LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of June 30,
1997, by and between Conductus, Inc. (the "Borrower") whose address is 000
Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000, and Silicon Valley Bank (the
"Lender") whose address is 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000.
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness
which may be owing by Borrower to Lender, Borrower is indebted to Lender
pursuant to, among other documents, a Promissory Note, dated August 15, 1994,
in the original principal amount of One Million and 00/100 Dollars
($1,000,000.00), as may be amended (the "Line"), a Promissory Note, dated
March 1, 1996, in the original principal amount of One Million and 00/100
Dollars ($1,000,000.00), as may be amended ("Term Note 1"), and a Promissory
Note dated December 26, 1996, in the original principal amount of One Million
and 00/100 Dollars ($1,000,000.00), as may be amended ("Term Note 2"). The
Line has been modified pursuant to among other documents, a Loan Modification
Agreement dated December 26, 1996, pursuant to which, among other things, the
principal amount of the Line was increased to One Million and 00/100 Dollars
($1,000,000.00). Hereinafter, the Line, Term Note 1, and Note 2 shall be
collectively referred to as the "Notes". The Notes, together with other
promissory notes from Borrower to Lender, are governed by the terms of a
Business Loan Agreement, dated August 15, 1994, between Borrower and Lender,
as such agreement may be amended from time to time (the "Loan Agreement").
Defined terms used but not defined herein shall have the same meanings as in
the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Lender shall be referred to
as the "Indebtedness".
2. DESCRIPTION OF COLLATERAL AND GUARANTIES: Repayment of the
Indebtedness is secured by a Commercial Security Agreement, dated August 15,
1994. In addition to the foregoing, Borrower has agreed not to sell,
transfer, assign, mortgage, pledge, lease, grant a security interest in, or
encumber any of Borrower's Intellectual Property.
Hereinafter, the above-described security documents, together with all other
documents securing payment of the Indebtedness shall be referred to as the
"Security Documents". Hereinafter, the Security Documents, together with all
other documents evidencing or securing the Indebtedness shall be referred to as
the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. MODIFICATION(S) TO TERM NOTE #2.
1. The Draw Period is hereby extended to September 30,
1997. Accordingly, the first principal plus interest
payment shall be due on October 30, 1997, with all
subsequent payments due the last day of each month
thereafter. The final payment, due December 31, 1999, will
be for all outstanding principal plus all accrued interest
not yet paid.
B. MODIFICATIONS(S) TO LOAN AGREEMENT.
1. The paragraph entitled "Financial Covenants" is hereby
amended, in its entirety, to read as follows:
Borrower shall maintain, on a monthly basis, a minimum quick
ratio of 1.75 to 1.00; a minimum liquidity coverage ratio of
2.00 to 1.00; a minimum Tangible Net Worth of $7,000,000.00;
and a maximum total Debt minus Subordinated Debt to Tangible
Net Worth plus Subordinated Debt ratio of 1.00 to 1.00.
Furthermore, Borrower may incur losses, provided, such
losses shall not exceed $1,250,000.00 for the quarter ended
March 31, 1997;
$2,000,000.00 for the quarter ending June 30, 1997; and
$750,000.00 for the quarter ending September 30, 1997.
Borrower shall achieve profitability beginning as of the
quarter ending December 31, 1997, with the allowance of
one quarterly loss, provided such loss does not exceed
$500,000.00.
For calculation purposes, the liquidity coverage ratio
shall mean cash or cash equivalents plus availability
under the Line divided by the sum of outstanding balances
under the Term Note as defined herein.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
5. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of this date, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
6. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor
signing below) understands and agrees that in modifying the existing
Indebtedness, Lender is relying upon Borrower's representations, warranties,
and agreements, as set forth in the Existing Loan Documents. Except as
expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Lender's agreement to modifications to the existing Indebtedness pursuant to
this Loan Modification Agreement in no way shall obligate Lender to make any
future modifications to the Indebtedness. Nothing in this Loan Modification
Agreement shall constitute a satisfaction of the Indebtedness. It is the
intention of Lender and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released
by Lender in writing. No maker, endorser, or guarantor will be released by
virtue of the Loan Modification Agreement. The terms of this paragraph apply
not only to this Loan Modification Agreement, but also to all subsequent loan
modification agreements.
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: LENDER:
CONDUCTUS, INC. SILICON VALLEY BANK
By: /s/ Xxxxxxx X Xxxxxxx By: /s/ Xxxxx Xxxxx
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Name: Xxxxxxx X Xxxxxxx Name: Xxxxx Xxxxx
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Title: VP/CFO Title: Vice President
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