FIRST LOAN MODIFICATION AND
FORBEARANCE AGREEMENT
This First Loan
Modification and Forbearance Agreement (this “ Loan
Modification Agreement ”) is entered into as of the First
Loan Modification Effective Date, by and between SILICON VALLEY
BANK , a California corporation, with its principal place of
business at 3003 Tasman Drive, Santa Clara, California 95054 and
with a loan production office located at 380 Interlocken Crescent,
Suite 600, Broomfield, Colorado 80021 (“ Bank
”), and ENERGY FOCUS, INC. , a Delaware corporation,
formerly known as Fiberstars, Inc., a Delaware corporation, with
offices located at 32000 Aurora Road, Solon, Ohio 44139.
1.
DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS . Among
other indebtedness, and obligations which may be owing by Borrower
to Bank, Borrower is indebted to Bank pursuant to a loan
arrangement dated as of October 27, 2008, evidenced by, among
other documents, a certain Second Amended and Restated Loan and
Security Agreement dated as of October 27, 2008 between
Borrower and Bank (as may be amended from time to time, the “
Loan Agreement ”). Capitalized terms used but not
otherwise defined herein shall have the same meaning as in the Loan
Agreement.
2.
DESCRIPTION OF COLLATERAL . Repayment of the Obligations is
secured by the Collateral as described in the Loan Agreement
(together with any other collateral security granted to Bank, the
“ Security Documents ”).
Hereinafter, the
Security Documents, together with all other documents evidencing or
securing the Obligations shall be referred to as the “
Existing Loan Documents ”.
3.
ACKNOWLEDGMENT OF DEFAULTS . Borrower acknowledges and
agrees that certain Defaults and Events of Default have occurred
under the Loan Agreement by virtue of Borrower’s failure to
comply with the minimum Tangible Net Worth covenant contained in
Section 6.9(a) of the Loan Agreement for the compliance period
ending on November 30, 2008 (the “ Prior Default
”). Borrower has informed Bank that it anticipates that it
will also fail to comply with the minimum Tangible Net Worth
covenant set forth in Section 6.9(a) for the compliance period
ending December 31, 2008 (the “ Anticipated
Default ”, and together with the Prior Default, the
“ Existing Defaults ”).
4.
DESCRIPTION OF CHANGE IN TERMS .
|
|
A.
|
|
Modifications to Loan
Agreement.
|
|
|
1
|
|
The
Loan Agreement shall be amended by deleting the following text
appearing in Section 2.3(a) thereof in its
entirety:
|
|
|
|
|
“(a) Interest Rate ;
Advances . Subject to Section 2.3(b), the principal
amount outstanding under the Revolving Line shall accrue interest
at a floating per annum rate equal to the aggregate of the Prime
Rate plus one percentage point (1.00%), which interest shall be
payable monthly.”
|
|
|
|
|
|
|
|
|
|
and
inserting in lieu thereof the following:
|
|
|
|
|
|
|
|
|
|
“(a) Interest Rate ;
Advances . Subject to Section 2.3(b), the principal
amount outstanding under the Revolving Line shall accrue interest
at a floating per annum rate equal to the aggregate of the Prime
Rate plus one and one-half percentage point (1.50%), which interest
shall be payable monthly.”
|
|
|
2
|
|
The
Loan Agreement shall be amended by inserting the following
definition in Section 13.1 thereof, in appropriate
alphabetical order:
|
|
|
|
|
““ First Loan
Modification Effective Date ” is the date indicated on
the signature page to the First Loan Modification and Forbearance
Agreement entered into between Bank and Borrower.”
|
|
|
A.
|
|
In
consideration of, among other things, Borrower’s compliance
with each and every term of this Agreement, Bank hereby agrees to
forbear from exercising its rights and remedies against the
Borrower as a result of the Existing Defaults until the earlier to
occur of (i) a Default or an Event of Default under the Loan
Agreement (with the sole exception of the Existing Defaults), (ii)
the failure of Borrower to promptly, punctually, or faithfully
perform or comply with any term or condition of this Agreement as
and when required, it being expressly acknowledged and agreed that
TIME IS OF THE ESSENCE, or (iii) 3:00 pm (Denver, Colorado
time) on February 15, 2009 (the period commencing as of the
date of the First Loan Modification Effective Date and ending on
the earlier of (i), (ii) or (iii) above shall be referred
to as the “ Forbearance Period ”).
|
|
|
|
|
|
|
|
B.
|
|
Borrower hereby acknowledges and
agrees that nothing contained in this section or in any other
section of this Agreement shall be deemed or otherwise construed as
a waiver by Bank of the Existing Defaults or any other Default or
Event of Default (whether now existing or hereafter arising) or of
any of its rights and remedies pursuant to the Existing Loan
Documents, applicable law or otherwise. This Loan Modification
Agreement shall only constitute an agreement by Bank to forbear
from enforcing its rights and remedies based upon the Existing
Defaults upon the terms and conditions set forth herein. Upon the
expiration of the Forbearance Period, the agreement of Bank to
forbear as set forth in this Loan Modification Agreement shall
automatically terminate and Bank may immediately commence enforcing
its rights and remedies pursuant to the Existing Loan Documents,
applicable law or otherwise, in such order and manner as Bank may
determine appropriate.
|
|
|
A.
|
|
From and after the execution of this
Loan Modification Agreement, Borrower agrees that Bank shall have
no further obligation to make any Advances to Borrower, or to issue
or provide any other extensions of credit of any kind to Borrower
(as used herein and in the Loan Agreement, any Advance, Letter of
Credit, FX Forward Contract, amount utilized for Cash Management
Services, or any other extension of credit by Bank for
Borrower’s benefit shall be referred to as a “Credit
Extension”). Notwithstanding the foregoing, during the
Forbearance Period and at the request of Borrower, Bank may, in its
sole and absolute discretion, continue to make any Credit
Extensions, subject in all events to the terms and conditions of
this Loan Modification Agreement, the Loan Agreement (including but
not limited to, all limitations imposed by the Borrowing Base and
the Availability Amount) and the other Existing Loan Documents.
Borrower covenants and agrees that if, in the sole and absolute
discretion of Bank. Bank shall make any Credit Extensions during
the Forbearance Period, such act shall not constitute (i) a
waiver of any of the Existing Defaults, or of any other Default or
Event of Default which may now exist or which, may occur after the
date of this Loan Modification Agreement under any of the Existing
Loan Documents, or (ii) an agreement on the part of Bank to
make any further extensions of credit of any kind to Borrower at a
later date.
|
|
|
|
|
|
|
|
B.
|
|
At
all times during the Forbearance Period Borrower shall comply with
all terms and conditions contained in the Loan Agreement and other
Loan Documents and shall continue to remit all regularly scheduled
payments (including, without limitation, all principal, interest,
fees, costs and
|
|
