Document:

EXHIBIT 10.1

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT
(this “Agreement”) dated as of the Effective
Date between SILICON VALLEY BANK, a California
corporation with its principal place of business at 3003 Tasman Drive, Santa
Clara, California 95054 and with a loan production office located at One Newton
Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts  02462 (“Bank”), and (i) SATCON TECHNOLOGY
CORPORATION, a Delaware corporation with offices located at 27
Drydock Avenue, Boston, Massachusetts 02210; SATCON POWER
SYSTEMS, INC., Delaware corporation with offices located at 27
Drydock Avenue, Boston, Massachusetts 02210; SATCON
APPLIED TECHNOLOGY, INC., a Delaware corporation with offices
located at 27 Drydock Avenue, Boston, Massachusetts 02210; SATCON
ELECTRONICS, INC., a Delaware corporation with offices located at 27
Drydock Avenue, Boston, Massachusetts 02210; and SATCON POWER
SYSTEMS CANADA LTD. (the “Canadian Borrower”), a corporation
organized under the laws of the Province of Ontario, Canada with offices
located at 835 Harrington Court, Burlington, Ontario L7N 3P3 (individually and
collectively, jointly and severally, “Borrower”),
provides the terms on which Bank shall lend to Borrower and Borrower shall
repay Bank.  The parties agree as
follows:

 

1              ACCOUNTING AND OTHER TERMS

 

Accounting terms not defined in this Agreement shall
be construed following GAAP. 
Calculations and determinations must be made following GAAP.  Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in Section 13.  All other terms contained in this Agreement,
unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein.

 

2              LOAN AND TERMS OF PAYMENT

 

2.1          Promise to Pay.  Borrower hereby unconditionally promises to
pay Bank the outstanding principal amount of all Credit Extensions and accrued
and unpaid interest thereon as and when due in accordance with this Agreement.

 

2.1.1       Revolving Advances.

 

(a)           Availability.  Subject to the terms and conditions of this
Agreement and to deduction of Reserves, Bank will make Advances to Borrower up
to the Availability Amount.  Amounts borrowed under the Revolving Line may
be repaid, and prior to the Revolving Line Maturity Date, reborrowed, subject
to the applicable terms and conditions precedent herein.

 

(b)           Termination;
Repayment.  The Revolving Line
terminates on the Revolving Line Maturity Date, when the principal amount of
all Advances, the unpaid interest thereon, and all other Obligations relating
to the Revolving Line shall be immediately due and payable.

 

2.1.2       Letters of Credit Sublimit.

 

(a)           As part of the
Revolving Line and subject to deduction of Reserves, Bank shall issue or have
issued Letters of Credit for Borrower’s account.  The face amount of outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit and any Letter of
Credit Reserve) may not exceed $3,000,000 inclusive of Credit Extensions
relating to Sections 2.1.3 and 2.1.4. 
Such aggregate amounts utilized hereunder shall at all times reduce the
amount otherwise available for Advances under the Revolving Line.  If, on the Revolving Line Maturity Date,
there are any outstanding Letters of Credit, then on such date Borrower shall
provide to Bank cash collateral in an amount equal to 105% of the face amount
of all such Letters of Credit plus all interest, fees, and costs due or to
become due in connection therewith (as estimated by Bank in its good faith
business judgment), to secure all of the Obligations relating to said Letters
of Credit.  All Letters of Credit shall
be in form and substance acceptable to Bank in its sole discretion and shall be
subject to the terms and conditions of Bank’s standard Application and Letter
of Credit Agreement (the “Letter of Credit
Application”).  Borrower
agrees to execute any further documentation in connection with the Letters of
Credit as Bank may reasonably request.  Borrower further agrees to be bound by the regulations
and interpretations of the issuer of any Letters of Credit guarantied by Bank
and opened for Borrower’s account or by Bank’s interpretations of any Letter of
Credit issued by Bank for Borrower’s account, and 

 

 

Borrower
understands and agrees that Bank shall not be liable for any error, negligence,
or mistake, whether of omission or commission, in following Borrower’s
instructions or those contained in the Letters of Credit or any modifications,
amendments, or supplements thereto.

 

(b)           The obligation of
Borrower to immediately reimburse Bank for drawings made under Letters of
Credit shall be absolute, unconditional, and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, such Letters
of Credit, and the Letter of Credit Application.

 

(c)           Borrower may request
that Bank issue a Letter of Credit payable in a Foreign Currency.  If a demand for payment is made under any
such Letter of Credit, Bank shall treat such demand as an Advance to Borrower
of the equivalent of the amount thereof (plus fees and charges in connection
therewith such as wire, cable, SWIFT or similar charges) in Dollars at the
then-prevailing rate of exchange in San Francisco, California, for sales of the
Foreign Currency for transfer to the country issuing such Foreign Currency.

 

(d)           To guard against
fluctuations in currency exchange rates, upon the issuance of any Letter of
Credit payable in a Foreign Currency, Bank shall create a reserve (the “Letter of Credit Reserve”) under the Revolving Line in an
amount equal to ten percent (10%) of the face amount of such Letter of
Credit.  The amount of the Letter of
Credit Reserve may be adjusted by Bank from time to time to account for
fluctuations in the exchange rate.  The
availability of funds under the Revolving Line shall be reduced by the amount
of such Letter of Credit Reserve for as long as such Letter of Credit remains
outstanding.

 

2.1.3       Foreign Exchange Sublimit.  As part of the Revolving Line and subject to
deduction of Reserves, Borrower may enter into foreign exchange contracts with
Bank under which Borrower commits to purchase from or sell to Bank a specific
amount of Foreign Currency (each, a “FX Forward Contract”)
on a specified date (the “Settlement Date”).  FX Forward Contracts shall have a Settlement
Date of at least one (1) FX Business Day after the contract date and shall
be subject to a reserve of ten percent (10%) of each outstanding FX Forward
Contract  (the “FX Reserve”).
The aggregate amount of the FX Reserve at any one time may not exceed $300,000
and the aggregate amount of the FX Reserve at any one time plus Credit
Extensions relating to Sections 2.1.2 and 2.1.4 may not exceed $3,000,000.  The amount otherwise available for Credit
Extensions under the Revolving Line shall be reduced by an amount equal to ten
percent (10%) of each outstanding Forward Contract.  Any amounts needed to fully reimburse Bank
will be treated as Advances under the Revolving Line and will accrue interest
at the interest rate applicable to Advances.

 

2.1.4       Cash Management Services Sublimit.  Borrower may use up to $3,000,000 inclusive
of Credit Extensions relating to Sections 2.1.2 and 2.1.3 (the “Cash Management
Services Sublimit”) of the Revolving Line for Bank’s cash management services
which may include merchant services, direct deposit of payroll, business credit
card, and check cashing services identified in Bank’s various cash management
services agreements (collectively, the “Cash Management Services”).  The dollar amount of any Cash Management
Services provided under this sublimit will reduce the amount otherwise
available under the Revolving Line.  Any
amounts used or reserved by Borrower for any Cash Management Services will
reduce the amount otherwise available for Credit Extensions under the Revolving
Line.  Any amounts Bank pays on behalf of
Borrower for any Cash Management Services will be treated as Advances under the
Revolving Line and will accrue interest at the interest rate applicable to
Advances.

 

2.2          Overadvances.  If at any time or for any
reason the total of all outstanding Advances and all other monetary Obligations
exceeds the Availability Amount (an “Overadvance”),
Borrower shall immediately pay the amount of the excess to Bank, without notice
or demand.  Without limiting Borrower’s
obligation to repay to Bank the amount of any Overadvance, Borrower agrees to
pay Bank interest on the outstanding amount of any Overadvance, on demand, at
the Default Rate.

 

2.3          Payment of Interest on
the Credit Extensions.

 

(a)           Advances.  Each Advance shall bear interest on the outstanding
principal amount thereof from the date when made, continued or converted until
paid in full at a rate per annum equal to the Prime Rate plus the Prime Rate
Margin (as such term is defined in the LIBOR Supplement attached hereto) or the
LIBOR Rate plus the LIBOR Rate Margin (as such term is defined in the LIBOR
Supplement attached hereto), as the case may be.  On and after the expiration of any Interest
Period applicable to any LIBOR Advance outstanding on the date of occurrence of
an Event of Default or acceleration of the Obligations, the Effective Amount of
such LIBOR Advance shall, during the continuance of such Event of Default or
after acceleration, bear interest at a rate per annum equal to 

 

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the Prime Rate plus five
percent (5.00%).  Pursuant to the terms
hereof, interest on each Advance shall be paid in arrears on each Interest
Payment Date.  Interest shall also be paid
on the date of any prepayment of any Advance pursuant to the Loan Agreement for
the portion of any Advance so prepaid and upon payment (including prepayment)
in full thereof.  All accrued but unpaid
interest on the Advances shall be due and payable on the Revolving Line
Maturity Date.

 

(b)           Default Rate.
Immediately upon the occurrence and during the continuance of an Event of
Default, Obligations shall bear interest at a rate per annum which is four
percentage points above the rate effective immediately before the Event of
Default (the “Default Rate”).  Payment or
acceptance of the increased interest rate provided in this Section 2.3(b) is
not a permitted alternative to timely payment and shall not constitute a waiver
of any Event of Default or otherwise prejudice or limit any rights or remedies
of Bank.

 

(c)           Prime Rate Advances.  Each change in the interest rate of the Prime
Rate Advances based on changes in the Prime Rate shall be effective on the
effective date of such change and to the extent of such change.  Bank shall use its best efforts to give
Borrower prompt notice of any such change in the Prime Rate; provided, however,
that any failure by Bank to provide Borrower with notice hereunder shall not
affect Bank’s right to make changes in the interest rate of the Prime Rate
Advances based on changes in the Prime Rate.

 

(d)           LIBOR Advances.
The interest rate applicable to each LIBOR Advance shall be determined in
accordance with Section 5(a) of the LIBOR Supplement.  Subject to Sections 5 and 6 of the LIBOR
Supplement, such rate shall apply during the entire Interest Period applicable
to such LIBOR Advance, and interest calculated thereon shall be payable on the
Interest Payment Date applicable to such LIBOR Advance.

 

(e)           Computation of
Interest.  Interest on the Credit
Extensions and all fees payable hereunder shall be computed on the basis of a
360-day year and the actual number of days elapsed in the period during which
such interest accrues.  In computing
interest on any Credit Extension, the date of the making of such Credit
Extension shall be included and the date of payment shall be excluded;
provided, however, that if any Credit Extension is repaid on the same day on
which it is made, such day shall be included in computing interest on such
Credit Extension.

 

(f)            Debit of Accounts.  Bank may debit any of Borrower’s deposit
accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Bank when due.  These debits shall not constitute a set-off.

 

(g)           Payment; Interest
Computation; Float Charge.  Interest
is payable monthly on the last calendar day of each month.  In computing interest on the Obligations, all
Payments received after 12:00 p.m. Eastern time on any day shall be deemed
received on the next Business Day.  In
addition, Bank shall be entitled to charge Borrower a “float” charge in an
amount equal to three (3) Business Days interest, at the interest rate
applicable to the Advances, on all Payments received by Bank.  The float charge for each month shall be
payable on the last day of the month.  Bank shall not, however, be required to
credit Borrower’s account for the amount of any item of payment which is
unsatisfactory to Bank in its good faith business judgment, and Bank may charge
Borrower’s Designated Deposit Account for the amount of any item of payment
which is returned to Bank unpaid.

 

2.4          Fees.  Borrower shall pay to Bank:

 

(a)           Commitment
Fee.  A fully earned, non-refundable
commitment fee of $50,000, $25,000 of which shall be payable on the Effective
Date and $25,000 of which shall be payable on the date that is twelve months
from the Effective Date.  In the event
the Borrower pays all of the Obligations in full and terminates this facility
in accordance with the terms hereof prior to the date that is twelve months
prior to the Effective Date, the Borrower shall not be obligated to pay the
second $25,000 portion of the commitment fee;

 

(b)           Letter of Credit Fee.  Bank’s customary fees and expenses for the
issuance or renewal of Letters of Credit, upon the issuance or renewal of such
Letter of Credit by Bank;

 

(c)           Termination Fee.  Subject to the terms of Section 4.1, a
termination fee;

 

(d)           Unused Revolving
Line Facility Fee.  A fee (the “Unused Revolving Line Facility Fee”), which fee shall be
paid monthly, in arrears, on the last day of each month, in an amount equal to
one-half percent (0.50%) per annum of the average unused portion of the
Revolving Line, as determined by Bank. 
Borrower 

 

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shall not be entitled to any credit, rebate or
repayment of any Unused Revolving Line Facility Fee previously earned by Bank
pursuant to this Section notwithstanding any termination of the within
Agreement, or suspension or termination of Bank’s obligation to make loans and
advances hereunder;

 

(e)           Collateral
Monitoring Fee.  During each month in
which any Obligations are outstanding under this Agreement, a monthly
collateral monitoring fee of $750, payable in arrears on the last day of each
month (prorated for any partial month) at the beginning and upon termination of
this Agreement; and

 

(f)            Bank Expenses.  All Bank Expenses (including reasonable
attorneys’ fees and expenses for documentation and negotiation of this
Agreement) incurred through and after the Effective Date, when due.

 

2.5          Withholding.  In the event any payments are received by
Bank from Canadian Borrower hereunder such payments will be made subject to
applicable withholding for any taxes, levies, fees, deductions, withholding,
restrictions or conditions of any nature whatsoever.  Specifically, if at any time any governmental
authority, applicable law, regulation or international agreement requires
Canadian Borrower to make any such withholding or deduction from any such payment
or other sum payment hereunder to Bank, Canadian Borrower hereby covenants and
agrees that the amount due from Canadian Borrower with respect to such payment
or other sum payable hereunder will be increased to the extent necessary to
ensure that, after the making of such required withholding or deduction, Bank
receives a net sum equal to the sum which it would have received had no
withholding or deduction been required and Canadian Borrower shall pay the full
amount withheld or deducted to the relevant governmental authority.  Canadian Borrower will, upon request, furnish
Bank with proof satisfactory to Bank indicating that Canadian Borrower has made
such withholding payment provided, however, that Canadian Borrower need not
make any withholding payment if the amount or validity of such withholding
payment is contested in good faith by appropriate and timely proceedings and as
to which payment in full is bonded or reserved against by Canadian
Borrower.  The agreements and obligations
of Canadian Borrower contained in this Section shall survive the
termination of this Agreement.

 

3              CONDITIONS OF LOANS

 

3.1          Conditions Precedent to
Initial Credit Extension.  Bank’s
obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, such documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without limitation:

 

(a)         Borrower shall have
delivered duly executed original signatures to the Loan Documents to which it
is a party;

 

(b)           Borrower shall have
delivered its Operating Documents and a good standing certificate of Borrower
certified by the Secretary of State of the State of Delaware/Province of
Ontario (as applicable) as of a date no earlier than thirty (30) days prior to
the Effective Date;

 

(c)           Borrower shall have
delivered duly executed original signatures to the completed Borrowing
Resolutions for Borrower;

 

(d)           Borrower shall have
delivered evidence that (i) the Liens securing Indebtedness owed by
Borrower to Rockport/NGP will be terminated and (ii) the documents and/or
filings evidencing the perfection of such Liens, including without limitation
any financing statements and/or control agreements, have or will, concurrently
with the initial Credit Extension, be terminated.

 

(e)           Bank shall have
received certified copies, dated as of a recent date, of financing statement
searches, as Bank shall request, accompanied by written evidence (including any
UCC termination statements and/or PPSA discharges) that the Liens indicated in
any such financing statements either constitute Permitted Liens or have been
or, in connection with the initial Credit Extension, will be terminated or
released;

 

(f)            Borrower shall have
delivered the Perfection Certificates executed by Borrower;

 

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(g)           Borrower shall have
delivered landlords’ consents in favor of Bank with respect to such of Borrower’s
location as Bank may reasonably require;

 

(h)           Borrower shall have
delivered a legal opinion of Borrower’s counsel dated as of the Effective Date
together with the duly executed original signatures thereto;

 

(i)            Borrower shall have
delivered evidence satisfactory to Bank that the insurance policies required by
Section 6.7 hereof are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or endorsements
in favor of Bank; and

 

(j)            Borrower shall have
paid the fees and Bank Expenses then due as specified in Section 2.4
hereof.

 

3.2          Conditions Precedent to
all Credit Extensions.  Bank’s
obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following:

 

(a)           (i) for Advances,
timely receipt of a completed and executed Transaction Report and a completed
and executed Notice of Borrowing and, (ii) for any other Credit Extension,
timely receipt of a completed and executed Transaction Report; and

 

(b)           the representations and
warranties in Section 5 shall be true, accurate and complete in all
material respects on the date of the Transaction Report and Notice of Borrowing
and on the Funding Date of each Credit Extension; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date, and no Default or Event of Default shall
have occurred and be continuing or result from the Credit Extension.  Each Credit Extension is Borrower’s
representation and warranty on that date that the representations and
warranties in Section 5 remain true, accurate and complete in all material
respects; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date; and

 

(c)           in Bank’s reasonable
discretion, there has not been a Material Adverse Change.

