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Exhibit 1.2
ACTIVE POWER, INC.
August ___, 2000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
World Financial Center, South Tower
225 Liberty Street, 6th Floor
New York, New York 10080
Re: Active Power, Inc. Reserved Share Program
Ladies and Gentlemen:
Reference is made to the U.S. Underwriting Agreement dated August ____,
2000 (the "Underwriting Agreement") between Active Power, Inc. (the "Company")
and the Underwriters listed in Schedule I to the Underwriting Agreement. All
capitalized terms used but not otherwise defined herein shall have the meanings
given them in the Underwriting Agreement.
As part of the offerings contemplated by the Underwriting Agreement,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") has agreed
to reserve out of the shares of Common Stock ("Shares"), set forth opposite its
name on Schedule I to the Underwriting Agreement, up to ________ Shares for sale
to certain employee and friends of the Company ("Invitees"), as set forth in the
Prospectus under the heading "Underwriting" (the "Reserved Share Program"). The
Shares to be sold by Merrill Lynch pursuant to the Reserved Share Program (the
"Reserved Shares") will be sold by Merrill Lynch pursuant to the Underwriting
Agreement at the public offering price. Any Reserved Shares not orally confirmed
for purchase by such Invitees by the end of the first business day after the
date of the Underwriting Agreement will be offered directly to the public by
Merrill Lynch as set forth in the Prospectus.
In order to induce Merrill Lynch to conduct the Reserved Share Program, and
in addition to and without limiting the representations, warranties, covenants
and agreements of the Company contained in the Underwriting Agreement, the
Company hereby agrees with Merrill Lynch as follows:
1. The Company represents and warrants to Merrill Lynch that (i) the
Registration Statement, the Prospectus and any preliminary prospectus comply,
and any further amendments or supplements thereto will comply, in all material
respects with any applicable laws or regulations of foreign jurisdictions in
which the Registration Statement, Prospectus or any preliminary prospectus, as
amended or supplemented, if applicable, are distributed in connection with the
Reserved Share Program, and that (ii) no authorization, approval, consent,
license, order, registration or qualification of or with any government,
governmental instrumentality or court, other than such as have been
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obtained, is necessary under the securities laws and regulations of foreign
jurisdictions in which the Reserved Shares are offered or sold outside the
United States in connection with the Reserved Share Program.
2. The Company covenants with Merrill Lynch that the Company will comply
with all applicable securities and other applicable laws, rules and regulations
in each foreign jurisdiction in which the Reserved Shares are offered or sold in
connection with the Reserved Share Program.
3. In connection with the Reserved Share Program, the Company hereby agrees
that it will use its best efforts to ensure that purchasers of Reserved Shares
that are required to be restricted by the National Association of Securities
Dealers, Inc. (the "NASD") or the NASD rules will be so restricted from the
sale, transfer, assignment, pledge or hypothecation for a period of three months
following the date of the effectiveness of the Registration Statement. Merrill
Lynch will notify the Company as to which persons will need to be so restricted.
Upon such notification, the Company will direct the transfer agent to place a
stop transfer restriction upon such Reserved Shares held by such persons for the
applicable period of time.
4. The Company will pay all costs and expenses of the Underwriters,
including the fees and expenses of Merrill Lynch's counsel, in connection with
matters related to the Reserved Share Program and all stamp duties, similar
taxes or duties or other taxes, if any, incurred by the Underwriters in
connection with the Reserved Share Program.
5. The Company agrees to indemnify and hold harmless the Underwriters
against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, arising out of an untrue statement or alleged untrue statement of a
material fact contained in the prospectus wrapper material or other material
prepared by or with the consent of the Company for distribution in foreign
jurisdictions in connection with the Reserved Share Program attached to, or
included with, the Prospectus or any preliminary prospectus or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, when considered in
conjunction with the Prospectus or any applicable preliminary prospectus, not
misleading; provided that the Company shall not be liable in any such case to
the extent that any such loss, liability, claim, damage or expense arises out of
or is based upon any untrue statement or alleged untrue statement in or omission
or alleged omission from the Prospectus or any applicable preliminary prospectus
or amendment or supplement to either of the foregoing in reliance upon and in
conformity with information furnished to the Company by or on behalf of Merrill
Lynch specifically for use therein, which information the parties hereto agree
is limited to the statements contained in the fourteenth and fifteenth textual
paragraphs under the section entitled "Underwriting" in the Prospectus; and
provided further that the Company will not be liable to any Underwriter with
respect to any Prospectus to the extent that the Company shall sustain the
burden of proving that any such loss, liability, claim, damage or expense
resulted
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from the fact that Merrill Lynch, in contravention of a requirements of this
Agreement or applicable law, sold Shares to a person to whom Merrill Lynch
failed to send or give, at or prior to the Closing Date, a copy of the Final
Prospectus, as then amended or supplemented if the Company has previously
furnished copies thereof (sufficiently in advance of the Closing Date to allow
for distribution by the Closing Date) to Merrill Lynch and the loss, liability,
claim, damage or expense of Merrill Lynch resulted from an untrue statement or
omission of a material fact contained in or omitted from the Preliminary
Prospectus which was corrected in the Final Prospectus as, if applicable,
amended or supplemented prior to the Closing Date and such Final Prospectus was
required by law to be delivered at or prior to the written confirmation of sale
to such person, but only to the extent that such failure to give or send such
Final Prospectus by the Closing Date to the party or parties asserting such
loss, liability, claim, damage or expense bears in proportion to all of the
losses, liabilities, claims, damages or expenses asserted by such party(ies)
with respect to any Prospectus.
6. In connection with the Reserved Share Program, the Company agrees to
indemnify and hold harmless the Underwriters from and against any and all
losses, liabilities, claims, damages, fines, penalties and expenses, whatsoever,
incurred by the Underwriters as a result of (i) the failure of those Invitees
purchasing in the Reserved Share Program to pay for and accept delivery of
Reserved Shares which, following the effectiveness of the Registration
Statement, were the subject of a properly confirmed oral agreement to purchase
and (ii) the violation of any securities laws or regulations of foreign
jurisdictions or foreign regulatory bodies in connection with any offer and/or
sale of Reserved Shares.
7. This Agreement is for the benefit of Merrill Lynch and each of the
Underwriters and is enforceable to the same extent as if fully set forth in the
Underwriting Agreement.
8. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.
9. This Agreement may be executed in one or more counterparts and, when a
counterpart has been executed by each party, all such counterparts taken
together shall constitute one and the same agreement.
Very truly yours,
Active Power, Inc.
By:__________________________
Name:
Title:
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Accepted as of the date hereof:
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By:__________________________
Name:
Title:
