EXHIBIT 10.3

 

AMENDMENT NUMBER ONE

 

TO THE OPERATING AGREEMENT OF ENFISSION, LLC

 

This Amendment Number One (“Amendment One”) to the January 25, 2018 Operating
Agreement (“OA”) of Enfission, LLC, a Delaware limited liability company (the
“Company”), amends the existing OA and shall be deemed effective as of May 7,
2018.

 

In accordance with OA Section 7.6(a), Lightbridge Corporation and Framatome
Inc., (each a “Member” and collectively, all of the “Members” of the Company)
hereby approve the following Amendments to the OA (double underline indicates
added language and strikethrough indicates deleted language):

 

1. Section 3.1(e) The Capital Contributions, Membership Interests and Percentage
Interests of each Member are set forth on Exhibit A, which shall be amended from
time to time, as necessary and in a timely fashion, to reflect (i) the Transfer
by a Member of its Membership Interests in accordance with Article IX, (ii) the
issuance of New Securities or admission of a new Member in accordance with
Section 7.2(k)(vii), (iii) Additional Capital Contributions made by the Members
in accordance with Section 4.2, and (iv) such other events as otherwise may give
rise to a change in a Member’s Capital Contributions or ownership of its
Membership Interests under this Agreement. Upon any change in a Member’s Capital
Contributions or ownership of its Membership Interests, the Board of Directors
shall amend Exhibit A to properly reflect such change, and the Board of
Directors shall deliver a copy of Exhibit A, as so amended, to each Member. For
the avoidance of doubt, a transaction or event discussed in this Section 3.1(e)
could cause a change in one or more of Capital Contributions, Membership
Interests and Percentage Interests without causing a change in the others.

 

2. Section 6.1 Distributions Other Than Liquidation Proceeds. The Company shall
not make any distributions to the Members except (i) as authorized by the Board
of Directors in accordance with Section 7.2(k)(v), or (ii) as specified in this
Section 6.1. Subject to Net Available Cash as determined by the Board of
Directors, the Company Board may authorize the Company to make cash
distributions as a result of income from the Company’s operations in respect of
the Members’ Tax liabilities as a result of the Company’s income at least five
days prior to the installment due dates specified in Section 6655(c) of the
Code, pro rata to each Member in proportion to the Member’s Percentage
Interest.. Any amounts designated for distribution shall be distributed, subject
to the Act, pro rata in proportion to accordance with the Members’ respective
Percentage Interests Capital Accounts. The requirement that distributions be in
proportion to the Members’ respective Capital Accounts shall apply to the tax
distributions discussed in this Section 6.1, notwithstanding that this may
result in one Member receiving more than is necessary to satisfy its Tax
liability. Representative examples of and calculations for distributions that
could be authorized by the Board under this Section 6.1 and Section 7.2(k)(v)
are included in Exhibit A-1. For the avoidance of doubt, the Board is not
obligated to make distributions to the Members, whether the Members’ Capital
Accounts are equal or otherwise. When distributions are made to the Members they
will be made pro rata in proportion to the Members’ Capital Accounts.

 

3. Updated Exhibit A (see attached)

 

4. New Exhibit A-1 (see attached)

 

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Exhibit A

 

CAPITAL CONTRIBUTIONS AND MEMBERSHIP INTERESTS

 

Member

Capital Contribution

Membership Interests

Percentage Interest

Framatome

$10,000

1,000 Class A Membership Units

50%

Lightbridge

$10,000

1,000 Class A Membership Units

50%

 

* Additional Capital Contributions made by Lightbridge to the Company will be
included in this Exhibit and will be in the form of contributed rights to IP
that Lightbridgc owns by virtue of its work and funding of any R&D Services
Agreement. These contributed rights will be in the form of a license to the
Company of Lightbridgc co owned IP developed under the R&D Services Agreement.
The contribution credit that Lightbridge will receive to its capital account in
return for the contributed rights shall be equal to the fair market value of
such contributed rights at the time of the contribution (at the time of Company
formation), which the Members agree shall be derived from the R&D expenditures
that Lightbridge has made (and for which it has not been reimbursed) plus the
amount it has paid to Framatomc under the R&D Services Agreement up to the time
of such contribution.

 

Membership Interests

 

Member

Membership Interests

Percentage Interest

Framatome

  

1,000 Class A Membership Units

 

50%

 

Lightbridge

1,000 Class A Membership Units

50%

 

Capital Contributions

 

Member

Capital Contribution

Date

Type

Framatome

$10,000

1.25.18

Initial Contribution

 

$207,000

3.24.18

Additional Contribution

Total

$217,000

 

Lightbridge

$365,915

1.25.18

Pre-formation R7D Expenses

 

$10,000

1.25.18

Initial Contribution

 

$5,207,000

3.28.18

Additional Contribution

Total

$5,582,915

 

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EXHIBIT A-1

 

DISTRIBUTION CALCULATIONS (REPRESENTATIVE EXAMPLES)

 

Example 1

 

On March 20, the BOD, giving consideration to projected Capital Accounts and
cash at March 31, votes to make a $2,000,000 distribution payable April 15 based
on Capital Accounts at March 31.

