AGILITY CAPITAL
SUPERCONDUCTOR TECHNOLOGIES INC.
LOAN AND SECURITY AGREEMENT
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Agility Capital, LLC
This LOAN AND SECURITY AGREEMENT is entered into as of April 28, 2004, by
and between Agility Capital, LLC ("Lender") and Superconductor Technologies Inc.
("Borrower").
RECITALS
Borrower wishes to obtain credit from time to time from Lender, and Lender
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Lender will advance credit to Borrower, and Borrower will repay the
amounts owing to Lender.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms
shall have the following definitions:
"Accounts" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"Advance" means the cash advance made under the Term Facility.
"Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.
"Borrower's Books" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which banks in the State of California are authorized or
required to close.
"Change in Control" shall mean a transaction in which any
"person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of a sufficient number of shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors, empowering
such "person" or "group" to elect a majority of the Board of Directors of
Borrower, who did not have such power before such transaction.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means the property described on Exhibit A
attached hereto.
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap
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Agility Capital, LLC 1
agreement, interest rate collar agreement, or other agreement or arrangement
designed to protect such Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
"Control Agreement" means a deposit account control agreement
in a form and substance acceptable to Lender.
"Copyrights" means any and all copyright rights, copyright
applications, copyright registrations and like protections in each work or
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret, now or hereafter
existing, created, acquired or held.
"Credit Extension" means each Advance or any other extension
of credit by Lender for the benefit of Borrower hereunder.
"Daily Balance" means the amount of the Obligations owed at
the end of a given day.
"Equipment" means all present and future machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"Event of Default" has the meaning assigned in Article 8.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Guarantor" means Conductus, Inc., a Delaware corporation.
"Guaranty" means an unconditional guaranty by Guarantor.
"Indebtedness" means (a) all indebtedness for borrowed money
or the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"Intellectual Property Collateral" means all of Borrower's
right, title, and interest in and to the following:
(a) Copyrights, Trademarks and Patents;
(b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;
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(c) Any and all design rights which may be available to
Borrower now or hereafter existing, created, acquired or held;
(d) Any and all claims for damages by way of past, present and
future infringement of any of the rights included above, with the right, but not
the obligation, to xxx for and collect such damages for said use or infringement
of the intellectual property rights identified above;
(e) All licenses or other rights to use any of the Copyrights,
Patents or Trademarks, and all license fees and royalties arising from such use
to the extent permitted by such license or rights;
(f) All amendments, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
(g) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.
"Inventory" means all present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing.
"Investment" means any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"Lender Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; reasonable Collateral audit fees; and Lender's reasonable attorneys'
fees and expenses incurred in amending, enforcing or defending the Loan
Documents (including fees and expenses of appeal), incurred before, during and
after an Insolvency Proceeding, whether or not suit is brought.
"Lien" means any mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note
or notes executed by Borrower, and any other agreement entered into between
Borrower and Lender in connection with this Agreement, all as amended or
extended from time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business, operations, condition (financial or otherwise) or prospects of
Borrower or (ii) the ability of Borrower to repay the Obligations or otherwise
perform its obligations under the Loan Documents or (iii) the value or priority
of Lender's security interests in the Collateral.
"Negotiable Collateral" means all of Borrower's present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.
"Obligations" means all debt, principal, interest, Lender
Expenses and other amounts owed to Lender by Borrower pursuant to this Agreement
or any other agreement, whether absolute or contingent,
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Agility Capital, LLC 3
due or to become due, now existing or hereafter arising, including any interest
that accrues after the commencement of an Insolvency Proceeding and including
any debt, liability, or obligation owing from Borrower to others that Lender may
have obtained by assignment or otherwise.
"Patents" means all patents, patent applications and like
protections including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same.
"Periodic Payments" means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay to
Lender pursuant to the terms and provisions of any instrument, or agreement now
or hereafter in existence between Borrower and Lender.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Lender arising under
this Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date and disclosed in
the Schedule;
(c) Indebtedness secured by a lien described in clause (c) of
the defined term "Permitted Liens," provided (i) such Indebtedness does not
exceed the lesser of the cost or fair market value of the equipment financed
with such Indebtedness and (ii) such Indebtedness does not exceed $175,000 in
the aggregate in each fiscal year; and
(d) Subordinated Debt.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed in the
Schedule; and
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having rating of at least A-1 or P-1 from either
Standard & Poor's Corporation or Xxxxx'x Investors Service, (iii) accounts
subject to a Control Agreement.
"Permitted Liens" means the following:
(a) Any Liens existing on the Closing Date and disclosed in
the Schedule or arising under this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Lender's
security interests;
(c) Liens (i) upon or in any equipment acquired or held by
Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (c) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
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Agility Capital, LLC 4
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.
"Responsible Officer" means each of the Chief Executive
Officer, the Chief Operating Officer, and the Chief Financial Officer of
Borrower.
"Schedule" means the schedule of exceptions attached hereto
and approved by Lender, if any.
"Subordinated Debt" means any debt incurred by Borrower that
is subordinated to the debt owing by Borrower to Lender on terms reasonably
acceptable to Lender (and identified as being such by Borrower and Lender).
"Subsidiary" means any corporation, company or partnership in
which (i) any general partnership interest or (ii) more than 50% of the stock or
other units of ownership which by the terms thereof has the ordinary voting
power to elect the Board of Directors, managers or trustees of the entity, at
the time as of which any determination is being made, is owned by Borrower,
either directly or through an Affiliate.
