EXHIBIT 10(aw)
 
 
FIRST LOAN MODIFICATION AGREEMENT
 
(Domestic)
 
This First Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of June 15, 2010, and is effective as of May 31, 2010, by and
among (a) 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 One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462 (“Bank”) and (b) SPIRE
CORPORATION, a Massachusetts corporation, with its principal place of business
at One Patriots Park, Bedford, Massachusetts 01730 (“Spire Corporation”), SPIRE
SOLAR, INC., a Massachusetts corporation, with its principal place of business
at One Patriots Park, Bedford, Massachusetts 01730 (“Spire Solar”), SPIRE
BIOMEDICAL, INC., a Massachusetts corporation, with its principal place of
business at One Patriots Park, Bedford, Massachusetts 01730 (“Spire
Biomedical”), and SPIRE SEMICONDUCTOR, LLC, a Delaware limited liability
company, with its principal place of business at 25 Sagamore Park Road, Hudson,
New Hampshire 03051 (“Spire Semiconductor”) (Spire Corporation, Spire Solar,
Spire Biomedical, and Spire Semiconductor are jointly and severally,
individually and collectively, “Borrower”).
 
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 November
16, 2009, evidenced by, among other documents, a certain Second Amended and
Restated Loan and Security Agreement dated as of November 16, 2009, between
Borrower and Bank (as amended, 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.              DESCRIPTION OF CHANGE IN TERMS.
 
A.           
Modifications to Loan Agreement.

 
1  
The Loan Agreement shall be amended by deleting the following, appearing as
Section 2.1 thereof:

 
“           2.1           Promise to Pay.  Borrower hereby unconditionally
promises to pay Bank the unpaid principal amount of all Advances hereunder with
all interest, fees and finance charges due thereon as and when due in accordance
with this Agreement.”
 
and inserting in lieu thereof the following:
 
“           2.1           Promise to Pay.  Borrower hereby unconditionally
promises to pay Bank the unpaid principal amount of all Credit Extensions
hereunder with all interest, fees and finance charges due thereon as and when
due in accordance with this Agreement.”
 
2  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 2.1.1(a)(ii) thereof:

 
“Subject to the terms of this Agreement after the occurrence of the Sale Event,
and provided that Borrower is Streamline Facility Eligible, Borrower may
 
 

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request that Bank finance Eligible Accounts on an aggregate basis (the
“Aggregate Eligible Accounts”).”
 
and inserting in lieu thereof the following:
 
“Subject to the terms of this Agreement and provided that Borrower is Streamline
Facility Eligible, Borrower may request that Bank finance Eligible Accounts on
an aggregate basis (the “Aggregate Eligible Accounts”).”
 
3  
The Loan Agreement shall be amended by deleting the following, appearing as
Section 2.1.1(b) thereof:

 
“           (b)           Maximum Advances.  The aggregate face amount of all
Financed Receivables outstanding at any time may not exceed the Facility
Amount.  In addition and notwithstanding the foregoing, (i) prior to the
occurrence of the Sale Event, the aggregate amount of Advances outstanding
hereunder together with all Advances (as defined in the Exim Agreement)
outstanding under the Exim Agreement may not exceed Five Million Dollars
($5,000,000.00) at any time, and (ii) the aggregate amount of Advances
outstanding hereunder at any time may not exceed Three Million Dollars
($3,000,000.00).”
 
and inserting in lieu thereof the following:
 
“           (b)           Maximum Advances; Letter of Credit Sublimit.
 
(i)           The aggregate face amount of all Financed Receivables outstanding
at any time may not exceed the Facility Amount.  In addition and notwithstanding
the foregoing, (A) the aggregate amount of Advances outstanding at any time may
not exceed Three Million Dollars ($3,000,000.00), and (B) while Borrower is
Streamline Facility Eligible, the aggregate amount of (1) Advances outstanding
hereunder, plus (2) the Dollar Equivalent amount of outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) issued pursuant to Section 2.1.3, may not exceed at any time the
Streamline Availability Amount; provided, however, the Dollar Equivalent amount
of outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve) issued pursuant to Section 2.1.3 will
not be added into this calculation at any time that Borrower has requested that
it reduce availability under the Exim Agreement pursuant to Section 2.1.1(b) of
the Exim Agreement (and that it does in fact reduce availability under the Exim
Agreement) (such occurrence shall be the “LC Formula Event”).
 
