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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) SEPTEMBER 11, 1998
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CONDUCTUS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 000-19915 77-0162388
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(STATE OR OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
INCORPORATION)
969 W. MAUDE AVENUE, SUNNYVALE, CA 94086
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (408) 523-9950
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS
The information which is set forth in the Registrant's News Release dated
September 15, 1998 is incorporated by reference. In addition, the Registrant
has sold as part of its Series B Preferred Stock financing, over 1,481,485
shares of its Series B Preferred Stock to entities affiliated with Asset
Management Associates 1984 and Mr. Charles L. Grimes, each of which was,
prior to the financing, greater than 5% stockholders of the Registrant.
ITEM 7. EXHIBITS
(c) EXHIBITS:
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
3.1 Certificate of Designation of Series B Preferred Stock of the Registrant.
99.1 Text of Press Release dated September 15, 1998.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Conductus, Inc.
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(Registrant)
Date: September 24, 1998 By: /s/ Charles E. Shalvoy
----------------------
Charles E. Shalvoy
President and Chief Executive Officer
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CONDUCTUS, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<S> <C>
3.1 Certificate of Designation of Series B Preferred Stock of the Registrant.
99.1 Text of Press Release dated September 15, 1998.
</TABLE>
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF DESIGNATION
of
SERIES B PREFERRED STOCK
of
CONDUCTUS, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
Conductus, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on May 29, 1998:
WHEREAS, the Amended and Restated Certificate of Incorporation of
the Corporation authorizes the Preferred Stock (the "Preferred Stock") of the
Corporation to be issued in series and authorizes its board of directors (the
"Board") to determine the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series of Preferred Stock and
to fix the number of shares and designation of any such series; and
WHEREAS, the Board has designated an initial series of Preferred
Stock designated as Series A Junior Participating Preferred Stock (the
"Series A Preferred");
RESOLVED, that a series of Preferred Stock shall be designated
Series B Preferred Stock (the "Series B Preferred");
RESOLVED FURTHER, that the number of shares constituting Series B
Preferred shall be Four Million Five Hundred Thousand (4,500,000) shares; and
RESOLVED FURTHER, that the Board hereby fixes and determines the
rights, preferences, privileges and restrictions relating to the Series B
Preferred as follows:
1. DIVIDEND RIGHTS OF SERIES B PREFERRED. Subject to the rights of
additional series of Preferred Stock that may be designated by the Board from
time to time, including the rights of Series A Preferred, the holders of shares
of Series B Preferred shall be entitled to receive dividends, at the rate of
$0.162 per share of Series B Preferred (as such dollar amount shall be
appropriately adjusted for stock dividends, stock combinations,
recapitalization or the like, the "Quarterly Accrual Amount") on each March 31,
June 30, September 30 and December 31 (each, a "Quarterly Accrual Date") after
the date on which such share of Series B Preferred was issued (the "Original
Issue Date" for such share), provided that the amount of dividends on
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the first Quarterly Accrual Date after the Original Issue Date shall equal
the Quarterly Accrual Amount multiplied by a fraction (A) the numerator of
which shall equal the number of days from and including the Original Issue
Date for such share to and including such first Quarterly Accrual Date, and
(B) the denominator of which is Ninety (90). Such dividends shall be
cumulative and shall accrue, whether or not earned or declared. Any
accumulation of dividends on the Series B Preferred shall not bear interest.
Cumulative dividends with respect to a share of Series B Preferred which are
accrued, shall be paid (A) in shares of Common Stock of the Corporation
("Common Stock"), upon conversion of such share of Series B Preferred into
Common Stock pursuant to Section 3 below, or (B) if such share of Series B
Preferred is not so converted, upon the liquidation, dissolution or winding
up of the Corporation as provided in Section 2(a).
2. Any dividend or distribution which is declared by the
Corporation and payable with assets of the Corporation other than cash shall
be governed by the provisions of Subsection 2(d) below.
3. LIQUIDATION PREFERENCE.
(a) Subject to the rights of additional series of Preferred
Stock that may be designated by the Board from time to time, in the event of
any liquidation, dissolution or winding up of the Corporation, either
voluntarily or involuntarily, the holders of the Series B Preferred shall be
entitled to receive, prior and in preference to any distribution of any of
the assets of the Corporation to the holders of Common Stock, an amount per
share equal to $2.70 (the "Original Series B Purchase Price") plus any
accrued but unpaid dividends for each share of Series B Preferred then held
by them, such amounts being adjusted to reflect stock dividends, stock
splits, combinations, recapitalizations or the like after the Original Series
B Issue Date. After payment to the holders of the Series B Preferred of the
amounts set forth in this Section 2, the entire remaining assets and funds of
the Corporation legally available for distribution, if any, shall be
distributed among the holders of the Common Stock in proportion to the shares
of Common Stock then held by them. If, upon the occurrence of such event, the
assets thus distributed among the holders of the Series B Preferred shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amount, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed among the holders of
the Series B Preferred in proportion to the number of shares of Series B
Preferred then held by them.
