Document:

EXHIBIT 10.2

 

SEVENTH
LOAN MODIFICATION AGREEMENT

 

This Seventh Loan Modification Agreement (this “Loan
Modification Agreement”) is entered into as of June 16,
2010 (the “Seventh 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 SATCON TECHNOLOGY CORPORATION, a Delaware corporation (“Satcon”); SATCON POWER SYSTEMS, INC.,
a Delaware corporation (“Power”); SATCON ELECTRONICS, INC., a Delaware corporation (“Electronics”), each 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 835 Harrington Court, Burlington,
Ontario L7N 3P3 (the “Canadian Borrower”;
and together with Satcon, Power and Electronics, individually and collectively,
jointly and severally, the “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 further amended by that certain
Second Loan Modification Agreement, dated as of the Second Loan Modification
Effective Date, as further amended by that certain Third Loan Modification
Agreement, dated as of the Third Loan Modification Effective Date, as further
amended by that certain Waiver and Fourth Loan Modification Agreement, dated as
of the Fourth Loan Modification Effective Date, as further amended by that
certain Fifth Loan Modification Agreement, dated as of the Fifth Loan
Modification Effective Date and as further amended by that certain Sixth Loan
Modification Agreement, dated as of April 22, 2010 (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
in a certain Intellectual Property Security Agreement dated as of February 20,
2008, as may be amended from time to time (the “IP Agreement”).

 

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 definition appearing
in Section 13.1 thereof, entitled “Definitions”:

 

“              “Non-formula Sublimit” is an Advance or Advances under the
Revolving Line made after the Sixth Loan Modification Effective Date of up to
Five Million Dollars ($5,000,000); provided, however, the
Non-formula Sublimit shall be reduced to Two Million Five Hundred Thousand
Dollars ($2,500,000) effective on July 1, 2010, and Non-formula Sublimit
Advances in excess of such amount will be immediately due and payable; provided
further, that following the occurrence of a Default or an Event of
Default, the Non-formula Sublimit shall be reduced to Zero Dollars ($0.00) and
Non-

 

1

 

formula Sublimit Advances in excess of such
amount will be immediately due and payable.”

 

and inserting in lieu thereof the following:

 

“              “Non-formula Sublimit” is an Advance or Advances under the
Revolving Line made after the Sixth Loan Modification Effective Date of up to
Five Million Dollars ($5,000,000); provided, however, that (x) the
Non-formula Sublimit shall be reduced to Two Million Five Hundred Thousand
Dollars ($2,500,000) effective on July 1, 2010, and Non-formula Sublimit
Advances in excess of such amount will be immediately due and payable, and (y) the
Non-formula Sublimit shall be permanently reduced to Zero Dollars ($0.00)
effective on August 30, 2010, and Non-formula Sublimit Advances in excess
of such amount will be immediately due and payable; provided  further,
that following the occurrence of a Default or an Event of Default, the
Non-formula Sublimit shall be permanently reduced to Zero Dollars ($0.00) and
Non-formula Sublimit Advances in excess of such amount will be immediately due
and payable.”

 

2                                          The
Loan Agreement shall be amended by inserting the following definitions in the
appropriate alphabetical order in Section 13.1 thereof:

 

“              “Seventh Loan Modification Agreement” means that certain
Seventh Loan Modification Agreement, dated as of the Seventh Loan Modification
Effective Date, by and between Borrower and Bank.”

 

“Seventh Loan Modification
Effective Date” is the date noted in the preamble to the Seventh
Loan Modification Agreement.”

 

4.             FEES.  Borrower shall 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.

 

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 March 10,
2010 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

 

2

 

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.           RIGHT
OF SET-OFF.  In consideration of Bank’s
agreement to enter into this Loan Modification Agreement, Borrower hereby
reaffirms and hereby grants to Bank, a lien, security interest and right of set
off as security for all Obligations to Bank, whether now existing or hereafter
arising upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Bank or any
entity under the control of Bank (including a Bank subsidiary) or in transit to
any of them.  At any time after the
occurrence and during the continuance of an Event of Default, without demand or
notice, Bank may set off the same or any part thereof and apply the same to any
Obligation of Borrower, even though unmatured and regardless of the adequacy of
any other collateral securing the Obligations. 
ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

13.           JURISDICTION/VENUE.  Borrower accepts for itself and in connection
with its properties, unconditionally, the exclusive jurisdiction of any state
or federal court of competent jurisdiction in the Commonwealth of Massachusetts
in any action, suit, or proceeding of any kind against it which arises out of
or by reason of this Loan Modification Agreement.  NOTWITHSTANDING THE FOREGOING,  THE BANK SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST ANY BORROWER OR ANY OF THEIR PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE
IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS
AGAINST THE BORROWER OR ITS PROPERTY.

 

14.           COUNTERSIGNATURE.  This Loan Modification Agreement shall become
effective only when it shall have been executed by Borrower and Bank.

 

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 Seventh Loan Modification Effective Date.

 

 

	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
  SATCON TECHNOLOGY CORPORATION

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
  /s/ Donald R. Peck

  	
   

  
	
  Name:

  	
     Donald R. Peck

  	
   

  
	
  Title:

  	
    Chief Financial Officer and Treasurer

  	
   

  

 

	
  SATCON POWER SYSTEMS, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
  /s/ Charles S. Rhoades

  	
   

  
	
  Name:

  	
     Charles S. Rhoades

  	
   

  
	
  Title:

  	
    President, Chief Executive Officer

  	
   

  

 

	
  SATCON ELECTRONICS, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
  /s/ Charles S. Rhoades

  	
   

  
	
  Name:

  	
     Charles S. Rhoades

  	
   

  
	
  Title:

  	
    President, Chief Executive Officer

  	
   

  

 

	
  SATCON POWER SYSTEMS CANADA LTD.

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
  /s/ Charles S. Rhoades

  	
   

  
	
  Name:

  	
     Charles S. Rhoades

  	
   

  
	
  Title:

  	
    President, Chief Executive Officer

  	
   

  

 

	
  BANK:

  	
   

  
	
   

  	
   

  
	
  SILICON VALLEY BANK

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
  Name:

  	
     

  	
   

  
	
  Title:

  	
    

  	
   

  

 

[Satcon —
Seventh Loan Modification Agreement Signature Page]Exhibit 10.3

 

EXECUTION
VERSION

 

	
  VENTURE LOAN
  AND SECURITY AGREEMENT

  
	
   

  	
  Dated as of June 16, 2010

  
	
  by and among

  
	
   

  
	
  COMPASS
  HORIZON FUNDING COMPANY LLC,

  a Delaware
  limited liability company

  76 Batterson
  Park Road

  Farmington,
  CT 06032

  
	
   

  
	
  as a Lender,

  
	
   

  
	
  SATCON
  TECHNOLOGY CORPORATION,

  a Delaware corporation

  27 Drydock Avenue

  Boston, MA  02210

  
	
   

  
	
  as a
  Co-Borrower and as Borrower Representative,

  
	
   

  
	
  SATCON POWER
  SYSTEMS, INC.

  a Delaware corporation

  27 Drydock Avenue

  Boston, MA  02210

  	
  SATCON
  ELECTRONICS, INC.

  a Delaware corporation

  27 Drydock Avenue

  Boston, MA  02210

  
	
   

  	
   

  
	
  as a
  Co-Borrower and

  	
  as a
  Co-Borrower

  
	
   

  	
   

  
	
  Commitment Amount:

  	
  $12,000,000

  
	
   

  	
   

  
	
  Commitment Termination Date:

  	
  June 30, 2010

  
			

 

 

Lenders and Co-Borrowers hereby agree as follows:

 

AGREEMENT

 

1.     Definitions and Construction.

 

1.1   Definitions. As used in this
Agreement, the following capitalized terms shall have the following meanings:

 

“Account Control Agreement” means an agreement acceptable to
Lenders which perfects via control Lenders’ security interest in each
Co-Borrower’s deposit accounts and/or accounts holding securities.

 

“Affiliate” means any Person that owns or controls directly or
indirectly ten percent (10%) or more of the Equity Securities of another
entity, any Person that controls or is controlled by or is under common control
with such Persons or any Affiliate of such Persons and each of such Person’s
officers, directors, managers, joint venturers or partners.

 

“Agreement” means this certain Venture Loan and Security
Agreement by and among Co-Borrowers and Lenders dated as of the date on the
cover page hereto, as the same may be amended, restated, supplemented or
otherwise modified from time to time and including all exhibits, attachments
and appendices hereto.

 

“Bankruptcy Code” means the law codified and enacted as
Title 11 of the United States Code, entitled “Bankruptcy” and any
successor statute thereto, in either case, as now or hereafter in effect.

 

“Borrower Representative” means Satcon Technology Corporation,
in its capacity as Borrower Representative pursuant to the provisions of Section 2.7
of this Agreement.

 

“Business Day” means any day that is not a Saturday, Sunday, or
other day on which banking institutions are authorized or required to close in
Connecticut or Massachusetts.

 

“Change of Control” means (a) a merger, consolidation,
reorganization, recapitalization or share exchange (whether in one or a series
of transactions) in which the holders of the Equity Securities of a Co-Borrower
immediately prior to such transaction receive, in exchange for Equity
Securities of such Co-Borrower owned by them, cash, property, or securities of
the resulting or surviving entity and as a result thereof Persons who were
holders of Equity Securities of such Co-Borrower hold (together with any Affiliates
of such Persons) less than 50.1% of the Equity Securities, calculated on a
fully diluted basis, of the resulting legal entity entitled to vote in the
election of directors, (b) sale of all or substantially all of the
property or assets of a Co-Borrower or (c) the initial public offering of
Equity Securities of a Co-Borrower (excluding Satcon Technology Corporation)
other than an offering of Equity Securities of a Co-Borrower for an employee
benefit plan on SEC Form S-8 or a successor form.  For purposes of this definition, “control of
Co-Borrower” shall mean the power, direct or indirect (x) to vote not less
than 50.1% of the Equity Securities having ordinary voting power for the
election of directors (or the individuals performing similar functions) of the
Co-Borrower or (y) to direct or cause the direction of the management and
policies of the Co-Borrower by contract.

 

“Claim” has the meaning given such term in Section 10.3(a) of
this Agreement

 

“Co-Borrower” and “Co-Borrowers” means, individually or
collectively, as applicable, the Co-Borrowers as set forth on the cover page of
this Agreement.

 

1

 

“Code” means the Uniform Commercial Code as adopted and in
effect in the State of Connecticut, as amended from time to time; provided
that if by reason of mandatory provisions of law, the creation and/or
perfection or the effect of perfection or non-perfection of the security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than Connecticut, the term “Code” shall also
mean the Uniform Commercial Code as in effect from time to time in such
jurisdiction for purposes of the provisions hereof relating to such creation,
perfection or effect of perfection or non-perfection.

 

“Collateral” has the meaning given such term in Section 4.1
of this Agreement.

 

“Commitment Amount” has the meaning set forth on the cover page of
this Agreement.

 

“Commitment Fee” has the meaning given such term in Section 2.6(c) of
this Agreement.

 

“Commitment Termination Date” has the meaning as set forth on
the cover page of this Agreement.

 

“Default” means any event which with the passing of time or the
giving of notice or both would become an Event of Default hereunder.

 

“Default Rate” means the per annum rate of interest equal to six
percent (6%) over the Loan Rate, but such rate shall in no event be more
than the highest rate permitted by applicable law to be charged on commercial
loans in a default situation.

 

“Disclosure Schedule” means Exhibit A attached
hereto.

 

“Environmental Laws” means all foreign, federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests, licenses, authorizations
and permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters, including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid
Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the
Toxic Substances Control Act and the Emergency Planning and Community
Right-to-Know Act.

 

“Equity Securities” of any Person means (a) all common
stock, preferred stock, participations, shares, partnership interests,
membership interests or other equity interests in and of such Person
(regardless of how designated and whether or not voting or non-voting) and
(b) all warrants, options and other rights to acquire any of the
foregoing.

 

“ERISA” has the meaning given to such term in Section 7.12
of this Agreement.

 

“Event of Default” has the meaning given to such term in Section 8
of this Agreement.

 

“Foreign Permitted Accounts” has the meaning given to such term
in the definition of Permitted Investments.

 

“Funding Certificate” means a certificate executed by a
Responsible Officer of Borrower Representative substantially in the form of Exhibit B
or such other form as Lenders may agree to accept.

 

“Funding Date” means the date on which the Loan is made to or on
account of Co-Borrowers under this Agreement.

 

2

 

“GAAP” means generally accepted accounting principles as in effect
in the United States of America from time to time, consistently applied.

 

“Good Faith Deposit” has the meaning given such term in Section 2.6(a) of
this Agreement.

 

“Governmental Authority” means (a) any federal, state,
county, municipal or foreign government, or political subdivision thereof,
(b) any governmental or quasi-governmental agency, authority, board,
bureau, commission, department, instrumentality or public body, (c) any
court or administrative tribunal, or (d) with respect to any Person, any
arbitration tribunal or other non-governmental authority to whose jurisdiction
that Person has consented.

 

“Hazardous Materials” means all those substances which are
regulated by, or which may form the basis of liability under, any Environmental
Law, including all substances identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special waste,
hazardous substance, hazardous material, or toxic substance, or petroleum or
petroleum derived substance or waste.

 

“Horizon” means Compass Horizon Funding Company LLC and its
successors and/or assigns.

 

“Indebtedness” means, with respect to Co-Borrowers and their
Subsidiaries, the aggregate amount of, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all obligations of such Person to pay the deferred purchase price of
property or services (excluding trade payables incurred in the ordinary course
of business), (d) all capital lease obligations of such Person,
(e) all obligations or liabilities of others secured by a Lien on any
asset of such Person, whether or not such obligation or liability is assumed,
(f) all obligations or liabilities of others guaranteed by such Person,
and (g) any other obligations or liabilities which are required by GAAP to
be shown as debt on the balance sheet of such Person (provided that accounts
payable, accrued expenses and other liabilities arising in the ordinary course
of business shall not constitute Indebtedness). 
Unless otherwise indicated, the term “Indebtedness” shall include
all Indebtedness of the Co-Borrowers and their Subsidiaries.

 

“Indemnified Person” has the meaning given such term in Section 10.3
of this Agreement.

 

“Intellectual Property” means, with respect to the Co-Borrowers,
all right, title and interest in and to patents, patent rights (and
applications and registrations therefor), trademarks and service marks (and
applications and registrations therefor), inventions, copyrights, mask works
(and applications and registrations therefor), trade names, trade styles,
software and computer programs, source code, object code, trade secrets,
methods, processes, know how, drawings, specifications, descriptions, and all
memoranda, notes, and records with respect to any research and development, all
whether now owned or subsequently acquired or developed by a Co-Borrower and
whether in tangible or intangible form or contained on magnetic media readable
by machine together with all such magnetic media (but not including embedded
computer programs and supporting information included within the definition of “goods”
under the Code).

 

“Investment” means the purchase or acquisition of any capital
stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or the extension of any advance, loan, extension of
credit or capital contribution to, or any other investment in, or deposit with,
any Person.

 

“Landlord Agreement” means an agreement substantially in the
form provided by Lenders to Borrower Representative or such other form as
Lenders may agree to accept.

 

“Lender” means each Lender set forth on the cover page of
this Agreement or otherwise joined to this Agreement from time to time.

 

3

 

“Lenders” means collectively, Horizon and all other Lenders
joined to this Agreement from time to time.

 

“Lenders’ Expenses” means all reasonable costs or expenses
(including reasonable attorneys’ fees and expenses) incurred in connection with
the preparation, negotiation, documentation, administration, perfection and
funding of the Loan Documents; and Lenders’ reasonable attorneys’ fees, costs
and expenses incurred in drafting, amending, modifying, enforcing or defending
the Loan Documents (including fees and expenses of appeal or review), including
the exercise of any rights or remedies afforded hereunder or under applicable
law, whether or not suit is brought, whether before or after bankruptcy or
insolvency, including without limitation all fees and costs incurred by Lenders
in connection with Lenders’ enforcement of their rights in a bankruptcy or
insolvency proceeding filed by or against any Co-Borrower or its Property.

 

“Lien” means any voluntary or involuntary security interest,
pledge, bailment, lease, mortgage, hypothecation, conditional sales and title
retention agreement, encumbrance or other lien with respect to any Property in
favor of any Person.

