Exhibit 10.2
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") dated as of August 11, 2000,
between SILICON VALLEY BANK, a California-chartered bank, with its principal
place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a
loan production office located at Wellesley Office Park, 00 Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, doing business under the name
"Silicon Valley East" ("Bank") and LIGHTBRIDGE, INC. ("Borrower"), provides the
terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The
parties agree as follows:
1 ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation" in this or any Loan Document. Capitalized terms in this Agreement
shall have the meanings set forth in Section 12. This Agreement shall be
construed to impart upon Bank a duty to act reasonably at all times.
2 LOAN AND TERMS OF PAYMENT
2.1 CREDIT EXTENSIONS. Borrower shall pay Bank the unpaid
principal amount of all Credit Extensions and interest on the unpaid
principal amount of the Credit Extensions as and when due in accordance with
this Agreement.
2.1.1 REVOLVING ADVANCES.
(a) Bank shall make Advances not exceeding (i) the lesser
of the Committed Revolving Line or the Borrowing Base minus (ii) the amount
of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit), minus (iii) the aggregate outstanding Advances hereunder.
Amounts borrowed under this Section may be repaid and reborrowed during the
term of this Agreement.
(b) To obtain an Advance, Borrower must notify Bank by
facsimile or telephone by 3:00 p.m. Eastern time on the Business Day the
Advance is to be made. Borrower must promptly confirm the notification by
delivering to Bank the Payment/Advance Form attached as EXHIBIT A. Bank shall
credit Advances to Borrower's deposit account. Bank may make Advances under
this Agreement based on instructions from a Responsible Officer or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due. Bank may rely on any telephone notice
given by a person whom Bank believes is a Responsible Officer or designee.
Borrower shall indemnify Bank for any loss Bank suffers due to that reliance.
(c) The Committed Revolving Line terminates on the
Maturity Date, when all Advances are immediately payable.
2.1.2 LETTERS OF CREDIT.
(a) Bank shall issue or have issued Letters of Credit for
Borrower's account not exceeding (i) the lesser of the Committed
Revolving Line or the Borrowing Base minus (ii) the outstanding
principal balance of the Advances, but the face amount of
outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit and any Letter of Credit Reserve) may not exceed
$1,250,000.00. Each Letter of Credit shall expire no later than 180
days after the Maturity Date (except for a certain existing Letter
of Credit issued in the amount of up to $1,000,000.00, which shall
expire 270 days after the Maturity Date) provided Borrower's Letter
of Credit reimbursement obligation is secured by cash on terms
acceptable to Bank at any time after the Maturity Date if the term
of this Agreement is not extended by Bank. All Letters of Credit
shall be, in form and substance, acceptable to Bank in its sole
discretion and shall be subject to the terms and conditions of
Bank's form of standard Application and Letter of Credit Agreement.
(b) The obligation of Borrower to immediately reimburse
Bank for drawings made under Letters of Credit shall be absolute,
unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement and such Letters of
Credit, under all circumstances whatsoever. Borrower shall
indemnify, defend, protect, and hold Bank harmless from any loss,
cost, expense or liability, including, without limitation,
reasonable attorneys' fees, arising out of or in connection with any
Letters of Credit.
(c) Borrower may request that Bank issue a Letter of
Credit payable in a currency other than United States Dollars. If a
demand for payment is made under any such Letter of Credit, Bank
shall treat such demand as an Advance to Borrower of the equivalent
of the amount thereof (plus cable charges) in United States currency
at the then prevailing rate of exchange in San Francisco,
California, for sales of that other currency for cable transfer to
the country of which it is the currency.
(d) Upon the issuance of any letter of credit payable in
a currency other than United States Dollars, Bank shall create a
reserve (the "Letter of Credit Reserve") under the Committed
Revolving Line for letters of credit against fluctuations in
currency exchange rates, in an amount equal to ten percent (10%) of
the face amount of such letter of credit. The amount of such reserve
may be amended by Bank from time to time to account for fluctuations
in the exchange rate. The availability of funds under the Committed
Revolving Line shall be reduced by the amount of such reserve for so
long as such letter of credit remains outstanding.
2.2 OVERADVANCES. If Borrower's Obligations under Section 2.1.1
and 2.1.2 exceed the lesser of either (i) the Committed Revolving Line or
(ii) the Borrowing Base, Borrower shall immediately pay in cash to Bank the
excess.
2.3 INTEREST RATE; PAYMENTS.
(a) INTEREST RATE. Advances accrue interest on the
outstanding principal balance at a per annum rate equal to the Prime
Rate. After an Event of Default, Obligations accrue interest at five
percent (5.0%) above the rate effective immediately before the Event
of Default. The interest rate increases or decreases when the Prime
Rate changes. Interest is computed on a 360 day year for the actual
number of days elapsed.
(b) PAYMENTS. Interest is payable on the first of each
month. Bank may debit any of Borrower's deposit accounts including
Account Number 700195970 for principal and interest payments or any
amounts Borrower owes Bank. Bank shall notify Borrower when it
debits Borrower's accounts. These debits are not a set-off. Payments
received after 12:00 noon Eastern time are considered received at
the opening of business on the next Business Day. When a payment is
due on a day that is not a Business Day, the payment is due the next
Business Day and additional fees or interest, as applicable, shall
continue to accrue.
2.4 FEES. Borrower shall pay to Bank:
(a) FACILITY FEE. A fully earned, non-refundable
facility fee of $37,500.00 due on the Closing Date; and
(b) BANK EXPENSES. All Bank Expenses (including
reasonable attorneys' fees and expenses incurred through and after
the Closing Date) when due.
3 CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. The
obligation of Bank to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:
(a) this Agreement;
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(b) a Guaranty of the Obligations of the Borrower,
executed and delivered in favor of Bank by Guarantor.
(c) a certificate of the Secretary of Borrower and
Guarantor with respect to articles, bylaws, incumbency and
resolutions authorizing the execution and delivery of this Agreement;
(d) an opinion of Borrower's counsel;
(e) payment of the fees and Bank Expenses then due
specified in Section 2.4 hereof;
(f) Certificate of Foreign Qualification (if
applicable);
(g) Certificate of Good Standing/Legal Existence; and
(h) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's
obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following:
(a) timely receipt of any Payment/Advance Form; and
(b) the representations and warranties in Section 4
must be materially true on the date of the Payment/Advance Form and
on the effective date of each Credit Extension and no Event of
Default may have occurred and be continuing, or result from the
Credit Extension. Each Credit Extension is Borrower's representation
and warranty on that date that the representations and warranties in
Section 4 remain true.
4 REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
4.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower and each
Subsidiary is duly existing and in good standing in its state of formation
and qualified and licensed to do business in, and in good standing in, any
state in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to cause a Material Adverse Change.
The execution, delivery and performance of the Loan Documents have
been duly authorized, and do not conflict with Borrower's organizational
documents, nor constitute an event of default under any material agreement by
which Borrower is bound. Borrower is not in default under any agreement to
which or by which it is bound in which the default could reasonably be
expected to cause a Material Adverse Change.
4.2 ASSETS; ACCOUNTS. Borrower has good title to its assets,
free of Liens except Permitted Liens. The Eligible Accounts are bona fide,
existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. Borrower has no notice of any
actual or imminent Insolvency Proceeding of any account debtor whose accounts
are an Eligible Account in any Borrowing Base Certificate. All Inventory is
in all material respects of good and marketable quality, free from material
defects.
4.3 LITIGATION. Except as shown in the Schedule, there are no
actions or proceedings pending or, to Borrower's knowledge, threatened by or
against Borrower or any Subsidiary in which an adverse decision could
reasonably be expected to cause a Material Adverse Change.
4.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
consolidated financial statements for Borrower and any Subsidiary delivered
to Bank fairly present in all material respects Borrower's consolidated
financial
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condition and Borrower's consolidated results of operations. There has not
been any material deterioration in Borrower's consolidated financial
condition since the date of the most recent financial statements submitted to
Bank.
4.5 REGULATORY COMPLIANCE. Borrower is not an "investment
company" or a company "controlled" by an "investment company" under the
Investment Company Act. Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations T and U of
the Federal Reserve Board of Governors). Borrower has complied in all
material respects with the Federal Fair Labor Standards Act. Borrower has not
violated any laws, ordinances or rules, the violation of which could
reasonably be expected to cause a Material Adverse Change. None of Borrower's
or any Subsidiary's properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous
substance other than legally. Borrower and each Subsidiary has timely filed
all required tax returns and paid, or made adequate provision to pay, all
material taxes, except those being contested in good faith with adequate
reserves under GAAP. Borrower and each Subsidiary has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to
continue its business as currently conducted except where the failure to make
such declarations, notices or filings would not reasonably be expected to
result in a Material Adverse Change.
4.6 SUBSIDIARIES. Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.
4.7 FULL DISCLOSURE. No representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank
taken together with all such certificates and written statements given to
Bank contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates
or statements not misleading (it being recognized by Bank that the
projections and forecasts provided by Borrower in good faith and based upon
reasonable assumptions are not to be viewed as facts and that actual results
during the period or periods covered by any such projections and forecasts
may differ from the projected or forecasted results).