(ii)           The sum of the aggregate amount of the Dollar Equivalent amount
of outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve) issued pursuant to Section 2.1.3 may
not exceed the lesser of (A) One Million Five Hundred Thousand Dollars
($1,500,000.00) and (B) the Borrowing Base minus the principal amount of
Advances outstanding hereunder.
 
(iii)           If, at any time, amounts outstanding exceed the amounts set
forth in this Section 2.1.1(b), Borrower shall immediately
 
 
 

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pay to Bank in cash such excess amount, and Borrower hereby irrevocably
authorized to Bank debit any of its accounts maintained with Bank or any of
Bank’s Affiliates in connection therewith.”
 
4  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 2.1.1(c) thereof:

 
“Borrower will deliver an Advance Request and Invoice Transmittal in the form
attached hereto as Exhibit C signed by a Responsible Officer for each Advance it
requests, accompanied by an accounts receivable aging, with respect to Advances
based upon Aggregate Eligible Accounts, or by invoices (and any other
documentation related thereto as requested by Bank), with respect to Advances
based upon Eligible Accounts.”
 
and inserting in lieu thereof the following:
 
“Borrower will deliver an Advance Request and Invoice Transmittal in the form
attached hereto as Exhibit C signed by a Responsible Officer for each Credit
Extension it requests, accompanied by an accounts receivable aging, with respect
to Advances based upon Aggregate Eligible Accounts or Letters of Credit issued
pursuant to Section 2.1.3, or by invoices (and any other documentation related
thereto as requested by Bank), with respect to Advances based upon Eligible
Accounts.”
 
5  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 2.1.1 thereof:

 
“           (h)           Suspension of Advances.  Borrower’s ability to request
that Bank finance Eligible Accounts and Aggregate Eligible Accounts hereunder
will terminate if, in Bank’s sole discretion, there has been a material adverse
change in the general affairs, management, results of operation, condition
(financial or otherwise) or the prospect of repayment of the Obligations, or
there has been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Bank prior to the
execution of this Agreement.”
 
and inserting in lieu thereof the following:
 
“           (h)           Suspension of Credit Extensions.  Borrower’s ability
to request that Bank make Credit Extensions hereunder will terminate if, in
Bank’s sole discretion, there has been a material adverse change in the general
affairs, management, results of operation, condition (financial or otherwise) or
the prospect of repayment of the Obligations, or there has been any material
adverse deviation by Borrower from the most recent business plan of Borrower
presented to and accepted by Bank prior to the execution of this Agreement.”
 
6  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 2.1.1(i) thereof:

 
“On any day that Borrower ceases to be Streamline Facility Eligible, all
outstanding Advances made based on Aggregate Eligible Accounts shall be
immediately due and payable, together with all Finance Charges accrued thereon.”
 
and inserting in lieu thereof the following:
 
 

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“On any day that Borrower ceases to be Streamline Facility Eligible, all
outstanding Advances made based on Aggregate Eligible Accounts shall be
immediately due and payable, together with all Finance Charges accrued thereon,
and all Letters of Credit issued pursuant to Section 2.1.3 shall immediately be
cash secured on terms acceptable to Bank consistent with Section 2.1.3(a).”
 
7  
Bank acknowledges that all principal and interest with respect to the Term Loan
has been paid in full.  Accordingly, the Loan Agreement shall be amended by
deleting Section 2.1.2 (entitled “Term Loan”) in its entirety and inserting in
lieu thereof the following:

 
“           2.1.2           Interntionally omitted.”
 
8  
The Loan Agreement shall be amended by inserting the following new Section
2.1.3, appearing immediately after Section 2.1.2 thereof:

 
“           2.1.3           Letters of Credit.
 
(a)           For so long as Borrower is Letter of Credit Facility Eligible,
upon Borrower’s request, Bank may, in its good faith business discretion, issue
or have issued Letters of Credit denominated in Dollars or a Foreign Currency
for Borrower’s account.  The aggregate Dollar Equivalent amount of outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit and any
Letters of Credit Reserve) may not exceed the amounts set forth in Section
2.1.1(b) above.  Any such aggregate amounts utilized hereunder shall reduce the
amount otherwise available for Credit Extensions hereunder.  If, on the Maturity
Date, and immediately when Borrower is no longer Letter of Credit Facility
Eligible, there are any outstanding Letters of Credit, then on such date
Borrower shall provide to Bank cash collateral in an amount equal to one hundred
five percent (105.0%) of the  Dollar Equivalent amount of all such Letters of
Credit plus all interest, fees, and costs due or to become due in connection
therewith (as estimated by Bank in its good faith business judgment), to secure
all of the Obligations relating to such Letters of Credit.  All Letters of
Credit shall be in form and substance acceptable to Bank in its sole discretion
and shall be subject to the terms and conditions of Bank’s standard Application
and Letter of Credit Agreement (the “Letter of Credit Application”).  Borrower
agrees to execute any further documentation in connection with the Letters of
Credit as Bank may reasonably request.  Borrower further agrees to be bound by
the regulations and interpretations of the issuer of any Letters of Credit
guaranteed by Bank and opened for Borrower’s account or by Bank’s
interpretations of any Letters of Credit issued by Bank for Borrower’s account,
and Borrower understands and agrees that Bank 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, except for errors or mistakes
directly resulting from Bank’s gross negligence or willful misconduct.
 
