NINTH LOAN MODIFICATION AGREEMENT
Exhibit 10.1
NINTH LOAN MODIFICATION AGREEMENT
This Ninth Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of March , 2011 (the “Ninth Loan Modification Effective Date”) by and between SILICON VALLEY BANK, a California corporation, with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production office located at 000 Xxxxx Xxxxxx, Xxxxx 0-000, Xxxxxx, Xxxxxxxxxxxxx 00000 (“Bank”) and SATCON TECHNOLOGY CORPORATION, a Delaware corporation (“Satcon”); SATCON POWER SYSTEMS, INC., a Delaware corporation (“Power”); SATCON ELECTRONICS, INC., a Delaware corporation (“Electronics”), each with offices located at 00 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; and SATCON POWER SYSTEMS CANADA LTD., a corporation organized under the laws of the Province of Ontario, Canada with offices located at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx X0X 0X0 (the “Canadian Borrower”; and together with Satcon, Power and Electronics, individually and collectively, jointly and severally, the “Borrower”).
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of February 20, 2008, evidenced by, among other documents, a certain Loan and Security Agreement dated as of February 20, 2008, as amended by that certain First Loan Modification Agreement, dated as of the First Loan Modification Effective Date, as further amended by that certain Second Loan Modification Agreement, dated as of the Second Loan Modification Effective Date, as further amended by that certain Third Loan Modification Agreement, dated as of September 29, 2009, as further amended by that certain Waiver and Fourth Loan Modification Agreement, dated as of February 18, 2010, as further amended by that certain Fifth Loan Modification Agreement, dated as of March 10, 2010, as further amended by that certain Sixth Loan Modification Agreement, dated as of April 22, 2010, as further amended by that certain Seventh Loan Modification Agreement, dated as of June 16, 2010 and as further amended by that certain Eighth Loan Modification Agreement, dated as of August 3, 2010 (as amended, the “Loan Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement and in a certain Intellectual Property Security Agreement dated as of February 20, 2008, as may be amended from time to time (the “IP Agreement”).
Hereinafter, the Loan Agreement and the IP Agreement, together with all other documents executed in connection therewith evidencing, securing or otherwise relating to the Obligations (other than this Loan Modification Agreement) shall be referred to as the “Existing Loan Documents”.
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modifications to Loan Agreement.
1 The Loan Agreement shall be amended by deleting the following text appearing as Section 6.2(a)(i) thereof:
“ (i) twice per month, as of the 15th day and as of the last day of each month, if there are outstanding Credit Extensions under the Revolving Line (monthly, in the event (I) there are no outstanding Credit Extensions under the Revolving line for the entire calendar month then ended or (II) Borrower maintains or exceeds $10,000,000 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), and upon each request for a Credit Extension, a Transaction Report;”
and inserting in lieu thereof the following:
“ (i) twice per month, as of the 15th day and as of the last day of each month, and upon each request for a Credit Extension, a Transaction Report;”
2 The Loan Agreement shall be amended by deleting the following text appearing as Section 6.3(c) thereof:
“ (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. All payments on, and proceeds of, Accounts shall be deposited directly by the applicable Account Debtor into a lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in form and substance satisfactory to Bank in its sole discretion. 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 promptly deliver all such payments and proceeds to Bank in their original form, duly endorsed, to be applied 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 $10,000,000 in (A) Borrower’s unrestricted cash on deposit at Bank plus (B) unused availability pursuant to the Revolving Line under this Agreement, as determined by Bank with reference to the Availability Amount set forth herein and (ii) no Default or Event of Default has occurred and in is continuing, Payments on, and proceeds of, Accounts shall be transferred by Bank to an operating account of Borrower maintained at Bank.”
and inserting in lieu thereof the following:
“ (c) Collection of Accounts. Borrower shall have the right to collect all Accounts, unless and until a Default or an Event of Default has occurred and is continuing. All payments on, and proceeds of, Accounts shall be deposited directly by the applicable Account Debtor into a lockbox account, or such other “blocked account” as Bank may specify, pursuant to a blocked account agreement in form and substance satisfactory to Bank in its sole discretion. Whether or not an Event of Default has occurred and is continuing, Borrower shall hold all payments on, and proceeds of, Accounts in trust for Bank, and Borrower shall promptly deliver all such payments and proceeds to Bank in their original form, duly endorsed, to be applied to be applied to the Obligations pursuant to the terms of Section 9.4 hereof.”