 

“Loan” means the advance of credit to the Co-Borrowers by
Lenders under this Agreement in the Commitment Amount.

 

“Loan Documents” means, collectively, this Agreement, the Notes,
the Warrants, any Landlord Agreement, any Account Control Agreement and all
other documents, instruments and agreements entered into in connection with
this Agreement, all as amended or extended from time to time.

 

“Loan Rate” means, with respect to the Loan, the per annum rate
of interest (based on a year of twelve 30-day months) equal to the greater of
(a) 12.50% or (b) 12.50% plus the difference between (i) the one
month LIBOR Rate (rounded to the nearest one hundredth percent) as reported in
the Wall Street Journal, on the date which is five (5) Business
Days before the Funding Date for the Loan (or, if the Wall Street Journal
is not published on such date, the next earlier date on which it is published)
and (ii) 0.27%.

 

“Maturity Date” means, with respect to the Loan,
forty-two (42) months from the first day of the month next following the
Funding Date for the Loan, or if earlier, the date of acceleration of the Loan
following an Event of Default or the date of prepayment, whichever is
applicable.

 

“Note” means each promissory note executed by the Co-Borrowers
in connection with the Loan in substantially the form of Exhibit C
attached hereto, and, collectively, “Notes” means all such promissory
notes.

 

“Obligations” means all debt, principal, interest, fees,
charges, expenses and attorneys’ fees and costs and other amounts, obligations,
covenants, and duties owing, jointly and severally, by the Co-Borrowers to
Lenders of any kind and description (whether pursuant to or evidenced by the
Loan Documents, or by any other agreement among Lenders and Co-Borrower related
thereto (other than the Warrants or any stockholders agreement relating
thereto), and whether or not for the payment of money), whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including all Lenders’ Expenses, but excluding any inchoate
indemnity obligations that arose after the repayment in full of the Loan.

 

“Officer’s Certificate” means a certificate executed by a
Responsible Officer substantially in the form of Exhibit E or such
other form as Lenders may agree to accept.

 

“Payment Date” has the meaning given such term in Section 2.2(a) of
this Agreement.

 

4

 

“Permitted Indebtedness” means and includes:

 

(a)   Indebtedness of Co-Borrowers to Lenders;

 

(b)   Indebtedness of Co-Borrowers secured by Liens
permitted under clause (e) of the definition of Permitted Liens, in
an amount not to exceed $100,000 in the aggregate at any time outstanding;

 

(c)   Indebtedness arising from the endorsement of
instruments in the ordinary course of business;

 

(d)   Indebtedness existing on the date hereof, set
forth on the Disclosure Schedule and approved by Lenders;

 

(e)   Indebtedness consisting of either:

 

(i)    A revolving credit facility, not to exceed
the aggregate principal amount of Ten Million Dollars ($10,000,000), pursuant
to that certain that certain Loan and Security Agreement dated as of February 20,
2008, as amended by that certain First Loan Modification Agreement, as further
amended by that certain Second Loan Modification Agreement, dated as of September 26,
2008, as further amended by that certain Third Loan Modification Agreement,
dated as of September 29, 2009, as further amended by that certain Waiver
and Fourth Loan Modification Agreement, dated as of February 18, 2010, as
further amended by that certain Fifth Loan Modification Agreement, dated as of March 10,
2010, and as further amended by that certain Sixth Loan Modification Agreement,
dated as of April 22, 2010 (which
may be further amended, modified or supplemented in accordance with the terms
and conditions of the Subordination Agreement) between Silicon Valley
Bank, Co-Borrowers; and SATCON
POWER SYSTEMS CANADA LTD., a corporation organized under the laws of the
Province of Ontario, Canada, which Indebtedness must be, on or before August 31, 2010, either (B) amended
to conform with the terms described under subsection (e)(ii) of this
definition of Permitted Indebtedness, or (Y) re-paid and/or re-refinanced
with Indebtedness permitted under subsection (e)(ii) of this
definition of Permitted Indebtedness; or

 

(ii)   a revolving credit facility with (a) Silicon Valley Bank or (b) one
or more accredited commercial banks reasonably acceptable to Lenders, in which
the loans are limited to not more than Eighty Percent (80%) of outstanding
eligible accounts receivable plus not more than Forty Percent (40%) of the
eligible inventory of the Co-Borrowers, in an aggregate principal amount not
exceeding Fifteen Million Dollars ($15,000,000);

 

(f)    Indebtedness consisting of security deposits
and reimbursement obligations under letters of credit in favor of landlords and
utilities in the ordinary course of business, in an amount not to exceed
$250,000 in the aggregate at any time outstanding; and

 

(g)   Extensions, refinancings, modifications,
amendments and restatements of any items of Permitted Indebtedness above,
provided that the principal amount thereof is not increased or its repayment
accelerated or the terms thereof are not modified to impose more burdensome
terms upon Co-Borrowers.

 

“Permitted Investments” means and includes any of the following
Investments as to which Lenders have a perfected security interest:

 

(a)   Deposits and deposit accounts with commercial
banks organized under the laws of the United States or a state thereof to the
extent: (i) the deposit accounts of each such institution are insured by
the Federal Deposit Insurance Corporation up to the legal limit; and
(ii) each such

 

5

 

institution has an aggregate capital and
surplus of not less than One Hundred Million Dollars ($100,000,000);

 

(b)   Deposits and deposit accounts with commercial
banks organized outside of the United States, in which accounts Lenders shall
not have a perfected security interest, in an aggregate amount not to exceed
Two Million Dollars ($2,000,000) (the “Foreign Permitted Accounts”), except
that the aggregate deposits in the Foreign Permitted Accounts may exceed Two
Million Dollars ($2,000,000) for a period of up to fifteen (15) calendar days
after the deposit by into one or more of such Foreign Permitted Accounts of
payments received from Co-Borrowers’ customers.

 

(c)   Investments in marketable obligations issued
or fully guaranteed by the United States and maturing not more than one (1) year
from the date of issuance;

 

(d)   Investments in open market commercial paper
rated at least “A1” or “P1” or higher by a national credit rating agency and
maturing not more than one (1) year from the creation thereof;

 

(e)   Investments pursuant to or arising under
currency agreements (including foreign exchange agreements) or interest rate
agreements entered into in the ordinary course of business, not in excess of
$250,000 at any time;

 

(f)    Other Investments aggregating not in excess
of Two Hundred Fifty Thousand Dollars ($250,000) at any time;

 

(g)   Loans or advances made to employees for
travel, relocation or other expenses in the ordinary course of business in an
amount not to exceed Fifty Thousand Dollars ($50,000) in the aggregate,
during any fiscal year;

 

(h)   Investments (cash and letters of credit) for
security deposits in favor of landlords and utilities in the ordinary course of
business, not in excess of $250,000 at any time; and

 

(i)    Investments existing on the date hereof, set
forth on the Disclosure Schedule and approved by Lenders.

 

“Permitted Liens” means and includes:

 

(a)          the Lien created by this
Agreement;

 

(b)   Liens
for fees, taxes, levies, imposts, duties or other governmental charges of any
kind which are not yet delinquent or which are being contested in good faith by
appropriate proceedings which suspend the collection thereof (provided  that
such appropriate proceedings do not involve any substantial danger of the sale,
forfeiture or loss of any material item of Collateral or Collateral which in
the aggregate is material to the Co-Borrowers and that the Co-Borrowers have
adequately bonded such Lien or reserves sufficient to discharge such Lien have
been provided on the books of the Co-Borrowers);

 

(c)   Liens
existing on the date hereof, set forth on the Disclosure Schedule and approved
by Lenders;

 

(d)   carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Liens
arising in the ordinary course of business and which are not delinquent or
remain payable without penalty or which are being contested in good faith and
by appropriate proceedings (provided  that such appropriate
proceedings do not involve any substantial danger of the sale, forfeiture or
loss of any

 

6

 

material item of Collateral or Collateral which in the aggregate is
material to the Co-Borrowers and that the Co-Borrowers have adequately bonded
such Lien or reserves sufficient to discharge such Lien have been provided on
the books of the Co-Borrowers);

 

(e)   Liens
upon any equipment or other personal property acquired by a Co-Borrower after
the date hereof to secure (i) the purchase price of such equipment or
other personal property, or (ii) lease obligations or indebtedness
incurred solely for the purpose of financing the acquisition of such equipment or
other personal property; provided  that (A) such Liens are
confined solely to the equipment or other personal property so acquired and the
proceeds thereof and the amount secured does not exceed the acquisition price
thereof, and (B) no such Lien shall be created, incurred, assumed or
suffered to exist in favor of any Co-Borrower’s officers, directors or
shareholders holding five percent (5%) or more of any Co-Borrower’s
Equity Securities;

 

(f)    Liens
granted in connection with Indebtedness permitted under subsection (e) of
the definition of Permitted Indebtedness;

 

(g)   Leases
or subleases of real property and non-exclusive licenses, sublicenses,
assignments and similar arrangements of Intellectual Property granted in good
faith and in a manner that the board of directors of the effected Co-Borrower
reasonably believes is in or is not opposed to the best interest of such
Co-Borrower;

 

(h)   Liens
securing security deposits to landlords and utilities;

 

(i)    Liens
incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social
security, and other Liens to secure the performance of tenders, statutory
obligations, contract bids, government contracts, performance and return of money
bonds and other similar obligations, incurred in the ordinary course of
business, whether pursuant to statutory requirements, common law or consensual
arrangements; easements, rights-of-way, restrictions and other similar
encumbrances, incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Co-Borrowers; and,
whether pursuant to statutory requirements, common law or consensual
arrangements;

 

(j)    Liens
in favor of customs and revenue authorities arising as a matter of law to
secure payments of customs duties in connection with the importation of goods;

 

(k)   Liens
which constitute rights of setoff of a customary nature or banker’s liens,
whether arising by law or by contract; and

 

(l)    Liens
incurred in the extension, renewal or refinancing of the Indebtedness secured
by Liens described above, but any extension, renewal or replacement Lien
must be limited to the property encumbered by the existing Lien and the
principal amount of the Indebtedness may not increase and, if any such Lien is
subject to a Subordination Agreement, such Lien shall continue to be subject
thereto.

 

“Person” means and includes any individual, any partnership, any
corporation, any business trust, any joint stock company, any limited liability
company, any unincorporated association or any other entity and any domestic or
foreign national, state or local government, any political subdivision thereof,
and any department, agency, authority or bureau of any of the foregoing.

 

“Property” means any interest in any kind of property or asset,
whether real, personal or mixed, whether tangible or intangible.

 

7

 

“Responsible Officer” has the meaning given such term in Section 6.3
of this Agreement.

 

“Scheduled Amortization Payments” has the meaning given such
term in Section 2.2(a) of this Agreement.

 

“Scheduled Interest Payments” has the meaning given such term in
Section 2.2(a) of this Agreement.

 

“Scheduled Payments” has the meaning given such term in Section 2.2(a) of
this Agreement.

 

“Solvent” has the meaning given such term in Section 5.11
of this Agreement.

 

“Subordination Agreement” has the meaning given such term in Section 3.2(f) of
this Agreement.

 

“Subsidiary” means any corporation or other entity of which a
majority or more of the outstanding Equity Securities entitled to vote for the election
of directors or other governing body (otherwise than as the result of a
default) is owned by a Co-Borrower directly or indirectly through Subsidiaries.

 

“Third Party Equipment” has the meaning given such term in Section 4.8
of this Agreement.

 

“Transfer” has the meaning given such term in Section 7.4
of this Agreement.

 

“Warrants” means the separate warrant or warrants dated on or
about the date hereof in favor of Lenders or their designees to purchase Common
Stock,  par value $0.01  per
share, of Satcon Technology Corporation.

 

1.2   Construction.  References in this Agreement to “Articles,” “Sections,” “Exhibits,” “Schedules” and “Annexes” are to recitals, articles, sections, exhibits,
schedules and annexes herein and hereto unless otherwise indicated.  References in this Agreement and each of the
other Loan Documents to any document, instrument or agreement shall include
(a) all exhibits, schedules, annexes and other attachments thereto,
(b) all documents, instruments or agreements issued or executed in
replacement thereof, and (c) such document, instrument or agreement, or
replacement or predecessor thereto, as amended, modified and supplemented from
time to time and in effect at any given time. 
The words “hereof,” “herein”
and “hereunder” and words of similar import
when used in this Agreement or any other Loan Document shall refer to this
Agreement or such other Loan Document, as the case may be, as a whole and not
to any particular provision of this Agreement or such other Loan Document, as
the case may be.  The words “include” and “including” and
words of similar import when used in this Agreement or any other Loan Document
shall not be construed to be limiting or exclusive.  Unless otherwise indicated in this Agreement
or any other Loan Document, all accounting terms used in this Agreement or any
other Loan Document shall be construed, and all accounting and financial
computations hereunder or thereunder shall be computed, in accordance with
GAAP, and all terms describing Collateral shall be construed in accordance with
the Code. The terms and information set forth on the cover page of this
Agreement are incorporated into this Agreement.

 

2.     Loan; Repayment.

 

2.1   Commitments.

 

(a)   Subject to the terms and conditions of this
Agreement, and relying upon the representations and warranties herein set forth
as and when made or deemed to be made, Horizon agrees to lend to the
Co-Borrowers the Loan prior to the Commitment Termination Date.

 

8

 

(b)   The Loan and the Notes.  The joint and several obligations of the
Co-Borrowers to repay the unpaid principal amount of and interest on the Loan
shall be evidenced by a Note issued to each applicable Lender.

 

(c)   Use of Proceeds.  The proceeds of the Loan shall be used solely
(i) to pay fees and expenses of the Co-Borrowers incurred in connection
with the transactions contemplated herein including Lenders’ Expenses and other
fees of Lenders as prescribed in this Agreement, (ii) for working capital
or general corporate purposes of the Co-Borrowers or (iii) to repay
Indebtedness permitted under subsection (e)(i) of the definition of
Permitted Indebtedness.

 

(d)   Termination of Commitment to Lend.  Notwithstanding anything in the Loan
Documents, Lenders’ obligation to lend the undisbursed portion of any
Commitment Amount to the Co-Borrowers hereunder shall terminate on the earlier
of (i) at Lenders’ sole election, the occurrence of any Default or Event
of Default hereunder, and (ii) the Commitment Termination Date.  Notwithstanding the foregoing, Lenders’
obligation to lend the undisbursed portion of the Commitment Amount to the
Co-Borrowers shall terminate if, in Lenders’ sole judgment, there has been a
material adverse change in the general affairs, management, results of operations,
condition (financial or otherwise) or prospects of the Co-Borrowers, whether or
not arising from transactions in the ordinary course of business, or there has
been any material adverse deviation by the Co-Borrowers from the business plan
of the Co-Borrowers presented to Lenders on or before the date of this
Agreement.

 

2.2   Payments.

 

(a)   Scheduled Payments.  The Co-Borrowers shall jointly and severally
be obligated to make (i) a payment of accrued interest only on the
outstanding principal amount of the Loan on the first nine (9) Payment
Dates specified in the Note applicable to the Loan (“Scheduled Interest
Payments”) and (ii) an equal payment of principal plus accrued
interest on the outstanding principal amount of the Loan on the next thirty three (33)
Payment Dates specified in the Note applicable to the Loan (“Scheduled
Amortization Payments” and, together with the Scheduled Interest Payments,
the “Scheduled Payments”).  The
Co-Borrowers shall jointly and severally be obligated to make Scheduled
Payments commencing on the date set forth in the Note applicable to the Loan
and continuing thereafter on the first Business Day of each calendar month
(each a “Payment Date”) through the Maturity Date.  In any event, all unpaid principal, accrued
interest and all outstanding fees thereon shall be due and payable in full on
the Maturity Date.

 

(b)   Interim Payment.  Unless the Funding Date for the Loan is the
first day of a calendar month, the Co-Borrowers shall pay the per diem interest
(accruing at the Loan Rate from the Funding Date through the last day of that
month) payable with respect to the Loan on the first Business Day of the next
calendar month.

 

(c)   Payment of Interest.  The Co-Borrowers shall pay interest on the
Loan at a per annum rate of interest equal to the Loan Rate.  All computations of interest (including
interest at the Default Rate, if applicable) shall be based on a year of twelve
30-day months.  Notwithstanding any other
provision hereof, the amount of interest payable hereunder shall not in any
event exceed the maximum amount permitted by the law applicable to interest
charged on commercial loans.