"Term Facility" means the facility under which Borrower may
request Lender to issue the Advance, as specified in Section 2.1 hereof.
"Term Line" means credit extensions of up to Two Million
Dollars ($2,000,000).
"Term Maturity Date" means July 31, 2004.
"Trademarks" means any trademark and servicemark rights,
whether registered or not, applications to register and registrations of the
same and like protections, and the entire goodwill of the business of Borrower
connected with and symbolized by such trademarks.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms "financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT.
2.1 Advances. Subject to and upon the terms and conditions of this
Agreement, Lender agrees to make up to three (3) Advances to Borrower in an
aggregate outstanding amount not to exceed the Term Line. The first Advance of
One Million Dollars ($1,000,000) may be made on or about the Closing Date. The
second Advance of Five Hundred Thousand Dollars ($500,000) may be requested upon
confirmation to Lender by Xxxxxxx & Company, Inc. that the roadshow to be held
in connection with the proposed sale of Borrower's securities has begun. The
final Advance of Five Hundred Thousand Dollars ($500,000) may be made thereafter
by Lender after Borrower has completed the roadshow and obtained commitments
from prospective purchasers of its equity securities to the satisfaction of
Lender, in its sole discretion. The Advances are non-revolving, so that any
Advance, once repaid, may not be reborrowed. The Advances are also available
only at the times specified in this Section, so that if Borrower does not
request an Advance on or about the date that such Advance would otherwise be
available, Borrower may not request such Advance at a later date. Borrower may
request the second and third Advances by facsimile transmission delivered not
later than 3:00 p.m. Pacific time, on the Business Day that is two (2) days
before the day the Advance is to be made. Each request for an Advance shall
constitute a representation by Borrower that the Representations and Warranties
set forth in Section 5 are true and correct and that an Event of Default has not
occurred or is continuing.
2.2 Interest Rates, Payments, and Calculations.
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Agility Capital, LLC 5
(a) Interest Rates. Except as set forth in Section 2.2(b), the
Advances shall bear interest, on the outstanding Daily Balance thereof, at a
fixed rate equal to twelve percent (12.0%) per annum, calculated on a 360-day
year.
(b) Late Fees; Default Rate. If any payment is not made within
ten (10) days after the date such payment is due, Borrower shall pay Lender a
late fee equal to the lesser of (i) twenty five percent (25%) of the amount of
such unpaid amount or (ii) the maximum amount permitted to be charged under
applicable law. If any amount is outstanding after the Term Maturity Date, in
lieu of the fee provided for in the immediately preceding sentence, Borrower
shall pay Lender a fee equal to the greater of (i) $25,000 or (ii) an amount
equal to two percent (2%) of the unpaid balance. An additional fee of $15,000
shall be due on the first day of each month after the entire principal amount
hereunder has become due and payable, whether on the Term Maturity Date or as a
consequence of the occurrence of an Event of Default, until the Obligations have
been repaid in full. All Obligations shall bear interest, from and after the
occurrence and during the continuance of an Event of Default, including before,
during and after the initiation or continuance of an Insolvency Proceeding
(unless waived in writing by Lender), at a rate equal to five (5.0) percentage
points above the interest rate applicable immediately prior to the occurrence of
the Event of Default. Provision for a late fee, extension fee and default
interest under this Agreement does not constitute Lender's consent to Borrower's
failure to make any payment on the due date or a waiver of Lender's right to
exercise any remedies as a consequence of such failure.
2.3 Payments. Beginning May 1, 2004, interest shall be payable
monthly on the first day of each month through the Term Maturity Date. The
principal balance of the outstanding Advances and all accrued but unpaid
interest and fees shall be due and payable on the Term Maturity Date. Borrower
may prepay all or any amount outstanding under this Agreement without penalty or
premium. The receipt by Lender of any wire transfer of funds, check, or other
item of payment shall be immediately applied to conditionally reduce
Obligations, but shall not be considered a payment on account unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment received
by Lender after 12:00 noon Pacific time shall be deemed to have been received by
Lender as of the opening of business on the immediately following Business Day.
Whenever any payment to Lender under the Loan Documents would otherwise be due
(except by reason of acceleration) on a date that is not a Business Day, such
payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such
extension. Any interest not paid when due shall be compounded by becoming a part
of the Obligations, and such interest shall thereafter accrue interest at the
rate then applicable hereunder.
2.4 Fees. Borrower shall pay to Lender the following:
(a) Closing Fee. On the Closing Date, a fee equal to Fifty
Thousand Dollars ($50,000); and
(b) Lender Expenses. On the Closing Date, all Lender Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses and, after the Closing Date, all Lender Expenses, including reasonable
attorneys' fees and expenses, as and when they become due.
2.5 Term. This Agreement shall become effective on the Closing
Date and, subject to Section 12.7, shall continue in full force and effect for
so long as any Obligations remain outstanding or Lender has any obligation to
make Credit Extensions under this Agreement. Notwithstanding the foregoing,
Lender shall have the right to terminate its obligation to make Credit
Extensions under this Agreement immediately and without notice upon the
occurrence and during the continuance of an Event of Default. Notwithstanding
termination, Lender's Lien on the Collateral shall remain in effect for so long
as any Obligations are outstanding.
