EXHIBIT 10.1

 

SECOND LOAN MODIFICATION AGREEMENT

 

This Second Loan Modification Agreement (this “Loan Modification Agreement”) is
entered into as of the Second 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 One Newton Executive Park, Suite 200, 2221
Washington Street, Newton, Massachusetts 02462 (“Bank”) and (i) SATCON
TECHNOLOGY CORPORATION, a Delaware corporation; SATCON POWER SYSTEMS, INC., a
Delaware corporation; SATCON APPLIED TECHNOLOGY, INC., a Delaware corporation;
SATCON ELECTRONICS, INC., a Delaware corporation, each with offices located at
27 Drydock Avenue, Boston, Massachusetts 02210; and (ii) SATCON POWER SYSTEMS
CANADA LTD. (the “Canadian Borrower”), a corporation organized under the laws of
the Province of Ontario, Canada with offices located at 835 Harrington Court,
Burlington, Ontario L7N 3P3 (individually and collectively, jointly and
severally, “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 FEBRUARY 20, 2008,
EVIDENCED BY, AMONG OTHER DOCUMENTS, A CERTAIN LOAN AND SECURITY AGREEMENT DATED
AS OF FEBRUARY 20, 2008, AS AMENDED BY THAT CERTAIN FIRST LOAN MODIFICATION
AGREEMENT, DATED AS OF THE FIRST LOAN MODIFICATION EFFECTIVE DATE (AS AMENDED,
THE “LOAN AGREEMENT”). CAPITALIZED TERMS USED BUT NOT OTHERWISE DEFINED HEREIN
SHALL HAVE THE SAME MEANING AS IN THE LOAN AGREEMENT.

 

DESCRIPTION OF COLLATERAL. REPAYMENT OF THE OBLIGATIONS IS SECURED BY THE
COLLATERAL AS DESCRIBED IN THE LOAN AGREEMENT AND A CERTAIN INTELLECTUAL
PROPERTY SECURITY AGREEMENT DATED AS OF FEBRUARY 20, 2008, AS MAY BE AMENDED
FROM TIME TO TIME (THE “IP AGREEMENT”).

 

2.             HEREINAFTER, THE LOAN AGREEMENT AND THE IP AGREEMENT, TOGETHER
WITH ALL OTHER DOCUMENTS EXECUTED IN CONNECTION THEREWITH EVIDENCING, SECURING
OR OTHERWISE RELATING TO THE OBLIGATIONS (OTHER THAN THIS LOAN MODIFICATION
AGREEMENT) 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 SECTION 6.9 ENTITLED “FINANCIAL COVENANTS” IN ITS
ENTIRETY:

 

“              6.9          FINANCIAL COVENANTS.

 

Borrower shall maintain at all times, to be tested as of the last day of each
month, unless otherwise noted, on a consolidated basis with respect to Borrower
and its Subsidiaries:

 

(a)                                  Liquidity. Borrower’s (A) unrestricted cash
on deposit at Bank plus (B) unused availability pursuant to the Revolving Line
under this Agreement, as determined by Bank with reference to the Availability
Amount set forth herein, of at least $3,000,000.

 

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(b)           Tangible Net Worth. A Tangible Net Worth of at least (i) from the
Effective Date through March 29, 2008, $17,500,000, and (ii) from May 3, 2008
and as of the end of each fiscal month of Borrower thereafter, $16,500,000. The
Tangible Net Worth requirements set forth herein shall increase by 50% of
quarterly Net Income and 50% of issuances of equity after the Effective Date.”

 

and inserting in lieu thereof the following:

 

“              6.9          FINANCIAL COVENANTS.

 

Borrower shall maintain at all times, to be certified by the Borrower as of the
last day of each month, unless otherwise noted, on a consolidated basis with
respect to Borrower and its Subsidiaries:

 

(a)           Liquidity. Borrower’s (A) unrestricted cash on deposit at Bank
plus (B) unusedavailability pursuant to the Revolving Line under this Agreement,
as determined by Bank with reference to the Availability Amount set forth
herein, of at least $4,000,000.

 

(b)           Tangible Net Worth. A Tangible Net Worth, tested as of the last
day of each fiscal quarter, of at least (i) from the Second Loan Modification
Effective Date through March 31, 2009, $12,000,000, and (ii) from June 30, 2009,
and as of the end of each fiscal quarter of Borrower thereafter, $12,500,000.
The Tangible Net Worth requirements set forth herein shall increase by 50% of
quarterly Net Income and 50% of issuances of equity after the Second Loan
Modification Effective Date.”

 

2              THE LOAN AGREEMENT SHALL BE AMENDED BY INSERTING THE FOLLOWING
DEFINITIONS IN THE APPROPRIATE ALPHABETICAL ORDER IN SECTION 13.1 THEREOF,
ENTITLED “DEFINITIONS”:

“              “SECOND LOAN MODIFICATION AGREEMENT” MEANS THAT CERTAIN SECOND
LOAN MODIFICATION AGREEMENT, DATED AS OF THE SECOND LOAN MODIFICATION EFFECTIVE
DATE, BY AND BETWEEN BORROWER AND BANK.”