 

3.3          Covenant to Deliver.

 

Borrower
agrees to deliver to Bank each item required to be delivered to Bank under this
Agreement as a condition to any Credit Extension.  Borrower expressly agrees that the extension
of a Credit Extension prior to the receipt by Bank of any such item shall not
constitute a waiver by Bank of Borrower’s obligation to deliver such item, and
any such extension in the absence of a required item shall be in Bank’s sole
discretion.

 

3.4          Procedures for Borrowing.  In addition to and supplemental of the
requirements set forth in Section 3 the LIBOR Supplement to the Loan
Agreement attached hereto as Exhibit E and specifically
incorporated by reference herein, subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in this
Agreement, to obtain an Advance (other than Advances under Sections 2.1.2 or
2.1.4), Borrower shall notify Bank (which notice shall be irrevocable) by
electronic mail, facsimile, or telephone by 12:00 p.m. Eastern time on the
Funding Date of the Advance.  Together
with such notification, Borrower must promptly deliver to Bank by electronic
mail or facsimile a completed Transaction Report executed by a Responsible
Officer or his or her designee.  Bank
shall credit Advances to the Designated Deposit Account.  Bank may make Advances under this Agreement
based on instructions from a Responsible Officer or his or her designee or
without instructions if the Advances are necessary to meet Obligations which
have become due.  Bank may rely on any
telephone notice given by a person whom Bank believes is a Responsible Officer
or designee.

 

4              CREATION OF SECURITY INTEREST

 

4.1          Grant of Security
Interest.  Borrower hereby grants
Bank, to secure the payment and performance in full of all of the Obligations,
a continuing security interest in, and pledges to Bank, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof.  

 

5

 

Borrower represents, warrants, and covenants that the
security interest granted herein is and shall at all times continue to be a
first priority perfected security interest in the Collateral (subject only to
Permitted Liens that may have superior priority to Bank’s Lien under this
Agreement).  If Borrower shall acquire a
commercial tort claim, Borrower shall promptly notify Bank in a writing signed
by Borrower of the general details thereof and grant to Bank 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 reasonably
satisfactory to Bank.

 

This Agreement may
be terminated prior to the Revolving Line Maturity Date by Borrower, effective
three (3)] Business Days after written notice of termination is given to Bank or
if Bank’s obligation to fund Credit Extensions terminates pursuant to the terms
of Section 2.1.1(c). 
Notwithstanding any such termination, Bank’s lien and security interest
in the Collateral shall continue until Borrower fully satisfies its Obligations.  If such termination is at Borrower’s election
or at Bank’s election due to the occurrence and continuance of an Event of
Default, Borrower shall pay to Bank, in addition to the payment of any other
expenses or fees then-owing, a termination fee in an amount equal to one
percent (1.00%) of the Revolving Line provided that no termination fee shall be
charged if the credit facility hereunder is (i) is terminated after twelve
months after the Effective Date or (ii) replaced with a new facility from
another division of Silicon Valley Bank. 
Upon payment in full of the Obligations and at such
time as Bank’s obligation to make Credit Extensions has terminated, Bank shall
release its liens and security interests in the Collateral and all rights
therein shall revert to Borrower.

 

4.2          Authorization to File
Financing Statements.  Borrower
hereby authorizes Bank to file financing statements, without notice to
Borrower, with all appropriate jurisdictions to perfect or protect Bank’s
interest or rights hereunder, including a notice that any disposition of the
Collateral, by either Borrower or any other Person, shall be deemed to violate
the rights of Bank under the Code.  
Without limiting the foregoing, Borrower hereby authorizes Bank to file
financing statements which describe the collateral as “all assets” and/or “all
personal property” of Borrower or words of similar import.

 

5              REPRESENTATIONS
AND WARRANTIES

 

Borrower
represents and warrants as follows:

 

5.1          Due Organization and
Authorization.  Borrower and each of
its Subsidiaries, if any, are duly existing and in good standing as Registered
Organizations in their respective jurisdictions of formation and are qualified
and licensed to do business and are in good standing in any jurisdiction in
which the conduct of their business or their ownership of property requires
that they be qualified except where the failure to do so could not reasonably
be expected to have a material adverse effect on Borrower’s business.  In connection with this Agreement, Borrower
has delivered to Bank a completed certificate substantially in the form
attached hereto as Exhibit C signed by Borrower, entitled “Perfection
Certificate”.  Borrower represents and
warrants to Bank that (a) Borrower’s exact legal name is that indicated on
the Perfection Certificate and on the signature page hereof; (b) Borrower
is an organization of the type and is organized in the jurisdiction set forth
in the Perfection Certificate; (c) the Perfection Certificate accurately
sets forth Borrower’s organizational identification number or accurately states
that Borrower has none; (d) the Perfection Certificate accurately sets
forth Borrower’s place of business, or, if more than one, its chief executive
office as well as Borrower’s mailing address (if different than its chief
executive office); (e) Borrower (and each of its predecessors) has not, in
the past five (5) years, changed its jurisdiction of formation,
organizational structure or type, or any organizational number assigned by its
jurisdiction; and (f) all other information set forth on the Perfection
Certificate pertaining to Borrower and each of its Subsidiaries is accurate and
complete.  If Borrower is not now a
Registered Organization but later becomes one, Borrower shall promptly notify
Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.

 

The execution, delivery
and performance of the Loan Documents have been duly authorized, and do not
conflict with Borrower’s organizational documents, nor constitute an event of
default under any material agreement by which Borrower is bound.  Borrower is not in default under any
agreement to which it is a party or by which it is bound in which the default
could have a material adverse effect on Borrower’s business.

 

5.2          Collateral.  Borrower has good title to, has rights in,
and the power to transfer each item of Collateral upon which it purports to
grant a Lien hereunder, free and clear of any and all Liens except Permitted
Liens.  Borrower has no deposit accounts
other than the deposit accounts with Bank.

 

The Collateral is not in the possession of any third
party bailee (such as a warehouse) except as otherwise provided in the
Perfection Certificate.  None of the
components of the Collateral shall be maintained at locations 

 

6

 

other than as provided in the Perfection Certificate.  In the event that Borrower, after the date
hereof, intends to store or otherwise deliver any portion of the Collateral to
a bailee, then Borrower will first receive the written consent of Bank and such
bailee must execute and deliver a bailee agreement in form and substance
satisfactory to Bank in its sole discretion.

 

All Inventory is in all material respects of good and
marketable quality, free from material defects.

 

Borrower is the sole owner of its intellectual
property, except for non-exclusive licenses granted to its customers in the
ordinary course of business.  To the best
of Borrower’s knowledge, each patent is valid and enforceable and no part of
the intellectual property has been judged invalid or unenforceable, in whole or
in part, and no claim has been made that any part of the Intellectual Property
violates the rights of any third party.

 

Borrower is not a party to, nor is bound by, any
license or other agreement with respect to which Borrower is the licensee that
prohibits or otherwise restricts Borrower from granting a security interest in
Borrower’s interest in such license or agreement or any other property.  Borrower shall provide written notice to Bank
within ten (10) days of entering or becoming bound by any such license or
agreement which is reasonably likely to have a material impact on Borrower’s
business or financial condition (other than over-the-counter software that is
commercially available to the public). 
Borrower shall take such steps as Bank requests to obtain the consent
of, or waiver by, any person whose consent or waiver is necessary for all such
licenses or contract rights to be deemed “Collateral” and for Bank to have a
security interest in it that might otherwise be restricted or prohibited by law
or by the terms of any such license or agreement (such consent or authorization
may include a licensor’s agreement to a contingent assignment of the license to
Bank if Bank determines that is necessary in its good faith judgment), whether
now existing or entered into in the future.

 

5.3          Accounts Receivable.

 

(a)           For each
Account with respect to which Advances are requested, on the date each Advance
is requested and made, such Account shall meet the Minimum Eligibility
Requirements set forth in Section 13 below.

 

(b)           All
statements made and all unpaid balances appearing in all invoices, instruments
and other documents evidencing the Accounts are and shall be true and correct
and all such invoices, instruments and other documents, and all of Borrower’s
Books are genuine and in all respects what they purport to be.  All sales and other transactions underlying
or giving rise to each Account shall comply in all material respects with all
applicable laws and governmental rules and regulations.  Borrower has no knowledge of any actual or
imminent Insolvency Proceeding of any Account Debtor whose accounts are an
Eligible Account in any Borrowing Base Certificate.  To the best of Borrower’s knowledge, all
signatures and endorsements on all documents, instruments, and agreements
relating to all Accounts are genuine, and all such documents, instruments and
agreements are legally enforceable in accordance with their terms.

 

5.4          Litigation.  There are no actions or proceedings pending
or, to the knowledge of the Responsible Officers, threatened in writing by or
against Borrower or any of its Subsidiaries involving more than $250,000.

 

5.5          No Material Deviation in
Financial Statements.  All
consolidated financial statements for Borrower and any of its Subsidiaries
delivered to Bank fairly present in all material respects Borrower’s
consolidated financial condition and Borrower’s consolidated results of
operations.  There has not been any
material deterioration in Borrower’s consolidated financial condition since the
date of the most recent financial statements submitted to Bank.

 

5.6          Solvency.  The fair salable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; Borrower is not left with unreasonably small capital after the
transactions in this Agreement; and Borrower is able to pay its debts
(including trade debts) as they mature.

 

5.7          Regulatory Compliance.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company
Act.  Borrower is not engaged as one of
its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Borrower has not violated any laws,
ordinances or rules, the violation of which could reasonably be expected to
have a material adverse effect on its business. 
None of Borrower’s or any of its Subsidiaries’ properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower’s
knowledge, by previous Persons, in disposing, 

 

7

 

producing, storing, treating, or transporting any
hazardous substance other than legally. 
Borrower and each of its Subsidiaries have obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to continue
its business as currently conducted.

 

5.8          Subsidiaries;
Investments.  Borrower does not own
any stock, partnership interest or other equity securities except for Permitted
Investments.

 

5.9          Tax Returns and Payments;
Pension Contributions.  Borrower has
timely filed all required tax returns and reports, and Borrower and its
Subsidiaries, if any, have timely paid all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrower.  Borrower may defer payment of any contested
taxes, provided that Borrower (a) in good faith contests its obligation to
pay the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Bank in writing of the commencement of, and any
material development in, the proceedings, (c) posts bonds or takes any
other steps required to prevent the governmental authority levying such
contested taxes from obtaining a Lien upon any of the Collateral that is other
than a “Permitted Lien”.  Borrower is
unaware of any claims or adjustments proposed for any of Borrower’s prior tax
years which could result in additional taxes becoming due and payable by
Borrower.  Borrower has paid all amounts
necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not withdrawn from
participation in, and has not permitted partial or complete termination of, or
permitted the occurrence of any other event with respect to, any such plan
which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.

 

5.10        Use of Proceeds.  Borrower shall use the proceeds of the Credit
Extensions solely as working capital and to fund its general business
requirements and not for personal, family, household or agricultural purposes.

 

5.11        Full Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representations, warranties, or other statements were made,
taken together with all such written certificates and written statements given
to Bank, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period
or periods covered by such projections and forecasts may differ from the
projected or forecasted results).

 

6              AFFIRMATIVE
COVENANTS

 

Borrower shall do all of
the following:

 

6.1          Government Compliance.  Maintain its and all its Subsidiaries’ legal
existence and good standing in their respective jurisdictions of formation and
maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to have a material adverse effect on Borrower’s
business or operations.  Borrower shall
comply, and have each Subsidiary comply, with all laws, ordinances and
regulations to which it is subject, the noncompliance with which could have a
material adverse effect on Borrower’s business.

 

6.2          Financial Statements,
Reports, Certificates.

 

(a)           Borrower shall provide Bank with the
following:

 

(i) weekly (monthly, if there are no
borrowings under this Agreement or in the event Borrower maintains or exceeds
$12,000,000 in (A) Borrower’s unrestricted cash on deposit at Bank plus (B) unused
availability pursuant to the Revolving Line under this Agreement, as determined
by Bank with reference to the Availability Amount set forth herein) (twice per
month, if there are borrowings under this Agreement and Borrower maintains
between $10,000,000 and $12,000,000 in (A) unrestricted cash on deposit at
Bank plus (B) unused availability pursuant to the Revolving Line under
this Agreement, as determined by Bank with reference to the Availability Amount
set forth herein, and upon each request for a Credit Extension, a Transaction
Report;

 

(ii) within fifteen (15) days after the
end of each month, (A) monthly accounts receivable agings, aged by invoice
date, (B) monthly accounts payable agings, aged by invoice date, and
outstanding or held check registers, if any, (C) monthly reconciliations
of accounts receivable agings (aged by invoice date), transaction reports,
deferred revenue report and general ledger, and (D) monthly perpetual
inventory reports for Inventory 

 

8

 

valued on a first-in, first-out basis at the lower of cost or market
(in accordance with GAAP) or such other inventory reports as are requested by
Bank in its good faith business judgment;

 

(iii) as soon as available, and in any
event within thirty (30) days after the end of each month, monthly unaudited
financial statements;

 

(iv) within thirty (30) days after the
end of each month a monthly Compliance Certificate signed by a Responsible
Officer, certifying that as of the end of such month, Borrower was in full
compliance with all of the terms and conditions of this Agreement, and setting
forth calculations showing compliance with the financial covenants set forth in
this Agreement and such other information as Bank shall reasonably request,
including, without limitation, a statement that at the end of such month there
were no held checks;

 

(v) within thirty (30) days prior
to the end of each fiscal year of Borrower, (A) annual operating budgets
(including income statements, balance sheets and cash flow statements, by
month) for the upcoming fiscal year of Borrower, and (B) annual financial
projections for the following fiscal year (on a quarterly basis) as approved by
Borrower’s board of directors, together with any related business forecasts
used in the preparation of such annual financial projections; and

 

(v) as soon as available, and in any event
within one hundred twenty (120) days following the end of Borrower’s fiscal
year, annual financial statements certified by, and with an unqualified opinion
of, independent certified public accountants acceptable to Bank.

 

(b)           In
the event that Borrower is or becomes subject to the reporting requirements
under the Securities Exchange Act of 1934, as amended, within five (5) days
after filing, all reports on Form 10-K, 10-Q and 8-K filed with the
Securities and Exchange Commission or a link thereto on Borrower’s or another
website on the Internet.

 

(c)           Prompt
written notice of (i) any material change in the composition of the
Intellectual Property, (ii) the registration of any Copyright, including
any subsequent ownership right of Borrower in or to any Copyright, Patent or
Trademark not previously disclosed to Bank, or (iii) Borrower’s knowledge
of an event that materially adversely affects the value of the Intellectual
Property.

 

6.3          Accounts Receivable.

 

(a)           Schedules
and Documents Relating to Accounts.  Borrower shall deliver to Bank transaction
reports and schedules of collections, as provided in Section 6.2, on Bank’s
standard forms; provided, however, that Borrower’s failure to execute and
deliver the same shall not affect or limit Bank’s Lien and other rights in all
of Borrower’s Accounts, nor shall Bank’s failure to advance or lend against a
specific Account affect or limit Bank’s Lien and other rights therein.  If requested by Bank, Borrower shall furnish
Bank with copies (or, at Bank’s request, originals) of all contracts, orders,
invoices, and other similar documents, and all shipping instructions, delivery
receipts, bills of lading, and other evidence of delivery, for any goods the
sale or disposition of which gave rise to such Accounts.  In addition, Borrower shall deliver to Bank,
on its request, the originals of all instruments, chattel paper, security
agreements, guarantees and other documents and property evidencing or securing
any Accounts, in the same form as received, with all necessary indorsements,
and copies of all credit memos.

 

(b)           Disputes.  Borrower shall promptly notify Bank of all
disputes or claims relating to Accounts. 
Borrower may forgive (completely or partially), compromise, or settle
any Account for less than payment in full, or agree to do any of the foregoing
so long as (i) Borrower does so in good faith, in a commercially
reasonable manner, in the ordinary course of business, in arm’s-length
transactions, and reports the same to Bank in the regular reports provided to
Bank; (ii) no Default or Event of Default has occurred and is continuing;
and (iii) after taking into account all such discounts, settlements and
forgiveness, the total outstanding Advances will not exceed the Availability
Amount.

 

(c)           Collection
of Accounts. 
Borrower shall have the right to collect all Accounts, unless and until
a Default or an Event of Default has occurred and is continuing.  Accounts shall be deposited by Borrower into
a lockbox account, or such other “blocked account” as Bank may specify,
pursuant to a blocked account agreement in such form as Bank may specify in its
good faith business judgment.  Whether or
not an Event of Default has occurred and is continuing, Borrower shall hold all
Payments on, and proceeds of, Accounts in trust for Bank, and Borrower shall
immediately deliver all such payments and proceeds to Bank in their original
form, duly endorsed, to be applied to the Obligations pursuant to the terms of Section 9.4
hereof; provided, however, in the event (i) Borrower maintains or exceeds
$10,000,000 in (A) Borrower’s unrestricted cash on deposit at Bank plus (B) unused

 

9

 

availability
pursuant to the Revolving Line under this Agreement, as determined by Bank with
reference to the Availability Amount set forth herein and (ii) no Default
or Event of Default has occurred and in is continuing, Payments on, and
proceeds of, Accounts shall be applied to the Obligations pursuant to the terms
of Section 9.4 hereof only in the event the outstanding principal amount
of the Obligations then exceeds $6,000,000 (and only to the extent the
Obligations then exceed $6,000,000) and shall otherwise be transferred by Bank
to an operating account of Borrower maintained at Bank.

