EXHIBIT 10.2


 


LOAN MODIFICATION AGREEMENT


 


This Loan
Modification Agreement  (this “Loan
Modification Agreement”) is entered into as of June29, 2005, with an effective
date of May 31, 2005, by and between SILICON
VALLEY BANK, a California-chartered bank, 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, doing business under the
name “Silicon Valley East” (“Bank”) and SATCON
TECHNOLOGY CORPORATION, a Delaware corporation with offices located
at 27 Drydock Avenue, Boston, Massachusetts 02210 (FAX 617-897-2401); SATCON POWER SYSTEMS, INC., Delaware
corporation with offices located at 27 Drydock Avenue, Boston, Massachusetts
02210; SATCON APPLIED TECHNOLOGY, INC.,
a Delaware corporation with offices located at 27 Drydock Avenue, Boston,
Massachusetts 02210; SATCON ELECTRONICS, INC.,
a Delaware corporation with offices located at 27 Drydock Avenue, Boston,
Massachusetts 02210; and SATCON POWER SYSTEMS
CANADA LTD., a corporation organized under the laws of the Province
of Ontario, Canada with offices located at 35 Harrington Court, Burlington,
Ontario L7N 3P3 (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 January 31, 2005,
evidenced by, among other documents,  a certain Loan and Security Agreement
dated as of January 31, 2005 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 and
a certain Intellectual Property Security Agreement dated January 31, 2005
(the “IP 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.


 


Modification to Loan Agreement.


 


A.                                   Section 1
of the Schedule to the Loan Agreement is hereby amended by deleting the
following text appearing therein in its entirety:


 


“Borrower
acknowledges that (i) Silicon will make no advances under this Agreement
unless and until it has received an audit of the Collateral in form and
substance satisfactory to Silicon, and (ii) Silicon will make no advances
under this Agreement based upon Borrower’s Eligible Inventory unless and until
it has received an appraisal of Borrower’s Inventory in form and substance
satisfactory to Silicon performed by an independent auditor that is acceptable
to Silicon in its sole discretion.”


 


and
substituting the following text therefor:


 


“Borrower
acknowledges that (i) Silicon will make no advances under this Agreement
unless and until it has received an audit of the Collateral in form and
substance satisfactory to Silicon, and (ii) Silicon will make no advances
under this Agreement based upon Borrower’s Eligible Inventory unless and until (a) it
has received an appraisal of Borrower’s Inventory in form and substance
satisfactory to Silicon performed by an independent auditor that is acceptable
to Silicon in its sole discretion, and (b) prior to each request for
an advance under this Agreement based upon Borrower’s Eligible Inventory, Borrower
furnishes Silicon with evidence satisfactory to Silicon, in 


 





















 


Silicon’s sole
discretion, that Borrower has achieved earnings before interest, taxes,
depreciation and amortization of at least $1.00 for the immediately preceding
three month period.”


 


B.                                     Section 5
of the Schedule to the Loan Agreement is hereby amended by deleting the following
text appearing therein:


 


“(Section 5.1):                     Borrower
shall comply with each of the following covenant(s).  Compliance shall be determined as of the end
of each month, except as otherwise specifically provided below:


 


a.
Minimum Tangible Net Worth:


 


Borrower
shall maintain an Tangible Net Worth of not less than
the sum of (i) plus (ii) below:


 


	
  (i)

  	
   

  	
  (a)

  	
   

  	
  from
  October 1, 2004 through and including October 31, 2004 -
  $9,000,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
   

  	
  from
  November 1, 2004 through November 30, 2004 - $8,250,000.00;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
   

  	
  (c) from
  December 1, 2004 through December 31, 2004 - $12,500,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
   

  	
  from
  January 1, 2005 through January 31, 2005 - $11,750,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
   

  	
  from
  February 1, 2005 through February 28, 2005 - $11,000,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f)

  	
   

  	
  from
  March  1, 2005 through March 31, 2005 - $12,500,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (g)

  	
   

  	
  from
  April 1, 2005 through April 30, 2005 - $11,750,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (h)

  	
   

  	
  from
  May 1, 2005 through May 31, 2005 - $11,000,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  from
  June 1, 2005 through June 30, 2005 - $12,500,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (j)

  	
   

  	
  from
  July 1, 2005 through July 31, 2005 - $11,750,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (k)

  	
   

  	
  from
  August 1, 2005 through August 31, 2005 - $11,000,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (l)

  	
   

  	
  from
  September 1, 2005 through September 30, 2005 - $12,500,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (m)

  	
   

  	
  from
  October 1, 2005 through October 31, 2005 - $11,750,000;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (n)

  	
   

  	
  from
  November 1, 2005 through November 30, 2005 - $11,000,000; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (o)

  	
   

  	
  from
  December 1, 2005 through December 31, 2005 - $12,500,000

  



 


(ii)                                  80%
of all consideration received in addition to those amount
to be received pursuant to the Capitalization Event (as defined in Section 8
(4) of this Schedule to Loan and Security Agreement) from proceeds
from the issuance of any equity securities of the Borrower and/or subordinated
debt incurred by the Borrower.


