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SILICON VALLEY BANK
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: CONDUCTUS, INC.
ADDRESS: 000 X. XXXXX XXXXXX
XXXXXXXXX, XXXXXXXXXX 00000
DATE: APRIL 23, 1998
This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.
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1. CREDIT LIMIT
(Section 1.1): I. REVOLVING FACILITY.
An amount (collectively referred to herein as the
"Accounts Loans") not to exceed the lesser of: (i)
$2,000,000 at any one time outstanding (the "Maximum
Credit Limit"); or (ii) 80% of the amount of
Borrower's Eligible Receivables (as defined in
Section 8 above).
PLUS
II. BRIDGE FACILITY.
An amount (collectively referred to herein as the
"Bridge Loans") not exceed $2,000,000.
PLUS
III. EXISTING TERM NOTES.
Amounts currently outstanding under the following
promissory notes executed by Borrower, as maker,
with Silicon, as payee (collectively referred to
herein as the "Term Notes"): (A) Promissory Note
dated August 15, 1994 in the original principal
amount of $1,500,000, as amended from time to time;
(B) Promissory Note dated March 1, 1996 in the
original principal amount of $1,000,000, as amended
from time to time; and (C) Promissory Note dated
December 26, 1996 in the original principal amount
of $1,000,000, as amended from time to time.
LETTER OF CREDIT SUBLIMIT
(Section 1.5): $500,000
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2. INTEREST
INTEREST RATE (Section 1.2):
With rate equal to the "Prime Rate" in effect from
time to time, plus 2.00% per annum. Interest shall
be calculated on the basis of a 360-day year for the
actual number of days elapsed. "Prime Rate" means
the rate announced from time to time by Silicon as
its "prime rate;" it is a base rate upon which other
rates charged by Silicon are based, and it is not
necessarily the best rate available at Silicon. The
interest rate applicable to the Obligations shall
change on each date there is a change in the Prime
Rate. Each of the Term Notes is amended to reflect
the above interest rate.
MINIMUM MONTHLY
INTEREST (Section 1.2): N/A.
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3. FEES (Section 1.4):
Loan Fee: $25,000, which has been already been paid by the
Borrower. (Any Commitment Fee previously paid by
the Borrower in connection with this loan shall be
credited against this Fee.)
Collateral Monitoring
Fee: $750, per month, payable in arrears (prorated for
any partial month at the beginning and at
termination of this Agreement).
Unused Line Fee: In the event, in any calendar month (or portion
thereof at the beginning and end of the term
hereof), the average daily principal balance of the
Accounts Loans outstanding during the month is less
than $2,000,000, Borrower shall pay Silicon an
unused line fee in an amount equal to 0.25% per
annum on the difference between $2,000,000 and the
average daily principal balance of the Loans
outstanding during the month, which unused line fee
shall be computed and paid monthly, in arrears, on
the first day of the following month.
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4. MATURITY DATE
(Section 6.1): WITH RESPECT TO THE ACCOUNTS LOANS REVOLVING
FACILITY: the date that is one day prior to first
anniversary of the date of this Agreement, subject
to automatic renewal as provided in Section 6.1
above, and early termination as provided in Section
6.2 above.
WITH RESPECT TO THE BRIDGE LOANS FACILITY: The
earlier of 120 days from the date hereof OR the date
of the consummation of the equity financing
transaction of the Borrower.
WITH RESPECT TO THE TERM NOTES: the later of
maturity dates set forth in each of the Term Notes
OR the date of the consummation of the equity
financing transaction of the Borrower, PROVIDED,
HOWEVER, that if the
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Borrower chooses to secure the Term Notes with cash
deposits at Silicon then the Maturity Date for the
Term Notes shall remain as originally set forth
therein. Each of the Term Notes is amended to
reflect the above change.
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5. FINANCIAL COVENANTS
(Section 5.1): Borrower shall comply with all of the following
covenants. Compliance shall be determined as of the
end of each month:
MINIMUM TANGIBLE
NET WORTH: Borrower shall maintain a Tangible Net Worth of not
less than $900,000 plus (A) 50% of the Borrower's
positive net income plus (B) 50% of the amount of
subordinated debt of the Borrower that is acceptable
to Silicon in its discretion and which is incurred
on and after December 31, 1998 plus (C) 50% of the
amount of net proceeds the Borrower receives from
equity financing transactions consummated on and
after December 31, 1998.
DEFINITIONS. For purposes of the foregoing financial covenants,
the following terms shall have the following
meanings:
"Current assets", "current liabilities" and
"liabilities" shall have the meanings ascribed to
them by generally accepted accounting principles.