 

(d)           Returns.  Provided no Event of
Default has occurred and is continuing, if any Account Debtor returns any
Inventory to Borrower, Borrower shall promptly (i) determine the reason
for such return, (ii) issue a credit memorandum to the Account Debtor in
the appropriate amount, and (iii) provide a copy of such credit memorandum
to Bank, upon request from Bank.  In the
event any attempted return occurs after the occurrence and during the
continuance of any Event of Default, Borrower shall hold the returned Inventory
in trust for Bank, and immediately notify Bank of the return of the
Inventory.

 

(e)           Verification.  Bank may, from time
to time, verify directly with the respective Account Debtors the validity,
amount and other matters relating to the Accounts, either in the name of
Borrower or Bank or such other name as Bank may choose.

 

(f)            No
Liability. 
Bank shall not be responsible or liable for any shortage or discrepancy
in, damage to, or loss or destruction of, any goods, the sale or other
disposition of which gives rise to an Account, or for any error, act, omission,
or delay of any kind occurring in the settlement, failure to settle, collection
or failure to collect any Account, or for settling any Account in good faith
for less than the full amount thereof, nor shall Bank be deemed to be
responsible for any of Borrower’s obligations under any contract or agreement
giving rise to an Account.  Nothing
herein shall, however, relieve Bank from liability for its own gross negligence
or willful misconduct.

 

6.4          Remittance of Proceeds.  Except as otherwise provided in Section 6.3(c),
deliver, in kind, all proceeds arising from the disposition of any Collateral
to Bank in the original form in which received by Borrower not later than the
following Business Day after receipt by Borrower, to be applied to the
Obligations pursuant to the terms of Section 9.4 hereof; provided that, if
no Default or Event of Default has occurred and is continuing, Borrower shall
not be obligated to remit to Bank the proceeds of the sale of worn out or
obsolete Equipment disposed of by Borrower in good faith in an arm’s length
transaction for an aggregate purchase price of $25,000
or less (for all such transactions in any fiscal year).  Borrower agrees that it will not commingle
proceeds of Collateral with any of Borrower’s other funds or property, but will
hold such proceeds separate and apart from such other funds and property and in
an express trust for Bank.  Nothing in
this Section limits the restrictions on disposition of Collateral set
forth elsewhere in this Agreement.

 

6.5          Taxes; Pensions. 
Make, and cause each of its Subsidiaries, if any, to make, timely
payment of all foreign, federal, state and local taxes or assessments (other
than taxes and assessment which Borrower is contesting pursuant to the terms of
Section 5. 9 hereof, and shall deliver to Bank, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms.

 

6.6          Access to Collateral;
Books and Records.  At reasonable
times, on one (1) Business Day’s notice (provided no notice is required if
an Event of Default has occurred and is continuing), Bank, or its agents, shall
have the right to inspect the Collateral and the right to audit and copy
Borrower’s Books.  The foregoing inspections
and audits shall be (i) conducted three times per year or as conditions
warrant in Bank’s discretion, and (ii) at Borrower’s expense, and the
charge therefor shall be $750 per person per day (or such higher amount as
shall represent Bank’s then-current standard charge for the same), plus
reasonable out-of-pocket expenses.  In
the event Borrower and Bank schedule an audit more than ten (10) days in
advance, and Borrower cancels or seeks to reschedules the audit with less than
ten (10) days written notice to Bank, then (without limiting any of Bank’s
rights or remedies), Borrower shall pay Bank a fee of $1,000 plus any
out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated
costs and expenses of the cancellation or rescheduling.

 

6.7          Insurance.  Keep its business and the Collateral insured
for risks and in amounts standard for companies in Borrower’s industry and
location and as Bank may reasonably request. 
Insurance policies shall be in a form, with companies, and in amounts
that are satisfactory to Bank.  All
property policies shall have a lender’s loss payable endorsement showing Bank
as the sole lender loss payee and waive subrogation against Bank, and all
liability policies shall show, or have endorsements showing, Bank as an additional
insured.  All policies (or the loss

 

10

 

payable and additional insured endorsements) shall
provide that the insurer must give Bank at least thirty (30) days notice before
canceling, amending, or declining to renew its policy.  At Bank’s request, Borrower shall deliver
certified copies of policies and evidence of all premium payments.  Proceeds payable under any policy shall, at
Bank’s option, be payable to Bank on account of the Obligations.  Notwithstanding the foregoing, (a) so
long as no Event of Default has occurred and is continuing, Borrower shall have
the option of applying the proceeds of any casualty policy up to $50,000, in
the aggregate, toward the replacement or repair of destroyed or damaged
property; provided that 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 Bank has been granted a first priority security
interest, and (b) after the occurrence and during the continuance of an
Event of Default, all proceeds payable under such casualty policy shall, at the
option of Bank, be payable to Bank on account of the Obligations.  If Borrower fails to obtain insurance as
required under this Section 6.7 or to pay any amount or furnish any
required proof of payment to third persons and Bank, Bank may make all or part
of such payment or obtain such insurance policies required in this Section 6.7,
and take any action under the policies Bank deems prudent.

 

6.8          Operating Accounts.

 

(a)           Maintain its and its
Subsidiaries’, if any, primary depository, operating accounts and securities
accounts with Bank and Bank’s affiliates with all excess funds maintained at or
invested through Bank or an affiliate of Bank.

 

(b)           Provide Bank five (5) days
prior written notice before establishing any Collateral Account at or with any
bank or financial institution other than Bank or its Affiliates.  In addition, for each Collateral Account that
Borrower at any time maintains, Borrower shall cause the applicable bank or financial
institution (other than Bank) at or with which any Collateral Account is
maintained to execute and deliver a Control Agreement or other appropriate
instrument with respect to such Collateral Account to perfect Bank’s Lien in
such Collateral Account in accordance with the terms hereunder.  The provisions of the previous sentence shall
not apply to deposit accounts exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of Borrower’s
employees and identified to Bank by Borrower as such.

 

6.9          Financial Covenants.

 

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

 

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

 

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

 

6.10        Protection and
Registration of Intellectual Property Rights.  Borrower shall:  (a) protect, defend and maintain the
validity and enforceability of its intellectual property; (b) promptly
advise Bank in writing of material infringements of its intellectual property;
and (c) not allow any intellectual property material to Borrower’s
business to be abandoned, forfeited or dedicated to the public without Bank’s
written consent.  If Borrower decides to
register any copyrights or mask works in the United States Copyright Office
and/or Canadian Intellectual Property Office, Borrower shall: (x) provide
Bank with at least fifteen (15) days prior written notice of its intent to
register such copyrights or mask works together with a copy of the application
it intends to file with the United States Copyright Office and/or Canadian
Intellectual Property Office (excluding exhibits thereto); (y) execute an
intellectual property security agreement or such other documents as Bank may
reasonably request to maintain the perfection and priority of Bank’s security
interest in the copyrights or mask works intended to be registered with the
United States Copyright Office and/or Canadian Intellectual Property Office;
and (z) record such intellectual property security agreement with the
United States Copyright Office and/or Canadian Intellectual Property Office
contemporaneously with filing the copyright or mask work application(s) with
the United States Copyright Office and/or Canadian Intellectual Property
Office. Borrower shall promptly provide to Bank a copy of the application(s) filed
with the United States Copyright Office and/or Canadian Intellectual Property
Office together with evidence of the recording of the intellectual property
security agreement necessary for Bank to 

 

11

 

maintain the perfection and priority of its security
interest in such copyrights or mask works. 
Borrower shall provide written notice to Bank of any application filed
by Borrower in the United States Patent and Trademark Office and/or Canadian
Intellectual Property Office for a patent or to register a trademark or service
mark within 30 days after any such filing.

 

6.11        Litigation Cooperation.  From the date hereof and continuing through
the termination of this Agreement, make available to Bank, without expense to
Bank, Borrower and its officers, employees and agents and Borrower’s books and
records, to the extent that Bank may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Bank with respect to any Collateral or relating to Borrower.

 

6.12        Further Assurances.  Borrower shall execute any further
instruments and take further action as Bank reasonably requests to perfect or
continue Bank’s Lien in the Collateral or to effect the purposes of this
Agreement.

 

7              NEGATIVE
COVENANTS

 

Borrower shall not do any
of the following without Bank’s prior written consent:

 

7.1          Dispositions.  Convey, sell, lease, transfer or otherwise
dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, except for Transfers of (a) of
Inventory in the ordinary course of business; (b) of worn out or obsolete
Equipment; and (c) in connection with Permitted Liens and Permitted
Investments.

 

7.2          Changes
in Business, Management, Ownership, Control, or Business Locations.  (a) Engage in or permit any of its
Subsidiaries, if any, to engage in any business other than the businesses
currently engaged in by Borrower and such Subsidiary, as applicable, or
reasonably related thereto; (b) liquidate or dissolve; or (c) (i) have
a change in management or permit or suffer any Change in Control.  Borrower shall not, without at least thirty
(30) days prior written notice to Bank: (1) add any new offices or
business locations, including warehouses (unless such new offices or business
locations contain less than $10,000 in Borrower’s assets or property), (2) change
its jurisdiction of organization, (3) change its organizational structure
or type, (4) change its legal name, or (5) change any organizational
number (if any) assigned by its jurisdiction of organization.

 

7.3          Mergers or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. 
A Subsidiary may merge or consolidate into another Subsidiary or into
Borrower.

 

7.4          Indebtedness.  Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.

 

7.5          Encumbrance.  Create, incur, or allow any Lien on any of its
property, or assign or convey any right to receive income, including the sale
of any Accounts, or permit any of its Subsidiaries to do so, except for
Permitted Liens, permit any Collateral not to be subject to the first priority
security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a
security interest in or upon, or encumbering any of Borrower’s or any
Subsidiary’s intellectual property, except as is otherwise permitted in Section 7.1
hereof and the definition of “Permitted Lien” herein.

 

7.6          Maintenance of
Collateral Accounts.  Maintain any
Collateral Account except pursuant to the terms of Section 6.8(b) hereof.

 

7.7          Investments;
Distributions.  (a) Directly
or indirectly make any Investment other than Permitted Investments, or permit any
of its Subsidiaries to do so; or (b) pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock
provided that (i) Borrower may convert any of its convertible securities
into other securities pursuant to the terms of such convertible securities or
otherwise in exchange thereof, (ii) Borrower may pay dividends solely in
common stock; and (iii) Borrower may repurchase the stock of former
employees or consultants pursuant to stock repurchase agreements so long as an
Event of Default does not exist at  

 

12

 

the time of such repurchase and would not exist after
giving effect to such repurchase, provided such repurchase does not exceed in
the aggregate of $50,000 per fiscal year.

 

7.8          Transactions with
Affiliates.  Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower, except for transactions that are in the ordinary course of Borrower’s
business, upon fair and reasonable terms that are no less favorable to Borrower
than would be obtained in an arm’s length transaction with a non-affiliated
Person.

 

7.9          Subordinated Debt.  (a) Make or permit any payment on any
Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or (b) amend
any provision in any document relating to the Subordinated Debt which would
increase the amount thereof or adversely affect the subordination thereof to Obligations
owed to Bank.

 

7.10        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 activities extending credit to purchase or
carry margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System), or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of 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 could reasonably be expected to have a material
adverse effect on Borrower’s business, or permit any of its Subsidiaries to do
so; withdraw or permit any Subsidiary to withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower,
including any liability to the Pension Benefit Guaranty Corporation or its
successors or any other governmental agency.

 

8              EVENTS OF DEFAULT

 

Any one of the following
shall constitute an event of default (an “Event of Default”)
under this Agreement:

 

8.1          Payment Default.  Borrower fails to (a) make any payment
of principal or interest on any Credit Extension on its due date, or (b) pay
any other Obligations within three (3) Business Days after such
Obligations are due and payable.  During
the cure period, the failure to cure the payment default is not an Event of
Default (but no Credit Extension will be made during the cure period);

 

8.2          Covenant Default.

 

(a) Borrower fails
or neglects to perform any obligation in Sections 6.2, 6.8, or 6.9 or violates
any covenant in Section 7; or

 

(b) Borrower fails or neglects to perform, keep,
or observe any other term, provision, condition, covenant or agreement
contained in this Agreement, any Loan Documents, and as to any default (other
than those specified in this Section 8) under such other term, provision,
condition, covenant or agreement that can be cured, has failed to cure the
default within ten (10) days after the occurrence thereof; provided,
however, that if the default cannot by its nature be cured within the ten (10) day
period or cannot after diligent attempts by Borrower be cured within such ten (10) day
period, and such default is likely to be cured within a reasonable time, then
Borrower shall have an additional period (which shall not in any case exceed
thirty (30) days) to attempt to cure such default, and within such reasonable
time period the failure to cure the default shall not be deemed an Event of
Default (but no Credit Extensions shall be made during such cure period).  Grace periods provided under this section
shall not apply, among other things, to financial covenants or any other
covenants set forth in subsection (a) above;

 

8.3          Material Adverse Change.  A Material Adverse Change occurs;

 

8.4          Attachment.  (a) Any material portion of Borrower’s
assets is attached, seized, levied on, or comes into possession of a trustee or
receiver and the attachment, seizure or levy is not removed in ten (10) days;
(b) the service of process upon Bank (or Bank’s Affiliate) seeking to
attach, by trustee or similar process, any funds of Borrower, or of any entity
under control of Borrower (including a Subsidiary) on deposit with Bank; (c) Borrower
is enjoined, restrained, or prevented by court order from conducting a material
part of its business; (d) a judgment or other claim in excess of $200,000
becomes a Lien on any of Borrower’s assets; or (e) a notice of lien, levy,
or 

 

13

 

assessment is filed against any of Borrower’s assets
by any government agency and not paid within ten (10) days after Borrower
receives notice.  These are not Events of
Default if stayed or if a bond is posted pending contest by Borrower (but no
Credit Extensions shall be made during the cure period);

 

8.5          Insolvency.  Borrower is unable to pay its debts
(including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within thirty (30) days (but no
Credit Extensions shall be made while of any of the conditions described in
clause (a) exist and/or until any Insolvency Proceeding is dismissed);

 

8.6          Other Agreements.  There is a default in any agreement to which
Borrower or any Guarantor is a party with a third party or parties resulting in
a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount in excess of $200,000 or that
could have a material adverse effect on Borrower’s or any Guarantor’s business;

 

8.7          Judgments.  A judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least $200,000 (not
covered by independent third-party insurance) shall be rendered against
Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days
after the entry thereof (provided that no Credit Extensions will be made prior
to the satisfaction or stay of such judgment);

 

8.8          Misrepresentations.  Borrower or any Person acting for Borrower
makes any representation, warranty, or other statement now or later in this
Agreement, any Loan Document or in any writing delivered to Bank or to induce
Bank to enter this Agreement or any Loan Document, and such representation,
warranty, or other statement is incorrect in any material respect when made;

 

8.9          Subordinated Debt.  A default or breach occurs under any
agreement between Borrower and any creditor of Borrower that signed a
subordination, intercreditor, or other similar agreement with Bank, or any
creditor that has signed such an agreement with Bank breaches any terms of such
agreement; or

 

9              BANK’S
RIGHTS AND REMEDIES

 

9.1          Rights and Remedies.  While an Event of Default occurs and
continues Bank may, without notice or demand, do any or all of the following:

 

(a)           declare all Obligations
immediately due and payable (but if an Event of Default described in Section 8.5
occurs all Obligations are immediately due and payable without any action by
Bank);

 

(b)           stop advancing money or
extending credit for Borrower’s benefit under this Agreement or under any other
agreement between Borrower and Bank;

 

(c)           demand that Borrower (i) deposits
cash with Bank in an amount equal to the aggregate amount of any Letters of
Credit remaining undrawn, as collateral security for the repayment of any
future drawings under such Letters of Credit, and Borrower shall forthwith
deposit and pay such amounts, and (ii) pay in advance all Letter of Credit
fees scheduled to be paid or payable over the remaining term of any Letters of
Credit;

 

(d)           terminate any FX
Contracts;

 

(e)           settle or adjust
disputes and claims directly with Account Debtors for amounts on terms and in
any order that Bank considers advisable, notify any Person owing Borrower money
of Bank’s security interest in such funds, and verify the amount of such
account;

 

(f)            make any payments and
do any acts it considers necessary or reasonable to protect the Collateral
and/or its security interest in the Collateral. 
Borrower shall assemble the Collateral if Bank requests and make it
available as Bank designates.  Bank may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of
its premises, without charge, to exercise any of Bank’s rights or remedies;

 

14

 

(g)           apply to the
Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower;

 

(h)           ship, reclaim, recover,
store, finish, maintain, repair, prepare for sale, advertise for sale, and sell
the Collateral.  Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank’s exercise of its rights under this Section, Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s benefit;

 

(i)            place a “hold” on any
account maintained with Bank and/or deliver a notice of exclusive control, any
entitlement order, or other directions or instructions pursuant to any Control
Agreement or similar agreements providing control of any Collateral;

 

(j)            demand and receive
possession of Borrower’s Books; and

 

(k)           exercise all rights and
remedies available to Bank under the Loan Documents or at law or equity,
including all remedies provided under the Code (including disposal of the
Collateral pursuant to the terms thereof).

