<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
----------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
Commission File Number 1-11512
----------------
SATCON TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
----------------
State of Incorporation: Delaware I.R.S. Employer Identification
No. 04-2857552
161 First Street
Cambridge, MA 02142-1221
(Address of principal executive offices)
(617)661-0540
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $0.01 Par Value, 7,488,075 shares outstanding as of
March 31, 1997.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Page
----
<S> <C>
Condensed Consolidated Balance Sheets .........................................1
Condensed Consolidated Statements of Operations ...............................2
Condensed Consolidated Statements of Cash Flows ...............................3
Notes to Financial Statements .................................................4
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS .................................................................5
PART II: OTHER INFORMATION
Items No. 1 through 6 .........................................................9
Signatures ........ ..........................................................11
</TABLE>
<PAGE>
SATCON TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................................................. $3,676,287 $3,770,925
Marketable securities.................................................................. 1,375,104 3,435,743
Accounts receivable, net of allowance of $130,900 in 1997 and 1996..................... 1,647,927 2,881,790
Unbilled contract costs, net of allowance of $230,500 in 1997 and $432,500 in 1996..... 3,459,289 1,563,254
Inventory.............................................................................. 250,090 -
Prepaid expenses and other assets...................................................... 599,500 442,745
--------------- ----------------
Total current assets............................................. 11,008,197 12,094,457
--------------- ----------------
Property and equipment, net................................................................. 4,767,663 4,347,784
Other assets................................................................................. 621,209 740,214
--------------- ----------------
Total assets..................................................... $16,397,069 $17,182,455
=============== ================
LIABILITIES
Current liabilities:
Deferred revenue...................................................................... 203,407 -
Accounts payable...................................................................... 220,797 605,048
Accrued payroll and payroll taxes..................................................... 289,372 183,747
Other accrued expenses................................................................ 252,554 294,492
--------------- ----------------
Total current liabilities....................................... 966,130 1,083,287
--------------- ----------------
Commitments................................................................................. - -
STOCKHOLDERS' EQUITY
Preferred stock; $.01 par value, 1,000,000 shares authorized; none issued................. - -
Common stock; $.01 par value, 15,000,000 shares authorized;
7,488,075 and 7,359,074 shares at March 31, 1997
and September 30, 1996, respectively, issued and outstanding.......................... 74,881 73,591
Additional paid-in capital.................................................................. 18,771,369 18,487,209
Retained earnings........................................................................... (3,381,799) (2,421,697)
Unrealized losses on marketable securities, net of tax effect............................... (33,512) (39,935)
--------------- ----------------
Total stockholders' equity...................................... 15,430,939 16,099,168
--------------- ----------------
Total liabilities and stockholders' equity...................... $16,397,069 $17,182,455
=============== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
SATCON TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
-----------
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31 March 31
--------------------------------- ------------------------------
1997 1996 1997 1996
-------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenue......................................... $2,908,114 $3,187,897 $5,041,672 $5,595,859
-------------- -------------- ------------- ------------
Cost of sales................................... 1,349,353 1,605,722 2,053,733 2,480,448
Selling, general and administrative expenses.... 1,897,858 1,811,202 4,045,607 3,774,621
Research and development expenses............... 10,399 37,973 43,623 78,111
-------------- -------------- ------------- ------------
Total operating expenses........................ 3,257,610 3,454,897 6,142,963 6,333,180
-------------- -------------- ------------- ------------
Operating loss.................................. (349,496) (267,000) (1,101,291) (737,321)
Interest income, net............................ 42,559 119,029 141,189 256,524
-------------- -------------- ------------- ------------
Loss before income taxes........................ (306,937) (147,971) (960,102) (480,797)
Benefit for income taxes........................ - (58,841) - (192,001)
-------------- -------------- ------------- ------------
Net loss........................................ (306,937) (89,130) (960,102) (288,796)
============== ============== ============= ============
Loss per common and common equivalent share..... ($0.04) ($0.01) ($0.13) ($0.04)
============== ============== ============= ============
Weighted average shares outstanding............. 7,477,885 7,276,933 7,432,029 7,223,542
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
SATCON TECHNOLOGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
---------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................................ ($960,102) ($288,796)
--------------- ---------------
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization................................. 389,112 354,574
Changes in operating assets and liabilities:
Accounts receivable......................................... 1,233,862 (3,162,458)
Prepaid expenses............................................ 32,388 (87,225)
Unbilled contract costs..................................... (1,692,629) (762,058)
Inventory................................................... (90,090) -
Other assets................................................ 219,108 (11,792)
Accounts payable............................................ (384,251) (166,684)
Accrued expenses and payroll................................ 63,687 89,302
Deferred income taxes....................................... - (193,906)
--------------- ---------------
Total adjustments................................................................ (228,108) (3,940,247)
--------------- ---------------
Net cash used in operating activities............................................ (1,188,915) (4,229,043)
Cash flows from investing activities:
Sales and maturities of marketable securities....................... 2,067,063 3,747,119
Patent & trademark expenditures..................................... (62,427) (90,666)
Deferred deal costs................................................. (189,143) -
Capital expenditures................................................ (597,916) (1,001,658)
Purchase of K&D Magmotor............................................ (210,000) -
--------------- ---------------
Net cash provided by investing activities........................................ 1,011,577 2,654,795
Cash flows from financing activities:
Proceeds from exercise of stock options............................. 86,700 168,986
--------------- ---------------
Net decrease in cash and cash equivalents........................................ (94,638) (1,405,262)
Cash and cash equivalents at beginning of period................................. 3,770,925 2,187,987
--------------- ---------------
Cash and cash equivalents at end of period....................................... $3,676,287 $782,725
=============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
SatCon Technology Corporation
Notes to Financial Statements
Note A. Basis of Presentation
- ------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These condensed consolidated financial statements, which
in the opinion of management reflect all adjustments (including normal recurring
adjustments) necessary for a fair presentation, should be read in conjunction
with the financial statements and notes thereto included in the Company's Report
on Form 10-K for the year ended September 30, 1996. Operating results for the
three and six month periods ended March 31, 1997 are not necessarily indicative
of the results that may be expected for any future interim period or for the
entire fiscal year.
Note B. Significant Events
- ---------------------------
Line of Credit
The Company's $3,000,000 line of credit expired on January 31, 1997. No funds
were advanced under this facility. The Company has entered into negotiations to
replace this line of credit.
K&D Acquisition
On January 23, 1997, SatCon Technology Corporation (the "Company" or "SatCon")
completed the acquisition of K&D Magmotor Corporation ("K&D"). K&D, a privately
held company, is a manufacturer of custom electric motors targeting the factory
automation, medical, semi-conductor and packaging markets. Pursuant to the Asset
Purchase Agreement, dated as of January 2, 1997, by and among the Company, K&D
and K&D's principal stockholder, SatCon acquired substantially all of the assets
of K&D, which became a wholly-owned subsidiary of SatCon. The aggregate
consideration paid by the Company for the acquired assets of K&D was $210,000 in
cash and 30,000 shares of the Company's Common Stock ("Common Stock"), par value
$.01 per share. The 30,000 shares of Common Stock were valued at approximately
$200,000 based on a closing price of $6.625 per share on January 23, 1997. K&D's
assets have been recorded at their estimated market values, inventory of
$160,000 and property, plant and equipment of approximately $250,000, with the
excess purchase price assigned to goodwill.
Film Microelectronics Acquisition
On April 16, 1997, SatCon acquired substantially all of the assets and assumed
certain of the liabilities of Film Microelectronics, Inc. ("FMI") pursuant to
the terms of an Amended and Restated Purchase Agreement (the "Asset Purchase
Agreement"), dated as of April 3, 1997, among SatCon Film Microelectronics,
Inc., a wholly-owned subsidiary of the Company, FMI and Albert R. Snider, FMI's
principal stockholder (the "Stockholder"). The aggregate consideration paid by
the Company for the acquired assets of FMI was (i) 420,000 shares of the
Company's Common Stock, (ii) the assumption of trade payables aggregating
approximately $710,000, and (iii) the assumption of indebtedness in an amount
not to exceed $1 million. The Company also entered into a non-competition
agreement with the Stockholder requiring aggregate payments by the
4
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Company of $500,000 over the next eight months. The Company does not intend to
register the Common Stock under the Securities Act of 1933, as amended (the
"Securities Act").
The terms of the Asset Purchase Agreement were determined on the basis of
arms-length negotiations. Prior to the execution of the Asset Purchase
Agreement, the Company did not have any material relationship with FMI or the
Stockholder.
FMI, headquartered in North Andover, Massachusetts, manufactures production and
custom integrated circuits for the communications, industrial, military and
aerospace markets. The Company currently intends to continue to use the assets
of FMI constituting plant, equipment or other physical property substantially in
the same manner in which they were used by FMI immediately prior to the
acquisition.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
This Form 10-Q contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects," and similar expressions are
intended to identify forward-looking statements. There are a number of important
factors that could cause the Company's actual results to differ materially from
those indicated by such forward-looking statements. The factors include, without
limitation, those set forth below under the caption "Factors Affecting Future
Results."