5 AFFIRMATIVE COVENANTS
Borrower shall do all of the following:
5.1 GOVERNMENT COMPLIANCE. Borrower shall maintain its and all
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a material adverse effect on Borrower's
business or operations. Borrower shall comply, and have each Subsidiary
comply, with all laws, ordinances and regulations to which it is subject,
noncompliance with which could have a material adverse effect on Borrower's
business or operations or cause a Material Adverse Change.
5.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Bank: (i) as soon as
available, but no later than forty-five (45) days after the last day
of each quarter, a company prepared consolidated balance sheet and
income statement covering Borrower's consolidated operations during
the period, in a form acceptable to Bank and certified by a
Responsible Officer; (ii) as soon as available, but no later than
one hundred twenty (120) days after the end of Borrower's fiscal
year, audited, consolidated financial statements prepared under
GAAP, consistently applied, together with an unqualified opinion on
the financial statements from an independent certified public
accounting firm acceptable to Bank; (iii) within five (5) days of
filing, copies of all statements, reports and notices made available
to Borrower's security holders or to any holders of Subordinated
Debt and all reports on Form 10-K, 10-Q and 8-K filed with the
Securities and Exchange Commission; (iv) a prompt 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 One Hundred Thousand Dollars ($100,000.00) or more;
and (v) budgets, sales projections, operating plans or other
financial information Bank reasonably requests.
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(b) Within twenty-five (25) days after the last day of
each month, Borrower shall deliver to Bank a Borrowing Base
Certificate signed by a Responsible Officer in the form of EXHIBIT
B, with aged listings of accounts receivable (by invoice date).
(c) Within twenty-five (25) days after the last day of
each month, Borrower shall deliver to Bank with the Borrowing Base
Certificate, a Compliance Certificate signed by a Responsible
Officer in the form of EXHIBIT C.
(d) Bank has the right to audit Borrower's Accounts at
Borrower's expense, but the audits shall be conducted no more often
than once every twelve (12) months unless an Event of Default has
occurred and is continuing. Notwithstanding the foregoing, the first
audit shall be conducted on or before forty-five (45) days after the
Closing Date.
5.3 INVENTORY; RETURNS. Borrower shall keep all Inventory in
good and marketable condition, free from material defects. Returns and
allowances between Borrower and its account debtors shall follow Borrower's
customary practices as they exist at the Closing Date. Borrower must promptly
notify Bank of all returns, recoveries, disputes and claims that involve more
than Fifty Thousand Dollars ($50,000.00).
5.4 TAXES. Borrower shall make, and cause each Subsidiary to
make, timely payment of all material federal, state, and local taxes or
assessments owing by Borrower and shall deliver to Bank, on demand,
appropriate certificates attesting to such payments.
5.5 INSURANCE. Borrower shall keep its assets insured for risks
and in amounts, as Bank requests.
5.6 PRIMARY ACCOUNTS. Borrower shall maintain its primary
depository and operating accounts with Bank.
5.7 FINANCIAL COVENANTS.
Borrower shall maintain as of the last day of each quarter, unless
otherwise noted:
(a) QUICK RATIO. A ratio of Quick Assets to Current
Liabilities of at least 1.75 to 1.0.
(b) TANGIBLE NET WORTH. A Tangible Net Worth of at least
Fifty-Five Million Dollars ($55,000,000.00), plus seventy-five
percent (75.0%) of the amount of quarterly net income beginning with
the quarter ending September 30, 2000.
5.8 FURTHER ASSURANCES. Borrower shall execute any further
instruments and take further action as Bank requests to effect the purposes
of this Agreement.
6 NEGATIVE COVENANTS
Borrower shall not do any of the following without the prior written
consent of the Bank:
6.1 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 a Transfer
(i) of Inventory in the ordinary course of business; (ii) 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) of worn-out or
obsolete Equipment.
6.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS
LOCATIONS. Engage in or permit any of its Subsidiaries to engage in any
business other than the businesses currently engaged in, or reasonably
related thereto, or permit a material change in the management of the
Borrower. Borrower shall not, without prior written notice to Bank, relocate
its principal executive office or add any new offices or business locations,
or change its state of formation.
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6.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit
any of its Subsidiaries to merge or consolidate, with any other Person, or
acquire, or permit any of its Subsidiaries to acquire, all or substantially
all of the capital stock or property of another Person.
6.4 INDEBTEDNESS. Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.
6.5 ENCUMBRANCE. Create, incur, or allow any Lien on any of its
property, or assign or convey any right to receive income, including the sale
of any Accounts, or permit any of its Subsidiaries to do so, except for
Permitted Liens.