(b)           The obligation of Borrower to immediately reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional, and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, such Letters of Credit, and the Letter of Credit Application.
 
(c)           Borrower may request that Bank issue a Letter of Credit payable in
a Foreign Currency.  If a demand for payment is made under any such Letters of
Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent
of the amount thereof (plus fees and charges in connection
 
 

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therewith such as wire, cable, SWIFT or similar charges) in Dollars at the
then-prevailing rate of exchange in San Francisco, California, for sales of the
Foreign Currency for transfer to the country issuing such Foreign Currency.
 
(d)           To guard against fluctuations in currency exchange rates, upon the
issuance of any Letters of Credit payable in a Foreign Currency, Bank shall
create a reserve (the “Letter of Credit Reserve”) in an amount equal to ten
percent (10.0%) of the Dollar Equivalent amount of such Letters of Credit.  The
amount of the Letter of Credit Reserve may be adjusted by Bank from time to time
to account for fluctuations in the exchange rate.  While Borrower is Letter of
Credit Facility Eligible, the availability of funds under either Section 2.1.1
of this Agreement or Section 2.1.1 of the Exim Agreement (as contemplated by
Section 2.1.1(b) above) shall be reduced by the amount of such Letter of Credit
Reserve for as long as such Letters of Credit remain outstanding.
 
(e)           Borrower shall pay Bank’s customary fees and expenses for the
issuance or renewal of Letters of Credit, upon the issuance of such Letter of
Credit, each anniversary of the issuance during the term of such Letter of
Credit, and upon the renewal of such Letter of Credit by Bank.”
 
9  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 2.2.3 thereof:

 
“In the event that the aggregate amount of Finance Charges earned by Bank in any
Reconciliation Period during which Borrower is not Streamline Facility Eligible
under this Agreement and the Exim Agreement is less than the Minimum Finance
Charge, Borrower shall pay to Bank an additional Finance Charge equal to (i) the
Minimum Finance Charge minus (ii) the aggregate amount of all Finance Charges
earned by Bank under this Agreement and the Exim Agreement in such
Reconciliation Period.”
 
and inserting in lieu thereof the following:
 
“In the event that the aggregate amount of Finance Charges earned by Bank in any
Reconciliation Period under this Agreement and the Exim Agreement is less than
the Minimum Finance Charge, Borrower shall pay to Bank an additional Finance
Charge equal to (i) the Minimum Finance Charge minus (ii) the aggregate amount
of all Finance Charges earned by Bank under this Agreement and the Exim
Agreement in such Reconciliation Period.”
 
10  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 2.2.4 thereof:

 
“With respect to Financed Receivables based upon Eligible Accounts, Borrower
will pay to Bank a collateral handling fee equal to 0.30% per month of the
Financed Receivable Balance for each such Financed Receivable outstanding based
upon a 360 day year (the “Collateral Handling Fee”).”
 
and inserting in lieu thereof the following:
 
“With respect to Financed Receivables based upon Eligible Accounts, Borrower
will pay to Bank a collateral handling fee equal to 0.20% per month of the
Financed Receivable Balance for each such Financed Receivable outstanding based
upon a 360 day year (the “Collateral Handling Fee”).”
 