"Tangible Net Worth" shall mean the excess of total
assets over total liabilities, determined in
accordance with generally accepted accounting
principles, with the following adjustments:
(A) there shall be excluded from assets: (i)
notes, accounts receivable and other obligations
owing to the Borrower from its officers or other
Affiliates, and (ii) all assets which would be
classified as intangible assets under generally
accepted accounting principles, including without
limitation goodwill, licenses, patents,
trademarks, trade names, copyrights, capitalized
software and organizational costs, licenses and
franchises
(B) there shall be excluded from liabilities: all
indebtedness which is subordinated to the
Obligations under a subordination agreement in
form specified by Silicon or by language in the
instrument evidencing the indebtedness which is
acceptable to Silicon in its discretion.
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6. REPORTING.
(Section 5.3):
Borrower shall provide Silicon with the following:
1. Monthly Receivable agings, aged by invoice date,
within 15 days after the end of each month.
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2. Monthly accounts payable agings, aged by invoice
date, and outstanding or held check registers,
if any, within 15 days after the end of each
month.
3. Monthly reconciliations of Receivable agings
(aged by invoice date), transaction reports, and
general ledger, within 15 days after the end of
each month, or sooner, if available prior to
such 15 day period.
4. Monthly list of a government contracts within 15
days after the end of each month.
5. Monthly unaudited financial statements, as soon
as available, and in any event within thirty
days after the end of each month.
6. Monthly Compliance Certificates, within thirty
days after the end of each month, in such form
as Silicon shall reasonably specify, signed by
the Chief Financial Officer of Borrower,
certifying that as of the end of such month
Borrower was in full compliance with all of the
terms and conditions of this Agreement, and
setting forth calculations showing compliance
with the financial covenants set forth in this
Agreement and such other information as Silicon
shall reasonably request, including, without
limitation, a statement that at the end of such
month there were no held checks.
7. Quarterly unaudited financial statements, as
soon as available, and in any event within
forty-five days after the end of each fiscal
quarter of Borrower.
8. Annual operating budgets (including income
statements, balance sheets and cash flow
statements, by month) for the upcoming fiscal
year of Borrower within thirty days prior to the
end of each fiscal year of Borrower.
9. Annual financial statements, as soon as
available, and in any event within 120 days
following the end of Borrower's fiscal year,
certified by independent certified public
accountants acceptable to Silicon.
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7. COMPENSATION
(Section 5.5): N/A.
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8. BORROWER INFORMATION:
PRIOR NAMES OF
BORROWER
(Section 3.2): See Representations and Warranties dated April
14, 1998.
PRIOR TRADE
NAMES OF BORROWER
(Section 3.2): See Representations and Warranties dated April
14, 1998.
EXISTING TRADE
NAMES OF BORROWER
(Section 3.2): See Representations and Warranties dated April
14, 1998.
OTHER LOCATIONS AND
ADDRESSES (Section 3.3): See Representations and Warranties dated April
14, 1998.
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MATERIAL ADVERSE
LITIGATION (Section 3.10): None
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9. OTHER COVENANTS
(Section 5.1): Borrower shall at all times comply with all of the
following additional covenants:
(1) BANKING RELATIONSHIP. Borrower shall at all
times maintain its primary banking relationship
with Silicon.
(2) CONTINUATION OF PRIOR AGREEMENTS (EXCEPT FOR
PRIOR REVOLVING LINE). Notwithstanding the
execution of this Agreement, all of the other
documents and agreements in place between the
Borrower and Silicon (other than the revolving
facility of $500,000 (the "Prior Revolving
Line") set forth in the Business Loan Agreement
dated August 15, 1994 between the Borrower and
Silicon) shall continue in full force and
effect: All standard documents of Silicon
entered into by the Borrower in connection with
Letters of Credit and/or Foreign Exchange
Contracts; all security agreements (including
but not limited to the Assignment of Deposit
Account which shall secure all Obligations),
collateral assignments and mortgages, including
but not limited to those relating to patents,
trademarks, copyrights and other intellectual
property; all lockbox agreements and/or blocked
account agreements; and all UCC-1 financing
statements and other documents filed with
governmental offices which perfect liens or
security interests in favor of Silicon. In
addition, in the event the Borrower has
previously issued any stock options, stock
purchase warrants or securities to Silicon, the
same and all documents and agreements relating
thereto shall also continue in full force and
effect. The Prior Revolving Line shall be
deemed terminated and of no further force upon
the effectiveness of this Agreement and the
beginning balance of the Accounts Loans
hereunder shall be the balance under the Prior
Revolving Line plus any new Accounts Loans made
hereunder.
(3) MODIFICATION OF TERM NOTES. The Term Notes
have been modified by the interest rate and
maturity date provisions of this Schedule to
Loan Agreement.
(4) CONDITIONS. Prior to the effectiveness of this
Agreement the following represent conditions
precedent thereto: All conditions set forth in
Section B of the letter dated March 30, 1998
from Silicon Valley Bank to the Borrower shall
be satisfied or waived by Silicon in its sole
discretion in writing.