6.6 INVESTMENTS; DISTRIBUTIONS. (i) Directly or indirectly
acquire or own any Person, or make any Investment in any Person, other than
Permitted Investments, or permit any of its Subsidiaries to do so; or (ii)
pay any dividends or make any distribution or payment or redeem, retire or
purchase any capital stock, except for repurchases of stock from former
employees or directors of Borrower under the terms of applicable repurchase
agreements in an aggregate amount not to exceed $200,000, in the aggregate in
any fiscal year, provided that no Event of Default has occurred, is
continuing or would exist after giving effect to the repurchases.
6.7 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter
or permit any material transaction with any Affiliate, except transactions
that are in the ordinary course of Borrower's business, on terms no less
favorable to Borrower than would be obtained in an arm's length transaction
with a non-affiliated Person.
6.8 SUBORDINATED DEBT. Make or permit any payment on any
Subordinated Debt, except under the terms of the Subordinated Debt, or amend
any provision in any document relating to the Subordinated Debt, without
Bank's prior written consent.
6.9 COMPLIANCE. Undertake as one of its important activities
extending credit to purchase or carry margin stock, or use the proceeds of
any Advance for that purpose; fail to meet the minimum funding requirements
of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in
ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or
violate any other law or regulation, if the violation could reasonably be
expected to have a material adverse effect on Borrower's business or
operations or cause a Material Adverse Change, or permit any of its
Subsidiaries to do so.
7 EVENTS OF DEFAULT
Any one of the following is an Event of Default:
7.1 PAYMENT DEFAULT. Borrower fails to pay any of the
Obligations within three (3) days after their due date. During the additional
period the failure to cure the default is not an Event of Default (but no
Credit Extensions shall be made during the cure period);
7.2 COVENANT DEFAULT. Borrower does not perform any obligation
in Section 5 or violates any covenant in Section 6 or does not perform or
observe any other material term, condition or covenant in this Agreement, any
Loan Documents, or in any agreement between Borrower and Bank and as to any
default under a term, condition or covenant that can be cured, has not cured
the default within ten (10) days after it occurs, or if the default cannot be
cured within ten (10) days or cannot be cured after Borrower's attempts in
the ten (10) day period, and the default may be cured within a reasonable
time, then Borrower shall have additional time, (of not more than thirty (30)
days) to attempt to cure the default. During the additional period the
failure to cure the default is not an Event of Default (but no Credit
Extensions shall be made during the cure period);
7.3 MATERIAL ADVERSE CHANGE. A Material Adverse Change occurs;
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7.4 ATTACHMENT. (i) Any material portion of Borrower's assets
is attached, seized, levied on, or comes into possession of a trustee or
receiver and the attachment, seizure or levy is not removed in thirty (30)
days; (ii) Borrower is enjoined, restrained, or prevented by court order from
conducting a material part of its business; (iii) a judgment or other claim
becomes a Lien on a material portion of Borrower's assets; or (iv) a notice
of lien, levy, or assessment is filed against any of Borrower's assets by any
government agency and not paid within ten (10) days after Borrower receives
notice. These are not Events of Default if stayed or if a bond is posted
pending contest by Borrower (but no Credit Extensions shall be made during
the cure period);
7.5 INSOLVENCY. (i) Borrower becomes insolvent; (ii) Borrower
begins an Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within forty-five (45) days (but
no Credit Extensions shall be made before any Insolvency Proceeding is
dismissed);
7.6 OTHER AGREEMENTS. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in the
acceleration of the maturity of any Indebtedness in an amount in excess of
One Hundred Thousand Dollars ($100,000) or that could reasonably result in a
Material Adverse Change;
7.7 JUDGMENTS. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Two Hundred
Thousand Dollars ($200,000) shall be rendered against Borrower and shall
remain unsatisfied and unstayed for a period of thirty (30) days (provided
that no Credit Extensions will be made prior to the satisfaction or stay of
such judgment);
7.8 MISREPRESENTATIONS. If Borrower or any Person acting for
Borrower makes any material misrepresentation or material misstatement now or
later in any warranty or representation in this Agreement or in any
communication delivered to Bank or to induce Bank to enter this Agreement or
any Loan Document.
8 BANK'S RIGHTS AND REMEDIES
8.1 RIGHTS AND REMEDIES. When an Event of Default occurs and
continues Bank may, without notice or demand, do any or all of the following:
(a) Declare all Obligations immediately due and payable
(but if an Event of Default described in Section 7.5 occurs all
Obligations are immediately due and payable without any action by
Bank);
(b) Stop advancing money or extending credit for
Borrower's benefit under this Agreement or under any other agreement
between Borrower and Bank;
(c) Exercise any of its rights and remedies under the
law;
8.2 REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements are cumulative. Bank
has all rights and remedies provided under the Code, by law, or in equity.
