<PAGE>
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 21, 1999
----------------
SATCON TECHNOLOGY CORPORATION
----------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 001-11512 04-2857552
----------------------------------------------------------------------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
161 First Street, Cambridge, Massachusetts 02142
----------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 661-0540
--------------
Not Applicable
--------------
(Former Name or Former Address, if Changed Since Last Report)
-1-
<PAGE>
Item 2 Acquisition or Disposition of Assets
On October 21, 1999, SatCon Technology Corporation (the "Registrant")
completed its acquisition of Ling Electronics, Inc. and Ling Electronics, Ltd.
(collectively, "Ling Electronics") from Mechanical Technology, Inc. ("MTI") in
connection with an investment by MTI of approximately $7,000,000 in the
Registrant. In consideration for the acquisition of Ling Electronics and MTI's
investment, MTI received 1,800,000 shares of the Registrant's common stock,
$0.01 par value per share (the "Common Stock"), and warrants to purchase an
additional 100,000 shares of the Registrant's Common Stock. MTI funded
$2,750,000 of its investment in the Registrant on October 21, 1999, and it will
make the remaining investment by the end of January 2000. In addition, the
Registrant will also receive warrants to purchase 100,000 shares of MTI's common
stock.
In connection with the transaction, Mr. David B. Eisenhaure, President and
Chief Executive Officer of the Registrant, will become a member of the board of
directors of MTI, and Alan Goldberg, a director of MTI, and co-Chief Executive
Officer of First Albany Companies, will become a member of the Registrant's
board of directors. The Registrant has also agreed to appoint an additional
member to its board of directors based on recommendations by MTI.
As a result of the forgoing transaction, provisions of the Registrant's
Series A Convertible Preferred Stock issued on August 25, 1999 that allowed the
holders to reset the initial $7.80 conversion price have been terminated. Under
the terms of the Series A Convertible Preferred Stock, the holders had the
option to reset the conversion price on the first anniversary of the issuance of
the Series A Convertible Preferred Stock to the greater of the then current
market price or $5. Such reset rights terminated if the Registrant completed the
transactions with MTI.
The Registrant has agreed to register for resale under the Securities Act
of 1933, as amended (the "Securities Act"), the Common Stock (i) issued in
connection with the transaction and (ii) issuable upon exercise of the MTI
warrants.
The foregoing summary description is qualified in its entirety by reference
to the definitive transaction documents, copies of which are attached as
exhibits to this Current Report on Form 8-K.
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 Registrant's current judgment on certain
issues. Because such statements apply to future events, they are subject to
risks and uncertainties that
-2-
<PAGE>
could cause the actual results to differ materially. Important factors which
could cause actual results to differ materially are described in the
Registrant'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.
Financial Statements of Ling Electronics will be filed as an
amendment to this Form 8-K not later than 60 days after the date that the
initial report on Form 8-K must be filed.
(b) Pro forma financial information.
Pro forma financial statements reflecting the transaction will be
filed as an amendment to this Form 8-K not later than 60 days after the date
that the initial report on Form 8-K must be filed.
(c) Exhibits.
The Exhibits to this report are listed in the Index to Exhibits
set forth on page 5 hereof.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SATCON TECHNOLOGY CORPORATION
Date: November 5, 1999 By: /s/ David B. Eisenhaure
---------------------------------------
David B. Eisenhaure
President, Chief Executive Officer and
Chairman of the Board
-4-
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------- -------
2.2 Stock Purchase Agreement, dated as of October 21, 1999, by and among
the Registrant, Mechanical Technology Incorporated, Ling Electronics,
Inc. and Ling Electronics, Ltd.
3.1(1) Certificate of Incorporation of the Registrant.
3.2(1) Bylaws of the Registrant.
3.3(2) Certificate of Amendment of Certificate of Incorporation of the
Registrant, as filed with the Secretary of State of the State of
Delaware on May 12, 1997.
3.4(2) Bylaws Amendment of the Registrant.
3.5(3) Certificate of Amendment of Certificate of Incorporation of the
Registrant, as filed with the Secretary of State of the State of
Delaware on March 17, 1999.
3.6(3) Certificate of Designation of Series and Statement of Variations of
Relative Rights, Preferences and Limitations of Preferred Stock, dated
as of August 25, 1999, relating to the Series A Preferred Stock.
10.28 Securities Purchase Agreement, dated as of October 21, 1999, between
the Registrant and Mechanical Technology Incorporated.
10.29 SatCon Registration Rights Agreement, dated as of October 21, 1999,
between the Registrant and Mechanical Technology Incorporated.
10.30 MTI Registration Rights Agreement, dated as of October 21, 1999,
between Mechanical Technology Incorporated and the Registrant.
10.31 Form of Stock Purchase Warrant issued on October 21, 1999 by the
Registrant to Mechanical Technology Incorporated.
-5-
<PAGE>
10.32 Form of Stock Purchase Warrant issued on October 21, 1999 by
Mechanical Technology Incorporated to the Registrant.
_______________
(1) Incorporated by reference to Exhibits to the on Registrant's Registration
Statement Form S-1 (File No. 33-49286).
(2) Incorporated by reference to Exhibits to the Registrant's Quarterly Report
on Form 10-Q for the period ended March 31, 1997.
(3) Incorporated by reference to Exhibits to the Registrant's Current Report on
Form 8-K dated August 25, 1999.
-6-
<PAGE>
Exhibit 2.2
STOCK PURCHASE AGREEMENT
among
MECHANICAL TECHNOLOGY INCORPORATED,
LING ELECTRONICS, INC.,
LING ELECTRONICS, LTD.