 

(d)   Application of Payments.  All payments received by Lenders prior to an
Event of Default shall be applied as follows: 
(1) first, to Lenders’ Expenses then due and owing; and
(2) second, to all Scheduled Payments then due and owing (provided,
however, if such payments are not sufficient to pay the whole amount
then due, such payments shall be applied first to unpaid interest at the Loan Rate,
then to the remaining amount then due). 
After an Event of Default, all payments and application of proceeds
shall be made as set forth in Section 9.7.

 

9

 

(e)   Late Payment Fee.  The Co-Borrowers shall pay to Lenders a late
payment fee equal to six percent (6%) of any Scheduled Payment not
paid when due.

 

(f)    Default Rate.  The Co-Borrowers shall pay interest at a per
annum rate equal to the Default Rate on any amounts required to be paid by the
Co-Borrowers under this Agreement or the other Loan Documents (including
Scheduled Payments), payable with respect to the Loan, accrued and unpaid
interest, and any fees or other amounts which remain unpaid after such amounts
are due.  If an Event of Default has
occurred and the Obligations have been accelerated (whether automatically or by
Lenders’ election), the Co-Borrowers shall pay interest on the aggregate,
outstanding accelerated balance hereunder from the date of the Event of Default
until all Events of Default are waived, at a per annum rate equal to the
Default Rate.

 

2.3   Prepayments.

 

(a)   Mandatory Prepayment Upon an Acceleration.  If the Loan is accelerated following the
occurrence of an Event of Default pursuant to Section 9.1(a) hereof,
then the Co-Borrowers, in addition to any other amounts which may be due and
owing hereunder, shall immediately pay to Lenders the amount set forth in Section 2.3(b)(ii) below,
as if the Co-Borrowers had opted to prepay on the date of such acceleration.

 

(b)   Optional Prepayment.  Upon not less than thirty (30) days’
prior written notice to Lenders, the Co-Borrowers may, at their option, at any
time, prepay all of the Loan by paying to Lenders an amount equal to:
(i) any accrued and unpaid interest on the portion of the outstanding
principal balance of the Loan; (ii) a prepayment fee equal to (A) if
the Loan is prepaid within twelve (12) months from the Funding Date
thereof, four (4%) percent of the then outstanding principal balance of
the Loan, (B) if the Loan is prepaid more than twelve (12) months
from the Funding Date thereof but less than twenty-four (24) months from
the Funding Date, three (3%) percent of the then outstanding principal
balance of the Loan, or (C) if the Loan is prepaid more than
twenty-four (24) months from the Funding Date thereof but prior to the
Maturity Date, two (2%) percent of the then outstanding principal balance
of the Loan; (iii) the outstanding principal balance of the Loan; and
(iv) all other sums, if any, that shall have become due and payable
hereunder.

 

2.4   Other Payment Terms.

 

(a)   Place and Manner.  The Co-Borrowers shall make all payments to
Lenders in lawful money of the United States. 
All payments of principal, interest, fees and other amounts payable by
the Co-Borrowers to Horizon hereunder shall be made, in immediately available
funds, not later than 10:00 a.m. Connecticut time, on the date on which
such payment is due.  The Co-Borrowers
shall make such payments to each Lender via wire as follows:

 

	
  Credit:

  	
   

  	
  Compass Horizon Funding Company

  LLC/Horizon Credit I LLC

  
	
  Bank Name:

  	
   

  	
  U.S. Bank National Association

  
	
  Bank Address:

  	
   

  	
  P.O. Box 643857 Cincinnati OH 45264-3857

  
	
  Account No.:

  	
   

  	
  Lockbox No.: 153910632600

  
	
  ABA Routing No.:

  	
   

  	
  123000848

  
	
  Reference:

  	
   

  	
  Satcon Technology Corporation Invoice #

  

 

(b)   Date. 
Whenever any payment is due hereunder on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall be included in the computation of interest or fees, as
the case may be.

 

10

 

2.5   Procedure for Making the Loan.

 

(a)   Notice.  Borrower Representative shall notify Lenders
of the date on which Co-Borrowers desire Lenders to make the Loan for the
entire Commitment Amount at least five (5) Business Days in advance
of the desired Funding Date, unless Lenders elect at their sole discretion to
allow the Funding Date to be within five (5) Business Days of
Borrower Representative’s notice, and the entire Commitment Amount will be
drawn in the single Loan made on the Funding Date.  Co-Borrowers’ execution and delivery to the
applicable Lender of a Note shall be Co-Borrowers’ joint and several agreement
to the terms and calculations thereunder with respect to the Loan to be made by
such Lender.  Lenders’ obligation to make
the Loan shall be expressly subject to the satisfaction of the conditions set
forth in Section 3.

 

(b)   Loan Rate Calculation.  Prior to the Funding Date, Lenders shall establish
the Loan Rate with respect to the Loan, which shall be set forth in the Note to
be executed by each Co-Borrower with respect to the Loan and shall be
conclusive in the absence of a manifest error.

 

(c)   Disbursement.  Each Lender shall disburse its portion of the
proceeds of the Loan by wire transfer to the account specified by Borrower
Representative in the Funding Certificate for the Loan.

 

2.6   Good Faith Deposit; Legal and Closing
Expenses; and Commitment Fee.

 

(a)   Good Faith Deposit.  The Co-Borrowers have delivered to Lenders a
good faith deposit in the amount of Sixty Thousand Dollars ($60,000) (the “Good
Faith Deposit”).  The Good Faith
Deposit will be credited to the Commitment Fee. 
If the Funding Date does not occur as a result of the Co-Borrowers’
failure to comply with the conditions set forth in Section 3.2 or
the Co-Borrowers’ election not to proceed with the Loan, Lenders shall retain
the Good Faith Deposit as compensation for their time, expenses and opportunity
cost.

 

(b)   Legal, Due Diligence and Documentation
Expenses.  Concurrently with its
execution and delivery of this Agreement, the Co-Borrowers shall pay Lenders
for their respective legal, due diligence and documentation expenses in
connection with the negotiation and documentation of this Agreement and the
Loan Documents.

 

(c)   Commitment Fee.  Subject to application of the Good Faith
Deposit under Section 2.6(a), the Co-Borrowers shall pay Lenders
concurrently with its execution and delivery of this Agreement a commitment fee
in the amount of One Hundred Twenty Thousand Dollars ($120,000) (the “Commitment
Fee”).  The Commitment Fee shall be
retained by Lenders and be deemed fully earned upon receipt.

 

2.7   Borrower Representative.  Each Co-Borrower hereby designates Satcon
Technology Corporation as Borrower Representative hereunder to act on its
behalf for the purposes of issuing a Funding Certificate, giving instructions
with respect to the disbursement of the proceeds of the Advances, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants and amendment to the Loan Documents) on behalf of any
Co-Borrower or Co-Borrowers under the Loan Documents.  Satcon Technology Corporation hereby accepts
such appointment as Borrower Representative. 
Each Lender may regard any notice or other communication pursuant to any
Loan Document from Borrower Representative as a notice or communication from
all Co-Borrowers, and may give any notice or communication required or
permitted to be given to any Co-Borrower or Co-Borrowers hereunder to Borrower
Representative on behalf of such Co-Borrower or Co-Borrowers.  Each Co-Borrower agrees that each notice,
election agrees that each notice, election, representation and warranty,
covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be 

 

11

 

deemed for all
purposes to have been made by such Co-Borrower and shall be binding upon and
enforceable against such Co-Borrower to the same extent as if the same had been
made directly by such Co-Borrower.

 

3.     Conditions of Loan.

 

3.1   Conditions Precedent to Execution.  At the time of the execution and delivery of
this Agreement, Lenders shall have received, in form and substance reasonably
satisfactory to Lenders, all of the following (unless Lenders have agreed to
waive such condition or document, in which case such condition or document
shall be a condition precedent to the making of the Loan and shall be deemed
added to Section 3.2):

 

(a)   Loan Agreement.  This Agreement duly executed by each
Co-Borrower and Lenders.

 

(b)   Warrants.  The Warrants duly executed by Satcon
Technology Corporation.

 

(c)   Secretary’s Certificate.  A certificate of the secretary or assistant
secretary of each Co-Borrower with copies of the following documents
attached:  (i) the certificate of
incorporation and bylaws of each Co-Borrower certified by such Co-Borrower as
being complete and in full force and effect on the date thereof,
(ii) incumbency and representative signatures, and (iii) resolutions
authorizing the execution and delivery of this Agreement and each of the other
Loan Documents.

 

(d)   Good Standing Certificates.  A good standing certificate from each
Co-Borrower’s state of incorporation and the state in which each Co-Borrower’s
principal place of business is located, each dated as of a recent date.

 

(e)   Certificate of Insurance.  Evidence of the insurance coverage required
by Section 6.8 of this Agreement.

 

(f)    Consents.  All necessary consents of shareholders and
other third parties with respect to the execution, delivery and performance of
this Agreement, the Warrants and the other Loan Documents.

 

(g)   Legal Opinion.  A legal opinion of counsel to the
Co-Borrowers covering the matters set forth in Exhibit D hereto.

 

(h)   Account Control Agreements.  Account Control Agreements for all of the
deposit accounts and accounts holding securities of the Co-Borrowers duly
executed by all of the parties thereto, in the forms provided by or reasonably
acceptable to Lenders.

 

(i)    Other Documents.  Such other documents and completion of such
other matters, as Lenders may reasonably deem necessary or appropriate.

 

3.2   Conditions Precedent to Making the Loan.  The obligation of Lenders to make the Loan is
further subject to the following conditions:

 

(a)   No Default.  No Default or Event of Default shall have
occurred.

 

(b)   Landlord Agreements.  The Co-Borrowers shall have provided Lenders
with a Landlord Agreement for each location where a Co-Borrower’s books and
records and any material portion of the Collateral is located (unless a
Co-Borrower is the fee simple owner thereof).

 

12

 

(c)   Notes. 
Each Co-Borrower shall have duly executed and delivered to the
applicable Lender a Note in the amount of the Loan.

 

(d)   UCC Financing Statements.  Lenders shall have received such documents,
instruments and agreements, including UCC financing statements or amendments to
UCC financing statements, as Lenders shall reasonably request to evidence the
perfection and priority of the security interests granted to Lenders pursuant
to Section 4.  Each
Co-Borrower authorizes Lenders to file any UCC financing statements, continuations
of or amendments to UCC financing statements they deem necessary to perfect
their security interest in the Collateral.

 

(e)   Funding Certificate.  Borrower Representative, for itself and on
behalf of the Co-Borrowers, shall have duly executed and delivered to the
applicable Lender a Funding Certificate for the Loan.

 

(f)    Senior Lender Subordination Agreement.  A subordination agreement, in form and
substance satisfactory to Lenders, with respect to the Indebtedness
constituting Permitted Indebtedness under subsection (e) of the
definition of Permitted Indebtedness, executed by the lender providing such
Indebtedness (the “Subordination Agreement”).

 

(g)   Other Documents.  Such other documents and completion of such
other matters, as Lenders may reasonably deem necessary or appropriate.

 

3.3   Covenant to Deliver.  Borrower Representative agrees (not as a
condition but as a covenant), for itself and on behalf of the other
Co-Borrowers, to deliver to Lenders each item required to be delivered to
Lenders as a condition to the Loan, if the Loan is advanced.  Co-Borrowers expressly agree that the
extension of the Loan prior to the receipt by Lenders of any such item shall
not constitute a waiver by Lenders of the joint and several obligation of the
Co-Borrowers to deliver such item, and any such extension in the absence of a
required item shall be in Lenders’ sole discretion.

 

4.     Creation of Security Interest.

 

4.1   Grant of Security Interest.  Subject to the provisions of Section 4.8
herein, each Co-Borrower grants to Lenders a valid, first priority, continuing
security interest in all presently existing and hereafter acquired or arising
Collateral in order to secure prompt, full and complete payment and performance
of any and all Obligations.  The “Collateral”
shall mean and include all right, title, interest, claims and demands of each
Co-Borrower in and to all personal property of such Co-Borrower, including
without limitation, all of the following:

 

(a)   All goods (and embedded computer programs and
supporting information included within the definition of “goods” under the
Code) and equipment now owned or hereafter acquired, including, without
limitation, all laboratory equipment, computer equipment, office equipment,
machinery, fixtures, vehicles (including motor vehicles and trailers), and any
interest in any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing, wherever located;

 

(b)   All inventory now owned or hereafter
acquired, including, without limitation, all merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
including such inventory as is temporarily out of such Co-Borrower’s custody or
possession or in transit and including any returns upon any accounts or other
proceeds, including insurance proceeds, resulting from the sale or disposition
of any of the foregoing and any documents of title representing any of the
above, and such Co-Borrower’s books relating to any of the foregoing;

 

13

 

(c)   All contract rights and general intangibles
(including Intellectual Property), now owned or hereafter acquired, including,
without limitation, goodwill, license agreements, franchise agreements,
blueprints, drawings, purchase orders, customer lists, route lists,
infringements, claims, software, computer programs, computer disks, computer
tapes, literature, reports, catalogs, design rights, income tax refunds,
payment intangibles, commercial tort claims, payments of insurance and rights
to payment of any kind;

 

(d)   All now existing and hereafter arising
accounts, contract rights, royalties, license rights, license fees and all
other forms of obligations owing to such Co-Borrower arising out of the sale or
lease of goods, the licensing of technology or the rendering of services by
such Co-Borrower (subject, in each case, to the contractual rights of third
parties to require funds received by such Co-Borrower to be expended in a
particular manner), whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by such Co-Borrower and such Co-Borrower’s
books relating to any of the foregoing;

 

(e)   All documents, cash, deposit accounts,
letters of credit (whether or not the letter of credit is evidenced by a
writing), certificates of deposit, instruments, promissory notes, chattel paper
(whether tangible or electronic) and investment property, including, without
limitation, all securities, whether certificated or uncertificated, security
entitlements, securities accounts, commodity contracts and commodity accounts,
and all financial assets held in any securities account or otherwise, wherever
located, now owned or hereafter acquired and such Co-Borrower’s books relating
to the foregoing; and

 

(f)    Any and all claims, rights and interests in
any of the above and all substitutions for, additions and accessions to and
proceeds thereof, including, without limitation, insurance, condemnation,
requisition or similar payments and proceeds of the sale or licensing of
Intellectual Property and proceeds of the sale or licensing of Intellectual
Property.

 

4.2   After-Acquired Property.  If any Co-Borrower shall at any time acquire
a commercial tort claim, as defined in the Code, the Borrower Representative
shall immediately notify the Lenders in writing signed by the Borrower
Representative of the brief details thereof and grant to the Lenders in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
satisfactory to the Lenders.

 

4.3   Duration of Security Interest.  Lenders’ security interest in the Collateral
shall continue until the indefeasible payment in full and the satisfaction of
all Obligations and termination of Lenders’ commitment to fund the Loan,
whereupon such security interest shall terminate.  Lenders shall, at Co-Borrowers’ sole cost and
expense, execute such further documents and take such further actions as may be
reasonably necessary to make effective the release contemplated by this Section 4.3,
including duly authorizing and delivering termination statements for filing in
all relevant jurisdictions under the Code.

 

4.4   Location and Possession of Collateral.   The Collateral is and shall remain in the
possession of the Co-Borrowers at their locations listed on the cover page hereof
or as set forth in the Disclosure Schedule or at such other locations within
the United States and Canada as to which Borrower Representative has provided
not less than thirty (30) days prior written notice to Lenders, provided,
however, that the Co-Borrowers may maintain inventory at their contract
manufacturer’s facility in Shenzhen, China and may maintain finished goods
inventory and spare parts to service specific customer requirements at other
locations as to which the Borrower Representative shall have given the Lenders
prior written notice.  The Co-Borrowers
shall remain in full possession, enjoyment and control of the Collateral
(except only as may be otherwise required by Lenders for perfection of their
security interest therein and except to the extent such Collateral is
maintained by bailees (for which 

 

14

 

executed
bailees agreements in form and substance satisfactory to Lenders have been
provided)).  So long as no Event of
Default has occurred, the Co-Borrowers shall be entitled to manage, operate and
use the Collateral and each part thereof with the rights and franchises
appertaining thereto; provided  that the possession, enjoyment,
control and use of the Collateral shall at all time be subject to the
observance and performance of the terms of this Agreement.