Bank's exercise of one right or remedy is not an election, and Bank's waiver
of any Event of Default is not a continuing waiver. Bank's delay is not a
waiver, election, or acquiescence. No waiver is effective unless signed by
Bank and then is only effective for the specific instance and purpose for
which it was given.
8.3 DEMAND WAIVER. Borrower waives demand, 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 guaranties held by Bank
on which Borrower is liable.
9 NOTICES
All notices or demands by any party to this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile at the addresses listed below. Either Bank or
Borrower may change its notice address by giving the other written notice.
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If to Borrower: Lightbridge, Inc.
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Financial Officer
FAX: (000) 000-0000
If to Bank: Silicon Valley Bank
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxxxx, Senior Vice President
FAX: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esquire
FAX: (000) 000-0000
10 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Massachusetts law governs the Loan Documents without regard to
principles of conflicts of law. Borrower and Bank each submit to the exclusive
jurisdiction of the State and Federal courts in Massachusetts; provided,
however, that if for any reason Bank cannot avail itself of such courts in the
Commonwealth of Massachusetts, Borrower accepts jurisdiction of the courts and
venue in Santa Xxxxx County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
11 GENERAL PROVISIONS
11.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the
benefit of the successors and permitted assigns of each party. Borrower may
not assign this Agreement or any rights or Obligations under it without
Bank's prior written consent which may be granted or withheld in Bank's
discretion. Bank has 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, Bank's obligations, rights and benefits under this
Agreement, the Loan Documents or any related agreement.
11.2 INDEMNIFICATION. Borrower hereby indemnifies, defends and
holds the Bank and its officers, employees and agents harmless against: (a)
all obligations, demands, claims, and liabilities asserted by any other party
in connection with the transactions contemplated by the Loan Documents; and
(b) all losses or Bank Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower (including reasonable
attorneys' fees and expenses), except for losses caused by Bank's gross
negligence or willful misconduct.
11.3 TIME OF ESSENCE. Time is of the essence for the
performance of all Obligations in this Agreement.
11.4 SEVERABILITY OF PROVISION. Each provision of this Agreement
is severable from every other provision in determining the enforceability of
any provision.
11.5 AMENDMENTS IN WRITING, INTEGRATION. All amendments to this
Agreement must be in writing signed by both Bank and Borrower. This Agreement
and the Loan Documents represent the entire agreement about this subject
matter, and supersedes prior or contemporaneous negotiations or agreements.
All prior or contemporaneous agreements,
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understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents
merge into this Agreement and the Loan Documents.
11.6 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, are an original, and all taken together,
are one Agreement.
11.7 SURVIVAL. All covenants, representations and warranties
made in this Agreement continue in full force while any Obligations remain
outstanding. The obligations of Borrower in Section 11.2 to indemnify Bank
shall survive until all statutes of limitations for actions that may be
brought against Bank have run.
11.8 CONFIDENTIALITY. In handling any confidential information,
Bank shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (i) to
Bank's subsidiaries or affiliates in connection with their present or
prospective business relations with Borrower; (ii) to prospective transferees
or purchasers of any interest in the Credit Extensions; (iii) as required by
law, regulation, subpoena, or other order, (iv) as required in connection
with Bank's examination or audit; and (v) as Bank considers appropriate in
exercising remedies under this Agreement. Confidential information does not
include information that either: (a) is in the public domain or in Bank's
possession when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank; or (b) is disclosed to Bank by a third party, if Bank
does not know that the third party is prohibited from disclosing the
information.
12 DEFINITIONS
12.1 DEFINITIONS.
"ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly
or indirectly the Person, any Person that controls or is controlled by or is
under common control with the Person, and each of that Person's senior
executive officers, directors, partners and, for any Person that is a limited
liability company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs
or expenses (including reasonable attorneys' fees and expenses) for
preparing, negotiating, administering, defending and enforcing the Loan
Documents (including appeals or Insolvency Proceedings).
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.
"BORROWING BASE" is 80.0% of Eligible Accounts, as determined by
Bank from Borrower's most recent Borrowing Base Certificate.
"BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code as adopted in Massachusetts,
as amended and in effect from time to time.
9
"COMMITTED REVOLVING LINE" is an Advance or Advances of up to
Fifteen Million Dollars ($15,000,000.00).