 

“Second Loan Modification Effective Date” is the date noted on the signature
page to the Second Loan Modification Agreement.”

 

3              THE COMPLIANCE CERTIFICATE APPEARING AS EXHIBIT D TO THE LOAN
AGREEMENT IS HEREBY REPLACED WITH THE COMPLIANCE CERTIFICATE ATTACHED AS
EXHIBIT D HERETO.

 

4.             FEES. BORROWER SHALL PAY TO BANK A MODIFICATION FEE IN THE AMOUNT
OF FIFTEEN THOUSAND DOLLARS ($15,000.00), WHICH FEE SHALL BE DUE AND PAYABLE AND
FULLY EARNED AS OF THE DATE HEREOF. BORROWER SHALL ALSO REIMBURSE BANK FOR ALL
LEGAL FEES AND EXPENSES INCURRED BY BANK IN CONNECTION WITH THE EXISTING LOAN
DOCUMENTS AND THIS AMENDMENT THERETO.

 

5.             RATIFICATION OF INTELLECTUAL PROPERTY SECURITY AGREEMENT.
BORROWER HEREBY RATIFIES, CONFIRMS, AND REAFFIRMS, ALL AND SINGULAR, THE TERMS
AND CONDITIONS OF THE IP AGREEMENT AND ACKNOWLEDGES, CONFIRMS AND AGREES THAT
THE IP AGREEMENT CONTAINS AN ACCURATE AND COMPLETE LISTING OF ALL INTELLECTUAL
PROPERTY.

 

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6.             RATIFICATION OF PERFECTION CERTIFICATE. BORROWER HEREBY RATIFIES,
CONFIRMS AND REAFFIRMS, ALL AND SINGULAR, THE TERMS AND DISCLOSURES CONTAINED IN
A CERTAIN PERFECTION CERTIFICATE DATED AS OF FEBRUARY 20, 2008 BETWEEN BORROWER
AND BANK, AND ACKNOWLEDGES, CONFIRMS AND AGREES THE DISCLOSURES BORROWER
PROVIDED TO BANK IN THE PERFECTION CERTIFICATE, AS AMENDED, HAS NOT CHANGED.

 

7.             AUTHORIZATION TO FILE. BORROWER HEREBY AUTHORIZES BANK TO FILE
UCC FINANCING STATEMENTS WITHOUT NOTICE TO BORROWER, WITH ALL APPROPRIATE
JURISDICTIONS, AS BANK DEEMS APPROPRIATE, IN ORDER TO FURTHER PERFECT OR PROTECT
BANK’S INTEREST IN THE COLLATERAL, INCLUDING A NOTICE THAT ANY DISPOSITION OF
THE COLLATERAL, BY EITHER THE BORROWER OR ANY OTHER PERSON, SHALL BE DEEMED TO
VIOLATE THE RIGHTS OF THE BANK UNDER THE CODE.

 

8.             CONSISTENT CHANGES. THE EXISTING LOAN DOCUMENTS ARE HEREBY
AMENDED WHEREVER NECESSARY TO REFLECT THE CHANGES DESCRIBED ABOVE.

 

9.             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.

 

10.           NO DEFENSES OF BORROWER. BORROWER HEREBY ACKNOWLEDGES AND AGREES
THAT, AS OF THE DATE OF THIS LOAN MODIFICATION AGREEMENT, 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.

 

11.           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.

 

12.           COUNTERSIGNATURE. THIS LOAN MODIFICATION AGREEMENT SHALL BECOME
EFFECTIVE ONLY WHEN IT SHALL HAVE BEEN EXECUTED BY BORROWER AND BANK.

 

[The remainder of this page is intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Modification
Agreement to be executed as a sealed instrument under the laws of the
Commonwealth of Massachusetts as of the Second Loan Modification Effective Date.

 

 

BORROWER:

 

SATCON TECHNOLOGY CORPORATION

 

 

 

By

/s/ Charles S. Rhoades

 

Name:

 Charles S. Rhoades

 

Title:

 President

 

 

 

SATCON POWER SYSTEMS, INC.

 

 

 

By

/s/ Charles S. Rhoades

 

Name:

 Charles S. Rhoades

 

Title:

 President

 

 

 

SATCON APPLIED TECHNOLOGY, INC.

 

 

 

By

/s/ Charles S. Rhoades

 

Name:

 Charles S. Rhoades

 

Title:

 President

 

 

 

SATCON ELECTRONICS, INC.

 

 

 

By

/s/ Charles S. Rhoades

 

Name:

 Charles S. Rhoades

 

Title:

 President

 

 

 

SATCON POWER SYSTEMS CANADA LTD.