 

9.2          Power of Attorney.  Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to:  (a) endorse
Borrower’s name on any checks or other forms of payment or security; (b) sign
Borrower’s name on any invoice or bill of lading for any Account or drafts
against Account Debtors; (c) settle and adjust disputes and claims about
the Accounts directly with Account Debtors, for amounts and on terms Bank
determines reasonable; (d) make, settle, and adjust all claims under
Borrower’s insurance policies; (e) pay, contest or settle any Lien,
charge, encumbrance, security interest, and adverse claim in or to the
Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; and (f) transfer the Collateral into the
name of Bank or a third party as the Code permits.  Borrower hereby appoints Bank as its lawful
attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of any security interest regardless of whether an
Event of Default has occurred until all Obligations have been satisfied in full
and Bank is under no further obligation to make Credit Extensions
hereunder.  Bank’s foregoing appointment
as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled
with an interest, are irrevocable until all Obligations have been fully repaid
and performed and Bank’s obligation to provide Credit Extensions terminates.

 

9.3          Protective Payments.  If Borrower fails to obtain the insurance
called for by Section 6.7 or fails to pay any premium thereon or fails to
pay any other amount which Borrower is obligated to pay under this Agreement or
any other Loan Document, Bank may obtain such insurance or make such payment,
and all amounts so paid by Bank are Bank Expenses and immediately due and
payable, bearing interest at the then highest applicable rate, and secured by
the Collateral.  Bank will make
reasonable efforts to provide Borrower with notice of Bank obtaining such
insurance at the time it is obtained or within a reasonable time
thereafter.  No payments by Bank are
deemed an agreement to make similar payments in the future or Bank’s waiver of
any Event of Default.

 

9.4          Application of Payments
and Proceeds.  Unless an Event of
Default has occurred and is continuing, Bank shall apply any funds in its
possession, whether from Borrower account balances, payments, or proceeds
realized as the result of any collection of Accounts or other disposition of
the Collateral, first, to Bank Expenses, including without limitation, the
reasonable costs, expenses, liabilities, obligations and reasonable attorneys’
fees incurred by Bank in the exercise of its rights under this Agreement;
second, to the interest due upon any of the Obligations; and third, to the
principal of the Obligations and any applicable fees and other charges, in such
order as Bank shall determine in its sole discretion.  Any surplus shall be paid to Borrower or
other Persons legally entitled thereto; Borrower shall remain liable to Bank
for any deficiency.  If an Event of
Default has occurred and is continuing, Bank may apply any funds in its
possession, whether from Borrower account balances, payments, proceeds realized
as the result of any collection of Accounts or other disposition of the
Collateral, or otherwise, to the Obligations in such order as Bank shall
determine in its sole discretion.  Any
surplus shall be paid to Borrower or to other Persons legally entitled thereto;
Borrower shall remain liable to Bank for any deficiency.  If Bank, in its good faith business judgment,
directly or indirectly enters into a deferred payment or other credit
transaction with any purchaser at any sale of Collateral, Bank shall have the
option, exercisable at any time, of either reducing the 

 

15

 

Obligations by the principal amount of the purchase
price or deferring the reduction of the Obligations until the actual receipt by
Bank of cash therefor.

 

9.5          Bank’s Liability for
Collateral.  So long as Bank complies
with reasonable banking practices regarding the safekeeping of the Collateral
in the possession or under the control of Bank, Bank shall not be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss
or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman,
bailee, or other Person.  Borrower bears
all risk of loss, damage or destruction of the Collateral.

 

9.6          No Waiver; Remedies
Cumulative.  Bank’s failure, at any
time or times, to require strict performance by Borrower of any provision of
this Agreement or any other Loan Document shall not waive, affect, or diminish
any right of Bank thereafter to demand strict performance and compliance
herewith or therewith.  No waiver hereunder
shall be effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it is given.  Bank’s rights and remedies under this
Agreement and the other Loan Documents are cumulative.  Bank has all rights and remedies provided
under the Code, by law, or in equity. 
Bank’s exercise of one right or remedy is not an election, and Bank’s
waiver of any Event of Default is not a continuing waiver.  Bank’s delay in exercising any remedy is not
a waiver, election, or acquiescence.

 

9.7          Demand Waiver.  Borrower waives demand, 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 held by Bank on
which Borrower is liable.

 

10           NOTICES

 

All notices, consents,
requests, approvals, demands, or other communication (collectively, “Communication”), other than Advance requests made pursuant
to Section 3.4, by any party to this Agreement or any other Loan Document
must be in writing and be delivered or sent by facsimile at the addresses or
facsimile numbers listed below.  Bank or
Borrower may change its notice address by giving the other party written notice
thereof.  Each such Communication shall
be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the
Canadian or U.S. mail (as applicable), registered or certified mail, return
receipt requested, with proper postage prepaid; (b) upon transmission,
when sent by facsimile transmission (with such facsimile promptly confirmed by
delivery of a copy by personal delivery or United States mail as otherwise
provided in this Section 10); (c) one (1) Business Day after
deposit with a reputable overnight courier with all charges prepaid; or (d) when
delivered, if hand-delivered by messenger, all of which shall be addressed to
the party to be notified and sent to the address or facsimile number indicated
below.  Advance requests made pursuant to
Section 3.4 must be in writing and may be in the form of electronic mail,
delivered to Bank by Borrower at the e-mail address of Bank provided below and
shall be deemed to have been validly served, given, or delivered when sent
(with such electronic mail promptly confirmed by delivery of a copy by personal
delivery or United States mail as otherwise provided in this Section 10).  Bank or Borrower may change its address,
facsimile number, or electronic mail address by giving the other party written
notice thereof in accordance with the terms of this Section 10.

 

16

 

	
  If to Borrower:

  	
   

  	
  Satcon
  Technology Corporation

  	
   

  
	
   

  	
   

  	
  Satcon Power
  Systems, Inc.

  	
   

  
	
   

  	
   

  	
  Satcon
  Electronics, Inc.

  	
   

  
	
   

  	
   

  	
  Satcon Applied
  Technology , Inc.

  	
   

  
	
   

  	
   

  	
  Satcon Power
  Systems Canada Ltd.

  	
   

  
	
   

  	
   

  	
  27 Drydock
  Avenue

  	
   

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02210

  	
   

  
	
   

  	
   

  	
  Attn: David
  O’Neil

  	
   

  
	
   

  	
   

  	
  Fax: (617)
  897-2401

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Greenberg
  Traurig LLP

  	
   

  
	
   

  	
   

  	
  One International
  Place

  	
   

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02108

  	
   

  
	
   

  	
   

  	
  Attn: Jonathan
  Bell, Esquire

  	
   

  
	
   

  	
   

  	
  Fax: (617)
  310-9000

  	
   

  
	
   

  	
   

  	
  Email:
  jbell@gtlaw.com

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If to Bank:

  	
   

  	
  Silicon Valley
  Bank

  	
   

  
	
   

  	
   

  	
  One Newton
  Executive Park, Suite 200

  	
   

  
	
   

  	
   

  	
  2221 Washington
  Street, Newton, MA 02462

  	
   

  
	
   

  	
   

  	
  Attn: Michael
  Tramack

  	
   

  
	
   

  	
   

  	
  Fax: (617)
  969-5962

  	
   

  
	
   

  	
   

  	
  Email:  MTramack@svb.com

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Riemer &
  Braunstein LLP

  	
   

  
	
   

  	
   

  	
  Three Center
  Plaza

  	
   

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02108

  	
   

  
	
   

  	
   

  	
  Attn: Charles W. Stavros, Esquire

  	
   

  
	
   

  	
   

  	
  Fax: (617)
  880-3456

  	
   

  
	
   

  	
   

  	
  Email: CStavros@riemerlaw.com

  	
   

  

 

11           CHOICE
OF LAW, VENUE AND JURY TRIAL WAIVER AND JUDICIAL REFERENCE

 

Massachusetts law governs the Loan Documents without
regard to principles of conflicts of law. 
Borrower and Bank each submit to the exclusive jurisdiction of the State
and Federal courts in Massachusetts; provided, however, that nothing in this
Agreement shall be deemed to operate to preclude Bank from bringing suit or
taking other legal action in any other jurisdiction to realize on the
Collateral or any other security for the Obligations, or to enforce a judgment
or other court order in favor of Bank. 
Borrower expressly submits and consents in advance to such jurisdiction
in any action or suit commenced in any such court, and Borrower hereby waives
any objection that it may have based upon lack of personal jurisdiction,
improper venue, or forum non conveniens and hereby consents to the granting of
such legal or equitable relief as is deemed appropriate by such court.  Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees
that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to Borrower at the address set forth in Section 10
of this Agreement and that service so made shall be deemed completed upon the
earlier to occur of Borrower’s actual receipt thereof or three (3) days
after deposit in the U.S. mails, proper postage prepaid. NOTWITHSTANDING
ANYTHING TO THE CONTRARY SET FORTH HEREINABOVE, BANK SHALL SPECIFICALLY HAVE
THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE
IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK’S RIGHTS
AGAINST BORROWER OR ITS PROPERTY.

 

TO THE EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR
ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL
OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER
INTO THIS AGREEMENT.  EACH PARTY HAS
REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

17

 

12           GENERAL
PROVISIONS

 

12.1        Successors and Assigns.  This Agreement binds and is for the benefit
of the successors and permitted assigns of each party.  Borrower may not assign this Agreement or any
rights or obligations under it without Bank’s prior written consent (which may
be granted or withheld in Bank’s discretion). 
Bank has the right, without the consent of or notice to Borrower, to
sell, transfer, negotiate, or grant participation in all or any part of, or any
interest in, Bank’s obligations, rights, and benefits under this Agreement and
the other Loan Documents.

 

12.2        Indemnification.  Borrower agrees to indemnify, defend and hold
Bank and its directors, officers, employees, agents, attorneys, or any other
Person affiliated with or representing Bank harmless against:  (a) all obligations, demands, claims,
and liabilities (collectively, “Claims”)
asserted by any other party in connection with the transactions contemplated by
the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid
by Bank from, following, or arising from transactions between Bank and Borrower
(including reasonable attorneys’ fees and expenses), except for Claims and/or
losses directly caused by Bank’s gross negligence or willful misconduct.

 

12.3        Time of Essence.  Time is of the essence for the performance of
all Obligations in this Agreement.

 

12.4        Severability of Provisions.  Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

 

12.5        Amendments in Writing;
Integration.  All amendments to this
Agreement must be in writing signed by both Bank and Borrower.  This Agreement and the Loan Documents
represent the entire agreement about this subject matter and supersede prior
negotiations or agreements.  All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement and the Loan
Documents merge into this Agreement and the Loan Documents.

 

12.6        Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, are an original, and all taken together,
constitute one Agreement.

 

12.7        Survival.  All covenants, representations and warranties
made in this Agreement continue in full force until this Agreement has
terminated pursuant to its terms and all Obligations (other than inchoate
indemnity obligations and any other obligations which, by their terms, are to
survive the termination of this Agreement) have been satisfied.  The obligation of Borrower in Section 12.2
to indemnify Bank shall survive until the statute of limitations with respect
to such claim or cause of action shall have run.

 

12.8        Confidentiality.  In handling any confidential information,
Bank shall exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made: (a) to
Bank’s Subsidiaries or Affiliates; (b) to prospective transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank
shall use commercially reasonable efforts to obtain such prospective transferee’s
or purchaser’s agreement to the terms of this provision); (c) as required
by law, regulation, subpoena, or other order; (d) to Bank’s regulators or
as otherwise required in connection with Bank’s examination or audit; and (e) as
Bank considers appropriate in exercising remedies under this Agreement.  Confidential information does not include
information that either: (i) is in the public domain or in Bank’s
possession when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank
does not know that the third party is prohibited from disclosing the
information.

 

12.9        Attorneys’ Fees, Costs and
Expenses.  In any action or
proceeding between Borrower and Bank arising out of or relating to the Loan
Documents, Bank shall be entitled to recover its reasonable attorneys’ fees and
other costs and expenses incurred, in addition to any other relief to which it
may be entitled.

 

12.10      Borrower Liability.  Each Borrower may, acting singly, request
Credit Extensions hereunder.  Each
Borrower hereby appoints the other as agent for the other for all purposes
hereunder, including with respect to requesting Credit Extensions hereunder.
Each Borrower hereunder shall be obligated to repay all Credit Extensions made
hereunder, regardless of which Borrower actually receives said Advance, as if
each Borrower hereunder directly received all Credit Extensions.  Each Borrower waives any suretyship defenses
available to it under the Code or any other applicable law.  Each Borrower waives any right to require
Bank to: (i) proceed against any 

 

18

 

Borrower or any other
person; (ii) proceed against or exhaust any security; or (iii) pursue
any other remedy.  Bank may exercise or
not exercise any right or remedy it has against any Borrower or any security it
holds (including the right to foreclose by judicial or non-judicial sale)
without affecting any Borrower’s liability. 
Notwithstanding any other provision of this Agreement or other related
document, each Borrower irrevocably waives all rights that it may have at law
or in equity (including, without limitation, any law subrogating Borrower to
the rights of Bank under this Agreement) to seek contribution, indemnification
or any other form of reimbursement from any other Borrower, or any other Person
now or hereafter primarily or secondarily liable for any of the Obligations,
for any payment made by Borrower with respect to the Obligations in connection
with this Agreement or otherwise and all rights that it might have to benefit
from, or to participate in, any security for the Obligations as a result of any
payment made by Borrower with respect to the Obligations in connection with
this Agreement or otherwise.  Any
agreement providing for indemnification, reimbursement or any other arrangement
prohibited under this Section shall be null and void.  If any payment is made to a Borrower in
contravention of this Section, such Borrower shall hold such payment in trust
for Bank and such payment shall be promptly delivered to Bank for application
to the Obligations, whether matured or unmatured.

 

12.11      Right of Set Off.   Borrower 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 liability or 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           DEFINITIONS

 

13.1        Definitions.  As used in this Agreement, the following
terms have the following meanings:

 

“Account” is any
“account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable
and other sums owing to Borrower.

 

“Account Debtor”
is any “account debtor” as defined in the Code with such additions to such term
as may hereafter be made.

 

“Advance” or “Advances” means an advance (or advances) under the Revolving
Line.

 

“Affiliate” of
any Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with
the Person, and each of that Person’s senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person’s
managers and members.

 

“Agreement” is
defined in the preamble hereof.

 

“Availability Amount”
is (a) the lesser of (i) the Revolving Line or (ii) the
Borrowing Base minus (b) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) plus an amount equal to
the Letter of Credit Reserves, minus (c) the FX Reserve, and minus (d) the
outstanding principal balance of any Advances (including any amounts used for
Cash Management Services).

 

“Bank” is
defined in the preamble hereof.

 

“Bank Expenses”
are all audit fees and expenses, costs, and expenses (including reasonable attorneys’
fees and expenses) for preparing, negotiating, administering, defending and
enforcing the Loan Documents (including, without limitation, those incurred in
connection with appeals or Insolvency Proceedings) or otherwise incurred with
respect to Borrower.

 

“Borrower” is
defined in the preamble hereof

 

19

 

“Borrower’s Books”
are all Borrower’s books and records including ledgers, federal and state tax
returns, records regarding Borrower’s assets or liabilities, the Collateral,
business operations or financial condition, and all computer programs or
storage or any equipment containing such information.

 

“Borrowing Base”
is (a) 80% of Eligible Accounts plus (b) the lesser of 25% of the
value of Borrower’s Eligible Inventory (valued at the lower of cost or
wholesale fair market value) or $1,000,000, as determined by Bank from Borrower’s
most recent Borrowing Base Certificate, provided, however, that Bank may
decrease the foregoing percentages  in its good
faith business judgment based on events, conditions, contingencies, or risks
which, as determined by Bank, may adversely affect Collateral.

 

“Borrowing Base Certificate”
is that certain certificate included within each Transaction Report.

 

“Borrowing Resolutions”
are, with respect to any Person, those resolutions adopted by such Person’s
Board of Directors or other appropriate body and delivered by such Person to
Bank approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, together with a certificate executed by its
secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the
Loan Documents to which it is a party, (b) that attached as Exhibit A
to such certificate is a true, correct, and complete copy of the resolutions
then in full force and effect authorizing and ratifying the execution,
delivery, and performance by such Person of the Loan Documents to which it is a
party, (c) the name(s) of the Person(s) authorized to execute
the Loan Documents on behalf of such Person, together with a sample of the true
signature(s) of such Person(s), and (d) that Bank may conclusively
rely on such certificate unless and until such Person shall have delivered to
Bank a further certificate canceling or amending such prior certificate.