3 The Loan Agreement shall be amended by deleting the following text appearing as Section 6.9(b) thereof:
“ (b) Adjusted EBITDA. Achieve EBITDA minus Capital Expenditures, tested as of the last day of each fiscal quarter on a trailing quarterly basis or trailing two-quarter’s basis, as indicated below, of at least the following for the periods listed below:
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Quarterly Period Ending |
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Minimum Adjusted EBITDA |
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Trailing quarterly period ending September 30, 2010 |
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$ |
(2,000,000 |
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Trailing quarterly period ending December 31, 2010 |
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$ |
2,000,000 |
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Trailing two-quarter period ending March 31, 2011 |
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$ |
5,000,000 |
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Trailing two-quarter period ending June 30, 2011 |
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$ |
5,000,000 |
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Trailing two-quarter period ending September 30, 2011 |
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$ |
5,000,000 |
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and inserting in lieu thereof the following:
“(b) Adjusted EBITDA. Achieve EBITDA minus Capital Expenditures, tested as of the last day of each fiscal quarter on a trailing quarterly basis or trailing two-quarter’s basis, as indicated below, of at least the following for the periods listed below:
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Quarterly Period Ending |
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Minimum Adjusted EBITDA |
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Trailing two-quarter period ending March 31, 2011 |
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$ |
(2,000,000 |
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Trailing two-quarter period ending June 30, 2011 |
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$ |
5,000,000 |
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Trailing two-quarter period ending September 30, 2011 |
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$ |
5,000,000 |
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4 The Loan Agreement shall be amended by deleting the following text appearing in Section 10 thereof:
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“If to Borrower: |
Satcon Technology Corporation |
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Satcon Power Systems, Inc. |
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Satcon Electronics, Inc. |
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Satcon Applied Technology, Inc. |
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Satcon Power Systems Canada Ltd. |
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00 Xxxxxxx Xxxxxx |
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Xxxxxx, Xxxxxxxxxxxxx 00000 |
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Attn: Xxxxx X’Xxxx |
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Fax: (000) 000-0000 |
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with a copy to: |
Xxxxxxxxx Xxxxxxx LLP |
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Xxx Xxxxxxxxxxxxx Xxxxx |
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Xxxxxx, Xxxxxxxxxxxxx 00000 |
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Attn: Xxxxxxxx Xxxx, Esquire |
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Fax: (000) 000-0000 | |
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Email: xxxxx@xxxxx.xxx | |
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If to Bank: |
Silicon Valley Bank | |
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One Newton Executive Park, Suite 200 | |
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0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, XX 00000 | |
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Attn: Xxxxxxx Xxxxxxx | |
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Fax: (000) 000-0000 | |
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Email: XXxxxxxx@xxx.xxx | |
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with a copy to: |
Xxxxxx & Xxxxxxxxxx LLP | |
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Xxxxx Xxxxxx Xxxxx | |
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Xxxxxx, Xxxxxxxxxxxxx 00000 | |
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Attn: Xxxxxxx X. Xxxxxxx, Esquire | |
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Fax: (000) 000-0000 | |
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Email: XXxxxxxx@xxxxxxxxx.xxx” | |
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and inserting in lieu thereof the following: | ||
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“If to Borrower: |
Satcon Technology Corporation | |
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Satcon Power Systems, Inc. | |
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Satcon Electronics, Inc. | |
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Satcon Power Systems Canada Ltd. | |
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00 Xxxxxxx Xxxxxx | |
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Xxxxxx, Xxxxxxxxxxxxx 00000 | |
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Attn: Xxxxx X’Xxxx | |
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Fax: (000) 000-0000 | |
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with a copy to: |
Xxxxxxxxx Traurig LLP | |
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Xxx Xxxxxxxxxxxxx Xxxxx | |
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Xxxxxx, Xxxxxxxxxxxxx 00000 | |
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Attn: Xxxxxxxx Xxxx, Esquire | |
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Fax: (000) 000-0000 | |
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Email: xxxxx@xxxxx.xxx | |
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If to Bank: |
Silicon Valley Bank | |
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000 Xxxxx Xxxxxx, Xxxxx 0-000 | |
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Xxxxxx, XX 00000 | |
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Attn: Xxxxxxx Xxxxx | |
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Fax: (000) 000-0000 | |
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Email: XXxxxx@xxx.xxx | |
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with a copy to: |
Xxxxxx & Xxxxxxxxxx LLP | |
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Xxxxx Xxxxxx Xxxxx | |
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Xxxxxx, Xxxxxxxxxxxxx 00000 | |
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Attn: Xxxxxxx X. Xxxxxxx, Esquire | |
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Fax: (000) 000-0000 | |
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Email: XXxxxxxx@xxxxxxxxx.xxx” | |
5 The Loan Agreement shall be amended by deleting the following definition appearing in Section 13.1 thereof:
“ “Revolving Line” is an Advance or Advances in an aggregate amount of up to $15,000,000 outstanding at any time.”