(5) ISSUANCE OF WARRANTS. The Borrower shall
provide Silicon with five year warrants to
purchase15,000 shares of common stock of the
Borrower at an initial exercise price of $3.625
per share on the terms and conditions set forth
in the Warrant to Purchase Stock, Anti-Dilution
Agreement and Registration Right Agreement
being executed concurrently with this
Agreement, which shall in such form and contain
such provisions as are satisfactory to Silicon
in its discretion. Further, Borrower shall
issue to Silicon additional
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warrants at such initial exercise for 10,000
additional shares of common stock of the
Borrower if the Bridge Loans facility is
utilized and remains in place on and after May
31, 1998. Finally, Borrower shall issue to
Silicon additional warrants at such initial
exercise for 25,000 additional shares of common
stock of the Borrower if the Bridge Loans
facility is utilized and remains in place on
and after June 30, 1998.
(6) INTELLECTUAL PROPERTY SECURITY AGREEMENTS. The
Borrower shall execute and deliver to Silicon
security agreements regarding its copyrights,
trademarks and patent intellectual property,
which shall in form satisfactory to Silicon in
its discretion, and Borrower shall undertake
all actions that Silicon determines are
necessary or desirable in order to permit
Silicon to establish and perfect its security
interest therein.
Borrower: Silicon:
CONDUCTUS, INC. SILICON VALLEY BANK
By By
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President or Vice President Title
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By
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Secretary or Ass't Secretary
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SILICON VALLEY BANK
CERTIFIED RESOLUTION AND INCUMBENCY CERTIFICATE
BORROWER: CONDUCTUS, INC.,
A CORPORATION ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE
DATE: APRIL 23, 1998
I, the undersigned, Secretary or Assistant Secretary of the above-named
borrower, a corporation organized under the laws of the state set forth above,
do hereby certify that the following is a full, true and correct copy of
resolutions duly and regularly adopted by the Board of Directors of said
corporation as required by law, and by the by-laws of said corporation, and that
said resolutions are still in full force and effect and have not been in any way
modified, repealed, rescinded, amended or revoked.
RESOLVED, that this corporation borrow from Silicon Valley Bank
("Silicon"), from time to time, such sum or sums of money as, in the
judgment of the officer or officers hereinafter authorized hereby, this
corporation may require.
RESOLVED FURTHER, that any officer of this corporation be, and he or she is
hereby authorized, directed and empowered, in the name of this corporation,
to execute and deliver to Silicon, and Silicon is requested to accept, the
loan agreements, security agreements, notes, financing statements, and
other documents and instruments providing for such loans and evidencing
and/or securing such loans, with interest thereon, and said authorized
officers are authorized from time to time to execute renewals, extensions
and/or amendments of said loan agreements, security agreements, and other
documents and instruments.
RESOLVED FURTHER, that said authorized officers be and they are hereby
authorized, directed and empowered, as security for any and all
indebtedness of this corporation to Silicon, whether arising pursuant to
this resolution or otherwise, to grant, transfer, pledge, mortgage, assign,
or otherwise hypothecate to Silicon, or deed in trust for its benefit, any
property of any and every kind, belonging to this corporation, including,
but not limited to, any and all real property, accounts, inventory,
equipment, general intangibles, instruments, documents, chattel paper,
notes, money, deposit accounts, furniture, fixtures, goods, and other
property of every kind, and to execute and deliver to Silicon any and all
grants, transfers, trust receipts, loan or credit agreements, pledge
agreements, mortgages, deeds of trust, financing statements, security
agreements and other hypothecation agreements, which said instruments and
the note or notes and other instruments referred to in the preceding
paragraph may contain such provisions, covenants, recitals and agreements
as Silicon may require and said authorized officers may approve, and the
execution thereof by said authorized officers shall be conclusive evidence
of such approval.
RESOLVED FURTHER, that Silicon may conclusively rely upon a certified copy
of these resolutions and a certificate of the Secretary or Ass't Secretary
of this corporation as to the officers of this corporation and their
offices and signatures, and continue to conclusively rely on such certified
copy of these resolutions and said certificate for all past, present and
future transactions until written notice of any change hereto or thereto is
given to Silicon by this corporation by certified mail, return receipt
requested.
RESOLVED FURTHER, that, in connection with the foregoing loans, this
corporation shall issue to Silicon five year warrants to purchase up
to50,000 shares of common stock of this corporation, at $3.625 per share,
on the terms and provisions of Silicon's standard form Warrant to Purchase
Stock and related documents, with such changes therein as Silicon and this
corporation shall agree; any officer of this corporation is hereby
authorized to execute and deliver such Warrant to Purchase Stock and
related documents, and all documents and instruments relating thereto, in
such form and containing such additional provisions as said authorized
officers may approve, and the execution thereof by said authorized officers
shall be conclusive evidence of such approval.
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The undersigned further hereby certifies that the following persons are the
duly elected and acting officers of the corporation named above as borrower and
that the following are their actual signatures:
NAMES OFFICE(S) ACTUAL SIGNATURES
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IN WITNESS WHEREOF, I have hereunto set my hand as such Secretary or Assistant
Secretary on the date set forth above.
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Secretary or Assistant Secretary
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