EXHIBIT 10.3
Silicon Valley Bank
Loan and Security Agreement
Borrowers: INT'X.xxx, Inc.
International Language Engineering Corporation
Harvard Translations, Inc.
Lionbridge Technologies California, Inc.
Address: 000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Date: June 28, 2001
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK, COMMERCIAL FINANCE DIVISION ("Silicon"), whose address is
0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and the borrowers named above
on a joint and several basis (together, the "Borrower"), whose chief executive
office is located at the above address ("Borrower's Address"). The Schedule to
this Agreement (the "Schedule") shall for all purposes be deemed to be a part of
this Agreement, and the same is an integral part of this Agreement.
(Definitions of certain terms used in this Agreement are set forth in Section 8
below.)
1.1 Loans. Silicon will make loans to Borrower (the "Loans"), subject to
the terms and conditions of this Agreement, up to the amounts (the "Credit
Limit") shown on the Schedule, provided no Default or Event of Default has
occurred and is continuing, and subject to deduction of any Reserves for accrued
interest and such other Reserves as Silicon, in the exercise of its commercially
reasonable judgment, deems proper from time to time.
1.2 Interest. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement. Interest shall be payable monthly, on the last
day of the month. Interest may, in Silicon's discretion, be charged to
Borrower's loan account, and the same shall thereafter bear interest at the same
rate as the other Loans. Silicon may, in its discretion, charge interest to
Borrower's Deposit Accounts maintained with Silicon.
1.3 Overadvances. If at any time or for any reason the total of all
outstanding Loans and all other Obligations exceeds the Credit Limit (an
"Overadvance"), Borrower shall immediately pay the amount of the excess to
Silicon, without notice or demand. Without limiting Borrower's obligation to
repay to Silicon on demand the amount of any Overadvance, Borrower agrees to pay
Silicon interest on the outstanding amount of any Overadvance, on demand, at a
rate equal to the interest rate which would otherwise be applicable to the
Overadvance, plus an additional 2% per annum.
1.4 Fees. Borrower shall pay Silicon the fee(s) shown on the Schedule,
which are in addition to all interest and other sums payable to Silicon and are
not refundable.
1.5 Letters of Credit. At the request of Borrower, Silicon may, in the
exercise of its commercially reasonable judgment, issue or arrange for the
issuance of letters of credit for the account of Borrower, in each case in form
and substance satisfactory to Silicon in its sole discretion (collectively,
"Letters of Credit"). The aggregate face amount of all outstanding Letters of
Credit from time to time shall not exceed the amount shown on the Schedule (the
"Letter of Credit and Exchange Contract Sublimit"), and shall be reserved
against Loans which would otherwise be available hereunder. Borrower shall pay
all standard bank charges (including charges of Silicon) for the issuance of
Letters of Credit, together with such additional standard fee as Silicon's
letter of credit department shall charge in connection with the issuance of the
Letters of Credit. Any payment by Silicon under or in connection with a Letter
of Credit shall constitute a Loan hereunder on the date such payment is made.
Except as otherwise agreed by Silicon, each Letter of
Credit shall have an expiry date no later than thirty days prior to the Maturity
Date. Borrower hereby agrees to indemnify, save, and hold Silicon harmless from
any loss, cost, expense, or liability, including payments made by Silicon,
expenses, and reasonable attorneys' fees incurred by Silicon arising out of or
in connection with any Letters of Credit. Borrower agrees to be bound by the
regulations and interpretations of the issuer of any Letters of Credit
guarantied by Silicon and opened for Borrower's account or by Silicon's
interpretations of any Letter of Credit issued by Silicon for Borrower's
account, and Borrower understands and agrees that Silicon shall not be liable
for any error, negligence, or mistake, whether of omission or commission, in
following Borrower's instructions or those contained in the Letters of Credit or
any modifications, amendments, or supplements thereto. Borrower understands that
Letters of Credit may require Silicon to indemnify the issuing bank for certain
costs or liabilities arising out of claims by Borrower against such issuing
bank. Borrower hereby agrees to indemnify and hold Silicon harmless with respect
to any loss, cost, expense, or liability incurred by Silicon under any Letter of
Credit as a result of Silicon's indemnification of any such issuing bank, other
than those arising from Silicon's gross negligence or willful misconduct. The
provisions of this Agreement, as it pertains to Letters of Credit, and any other
present or future documents or agreements between Borrower and Silicon relating
to Letters of Credit are cumulative.
1.6. Foreign Exchange Contracts. (a) In accordance with the terms of
this Agreement and subject to the limitations set forth below, Borrower may
enter foreign exchange contracts (the "Exchange Contracts"), under which Silicon
will sell to or purchase from Borrower foreign currency on a spot or future
basis. The aggregate face amount of all outstanding Exchange Contracts from time
to time shall not exceed the amount shown on the Schedule (the "Letter of Credit
and Exchange Contract Sublimit"), and shall be reserved against Loans which
would otherwise be available hereunder. Borrower may not request any Exchange
Contracts if it is out of compliance with any provision of this Agreement.
Except as otherwise agreed by Silicon, Exchange Contracts must provide for
delivery of settlement on or before the 90th day after the Maturity Date, or if
such day is not a Business Day, then on the next succeeding Business Day. The
amount of Loans available shall be reduced in an amount equal to the following
(the "Foreign Exchange Reserve") on any given day (the "Determination Date"):
(i) on all outstanding Exchange Contracts on which delivery is to be effected or
settlement allowed less than two Business Days after the Determination Date, 10%
of the gross amount of the Exchange Contracts; plus (ii) on all outstanding
Exchange Contracts on which delivery is to be effected or settlement allowed
more than two Business Days after the Determination Date, 100% of the gross
amount of the Exchange Contracts, less the amount debited by Silicon from
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deposit accounts of Borrower with Silicon to cover such Exchange Contracts,
which Borrower hereby authorizes. If Silicon takes a Foreign Exchange Reserve
pursuant to clause (ii) of the foregoing sentence, such Foreign Exchange Reserve
shall be deemed a Loan in like amount.
(b) Silicon may terminate the Exchange Contracts if (a) an Event of
Default occurs under Sections 7.1(b), 7.1(i), 7.1(j) or 7.1(k) hereof or any
other Event of Default has occurred and Silicon has accelerated Borrower's
Obligations under this Agreement or (b) there is not sufficient availability
under the Credit Limit and Borrower does not have available funds in its deposit
account for the Foreign Exchange Reserve. If Silicon terminates the Exchange
Contracts pursuant to this Section 1.6, Borrower will reimburse Silicon for all
fees, costs and expenses reasonably incurred by Silicon in connection with the
Exchange Contracts.
(c) Borrower may not permit the total of all Exchange Contracts on which
delivery is to be effected and settlement allowed in any two Business Day period
to be more than $270,000 (the "Settlement Limit") nor may Borrower permit the
total of all Exchange Contracts outstanding at any one time, to exceed the
Letter of Credit and Exchange Contract Sublimit. However, the amount which may
be settled in any two Business Day period may be increased above the Settlement
Limit if: (i) there is sufficient availability under the Credit Limit in the
amount of the Foreign Exchange Reserve for each Determination Date, provided
Silicon, with the prior consent of the Borrower, may reserve the full amount of
the Foreign Exchange Reserve against the Credit Limit; or (ii) there is
insufficient availability under the Credit Limit for settlements within any two
Business Day period, but Silicon: (A) verifies good funds overseas before
crediting Borrower's deposit account (in the case of Borrower's sale of foreign
currency); or (B) debits Borrower's deposit account before delivering foreign
currency overseas (in the case of Borrower's purchase of foreign currency).