 

“Business Day” is any day other
than a Saturday, Sunday or other day on which banking institutions in the
Commonwealth of Massachusetts are authorized or required by law or other
governmental action to close, except that if any determination of a “Business
Day” shall relate to a LIBOR Advance, the term “Business Day” shall also mean a
day on which dealings are carried on in the London interbank market, and if any
determination of a “Business Day” shall relate to an FX Forward Contract, the
term “Business Day” shall mean a day on which dealings are carried on in the
country of settlement of the foreign (i.e., non-Dollar) currency.

 

“Cash Equivalents” means (a) marketable
direct obligations issued or unconditionally guaranteed by the United States or
any agency or any State thereof having maturities of not more than one (1) year
from the date of acquisition; (b) commercial paper maturing no more than
one (1) year after its creation and having the highest rating from either
Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.,
(c) Bank’s certificates of deposit issued maturing no more than one (1) year
after issue; and (d) money market funds at least ninety-five percent (95%)
of the assets of which constitute Cash Equivalents of the kinds described in
clauses (a) through (c) of this definition.

 

“Cash Management Services” is
defined in Section 2.1.4.

 

“Cash Management Services Sublimit” is
defined in Section 2.1.4.

 

“Change in Control” means any event, transaction, or occurrence as a result of which (a) any “person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934, as an amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of Borrower, representing thirty-five percent (35%) or more of the combined voting power of Borrower’s then outstanding securities; or (b) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the Board of Directors of Borrower (together with any new directors whose election by the Board of Directors of Borrower was approved by a vote of at least two-thirds of the directors then still in office who either were directions at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason other than death or disability to constitute a majority of the directors then in office.
 
“Code” means (i) the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the Commonwealth of Massachusetts; provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction

 

20

 

other than the  Commonwealth of  Massachusetts, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes on the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions and (ii) with respect to Canadian Borrower or any tangible assets located in Ontario, the Personal Property Security Act (Ontario) as amended and as may be further amended and in effect from time to time; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Personal Property Security Act in effect in a provincial jurisdiction other than Ontario, the term “Code” shall mean the Personal Property Security Act as enacted and in effect in such other province solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.
 

“Collateral” is
any and all properties, rights and assets of Borrower described on Exhibit A.

 

“Collateral Account”
is any Deposit Account, Securities Account, or Commodity Account.

 

“Commodity Account”
is any “commodity account” as defined in the Code with such additions to such
term as may hereafter be made.

 

“Communication”
is defined in Section 10.

 

“Compliance Certificate”
is that certain certificate in the form attached hereto as Exhibit D.

 

“Contingent Obligation”
is, for any Person, any direct or indirect liability, contingent or not, of
that Person for (a) any indebtedness, lease, dividend, letter of credit or
other obligation of another such as an obligation directly or indirectly
guaranteed, endorsed, co-made, discounted or sold with recourse by that Person,
or for which that Person is directly or indirectly liable; (b) any
obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement,
interest rate cap or collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; but “Contingent Obligation” does not
include endorsements in the ordinary course of business.  The amount of a Contingent Obligation is the
stated or determined amount of the primary obligation for which the Contingent
Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined by the Person in good faith; but the amount may not
exceed the maximum of the obligations under any guarantee or other support
arrangement.

 

“Control Agreement”
is any control agreement entered into among the depository institution at which
Borrower maintains a Deposit Account or the securities intermediary or
commodity intermediary at which Borrower maintains a Securities Account or a
Commodity Account, Borrower, and Bank pursuant to which Bank obtains control
(within the meaning of the Code) over such Deposit Account, Securities Account,
or Commodity Account.

 

“Credit Extension”
is any Advance, Letter of Credit, FX Forward Contract, amount utilized for Cash
Management Services, or any other extension of credit by Bank for Borrower’s
benefit.

 

“Current Assets” are
amounts that under GAAP should be included on that date as current assets on
Borrower’s consolidated balance sheet.

 

“Default” means
any event which with notice or passage of time or both, would constitute an
Event of Default.

 

“Default Rate”
is defined in Section 2.3(b).

 

“Deferred Revenue”
is all amounts received or invoiced in advance of performance under contracts
and not yet recognized as revenue.

 

“Deposit Account”
is any “deposit account” as defined in the Code with such additions to such
term as may hereafter be made.

 

“Designated Deposit Account”
is Borrower’s deposit account, account number 3300371353, maintained with Bank.

 

21

 

“Dollars,”  “dollars” and “$” each mean
lawful money of the United States.

 

“Domestic Subsidiary”
means a Subsidiary organized under the laws of the United States or any state
or territory thereof or the District of Columbia.

 

“Effective Date”
is the date Bank executes this Agreement and as indicated on the signature page hereof.

 

“Eligible Accounts”
are Accounts which arise in the ordinary course of Borrower’s business that
meet all Borrower’s representations and warranties in Section 5.3.  Bank reserves the right at any time and from
time to time after the Effective Date upon notice to Borrower, to adjust any of
the criteria set forth below and to establish new criteria in its good faith
business judgment.  Without limiting the
fact that the determination of which Accounts are eligible for borrowing is a
matter of Bank’s good faith judgment, the following (“Minimum Eligibility
Requirements”) are the minimum requirements for an Account to be an Eligible
Account.  Unless Bank agrees otherwise in
writing, Eligible Accounts shall not include:

 

(a)           Accounts for which the Account Debtor
has not been invoiced;

 

(b)           Accounts that the Account Debtor has
not paid within ninety (90) days of invoice date;

 

(c)           Accounts
owing from an Account Debtor, fifty percent (50%) or more of whose Accounts
have not been paid within ninety (90) days of invoice date;

 

(d)           Credit balances over ninety (90) days
from invoice date;

 

(e)           Accounts owing from an Account
Debtor, including Affiliates, whose total obligations to Borrower exceed
twenty-five (25%) of all Accounts, for the amounts that exceed that percentage,
unless Bank approves in writing;

 

(f)            Represent progress billings, or be
due under a fulfillment or requirements contract;

 

(g)           Accounts owing from an Account Debtor
which does not have its principal place of business in the United States or
Canada except for Eligible Foreign Accounts;

 

(h)           Accounts owing from the United States
or any department, agency, or instrumentality thereof, except for Accounts of
the United States if Borrower has assigned its payment rights to Bank and the
assignment has been acknowledged under the Federal Assignment of Claims Act of
1940, as amended;

 

(i)            Accounts owing from an Account
Debtor to the extent that Borrower is indebted or obligated in any manner to
the Account Debtor (as creditor, lessor, supplier or otherwise - sometimes
called “contra” accounts, accounts payable, customer deposits or credit
accounts), with the exception of customary credits, adjustments and/or
discounts given to an Account Debtor by Borrower in the ordinary course of its
business;

 

(j)            Accounts for demonstration or
promotional equipment, or in which goods are consigned, or sold on a “sale
guaranteed”, “sale or return”, “sale on approval”, “bill and hold”, or other
terms if Account Debtor’s payment may be conditional;

 

(k)           Accounts for which the Account Debtor
is Borrower’s Affiliate, officer, employee, or agent;

 

(l)            Accounts in which the Account Debtor
disputes liability or makes any claim (but only up to the disputed or claimed
amount), or if the Account Debtor is subject to an Insolvency Proceeding, or
becomes insolvent, or goes out of business;

 

(m)          Accounts owing from an Account Debtor
with respect to which Borrower has received deferred revenue (but only to the
extent of such deferred revenue);

 

(n)           Accounts for which Bank in its good
faith business judgment determines collection to be doubtful; and

 

(o)           other Accounts Bank deems ineligible
in the exercise of its good faith business judgment.

 

22

 

“Eligible Foreign Accounts”
are Accounts for which the Account Debtor does not have its principal place of
business in the United States but are otherwise Eligible Accounts that are (a) covered
by credit insurance satisfactory to Bank in its good faith business judgment,
less any deductible; (b) supported by letter(s) of credit acceptable
to Bank in its good faith business judgment; or (c) that Bank approves in
writing.

 

“Eligible Inventory” means, at
any time, the aggregate of Borrower’s Inventory that (a) consists of
finished goods or raw materials, in good, new, and salable condition, which are
not perishable, returned, consigned, obsolete, not sellable, damaged, or
defective, and is not comprised of demonstrative or custom inventory, works in
progress, packaging or shipping materials, or supplies; (b) meet all
applicable governmental standards; (c) have been manufactured in
compliance with the Fair Labor Standards Act; (d) are not subject to any
Liens, except the first priority Liens granted or in favor of Bank under this
Agreement or any of the other Loan Documents; (e) are located at Borrower’s
principal place of business, any location noted on the Borrower’s Perfection
Certificate delivered in connection herewith (provided Bank has received a
landlord’s waiver, bailee’s waiver or similar agreement in form reasonably
satisfactory to Bank with respect to such location), or any location permitted
under Section 7.2; and (f) are otherwise acceptable to Bank in its good
faith business judgment.

 

“Equipment” is
all “equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures,
goods, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing.

 

“ERISA” is the
Employment Retirement Income Security Act of 1974, and its regulations.

 

“Event of Default”
is defined in Section 8.

 

“Foreign Currency” means lawful
money of a country other than the United States.

 

“Foreign Subsidiary” means any
Subsidiary which is not a Domestic Subsidiary.

 

“Funding Date”
is any date on which a Credit Extension is made to or on account of Borrower
which shall be a Business Day.

 

“FX Business Day”
is any day when (a) Bank’s Foreign Exchange Department is conducting its
normal business and (b) the Foreign Currency being purchased or sold by
Borrower is available to Bank from the entity from which Bank shall buy or sell
such Foreign Currency.

 

“FX Forward Contract”  is defined in Section 2.1.3.

 

“FX Reserve”  is defined in Section 2.1.3.

 

“GAAP” is
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.

 

“General Intangibles”
is all “general intangibles” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation, all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work, whether published or unpublished, any patents, trademarks, service marks
and, to the extent permitted under applicable law, any applications therefor,
whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route lists,
telephone numbers, domain names, claims, income and other tax refunds, security
and other deposits, options to purchase or sell real or personal property,
rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man,
property damage, and business interruption insurance), payments of insurance
and rights to payment of any kind.

 

“Guarantor”  is any present or future guarantor of the Obligations.

 

23

 

“Indebtedness” is
(a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and
letters of credit, (b) obligations evidenced by notes, bonds, debentures
or similar instruments, (c) capital lease obligations, and (d) Contingent
Obligations.

 

“Insolvency Proceeding”
is any proceeding by or against any Person under the United States Bankruptcy
Code or the Bankruptcy and Insolvency Act (Canada),, or any other bankruptcy or
insolvency law, including assignments for the benefit of creditors,
compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief, whether in Canada or the United
States.

 

“Inventory” is
all “inventory” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without
limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

 

“Investment” is
any beneficial ownership interest in any Person (including stock, partnership
interest or other securities), and any loan, advance or capital contribution to
any Person.

 

“IP Agreement” is that certain
Intellectual Property Security Agreement executed and delivered by Borrower to
Bank dated as of the date hereof.

 

“Letter of Credit”
means a standby letter of credit issued by Bank or another institution based
upon an application, guarantee, indemnity or similar agreement on the part of
Bank as set forth in Section 2.1.2.

 

“Letter of Credit Application”
is defined in Section 2.1.2(a).

 

“Letter of Credit Reserve”
has the meaning set forth in Section 2.1.2(d).

 

“Lien” is a
mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.

 

“Loan Documents”
are, collectively, this Agreement, the Perfection Certificate, the IP
Agreement,  any note, or notes or guaranties
executed by Borrower or any Guarantor, and any other present or future
agreement between Borrower any Guarantor and/or for the benefit of Bank in
connection with this Agreement, all as amended, restated, or otherwise
modified.

 

“Material Adverse Change” is (a) a
material impairment in the perfection or priority of Bank’s Lien in the
Collateral or in the value of such Collateral; (b) a material adverse
change in the business, operations, or condition (financial or otherwise) of
Borrower; (c) a material impairment of the prospect of repayment of any
portion of the Obligations or  (d) Bank
determines, based upon information available to it and in its reasonable
judgment, that there is a significant likelihood that Borrower shall fail to
comply with one or more of the financial covenants in Section 6 during the
next succeeding financial reporting period.

 

“Minimum Eligibility Requirements”
is defined in the defined term “Eligible Accounts”.

 

“Net Income” means, as
calculated on a consolidated basis for Borrower and its Subsidiaries, if
any,  for any period as at any date of
determination, the net profit (or loss), after provision for taxes, of Borrower
and its Subsidiaries for such period taken as a single accounting period.

 

“Obligations”
are Borrower’s obligation to pay when due any debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, whether under this
Agreement, the Loan Documents, or otherwise, including, without limitation, all
obligations relating to letters of credit, cash management services, and
foreign exchange contracts, if any, and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower
assigned to Bank, and the performance of Borrower’s duties under the Loan
Documents.

 

“Operating Documents” are, for
any Person, such Person’s formation documents, as certified with the Secretary
of State of such Person’s state of formation on a date that is no earlier than
30 days prior to the Effective Date, and, (a) if such Person is a
corporation, its bylaws in current form, (b) if such Person is a limited
liability company, its limited liability company agreement (or similar agreement),
and (c) if such Person is a partnership, its 

 

24

 

partnership agreement (or similar agreement), each of
the foregoing with all current amendments or modifications thereto.

 

“Payment” means all checks, wire
transfers and other items of payment received by Bank (including proceeds of
Accounts and payment of all the Obligations in full) for credit to Borrower’s
outstanding Credit Extensions or, if the balance of the Credit Extensions has
been reduced to zero, for credit to its Deposit Accounts.

 

“Perfection Certificate”
is defined in Section 5.1.

 

“Permitted Indebtedness”
is:

 

(a)           Borrower’s Indebtedness to Bank under
this Agreement and the other Loan Documents;

 

(b)           Indebtedness existing on the
Effective Date and shown on the Perfection Certificate;

 

(c)           Subordinated Debt;

 

(d)           unsecured Indebtedness to trade creditors incurred in the ordinary course of
business;

 

(e)           Indebtedness incurred as a result of
endorsing negotiable instruments received in the ordinary course of business;

 

(f)            Indebtedness secured by Permitted
Liens; and

 

(g)           extensions,
refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (f) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified
to impose more burdensome terms upon Borrower or its Subsidiary, as the case
may be.

 

“Permitted Investments”
are:

 

(a)           Investments shown on the Perfection
Certificate and existing on the Effective Date;

 

(b)           Cash Equivalents;

 

(c)           Investments
consisting of the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of Borrower;

 

(d)           Investments consisting of deposit
accounts in which Bank has a perfected security interest;

 

(e)           Investments accepted in connection
with Transfers permitted by Section 7.1;

 

(f)            Investments consisting of (i) travel
advances and employee relocation loans and other employee loans and advances in
the ordinary course of business, and (ii) loans to employees, officers or
directors relating to the purchase of equity securities of Borrower or its
Subsidiaries pursuant to employee stock purchase plans or agreements approved
by Borrower’s Board of Directors;

 

(h)           Investments (including debt
obligations) received in connection with the bankruptcy or reorganization of
customers or suppliers and in settlement of delinquent obligations of, and
other disputes with, customers or suppliers arising in the ordinary course of
business;

 

(i)            Investments consisting of notes
receivable of, or prepaid royalties and other credit extensions, to customers
and suppliers who are not Affiliates, in the ordinary course of business;
provided that this paragraph (i) shall not apply to Investments of Borrower
in any Subsidiary.

 

“Permitted Liens”
are:

 

(a)           Liens existing on the Effective Date
and shown on the Perfection Certificate or arising under this Agreement and the
other Loan Documents;

 

25

 

(b)           Liens for taxes, fees, assessments or
other government charges or levies, either not delinquent or being contested in
good faith and for which Borrower maintains adequate reserves on its Books, if
they have no priority over any of Bank’s Liens;

 

(c)           purchase money Liens (i) on
Equipment acquired or held by Borrower incurred for financing the acquisition
of the Equipment securing no more than $250,000 in the aggregate amount
outstanding, or (ii) existing on Equipment when acquired, if the
Lien is confined to the property and improvements and the proceeds of the
Equipment;

 

(d)           Liens of carriers, warehousemen,
suppliers, or other Persons that are possessory in nature arising in the
ordinary course of business so long as such Liens attach only to Inventory,
securing liabilities in the aggregate amount not to exceed $100,000 and which
are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings which proceedings have
the effect of preventing the forfeiture or sale of the property subject
thereto;

 

(e)           Liens to secure payment of workers’
compensation, employment insurance, old-age pensions, social security and other
like obligations incurred in the ordinary course of business (other than Liens
imposed by ERISA);

 

(f)            Liens incurred in the extension,
renewal or refinancing of the indebtedness secured by Liens described in (a) through
(c), 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;

 

(g)           leases or subleases of real property
granted in the ordinary course of business, and leases, subleases,
non-exclusive licenses or sublicenses of property (other than real property or
intellectual property) granted in the ordinary course of Borrower’s business, if
the leases, subleases, licenses and sublicenses do not prohibit granting Bank a
security interest;

 

(h)           non-exclusive license of intellectual
property granted to third parties in the ordinary course of business; and

 

(i)            Liens arising from judgments,
decrees or attachments in circumstances not constituting an Event of Default
under Section 8.4 or 8.7.