and
SATCON TECHNOLOGY CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
1. Purchase and Sale of the Shares and the U.K. Shares................................................ 1
1.1 Purchase of the Shares and the U.K. Shares from the Parent................................... 1
1.2 Further Assurances........................................................................... 1
1.3 Purchase Price for the Shares................................................................ 2
1.4 Closing...................................................................................... 2
2. Representations of the Parent Regarding the Securities............................................. 2
3. Representations Regarding the Parent, the Company and the U.K. Subsidiary.......................... 3
3.1 Organization................................................................................. 3
3.2 Capitalization of the Company................................................................ 3
3.3 Subsidiaries................................................................................. 3
3.4 Authorization................................................................................ 4
3.5 Financial Statements......................................................................... 5
3.6 Absence of Undisclosed Liabilities........................................................... 6
3.7 Litigation................................................................................... 6
3.8 Insurance.................................................................................... 6
3.9 Personal Property............................................................................ 7
3.10 Intangible Property.......................................................................... 8
3.11 Real Estate and Leases....................................................................... 9
3.12 Inventory.................................................................................... 9
3.13 Accounts Receivable and Payable.............................................................. 10
3.14 Tax Matters.................................................................................. 10
3.15 Books and Records............................................................................ 13
3.16 Contracts and Commitments.................................................................... 13
3.17 Compliance with Agreements and Laws.......................................................... 15
3.18 Employee Relations........................................................................... 16
3.19 Employee Benefit Plans....................................................................... 17
3.20 Environmental Matters........................................................................ 20
3.21 Absence of Certain Changes or Events......................................................... 22
3.22 Suppliers.................................................................................... 24
3.23 Warranty and Product Liability Claims........................................................ 24
3.24 Prepayments and Deposits..................................................................... 24
3.25 Indebtedness to and from Officers, Directors and Parent...................................... 24
3.26 Banking Facilities........................................................................... 25
3.27 Powers of Attorney and Suretyships........................................................... 25
3.28 Conflicts of Interest........................................................................ 25
3.29 Regulatory Approvals......................................................................... 26
3.30 Year 2000 Compliance......................................................................... 26
3.31 Disclosure................................................................................... 27
3.32 Broker's Fees................................................................................ 27
3.33 Securities Representations................................................................... 27
4. Representation and Warranties of the Buyer......................................................... 29
4.1 Organization and Qualification............................................................... 29
4.2 Authorization; Enforcement................................................................... 30
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
4.3 Capitalization................................................................................ 30
4.4 Authorization and Validity; Issuance of Shares................................................ 31
4.5 No Conflicts.................................................................................. 31
4.6 Consents and Approvals........................................................................ 31
4.7 Litigation; Proceedings....................................................................... 32
4.8 No Default or Violation....................................................................... 32
4.9 Disclosure; Absence of Certain Changes........................................................ 33
4.10 Buyer SEC Documents; Financial Statements..................................................... 33
4.11 Broker's Fees................................................................................. 33
4.12 Form S-3 Eligibility.......................................................................... 34
4.13 Listing and Maintenance Requirements Compliance............................................... 34
4.14 Intellectual Property Rights.................................................................. 34
4.15 Registration Rights; Rights of Participation.................................................. 34
4.16 Tax Status; Firpta............................................................................ 34
4.17 Transactions With Affiliates.................................................................. 35
4.18 Material Contracts.:.......................................................................... 35
4.19 ERISA......................................................................................... 36
4.20 Environmental Matters......................................................................... 36
4.21 Year 2000 Matters............................................................................. 38
4.22 Private Offering.............................................................................. 38
4.23 Investment Company............................................................................ 38
5. Public Announcements................................................................................ 39
6. Conditions to Obligations of the Buyer.............................................................. 39
6.1 Continued Truth of Representations and Warranties of the Parent and the
Company; Compliance with Covenants and Obligations............................................ 39
6.2 Performance by the Parent and the Company..................................................... 39
6.3 Governmental Approvals........................................................................ 39
6.4 Consent of Lenders, Lessors and Other Third Parties........................................... 39
6.5 Adverse Proceedings........................................................................... 40
6.6 Opinion of Counsel............................................................................ 40
6.7 Employment Contracts.......................................................................... 40
6.8 Repayment of Indebtedness..................................................................... 40
6.9 Closing Deliveries............................................................................ 40
7. Conditions to Obligations of the Parent............................................................. 41
7.1 Continued Truth of Representations and Warranties of the Buyer;
Compliance with Covenants and Obligations..................................................... 42
7.2 Corporate Proceedings......................................................................... 42
7.3 Governmental Approvals........................................................................ 42
7.4 Consents of Lenders, Lessors and Other Third Parties.......................................... 42
7.5 Adverse Proceedings........................................................................... 42
7.6 Opinion of Counsel............................................................................ 42
7.7 Closing Deliveries............................................................................ 42
7.8 Buyer Registration Rights Agreement........................................................... 43
8. Indemnification..................................................................................... 43
8.1 By the Parent and the Company................................................................. 43
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
8.2 By the Buyer................................................................................. 44
8.3 Indemnification Claims....................................................................... 44
8.4 Survival of Representations and Warranties................................................... 47
8.5 Limitations.................................................................................. 47
9. Tax Matters....................................................................................... 48
9.1 Preparation and Filing of Tax Returns........................................................ 48
9.2 Tax Indemnification by the Parent............................................................ 48
9.3 Allocation of Certain Taxes.................................................................. 49
9.4 Cooperation on Tax Matters................................................................... 49
9.5 Termination of Tax-Sharing Agreements........................................................ 50
9.6 Certain Tax Elections........................................................................ 50
10. Post-Closing Agreements........................................................................... 51
10.1 Proprietary Information..................................................................... 51
10.2 No Solicitation or Hiring of Former Employees............................................... 51
10.3 Non-Competition Agreement................................................................... 52
10.4 Board Representation........................................................................ 52
10.5 Benefit Transition.......................................................................... 53
10.6 Co-operation in Financial and Other Reparation.............................................. 53
11. Notices........................................................................................... 53
12. Successors and Assigns............................................................................ 54
13. Entire Agreement; Amendments; Attachments......................................................... 54
14. Severability...................................................................................... 55
15. Investigation of the Parties...................................................................... 55
16. Expenses.......................................................................................... 55
17. Submission to Jurisdiction........................................................................ 55
18. Governing Law..................................................................................... 56
19. Section Headings.................................................................................. 56
20. Counterparts...................................................................................... 56
</TABLE>
Exhibit A - Opinion of Catherine S. Hill PLLC
Exhibit B - Estoppel Certificate
Exhibit C - Opinion of Hale and Dorr LLP
Exhibit D - Buyer Registration Rights Agreement
iii
<PAGE>
STOCK PURCHASE AGREEMENT
Agreement (the "Agreement") made as of the 21st day of October, 1999 by and
among SatCon Technology Corporation, a Delaware corporation with its principal
office at 161 First Street, Cambridge, Massachusetts 02142 (the "Buyer"),
Mechanical Technology Incorporated, a New York corporation with its principal
office at 968 Albany-Shaker Road, Latham, New York 12110 (the "Parent"), Ling
Electronics, Inc., a California corporation and a wholly-owned subsidiary of the
Parent, with its principal office at 4890 East La Palma Avenue, Anaheim,
California 92807 (the "Company") and Ling Electronics, Ltd., a United Kingdom
corporation and a wholly-owned subsidiary of the Parent with its principal
office c/o J.Bignall, 3 De Walden Court, 85 New Cavendish Street, London W1M 7RA
(the "U.K. Subsidiary" or the "Subsidiaries").