 

4.5   Delivery of Additional Documentation
Required.  The Co-Borrowers shall
from time to time execute and deliver to Lenders, at the request of Lenders,
all financing statements and other documents Lenders may reasonably request, in
form satisfactory to Lenders, to perfect and continue Lenders’ perfected
security interests in the Collateral and in order to consummate fully all of
the transactions contemplated under the Loan Documents.

 

4.6   Right to Inspect; Management Meetings.  Lenders (through any of their officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Co-Borrowers’ usual business hours, to inspect any
Co-Borrower’s facilities, books and records and to make copies thereof and to
inspect, test, and appraise the Collateral in order to verify the Co-Borrowers’
financial condition or the amount, condition of, or any other matter relating
to, the Collateral.  Upon the reasonable
prior notice of Lenders, one or more Responsible Officers of Borrower
Representative will participate in meetings with Lenders to discuss the
business, operations, affairs, finances and conditions of the
Co-Borrowers.  The parties intend that
the rights granted Lenders hereunder shall constitute “management
rights” within the meaning of
29 C.F.R §2510.3-101(d)(3)(ii), but that any advice, recommendations
or participation by Lenders with respect to any business issues shall not be
deemed to give Lenders, nor be deemed an exercise by Lenders of, control over the
Co-Borrowers’ management or policies.

 

4.7   Intellectual Property.

 

(a)   Registration of Existing and Future
Copyrights.  At Lenders’ request at
any time following the occurrence of an event giving rise to the obligation of
Co-Borrowers to notify Lenders pursuant to Section 6.5, Borrower
Representative shall register or cause to be registered with the United States
Copyright Office (i) any software (material to the business of any
Co-Borrowers) developed or acquired by a Co-Borrower in connection with any
product developed or acquired for sale or licensing (ii) any software
(material to the business of any Co-Borrower) developed or acquired by a
Co-Borrower hereafter from time to time in connection with any product
developed or acquired for sale or licensing, and (iii) any major revisions
or upgrades to any software that has previously been registered by or on behalf
of a Co-Borrower with the United States Copyright Office.

 

(b)   Additional Intellectual Property.  At any time following the occurrence of an
event giving rise to the obligation of Co-Borrowers to notify Lenders pursuant
to Section 6.5, Borrower Representative shall promptly notify
Lenders on or before the federal registration or filing by any Co-Borrower of
any patent or patent application, or trademark or trademark application, or
copyright or copyright application and shall promptly execute and deliver, or
cause such Co-Borrower to promptly execute and deliver, to Lenders any grants
of security interests in same, in form acceptable to Lenders, to file with the
United States Patent and Trademark Office or the United States Copyright
Office, as applicable.

 

(c)   Protection of Intellectual Property.  Borrower Representative shall
(i) protect, defend and maintain the validity and enforceability of its
Intellectual Property and promptly advise Lenders in writing of material
infringements, and (ii) not allow any Intellectual Property material to
the business of the Co-Borrowers to be abandoned, forfeited or dedicated to the
public without Lenders’ written consent.

 

15

 

4.8   Lien Subordination.  Lenders agree that the Liens granted to them
hereunder shall be subordinate to the Liens to secure the Indebtedness
permitted under clause (e) of the definition of Permitted Indebtedness,
as more fully described (and for the periods prescribed) in the Subordination
Agreement pursuant to Section 3.2(f).  Lenders agree that the Liens granted to them
hereunder in Third Party Equipment shall be subordinate to the Liens of future
lenders providing equipment financing and equipment lessors for equipment and
other personal property acquired by a Co-Borrower after the date hereof (“Third
Party Equipment”); provided  that in the case of equipment
financings and leasing such Liens are confined solely to the equipment so
financed and the proceeds thereof and are Permitted Liens.  Notwithstanding the foregoing, the
Obligations hereunder shall not be subordinate in right of payment to any
obligations to other equipment lenders or equipment lessors and Lenders’ rights
and remedies hereunder shall not in any way be subordinate to the rights and
remedies of any such lenders or equipment lessors (except with respect to such
lender’s Lien on Third Party Equipment). 
So long as no Event of Default has occurred, Lenders agree to execute
and deliver such agreements and documents as may be reasonably requested by
Borrower Representative from time to time which set forth the lien
subordination described in this Section 4.8 and are reasonably
acceptable to Lenders.  Lenders shall
have no obligation to execute any agreement or document which would impose
obligations, restrictions or lien priority on Lenders which are less favorable
to Lenders than those described in this Section 4.8.

 

5.     Representations and Warranties.  Except as set forth in the Disclosure
Schedule, the Co-Borrowers hereby, jointly and severally, represent and warrant
as follows:

 

5.1   Organization and Qualification.  Each Co-Borrower is a corporation duly
organized and validly existing under the laws of its state of incorporation and
qualified and licensed to do business in, and is in good standing in, any state
in which the conduct of its business or its ownership of Property requires that
it be so qualified or in which the Collateral is located, except for such
states as to which any failure to so qualify would not reasonably be expected
to have a material adverse effect on such Co-Borrower.

 

5.2   Authority.  Each Co-Borrower has all necessary corporate
power and authority to execute, deliver, and perform in accordance with the
terms thereof, the Loan Documents to which it is a party.  Each Co-Borrower has all requisite corporate
power and authority to own and operate its Property and to carry on its businesses
as now conducted.

 

5.3   Conflict with Other Instruments, etc.  Neither the execution and delivery of any
Loan Document to which any Co-Borrower is a party nor the consummation of the
transactions therein contemplated nor compliance with the terms, conditions and
provisions thereof will conflict with or result in a breach of any of the
terms, conditions or provisions of the certificate of incorporation, the
by-laws, or any other organizational documents of any Co-Borrower or any law or
any regulation, order, writ, injunction or decree of any court or governmental
instrumentality or any material agreement or instrument to which any
Co-Borrower is a party or by which it or any of its Property is bound or to
which it or any of its Property is subject, or constitute a default thereunder
or result in the creation or imposition of any Lien, other than Permitted
Liens.

 

5.4   Authorization; Enforceability.  The execution and delivery of this Agreement,
the granting of the security interest in the Collateral, the incurring of the
Loan, the execution and delivery of the other Loan Documents to which any
Co-Borrower is a party and the consummation of the transactions herein and
therein contemplated have each been duly authorized by all necessary action on
the part of each Co-Borrower.  No
authorization, consent, approval, license or exemption of, and no registration,
qualification, designation, declaration or filing with, or notice to, any
Person, except for those which have been made or obtained, is, was or will be
necessary to (i) the valid execution and delivery of any Loan Document to
which any Co-Borrower is a party, (ii) the performance of any Co-Borrower’s
obligations under any Loan Document, or (iii) the granting of the security
interest in the 

 

16

 

Collateral,
except for filings in connection with the perfection of the security interest
in any of the Collateral or the issuance of the Warrants.  The Loan Documents have been duly executed
and delivered and constitute legal, valid and binding obligations of the
Co-Borrowers, enforceable against the Co-Borrowers in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws of general application relating to
or affecting the enforcement of creditors’ rights or by general principles of
equity.

 

5.5   No Prior Encumbrances.  The Co-Borrowers have good and marketable
title to the Collateral, free and clear of Liens except for Permitted
Liens.  The Co-Borrowers have good title
and ownership of, or is licensed under, all of Co-Borrowers’ current
Intellectual Property.  The Co-Borrowers
have not received any communications alleging that any Co-Borrower has
violated, or by conducting its business as proposed, would violate any
proprietary rights of any other Person, except such that would not reasonably
be expected to have a material adverse effect on the Co-Borrowers.  No Co-Borrower has knowledge of any
infringement or violation by it of the intellectual property rights of any
third party and no Co-Borrower has knowledge of any violation or infringement
by a third party of any of its Intellectual Property, in either case, which
would reasonably be expected to have a material adverse effect on the
Co-Borrowers.  The Collateral and the
Intellectual Property constitute substantially all of the assets and property
of the Co-Borrowers.

 

5.6   Name; Location of Chief Executive Office,
Principal Place of Business and Collateral. 
During the past five years, no Co-Borrower has done business under any
name other than that specified on the signature page hereof or as set
forth on the Disclosure Schedule.  Each
Co-Borrower’s jurisdiction of incorporation, chief executive office, principal
place of business, and the place where each Co-Borrower maintains its records
concerning the Collateral are presently located in the state and at the address
set forth on the cover page of this Agreement.  The Collateral is presently located at the
address set forth on the cover page hereof or as set forth in the
Disclosure Schedule.

 

5.7   Litigation.  There are no actions or proceedings pending
by or against any Co-Borrower before any court or administrative agency which
would reasonably be expected to have a material adverse effect on the
Co-Borrowers or the aggregate value of the Collateral.  No Co-Borrower has knowledge of any such
pending or threatened actions or proceedings.

 

5.8   Financial Statements.  All financial statements relating to the
Co-Borrowers or any Affiliate consolidated with any Co-Borrower for financial reporting
purposes that have been or may hereafter be delivered by Borrower
Representative to Lenders present fairly in all material respects Co-Borrowers’
financial condition as of the date thereof and Co-Borrowers’ results of
operations for the period then ended.

 

5.9   No Material Adverse Effect.  No event has occurred and no condition exists
which would reasonably be expected to have a material adverse effect on the
financial condition, business or operations of the Co-Borrowers taken as a
whole since December 31, 2009.

 

5.10 Full Disclosure.  No representation, warranty or other
statement made by any Co-Borrower in any Loan Document (including the
Disclosure Schedule), certificate or written statement furnished to Lenders
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates
or statements not misleading.  There is
no fact known to any Co-Borrower which materially adversely affects, or which
would in the future be reasonably expected to materially adversely affect, the
Co-Borrowers’ ability to perform their obligations under this Agreement.

 

5.11 Solvency, Etc.  The Co-Borrowers, individually and
collectively, are Solvent (as defined below) and, after the execution and
delivery of the Loan Documents and the consummation of the transactions
contemplated thereby, the Co-Borrowers, individually and collectively, will be
Solvent.  

 

17

 

“Solvent”
means, with respect to any Person on any date, that on such date (a) the
fair value of the property of such Person is greater than the fair value of the
liabilities (including, without limitation, contingent liabilities) of such
Person, (b) the present fair saleable value of the assets of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured, (c) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature and (d) such Person is not engaged in business or a transaction,
and is not about to engage in business or a transaction, for which such Person’s
property would constitute an unreasonably small capital.

 

5.12 Subsidiaries.  As of the date hereof, the Co-Borrowers have
no Subsidiaries, except as set forth on the Disclosure Schedule.

 

5.13 Catastrophic Events; Labor Disputes.  Neither the
Co-Borrowers nor their properties is or has been affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or other casualty that would reasonably
be expected to have a material adverse effect on the financial condition,
business or operations of the Co-Borrowers taken as a whole.  There are no disputes presently subject to
grievance procedure, arbitration or litigation under any of the collective
bargaining agreements, employment contracts or employee welfare or incentive
plans to which any Co-Borrower is a party, and there are no strikes, lockouts,
work stoppages or slowdowns, or, to the knowledge of any Co-Borrower,
jurisdictional disputes or organizing activity occurring or threatened which
would reasonably be expected to have a material adverse effect on the financial
condition, business or operations of the Co-Borrowers taken as a whole.

 

5.14 Certain Agreements of Officers, Employees
and Consultants.

 

(a)   No Violation.  To the knowledge of the Co-Borrowers, no
officer, employee or consultant of any Co-Borrower is, or is now expected to
be, in material violation of any term of any employment contract, proprietary
information agreement, nondisclosure agreement, noncompetition agreement or any
other material contract or agreement or any restrictive covenant relating to
the right of any such officer, employee or consultant to be employed by any
Co-Borrower because of the nature of the business conducted or to be conducted
by the Co-Borrowers or relating to the use of trade secrets or proprietary
information of others, and to Co-Borrowers’ knowledge, as of the date hereof,
the continued employment of Co-Borrowers’ respective officers, employees and
consultants does not subject any Co-Borrower to any material liability for any
claim or claims arising out of or in connection with any such contract,
agreement, or covenant.

 

(b)   No Present Intention to Terminate.  To the knowledge of the Co-Borrowers, as of
the date hereof, no officer of any Co-Borrower, and no employee or consultant
of any Co-Borrower whose termination, either individually or in the aggregate,
would reasonably be expected to have a material adverse effect on the financial
condition, business or operations of the Co-Borrowers taken as a whole, has any
present intention of terminating his or her employment or consulting
relationship with such Co-Borrower.

 

6.     Affirmative Covenants.  Each Co-Borrower, until the full and complete
indefeasible payment of the Obligations, covenants and agrees that:

 

6.1   Good Standing.  Each Co-Borrower shall maintain its corporate
existence and its good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to have a material adverse effect on the financial
condition, operations or business of the Co-Borrowers taken as a whole.  Each Co-Borrower shall maintain in force all
licenses, approvals and agreements, the loss of which would reasonably be
expected to have a material adverse effect on the financial condition,
operations or business of the Co-Borrowers taken as a whole.

 

18

 

6.2   Government Compliance.  Each Co-Borrower shall comply with all
statutes, laws, ordinances and government rules and regulations to which
it is subject, noncompliance with which would reasonably be expected to
materially adversely affect the financial condition, operations or business of
the Co-Borrowers.

 

6.3   Financial Statements, Reports,
Certificates.  Borrower
Representative shall deliver to Lenders:

 

(a)   as soon as available, but in any event within
thirty (30) days after the end of each month, a company prepared consolidated
balance sheet, income statement and cash flow statement covering Co-Borrowers’ operations
during such month, certified by Borrower Representative’s chief executive
officer, president, treasurer or chief financial officer (each, a “Responsible
Officer”);

 

(b)   as soon as available, but in any event within
forty-five (45) days after the end of each fiscal quarter, a company
prepared consolidated balance sheet, income statement and cash flow statement
covering Co-Borrowers’ operations during such fiscal quarter, certified by a
Responsible Officer;

 

(c)   as soon as available, but in any event within
ninety (90) days after the end of Co-Borrowers’ fiscal year, audited
consolidated financial statements of Co-Borrowers prepared in accordance with
GAAP, together with an unqualified opinion on such financial statements of a
nationally recognized or other independent public accounting firm reasonably
acceptable to Lenders;

 

(d)   as soon as available, but in any event within
ninety (90) days after the end of Co-Borrowers’ fiscal year or the date of
adoption by the board of directors of Satcon Technology Corporation,
Co-Borrowers’ consolidated operating budget and plan for the next fiscal year
(including, without limitation, updates to the projections presented to Lenders
in connection with the execution of this Agreement);

 

(e)   (x) at the time of filing of Satcon
Technology Corporation’s Form 10-K with the Securities and Exchange
Commission after the end of each fiscal year, the financial statements filed
with such Form 10-K; and (y) at the time of filing of Satcon
Technology Corporation’s Form 10-Q with the Securities and Exchange
Commission after the end of each of the first three fiscal quarters, the
financial statements filed with such Form 10-Q; and

 

(f)    such other information and data with respect
to the financial conditions, business or operations of Co-Borrowers as may be
reasonably requested by Lenders from time to time.

 

In addition, Borrower Representative shall
deliver to Lenders (i) promptly upon becoming available, copies of all
statements, reports and notices sent or made available generally by any
Co-Borrower to its security holders; (ii) immediately upon receipt of
notice thereof, a report of any material legal actions pending or threatened in
writing against any Co-Borrower or the commencement of any action, proceeding
or governmental investigation against any Co-Borrower is commenced that is
reasonably expected to result in damages or costs to the Co-Borrowers of Five
Hundred  Thousand
Dollars ($500,000); and (iii) promptly upon any officer of a
Co-Borrower obtaining knowledge, notice of any material adverse change in the
financial condition, business or operations of the Co-Borrowers.

 

6.4   Certificates of Compliance.  Each time financial statements are furnished
pursuant to Section 6.3 above (except Section 6.3(b)),
Borrower Representative shall deliver to Lenders an Officer’s Certificate
signed by a Responsible Officer in the form of, and certifying to the matters
set forth in, Exhibit E hereto.