(d) If Borrower purchases foreign currency, Borrower must in advance
instruct Silicon either to
treat the settlement as a Loan, or to debit Borrower's account for the amount
settled.
(e) Borrower will execute all Silicon's standard applications and
agreements in connection with the Exchange Contracts and pay all Silicon's
standard fees and charges.
(f) Borrower will indemnify Silicon and hold it harmless from all claims,
liabilities, demands, obligations, actions, costs and expenses (including
reasonable attorneys' fees and any costs arising out of the failure of Borrower
to fulfill its obligations on a timely basis) which Silicon incurs arising out
of or in any way relating to any of the Exchange Contracts or any transactions
contemplated thereby (collectively "Foreign Exchange Costs"), provided, however,
in no event shall Borrower be responsible for Foreign Exchange Costs to the
extent (i) caused by Silicon's gross negligence or willful misconduct, or (ii)
attributable to Exchange Contracts entered into by Silicon for the benefit of
other parties.
1.7 The Note. The Loans shall be evidenced by a promissory note in the
form of Exhibit A to this Agreement, dated as of the date hereof and completed
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with appropriate insertions (the "Note"). The Note shall be payable to Silicon
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in the amount of the Maximum Credit Limit. The Borrower irrevocably authorizes
Silicon to make or cause to be made, at or about the time of any Loan made or at
the time of receipt of any payment of Principal on the Note, an appropriate
notation on its internal records reflecting the making of such Loan or the
receipt of such payment. The outstanding amount of the Loans set forth in
Silicon's internal records shall be prima facie evidence of the principal amount
thereof owing and unpaid to Silicon, but the failure to record or any error in
so recording any such amount shall not limit or otherwise affect the obligations
of the Borrower under this Agreement or under the Note to make payments of
principal of or interest on the Note when due.
2. SECURITY INTEREST.
2.1 Security Interest. To secure the payment and performance of all of
the Obligations when due, Borrower hereby grants to Silicon a security interest
in all of Borrower's interest in the following, whether now owned or hereafter
acquired, and wherever located: All assets of the Borrower, including, without
limitation, all Accounts, General Intangibles, Documents, Instruments, Chattel
Paper, Inventory, Equipment and Receivables, including without limitation, all
of Borrower's Deposit Accounts, and all Investment Property and money, and all
property now or at any time in the future in Silicon's possession (including
claims and credit balances), and all proceeds (including proceeds of any
insurance policies, proceeds of proceeds and claims against third parties), all
products and all books and records related to any of the foregoing (all of the
foregoing, together with all other property in which Silicon may now or in the
future be granted a lien or security interest, is referred to herein,
collectively, as the "Collateral"). Capitalized terms used in this Section 2.1
but not defined in this Agreement shall have the meaning ascribed to them in the
Code.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.
In order to induce Silicon to enter into this Agreement and to make Loans,
Borrower represents and warrants to Silicon as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:
3.1 Corporate Existence and Authority. Borrower, if a corporation, is and
will continue to be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. Borrower is and will
continue to be qualified and licensed to do business in all jurisdictions in
which any failure to do so would have a material adverse effect on Borrower.
The execution, delivery and performance by Borrower of this Agreement, and all
other documents contemplated hereby (i) have been duly and validly authorized,
(ii) are enforceable against Borrower in accordance with their terms (except as
enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights generally), (iii) do not violate Borrower's articles or certificate of
incorporation, or Borrower's by-laws, or any other similar organizational
documents of Borrower, or any law or any material agreement or instrument which
is binding upon Borrower or its property, and (iv) do not constitute grounds for
acceleration of any material indebtedness or obligation under any material
agreement or instrument which is binding upon Borrower or its property.
3.2 Name; Trade Names and Styles. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Silicon 30 days' prior written notice before changing
its name or doing business under any other name. Borrower has complied, and will
in the future comply, with all laws relating to the conduct of business under a
fictitious business name.
3.3 Place of Business; Location of Collateral. The address set forth in
the heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give Silicon at least 10 Business Days'
prior written notice before opening any additional place of business, changing
its chief executive office, or moving any of the Collateral to a location other
than Borrower's Address or one of the locations set forth on the Schedule.
3.4 Title to Collateral; Permitted Liens. Borrower is now, and will at
all times in the future be, the sole owner of all the Collateral, except for
items of Equipment which are leased by Borrower. The Collateral now is and will
remain free and clear of any and all liens, charges, security interests,
encumbrances and adverse claims, except for Permitted Liens. Silicon now has,
and will continue to have, a first-priority perfected and enforceable security
interest in all of the Collateral, subject only to the Permitted Liens, and
Borrower will at all times defend Silicon and the Collateral against all claims
of others. None of the Collateral now is or will be affixed to any real property
in such a manner, or with such intent, as to become a fixture. Borrower is not
and will not become a lessee under any real property lease pursuant to which the
lessor may obtain any rights in any of the Collateral and no such lease now
prohibits, restrains, impairs or will prohibit, restrain or impair Borrower's
right to remove any Collateral from the leased premises. Whenever any Collateral
is located upon premises in which any third party has an interest (whether as
owner, mortgagee, beneficiary under a deed of trust, lien or otherwise),
Borrower shall, whenever requested by Silicon, use its best efforts to cause
such third party to execute and deliver to Silicon, in form acceptable to
Silicon, such waivers and subordinations as Silicon shall specify, so as to
ensure that Silicon's rights in the Collateral are, and will continue to be,
superior to the rights of any such third party. Borrower will keep in full force
and effect, and will comply with all the terms of, any lease of real property
where any of the Collateral now or in the future may be located for so long as
the Collateral is located in such location.
3.5 Maintenance of Collateral. Borrower will maintain the Collateral in
good working condition, and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Silicon in writing of any
material loss or damage to the Collateral.
3.6 Books and Records. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with generally accepted accounting principles.
3.7 Financial Condition, Statements and Reports. All financial statements
now or in the future delivered to Silicon have been, and will be, prepared in
conformity with generally accepted accounting principles (except that all
interim or unaudited financial statements may lack footnotes and shall be
subject to normal year-end audit adjustments) and now and in the future will
completely and accurately reflect the financial condition of Borrower, at the
times and for the periods therein stated. Between the last date covered by any
such statement provided to Silicon and the date hereof, there has been no
material adverse change in the financial condition or business of Borrower.
Borrower is now and will continue to be solvent.
3.8 Tax Returns and Payments; Pension Contributions. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and Borrower has timely paid, and will timely pay,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (i) in good faith
contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies Silicon in
writing of the commencement of, and any material development in, the
proceedings, and (iii) posts bonds or takes any other steps required to keep the
contested taxes from becoming a lien upon any of the Collateral. Borrower is
unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any material liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other
governmental agency. Borrower shall, at all times, utilize the services of an
outside payroll service providing for the automatic deposit of all payroll taxes
payable by Borrower.
3.9 Compliance with Law. Borrower has complied, and will comply, in all
material respects, with all provisions of all foreign, federal, state and local
laws and regulations relating to Borrower, including, but not limited to, those
relating to Borrower's ownership of real or personal property, the conduct and
licensing of Borrower's business, and all environmental matters.
3.10 Litigation. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which may
result, either separately or in the aggregate, in any material adverse change in
the financial condition or business of Borrower, or in any material impairment
in the ability of Borrower to carry on its business in substantially the same
manner as it is now being conducted. Borrower will promptly inform Silicon in
writing of any claim, proceeding, litigation or investigation in the future
threatened or instituted by or against Borrower involving any single claim of
$250,000 or more, or involving $1,000,000 or more in the aggregate.
3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."