Results of Operations
The following table sets forth, for the periods indicated, the percentage of
revenues for certain items in the Company's Statement of Operations for each
period:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues.................................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales............................................. 46.4 50.3 40.7 44.3
Selling, general and administrative....................... 65.2 56.8 80.2 67.4
Research and development.................................. 0.4 1.2 0.9 1.4
Total operating expenses
(excluding cost of sales)................................. 65.6 58.0 81.1 68.8
Operating loss............................................ (12.0) (8.3) (21.8) (13.1)
Interest income, net...................................... 1.5 3.7 2.8 4.6
Loss before taxes......................................... (10.5) (4.6) (19.0) (8.5)
Benefit for income taxes.................................. - (1.8) - (3.4)
Net loss ................................................. (10.5) (2.8) (19.0) (5.1)
</TABLE>
5
<PAGE>
Three Months Ended March 31, 1997 ("Q2 1997") Compared to the Three Months Ended
- --------------------------------------------------------------------------------
March 31, 1996 ("Q2 1996")
- --------------------------
Revenues. The Company's revenues decreased $279,783, or 8.8%, from Q2 1996 to Q2
1997. The decrease is primarily due to a decrease in revenue of approximately
$1,340,000 related to contracts with Chrysler Corporation for the development of
drive train components as part of the Patriot Hybrid Vehicle Program. This
decrease was partially offset by increased revenues of approximately $746,000
related to work on various government development contracts. In addition, K&D
Magmotor Corporation, a wholly owned subsidiary of the Company, contributed
revenue of $323,000 in Q2 of fiscal 1997.
Cost of Sales. Cost of sales for Q2 1997 decreased $256,369, or 16.0%, from Q2
1996. The decrease is primarily due to a decrease in work on contracts with
Chrysler for the development of drive train components as part of the Patriot
Hybrid Vehicle Program. As a percentage of revenue, cost of sales decreased from
50.3% in Q2 1996 to 46.4% in Q2 1997. The decrease in cost of sales, as a
percentage of revenue, is primarily due to a decrease in direct labor, contract
labor and subcontract costs as a percentage of cost of sales related to the
shift from work on the Chrysler Patriot Program, which had high material costs,
to work on several labor-intensive research and development contracts funded by
the U.S. Government which typically have higher margins.
Selling, General and Administrative. Selling, general and administrative
expenses for Q2 1997 were $1,897,858, an increase of $86,656 or 4.8%, from Q2
1996. Approximately $45,000 is due to selling, general and administrative
expenses related to K&D Magmotor, acquired on January 23, 1997. Approximately
$40,000 is due to an increase in spending on bids and proposals aimed at both
government and commercial contracts, with potential commercial product
opportunities.
Research and Development. Research and development expenses decreased $27,574,
or 72.6% from Q2 1996 to Q2 1997. The Company expects to continue its efforts to
develop technology through a combination of internally funded research and
development and the award of development contracts from the U.S. Government and
commercial customers. These efforts are aimed at commercial product
opportunities.
Six Months Ended March 31, 1996 (Q2 1997 YTD) Compared to the Six Months Ended
- ------------------------------------------------------------------------------
March 31, 1996 (Q2 1996 YTD)
- ----------------------------
Revenues. The Company's revenues for Q2 1997 YTD were $5,041,672 a decrease of
$554,187 or 9.9% from Q2 1996 YTD. The decrease is primarily due to a decrease
in revenue of $2,287,000 from contracts with Chrysler Corporation for the
development of drive train components as part of the Patriot Hybrid Vehicle
Program. The decrease in revenue was partially offset by an increase in revenue
of approximately $1,403,000 related to work on government development contracts.
In addition, K&D Magmotor Corporation, a wholly owned subsidiary of the Company,
contributed revenue of $323,000 in Q2 of fiscal 1997.
Cost of Sales. Cost of sales for Q2 1997 YTD were $2,053,733, a decrease of
$426,715 or 17.2%, from Q2 1996 YTD. The decrease is primarily due to a decrease
in work on contracts with Chrysler Corporation for the development of drive
train components as part of the Patriot Hybrid Vehicle Program. The decrease in
cost of sales, as a percentage of revenue, is primarily due to a decrease in
direct labor, contract labor, and subcontract costs as a percentage of cost of
sales related to a shift from work on the Chrysler
6
<PAGE>
Patriot Program which had high material costs, to work on several
labor-intensive research and development contracts funded by the U.S. Government
which typically have higher margins.
Selling, General and Administrative. Selling, general and administrative
expenses for Q2 1997 YTD were $4,045,607, an increase of $270,986 or 7.2% from
Q2 1996 YTD. Approximately $45,000 is due to selling, general and
administrative expenses related to K&D Magmotor, acquired on January 23, 1997.
Approximately $84,000 is due to spending on bids and proposals aimed at both
government and commercial contracts with potential commercial product
opportunities. Approximately $75,000 of the increase is due to facilities
costs primarily related to the additional rent expense for the Company's Tucson,
Arizona facility. The remainder is due primarily to an increase in depreciation
expense.
Research and Development. Internally funded research and development expenses
for Q2 1997 YTD decreased $34,488 or 44.2% from Q2 1996 YTD. The Company expects
to continue its efforts to develop technology through a combination of
internally funded research and development and the award of development
contracts from the U.S. Government and commercial customers. These efforts are
aimed at commercial product opportunities.
Liquidity and Capital Resources
The Company's cash and cash equivalents was $3,676,287 as of March 31, 1997, a
net decrease of $94,638 from September 30, 1996. Cash used in operating
activities was $1,188,915 at the end of Q2 1997. The cash used in operations was
the result of a net increase of $662,172 in accounts receivable and unbilled
contract costs due to extended billing and payment terms with two customers. The
remainder of the cash used by operating activities is primarily the result of
the decrease in accounts payable, an increase in inventory, a decrease in other
assets, and the net loss for the period.
Cash provided by investing activities as of March 31, 1997, was $1,007,577. The
cash provided relates primarily to the sales and maturity of approximately
$2,067,063 of marketable securities to fund operations prior to the collection
of invoices outstanding. The cash provided was partially offset by capital
expenditures of approximately $600,000 and $210,000 related to the purchase
price of K&D. The capital expenditures primarily relate to the
purchase of laboratory equipment, computer equipment, and sales and
demonstration units.
The Company's $3,000,000 line of credit expired on January 31, 1997. No funds
were advanced under this facility. The Company has entered into negotiations to
replace this line of credit.
The Company anticipates that its existing cash resources and cash flow from
operations will be sufficient to fund its operations through September 30, 1997,
provided it meets its operating plan. The Company's ability to finance its
operations will be dependent on its ability to renegotiate its bank line of
credit for continued availability of borrowing thereunder. There can be no
assurance that the Company will be successful in renegotiating its line of
credit. The Company's ability to generate cash from operations depends upon,
among other things, revenue growth, its credit and payment terms with vendors,
and collections of accounts receivable. If such sources of cash prove
insufficient, the Company will be required to make changes in its operations or
to seek additional debt or equity financing. There can be no
7
<PAGE>
assurances that cash generated from operations will be sufficient to meet its
operating requirements, or if required, that additional debt or equity financing
will be available on terms acceptable to the Company.
Factors Affecting Future Results
The Company's future results remain difficult to predict and may be affected by
a number of factors which could cause actual results to differ materially from
forward-looking statements contained in this Form 10-Q and presented elsewhere
by management from time to time. These factors include business conditions
within the automotive, telecommunications, industrial machinery, and
semiconductor industries and the world economies as a whole, and competitive
pressures that may impact research and development spending. The Company's
revenue growth is dependent on technology developments and contract research and
development for both the government and commercial sectors and no assurance can
be given that such investments will continue or that the Company can
successfully obtain such funds. In addition, the Company's future growth
opportunities are dependent on the introduction of new products that must
penetrate automotive, telecommunications, industrial, and computer market
segments. No assurance can be given that new products can be developed, or if
developed, will be successful; that competitors will not force prices to an
unacceptably low level or take market share from the Company; or that the
Company can achieve or maintain profits in these markets. Because of these and
other factors, past financial performances should not be considered an indicator
of future performance. Investors should not use historical trends to anticipate
future results and should be aware that the Company's stock price frequently
experiences significant volatility.
Effect of Recent Accounting Pronouncements
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation," which encourages companies to
recognize compensation expense in the income statement based on the fair value
of the underlying common stock at the date the awards are granted. However, it
will permit continued accounting under APB Opinion 25, "Accounting for Stock
Issued to Employees," accompanied by a disclosure of the pro forma effects on
net income and earnings per share had the new accounting rules been applied. The
statement is effective for fiscal year 1997. The Company plans to account for
stock based compensation in accordance with APB Opinion 25.
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 128, "Earnings per Share." The
statement is effective for financial statements for periods ending after
December 15, 1997, and changes the method in which earnings per share will be
determined. Adoption of this statement by the Company will not have a material
impact on earnings per share.
Effects of Inflation
The Company believes that inflation over the past three years has not had a
significant impact on the Company's revenues or operating results.
