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.


 


1

















 


(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.


 


2

















 


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]


 


3

















 


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]


 

















 


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)

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


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

  
										



 

















 


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

  






 

















 


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