and inserting in lieu thereof the following:
“ “Revolving Line” is an Advance or Advances in an aggregate amount of up to $15,000,000 outstanding at any time; provided, that from the Ninth Loan Modification Effective Date through and including May 31, 2011, the “Revolving Line” shall be an Advance or Advances in an aggregate amount of up to $30,000,000 outstanding at any time.”
6 The Loan Agreement shall be amended by inserting the following definitions in the appropriate alphabetical order in Section 13.1 thereof:
“ “Ninth Loan Modification Agreement” means that certain Ninth Loan Modification Agreement, dated as of the Ninth Loan Modification Effective Date, by and between Borrower and Bank.”
“Ninth Loan Modification Effective Date” is the date noted in the preamble to the Ninth Loan Modification Agreement.”
7 The Compliance Certificate appearing as Exhibit D to the Loan Agreement is hereby replaced with the Compliance Certificate attached as Exhibit A hereto.
4. CONDITIONS PRECEDENT. Borrower hereby agrees that the following documents shall be delivered to the Bank prior to or concurrently with the Ninth Loan Modification Effective Date, each in form and substance satisfactory to the Bank (collectively, the “Conditions Precedent”):
A. A fully executed Acknowledgement, Amendment and Reaffirmation of Subordination Agreement from each of:
1 Horizon Credit I LLC; and
2 Velocity Venture Holdings, LLC.
5. FEES. Borrower shall pay to Bank a modification fee in the amount of Thirty Seven Thousand Five Hundred Dollars ($37,500) (the “Modification Fee”), which Modification Fee shall be due and payable and fully earned as of the date hereof. Borrower shall also reimburse Bank for all legal fees and expenses incurred by Bank in connection with the Existing Loan Documents and this amendment thereto.
6. RATIFICATION OF INTELLECTUAL PROPERTY SECURITY AGREEMENT. Borrower hereby ratifies, confirms, and reaffirms, all and singular, the terms and conditions of the IP Agreement and acknowledges, confirms and agrees that the IP Agreement contains an accurate and complete listing of all Intellectual Property.
7. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate dated as of March 10, 2010 between Borrower and Bank, and acknowledges, confirms and agrees the disclosures Borrower provided to Bank in the Perfection Certificate, as amended, has not changed.
8. AUTHORIZATION TO FILE. Borrower hereby authorizes Bank to file UCC financing statements without notice to Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in order to further perfect or protect Bank’s interest in the Collateral, including a notice that any disposition of the Collateral, by either the Borrower or any other Person, shall be deemed to violate the rights of the Bank under the Code.
9. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.
10. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.
11. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that, as of the date of this Loan Modification Agreement, Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.
12. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank’s agreement to modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification Agreement.
13. RIGHT OF SET-OFF. In consideration of Bank’s agreement to enter into this Loan Modification Agreement, Borrower hereby reaffirms and hereby grants to Bank, a lien, security interest and right of set off as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a Bank subsidiary) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may set off the same or any part thereof and apply the same to any Obligation of Borrower, even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
14. JURISDICTION/VENUE. Borrower accepts for itself and in connection with its properties, unconditionally, the exclusive jurisdiction of any state or federal court of competent jurisdiction in the Commonwealth of Massachusetts in any action, suit, or proceeding of any kind against it which arises out of or by reason of this Loan Modification Agreement. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR ANY OF THEIR PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS AGAINST THE BORROWER OR ITS PROPERTY.
15. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Modification Agreement to be executed as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the Ninth Loan Modification Effective Date.