 

19

 

6.5   Notice of Defaults; Notice of Lien on
Intellectual Property.

 

(a)   As soon as possible, and in any event within
five (5) days after the discovery of a Default or an Event of
Default, Borrower Representative shall provide Lenders with an Officer’s Certificate
setting forth the facts relating to or giving rise to such Default or Event of
Default and the action which the Co-Borrowers propose to take with respect
thereto.

 

(b)   As soon as possible, and in any event not
later than two (2) Business Days after any officer of any Co-Borrower
obtains knowledge or receives notice of the same, Borrower Representative shall
provide Lenders with notice of any default or event of default pursuant to the
documents and transactions evidencing the Indebtedness permitted under
subsection (e)(i) or (e)(ii) of the definition of Permitted
Indebtedness, specifying the nature and extent thereof and the action (if any)
that is proposed to be taken with respect thereto, and providing such other
information as may be reasonably available to the Co-Borrowers to enable
Lenders and their counsel to evaluate such matters.

 

6.6   Taxes. 
Each Co-Borrower shall make due and timely payment or deposit of all
federal, state, and local taxes, assessments, or contributions required of it
by law or imposed upon any Property belonging to it, and will execute and
deliver to Lenders, on demand, appropriate certificates attesting to the
payment or deposit thereof; and each Co-Borrower will make timely payment or
deposit of all tax payments and withholding taxes required of it by applicable
laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and will, upon request, furnish Lenders
with proof satisfactory to Lenders indicating that such Co-Borrower has made
such payments or deposits; provided  that Co-Borrowers need not
make any payment if the amount or validity of such payment is contested in good
faith by appropriate proceedings which suspend the collection thereof  (provided  that such proceedings
do not involve any substantial danger of the sale, forfeiture or loss of any
material item of Collateral or Collateral which in the aggregate is material to
the Co-Borrowers and that the Co-Borrowers have adequately bonded such amounts
or reserves sufficient to discharge such amounts have been provided on the
books of the Co-Borrowers).

 

6.7   Use; Maintenance.  The Co-Borrowers shall keep and maintain all
of its properties, assets, facilities and all items of equipment and other
similar types of personal property that form any significant portion or
portions of the Collateral in good operating condition and repair, ordinary
wear and tear excepted, and shall make all necessary replacements thereof and
renewals thereto so that the value and operating efficiency thereof shall at
all times be maintained and preserved. 
The Co-Borrowers shall not permit any such material item of Collateral
to become a fixture to real estate or an accession to other personal property,
without the prior written consent of Lenders. 
The Co-Borrowers shall not permit any such material item of Collateral
to be operated or maintained in violation of any applicable law, statute, rule or
regulation, except as would not reasonably be expected to have a material
adverse effect on the financial condition, business or operations of the
Co-Borrowers taken as a whole.  With
respect to items of leased equipment (to the extent Lenders have any security
interest in any Co-Borrower’s residual interest in such equipment under the
lease), the Co-Borrowers shall keep, maintain, repair, replace and operate such
leased equipment in accordance with the terms of the applicable lease, except
as would not reasonably be expected to have a material adverse effect on the
financial condition, business or operations of the Co-Borrowers taken as a
whole.

 

6.8   Insurance. The Co-Borrowers shall keep
their business and the Collateral insured for risks and in amounts, as Lenders
may reasonably request.  Insurance
policies shall be in a form, with companies, and in amounts that are
satisfactory to Lenders.  All property
policies shall have a lender’s loss payable endorsement showing Horizon
Technology Finance Management LLC and its respective successors and assigns as
additional loss payees.  All liability
policies shall show Horizon Technology Finance Management LLC and its
respective successors and assigns as additional insureds.  All policies shall be issued on a primary
non-contributory basis, shall contain waivers of subrogation against 

 

20

 

Horizon, and
shall be so written that the insurers shall have no claim or recourse of any
kind whatsoever against Horizon or against any property of Horizon.  All insurance policies shall provide that the
insurer shall endeavor to give Horizon at least thirty (30) days notice
before canceling its policy.  At Lenders’
request, Borrower Representative shall deliver certified copies of policies and
evidence of all premium payments. 
Proceeds payable under any property policy shall, at Lenders’ option, be
payable to Horizon on account of the Obligations.  Notwithstanding the foregoing, so long as no
Event of Default has occurred, the Co-Borrowers shall have the option of
applying the proceeds of any property policy toward the replacement or repair
of destroyed or damaged property; provided that (a) any such replaced or
repaired property (i) shall be of equal or like value as the replaced or
repaired Collateral and (ii) shall be deemed Collateral in which Lenders
have been granted a first priority security interest, and (b) after the
occurrence of an Event of Default all proceeds payable under such property
policy shall, at the option of Lenders, be payable to Horizon, on account of
the Obligations.  If the Co-Borrowers
fail to obtain insurance as required under this Section 6.8 or to
pay any amount or furnish any required proof of payment to third persons and
Lenders, Lenders may make all or part of such payment or obtain such insurance
policies required in this Section 6.8, and take any action under
the policies Lenders deem prudent.  On or
prior to the Funding Date and prior to each policy renewal, Borrower
Representative shall furnish to Lenders certificates of insurance or other
evidence satisfactory to Lenders that insurance complying with all of the above
requirements is in effect.

 

6.9   Security Interest.  Assuming the proper filing of one or more
financing statement(s) identifying the Collateral with the proper state
and/or local authorities, the security interests in the Collateral granted to
Lenders pursuant to this Agreement (a) constitute and will continue to
constitute first priority security interests (except to the extent any
Permitted Liens may have a superior priority to Lenders’ Lien under this
Agreement) and (b) are and will continue to be superior and prior to the
rights of all other creditors of the Co-Borrowers (except to the extent of such
Permitted Liens).  Except as set forth in
the Disclosure Schedule, as of the date hereof, none of the Co-Borrowers’
Intellectual Property is registered with either the US Patent and Trademark
Office or the US Copyright Office.

 

6.10 Further Assurances.  At any time and from time to time the
Co-Borrowers shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Lenders to make effective the
purposes of this Agreement, including without limitation, the continued
perfection and priority of Lenders’ security interest in the Collateral.

 

6.11 Subsidiaries.  The Co-Borrowers, upon Lender’s request,
shall cause any Subsidiary of any Co-Borrower to provide Lender with a guaranty
of the Obligations and a security interest in such Subsidiary’s assets to
secure such guaranty.

 

7.     Negative Covenants.  Each Co-Borrower, until the full and complete
indefeasible payment of the Obligations, covenants and agrees that no
Co-Borrower shall:

 

7.1   Chief Executive Office.  Change its name, jurisdiction of
incorporation, chief executive office, principal place of business or any of
the items set forth in Section 1 of the Disclosure Schedule without at
least thirty (30) days prior written notice to Lenders.

 

7.2   Collateral Control.  Subject to its rights and obligations under Sections 4.4
and 7.4 (including the obligation of Borrower Representative to provide
Lenders with not less than thirty (30) days prior written notice, refrain
from moving Collateral to locations located outside of the United States and
Canada, except with respect to inventory maintained at Co-Borrowers’ contract
manufacturer’s facility in Shenzhen, China and finished goods inventory and
spare parts maintained at other locations to service specific customer
requirements and, in the case of Collateral to be maintained by bailees,
provide satisfactory bailees agreements), remove any items of Collateral from
any Co-Borrower’s facility located at the address set forth on the cover page hereof
or as set forth on the Disclosure Schedule.

 

21

 

7.3   Liens. 
Create, incur, assume or suffer to exist any Lien of any kind upon any
Co-Borrower’s Property, whether now owned or hereafter acquired, except
Permitted Liens.

 

7.4   Other Dispositions of Collateral.  Convey, sell, lease or otherwise dispose of
all or any part of the Collateral to any Person (collectively, a “Transfer”),
except for: (a) Transfers of inventory in the ordinary course of business;
(b) Transfers of worn-out or obsolete equipment; or (c) Transfers
permitted under sub clause (g) of the definition of Permitted Liens
with respect to Collateral.

 

7.5   Distributions.  (a) Pay any dividends or make any
distributions on its Equity Securities; (b) purchase, redeem, retire,
defease or otherwise acquire for value any of its Equity Securities (other than
repurchases pursuant to the terms of employee stock purchase plans, employee
restricted stock agreements or similar arrangements in an aggregate amount not
to exceed One Hundred Thousand Dollars ($100,000)); (c) return any capital
to any holder of its Equity Securities as such; (d) make any distribution
of assets, Equity Securities, obligations or securities to any holder of its
Equity Securities as such; or (e) set apart any sum for any such purpose; provided,
however, a Co-Borrower may pay dividends payable solely in such
Co-Borrower’s common stock.

 

7.6   Change in Business;
Acquisitions.  Engage in or permit
any of its Subsidiaries to engage in any business other than the businesses
currently engaged in by the Co-Borrowers or reasonably related thereto, or
acquire all or substantially all of the capital stock or assets of another
Person.

 

7.7   Change of Control.  Engage in or permit any of its Subsidiaries
to engage in any Change of Control (other than by the sale by a Co-Borrower of
such Co-Borrower’s Equity Securities in a public offering, to existing holders
of such Co-Borrower’s Equity Securities or to venture capital investors so long
as the Borrower Representative identifies to Lenders the venture capital
investors prior to the closing of the investment).

 

7.8   Transactions With
Affiliates; Creation of Subsidiaries. 
(a) Enter into any contractual obligation with any Affiliate or
engage in any other transaction with any Affiliate except upon terms at least
as favorable to the Co-Borrowers as an arms-length transaction with Persons who
are not Affiliates of any Co-Borrower, or (b) form any Subsidiary unless,
at Lenders’ election, such Subsidiary guarantees the Obligations and grants a
Lien in its assets to secure such guaranty.

 

7.9   Indebtedness Payments.
(a) Prepay, redeem, purchase, defease or otherwise satisfy in any manner
prior to the scheduled repayment thereof any Indebtedness for borrowed money
(other than amounts due or permitted to be prepaid under this Agreement or
under any revolving credit agreement constituting Permitted Indebtedness under
clause (e) of the definition of Permitted Indebtedness) or capital
lease obligations; (b) amend, modify or otherwise change the terms of any
of the Co-Borrowers’ Indebtedness for borrowed money or capital lease
obligations so as to accelerate the scheduled repayment thereof; or
(c) repay any notes to officers, directors or shareholders; provided,
that, notwithstanding the foregoing, the Co-Borrowers may repay or prepay any
Indebtedness permitted under clause (f) of the definition of
Permitted Indebtedness (including, without limitation, any such Indebtedness
owed to officers, directors or shareholders of a Co-Borrower) at any time
solely by converting such Indebtedness into Equity Securities of a Co-Borrower.

 

7.10 Indebtedness.  Create, incur, assume or permit to exist any
Indebtedness except Permitted Indebtedness.

 

7.11 Investments.  Make any Investment except for Permitted
Investments.

 

7.12 Compliance.  Become an “investment company” or a company
controlled by an “investment company” under the Investment Company Act of 1940
or undertake as one of its important 

 

22

 

activities
extending credit to purchase or carry margin stock, or use the proceeds of the
Loan for that purpose; fail to meet the minimum funding requirements of the
Employment Retirement Income Security Act of 1974, and its regulations, as
amended from time to time (“ERISA”), permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation would reasonably be expected to have a material adverse effect on the
financial condition, business or operations of the Co-Borrowers taken as a
whole, or permit any of their Subsidiaries to do so.

 

7.13 Maintenance of Accounts.  (a) Maintain any deposit account or
account holding securities owned by any Co-Borrower except (i) accounts
with respect to which Lenders are able to take such actions as they deem
necessary to obtain a perfected security interest in such accounts through one
or more Account Control Agreements and (ii) Foreign Permitted Accounts; or
(b) grant or allow any other Person (other than Lenders) to perfect a
security interest in, or enter into any agreements with any Persons (other than
Lenders) accomplishing perfection via control as to, any of its deposit
accounts or accounts holding securities other than in favor of the lender or
lenders providing the Co-Borrowers with Indebtedness permitted under subsection (e) of
the definition of Permitted Indebtedness.

 

7.14 Negative Pledge Regarding Intellectual
Property.  (a) Create, incur,
assume or suffer to exist any Lien of any kind upon any Intellectual Property,
except pursuant to agreements covering Indebtedness permitted under
clause (e) of the definition of Permitted Indebtedness, or Transfer
any Intellectual Property, whether now owned or hereafter acquired, other than
non-exclusive licenses of Intellectual Property entered into in the ordinary
course of business; (b) enter into any agreement or permit to exist any
restriction with respect to any Co-Borrower’s right, title and interest in or
to the Intellectual Property other than pursuant hereto or pursuant to
agreements covering Indebtedness permitted under clause (e) of the
definition of Permitted Indebtedness; or (c) take or fail to take any
action which would in any manner impair the enforceability of this Section 7.14.

 

8.     Events of Default.  Any one or more of the following events shall
constitute an “Event of Default” by the Co-Borrowers under this
Agreement:

 

8.1   Failure to Pay.  If any Co-Borrower fails to pay when due and
payable or when declared due and payable in accordance with the Loan Documents:
(a) any Scheduled Payment within three (3) Business Days after the
relevant Payment Date or on the Maturity Date; or (b) any other portion of
the Obligations within five (5) business days after receipt of
written notice from Lenders that such payment is due.

 

8.2   Certain Covenant Defaults.  If any Co-Borrower fails to perform any
obligation or covenant contained in Sections 6 or 7 of this
Agreement.

 

8.3   Other Covenant Defaults.  If any Co-Borrower fails or neglects to
perform, keep, or observe any other material term, provision, condition,
covenant, or agreement contained in this Agreement (other than as set forth in Sections
8.1, 8.2 or 8.4 through 8.14), or in any of the other Loan Documents, and
the Co-Borrowers have failed to cure such default within fifteen (15) days
of the occurrence of such default.  During
this fifteen (15) day period, the failure to cure the default is not an
Event of Default (but no Loan will be made during the cure period).

 

8.4   Material Adverse Change.  If there occurs a material adverse change in
the Co-Borrowers’ business, or if there is a material impairment of the
prospect of repayment of any portion of the Obligations owing to Lenders or a
material impairment of the value or priority of Lenders’ Lien in the
Collateral.

 

8.5   Seizure of Assets, Etc.  If any material portion of any Co-Borrower’s
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of 

 

23

 

any trustee,
receiver or Person acting in a similar capacity and such attachment, seizure,
writ or distress warrant or levy has not been removed, discharged or rescinded
within ten (10) Business Days, or if any Co-Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other
claim becomes a lien or encumbrance upon any material portion of any
Co-Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any assets of any Co-Borrower by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid
within ten (10) Business Days after such Co-Borrower receives notice
thereof; provided  that none of the foregoing shall constitute an
Event of Default where such action or event is stayed or an adequate bond has
been posted pending a good faith contest by the Co-Borrowers.

 

8.6   Service of Process.  The service of process upon any Lender
seeking to attach, by a trustee or other process, any funds of the Co-Borrowers
on deposit or otherwise held by any Lender totaling at least One Hundred
Thousand Dollars ($100,000), or the delivery upon any Lender of a notice of
foreclosure by any Person seeking to attach or foreclose on any funds of the
Co-Borrowers on deposit or otherwise held by such Lender totaling at least One
Hundred Thousand Dollars ($100,000), or the delivery of a notice of foreclosure
or exclusive control to any entity holding or maintaining the Co-Borrowers’
deposit accounts or accounts holding securities by any Person (other than
Lenders) seeking to foreclose or attach any such accounts or securities.

 

8.7   Default on Indebtedness.  One or more defaults shall exist under any
agreement with any third party or parties which consists of the failure of the
Co-Borrowers to pay any Indebtedness at maturity or which results in the
acceleration of the maturity of Indebtedness or the effect of which, pursuant
to a subordination or similar agreement, is to prohibit Lenders from receiving
their regularly scheduled payments due hereunder.

 

8.8   Judgments.  If a judgment or judgments for the payment of
money (not acknowledged by an insurer as fully covered by such insurer) in an
amount, individually or in the aggregate, of at least Five Hundred  Thousand Dollars ($500,000) shall be
rendered against any Co-Borrower and shall remain unsatisfied and unstayed for
a period of ten (10) Business Days or more.

 

8.9   Misrepresentations.  If any material misrepresentation or material
misstatement was made or is made in any warranty, representation, statement,
certification, or report made to a Lender by any Co-Borrower or any officer,
employee, agent, or director of any Co-Borrower.