 

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11  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 2.3(b)(ii) thereof:

 
“Borrower will pay the principal amount of each Advance made based on Aggregate
Eligible Accounts on the earliest of: (A) the date the Financed Receivable (or
any portion thereof) is no longer an Eligible Account, or an Adjustment has been
made to any portion of the Aggregate Eligible Accounts, or any Account
comprising the Aggregate Eligible Accounts has been paid by the Account Debtor
(but in each case only up to the portion of Advances such that the aggregate
Financed Receivable Balance (net of any Accounts that are paid, not Eligible
Accounts, or subject to an Adjustment) is not less than 125% of the aggregate
Advances made thereon), (B) the date on which there is a breach of any warranty
or representation set forth in Section 5.3 or a breach of any covenant in this
Agreement, (C) the Maturity Date (including any early termination), or (D) as
required pursuant to Section 2.1.1(i).”
 
and inserting in lieu thereof the following:
 
“Borrower will pay the principal amount of the Advances made based upon
Aggregate Eligible Accounts on the earliest of: (A) the date on which the
aggregate amount of outstanding Advances, plus the Dollar Equivalent amount of
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letter of Credit Reserve) issued pursuant to Section 2.1.3,
exceeds the Streamline Availability Amount (but only up to the amount exceeding
the Streamline Availability Amount), (B) the Maturity Date (including any early
termination), or (C) as required pursuant to Section 2.1.1(i).”
 
12  
The Loan Agreement shall be amended by deleting the following, appearing as
Section 3.2 thereof:

 
“           3.2           Conditions Precedent to all Advances.  Bank’s
agreement to make each Advance, including the initial Advance, is subject to the
following:
 
(a)           receipt of the Advance Request and Invoice Transmittal;
 
(b)           Bank shall have (at its option) conducted the confirmations and
verifications as described in Section 2.1.1(d); and
 
(c)           each of the representations and warranties in Section 5 shall be
true on the date of the Advance Request and Invoice Transmittal and on the
effective date of each Advance and no Event of Default shall have occurred and
be continuing, or result from the Advance.  Each Advance is Borrower’s
representation and warranty on that date that the representations and warranties
in Section 5 remain true.”
 
and inserting in lieu thereof the following:
 
“           Conditions Precedent to all Credit Extensions.  Bank’s agreement to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:
 
(a)           receipt of the Advance Request and Invoice Transmittal;
 
 

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(b)           Bank shall have (at its option) conducted the confirmations and
verifications as described in Section 2.1.1(d); and
 
(c)           each of the representations and warranties in Section 5 shall be
true on the date of the Advance Request and Invoice Transmittal and on the
effective date of each Credit Extension and no Event of Default shall have
occurred and be continuing, or result from the Credit Extension.  Each Credit
Extension is Borrower’s representation and warranty on that date that the
representations and warranties in Section 5 remain true.”
 
13  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 7.9 thereof:

 
“Become an “investment company” or a company controlled by an “investment
company”, under the Investment Company Act of 1940, as amended, or undertake as
one of its important activities extending credit to purchase or carry margin
stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System), or use the proceeds of any Advance for that purpose;”
 
and inserting in lieu thereof the following:
 
“Become an “investment company” or a company controlled by an “investment
company”, under the Investment Company Act of 1940, as amended, or undertake as
one of its important activities extending credit to purchase or carry margin
stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System), or use the proceeds of any Credit Extension for that purpose;”
 
14  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 8.5 thereof:

 
“or (c) an Insolvency Proceeding is begun against Borrower and not dismissed or
stayed within forty five (45) days (but no Advances shall be made while of any
of the conditions described in clause (a) exist and/or until any Insolvency
Proceeding is dismissed);”
 
and inserting in lieu thereof the following:
 
“or (c) an Insolvency Proceeding is begun against Borrower and not dismissed or
stayed within forty five (45) days (but no Credit Extensions shall be made while
of any of the conditions described in clause (a) exist and/or until any
Insolvency Proceeding is dismissed);”
 
15  
The Loan Agreement shall be amended by deleting the following, appearing as
Section 8.7 thereof:

 
“           8.7           Judgments.  One or more judgments, orders, or decrees
for the payment of money in an amount, individually or in the aggregate, of at
least Fifty Thousand Dollars ($50,000.00) (not covered by independent
third-party insurance as to which liability has been accepted by such insurance
carrier) shall be rendered against Borrower and shall remain unsatisfied,
unvacated, or unstayed for a period of ten (10) days after the entry thereof
(provided that no Advances will be made prior to the satisfaction, vacation, or
stay of such judgment, order, or decree);”
 
 

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and inserting in lieu thereof the following:
 
“           8.7           Judgments.  One or more judgments, orders, or decrees
for the payment of money in an amount, individually or in the aggregate, of at
least Fifty Thousand Dollars ($50,000.00) (not covered by independent
third-party insurance as to which liability has been accepted by such insurance
carrier) shall be rendered against Borrower and shall remain unsatisfied,
unvacated, or unstayed for a period of ten (10) days after the entry thereof
(provided that no Credit Extensions will be made prior to the satisfaction,
vacation, or stay of such judgment, order, or decree);”
 