 

 

 

By

/s/ Charles S. Rhoades

 

Name:

 Charles S. Rhoades

 

Title:

 President

 

 

 

BANK:

 

 

 

SILICON VALLEY BANK

 

 

 

By

/s/ Philip Silvia

 

Name:

 Philip T. Silvia

 

Title:

 Relationship Manager

 

 

Second Loan Modification Effective Date: September 26, 2008

 

[Satcon –Second Loan Modification Agreement Signature Page]

 

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EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

TO:

 

SILICON VALLEY BANK

 

Date:               

 

 

 

 

 

FROM:

 

SATCON TECHNOLOGY CORPORATION, et al.

 

 

 

The undersigned authorized officer of Satcon Technology Corporation and its
Subsidiaries (“Borrower”) certifies that under the terms and conditions of the
Loan and Security Agreement between Borrower and Bank (the “Agreement”),
(1) Borrower is in complete compliance for the period ending
                     with all required covenants except as noted below,
(2) there are no Events of Default, (3) all representations and warranties in
the Agreement are true and correct in all material respects on this date except
as noted below; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date,
(4) Borrower, and each of its Subsidiaries, has timely filed all required tax
returns and reports, and Borrower has timely paid all foreign, federal, state
and local taxes, assessments, deposits and contributions owed by Borrower except
as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement,
and (5) no Liens have been levied or claims made against Borrower or any of its
Subsidiaries, if any, relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank. Attached are
the required documents supporting the certification. The undersigned certifies
that these are prepared in accordance with generally GAAP consistently applied
from one period to the next except as explained in an accompanying letter or
footnotes. The undersigned acknowledges that no borrowings may be requested at
any time or date of determination that Borrower is not in compliance with any of
the terms of the Agreement, and that compliance is determined not just at the
date this certificate is delivered. Capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenant

 

Required

 

Complies

 

 

 

 

 

Monthly financial statements with Compliance Certificate

 

Monthly within 30 days

 

Yes No

Annual financial statement (CPA Audited) + CC

 

FYE within 120 days

 

Yes No

10-Q, 10-K and 8-K

 

Within 5 days after filing with SEC

 

Yes No

A/R & A/P Agings

 

Monthly within 15 days

 

Yes No

Projections

 

Annually

 

Yes No

 

The following Intellectual Property was registered after the Effective Date (if
no registrations, state “None”)

 

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

 

 

Maintain on a Monthly Basis:

 

 

 

 

 

 

 

Minimum Liquidity

 

$

4,000,000

 

$

 

 

Yes No

 

Minimum Tangible Net Worth

 

$

    

 

$

    

 

Yes No

 

 

 

*See Section 6.9(b)

 

 

 

 

 

 

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The following financial covenant analyses and information set forth in Schedule
1 attached hereto are true and accurate as of the date of this Certificate.

 

The following are the exceptions with respect to the certification above:  (If
no exceptions exist, state “No exceptions to note.”)

 

 

 

 

SATCON TECHNOLOGY CORPORATION, et al.

 

BANK USE ONLY

 

 

 

 

 

Received by:

 

By:

 

 

AUTHORIZED SIGNER

Name:

 

 

Date:

 

Title:

 

 

 

 

 

 

Verified:

 

 

 

AUTHORIZED SIGNER

 

 

Date:

 

 

 

 

 

 

 

Compliance Status:           Yes    No

 

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Schedule 1 to Compliance Certificate

 

Financial Covenants of Borrower

 

Dated:                    

 

I.              Liquidity (Section 6.9(a))

 

Required:               $4,000,000 (at all times)

 

Actual:

 

A.

Unrestricted cash at Bank

 

$

 

 

 

 

 

 

 

 

B.

Availability Amount

 

$

 

 

 

 

 

 

 

 

C.

Liquidity (line A plus line B)

 

$

 

 

 

Is line C equal to or greater than $4,000,000      ?

 

o No, not in compliance

 

o Yes, in compliance

 

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II.            Tangible Net Worth (Section 6.9(b))

 

Required:               As of the end of each fiscal quarter from the Second
Loan Modification Effective Date through March 31, 2009, $12,000,000, and
(ii) from June 30, 2009, and as of the end of each fiscal quarter of Borrower
thereafter, $12,500,000. The Tangible Net Worth requirements set forth herein
shall increase by 50% of quarterly Net Income and 50% of issuances of equity
after the Effective Date.

 

Actual:                   $        

 

A.

Aggregate value of total assets of Borrower

 

$

 

 

 

 

 

 

 

B.

Deferred Financing Costs

 

$

 

 

 

 

 

 

 

C.

Aggregate value of goodwill of Borrower

 

$

 

 

 

 

 

 

 

D.

Aggregate value of intangible assets of Borrower

 

$

 

 

 

 

 

 

 

E.

Aggregate value of obligations owing to Borrower from officers or other
directors

 

$

 

 

 

 

 

 

 

F.

Aggregate value of any reserves not already deducted from assets

 

$

 

 

 

 

 

 

 

G.

Total Liabilities

 

$

 

 

 

 

 

 

 

H.

Value of Line A plus B minus C minus D minus E minus F minus G

 

$

 

 

 

Is line H equal to or greater than $             ?

 

o No, not in compliance

 

o Yes, in compliance

 

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