4. RECEIVABLES.
4.1 Representations Relating to Receivables. Borrower represents and
warrants to Silicon as follows: Each Receivable with respect to which Loans are
requested by Borrower shall, on the date each Loan is requested and made, (i)
represent an undisputed bona fide existing unconditional obligation of the
Account Debtor created by the sale, delivery, and acceptance of goods or the
rendition of services in the ordinary course of Borrower's business, and (ii)
meet the Eligibility Requirements set forth in Section 8 below.
4.2 Representations Relating to Documents and Legal Compliance. Borrower
represents and warrants to Silicon as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Receivables are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be,
and all signatories and endorsers have the capacity to contract. All sales and
other transactions underlying or giving rise to each Receivable shall fully
comply with all applicable laws and governmental rules and regulations. All
signatures and endorsements on all documents, instruments, and agreements
relating to all Receivables are and shall be genuine, and all such documents,
instruments and agreements are and shall be legally enforceable in accordance
with their terms.
4.3 Schedules and Documents relating to Receivables. Borrower shall
deliver to Silicon transaction reports and loan requests, schedules and
assignments of all Receivables, and schedules of collections, all on Silicon's
standard forms; provided, however, that Borrower's failure to execute and
deliver the same shall not affect or limit Silicon's security interest and other
rights in all of Borrower's Receivables, nor shall Silicon's failure to advance
or lend against a specific Receivable affect or limit Silicon's security
interest and other rights therein. Loan requests received after 12:00 noon
California time will not be considered by Silicon until the next Business Day.
If requested by Silicon, Borrower shall furnish Silicon with copies (or, at
Silicon's request, originals) of all contracts, orders, invoices, and other
similar documents, and all original shipping instructions, delivery receipts,
bills of lading, and other evidence of delivery, for any goods the sale or
disposition of which gave rise to such Receivables, and Borrower warrants the
genuineness of all of the foregoing. Borrower shall also furnish to Silicon an
aged accounts receivable trial balance in such form and at such intervals as
Silicon shall request. In addition, Borrower shall deliver to Silicon the
originals of all instruments, chattel paper, security agreements, guarantees and
other documents and property evidencing or securing any Receivables, immediately
upon receipt thereof and in the same form as received, with all necessary
indorsements, all of which shall be with recourse. Borrower shall also provide
Silicon with copies of all credit memos within seven days after the date issued
or on the date of the Borrower's next borrowing request, whichever occurs first.
4.4 Collection of Receivables. Borrower shall have the right to collect
all Receivables, unless and until an Event of Default shall exist. Borrower
shall hold all payments on, and proceeds of, Receivables in trust for Silicon,
and Borrower shall immediately deliver all such payments and proceeds to Silicon
in their original form, duly endorsed in blank, to be applied to the Obligations
in such order as Silicon shall determine. Silicon may, in its discretion,
require that all proceeds of Collateral be deposited by Borrower into a lockbox
account, or such other "blocked account" as Silicon may specify, pursuant to a
blocked account agreement in such form as Silicon may specify. During the
existence of an Event of Default, Silicon or its designee may, at any time,
notify Account Debtors that the Receivables have been assigned to Silicon.
4.5. Remittance of Proceeds. All proceeds arising from the disposition of
any Collateral shall be delivered, in kind, by Borrower to Silicon in the
original form in which received by Borrower not later than the following
Business Day after receipt by Borrower, to be applied to the Obligations in such
order as Silicon shall determine; provided that, if no Event of Default shall
exist, Borrower shall not be obligated to remit to Silicon the proceeds of the
sale of equipment disposed of by Borrower in good faith in an arm's length
transaction for an aggregate purchase price of $250,000 or less (for all such
transactions in any fiscal year). Silicon acknowledges that during the ordinary
course of Borrower's business that proceeds of Collateral (the "Proceeds") may
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from time to time become temporarily commingled with Borrower's other funds or
property; however, Borrower agrees to use its commercially reasonable best
efforts to inform Silicon when such commingling occurs at least on a weekly
basis, and sooner if commercially feasible and to reasonably cooperate with
Silicon so that appropriate transfers may be made in order that such Proceeds
may to the extent reasonably practicable be held separate and apart from such
other funds in an express trust for Silicon. Nothing in this Section limits the
restrictions on disposition of Collateral set forth elsewhere in this Agreement.
4.6 Disputes. Borrower shall notify Silicon promptly of all disputes or
claims relating to Receivables. Borrower shall not forgive (completely or
partially), compromise or settle any Receivable for less than payment in full,
or agree to do any of the foregoing, except that Borrower may do so, provided
that: (i) Borrower does so in good faith, in a commercially reasonable manner,
in the ordinary course of business, and in arm's length transactions, which are
reported to Silicon on the regular reports provided to Silicon if they exceed
$25,000 in any instance; (ii) no Event of Default has occurred and is
continuing; and (iii) taking into account all such discounts, settlements and
forgiveness, the total outstanding Loans will not exceed the Credit Limit.
Silicon may, at any time during the existence of an Event of Default, settle or
adjust disputes or claims directly with Account Debtors for amounts and upon
terms which Silicon considers advisable in its reasonable credit judgment and,
in all cases, Silicon shall credit Borrower's Loan account with only the net
amounts received by Silicon in payment of any Receivables.
4.7 Returns. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower in the ordinary course
of its business, Borrower shall promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount (sending a copy to Silicon for any amount in excess of $25,000). In the
event any attempted return occurs during the existence of any Event of Default,
Borrower shall (i) hold the returned Inventory in trust for Silicon, (ii)
segregate all returned Inventory from all of Borrower's other property, (iii)
conspicuously label the returned Inventory as Silicon's property, and (iv)
immediately notify Silicon of the return of any Inventory, specifying the reason
for such return, the location and condition of the returned Inventory, and on
Silicon's request deliver such returned Inventory to Silicon.
4.8 Verification. Silicon may, from time to time, verify directly with
the respective Account Debtors the validity, amount and other matters relating
to the Receivables, by means of mail, telephone or otherwise, either in the name
of Borrower or Silicon or such other name as Silicon may choose.
4.9 No Liability. Silicon shall not under any circumstances be
responsible or liable for any shortage or discrepancy in, damage to, or loss or
destruction of, any goods, the sale or other disposition of which gives rise to
a Receivable, or for any error, act, omission, or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Receivable, or for settling any Receivable in good faith for less than the full
amount thereof, nor shall Silicon be deemed to be responsible for any of
Borrower's obligations under any contract or agreement giving rise to a
Receivable. Nothing herein shall, however, relieve Silicon from liability for
its own gross negligence or willful misconduct.
5. ADDITIONAL DUTIES OF BORROWER.
5.1 Financial and Other Covenants. Borrower shall at all times comply
with the financial and other covenants set forth in the Schedule.
5.2 Insurance. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Silicon, in such form and amounts as Silicon
may reasonably require, and Borrower shall provide evidence of such insurance to
Silicon, so that Silicon is satisfied that such insurance is, at all times, in
full force and effect. All such insurance policies shall name Silicon as an
additional loss payee, and shall contain a lenders loss payee endorsement in
form reasonably acceptable to Silicon. Upon receipt of the proceeds of any such
insurance, Silicon shall apply such proceeds in reduction of the Obligations as
Silicon shall determine in its sole discretion, except that, provided no Event
of Default has occurred and is continuing, Silicon shall release to Borrower all
insurance proceeds. Silicon may require reasonable assurance that the insurance
proceeds so released will be so used. If Borrower fails to provide or pay for
any insurance, Silicon may, but is not obligated to, obtain the same at
Borrower's expense. Borrower shall promptly deliver to Silicon copies of all
reports made to insurance companies with respect to any claim in excess of
$100,000.
5.3 Reports. Borrower, at its expense, shall provide Silicon with the
written reports set forth in the Schedule, and such other written reports with
respect to Borrower (including budgets, sales projections, operating plans and
other financial documentation), as Silicon shall from time to time reasonably
specify.
5.4 Access to Collateral, Books and Records. At reasonable times, and on
one Business Day's notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy Borrower's books and
records. Silicon shall take reasonable steps to keep confidential all
information obtained in any such inspection or audit, but Silicon shall have the
right to disclose any such information to its auditors, regulatory agencies, and
attorneys, and pursuant to any subpoena or other legal process. The foregoing
inspections and audits shall be at Borrower's expense and the charge therefor
shall be $600 per person per day (or such higher amount as shall represent
Silicon's then current standard charge for the same), plus reasonable out of
pocket expenses. Borrower will not enter into any agreement with any accounting
firm, service bureau or third party to store Borrower's books or records at any
location other than Borrower's Address, without first obtaining Silicon's
written consent, which may be conditioned upon such accounting firm, service
bureau or other third party agreeing to give Silicon the same rights with
respect to access to books and records and related rights as Silicon has under
this Agreement.
5.5 Negative Covenants. Except as may be permitted in the Schedule,
Borrower shall not, without Silicon's prior written consent, do any of the
following: (i) merge or consolidate with another corporation or entity other
than another Borrower except that the Borrower may merge with another Subsidiary
as long as the Borrower is the surviving entity and no Event of Default exists
or would arise therefrom; (ii) acquire any assets, except in the ordinary course
of business; (iii) enter into any other transaction outside the ordinary course
of business; (iv) sell or transfer any Collateral, except for (a) the sale of
finished Inventory or services in the ordinary course of Borrower's business,
(b) the sale of obsolete or unneeded Equipment in the ordinary course of
business and (c) sales or transfers of Equipment or Inventory to a Subsidiary
for fair market value, in the ordinary course of business, but only to the
extent that such sales or transfers would not have a material, adverse effect on
Borrower or any guarantor or on the prospect of repayment of the Obligations;
(v) store any Inventory or other Collateral with any warehouseman or other third
party; (vi) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis; (vii) make any loans of any money or
other assets to any party, other than loans to a Subsidiary in the ordinary
course of business, but only to the extent that such loans would not have a
material adverse effect on Borrower or any guarantor or on the prospect of
repayment of the Obligations; (viii) incur any debts, other than appropriately
subordinated Inside Debt (as defined in the Schedule) or debts to a Subsidiary
in the ordinary course of business, but only to the extent that such loans would
not have a material, adverse effect on Borrower or any guarantor or on the
prospect of repayment of the Obligations; (ix) guarantee or otherwise become
liable with respect to the obligations of another party or entity other than
another Borrower or a Foreign Borrower or, to the extent required by applicable
local law, any other Subsidiary; (x) pay or declare any cash dividends on
Borrower's stock, other than to another Borrower or the Guarantor in the
ordinary course of business, but only to the extent that the payment or
declaration of such dividend would not have a
material adverse effect on Borrower or any guarantor or on the prospect of
repayment of the Obligations; (xi) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Borrower's stock, except from another
Borrower or the Guarantor; (xii) make any change in Borrower's capital structure
which would have a material adverse effect on Borrower or on the prospect of
repayment of the Obligations, except as otherwise expressly permitted pursuant
to this Section 5.5; or (xiii) dissolve or elect to dissolve, except in a
reorganization approved by Silicon in its reasonable discretion. Transactions
permitted by the foregoing provisions of this Section are only permitted if no
Event of Default would occur as a result of such transaction.
5.6 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or in any manner
relating to Borrower, Borrower shall, without expense to Silicon, make available
Borrower and its officers, employees and agents and Borrower's books and
records, to the extent that Silicon may deem them reasonably necessary in order
to prosecute or defend any such suit or proceeding.
5.7 Further Assurances. Borrower agrees, at its expense, on request by
Silicon, to execute all documents and take all actions, as Silicon, may deem
reasonably necessary or useful in order to perfect and maintain Silicon's
perfected security interest in the Collateral, and in order to fully consummate
the transactions contemplated by this Agreement.
6. TERM.
6.1 Maturity Date. This Agreement shall continue in effect until the
maturity date set forth on the Schedule (the "Maturity Date"), subject to
Section 6.3 below.
6.2 Early Termination. The credit facility established under this
Agreement may be terminated prior to the Maturity Date by Borrower, effective
three Business Days after written notice of termination is given to Silicon.
6.3 Payment of Obligations. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Without limiting the generality of the foregoing, if on the Maturity Date, or on
any earlier effective date of termination, there are any outstanding Letters of
Credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to the face amount of all such Letters of Credit plus all interest, fees
and cost due or to become due in connection therewith, to secure all of the
Obligations relating to said Letters of Credit, pursuant to Silicon's then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon's security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full; provided
that, without limiting the fact that Loans are subject to the discretion of
Silicon, Silicon may, in its sole discretion, refuse to make any further Loans
after termination. No termination shall in any way affect or impair any right or
remedy of Silicon, nor shall any such termination relieve Borrower of any
Obligation to Silicon, until all of the Obligations have been paid and performed
in full. Upon payment and performance in full of all the Obligations and
termination of this Agreement, Silicon shall promptly deliver to Borrower
termination statements, requests for reconveyances and such other documents as
may be required to fully terminate Silicon's security interests.
7. EVENTS OF DEFAULT AND REMEDIES.
7.1 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement, and Borrower shall
give Silicon immediate written notice thereof: (a) any warranty, representation,
statement, report or certificate made or delivered to Silicon by Borrower or any
of Borrower's officers, employees or agents, now or in the future, shall be
untrue or misleading in a material respect when made or deemed remade as a
result of any request for a Loan, Letter of Credit, Exchange Contract or other
extension of credit; or (b) Borrower shall fail to pay when due any Loan or any
interest thereon or any other monetary Obligation; or (c) the total Loans and
other Obligations outstanding at any time shall exceed the Credit Limit; or (d)
Borrower shall fail to comply with any of the financial covenants set forth in
the Schedule or shall fail to perform any other non-monetary Obligation which by
its nature cannot be cured; or (e) Borrower shall fail to perform any other non-
monetary Obligation, which failure is not cured within 10 Business Days after
the date due; or (f) any levy, assessment, attachment, seizure, lien or
encumbrance (other than a Permitted Lien) is made on all or any
part of the Collateral which is not cured within 10 Business Days after the
occurrence of the same; or (g) any default or event of default occurs under any
obligation in excess of $250,000 secured by a Permitted Lien, which is not cured
within any applicable cure period or waived in writing by the holder of the
Permitted Lien; or (h) Borrower breaches any material contract or obligation,
which has or may reasonably be expected to have a material adverse effect on
Borrower's business or financial condition; or (i) dissolution or termination of
existence (except in a reorganization approved by Silicon in its sole
discretion), or insolvency or business failure of Borrower; or appointment of a
receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower under any reorganization, bankruptcy, insolvency,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, now or in the future in effect; or (j) the commencement of any
proceeding against Borrower or any guarantor of any of the Obligations under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect, which is not cured by the dismissal thereof within 30 days
after the date commenced; or (k) revocation or termination of, or limitation or
denial of liability upon, any guaranty of the Obligations or any attempt to do
any of the foregoing, or commencement of proceedings by any guarantor of any of
the Obligations under any bankruptcy or insolvency law; or (l) revocation or
termination of, or limitation or denial of liability upon, any pledge of any
certificate of deposit, securities or other property or asset of any kind
pledged by any third party to secure any or all of the Obligations, or any
attempt to do any of the foregoing, or commencement of proceedings by or against
any such third party under any bankruptcy or insolvency law; or (m) Borrower
makes any payment on account of any indebtedness or obligation which has been
subordinated to the Obligations other than as permitted in the applicable
subordination agreement, or if any Person who has subordinated such indebtedness
or obligations terminates or in any way limits his subordination agreement; or
(n) there shall be a change in the record ownership of an aggregate of more than
20% of the outstanding shares of stock of Borrower, in one or more transactions,
compared to the ownership of outstanding shares of stock of Borrower in effect
on the date hereof, without the prior written consent of Silicon; or (o)
Borrower shall generally not pay its debts as they become due, or Borrower shall
conceal, remove or transfer any part of its property, with intent to hinder,
delay or defraud its creditors, or make or suffer any transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent conveyance or
similar law; or (p) there shall be a material adverse change in Borrower's
business or financial condition; or (q) there shall be a default or event of
default under the Parent Guaranty or the Foreign Loan Documents; or (r) Silicon,
acting in good faith and in a commercially reasonable manner, determines that
the Collateral is not adequately secured hereunder or that the security
provisions of this Agreement are unenforceable in any material respect. Silicon
may cease making any Loans hereunder during any of the above cure periods, and
thereafter if an Event of Default shall exist.