 

The initial capital accounts were zero. The transactions through March 31 were
as follows:

 

 

 

Lightbridge

 

 

Framatome

 

 

Total

 

Initial cash capital contribution

 

$ 10,000

 

 

$ 10,000

 

 

$ 20,000

 

Deemed contribution of IP

 

 

500,000

 

 

 

 

 

 

 

500,000

 

Cash contributions

 

 

5,200,000

 

 

 

 

 

 

 

5,200,000

 

Contributions required for 25% of payments to Framatome

 

 

 

 

 

 

250,000

 

 

 

250,000 (A)

Allocation of net loss

 

 

(1,000,000 )

 

 

 

 

 

 

(1,000,000) (B)

Ending capital accounts - March 31

 

 

4,710,000

 

 

 

260,000

 

 

 

4,970,000

 

 

 

 

94.7686 %

 

 

5.2314 %

 

 

100.0000 %

Distribution

 

 

(1,895,372 )

 

 

(104,628 )

 

 

(2,000,000 )

Capital Accounts after distributions

 

$ 2,814,628

 

 

$ 155,372

 

 

$ 2,970,000

 

 

(A) Entire $1,000,000 loss consists of amounts paid to Framatome for R&D
triggering a 25% required contribution under Section 4.2(f) of the Operating
Agreement.

 

(B) 100% allocation of net loss to Lightbridge to get capital accounts as close
as possible to 50%/50% as required under section 8.4(b). of the Operating
Agreement.

 

A required but unpaid contribution by Framatome results in a receivable. For
purposes of determining the allocation of distributions the recording of the
receivable increases Framatome’s Capital Account. The BOD may decide to offset a
distribution, in whole or in part, against the receivable (i.e. consider a
portion of the distribution paid by forgiveness of the receivable).

 

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Example 2

 

On March 20, the BOD votes to make a distribution, based on March 31 Capital
Accounts, payable April 10, to cover the members’ estimated tax payments based
on first quarter net income. Net income is $800,000 all allocated to Framatome.
Framatome’s combined federal, state and local income tax rate is assumed to be
30%. The tax payment to Framatome would be $240,000 ($800,000 @ 30%). Based on
the March 31 capital accounts as shown below, the distribution would need to be
$516,923.08 in order for the distribution to be in accordance with the Capital
Accounts and still get the required $240,000 to Framatome.

 

In this example, net income for purposes of accounting under the Operating
Agreement is assumed to equal taxable income,

 

 

 

Lightbridge

 

 

Framatome

 

 

Total

 

Opening Capital Accounts - January 1

 

$ 3,000,000.00

 

 

$ 1,800,000.00

 

 

$ 4,800,000.00

 

Allocation of net income

 

 

 

 

 

 

800,000.00

 

 

 

800,000.00 (C)

Ending capital accounts- March 31

 

 

3,000,000.00

 

 

 

2,600,000.00

 

 

 

5,600,000.00

 

 

 

 

53.5714 %

 

 

46.4286 %

 

 

100.0000 %

Distribution

 

 

(276,923.08 )

 

 

(240,000.00 )

 

 

(516,923.08 )

Capital Accounts after distributions

 

$ 2,723,076.92

 

 

$ 2,360,000.00

 

 

$ 5,083,076.92

 

 

(C) 100% allocation of net income to Framatome to get capital accounts as close
as possible to 50%/50% as required by Section 8.4(b) of the Operating Agreement.

 

Example 3

 

On December 20, 2022 the BOO, giving consideration to projected Capital Accounts
and cash projected at December 31, 2022, votes to make a $1,800,000 distribution
payable January 15, 2023 based on Capital Accounts at December 31 2022.

 

The 2022 activity and the subsequent distributions were as follows:

 

 

 

Lightbridge

 

 

Framatome

 

 

Total

 

Opening Capital Accounts -January 1, 2022

 

$ 5,000,000

 

 

$ 3,200,000

 

 

$ 8,200,000

 

Cash distributions during the year

 

 

(1,200,000 )

 

 

(1,000,000 )

 

 

(2,200,000) (D)

Allocation of net income

 

 

-

 

 

 

1,300,000

 

 

 

1,300,000 (E)

Ending capital accounts - December 31, 2022

 

 

3,800,000

 

 

 

3,500,000

 

 

 

7,300,000

 

 

 

 

52.0548 %

 

 

47.9452 %

 

 

100,0000 %

Distribution

 

 

(936,986 )

 

 

(863,014 )

 

 

(1,800,000 )

Capital Accounts after distributions

 

$ 2,863,014

 

 

$ 2,636,986

 

 

$ 5,500,000

 

 

(D) Distributions during the year were not in proportion to opening Capital
Accounts because net income through various interim dates changed the
proportions.

 

(E) 100% allocation of net income to Framatome to get capital accounts as close
as possible to 50%/50% as required by Section 8.4(b) of the Operating Agreement.

 

This Amendment One may be executed by the Members in one or more counterparts,
all of which shall be considered one and the same, and all of which shall have
an effective date of May 7, 2018. All other sections of the OA in effect prior
to this Amendment One shall continue in full force and effect.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the undersigned, who are all of the Members of the Company,
intending to be legally bound, have executed this Amendment One as of the
date(s) set forth below, with such Amendment One to be effective as of May 7,
2018,

 

LIGHTBRIDGE CORPORATION

 

By:

/s/ Seth Grae

 

Date: May 8, 2018                             

Name:

Seth Grae

 

 

Title:

President and Chief Executive Officer

 

 

FRAMATOME INC.

 

By:

/s/ Robert Freeman

 

Date: May 8, 2018                            

Name:

Robert Freeman

 

 

Title:

Vice President, Fuel Commercial and Customer Center

 

 

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