 

8.10 Breach of Warrants.  If Satcon Technology Corporation shall breach
any material term of the Warrants.

 

8.11 Unenforceable Loan Document.  If any Loan Document shall in any material
respect cease to be, or any Co-Borrower shall assert that any Loan Document is
not, a legal, valid and binding obligation of the Co-Borrowers enforceable
against the Co-Borrowers in accordance with its terms.

 

8.12 Involuntary Insolvency Proceeding.  If a proceeding shall have been instituted in
a court having jurisdiction in the premises seeking a decree or order for
relief in respect of any Co-Borrower in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee
(or similar official) of any Co-Borrower or for any substantial part of its
Property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period of
sixty (60) consecutive days or such court shall enter a decree or order
granting the relief sought in such proceeding.

 

24

 

8.13 Voluntary Insolvency Proceeding.  If any Co-Borrower shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian (or
other similar official) of any Co-Borrower or for any substantial part of its
Property, or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall take any
corporate action in furtherance of any of the foregoing.

 

8.14 Solvency.  Any Co-Borrower at any time is not Solvent.

 

9.     Lenders’ Rights and Remedies.

 

9.1   Rights and Remedies.  Upon the occurrence of any Default or Event
of Default, Lenders shall not have any further obligation to advance money or
extend credit to or for the benefit of any Co-Borrower.  In addition, upon the occurrence of an Event
of Default, Lenders shall have the rights, options, duties and remedies of a
secured party as permitted by law and, in addition to and without limitation of
the foregoing, Lenders may, at their election, without notice of election and
without demand, do any one or more of the following, all of which are
authorized by each Co-Borrower:

 

(a)   Acceleration of Obligations.  Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, including
(i) any accrued and unpaid interest, (ii) the amounts which would
have otherwise come due under Section 2.3(b)(ii) if the Loan
had been voluntarily prepaid, (iii) the unpaid principal balance of the
Loan and (iv) all other sums, if any, that shall have become due and
payable hereunder, immediately due and payable (provided  that
upon the occurrence of an Event of Default described in Section 8.12 or
8.13 all Obligations shall become immediately due and payable without any
action by Lenders);

 

(b)   Protection of Collateral.  Make such payments and do such acts as
Lenders consider necessary or reasonable to protect Lenders’ security interest
in the Collateral.  Each Co-Borrower
agrees to assemble the Collateral if Lenders so require and to make the
Collateral available to Lenders as Lenders may designate.  Subject to rights of third parties, each
Co-Borrower authorizes Lenders and their designees and agents to enter the
premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any Lien which in Lenders’ determination appears or is claimed to be prior or
superior to its security interest and to pay all expenses incurred in
connection therewith.  Subject to the
rights of third parties, with respect to any of the Co-Borrowers’ owned
premises, each Co-Borrower hereby grants Lenders a license to enter into
possession of such premises and to occupy the same, without charge, for up to
one hundred twenty (120) days in order to exercise any of Lenders’ rights
or remedies provided herein, at law, in equity, or otherwise;

 

(c)   Preparation of Collateral for Sale.  Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell (in the manner
provided for herein) the Collateral. 
Lenders and their agents and any purchasers at or after foreclosure are
hereby granted a non-exclusive, irrevocable, perpetual, fully-paid,
royalty-free license or other right, solely pursuant to the provisions of this Section 9.1,
to use, without charge, each Co-Borrower’s Intellectual Property, including
without limitation, labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any Property of a similar nature, now or at any time hereafter owned or
acquired by any Co-Borrower or in which any Co-Borrower now or at any time
hereafter has any rights; provided  that such license shall only
be exercisable in connection with the disposition of Collateral upon Lenders’
exercise of their remedies hereunder, and subject to any superior rights of
third parties, if any;

 

25

 

(d)   Sale of Collateral.  Sell the Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including any Co-Borrower’s
premises) as Lenders determine are commercially reasonable; and

 

(e)   Purchase of Collateral.  Credit bid and purchase all or any portion of
the Collateral at any public sale.  In
addition to the foregoing, upon the occurrence of an Event of Default described
in Section 8.12 or 8.13, (i) the sale of any Collateral shall
be conducted in accordance with Section 363 of the Bankruptcy Code and
(ii) Lenders shall retain the right to bid for or purchase, free from any
right of redemption, stay or appraisal and all rights of marshalling, the
Collateral and any other security for the Obligations or otherwise on the part
of any Co-Borrower, and may make payment on account thereof by using any claim
then due and payable to Lenders from the Co-Borrowers as credit against the
purchase price pursuant to Section 363(k) of the Bankruptcy
Code.  For the avoidance of doubt, the
sale of any Collateral upon the occurrence of an Event of Default described in Section 8.12
or 8.13 that is not conducted in accordance with Section 363 of the
Bankruptcy Code or that otherwise deprives or restricts the right of Lenders to
credit bid pursuant to Section 363(k) shall fail to provide Lenders
with the indubitable equivalent of Lenders’ claims.

 

Any deficiency that exists after disposition of the Collateral as
provided above will be paid immediately by the Co-Borrowers.

 

9.2   Set Off Right.  Lenders may set off and apply to the
Obligations any and all indebtedness at any time owing to or for the credit or
the account of Co-Borrowers or any other assets of Co-Borrowers in Lenders’
possession or control.

 

9.3   Effect of Sale.  Upon the occurrence of an Event of Default,
to the extent permitted by law, each Co-Borrower covenants that it will not at
any time insist upon or plead, or in any manner whatsoever claim or take any
benefit or advantage of, any stay or extension law now or at any time hereafter
in force, nor claim, take nor insist upon any benefit or advantage of or from
any law now or hereafter in force providing for the valuation or appraisement
of the Collateral or any part thereof prior to any sale or sales thereof to be
made pursuant to any provision herein contained, or to the decree, judgment or
order of any court of competent jurisdiction; nor, after such sale or sales,
claim or exercise any right under any statute now or hereafter made or enacted
by any state or otherwise to redeem the property so sold or any part thereof,
and, to the full extent legally permitted, except as to rights expressly
provided herein, hereby expressly waives for itself and on behalf of each and
every Person, except decree or judgment creditors of a Co-Borrower, acquiring
any interest in or title to the Collateral or any part thereof subsequent to
the date of this Agreement, all benefit and advantage of any such law or laws,
and covenants that it will not invoke or utilize any such law or laws or
otherwise hinder, delay or impede the execution of any power herein granted and
delegated to Lenders, but will suffer and permit the execution of every such
power as though no such power, law or laws had been made or enacted.  Any sale, whether under any power of sale
hereby given or by virtue of judicial proceedings, shall operate to divest all
right, title, interest, claim and demand whatsoever, either at law or in
equity, of any Co-Borrower in and to the Property sold, and shall be a
perpetual bar, both at law and in equity, against each Co-Borrower, its
successors and assigns, and against any and all Persons claiming the Property
sold or any part thereof under, by or through any Co-Borrower, its successors
or assigns.

 

9.4   Power of Attorney in Respect of the
Collateral.  Each Co-Borrower does
hereby irrevocably appoint Horizon and its successors and assigns, as agent for
Lenders (which appointment is coupled with an interest), the true and lawful
attorney in fact of the Co-Borrowers with full power of substitution, for it
and in its name to file any notices of security interests, financing statements
and continuations and amendments thereof pursuant to the Code or federal law,
as may be necessary to perfect, or to continue the perfection of Lenders’
security interests in the Collateral. 
Each Co-Borrower does hereby irrevocably appoint Horizon and its
successors and assigns, as agent for Lenders (which 

 

26

 

appointment is
coupled with an interest) on the occurrence of an Event of Default, the true
and lawful attorney in fact of the Co-Borrowers with full power of
substitution, for it and in its name: 
(a) to ask, demand, collect, receive, receipt for, sue for,
compound and give acquittance for any and all rents, issues, profits, avails,
distributions, income, payment draws and other sums in which a security
interest is granted under Section 4 with full power to settle,
adjust or compromise any claim thereunder as fully as if Horizon were such
Co-Borrower itself; (b) to receive payment of and to endorse the name of
each Co-Borrower to any items of Collateral (including checks, drafts and other
orders for the payment of money) that come into Lenders’ possession or under
Lenders’ control; (c) to make all demands, consents and waivers, or take
any other action with respect to, the Collateral; (d) in Lenders’
discretion to file any claim or take any other action or proceedings, either in
its own name or in the name of each Co-Borrower or otherwise, which Lenders may
reasonably deem necessary or appropriate to protect and preserve the right,
title and interest of Lenders in and to the Collateral; (e) endorse each
Co-Borrower’s name on any checks or other forms of payment or security;
(f) sign each Co-Borrower’s name on any invoice or bill of lading for any
account or drafts against account debtors; (g) make, settle, and adjust
all claims under each Co-Borrower’s insurance policies; (h) settle and
adjust disputes and claims about the accounts directly with account debtors,
for amounts and on terms Lenders determine reasonable; (i) transfer the
Collateral into the name of Lenders or a third party as the Code permits; and
(j) to otherwise act with respect thereto as though Lenders were the
outright owner of the Collateral.

 

9.5   Lenders’ Expenses.  If any Co-Borrower fails to pay any amounts
or furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Lenders may do any or all of
the following:  (a) make payment of
the same or any part thereof; or (b) obtain and maintain insurance
policies of the type discussed in Section 6.8 of this Agreement, and
take any action with respect to such policies as Lenders deem prudent.  Any amounts paid or deposited by Lenders
shall constitute Lenders’ Expenses, shall be immediately due and payable, shall
bear interest at the Default Rate and shall be secured by the Collateral.  Any payments made by Lenders shall not
constitute an agreement by Lenders to make similar payments in the future or a
waiver by Lenders of any Event of Default under this Agreement.  Each Co-Borrower shall pay all fees and
expenses, including, without limitation, reasonable attorneys’ fees and costs
and Lenders’ Expenses, incurred by Lenders in the enforcement or attempt to
enforce any of the Obligations hereunder not performed when due.

 

9.6   Remedies Cumulative.  Lenders’ rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be
cumulative.  Lenders shall have all other
rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity.  No exercise by
Lenders of one right or remedy shall be deemed an election, and no waiver by
Lenders of any Event of Default on any Co-Borrower’s part shall be deemed a
continuing waiver.  No delay by Lenders
shall constitute a waiver, election, or acquiescence by them.

 

9.7   Application of Collateral Proceeds.  The proceeds and/or avails of the Collateral,
or any part thereof, and the proceeds and the avails of any remedy hereunder
(as well as any other amounts of any kind held by Lenders, at the time of or
received by Lenders after the occurrence of an Event of Default hereunder)
shall be paid to and applied as follows:

 

(a)   First, to the payment of reasonable
out-of-pocket costs and expenses, including all amounts expended to preserve
the value of the Collateral, of foreclosure or suit, if any, and of such sale
and the exercise of any other rights or remedies, and of all proper fees,
expenses, liability and advances, including reasonable legal expenses and
attorneys’ fees, incurred or made hereunder by Lenders, including, without
limitation, Lenders’ Expenses;

 

(b)   Second, to the payment to Lenders of
the amount then owing or unpaid on the Loan for any accrued and unpaid
interest, the amounts which would have otherwise come due under 

 

27

 

Section 2.3(b)(ii),
if the Loan had been voluntarily prepaid, the principal balance of the Loan,
and all other Obligations with respect to the Loan (provided, however,
if such proceeds shall be insufficient to pay in full the whole amount so due,
owing or unpaid upon the Loan, then to the unpaid interest thereon, then to the
amounts which would have otherwise come due under Section 2.3(b)(ii),
if the Loan had been voluntarily prepaid, then to the principal balance of the
Loan, and then to the payment of other amounts then payable to Lenders under
any of the Loan Documents); and

 

(c)   Third, to the payment of the surplus,
if any, to the Co-Borrower, their successors and assigns, or to the Person
lawfully entitled to receive the same.

 

9.8   Reinstatement of Rights.  If Lenders shall have proceeded to enforce
any right under this Agreement or any other Loan Document by foreclosure, sale,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely, then and in
every such case (unless otherwise ordered by a court of competent
jurisdiction), Lenders shall be restored to their former position and rights
hereunder with respect to the Property subject to the security interest created
under this Agreement.

 

10.   Waivers; Indemnification.

 

10.1 Demand; Protest.  Each Co-Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, notice of any default, nonpayment at maturity, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments, chattel
paper, and guarantees at any time held by Lenders on which any Co-Borrower may
in any way be liable.

 

10.2 Lenders’ Liability for Collateral.  So long as Lenders comply with their obligations,
if any, under the Code, Lenders shall not in any way or manner be liable or
responsible for:  (a) the
safekeeping of the Collateral; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause other than Lenders’ gross
negligence or willful misconduct; (c) any diminution in the value thereof;
or (d) any act or default of any carrier, warehouseman, bailee, forwarding
agency, or other Person whomsoever. 
Subject to the foregoing and applicable law, all risk of loss, damage or
destruction of the Collateral shall be borne by the Co-Borrowers.

 

10.3 Indemnification and Waiver.  Whether or not the transactions contemplated
hereby shall be consummated:

 

(a)   General Indemnity.  Each Co-Borrower agrees upon demand to pay or
reimburse Lenders for all liabilities, obligations and out-of-pocket expenses,
including Lenders’ Expenses and reasonable fees and expenses of counsel for
Lenders from time to time arising in connection with the enforcement or
collection of sums due under the Loan Documents, and in connection with any
amendment or modification of the Loan Documents or any “work-out” in connection
with the Loan Documents.  Each
Co-Borrower shall indemnify, reimburse and hold Lenders, and each of their
respective successors, assigns, agents, attorneys, officers, directors, equity
holders, servants, agents and employees (each an “Indemnified Person”)
harmless from and against all liabilities, losses, damages, actions, suits,
demands, claims of any kind and nature (including claims relating to
environmental discharge, cleanup or compliance), all costs and expenses
whatsoever to the extent they may be incurred or suffered by such Indemnified
Person in connection therewith (including reasonable attorneys’ fees and
expenses), fines, penalties (and other charges of any applicable Governmental
Authority), licensing fees relating to any item of Collateral, damage to or
loss of use of property (including consequential or special damages to third
parties or damages to any Co-Borrower’s property), or bodily injury to or death
of any person (including any agent or employee of any Co-Borrower) (each, a “Claim”),
directly or indirectly relating to or arising out of the use of the proceeds of
the Loan or otherwise, the falsity of any representation or warranty of any
Co-Borrower, any Default or Event of Default, or any Co-Borrower’s 

 

28

 

failure to comply with the terms of this
Agreement or any other Loan Document. 
The foregoing indemnity shall cover, without limitation, (i) any
Claim in connection with a design or other defect (latent or patent) in any
item of equipment or product included in the Collateral, (ii) any Claim
for infringement of any patent, copyright, trademark or other intellectual property
right, (iii) any Claim resulting from the presence on or under or the
escape, seepage, leakage, spillage, discharge, emission or release of any
Hazardous Materials on the premises owned, occupied or leased by any
Co-Borrower, including any Claims asserted or arising under any Environmental
Law, (iv) any Claim for negligence or strict or absolute liability in
tort, or (v) any Claim asserted as to or arising under any Account Control
Agreement or any Landlord Agreement; provided, however, no
Co-Borrower shall indemnify Lenders for any liability incurred by Lenders as a
direct and sole result of Lenders’ gross negligence or willful misconduct.  Such indemnities shall continue in full force
and effect, notwithstanding the expiration or termination of this
Agreement.  Upon Lenders’ written demand,
the Co-Borrowers shall assume and diligently conduct, at their sole cost and
expense, the entire defense of Lenders, each of its members, partners, and each
of their respective, agents, employees, directors, officers, equity holders,
successors and assigns against any indemnified Claim described in this Section 10.3(a).  The Co-Borrowers shall not settle or
compromise any Claim against or involving Lenders without first obtaining
Lenders’ written consent thereto, which consent shall not be unreasonably
withheld.

 

(b)   Waiver.  NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS AGREEMENT OR ANYWHERE ELSE, EACH CO-BORROWER AGREES THAT IT
IS NOT ENTITLED TO OBTAIN AND SHALL NOT SEEK FROM LENDERS UNDER ANY THEORY OF
LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES.