7.2 Remedies. During the existence of any Event of Default, and at any time
thereafter, Silicon, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by Borrower), may do any one or more
of the following: (a) cease making Loans or otherwise extending credit to
Borrower under this Agreement or any other document or agreement; (b) accelerate
and declare all or any part of the Obligations to be immediately due, payable,
and performable, notwithstanding any deferred or installment payments allowed by
any instrument evidencing or relating to any Obligation; (c) in accordance with
applicable law, peaceably take possession of any or all of the Collateral
wherever it may be found, and for that purpose Borrower hereby authorizes
Silicon without judicial process to peaceably enter onto any of Borrower's
premises without interference to search for, take possession of, keep, store, or
remove any of the Collateral, and remain on the premises or cause a custodian to
remain on the premises in exclusive control thereof, without charge for so long
as Silicon deems it reasonably necessary in order to complete the enforcement of
its rights under this Agreement or any other agreement; provided, however, that
should Silicon seek to take possession of any of the Collateral by Court
process, Borrower hereby irrevocably waives: (i) any bond and any surety or
security relating thereto required by any statute, court rule or otherwise as an
incident to such possession; (ii) any demand for possession prior to the
commencement of any suit or action to recover possession thereof; and (iii) any
requirement that Silicon retain possession of, and not dispose of, any such
Collateral until after trial or final judgment; (d) in accordance with
applicable law, require Borrower to assemble any or all of the Collateral and
make it available to Silicon at places designated by Silicon which are
reasonably convenient to Silicon and Borrower, and to remove the Collateral to
such
locations as Silicon may deem advisable; (e) in accordance with applicable law,
complete the processing, manufacturing or repair of any Collateral prior to a
disposition thereof and, for such purpose and for the purpose of removal,
Silicon shall have the right to use Borrower's premises, vehicles, hoists,
lifts, cranes, equipment and all other property without charge; (f) in
accordance with applicable law, sell, lease or otherwise dispose of any of the
Collateral, in its condition at the time Silicon obtains possession of it or
after further manufacturing, processing or repair, at one or more public and/or
private sales, in lots or in bulk, for cash, exchange or other property, or on
credit, and to adjourn any such sale from time to time without notice other than
oral announcement at the time scheduled for sale; Silicon shall have the right
to conduct such disposition on Borrower's premises without charge, for such time
or times as Silicon deems reasonable, or on Silicon's premises, or elsewhere and
the Collateral need not be located at the place of disposition; Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if permissible under applicable law, at any
private disposition; any sale or other disposition of Collateral shall not
relieve Borrower of any liability Borrower may have if any Collateral is
defective as to title or physical condition or otherwise at the time of sale;
(g) demand payment of, and collect any Receivables and General Intangibles
comprising Collateral and, in connection therewith, Borrower irrevocably
authorizes Silicon to endorse or sign Borrower's name on all collections,
receipts, instruments and other documents, to take possession of and open mail
addressed to Borrower and remove therefrom payments made with respect to any
item of the Collateral or proceeds thereof, and, in Silicon's sole discretion,
to grant extensions of time to pay, compromise claims and settle Receivables and
the like for less than face value; (h) offset against any sums in any of
Borrower's general, special or other Deposit Accounts with Silicon; and (i)
demand and receive possession of any of Borrower's federal and state income tax
returns and the books and records utilized in the preparation thereof or
referring thereto. All reasonable attorneys' fees, expenses, costs, liabilities
and obligations incurred by Silicon with respect to the foregoing shall be added
to and become part of the Obligations, shall be due on demand, and shall bear
interest at a rate equal to the highest interest rate applicable to any of the
Obligations. Without limiting any of Silicon's rights and remedies, during the
existence of any Event of Default, the interest rate applicable to the
Obligations shall be increased by an additional four percent per annum.
7.3 Standards for Determining Commercial Reasonableness. Borrower and
Silicon agree that a sale or other disposition by Silicon or its agent
(collectively, "sale") of any Collateral which complies with the following
standards will conclusively be deemed to be commercially reasonable: (i) notice
of the sale is given to Borrower at least ten days prior to the sale, and, in
the case of a public sale, notice of the sale is published at least ten days
before the sale in a newspaper of general circulation in the county where the
sale is to be conducted; (ii) notice of the sale describes the collateral in
general, non-specific terms; (iii) the sale is conducted at a place designated
by Silicon, with or without the Collateral being present; (iv) the sale
commences at any time between 8:00 a.m. and 6:00 p.m.; (v) payment of the
purchase price in cash or by cashier's check or wire transfer is required; (vi)
with respect to any sale of any of the Collateral, Silicon may (but is not
obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same. Silicon shall be free to
employ other methods of noticing and selling the Collateral, in its discretion,
if they are commercially reasonable.
7.4 Power of Attorney. During the existence of any Event of Default, without
limiting Silicon's other rights and remedies, Borrower grants to Silicon an
irrevocable power of attorney coupled with an interest, authorizing and
permitting Silicon (acting through any of its employees, attorneys or agents) at
any time, at its option, but without obligation, with or without notice to
Borrower, and at Borrower's expense, to do any or all of the following, in
Borrower's name or otherwise, but Silicon agrees to exercise the following
powers in a commercially reasonable manner: (a) execute on behalf of Borrower
any documents that Silicon may, in its sole discretion, deem advisable in order
to perfect and maintain Silicon's security interest in the Collateral, or in
order to exercise a right of Borrower or Silicon, or in order to fully
consummate all the transactions contemplated under this Agreement, and all other
present and future agreements; (b) execute on behalf of Borrower any document
exercising, transferring or assigning any option to purchase, sell or otherwise
dispose of or to lease (as lessor or lessee) any real or personal property which
is part of Silicon's Collateral or in which Silicon has an interest; (c) execute
on behalf of Borrower, any invoices relating to any Receivable, any draft
against any Account Debtor and any notice to any Account Debtor, any proof of
claim in bankruptcy, any notice of lien, claim of mechanic's, materialman's or
other lien, or assignment or satisfaction of mechanic's,
materialman's or other lien; (d) take control in any manner of any cash or non-
cash items of payment or proceeds of Collateral; endorse the name of Borrower
upon any instruments, or documents, evidence of payment or Collateral that may
come into Silicon's possession; (e) endorse all checks and other forms of
remittances received by Silicon; (f) pay, contest or settle any lien, charge,
encumbrance, security interest and adverse claim in or to any of the Collateral,
or any judgment based thereon, or otherwise take any action to terminate or
discharge the same; (g) grant extensions of time to pay, compromise claims and
settle Receivables and General Intangibles for less than face value and execute
all releases and other documents in connection therewith; (h) pay any sums
required on account of Borrower's taxes or to secure the release of any liens
therefor, or both; (i) settle and adjust, and give releases of, any insurance
claim that relates to any of the Collateral and obtain payment therefor; (j)
instruct any third party having custody or control of any books or records
belonging to, or relating to, Borrower to give Silicon the same rights of access
and other rights with respect thereto as Silicon has under this Agreement; and
(k) take any action or pay any sum required of Borrower pursuant to this
Agreement and any other present or future agreements. Any and all reasonable
sums paid and any and all reasonable costs, expenses, liabilities, obligations
and attorneys' fees incurred by Silicon with respect to the foregoing shall be
added to and become part of the Obligations, shall be payable on demand, and
shall bear interest at a rate equal to the highest interest rate applicable to
any of the Obligations. In no event shall Silicon's rights under the foregoing
power of attorney or any of Silicon's other rights under this Agreement be
deemed to indicate that Silicon is in control of the business, management or
properties of Borrower.