Preliminary Statement
---------------------
1. The Buyer desires to purchase, and the Parent desires to sell (i) all
of the issued and outstanding shares (collectively, the "Shares") of the common
stock, $0.01 par value per share of the Company and (ii) all of the issued and
outstanding ordinary shares (the "U.K. Shares") of the U.K. Subsidiary, subject
to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. Purchase and Sale of the Shares and the U.K. Shares.
---------------------------------------------------
1.1 Purchase of the Shares and the U.K. Shares from the Parent.
Subject to and upon the terms and conditions of this Agreement, at the closing
of the transactions contemplated by this Agreement (the "Closing"), the Parent
shall sell, transfer, convey, assign and deliver to the Buyer, and the Buyer
shall purchase, acquire and accept from the Parent, all the Shares and the U.K.
Shares. At the Closing the Parent shall deliver to the Buyer certificates
evidencing the Shares and the U.K. Shares duly endorsed in blank or with stock
powers duly executed by the Parent.
1.2 Further Assurances. At any time and from time to time after the
------------------
Closing, at the Buyer's request and without further consideration, the Parent
shall promptly execute and deliver such instruments of sale, transfer,
conveyance, assignment and confirmation, and take all such other action as the
Buyer may reasonably request, more effectively to transfer, convey and assign to
the Buyer, and to confirm the Buyer's title to, all of the Shares and the U.K.
Shares owned by the Parent, to put the Buyer in actual possession and operating
control of the assets, properties and business of the Company and the U.K.
Subsidiary, to assist the Buyer in exercising all rights with respect thereto
and to carry out the purpose and intent of this Agreement.
1
<PAGE>
1.3 Purchase Price for the Shares. In full payment for the Shares and
-----------------------------
the U.K. Shares (collectively, the "Securities"), the Buyer shall pay to the
Parent $70,000.00 and shall issue to the Parent a certificate issued in the name
of the Parent representing 770,000 shares (the "SatCon Shares") of common stock,
$0.01 par value per share, of the Buyer ("Buyer Common Stock").
1.4 Closing. The Closing shall take place at the offices of Hale and
-------
Dorr LLP, 60 State Street, Boston, Massachusetts 02109 at 10:00 a.m., Boston
Time, on the date of execution of this Agreement or at such other location as
the parties shall mutually agree. The transfer of the Securities by the Parent
to the Buyer shall be deemed to occur at 8:00 a.m., Boston Time, on the Closing
Date.
2. Representations of the Parent Regarding the Securities.
------------------------------------------------------
The Parent represents and warrants to the Buyer as follows:
(a) The Parent has good and marketable title to the Securities
free and clear of any and all covenants, conditions, restrictions, voting trust
arrangements, liens, charges, encumbrances, options and adverse claims or rights
whatsoever. The Securities constitute all of the outstanding securities of the
Company and the U.K. Subsidiary.
(b) The Parent has the full right, power and authority to enter
into this Agreement and to transfer, convey and sell to the Buyer at the Closing
the Securities to be sold by the Parent hereunder and, upon consummation of the
purchase contemplated hereby, the Buyer will acquire from the Parent good and
marketable title to the Securities free and clear of all covenants, conditions,
restrictions, voting trust arrangements, liens, charges, encumbrances, options
and adverse claims or rights whatsoever.
(c) The Parent is not a party to, subject to or bound by any
agreement or any judgment, order, writ, prohibition, injunction or decree of any
court or other governmental body which would prevent the execution or delivery
of this Agreement by the Parent or the transfer, conveyance and sale of the
Securities to be sold by the Parent to the Buyer pursuant to the terms hereof.
2
<PAGE>
3. Representations Regarding the Parent, the Company and the U.K.
--------------------------------------------------------------
Subsidiary.
- ----------
The Parent, the Company and the U.K. Subsidiary, jointly and severally,
represent and warrant to the Buyer that:
3.1 Organization. Each of the Parent and the Company is a corporation
------------
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, and has all requisite power and
authority (corporate and other) to own its properties, to carry on its business
as now being conducted, to execute and deliver this Agreement and the agreements
contemplated herein, and to consummate the transactions contemplated hereby and
thereby. Each of the Parent and the Company is duly qualified to do business and
in good standing in all jurisdictions in which its ownership of property or the
character of its business requires such qualification, except where the failure
to be so qualified or in good standing, as the case may be, would not,
individually or in the aggregate, (x) adversely affect the legality, validity or
enforceability of any of this Agreement or any of the material transactions
contemplated hereby, (y) have or result in a material adverse effect on the
results of operations, assets, or financial condition of the Parent or the
Company or (z) impair the Parent's or the Company's ability to perform in all
material respects on a timely basis their respective material obligations under
this Agreement (any of (x), (y) or (z), being a "Material Adverse Effect").
Certified copies of the Certificate of Incorporation and Bylaws of the Company,
as amended to date, have been previously delivered to the Buyer, are complete
and correct, and no amendments have been made thereto or have been authorized
since the date thereof.
3.2 Capitalization of the Company. The Company's authorized capital
-----------------------------
stock consists of 5,000,000 shares of Common Stock, $0.01 par value per share,
of which Thirty-Two Thousand, Three Hundred and Ninety Eight (32,398) shares are
issued and outstanding on the date hereof and held of record and beneficially by
the Parent. All such issued and outstanding shares of the Company's common stock
have been and on the Closing Date will be duly and validly issued and are, or
will be on such date, fully paid and non-assessable. There are not, and on the
Closing Date there will not be, outstanding (i) any options, warrants or other
rights to purchase from the Company any capital stock of the Company; (ii) any
securities convertible into or exchangeable for shares of such stock; (iii) any
outstanding debt securities issued or guaranteed by the Company or (iv) any
other commitments of any kind for the issuance of additional shares of capital
stock or options, warrants or other securities of the Company. No shares of the
issued and outstanding shares of Common Stock are held in the treasury of the
Company.
3.3 Subsidiaries.
------------
(a) Other than Plug Power, LLC, Turbonetics Energy, Inc. , MTI
International, Inc. and the U.K. Subsidiary, the Parent does not own any equity
interest
3
<PAGE>
in any corporation partnership, joint venture or other entity. Turbonetics
Energy, Inc., MTI International, Inc., Power Plug, LLC do not compete with the
Company.