8
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
An amendment to the Certificate of Incorporation, increasing the number of
authorized shares of Common Stock from 10,000,000 shares, to 15,000,000 shares
was approved by the stockholders at the Annual Meeting of Stockholders held on
February 26, 1997 and was filed with the Secretary of State of the State of
Delaware on May 12, 1997.
Recent Sales of Unregistered Securities
On January 23, 1997, the Company issued 30,000 shares of Common Stock to K&D
Magmotor Corporation ("K&D"), in connection with the acquisition by the Company
of substantially all of the assets of K&D.
On April 16, 1997, the Company issued 420,000 shares of Common Stock to Film
Microelectronics, Inc. ("FMI") in connection with the acquisition by the Company
of substantially all of the assets of FMI.
Pursuant to a non-qualified stock option granted by the Company outside of its
existing stock option plans, the Company issued the following shares of its
Common Stock to five current or former members of its former law firm on the
following dates, for an exercise price per share of $5.25.
<TABLE>
Date Shares
- ---- ------
<S> <C>
September 24, 1994 13,405
March 31, 1995 1,005
October 18, 1996 2,010
February 27, 1997 8,375
February 27, 1997 2,005
</TABLE>
The shares of capital stock issued in the above transactions were offered and
sold in reliance upon the exemptions from registration under Section 4(2) of the
Securities Act of 1933, as amended or Regulation D promulgated thereunder,
relative to sales by an issuer not involving any public offering.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's Annual Meeting of Stockholders held on February 26, 1997, the
Company's stockholders approved the following:
<TABLE>
<CAPTION>
PROPOSAL FOR AGAINST/ ABSTAIN BROKER
WITHHELD NON-VOTES
<S> <C> <C> <C> <C>
(1) Election of Directors:
Marshal J. Armstrong 6,869,269 148,801 N/A N/A
David B. Eisenhaure 6,863,469 154,601 N/A N/A
</TABLE>
9
<PAGE>
James L. Kirtley, Jr. 6,869,069 149,001 N/A N/A
Michael C. Turmelle 6,869,069 149,001 N/A N/A
John P. O'Sullivan 6,869,269 148,801 N/A N/A
William E. Stanton 6,868,969 149,101 N/A N/A
(2) Classification of the 4,264,346 487,810 21,760 2,244,354
Board of Directors into
three classes,with members
of each class serving for staggered
three-year terms
(3) Approval of 6,745,177 237,893 13,800 21,400
increasing from
10,000,000 to
15,000,000 the number
of authorized shares of
Common Stock
(4) Ratification of 6,983,779 28,853 5,438 200
Coopers & Lybrand L.L.P.
as auditors for the
current fiscal year ending
September 30, 1997.
Item 5. Other Information.
Not applicable.
Item 6 Exhibits and Reports on Form 8-K.
(a) Exhibits
3.3 Certificate of Amendment of Certificate of Incorporation of SatCon
Technology Corporation filed on May 12, 1997
3.4 Amendment of Bylaws of SatCon Technology Corporation, approved on
January 2, 1997
10.12 Manufacturing Agreement between Applied Materials, Inc. and its wholly
owned subsidiaries and SatCon Technology Corporation and its wholly owned
subsidiaries, dated as of February 20, 1997
11 Statement of Computation of Earnings Per Share
27 Financial Data Schedule (EDGAR)
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K, dated January 23, 1997, in
connection with the acquisition of K&D Magmotor Corporation.
The Company filed a Current Report on Form 8-K, dated April 16, 1997, in
connection with the acquisition of Film Microelectronics, Incorporated.
10
<PAGE>
Signature
- ---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SATCON TECHNOLOGY CORPORATION
Date: May 15, 1997 By: /s/ David B. Eisenhaure
David B. Eisenhaure, President and Chief
Executive Officer
Date: May 15, 1997 By: /s/ Michael C. Turmelle
Michael C. Turmelle, Vice President,
Chief Financial Officer and Treasurer
11
<PAGE>
Exhibit 3.3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SATCON TECHNOLOGY CORPORATION
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
----------------------------------------
SatCon Technology Corporation (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation duly adopted two resolutions by
Written Action dated January 2, 1997, pursuant to Sections 141 and 242 of the
General Corporation Law of the State of Delaware, setting forth amendments to
the Certificate of Incorporation of the Corporation and declaring said
amendments to be advisable. The stockholders of the Corporation duly approved
said proposed amendments at the Annual Meeting of Stockholders held on February
26, 1997 in accordance with Section 242 of the General Corporation Law of the
State of Delaware. The resolutions setting forth the amendments are as follows:
RESOLVED:
- -------- That the Board of Directors deems it advisable and in the best
interests of the Corporation and its stockholders that Article 4
of the Certificate of Incorporation of the Corporation be and
hereby is deleted and is replaced in its entirety by the
provisions attached hereto as Exhibit A in order to increase the
---------
authorized number of shares of Common Stock of the Corporation
from 10,000,000 to 15,000,000.
<PAGE>
FURTHER
RESOLVED:
- -------- That the Board of Directors deems it advisable and in the best
interests of the Corporation and its stockholders that Article 13
be added to the Certificate of Incorporation of the Corporation
in the form attached hereto as Exhibit B in order to divide the
---------
members of the Board into three classes having staggered
three-year terms.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment to be signed by its President
this 25th day of April, 1997.
SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
-----------------------
David B. Eisenhaure
Chief Executive Officer
<PAGE>
Exhibit A
---------
4. The total number of shares of stock which the Corporation shall have
authority to issue is sixteen million (16,000,000) shares, fifteen million
(15,000,000) of which shall be Common Stock, of the par value of One Cent ($.01)
per share; and one million (1,000,000) of which shall be Preferred Stock, of the
par value of One Cent ($.01) per share.
Additional voting powers, designations, preferences, rights and qualifications,
limitations or restrictions of the shares of stock shall be determined by the
Board of Directors of the Corporation from time to time.
<PAGE>
Exhibit B
---------
13. The management of the business and the conduct of the affairs of the
Corporation will be governed as follows:
1. Number of Directors. The number of directors of the Corporation shall
-------------------
not be less than three. The exact number of directors within the limitations
specified in the preceding sentence shall be fixed from time to time pursuant to
a resolution adopted by the Board of Directors or as provided in the
Corporation's Bylaws.
2. Classes of Directors. The Board of Directors shall be and is divided
--------------------
into three classes: Class I, Class II and Class III. No one class shall have
more than one director more than any other class. If a fraction is contained in
the quotient arrived at by dividing the authorized number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class I, and if such fraction is two- thirds, one of the extra directors shall
be a member of Class I and one of the extra directors shall be a member of Class
II, unless otherwise provided for from time to time by resolution adopted by a
majority of the Board of Directors.
3. Election of Directors. Elections of directors need not be by written
----------------------
ballot except as and to the extent provided in the Bylaws of the Corporation.
4. Terms of Office. Each director shall serve for a term ending on the
---------------
date of the third annual meeting following the annual meeting at which such
director was elected; provided, that each initial director in Class I shall
serve for a term expiring at the 1998 annual meeting; each initial director in
Class II shall serve for a term expiring at the 1999 annual meeting; and each
initial director in Class III shall serve for a term expiring at the 2000 annual
meeting; and provided further, that the term of each director shall continue
until the election and qualification of his successor and shall be subject to
his earlier death, resignation or removal.
5. Allocation of Directors among Classes in the Event of Increases or
------------------------------------------------------------------
Decreases in the Number of Directors. In the event of any increase or decrease
- ------------------------------------
in the authorized number of directors, (i) each director then serving as such
shall nevertheless continue as a director of the class of which he is a member
until the expiration of his current term, subject to his earlier death,
resignation or removal, and (ii) the newly created or eliminated directorships
resulting from such increase or decrease shall be apportioned by the Board of
Directors among the three classes of directors in accordance with the provisions
of Section 2 above. To the extent possible, consistent with the foregoing rule,
any newly created directorships shall be added to those classes whose terms of
office are to expire at the latest dates following such allocation, and any
newly eliminated directorships shall be subtracted from those classes whose
terms of offices are to expire at the earliest dates following such allocation,
unless otherwise provided from time to time by resolution adopted by the Board
of Directors.
<PAGE>
6. Quorum; Action at Meeting. A majority of the total number of directors
-------------------------
then in office shall constitute a quorum at all meetings of the Board of
Directors. In the event one or more of the directors shall be disqualified to
vote at any meeting, then the required quorum shall be reduced by one for each
such director so disqualified; provided, however, that in no case shall less
-------- -------
than one-third of the number of directors fixed pursuant to Section 1 above
constitute a quorum. If at any meeting of the Board of Directors there shall be
less than such a quorum, a majority of those present may adjourn the meeting
from time to time. Every act or decision done or made by a majority of the
directors present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Board of Directors unless a greater number is
required by law, by the Bylaws of the Corporation or by this Certificate of
Incorporation.
7. Removal. For so long as the Board of Directors is classified pursuant
-------
to Section 141(d) of the General Corporation Law of Delaware, directors of the
Corporation may be removed only for cause by the affirmative vote of the holders
of at least two-thirds of the shares of the capital stock of the Corporation
issued and outstanding and entitled to vote.