3. CONDITIONS OF ADVANCES.
3.1 Conditions Precedent to Initial Advance. The obligation of
Lender to make each Advance is subject to the condition precedent that Lender
shall have received, in form and substance satisfactory to Lender, the
following:
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Agility Capital, LLC 6
(a) this Agreement;
(b) a certificate of the Secretary of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement;
(c) a financing statement (Form UCC-1);
(d) an intellectual property security agreement;
(e) a warrant to purchase capital stock;
(f) one or more Control Agreement(s);
(g) the Guaranty;
(h) payment of the fees and Lender Expenses then due specified
in Section 2.4 hereof;
(i) an Account Receivable Financing Agreement with Silicon
Valley Bank
(j) a Subordination Agreement between Lender and Silicon
Valley Bank, approved by Borrower; and
(k) such other documents, and completion of such other
matters, as Lender may reasonably deem necessary or appropriate.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower grants and pledges to
Lender a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Except for Permitted Liens,
such security interest constitutes a valid, first priority security interest in
the presently existing Collateral, and will constitute a valid, first priority
security interest in Collateral acquired after the date hereof.
4.2 Delivery of Additional Documentation Required. Borrower shall
from time to time execute and deliver to Lender, at the request of Lender, all
Negotiable Collateral, all financing statements and other documents that Lender
may reasonably request, in form satisfactory to Lender, to perfect and continue
the perfection of Lender's security interests in the Collateral and in order to
fully consummate all of the transactions contemplated under the Loan Documents.
4.3 Right to Inspect. Lender (through any of its officers,
employees, or agents) shall have the right from time to time to inspect
Borrower's Books and to make copies thereof and to check, test, and appraise the
Collateral in order to verify Borrower's financial condition or the amount,
condition of, or any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants on the Closing Date and as of the
date of each Advance, as follows:
5.1 Due Organization and Qualification. Borrower is a corporation
duly existing under the laws of Delaware and qualified and licensed to do
business in any state in which the conduct of its business or its ownership of
property requires that it be so qualified.
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5.2 Due Authorization; No Conflict. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Certificate of Incorporation or Bylaws, nor
will they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound.
5.3 No Prior Encumbrances. Borrower has good and marketable title
to the Collateral, free and clear of Liens, except for
Permitted Liens.
5.4 Bona Fide Accounts. The Accounts are bona fide existing
obligations. The property and services giving rise to such Accounts has been
delivered or rendered to the account debtor or to the account debtor's agent for
immediate and unconditional acceptance by the account debtor.
5.5 Merchantable Inventory. All Inventory is in all material
respects of good and marketable quality, free from all material defects, except
for Inventory for which adequate reserves have been made.
5.6 Intellectual Property Collateral. Borrower is the sole owner
of the Intellectual Property Collateral, except for non-exclusive licenses
granted by Borrower to its customers in the ordinary course of business. Each of
the Patents is valid and enforceable, and except as set forth in the Schedule,
no part of the Intellectual Property Collateral has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual Property Collateral violates the rights of any third party.
5.7 Name; Location of Chief Executive Office. Borrower has not
done business under any name other than that specified on the signature page
hereof. The chief executive office of Borrower is located at the address
indicated in Section 10 hereof. All Borrower's Inventory and Equipment is
located only at the location set forth in Section 10 hereof.
5.8 Litigation. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision could have a
Material Adverse Effect, or a material adverse effect on Borrower's interest or
Lender's security interest in the Collateral.
5.9 No Material Adverse Change in Financial Statements. All
consolidated and consolidating financial statements related to Borrower and any
Subsidiary that have been delivered by Borrower to Lender fairly present in all
material respects Borrower's financial condition as of the date thereof and
Borrower's consolidated and consolidating results of operations for the period
then ended. There has not been a material adverse change in the consolidated and
consolidating financial condition of Borrower since April 2, 2004, the date of
the most recent of such financial statements submitted to Lender.
5.10 Solvency, Payment of Debts. Borrower is solvent and able to
pay its debts (including trade debts) as they mature.
5.11 Regulatory Compliance. Borrower and each Subsidiary have met
the minimum funding requirements of ERISA with respect to any employee benefit
plans subject to ERISA, and no event has occurred resulting from Borrower's
failure to comply with ERISA that could result in Borrower's incurring any
material liability. Borrower is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940. Borrower is not engaged principally, or as one of the
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations T and U
of the Board of Governors of the Federal Reserve System). Borrower has complied
with all the provisions of the Federal Fair Labor Standards Act. Borrower has
not violated any statutes, laws, ordinances or rules applicable to it, violation
of which could have a Material Adverse Effect.
5.12 Environmental Condition. None of Borrower's or any
Subsidiary's properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or
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Agility Capital, LLC 8
hazardous substance other than in accordance with applicable law; to the best of
Borrower's knowledge, none of Borrower's properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a hazardous waste or hazardous substance disposal site, or a
candidate for closure pursuant to any environmental protection statute; no lien
arising under any environmental protection statute has attached to any revenues
or to any real or personal property owned by Borrower or any Subsidiary; and
neither Borrower nor any Subsidiary has received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal, state
or other governmental agency concerning any action or omission by Borrower or
any Subsidiary resulting in the releasing, or otherwise disposing of hazardous
waste or hazardous substances into the environment.
5.13 Taxes. Borrower and each Subsidiary have filed or caused to be
filed all tax returns required to be filed, and have paid, or have made adequate
provision for the payment of, all taxes reflected therein.
5.14 Subsidiaries. Except as set forth on the Schedule, Borrower
does not own any stock, partnership interest or other equity securities of any
Person, except for Permitted Investments.
5.15 Government Consents. Borrower and each Subsidiary have
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of Borrower's business as currently
conducted.
