be used to assign Purchase Warrant:

ASSIGNMENT

(To be executed by the registered Holder to effect a transfer of the within Purchase Warrant):

FOR VALUE RECEIVED, __________________ does hereby sell, assign and transfer unto the right to purchase shares of Superconductor Technologies, Inc., a Delaware corporation (the “Company”), evidenced by the Purchase Warrant and does hereby authorize the Company to transfer such right on the books of the Company.

Dated: __________, 201_

Signature

Signature Guaranteed

NOTICE: The signature to this form must correspond with the name as written upon the face of the within Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

  

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