(i) For purposes of this Section 2, a liquidation,
dissolution or winding up of the Corporation shall, unless holders of a
majority of the then outstanding shares of Series B Preferred elect
otherwise, be deemed to be occasioned by, or to include, (A) the acquisition
of the Corporation by another entity by means of any transaction or series of
related transactions (including, without limitation, any reorganization,
merger or consolidation but, excluding any merger effected exclusively for
the purpose of changing the domicile of the Corporation) that results in the
transfer of fifty percent (50%) or more of the outstanding voting power of
the Corporation; or (B) a sale of all or substantially all of the assets of
the Corporation.
(ii) In any of such event, if the consideration received
by the Corporation is other than cash, its value will be deemed its fair
market value. Any securities to
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be delivered to the holders of the Series B Preferred or Common Stock, as the
case may be, shall be valued as follows:
(1) If traded on a securities exchange or through
the Nasdaq National Market, the value shall be deemed to be the average of
the closing prices of the securities on such exchange over the thirty-day
period ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty-day period ending three (3) days
prior to the closing; and
(3) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined by the
Corporation and the holders of at least a majority of the then outstanding
shares of Series B Preferred.
(iii) In the event the requirements of this
Subsection 2(b) are not complied with, the Corporation shall forthwith either:
(1) cause such closing to be postponed until such
time as the requirements of this Section 2 have been complied with; or
(2) cancel such transaction, in which event the
respective rights, preferences and privileges of the holders of the Series B
Preferred shall revert to and be the same as such rights, preferences and
privileges existing immediately prior to the date of the first notice
referred to in Subsection 2(b)(iv) below.
(iv) The Corporation shall give each holder of record of
Series B Preferred written notice of such impending transaction not later
than twenty (20) days prior to the stockholders' meeting called to approve
such transaction, or twenty (20) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the impending transaction
and the provisions of this Section 2, and the Corporation shall thereafter
give such holders prompt notice of any material changes. The transaction
shall in no event take place sooner than twenty (20) days after the
Corporation has given the first notice provided for herein or sooner than ten
(10) days after the Corporation has given notice of any material changes
provided for herein; provided, however, that such periods may be shortened
upon the Corporation's receipt of written consent of the holders of at least
a majority of the then outstanding shares of Series B Preferred entitled to
such notice rights or similar notice rights.
4. CONVERSION. The holders of the Series B Preferred shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series B Preferred
shall be convertible, at the option of the holder thereof, at any time after
the date six (6) months following the Original Issue Date of such share, at
the office of the Corporation or any transfer agent for such stock, into such
number of fully paid and nonassessable shares of Common Stock
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as is determined by dividing the Original Series B Purchase Price plus any
accrued but unpaid dividends by the Conversion Price (as defined below)
applicable to such share, determined as hereafter provided, in effect on the
date the certificate is surrendered for conversion. The initial "Conversion
Price" per share for shares of Series B Preferred shall be the Original
Series B Purchase Price; provided, however, that the Conversion Price for the
Series B Preferred shall be subject to adjustment as set forth in subsection
3(d).
(b) AUTOMATIC CONVERSION. Each share of Series B Preferred
shall be automatically converted into shares of Common Stock at the
Conversion Price in effect at the time upon the date specified by written
consent or agreement of the holders of two-thirds of the then outstanding
shares of Series B Preferred.
(c) MECHANICS OF CONVERSION.
(i) CONVERSION PURSUANT TO SECTION 3(a). Before any
holder of Series B Preferred shall be entitled to convert the same into
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of
any transfer agent for the Series B Preferred, and shall give written notice
to the Corporation at such office that he/she elects to convert the same, and
shall state therein the name or names which he/she wishes the certificate or
certificates for shares of Common Stock to be issued. The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to each
holder of Series B Preferred, or to his nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which he/she shall
be entitled. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of such surrender of the shares of
Series B Preferred to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(ii) CONVERSION PURSUANT TO SECTION 3(b). If shares of
Series B Preferred are automatically converted, written notice shall be
delivered to the holder of such shares of Series B Preferred at the address
last shown on the records of the Corporation for such holder or given by
such holder to the Corporation for the purpose of notice or, if no such
address appears or is given, at the place where the principal executive
office of the Corporation is located, notifying such holder of the
conversion to be effected, specifying the date on which such conversion is
expected to occur, the number of shares of Series B Preferred to be converted
and calling upon such holder to surrender to Corporation, in the manner and
at the place designated, the certificate or certificates therefor. Upon such
conversion of the shares of Series B Preferred, holders shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series B Preferred, and shall
state therein the name or names which he/she wishes the certificate or
certificates for shares of Common Stock to be issued. The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to each
holder of Series B Preferred, or to his nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which he/she shall
be entitled. Any conversion of Series B Preferred pursuant to Section 3(b)
shall be deemed to have been made immediately prior to the closing of the
issuance and sale of shares as described in Section 3(b).
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(iii) FRACTIONAL SHARES. No fractional shares shall
be issued upon conversion of the Series B Preferred. In lieu of Corporation
issuing any fractional shares to holders upon the conversion of the Series B
Preferred, Corporation shall pay to such holders an amount equal to the
product obtained by multiplying the Conversion Price by the fraction of a
share not issued pursuant to the previous sentence.
(d) ADJUSTMENT OF CONVERSION RATE. The number of shares of
Common Stock into which the Series B Preferred may be converted shall be
subject to adjustment from time to time as follows:
(A) If the Corporation shall issue, after the date
upon which any shares of Series B Preferred were first issued (the "Purchase
Date") and prior to the date three years following the Purchase Date, any
Additional Stock (as defined below) without consideration or for a
consideration per share less than the Conversion Price for such series in
effect immediately prior to the issuance of such Additional Stock, the
Conversion Price for such series in effect immediately prior to each such
issuance shall forthwith (except as otherwise provided in this clause (i)) be
adjusted to a price equal to the price paid per share for such Additional
Stock.
(B) No adjustment of the Conversion Price for the
Series B Preferred shall be made in an amount less than one cent per share,
provided that any adjustments that are not required to be made by reason of
this sentence shall be carried forward and shall be either taken into account
in any subsequent adjustment made prior to three (3) years from the date of
the event giving rise to the adjustment being carried forward, or shall be
made at the end of three (3) years from the date of the event giving rise to
the adjustment being carried forward. Except to the limited extent provided
for in subsections (E)(3) and (E)(4), no adjustment of such Conversion Price
pursuant to this subsection 3(d)(i) shall have the effect of increasing the
Conversion Price above the Conversion Price in effect immediately prior to
such adjustment.
(C) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of the Common Stock
for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined by
the Board irrespective of any accounting treatment.
(E) In the case of the issuance (whether before, on
or after the applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock or options to purchase or rights to subscribe
for such convertible or exchangeable securities, the following provisions
shall apply for all purposes of this subsection 3(d)(i) and subsection
3(d)(ii):
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(1) The aggregate maximum number of shares of Common
Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the passage of
time, but without taking into account potential antidilution adjustments)
of such options to purchase or rights to subscribe for Common Stock shall
be deemed to have been issued at the time such options or rights were
issued and for a consideration equal to the consideration (determined in
the manner provided in subsections 3(d)(i)(C) and (d)(i)(D)), if any,
received by the Corporation upon the issuance of such options or rights
plus the minimum exercise price provided in such options or rights for the
Common Stock covered thereby.
(2) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of, or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability,
including, without limitation, the passage of time, but without taking
into account potential antidilution adjustments) for, any such
convertible or exchangeable securities or upon the exercise of options
to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed
to have been issued at the time such securities were issued or such
options or rights were issued and for a consideration equal to the
consideration, if any, received by the Corporation for any such
securities and related options or rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the minimum
additional consideration, if any, to be received by the Corporation upon
the conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be
determined in the manner provided in subsections 3(d)(i)(C) and
(d)(i)(D)).
(3) In the event of any change in the number of shares
of Common Stock deliverable or in the consideration payable to the
Corporation upon exercise of such options or rights or upon conversion
of or in exchange for such convertible or exchangeable securities,
including, but not limited to, a change resulting from the antidilution
provisions thereof (unless such options or rights or convertible or
exchangeable securities were merely deemed to be included in the
numerator and denominator for purposes of determining the number of
shares of Common Stock outstanding for purposes of subsection
3(d)(i)(A)), the Conversion Price of the Series B Preferred, to the
extent in any way affected by or computed using such options, rights or
securities, shall be recomputed to reflect such change, but no further
adjustment shall be made for the actual issuance of Common Stock or any
payment of such consideration upon the exercise of any such options or
rights or the conversion or exchange of such securities.
(4) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price of the Series B Preferred,
to the extent in any way affected by or computed using such options,
rights or securities or options or rights related to such securities
(unless such options or rights were merely deemed to be included in the
numerator and denominator for purposes of determining the number of
shares of Common Stock outstanding for
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purposes of subsection 3(d)(i)(A)), shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and convertible
or exchangeable securities that remain in effect) actually issued upon
the exercise of such options or rights, upon the conversion or exchange
of such securities or upon the exercise of the options or rights related
to such securities.
(5) The number of shares of Common Stock deemed issued
and the consideration deemed paid therefor pursuant to subsections
3(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either
subsection 3(d)(i)(E)(3) or (4).
(e) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to subsection 3(d)(i)(E)) by
the Corporation after the Purchase Date other than:
(A) Common Stock issued pursuant to a transaction
described in subsection 3(d)(iii) hereof;
(B) Common Stock issued in a transaction or series
of transactions resulting in gross proceeds to the Company of no more than
$1,000,000;
(C) Shares of Common Stock issuable or issued to
employees, consultants, directors or vendors (if in transactions with
primarily non-financing purposes) of the Corporation directly or pursuant to
a stock option plan or restricted stock plan approved by the Board of the
Corporation;
(D) The issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, except as
provided in Section 3(d)(i)(E); or
(E) The issuance of securities in connection with a
bona fide business acquisition of or by the Corporation, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise.
(ii) Adjustments for Stock Splits and Subdivisions. In the
event Corporation should at any time or from time to time after the date of
issuance hereof fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such
holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price shall be appropriately decreased so that the number of
shares of Common Stock issuable upon conversion of the Series B Preferred
shall be increased in proportion to such increase of outstanding shares.
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(iii) Adjustments for Reverse Stock Splits. If the number of
shares of Common Stock outstanding at any time after the date hereof is
decreased by a combination of the outstanding shares of Common Stock, then,
following the record date of such combination, the Conversion Price shall be
appropriately increased so that the number of shares of Common Stock issuable
on conversion hereof shall be decreased in proportion to such decrease in
outstanding shares.
(1) RECAPITALIZATIONS. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination or merger or sale of assets transaction
provided for elsewhere in this Section 3 or Section 2) provision shall
be made so that the holders of the Series B Preferred shall thereafter
be entitled to receive upon conversion of the Series B Preferred the
number of shares of stock or other securities or property of the
Corporation or otherwise, to which a holder of Common Stock deliverable
upon conversion would have been entitled on such recapitalization. In
any such case, appropriate adjustment shall be made in the application
of the provisions of this Section 3 with respect to the rights of the
holders of the Series B Preferred after the recapitalization to the end
that the provisions of this Section 3 (including adjustment of the
Conversion Price then in effect and the number of shares purchasable
upon conversion of the Series B Preferred) shall be applicable after
that event as nearly equivalent as may be practicable.
(f) NO IMPAIRMENT. Except for taking the actions contemplated by
Section 6 below upon obtaining the vote or consent set forth therein, the
Corporation will not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but it will at all times
in good faith assist in the carrying out of all of the provisions of this
Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred against impairment.
(1) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Conversion Price of the Series B
Preferred pursuant to this Section 3, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of such
Series B Preferred a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment
or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series B Preferred, furnish or
cause to be furnished to such holder a like certificate setting forth
(A) such adjustment and readjustment, (B) the Conversion Price at the
time in effect, and (C) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received
upon the conversion of a share of Series B Preferred.
(g) NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of the record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, the Corporation
shall mail to each holder of Series B Preferred, at least twenty (20)
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days prior to the date specified herein, a notice specifying the date on
which any such record is to be taken for the purpose of such dividend or
distribution.
(h) RESERVATION OF STOCK. The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of effecting the conversion of the shares
of the Series B Preferred such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Series B Preferred; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the
conversion of all the then outstanding shares of the Series B Preferred, the
Corporation will take such corporate action as may be necessary, in the
opinion of its counsel, to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such
purpose.
(i) NOTICES. Any notice required by the provisions of this
Section 3 to be given to the holders of shares of Series B Preferred shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his or her address appearing on the
books of the Corporation.
5. REDEMPTION. The Series B Preferred shall not be redeemable.
6. VOTING MATTERS. Except as otherwise required by law, each
share of Series B Preferred issued and outstanding shall have the number of
votes equal to the number of shares of Common Stock into which the Series B
Preferred is convertible pursuant to Section 3 hereof. The holder of each
share of Series B Preferred shall be entitled to notice of any stockholders'
meeting in accordance with the bylaws of the Corporation, and shall vote with
the holders of the Common Stock upon any matter submitted to a vote of
stockholders, except those matters required by law to be submitted to a class
vote.