7.5 Application of Proceeds. All proceeds realized as the result of any sale
of the Collateral shall be applied by Silicon first to the reasonable costs,
expenses, liabilities, obligations and attorneys' fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due upon
any of the Obligations, and third to the principal of the Obligations, in such
order as Silicon shall determine in its sole discretion. Any surplus shall be
paid to Borrower or other persons legally entitled thereto; Borrower shall
remain liable to Silicon for any deficiency. If, Silicon, in its sole
discretion, directly or indirectly enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, Silicon shall
have the option, exercisable at any time, in its sole discretion, of either
reducing the Obligations by the principal amount of purchase price or deferring
the reduction of the Obligations until the actual receipt by Silicon of the cash
therefor.
7.6 Remedies Cumulative. In addition to the rights and remedies set forth in
this Agreement, Silicon shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.
8. DEFINITIONS.
As used in this Agreement, the following terms have the following meanings:
"Account Debtor" means the obligor on a Receivable.
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"Affiliate" means, with respect to any Person, a relative, partner,
---------
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"Business Day" means a day on which Silicon is open for business.
------------
"Code" means the Uniform Commercial Code as adopted and in effect from time
----
to time in the Commonwealth of Massachusetts or, to the extent applicable to
issues involving perfection or enforcement of remedies in any other state, the
laws of which apply, including Delaware.
"Collateral" has the meaning set forth in Section 2.1 above.
----------
"Default" means any event which with notice or passage of time or both, would
-------
constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9-105 of the Code.
---------------
"Eligible Receivables" means Receivables arising in the ordinary course of
--------------------
Borrower's business from the sale of goods or rendition of services, which
Silicon, in its commercially reasonable judgment, shall deem eligible for
borrowing, based on such commercially reasonable considerations as Silicon may
from time to time deem appropriate. Without limiting the fact that the
determination of which Receivables are eligible for borrowing is a matter of
Silicon's discretion, the following (the "Eligibility Requirements") are the
------------------------
minimum requirements for a Receivable to be an Eligible Receivable: (i) the
Receivable must not be outstanding for more than 90 days from its invoice date,
(ii) the Receivable must not be subject to any contingencies (including
Receivables arising from sales on consignment, guaranteed sale or other terms
pursuant to which payment by the Account Debtor may be conditional), (iii) the
Receivable must not be owing from an Account Debtor with whom Borrower has any
material dispute regarding collection (whether or not relating to the particular
Receivable), (iv) the Receivable must not be owing from an Affiliate of
Borrower, (v) the Receivable must not be owing from an Account Debtor which is
subject to any insolvency or bankruptcy proceeding, or which fails or goes out
of a material portion of its business, or be a Receivable that Silicon knows or
has reason to know presents a material risk of non-collection, (vi) the
Receivable must not be owing from the United States or any department, agency or
instrumentality thereof (unless there has been compliance, to Silicon's
satisfaction, with the United States Assignment of Claims Act) or unless such
Account Debtor has substantial operations in the United States, (vii) the
Receivable must not be owing from an Account Debtor located outside the United
States or Canada (unless pre-approved by Silicon in its discretion in writing,
or backed by a letter of credit satisfactory to Silicon, or FCIA insured
satisfactory to Silicon), (viii) the Receivable must not be owing from an
Account Debtor to whom Borrower is or may be liable for goods purchased from
such Account Debtor or otherwise. Receivables owing from one Account Debtor will
not be deemed Eligible Receivables to the extent they exceed 25% of the total
Receivables outstanding. In addition, if more than 50% of the Receivables owing
from an Account Debtor are outstanding more than 90 days from their invoice date
(without regard to unapplied credits) or are otherwise not Eligible Receivables,
then all Receivables owing from that Account Debtor will be deemed ineligible
for borrowing. Silicon may, from time to time, in its commercially reasonable
judgment, revise the Eligibility Requirements, upon written notice to Borrower.
"Equipment" means all of Borrower's present and hereafter acquired machinery,
---------
molds, machine tools, motors, furniture, equipment, furnishings, fixtures, trade
fixtures, motor vehicles, tools, parts, dyes, jigs, goods and other tangible
personal property (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions or improvements to any of the foregoing, wherever
located.
"Event of Default" means any of the events set forth in Section 7.1 of this
----------------
Agreement.
"Foreign Loan Documents" means that certain Loan Agreement, of even date
----------------------
herewith, among Lionbridge Technologies Holdings B.V., Lionbridge Technologies
B.V. and Lionbridge Technologies (Limited) (collectively, the "Foreign
-------
Borrowers"), and Silicon, that certain Promissory Note, of even date herewith,
---------
in the principal amount of $6,000,000 made by the Foreign Borrowers to the order
of Silicon, that certain Guarantee, of even date herewith, between Lionbridge
Technologies, Inc. and Silicon with respect to the obligations of the Foreign
Borrower, that certain Debenture (Fixed and Floating Charge), of even date
herewith, between Lionbridge Technologies (Limited) and Silicon, that certain
Deed of Pledge of Accounts Receivable, of even date herewith, between Lionbridge
Technologies Holdings B.V. and Silicon and that certain Deed of Pledge of
Accounts Receivable, of even date herewith, between Lionbridge Technologies B.V.
and Silicon.
"GAAP" means generally accepted accounting principles in the United States
----
applied on a consistent basis.
"General Intangibles" means all general intangibles of Borrower, whether now
-------------------
owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, inventions, designs, drawings, blueprints, patents,
patent applications, trademarks and the goodwill of the business symbolized
thereby, names, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, customer lists, security and other deposits, rights in all
litigation presently or hereafter pending for any cause or claim (whether in
contract, tort or otherwise), and all
judgments now or hereafter arising therefrom, all claims of Borrower against
Silicon, rights to purchase or sell real or personal property, rights as a
licensor or licensee of any kind, royalties, telephone numbers, proprietary
information, purchase orders, and all insurance policies and claims (including
without limitation life insurance, key man insurance, credit insurance,
liability insurance, property insurance and other insurance), tax refunds and
claims, computer programs, discs, tapes and tape files, claims under guaranties,
security interests or other security held by or granted to Borrower, all rights
to indemnification and all other intangible property of every kind and nature
(other than Receivables).