8. Vacancies. Unless and until filled by the stockholders, any vacancy in
---------
the Board of Directors, however occurring, including a vacancy resulting from an
enlargement of the Board, may be filled by a vote of a majority of the directors
then in office, although less than a quorum, or by a sole remaining director. A
director elected to fill a vacancy shall be elected to hold office until the
next election of the class for which such director shall have been chosen,
subject to the election and qualification of his successor and to his earlier
death, resignation or removal.
9. Amendments to Article. Notwithstanding any other provisions of law,
---------------------
this Certificate of Incorporation or the By-Laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least seventy-five percent (75%) of the
shares of capital stock of the Corporation issued and outstanding and entitled
to vote shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article 13.
<PAGE>
Exhibit 3.4
BYLAWS AMENDMENT OF
SATCON TECHNOLOGY CORPORATION
Article III of SatCon Technology Corporation's Bylaws is hereby deleted in
its entirety and the following Bylaws provisions is hereby implemented in lieu
thereof.
Article III. Directors.
- ------------ ----------
Section 1. General Powers. The business of the Corporation shall be
---------- --------------
managed by its Board of Directors, which may exercise all powers of the
Corporation and perform all lawful acts that are not by law, the Certificate of
Incorporation, or these Bylaws directed or required to be exercised or performed
by the stockholders. In the event of a vacancy in the Board of Directors, the
remaining directors, except as otherwise provided by law, may exercise the
powers of the full Board until the vacancy is filled pursuant to this Article.
Section 2. Number, Election, Tenure and Qualification. The number of
---------- ------------------------------------------
directors shall be determined by the Board of Directors; but in no event shall
the number be less than three. Directors shall be elected at the annual meeting
of the stockholders, in the manner provided in the Certificate of Incorporation
by such stockholders as have the right to vote thereon. The number of directors
may be increased or decreased by action of the Board of Directors. Directors
need not be stockholders.
Section 3. Vacancies. If any vacancies occur in the Board of Directors,
---------- ---------
or if any new directorships are created, they may be filled in the manner
provided in the Certificate of Incorporation. If there are no directors in
office, any officer or stockholder may call a special meeting of stockholders in
accordance with the provisions of the Certificate of Incorporation, at which
meeting such vacancies shall be filled.
Section 4. Removal or Resignation.
---------- ----------------------
(a) except as otherwise provided by law or the Certificate of
Incorporation, any director may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote at an election of
directors.
(b) Any director may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, if any, or the President or
Secretary of the Corporation. Unless otherwise specified in such written
notice, a resignation shall take effect on delivery thereof to the Board of
Directors or the designated officer. It shall not be necessary for a
resignation to be accepted before it becomes effective.
<PAGE>
Section 5. Place of Meetings. The Board of Directors may hold meetings,
---------- -----------------
both regular and special, either within or without the State of Delaware.
Section 6. Annual Meeting. The annual meeting of the Board of Directors
---------- --------------
shall be held immediately following the annual meeting of stockholders, and no
notice of such meeting shall be necessary to the directors in order to
constitute the meeting legally, provided a quorum shall be present.
Section 7. Regular Meetings. Additional regular meetings of the Board of
---------- ----------------
Directors may be held without notice of such time and place as may be determined
from time to time by the Board of Directors.
Section 8. Special Meetings. Special meetings of the Board of Directors
---------- ----------------
may be called by the Chairman of the Board, the President, or by two or more
directors on at least two days' notice to each director, if such notice is
delivered personally or sent by telegram, or on at least three days' notice if
sent by mail. Special meetings shall be called by the Chairman of the Board,
President, Secretary, or two or more directors in like manner and on like notice
on the written request of one-half or more of the number of directors then in
office. Any such notice need not state the purpose or purposes of such meeting,
except as provided in Article XI.
Section 9. Quorum and Adjournments. At all meetings of the Board of
---------- -----------------------
Directors, a majority of the directors then in office shall constitute a quorum
for the transaction of business, and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by law or the
Certificate of Incorporation. If a quorum is not present at any meeting of the
Board of Directors, the directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting at which the
adjournment is taken, until a quorum shall be present.
Section 10. Compensation. Directors shall be entitled to such
----------- ------------
compensation for their services as directors and to such reimbursement for any
reasonable expenses incurred in attending directors' meetings as may from time
to time be fixed by the Board of Directors. The compensation of directors may be
on such basis as is determined by the Board of Directors. Any director may waive
compensation for any meeting. Any director receiving compensation under these
provisions shall not be barred from serving the Corporation in any other
capacity and receiving compensation and reimbursement for reasonable expenses
for such other services.
Section 11. Action by Consent. Any action required or permitted to
----------- -------------------
be taken at any meeting of the Board of Directors may be taken without a
meeting, and without prior notice, if a written consent to such action is signed
by all members of the Board of Directors and such written consent is filed with
the minutes of its proceedings.
2
<PAGE>
Section 12. Meetings by Telephone or Similar Communications Equipment.
----------- ---------------------------------------------------------
The Board of Directors may participate in a meeting by conference telephone or
similar communications equipment by means of which all directors participating
in the meeting can hear each other, and participation in such a meeting shall
constitute presence in person by any such director at such meeting.
3
<PAGE>
Exhibit 10.12
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE OMISSIONS.
MANUFACTURING AGREEMENT
-----------------------
THE AGREEMENT (the "Agreement") is entered into as of February 20, 1997,
between APPLIED MATERIALS, INC., a Delaware Corporation, and its wholly owned
subsidiaries ("Applied"), and SATCON TECHNOLOGY CORPORATION, a Delaware
Corporation, and its wholly owned subsidiaries ("SatCon"), with respect to the
following facts:
A) Applied is a manufacturer of semiconductor wafer processing, metrology, and
inspection equipment and developer of thin-film applications. Applied is
engaged in development and sale of, among other things, Rapid Thermal Processing
chambers and related equipment. SatCon is a manufacturer of, among other
things, magnetically levitated bearings.
B) The parties wish to provide for the purchase of Bearings (as hereinafter
defined) by Applied from SatCon.
The parties agree as follows:
1. TERM. Unless earlier terminated in accordance with this Agreement, the term
----
of this Agreement (the "Term") shall be ************** from the Effective Date
hereof.
2. CERTAIN DEFINITIONS. For purposes of the Agreement:
-------------------
2.1 "Application" means the U.S. patent application entitled **********
**************************************************************************
*****************. "Foundation Patent" means the U.S. patent issuing therefrom,
if any, and any division, continuation, continuation-in-part (to the extent
embodied in the Bearing), or reissue thereof, or any foreign counterpart
thereof.
2.2 "Bearing" means the magnetically levitating bearing, motor and associated
hardware covered by the pending claims of the Application or the issued claims
of the Foundation Patent, along with the supporting software therefor.
2.3 "Patent Rights" means the Application, the Foundation Patent, and any
additional patens or patent applications filed by or granted to SatCon alone, or
jointly with Applied with respect to improvements to Bearings.
2.4 "SatCon Technology Rights" means the trade secrets, know-how, drawings,
software, tools and the like owned by SatCon witch relate to the manufacture of
Bearings.
2.5 "Applied's Field of Use" means the field of wafer processing, metrology and
inspection tools, (excluding photolithography equipment) for the semiconductor
manufacturing industry.
2.6 "Effective Date" means the date on which the schedules of the Agreement
are completed, signed by each of the Parties and last dated. If the parties are
unable to finalize the Schedules within six (6) months of the contract execution
date, this Agreement shall become null and void.
2.7 "Fiscal Year" means Applied's fiscal year which is from November 1 to
October 31 of the next calendar year.
3. GRANT OF EXCLUSIVE LICENSE.
---------------------------
Subject to the terms of this Agreement, SatCon hereby grants to Applied a
royalty-free, worldwide license, solely in Applied's Field of Use, (the
"License") under the Patent Rights, and SatCon Technology Rights to use, sell,
offer for sale and import Bearings, and to make, have made, use, sell, offer for
sale and import
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
products incorporating Bearings ("Licensed Products"), with the right to grant
sublicenses. The License shall be exclusive until such exclusivity is terminated
as described in this Agreement.
4. EXCLUSIVE SALE AND PURCHASE.
----------------------------
4.1 SatCon shall sell Bearings for use in Rapid Thermal Processing Chambers
within Applied's Field of Use exclusively to Applied, and not to any other
purchaser, except as otherwise permitted in this Agreement. SatCon shall have
the right to subcontract the manufacture of all or part of the Bearings to one
or more third party subcontractors at any time. During the Term, Applied shall
not purchase Bearings, or substitute magnetically levitating bearing and motor
assemblies for use with Rapid Thermal processing chambers from any entity other
than SatCon, except as otherwise provided for in Section 5.
4.2 Set forth in Schedule A is a forecast of Applied's quarterly requirements
for Bearings for the one-year period beginning on the first day of the first
Applied fiscal quarter following the date of this Agreement (the "Forecast").
On the last day of each fiscal quarter, Applied shall provide SatCon with a new
one year forecast, broken down quarter by quarter. Applied and SatCon shall
consult with respect to each such new forecast. Applied will also make
available to SatCon its most current three year projections for Bearings.