 

(c)   Survival; Defense.  The obligations in this Section 10.3
shall survive payment of all other Obligations pursuant to Section 12.8.  At the election of any Indemnified Person,
the Co-Borrowers shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person’s reasonable discretion,
at the sole cost and expense of the Co-Borrowers.  All amounts owing under this Section 10.3
shall be paid within thirty (30) days after written demand.

 

11.   Notices.  Unless otherwise provided in this Agreement,
all notices or demands by any party relating to this Agreement or any other
agreement entered into in connection herewith shall be in writing and (except
for financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, by prepaid
nationally recognized overnight courier, or by prepaid facsimile to Borrower
Representative, on behalf of the Co-Borrowers, or to the Lenders, as the case
may be, at their respective addresses set forth below:

 

	
  If to Borrower Representative

  or any Co-Borrower:

  	
   

  	
  Satcon Technology Corporation

  27 Drydock Avenue

  Boston, MA 02210

  Attention: General Counsel and Chief Financial Officer

  Fax: (      )
        - 

  Ph: (      )
         -

  
	
   

  	
   

  	
   

  
	
  If to Horizon:

  	
   

  	
  Compass Horizon Funding Company LLC

  76 Batterson Park Road

  Farmington, CT 06032

  Attention: Legal Department

  Fax: (860) 676-8655

  Ph: (860) 676-8654

  

 

29

 

The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.

 

12.   General Provisions.

 

12.1 Successors and Assigns.  This Agreement and the Loan Documents shall bind
and inure to the benefit of the respective successors and permitted assigns of
each of the parties; provided, however, neither this Agreement
nor any rights hereunder may be assigned by any Co-Borrower without Lenders’
prior written consent, which consent may be granted or withheld in Lenders’
sole discretion (excluding the Warrants, which are assignable in accordance
with the terms thereof).  Lenders shall
have the right, without the consent of or notice to the Co-Borrowers, to sell,
transfer, assign, negotiate, or grant participations in all or any part of, or
any interest in Lenders’ rights and benefits hereunder.  Lenders may disclose the Loan Documents and
any other financial or other information relating to the Co-Borrower or any
Subsidiary to any potential participant or assignee of any of the Loan, provided
that such participant or assignee agrees to protect the confidentiality
of such documents and information using the same measures that it uses to
protect its own confidential information. 
The Co-Borrowers hereby
authorize and direct Lenders, for and on behalf of the Co-Borrowers, to
maintain a record of ownership of the Notes and any interest therein, which
record, or “book-entry system”, shall identify the owner or owners of the Notes
and any interests therein.  Such
book-entry system shall be conclusive and binding absent manifest error.  Notwithstanding any other provision of this
Agreement or the Loan Documents, the right to the principal of, and stated
interest on, the Notes may be transferred only through such book-entry system.

 

12.2 Time of Essence.  Time is of the essence for the performance of
all obligations set forth in this Agreement.

 

12.3 Severability of Provisions.  Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

 

12.4 Entire Agreement; Construction; Amendments
and Waivers.

 

(a)   Entire Agreement.  This Agreement and each of the other Loan
Documents dated as of the date hereof, taken together, constitute and contain
the entire agreement among Co-Borrowers and Lenders and supersedes any and all
prior agreements, negotiations, correspondence, understandings and
communications among the parties, whether written or oral, respecting the
subject matter hereof.  Each Co-Borrower
acknowledges that it is not relying on any representation or agreement made by
Lenders or any employee, attorney or agent thereof, other than the specific
agreements set forth in this Agreement and the Loan Documents.

 

(b)   Construction.  This Agreement is the result of negotiations
between and has been reviewed by each Co-Borrower and each Lender executing
this Agreement as of the date hereof and their respective counsel; accordingly,
this Agreement shall be deemed to be the product of the parties hereto, and no
ambiguity shall be construed in favor of or against the Co-Borrowers or
Lenders.  The Co-Borrowers and Lenders
agree that they intend the literal words of this Agreement and the other Loan
Documents and that no parol evidence shall be necessary or appropriate to
establish the Co-Borrowers’ or Lenders’ actual intentions.

 

(c)   Amendments and Waivers.  Any and all discharges or waivers of, or
consents to any departures from any provision of this Agreement or of any of
the other Loan Documents (excluding the Warrants, the provisions of which may
be waived only in accordance with the terms thereof) shall not be effective
without the written consent of Lenders. 
Any and all amendments and modifications of this Agreement or of any of
the other Loan Documents (excluding the Warrants, the 

 

30

 

provisions of which may be amended only in
accordance with the terms thereof) shall not be effective without the written
consent of Lenders and Borrower Representative. 
Any waiver or consent with respect to any provision of the Loan
Documents (excluding the Warrants) shall be effective only in the specific
instance and for the specific purpose for which it was given.  No notice to or demand on Co-Borrowers in any
case shall entitle Co-Borrowers to any other or further notice or demand in
similar or other circumstances.  Any amendment,
modification, waiver or consent affected in accordance with this Section 12.4
shall be binding upon Lenders and on Co-Borrowers.

 

12.5 Reliance by Lenders.  All covenants, agreements, representations
and warranties made herein by the Co-Borrowers shall be deemed to be material
to and to have been relied upon by Lenders, notwithstanding any investigation
by Lenders.

 

12.6 No Set-Offs by the Co-Borrowers.  All sums payable by the Co-Borrowers pursuant
to this Agreement or any of the other Loan Documents shall be payable without
notice or demand and shall be payable in United States Dollars without set-off
or reduction of any manner whatsoever.

 

12.7 Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts (including
signatures delivered by facsimile or other electronic means), each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.

 

12.8 Survival.  All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations or commitment to fund remain outstanding.  The joint and several obligations of the
Co-Borrowers to indemnify Lenders with respect to the expenses, damages,
losses, costs and liabilities described in Section 10.3 shall
survive until all applicable statute of limitations periods with respect to
actions that may be brought against Lenders have run.

 

13.   Relationship of Parties.  The Co-Borrowers and Lenders acknowledge,
understand and agree that the relationship between the Co-Borrowers, on the one
hand, and Lenders, on the other, is, and at all time shall remain solely that
of co-borrowers and lenders.  Lenders
shall not under any circumstances be construed to be a partner or a joint
venturer of any Co-Borrower or any of their respective Affiliates; nor shall
Lenders under any circumstances be deemed to be in a relationship of confidence
or trust or a fiduciary relationship with any Co-Borrower or any of their
respective Affiliates, or to owe any fiduciary duty to any Co-Borrower or any
of their respective Affiliates.  Lenders
do not undertake or assume any responsibility or duty to any Co-Borrower or any
of their respective Affiliates to select, review, inspect, supervise, pass judgment
upon or otherwise inform any Co-Borrower or any of their respective Affiliates
of any matter in connection with its or their Property, any Collateral held by
Lenders or the operations of any Co-Borrower or any of their respective
Affiliates.  Each Co-Borrower and each of
its Affiliates shall rely entirely on its own judgment with respect to such
matters, and any review, inspection, supervision, exercise of judgment or
supply of information undertaken or assumed by Lenders in connection with such matters
is solely for the protection of Lenders and no Co-Borrower nor any Affiliate is
entitled to rely thereon.

 

14.   Confidentiality.  All information (other than periodic reports
filed by Satcon Technology Corporation with the Securities and Exchange Commission)
disclosed by the Co-Borrowers to Lenders in writing or through inspection
pursuant to this Agreement that is marked confidential, shall be considered
confidential.  Lenders agree to use the
same degree of care to safeguard and prevent disclosure of such confidential
information as Lenders use with their own confidential information, but in any
event no less than a reasonable degree of care. 
Lenders shall not disclose such information to any third party (other
than to Lenders’ members, partners, attorneys, governmental regulators, or
auditors, or to Lenders’ 

 

31

 

subsidiaries, affiliates, successors,
assigns, financing sources and prospective transferees and purchasers of any
portion of the Loan, all subject to the same confidentiality obligation set
forth herein or as required by law, regulation, subpoena or other order to be
disclosed) and shall use such information only for purposes of evaluation of
their investment in the Co-Borrowers and the exercise of Lenders’ rights and
the enforcement of its remedies under this Agreement and the other Loan
Documents.  The obligations of
confidentiality shall not apply to any information that (a) was known to
the public prior to disclosure by the Co-Borrowers under this Agreement,
(b) becomes known to the public through no fault of Lenders, (c) is
disclosed to Lenders by a third party having a legal right to make such
disclosure, or (d) is independently developed by Lenders.  Notwithstanding the foregoing, Lenders’
agreement of confidentiality shall not apply if Lenders have acquired
indefeasible title to any Collateral or in connection with any enforcement or
exercise of Lenders’ rights and remedies under this Agreement following an
Event of Default, including the enforcement of Lenders’ security interest in
the Collateral.

 

15.   CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CONNECTICUT, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.  EACH CO-BORROWER AND LENDER HEREBY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE
STATE OF CONNECTICUT.  EACH CO-BORROWER
AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY
OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.

 

16.   Cross-Guaranty of Co-Borrowers.

 

16.1 Cross-Guaranty.  Each Co-Borrower hereby agrees that such
Co-Borrower is jointly and severally liable for, and hereby absolutely and
unconditionally guarantees to Lenders and their respective successors and
assigns, the full and prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of, all Obligations owed or
hereafter owing to Lenders by each other Co-Borrower.  Each Co-Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and
not of collection, that its obligations under this Section 16 shall
not be discharged until payment and performance, in full, of the Obligations
has occurred, and that its obligations under this Section 16 shall
be absolute and unconditional, irrespective of, and unaffected by:

 

(a)   the genuineness, validity, regularity,
enforceability or any future amendment of, or change in, this Agreement, any
other Loan Document or any other agreement, document or instrument to which any
Co-Borrower is or may become a party;

 

(b)   the absence of any action to enforce this
Agreement (including this Section 16) or any other Loan Document,
or the waiver or consent by any Lender with respect to any of the provisions
hereof or thereof;

 

(c)   the existence, value or condition of, or
failure to perfect its Lien against, any security for the Obligations or any
action, or the absence of any action, by any Lender in respect thereof
(including the release of any such security);

 

(d)   the insolvency of any Co-Borrower or any
other Person; or

 

(e)   any other action or circumstances that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor.

 

32

 

Each Co-Borrower shall be regarded, and shall be in the same position,
as principal debtor with respect to the Obligations guaranteed hereunder.

 

16.2 Waivers
by Co-Borrowers.  Each
Co-Borrower expressly waives all rights it may have now or in the future under
any statute, at common law, at law, in equity or otherwise, to compel Lenders
to marshal assets or to proceed in respect of the Obligations guaranteed
hereunder against any other Co-Borrower, any other party or against any
security for the payment and performance of the Obligations before proceeding
against, or as a condition to proceeding against, such Co-Borrower.  Each Co-Borrower and the Lenders agree that
the foregoing waivers are of the essence of the transaction contemplated by
this Agreement and the other Loan Documents and that, but for the provisions of
this Section 16 and such waivers, Lenders would decline to enter
into this Agreement.

 

16.3 Benefit
of Guaranty.  Each Co-Borrower
agrees that the provisions of this Section 16 are for the benefit
of Lenders and their respective successors, transferees, endorsees and assigns,
and nothing herein contained shall impair, as between any other Co-Borrower and
the Lenders, the obligations of such other Co-Borrower under the Loan
Documents.

 

16.4 Waiver
of Subrogation, Etc.  Notwithstanding anything to the contrary in
this Agreement or in any other Loan Document, and except as set forth in Section 16.7,
each Co-Borrower hereby expressly and irrevocably waives any and all rights at
law or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor until the Obligations are indefeasibly
paid in full in cash.  Each Co-Borrower
acknowledges and agrees that this waiver is intended to benefit Lenders and
shall not limit or otherwise affect such Co-Borrower’s liability hereunder or
the enforceability of this Section 16, and that Lenders and their
respective successors and assigns are intended third party beneficiaries of the
waivers and agreements set forth in this Section 16.

 

16.5 Election
of Remedies.  If any Lender may, under applicable
law, proceed to realize its benefits under any of the Loan Documents giving
such Lender a Lien upon any Collateral, whether owned by any Co-Borrower or by
any other Person, either by judicial foreclosure or by non-judicial sale or
enforcement, any Lender may, at its sole option, determine which of its
remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 16. 
If, in the exercise of any of its rights and remedies, any Lender shall
forfeit any of its rights or remedies (including, without limitation, its right
to enter a deficiency judgment against any Co-Borrower or any other Person),
whether because of any applicable laws pertaining to “election of remedies” or
the like, each Co-Borrower hereby consents to such action by such Lender and
waives any claim based upon such action, even if such action by such Lender
shall result in a full or partial loss of any rights of subrogation that each
Co-Borrower might otherwise have had but for such action by such Lender.  Any election of remedies that results in the
denial or impairment of the right of any Lender to seek a deficiency judgment
against any Co-Borrower shall not impair any other Co-Borrower’s obligation to
pay the full amount of the Obligations. 
In the event any Lender shall bid at any foreclosure or trustee’s sale
or at any private sale permitted by law or the Loan Documents, such Lender may
bid all or less than the amount of the Obligations and the amount of such bid
need not be paid by such Lender but shall be credited against the
Obligations.  The amount of the
successful bid at any such sale, whether a Lender or any other party is the
successful bidder, shall be conclusively deemed to be the fair market value of
the Collateral and the difference between such bid amount and the remaining
balance of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 16, notwithstanding that
any present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which any Lender might otherwise
be entitled but for such bidding at any such sale.

 

16.6 Limitation.  Notwithstanding
any provision herein contained to the contrary, each Co-Borrower’s liability
under this Section 16 (which liability is in any event in addition
to amounts for 

 

33

 

which such
Co-Borrower is primarily liable under this Agreement) shall be limited to an
amount not to exceed as of any date of determination the lesser of:

 

(a)   the net amount of all Loans advanced to any
other Co-Borrower under this Agreement and then re-loaned or otherwise
transferred to, or for the benefit of, such Co-Borrower; and

 

(b)   the amount that could be claimed by Lenders
from such Co-Borrower under this Section 16  without
rendering such claim voidable or avoidable under Section 548 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law after taking
into account, among other things, such Co-Borrower’s right of contribution and
indemnification from each other Co-Borrower under Section 16.7.

 

16.7 Contribution
with Respect to Guaranty Obligations.

 

(a)   To the extent that any Co-Borrower shall make
a payment under this Section 16 of all or any of the Obligations
(other than Loans made to such Co-Borrower for which it is primarily liable) (a
“Guarantor Payment”)
that, taking into account all other Guarantor Payments then previously or
concurrently made by any other Co-Borrower, exceeds the amount that such
Co-Borrower would otherwise have paid if each Co-Borrower had paid the
aggregate Obligations satisfied by such Guarantor Payment in the same
proportion that such Co-Borrower’s “Allocable Amount” (as defined below) (as
determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable
Amounts of each of the Co-Borrowers as determined immediately prior to the
making of such Guarantor Payment, then, following indefeasible payment in full
in cash of the Obligations and termination of the commitments to lend
hereunder, such Co-Borrower shall be entitled to receive contribution and
indemnification payments from, and be reimbursed by, each other Co-Borrower for
the amount of such excess, pro rata based upon their respective Allocable
Amounts in effect immediately prior to such Guarantor Payment.

 

(b)   As of any date of determination, the “Allocable Amount” of any
Co-Borrower shall be equal to the maximum amount of the claim that could then
be recovered from such Co-Borrower under this Section 16 without
rendering such claim voidable or avoidable under Section 548 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law.

 

(c)   This Section 16.7 is intended
only to define the relative rights of Co-Borrowers and nothing set forth in
this Section 16.7 is intended to or shall impair the obligations of
Co-Borrowers, jointly and severally, to pay any amounts as and when the same
shall become due and payable in accordance with the terms of this Agreement.  Nothing contained in this Section 16.7
shall limit the liability of any Co-Borrower to pay the Loans made directly or
indirectly to such Co-Borrower and accrued interest, fees and expenses with
respect thereto for which such Co-Borrower shall be primarily liable.

 

(d)   The parties hereto acknowledge that the
rights of contribution and indemnification hereunder shall constitute assets of
the Co-Borrowers to which such contribution and indemnification is owing.