7. COVENANT. In addition to any other rights provided by law, so
long as any Series B Preferred shall be outstanding, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of not less than seventy-five percent (75%), or two-thirds following
the sale by the Company of shares of Series B Preferred having an aggregate
purchase price of at least $6,000,000, of the then outstanding shares of all
series of Preferred Stock voting together as a single class:
(a) alter or change the rights, preferences or privileges of
the shares of the Series B Preferred;
(b) increase or decrease the authorized number of shares of
the Series B Preferred; or
(c) authorize or create any new class of shares or additional
series of Preferred Stock having rights, preferences or privileges prior to
shares of the Series B Preferred,
(d) if such Series B Preferred would be adversely affected by
such amendment in a manner different from other than outstanding shares of
Preferred Stock (it being understood that, without limiting the foregoing,
different shares of Preferred Stock shall not be
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affected differently because of differences in the amounts of their
respective issue prices, liquidation preferences and redemption prices).
8. RESIDUAL RIGHTS. All rights accruing to the outstanding shares
of the Corporation not expressly provided for to the contrary herein shall be
vested in the Common Stock.
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IN WITNESS WHEREOF, said Conductus, Inc. has caused this Certificate of
Designation to be signed by the undersigned this 11th day of September, 1998.
CONDUCTUS, INC.
/s/ CHARLES E. SHALVOY
----------------------
Charles E. Shalvoy, President
Attest:
By: /s/ BROOKS STOUGH
-----------------
Brooks Stough, Secretary
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EXHIBIT NUMBER 99.1
(1) ACCELERATION IN COMMERCIALIZATION OF WIRELESS PRODUCTS
SUNNYVALE, Calif., Sept. 15 /PRNewswire/ -- Conductus, Inc. (Nasdaq: CDTS), a
leading manufacturer of high-performance superconductive wireless systems,
announced today that it has received $6.525 million in financing to support
the commercialization of their ClearSite(TM) Wireless Products in the
wireless communications market. The Company raised $5.025 million in new
equity funds, $1.0 million in a new lease line with a prominent leasing
company, and $0.50 million released from a prior leasing agreement.
The equity funding has been received primarily from leading investment firms,
and is in the form of a new series of convertible preferred stock. The
Company has issued 1,861,085 preferred shares at $2.70 per share. The
preferred shares have a cumulative stock dividend of 6% and are convertible
into common stock. In connection with this financing, the Company has issued
warrants to purchase 372,217 shares of common stock at $2.70 per share.
In addition, the Company has signed a new lease line agreement to provide
$1.0 million in new funding for capital equipment requirements over a twelve
month period. This funding will be used to expand both engineering and
manufacturing capabilities, as well as general corporate needs.
"I am pleased to announce the completion of $6.525 million of additional
funding," stated Charles Shalvoy, President and CEO of Conductus, Inc. "This
latest financing round provides the financial resources for us to continue
the commercialization and development of our products. These funds will be
used to introduce new products in both the commercial, as well as government
sectors, expand our sales and marketing infrastructure, and extend our
manufacturing capabilities to meet market demand. We are seeing increasing
acceptance of our products in both the commercial and government market
sectors, as our ClearSite(TM) products continue to demonstrate reduced
dropped call rates, improved voice quality, enhanced coverage, and increased
billable minutes."
Conductus, Inc., founded in 1987 and based in Sunnyvale, California,
develops, manufactures and markets electronic components and systems based on
superconductors for applications in the worldwide telecommunications market.
For many applications, the unique properties of superconductors offer
significant performance advantages over products based on conventional copper
electronic components. These advantages can provide improved
price/performance at the system level because of enhanced sensitivity and
efficiency, as well as reduced size and weight.
The statements contained in this press release that are not purely historical
are forward-looking statements within the meaning of Section 21E of the
Securities and Exchange Act of 1934, including statements regarding the
Company's expectations, beliefs, hopes, intentions, or strategies regarding
the future. Forward-looking statements include statements regarding future
sales, product introduction and acceptance, market acceptance and financial
stability. The Company's actual results and the timing of certain events may
differ significantly from the results discussed in the forward-looking
statements.
Press announcements and other information about Conductus are available on
the World Wide Web. Type http://www.conductus.com at the prompt.
SOURCE Conductus, Inc.
CONTACT: Ainslie Mayberry, Chief Financial Officer (interim) of Conductus,
Inc., 408-523-9428