4.3 Applied shall purchase Bearings from SatCon pursuant to issued Purchase
Orders.
4.4 The "Minimum Purchase Commitment" for Fiscal Year 1997 is set forth in
Schedule A. For 1998 the Minimum Purchase Commitment shall not be less than
eighty percent (80%) of the number of Bearings purchased in Fiscal Year 1997.
For Fiscal Year 1999 and beyond, the Minimum Purchase Commitment shall be
subject to a minimum of eighty percent (80%) of the number of Bearings purchased
in the year preceding, ************, whichever is the greater.
4.5 In determining in any given Fiscal Year whether or not Applied has met its
Minimum Purchase Commitment for Bearings, the number of purchased Bearings shall
include those purchased from SatCon, those purchased from an Alternate Supplier
and those manufactured by Applied for and on its own behalf pursuant to Section
5 below. Applied shall be deemed to have met its Minimum Purchase Commitment
even if one hundred percent (100%) of its requirements are obtained from sources
other than SatCon, so long as the minimums as set forth in Section 4.4 are
satisfied.
4.6 In the event Applied fails to purchase the Minimum Purchase Commitment of
Bearings from SatCon or Alternate Supplier, including Applied as established
pursuant to Section 5 with respect to any Fiscal Year, SatCon may send Applied a
written notice of such fact ("Shortfall Notice"). Within 45 days from receipt
of a Shortfall Notice, Applied shall either (I) purchase sufficient Bearings to
make up the shortfall (the "Shortfall Quantity") or (ii) pay to SatCon an amount
of cash equal to 10% of the aggregate purchase price of the Shortfall Quantity.
Upon Applied's failure to complete either of the actions set forth in the
preceding sentence, SatCon's sole and exclusive remedy shall be the termination
of Applied's exclusive license rights, which shall thereafter be non-exclusive.
4.7 SatCon shall sell the Bearings to Applied at SatCon's prices then in
effect. Set forth on Schedule B is SatCon's non-binding, good faith estimate of
the prices at which currently intends to offer Bearings to Applied. SatCon is
not obligated to sell Bearings to Applied at the prices set forth on Schedule B.
However, in the event that the prices SatCon charges Applied for Bearings exceed
the prices set forth on Schedule B by more than ten percent (10%), Applied shall
have the right to appoint an Alternate Supplier as described in Section 5 below.
4.8 SatCon shall use reasonable efforts to sell to Applied the quantities of
Bearings established for each period in the applicable Forecast.
Notwithstanding the foregoing, compliance with the procedures set forth in
Section 5 below shall be Applied's exclusive remedy for any failure of SatCon to
supply sufficient quantities of Bearings.
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
5. TRANSFER EVENTS; SECOND-SOURCING.
---------------------------------
5.1 Should: (1) SatCon materially fail to deliver Bearings to Applied within
the mutually agreed upon delivery times, and thereafter is unable to complete
delivery within 90 days after notification of such failure by Applied, (2) the
quality of the Bearings delivered by SatCon be materially below the quality
standards set forth in Schedule C, if any, and SatCon is unable to cure or
otherwise resolve such quality issue (as determined by an independent third
party evaluator reasonably acceptable to SatCon) within 90 days after
notification of such failure by Applied, or (3) the prices at which SatCon
offers the Bearings to Applied exceed the prices set forth in Schedule B by more
than ten percent (10%), such shall constitute a "Transfer Event". A Transfer
Event shall also include (a) SatCon's ceasing to be in the business of
manufacturing Bearings, and (b) SatCon's breach of the exclusivity provisions of
paragraph 4.1 of the Agreement.
5.2 Upon Applied giving notice to SatCon of the occurrence of a Transfer Event
("Notice of Transfer Event"), Applied shall have the right to designate in
writing an alternate supplier for the Bearings (the "Alternate Supplier"),
provided that SatCon has not cured the conditions leading to the Transfer Event
prior to such designation. The Alternate Supplier, if other than Applied, must
be reasonably acceptable to SatCon. In the event that Applied is dissatisfied
with the performance of the Alternate Supplier, it may, upon sixty (60) days'
prior written notice to SatCon, designated a substitute Alternate Supplier.
5.3 SatCon, at the time of said Notice of Transfer Event, shall deliver to
Applied in writing such technical information as is reasonably necessary to
permit such Alternative Supplier to manufacture Bearings (the "Manufacturing
Package"). SatCon's failure to complete the delivery of the Manufacturing
Package to Applied within 90 days of such notice shall constitute a material
breach of this Agreement.
5.4 Following the designation of an Alternate Supplier, Applied shall pay a
negotiated fee to SatCon for the preparation of the manufacturing package and
shall release to the Alternate Supplier said Manufacturing Package. SatCon
shall grant the Alternate Supplier a limited, nonexclusive license to make
Bearings for use as described within this agreement and pursuant to an agreement
in form and substance acceptable to SatCon. SatCon shall assist as necessary to
qualify the Alternate Supplier, and shall be reasonably compensated for such
assistance.
5.5 Upon the occurrence of a Transfer Event, Applied shall pay to SatCon a
royalty of ***************** based on the net invoice price of Bearings for each
Bearing purchased by Applied from such Alternate Supplier. Where the Bearings
are manufactured by Applied, the ***************** royalty shall be calculated
based on SatCon's most favorable volume price at the time of the Notice of
Transfer Event for each Bearing incorporated into a wafer fabrication tool sold
by Applied, or sold separately as an upgrade or replacement.
5.6 Subsequent to the occurrence of a Transfer Event, should Applied choose to
convert the License granted it under Section 3 to one that is non-exclusive, it
may do so upon giving six (6) months notice to SatCon. At the end of the notice
period, the royalty shall *************************** for each Bearing
incorporated in a wafer fabrication tool sold by Applied, or sold separately as
an upgrade or replacement. SatCon shall thereafter be released from its
exclusivity obligations under Section 4.1. Royalties under this section and
section 5.5 shall be paid quarterly, payment due within 45 days after the close
of the most recent quarter. The obligation to pay royalties shall end ********
from the Effective Date. Thereafter, the royalties to paid shall be subject to
good faith negotiations between parties.
5.7 The parties agree that SatCon's sole obligation and liability, and
Applied's sole right and remedy, in respect of the occurrence of the Transfer
Events described in Section 5.1 above shall be the compliance by the parties
with the procedures, and the granting of the rights, described in Sections 5.2-
5.6 above.
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
6. FUTURE JOINT DEVELOPMENT, AND LICENSING.
----------------------------------------
6.1 The parties may agree to engage in future joint development activities
concerning Bearings and related technology. In such event, the parties will
mutually agree upon the terms of such joint development, including funding and
ownership of intellectual property.
6.2 SatCon will, if requested, negotiate in good faith with Applied Komatsu
Technology ("AKT") to license the Patent Rights and SatCon Technology Rights
hereunder to AKT under mutually agreeable, commercially reasonable terms and
conditions.
6.3 Should SatCon decide to develop new technologies/applications within
Applied's Field of Use, SatCon shall first present the development opportunity
to Applied. Thereafter, should the parties wish to mutually pursue the
disclosed development opportunity, they shall negotiate in good faith for an
agreement for same.
6.4 Following the signing of this Agreement, SatCon at its own expense shall
engage in **************************************************, the cost of the
redesign effort not to exceed one hundred thousand dollars ($100,000). This
expense will be amortized over the first ten units (10) ****** systems ordered
by Applied.
7. CONFIDENTIALITY.
----------------
7.1 For purposed of this Agreement, "Confidential Information" means all non-
public and/or proprietary information disclosed in the course of the activity by
either party pursuant to this Agreement, whether disclosed in oral, written,
graphic, machine recognizable (including computer programs or databases), model
or sample form, or any derivation thereof. However, "Confidential Information"
does not include information (a) of which the receiving party ("Recipient") was
rightfully in possession prior to disclosure, as evidenced by appropriate
documentation, (b) independently developed by employees or agents of Recipient
who have not received any information provided by the disclosing party
("Provider") hereunder, (c) Recipient rightfully receives from a third party not
owing a duty of confidentiality to Provider, (d) that becomes publicly available
without fault of Recipient, or (e) whose disclosure is required by order of a
court or governmental authority, provided that Provider shall have been given
timely notice of such requirement and that Recipient shall cooperate with
Provider to limit the scope and effect of such order.
7.2 Unless such information is disclosed orally, Confidential Information shall
be designated as such by an appropriate legend, such as "SatCon Confidential" or
"Applied Materials Confidential". Confidential Information that is disclosed
orally shall be identified as confidential before or at the time of disclosure,
and shall be confirmed as confidential in a notice given by Provider to
Recipient within thirty (30) days after such oral disclosure. Such notice must
contain a summary of the orally disclosed Confidential Information.