"Inventory" means all of Borrower's now owned and hereafter acquired goods,
---------
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit), and
all materials and supplies of every kind, nature and description which are or
might be used or consumed in Borrower's business or used in connection with the
manufacture, packing, shipping, advertising, selling or finishing of such goods,
merchandise or other personal property, and all warehouse receipts, documents of
title and other documents representing any of the foregoing.
"Loan Documents" means, collectively, this Agreement, the Note, the Parent
--------------
Guarantee and any instrument executed by the Borrowers or any present or future
agreement entered into among the Borrowers, the Guarantor and Silicon, or for
the benefit of Silicon in connection with this Agreement or the Guarantee, all
as amended, extended or restated from time to time.
"Obligations" means all present and future Loans, advances, debts,
-----------
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Silicon, whether evidenced by this Agreement or any
note or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Silicon in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorneys'
fees, expert witness fees, audit fees, letter of credit fees, collateral
monitoring fees, closing fees, facility fees, termination fees, minimum interest
charges and any other sums chargeable to Borrower under this Agreement or under
any other present or future instrument or agreement between Borrower and
Silicon.
"Parent Guarantee" means that certain Guarantee, of even date herewith,
----------------
between Lionbridge Technologies, Inc. and Silicon with respect to the
obligations of the Borrower.
"Permitted Liens" means the following: (i) purchase money security interests
---------------
in specific items of Equipment; (ii) leases of specific items of Equipment;
(iii) liens for taxes not yet payable; (iv) additional security interests and
liens consented to in writing by Silicon, which consent shall not be
unreasonably withheld; (v) security interests being terminated substantially
concurrently with this Agreement; (vi) liens of materialmen, mechanics,
warehousemen, carriers, or other similar liens arising in the ordinary course of
business and securing obligations which are not delinquent; (vii) liens incurred
in connection with the extension, renewal or refinancing of the indebtedness
secured by liens of the type described above in clauses (i) or (ii) above,
provided that any extension, renewal or replacement lien is limited to the
property encumbered by the existing lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase; (viii)
liens in favor of customs and revenue authorities which secure payment of
customs duties in connection with the importation of goods. Silicon will have
the right to require, as a condition to its consent under subparagraph (iv)
above, that the holder of the additional security interest or lien sign an
intercreditor agreement on Silicon's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of Silicon,
and agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agrees that any
uncured default in any obligation secured by the subordinate security interest
shall also constitute an Event of Default under this Agreement.
"Person" means any individual, sole proprietorship, partnership, joint
------
venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Receivables" means all of Borrower's now owned and hereafter acquired
-----------
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities,
securities accounts, investment property, documents and all other forms of
obligations at any time owing to Borrower, all guaranties and other security
therefor, all merchandise returned to or repossessed by Borrower, and all rights
of stoppage in transit and all other rights or remedies of an unpaid vendor,
lienor or secured party.
"Reserves" means, as of any date of determination, such amounts as Silicon
--------
may from time to time establish and revise in good faith and in the exercise of
its commercially reasonable judgment reducing the amount of Loans, Letters of
Credit and other financial accommodations which would otherwise be available to
Borrower under the lending formula(s) provided in the Schedule to reflect
events, conditions, contingencies or risks which, as determined by Silicon in
good faith, do or may affect (i) the Collateral or any other property which is
security for the Obligations or its value (including without limitation any
increase in delinquencies of Receivables), (ii) the assets, business, financial
condition or prospects of Borrower or any guarantor, or the ability of the
Borrower or any such guarantor to meet its obligations to Silicon or (iii) the
security interests and other rights of Silicon in the Collateral (including the
enforceability, perfection and priority thereof).
"Subsidiary" means any corporation, association, joint stock company,
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business trust, limited liability company or other similar organization of which
50% or more of the ordinary voting power for the election of a majority of the
members of the board of directors or other governing body of such entity is held
or controlled by Lionbridge Technologies, Inc.
Other Terms. All accounting terms used in this Agreement, unless otherwise
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indicated, shall have the meanings given to such terms in accordance with
generally accepted accounting principles, consistently applied. All other terms
contained in this Agreement, unless otherwise indicated, shall have the meanings
provided by the Code, to the extent such terms are defined therein.
9. GENERAL PROVISIONS.
9.1 Interest Computation. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Silicon (including
proceeds of Receivables and payment of the Obligations in full) shall be deemed
applied by Silicon on account of the Obligations three Business Days after
receipt by Silicon of immediately available funds, and, for purposes of the
foregoing, any such funds received after 12:00 noon California time on any day
shall be deemed received on the next Business Day. Silicon shall not, however,
be required to credit Borrower's account for the amount of any item of payment
which is unsatisfactory to Silicon in its sole discretion, and Silicon may
charge Borrower's loan account for the amount of any item of payment which is
returned to Silicon unpaid.
9.2 Application of Payments. All payments with respect to the Obligations
may be applied, and in Silicon's sole discretion reversed and re-applied, to the
Obligations, in such order and manner as Silicon shall determine in its sole
discretion.
9.3 Charges to Accounts. Silicon may, in its discretion, require that
Borrower pay monetary Obligations in cash to Silicon, or charge them to
Borrower's Loan account, in which event they will bear interest at the same rate
applicable to the Loans. Silicon may also, in its discretion, charge any
monetary Obligations to Borrower's Deposit Accounts maintained with Silicon.
9.4 Monthly Accountings. Silicon shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Silicon), unless Borrower
notifies Silicon in writing to the contrary within thirty days after each
account is rendered, describing the nature of any alleged errors or admissions.
9.5 Notices. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, or certified mail return receipt
requested, addressed to Silicon or Borrower at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by one
party to the other party. Notices to Silicon shall be directed to the
Commercial Finance Division, to the attention of the Division Manager or the
Division Credit Manager. All notices shall be deemed to have been given upon
delivery in the case of notices personally delivered, or at the expiration of
one Business Day following delivery to the private delivery service, or two
Business Days following the deposit thereof in the United States mail, with
postage prepaid.
9.6 Severability. Should any provision of this Agreement be held by any
court of competent
jurisdiction to be void or unenforceable, such defect shall not affect the
remainder of this Agreement, which shall continue in full force and effect.
9.7 Integration. This Agreement and such other written agreements, documents
and instruments as may be executed in connection herewith are the final, entire
and complete agreement between Borrower and Silicon and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement. There are no oral
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understandings, representations or agreements between the parties which are not
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set forth in this Agreement or in other written agreements signed by the parties
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in connection herewith.
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9.8 Waivers. The failure of Silicon at any time or times to require Borrower
to strictly comply with any of the provisions of this Agreement or any other
present or future agreement between Borrower and Silicon shall not waive or
diminish any right of Silicon later to demand and receive strict compliance
therewith. Any waiver of any default shall not waive or affect any other
default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Silicon shall be deemed to have been
waived by any act or knowledge of Silicon or its agents or employees, but only
by a specific written waiver signed by an authorized officer of Silicon and
delivered to Borrower. Borrower waives demand, protest, notice of protest and
notice of default or dishonor, notice of payment and nonpayment, release,
compromise, settlement, extension or renewal of any commercial paper,
instrument, account, General Intangible, document or guaranty at any time held
by Silicon on which Borrower is or may in any way be liable, and notice of any
action taken by Silicon, unless expressly required by this Agreement.
9.9 No Liability for Ordinary Negligence. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the ordinary negligence of Silicon, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon, but nothing herein shall relieve Silicon from
liability for its own gross negligence or willful misconduct.
9.10 Amendment. The terms and provisions of this Agreement may not be waived
or amended, except in a writing executed by Borrower and a duly authorized
officer of Silicon.