 

“Person” is any
individual, sole proprietorship, partnership, limited liability company, joint venture,
company, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or government agency.

 

“Prime Rate” is
Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.

 

“Registered Organization”
is any “registered organization” as defined in the Code with such additions to
such term as may hereafter be made

 

“Reserves” means, as of any date
of determination, such amounts as Bank may from time to time establish and
revise in good faith reducing the amount of Advances, Letters of Credit and
other financial accommodations which would otherwise be available to Borrower
under the lending formulas:  (a) to
reflect events, conditions, contingencies or risks which, as determined by Bank
in good faith, do or may affect (i) the Collateral or any other property
which is security for the Obligations or its value (including without
limitation any increase in delinquencies of Accounts), (ii) the assets or
business of Borrower or any guarantor, or (iii) the security interests and
other rights of Bank in the Collateral (including the enforceability,
perfection and priority thereof); or (b) to reflect Bank’s good faith
belief that any collateral report or financial information furnished by or on
behalf of Borrower or any guarantor to Bank is or may have been incomplete,
inaccurate or misleading in any material respect; or (c) in respect of any
state of facts which Bank determines in good faith constitutes an Event of
Default or may, with notice or passage of time or both, constitute an Event of
Default.

 

“Responsible Officer”
is any of the Chief Executive Officer, President, Chief Financial Officer and
Controller of Borrower.

 

26

 

“Revolving Line”
is an Advance or Advances in an aggregate amount of up to $10,000,000
outstanding at any time.

 

“Revolving Line Maturity Date” is
February 18, 2010.

 

“Securities Account”
is any “securities account” as defined in the Code with such additions to such
term as may hereafter be made.

 

“Settlement Date”  is defined in Section 2.1.3.

 

“Subordinated Debt”
is indebtedness incurred by Borrower subordinated to all of Borrower’s now or
hereafter indebtedness to Bank (pursuant to a subordination, intercreditor, or
other similar agreement in form and substance satisfactory to Bank entered into
between Bank and the other creditor), on terms acceptable to Bank.

 

“Subsidiary”
means, with respect to any Person, any Person of which more than 50% of the
voting stock or other equity interests is owned or controlled, directly or
indirectly, by such Person or one or more Affiliates of such Person.

 

“Tangible Net Worth”
is, on any date, the consolidated total assets of Borrower and its Subsidiaries
minus (a) any amounts attributable to (i) goodwill, (ii) intangible
items including unamortized debt discount and expense, patents, trade and
service marks and names, copyrights and research and development expenses
except prepaid expenses, (iii) notes, accounts receivable and other
obligations owing to Borrower from its officers or other Affiliates, and (iv) reserves
not already deducted from assets, minus (b) Total Liabilities
(exclusive of warrant and preferred stock liabilities, provided such
liabilities have redemption dates that exceed the term of this Agreement, as
certified by Borrower to Bank).

 

“Total Liabilities”
is on any day, obligations that should be classified as liabilities on Borrower’s
consolidated balance sheet, including all Indebtedness, and current portion of
Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all
other Subordinated Debt.

 

“Transaction Report” is that
certain form attached hereto as Exhibit B.

 

“Transfer” is
defined in Section 7.1.

 

“Unused Revolving Line Facility Fee”
is defined in Section 2.4(d).

 

[Signature page follows.]

 

27

 

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

 

	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
  SATCON TECHNOLOGY CORPORATION

  	
   

  
	
   

  	
   

  
	
  By

  	
      /s/ David B. Eisenhaure

  	
   

  
	
  Name:

  	
          
  David B. Eisenhaure

  	
   

  
	
  Title:

  	
            President
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  SATCON POWER SYSTEMS, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
      /s/ David B. Eisenhaure

  	
   

  
	
  Name:

  	
          
  David B. Eisenhaure

  	
   

  
	
  Title:

  	
            President
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  SATCON APPLIED TECHNOLOGY, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
      /s/ David B. Eisenhaure

  	
   

  
	
  Name:

  	
          
  David B. Eisenhaure

  	
   

  
	
  Title:

  	
            President
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  SATCON ELECTRONICS, INC.

  	
   

  
	
   

  	
   

  
	
  By

  	
      /s/ David B. Eisenhaure

  	
   

  
	
  Name:

  	
          
  David B. Eisenhaure

  	
   

  
	
  Title:

  	
            President
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  SATCON POWER SYSTEMS CANADA LTD.

  	
   

  
	
   

  	
   

  
	
  By

  	
      /s/ David B. Eisenhaure

  	
   

  
	
  Name:

  	
          
  David B. Eisenhaure

  	
   

  
	
  Title:

  	
            President
  and Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BANK:

  	
   

  
	
   

  	
   

  
	
  SILICON VALLEY BANK

  	
   

  
	
   

  	
   

  
	
  By

  	
      /s/ Michael Trumack

  	
   

  
	
  Name:

  	
            Michael Trumack

  	
   

  
	
  Title:

  	
            Senior
  Vice President

  	
   

  
									

 

 

Effective Date: February 26, 2008

 

[Signature page to Loan
and Security Agreement]

 

 

EXHIBIT A

 

The Collateral consists
of all of Borrower’s right, title and interest in and to the following personal
property:

 

All goods, Accounts (including health-care
receivables), Equipment, Inventory, contract rights or rights to payment of
money, leases, license agreements, franchise agreements, General Intangibles,
commercial tort claims, documents, instruments (including any promissory
notes), chattel paper (whether tangible or electronic), cash, deposit accounts,
fixtures, letters of credit rights (whether or not the letter of credit is
evidenced by a writing), securities, and all other investment property,
supporting obligations, and financial assets, whether now owned or hereafter
acquired, wherever located; and

 

all Borrower’s Books relating to the foregoing, and
any and all claims, rights and interests in any of the above and all
substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of
any or all of the foregoing.

 

1

 

EXHIBIT B

 

Transaction Report

 

[EXCEL
spreadsheet to be provided separately from lending officer.]

 

1

 

EXHIBIT C

 

PERFECTION CERTIFICATE

 

2

 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

	
  TO:

  	
   

  	
  SILICON VALLEY BANK

  	
  Date:

  	
   

  
	
  FROM:

  	
   

  	
  SATCON TECHNOLOGY CORPORATION, et al.

  	
   

  	
   

  

 

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

 

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

 

	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements with Compliance Certificate

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes No

  
	
  Annual financial statement (CPA Audited) + CC

  	
   

  	
  FYE within 120 days

  	
   

  	
  Yes No

  
	
  10-Q, 10-K and 8-K

  	
   

  	
  Within 5 days after filing with SEC

  	
   

  	
  Yes No

  
	
  A/R & A/P Agings

  	
   

  	
  Monthly within 15 days

  	
   

  	
  Yes No

  
	
  Projections

  	
   

  	
  Annually

  	
   

  	
  Yes No

  

 

]

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

 

	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain on a Monthly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Liquidity

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
  $

  	
   

  	
  Yes No

  	
   

  
	
  Minimum Tangible Net Worth

  	
   

  	
  $

  	
  *See Section 6.9(b)

  	
   

  	
  $

  	
   

  	
  Yes No

  	
   

  
										

 

3

 

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

 

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

 

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION, et al.

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
  Name:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Verified:

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance Status:                                        Yes     No

  
													

 

4

 

Schedule 1 to Compliance
Certificate

 

Financial Covenants of Borrower

 

Dated:

 

I.              Liquidity
(Section 6.9(a))

 

Required:               $3,000,000

 

Actual:

 

	
  A.

  	
   

  	
  Unrestricted
  cash at Bank

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Availability
  Amount

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Liquidity
  (line A plus line B)

  	
   

  	
  $

  

 

Is
line C equal to or greater than
$3,000,000          ?

 

	
  No, not in compliance

  	
   

  	
  Yes,
  in compliance

  

 

5

 

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

 

Required:               $

 

Actual:                   $

 

 

	
  A.

  	
   

  	
  Aggregate
  value of total assets of Borrower

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Aggregate
  value of goodwill of Borrower

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Aggregate
  value of intangible assets of Borrower

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

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

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  Aggregate
  value of any reserves not already deducted from assets

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Total
  Liabilities

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  G.

  	
   

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

  	
  $

  	
   

  	
   

  
						

 

Is
line G equal to or greater than
$          ?

 

	
  No, not in compliance

  	
   

  	
  Yes,
  in compliance

  

 

6

 

EXHIBIT E

LIBOR SUPPLEMENT TO AGREEMENT

 

This LIBOR Supplement to Agreement (the “LIBOR Supplement”) is a supplement to the Loan and Security
Agreement (the “Loan Agreement”) dated as of February     ,
2008 between Silicon Valley Bank (“Bank”) and
Satcon Technology Corporation, Satcon Power Systems, Inc., Satcon
Electronics, Inc., Satcon Applied Technology, Inc. and Satcon Power
Systems Canada Ltd. (individually and collectively, jointly and severally, “Borrower”), and forms a part of and is incorporated into the
Loan Agreement.  Notwithstanding any
other provision of the Loan Agreement to the contrary, the following provisions
shall govern with respect to LIBOR Advances as to the matters covered:

 

1                                         DEFINITIONS.

 

“Additional Costs”
is defined in Section 6(b) of this LIBOR Supplement.

 

“Continuation Date”
means any date on which Borrower elects to continue a LIBOR Advance into
another Interest Period.

 

“Conversion Date”
means any date on which Borrower elects to convert a Prime Rate Advance to a
LIBOR Advance or a LIBOR Advance to a Prime Rate Advance.

 

“Effective Amount”
means with respect to any Advances on any date, the aggregate outstanding
principal amount thereof after giving effect to any borrowing and prepayments
or repayments thereof occurring on such date.

 

“Interest Payment Date”
means (a) with respect to any LIBOR Advance, the last day of each Interest
Period applicable to such LIBOR Advance and the last day of each month, and (b) with
respect to Prime Rate Advances, the first (1st ) day of each month
(or, if the first day of the month does not fall on a Business Day, then on the
first Business Day following such date), and each date a Prime Rate Advance is
converted into a LIBOR Advance to the extent of the amount converted to a LIBOR
Advance.

 

“Interest Period”
means, as to any LIBOR Advance, the period commencing on the date of such LIBOR
Advance, or on the conversion/continuation date on which the LIBOR Advance is
converted into or continued as a LIBOR Advance, and ending on the date that is
one (1), two (2), three (3) or six (6) months thereafter, in each
case as Borrower may elect in the applicable Notice of Borrowing or Notice of
Conversion/Continuation; provided, however,
that (a) no Interest Period with respect to any LIBOR Advance shall end
later than the Revolving Line  Maturity Date,
(b) the last day of an Interest Period shall be determined in accordance
with the practices of the LIBOR interbank market as from time to time in
effect, (c) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the following
Business Day unless, in the case of a LIBOR Advance, the result of such
extension would be to carry such Interest Period into another calendar month,
in which event such Interest Period shall end on the preceding Business Day, (d) any
Interest Period pertaining to a LIBOR Advance that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of the calendar month at the end of such
Interest Period, and (e) interest shall accrue from and include the first
Business Day of an Interest Period but exclude the last Business Day of such
Interest Period.

 

“Interest Rate
Determination Date” means each date for calculating the LIBOR for
purposes of determining the interest rate in respect of an Interest Period.  The Interest Rate Determination Date shall be
the second Business Day prior to the first day of the related Interest Period
for a LIBOR Advance.

 

“LIBOR” means,
for any Interest Rate Determination Date with respect to an Interest Period for
any Advance to be made, continued as or converted into a LIBOR Advance, the
rate of interest per annum determined by Bank to be the per annum rate of
interest at which deposits in United States Dollars are offered to Bank in the
London interbank market (rounded upward, if necessary, to the nearest
1/10,000th of one percent (0.0001%)) in which Bank customarily participates at
11:00 a.m. (local time in such interbank market) two (2) Business
Days prior to the first day of such Interest Period for a period approximately equal
to such Interest Period and in an amount approximately equal to the amount of
such Advance.

 

“LIBOR Advance”
means an Advance that bears interest based at the LIBOR Rate.

 

7

 

“LIBOR Rate”
means, for each Interest Period in respect of LIBOR Advances comprising part of
the same Advances, an interest rate per annum
(rounded upward, if necessary, to the nearest 1/10,000th of one percent
(0.0001%)) equal to LIBOR for such Interest Period divided by
one (1) minus the Reserve Requirement for
such Interest Period.

 

“LIBOR Rate Margin”
is three and three quarters percent (3.75%).

 

“Notice of Borrowing”
means a notice given by Borrower to Bank in accordance with Section 3.2(a),
substantially in the form of Schedule I, with appropriate insertions.

 

“Notice of
Conversion/Continuation” means a notice given by Borrower to Bank in
accordance with Section 3.5(b), substantially in the form of Schedule
II, with appropriate insertions.

 

“Parent” is
defined in Section 6(c) of this LIBOR Supplement.

 

“Prime Rate Advance”
means an Advance that bears interest based at the Prime Rate.

 

“Prime Rate Margin”
is one percent (1.00%).

 

“Regulatory Change”
means, with respect to Bank, any change on or after the Effective Date of the
Loan Agreement in United States federal, state, or foreign laws or regulations,
including Regulation D, or the adoption or making on or after such date of any
interpretations, directives, or requests applying to a class of lenders
including Bank, of or under any United States federal or state, or any foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.

 

“Reserve Requirement”
means, for any Interest Period, the average maximum rate at which reserves
(including any marginal, supplemental, or emergency reserves) are required to
be maintained during such Interest Period under Regulation D against “Eurocurrency
liabilities” (as such term is used in Regulation D) by member banks of the
Federal Reserve System.  Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
against (a) any category of liabilities which includes deposits by
reference to which the LIBOR Rate is to be determined as provided in the
definition of LIBOR or (b) any category of extensions of credit or other
assets which include Advances.

 

2                                         GENERAL PROVISIONS RELATING TO
THE ADVANCES.

 

 Each Advance
shall, at Borrower’s option in accordance with the terms of the Loan Agreement,
be either in the form of a Prime Rate Advance or a LIBOR Advance; provided that
in no event shall Borrower maintain at any time LIBOR Advances having more than
three (3) different Interest Periods. 
Borrower shall pay interest accrued on the Advances at the rates and in
the manner set forth in Section 2.3(a).

 

3                                         PROCEDURES FOR BORROWING.

 

(a)           Subject
to the prior satisfaction of all other applicable conditions to the making of
an Advance set forth in the Loan Agreement, each Advance shall be made upon
Borrower’s irrevocable written notice delivered to Bank in the form of a Notice
of Borrowing, each executed by a Responsible Officer of Borrower or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due.  Bank
may rely on any telephone notice given by a person whom Bank believes is a
Responsible Officer or designee. 
Borrower will indemnify Bank for any loss Bank suffers due to such
reliance.  Such Notice of Borrowing must
be received by Bank prior to 12:00 p.m. Eastern time, (i) at least three (3) Business
Days prior to the requested Funding Date, in the case of LIBOR Advances, and (ii) on the
requested Funding Date, in the case of Prime Rate Advances, specifying:

 

(1)           the
amount of the Advance;

 

(2)           the
requested Funding Date;

 

8

 

(3)           whether
the Advance is to be comprised of LIBOR Advances or Prime Rate Advances; and

 

(4)           the duration of the
Interest Period applicable to any such LIBOR Advances included in such notice; provided that if the Notice of Borrowing shall fail to
specify the duration of the Interest Period for any Advance comprised of LIBOR
Advances, such Interest Period shall be one (1) month.

 

(b)           The
proceeds of all such Advances will then be made available to Borrower on the
Funding Date by Bank by transfer to the Designated Deposit Account and,
subsequently, by wire transfer to such other account as Borrower may instruct
in the Notice of Borrowing.  No Advances
shall be deemed made to Borrower, and no interest shall accrue on any such
Advance, until the related funds have been deposited in the Designated Deposit
Account.

 

(c)           Notwithstanding
any provision contained herein or in the Loan Agreement, Borrower acknowledges
and agrees that Borrower shall only be entitled to request (or continue or
covert into) LIBOR Advances during such time as Borrower maintains (A) unrestricted
cash on deposit at Bank plus (B) unused availability pursuant to the
Revolving Line under this Agreement, as determined by Bank with reference to
the Availability Amount set forth in the Loan Agreement, of at least
$10,000,000.