7.3 Recipient shall hold Provider's Confidential Information in strictest
confidence, without limitation as to the terms of years, for information
contained in the Manufacturing Package, and for five (5) years after receipt for
all other Confidential Information, using such measures as Recipient uses to
protect the confidentiality of its own Confidential Information of like
importance, but in no event using less than reasonable care. Recipient shall
not make any disclosure of such Confidential Information other than to its
employees and consultants on a need-to-know basis. Recipient shall inform each
such employee and consultant of Recipient's confidentiality obligations under
this Agreement, and shall be jointly and severally liable with such employee or
consultant for any breach of this Agreement by any said employee or consultant.
Recipient shall use the Confidential Information solely to perform the
activities contemplated by this Agreement.
7.4 The parties respective coordinators for exchange of Confidential
Information are named below:
For Applied: Jim Tietz
<PAGE>
SatCon: Michael Turmelle
8. ANCILLARY DOCUMENTS.
--------------------
Applied's Standard Terms and Conditions of Purchase (the "Ts & Cs") are attached
hereto as Schedule D-1. The Master Purchase Order ("Master P.O."), if any,
shall be attached hereto as Schedule D-2. Together the Master P.O. and the Ts
&Cs (as negotiated at the time of <Master> P.O. issuance) shall constitute the
"Ancillary Documents", and are and shall be incorporated into this Agreement by
this reference. In the event of an apparent conflict between or among
provisions of this Agreement (excluding the Ancillary Documents) and/or either
or both of the Ancillary Documents, such provisions shall be read in a mutually
consistent way or, if no such reading shall be reasonably possible, the
following order of priority shall apply: (I) this Agreement (excluding the
Ancillary Documents), (ii) the Master P.O., and (iii) the Ts & Cs.
9. TERMINATION.
------------
9.1 This Agreement may be terminated prior to the expiration of the Term as
follows:
(a) By mutual agreement of the parties;
(b) By either party, in the event the other party has materially breached a
provision of this Agreement (other than a breach, the exclusive remedy for which
is otherwise set forth in this Agreement), which breach has remained uncured for
a period of sixty (60) days following notice thereof by the terminating party;
9.2 Upon the termination of this Agreement, all rights, and obligations of the
parties shall be automatically terminated, other than obligations incurred prior
to the effective date of such termination, and the licenses granted to Applied
under Section 3, which licenses shall be non-exclusive in the case of a
termination of Applied for cause (except where such termination is for failure
to pay obligations incurred per Section 4.3, or failure to pay royalties
pursuant to Section 5.5 and 5.6, in which case all license rights to
applications, patents, and technology owned solely by SatCon shall terminate),
or exclusive in the case of termination of SatCon for cause. Further, the
provisions of Sections 5,7, and 10 shall survive any termination or expiration
of this Agreement in accordance with their terms.
10. LIMITATIONS OF LIABILITY AND DISCLAIMERS OF WARRANTY.
-----------------------------------------------------
10.1 SATCON WARRANTS THAT THE BEARINGS SUPPLIED BY SATCON WILL SUBSTANTIALLY
CONFORM TO THE APPLICABLE SPECIFICATIONS FOR THE PERIOD COMMENCING WITH THE
SHIPMENT TO APPLIED AND ENDING TWELVE (12) MONTHS AFTER TOOL ACCEPTANCE BY THE
END USER. EXCEPT AS PROVIDED IN THE PRECEDING SENTENCE, SATCON HEREBY DISCLAIMS
ALL OTHER WARRANTIES WITH RESPECT TOT HE BEARINGS SOLD UNDER THIS AGREEMENT,
WRITTEN OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT.
NEVERTHELESS, SATCON SHALL DEFEND, HOLD HARMLESS AND INDEMNIFY APPLIED FOR ANY
ACTION, CLAIMS OR SUITS BROUGHT AGAINST APPLIED ALLEGING THAT THE BEARINGS
DESIGNED BY ALLEGING THAT THE BEARINGS DESIGNED BY SATCON (THE "SATCON
BEARINGS") MISAPPROPRIATE ANY TRADE SECRET OR INFRINGE ANY PATENT, COPYRIGHT OR
OTHER INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTY, PROVIDED THAT APPLIED (1)
PROMPTLY NOTIFIES SATCON OF SUCH ACTION, CLAIMS OR SUIT, (2) GIVES SATCON THE
SOLE CONTROL OVER THE DEFENSE AND SETTLEMENT THEREOF, AND (3) PROVIDES
REASONABLE ASSISTANCE TO SATCON IN CONNECTION WITH THE DEFENSE THEREOF. THE
FOREGOING OBLIGATIONS SHALL NOT APPLY WITH RESPECT TO ACTIONS, CLAIMS OR SUITS
RESULTING FROM THE MODIFICATION OF THE SATCON BEARINGS OR THE COMBINATION OF THE
SATCON BEARINGS WITH DEVICES OR EQUIPMENT NOT SUPPLIED
<PAGE>
BY SATCON. IN THE EVENT APPLIED's USE OF THE SATCON BEARINGS ARE OR IN SATCON's
OPINION ARE LIKELY TO BE ENJOINED DUE TO AN INFRINGEMENT OR MISAPPROPRIATION
CLAIM, SATCON MAY (1) PROCURE FOR APPLIED THE RIGHT TO CONTINUE TO MANUFACTURE,
USE AND SELL THE SATCON BEARINGS, (2) REPLACE OR MODIFY THE SATCON BEARINGS SO
THAT THEY ARE NONINFRINGING, AND SUBSTANTIALLY EQUIVALENT IN FUNCTION TO THE
ENJOINED SATCON BEARINGS, OR (3) IF (1) AND (2) ARE NOT REASONABLY AVAILABLE TO
TERMINATE THE LICENSES GRANTED HEREUNDER.
10.2 Except for the indemnity obligation as provided in Section 10.1,
notwithstanding anything to the contrary contained in this Agreement, no party
hereto shall be liable to the other for any indirect, special, consequential,
incidental or punitive damages (including without limitation damages for loss of
use of facilities or equipment, loss or revenue, loss of profits or loss of
goodwill) regardless of (I) the negligence (either sole or concurrent) of the
other party and (ii) whether the other party has been informed of the
possibility of such damages.
10.3 The parties acknowledge that the Bearings shall be used by Applied as one
of several components in an assembly which shall be designed, manufactured,
marketed and sold by or for Applied. Therefore, the parties agree that in no
event shall SatCon have any liability to any customer or end user of Applied
hereunder, and Applied agrees to defend, indemnify and hold SatCon harmless from
and against any and all claims and actions by any such customers and end users.
11. MISCELLANEOUS PROVISIONS.
-------------------------
Nothing contained in this Agreement shall be construed as creating a partnership
or joint venture by or between the parties or constitute either party the agent
of the other. This Agreement constitutes the parties entire agreement with
respect t the subject matter hereof, and all prior agreements or understandings
between them concerning such subject matter shall not have any further force or
effect. This Agreement (including the Ancillary Documents and the Schedules
hereto) may be modified only by a writing signed by both parties. This
Agreement will be governed by the laws of the State of New York, without giving
effect to its conflict of law principles, and in the case of litigation, the
prevailing party shall be entitled to recover its reasonable attorney's fees and
expenses. Whenever possible, each provision of this Agreement will be
interpreted so as to be effective and valid under applicable law, but if any
provision is held to be invalid under applicable law, either in whole or in
part, the provision will be ineffective only to the extent of such invalidity,
and the remaining provisions of this Agreement shall remain in full force and
effect. This Agreement may be executed in one or more counterparts, each of
which will be deemed an original, and all of which taken together shall be
deemed one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
APPLIED MATERIALS
By: /s/ Chris Gronet
Chris Gronet, General Manager RTP Division
SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
David B. Eisenhaure, President
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
SCHEDULE A
TO MANUFACTURING AGREEMENT
FY 1997 Minimum Purchase Commitment
-----------------------------------
Schedule A contains confidential materials
which have been omitted and filed separately
with the Securities and Exchange Commission.
<PAGE>
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
SCHEDULE B
TO MANUFACTURING AGREEMENT
Bearing Pricing
---------------
Schedule B contains confidential materials
which have been omitted and filed separately
with the Securities and Exchange Commission.
<PAGE>
SCHEDULE C
TO MANUFACTURING AGREEMENT
Quality Standards
-----------------
(to be provided)
<PAGE>
SCHEDULE D
TO MANUFACTURING AGREEMENT
Terms and Conditions of Purchase
--------------------------------
Master Purchase Order
---------------------
<PAGE>
Schedule D-1
APPLIED MATERIALS STANDARD TERMS AND CONDITIONS - Revised 1/94
1. ACCEPTANCE - THE TERMS AND CONDITIONS HEREOF BECOME THE EXCLUSIVE AND
BINDING AGREEMENT BETWEEN THE PARTIES COVERING THE PURCHASE OF THE GOODS OR
SERVICES ORDERED HEREIN WHEN THIS ORDER IS ACCEPTED BY ACKNOWLEDGMENT OR
COMMENCEMENT OF PERFORMANCE. THIS PURCHASE ORDER CAN BE ACCEPTED ONLY ON THESE
TERMS AND CONDITIONS. ADDITIONAL OR DIFFERENT TERMS PROPOSED BY SELLER WILL NOT
BE APPLICABLE UNLESS ACCEPTED IN WRITING BY THE BUYER. NO CHANGE, MODIFICATION,
OR REVISION OF THIS PURCHASE ORDER SHALL BE EFFECTIVE UNLESS IN WRITING AND
SIGNED BY BUYER.