5.16 Investment Accounts. Borrower's and each Subsidiary's cash and
Investment Property is maintained or invested with the Person(s) and in the
accounts disclosed in the Schedule.
5.17 Full Disclosure. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Lender contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Lender may have any commitment to
make a Credit Extension hereunder, Borrower shall do all of the following:
6.1 Good Standing. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which it is
required under applicable law. Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain in force all licenses, approvals and agreements
necessary for the conduct of its business as conducted on the Closing Date.
6.2 Government Compliance. Borrower shall meet, and shall cause
each Subsidiary to meet, the minimum funding requirements of ERISA with respect
to any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject.
6.3 Financial Statements, Reports, Board Materials. Borrower shall
deliver the following to Lender, in each case in form and substance acceptable
to Lender: (a) as soon as available, but in any event within thirty (30) days
after the end of each calendar month, a company prepared consolidated balance
sheet, income, and cash flow statement covering Borrower's consolidated
operations during such period, prepared in accordance with GAAP, consistently
applied, in a form acceptable to Lender and certified by a Responsible Officer;
(b) as soon as available, but in any event within ninety (90) days after the end
of Borrower's fiscal year, audited consolidated financial statements of Borrower
prepared in accordance with GAAP, consistently applied, together with an opinion
on such financial statements of an independent certified public accounting firm
reasonably acceptable to Lender; (c) as soon as available, but in any event
within ten (10) days of the last day of each month, an aging of accounts payable
and account receivable; (d) as soon as available, but in any event within
fifteen days after the end of each calendar month, statements from each bank or
other financial institution in which Borrower maintains an account;
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Agility Capital, LLC 9
(e) copies of the notices, board packages and materials provided to members of
Borrower's Board of Directors in connection with all regular and special
meetings (including committees of such Board) and minutes of all such meetings
of Borrower's Board of Directors and committees thereof, in each case at the
same time as such packages, materials and minutes are provided to such members;
(f) copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders or to any holders of Subordinated
Debt; (g) promptly upon receipt of notice thereof, a report of any legal actions
pending or threatened against Borrower or any Subsidiary that could result in
damages or costs to Borrower or any Subsidiary of Fifty Thousand Dollars
($50,000) or more; and (h) such budgets, sales projections, operating plans or
other financial information as Lender may reasonably request from time to time.
6.4 Inventory; Returns. Borrower shall keep all Inventory in good
and marketable condition, free from all material defects except for Inventory
for which adequate reserves have been made. Returns and allowances, if any, as
between Borrower and its account debtors shall be on the same basis and in
accordance with the usual customary practices of Borrower, as they exist at the
time of the execution and delivery of this Agreement. Borrower shall promptly
notify Lender of all returns and recoveries and of all disputes and claims,
where the return, recovery, dispute or claim involves more than Fifty Thousand
Dollars ($50,000).
6.5 Taxes. Borrower shall make, and shall cause each Subsidiary to
make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Lender, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Lender with
proof satisfactory to Lender indicating that Borrower or a Subsidiary has made
such payments or deposits; provided that Borrower or a Subsidiary need not make
any payment if the amount or validity of such payment is contested in good faith
by appropriate proceedings and is reserved against (to the extent required by
GAAP) by Borrower.
6.6 Insurance.
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's business, ownership and use of the Collateral in amounts
and of a type that are customary to businesses similar to Borrower's.
(b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as are reasonably satisfactory to Lender.
All such policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Lender, showing Lender as an additional
loss payee thereof, and all liability insurance policies shall show the Lender
as an additional insured and shall specify that the insurer must give at least
twenty (20) days notice to Lender before canceling its policy for any reason.
Upon Lender's request, Borrower shall deliver to Lender certified copies of such
policies of insurance and evidence of the payments of all premiums therefor. All
proceeds payable under any such policy shall, at the option of Lender, be
payable to Lender to be applied on account of the Obligations.
6.7 Depository Accounts. Borrower shall maintain all its
depository and operating accounts with the financial institution disclosed in
the Schedule. Borrower shall cause any financial institution with which it
maintains a depository account to enter into such control agreement as Lender
requests to perfect Lender's security interest in such account
6.8 Intellectual Property Collateral. Borrower shall promptly give
Lender written notice of any applications or registrations of Intellectual
Property Collateral filed with the United States Patent and Trademark Office,
including the date of such filing and the registration or application numbers,
if any. Borrower shall give Lender not less than 15 das prior written notice of
the filing of any applications or registrations with the United States Copyright
Office, including the title of such Intellectual Property Collateral to be
registered, as such title will appear on such applications or registrations, and
the date such applications or registrations will be filed and, prior to
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Agility Capital, LLC 10
the date of such filing or registration, shall execute such documents as Lender
may reasonably request to perfect Lender's security interest in such
Intellectual Property Collateral. Within 60 days of the Closing Date, Borrower
shall use commercially reasonable efforts to obtain the consent of any third
parties to the disposition of Borrower's rights under any material agreements
under which it is the licensee of Intellectual Property upon the occurrence of
an Event of Default and exercise of remedies hereunder.
6.9 Artwork. Promptly after the Closing Date, Borrower shall
provide camera ready artwork of its type styles and logos to Lender, and
Borrower consents their use in promotional materials by Lender.