16  
The Loan Agreement shall be amended by deleting the following text, appearing in
Section 12.11 thereof:

 
“(b) to prospective transferees or purchasers of any interest in the Advances
(provided, however, Bank shall use commercially reasonable efforts to obtain
such prospective transferee’s or purchaser’s agreement to the terms of this
provision);”
 
and inserting in lieu thereof the following:
 
“(b) to prospective transferees or purchasers of any interest in the Credit
Extensions (provided, however, Bank shall use commercially reasonable efforts to
obtain such prospective transferee’s or purchaser’s agreement to the terms of
this provision);”
 
17  
The Loan Agreement shall be amended by inserting the following new definitions,
appearing alphabetically in Section 13.1 thereof:

 
“           “Borrowing Base” is eighty percent (80.0%) (or such other percentage
as Bank establishes under Section 2.1.1) multiplied by Borrower’s Aggregate
Eligible Accounts (net of any offsets related to each specific Account Debtor,
including, without limitation, Deferred Revenue).  In addition, solely for
purposes of determining whether Borrower has availability to have Letters of
Credit issued or outstanding pursuant to Section 2.1.3 (and specifically not for
determining availability for Advances under Section 2.1.1), the Borrowing Base
will also include, but only to the extent not included in any borrowing base or
in determining availability under the Exim Agreement, (a) ninety percent (90.0%)
of Hedged Eligible Foreign Accounts (as defined in the Exim Agreement)
denominated in United States dollars or hedged foreign currencies and (b)
seventy five percent (75.0%) of Eligible Foreign Accounts (as defined in the
Exim Agreement) billed in a foreign currency and not subject to a Foreign
Currency Hedge Agreement (as defined in the Exim Agreement), in each case net of
any offsets related to each specific Account Debtor, including, without
limitation, Deferred Revenue, or such other percentages as Bank establishes
under Section 2.1.1of the Exim Agreement.”
 
“           “Credit Extension” is any Advance, Letter of Credit, or any other
extension of credit by Bank for Borrower’s benefit.”
 
“           “Dollars,” “dollars” or use of the sign “$” means only lawful money
of the United States and not any other currency, regardless of whether that
currency uses the “$” sign to denote its currency or may be readily converted
into lawful money of the United States.”
 
 

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“           “Dollar Equivalent” is, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in a Foreign Currency, the equivalent amount therefor in Dollars as
determined by Bank at such time on the basis of the then-prevailing rate of
exchange in San Francisco, California, for sales of the Foreign Currency for
transfer to the country issuing such Foreign Currency.”
 
“           “Foreign Currency” means lawful money of a country other than the
United States.”
 
“           “Letter of Credit” means a standby letter of credit issued by Bank
or another institution based upon an application, guarantee, indemnity or
similar agreement on the part of Bank as set forth in Section 2.1.3.”
 
“           “Letter of Credit Application” is defined in Section 2.1.3(b).”
 
“           “Letter of Credit Reserve” has the meaning set forth in Section
2.1.3(d).”
 
“           “Letter of Credit Facility Eligible” means, as of any day during any
Subject Month, Borrower has provided evidence to Bank that it (a) had Liquidity
of at least the sum of (i) Six Million Dollars ($6,000,000.00) plus (ii) the
aggregate Dollar Equivalent amount of outstanding Letters of Credit (including
drawn but unreimbursed Letters of Credit and any Letters of Credit Reserve) at
all times during the applicable Testing Month, and (b) has Liquidity of at least
the sum of (i) Six Million Dollars ($6,000,000.00) plus (ii) the aggregate
Dollar Equivalent amount of outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit and any Letters of Credit Reserve) on such day.”
 
“           “LC Formula Event” is defined in Section 2.1.1(b).”
 
“           “Streamline Availability Amount” is the lesser of (a) Three Million
Dollars ($3,000,000.00) and (b) the Borrowing Base.”
 
18  
The Loan Agreement shall be amended by deleting the following definitions,
appearing in Section 13.1 thereof:

 
“           “Advance Request and Invoice Transmittal” shows Eligible Accounts
and/or Aggregate Eligible Accounts which Bank may finance and, for each such
Account, includes the Account Debtor’s name, address, invoice amount, invoice
date and invoice number.”
 