 

4                                         CONVERSION AND CONTINUATION ELECTIONS.

 

(a)           So
long as (i) no Event of Default or Default exists; (ii) Borrower
shall not have sent any notice of termination of the Loan Agreement; and (iii) Borrower
shall have complied with such customary procedures as Bank has established from
time to time for Borrower’s requests for LIBOR Advances, Borrower may, upon
irrevocable written notice to Bank:

 

(1)           elect
to convert on any Business Day, Prime Rate Advances into LIBOR Advances;

 

(2)           elect
to continue on any Interest Payment Date any LIBOR Advances maturing on such
Interest Payment Date; or

 

(3)           elect
to convert on any Interest Payment Date any LIBOR Advances maturing on such
Interest Payment Date into Prime Rate Advances.

 

(b)           Borrower
shall deliver a Notice of Conversion/Continuation to be received by Bank prior
to 12:00 p.m. Pacific time (i) at least  three (3) Business Days in advance
of the Conversion Date or Continuation Date, if any Advances are to be
converted into or continued as LIBOR Advances; and (ii) on the Conversion Date, if any
Advances are to be converted into Prime Rate Advances, in each case specifying
the:

 

(1)           proposed
Conversion Date or Continuation Date;

 

(2)           aggregate
amount of the Advances to be converted or continued;

 

(3)           nature
of the proposed conversion or continuation; and

 

(4)           duration
of the requested Interest Period.

 

(c)           If
upon the expiration of any Interest Period applicable to any LIBOR Advances,
Borrower shall have timely failed to select a new Interest Period to be
applicable to such LIBOR Advances, Borrower shall be deemed to have elected to
convert such LIBOR Advances into Prime Rate Advances.

 

(d)           Any
LIBOR Advances shall, at Bank’s option, convert into Prime Rate Advances in the
event that (i) an Event of Default or Default shall exist, or (ii) the
aggregate principal amount of the Prime Rate Advances which have been
previously converted to LIBOR Advances, or the aggregate principal amount of
existing LIBOR Advances continued, as the case may be, at the beginning of an
Interest Period shall at any time during such Interest Period exceed the
Revolving Line.  Borrower agrees to pay
Bank, upon demand by Bank (or Bank may, at its option, charge the Designated
Deposit Account or any other account Borrower maintains with Bank) any amounts
required to compensate Bank for any loss (including loss of anticipated
profits), cost, or expense incurred 

 

9

 

by Bank, as a result of the conversion of LIBOR Advances to Prime Rate
Advances pursuant to any of the foregoing.

 

(e)           Notwithstanding
anything to the contrary contained herein, Bank shall not be required to
purchase United States Dollar deposits in the London interbank market or other
applicable LIBOR market to fund any LIBOR Advances, but the provisions hereof
shall be deemed to apply as if Bank had purchased such deposits to fund the
LIBOR Advances.

 

5                                         SPECIAL PROVISIONS GOVERNING
LIBOR ADVANCES.

 

(a)           Determination
of Applicable Interest Rate.  As soon
as practicable on each Interest Rate Determination Date, Bank shall determine
(which determination shall, absent manifest error in calculation, be final,
conclusive and binding upon all parties) the interest rate that shall apply to
the LIBOR Advances for which an interest rate is then being determined for the
applicable Interest Period and shall promptly give notice thereof (in writing
or by telephone confirmed in writing) to Borrower.

 

(b)           Inability
to Determine Applicable Interest Rate. 
In the event that Bank shall have determined (which determination shall
be final and conclusive and binding upon all parties hereto), on any Interest
Rate Determination Date with respect to any LIBOR Advance, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Advance on the
basis provided for in the definition of LIBOR, Bank shall on such date give
notice (by facsimile or by telephone confirmed in writing) to Borrower of such
determination, whereupon (i) no Advances may be made as, or converted to,
LIBOR Advances until such time as Bank notifies Borrower that the circumstances
giving rise to such notice no longer exist, and (ii) any Notice of
Borrowing or Notice of Conversion/Continuation given by Borrower with respect
to Advances in respect of which such determination was made shall be deemed to
be rescinded by Borrower.

 

(c)           Compensation
for Breakage or Non-Commencement of Interest Periods.  Borrower shall compensate Bank, upon written
request by Bank (which request shall set forth the manner and method of
computing such compensation), for all reasonable losses, expenses and
liabilities, if any (including any interest paid by Bank to lenders of funds
borrowed by it to make or carry its LIBOR Advances and any loss, expense or
liability incurred by Bank in connection with the liquidation or re-employment
of such funds) such that Bank may incur: (i) if for any reason (other than
a default by Bank or due to any failure of Bank to fund LIBOR Advances due to
impracticability or illegality under Sections 6(d) and 6(e) of
this LIBOR Supplement) a borrowing or a conversion to or continuation of any
LIBOR Advance does not occur on a date specified in a Notice of Borrowing or a
Notice of Conversion/Continuation, as the case may be, or (ii) if any principal
payment or any conversion of any of its LIBOR Advances occurs on a date prior
to the last day of an Interest Period applicable to that Advance.

 

(d)           Assumptions
Concerning Funding of LIBOR Advances. 
Calculation of all amounts payable to Bank under this Section 5 and
under Section 3 of this LIBOR Supplement shall be made as though Bank had
actually funded each of its relevant LIBOR Advances through the purchase of a
Eurodollar deposit bearing interest at the rate obtained pursuant to the
definition of LIBOR Rate in an amount equal to the amount of such LIBOR Advance
and having a maturity comparable to the relevant Interest Period; provided, however, that Bank may fund each of its LIBOR
Advances in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this Section 5
and under Section 3 of this LIBOR Supplement.

 

(e)           LIBOR
Advances After Default.  After the
occurrence and during the continuance of an Event of Default, (i) Borrower
may not elect to have an Advance be made or continued as, or converted to, a
LIBOR Advance after the expiration of any Interest Period then in effect for
such Advance and (ii) subject to the provisions of Section 5(c), any
Notice of Conversion/Continuation given by Borrower with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Borrower and be deemed a request to convert or continue Advances
referred to therein as Prime Rate Advances.

 

6                                         ADDITIONAL
REQUIREMENTS/PROVISIONS REGARDING LIBOR ADVANCES.

 

(a)           If
for any reason (including voluntary or mandatory prepayment or acceleration),
Bank receives all or part of the principal amount of a LIBOR Advance prior to
the last day of the Interest Period for such Advance, Borrower shall
immediately notify Borrower’s account officer at Bank and, on demand by Bank,
pay 

 

10

 

Bank the amount (if any) by which (i) the additional interest
which would have been payable on the amount so received had it not been
received until the last day of such Interest Period exceeds (ii) the
interest which would have been recoverable by Bank by placing the amount so
received on deposit in the certificate of deposit markets, the offshore
currency markets, or United States Treasury investment products, as the case
may be, for a period starting on the date on which it was so received and
ending on the last day of such Interest Period at the interest rate determined
by Bank in its reasonable discretion. 
Bank’s determination as to such amount shall be conclusive absent
manifest error.

 

(b)           Borrower
shall pay Bank, upon demand by Bank, from time to time such amounts as Bank may
determine to be necessary to compensate it for any costs incurred by Bank that
Bank determines are attributable to its making or maintaining of any amount
receivable by Bank hereunder in respect of any Advances relating thereto (such
increases in costs and reductions in amounts receivable being herein called “Additional Costs”), in each case resulting from any
Regulatory Change which:

 

(1)           changes
the basis of taxation of any amounts payable to Bank under the Loan Agreement
in respect of any Advances (other than changes which affect taxes measured by
or imposed on the overall net income of Bank by the jurisdiction in which Bank
has its principal office);

 

(2)           imposes
or modifies any reserve, special deposit or similar requirements relating to
any extensions of credit or other assets of, or any deposits with, or other liabilities
of Bank (including any Advances or any deposits referred to in the definition
of LIBOR); or

 

(3)           imposes
any other condition affecting the Loan Agreement (or any of such extensions of
credit or liabilities).

 

Bank will notify Borrower of
any event occurring after the Effective Date which will entitle Bank to
compensation pursuant to this Section 6 as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation.  Bank will furnish Borrower with a statement setting
forth the basis and amount of each request by Bank for compensation under this Section 6.  Determinations and allocations by Bank for
purposes of this Section 6 of the effect of any Regulatory Change on its
costs of maintaining its obligations to make Advances, of making or maintaining
Advances, or on amounts receivable by it in respect of Advances, and of the
additional amounts required to compensate Bank in respect of any Additional
Costs, shall be conclusive absent manifest error.

 

(c)           If
Bank shall determine that the adoption or implementation of any applicable law,
rule, regulation, or treaty regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or its
applicable lending office) with any respect or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank, or comparable agency, has or would have the effect of reducing
the rate of return on capital of Bank or any person or entity controlling Bank
(a “Parent”) as a consequence of its
obligations hereunder to a level below that which Bank (or its Parent) could
have achieved but for such adoption, change, or compliance (taking into
consideration policies with respect to capital adequacy) by an amount deemed by
Bank to be material, then from time to time, within fifteen (15) days after
demand by Bank, Borrower shall pay to Bank such additional amount or amounts as
will compensate Bank for such reduction. 
A statement of Bank claiming compensation under this Section 6(c) and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive absent manifest error.

 

(d)           If,
at any time, Bank, in its sole and absolute discretion, determines that (i) the
amount of LIBOR Advances for periods equal to the corresponding Interest
Periods are not available to Bank in the offshore currency interbank markets,
or (ii) LIBOR does not accurately reflect the cost to Bank of lending the
LIBOR Advances, then Bank shall promptly give notice thereof to Borrower.  Upon the giving of such notice, Bank’s
obligation to make the LIBOR Advances shall terminate; provided,
however, Advances shall not terminate if Bank and Borrower agree in
writing to a different interest rate applicable to LIBOR Advances.

 

(e)           If
it shall become unlawful for Bank to continue to fund or maintain any LIBOR
Advances, or to perform its obligations hereunder, upon demand by Bank,
Borrower shall prepay the Advances in full with accrued interest thereon and
all other amounts payable by Borrower hereunder (including, without limitation,
any amount payable in connection with such prepayment pursuant to Section 6(a) of
this LIBOR Supplement).  Notwithstanding
the foregoing, to the extent a determination by Bank as described above relates
to a 

 

11

 

LIBOR Advance then being requested by Borrower pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, Borrower shall have the
option, subject to the provisions of Section 5(c) of this LIBOR
Supplement, to (i) rescind such Notice of Borrowing or Notice of
Conversion/Continuation by giving notice (by facsimile or by telephone
confirmed in writing) to Bank of such rescission on the date on which Bank
gives notice of its determination as described above, or (ii) modify such
Notice of Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate
Advance or to have outstanding Advances converted into or continued as Prime
Rate Advances by giving notice (by facsimile or by telephone confirmed in
writing) to Bank of such modification on the date on which Bank gives notice of
its determination as described above.

 

12

 

SCHEDULE I

FORM OF NOTICE OF BORROWING

 

SATCON TECHNOLOGY
CORPORATION, et al.

 

	
   

  	
  Date:

  	
   

  

 

TO:                            SILICON VALLEY BANK

3003 Tasman Drive

Santa Clara, CA  95054

Attention:  Corporate Services
Department

 

RE:                              Loan and Security Agreement dated as of February       ,
2008 (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”), by and between Satcon Technology
Corporation, Satcon Power Systems, Inc., Satcon Electronics, Inc.,
Satcon Applied Technology, Inc. and Satcon Power Systems Canada Ltd.
(individually and collectively, jointly and severally”Borrower”),
and Silicon Valley Bank (the “Bank”)

 

Ladies and Gentlemen:

 

The undersigned refers to the Loan Agreement, the terms defined therein
and used herein as so defined, and hereby gives you notice irrevocably,
pursuant to Section 3 of the LIBOR Supplement to the Loan Agreement, of
the borrowing of an Advance.

 

1.             The Funding Date, which shall be a Business
Day, of the requested borrowing is
                              .

 

2.             The aggregate amount of the requested
borrowing is
$                          .

 

3.             The requested Advance shall consist of
$                      
of Prime Rate Advances and $            
of LIBOR Advances.

 

4.             The duration of the Interest Period for the
LIBOR Advances included in the requested Advance shall be
                  
month(s).

 

The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Advance before
and after giving effect thereto, and to the application of the proceeds
therefrom, as applicable:

 

(a)           all
representations and warranties of Borrower contained in the Loan Agreement are
true, accurate and complete in all material respects as of the date hereof;

 

(b)           no
Default or Event of Default has occurred and is continuing, or would result
from such proposed Advance; and

 

(c)           the requested Advance will not cause the
aggregate principal amount of the outstanding Advances to exceed, as of the
designated Funding Date, (a) the Revolving Line, minus (b) the amount
of all outstanding Letters of Credit (including drawn but unreimbursed Letters
of Credit) plus an amount equal to the Letter of Credit Reserves, minus (c) the
FX Reserve, and minus (d) the outstanding principal balance of any
Advances (including any amounts used for Cash Management Services).

 

[Signature page follows.]

 

13

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  [SATCON ENTITY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

For internal Bank use only

 

	
  LIBOR Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

14

 

SCHEDULE II

FORM OF NOTICE OF CONVERSION/CONTINUATION

 

SATCON TECHNOLOGY
CORPORATION, et al.

 

	
   

  	
  Date:

  	
   

  

 

TO:                            SILICON VALLEY BANK

3003 Tasman Drive

Santa Clara, CA 
95054

Attention:

 

RE:                              Loan and Security Agreement dated as of January       ,
2008 (as amended, modified, supplemented or restated from time to time, the “Loan Agreement”), by and between Satcon Technology
Corporation, Satcon Power Systems, Inc., Satcon Electronics, Inc.,
Satcon Applied Technology, Inc. and Satcon Power Systems Canada Ltd.
(individually and collectively, jointly and severally, “Borrower”),
and Silicon Valley Bank (the “Bank”)

 

Ladies and Gentlemen:

 

The undersigned refers to the Loan Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to Section 4 of the LIBOR Supplement to the Loan Agreement, of
the [conversion] [continuation] of the Advances specified herein, that:

 

1.             The date of the [conversion] [continuation]
is
                                           ,
20      .

 

2.             The aggregate amount of the proposed Advances
to be [converted] is $                            
or [continued] is $                                  .

 

3.             The Advances are to be [converted into]
[continued as] [LIBOR] [Prime Rate] Advances.

 

4.             The duration of the Interest Period for the
LIBOR Advances included in the [conversion] [continuation] shall be
              
month(s).

 

The
undersigned, on behalf of Borrower, hereby certifies that the following
statements are true on the date hereof, and will be true on the date of the
proposed [conversion] [continuation], before and after giving effect thereto
and to the application of the proceeds therefrom:

 

(a)           all
representations and warranties of Borrower stated in the Loan Agreement are
true, accurate and complete in all material respects as of the date hereof; and

 

(b)           no Default or Event of Default has occurred and is
continuing, or would result from such proposed [conversion] [continuation].

 

[Signature page follows.]

 

1

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  [SATCON ENTITY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

For internal Bank use only

 

	
  LIBOR Pricing Date

  	
   

  	
  LIBOR

  	
   

  	
  LIBOR Variance

  	
   

  	
  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  %

  	
   

  	
   

  

 

1Exhibit 10.18

 

Loan
Amortization Schedule      CORRECTED AMORTIZATION SCHEDULE

 

	
   

  	
   

  	
   

  	
  Enter values

  	
   

  
	
   

  	
  Loan amount

  	
   

  	
  $

  	
  2,372,677.00

  	
   

  
	
   

  	
  Annual interest rate

  	
   

  	
  8.00

  	
  %

  
	
   

  	
  Loan period in years

  	
   

  	
  5

  	
   

  
	
   

  	
  Number of payments per year

  	
   

  	
  12

  	
   

  
	
   

  	
  Start date of loan

  	
   

  	
  6/26/2007

  	
   

  
	
   

  	
  Optional extra payments

  	
   

  	
  $

  	
  —

  	
   

  

 

	
   

  	
   

  	
   

  	
  Loan summary

  	
   

  
	
   

  	
  Scheduled payment

  	
   

  	
  $

  	
  48,109.33

  	
   

  
	
   

  	
  Scheduled number of payments

  	
   

  	
  60

  	
   

  
	
   

  	
  Actual number of payments

  	
   

  	
  50

  	
   

  
	
   

  	
  Total early payments

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
  Total interest

  	
   

  	
  $

  	
  287,438.15

  	
   

  

 

Lender name: RACUSIN

 

	
  Pmt

  No.