6.10 Further Assurances. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Lender to effect the purposes of this
Agreement.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the outstanding Obligations or
for so long as Lender may have any commitment to make any Credit Extensions,
Borrower will not do any of the following:
7.1 Dispositions. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than: (i) Transfers
of Inventory in the ordinary course of business; (ii) Transfers of non-exclusive
licenses and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; or (iii) Transfers of worn-out
or obsolete Equipment.
7.2 Change in Business; Change in Control or Executive Office.
Engage in any business, or permit any of its Subsidiaries to engage in any
business, other than the businesses currently engaged in by Borrower and any
business substantially similar or related thereto (or incidental thereto); or
cease to conduct business in the manner conducted by Borrower as of the Closing
Date; or suffer or permit a Change in Control; or without thirty (30) days prior
written notification to Lender, relocate its chief executive office or state of
incorporation; or without Lender's prior written consent, amend its Certificate
of Incorporation or bylaws or change the date on which its fiscal year ends.
7.3 Mergers or Acquisitions. Merge or consolidate, or permit any
of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person.
7.4 Indebtedness. Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 Encumbrances. Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for Permitted Liens, or agree with any Person
other than Lender not to grant a security interest in, or otherwise encumber,
any of its property, or permit any Subsidiary to do so.
7.6 Distributions. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, or permit any of its Subsidiaries to do so.
7.7 Investments. Directly or indirectly acquire or own, or make
any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments; or maintain or invest any of its property with
a Person other than Lender unless such Person has entered into a control
agreement with Lender, in form and substance satisfactory to Lender; or suffer
or permit any Subsidiary to be a party to, or be bound by, an agreement that
restricts such Subsidiary from paying dividends or otherwise distributing
property to Borrower.
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Agility Capital, LLC 11
7.8 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a non-affiliated Person.
7.9 Subordinated Debt. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Lender's prior written consent.
7.10 Inventory and Equipment. Store the Inventory or the Equipment
with a bailee, warehouseman, or other third party unless the third party has
been notified of Lender's security interest and Lender has received an
acknowledgment from the third party that it is holding or will hold the
Inventory or Equipment for Lender's benefit, or store or maintain any Equipment
or Inventory at a location other than the location set forth in Section 10 of
this Agreement.
7.11 Compliance. Become an "investment company" or be controlled by
an "investment company," within the meaning of the Investment Company Act of
1940, or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose, fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, or
violate any law or regulation, which violation could have a Material Adverse
Effect, or a material adverse effect on the Collateral or the priority of
Lender's Lien on the Collateral, or permit any of its Subsidiaries to do any of
the foregoing.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1 Payment Default. If Borrower fails to pay, when due, any of
the Obligations;
8.2 Covenant Default. If Borrower fails to perform any obligation
under Article 6 or violates any of the covenants contained in Article 7 of this
Agreement, or fails or neglects to perform, keep, or observe any other material
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between Borrower and Lender and as to any default under such other term,
provision, condition, covenant or agreement that can be cured, has failed to
cure such default within ten (10) days after Borrower receives notice thereof or
any officer of Borrower becomes aware thereof;
8.3 Material Adverse Effect. If there occurs any circumstance or
circumstances that could have a Material Adverse Effect;
8.4 Attachment. If any portion of Borrower's assets is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
no Advances will be made during such cure period);
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Agility Capital, LLC 12
8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against Borrower;
8.6 Other Agreements. If there is a default or other failure to
perform in (i) the Accounts Receivable Purchase Agreement or any other
agreements between Borrower and Silicon Valley Bank, or (ii) any agreement to
which Borrower is a party or by which it is bound resulting in a right by a
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of Fifty Thousand Dollars ($50,000), or
(iii) any agreement, the termination of which or the exercise of remedies
against Borrower under which could have a Material Adverse Effect;
8.7 Subordinated Debt. If Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Lender;
8.8 Judgments. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least Fifty Thousand
Dollars ($50,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided no Advances
will be made during such cure period); or
8.9 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Lender by any Responsible
Officer pursuant to this Agreement or to induce Lender to enter into this
Agreement or any other Loan Document.
8.10 Guaranty. If the Guaranty ceases to be in full force and
effect, or the Guarantor fails to perform any obligation under the Guaranty, or
revokes or purports to revoke the Guaranty, or if any of the circumstances
described in Section 8.3 through 8.8 occurs with respect to Guarantor.
9. LENDER'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Subject to the terms of any subordination
agreement to which Lender is party, upon the occurrence and during the
continuance of an Event of Default, Lender may, at its election, without notice
of its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.5, all Obligations shall become immediately due and payable without
any action by Lender);
(b) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and Lender;
(c) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Lender reasonably
considers advisable;
(d) Make such payments and do such acts as Lender considers
necessary or reasonable to protect its security interest in the Collateral.