“           “Applicable Rate” is a per annum rate equal to the Prime Rate plus
(a) with respect to Financed Receivables based upon Eligible Accounts, three
percent (3.0%), and (b) with respect to Financed Receivables based upon
Aggregate Eligible Accounts, two percent (2.0%), provided, however, for any
Subject Month (as of the first calendar day of such month), to the extent that
Borrower had Net Income of at least One Dollar ($1.00) at all times during the
three-month period ending on the last day of the applicable Testing Month, the
Applicable Rate with respect to Financed Receivables based upon Aggregate
Eligible Accounts shall be a per annum rate equal to the Prime Rate plus one and
one-half of one percent (1.50%).”
 
“           “Maturity Date” is May 31, 2010.”
 
 

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“           “Minimum Finance Charge” is Five Thousand Dollars ($5,000.00).”
 
“           “Prime Rate” is the greater of (a) six percent (6.0%) and (b) Bank’s
most recently announced “prime rate,” even if it is not Bank’s lowest rate.”
 
“           “Testing Month” is any month with respect to which Bank has tested
(a) Borrower’s Liquidity in order to determine if Borrower is Streamline
Facility Eligible, and (b) Borrower’s Net Income in order to determine the
Applicable Rate when Borrower is Streamline Facility Eligible.”
 
and inserting in lieu thereof the following:
 
“           “Advance Request and Invoice Transmittal” shows Eligible Accounts
and/or Aggregate Eligible Accounts, which Bank may finance, and (a) with respect
to requests for Advances based upon Eligible Accounts, includes the Account
Debtor’s name, address, invoice amount, invoice date and invoice number, (b)
with respect to requests for Advances based upon Aggregate Eligible Accounts,
includes (i) the Account Debtor’s name, address, invoice amount, invoice date
and invoice number, (ii) the current outstanding amount of Advances made based
upon (A) Eligible Accounts and (B) Aggregate Eligible Accounts and (iii) the
Streamline Availability Amount, and (c) with respect to requests for Letters of
Credit pursuant to Section 2.1.3, the requested amount of such Letter of
Credit.”
 
“           “Applicable Rate” is (a) with respect to Financed Receivables based
upon Eligible Accounts, a per annum rate equal to the Prime Rate plus two and
one-half of one percent (2.50%), and (b) with respect to Financed Receivables
based upon Aggregate Eligible Accounts, a per annum rate equal to the Prime Rate
plus two percent (2.0%), provided, however, for any Subject Month (as of the
first calendar day of such month), to the extent that Borrower had Net Income
greater than One Dollar ($1.00) at all times during the three-month period
ending on the last day of the applicable Testing Month, the Applicable Rate with
respect to Financed Receivables based upon Aggregate Eligible Accounts shall be
a per annum rate equal to the Prime Rate plus one and one-half of one percent
(1.50%).”
 
“           “Maturity Date” is December 31, 2011.”
 
“           “Minimum Finance Charge” is Five Thousand Dollars ($5,000.00),
provided, however, for any Reconciliation Period during which no Credit
Extensions were outstanding at any time under this Agreement and no Advances (as
defined in the Exim Agreement) were outstanding under the Exim Agreement, the
Minimum Finance Charge shall be Three Thousand Dollars ($3,000.00).”
 
“           “Prime Rate” is the greater of (a) four percent (4.0%) and (b)
Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.”
 
“           “Testing Month” is any month with respect to which Bank has tested
(a) Borrower’s Liquidity in order to determine if Borrower is Streamline
Facility Eligible or Letter of Credit Facility Eligible, and (b) Borrower’s Net
Income in order to determine the Applicable Rate when Borrower is Streamline
Facility Eligible.”
 
 

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19  
The Compliance Certificate appearing as Exhibit B to the Loan Agreement is
hereby replaced with the Compliance Certificate attached as Schedule 1 hereto.

 
4.              FEES.  Borrower shall pay to Bank a modification fee equal to
Sixty Three Thousand Twenty Five Dollars ($63,025.00), which fee shall be due on
the date hereof and shall be deemed fully earned as of the date
hereof.  Borrower shall also reimburse Bank for all legal fees and expenses
incurred in connection with this amendment to the Existing Loan Documents.
 
5.              RATIFICATION OF PERFECTION CERTIFICATES.
 
(a)           Spire Corporation hereby ratifies, confirms and reaffirms, all and
singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of June 22, 2009, between Spire Corporation and Bank, and
acknowledges, confirms and agrees the disclosures and information Spire
Corporation provided to Bank in such Perfection Certificate have not changed, as
of the date hereof.
 
(b)           Spire Solar hereby ratifies, confirms and reaffirms, all and
singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of June 22, 2009, between Spire Solar and Bank, and
acknowledges, confirms and agrees the disclosures and information Spire Solar
provided to Bank in such Perfection Certificate have not changed, as of the date
hereof.
 