  	
   

  	
  Payment

  Date

  	
   

  	
  Beginning

  Balance

  	
   

  	
  Scheduled

  Payment

  	
   

  	
  Extra

  Payment

  	
   

  	
  Total Payment

  	
   

  	
  Principal

  	
   

  	
  Interest

  	
   

  	
  Ending

  Balance

  	
   

  	
  Cumulative

  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  7/26/2007

  	
   

  	
  $

  	
  2,372,677.00

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  15,817.85

  	
   

  	
  $

  	
  2,372,677.00

  	
   

  	
  $

  	
  15,817.85

  	
   

  
	
  2

  	
   

  	
  8/26/2007

  	
   

  	
  2,372,677.00

  	
   

  	
  0.00

  	
   

  	
  —

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  15,817.85

  	
   

  	
  2,372,677.00

  	
   

  	
  31,635.69

  	
   

  
	
  3

  	
   

  	
  9/26/2007

  	
   

  	
  2,372,677.00

  	
   

  	
  0.00

  	
   

  	
  —

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  15,817.85

  	
   

  	
  2,372,877.00

  	
   

  	
  47,453.54

  	
   

  
	
  4

  	
   

  	
  10/26/2007

  	
   

  	
  2,372,677.00

  	
   

  	
  0.00

  	
   

  	
  —

  	
   

  	
  0.00

  	
   

  	
  0.00

  	
   

  	
  15,817.85

  	
   

  	
  2,372,677.00

  	
   

  	
  63,271.39

  	
   

  
	
  5

  	
   

  	
  11/5/2007

  	
   

  	
  2,372,677.00

  	
   

  	
  1,087,550.00

  	
   

  	
  —

  	
   

  	
  1,087,550.00

  	
   

  	
  1,045,035.00

  	
   

  	
  42,515.00

  	
   

  	
  1,327,642.00

  	
   

  	
  105,786.39

  	
   

  
	
  6

  	
   

  	
  12/1/2007

  	
   

  	
  1,327,642.00

  	
   

  	
  34,929.00

  	
   

  	
  —

  	
   

  	
  37,434.00

  	
   

  	
  25,000.00

  	
   

  	
  12,434.00

  	
   

  	
  1,302,642.00

  	
   

  	
  118,220.39

  	
   

  
	
  7

  	
   

  	
  1/1/2008

  	
   

  	
  1,302,642.00

  	
   

  	
  37,264.00

  	
   

  	
  —

  	
   

  	
  37,264.00

  	
   

  	
  25,000.00

  	
   

  	
  12,264.00

  	
   

  	
  1,277,642.00

  	
   

  	
  130,484.39

  	
   

  
	
  8

  	
   

  	
  2/1/2008

  	
   

  	
  1,277,642.00

  	
   

  	
  256,314.00

  	
   

  	
  —

  	
   

  	
  256,314.00

  	
   

  	
  245,000.00

  	
   

  	
  11,314.00

  	
   

  	
  1,032,642.00

  	
   

  	
  141,798.39

  	
   

  
	
  9

  	
   

  	
  3/1/2008

  	
   

  	
  1,032,642.00

  	
   

  	
  31,884.28

  	
   

  	
  —

  	
   

  	
  31,884.28

  	
   

  	
  25,000.00

  	
   

  	
  6,884.28

  	
   

  	
  1,007,642.00

  	
   

  	
  148,682.67

  	
   

  
	
  10

  	
   

  	
  4/1/2008

  	
   

  	
  1,007,642.00

  	
   

  	
  31,717.61

  	
   

  	
  —

  	
   

  	
  31,717.61

  	
   

  	
  25,000.00

  	
   

  	
  6,717.61

  	
   

  	
  982,642.00

  	
   

  	
  155,400.28

  	
   

  
	
  11

  	
   

  	
  5/1/2008

  	
   

  	
  982,642.00

  	
   

  	
  31,550.95

  	
   

  	
  —

  	
   

  	
  31,550.95

  	
   

  	
  25,000.00

  	
   

  	
  6,550.95

  	
   

  	
  957,642.00

  	
   

  	
  161,951.23

  	
   

  
	
  12

  	
   

  	
  6/1/2008

  	
   

  	
  957,642.00

  	
   

  	
  31,384.28

  	
   

  	
  —

  	
   

  	
  31,384.28

  	
   

  	
  25,000.00

  	
   

  	
  6,384.28

  	
   

  	
  932,642.00

  	
   

  	
  168,335.51

  	
   

  
	
  13

  	
   

  	
  7/1/2008

  	
   

  	
  932,642.00

  	
   

  	
  31,217.61

  	
   

  	
  —

  	
   

  	
  31,217.61

  	
   

  	
  25,000.00

  	
   

  	
  6,217.61

  	
   

  	
  907,642.00

  	
   

  	
  174,553.12

  	
   

  
	
  14

  	
   

  	
  8/1/2008

  	
   

  	
  907,642.00

  	
   

  	
  31,050.95

  	
   

  	
  —

  	
   

  	
  31,050.95

  	
   

  	
  25,000.00

  	
   

  	
  6,050.95

  	
   

  	
  882,642.00

  	
   

  	
  180,604.07

  	
   

  
	
  15

  	
   

  	
  9/1/2008

  	
   

  	
  882,642.00

  	
   

  	
  30,884.28

  	
   

  	
  —

  	
   

  	
  30,884.28

  	
   

  	
  25,000.00

  	
   

  	
  5,884.28

  	
   

  	
  857,642.00

  	
   

  	
  186,488.35

  	
   

  
	
  16

  	
   

  	
  10/1/2008

  	
   

  	
  857,642.00

  	
   

  	
  30,717.61

  	
   

  	
  —

  	
   

  	
  30,717.61

  	
   

  	
  25,000.00

  	
   

  	
  5,717.61

  	
   

  	
  832,642.00

  	
   

  	
  192,205.96

  	
   

  
	
  17

  	
   

  	
  11/1/2008

  	
   

  	
  832,642.00

  	
   

  	
  30,550.95

  	
   

  	
  —

  	
   

  	
  30,550.95

  	
   

  	
  25,000.00

  	
   

  	
  5,550.95

  	
   

  	
  807,642.00

  	
   

  	
  197,756.91

  	
   

  
	
  18

  	
   

  	
  12/1/2008

  	
   

  	
  807,642.00

  	
   

  	
  30,384.28

  	
   

  	
  —

  	
   

  	
  30,384.28

  	
   

  	
  25,000.00

  	
   

  	
  5,384.28

  	
   

  	
  782,542.00

  	
   

  	
  203,141.19

  	
   

  
	
  19

  	
   

  	
  1/1/2009

  	
   

  	
  782,642.00

  	
   

  	
  30,217.61

  	
   

  	
  —

  	
   

  	
  30,217.61

  	
   

  	
  25,000.00

  	
   

  	
  5,217.61

  	
   

  	
  757,642.00

  	
   

  	
  208,358.80

  	
   

  
	
  20

  	
   

  	
  2/1/2009

  	
   

  	
  757,642.00

  	
   

  	
  30,050.95

  	
   

  	
  —

  	
   

  	
  30,050.95

  	
   

  	
  25,000.00

  	
   

  	
  5,050.95

  	
   

  	
  732,642.00

  	
   

  	
  213,409.75

  	
   

  
	
  21

  	
   

  	
  3/1/2009

  	
   

  	
  732,642.00

  	
   

  	
  29,884.28

  	
   

  	
  —

  	
   

  	
  29,884.28

  	
   

  	
  25,500.00

  	
   

  	
  4,884.28

  	
   

  	
  707,642.00

  	
   

  	
  218,294.03

  	
   

  
	
  22

  	
   

  	
  4/1/2009

  	
   

  	
  707,642.00

  	
   

  	
  29,717.61

  	
   

  	
  —

  	
   

  	
  29,717.61

  	
   

  	
  25,000.00

  	
   

  	
  4,717.61

  	
   

  	
  682,642.00

  	
   

  	
  223,011.64

  	
   

  
	
  23

  	
   

  	
  5/1/2009

  	
   

  	
  682,642.00

  	
   

  	
  29,550.95

  	
   

  	
  —

  	
   

  	
  29,550.95

  	
   

  	
  25,000.00

  	
   

  	
  4,550.95

  	
   

  	
  657,642.00

  	
   

  	
  227,562.59

  	
   

  
	
  24

  	
   

  	
  6/1/2009

  	
   

  	
  657,642.00

  	
   

  	
  29,384.28

  	
   

  	
  —

  	
   

  	
  29,384.28

  	
   

  	
  25,500.00

  	
   

  	
  4,384.28

  	
   

  	
  632,642.00

  	
   

  	
  231,946.87

  	
   

  
	
  25

  	
   

  	
  7/1/2009

  	
   

  	
  632,642.00

  	
   

  	
  29,217.61

  	
   

  	
  —

  	
   

  	
  29,217.61

  	
   

  	
  25,000.00

  	
   

  	
  4,217.61

  	
   

  	
  607,642.00

  	
   

  	
  236,164.48

  	
   

  
	
  26

  	
   

  	
  8/1/2009

  	
   

  	
  607,642.00

  	
   

  	
  29,050.95

  	
   

  	
  —

  	
   

  	
  29,050.95

  	
   

  	
  25,000.00

  	
   

  	
  4,050.95

  	
   

  	
  582,642.00

  	
   

  	
  240,215.43

  	
   

  
	
  27

  	
   

  	
  9/1/2009

  	
   

  	
  582,642.00

  	
   

  	
  28,884.28

  	
   

  	
  —

  	
   

  	
  28,884.28

  	
   

  	
  25,500.00

  	
   

  	
  3,884.28

  	
   

  	
  557,642.00

  	
   

  	
  244,099.71

  	
   

  
	
  28

  	
   

  	
  10/1/2009

  	
   

  	
  557,642.00

  	
   

  	
  28,717.61

  	
   

  	
  —

  	
   

  	
  28,717.61

  	
   

  	
  25,000.00

  	
   

  	
  3,717.61

  	
   

  	
  532,642.00

  	
   

  	
  247,817.32

  	
   

  
	
  29

  	
   

  	
  11/1/2009

  	
   

  	
  532,642.00

  	
   

  	
  28,550.95

  	
   

  	
  —

  	
   

  	
  28,550.95

  	
   

  	
  25,000.00

  	
   

  	
  3,550.95

  	
   

  	
  507,642.00

  	
   

  	
  251,368.27

  	
   

  
	
  30

  	
   

  	
  12/1/2009

  	
   

  	
  507,642.00

  	
   

  	
  28,384.28

  	
   

  	
  —

  	
   

  	
  28,384.28

  	
   

  	
  25,000.00

  	
   

  	
  3,384.28

  	
   

  	
  482,642.00

  	
   

  	
  254,752.55

  	
   

  
	
  31

  	
   

  	
  1/1/2010

  	
   

  	
  482,642.00

  	
   

  	
  28,217.61

  	
   

  	
  —

  	
   

  	
  28,217.61

  	
   

  	
  25,000.00

  	
   

  	
  3,217.61

  	
   

  	
  457,642.00

  	
   

  	
  257,970.16

  	
   

  
	
  32

  	
   

  	
  2/1/2010

  	
   

  	
  457,642.00

  	
   

  	
  28,050.95

  	
   

  	
  —

  	
   

  	
  28,050.95

  	
   

  	
  25,000.00

  	
   

  	
  3,050.95

  	
   

  	
  432,642.00

  	
   

  	
  261,021.11

  	
   

  
	
  33

  	
   

  	
  3/1/2010

  	
   

  	
  432,642.00

  	
   

  	
  27,884.28

  	
   

  	
  —

  	
   

  	
  27,884.28

  	
   

  	
  25,000.00

  	
   

  	
  2,884.28

  	
   

  	
  407,642.00

  	
   

  	
  263,905.39

  	
   

  
	
  34

  	
   

  	
  4/1/2010

  	
   

  	
  407,642.00

  	
   

  	
  27,717.61

  	
   

  	
  —

  	
   

  	
  27,717.61

  	
   

  	
  25,000.00

  	
   

  	
  2,717.61

  	
   

  	
  382,642.00

  	
   

  	
  266,623.00

  	
   

  
	
  35

  	
   

  	
  5/1/2010

  	
   

  	
  382,642.00

  	
   

  	
  27,550.95

  	
   

  	
  —

  	
   

  	
  27,550.95

  	
   

  	
  25,000.00

  	
   

  	
  2,550.95

  	
   

  	
  357,642.00

  	
   

  	
  269,173.95

  	
   

  
	
  36

  	
   

  	
  6/1/2010

  	
   

  	
  357,642.00

  	
   

  	
  27,384.28

  	
   

  	
  —

  	
   

  	
  27,384.28

  	
   

  	
  25,000.00

  	
   

  	
  2,384.28

  	
   

  	
  332,642.00

  	
   

  	
  271,558.23

  	
   

  
	
  37

  	
   

  	
  7/1/2010

  	
   

  	
  332,642.00

  	
   

  	
  27,217.61

  	
   

  	
  —

  	
   

  	
  27,217.61

  	
   

  	
  25,000.00

  	
   

  	
  2,217.61

  	
   

  	
  307,642.00

  	
   

  	
  273,775.84

  	
   

  
	
  38

  	
   

  	
  8/1/2010

  	
   

  	
  307,642.00

  	
   

  	
  27,050.95

  	
   

  	
  —

  	
   

  	
  27,050.95

  	
   

  	
  25,000.00

  	
   

  	
  2,050.95

  	
   

  	
  282,642.00

  	
   

  	
  275,826.79

  	
   

  
	
  39

  	
   

  	
  9/1/2010

  	
   

  	
  282,642.00

  	
   

  	
  26,884.28

  	
   

  	
  —

  	
   

  	
  26,884.28

  	
   

  	
  25,000.00

  	
   

  	
  1,884.28

  	
   

  	
  257,642.00

  	
   

  	
  277,711.07

  	
   

  
	
  40

  	
   

  	
  10/1/2010

  	
   

  	
  257,642.00

  	
   

  	
  26,717.61

  	
   

  	
  —

  	
   

  	
  26,717.61

  	
   

  	
  25,000.00

  	
   

  	
  1,717.61

  	
   

  	
  232,642.00

  	
   

  	
  279,428.68

  	
   

  
	
  41

  	
   

  	
  11/1/2010

  	
   

  	
  232,642.00

  	
   

  	
  26,550.95

  	
   

  	
  —

  	
   

  	
  26,550.95

  	
   

  	
  25,000.00

  	
   

  	
  1,550.95

  	
   

  	
  207,642.00

  	
   

  	
  280,979.63

  	
   

  
	
  42

  	
   

  	
  12/1/2010

  	
   

  	
  207,642.00

  	
   

  	
  26,384.28

  	
   

  	
  —

  	
   

  	
  26,384.28

  	
   

  	
  25,000.00

  	
   

  	
  1,384.28

  	
   

  	
  182,642.00

  	
   

  	
  282,363.91

  	
   

  
	
  43

  	
   

  	
  1/1/2011

  	
   

  	
  182,642.00

  	
   

  	
  26,217.61

  	
   

  	
  —

  	
   

  	
  26,217.61

  	
   

  	
  25,000.00

  	
   

  	
  1,217.61

  	
   

  	
  157,642.00

  	
   

  	
  283,581.52

  	
   

  
	
  44

  	
   

  	
  2/1/2011

  	
   

  	
  157,642.00

  	
   

  	
  26,050.95

  	
   

  	
  —

  	
   

  	
  26,050.95

  	
   

  	
  25,000.00

  	
   

  	
  1,050.95

  	
   

  	
  132,642.00

  	
   

  	
  284,632.47

  	
   

  
	
  45

  	
   

  	
  3/1/2011

  	
   

  	
  132,642.00

  	
   

  	
  25,884.28

  	
   

  	
  —

  	
   

  	
  25,884.28

  	
   

  	
  25,000.00

  	
   

  	
  884.28

  	
   

  	
  107,642.00

  	
   

  	
  285,516.75

  	
   

  
	
  46

  	
   

  	
  4/1/2011

  	
   

  	
  107,642.00

  	
   

  	
  25,717.61

  	
   

  	
  —

  	
   

  	
  25,717.61

  	
   

  	
  25,000.00

  	
   

  	
  717.61

  	
   

  	
  82,642.00

  	
   

  	
  286,234.38

  	
   

  
	
  47

  	
   

  	
  5/1/2011

  	
   

  	
  82,642.00

  	
   

  	
  25,550.95

  	
   

  	
  —

  	
   

  	
  25,550.95

  	
   

  	
  25,000.00

  	
   

  	
  550.95

  	
   

  	
  57,642.00

  	
   

  	
  286,785.31

  	
   

  
	
  48

  	
   

  	
  6/1/2011

  	
   

  	
  57,642.00

  	
   

  	
  25,384.28

  	
   

  	
  —

  	
   

  	
  25,384.28

  	
   

  	
  25,000.00

  	
   

  	
  384.28

  	
   

  	
  32,642.00

  	
   

  	
  287,169.59

  	
   

  
	
  49

  	
   

  	
  7/1/2011

  	
   

  	
  32,642.00

  	
   

  	
  25,217.61

  	
   

  	
  —

  	
   

  	
  25,217.61

  	
   

  	
  25,000.00

  	
   

  	
  217.61

  	
   

  	
  7,642.00

  	
   

  	
  287,337.20

  	
   

  
	
  50

  	
   

  	
  8/1/2011

  	
   

  	
  7,642.00

  	
   

  	
  7,692.95

  	
   

  	
  —

  	
   

  	
  7,692.95

  	
   

  	
  7,642.00

  	
   

  	
  50.95

  	
   

  	
  0.00

  	
   

  	
  287,438.15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00142-of-00352.parquet"}]]