 


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b.
Minimum Cash or Excess Availability:


 


The Borrower shall at all times maintain $400,000.00
in (i) cash deposits maintained at Silicon, and/or (ii) excess “availability”
under this Agreement (net of Loans, Letters of Credit or other indebtedness
under this Agreement), as determined by Silicon based upon the Credit Limit
restrictions set forth in Section 1 above).”


 


and substituting the following
text therefor:


 


“(Section 5.1):                     Borrower
shall comply with each of the following covenants.  Compliance shall be determined as of the end
of each month, except as otherwise specifically provided below:


 


a. Minimum Tangible Net Worth:


 


Borrower
shall maintain a Tangible Net Worth of not less than the sum of (i) plus (ii) below:


 


	
  (i)

  	
  (a)

  	
  at
  June 4, 2005 - $13,000,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  From June 5, 2005
  through July 2, 2005 - $12,750,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  From July 3, 2005
  through August 6, 2005 - $12,600,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  From August 7,
  2005 through September 3, 2005 - $12,300,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  From September 4,
  2005 through September 30, 2005 - $12,300,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  From October  1, 2005 through November 5, 2005 -
  $11,750,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  From November 6,
  2005 through December 3, 2005 - $11,500,000;

  
	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  From December 4,
  2005 through December 31, 2005 - $14,500,000; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  From January 1,
  2006 and thereafter - $14,500,000

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
  (a)

  	
  from
  the date of this Agreement through December 3, 2005, 75% of all
  consideration 

  
	
   

  	
  received from proceeds
  from the issuance of any equity securities of the Borrower and/or
  subordinated debt incurred by the Borrower from June 1, 2005 through December 3,
  2005, and (b) from December 4, 2005 and thereafter, 75% of all
  consideration received from proceeds from the issuance of any equity
  securities of the Borrower and/or subordinated debt incurred by the Borrower
  in excess of $4,000,00.00 from December 4, 2005
  and thereafter.

  



 


b. Minimum Cash or Excess Availability:


 


The Borrower shall at all times maintain $2,000,000.00
(which amount shall be reduced to $800,000.00 upon Silicon’s receipt of the
Borrower’s August 6, 2005 month-end financial statements provided that there
is no then existing Default and the Borrower is otherwise in compliance with
all terms and conditions of this Agreement)  in (i) cash deposits maintained at
Silicon, and/or (ii) excess “availability” under this Agreement (net of
Loans, Letters of Credit or other indebtedness under this Agreement), as
determined by Silicon based upon the Credit Limit restrictions set forth in Section 1
above).”


 


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4.                                       WAIVER.  The Bank hereby waives Borrower’s anticipated
default arising from Borrower’s failure to comply with the Tangible Net Worth
requirement set forth in Section 5a. of the Schedule to
the Loan Agreement as of May 31, 2005.  
The Bank’s waiver of Borrower’s compliance with said foregoing
affirmative covenant shall apply only to the foregoing specific period and
shall not constitute a continuing waiver.


 


5.                                       FEES.  Borrower shall pay to Bank a modification fee
equal to Twenty Thousand Dollars ($20,000.00), 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.


 


6.                                       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.


 


7.                                       RATIFICATION
OF PERFECTION CERTIFICATES.  Borrower
hereby ratifies, confirms, and reaffirms, all and singular, the terms and
disclosures contained in certain Perfection Certificates delivered to the Bank
on or about January 31, 2005, and acknowledges, confirms and agrees the
disclosures and information provided therein have not changed, as of the date
hereof.


 


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 Borrower has no offsets, defenses, claims, or
counterclaims against the 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 the Bank, whether known or unknown, at law or in
equity, all of tem are hereby expressly WAIVED and Borrower hereby RELEASES the
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.


 


[Remainder of page intentionally left blank]


 


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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:

  
	
   

  	
   

  
	
   

  	
  SATCON TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  /David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Title  CEO

  
	
   

  	
   

  
	
   

  	
  SATCON POWER SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  / David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Title  CEO

  
	
   

  	
   

  
	
   

  	
  SATCON APPLIED TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  / David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Title  CEO

  
	
   

  	
   

  
	
   

  	
  SATCON ELECTRONICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  / David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Title  CEO

  
	
   

  	
   

  
	
   

  	
  SATCON POWER SYSTEMS CANADA LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /S/ David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  / David B. Eisenhaure

  	
   

  
	
   

  	
   

  
	
   

  	
  Title  CEO

  
											



 


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  BANK:

  
	
   

  	
   

  
	
   

  	
  SILICON VALLEY BANK, d/b/a

  
	
   

  	
  SILICON VALLEY EAST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Tramack

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Michael Tramack

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
    Relationship Manager

  	
   

  
								



 


6