(b) Except as set forth in Schedule 3.3(b), the Parent owns of
record and beneficially all of the outstanding shares of capital stock of the
U.K. Subsidiary free and clear of all covenants, conditions, restrictions,
liens, charges and encumbrances.
(c) Except as set forth in Schedule 3.3(c), the U.K. Subsidiary
is a corporation duly organized and validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite power and authority to own its properties and carry on its business as
now being conducted. The U.K. Subsidiary is duly qualified to do business and in
good standing in all jurisdictions in which its ownership of property or the
character of its business requires such qualification except where the failure
to be so qualified or in good standing, as the case may be, would not have a
Material Adverse Effect. Copies of the charter, bylaws and other governing
instruments of The U.K. Subsidiary, each as amended to date, have been
previously delivered to the Buyer, are complete and correct, and no amendments
have been made thereto or have been authorized since the date of such delivery.
The Company does not own any capital stock of or other equity interest in any
corporation, partnership or other entity. The shares of capital stock of the
U.K. Subsidiary have been duly and validly issued and are fully paid and non-
assessable.
(d) The U.K. Subsidiary does not hold shares of its capital stock
in its treasury, and there are not, and on the Closing Date there will not be,
outstanding any (i) options, warrants or other rights with respect to the
capital stock of the U.K. Subsidiary, (ii) any securities convertible into or
exchangeable for shares of such stock, or (iii) any other commitments of any
kind for the issuance of additional shares of capital stock or options, warrants
or other securities of any of them.
(e) As of August 22, 1999, the U.K. Subsidiary had the assets and
liabilities set forth on Schedule 3.3(e). Since August 22, 1999, there have been
no material changes in the assets or liabilities of the U.K. Subsidiaries.
3.4 Authorization. The execution and delivery by the Company, the
-------------
U.K. Subsidiary and the Parent of this Agreement and the agreements provided for
herein, and the consummation by the Company, the U.K. Subsidiary and the Parent
of all transactions contemplated hereunder and thereunder by the Company, the
U.K. Subsidiary and the Parent, have been duly authorized by all requisite
corporate action. This Agreement has been duly executed by the Company, the U.K.
Subsidiary and the Parent. This Agreement and all other agreements and
obligations entered into and undertaken in connection with the transactions
contemplated hereby to which the Company, the U.K. Subsidiary or the Parent is a
party constitute the valid and legally binding obligations of the Company, the
U.K. Subsidiary and the Parent, enforceable against them in accordance with
their respective terms. The execution, delivery and
4
<PAGE>
performance by the Company, the U.K. Subsidiary and the Parent of this Agreement
and the agreements provided for herein, and the consummation by the Company, the
U.K. Subsidiary and the Parent of the transactions contemplated hereby and
thereby, will not, with or without the giving of notice or the passage of time
or both, (a) violate the provisions of any law, rule or regulation applicable to
the Company, the U.K. Subsidiary or the Parent; (b) violate the provisions of
the Certificate of Incorporation or Bylaws of the Company, the U.K. Subsidiary
or the Parent; (c) violate any judgment, decree, order or award of any court,
governmental body or arbitrator; or (d) conflict with or result in the breach or
termination of any term or provision of, or constitute a default under, or cause
any acceleration under, or cause the creation of any lien, charge or encumbrance
upon the properties or assets of the Company, the U.K. Subsidiary or the Parent
pursuant to, any indenture, mortgage, deed of trust or other instrument or
agreement to which the Company, the U.K. Subsidiary or the Parent is a party or
by which the Company, the U.K. Subsidiary or the Parent or any of their
respective properties is or may be bound. Schedule 3.4 attached hereto sets
forth a true, correct and complete list of all consents and approvals of third
parties that are required in connection with the consummation by the Company,
the U.K. Subsidiary and the Parent of the transactions contemplated by this
Agreement.
3.5 Financial Statements.
--------------------
(a) The Parent previously delivered to the Buyer the unaudited
consolidated balance sheets of the Company and the U.K. Subsidiary as of
September 30, 1996, 1997 and 1998 (the "Fiscal Year Balance Sheets") and the
related statements of income of the Company and the U.K. Subsidiary for the
fiscal years then ended (collectively, the "Fiscal Year Financial Statements").
The Parent has also previously delivered to the Buyer the unaudited consolidated
balance sheets of the Company and the U.K. Subsidiary as of August 22, 1999 (the
"Current Balance Sheet") and the related statements of income for the eleven-
month period then ended (collectively, the "Current Financial Statements"). The
Fiscal Year Financial Statements and, the Current Financial Statements
(collectively, the "Financial Statements") have been prepared in accordance with
generally accepted accounting principles applied consistently with past
practices and have been certified by the Company's chief financial officer. The
date of the August 22, 1999 Fiscal Year Balance Sheet is hereinafter referred to
as the "Balance Sheet Date."
(b) The Financial Statements fairly present, as of their
respective dates, the financial condition, retained earnings, assets and
liabilities of the Company and the U.K. Subsidiary and the results of operations
of the Company's and the U.K. Subsidiary's businesses for the periods indicated.
With respect to contracts and commitments for the sale of goods or the provision
of services by the Company and the U.K. Subsidiary, the Financial Statements
contain and reflect adequate reserves, which are consistent with previous
reserves taken, for all reasonably anticipated material losses and costs and
expenses. The amounts shown as accrued for current and deferred Taxes (other
than state and federal income taxes) in the Financial Statements are
5
<PAGE>
sufficient for the payment of all accrued and unpaid Taxes (other than state and
federal income taxes), interest, penalties, assessments or deficiencies
applicable to the Company or any Subsidiary, whether disputed or not, for the
applicable period then ended and periods prior thereto.
(c) The book value of inventory reflected on the August 22, 1999
Balance Sheet, as computed on a first-in, first-out basis is true and correct.
3.6 Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
(a) reflected and reserved against in the Current Balance Sheet, (b) set forth
on Schedule 3.6 attached hereto, or (c) incurred in the ordinary course of
business after the date of the Current Balance Sheet and not material in amount,
either individually or in the aggregate, neither the Company nor any of the
Subsidiaries has any liability or obligation, secured or unsecured, whether
accrued, absolute, contingent, unasserted or otherwise, which is material to the
condition (financial or otherwise) of the assets, properties, business or
prospects of the Company and the U.K. Subsidiaries taken as a whole. For
purposes of this Subsection 3.6, "material" means any amount in excess of
$100,000.
3.7 Litigation. Except as set forth on Schedule 3.7 attached hereto
----------
(a) there is no action, suit or proceeding to which the Company or any of the
Subsidiaries is a party (either as a plaintiff or defendant) pending or
threatened before any court or governmental agency, authority, body or
arbitrator and to the best knowledge of the Parent, there is no basis for any
such action, suit or proceeding; (b) neither the Company nor any of the
Subsidiaries, nor any officer, director or employee of any of the foregoing, has
been permanently or temporarily enjoined by any order, judgment or decree of any
court or any governmental agency, authority or body from engaging in or
continuing any conduct or practice in connection with the business, assets, or
properties of the Company or any of the Subsidiaries; and (c) there is not in
existence on the date hereof any order, judgment or decree of any court,
tribunal or agency enjoining or requiring the Company or any of the Subsidiaries
to take any action of any kind with respect to its business, assets or
properties.
3.8 Insurance. Schedule 3.8 attached hereto sets forth a true,
---------
correct and complete list of all fire, theft, casualty, general liability,
workers compensation, business interruption, environmental impairment, product
liability, automobile and other insurance policies maintained by the Company,
the U.K. Subsidiary or the Parent with respect to the business and the Company
or the U.K. Subsidiary and of all life insurance policies maintained on the
lives of any of their employees (collectively, the "Insurance Policies"). The
Company has previously delivered complete and accurate information to the Buyer
on all claims made under such Insurance Policies (other than life insurance
policies) since October 1, 1996. A true, correct and complete summary of all
Insurance Policies currently in effect has previously been delivered by the
Parent or the Company to the Buyer. As of the date hereof and the Closing Date,
the Insurance Policies are in full force and effect and are in amounts of a
nature which are adequate
6
<PAGE>
and customary for the Company's and the Subsidiaries' business. All premiums due
on the Insurance Policies or renewals thereof have been paid, if billed, and
there is no default under the Insurance Policies. Except as set forth on
Schedule 3.8, neither the Company nor any of the Subsidiaries has received any
notice or other communication from any issuer of the Insurance Policies since
September 30, 1996 canceling or materially amending any of the Insurance
Policies, materially increasing any deductibles or retained amounts thereunder,
or materially increasing the annual or other premiums payable thereunder, and,
to the best knowledge of the Parent, no such cancellation, amendment or increase
of deductibles, retainages or premiums is threatened. Except as set forth on
Schedule 3.8, neither the Company nor any of the Subsidiaries has any
outstanding claims or any dispute with any insurance carrier regarding claims,
settlements or premiums and neither the Company nor any of the Subsidiaries has
failed to give any notice or present any claim under any Insurance Policy in due
and timely fashion. There are no outstanding requirements or recommendations by
any issuer of the Insurance Policies or by any Board of Fire Underwriters or
other similar body exercising similar functions or by any governmental authority
exercising similar functions which requires or recommends any changes in the
conduct of the business of, or any repairs or other work to be done on or with
respect to any of the properties or assets of, the Company or any of the
Subsidiaries.
3.9 Personal Property. Except as disclosed in Schedule 3.9:
-----------------
(a) the Company or the U.K. Subsidiary, as the case may be, has
good and marketable title to each item of tangible personal property used by the
Company in the conduct of the Company's historic operations ("Personal
Property") free and clear of all liens, leases, encumbrances, claims under
bailment and storage agreements, equities, conditional sales contracts, security
interests, charges and restrictions ("Liens"), except for Liens, if any, for
personal property taxes not due;
(b) no officer, director, stockholder or employee of the Company
or the U.K. Subsidiary, nor any spouse, child or other relative or affiliate
thereof, owns directly or indirectly, in whole or in part, any of the Personal
Property;
(c) each item of Personal Property not owned by the Company or
the U.K. Subsidiary is in such condition that upon the return of such property
to its owner in its present condition at the end of the relevant lease term or
as otherwise contemplated by the applicable agreement between the Company or the
U.K. Subsidiary, as the case may be, and the owner or lessor thereof, the
obligations of the Company or the U.K. Subsidiary, as the case may be, to such
owner or lessor will be discharged; and
(d) the Company and the U.K. Subsidiary own or otherwise have the
right to use all of the Personal Property now used or useful in the operation of
7
<PAGE>
their business or the use of which is necessary for or useful in the performance
of any material contract, letter of intent or proposal to which any of them is a
party.
3.10 Intangible Property. Schedule 3.10 attached hereto sets forth:
-------------------
(i) a true, correct and complete list of, all items of intangible property owned
by, or used or useful in connection with the business of, the Company or any of
the Subsidiaries, including, but not limited to, trade secrets, know-how, any
other confidential information of the Company, United States and foreign
patents, trade names, trademarks, trade name and trademark registrations,
copyrights and copyright registrations, and applications for any of the
foregoing (the "Intangible Property"); and (ii) a true, correct and complete
list of all licenses or similar agreements or arrangements to which the Company
or the U.K. Subsidiary is a party, either as licensee or licensor, with respect
to the Intangible Property. Except as otherwise disclosed in Schedule 3.10:
(a) the Company or the U.K. Subsidiary is the sole and exclusive
owner of all right, title and interest in and to the Intangible Property and all
designs, and permits, used in connection therewith, free and clear of all liens,
security interests, charges, encumbrances, equities or other adverse claims;
(b) the Company or the U.K. Subsidiary has the right and
authority to use, and to continue to use after the Closing, the Intangible
Property in connection with the conduct of its business in the manner presently
conducted, and such use or continuing use does not and, to the best of the
Company's knowledge, will not conflict with, infringe upon or violate any rights
of any other person, corporation or entity;
(c) none of the Company, the Parent nor the U.K. Subsidiary has
received notice of, or to the best of the Parent's knowledge there is no basis
for, a pleading or threatened claim, interference action or other judicial or
adversarial proceeding against the Company that any of the operations,
activities, products, services or publications of the Company or any of its
customers or distributors infringes or will infringe any patent, trademark,
trade name, copyright, trade secret or other property right of a third party, or
that it is illegally or otherwise using the trade secrets, formulae or property
rights of others;
(d) there are no outstanding, nor, to the best of the Company's
knowledge, any threatened disputes or other disagreements with respect to any
licenses or similar agreements or arrangements described in Schedule 3.10 or
-------------
with respect to infringement by a third party of any of the Intangible Property;
(e) the Intangible Property owned or licensed by the Company or
the relevant Subsidiary is sufficient to conduct the Company's or the U.K.
Subsidiary's business as presently conducted;
8
<PAGE>
(f) the Company or the U.K. Subsidiary has taken all steps
reasonably necessary to protect its right, title and interest in and to the
Intangible Property and the continued use of the Intangible Property;
(g) no officer, director, stockholder or employee of the Company
or the U.K. Subsidiary, nor any spouse, child or other relative or affiliate
thereof, owns directly or indirectly, in whole or in part, any of the Intangible
Property; and
(h) To the best of the Parent's knowledge, no third party is
infringing, or will threaten to infringe, upon or otherwise violate any of the
Intangible Property in which the Company or the U.K. Subsidiary has ownership
rights.
3.11 Real Estate and Leases. Neither the Company nor any Subsidiary
----------------------
owns any real property. Schedule 3.11 attached hereto sets forth (a) a true,
correct and complete list as of the date hereof of all leases of real property,
identifying separately each ground lease, to which the Company or any of the
Subsidiaries is a party (collectively, the "Leases"). True, correct and complete
copies of all Leases and all amendments, modifications and supplemental
agreements thereto, have previously been delivered by the Parent or the Company
to the Buyer. The Leases are in full force and effect, are binding and
enforceable against each of the parties thereto in accordance with their
respective terms and, except as set forth on Schedule 3.11, have not been
modified or amended since the date of delivery to the Buyer. No party to any
Lease has sent written notice to the other claiming that such party is in
default thereunder and that such default remains uncured. Except as set forth on
Schedule 3.11, there has not occurred any event which would constitute a breach
of or default in the performance of any covenant, agreement or condition
contained in any Lease, nor has there occurred any event which with the passage
of time or the giving of notice or both would constitute such a breach or
material default. Neither the Company nor any of the Subsidiaries is obligated
to pay any leasing or brokerage commission relating to any Lease and, except as
set forth on Schedule 3.11, will not have any obligation to pay any leasing or
brokerage commission upon the renewal of any Lease. Except as set forth on
Schedule 3.11, no construction, alteration or other leasehold improvement work
with respect to any of the Leases remains to be paid for or to be performed by
the Company or any of the Subsidiaries. Except as set forth on Schedule 3.11,
the Financial Statements contain adequate reserves to provide for the
restoration of the property subject to the Leases at the end of the respective
Lease terms, to the extent required by the Leases.
3.12 Inventory. The inventory owned by the Company and its U.K.
---------
Subsidiary consists of items of a quality and quantity which are usable or
saleable without discount in the ordinary course of the business conducted by
the Company and the Subsidiaries. The value of all items of obsolete materials
and of materials of below standard quality have been written down to realizable
market value and the values at which such inventory is carried reflect the
normal Inventory valuation policy of the
9
<PAGE>
Company and the Subsidiaries of stating Inventory at the lower of cost or market
value in accordance with generally accepted accounting principles.
3.13 Accounts Receivable and Payable. Schedule 3.13 attached hereto
------------------------------- -------------
sets forth a true, correct and complete list of the accounts and notes
receivable of the Company and the Subsidiaries (the "Account Receivable"),
including the aging thereof as of October 19, 1999. All Accounts Receivable of
the Company and the U.K. Subsidiary arose out of the sales of inventory or
services in the ordinary course of business and are collectible in the face
value thereof within 90 days after the date of invoice, except for retainages
and balances which are subject to customer acceptance of units, using normal
collection procedures, net of the reserve for doubtful accounts set forth
thereon, which reserve is adequate and was calculated in accordance with
generally accepted accounting principles consistently applied. Schedule 3.13
attached hereto also sets forth a true, correct and complete list of accounts
payable of the Company and the Subsidiaries ("Accounts Payable"), including the
aging thereof as of the date hereof. All Accounts Payable arose in the ordinary
course of business.
3.14 Tax Matters.
-----------
(a) Unless otherwise provided, for purposes of this Agreement,
"Taxes" means all taxes, charges, fees, levies or other similar assessments or
liabilities, including without limitation income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, payroll and franchise taxes imposed by the
United States of America or any state, local or foreign government, or any
agency thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof.
(b) Unless otherwise provided, for purposes of this Agreement,
"Tax Returns" means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection with
Taxes.
(c) Except as set forth on Schedule 3.14, since October 1, 1996,
each of the Company and the Subsidiaries has filed all material Tax Returns that
it was required to file, and all such material Tax Returns were correct and
complete in all material respects. Each group of corporations with which the
Company or any of the Subsidiaries has filed (or was required to file)
consolidated, combined, unitary or similar material Tax Returns (an "Affiliated
Group") has filed all material Tax Returns that it was required to file with
respect to any period in which the Company or any of the Subsidiaries was a
member of such Affiliated Group (an "Affiliated Period"), and all such Tax
Returns were correct and complete in all material respects. Each of the Company
and the Subsidiaries has paid all Taxes that are shown to be due on any such Tax
Returns and subsequent assessment to such Tax Returns that were due and payable
and each Affiliated Group has paid all Taxes and subsequent assessments to such
Tax
10
<PAGE>
Returns that were due and payable and each Affiliated Group has paid all Taxes
and subsequent assessments to such Tax Returns that were due and payable with
respect to all Affiliated Periods. The unpaid Taxes of the Company and the
Subsidiaries for tax periods through the date of the Current Balance Sheet do
not exceed the accruals and reserves for Taxes set forth on the Current Balance
Sheet (exclusive of any accruals for "deferred taxes" or similar items that
reflect timing differences between Tax and financial accounting principles and
exclusive of federal and state income taxes that are accrued on the Parent's
balance sheet). Since October 1, 1996, all Taxes that the Company or any of the
Subsidiaries is or was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
governmental entity.
(d) The Parent has delivered to the Buyer correct and complete copies
of all federal income Tax Returns, examination reports and statements of
deficiencies assessed against or agreed to by the Company or any of the
Subsidiaries since September 30, 1996 and materially correct and complete copies
of the portion of the federal income Tax Returns, examination reports and
statements of deficiency assessed against or agreed to with respect to any
Affiliated Group relating to the activities of the Company and the Subsidiaries
for all Affiliated Periods since September 30, 1996. The Parent has delivered or
made available to the Buyer materially correct and complete copies of all other
Tax Returns of the Company and the Subsidiaries request by the Buyer together
with all related examination reports and statements of deficiency for all
periods from and after September 30, 1996 and materially correct and complete
copies of the portion of all other Tax Returns, examination reports and
statements of deficiency assessed against or agreed to with respect to any
Affiliated Group relating to the activities of the Company and the Subsidiaries
for all Affiliated Periods since September 30, 1996. The Tax Returns of the
Company, each of the Subsidiaries, and each Affiliated Group have been audited
by the applicable taxing authorities or are closed by the applicable statute of
limitations for all taxable years through the taxable year specified on Schedule
3.14 hereto. No examination or audit of any Tax Return of the Company or any of
the Subsidiaries or any Affiliated Group with respect to an Affiliated Period by
any Governmental Entity is currently in progress or, to the knowledge of the
Company and the Subsidiaries and the members of any Affiliated Group, threatened
or contemplated and exclusive of federal and state income taxes that are accrued
on the Parent's balance sheet. Since October 1, 1996, neither the Company nor
any of the Subsidiaries nor the members of any Affiliated Group has been
informed by any jurisdiction that the jurisdiction believes that the Company or
any of the Subsidiaries or the Affiliated Group was required to file any Tax
Return that was not filed.
(e) Neither the Company nor any of the Subsidiaries nor any
Affiliated Group has waived any statute of limitations with respect to Taxes or
agreed to an extension of time with respect to a Tax assessment or deficiency.
(f) Neither the Company nor any of the Subsidiaries is a "consenting
corporation" within the meaning of Section 341(f) of the Internal Revenue
11
<PAGE>
Code of 1986, as amended (the "Code"), and none of the assets of the Company or
the Subsidiaries are subject to an election under Section 341(f) of the Code.
(g) Neither the Company nor any of the Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(l)(A)(ii)
of the Code.
(h) Other than the Parent's employment agreement with Jim Clemens
executed in connection with this Agreement, neither the Company nor any of the
Subsidiaries has made any payments, is obligated to make any payments, or is a
party to any agreement that could obligate it to make any payments that will be
an "excess parachute payment" under Code Section 280G.
(i) Neither the Company nor any of the Subsidiaries has any actual or
to the best of the Parent's knowledge, potential liability for any Taxes of any
person (other than the Company, the Subsidiaries, and any Affiliated Group) as a
transferee or successor, by contract, or otherwise.
(j) None of the assets of the Company or any of the Subsidiaries is
property that is required to be treated as being owned by any other person
pursuant to the provisions of former Section 168(f)(8) of the Code.
(k) None of the assets of the Company or any of the Subsidiaries is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(l) None of the assets of the Company or any of the Subsidiaries
directly or indirectly secures any debt the interest on which is tax exempt
under Section 103(a) of the Code.
(m) Neither the Company nor any of the Subsidiaries has undergone a
change in its method of accounting resulting in an adjustment to its taxable
income pursuant to Section 481 of the Code.
(n) Neither the Company nor any of the Subsidiaries has ever
participated in or cooperated with an international boycott within the meaning
of Section 999 of the Code.
(o) Neither the Company nor any of the Subsidiaries is or has ever
been a member of a group of corporations with which it has filed (or been
required to file) consolidated, combined or unitary Tax Returns, other than a
group of which only the Company, the Subsidiaries, and any current Affiliated
Group are or were members.
12
<PAGE>
(p) Neither the Company nor any Subsidiary is or has been required to
make a basis reduction pursuant to Treasury Regulation Section 1.1502-20(b) or
Treasury Regulation Section 1.337(d)-2(b).
3.15 Books and Records. The general ledgers and books of account of
-----------------
the Company and the Subsidiaries, all federal, state and local income,
franchise, property and other Tax Returns filed by the Company and the
Subsidiaries are in all material respects complete and correct and have been
maintained in accordance with good business practice and in accordance with all
applicable procedures required by laws and regulations.
3.16 Contracts and Commitments.
-------------------------
(a) Schedule 3.16 attached hereto contains a true, complete and
-------------
correct list and description of the following contracts and agreements, whether
written or oral (collectively, the "Contracts"):
(1) all loan agreements, indentures, mortgages and
guaranties to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their property is bound;
(2) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase agreements to which the Company or any of the Subsidiaries is
a party or by which the Company or any of the Subsidiaries or any of their
property is bound;
(3) all contracts, agreements, commitments, (other than
purchase orders) or other understandings or arrangements to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries or any of their property is bound which (A) involve payments or
receipts by the Company or any of the Subsidiaries of more than $25,000 in the
case of any single contract, agreement, commitment, understanding or arrangement
under which full performance (including payment) has not been rendered by all
parties thereto or (B) which may materially adversely affect the condition
(financial or otherwise) or the properties, assets, business or prospects of the
Company or any of the Subsidiaries;
(4) all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, pension plans, retirement plans, employee stock option
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, arrangements or commitments to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their property is bound;
13
<PAGE>
(5) all agency, distributor, sales representative,
franchise or similar agreements to which the Company or any of the Subsidiaries
is a party or by which the Company or any of the Subsidiaries or any of their
property is bound;
(6) all contracts, agreements or other understandings or
arrangements between the Company and any of the Subsidiaries (including, but not
limited to, any tax sharing arrangements) or between the Company and the Parent
or their affiliates;
(7) all leases, whether operating, capital or otherwise,
under which the Company or any of the Subsidiaries is lessor or lessee;
(8) all contracts, agreements and other documents or
information relating to past disposal of waste (whether or not hazardous), and
sales of steel scrap, prototypes, tools and dies;
(9) all contracts, agreements or other arrangements
imposing a non-competition or non-solicitation obligation on the Company or any
of its Subsidiaries; and
(10) any other material agreements or contracts (other than
purchase orders) entered into by the Company or any of the Subsidiaries.
(b) Except as set forth on Schedule 3.16:
-------------
(1) Each Contract is a valid and binding agreement of the
Company or the relevant Subsidiary, enforceable against the Company or the
relevant Subsidiary in accordance with its terms, and, to the best of the
Parent's knowledge, each Contract is a valid and binding agreement of the other
parties thereto;
(2) the Company or the relevant Subsidiary has fulfilled
all material obligations required pursuant to the Contracts to have been
performed by the Company or the relevant Subsidiary, as the case may be, on its
part prior to the date hereof, and to the best of the Parent's knowledge it will
be able to fulfill, when due, all of its obligations under the Contracts which
remain to be performed after the date hereof; the Company's outstanding purchase
orders on the Closing Date provide for a number of units to be delivered that
are consistent with the Company's historical capacity to produce such number of
units within the prescribed contractual period;
(3) the Company or the relevant Subsidiary is not in breach
of or default in any material respect under any Contract, and, to the best
knowledge of the Parent, no event has occurred which with the passage of time or
giving of notice or both would constitute such a default, result in a loss of
rights or result in the creation of any lien, charge or encumbrance, thereunder
or pursuant thereto;
14
<PAGE>
(4) to the best knowledge of the Parent, there is no
existing breach or default by any other party of a material obligation under any
Contract, and to the best knowledge of the Parent no event has occurred which
with the passage of time or giving of notice or both would constitute a default
by such other party, result in a loss of rights or result in the creation of any
lien, charge or encumbrance thereunder or pursuant thereto;
(5) there are not and, since October 1, 1996 have not been,
any claims material in amount of a non-routine nature relating to the Company or
any Subsidiary by customers of the Company or any of the Subsidiaries under any
warranties, whether express or implied;
(6) the Company and the Subsidiaries are not restricted by
any Contract from carrying on their business anywhere in the world; and
(7) neither the Company nor any of the Subsidiaries has any
written or oral contracts to sell products or perform services which are
expected to be performed at, or to result in, a loss.