Borrower agrees to assemble the Collateral if Lender so requires, and to make
the Collateral available to Lender as Lender may designate. Borrower authorizes
Lender to enter the premises where the Collateral is located, to take and
maintain possession of the Collateral, or any part of it, and to pay, purchase,
contest, or compromise any encumbrance, charge, or lien which in Lender's
determination appears to be prior or superior to its security interest and to
pay all expenses incurred in connection therewith. With respect to any of
Borrower's owned premises, Borrower grants Lender a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of Lender's rights or remedies provided herein, at law, in equity,
or otherwise;
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC 13
(e) Set off and apply to the Obligations any and all (i)
balances and deposits of Borrower held by Lender, or (ii) indebtedness at any
time owing to or for the credit or the account of Borrower held by Lender;
(f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Lender is hereby granted a license or other right,
solely pursuant to the provisions of this Section 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Lender's exercise of its rights under this Section 9.1,
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender's benefit;
(g) Dispose of the Collateral by way of one or more contracts
or transactions, for cash or on terms, in such manner and at such places
(including Borrower's premises) as Lender determines is commercially reasonable,
and apply any proceeds to the Obligations in whatever manner or order Lender
deems appropriate;
(h) Lender may credit bid and purchase at any public sale; and
(i) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 Power of Attorney. Borrower hereby irrevocably appoints Lender
(and any of Lender's designated officers, or employees) as Borrower's true and
lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Lender's security interest in the Accounts; (b) endorse
Borrower's name on any checks or other forms of payment or security that may
come into Lender's possession; (c) sign Borrower's name on any invoice or xxxx
of lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims
under and decisions with respect to Borrower's policies of insurance; (f) settle
and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Lender determines to be reasonable;
and (g) to file, in its sole discretion, one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral without the
signature of Borrower where permitted by law. The appointment of Lender as
Borrower's attorney in fact, and each and every one of Lender's rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and Lender's obligation to
provide Credit Extensions hereunder is terminated.
9.3 Accounts Collection. Subject to the terms of any subordination
agreement to which Lender is party, At any time during the term of this
Agreement, Lender may notify any Person owing funds to Borrower of Lender's
security interest in such funds and verify the amount of such Account. Borrower
shall collect all amounts owing to Borrower for Lender, receive in trust all
payments as Lender's trustee, and immediately deliver such payments to Lender in
their original form as received from the account debtor, with proper
endorsements for deposit.
9.4 Lender Expenses. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Lender may do any or all of the
following after reasonable notice to Borrower: (a) make payment of the same or
any part thereof; (b) set up such reserves under the loan facility in Section
2.1 as Lender deems necessary to protect Lender from the exposure created by
such failure; or (c) obtain and maintain insurance policies of the type
discussed in Section 6.6 of this Agreement, and take any action with respect to
such policies as Lender deems prudent. Any amounts so paid or deposited by
Lender shall constitute Lender Expenses, shall be immediately due and payable,
and shall bear interest at the then applicable rate hereinabove provided, and
shall be secured by the Collateral. Any payments made by Lender shall not
constitute an agreement by Lender to make similar payments in the future or a
waiver by Lender of any Event of Default under this Agreement.
9.5 Lender's Liability for Collateral. Lender shall not in any way
or manner be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage thereto occurring or arising in any manner or fashion
from any cause; (c) any diminution in the value thereof; or (d) any act or
default of any carrier,
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Agility Capital, LLC 14
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.
9.6 Remedies Cumulative. Lender's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Lender shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Lender of one
right or remedy shall be deemed an election, and no waiver by Lender of any
Event of Default on Borrower's part shall be deemed a continuing waiver. No
delay by Lender shall constitute a waiver, election, or acquiescence by it. No
waiver by Lender shall be effective unless made in a written document signed on
behalf of Lender and then shall be effective only in the specific instance and
for the specific purpose for which it was given.
9.7 Demand; Protest. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Lender on which Borrower may in any way be
liable.
10. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by a recognized overnight
delivery service, certified mail, postage prepaid, return receipt requested, or
by telefacsimile to Borrower or to Lender, as the case may be, at its addresses
set forth below:
If to Borrower: Superconductor Technologies Inc.
000 Xxxx Xxxxx
Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxx XxXxxxxx, Chief Financial Officer
FAX: (000) 000-0000
If to Lender: Agility Capital, LLC
000 X. Xxxxx Xxxxxxx Xxxxxx, Xxxxx X
Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxx
FAX: (000) 000-0000
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; ARBITRATION.
This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of California, without regard to principles
of conflicts of law. Each of Borrower and Lender hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Xxxxxxx, State of California. BORROWER AND LENDER EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IF FOR ANY REASON THIS
JURY WAIVER IS NOT ENFORCEABLE, THEN BORROWER AND LENDER AGREE TO RESOLVE ALL
CLAIMS, CAUSES AND DISPUTES THROUGH FINAL AND BINDING ARBITRATION TO BE HELD IN
SANTA XXXXXXX
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC 15
COUNTY, CALIFORNIA IN ACCORDANCE WITH THE THEN CURRENT COMMERCIAL ARBITRATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION. JUDGMENT UPON ANY AWARD RESULTING
FROM ARBITRATION MAY BE ENTERED INTO AND ENFORCED BY ANY STATE OR FEDERAL COURT
HAVING JURISDICTION THEREOF.
12. GENERAL PROVISIONS.
12.1 Successors and Assigns. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Lender's prior written consent, which
consent may be granted or withheld in Lender's sole discretion. Lender shall
have the right without the consent of or notice to Borrower to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Lender's obligations, rights and benefits hereunder.
12.2 Indemnification. Borrower shall defend, indemnify and hold
harmless Lender and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Lender Expenses in any way suffered, incurred, or paid by
Lender as a result of or in any way arising out of, following, or consequential
to transactions between Lender and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys' fees and
expenses), except for losses caused by Lender's gross negligence or willful
misconduct.
12.3 Time of Essence. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.4 Severability of Provisions. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.5 Amendments in Writing, Integration. Neither this Agreement nor
the Loan Documents can be amended or terminated orally. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties hereto with respect to the subject matter of this Agreement and the Loan
Documents, if any, are merged into this Agreement and the Loan Documents.
12.6 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
12.7 Survival. All covenants, representations and warranties made
in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding or Lender has any obligation to make Credit
Extensions to Borrower. The obligations of Borrower to indemnify Lender with
respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods
with respect to actions that may be brought against Lender have run.
12.8 Confidentiality. In handling any confidential information
Lender and all employees and agents of Lender, including but not limited to
accountants, shall exercise the same degree of care that it exercises with
respect to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Lender in connection with their
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Obligations, or any agents or
representatives thereof, (iii) as required by law, regulations, rule or order,
subpoena, judicial order or similar order, (iv) as may be required in connection
with the examination, audit or similar investigation of Lender and (v) as Lender
may determine in connection with the enforcement of any remedies hereunder.
Confidential information hereunder shall not include information that either:
(a) is in the public domain or in the knowledge or possession of Lender when
disclosed to Lender, or becomes part of the public domain after disclosure to
Lender through no fault
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC 16
of Lender; or (b) is disclosed to Lender by a third party, provided Lender does
not have actual knowledge that such third party is prohibited from disclosing
such information. For so long as Lender is receiving Confidential Information
under this Agreement, Lender shall not use any such Confidential Information in
connection with the purchase or sale of Borrower's capital stock in violation of
any domestic or foreign laws. Lender acknowledges that, among other things, such
laws prohibit any person who has received material nonpublic information about a
company from purchasing or selling securities of that company on the basis of
that information or from communicating such information to any other person
under circumstances in which it is reasonably foreseeable that such person is
likely to purchase or sell such securities.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SUPERCONDUCTOR TECHNOLOGIES INC.
By: ________________________________
Title:______________________________
AGILITY CAPITAL, LLC
By: ________________________________
Title:______________________________
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC 17
DEBTOR: SUPERCONDUCTOR TECHNOLOGIES INC.
SECURED PARTY: AGILITY CAPITAL, LLC
EXHIBIT A
COLLATERAL DESCRIPTION ATTACHMENT
TO LOAN AND SECURITY AGREEMENT
All personal property of Borrower (herein referred to as "Borrower" or
"Debtor") whether presently existing or hereafter created or acquired, and
wherever located, including, but not limited to:
(a) all accounts (including health-care-insurance receivables),
chattel paper (including tangible and electronic chattel paper), deposit
accounts, documents (including negotiable documents), equipment (including all
accessions and additions thereto), general intangibles (including payment
intangibles and software), goods (including fixtures), instruments (including
promissory notes), inventory (including all goods held for sale or lease or to
be furnished under a contract of service, and including returns and
repossessions), investment property (including securities and securities
entitlements), letter of credit rights, money, and all of Debtor's books and
records with respect to any of the foregoing, and the computers and equipment
containing said books and records;
(b) all common law and statutory copyrights and copyright
registrations, applications for registration, now existing or hereafter arising,
in the United States of America or in any foreign jurisdiction, obtained or to
be obtained on or in connection with any of the forgoing, or any parts thereof
or any underlying or component elements of any of the forgoing, together with
the right to copyright and all rights to renew or extend such copyrights and the
right (but not the obligation) of Secured Party to xxx in its own name and/or in
the name of the Debtor for past, present and future infringements of copyright;
(c) all trademarks, service marks, trade names and service names
and the goodwill associated therewith, together with the right to trademark and
all rights to renew or extend such trademarks and the right (but not the
obligation) of Secured Party to xxx in its own name and/or in the name of the
Debtor for past, present and future infringements of trademark;
(d) all (i) patents and patent applications filed in the United
States Patent and Trademark Office or any similar office of any foreign
jurisdiction, and interests under patent license agreements, including, without
limitation, the inventions and improvements described and claimed therein, (ii)
licenses pertaining to any patent whether Debtor is licensor or licensee, (iii)
income, royalties, damages, payments, accounts and accounts receivable now or
hereafter due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to xxx in the name of Debtor and/or
in the name of Secured Party for past, present and future infringements thereof,
(v) rights corresponding thereto throughout the world in all jurisdictions in
which such patents have been issued or applied for, and (vi) reissues,
divisions, continuations, renewals, extensions and continuations-in-part with
respect to any of the foregoing; and
(e) any and all cash proceeds and/or noncash proceeds of any of
the foregoing, including, without limitation, insurance proceeds, and all
supporting obligations and the security therefor or for any right to payment.
All terms above have the meanings given to them in the California Uniform
Commercial Code, as amended or supplemented from time to time, including revised
Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats.
1999, c.991 (S.B. 45), Section 35, operative July 1, 2001.
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC
CORPORATE RESOLUTIONS TO BORROW
BORROWER: Superconductor Technologies Inc.
I, the undersigned Secretary or Assistant Secretary of Superconductor
Technologies Inc. (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of Delaware.
I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Certificate of Incorporation, as amended, and the Bylaws
of the Corporation, each of which is in full force and effect on the date
hereof.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation,
duly called and held, at which a quorum was present and voting (or by other duly
authorized corporate action in lieu of a meeting) the resolutions set forth on
Attachment 3 were adopted, which resolutions remain in full force and effect on
the date hereof.
I FURTHER CERTIFY that at a meeting of the Pricing Committee of Directors
of the Corporation, duly called and held, at which a quorum was present and
voting (or by other duly authorized corporate action in lieu of a meeting), the
following resolutions were adopted.
BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAMES POSITION ACTUAL SIGNATURES
______________________ ______________________ ______________________
______________________ ______________________ ______________________
______________________ ______________________ ______________________
______________________ ______________________ ______________________
acting for and on behalf of this Corporation and as its act and deed be, and
they hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Agility Capital, LLC
("Lender"), on such terms as may be agreed upon between the officers, employees,
or agents of the Corporation and Lender, such sum or sums of money as in their
judgment should be borrowed, without limitation.
EXECUTE LOAN DOCUMENTS. To execute and deliver to Lender that certain Loan
and Security Agreement dated as of April 28, 2004 (the "Loan Agreement") and any
other agreement entered into between Corporation and Lender in connection with
the Loan Agreement, including any amendments, all as amended or extended from
time to time (collectively, with the Loan Agreement, the "Loan Documents"), and
also to execute and deliver to Lender one or more renewals, extensions,
modifications, refinancings, consolidations, or substitutions for the Loan
Documents, or any portion thereof.
GRANT SECURITY. To grant a security interest to Lender in the Collateral
described in the Loan Documents, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Documents.
NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation or in which the Corporation may have an
interest, and either to receive cash for the same or to cause such proceeds to
be credited to the account of the Corporation with Lender, or to cause such
other disposition of the proceeds derived therefrom as they may deem advisable.
WARRANTS. To issue Lender warrants to purchase the Corporation's capital
stock.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request Advance thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above are
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupy the positions set forth opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on April 28, 2004 and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED AND ATTESTED BY:
X___________________________________
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC
SCHEDULE OF EXCEPTIONS
PERMITTED INDEBTEDNESS (SECTION 1.0)
Indebtedness related to Permitted Liens on Exhibit A attached
PERMITTED INVESTMENTS (SECTION 1.1)
Investment account with SVB Securities-A/C # 886-02766, Nations Institutional
Reserves, Cash Reserves Institutional
PERMITTED LIENS (SECTION 1.1)
Silicon Valley Bank and liens listed on Exhibit A.
13. Intellectual Property Collateral (Section 5.6)
See Litigation below which discusses ISCO litigation which relates to
Superconductor intellectual property
14. Litigation (Section 5.8)
Employment Termination-The Company has been sued by a former employee -- Xxxxxxx
Xxxxxxx and a lawsuit has been threatened by Boo Nillson. The cases are
unrelated and arise from termination of employment.
Class Actions-The Company has recently been named as a defendant in two federal
securities lawsuits filed in the United States District Court for the Central
District of California. Xxxxxxxx vs. Superconductor et al was filed April 16,
2004 and Xxxxxxxx v. Superconductor et al was filed on April 23, 2004. Both
suits allege securities law violations by us and certain of our officers and
directors under Rule 10b-5 and Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, as amended. The complaints were each filed on behalf of
purported classes of people who purchased our stock during the period between
January 9, 2004 and March 1, 2004 and both seek unspecified damages.
ISCO Dispute
The Company is engaged in a patent dispute with ISCO International, Inc.
relating to U.S. Patent No. 6,263,215 entitled "Cryoelectronically Cooled
Receiver Front End for Mobile Radio Systems." ISCO filed a complaint on
July 17, 2001 in the United States District Court for the District of
Delaware against us and our wholly-owned subsidiary, Conductus, Inc. The
ISCO complaint alleged that our SuperFilter product and Conductus'
ClearSite(R) product infringe ISCO's patent. The matter went to trial on
March 17, 2003.
On April 3, 2003, the jury returned a unanimous verdict that our
SuperFilter III product does not infringe the patent in question, and that
ISCO's patent is invalid and unenforceable. The jury also awarded us $3.8
million in compensatory damages based upon a finding that ISCO engaged in
unfair competition and acted in bad faith by issuing press releases and
contacting our customers asserting rights under this patent.
On April 17, 2003, we filed a Motion for Attorneys' Fees and
Disbursements, in which we asked the court to award us our attorneys' fees
and other litigation expenses. On the same date, ISCO filed a motion,
asking the court to overturn the verdict and grant a new trial. In August
2003, the court rejected ISCO's request to overturn the jury's verdict
that the patent is invalid and not infringed by the SuperFilter III
product, and accepted the jury's verdict that the patent is unenforceable
because of inequitable conduct committed by one of the alleged inventors.
ISCO subsequently filed a notice of appeal as to this portion of the
court's decision. The court overturned the jury's verdict of unfair
competition and bad faith on the part of ISCO and the related $3.8 million
compensatory damage award to us, and also denied our request for
reimbursement of our legal fees associated with the case. We have filed a
notice of appeal as to this portion of the court's decision.
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC
SUBSIDIARIES (SCHEDULE 5.14)
Conductus, Inc. (Delaware)
Superconductor Investments (Mauritius) Limited (inactive subsidiary)
STI Investments Limited (inactive subsidiary)
INVESTMENT ACCOUNTS (SECTION 5.16)
Investment account with SVB Securities-A/C # 886-02766, Nations Institutional
Reserves, Cash Reserves Institutional
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC
Permitted Liens and Permitted Indebtedness
Exhibit A
Exhibit A
Equipment Capital Original lease Payment
Leases Term value remaining 4/3/04
------ ---- ----- ----------------
Agilent Financial 5 leases-test 6/2-11/05 $156,073 77,175
Services equipment
BSB Leasing Furniture 10/02-10/07 81,169 75,696
Pentech Financial Mfg equipment 03/01-11/04 $510,000 74,335
Services
Equipment
Operating leases
Panasonic Credit 2 Copiers 9/02-08/07 $46,560 31,809
Co.
Xxxx Xxxx\PA\10355088.3
Agility Capital, LLC