2. INVOICES - Invoices shall contain the following information: purchase order
number, item number, description of goods, sized, quantities, unit prices, and
extended totals in addition to any other information specified elsewhere herein.
Payment of invoice shall not constitute acceptance of goods or services and
shall be subject to adjustment for errors, shortages, defects in the goods, or
other failure of Seller to meet the requirements of the Purchase Order. Buyer
may at any time set off any amount owed by Buyer to Seller against any amount
owed by Seller or any of its affiliated companies to Buyer. Partial shipments
must be invoiced separately.
3. CASH DISCOUNTS - Time in connection with any discount offered will be
calculated from (I) the scheduled delivery date, (ii) the date of actual
delivery, or (iii) the date an acceptable invoice is received, whichever is
latest. For the purpose of earning the discount, payment is deemed to be made
on the date of mailing of the Buyer's check.
4. TAXES - Unless otherwise specified, the agreed prices include all applicable
federal, state, and local taxes. All such taxes shall be stated separately on
Seller's invoice.
5. PRICES - Seller hereby agrees and represents that prices charged for goods
or services provided hereunder are not in excess of prices charged other
customers of Seller for orders of similar quantities of substantially similar
goods or services on comparable terms.
6. ODC ELIMINATION - (a) In the event Seller's goods are manufactured with or
contain Class I ODC's as defined under Section 602 of the Federal Clean Air Act
(42 USC Section 7671 a (a)) and implementing regulations, or if Seller suspects
that such a condition exists, Seller shall notify Buyer prior to performing any
work against this order. Buyer reserves the right to terminate all orders for
such goods without penalties. (b) Buyer reserves the right to return any and
all goods delivered which are found to contain or have been manufactured with
Class I ODC's. Buyer reserves the right to terminate any outstanding orders for
such goods without penalties. Seller shall reimburse Buyer all monies paid to
Seller and all additional costs incurred by Buyer in purchasing and returning
such goods.
7. DELIVERY - (a) Time is of the essence. Failure to deliver as scheduled shall
constitute default. (b) Buyer will pay only for maximum quantities ordered.
Overshipments will be held at Seller's risk and expense for a reasonable time
awaiting shipping instructions. Return shipping charges for excess quantities
will be at Seller's expense. (c) No partial delivery shall be made unless Buyer
has given prior consent. (d) No delivery shall be made hereunder prior to the
date or dates shown unless Buyer has given prior consent.
8. PACKING AND SHIPMENT - Unless otherwise specified, when the price of this
order is based on the weight of the ordered goods, such price is to cover net
weight of goods ordered only, and no charges will be allowed for boxing,
crating, handling damage, carting, drayage, storage, or other packing
requirements. Unless otherwise specified, all goods shall be packed, packaged,
marked, and otherwise prepared for shipment in a manner which is (i) in
accordance with good commercial practice, (ii) acceptable to common carriers for
shipment at the lowest rate for the particular goods and in accordance
<PAGE>
with I.C.C. regulations and (iii) adequate to insure safe arrival of the goods
at the named destination. Seller shall mark all containers with necessary
lifting, handling, and shipping information and also purchase order numbers,
date of shipment, and the names of the consignee and consignor. An itemized
packaging sheet must accompany each shipment.
9. RESPONSIBILITY FOR GOODS - Notwithstanding any prior inspections, and
irrespective of the F.O.B. point named herein, the Seller shall bear all risks
of loss, damage, or destruction to the goods called for hereunder until final
acceptance by Buyer at destination. Further, the Seller shall also bear the
same risks with respect to any goods rejected by Buyer provided, however, that
in either case, the Buyer shall be responsible for any loss occasioned by the
gross negligence of its employees acting within the scope of their employment.
10. QUALITY ASSURANCE - (a) All goods purchased hereunder shall be subject to
inspection and test by Buyer to the extent practicable at all times and places,
including the period of manufacture and in any event, prior to final acceptance.
If inspection or test is made by Buyer on Seller's premises, Seller, without
additional charge, shall provide all reasonable facilities and assistance for
the safety and convenience of Buyer's inspectors. No preliminary inspection or
test shall constitute acceptance. Records of all inspection work shall be kept
complete and available to Buyer during the performance of this order and for
such further period as the Buyer may determine. (b) In case any goods are
defective in material or workmanship, or otherwise not in conformity with the
requirements of this order, Buyer shall have the right either to reject, require
correction, or accept such goods with an adjustment in price. Any goods which
have been rejected or required to be corrected shall be replace or corrected by
and at the expense of the Seller promptly after notice. If, after being
requested by Buyer, the Seller fails to promptly replace or correct any
defective goods within the delivery schedule, Buyer may (i) by contract or
otherwise, replace or correct such goods and charge to the Seller the cost
occasioned thereby; (ii) terminate this order for default in accordance with the
clause hereof entitled "TERMINATION FOR DEFAULT"; (iii) and require an
appropriate reduction in price. (c) The Seller shall provide and maintain a
quality assurance program which is acceptable to Buyer.
11. WARRANTY - (a) Seller warrants that all goods and services delivered
hereunder shall be free from defects in workmanship, material, and manufacture;
shall comply with the requirements of this contract, including any drawings or
specifications incorporated herein or samples furnished by Seller; and, where
design is Seller's responsibility, shall be free from defects in design. Seller
further warrants all goods purchased hereunder shall be of merchantable quality
and shall be fit and suitable for the purpose intended by Buyer. The foregoing
warranties shall constitute conditions and are in addition to all other
warranties, whether expressed or implied, and shall survive any delivery,
inspection, acceptance, or payment by Buyer. (b) If any goods or services
delivered hereunder do not meet the warranties specified herein or otherwise
applicable, Buyer may, at its option (I) require Seller to correct at no cost to
Buyer any defective or nonconforming goods or services by repair or replacement,
or (ii) return such defective or nonconforming goods at Seller's expense to
Seller and recover from Seller the order price thereof, or (iii) correct the
defective or nonconformant goods or services itself and charge Seller with the
cost of such correction. The foregoing remedies are in addition to all other
remedies at law or in equity or under this order. All warranties shall run to
Buyer and to its customers. (c) Buyer's approval of Seller's material or
design shall not relieve Seller of the warranties set forth in this clause, nor
shall waiver by Buyer of any drawing or specification requirement for one or
more of the goods constitute a waiver of such requirements for the remaining
goods to be delivered hereunder unless so stated by Buyer in writing. The
provisions of this clause shall not limit or affect the rights of Buyer under
the clause entitled "QUALITY ASSURANCE".
12. CHANGES - Buyer may at anytime, by a written order and without notice to
sureties or assignees, suspend performance hereunder, increase or decrease the
order quantities, or make changes within the general scope of this order in any
one or more of the following:
(a) applicable drawings, designs, or specification
(b) method of shipment or packing, and/or
(c) place and date of delivery.
<PAGE>
If any such change causes an increase or decrease in the cost of or time
required for performance of the Purchase Order, an equitable adjustment shall be
made in the Purchase Order price or delivery schedule, or both, and the order
shall be modified in writing accordingly. No claim by Seller for adjustment
hereunder shall be valid unless asserted within twenty (20) days from the date
of receipt by Seller of the notification of change, provided, however, that such
period may be extended upon the written approval of Buyer. However, nothing in
this clause shall excuse Seller from proceeding with the order as changed or
amended.
13. TERMINATION FOR DEFAULT - (a) Buyer may, by notice, terminate this Purchase
Order in whole or in part (i) if Seller fails to deliver goods or services on
agreed delivery schedules; (ii) if Seller fails to replace or correct defective
goods or services; (iii) if Seller fails to perform any other obligations or;
(iv) if Seller becomes insolvent. (b) In the event of termination pursuant to
this Section:
(i) Seller shall continue to supply any portion of this Purchase Order not
terminated.
(ii) Seller shall be liable for additional costs, if any, for the purchase of
such similar goods and services to cover such default;
(iii) At Buyer's request Seller will transfer title and deliver to Buyer (1) any
completed goods (2) any partially completed goods and (3) all unique materials.
Prices for partially completed goods and unique materials so accepted shall be
negotiated. However, such prices shall not exceed the Agreement price per item.
(c) Buyer's rights and remedies herein are in addition to any other rights and
remedies provided by law or in equity.
14. TERMINATION FOR CONVENIENCE - (a) Buyer may terminate, for convenience, work
under this Purchase Order in whole or in part, at any time by written or
electronic notice. Upon any such termination Seller shall, to the extent and at
the time specified by Buyer, stop all work on this Purchase Order, place no
further orders hereunder, terminate work under orders outstanding hereunder,
assign to Buyer all Seller's interests under terminated sub-contracts and
orders, settle all claims thereunder after obtaining Buyer's approval, protect
all property in which Buyer has or may acquire an interest, and transfer title
and make delivery to Buyer of all goods, materials, work in process, or other
things held or acquired by Seller in connection with the terminated portion of
this Purchase Order. Seller shall proceed promptly to comply with Buyer's
directions respecting each of the foregoing without awaiting settlement or
payment of its termination claim. (b) Within six (6) months from such
termination, Seller may submit to Buyer its written claim for termination
charges, in the form and with supporting data and detail prescribed by Buyer.