BORROWER:
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SATCON TECHNOLOGY CORPORATION |
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By |
/s/ Xxxxxxx X. Xxxxxxx |
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Name: |
Xxxxxxx X. Xxxxxxx |
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Title: |
President and Chief Executive Officer |
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SATCON POWER SYSTEMS, INC. | |||
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By |
/s/ Xxxxxxx X. Xxxxxxx |
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Name: |
Xxxxxxx X. Xxxxxxx |
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Title: |
President and Chief Executive Officer |
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SATCON ELECTRONICS, INC. | |||
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By |
/s/ Xxxxxxx X. Xxxxxxx |
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Name: |
Xxxxxxx X. Xxxxxxx |
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Title: |
President and Chief Executive Officer |
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SATCON POWER SYSTEMS CANADA LTD. | |||
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By |
/s/ Xxxxxxx X. Xxxxxxx |
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Name: |
Xxxxxxx X. Xxxxxxx |
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Title: |
President and Chief Executive Officer |
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BANK: |
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SILICON VALLEY BANK | |||
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By |
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Name: |
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Title: |
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[Satcon — Ninth Loan Modification Agreement Signature Page]
Exhibit A to Ninth Loan Modification Agreement
EXHIBIT D
COMPLIANCE CERTIFICATE
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TO: |
SILICON VALLEY BANK |
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Date: |
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FROM: |
SATCON TECHNOLOGY CORPORATION, et al. |
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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 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.
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Reporting Covenant |
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Required |
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Complies |
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Monthly financial statements with Compliance Certificate |
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Monthly within 30 days |
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Yes No |
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Annual financial statement (CPA Audited) + XX |
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XXX within 120 days |
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Yes No |
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10-Q, 10-K and 8-K |
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Within 5 days after filing with SEC |
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Yes No |
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A/R & A/P Agings |
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Monthly within 15 days |
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Yes No |
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Projections |
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Annually |
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Yes No |
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Transaction Reports |
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twice per month, as of the 15th day and as of the last day of each month and upon each request for a Credit Extension. |
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Yes No |
The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”)
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Financial Covenant |
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Required |
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Actual |
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Complies |
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Maintain, as indicated: |
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Minimum Liquidity (at all times, certified monthly) |
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$ |
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$ |
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Yes No |
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Minimum adjusted EBITDA (quarterly) |
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$ |
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$ |
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Yes No |
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* See Section 6.9(a)
** See Section 6.9(b)
The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.
The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)
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SATCON TECHNOLOGY CORPORATION, et al. |
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BANK USE ONLY | ||||
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Received by: |
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By: |
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AUTHORIZED SIGNER | ||
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Name: |
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Date: |
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Title: |
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Verified: |
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AUTHORIZED SIGNER | |||
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Date: |
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Compliance Status: |
Yes No | |||
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Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
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Dated: |
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I. Liquidity (Section 6.9(a))
Required: (I) From the Eighth Loan Modification Effective Date through and including March 31, 2011, Borrower shall maintain (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 (including, through August 30, 2010, the unused availability under the Non-formula Sublimit), of at least $5,000,000; and (II) From April 1, 2011 and at all times thereafter, Borrower shall maintain (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 $6,500,000.
Actual:
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Unrestricted cash at Bank |
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$ |
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B. |
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Unused availability pursuant to the Revolving Line under this Agreement, as determined by Bank with reference to the Availability Amount set forth herein (including, through August 30, 2010, the unused availability under the Non-formula Sublimit) |
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$ |
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C. |
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Liquidity (line A plus line B) |
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$ |
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Is line C equal to or greater than $[ ]?
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o No, not in compliance |
o Yes, in compliance |
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II. Adjusted EBITDA (Section 6.9(b))
Required: Achieve EBITDA minus Capital Expenditures, tested as of the last day of each fiscal quarter on a trailing quarterly basis or trailing two-quarter’s basis, as indicated below, of at least the following for the periods listed below:
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Quarterly Period Ending |
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Minimum Adjusted EBITDA |
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Trailing two-quarter period ending March 31, 2011 |
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$ |
(2,000,000 |
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Trailing two-quarter period ending June 30, 2011 |
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$ |
5,000,000 |
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Trailing two-quarter period ending September 30, 2011 |
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$ |
5,000,000 |
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Actual:
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A. |
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Net Income, exclusive of any non-cash gains or losses due to xxxx-to-market changes in the value of Borrower’s warrants |
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$ |
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B. |
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To the extend deducted from the calculation of Net Income: |
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$ |
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1. Interest Expense |
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$ |
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2. Depreciation and amortization expense (including, without limitation, deferred financing costs and expenses) |
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$ |
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3. Income tax expense |
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$ |
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4. Non-cash stock compensation expense |
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$ |
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C. |
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EBITDA (line A plus line B.1 plus line B.2 plus line B.3 plus line B.4) |
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$ |
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D. |
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Capital Expenditures |
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$ |
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E. |
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Adjusted EBITDA (line C minus line D) |
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$ |
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Is line E equal to or greater than $[ ]?
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o No, not in compliance |
o Yes, in compliance |
