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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 23, 1998
SATCON TECHNOLOGY CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 001-11512 04-2857552
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
161 First Street, Cambridge, Massachusetts 02142
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 661-0540
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On October 23, 1998, SatCon Technology Corporation (the "Company") entered
into a Securities Purchase Agreement (the "Agreement"), dated as of October 23,
1998, by and among Beacon Power Corporation, a majority-owned subsidiary of the
Company ("Beacon"), Perseus Capital, L.L.C. ("Perseus"), Duquesne Enterprises
("Duquesne"), Micro Generation Technology Fund, L.L.C. ("Micro," and together
with Perseus and Duquesne, the "Purchasers") and the Company. Pursuant to the
terms of the Agreement, (i) the Purchasers purchased from Beacon and Beacon
issued, sold and delivered to the Purchasers 1,900,000 shares (the "Shares") of
Beacon's Class D Preferred Stock, $.01 par value per share; (ii) the Purchasers
have the right to receive certain warrants to purchase shares of Beacon's common
stock, $.01 par value per share ("Beacon's Common Stock"); (iii) the Company
granted the Purchasers the right (the "Put Right") to cause the Company, in the
circumstances described below, to purchase all of the Shares and all of Beacon's
Common Stock issuable upon conversion of the Shares; and (iv) upon exercise of
the Put Right pursuant to the terms of the Agreement, the Company must pay the
consideration contemplated by the Agreement in shares of the Company's common
stock, $.01 par value per share, valued at the average fair market value for the
fifteen trading days before and after notice of exercise of the Put Right. The
aggregate consideration received by Beacon was $4,750,000. The Put Right is
exercisable within sixty days of the second, third, fourth and fifth anniversary
of the closing date of the transaction, upon certain events of bankruptcy of
Beacon and upon the occurrence of certain going private transactions involving
the Company.
Beacon was organized by the Company in May 1997 to continue the development
and distribution of the stationary, on-ground applications of the Company's fly-
wheel energy storage technology. A fly-wheel energy storage system acts as a
mechanical battery and has applications in a variety of markets requiring an
uninterruptible power source, including the cable television and
telecommunications markets.
The Shares were not registered under the Securities Act of 1933, as amended
(the "Securities Act") but the Purchasers entered into registration rights
agreements with the Company and Beacon.
The terms of the Agreement were determined on the basis of arms-length
negotiations. Prior to the execution of the Agreement, neither the Company nor
Beacon had any material relationship with Perseus or Micro. In May 1997,
Duquesne entered into agreements with the Company and Beacon pursuant to which,
among other things, Duquesne will act as exclusive distributor of Beacon's
products, subject to certain exceptions, in seven Mid-Atlantic States and the
District of Colombia.
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This report may contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended, which reflect the Company's current judgment on certain
issues. Because such statements apply to future events, they are subject to
risks and uncertainties that could cause the actual results to differ
materially. Important factors which could cause actual results to differ
materially are described in the Company's reports on Forms 10-K and 10-Q on file
with the Securities and Exchange Commission.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements.
None.
(b) Pro forma financial information.
None.
(c) Exhibits.
The Exhibits to this report are listed in the Index to Exhibits
set forth on page 4 hereof.
SIGNATURES
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 hereunto duly authorized.
Date: October 28, 1998 SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
___________________________________________
David B. Eisenhaure
President, Chief Executive Officer and
Chairman of the Board of Directors
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INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -------
10.14 Securities Purchase Agreement, dated as of October 23, 1998, by
and among Beacon Power Corporation, Perseus Capital, L.L.C., Duquesne
Enterprises, Micro Generation Technology Fund, L.L.C. and SatCon
Technology Corporation.
10.15 Amended and Restated License Agreement, dated as of October 23,
1998, by and among SatCon Technology Corporation and Beacon Power
Corporation.
10.16 Registration Rights Statement, dated as of October 23, 1998, by
and among Beacon Power Corporation, Perseus Capital, L.L.C., Duquesne
Enterprises, Micro Generation Technology Fund, L.L.C. and SatCon
Technology Corporation, setting forth certain registration rights
granted by SatCon Technology Corporation.
10.17 Registration Rights Statement, dated as of October 23, 1998, by
and among Beacon Power Corporation, Perseus Capital, L.L.C., Duquesne
Enterprises, Micro Generation Technology Fund, L.L.C. and SatCon
Technology Corporation, setting forth certain registration rights
granted by Beacon Power Corporation.
<PAGE>
Exhibit 10.14
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement") entered into as of October
23, 1998, by and among Beacon Power Corporation, a Delaware corporation (the
"Company"), Perseus Capital, L.L.C., a Delaware limited liability company
("Perseus"), Duquesne Enterprises, a Pennsylvania corporation ("Duquesne"),
Micro Generation Technology Fund, L.L.C., a Delaware limited liability company
("Micro," and together with Perseus and Duquesne, the "Purchasers"), and SatCon
Technology Corporation, a Delaware corporation ("SatCon"). Certain capitalized
terms used in this Agreement are defined in Exhibit A attached hereto.
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RECITALS
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A. The Company desires to raise capital to finance its business
operations and in furtherance thereof desires to issue and sell to the
Purchasers the securities specified herein, and the Purchasers are
willing to acquire such securities, all on the terms and subject to
the conditions set forth in this Agreement.
B. SatCon, an existing shareholder of the Company, desires that the
Company issue and sell such securities to the Purchasers and that the
Purchasers acquire such securities. In furtherance thereof, and to
induce the Purchasers to acquire such securities and consummate the
other transactions contemplated by this Agreement, SatCon is willing
to execute and deliver this Agreement and each of the Related
Agreements to which it is a party and to perform its obligations
hereunder and thereunder.
AGREEMENT
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In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. Authorization and Sale of the Preferred Shares.
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1.1 Authorization; Amended and Restated Certificate of Incorporation.
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The Company has authorized the issuance and sale pursuant to the terms and
conditions hereof of 1,900,000 shares of its Class D Preferred Stock (the
"Preferred Shares"), having the rights, restrictions, privileges and preferences
set forth in the Second Amended and Restated Certificate of Incorporation
attached hereto as Exhibit B (the "Restated Certificate").
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1.2 Issuance and Sale. On the terms and subject to the conditions
-----------------
hereof, at the Closing, (a) the Company will issue and sell to Perseus, and
Perseus will purchase from the Company, 1,200,000 of the Preferred Shares, at a
purchase price of $2.50 per share, (b) the Company will issue and sell to
Duquesne, and Duquesne will purchase from the Company, 400,000 of the Preferred
Shares, at a purchase price of $2.50 per share and (c) the Company will
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issue and sell to Micro, and Micro will purchase from the Company, 300,000 of
the Preferred Shares, at a purchase price of $2.50 per share. The Company's
agreement with each of the Purchasers hereunder is a separate agreement and the
sale of Preferred Shares to each of the Purchasers is a separate sale; provided,
however, that no Purchaser shall be obligated to proceed with its purchase of
Preferred Shares hereunder unless the each of the other Purchasers
simultaneously consummates its purchase of Preferred Shares hereunder.
1.3 Warrants. As a further inducement to the Purchasers to acquire
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the Preferred Shares, the Company hereby agrees to issue and deliver the
following Warrants:
(a) In the event the Company has not completed a Qualified
Financing within one year after the Closing Date, the Company, on the next
succeeding Business Day, shall issue to Perseus Warrants substantially in the
forms attached hereto as Exhibits C-1, C-2 and C-3, shall issue to Duquesne
------------ --- ---
Warrants substantially in the forms attached hereto as Exhibits D-1, D-2 and D-3
------------ --- ---
and shall issue to Micro Warrants substantially in the forms attached hereto as
Exhibits E-1, E-2 and E-3.
- ------------ --- ---
(b) In the event the Company has not completed a Qualified
Financing within 18 months after the Closing Date, the Company, on the next
succeeding Business Day, shall issue to Perseus additional Warrants
substantially in the forms attached hereto as Exhibits C-1, C-2 and C-3 (except
------------ --- ---
that the number of shares of Warrant Stock in the case of each such Warrant
shall be 225,000 shares, subject to adjustment as provided therein), shall issue
to Duquesne additional Warrants substantially in the forms attached hereto as
Exhibits D-1, D-2 and D-3 and shall issue to Micro additional Warrants
- ------------ --- ---
substantially in the forms attached hereto as Exhibits E-1, E-2 and E-3.
------------ --- ---
1.4 Put Option.
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Subject to the last sentence of this Section 1.4, after the occurrence of a
Put Event or within the first sixty days after the second anniversary of the
Closing Date and each succeeding anniversary of the Closing Date, each Purchaser
shall have the right (a "Put Right") to cause SatCon to purchase all of the
Preferred Shares and warrants issued to such Purchaser pursuant to this
Agreement, all Preferred Shares or other capital stock of the Company issued in
payment of dividends on such Preferred Shares and all Conversion Shares issued
to such Purchaser (collectively, the "Put Shares") for a consideration (the "Put
Consideration") equal to the sum of (i) the stated value of (A) such Preferred
Shares owned by such Purchaser and (B) the Preferred Shares that were converted
into Conversion Shares plus (ii) all accrued but unpaid dividends (whether or
not declared) on such Preferred Shares. A Purchaser may exercise its Put Right
by delivering to SatCon a written notice of such exercise, which notice, once
given, shall not be revoked without SatCon's consent. Consummation of the
purchase of the Put Shares by SatCon shall take place at a closing to occur at
the principal offices of SatCon on a date chosen by SatCon (with at least three
Business Days' advance written notice to the Purchaser exercising such Put
Right) no later than 25 days after the date it receives such Put Notice. At
such closing, the Purchaser exercising such Put Right shall deliver to SatCon
the certificates representing the Put Shares duly endorsed in blank, and SatCon
shall deliver to such Purchaser the Put Consideration in
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shares of SatCon Common Stock. The number of shares to be issued in payment of
such Put Consideration shall equal the quotient obtained by dividing the Put
Consideration by the Average Market Price. No fractional share shall be issued
in such payment; in lieu of issuing any such fractional share, SatCon shall pay
to such Purchaser cash in an amount equal to the amount of such fraction
multiplied by the Average Market Price. The Put Rights set forth in this
Section 1.4 shall terminate, if not previously exercised, at 5 p.m. New York
time on the earlier of (x) the fifth anniversary of the Closing Date, (y) the
date the Company's Common Stock is listed on the New York Stock Exchange or the
Nasdaq National Market or (z) as to the Put Rights of a Purchaser resulting from
a Put Event, the 100th day after such Purchaser receives a written notice from
SatCon delivered after the occurrence of such Put Event requesting that such
Purchaser either exercise or waive its Put Rights resulting from such Put Event.
1.5 Registration Rights. The Purchasers shall have the registration
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rights specified in Exhibits F and G, hereto.
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2. Closing.
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2.1 Closing. The closing (the "Closing") of the sale and purchase of
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the Preferred Shares under this Agreement shall take place at the offices of
Arnold & Porter, 555 Twelfth Street, N.W. Washington DC at 10:00 a.m. on October
23, 1998, or at such other time, date and place as are mutually agreeable to the
Company and to the Purchasers. The date of the Closing is hereinafter referred
to as the "Closing Date."
2.2 Deliveries. At the Closing, the Company will deliver to the
----------
Purchasers certificates registered in the Purchasers' respective names
representing the aggregate number of Preferred Shares issued and sold by the
Company to each Purchaser, as determined pursuant to Section 1.2 above, and each
Purchaser will deliver to the Company the purchase price for such Preferred
Shares by wire transfer thereof to the Company Account (or in the case of Micro,
by the delivery to the Company of a check made payable to the order of the
Company). The parties shall also deliver all documents required to be delivered
at the Closing pursuant to Section 2.3 hereof.
2.3 Conditions to Closing.
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(a) Conditions to Obligations of the Purchasers. The obligations
-------------------------------------------
of each Purchaser to purchase Preferred Shares at the Closing are subject to the
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived by such Purchaser:
(i) Representations and Warranties Correct; Performance of
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Obligations. The representations and warranties made by the Company in Section 3
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and by SatCon in Section 4 hereof shall have been true and correct in all
material respects when made, and shall be true and correct in all material
respects on the Closing Date with the same force and effect as if they had been
made on and as of such date, and the Company shall have performed all
obligations, covenants and agreements herein required to be performed by it on
or prior to the Closing.
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(ii) Consents and Waivers. The Company shall have obtained
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any and all consents (including all governmental or regulatory consents,
approvals or authorizations required in connection with the valid execution and
delivery of this Agreement and the Related Agreements), permits and waivers
necessary or appropriate for consummation of the transactions contemplated by
this Agreement or any Related Agreement.
(iii) Related Agreements. Each of the Related Agreements
------------------
shall have been executed and delivered by the parties thereto and the Side
Letter shall have been executed and delivered by David Eisenhaure.
(iv) Other Purchaser's Obligations. The other Purchasers
-----------------------------
shall have performed all of their obligations hereunder required to be performed
at the Closing.
(v) Amended and Restated License Agreement. SatCon and
--------------------------------------
the Company shall have executed and delivered the Amended and Restated License
Agreement.
(vi) Restated Certificate. The Restated Certificate shall
--------------------
have been filed with the Delaware Secretary of State and a certified copy
thereof shall have been delivered to each Purchaser.
(vii) Compliance Certificate. The Company shall have
----------------------
delivered to the Purchasers a certificate, executed by the President and Chief
Financial Officer of the Company, dated as of the Closing Date, certifying the
fulfillment of the conditions specified in subsections (a)(i), (ii) and (x) of
this Section 2.3.
(viii) Secretary's Certificate. The Company shall have
-----------------------
delivered to the Purchasers a certificate, executed by the Secretary of the
Company, dated as of the Closing Date, certifying the authenticity of attached
copies of the Company's Restated Certificate, Bylaws and resolutions of the
Board of Directors of the Company approving the transactions contemplated
hereby.
(ix) Opinions of Company's Counsel. The Purchasers shall
-----------------------------
have received from Hale and Dorr LLP and Dike, Bronstein, Roberts & Cushman, LLP
opinions, dated the date of the Closing, substantially in the forms attached
hereto as Exhibits H-1 and H-2, respectively.
------------ ---
(x) Payments to Gilford Securities. The Company shall
------------------------------
have no obligation to make any payments to Gilford Securities, Gilford
Securities shall hold no warrants or other securities of the Company.
(xi) Amendment to Duquesne Consulting Agreement. The
------------------------------------------
Consulting Agreement dated as of May 28, 1997 between the Company and Duquesne
shall have been amended, in form and substance satisfactory to Perseus, to
provide for the payment of all fees thereunder by delivery of Common Stock with
an agreed value of $2.50 per share.
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(xii) Other Documents. The Purchasers shall have received
---------------
such other certificates and documents as they shall have reasonably requested.
(b) Conditions to Obligations of the Company. The Company's
----------------------------------------
obligation to sell and issue the Preferred Shares at the Closing is subject to
the fulfillment on or prior to the Closing Date of the following conditions, any
of which may be waived by the Company:
(i) Representations and Warranties. The representations and
------------------------------
warranties made by each Purchaser in Section 5 hereof shall have been true and
correct when made, and shall be true and correct on such Closing Date with the
same force and effect as if they had been made on and as of such date.
(ii) Related Agreements. Each of the Related Agreements
------------------
shall have been executed and delivered by the parties hereto.
3. Representations and Warranties Relating to the Company. Except as
------------------------------------------------------
otherwise set forth in the Disclosure Schedule attached hereto as Exhibit I (the
---------
"Company Disclosure Schedule"), the Company represents and warrants to the
Purchasers as set forth below.
3.1 Organization and Good Standing. The Company is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has full corporate power and authority to carry
on its business as now conducted and as it is proposed to be conducted, and is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the nature of its business or properties makes such
qualification or licensing necessary, except where the failure to so qualify or
be licensed would not have a Material Adverse Effect.
3.2 Capital Structure. As of the date hereof, the authorized capital
-----------------
stock of the Company consists of the following shares, and all of the issued and
outstanding shares as hereinafter set forth have been duly authorized and
validly issued, are fully paid and nonassessable and have been offered, issued,
sold and delivered by the Company in compliance with all applicable federal and
state securities laws:
(a) Preferred Stock. A total of 8,000,007 authorized shares of
---------------
Preferred Stock, $.01 par value (the "Preferred Stock"), consisting of 5,000,000
shares designated as Class A Preferred Stock, of which 4,498,313 shares are
issued and outstanding; one share designated as Class B Preferred Stock, none of
which is issued and outstanding; six shares designated as Class C Preferred
Stock, all of which are issued and outstanding; and 3,000,000 shares designated
as Class D Preferred Stock, none of which are issued and outstanding prior to
the consummation of the transactions contemplated hereby.
(b) Common Stock. A total of 15,000,000 authorized shares of
------------
Common Stock, of which 8,424 shares are issued and outstanding.
5
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(c) Options, Warrants, Reserved Shares, Treasury Stock. Except
--------------------------------------------------
for the conversion privileges of the Class A Preferred Stock, the Class B
Preferred Stock and the Class C Preferred Stock, there are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of the
Company's capital stock or any securities convertible into or ultimately
exchangeable or exercisable for any shares of the Company's capital stock, nor
is the Company obligated in any manner to issue any shares of its capital stock
or other securities. Apart from the exceptions noted in this Section 3.2(c),
none of the Company's outstanding capital stock, or stock issuable upon exercise
or exchange of any outstanding options, warrants or rights, is subject to any
preemptive rights, rights of first refusal or other rights to purchase such
stock (whether in favor of the Company or any other person), pursuant to any
agreement or commitment of the Company. The Company holds no shares of its
capital stock in its treasury.
(d) Security Holders. Section 3.2(d) of the Company Disclosure
----------------
Schedule contains a complete and accurate list of the names of all current
stockholders of the Company and all current holders of outstanding warrants,
options, or other rights ultimately exchangeable, exercisable or convertible for
or into capital stock, segregated by the type of security held by each such
holder and setting forth the amount of such security held by such holder and, in
the case of securities, exchangeable, exercisable or convertible into Common
Stock, the amount of Common Stock into which such securities are exchangeable,
exercisable or convertible.
3.3 Power, Authorization and Validity. The Company has the corporate
---------------------------------
power, legal capacity and corporate authority to enter into and perform its
obligations under this Agreement and each of the Related Agreements to which it
is a party. The execution, delivery and performance by the Company of this
Agreement and each of the Related Agreements to which it is a party have been
duly and validly approved and authorized by all necessary corporate action on
its part. No authorization, consent, or approval, governmental or otherwise, is
necessary to enable the Company to enter into the Agreement or any Related
Agreement to which it is a party and to perform its obligations hereunder or
thereunder. This Agreement is, and each of the Related Agreements to which it
is a party when executed and delivered by the Company will be, the valid and
binding obligations of the Company, enforceable in accordance with their
respective terms.
3.4 No Violation of Existing Agreements. Neither the execution and
-----------------------------------
delivery of this Agreement or any Related Agreement to which it is a party nor
the consummation of the transactions or performance of the Company's obligations
contemplated hereby or thereby will conflict with, result in a material breach
or violation of, or cause a default under, any provision of the Company's
Certificate of Incorporation or Bylaws, each as is currently in effect, any
instrument, contract or agreement that is material to the business of the
Company or any judgment, writ, decree, order, law, statute, ordinance, rule or
regulation applicable to the Company.
3.5 Representations Regarding Preferred Shares, Conversion Shares and
--- -----------------------------------------------------------------
Warrant Shares. All corporate action has been taken on the part of the Company,
- --------------
its officers, directors and shareholders necessary for the authorization and
creation, issuance and delivery of the Preferred Shares, the Conversion Shares,
the Warrants and the Warrant Shares. The Preferred Shares, the Conversion
Shares, and the Warrant Shares when issued in compliance with the
6
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provisions of this Agreement and the Restated Certificate or the Warrants, as
the case may be, will be validly issued, fully paid and nonassessable and,
assuming the accuracy of each of the Purchasers' representation in Section 5 of
this Agreement, issued in compliance with all applicable federal and state
securities laws. None of the Preferred Shares or Warrants issued pursuant to
this Agreement, and none of the Conversion Shares or Warrant Shares are subject
to any preemptive rights, rights of first refusal, or other rights to purchase
such stock (whether in favor of the Company or any other person), pursuant to
any agreement or commitment of the Company.
3.6 No Subsidiary. The Company does not own of record or
-------------
beneficially any capital stock or equity interest or investment in any
corporation, association, partnership, limited partnership, limited liability
company, trust or other entity.
3.7 Financial Statements.
--------------------
(a) The Company's unaudited consolidated balance sheets as of
December 31, 1997 and July 31, 1998 and statements of operations, cash flows and
changes in stockholders' equity for the year ended December 31, 1997 and the
seven months ended July 31, 1998, including the notes thereto (collectively the
"Company Financial Statements"), all of which are attached to the Company
Disclosure Schedule, have been prepared in all material respects in accordance
with GAAP (except that the July 31, 1998 statements may not contain all
footnotes required by GAAP). The Company Financial Statements have been prepared
in accordance with the books and records of the Company and present fairly in
all material respects the financial position, results of operations, cash flows
and equity transactions of the Company as of and for the periods ending on their
dates. Except and to the extent reflected or reserved against in the Company
Financial Statements, the Company does not have, as of the dates of the Company
Financial Statements, any liabilities or obligations (absolute or contingent) of
a nature required to be or customarily reflected in a balance sheet (or the
notes thereto) prepared in accordance with GAAP. The reserves, if any, reflected
on the Company Financial Statements are adequate in light of the contingencies
with respect to which they are made. There has been no material change in the
Company's accounting policies except as described in the notes to the Company
Financial Statements.
(b) The Company has no debts, liabilities, or obligations in a
material amount, either individually or in the aggregate, of any nature, whether
accrued, absolute, contingent, or otherwise, and whether due or to become due,
that is not reflected or reserved against in the Company Financial Statements.
All material debts, liabilities, and obligations incurred after the date of the
Company Financial Statements were incurred in the ordinary course of business,
and are usual and normal in amount, both individually and in the aggregate.
3.8 Absence of Certain Changes and Events. Since July 31, 1998, the
-------------------------------------
Company has not:
(a) suffered any Material Adverse Change;
7
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(b) suffered any damage, destruction or loss, whether or not
covered by insurance, in an amount in excess of $50,000;
(c) granted or agreed to make any increase in the compensation
payable or to become payable by the Company to any of its officers or employees,
except for normal raises for nonexecutive personnel made in the ordinary course
of business that are usual and normal in amount;
(d) declared, set aside or paid any dividend or made any other
distribution on or in respect of the shares of capital stock of the Company or
declared or agreed to any direct or indirect redemption, retirement, purchase or
other acquisition by the Company of such shares;
(e) issued any shares of capital stock of the Company or any
warrants, rights, options or entered into any commitment relating to the shares
of capital stock of the Company;
(f) made any change in the accounting methods or practices it
follows, whether for general financial or tax purposes, or any change in
depreciation or amortization policies or rates adopted therein;
(g) sold, leased, abandoned or otherwise disposed of any real
property or any machinery, equipment or other operating property other than in
the ordinary course of its business;
(h) sold, assigned, transferred, licensed or otherwise disposed
of any patent, trademark, trade name, brand name, copyright (or pending
application for any patent, trademark or copyright), invention, work of
authorship, process, know-how, formula or trade secret or interest thereunder or
other intangible asset except in the ordinary course of its business;
(i) been involved in any dispute involving any employee which may
result in a Material Adverse Change;
(j) engaged in any activity or entered into any material
commitment or transaction (including without limitation any borrowing or capital
expenditure);
(k) incurred any material liabilities, contingent or otherwise,
either matured or unmatured (whether or not required to be reflected in
financial statements in accordance with GAAP, and whether due or to become due),
except for accounts payable or accrued salaries that have been incurred by the
Company since July 31, 1998, in the ordinary course of its business and
consistent with the Company's past practices;
(l) permitted or allowed any of its material property or assets
to be subjected to any mortgage, deed of trust, pledge, lien, security interest
or other encumbrance of
8
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any kind, except those permitted under Section 3.9 hereof, other than any
purchase money security interests incurred in the ordinary course of its
business;
(m) made any capital expenditure or commitment for additions to
property, plant or equipment individually in excess of $50,000, or in the
aggregate, in excess of $100,000;
(n) paid, loaned or advanced any amount to, or sold, transferred
or leased any properties or assets to, or entered into any agreement or
arrangement with any of its affiliates within the meaning of the rules and
regulations promulgated under the Securities Act of 1933 ("Affiliates"),
officers, directors or shareholders or, to the Company's knowledge, any
Affiliate or associate of any of the foregoing;
(o) made any amendment to or terminated any agreement that, if
not so amended or terminated, would be material to the business, assets,
liabilities, operations or financial performance of the Company;
(p) entered into any agreement in contemplation of the
transactions specified herein other than this Agreement and the Related
Agreements; or
(q) agreed to take any action described in this Section 3.8 or
outside of the ordinary course of its business or which would constitute a
breach of any of the representations or warranties contained in this Agreement.
3.9 Title to Property and Assets. The Company owns and possesses its
----------------------------
properties and assets that are material to its business free and clear of all
mortgages, deeds of trust, liens, encumbrances, security interests and claims
except as reflected in the Company Financial Statements and except for statutory
liens for the payment of current taxes that are not yet delinquent and liens,
encumbrances and security interests that arise in the ordinary course of its
business and do not affect material properties and assets of the Company. With
respect to the property and assets it leases that are material to its business,
the Company is in compliance with such leases in all material respects. The
Company holds valid leasehold interests to its material leased properties and
assets free of any liens, encumbrances or security interests of any party other
than the lessors of such property and assets. The Company's properties and
assets are in all material respects in good operating condition and repair.
3.10 Proprietary Assets.
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(a) Section 3.10(a)(i) of the Company Disclosure Schedule sets
forth, with respect to each Proprietary Asset of the Company registered with or
issued by any Governmental Body or for which an application has been filed with
any Governmental Body, (i) a brief description of such Proprietary Asset, and
(ii) the names of the jurisdictions covered by the applicable registration or
application or in which the Proprietary Asset has been issued. Section
3.10(a)(ii) of the Company Disclosure Schedule identifies and provides a brief
description of each Proprietary Asset licensed to the Company by any Person
(other than software licenses that are
9
<PAGE>
relating to unmodified commercial computer software that is generally available
in the ordinary course of business), and identifies the license agreement under
which such Proprietary Asset is being licensed to the Company. The Company has
good and marketable title to all Proprietary Assets used in or necessary for its
business as currently conducted and as proposed to be conducted, free and clear
of all material liens and other encumbrances, except for third party rights
licensed to it, as to which the Company has a valid right to use such
Proprietary Assets (all of the foregoing are referred to herein as the "Company
Proprietary Rights"). The Company is not obligated to make any material payment
to any Person for the use of any Proprietary Asset. The Company has not
developed jointly with any other Person any Proprietary Asset with respect to
which such other Person has any rights or the Company has any obligations.
(b) The Company has taken all measures required under the License
Agreement and all other reasonable and customary measures and precautions
necessary to protect and maintain the confidentiality and secrecy of all its
Proprietary Assets (except trademarks, issued patents and other Proprietary
Assets similarly known to the public and Proprietary Assets whose value would be
materially unimpaired by public disclosure) and otherwise to maintain and
protect the value of all its Proprietary Assets.
(c) Except where such infringement, misappropriation or unlawful use,
would not and could not reasonably be expected to be material in impact or
amount, either individually or in the aggregate, the Company is not infringing,
misappropriating or making any unlawful use of, and the Company has not at any
time infringed, misappropriated or made any unlawful use of, any Proprietary
Asset owned or used by any other Person. No claims or notices (in writing or
otherwise) with respect to Proprietary Assets have been communicated to the
Company: (i) to the effect that the manufacture, sale, license or use of any
Proprietary Asset or product, practice of any process or provision of any
service as now made, sold, practiced, used practiced or provided or currently
offered or proposed by the Company infringes or potentially infringes, or
constitutes a misappropriation or unlawful use of any copyright, patent, trade
secret or other intellectual property right of a third party, or (ii)
challenging the ownership or validity of any of the Company's rights to or
interest in such Proprietary Assets. The Company has received no notice to the
effect that any patents or registered trademarks, service marks or registered
copyrights held by the Company are invalid or not subsisting except for failures
to be valid and subsisting that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. To
the Company's knowledge, no other Person is infringing, misappropriating or
making any unlawful use of, and no Proprietary Asset owned or used by any other
Person infringes or conflicts with, any Proprietary Asset used in or pertaining
to the business of the Company.
(d) The Proprietary Assets owned by the Company or licensed by the
Company and identified in Section 3.10(a)(ii) of the Disclosure Schedule
constitute all the Proprietary Assets necessary, in the Company's reasonable
judgment, to enable the Company to conduct its business in the manner in which
such business has been, is being and is intended to be conducted. The Company
has not licensed any of its Proprietary Assets to any Person on an exclusive
basis and the Company has not entered into any covenant not to compete or
contract
10
<PAGE>
limiting its ability to exploit fully any of its Proprietary Assets or to
transact business in any market or geographical area or with any Person.
(e) All current and former employees of the Company have executed
and delivered to the Company an agreement (containing no exceptions to or
exclusions from the scope of its coverage relevant to the Company's business)
that is substantially identical to the form of the Employee Agreement previously
delivered to the Purchasers, and all current and former consultants and
independent contractors to the Company providing technical services relating to
the Company's Proprietary Assets have executed and delivered to the Company an
agreement (containing no exceptions to or exclusions from the scope of its
coverage relevant to the Company's business), the material provisions of which
are in substance as protective to the Company as the terms of the form of
Employee Agreement previously delivered to the Purchasers.
3.11 Contracts.
---------
(a) Section 3.11(a) of the Company Disclosure Schedule identifies
each material license agreement, development agreement, manufacturing agreement,
distribution agreement, OEM agreement or other agreement to which the Company is
a party.
(b) (i) The Company has no agreements, contracts or
commitments that call for prospective fixed and/or contingent payments or
expenditures by or to the Company of more than $50,000 other than those entered
into in the ordinary course of its business concerning the sale of Company
Products;
(ii) The Company has no purchase agreement, contract or
commitment that calls for fixed and/or contingent payments by the Company that
are in excess of the normal, ordinary and usual requirements of the Company's
business;
(iii) There is no outstanding sales contract, commitment or
proposal (including, without limitation. development projects) of the Company
that is reasonably likely to result, either individually or in the aggregate, in
any Material Adverse Change to the Company upon completion or performance
thereof;
(iv) The Company has no outstanding agreements, contracts
or commitments with officers, employees, agents, consultants, advisors,
salesmen, sales representatives, distributors or dealers that are not cancelable
by it on notice of not longer than thirty days and without liability, penalty or
premium exceeding $50,000 in any single instance or $75,000 in the aggregate;
(v) The Company has not entered into any employment,
independent contractor or similar agreement, contract or commitment that is not
terminable on not more than thirty days' notice without penalty or liability of
any type, including without limitation severance or termination pay;
11
<PAGE>
(vi) The Company has no collective bargaining or union
agreements, contracts or commitments;
(vii) The Company is not restricted by agreement from
competing with any person, from carrying on its business anywhere in the world
or otherwise operating its business in any manner it deems appropriate;
(viii) The Company has not guaranteed any obligations of
other Persons or made any agreements to acquire or guarantee any obligations of
other Persons; and
(ix) The Company has no outstanding loan or advance to any
Person; nor is it party to any line of credit, standby financing, revolving
credit or other similar financing arrangement of any sort that would permit the
borrowing by the Company of any sum not reflected in the Company Financial
Statements.
(c) The Company has delivered to the Purchasers accurate and
complete copies of all written contracts identified in Section 3.11(a) and (b)
of the Company Disclosure Schedule, including all amendments thereto. Sections
3.11(a) and (b) of the Company Disclosure Schedule contain a complete list of
all the material contracts to which the Company is a party. The Company has not
entered into any material oral contracts. Each contract identified in Sections
3.11(a) and (b) of the Company Disclosure Schedule (a "Company Material
Contract") is valid and in full force and effect, is enforceable by the Company
in accordance with its terms, subject to (i) laws of general application
relating to insolvency and the relief of debtors and (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies, and will
continue to be so immediately following the Closing Date. No such contract,
agreement or instrument contains any liquidated damages, penalty or similar
provision. To the Company's knowledge, no party to any such contract, agreement
or instrument intends to cancel, withdraw, modify or amend such contract,
agreement or instrument.
(d) (i) The Company has not violated or breached, or committed
any default under, any Company Material Contract in any material respect, and,
to the Company's knowledge, no other Person has violated or breached, or
committed any default under, any Company Material Contract in any material
respect; and
(ii) to the Company's knowledge, no event has occurred, and
no circumstance or condition exists, that (with or without notice or lapse of
time) will, or could reasonably be expected to, (A) result in a material
violation or breach of any of the provisions of any Company Material Contract,
(B) give any Person the right to declare a default or exercise any remedy under
any Company Material Contract, (C) give any Person the right to accelerate the
maturity or performance of any Company Material Contract or (D) give any Person
the right to cancel, terminate or modify any Company Material Contract.
(e) None of the Company Material Contracts contains any
provision which would require the consent of third parties to the sale and
issuance of the Preferred Shares or
12
<PAGE>
any of the other transactions as contemplated hereunder or under any of the
Related Agreements or which would be altered as a result of such transaction.
3.12 Registration Rights. The Company has not granted or agreed to
-------------------
grant to any person or entity any rights (including piggyback registration
rights) to have any securities of the Company registered with the U.S.
Securities and Exchange Commission ("SEC") or any other governmental authority.
3.13 Taxes.
-----
(a) The Company has fully and timely, properly and accurately
filed all tax returns and reports required to be filed by it, including all
federal, foreign, state and local tax returns and estimates for all years and
periods (and portions thereof) for which any such returns, reports or estimates
were due. All such returns, reports and estimates were prepared in the manner
required by applicable law in all material respects. All income, sales, use,
occupation, property or other taxes or assessments due from the Company prior to
the Closing Date have been paid or will be paid on or before the Closing Date.
There are no pending assessments, asserted deficiencies or claims for additional
taxes that have not been paid. The reserves for taxes, if any, reflected on the
Company Financial Statements are adequate, and there are no tax liens on any
property or assets of the Company (other than liens for taxes not yet due and
payable). There have been no audits or examinations of any tax returns or
reports of the Company by any Governmental Body. No state of facts exists or has
existed which would constitute grounds for the assessment of any penalty or any
further tax liability in a material amount, either individually or in the
aggregate, beyond that shown on the respective tax reports, returns or
estimates. There are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any federal, foreign, state or
local tax return or report for any period.
(b) All taxes that the Company has been required to collect or
withhold have been duly withheld or collected and, to the extent required, have
been paid to the proper taxing authority.
(c) Other than the Tax Sharing Agreement effective as of May 30,
1997 with SatCon (the "Tax Sharing Agreement"), the Company is not a party to
any tax-sharing agreement or similar arrangement with any other Person.
(d) At no time has the Company been included in the federal
consolidated income tax return of any affiliated group of corporations.
(e) Other than the Tax Sharing Agreement, the Company is not
currently under any contractual obligation to pay to any Governmental Body any
tax obligations of, or with respect to any transaction relating to, any other
Person or to indemnify any other Person with respect to any tax, other than
pursuant to this Agreement.
3.14 Employees. The Company is not a party to any collective
---------
bargaining agreements and, to its knowledge, there are no attempts to organize
the employees of the
13
<PAGE>
Company. Section 3.14 of the Company Disclosure Schedule lists all employee
benefit plans and programs of the Company and employment contracts, arrangements
and understandings with its employees, other than those terminable, without
penalty, at will or within thirty days. Copies of any of the foregoing plans,
programs, contracts, arrangements or understandings have been made available to
the Purchasers or their counsel. To the knowledge of the Company, no employee
of the Company is subject to any judgment, decree or order of any court or
administrative agency, or any other restriction that would materially interfere
with the use of his or her best efforts to carry out his or her duties for the
Company or that would conflict with the Company's business as currently
conducted. The Company has received no written notice from any former employer
that an employee of the Company has prior obligations to a former employer that
would interfere or conflict with such employee's ability to perform his or her
intended services for the Company. To the Company's knowledge, no employee or
advisor of the Company is or is now expected to be in violation of any term of
any employment contract, disclosure agreement, proprietary information and
inventions agreement or any other contract or agreement or any restrictive
covenant or any other common law obligation to a former employer relating to the
right of any such employee to be employed by the Company because of the nature
of the business conducted or to be conducted by the Company or to the use of
trade secrets or proprietary information of others, and the employment of the
Company's employees does not subject the Company or the Company's shareholders
to any liability. There is neither pending nor, to the Company's knowledge,
threatened any actions, suits, proceedings or claims, or, to its knowledge, any
basis therefor or threat thereof with respect to any contract, agreement,
covenant or obligation referred to in the preceding sentence.
3.15 Insurance. The Company maintains and keeps in force with good
---------
and responsible insurance companies fire, public liability, property damage and
other insurance in such amounts and with such coverage or risks as are customary
for similar businesses and adequate to the needs of the Company. The Company
Disclosure Schedule sets forth a list of such insurance, stating the name and
address of the insurance provider and the amount of insurance. The Company has
not done anything, either by way of action or inaction, that might reasonably be
expected to invalidate any of its insurance policies as a whole or in part.
3.16 Compliance with Environmental Requirements. The Company has
------------------------------------------
obtained all material permits, licenses and other authorizations which are
required under federal, foreign, state and local laws applicable to the Company
and relating to pollution or protection of the environment, including laws or
provisions relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials, substances, or wastes
into air, surface water, groundwater, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials, substances, or wastes. The Company is in material compliance with
all terms and conditions of the required permits, licenses and authorizations.
The Company is not aware of, nor has the Company received written notice of, any
conditions, circumstances, activities, practices, incidents, or actions which
might reasonably form the basis of a claim, action, suit, proceeding, hearing,
or investigation of, by, against or relating to the Company, based on or related
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or
14
<PAGE>
handling, or the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, or hazardous or toxic substance,
material or waste.
3.17 Compliance With Corporate Instruments and Laws. The Company is
----------------------------------------------
not in violation of any provisions of its Certificate of Incorporation or Bylaws
as currently in effect. The Company is in compliance in all material respects
with all applicable laws, statutes, rules, and regulations of all governmental
and regulatory authorities which are applicable and the compliance with which is
material to the Company or its assets or business. The Company has complied in
all material respects at all times with any and all applicable federal, state
and foreign laws, rules, regulations, proclamations and orders relating to the
importation or exportation of its products. All licenses, franchises, permits
and other governmental authorizations held by the Company and which are material
to its business are valid and sufficient in all respects for the business
presently carried on by the Company.
3.18 Litigation. There is no suit, action, proceeding, claim or
----------
investigation pending or, to the Company's knowledge, threatened against the
Company before any court or administrative agency which could have a Material
Adverse Effect or which questions or challenges the validity of this Agreement
or any Related Agreement. There is no judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against the Company.
3.19 Corporate Documents. The Company has furnished to the Purchasers
-------------------
or their counsel for their examination true and complete copies of the following
documents: (i) copies of its Certificate of Incorporation and Bylaws, each as
currently in effect, (ii) minute books containing required records setting forth
proceedings, consents, actions, and meetings of its shareholders, board of
directors and any committees thereof, and (iii) all material permits, orders,
and consents issued by any regulatory agency with respect to the Company, or any
securities of the Company, and all applications for such permits, orders, and
consents. The corporate minute books, stock certificate books, stock registers
and other corporate records of the Company are complete and accurate in all
material respects, and the signatures appearing on all documents contained
therein are the true signatures of the persons purporting to have signed the
same. All actions reflected in such books and records were duly and validly
taken in compliance in all material respects with the laws of the applicable
jurisdiction.
3.20 No Brokers. Neither the Company nor, to the Company's knowledge,
----------
any Company shareholder is obligated for the payment of fees or expenses of any
broker or finder in connection with the origin, negotiation or execution of this
Agreement or any Related Agreement or in connection with any transaction
contemplated hereby or thereby.
3.21 Related Party Transactions.
--------------------------
(a) None of the Company's Affiliates, officers, directors,
shareholders or employees, or any Affiliate of any of such Person, has any
material interest in any property, real or personal, tangible or intangible,
including Proprietary Assets used in or pertaining to the business
15
<PAGE>
of the Company, except for the normal rights of a stockholder, or, to the
knowledge of the Company, any supplier, distributor or customer of the Company.
(b) Except for the Agreement and the Related Agreements, there
are no agreements, understandings or proposed transactions between the Company
and any of its officers, directors, employees, Affiliates, or, to the Company's
knowledge, any Affiliate thereof.
(c) To the best of the Company's knowledge, no employee, officer
or director of the Company has any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation that competes
with the Company, other than SatCon or Duquesne, except that employees, officers
or directors of the Company may own stock in publicly traded companies that may
compete with the Company. To the Company's knowledge, no member of the immediate
family of any officer or director of the Company is directly or indirectly
interested in any material contract with the Company.
3.22 Disclosure. The statements by the Company contained in this
----------
Agreement, the exhibits hereto, and the certificates and documents required to
be delivered by the Company to the Purchasers under this Agreement, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements contained herein and
therein not misleading in light of the circumstances under which such statements
were made.
3.23 Securities Act. Subject to the accuracy of the Purchasers'
--------------
representations in Section 5 hereof, the offer, sale and issuance of the
Preferred Shares and the Warrants in conformity with the terms of this Agreement
and the issuance of Conversion Shares upon conversion of the Preferred Shares
and the Warrant Shares upon exercise or conversion of the Warrants constitute or
will constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act of 1933, as amended, and the qualification or
registration requirements of any applicable state securities laws as such laws
exist on the date hereof.
4. Representations and Warranties of SatCon. Except as set forth in the
----------------------------------------
Disclosure Schedule attached hereto as Exhibit J, (the "SatCon Disclosure
---------
Schedule"), SatCon represents and warrants to the Purchasers as set forth below.
4.1 Organization and Good Standing. SatCon is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. SatCon has full power and authority to carry on its business as now
conducted and as it is proposed to be conducted, and is duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
nature of its business or properties makes such qualification or licensing
necessary, except where the failure to so qualify or be licensed would not be
material in impact or amount to SatCon's business, intellectual property rights
or condition, or taken as a whole, its assets, liabilities, operations, or
financial performance.
16
<PAGE>
4.2 Capital Structure. As of the date hereof, the authorized capital
-----------------
stock of SatCon is as set forth in the balance sheet of SatCon contained in
SatCon's Form 10-Q report for the period ended June 30, 1998. Except as set
forth in the SatCon SEC Filings, there are no outstanding options, warrants,
rights (including conversion or preemptive rights) or agreements for the
purchase or acquisition from SatCon of any shares of SatCon's capital stock or
any securities convertible into or ultimately exchangeable or exercisable for
any shares of SatCon's capital stock, nor is SatCon obligated in any manner to
issue any shares of its capital stock or other securities. Apart from the
exceptions noted in this Section 4.2, none of SatCon's outstanding capital
stock, or stock issuable upon exercise or exchange of any outstanding options,
warrants or rights, is subject to any preemptive rights, rights of first refusal
or other rights to purchase such stock (whether in favor of SatCon or any other
person), pursuant to any agreement or commitment of SatCon. SatCon holds no
shares of its capital stock in its treasury.
4.3 Power, Authorization and Validity. SatCon has the corporate
---------------------------------
power, legal capacity and corporate authority to enter into and perform its
obligations under this Agreement, and each of the Related Agreements to which it
is a party. The execution, delivery and performance by SatCon of this Agreement
and each of the Related Agreements to which it is a party have been duly and
validly approved and authorized by all necessary corporate action on its part.
No authorization, consent, or approval, governmental or otherwise, is necessary
to enable SatCon to enter into the Agreement or any Related Agreement to which
it is a party and to perform its obligations hereunder or thereunder. This
Agreement is, and each of the Related Agreements to which it is a party when
executed and delivered by SatCon will be, the valid and binding obligations of
SatCon, enforceable in accordance with their respective terms.
4.4 No Violation of Existing Agreements. Neither the execution and
-----------------------------------
delivery of this Agreement or any Related Agreement to which it is a party nor
the consummation of the transactions or performance of SatCon's obligations
contemplated hereby or thereby will conflict with, result in a material breach
or violation of, or cause a default under, any provision of SatCon's Certificate
of Incorporation or Bylaws, each as currently in effect, any instrument,
contract or agreement that is material to the business of SatCon or any
judgment, writ, decree, order, law, statute, ordinance, rule or regulation
applicable to SatCon.
4.5 Representations Regarding the Shares of SatCon Common Stock.
-----------------------------------------------------------
Based on the number of SatCon shares that would be issued at the current market
price of SatCon Common Stock, all corporate action has been taken on the part of
SatCon, its officers, directors and shareholders necessary for the authorization
and creation, issuance and delivery of the shares of SatCon Common Stock to be
issued upon exercise of the Put Rights. Such shares of SatCon Common Stock when
issued in compliance with the provisions of this Agreement will be validly
issued, fully paid and nonassessable and issued in compliance with all
applicable federal and state securities laws. None of such shares are subject
to any preemptive rights, rights of first refusal, or other rights to purchase
such stock (whether in favor of SatCon or any other person), pursuant to any
agreement or commitment of SatCon.
4.6 Periodic Reports.
----------------
17
<PAGE>
(a) The financial statements of SatCon appearing in the SatCon
SEC Filings (the "SatCon Financial Statements"), all of which have been
previously delivered to the Purchasers, have been prepared in all material
respects in accordance with GAAP (except that any interim statements may not
contain all footnotes required by GAAP). The SatCon Financial Statements have
been prepared in accordance with the books and records of SatCon and present
fairly in all material respects the financial position, results of operations,
cash flows and equity transactions of SatCon as of and for the periods ending on
their historical dates. Except and to the extent reflected or reserved against
in the SatCon Financial Statements, SatCon does not have, as of the dates of the
SatCon Financial Statements, any liabilities or obligations (absolute or
contingent) of a nature required to be or customarily reflected in a balance
sheet (or the notes thereto) prepared in accordance with GAAP. The reserves, if
any, reflected on the SatCon Financial Statements are adequate in light of the
contingencies with respect to which they are made. There has been no material
change in SatCon's accounting policies except as described in the notes to the
SatCon Financial Statements.
(b) SatCon has no debts, liabilities, or obligations in a
material amount, either individually or in the aggregate, of any nature, whether
accrued, absolute, contingent, or otherwise, and whether due or to become due,
that is not reflected or reserved against in the SatCon Financial Statements.
All material debts, liabilities, and obligations incurred after the date of the
SatCon Financial Statements were incurred in the ordinary course of business,
and are usual and normal in amount, both individually and in the aggregate.
(c) The SatCon SEC Filings do not, as of their respective dates,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. SatCon
has filed with the SEC all reports required to be filed by it during the last 24
months, including all current reports on Form 8-K.
4.7 Absence of Adverse Changes. Since June 30, 1998, no event,
--------------------------
violation or other matter has occurred that is material in impact or amount to
SatCon's business, intellectual property rights or condition, or taken as a
whole, its assets, liabilities, operations, or financial performance.
4.8 Registration Rights. SatCon has not granted or agreed to grant
-------------------
to any person or entity any rights (including piggyback registration rights) to
have any securities of SatCon registered with the SEC or any other governmental
authority.
4.9 Compliance With Corporate Instruments and Laws. SatCon is not in
----------------------------------------------
violation of any provisions of its Certificate of Incorporation or Bylaws as
currently in effect. SatCon is in compliance in all material respects with all
applicable laws, statutes, rules, and regulations of all governmental and
regulatory authorities which are applicable to SatCon or its assets or business.
SatCon has complied in all material respects at all times with any and all
applicable federal, state and foreign laws, rules, regulations, proclamations
and orders relating to the importation or exportation of its products. All
licenses, franchises, permits and other
18
<PAGE>
governmental authorizations held by SatCon and which are material to its
business are valid and sufficient in all respects for the business presently
carried on by SatCon.
4.10 Litigation. There is no suit, action, proceeding, claim or
----------
investigation pending or, to SatCon's knowledge, threatened against SatCon
before any court or administrative agency which could be material in impact or
amount to SatCon's business, intellectual property rights or condition, or taken
as a whole, its assets, liabilities, operations, or financial performance, or
which questions or challenges the validity of this Agreement or any Related
Agreement. There is no judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against SatCon.
4.11 No Brokers. Neither SatCon nor, to SatCon's knowledge, any
----------
SatCon shareholder is obligated for the payment of fees or expenses of any
broker or finder in connection with the origin, negotiation or execution of this
Agreement or any Related Agreement or in connection with any transaction
contemplated hereby or thereby.
4.12 SatCon Proprietary Assets. (a) To SatCon's knowledge (i) SatCon
-------------------------
and its subsidiaries own or have the right to license all Proprietary Assets
used in or necessary for their businesses as currently conducted and (ii) SatCon
has good and marketable title to all Proprietary Assets that are subject to the
License Agreement, in each case free and clear of all material liens and other
encumbrances, except for third party rights licensed to it, as to which SatCon
has a valid right to use such Proprietary Assets (all of the foregoing are
referred to herein as the "SatCon Proprietary Rights").
(b) SatCon and its subsidiaries have taken reasonable and
customary measures and precautions necessary in their reasonable business
judgment to protect and maintain the value of all of the SatCon Proprietary
Rights.
(c) To SatCon's knowledge, except where such infringement,
misappropriation or unlawful use, would not and could not reasonably be expected
to be material in impact or amount, either individually or in the aggregate, to
SatCon and its subsidiaries taken as a whole or to the Company, neither SatCon
nor any of its subsidiaries is infringing, misappropriating or making any
unlawful use of, and neither SatCon nor any of its subsidiaries has at any time
infringed, misappropriated or made any unlawful use of, any Proprietary Asset
owned or used by any other Person. No claims or notices (in writing or
otherwise) with respect to Proprietary Assets have been communicated to SatCon
or any of its subsidiaries: (i) to the effect that the manufacture, sale,
license or use of any Proprietary Asset or product, practice of any process or
provision of any service as now made, sold, licensed, used, practiced or
provided or currently offered or proposed by SatCon or any of its subsidiaries
infringes or potentially infringes, or constitutes a misappropriation or
unlawful use of any copyright, patent, trade secret or other intellectual
property right of a third party, or (ii) challenging the ownership or validity
of any of SatCon's or any of its subsidiaries' rights to or interest in such
Proprietary Assets. Neither SatCon nor any of its subsidiaries has received any
notice to the effect that any patents or registered trademarks, service marks or
registered copyrights held by SatCon or any of its subsidiaries are invalid or
not subsisting except for failures to be valid and subsisting that would
19
<PAGE>
not reasonably be expected to have, individually or in the aggregate, a material
adverse effect on SatCon's or any of its subsidiaries' business, intellectual
property rights or condition, or, on a consolidated basis, SatCon's assets,
liabilities, operations, or financial performance. To SatCon's knowledge, no
other Person is infringing, misappropriating or making any unlawful use of, any
Proprietary Asset used in or pertaining to the business of SatCon or its
subsidiaries.
(d) The Proprietary Assets owned or licensed by SatCon and its
subsidiaries constitute all the Proprietary Assets necessary, in SatCon's
reasonable judgment, to enable SatCon and each of its subsidiaries to conduct
their business in the manner in which such business has been or is being
conducted.
(e) All current and former employees of SatCon and its
subsidiaries providing technical services relating to SatCon's or its
subsidiaries' Proprietary Assets have executed and delivered to SatCon or its
subsidiary an agreement containing reasonable and customary provisions regarding
confidentiality and assignment of Proprietary Assets. All current and former
consultants and independent contractors to SatCon and its subsidiaries providing
technical services relating to SatCon's or any of its subsidiaries' Proprietary
Assets have executed and delivered to SatCon or such subsidiary an agreement
containing reasonable and customary provisions regarding confidentiality and
assignment of Proprietary Assets, except where SatCon, in its reasonable
business judgment, has determined that such agreement was not necessary to its
business.
(f) SatCon has the corporate power, legal capacity and corporate
authority to enter into and perform its obligations under the License Agreement.
The execution, delivery and performance by SatCon of the License have been duly
and validly approved and authorized by all necessary corporate action on its
part. No authorization, consent, or approval, governmental or otherwise, is
necessary to enable SatCon to enter into the and to perform its obligations
thereunder. The License Agreement is the valid and binding obligation of
SatCon, enforceable in accordance with its respective terms and there has been
no breach of any of the terms thereof.
5. Representations and Warranties of Purchasers and Restrictions on
----------------------------------------------------------------
Transfer Imposed by the Securities Act of 1933 and Applicable State Securities
- ------------------------------------------------------------------------------
Laws.
- ----
5.1 Representations and Warranties by Each Purchaser. Each
------------------------------------------------
Purchaser, severally and not jointly and as to itself only, represents and
warrants to the Company and SatCon as follows:
(a) The Preferred Shares, the Conversion Shares, the Warrants,
the Warrant Shares and any Shares of SatCon Common Stock issued upon exercise of
the Put Rights (collectively, the "Securities") are being or will be acquired
for such Purchaser's own account, for investment and not with a view to, or for
resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"), or
applicable state securities laws.
20
<PAGE>
(b) Such Purchaser understands that (i) the Securities have not
been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act pursuant to Section 4(2) thereof and have not been qualified
under any state securities laws on the grounds that the offering and sale of
securities contemplated by this Agreement are exempt from registration
thereunder, and (ii) the Company's and SatCon's reliance on such exemptions is
predicated on such Purchaser's representations set forth herein. Such Purchaser
understands that the resale of the Securities may be restricted indefinitely,
unless a subsequent disposition thereof is registered under the Securities Act
and registered under any state securities law or is exempt from such
registration.
(c) Such Purchaser is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act. Such
Purchaser is able to bear the economic risk of the purchase of the Securities
pursuant to the terms of this Agreement, including a complete loss of such
Purchaser's investment in the Securities. The principal place of business of
each of the Purchasers is as follows: Perseus--the District of Columbia,
Duquesne--Pennsylvania, and Micro--New Hampshire.
(d) Such Purchaser has the full right, power and authority to
enter into and perform such Purchaser's obligations under this Agreement and
each Related Agreement to which it is a party, and this Agreement and each
Related Agreement to which it is a party constitute valid and binding
obligations of such Purchaser enforceable in accordance with their terms.
(e) No consent, approval or authorization of or designation,
declaration or filing with any Governmental Body on the part of such Purchaser
is required in connection with the valid execution and delivery of this
Agreement or any Related Agreement to which it is a party.
5.2 Legend. Each certificate representing the Securities may be
------
endorsed with the following legends:
(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT
(I) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT, OR (II) IN COMPLIANCE WITH RULE 144 OR (III) OTHERWISE PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE ACT.
(b) Any other legends required by applicable securities laws.
The Company or SatCon, as the case may be, may instruct its transfer agent not
to register the transfer of the Securities, unless the conditions specified in
the foregoing legends are satisfied.
21
<PAGE>
5.3 Removal of Legend and Transfer Restrictions.
-------------------------------------------
Any legend endorsed on a certificate pursuant to Section 4.2(a)
and the stop transfer instructions with respect to such Securities shall be
removed and the Company or SatCon, as the case may be, shall issue a certificate
without such legend to the holder thereof (1) if such Securities are registered
under the Securities Act and a prospectus meeting the requirements of Section 10
of the Securities Act is available, (2) if such legend may be properly removed
under the terms of Rule 144 promulgated under the Securities Act, or (3) if such
holder provides the Company or SatCon, as the case may be, with an opinion of
counsel for such holder, reasonably satisfactory to legal counsel for the
Company or SatCon, as the case may be, to the effect that a sale, transfer or
assignment of such Securities may be made without registration.
6. Indemnity.
---------
6.1 Indemnity.
---------
(a) The Company hereby agrees to indemnify and defend and hold
harmless each of the Purchasers, their respective Affiliates, successors and
assigns and each of their respective officers, directors, employees and agents
(the "Indemnified Parties") from and against, and agrees to pay or cause to be
paid to the Indemnified Parties all amounts equal to the sum of, any and all
claims, demands, costs, expenses, losses and other liabilities of any kind that
the Indemnified Parties may incur or suffer (including without limitation all
reasonable legal fees and expenses) which arise or result from any breach of or
failure by the Company to perform any of its representations, warranties,
covenants or agreements in this Agreement or any Related Agreement. The rights
of Purchasers hereunder shall be in addition to, and not in lieu of, any other
rights and remedies which may be available to them by law.
(b) SatCon hereby agrees to indemnify and defend and hold
harmless each of the Indemnified Parties from and against, and agrees to pay or
cause to be paid to the Indemnified Parties all amounts equal to the sum of, any
and all claims, demands, costs, expenses, losses and other liabilities of any
kind that the Indemnified Parties may incur or suffer (including without
limitation all reasonable legal fees and expenses) which arise or result from
any breach of or failure by SatCon to perform any of its representations,
warranties, covenants or agreements in this Agreement or any Related Agreement.
The rights of Purchasers hereunder shall be in addition to, and not in lieu of,
any other rights and remedies which may be available to them by law.
Notwithstanding the immediately previous sentence, absent fraud or an
intentional breach of representation or warranty by SatCon, the maximum amount
for which SatCon shall be liable to any Purchaser with respect to any breach of
its representations and warranties contained in this Agreement shall be an
amount equal to (A) the total purchase price paid by such Purchaser under
Section 1.2 hereof, plus (B) any amounts paid in cash by such Purchaser to
----
exercise of any Warrants that have been exercised by such Purchaser prior to the
time such claim for indemnification is made, plus (C) a return on the amounts
----
specified in clauses (A) and (B) from the period such amounts were paid until
the date such liability is fully satisfied computed at an annual rate of 12
1/2%, plus (D) the costs and expenses, including reasonable attorneys' fees,
----
22
<PAGE>
incurred by such Purchaser in enforcing its rights under this Article 6, minus
-----
(E) any cash dividends paid to such Purchaser with respect any Preferred Shares
acquired by such Purchaser pursuant to this Agreement or with respect to any
shares of Common Stock issued upon conversion of such Preferred Shares or
exercise (for cash) of any Warrants and minus (F) in the case of any such breach
-----
of a representation or warranty of SatCon as to which all material facts are
publicly disclosed at least 30 days prior to the exercise by such Purchaser of
its Put Right, the fair market value, at the time of issuance, of the SatCon
Common Stock received by such Purchaser upon the exercise of such Put Right.
6.2 Procedures.
----------
(a) If a third party shall notify an Indemnified Party with
respect to any matter that may give rise to a claim for indemnification under
the indemnity set forth above in Section 6. 1, the procedure set forth below
shall be followed.
(i) Notice. The Indemnified Party shall give to the party
------
providing indemnification (the "Indemnifying Party") written notice of any
claim, suit, judgment or matter for which indemnity may be sought under Section
6.1 promptly but in any event within thirty days after the Indemnified Party
receives notice thereof; provided, however, that failure by the Indemnified
-------- -------
Party to give such notice shall not relieve the Indemnifying Party from any
liability it shall otherwise have pursuant to this Agreement except to the
extent that the Indemnifying Party is actually prejudiced by such failure. Such
notice shall set forth in reasonable detail (i) the basis for such potential
claim and (ii) the dollar amount of such claim. The Indemnifying Party shall
have a period of fifteen days within which to respond thereto. If the
Indemnifying Party does not respond within such fifteen day period, the
Indemnifying Party shall be deemed to have accepted responsibility for such
indemnity.
(ii) Defense of Claim. With respect to a claim by a third
----------------
party against an Indemnified Party for which indemnification may be sought under
this Agreement, the Indemnifying Party shall have the right, at its option, to
be represented by counsel of its choice and to assume the defense or otherwise
control the handling of any claim, suit, judgment or matter for which indemnity
is sought, which is set forth in the notice sent by the Indemnified Party, by
notifying the Indemnified Party in writing to such effect within fifteen days of
receipt of such notice; provided, however, that the Indemnified Party shall have
-------- -------
the right to employ counsel to represent it if, in the Indemnified Party's
reasonable judgment based upon the advice of counsel, it is advisable in light
of the separate interests of the Indemnified Party, to be represented by
separate counsel, and in that event the reasonable fees and expenses of such
separate counsel shall be paid by the Indemnifying Party. If the Indemnifying
Party does not give timely notice in accordance with the preceding sentence, the
Indemnifying Party shall be deemed to have given notice that it does not wish to
control the handling of such claim, suit or judgment. In the event the
Indemnifying Party elects (by notice in writing within such fifteen day period)
to assume the defense of or otherwise control the handling of any such claim,
suit, judgment or matter for which indemnity is sought, the Indemnifying Party
shall indemnify and hold harmless the Indemnified Party from and against any and
all reasonable professional fees (including attorneys' fees, accountants,
consultants and engineering fees) and investigation expenses incurred by the
23
<PAGE>
Indemnifying Party prior to such election, notwithstanding the fact that the
Indemnifying Party may not have been so liable to the Indemnified Party had the
Indemnifying Party not elected to assume the defense of or to otherwise control
the handling of such claim, suit, judgment or other matter. In the event that
the Indemnifying Party does not assume the defense or otherwise control the
handling of such matter, the Indemnified Party may retain counsel, as an
indemnification expense, to defend such claim, suit, judgment or matter.
(iii) Final Authority. The parties shall cooperate in the
---------------
defense of any such claim or litigation and each shall make available all books
and records which are relevant in connection with such claim or litigation. In
connection with any claim, suit or other proceeding with respect to which the
Indemnifying Party has assumed the defense or control, the Indemnifying Party
will not consent to the entry of any judgment or enter into any settlement with
respect to any matter which does not include a provision whereby the plaintiff
or claimant in the matter releases the Indemnified Party from all liability with
respect thereto, without the written consent of the Indemnified Party. In
connection with any claim, suit or other proceeding with respect to which the
Indemnifying Party has not assumed the defense or control, the Indemnified Party
may not compromise or settle such claim without the consent of the Indemnifying
Party, which shall not be unreasonably withheld and shall be deemed to have been
given if the Indemnified Party provides the Indemnifying Party with a written
notice setting forth the material terms of such compromise or settlement and the
Indemnifying Party does not object thereto in writing within ten days of its
receipt of such notice.
(b) Claims Between the Indemnifying Party and the Indemnified
---------------------------------------------------------
Party. Any claim for indemnification under this Agreement which does not result
- -----
from the assertion of a claim by a third party shall be asserted by written
notice given by the Indemnified Party to the Indemnifying Party. The
Indemnifying Party shall have a period of thirty days within which to respond
thereto. If the Indemnifying Party does respond within such thirty day period
and rejects such claim in whole or in part or does not respond, the Indemnified
Party shall submit the dispute to arbitration in accordance with Section 8.2
hereof.
6.3 Election of Remedies. In the event that a Purchaser elects to
--------------------
exercise its Put Right, such Purchaser shall not be entitled to bring an action
against either the Company or SatCon for indemnification, breach of contract or
any similar action based upon the representations, warranties or covenants of
the Company set forth in this Agreement. In the event all Purchasers exercise
their Put Rights, SatCon shall succeed to such Purchasers' rights against the
Company for damages arising out of any such breach of the representations,
warranties or covenants by the Company set forth in this Agreement. The
indemnification rights of any Purchaser against SatCon granted in Section 6.1(b)
hereof shall terminate upon the unexercised expiration of the Put Rights granted
to such Purchaser.
7. Additional Covenants.
--------------------
7.1 Right of First Offer. Subject to the terms and conditions
--------------------
specified in this Section 7.1, the Company hereby grants to each Purchaser and
to SatCon (collectively, the "Investors") a right of first offer with respect to
future sales by the Company of its Shares (as
24
<PAGE>
hereinafter defined). Each Investor shall be entitled to apportion the right of
first offer hereby granted it among itself and its members, partners and
affiliates in such proportions as it deems appropriate. Each time the Company
proposes to offer any shares of, or any securities convertible into or
exercisable or exchangeable for any shares of, any class of its capital stock
(collectively, "Shares"), the Company shall first make an offering of such
Shares to each Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail (a
"Sales Notice") to the Investors stating (i) its bona fide intention to offer
such Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms, if any, upon which it proposes to offer such Shares.
(b) Within 20 Business Days after receipt of a Sales Notice, each
Investor that desires to purchase any of the Shares specified in such Sales
Notice at the price and on the terms specified in such Sales Notice shall
provide to the Company a written notice (a "Purchase Notice") setting forth the
number of such Shares such Investor is willing to purchase. If the total number
of Shares specified in all of the Purchase Notices received by the Company
within such period exceeds the total number of Shares specified in such Sales
Notice or such greater number of Shares that the Company is willing to sell at
the price and on the terms specified in such Sales Notice, then the Shares to be
sold shall be allocated as follows (provided that no Investor shall be allocated
more Shares than it has agreed to purchase in its Purchase Notice):
(i) Up to 22 1/2% to Duquesne until such time as the sum of the total
number of Common Stock Equivalents owned by Duquesne and the total
number of Common Stock Equivalents to be purchased by Duquesne
pursuant to such sale equals 20% of the total Common Stock
Equivalents that will be outstanding after completion of such sale;
(ii) Up to 22 1/2% to Perseus until such time as the sum of the total
number of Common Stock Equivalents owned by Perseus and the total
number of Common Stock Equivalents to be purchased by Perseus
pursuant to such sale equals 30% of the total Common Stock
Equivalents that will be outstanding after completion of such sale;
(iii) Up to 5% to Micro until such time as the sum of the total number of
Common Stock Equivalents owned by Micro and the total number of
Common Stock Equivalents to be purchased by Micro pursuant to such
sale equals 5% of the total Common Stock Equivalents that will be
outstanding after completion of such sale;
(iv) All Shares not allocated pursuant to clauses (i)-(iii) above shall
be allocated among the Investors in the same proportion that each
such Investor's Common Share Equivalents bear to the total Common
Share Equivalents owned by all of the Investors; provided that if
such allocation would result in any Investor being allocated Shares
under this subsection (b) in excess of the total number of Shares
that it specified in its Purchase Notice, such excess Shares shall
be allocated among
25
<PAGE>
the other Investors that have not been allocated Shares equal to
the number of Shares specified in their Purchase Notices in a
manner that results in such other Investors receiving in the
aggregate under this subsection (b) an equal percentage of the
total number of Shares specified in their respective Purchase
Notices.
All allocations made pursuant to this subsection (b) shall be rounded to the
nearest whole Share. The Shares allocated to each Investor under this
subsection (b) shall be purchased by such Investor at the price and on the terms
specified in the Sales Notice at a closing to be held within 30 Business Days
after the delivery of the Sales Notice. Such date shall be specified by the
Company in a written notice delivered to each Investor participating in such
sale at least 10 Business Days prior thereto.
(c) If all Shares that the Investors are entitled to obtain
pursuant to Section 7.1(b) are not elected to be obtained as provided in Section
7.1(b) hereof, the Company may, during the 120-day period following the
expiration of the period provided in Section 7.1(b) hereof, offer the remaining
unsubscribed portion of such Shares to any Person or Persons at a price not less
than, and upon terms no more favorable to the offeree than, those specified in
the Sales Notice with respect thereto. If the Company does not enter into an
agreement for the sale of such Shares within such period, or if such agreement
is not consummated within 30 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Investors in accordance herewith.
(d) The right of first offer granted in this Section 7.1 shall
not be applicable (i) to the issuance or sale of Common Stock (or options
therefor) to consultants, officers, directors and employees for the primary
purpose of soliciting or retaining their employment or services in a transaction
or pursuant to a plan approved by the Company's Board of Directors, (ii) as part
of or after an Initial Public Offering that results in aggregate net cash
proceeds to the Company of $25,000,000 or greater, (iii) the issuance of
securities pursuant to the conversion or exercise of outstanding convertible
securities or warrants, options or similar rights, (iv) the issuance of
securities in connection with a bona fide business acquisition by the Company,
whether by merger, consolidation, sale of assets, sale or exchange of stock or
otherwise, (v) the issuance of warrants, options or similar securities to a bank
or other institutional lender as consideration for the extension of credit by
such lender to the Company, (vi) the issuance of stock, warrants or other
securities or rights to persons or entities with which the Company has business
relationships provided such issuances are for other than primarily equity
financing purposes and provided that at the time of any such issuance, the
aggregate of such issuance and similar issuances in the preceding twelve-month
period do not exceed 2% of the then outstanding Common Stock of the Company
(assuming full conversion and exercise of all convertible and exercisable
securities then outstanding) or such issuance is expressly approved by a
majority of the director representatives of the Purchasers on the Company's
Board of Directors, or (vii) the issuance of the Preferred Shares and Warrants
pursuant to the terms of this Agreement.
7.2 SatCon Observer Rights. Until such time as Perseus shall have
----------------------
exercised its Put Right and thereafter sold at least one-half of the shares of
SatCon Common Stock it obtained upon such exercise, SatCon shall invite a
representative of Perseus to attend all meetings of
26
<PAGE>
SatCon's Board of Directors, at SatCon's expense, in a nonvoting observer
capacity. SatCon shall provide such representative with the same financial and
other information that is provided to the members of the Board of Directors in
connection with any meetings of the Board of Directors of SatCon. As a condition
of the rights granted in this Section 7.2, Perseus agrees to abide by SatCon's
insider trading rules to the extent they are applicable to all members of its
Board of Directors, and such representative of Perseus shall agree to abide by
SatCon's insider trading rules to the extent they are applicable to all members
of its Board of Directors.
7.3 Transactions with Affiliates. The Company shall not, without the
----------------------------
approval of a majority of the disinterested members of the Company's Board of
Directors, engage or continue in any loans, leases, contracts or other similar
transactions (including, but not by way of limitation, the payment of dividends
or the repurchase of securities) with any Affiliate of the Company, SatCon, or
any of SatCon's Affiliates, or any members of their immediate family or entities
controlled by them. For purposes of this Section 2.5, "immediate family" shall
be deemed to include parents, children, siblings and spouse.
7.4 Delivery of Financial Statements. The Company shall deliver to
--------------------------------
each Purchaser for so long as such Purchaser (together with its shareholders,
partners and members and any other Persons whose securities are aggregated with
those of such Purchaser for purposes of the Shareholders Agreement) holds
Preferred Shares, Conversion Shares or Warrant Shares that in the aggregate
equal or represent the right to acquire at least 250,000 shares of Common Stock
and to any transferee acquiring such amount of Preferred Shares, Conversion
Shares or Warrant Shares, directly or indirectly, from a Purchaser (such 250,000
shares shall be appropriately adjusted to reflect any subsequent stock
dividends, combinations, splits, recapitalizations and the like):
(a) as soon as practicable, but in any event within 120 days
after the end of each fiscal year of the Company, an income statement of the
Company for such fiscal year, a cash flow statement of the Company for such
fiscal year, a balance sheet of the Company as of the end of such fiscal year
and a statement of changes in shareholder's equity of the Company as of the end
of such year, with each such financial statement to be in reasonable detail,
prepared in accordance GAAP, and audited and certified by a firm of independent
public accountants of nationally recognized standing selected by the Company;
(b) as soon as practicable, but in any event within sixty days
after the end of each of the first three quarters of each fiscal year of the
Company, unaudited statements of income and cash flows of the Company for such
fiscal quarter and an unaudited balance sheet and a statement of changes in
shareholder's equity of the Company as of the end of such fiscal quarter;
(c) within thirty days of the end of each calendar month,
unaudited statements of income and cash flows and balance sheet of the Company
for and as of the end of such month, in reasonable detail;
(d) as soon as practicable, but in any event at least thirty days
prior to the end of each fiscal year, a budget and business plan of the Company
for the next fiscal year, prepared on a monthly basis, including balance sheets
and statements of cash flows for such months and, as soon as prepared, any other
budgets or revised budgets prepared by the Company;
27
<PAGE>
(e) with respect to the financial statements called for in
subsections (b) and (c) of this Section 7.4, an instrument executed by the Chief
Financial Officer or President of the Company certifying that such financial
statements were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation, cash flows and changes in shareholders' equity for the
period specified, subject to year-end audit adjustments; and
(f) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as such Purchaser or any
transferee of such Purchaser may from time to time request.
7.5 Inspection. During any period in which a Purchaser (or its
----------
transferee) is entitled to receive the materials specified in Section 7.4
hereof, the Company shall permit such Purchaser, at such Purchaser's expense, to
visit and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times and upon reasonable notice as may be
requested by such Purchaser.
7.6 The Company's Board of Directors. The Company shall promptly pay
--------------------------------
or reimburse each of the Purchasers for all reasonable costs and expenses for
the travel, lodging and related subsistence of their representatives or
observer, as the case may be, on the Company's Board of Directors to meetings
thereof or of any committee thereof. The Company shall enter into an
Indemnification Agreement with each director representative of Perseus and
Duquesne substantially in the form attached hereto as Exhibit N.
---------
7.7 Use of Proceeds. Except for (a) repayment of the Company's
---------------
outstanding principal (but not interest) indebtedness of up to $400,000 to
Duquesne under the Loan Agreement dated July 17, 1998 (the "Duquesne Loan
Agreement"), (b) repayment of the Company's outstanding principal (but not
interest) indebtedness of up to $275,000 to SatCon to repay cash advances made
to the Company prior to the date hereof, (c) repayment of the Company's
outstanding principal (but not interest) indebtedness of up to $70,000 to
William Stanton to repay cash advances made to the Company prior to the date
hereof, and (d) payment of the Company's outstanding indebtedness of up to
$209,000 to SatCon in payment of accounts payable to SatCon (without interest
thereon), the Company hereby covenants and agrees that all of the net proceeds
received by it from the issuance and sale of the Preferred Shares and any
Warrant Shares shall be used for the purpose of developing and conducting its
business, which is the development, manufacturing and marketing of flywheel
energy storage systems for use in energy storage applications, and no part of
such net proceeds shall be used to (i) repay SatCon, Duquesne or any other
Person any funds expended by it or advanced by it to the Company prior to the
Closing, unless agreed to in writing by Perseus and (ii) pay any broker's fees
or commissions or similar payments of any kind. The Company has previously
provided the Purchasers its best estimate of the expenses it will incur in
connection with the negotiation and execution of this Agreement and the Related
Agreements and the consummation of the transactions contemplated to be
consummated at the Closing. The Company shall use $400,000 of the net proceeds
received by it
28
<PAGE>
from the issuance and sale of the Preferred Shares at the Closing to repay all
amounts owed by the Company under the Duquesne Loan Agreement; upon such
repayment all security interests held by Duquesne under or in connection with
the Duquesne Loan Agreement shall terminate. The Parties agree that all accrued
but unpaid interest on the amounts described in clauses (a) and (b) of this
Section shall be paid through the issuance of shares of Common Stock with each
share having an agreed value of $2.50 and cash to be paid in lieu of any
fractional share.
7.8 Development Contracts. SatCon covenants and agrees that it shall
---------------------
offer to the Company the opportunity to be retained as a contractor for any
development contracts existing on the date hereof held by SatCon or its
affiliates that are related to stationary terrestrial (in or on the ground or
affixed to structures on the ground) applications of flywheel technology, upon
terms and conditions that are mutually agreed upon by SatCon and the Company,
acting in good faith. SatCon further covenants and agrees that neither it nor
any of its affiliates shall, at any time or from time to time, compete with the
Company, directly or indirectly, for new development contracts that are related
specifically to stationary terrestrial applications of flywheel technology.
7.9 U.S. Marine Corps Development Agreement. SatCon covenants and
---------------------------------------
agrees that from and after the Closing Date, any revenues that are received, and
any expenses that have been or are incurred (other than expenses that have been
offset by revenues received), by SatCon pursuant to the Agreement between
SatCon and the U.S. Marine Corps (the "Marine Corps Contract") shall be paid and
delivered by SatCon to the Company within five days after receipt thereof.
SatCon shall remain the party to the Marine Corps Contract but the Company shall
perform and be primarily responsible for managing SatCon's obligations under the
Marine Corps Contract. In performing such obligations, the Company may use such
personnel of the Company or SatCon as the Company and SatCon shall agree from
time to time. SatCon shall reimburse the Company on the same basis as SatCon is
paid or reimbursed under the Marine Corps Contract for all of the Company's
direct costs, including labor and materials, in performing SatCon's obligations
under the Marine Corps Contract plus an agreed upon percentage of overhead
expenses as provided in the Marine Corps Contract.
7.10 Termination or Modification of Certain Obligations of the
---------------------------------------------------------
Company. Upon consummation of the transactions contemplated at the Closing, (a)
the Company's obligations under Sections 4.4 and 4.6 of the Securities Purchase
Agreement, dated as of May 28, 1997 among SatCon, the Company and Duquesne shall
terminate, (b) all of the rights of Duquesne under Section 12 of the Warrant
issued to Duquesne on May 28, 1997 shall terminate and (c) all of the rights of
Duquesne under the Registration Rights Agreement dated May 28, 1997 between the
Company, SatCon and Duquesne relating to the Capital Stock of the Company, shall
terminate and be replaced by the rights of Duquesne under the Registration
Rights Statement attached hereto as Exhibit F. Effective as of the Closing, the
---------
annual consulting fee payable to Duquesne pursuant to Section 3 of the
Consulting Agreement dated as of May 28, 1997 between the Company and Duquesne
shall be paid through the issuance of shares of the Company's Common Stock or
Class A Preferred Stock with each such share having an agreed value of $2.50 for
such purpose as provided in the Amendment Agreement of even date herewith
between the Company and Duquesne.
29
<PAGE>
7.11 Protective Provisions. The Company and SatCon covenant and agree
---------------------
that neither the Company nor SatCon shall, without the prior written consent of
holders of two-thirds of the Preferred Shares (including for such purpose
Preferred Shares that have been converted into Conversion Shares to the extent
such holder retains such Conversion Shares):
(a) make any material change in the principal business activity
of the Company as currently contemplated to be conducted; or
(b) enter into any license, arrangement or agreement pursuant to
which SatCon grants rights in or to intellectual property of SatCon or the
Company relating to the flywheel technology to a competitor of the Company.
7.12 SatCon Shares. SatCon shall take all actions under its control
-------------
to increase the number of authorized shares of SatCon Common Stock by 5,000,000
by no later than the third Business Day after the next annual meeting of
SatCon's stockholders. In the event that at any time on or prior to the full
exercise or expiration of the Put Rights, the number of authorized shares of
SatCon Common Stock that are legally available for issuance in satisfaction of
the Put Rights is less than 1,000,000 more than the total number of such shares
required to satisfy in full SatCon's obligations under the Put Rights (based on
the lowest Average Market Price during the six-month period prior to such time),
then SatCon, as promptly as practicable, shall take all actions under its
control to increase the number of authorized shares of SatCon Common Stock
legally available for issuance in satisfaction of the Put Rights to at least
1,000,000 more than the total number of such shares required to satisfy in full
SatCon's obligations under the Put Rights (based on the lowest Average Market
Price during the six-month period prior to such time).
7.13 Services Agreement. The Services Agreement dated as of May 28,
------------------
1997 by and between SatCon and the Company shall terminate at the close of
business on December 31, 1998, except that the obligation of the Company to pay
any fees due to SatCon for services provided prior to December 31, 1998 shall
survive such termination.
7.14 Voluntary Bankruptcy. The Purchasers shall not cause the Company
--------------------
to take any of the following actions (each a "Bankruptcy Action"): (i) apply
for or consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property, (ii) admit
in writing its inability to pay its debts generally as they mature, (iii) make a
general assignment for the benefit of its creditors, (iv) be dissolved or
liquidated in full or in part, or (v) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the appointment of or
taking possession of its property by any official in an involuntary case or
other proceeding commenced against it, unless (a) SatCon has been delivered a
written notice of the Purchasers' intention to cause the Company to take such
Bankruptcy Action (a "Bankruptcy Notice") and (b) within five Business Days
after the delivery of such Bankruptcy Notice SatCon, SatCon has not delivered to
each of the Purchasers and to the Company a written acknowledgement and
agreement that a Put Event has occurred (a "SatCon Put Event Notice"); provided
that no such Bankruptcy Action may be taken more than 60 days after the deliver
of a Bankruptcy Notice. If the Purchasers and the Company
30
<PAGE>
receive a SatCon Put Event Notice within such five Business Day period, then
each of the Purchasers shall have all of the rights granted to such Purchaser
upon the occurrence of a Put Event and the Purchasers shall not cause the
Company to take any Bankruptcy Action without the prior written consent of
SatCon. The Purchasers shall not provide to SatCon a Bankruptcy Notice unless
they have a good faith belief that the Company is insolvent or otherwise in a
position where the taking of a Bankruptcy Action is in the Company's best
interests.
8. Miscellaneous.
-------------
8.1 Waivers and Amendments. With the written consent of the record
----------------------
or beneficial holders of more than a majority of the Preferred Shares issued and
sold under this Agreement (including any Conversion Shares or any and all
securities obtained upon conversion of such Preferred Shares or exchange of such
Preferred Shares or Conversion Shares and as adjusted for stock dividends, stock
splits, recapitalizations and the like) and SatCon, the obligations of the
Company and the rights of the holders of such Preferred Shares under this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely), and with the same consent the Company, when authorized by
resolution of its Board of Directors, may enter into a supplementary agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement; provided, however, that no
such waiver or supplemental agreement shall reduce the aforesaid percentage of
Preferred Shares issued and sold under this Agreement the holders of which are
required to consent to any waiver or supplemental agreement without the consent
of the record or beneficial holders of all of the Preferred Shares issued and
sold under this Agreement. Upon the effectuation of each such waiver, consent
or agreement of amendment or modification the Company shall promptly give
written notice thereof to the record holders of the Preferred Shares who have
not previously consented thereto in writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, except to the extent
provided in this subsection.
8.2 Arbitration. Any controversy or claim arising out of or relating
-----------
to this Agreement or any of the Related Agreements, or the breach hereof or
thereof, shall be settled by arbitration administered by the American
Arbitration Association under its Commercial Arbitration Rules, and judgment on
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Such arbitration shall be conducted by a panel of three
arbitrators, each party having the right to select one arbitrator with the third
arbitrator to be selected in accordance with the rules of the American
Arbitration Association.
8.3 Governing Law. This Agreement shall be governed in all respects
-------------
by the laws of the State of New York without regards to the principles of
conflicts of laws thereof.
8.4 Survival. The representations, warranties, covenants and
--------
agreements made herein shall survive the execution of this Agreement and the
Closing of the transactions contemplated hereby; provided however that the
provisions of Section 7.1, 7.4, 7.5, 7.8 and 7.11
31
<PAGE>
shall terminate upon the Company completing and Initial Public Offering that
raises at least $25,000,000 of gross proceeds to the Company.
8.5 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein and subject to the Related Agreements and applicable law, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
8.6 Entire Agreement. This Agreement, the Related Agreements and
----------------
other exhibits to this Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
8.7 Notices, etc. All notices, requests and other communications
------------
hereunder shall be in writing and shall be deemed to have been duly given at the
time of receipt if delivered by hand or by facsimile transmission or three days
after being mailed, registered or certified mail, return receipt requested, with
postage prepaid, to the address or facsimile number (as the case may be) listed
for each such party below or, if any party shall have designated a different
address or facsimile number by notice to the other party given as provided
above, then to the last address or facsimile number so designated.
If to the Company:
Beacon Power Corporation
6D Gill Street
Woburn, MA 01801
Fax No.: (781) 938-9401
Attn: Chief Executive Officer
With a required copy to:
Jeffrey N. Carp, Esq.
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Fax No.: (617) 526-5000
If to Perseus:
Perseus Capital, L.L.C.
The Army and Navy Club Building
1627 I Street, N.W.
Suite 610
Washington, D.C. 20006
Attn: Kenneth M. Socha
32
<PAGE>
Fax No. (202) 463-6215
With a required copy to:
555 12th Street, N.W.
Washington, D.C. 20004
Attn: Robert B. Ott
Fax No.: (202) 942-5999
If to Duquesne:
Anthony J. Villiotti
Vice President
One Northshore Center
Suite 100
12 Federal Street
Pittsburgh, PA 15212
Fax No.: 412-231-2140
With a required copy to:
David J. Lehman, Esq.
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Fax No.: 412-355-6501
If to Micro:
c/o Robert W. Shaw, Jr.
Arete Corporation
P.O. Box 1299
Center Harbor, New Hampshire 03226
Fax No.: (603) 253-9799
If to SatCon:
David Eisenhaure
President
161 First Street
Cambridge, MA 02142
Fax No.: (617) 661-3373
With a required copy to:
33
<PAGE>
Jeffrey N. Carp, Esq.
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Fax No.: (617) 526-5000
8.8 Separability. In case any provision of this Agreement shall be
------------
declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
8.9 Expenses. The Company and Duquesne shall each bear its
--------
respective expenses and legal fees incurred with respect to this Agreement, each
of the Related Agreements and the transactions contemplated hereby and thereby.
All reasonable costs and expenses of Perseus relating to this Agreement, each of
the Related Agreements and the transactions contemplated hereby and thereby,
including reasonable fees and expenses of legal counsel, shall be promptly paid
or reimbursed by the Company.
8.10 Titles and Subtitles. The titles of the paragraphs and
--------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
8.12 Publicity. None of the parties to this Agreement, nor any of
---------
their affiliates, shall issue any press release or otherwise make any public
announcement or disclosure with respect to this Agreement, any of the Related
Agreements or any of the transactions contemplated hereby or thereby without the
prior written consent of each of the Company, Perseus and SatCon, unless such
disclosure is required by applicable law.
34
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
BEACON POWER CORPORATION
By: /s/ William E. Stanton
------------------------------------
Name: William E. Stanton
----------------------------------
Title: President & CEO
---------------------------------
PERSEUS CAPITAL, L.L.C.
By: /s/ Philip J. Deutch
-----------------------------------
Name: Philip J. Deutch
----------------------------------
Title: Vice President
---------------------------------
DUQUESNE ENTERPRISES
By: /s/ Anthony J. Villiotti
-----------------------------------
Name: Anthony J. Villiotti
----------------------------------
Title: Vice President
---------------------------------
MICRO-GENERATION
TECHNOLOGY FUND, L.L.C.
BY ARETE CORPORATION,
ITS MANAGER
By: /s/ Robert W. Shaw, Jr.
-----------------------------------
Robert W. Shaw, Jr.
President
35
<PAGE>
SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
------------------------------------
Name: David B. Eisenhaure
----------------------------------
Title: President
---------------------------------
36
<PAGE>
SCHEDULE OF EXHIBITS
A CERTAIN DEFINITIONS
B AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
C-1, C-2
and C-3 FORMS OF PERSEUS WARRANTS
D-1, D-2
and D-3 FORMS OF DUQUESNE WARRANTS
E-1, E-2
and E-3 FORMS OF MICRO WARRANTS
F COMPANY REGISTRATION RIGHTS STATEMENT
G SATCON REGISTRATION RIGHTS STATEMENT
H-1 FORM OF OPINION OF HALE & DORR
H-2 FORM OF OPINION OF DIKE, BROWNSTEIN, ROBERTS 7 CUSHMAN, L.L.P.
I COMPANY DISCLOSURE SCHEDULE
J SATCON DISCLOSURE SCHEDULE
K SHAREHOLDERS AGREEMENT
L CONSULTING AGREEMENT BETWEEN THE COMPANY AND PERSEUS
M CONSULTING AGREEMENT BETWEEN THE COMPANY AND MICRO
N INDEMNIFICATION AGREEMENT
O SIDE LETTER
P AMENDED AND RESTATED LICENSE AGREEMENT
<PAGE>
EXHIBIT A
---------
CERTAIN DEFINITIONS
-------------------
For purposes of the Agreement to which this Exhibit A is attached, the
following terms have the following meanings:
"Amended and Restated License Agreement" means the Amended and Restated
License Agreement between SatCon and the Company substantially in the form
attached hereto as Exhibit P.
"Average Market Price" means (a) the arithmetic average of the closing
sales prices (or if there is no closing sales price on any trading day, the
average of the closing bid and asked prices for such trading day) for one share
of SatCon Common Stock as reported by the national securities exchange or other
principal trading market for the shares of SatCon Common Stock for the period of
thirty consecutive trading days ending on the fifteenth trading day after the
date of delivery of a Put Notice or (b) if there is no principal trading market
for the SatCon Common Stock that reports such information, the price for one
share of SatCon Common Stock determined by an investment banking firm chosen by
Perseus with the consent of SatCon, which consent shall not be unreasonably
withheld.
"Business Day" means any day other than a Saturday, Sunday or other day on
which the national or state banks located in the State of New York, the State of
Massachusetts, or the District of Columbia are authorized to be closed.
"Common Share Equivalent Price" means (a) in the case of the sale of Common
Stock of the Company, the per share price at which such Common Stock is sold,
and (b) in the case of the sale of securities convertible into Common Stock of
the Company, the effective per share price at which such securities are
convertible into Common Stock.
"Common Share Equivalents" means all shares of Common Stock that are issued
and outstanding or are issuable upon the exchange, exercise or conversion of any
other security of the Company. The number of Common Share Equivalents owned by
a Person shall equal the sum of the number of shares of Common Stock owned by
such Person plus the number of shares of Common Stock issuable upon the
exchange, exercise or conversion of any other security of the Company owned by
such Person.
"Common Stock" means the common stock, par value $0.01 per share, of the
Company.
"Company Account" means an account of the Company designated in a written
notice delivered to the Purchasers at least two Business Days prior to the date
of any required payment by the Purchasers to the Company under the Agreement.
<PAGE>
"Company Products" means all versions and implementations of any product
which has been, is being or is intended to be marketed by the Company.
"Conversion Shares" means shares of Common Stock issuable upon conversion
of the Preferred Shares.
"GAAP" means United States generally accepted accounting principles
consistently applied.
"Governmental Body" means any: (a) nation, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government; or (c)
governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or entity and any court or other tribunal).
"Initial Public Offering" means the consummation of a public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, that is underwritten by one or more nationally recognized
investment banking firms or a syndicate managed or co-managed by one or more
nationally recognized investment banking firms.
"Material Adverse Change" means a change which would have a Material
Adverse Effect.
"Material Adverse Effect." An event, violation or other matter will be
deemed to have a "Material Adverse Effect" on the Company if such event,
violation or other matter would be material in impact or amount to the Company's
business, intellectual property rights or condition, or, taken as a whole, its
assets, liabilities, operations, or financial performance.
"Person" means any individual, entity or Governmental Body.
"Proprietary Asset" means: (a) any patent, patent application, trademark
(whether registered or unregistered), trademark application, trade name,
fictitious business name, service mark (whether registered or unregistered),
service mark application, copyright (whether registered or unregistered),
copyright application, maskwork, maskwork application, trade secret, know-how,
customer list, franchise, system, computer software, computer program,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset; and (b) any right to use or exploit any of the foregoing.
"Put Event" means any of the following events:
(a) The Company shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a substantial
part of its property, (ii) be unable, or admit in writing its inability, to pay
its debts generally as they mature, (iii) make a general assignment for the
benefit of its creditors, (iv) be dissolved or liquidated in full or in part,
(v) become insolvent (as such term may be defined or interpreted under the
Federal Bankruptcy Code, Delaware General Corporation Law or any other
applicable statute), (vi) commence a voluntary
2
<PAGE>
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it or (vii) take any
action for the purpose of effecting any of the foregoing;
(b) Proceedings for the appointment of a receiver, trustee, liquidator
or custodian of the Company or of all or a substantial part of the property
thereof, or an involuntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to the Company or the debts thereof
under any bankruptcy, insolvency or other similar law or hereafter in effect
shall be commenced and an order for relief entered, or such proceeding shall not
be dismissed or discharged within sixty days of commencement;
(c) The Board of Directors of SatCon shall approve or SatCon shall
publicly announce or take an action that, if consummated, would constitute or
that constitutes (i) a Rule 13e-3 transaction under Rule 13e-3(a)(3) of the
Rules of the SEC under the Securities Exchange Act of 1934, as amended, or (ii)
a "change in control" as such term is used in Item 1 of Form 8-K of the SEC
under the Securities Exchange Act of 1934, as amended; or
(b) The SatCon Common Stock is deregistered by the SEC or delisted or
otherwise removed from trading by any securities market in which it is traded.
"Qualified Financing" means the sale by the Company of Common Stock (or
preferred stock convertible into Common Stock), either (a) in an Initial Public
Offering that raises at least $25 million in gross proceeds to the Company at a
Common Share Equivalent Price of at least $6.66 (subject to appropriate
adjustment to reflect any stock dividend, stock split or other recapitalization
transaction occurring after the Closing Date) or (b) in one or more private
offerings, that raises at least $10 million in gross proceeds to the Company
from investors that are unaffiliated with the Company or SatCon at a Common
Share Equivalent Price of at least $6.66 (subject to appropriate adjustment to
reflect any stock dividend, stock split or other recapitalization transaction
occurring after the Closing Date).
"Related Agreements" means (a) the Shareholders Agreement substantially in
the form attached as Exhibit K to the Agreement; (b) the Perseus Consulting
Agreement substantially in the form attached as Exhibit L to the Agreement; (c)
the Micro Consulting Agreement substantially in the form attached as Exhibit M
to the Agreement, the Warrants, (D) the Amended and Restated License Agreement
and (e) any other agreement or document entered into by any of the parties in
connection with the Agreement or any of the transactions contemplated thereby.
"SatCon Common Stock" means shares of the common stock of SatCon, par value
$0.01 per share, or any security issued in substitution thereof.
"SatCon SEC Filings" means SatCon's Form 10-Q report for the periods ended
December 31, 1997, March 31, 1998 and June 30, 1998 and SatCon's Form 10-K
report for the year ended
3
<PAGE>
September 30, 1997, in each case as filed with the SEC and any other filings
made by SatCon with the SEC under the Securities Exchange Act of 1934, as
amended, since September 30, 1997.
"Side Letter" means the letter agreement substantially in the form attached
as Exhibit O to the Agreement.
"Warrants" means the warrants to acquire Common Stock substantially in the
forms attached to the Agreement as Exhibits C-1, C-2, C-3, D-1, D-2, D-3, E-1,
E-2 and E-3.
"Warrant Shares" means shares of Common Stock issuable upon exercise or
conversion of the Warrants.
4
<PAGE>
Exhibit 10.15
-------------
AMENDED AND RESTATED LICENSE AGREEMENT
--------------------------------------
THIS AMENDED AND RESTATED LICENSE AGREEMENT (the "Agreement"), made as of
the October 23, 1998, amends and restates the agreement made on the 28th day of
May, 1997 (the "Effective Date") by and between SatCon Technology Corporation, a
Delaware corporation, whose office is located at 161 First St., Cambridge,
Massachusetts, 02142 U.S.A. ("SatCon") and Beacon Power Corporation, a Delaware
corporation whose office is located at 6D Gill Street, Woburn, Massachusetts,
01801 U.S.A. ("Licensee").
WHEREAS, SatCon has formed Licensee as a wholly-owned subsidiary to develop
technology relating to flywheel energy storage products; and
WHEREAS, SatCon, through its ownership of Licensee, will benefit from the
success of Licensee's product development efforts and therefore desires to
enable Licensee to utilize certain of SatCon's existing rights in the
development of new products for the flywheel energy storage market;
NOW THEREFORE, in consideration of the mutual agreements and covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby confirmed, and intending to be legally bound
hereby, the parties agree as follows:
1. DEFINITIONS
1.1 "Covered Product" means a product or process covered by a Valid Claim
---------------
of a SatCon Patent Right or which embodies SatCon Know-How.
1.2 "Licensee Improvements" means any of Licensee's inventions,
---------------------
improvements, modifications, enhancements and derivative works having
application outside the FES field and deriving from or based upon any
SatCon Rights developed prior to earliest of (i) the completion by the
Licensee of an Initial Public Offering that raises at least
$25,000,000 of gross proceeds to the Licensee; (ii) the fifth
anniversary of this Agreement; or (iii) the date shares of Licensee
are put to SatCon pursuant to Section 1.4 of the Securities Purchase
Agreement.
1.3 "FES Field" means the field of flywheel energy storage products,
---------
systems and processes for stationary terrestrial (in- or on-ground or
affixed to structures on ground) applications, but not for satellite
or other nonterrestrial applications.
1.4 "SatCon Improvements" means any of inventions, improvements,
-------------------
modifications, enhancements and derivative works having application in
the FES field deriving from or based upon any SatCon Rights, that are
developed by or for SatCon or any of its controlled subsidiaries other
than Licensee prior to the earliest of (i) the completion by the
Licensee of an
<PAGE>
Initial Public Offering that raises at least $25,000,000 of gross
proceeds to the Licensee; (ii) the fifth anniversary of this
Agreement; or (iii) the date shares of Licensee are put to SatCon
pursuant to Section 1.4 of the Securities Purchase Agreement..
1.5 "SatCon Know-How" means all technical knowledge, information and know-
---------------
how, whether treated as a trade secret or otherwise, and whether
embodied in a copyrighted work or not, which relates to the FES Field
and is owned by SatCon or in which SatCon has a sublicensable interest
as of the date of this Agreement.
1.6 "SatCon Patent Rights" means (a) the United States patents listed on
--------------------
Exhibit A hereto, (b) all corresponding patents and patent
---------
applications filed and the resulting patents issued in other
jurisdictions, (c) all divisions, continuations and continuations-in-
part of the patents referred to in the foregoing clauses (a) and (b),
and (d) all reissues, reexaminations and extensions thereof.
1.7 "SatCon Rights" means, collectively, the SatCon Know-How and the
-------------
SatCon Patent Rights.
1.8 "Securities Purchase Agreement" means the Securities Purchase
------------------------------------------------------------
Agreement dated as of October 23, 1998 by and among SatCon, Licensee,
---------------------------------------------------------------------
Perseus Capital, L.L.C., Duquesne Enterprises and Micro-Generation
------------------------------------------------------------------
Technology Fund, L.L.C.
-----------------------
1.9 "Valid Claim" means a claim of an unexpired patent which shall not
-----------
have been withdrawn, canceled or disclaimed, nor held invalid by a
court of competent jurisdiction in an unappealed or unappealable
decision, or a claim of a patent application which has not been on
file for more than seven years.
2. LICENSES
2.1 SatCon License. SatCon hereby grants to the Licensee, and the
--------------
Licensee hereby accepts, a perpetual (subject to termination pursuant
to Section 6), worldwide, royalty-free, exclusive right and license
(the "SatCon License"), subject to the terms and conditions of this
Agreement, to make, have made, use, offer to sell, sell, have sold,
import, repair, modify, market, create derivative works of and
otherwise commercially exploit Covered Products in the FES Field.
2.2 Sublicensing. Licensee shall have the right to grant sublicenses
------------
under the SatCon Rights to make, have made, use, offer to sell, sell,
have sold, import, repair, modify, market, create derivative works of
and otherwise commercially exploit the Covered Products in the FES
Field. All sublicenses of the SatCon Rights by Licensee shall be
pursuant to written sublicense agreements. Licensee shall provide
SatCon a copy of any such
-2-
<PAGE>
agreement within thirty (30) days after entering into it. SatCon shall
maintain any such agreement in strict confidence.
2.3 Improvements.
------------
(a) Licensee hereby grants to SatCon, and SatCon hereby accepts, a
perpetual, worldwide, royalty-free, exclusive right and license,
subject to the terms and conditions of this Agreement, to make,
have made, use, offer to sell, sell, have sold, import, repair,
modify, market, create derivative works of and otherwise
commercially exploit products covered by Licensee Improvements
outside of the FES Field
(b) SatCon hereby grants to Licensee, and Licensee hereby accepts, a
perpetual, worldwide, royalty-free, exclusive right and, subject
to the terms and conditions of this Agreement, to make, have
made, use, offer to sell, sell, have sold, import, repair,
modify, market, create derivative works of and otherwise
commercially exploit products covered by SatCon Improvements in
the FES Field.
3. INTELLECTUAL PROPERTY
3.1 Ownership of Intellectual Properity. All SatCon Rights and SatCon
-----------------------------------
Improvements and the goodwill associated therewith are and shall
remain the property of SatCon or its licensor and no ownership
interest therein is being conveyed to Licensee under this Agreement.
All Licensee Improvements and the goodwill associated therewith are
and shall remain the property of Licensee, subject to SatCon's
ownership of any underlying SatCon Rights, and no ownership interest
in the Licensee Improvements is being conveyed to SatCon under this
Agreement. SatCon represents and warrants to Licensee that SatCon has
good and valid title to the SatCon Patent Rights, and has the right to
grant Licensee the licenses granted under this Agreement.
3.2 Proprietary Notices. The Licensee shall include in each Covered
-------------------
Product, or the documentation therefor, an acknowledgment of SatCon's
ownership of the SatCon Rights in a form reasonably acceptable to
SatCon. SatCon shall include in each SatCon product embodying Licensee
Improvements, or the documentation therefor, an acknowledgment of
Licensee's ownership of the Licensee Improvements in a form reasonably
acceptable to Licensee.
3.3 Patent Prosecution.
------------------
(a) The parties shall consult with each other in all efforts to file,
prosecute and maintain the SatCon Patent Rights throughout the
world, including all decisions regarding the scope of patent
coverage, claim language, whether to pursue or continue to pursue
-3-
<PAGE>
patent protection in any jurisdiction and other matters bearing
upon the substantive content of patents. SatCon shall pay all
costs of such efforts where the parties agree upon the action to
be taken.
(b) If the parties disagree on any action to be taken with respect to
the prosecution, issuance or maintenance of the SatCon Patent
Rights, the parties shall take the action resulting in the least
diminution of the SatCon Patent Rights, and if the action taken
results in increased costs or in costs that would be avoided by
not taking such action, such increased costs or costs that would
be avoided shall be borne by the party requesting such action.
3.4 Assertion of SatCon Rights.
--------------------------
(a) Each party shall report promptly in writing to the other any
known or suspected infringement or misappropriation of the SatCon
Patent Rights or of other SatCon Rights in the FES Field anywhere
in the world. The parties shall consult with each other on all
efforts to initiate and prosecute an infringement or other
appropriate suit against any third party who at any time has
infringed, or is suspected of infringing, any of the SatCon
Patent Rights or of other SatCon Rights in the FES Field.
(b) Licensee shall have the exclusive right to initiate an
infringement or other appropriate suit, in the name of SatCon if
necessary, against any third party who at any time has infringed,
or is suspected of infringing, any of the SatCon Rights in the
FES Field. Licensee shall have the sole and exclusive right to
control, select counsel for and settle any such suit and shall
pay all expenses of such suit. Any damages, settlements,
recoveries or other consideration received by Licensee for past
infringement or misappropriation as a result of such litigation
shall be retained by Licensee. If Licensee initiates suit in the
name of SatCon, then Licensee shall indemnify SatCon for any
damages SatCon is ordered to pay to a third party in such suit.
(c) SatCon shall have the exclusive right to initiate an infringement
or other appropriate suit against any third party who at any time
has infringed, or is suspected of infringing, any of the SatCon
Rights outside of the FES Field. SatCon shall have the sole and
exclusive right to control, select counsel for and settle any
such suit and shall pay all expenses of such suit. Any damages,
settlements, recoveries or other consideration received by SatCon
for past infringement or misappropriation as a result of such
litigation shall be retained by SatCon.
-4-
<PAGE>
(d) Each party, at its expense, will reasonably cooperate with the
other party in the conduct of a suit under this Section 3.4, such
cooperation to include the making of affidavits, the answering of
interrogatories, the making of persons available for depositions
and appearances as witnesses, the production of documents, and
the like.
4. NONDISCLOSURE
4.1 The parties agree that the SatCon Know-How, confidential portions of
the SatCon Patent Rights, and information relating to the filing,
maintenance, prosecution, assertion and litigation of the SatCon
Rights (collectively, the "SatCon Confidential Information")
constitute the confidential and proprietary information and the
valuable trade secrets of SatCon in which Licensee has the exclusive
rights granted herein. Neither party shall publish, disseminate or
disclose the SatCon Confidential Information, in whole or in part, to
any third party, except to its distributors, customers, licensees,
sublicensees and independent contractors who have a need to know such
SatCon Confidential Information, and further provided that such
distributors, customers, licensees, sublicensees and independent
contractors have agreed in writing to maintain the confidentiality of
such SatCon Confidential Information with at least the same degree of
protection set forth herein.
4.2 Licensee shall not use the SatCon Confidential Information except as
expressly permitted by this Agreement. Each party shall protect the
confidentiality of the SatCon Confidential Information using
reasonable security measures. All personnel who are permitted to
access or use the SatCon Confidential Information shall be required to
sign agreements obligating them to maintain the confidentiality of the
SatCon Confidential Information indefinitely, and not to use the
SatCon Confidential Information except as permitted by this Agreement.
A party shall notify the other party promptly and in writing of the
circumstances surrounding any suspected possession, use or knowledge
of the SatCon Confidential Information or any part thereof at any
location or by any person or entity other than those authorized by
this Agreement, and shall take further steps as may reasonably be
requested by the other party to prevent or remedy any such violation.
Each party is permitted to make reasonable inquiries concerning the
other party's compliance with the provisions of this Section 4.
4.3 Notwithstanding Sections 4.1 and 4.2, (i) SatCon may disclose SatCon
Confidential Information to a third party when such disclosure is, in
SatCon's reasonable business judgment, necessary for its business
outside the FES Field; (ii) Licensee may disclose SatCon Confidential
Information to a third party when such disclosure is, in Licensee's
reasonable business judgment, necessary for its business in the FES
Field; (iii) a party shall not
-5-
<PAGE>
be required to maintain the confidentiality of any information that
(a) is or becomes public or available to the general public otherwise
than through any act or default of such party or (b) is received by
such party from a third party who has no obligation to maintain the
confidentiality of such information; and (iv) a party may disclose
SatCon Confidential Information to the extent required by a court or
other governmental authority, provided that (a) the party gives the
other party reasonable notice of the disclosure, (b) the party uses
reasonable efforts to resist disclosing the SatCon Confidential
Information, and (c) the party cooperates with the other party on
request to obtain a protective order or otherwise limit the
disclosure.
5. DISCLAIMERS; LIMITATIONS
5.1 EXCEPT AS PROVIDED IN SECTION 3.1, SATCON DISCLAIMS ALL WARRANTIES,
WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THE
SATCON RIGHTS, INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES
OF, NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE.
5.2 SATCON SHALL HAVE NO LIABILITY WHATSOEVER FOR DAMAGES TO LICENSEE FOR
ANY CAUSE RELATING TO OR ARISING FROM THE SATCON RIGHTS, REGARDLESS OF
THE FORM OF ANY CLAIM OR ACTION, INCLUDING DIRECT, INDIRECT, SPECIAL,
CONSEQUENTIAL, PUNITIVE AND EXEMPLARY DAMAGES, AND ANY DAMAGES ARISING
FROM LOSS OF DATA, LOSS OF PROFITS, BUSINESS INTERRUPTION, AND ALL
OTHER CAUSES, EVEN IF SATCON HAS BEEN MADE AWARE OF THE POSSIBILITY OF
SUCH DAMAGES, EXCEPT AS OTHERWISE REQUIRED BY LAW.
5.3 The parties acknowledge and agree that the unauthorized use,
disclosure, transfer or dissemination of the SatCon Confidential
Information will diminish substantially the value of such SatCon
Confidential Information and is likely to irreparably harm the other
party and not to be susceptible of cure by monetary damages; and that
if a party or any employee, agent, affiliate, officer or subsidiary of
such party breaches the provisions of Sections 2, 3.1 or 4 hereof, the
other party shall, without limiting its other rights or remedies, be
entitled to equitable relief to enjoin or prevent such breach.
5.4 The design, manufacture, testing, marketing and distribution of the
Covered Products are the responsibility of Licensee. Therefore,
Licensee agrees to defend, indemnify and hold SatCon harmless from and
against
-6-
<PAGE>
any and all expenses, charges, costs, fees, damages and settlements
incurred by SatCon in connection with any claim by any customer,
reseller or other third party relating in any way to the Covered
Products or the incorporation of the SatCon Know-How therein.
6. TERM AND TERMINATION
6.1 Term. This Agreement, and the licenses granted herein, shall remain
----
in effect until terminated as set forth below.
6.2 Termination. This Agreement may be terminated:
-----------
(a) by SatCon, immediately if the Licensee has materially breached
(i) any obligation under this Agreement and has not cured such
breach within one hundred twenty (120) days following the date on
which SatCon. has given written notice specifying the facts
constituting the breach, if such breach is susceptible of cure,
or (ii) any obligation under this Agreement, if such breach is
not susceptible of cure.
(b) by SatCon effective immediately and without any requirement of
notice, if (i) all Purchasers to the Securities Purchase
Agreement dated October 23, 1998 have exercised their Put Rights
(as defined in that agreement) and (ii) the Licensee files for or
consents to a general assignment for the benefit of creditors,
files a petition in bankruptcy or liquidation, or is adjudicated
bankrupt or insolvent under the laws of any jurisdiction for the
general benefit of creditors of an insolvent or financially
troubled debtor, or if a petition in bankruptcy or liquidation is
filed against Licensee and is not finally dismissed by a court of
competent jurisdiction within forty-five (45) days of such
filing;
6.3 Effects of Termination. Upon termination of this Agreement, all
----------------------
rights, licenses and obligations of the parties under this Agreement
shall cease, and Licensee and its sublicensees shall deliver to
SatCon, at the Licensee's expense, all originals and copies of any
materials describing the SatCon Know-How, including all compilations,
translations, and partial copies, whether or not modified, and all
patent prosecution, maintenance and litigation files relating to the
SatCon Patent Rights in the possession of Licensee and its counsel.
The Licensee shall certify in writing within ten (10) business days
following termination that it and its sublicensees have complied with
this Section 6.3. Notwithstanding the foregoing, the provisions of
Sections 2.3(a) (as applicable only to Licensee Improvements in
existence as of the date of termination), 4, 5, 6.3 and 7.2 of this
Agreement shall survive any termination or expiration of this
Agreement in accordance with their terms.
-7-
<PAGE>
7. MISCELLANEOUS
7.1 Agreement Terms. Neither party hereto shall disclose the terms or
---------------
conditions of this Agreement to any third party without the prior
written consent of the other party, except (a) as required by order or
rule of a governmental authority including, without limitation, the
United States Securities and Exchange Commission, (b) that copies of
this Agreement may be provided to Duquesne Enterprises, Inc., Perseus
Capital, L.L.C., and Micro Generation Fund, L.L.C.
7.2 Governing Laws. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the Commonwealth of Massachusetts, U.S.A.,
excluding its choice of law rules. Each party hereby consents to the
personal jurisdiction of the Federal and state courts of the
Commonwealth of Massachusetts for the purpose of the resolution of all
disputes arising under this Agreement.
7.3 Compliance with Laws. The Licensee shall comply with all applicable
--------------------
laws, legislation, rules, regulations, export restrictions,
governmental requirements and industry standards existing from time to
time with respect to the Covered Products and the performance by the
Licensee of its obligations hereunder.
7.4 Entire Agreement. This Agreement, including its Exhibits, constitutes
----------------
the entire agreement between SatCon and the Licensee with respect to
the subject matter hereof, and shall not be released, discharged,
supplemented, interpreted, amended, varied, or modified in any manner
except by an instrument in writing signed by an authorized officer or
representative of each of the parties hereto.
7.5 No Waivers. No delay or omission on the part of either party to this
----------
Agreement in requiring performance by the other party or in exercising
any right hereunder shall operate as a waiver of any provision hereof
or of any right or rights hereunder; and the waiver, omission or delay
in requiring performance or exercising any right hereunder on any one
occasion shall not be construed as a bar to or waiver of such
performance or right on any future occasion.
7.6 Severability. If any provision of this Agreement shall for any reason
------------
be held illegal or unenforceable, such provision shall be deemed
separable from the remaining provisions of this Agreement and shall in
no way affect or impair the validity or enforceability of the
remaining provisions of this Agreement.
7.7 Section Headings. Section headings of this Agreement are for
----------------
descriptive purposes only and shall not control or alter the meaning
of this Agreement.
-8-
<PAGE>
7.8 Relationship of the Parties. The parties shall for all purposes be
---------------------------
considered independent contractors with respect to each other, and
neither shall be considered an employee, employer, agent, principal,
partner or joint venturer of the other.
7.9 Notices. For the purposes of this Agreement, and for all notices and
-------
correspondence hereunder, the addresses of the respective parties are
as follows:
If to SatCon: SatCon Technology Corporation
161 First Street
Cambridge, Massachusetts 02142-1771
Attn: President
Fax: (617) 661-3373
with a copy to Jeffrey N. Carp, Esq.
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Fax: (617) 526-5000
If to Licensee: Beacon Power Corporation
6D Gill Street
Woburn, MA 01801
Attn: President
Fax: (781) 938-9401
with copies to: Perseus Capital, L.L.C.
The Army and Navy Club Building
1627 I Street, N.W., Suite 610
Washington, D.C. 20006
Attn: Kenneth M. Socha
Fax No. (202) 463-6215
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
Attn: Robert B. Ott
Fax No.: (202) 942-5999
Anthony J. Villotti, Vice President
Duquesne Enterprises, Inc.
One Northshore Center, Suite 100
12 Federal Street
Pittsburgh, PA 15212
Fax No.:
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<PAGE>
Robert W. Shaw, Jr.
Arete Corporation
P.O. Box 1299
Center Harbor, New Hampshire 03226
Fax No.: (603) 253-9799
No change of address shall be binding upon the other party hereto
until written notice thereof is received by such party at the address
show herein. All notices shall be in English and shall be effective
upon receipt if delivered personally or sent by facsimile, two days
after shipment by overnight delivery service and five (5) days after
mailing if sent by certified mail return receipt requested.
7.10 Assignment and Corporate Reorganization. The rights granted to the
---------------------------------------
Licensee under this Agreement are personal in character. Except as
provided herein, neither this Agreement nor any rights granted hereby
may be assigned by the Licensee voluntarily or by operation of law
without SatCon's prior written consent and any such attempted
assignment shall be null and void. For purposes of this Agreement,
"assignment" shall be deemed not to include the transfer of all or
substantially all of the assets of, or a majority interest in the
voting stock of, the Licensee, or the merger of the Licensee with one
or more entities. SatCon may assign its rights under this Agreement
without the consent of the Licensee. This Agreement shall inure to
the benefit of and be binding upon any permitted successor or assign
of either party.
[Remainder of Page Intentionally Blank]
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<PAGE>
IN WITNESS WHEREOF, SatCon and the Licensee have duly executed this
Agreement as of the dates written below:
LICENSEE: SATCON:
- -------- ------
BEACON POWER CORPORATION SATCON TECHNOLOGY CORPORATION
By: /s/ William E. Stanton By: /s/ David B. Eisenhaure
----------------------------------- -------------------------------
Name: William E. Stanton Name: David B. Eisenhaure
--------------------------------- -----------------------------
Title: President & CEO Title: President
-------------------------------- ----------------------------
Date: October 27, 1998 Date: October 23, 1998
--------------------------------- -----------------------------
[Signature Page to License Agreement]
-1-
<PAGE>
Exhibit 10.16
-------------
REGISTRATION RIGHTS STATEMENT
This Registration Rights Statement (this "Statement") sets forth the
registration rights granted by Beacon Power Corporation (the "Company") to the
Purchasers under the Securities Purchase Agreement dated as of October 23, 1998
by and among the Company, SatCon Technology Corporation ("SatCon") and such
Purchasers (the "Purchase Agreement") and to SatCon. Capitalized terms defined
in the Purchase Agreement and used herein without definition have the same
meanings herein as in the Purchase Agreement.
In consideration of the agreements of the Purchasers contained in the
Purchase Agreement, the Company hereby grants to the Purchasers the rights set
forth herein:
1. Definitions. For purposes of this Statement:
-----------
(a) "Commencement Date" means the 180th day after the date on which
the first of the following events occurs: (i) the Company consummates its
initial public offering of securities under the Securities Act; (ii) the Company
registers a class of securities under Section 12(b) or 12(g) of the Exchange Act
or (iii) the Company becomes required to file periodic reports with the
Commission under Section 15(d) of the Exchange Act.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(c) "Investors" means (i) the Purchasers, (ii) the partners, members
or stockholders of any Purchaser collectively provided that such partners,
members or stockholders act through such Purchaser or its successor and (iii)
any person or entity to whom any Purchaser or any person or entity identified in
clause (ii) of this Section 1(c) sells, transfers or assigns Registrable
Securities, other than in a sale pursuant to Rule 144 under the Securities Act
or a registration effected pursuant to this Agreement and (iv) SatCon.
(d) "Majority-In-Interest" means the holder or holders of a majority
of the Registrable Securities not held by SatCon or its Affiliates. For
purposes of this definition, all Registrable Securities issuable upon conversion
or exercise of any other securities shall be deemed to be issued and
outstanding.
(e) "Register," "registered," and "registration" refer to an
underwritten registration effected by preparing and filing with the Securities
and Exchange Commission (the "Commission") a registration statement or similar
document in compliance with the Securities Act, and the declaration or ordering
by the Commission of effectiveness of such registration statement or document.
<PAGE>
(f) "Registration Expenses" means all expenses in connection with the
Company's performance of or compliance with its obligations under this
Statement, including, without limitation, all (i) registration, qualification
and filing fees; (ii) fees, costs and expenses of compliance with securities or
blue sky laws (including reasonable fees, expenses and disbursements of counsel
for the underwriters in connection with blue sky qualifications of the
Registrable Securities under the laws of such jurisdictions as the managing
underwriter or underwriters in a registration may designate, subject to the
limitation as set forth in subsection (h) of Section 5 hereof); (iii) printing
expenses; (iv) messenger, telephone and delivery expenses; (v) fees, expenses
and disbursements of counsel for the Company and of all independent certified
public accountants retained by the Company (including the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance); (vi) Securities Act liability insurance if the Company so desires;
(vii) fees, expenses and disbursements of any other individuals or entities
retained by the Company in connection with the registration of the Registrable
Securities; (viii) fees, costs and expenses incurred in connection with the
listing of the Registrable Securities on each national securities exchange or
automated quotation system on which the Company has made application for the
listing of its Common Stock; and (ix) internal expenses of the Company
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties and expenses of any annual
audit). Registration Expenses shall not include selling commissions, discounts
or other compensation paid to underwriters or other agents or brokers to effect
the sale of Registrable Securities, or counsel fees and any other expenses
incurred by Investors in connection with any registration that are not specified
in the immediately preceding sentence.
(g) "Registrable Securities" means (i) shares of Common Stock or other
securities of the Company issued upon conversion of the Class D Preferred Stock
or exercise or conversion of the Warrants or in payment for consulting or other
services rendered by any of the Purchasers or their Affiliates to the Company,
(ii) shares of Common Stock held on the date hereof by SatCon or issued upon
conversion of the Class A Preferred Stock of the Company held by SatCon, or
(iii) shares of Common Stock or other securities of the Company issued as a
dividend or other distribution on or in exchange for any of the shares of Common
Stock specified in clauses (i) and (ii). Notwithstanding the foregoing, until
such time as all Registrable Securities held by Investors other than SatCon have
been sold pursuant to Rule 144 under the Securities Act or a registration
effected pursuant to this Agreement, securities held by SatCon and its
Affiliates shall not exceed, in the aggregate, 20% of the total Registrable
Securities held by all Investors.
(h) "Requestor" means either the Majority-In-Interest or SatCon,
whichever requests the registration in question.
(i) "Securities Act" means the Securities Act of 1933, as amended, or
any successor statute.
2. Demand Registrations.
--------------------
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<PAGE>
(a) Request for Registration. If the Majority-In-Interest or SatCon
------------------------
submits a written request (a "Demand Notice") to the Company subsequent to the
Commencement Date that the Company register Registrable Securities under and in
accordance with the Securities Act (a "Demand Registration"), then, on no more
than three occasions (no more than two requested by the Majority-In-Interest and
no more than one requested by SatCon), the Company shall:
(i) within 5 days after receipt of such Demand Notice, give
written notice of the proposed registration to all other Investors; and
(ii) as soon as practicable, use diligent efforts to effect such
registration as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Investors joining in such request as are specified in written
requests received by the Company within 20 days after the date the Company
mails the written notice referred to in clause (i) above.
Notwithstanding the foregoing, if the Company shall furnish to the
Investors a certificate signed by the president of the Company stating that in
the good faith judgment of the board of directors of the Company, it would be
seriously detrimental to the Company or its stockholders for a registration
statement to be filed on or before the date filing would be required in
connection with any Demand Registration and it is therefore essential to defer
the filing of such registration statement, the Company shall have the right to
defer such filing or delay its effectiveness for a reasonable period not to
exceed 60 days provided that such right shall not be exercised more than once
with respect to a request for registration hereunder. The Company will pay all
Registration Expenses in connection with such withdrawn request for
registration.
(b) Underwriting. In connection with any registration under this
------------
Section 2, if so requested by the Requestor, the Company shall enter into an
underwriting agreement with one or more underwriters selected by the Requestor
having terms and conditions customary for such agreements.
(c) Shelf Registration. If at the time the Company registers the
------------------
Registrable Securities under the Securities Act pursuant to this Section 1, the
sale or other disposition of such Registrable Securities by the Investors may be
made pursuant to a registration statement on Form S-3 (or any successor form
that permits the incorporation by reference of future filings by the Company
under the Exchange Act), such registration statement, unless otherwise directed
by the Requestor, shall be filed as a "shelf" registration statement pursuant to
Rule 415 under the Securities Act (or any successor rule). Any such shelf
registration shall cover the disposition of all Registrable Securities in one or
more underwritten offerings, block transactions, broker transactions, at-market
transactions and in such other manner or manners as may be specified by the
Requestor. The Company shall use its best efforts to keep such "shelf"
registration continuously effective as long as the delivery of a prospectus is
required under the Securities Act in connection with the disposition of the
Registrable Securities registered
-3-
<PAGE>
thereby and in furtherance of such obligation, shall supplement or amend such
registration statement if, as and when required by the rules, regulations and
instructions applicable to the form used by the Company for such registration or
by the Securities Act or by any other rules and regulations thereunder
applicable to shelf registrations. On one occasion during each twelve months
such shelf registration statement remains effective, upon their receipt of a
certificate signed by the president of the Company in accordance with the last
paragraph of Section 2(a) hereof, the Investors will refrain from making any
sales of Registrable Securities under the shelf registration statement for a
period of up to 60 days; provided that this right to cause the Investors to
refrain from making sales shall not be exercised by the Company during the one
year period following any exercise of the Company's right to defer the filing or
delay its effectiveness of a registration statement under the last paragraph of
Section 2(a).
3. Company Registration.
--------------------
(a) Notice of Registration. If at any time or from time to time,
----------------------
the Company shall determine to register any of its Common Stock, whether or not
for its own account, other than a registration relating to employee benefit
plans or a registration effected on Form S-4, the Company shall:
(i) provide to each Investor written notice thereof at least
ten days prior to the filing of the registration statement by the Company in
connection with such registration; and
(ii) include in such registration, and in any underwriting
involved therein, all those Registrable Securities specified in a written
request by each Investor received by the Company within five days after the
Company mails the written notice referred to above, subject to the provisions of
Section 3(b) below.
(b) Underwriting. The right of any Investor to registration
------------
pursuant to this Section 3 shall be conditioned upon the participation by such
Investor in the underwriting arrangements specified by the Company in connection
with such registration and the inclusion of the Registrable Securities of such
Investor in such underwriting to the extent provided herein. All Investors
proposing to distribute their Registrable Securities through such underwriting
shall (together with the Company) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company and take all other actions, and deliver such opinions and
certifications, as may be reasonably requested by such managing underwriter.
Notwithstanding any other provision of this Section 3, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the number of
Registrable Securities to be included in such registration. The Company shall so
advise all Investors distributing Registrable Securities through such
underwriting, and there shall be excluded from such registration and
underwriting, to the extent necessary to satisfy such limitation, first shares
held by the Investors and, thereafter, to the extent necessary, shares which the
Company wishes to register for its own account. As among the Investors as a
group, the number of Registrable Securities that may be included in the
registration and
-4-
<PAGE>
underwriting shall be allocated in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities required to be included (determined
without regard to any requirement of a request to be included in such
registration) in such registration held by all Investors at the time of filing
the registration statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company may round the number of shares allocated
to any Investor to the nearest 100 shares.
(c) Right to Terminate Registration. The Company shall have the
-------------------------------
right to terminate or withdraw any registration initiated by it under this
Section 3 prior to the effectiveness of such registration whether or not any
Investor has elected to include Registrable Securities in such registration.
4. Expense of Registration. All Registration Expenses incurred in
-----------------------
connection with the registration and other obligations of the Company pursuant
to Sections 2, 3 and 5 shall be borne by Company.
5. Registration Procedures. If and whenever the Company is required
-----------------------
by the provisions of this Statement to effect the registration of Registrable
Securities, the Company shall:
(a) promptly prepare and file with the Commission a registration
statement with respect to such Registrable Securities on any form that may be
utilized by the Company and that shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and use its reasonable diligent efforts to cause such registration
statement to become effective as promptly as practicable and remain effective
thereafter as provided herein, provided that prior to filing a registration
statement or prospectus or any amendments or supplements thereto, including
documents incorporated by reference after the initial filing of any registration
statement, the Company will furnish to each of the Investors whose Registrable
Securities are covered by such registration statement, their counsel and the
underwriters copies of all such documents proposed to be filed sufficiently in
advance of filing to provide them with a reasonable opportunity to review such
documents and comment thereon;
(b) prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and current and to comply with the provisions
of the Securities Act with respect to the sale or other disposition of all
Registrable Securities covered by such registration statement, including such
amendments (including post-effective amendments) and supplements as may be
necessary to reflect the intended method of disposition by the prospective
seller or sellers of such Registrable Securities, but (except for a shelf
registration) for no longer than 120 days subsequent to the effective date of
such registration statement;
(c) provide customary indemnity and contribution arrangements to
any qualified independent underwriter or qualified independent pricer as defined
in Schedule
-5-
<PAGE>
E of the Bylaws of the National Association of Securities Dealers, Inc. (a
"Qualified Independent Underwriter/Pricer"), if requested by such Qualified
Independent Underwriter/Pricer, on such reasonable terms as such Qualified
Independent Underwriter/Pricer customarily requires;
(d) subject to receiving reasonable assurances of confidentiality,
for a reasonable period after the filing of such registration statement, and
throughout each period during which the Company is required to keep a
registration effective, make available for inspection by the selling holders of
Registrable Securities being offered, and any underwriters, and their respective
counsel, such financial and other information and books and records of the
Company, and cause the officers, directors, employees, counsel and independent
certified public accountants of the Company to respond to such inquiries as
shall be reasonably necessary, in the judgment of such counsel, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act;
(e) promptly notify the selling holders of Registrable Securities
and any underwriters and confirm such advice in writing, (i) when such
registration statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment, when the
same has become effective, (ii) of any comments by the Commission, by the
National Association of Securities Dealers Inc. ("NASD"), and by the blue sky or
securities commissioner or regulator of any state with respect thereto or any
request by any such entity for amendments or supplements to such registration
statement or prospectus or for additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings for
that purpose, (iv) if at any time the representations and warranties of the
Company cease to be true and correct in all material respects, (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (vi) at any
time when a prospectus is required to be delivered under the Securities Act,
that such registration statement, prospectus, prospectus amendment or supplement
or post-effective amendment, or any document incorporated by reference in any of
the foregoing, contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading;
(f) furnish to each selling holder of Registrable Securities being
offered, and any underwriters, prospectuses or amendments or supplements
thereto, in such quantities as they may reasonably request and as soon as
practicable, that update previous prospectuses or amendments or supplements
thereto;
(g) in the case of a registration under Section 3 hereof, permit
selling holders of Registrable Securities to rely on any representations and
warranties made to any underwriter of the Company or any opinion of counsel or
"cold comfort" letter delivered to any such underwriter, and indemnify each such
holder to the same extent that it indemnifies any such underwriter;
-6-
<PAGE>
(h) use reasonable diligent efforts to (i) register or qualify the
Registrable Securities to be included in a registration statement hereunder
under such other securities laws or blue sky laws of such jurisdictions within
the United States of America as any selling holder of such Registrable
Securities or any underwriter of the securities being sold shall reasonably
request, (ii) keep such registrations or qualifications in effect for so long as
the registration statement remains in effect and (iii) take any and all such
actions as may be reasonably necessary or advisable to enable such holder or
underwriter to consummate the disposition in such jurisdictions of such
Registrable Securities owned by such holder; provided, however, that the Company
-------- --------
shall not be required for any such purpose to (x) qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of this Section 5(h),
(y) subject itself to taxation in any such jurisdiction or (z) consent to
general service of process in any such jurisdiction;
(i) cause all such Registrable Securities to be listed or accepted
for quotation on each securities exchange or automated quotation system on which
the Company's Common Stock then trades; and
(j) otherwise use reasonable diligent efforts to comply with all
applicable provisions of the Securities Act, and rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of at least twelve months
which shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder.
6. Indemnification. In the event any of the Registrable Securities
---------------
are included in a registration statement under this Statement:
(a) the Company will indemnify each Investor who participates in
such registration, each of its officers and directors and partners and such
Investor's separate legal counsel and independent accountants, and each person
controlling such Investor within the meaning of Section 15 of the Securities
Act, and each underwriter, if any, and each person who controls any underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
claims, losses, damages or liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or any violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Investor, each of its officers and directors and partners and such
Investor's separate legal counsel and independent accountants and each person
controlling such Investor, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating, preparing or
-7-
<PAGE>
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Investor or underwriter and stated to be
specially for use therein.
(b) Each Investor will, if Registrable Securities held by such
Investor are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, and each other such
Investor, each of its officers and directors and each person controlling such
Investor within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse the Company, such
Investors, such directors, officers, persons, underwriters or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Investor and stated to be
specifically for use therein.
(c) Each party entitled to indemnification under this Section 6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought provided
that failure to give such prompt notice shall not relieve the Indemnifying Party
of its obligations hereunder unless it is materially prejudiced thereby, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). Such Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be that of such Indemnified Party unless
(i) the Indemnifying Party has agreed to pay such fees and expenses or (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to such Indemnified Party
in any such action or proceeding or (iii) the named parties to any such action
or proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party and such Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to
such Indemnified Party
-8-
<PAGE>
which are different from or additional to those available to the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing of an election to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense of such action or proceeding on behalf of such Indemnified Party, it
being understood, however, that the Indemnifying Party then shall have the right
to employ separate counsel at its own expense and to participate in the defense
thereof, and shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all Indemnified Parties, which firm shall be
designated in writing by a majority of the Indemnified Parties who are eligible
to select such counsel). No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnified Party may consent to entry of any judgment or enter
into any settlement without the prior written consent of the Indemnifying Party.
(d) If the indemnification provided for in this Section 6 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying the Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
with respect to such loss, liability, claim, damage or expenses in the
proportion that is appropriate to reflect the relative fault of the Indemnifying
Party and the Indemnified Party in connection with the statements or omissions
that resulted in such loss, liability, claim, damage, or expense, as well as any
other relevant equitable considerations. The relative fault of the Indemnifying
Party and the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
7. Information by Investor. Investors whose Registrable Securities
-----------------------
are included in any registration shall furnish to the Company such information
regarding themselves and the distribution proposed by them as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Statement.
8. Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock and until five years
from the date thereof, the Company shall use reasonably diligent efforts to:
-9-
<PAGE>
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, beginning 90 days
after the Company registers a class of securities under Section 12 of the
Exchange Act or completes a registered offering under the Securities Act; or
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements);
(c) Furnish to any Investor promptly upon request a written
statement as to its compliance with the reporting requirements of Rule 144 (at
any time after 90 days after the Company completes a registered offering under
the Securities Act), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as an Investor may reasonably request in
availing itself of any rule or regulation of the Commission allowing an Investor
to sell Registrable Securities without registration.
9. Termination of Registration Rights. No Investor shall be entitled
----------------------------------
to exercise any right provided for in this Statement after ten years following
the Commencement Date.
10. Information To Be Provided by the Investors. Each Investor whose
-------------------------------------------
Registrable Securities are included in any registration pursuant to this
Agreement shall furnish the Company such information regarding such Investor and
the distribution proposed by such Investor as may be reasonably requested in
writing by the Company and as shall be required in connection with such
registration or the registration or qualification of such securities under any
applicable state securities law.
11. "Stand-Off" Agreement. Each Investor, if requested by the managing
--------------------
underwriter of a registered public offering of securities by the Company, shall
agree not to sell or otherwise transfer or dispose of any Registrable Securities
or other securities of the Company then held by such Investor for a specified
period of time that is customary under the circumstances (not to exceed 180
days) following the effective date of the registration statement for such
offering, provided that (a) no such agreement shall be required unless the other
principal stockholders of the Company enter into a similar agreement covering
the same period of time and (b) such agreement shall contain terms customary for
such agreements. The Company may impose stop transfer instructions to enforce
any required agreement of the Investors under this Section 11.
12. Agreements With Respect to Underwritten Offering. In the event
------------------------------------------------
that Registrable Securities are sold pursuant to a registration statement in an
underwritten offering, the Company and each Investor participating in such sale
shall enter into an underwriting agreement with the lead underwriters for such
offering containing customary representations, warranties and covenants.
-10-
<PAGE>
13. Miscellaneous.
-------------
(a) Amendments and Waivers. The provisions of this Statement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to depart from the provisions hereof may
not be given unless the Company has obtained the written consent of the
Majority-In-Interest. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof with respect to a matter which relates
exclusively to the rights of Investors whose Registrable Securities are being
sold pursuant to a registration statement and which does not directly or
indirectly affect the rights of other Investors may be given by the holders of a
majority of the Registrable Securities being sold by such holders.
(b) Notices. All communications provided for hereunder shall be
-------
sent by registered or certified mail, reputable overnight delivery service or
facsimile transmission. Communications to an Investor shall be sent to such
Investor at its address set forth in the Purchase Agreement or, if the Investor
was not a Purchaser, in the security register or other records of the Company.
Communications to the Company shall be sent to the Company as provided in the
Purchase Agreement.
(c) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Statement are inserted for convenience only and do not
constitute a part of this Statement.
(d) Governing Law. This Statement shall be construed and
-------------
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York as applied to agreements entered into and
wholly performed in New York, without giving effect to the choice of law or
conflicts principles thereof. In the event of any dispute arising out of the
terms of this Statement, the parties hereby consent to the exclusive
jurisdiction of the federal and state courts located in the State of New York
for resolution of such dispute, and agree not to contest such exclusive
jurisdiction or seek to transfer any action relating to such dispute to any
other jurisdiction.
(e) Part of Purchase Agreement. This Statement constitutes a
--------------------------
part of the Purchase Agreement and is subject to all provisions thereof.
(f) Severability. Any provision of this Statement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
-11-
<PAGE>
Exhibit 10.17
-------------
REGISTRATION RIGHTS STATEMENT
This Registration Rights Statement (this "Statement") sets forth the
registration rights granted by SatCon Technology Corporation (the "Company") to
the Purchasers under the Securities Purchase Agreement dated as of October 23,
1998 by and among the Company, Beacon Power Corporation and such Purchasers (the
"Purchase Agreement"). Capitalized terms defined in the Purchase Agreement and
used herein without definition have the same meanings herein as in the Purchase
Agreement.
In consideration of the agreements of the Purchasers contained in the
Purchase Agreement, the Company hereby grants to the Purchasers the rights set
forth herein:
1. Definitions. For purposes of this Statement:
-----------
(a) "Commencement Date" means as to each Purchaser, the date on which
such Purchaser exercises its Put Right under the Purchase Agreement.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(c) "Investors" means (i) the Purchasers, (ii) the partners, members
or stockholders of any Investor collectively provided that such partners,
members or stockholders act through such Investor or its successor and (iii) any
person or entity to whom an Investor sells, transfers or assigns Registrable
Securities held by such Investor, other than in a sale pursuant to Rule 144
under the Securities Act or a registration effected pursuant to this Agreement.
(d) "Majority-In-Interest" means the holder or holders of a majority
of the Registrable Securities. For purposes of this definition, all Registrable
Securities issuable upon conversion or exercise of any other securities shall be
deemed to be issued and outstanding.
(e) "Register," "registered," and "registration" refer to an
underwritten registration effected by preparing and filing with the Securities
and Exchange Commission (the "Commission") a registration statement or similar
document in compliance with the Securities Act, and the declaration or ordering
by the Commission of effectiveness of such registration statement or document.
(f) "Registration Expenses" means all expenses in connection with the
Company's performance of or compliance with its obligations under this
Statement, including, without limitation, all (i) registration, qualification
and filing fees; (ii) fees, costs and expenses of compliance with securities or
blue sky laws (including reasonable
<PAGE>
fees, expenses and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities under the laws of
such jurisdictions as the managing underwriter or underwriters in a registration
may designate, subject to the limitation as set forth in subsection (h) of
Section 5 hereof); (iii) printing expenses; (iv) messenger, telephone and
delivery expenses; (v) fees, expenses and disbursements of counsel for the
Company and of all independent certified public accountants retained by the
Company (including the expenses of any special audit and "cold comfort" letters
required by or incident to such performance); (vi) Securities Act liability
insurance if the Company so desires; (vii) fees, expenses and disbursements of
any other individuals or entities retained by the Company in connection with the
registration of the Registrable Securities; (viii) fees, costs and expenses
incurred in connection with the listing of the Registrable Securities on each
national securities exchange or automated quotation system on which the Company
has made application for the listing of its Common Stock; and (ix) internal
expenses of the Company (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties and
expenses of any annual audit). Registration Expenses shall not include selling
commissions, discounts or other compensation paid to underwriters or other
agents or brokers to effect the sale of Registrable Securities, or counsel fees
and any other expenses incurred by Investors in connection with any registration
that are not specified in the immediately preceding sentence.
(g) "Registrable Securities" means (i) shares of SatCon Common Stock
issued upon exercise of the Put Rights under the Purchase Agreement or (ii)
shares of Common Stock or other securities of the Company issued as a dividend
or other distribution on or in exchange for any such shares of SatCon Common
Stock; provided that "Registrable Securities" shall not include any such shares
that are eligible for sale under Rule 144(k) of the Commission (or any successor
provision).
(h) "Securities Act" means the Securities Act of 1933, as amended, or
any successor statute.
2. Demand Registrations.
--------------------
(a) Request for Registration. If subsequent to the Commencement Date
------------------------
and at a time the Company is eligible to use Form S-3 of the Commission (or any
successor form) for a secondary offering, the Majority-In-Interest submits a
written request (a "Demand Notice") to the Company that the Company register
Registrable Securities under and in accordance with the Securities Act (a
"Demand Registration"), then, on no more than one occasion, the Company shall:
(i) within 5 days after receipt of such Demand Notice, give
written notice of the proposed registration to all other Investors; and
(ii) as soon as practicable, use reasonable diligent efforts to
effect such registration as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any
-2-
<PAGE>
Investors joining in such request as are specified in written requests received
by the Company within 20 days after the date the Company mails the written
notice referred to in clause (i) above. The Company shall be permitted to
include in any such registration any shares of SatCon Common Stock required to
be registered under the Registration Rights Agreement dated as of May 28, 1997
by and among the Company, Beacon Power Corporation and Duquesne Enterprises (the
"Duquesne Agreement") and any other registration rights agreement then in
effect.
Notwithstanding the foregoing, if the Company shall furnish to the
Investors a certificate signed by the president of the Company stating that in
the good faith judgment of the Company, it would be seriously detrimental to the
Company or its stockholders for a registration statement to be filed on or
before the date filing would be required in connection with any Demand
Registration and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing or
delay its effectiveness for a reasonable period not to exceed 60 days provided
that such right shall not be exercised more than once with respect to a request
for registration hereunder. The Company will pay all Registration Expenses in
connection with such withdrawn request for registration.
(b) Shelf Registration. Unless otherwise directed by the Majority-In-
------------------
Interest, the registration statement shall be filed as a "shelf" registration
statement pursuant to Rule 415 under the Securities Act (or any successor rule).
Any such shelf registration shall cover the disposition of all Registrable
Securities in one or more underwritten offerings, block transactions, broker
transactions, at-market transactions and in such other manner or manners as may
be specified by the Requestor. The Company shall use its best efforts to keep
such "shelf" registration continuously effective as long as the delivery of a
prospectus is required under the Securities Act in connection with the
disposition of the Registrable Securities registered thereby and in furtherance
of such obligation, shall supplement or amend such registration statement if, as
and when required by the rules, regulations and instructions applicable to the
form used by the Company for such registration or by the Securities Act or by
any other rules and regulations thereunder applicable to shelf registrations.
On one occasion during each twelve-month period during which such shelf
registration statement remains effective, upon their receipt of a certificate
signed by the president of the Company in accordance with the last paragraph of
Section 2(a) hereof, the Investors will refrain from making any sales of
Registrable Securities under the shelf registration statement for a period of up
to 60 days; provided that this right to cause the Investors to refrain from
making sales shall not be exercised by the Company during the one year period
following any exercise of the Company's right to defer or delay the
effectiveness of the filing of a registration statement under the last paragraph
of Section 2(a).
-3-
<PAGE>
3. Company Registration.
--------------------
(a) Notice of Registration. If at any time or from time to time,
----------------------
the Company shall determine to register any of its Common Stock, whether or not
for its own account, other than a registration relating to employee benefit
plans or a registration effected on Form S-4, the Company shall:
(i) provide to each Investor written notice thereof at least
ten days prior to the filing of the registration statement by the Company in
connection with such registration; and
(ii) include in such registration, and in any underwriting
involved therein, all those Registrable Securities specified in a written
request by each Investor received by the Company within five days after the
Company mails the written notice referred to above, subject to the provisions of
Section 3(b) below.
(b) Underwriting. The right of any Investor to registration
------------
pursuant to this Section 3 shall be conditioned upon the participation by such
Investor in the underwriting arrangements specified by the Company in connection
with such registration and the inclusion of the Registrable Securities of such
Investor in such underwriting to the extent provided herein. All Investors
proposing to distribute their Registrable Securities through such underwriting
shall (together with the Company) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company and take all other actions, and deliver such opinions and
certifications, as may be reasonably requested by such managing underwriter.
Notwithstanding any other provision of this Section 3, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the number of
Registrable Securities to be included in such registration. The Company shall so
advise all Investors distributing Registrable Securities through such
underwriting, and there shall be excluded from such registration and
underwriting, to the extent necessary to satisfy such limitation, first shares
held by the Investors, shares subject to the Duquesne Agreement and shares
subject to any other registration rights agreements of the Company in effect at
such time, on a pro rata basis based on the number of such shares required to be
included in such registration (determined without regard to any requirement of a
request to be included in such registration) at the time of filing of such
registration statement, and, thereafter, to the extent necessary, shares which
the Company wishes to register for its own account. As among the Investors as a
group, the number of Registrable Securities that may be included in the
registration and underwriting shall be allocated among them in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities
required to be included (determined without regard to any requirement of a
request to be included in such registration) in such registration held by all
Investors at the time of filing the registration statement. To facilitate the
allocation of shares in accordance with the above provisions, the Company may
round the number of shares allocated to any Investor to the nearest 100 shares.
-4-
<PAGE>
(c) Right to Terminate Registration. The Company shall have the
-------------------------------
right to terminate or withdraw any registration initiated by it under this
Section 3 prior to the effectiveness of such registration whether or not any
Investor has elected to include Registrable Securities in such registration.
4. Expense of Registration. All Registration Expenses incurred in
-----------------------
connection with the registration and other obligations of the Company pursuant
to Sections 2, 3 and 5 shall be borne by Company.
5. Registration Procedures. If and whenever the Company is required by
-----------------------
the provisions of this Statement to effect the registration of Registrable
Securities, the Company shall:
(a) promptly prepare and file with the Commission a registration
statement with respect to such Registrable Securities on any form that may be
utilized by the Company and that shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and use its reasonable diligent efforts to cause such registration
statement to become effective as promptly as practicable and remain effective
thereafter as provided herein, provided that prior to filing a registration
statement or prospectus or any amendments or supplements thereto, including
documents incorporated by reference after the initial filing of any registration
statement, the Company will furnish to each of the Investors whose Registrable
Securities are covered by such registration statement, their counsel and the
underwriters copies of all such documents proposed to be filed sufficiently in
advance of filing to provide them with a reasonable opportunity to review such
documents and comment thereon;
(b) prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and current and to comply with the provisions
of the Securities Act with respect to the sale or other disposition of all
Registrable Securities covered by such registration statement, including such
amendments (including post-effective amendments) and supplements as may be
necessary to reflect the intended method of disposition by the prospective
seller or sellers of such Registrable Securities, but (except for a shelf
registration) for no longer than 120 days subsequent to the effective date of
such registration statement;
(c) provide customary indemnity and contribution arrangements to any
qualified independent underwriter or qualified independent pricer as defined in
Schedule E of the Bylaws of the National Association of Securities Dealers, Inc.
(a "Qualified Independent Underwriter/Pricer"), if requested by such Qualified
Independent Underwriter/Pricer, on such reasonable terms as such Qualified
Independent Underwriter/Pricer customarily requires;
(d) subject to receiving reasonable assurances of confidentiality,
for a reasonable period after the filing of such registration statement, and
throughout each
-5-
<PAGE>
period during which the Company is required to keep a registration effective,
make available for inspection by the selling holders of Registrable Securities
being offered, and any underwriters, and their respective counsel, such
financial and other information and books and records of the Company, and cause
the officers, directors, employees, counsel and independent certified public
accountants of the Company to respond to such inquiries as shall be reasonably
necessary, in the judgment of such counsel, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act;
(e) promptly notify the selling holders of Registrable Securities
and any underwriters and confirm such advice in writing, (i) when such
registration statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment, when the
same has become effective, (ii) of any comments by the Commission, by the
National Association of Securities Dealers Inc. ("NASD"), and by the blue sky or
securities commissioner or regulator of any state with respect thereto or any
request by any such entity for amendments or supplements to such registration
statement or prospectus or for additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of such
registration statement or the initiation or threatening of any proceedings for
that purpose, (iv) if at any time the representations and warranties of the
Company cease to be true and correct in all material respects, (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (vi) at any
time when a prospectus is required to be delivered under the Securities Act,
that such registration statement, prospectus, prospectus amendment or supplement
or post-effective amendment, or any document incorporated by reference in any of
the foregoing, contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading;
(f) furnish to each selling holder of Registrable Securities being
offered, and any underwriters, prospectuses or amendments or supplements
thereto, in such quantities as they may reasonably request and as soon as
practicable, that update previous prospectuses or amendments or supplements
thereto;
(g) in the case of a registration under Section 3 hereof, permit
selling holders of Registrable Securities to rely on any representations and
warranties made to any underwriter of the Company or any opinion of counsel or
"cold comfort" letter delivered to any such underwriter, and indemnify each such
holder to the same extent that it indemnifies any such underwriter;
(h) use reasonable diligent efforts to (i) register or qualify the
Registrable Securities to be included in a registration statement hereunder
under such other securities laws or blue sky laws of such jurisdictions within
the United States of America as any selling holder of such Registrable
Securities or any underwriter of the securities being sold shall reasonably
request, (ii) keep such registrations or qualifications in effect for so long as
the registration statement remains in effect and (iii) take any and all such
actions
-6-
<PAGE>
as may be reasonably necessary or advisable to enable such holder or underwriter
to consummate the disposition in such jurisdictions of such Registrable
Securities owned by such holder; provided, however, that the Company shall not
-------- -------
be required for any such purpose to (x) qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 5(h), (y) subject
itself to taxation in any such jurisdiction or (z) consent to general service of
process in any such jurisdiction;
(i) cause all such Registrable Securities to be listed or accepted
for quotation on each securities exchange or automated quotation system on which
the Company's Common Stock then trades; and
(j) otherwise use reasonable diligent efforts to comply with all
applicable provisions of the Securities Act, and rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, an earning statement covering a period of at least twelve months
which shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder.
6. Indemnification. In the event any of the Registrable Securities are
---------------
included in a registration statement under this Statement:
(a) the Company will indemnify each Investor who participates in
such registration, each of its officers and directors and partners and such
Investor's separate legal counsel and independent accountants, and each person
controlling such Investor within the meaning of Section 15 of the Securities
Act, and each underwriter, if any, and each person who controls any underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
claims, losses, damages or liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any registration
statement, prospectus, offering circular or other document, or any amendment or
supplement thereto, incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or any violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Investor, each of its officers and directors and partners and such
Investor's separate legal counsel and independent accountants and each person
controlling such Investor, each such underwriter and each person who controls
any such underwriter, for any legal and any other expenses reasonably incurred
in connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Investor or underwriter and stated to be specially for use therein.
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<PAGE>
(b) Each Investor will, if Registrable Securities held by such
Investor are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and its legal counsel and independent accountants,
each underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act, and each other such
Investor, each of its officers and directors and each person controlling such
Investor within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse the Company, such
Investors, such directors, officers, persons, underwriters or control persons
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Investor and stated to be
specifically for use therein.
(c) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought provided
that failure to give such prompt notice shall not relieve the Indemnifying Party
of its obligations hereunder unless it is materially prejudiced thereby, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). Such Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be that of such Indemnified Party unless
(i) the Indemnifying Party has agreed to pay such fees and expenses or (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to such Indemnified Party
in any such action or proceeding or (iii) the named parties to any such action
or proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party and such Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to
such Indemnified Party which are different from or additional to those available
to the Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing of an election to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action or proceeding on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying Party
then shall have the right to employ separate counsel at its own expense and to
participate in the defense thereof, and shall not, in connection with any
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<PAGE>
one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties, which firm shall be designated in writing by a majority of the
Indemnified Parties who are eligible to select such counsel). No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. No Indemnified Party may
consent to entry of any judgment or enter into any settlement without the prior
written consent of the Indemnifying Party.
(d) If the indemnification provided for in this Section 6 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying the Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party with
respect to such loss, liability, claim, damage or expenses in the proportion
that is appropriate to reflect the relative fault of the Indemnifying Party and
the Indemnified Party in connection with the statements or omissions that
resulted in such loss, liability, claim, damage, or expense, as well as any
other relevant equitable considerations. The relative fault of the Indemnifying
Party and the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
7. Information by Investor. Investors whose Registrable Securities are
-----------------------
included in any registration shall furnish to the Company such information
regarding themselves and the distribution proposed by them as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Statement.
8. Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock and until five years
from the date thereof, the Company shall use reasonably diligent efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, beginning 90 days
after the Company registers a class of securities under Section 12 of the
Exchange Act or completes a registered offering under the Securities Act; or
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements);
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<PAGE>
(c) Furnish to any Investor promptly upon request a written
statement as to its compliance with the reporting requirements of Rule 144 (at
any time after 90 days after the Company completes a registered offering under
the Securities Act), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as an Investor may reasonably request in
availing itself of any rule or regulation of the Commission allowing an Investor
to sell Registrable Securities without registration.
9. Termination of Registration Rights. No Investor shall be entitled
----------------------------------
to exercise any right provided for in this Statement after ten years following
the Commencement Date.
10. Information To Be Provided by the Investors. Each Investor whose
-------------------------------------------
Registrable Securities are included in any registration pursuant to this
Agreement shall furnish the Company such information regarding such Investor and
the distribution proposed by such Investor as may be reasonably requested in
writing by the Company and as shall be required in connection with such
registration or the registration or qualification of such securities under any
applicable state securities law.
11. "Stand-Off" Agreement. Each Investor, if requested by the managing
--------------------
underwriter of a registered public offering of securities by the Company, shall
agree not to sell or otherwise transfer or dispose of any Registrable Securities
or other securities of the Company then held by such Investor for a specified
period of time that is customary under the circumstances (not to exceed 180
days) following the effective date of the registration statement for such
offering, provided that (a) no such agreement shall be required unless the other
principal stockholders of the Company enter into a similar agreement covering
the same period of time and (b) such agreement shall contain terms customary for
such agreements. The Company may impose stop transfer instructions to enforce
any required agreement of the Investors under this Section 11.
12. Miscellaneous.
-------------
(a) Amendments and Waivers. The provisions of this Statement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to depart from the provisions hereof may
not be given unless the Company has obtained the written consent of the
Majority-In-Interest. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof with respect to a matter which relates
exclusively to the rights of Investors whose Registrable Securities are being
sold pursuant to a registration statement and which does not directly or
indirectly affect the rights of other Investors may be given by the holders of a
majority of the Registrable Securities being sold by such holders.
(b) Notices. All communications provided for hereunder shall be
-------
sent by registered or certified mail, reputable overnight delivery service or
facsimile transmission. Communications to an Investor shall be sent to such
Investor at its address
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<PAGE>
set forth in the Purchase Agreement or, if the Investor was not a Purchaser, in
the security register or other records of the Company. Communications to the
Company shall be sent to the Company as provided in the Purchase Agreement.
(c) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Statement are inserted for convenience only and do not
constitute a part of this Statement.
(d) Governing Law. This Statement shall be construed and enforced
-------------
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York as applied to agreements entered into and wholly
performed in New York, without giving effect to the choice of law or conflicts
principles thereof. In the event of any dispute arising out of the terms of this
Statement, the parties hereby consent to the exclusive jurisdiction of the
federal and state courts located in the State of New York for resolution of such
dispute, and agree not to contest such exclusive jurisdiction or seek to
transfer any action relating to such dispute to any other jurisdiction.
(e) Part of Purchase Agreement. This Statement constitutes a part
--------------------------
of the Purchase Agreement and is subject to all provisions thereof.
(f) Severability. Any provision of this Statement that is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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