9.11 Time of Essence. Time is of the essence in the performance by Borrower
of each and every obligation under this Agreement.
9.12 Attorneys Fees and Costs. Borrower shall reimburse Silicon for all
reasonable attorneys' fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys' fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and the documents relating to this Agreement; obtain legal advice in
connection with this Agreement or Borrower; enforce, or seek to enforce, any of
its rights; prosecute actions against, or defend actions by, Account Debtors;
commence, intervene in, or defend any action or proceeding; initiate any
complaint to be relieved of the automatic stay in bankruptcy; file or prosecute
any probate claim, bankruptcy claim, third-party claim, or other claim; examine,
audit, copy, and inspect any of the Collateral or any of Borrower's books and
records; protect, obtain possession of, lease, dispose of, or otherwise enforce
Silicon's security interest in, the Collateral; and otherwise represent Silicon
in any litigation relating to Borrower. In satisfying Borrower's obligation
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hereunder to reimburse Silicon for attorneys' fees, Borrower may, for
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convenience, issue checks directly to Silicon's attorneys, Xxxxxxxx & Worcester
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LLP, but Borrower acknowledges and agrees that Xxxxxxxx & Worcester LLP is
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representing only Silicon and not Borrower in connection with this Agreement.
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If either Silicon or Borrower files any lawsuit against the other predicated on
a breach of this Agreement, the prevailing party in such action shall be
entitled to recover its reasonable costs and attorneys' fees, including (but not
limited to) reasonable attorneys' fees and costs incurred in the enforcement of,
execution upon or defense of any order, decree, award or judgment. All
attorneys' fees and costs to which Silicon may be entitled pursuant to this
Paragraph shall immediately become part of Borrower's Obligations, shall be due
on demand, and shall bear interest at a rate equal to the highest interest rate
applicable to any of the Obligations.
9.13 Benefit of Agreement. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of Borrower and Silicon; provided, however,
that Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of Silicon, and any prohibited assignment
shall be void. No consent by Silicon to any assignment shall release Borrower
from its liability for the Obligations.
9.14 Joint and Several Liability. Each and every representation, warranty,
covenant and agreement made by any of the Borrowers, hereunder and under the
other Loan Documents shall be joint and several, whether or not so expressed,
and such obligations of any of the Borrowers shall not be subject to any
counterclaim, setoff, recoupment or defense based upon any claim any Borrower
may have against any other Borrower, or Silicon, and shall remain in full force
and effect without regard to, and shall not be released, discharged or in any
way affected by, any circumstance or condition affecting any other Borrower,
including without limitation (a) any waiver, consent, extension, renewal,
indulgence or other action or inaction under or in respect of this Agreement or
any other Loan Document, or any agreement or other document related thereto with
respect to any other Borrower, or any exercise or nonexercise of any right,
remedy, power or privilege under or in respect of any such agreement or
instrument with respect to the other Borrower, or the failure to give notice of
any of the foregoing to the other Borrower, (b) any invalidity or
unenforceability, in whole or in part, of any such agreement or instrument with
respect to any other Borrower, (c) any failure on the part of any other Borrower
for any reason to perform or comply with any term of any such agreement or
instrument, (d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding with respect to any
other Borrower or its properties or creditors or (e) any other occurrence
whatsoever, whether similar or dissimilar to the foregoing, with respect to any
other Borrower. Each Borrower hereby waives any requirement of diligence or
promptness on the part of Silicon in the enforcement of their respective rights
hereunder or under any other Loan Document with respect to the obligations of
itself or of the other Borrowers. Without limiting the foregoing, any failure
to make any demand upon, to pursue or exhaust any rights or remedies against a
Borrower, or any delay with respect thereto, shall not affect the obligations of
the other Borrowers hereunder or under any other Loan Document. Each of the
Borrowers hereby designates and appoints the President, the Chief Financial
Officer and the Controller of the Guarantor to act on its behalf in request
advances under this Agreement and otherwise dealing with Silicon in connection
therewith.
9.15 Limitation of Actions. Any claim or cause of action by Borrower against
Silicon, its directors, officers, employees, agents, accountants or attorneys,
based upon, arising from, or relating to this Agreement, or any other present or
future document or agreement, or any other transaction contemplated hereby or
thereby or relating hereto or thereto, or any other matter, cause or thing
whatsoever, occurred, done, omitted or suffered to be done by Silicon, its
directors, officers, employees, agents, accountants or attorneys, shall be
barred unless asserted by Borrower by the commencement of an action or
proceeding in a court of competent jurisdiction by the filing of a complaint
within three years after the first act, occurrence or omission upon which such
claim or cause of action, or any part thereof, is based, and the service of a
summons and complaint on an officer of Silicon, or on any other person
authorized to accept service on behalf of Silicon, within thirty (30) days
thereafter. Borrower agrees that such three-year period is a reasonable and
sufficient time for Borrower to investigate and act upon any such claim or cause
of action. The three-year period provided herein shall not be waived, tolled,
or extended except by the written consent of Silicon in its sole discretion.
This provision shall survive any termination of this Agreement or any other
present or future agreement.
9.16 Paragraph Headings; Construction. Paragraph headings are only used in
this Agreement for convenience. Borrower and Silicon acknowledge that the
headings may not describe completely the subject matter of the applicable
paragraph, and the headings shall not be used in any manner to construe, limit,
define or interpret any term or provision of this Agreement. The term
"including," whenever used in this Agreement, shall mean "including (but not
limited to)." This Agreement has been fully reviewed and negotiated between the
parties and no uncertainty or ambiguity in any term or provision of this
Agreement shall be construed strictly against Silicon or Borrower under any rule
of construction or otherwise.
9.17 Governing Law; Jurisdiction; Venue. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and Borrower
shall be governed by the laws of the Commonwealth of Massachusetts, without
regard to principles of conflicts of law. The Borrowers and Silicon hereby
submit to the exclusive jurisdiction of the state and federal courts located in
the Commonwealth of Massachusetts, but if for any reason Silicon is denied
access to these courts, then in such event venue shall lie in the state and
federal courts located in the County of Santa Xxxxx, State of California. As a
material part of the consideration to Silicon to enter into this Agreement,
Borrower (i) consents to the jurisdiction and venue of any such court and
consents to service of process in any such action or proceeding by personal
delivery or any other method permitted by law; and (ii) waives any and all
rights Borrower may have to object to the jurisdiction of any such court, or to
transfer or change the venue of any such action or proceeding.
9.18 Mutual Waiver of Jury Trial. Borrower and Silicon each hereby waive the
right to trial by jury in any action or proceeding based upon, arising out of,
or in any way relating to, this Agreement or any other present or future
instrument or agreement between Silicon and Borrower, or any conduct, acts or
omissions of Silicon or Borrower or any of their directors, officers, employees,
agents, attorneys or any other persons affiliated with Silicon or Borrower, in
all of the foregoing cases, whether sounding in contract or tort or otherwise.
Each party recognizes and agrees that the foregoing waiver constitutes a
material inducement for it to enter into this Agreement. Each party represents
and warrants that it has reviewed this waiver with its legal counsel and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel.
Borrower:
INT'X.xxx, Inc.
By /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Chief Executive Officer
International Language Engineering Corporation
By /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Chief Executive Officer
Harvard Translations, Inc.
By /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
President
Lionbridge Technologies California, Inc.
By /s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Chief Executive Officer
Silicon:
SILICON VALLEY BANK
By /s/ Xxxx X. Xxxxxxx, Xx.
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Title: Xxxx X. Xxxxxxx, Xx.