 

(e)   The rights of the indemnifying Co-Borrowers
against other Co-Borrowers under this Section 16 shall be
exercisable upon the full and indefeasible payment of the Obligations and the
termination of the commitments to lend hereunder.

 

16.8 Liability Cumulative. 
The liability of Co-Borrowers under this Section 16 is in
addition to and shall be cumulative with all liabilities of each Co-Borrower to
the Lenders under this Agreement and the other Loan Documents to which such
Co-Borrower is a party or in respect of any 

 

34

 

Obligations or
obligation of the other Co-Borrower, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.

 

[Remainder of page intentionally left
blank. Signature page follows]

 

35

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

 

	
   

  	
  BORROWER REPRESENTATIVE:

  
	
   

  	
   

  
	
   

  	
  SATCON TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  CO-BORROWERS:

  
	
   

  	
   

  
	
   

  	
  SATCON TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  SATCON POWER SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  SATCON ELECTRONICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  COMPASS HORIZON FUNDING

  COMPANY LLC

  
	
   

  	
  By:

  	
  Horizon Technology Finance Management

  
	
   

  	
  LLC, its adviser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: Robert D. Pomeroy, Jr.

  
	
   

  	
  Title: Chief Executive Officer

  

 

VENTURE LOAN AND SECURITY AGREEMENT

 

 

LIST OF EXHIBITS AND SCHEDULES

 

	
  Exhibit A

  	
  Disclosure Schedule

  
	
  Exhibit B

  	
  Funding Certificate

  
	
  Exhibit C

  	
  Form of Note

  
	
  Exhibit D

  	
  Form of Legal Opinion

  
	
  Exhibit E

  	
  Form of Officer’s Certificate

  

 

 

EXHIBIT A

 

DISCLOSURE SCHEDULE

 

Part I

 

Each Co-Borrower hereby certifies the following information to Lenders:

 

Section 1.  Information For UCC Financing Statements
and Searches and Deposit Accounts and Accounts Holding Securities.

 

(a)   The exact corporate name of each Co-Borrower
as it appears in its Certificate of Incorporation, as amended to date is:
                                                      .

 

(b)   Each Co-Borrower’s state of incorporation is:
                                                .

 

(c)   The organizational ID number of each
Co-Borrower from its jurisdiction of incorporation is
                            .

 

(d)   Each Co-Borrower’s taxpayer identification
number is:
                                    .

 

(e)   The following is a list of all corporate
names, dba or trade names used by each Co-Borrower in the past five years:
                                                      .

 

(f)    The following is a list of all Subsidiaries
of each Co-Borrower:
                        .

 

(g)   The address of the headquarters and chief
executive office of each Co-Borrower is:
                                                .  The following is a list of all States where
the headquarters and chief executive office of each Co-Borrower has been
located in the past five years:                                               .

 

(h)   The following is a list of all States where
property and assets of each Co-Borrower have been located in the past five
years:
                                                                .

 

(i)    The following is a list of all of deposit
accounts of each Co-Borrower (bank name, address and account names and
numbers):
                                                                    .

 

(j)    The following is a list of all accounts
holding securities of each Co-Borrower (broker/bank name, address and account
names and numbers):
                                                .

 

Section 2.               Information
Regarding Intellectual Property.  All
Intellectual Property of each Co-Borrower which is registered with either the
U.S. Patent and Trademark Office or the U.S. Copyright Office is listed below:

 

list of name, filing date and number for each patent, patent
application, trademark, trademark application, copyright or copyright
application

 

 

Part II

 

The following contains exceptions as of
                                ,
2010 to the representations and warranties set forth in Section 5 of the
Venture Loan and Security Agreement dated June [    ],
2010 by and among Satcon Technology Corporation, Satcon Power Systems, Inc.,
Satcon Electronics, Inc. and Compass Horizon Funding Company LLC (the “Loan
Agreement”) of which this Exhibit A is a part.  This Part II of Exhibit A is
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in Section 5 of the Loan Agreement.  The disclosures in any paragraph of this
Part II of Exhibit A shall qualify every other paragraph of
Section 5 of the Loan Agreement to the extent it is reasonably clear from
a reading of the disclosure that such disclosure is applicable to such other
paragraphs.

 

Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Loan Agreement.

 

 

EXHIBIT B

 

FUNDING CERTIFICATE

 

The undersigned, being the duly elected and acting                                               
of SATCON TECHNOLOGY CORPORATION, a Delaware corporation (“Borrower
Representative”), does hereby certify, for itself and on behalf of the
other Co-Borrowers, to COMPASS HORIZON FUNDING COMPANY LLC (“Lender”) in
connection with that certain Venture Loan and Security Agreement dated as of
June [    ], 2010 by and
among Borrower Representative and the other Co-Borrowers party thereto and the
Lenders party thereto from time to time (the “Loan Agreement”; with
other capitalized terms used below having the meanings ascribed thereto in the
Loan Agreement) that:

 

1.             The representations
and warranties made by the Co-Borrowers in Section 5 of the Loan
Agreement and in the other Loan Documents are true and correct as of the date
of the Loan Agreement and as of the date hereof.

 

2.             No
event or condition has occurred that would constitute a Default or an Event of
Default under the Loan Agreement or any other Loan Document.

 

3.             The Co-Borrowers
are in compliance with the covenants and requirements contained in Sections 4,
6 and 7 of the Loan Agreement.

 

4.             All conditions
referred to in Section 3 of the Loan Agreement to the making of the
Loan to be made on or about the date hereof have been satisfied.

 

5.             No material adverse
change in the general affairs, management, results of operations, condition
(financial or otherwise) or prospects of the Co-Borrowers, whether or not
arising from transactions in the ordinary course of business, has occurred.

 

6.             The proceeds of the
Loan shall be disbursed by Horizon as follows:

 

	
  Loan Amount

  	
   

  	
  $

  	
  12,000,000.00

  	
   

  
	
  Less:

  	
   

  	
   

  	
   

  
	
  Legal Fees

  	
   

  	
  $

  	
   

  	
   

  
	
  Balance of Commitment Fee

  	
   

  	
  $

  	
   

  	
   

  
	
  Net Proceeds due from Horizon:

  	
   

  	
  $

  	
   

  	
   

  

 

7.             The aggregate net
proceeds of the Loan in the amount of
$                                  
shall be transferred to Borrower Representative’s account (on behalf of the
Co-Borrowers) as follows:

 

	
  Account Name:

  	
   

  	
  Satcon Technology Corporation

  	
   

  
	
  Bank Name:

  	
   

  	
  Silicon Valley Bank

  	
   

  
	
  Bank Address:

  	
   

  	
  3003 Tasman Drive

  	
   

  
	
   

  	
   

  	
  Santa Clara, CA 95054 USA

  	
   

  
	
  Account Number:

  	
   

  	
  3300371353

  	
   

  
	
  ABA Number:

  	
   

  	
  121 -
  140 - 399

  	
   

  
	
  SWIFT BIC:

  	
   

  	
  SVBKUS6S

  	
   

  

 

 

Dated: June [    ],
2010

 

	
   

  	
  BORROWER REPRESENTATIVE:

  
	
   

  	
   

  
	
   

  	
  SATCON TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT C

 

SECURED PROMISSORY NOTE

 

	
  $  ,      ,

  	
   

  	
  Dated: June [    ],
  2010

  

 

FOR VALUE RECEIVED, each of the undersigned, SATCON TECHNOLOGY
CORPORATION, a Delaware corporation (“Borrower Representative”), SATCON
POWER SYSTEMS, INC., a Delaware corporation (“Satcon Power”) and
SATCON ELECTRONICS, INC., a Delaware corporation (“Satcon Electronics”
and, together with Borrower Representative and Satcon Power, the “Co-Borrowers”
and each, a “Co-Borrower”), JOINTLY AND SEVERALLY HEREBY PROMISES TO PAY
to the order of COMPASS HORIZON FUNDING COMPANY LLC, a Delaware limited
liability company (“Lender”) the principal amount of
TWELVE MILLION DOLLARS ($12,000,000.00) or such lesser amount as
shall equal the outstanding principal balance of the Loan (the “Loan”)
made to Co-Borrowers by Lender pursuant to the Loan Agreement (as defined
below), and to pay all other amounts due with respect to the Loan on the dates
and in the amounts set forth in the Loan Agreement.

 

Interest on the principal amount of this Note from the date of this
Note shall accrue at the Loan Rate or, if applicable, the Default Rate.  The Loan Rate for this Note is [      ]% per annum based on a
year of twelve 30-day months.  If the
Funding Date is not the first day of the month, interim interest accruing from
the Funding Date through the last day of that month shall be paid on the first
calendar day of the next calendar month. 
Commencing
                    ,
201_, through and including                 ,
201_, on the first day of each month (each an “Interest Payment Date”)
Co-Borrowers shall make payments of accrued interest only on the outstanding
principal amount of the Loan in the amount of
              
Dollars
($                ).  Commencing on
                ,
201_, and continuing on the first day of each month thereafter (each a “Principal
and Interest  Payment Date” and, collectively with each Interest
Payment Date, each a “Payment Date”), Co-Borrowers shall make to Lender
thirty three (33) equal payments of principal plus accrued interest
on the then outstanding principal amount due hereunder each in the amount of
              
Dollars
($                ).  If not sooner paid, all outstanding amounts
hereunder and under the Loan Agreement shall become due and payable on
                                              
(the “Maturity Date”).

 

Principal, interest and all other amounts due with respect to the Loan,
are payable in lawful money of the United States of America to Lender as set
forth in the Loan Agreement.  The
principal amount of this Note and the interest rate applicable thereto, and all
payments made with respect thereto, shall be recorded by Lender and, prior to
any transfer hereof, endorsed on the grid attached hereto which is part of this
Note.

 

This Note is referred to in, and is entitled to the benefits of, the
Venture Loan and Security Agreement dated as of June [    ],
2010 by and among Borrower Representative, the other Co-Borrowers and Compass
Horizon Funding Company LLC (the “Loan Agreement”).  The Loan Agreement, among other things,
(a) provides for the making of a secured Loan to Co-Borrowers, and
(b) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events. 
Capitalized terms used herein but not defined shall have the meanings
ascribed in the Loan Agreement.

 

This Note may not be prepaid, except as set forth in Section 2.3
of the Loan Agreement.

 

This Note and the joint and several obligation of Co-Borrowers to repay
the unpaid principal amount of the Loan, interest on the Loan and all other
amounts due Lender under the Loan Agreement is secured under the Loan
Agreement.

 

Presentment for payment, demand, notice of protest and all other
demands and notices of any kind in connection with the execution, delivery,
performance and enforcement of this Note are hereby waived.

 

 

Co-Borrowers shall pay all fees and expenses, including, without
limitation, reasonable attorneys’ fees and costs and Lenders’ Expenses,
incurred by Lender in the enforcement or attempt to enforce any of Co-Borrowers’
obligations hereunder not performed when due. 
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Connecticut.

 

IN WITNESS WHEREOF, each Co-Borrower has caused this Note to be duly
executed by one of its officers thereunto duly authorized on the date hereof.

 

	
   

  	
  CO-BORROWERS:

  
	
   

  	
   

  
	
   

  	
  SATCON TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  SATCON POWER SYSTEMS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  SATCON ELECTRONICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT D

 

ITEMS TO BE COVERED BY OPINION OF
CO-BORROWERS’ COUNSEL

 

1.             Each Co-Borrower is
a corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware, and is duly qualified and licensed to do
business in, and is in good standing in, the Commonwealth of Massachusetts, the
State of California and any other state in which the conduct of its business or
its ownership of Property requires that it be so qualified or in which the
Collateral is located.

 

2.             Each Co-Borrower
has the full corporate power, authority and legal right, and has obtained all
necessary approvals, consents and given all notices to execute and deliver the
Loan Documents and perform the terms thereof.

 

3.             The Loan Documents
have been duly authorized, executed and delivered by each Co-Borrower and
constitute valid, legal and binding agreements, and are enforceable in
accordance with their terms.

 

4.             To our knowledge,
there is no action, suit, audit, investigation, proceeding or patent claim
pending or threatened against Co-Borrowers in any court or before any
governmental commission, agency, board or authority which might have a material
adverse effect on the business, condition or operations of Co-Borrowers or the
ability of Co-Borrowers to perform their obligations under the Loan Documents.

 

5.             The provisions of
the Agreement are effective under the Uniform Commercial Code presently in
effect in the State of Connecticut (the “Applicable UCC”) to create a valid security interest in favor
of Lenders in the Collateral.

 

6.             The financing
statements of Co-Borrowers (the “Financing Statements”) are in proper
form for filing in the recording office noted thereon.  The due filing and indexing of the Financing
Statements in the UCC records of the Office of the Secretary of State of the
State of Delaware will be sufficient to perfect the security interests created
by the Agreement in those items and types of Collateral described therein in
which a security interest may be perfected under the Applicable UCC by the
filing of a financing statement.

 

7.             The Shares (as
defined in the Warrants) issuable pursuant to exercise or conversion of the
Warrants have been duly authorized and reserved for issuance by Satcon
Technology Corporation and, when issued in accordance with the terms of Satcon
Technology Corporation’s Certificate of Incorporation, as amended, will be
validly issued, fully paid and nonassessable.

 

8.             The execution and
delivery of the Loan Documents are not, and the issuance of the Shares upon
exercise of the Warrants in accordance with the terms thereof will not be,
inconsistent with the Certificate of Incorporation, as amended, or Bylaws of
any Co-Borrower, do not and will not contravene any law, governmental rule or
regulation, judgment or order applicable to any Co-Borrower, and do not and
will not conflict with or contravene any provision of, or constitute a default
under, any indenture, mortgage, contract or other agreement or instrument of
which a Co-Borrower is a party or by which it is bound or require the consent
or approval of, the giving of notice to, the registration or filing with or the
taking of any action in respect of or by, any federal, state or local
government authority or agency or other person, except for the filing of
notices pursuant to federal and state securities laws, which filings will be
effected by the time required thereby.

 

 

EXHIBIT E

 

FORM OF OFFICER’S
CERTIFICATE

 

TO:  COMPASS HORIZON FUNDING
COMPANY LLC

 

Reference is made to the Venture Loan and Security Agreement dated as
of June [    ], 2010 (as it may be amended from time
to time, the “Loan Agreement”) by and among SATCON TECHNOLOGY
CORPORATION (“Borrower Representative”), SATCON POWER SYSTEMS, INC.,
a Delaware corporation (“Satcon Power”) and SATCON ELECTRONICS, INC.,
a Delaware corporation (“Satcon Electronics” and, together with Borrower
Representative and Satcon Power, the “Co-Borrowers” and each, a “Co-Borrower”)
and COMPASS HORIZON FUNDING COMPANY LLC (“Lender”).  Unless otherwise defined herein, capitalized
terms have the meanings given such terms in the Loan Agreement.

 

The undersigned Responsible Officer of the
Borrower Representative hereby certifies to the Lenders, for itself and on
behalf of the other Co-Borrowers, that:

 

1.                                       No
Event of Default or Default has occurred under the Loan Agreement. (If a
Default or Event of Default has occurred, specify the nature and extent thereof
and the action the Co-Borrowers propose to take with respect thereto.)

 

2.                                       Each
Co-Borrower is in compliance with the covenants and requirements contained in Sections 4,
6 and 7 of the Loan Agreement.

 

3.                                       The
information provided in Section 1 of the Disclosure Schedule is currently
true and accurate in all material respects, except as noted below.

 

4.                                       The
Disclosure Schedule accurately lists all Intellectual Property of Co-Borrowers
as to which any Co-Borrower has made filings, applications or registrations
with the United States Copyright Office or the United States Patent and
Trademark Office except as noted below and except as previously noted by
Borrower Representative in writing to Lender.

 

5.                                       Attached
herewith are the [monthly financial statements pursuant to Section 6.3(a) of
the Loan Agreement/quarterly financial statements pursuant to Section 6.3(b) of
the Loan Agreement/annual audited financial statements pursuant to
Section 6.3(c) of the Loan Agreement].  These have been prepared in accordance with
GAAP (subject to year end adjustments and the absence of footnotes) and are
consistent from one period to the next except as noted below.

 

NOTES TO ABOVE CERTIFICATIONS:

 

 

 

	
   

  	
  BORROWER REPRESENTATIVE:

  
	
   

  	
   

  
	
   

  	
  SATCON TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

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