No profit shall be allowed if it appears Seller would have sustained a loss on
the Purchase Order. Failure to submit such claim with such items shall
constitute a waiver of all claims and a release of all Buyer's liability arising
out of such termination. (c) The parties may agree upon the amount to be paid
Seller for such termination. If they fail to agree, Buyer shall pay Seller the
amount due for goods delivered prior to termination and in addition thereto but
without duplication, shall pay the following amounts:
(I) The contract price for all goods completed in accordance with this Purchase
Order and not previously paid for.
(ii) The actual costs for work in process incurred by Seller which are properly
allocable or apportionable under recognized commercial accounting practices to
the terminated portion of this Purchase Order and a sum constituting a fair and
reasonable profit on such costs. If it appears Seller would have sustained a
loss on the Purchase Order, no profit shall be allowed under this Subparagraph
(ii), and an adjustment shall be made reducing the amount of the settlement to
reflect the indicated rate of loss.
(iii) The reasonable costs of Seller in making settlement hereunder and in
protecting goods to which Buyer has or may acquire an interest.
(d) Payments made under subparagraphs 14(c)(i) and 14(c)(ii) shall not exceed
the aggregate price specified in this order, less payment otherwise made or to
be made. Buyer shall have no obligation to pay for goods lost, damaged, stolen
or destroyed prior to delivery to Buyer. (e) The foregoing paragraphs (a) to
(d) inclusive, shall be applicable only to a termination for Buyer's convenience
and shall not affect or impair any right of Buyer to terminate this order for
Seller's default in the performance thereof.
15. NON-DISCLOSURE OF CONFIDENTIAL MATTER/BUYER'S PROPERTY - (a) All
specifications, drawings, samples, data, technical information, tools, equipment
and other materials furnished or paid for by Buyer, or amortized in the unit
price of items purchased by Buyer, shall (I) be kept
<PAGE>
confidential and not to be disclosed to third parties, (ii) remain or become
Buyer's property, (iii) be used by Seller exclusively for Buyer's orders, (iv)
be clearly marked as Buyer's property and segregated when not in use, (v) be
kept in good working condition at Seller's expense, and (vi) be returned to
Buyer promptly upon request. Seller shall insure Buyer's property and be liable
for loss or damage while in Sellers's possession or control, ordinary wear and
tear excepted. (b) Goods purchased hereunder with the Buyer's specifications or
drawings shall not be quoted for sale to others without the Buyer's written
authorization.
16. PATENTS, ROYALTIES AND ENCUMBRANCES - All goods must be free from liability
of royalties, patent rights, and mechanics' liens or other encumbrances, and
Seller agrees to defend and indemnify the Buyer against all claims, demands,
costs, and actions for actual or alleged infringements of patent, copyright or
trade secret rights in the use, sale, or resale of said goods, except to the
extent such infringement was unavoidably caused by Seller's compliance with a
detailed design furnished and required by Buyer.
17. PATENT LICENSE - Seller, as part consideration for this Purchase Order and
without further cost to Buyer, hereby grants to Buyer an irrevocable, non-
exclusive, paid-up right and license to make, have made, use and sell any
inventions made by or for Seller in the performance of this Purchase Order. In
addition, Buyer shall be entitled to license Buyer's customers to use such
inventions during the operation of Buyer's products.
18. INSURANCE - Seller shall maintain (1) comprehensive general liability
insurance covering bodily injury, property damage, contractual liability,
products liability and completed operations, (2) Worker's Compensation and
employer's liability insurance, and (3) auto insurance, in such amounts as are
necessary to insure against the risks of Seller's operations. Upon request,
Seller shall furnish to Buyer certificates evidencing such coverage. Seller
shall notify Buyer at least thirty (30) days prior to the cancellation or change
of any of the foregoing policies.
19. TOOLS AND DOCUMENTS - Unless otherwise agreed in writing, special dies,
tools, patterns and drawings used in the manufacture of goods herein ordered
shall be furnished by and at the expense of the Seller.
20 SUBCONTRACTING - Seller shall not subcontract for completed or substantially
completed goods or services supplied to Buyer without prior written approval of
Buyer.
21. ASSIGNMENTS - No right or obligation under this order shall be assigned by
Seller without the prior written consent of Buyer, and any purported assignment
without such consent shall be void. Buyer may assign this order at any time if
such assignment is considered necessary by Buyer in connection with a sale of
Buyer's assets or a transfer of its obligation.
22. GRATUITIES - Seller warrants that is has not offered or given and will not
offer or give to any employee, agent, or representative of Buyer any gratuity.
Any breach of this warranty shall be material breach of each and every contract
between Buyer and Seller.
23. NOTICE OF LABOR DISPUTES - Whenever an actual or potential labor dispute is
delaying or threatens to delay the timely performance of this Purchase Order,
Seller will immediately notify Buyer of such dispute and furnish all relevant
details.
24. INSOLVENCY - The insolvency or adjudication of bankruptcy, the filing of a
voluntary petition, or the making of an assignment for the benefit of creditors,
by either party, shall be a material breach hereof.
25. COMPLIANCE WITH LAWS - Seller warrants that no law, rule, or ordinance of
the United States, a state, or any other governmental agency has been violated
in supplying the goods or services ordered herein.
<PAGE>
26. WAIVER - In the event Buyer fails to insist on performance of any of the
terms and conditions, or fails to exercise any of its rights or privileges
hereunder, such failure shall not constitute a waiver of such terms, conditions,
rights or privileges.
27. EQUAL EMPLOYMENT OPPORTUNITY - Seller represents and agrees that it is in
compliance with Executive Order 11246 and implementing regulations unless
exempted.
28. GOVERNMENT CONTRACTS - If this Purchase Order is issued in connection with
direct performance of a Government prime contract or subcontract, then the
flowdown Federal Acquisition Regulations clauses (and any applicable agency
supplements thereto) in effect on the date of this Purchase Order are
incorporated herein by reference. The contract number of the prime contract or
subcontract is listed on the face of this Purchase Order.
29. LIMITATION OF LIABILITY - In no event shall Buyer be liable for any
special, indirect, incidental, consequential, or contingent damages, whether or
not Buyer has been advised of the possibility of such damages.
30. INDEMNITY BY SELLER -Seller shall defend, indemnify and hold harmless Buyer
from and against any and all claims, suits, losses, and liabilities and the
associated costs and expenses (including attorney's fees), caused in whole or in
part by Seller's breach of any term or provision of this Agreement, or any
negligent, grossly negligent or intentional acts, errors or omissions by Seller,
its employees, officers, agents, or representatives in the performance of this
Agreement.
31. APPLICABLE LAW - This Purchase Order shall be governed by, subject to, and
construed in accordance with the laws of the State of California, excluding
conflict law rules.
<PAGE>
EXHIBIT 11
SATCON TECHNOLOGY CORPORATION
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
For Six Months Ended
--------------------------------
March 31, 1997 March 31, 1996
----------------- -----------------
<S> <C> <C>
Calculation of Shares:
Weighted Average Shares Outstanding..................... 7,432,029 7,223,542
Net Shares Outstanding from Assumed Exercise of
stock options..................................... - -
Net Warrants Outstanding from Assumed Exercise
of Warrants....................................... - -
----------------- -----------------
Net Common Stock Equivalents Outstanding................ - -
----------------- -----------------
Weighted Average Shares - Basic......................... 7,432,029 7,223,542
----------------- -----------------
Additional Shares Assumed Exercised with Full
Dilution - Options................................ - -
Additional Shares Assumes Exercised with Full
Dilution - Warrants............................... - -
----------------- -----------------
Weighted Average Shares - Fully Diluted................. 7,432,029 7,223,542
================= =================
Calculation of Earnings per Share:
Net Income.............................................. $(960,102) $(288,796)
Basic Earnings per Share................................ $ (0.13) $ (0.04)
Fully Diluted Earnings per Share........................ $ (0.13) $ (0.04)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,676,287
<SECURITIES> 1,375,104
<RECEIVABLES> 1,647,927
<ALLOWANCES> 361,430
<INVENTORY> 250,090
<CURRENT-ASSETS> 11,008,197
<PP&E> 4,767,663<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,397,069
<CURRENT-LIABILITIES> 966,130
<BONDS> 0
0
0
<COMMON> 74,881
<OTHER-SE> 15,356,058
<TOTAL-LIABILITY-AND-EQUITY> 16,397,069
<SALES> 0
<TOTAL-REVENUES> 2,908,114
<CGS> 0
<TOTAL-COSTS> 1,349,353
<OTHER-EXPENSES> 1,908,257
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (306,937)
<INCOME-TAX> 0
<INCOME-CONTINUING> (306,937)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (306,937)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
<FN>
<F1>PP&E IS SHOWN NET OF ACCUMULATED DEPRECIATION AS REPORTED WITHIN THE FORM 10-Q
ON THE BALANCE SHEET
</FN>
</TABLE>