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an
obligation directly or indirectly guaranteed, endorsed, co-made, discounted
or sold with recourse by that Person, or for which that Person is directly or
indirectly liable; (ii) any obligations for undrawn letters of credit for the
account of that Person; and (iii) all obligations from any interest rate,
currency or commodity swap agreement, interest rate cap or collar agreement,
or other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices;
but "Contingent Obligation" does not include endorsements in the ordinary
course of business. The amount of a Contingent Obligation is the stated or
determined amount of the primary obligation for which the Contingent
Obligation is made or, if not determinable, the maximum reasonably
anticipated liability for it determined by the Person in good faith; but the
amount may not exceed the maximum of the obligations under the guarantee or
other support arrangement.
"CREDIT EXTENSION" is each Advance, Letter of Credit, or any other
extension of credit by Bank for Borrower's benefit.
"CURRENT ASSETS" are amounts that under GAAP should be included on
that date as current assets on Borrower's consolidated balance sheet.
"CURRENT LIABILITIES" are the aggregate amount of Borrower's Total
Liabilities which mature within one (1) year, which shall include, without
limitation, all obligations and liabilities of Borrower to Bank.
"ELIGIBLE ACCOUNTS" are Accounts in the ordinary course of
Borrower's business that meet all Borrower's representations and warranties
in Section 5.2; BUT Bank may change eligibility standards by giving Borrower
thirty (30) days prior written notice. Unless Bank agrees otherwise in
writing, Eligible Accounts shall not include:
(a) Accounts that the account debtor has not paid within
ninety (90) days of invoice date;
(b) Accounts for an account debtor, fifty percent
(50%) or more of whose Accounts have not been paid within ninety
(90) days of invoice date;
(c) Credit balances over ninety (90) days from invoice
date;
(d) Accounts for an account debtor, including
Affiliates, whose total obligations to Borrower exceed twenty-five
(25%) of all Accounts, for the amounts that exceed that percentage,
unless Bank approves in writing;
(e) Accounts for which the account debtor does not have
its principal place of business in the United States;
(f) Accounts for which the account debtor is a federal,
state or local government entity or any department, agency, or
instrumentality thereof;
(g) Accounts for which Borrower owes the account debtor,
but only up to the amount owed (sometimes called "contra" accounts,
accounts payable, customer deposits or credit accounts);
(h) Accounts for demonstration or promotional equipment,
or in which goods are consigned, sales guaranteed, sale or return,
sale on approval, xxxx and hold, or other terms if account debtor's
payment may be conditional;
(i) Accounts for which the account debtor is Borrower's
Affiliate, officer, employee, or agent;
10
(j) Accounts in which the account debtor disputes
liability or makes any claim and Bank believes there may be a basis
for dispute (but only up to the disputed or claimed amount), or if
the Account Debtor is subject to an Insolvency Proceeding, or
becomes insolvent, or goes out of business;
(k) Accounts for which Bank reasonably determines
collection to be doubtful.
"EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.
"ERISA" is the Employment Retirement Income Security Act of 1974,
and its regulations.
"GAAP" is generally accepted accounting principles.
"GUARANTOR" is any present or future guarantor of the Obligations,
including, without limitation, Lightbridge Security Corporation.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the
deferred price of property or services, such as reimbursement and other
obligations for surety bonds and letters of credit, (b) obligations evidenced
by notes, bonds, debentures or similar instruments, (c) capital lease
obligations and (d) Contingent Obligations.
"INSOLVENCY PROCEEDING" is any proceeding by or against any Person
under the United States Bankruptcy Code, or any other bankruptcy or
insolvency law, including assignments for the benefit of creditors,
compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"INVENTORY" is 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 later owned by or in the custody or possession, actual
or constructive, of Borrower, including inventory temporarily out of its
custody or possession or in transit and including returns on any accounts or
other proceeds (including insurance proceeds) from the sale or disposition of
any of the foregoing and any documents of title.
"INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"LETTER OF CREDIT" means a letter of credit or similar undertaking
issued by Bank pursuant to Section 2.1.2.
"LETTER OF CREDIT RESERVE" has the meaning set forth in
Section 2.1.2.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, any note, or
notes or guaranties executed by Borrower or Guarantor, and any other present
or future agreement between Borrower and/or for the benefit of Bank in
connection with this Agreement, all as amended, extended or restated.
"MATERIAL ADVERSE CHANGE " is: (i) Bank determines, based upon
information available to it and in its reasonable judgment, that there is a
reasonable likelihood that Borrower shall fail to comply with one or more of
the financial covenants in Section 5 during the next succeeding financial
reporting period; (ii) a material adverse change in the business, operations,
or condition (financial or otherwise) of the Borrower; or (iii) a material
impairment of the prospect of repayment of any portion of the Obligations;
"MATURITY DATE" is August 11, 2001.
11
"OBLIGATIONS" are debts, principal, interest, Bank Expenses and
other amounts Borrower owes Bank now or later, including letters of credit
and foreign exchange contracts, if any, and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of
Borrower assigned to Bank.
"PAYMENT DATE" is defined in Section 2._(a).
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this Agreement
or the Loan Documents;
(b) Indebtedness existing on the Closing Date and shown
on the Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in the
ordinary course of business; and
(e) Indebtedness secured by Permitted Liens;
(f) Extensions, refinancings, modifications, amendments
and restatements of any items of Permitted Indebtedness (a) through
(e) above, provided that the principal amount thereof is not
increased or the terms thereof are not modified to impose more
burdensome terms upon Borrower or its Subsidiary, as the case may be.
"PERMITTED INVESTMENTS" are:
(a) Investments shown on the Schedule and existing on
the Closing Date; and
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States or its agency or any
State maturing within 1 year from its acquisition, (ii) commercial
paper maturing no more than 1 year after its creation and having the
highest rating from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc., and (iii) Bank's certificates of deposit
issued maturing no more than 1 year after issue and (iv) any
Investments permitted by Borrower's investment policy, as amended
from time to time, provided that such investment policy (and any
such amendment thereto) has been approved by Bank;
(c) Investments of Subsidiaries in or to other
Subsidiaries or Borrower and Investments by Borrower. after the
Closing Date, in Subsidiaries not to exceed $5,000,000 in the
aggregate in any fiscal year, provided that such investment does not
indirectly or directly result in an Event of Default, either by the
passage of time or otherwise;
(d) Investments consisting of (i) travel advances and
employee relocation loans and other employee loans and advances in
the ordinary course of business, and (ii) loans to employees,
officers or directors relating to the purchase of equity securities
of Borrower or its Subsidiaries pursuant to employee stock purchase
plans or agreements approved by Borrower's Board of Directors;
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown on the
Schedule or arising under this Agreement or other Loan Documents;
(b) Liens for taxes, fees, assessments or other
government charges or levies, either not delinquent or being
contested in good faith and for which Borrower maintains adequate
reserves on its Books;
(c) Purchase money Liens (i) on Equipment acquired or
held by Borrower incurred for financing the acquisition of the
Equipment, or (ii) existing on equipment when acquired, if the Lien
is confined to the property and improvements and the proceeds of the
equipment;
12
(d) Leases or subleases and licenses or sublicenses
granted in the ordinary course of Borrower's business, if the
leases, subleases, licenses and sublicenses do not prohibit granting
Bank a security interest;
(e) Liens incurred in the extension, renewal or
refinancing of the indebtedness secured by Liens described in (a)
through (c), BUT any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness may not increase[;
"PERSON" is any individual, sole proprietorship, partnership,
limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if
it is not Bank's lowest rate.
"QUICK ASSETS" is, on any date, the Borrower's consolidated,
unrestricted cash, cash equivalents, net billed accounts receivable and
investments with maturities of less than 12 months determined according to
GAAP.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer,
President, Chief Financial Officer and Controller of Borrower.
"SCHEDULE" is any attached schedule of exceptions.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (pursuant to a subordination agreement entered into
between the Bank, the Borrower and the subordinated creditor).
"SUBSIDIARY" is for any Person, joint venture, or any other business
entity of which more than 50% of the voting stock or other equity interests
is owned or controlled, directly or indirectly, by the Person or one or more
Affiliates of the Person.
"TANGIBLE NET WORTH" is, on any date, the consolidated total assets
of Borrower and its Subsidiaries MINUS (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
patents, trade and service marks and names, Copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, MINUS (ii) Total Liabilities, PLUS (iii) Subordinated
Debt.
13
"TOTAL LIABILITIES" is on any day, obligations that should, under
GAAP, be classified as liabilities on Borrower's consolidated balance sheet,
including all Indebtedness.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the date first above written.
BORROWER:
LIGHTBRIDGE, INC.
By: /s/ XXXXXX X. X. XXXXX
--------------------------------------------
Name: XXXXXX X. X. XXXXX
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
BANK:
SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST
By: /s/ XXXXXXX XXXXXXX
--------------------------------------------
Name: XXXXXXX XXXXXXX
Title: ASSISTANT VICE PRESIDENT
SILICON VALLEY BANK
By: /s/ XXXXX XXXXX
--------------------------------------------
Name: XXXXX XXXXX
Title: ASSISTANT VICE PRESIDENT
AND LOAN DOCUMENTATION
SPECIALIST
(Signed in Santa Xxxxx County, California)
14
EXHIBIT A
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., E.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE:
-------------------
FAX#: (000) 000-0000 TIME:
-------------------
--------------------------------------------------------------------------------
FROM: LIGHTBRIDGE, INC.