(c)           Spire Biomedical hereby ratifies, confirms and reaffirms, all and
singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of June 22, 2009, between Spire Biomedical and Bank, and
acknowledges, confirms and agrees the disclosures and information Spire
Biomedical provided to Bank in such Perfection Certificate have not changed, as
of the date hereof.
 
(d)           Spire Semiconductor hereby ratifies, confirms and reaffirms, all
and singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of June 22, 2009, between Spire Semiconductor and Bank, and
acknowledges, confirms and agrees the disclosures and information Spire
Semiconductor provided to Bank in such Perfection Certificate have not changed,
as of the date hereof.
 
6.              CONSISTENT CHANGES.  The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above.
 
7.              RATIFICATION OF LOAN DOCUMENTS.  Borrower hereby ratifies,
confirms, and reaffirms all terms and conditions of all security or other
collateral granted to the Bank, and confirms that the indebtedness secured
thereby includes, without limitation, the Obligations.
 
8.              NO DEFENSES OF BORROWER.  Borrower hereby acknowledges and
agrees that Borrower has no offsets, defenses, claims, or counterclaims against
Bank with respect to the Obligations, or otherwise, and that if Borrower now
has, or ever did have, any offsets, defenses, claims, or counterclaims against
Bank, whether known or unknown, at law or in equity, all of them are hereby
expressly WAIVED and Borrower hereby RELEASES Bank from any liability
thereunder.
 
9.              CONTINUING VALIDITY.  Borrower understands and agrees that in
modifying the existing Obligations, Bank is relying upon Borrower’s
representations, warranties, and agreements, as set forth in the Existing Loan
Documents.  Except as expressly modified pursuant to this Loan Modification
Agreement, the terms of the Existing Loan Documents remain unchanged and in full
force and effect.  Bank’s agreement to modifications to the existing Obligations
pursuant to this  Loan Modification Agreement in no way shall obligate Bank to
make any future modifications to the Obligations.  Nothing in this Loan
Modification Agreement shall constitute a satisfaction of the Obligations.  It
is the intention of Bank and Borrower to retain as liable parties all makers of
Existing Loan Documents, unless the party is expressly released by Bank in
writing.  No maker will be released by virtue of this Loan Modification
Agreement.
 
10.            COUNTERSIGNATURE.  This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank.
 
 

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This Loan Modification Agreement is executed as a sealed instrument under the
laws of the Commonwealth of Massachusetts as of the date first written above.
 
BORROWER:
 
SPIRE CORPORATION
 
By:       /s/ Roger G. Little                     
Name: Roger G. Little
Title:    Chief Executive Officer
 
 
 
By:       /s/ Robert S. Lieberman                         
Name: Robert S. Lieberman
Title:    Chief Financial Officer and Treasurer
 
SPIRE SOLAR, INC.
 
By:       /s/ Roger G. Little                     
Name: Roger G. Little
Title:    Chief Executive Officer
 
By:       /s/ Robert S. Lieberman                         
Name: Robert S. Lieberman
Title:    Chief Financial Officer and Treasurer
 
SPIRE BIOMEDICAL, INC.
 
By:       /s/ Roger G. Little                     
Name: Roger G. Little
Title:    Chief Executive Officer
 
By:       /s/ Robert S. Lieberman                         
Name: Robert S. Lieberman
Title:    Chief Financial Officer and Treasurer
 
SPIRE SEMICONDUCTOR, LLC
 
By: Spire Corporation, a Massachusetts corporation,
its sole Member and Manager
 
By:       /s/ Roger G. Little                     
Name: Roger G. Little
Title:    Chief Executive Officer
 
 
 
By:       /s/ Robert S. Lieberman                         
Name: Robert S. Lieberman
Title:    Chief Financial Officer and Treasurer

 
BANK:
 
SILICON VALLEY BANK
 
By:       /s/ Kate Leland                         
Name: Kate Leland
Title:    Vice President
 
 
 

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Schedule 1

EXHIBIT B
 
SVB>Silicon Valley Bank
A Member of SVB Financial Group

SPECIALTY FINANCE DIVISION
Compliance Certificate

I, an authorized officer of SPIRE CORPORATION, SPIRE SOLAR, INC., SPIRE
BIOMEDICAL, INC. and SPIRE SEMICONDUCTOR, LLC (jointly and severally,
individually and collectively, “Borrower”) certify under the Second Amended and
Restated Loan and Security Agreement (as amended, the “Agreement”) between
Borrower and Silicon Valley Bank (“Bank”) as follows (all capitalized terms used
herein shall have the meaning set forth in the Agreement):