-------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:
------------------------------------------------------------------
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
----------------------------------------------------------
PHONE NUMBER:
------------------------------------------------------------------
FROM ACCOUNT # TO ACCOUNT #
------------------- ---------------------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
-------------------------- ---------------------
PRINCIPAL INCREASE (ADVANCE) $_______________
PRINCIPAL PAYMENT (ONLY) $_______________
INTEREST PAYMENT (ONLY) $_______________
PRINCIPAL AND INTEREST (PAYMENT) $_______________
OTHER INSTRUCTIONS:
------------------------------------------------------------
All Borrower's representations and warranties in the Loan Agreement are true,
correct and complete in all material respects on the date of the telephone
request for and Advance confirmed by this Borrowing Certificate; but those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of that date.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
BANK USE ONLY
TELEPHONE REQUEST:
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
-------------------------------------- ---------------------------------
Authorized Requester Phone #
--------------------------------------------------------------------------------
15
EXHIBIT B
BORROWING BASE CERTIFICATE
-------------------------------------------------------------------------------------------------------------------
Borrower: Lightbridge, Inc. Lender: Silicon Valley Bank
Commitment Amount: $15,000,000.00
-------------------------------------------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of ____________________ $_______________
2. Additions (please explain on reverse) $_______________
3. TOTAL ACCOUNTS RECEIVABLE $_______________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due $_______________
5. Balance of 50% over 90 day accounts $_______________
6. Credit balances over 90 days $_______________
7. Concentration Limits $_______________
8. Foreign Accounts $_______________
9. Governmental Accounts $_______________
10. Contra Accounts $_______________
11. Promotion or Demo Accounts $_______________
12. Intercompany/Employee Accounts $_______________
13. Other (please explain on reverse) $_______________
14. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $_______________
15. Eligible Accounts (#3 minus #14) $_______________
16. LOAN VALUE OF ACCOUNTS ( 80.0% of #15) $_______________
BALANCES
17. Maximum Loan Amount $ 15,000,000.00
18. Total Funds Available [Lesser of #17 or #16] $_______________
19. Present balance owing on Line of Credit $_______________
20. Outstanding under Sublimits (Letters of Credit ) $_______________
21. RESERVE POSITION (#18 minus #19 and #20) $_______________
THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THIS IS TRUE, COMPLETE AND
CORRECT, AND THAT THE INFORMATION IN THIS BORROWING BASE CERTIFICATE COMPLIES
WITH THE REPRESENTATIONS AND WARRANTIES IN THE LOAN AGREEMENT BETWEEN THE
UNDERSIGNED AND SILICON VALLEY BANK.
------------------------------------
COMMENTS: BANK USE ONLY
By: ___________________________ Received by: _____________________
Authorized Signer AUTHORIZED SIGNER
Date: _________________________
Verified: ________________________
AUTHORIZED SIGNER
Date: _________________________
------------------------------------
16
EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: LIGHTBRIDGE, INC.
The undersigned authorized officer of LIGHTBRIDGE, INC. certifies that
under the terms and conditions of the Loan Agreement between Borrower and Bank
(the "Agreement"), (i) Borrower is in complete compliance for the period ending
_______________ with all required covenants except as noted below and (ii) all
representations and warranties in the Agreement are true and correct in all
material respects on this date. Attached are the required documents supporting
the certification. The Officer certifies that these are prepared in accordance
with Generally Accepted Accounting Principles (GAAP) consistently applied from
one period to the next except as explained in an accompanying letter or
footnotes. The Officer acknowledges that no borrowings may be requested at any
time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that compliance is determined not just at the date
this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Quarterly financial statements with CC Quarterly within 45 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
BBC A/R Agings with CC Monthly within 25 days Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------
Maintain on a Quarterly Basis:
Minimum Quick Ratio 1.75:1.0 _____:1.0 Yes No
Minimum Tangible Net Worth $See Loan Agreement $________ Yes No
COMMENTS REGARDING EXCEPTIONS: See Attached.
------------------------------------
Sincerely, BANK USE ONLY
----------------------------- Received by: _____________________
SIGNATURE AUTHORIZED SIGNER
----------------------------- Date: _________________________
TITLE
Verified: ________________________
----------------------------- AUTHORIZED SIGNER
DATE Date: _________________________
------------------------------------
17