Borrower represents and warrants for each Financed Receivable:

Each Financed Receivable is an Eligible Account;

Borrower is the owner with legal right to sell, transfer, assign and encumber
such Financed Receivable;

The correct amount is on the Advance Request and Invoice Transmittal and is not
disputed;

Payment is not contingent on any obligation or contract and Borrower has
fulfilled all its obligations as of the Advance Request and Invoice Transmittal
date;

Each Financed Receivable is based on an actual sale and delivery of goods and/or
services rendered, is due to Borrower, is not past due or in default, has not
been previously sold, assigned, transferred, or pledged and is free of any
liens, security interests and encumbrances other than Permitted Liens;

There are no defenses, offsets, counterclaims or agreements for which the
Account Debtor may claim any deduction or discount;

It reasonably believes no Account Debtor is insolvent or subject to any
Insolvency Proceedings;

It has not filed or had filed against it Insolvency Proceedings and does not
anticipate any filing;

Bank has the right to endorse and/or require Borrower to endorse all payments
received on Financed Receivables and all proceeds of Collateral; and

No representation, warranty or other statement of Borrower in any certificate or
written statement given to Bank contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statement contained in
the certificates or statement not misleading.

Additionally, Borrower represents and warrants as follows:

Borrower and each Subsidiary is duly existing and in good standing in its state
of formation and qualified and licensed to do business in, and in good standing
in, any state in which the conduct of its business or its ownership of property
requires that it be qualified except where the failure to do so could not
reasonably be expected to cause a Material Adverse Change.  The execution,
delivery and performance of the Loan Documents have been duly authorized, and do
not conflict with Borrower’s organizational documents, nor constitute an event
of default under any material agreement by which Borrower is bound.  Borrower is
not in default under any agreement to which or by which it is bound in which the
default could reasonably be expected to cause a Material Adverse Change.

 
 

--------------------------------------------------------------------------------

 
Borrower has good title to the Collateral, free of Liens except Permitted
Liens.  All inventory is in all material respects of good and marketable
quality, free from material defects.

Borrower is not an “investment company” or a company “controlled” by an
“investment company” under the Investment Company Act of 1940, as
amended.  Neither Borrower nor any of its Subsidiaries is a “holding company” or
an “affiliate” of a “holding company” or a “subsidiary company” of a “holding
company” as each term is defined and used in the Public Utility Holding Company
Act of 2005.  Borrower is not engaged as one of its important activities in
extending credit for margin stock (under Regulations X, T and U of the Federal
Reserve Board of Governors).  Borrower has complied in all material respects
with the Federal Fair Labor Standards Act.  Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to
cause a Material Adverse Change.  None of Borrower’s or any Subsidiary’s
properties or assets has been used by Borrower or any Subsidiary or, to the best
of Borrower’s knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally.  Borrower
and each Subsidiary has timely filed all required tax returns and paid, or made
adequate provision to pay, all material taxes, except those being contested in
good faith with adequate reserves under GAAP.  Borrower and each Subsidiary has
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all government authorities that are
necessary to continue its business as currently conducted except where the
failure to obtain or make such consents, declarations, notices or filings would
not reasonably be expected to cause a Material Adverse Change.

Borrower is in compliance with the financial covenant set forth in Section 6.7
of the Agreement.

All other representations and warranties in the Agreement are true and correct
in all material respects on this date, and Borrower represents that there is no
existing Event of Default.

Financial Covenant

Required                                      Actual         
                       Compliance

Liquidity                                          
   >$1,000,000                                  $
______                                Yes   No

Streamline Facility Eligibility

Required                                    
  Actual                                   Eligible
 
Liquidity                                            
 >$6,000,000                                  $
______                                Yes   No

Letter of Credit Eligibility

Required                                
     Actual                                    Eligible

Liquidity                                          
   $______*                                    $_____                         
          Yes   No

*As set forth in the definition of Letter of Credit Facility Eligible.
 
Applicable Rate Reduction when Streamline Facility Eligible

Required                                      Actual         
                  Eligible for Reduction

Three-Month Net
Income                     >$1.00                                       $_____          
                      Yes   No   N/A
 
 
 

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Sincerely,

SPIRE CORPORATION
SPIRE SOLAR, INC.
SPIRE BIOMEDICAL, INC.
SPIRE SEMICONDUCTOR, LLC

________________________
Signature
________________________
Title
________________________
Date