(c) True, correct and complete (in all material respects) copies
of all Contracts have previously been delivered by the Company or the Parent to
the Buyer.
3.17 Compliance with Agreements and Laws. The Company and the
-----------------------------------
Subsidiaries each have all licenses, permits and certificates, including
environmental, health and safety permits, from federal, state and local
authorities the possession of which are material to conduct their respective
business and the ownership and operation of their respective assets
(collectively, the "Permits"). Schedule 3.17 attached hereto sets forth a true,
correct and complete list of all such Permits which are material to the conduct
of the Company's business, copies of which have previously been delivered by the
Company or the Parent to the Buyer. Neither the Company nor any of the
Subsidiaries is in violation in any material respect of any law, regulation or
ordinance (including, without limitation, laws, regulations or ordinances
relating to building, zoning, environmental protection, occupational, health and
safety, disposal of hazardous substances, hazardous waste, land use or similar
matters) relating to its properties. The business of the Company and the
Subsidiaries as conducted since October 1, 1996, has not violated, and on the
date hereof does not violate, in any material respect, any federal, state, local
or foreign laws, regulations or orders (including, but not limited to, any of
the foregoing relating to employment discrimination, occupational safety and
health, environmental protection, hazardous substances, hazardous waste or
corrupt practices), the enforcement of which would have a material adverse
effect on the results of operations, condition (financial or otherwise), assets,
properties business or prospects of the Company or any of the Subsidiaries.
Except as set forth on Schedule 3.17, neither the Company nor any of the
15
<PAGE>
Subsidiaries has had notice or communication from any federal, state or local
governmental or regulatory authority or otherwise since October 1, 1996 of any
such violation or noncompliance.
3.18 Employee Relations.
------------------
(a) The Company and each of the Subsidiaries is in compliance in
all material respects with all federal, state and municipal laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and is not engaged in any unfair labor practice, and there are
no arrears (other than arising out of its normal weekly payroll cycle) in the
payment of wages or social security taxes.
(b) Except as set forth on Schedule 3.18 attached hereto:
-------------
(1) none of the employees of the Company or the Subsidiaries
is represented by any labor union;
(2) there is no unfair labor practice complaint against the
Company or any of the Subsidiaries pending before the National Labor Relations
Board or any state or local agency;
(3) to the best of the Parent's knowledge, there is no
pending labor strike or other material labor trouble affecting the Company or
any of the Subsidiaries (including, without limitation, any organizational
drive);
(4) there is no material labor grievance pending against the
Company or any of the Subsidiaries;
(5) to the best of the Parent's knowledge, there is no
pending representation question respecting the employees of the Company or any
of the Subsidiaries;
(6) there are no pending arbitration proceedings arising out
of or under any collective bargaining agreement to which the Company or any of
the Subsidiaries is a party, or to the best knowledge of the Parent, any basis
for which a claim may be made under any collective bargaining agreement to which
the Company or any of the Subsidiaries is a party;
(7) other then as required under COBRA, neither the Company
nor any of the Subsidiaries has any continuing obligation for health, life,
medical insurance or other similar fringe benefits to any former employee of the
Company or any Subsidiary; and
16
<PAGE>
(8) no employee is entitled to a bonus payment for any
period prior to the Closing Date or has any contractual arrangements (whether
oral or in writing) relating to severance, or has been promised any stay pay or
similar arrangement.
(c) For purposes of this Subsection 3.18, the term "employee"
shall be construed to include sales agents and other independent contractors who
spend a majority of their working time on the business of the Company or any of
the Subsidiaries.
3.19 Employee Benefit Plans.
----------------------
(a) Employee Plans. Schedule 3.19 attached hereto contains a
-------- -----
true, correct and complete list of all pension, benefit, profit sharing,
retirement, deferred compensation, welfare, insurance, disability, bonus,
vacation pay, severance pay and other similar plans, programs and agreements,
whether reduced to writing or not, other than any "multiemployer plan" as such
term is defined in Section 4001(a)(3) of ERISA, relating to the Company's
employees, or maintained at any time since October 1, 1996 by the Company or by
any other member (hereinafter, "Affiliate") of any controlled group of
corporations, group of trades or businesses under common control, or affiliated
service group (as defined for purposes of Section 414(b), (c) and (m),
respectively, of the Internal Revenue Code of 1986, as amended (the "Code"))
(the Employee Plans") and, except as set forth on Schedule 3.19 attached hereto,
-------- ----
the Company has no obligations, contingent or otherwise, past or present, under
applicable law or the terms of any Employee Plan.
(b) Prohibited Transactions. Neither the Company nor any of its
-----------------------
Affiliates, directors, officers, employees or agents, or any "party in interest"
or "disqualified person," as such terms are defined in Section 3 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Code has, with respect to any Employee Plan, engaged in or been a party
to any nonexempt "prohibited transaction," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, in connection with which, directly or
indirectly, the Buyer or any of its Affiliates, directors or employees or any
Employee Plan or any related funding medium could be subject to either a penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Code.
(c) Compliance. With respect to all Employee Plans, the Company
----------
and its Affiliates are in compliance in all material respects with the
requirements prescribed by any and all statutes, orders or governmental rules or
regulations currently in effect, including, but not limited to, ERISA and the
Code, applicable to such Employee Plans. The Company and its Affiliates have in
all material respects performed all obligations required to be performed by them
under, and is not in violation in any respect of, and there has been no default
or violation by any other party with respect to, any of the Employee Plans.
Except as set forth on Schedule 3.19
-------------
17
<PAGE>
attached hereto: (i) none of the Employee Plans which are subject to Title IV of
ERISA has been or will be terminated in whole or in part within the meaning of
ERISA or the Code; (ii) no liability has been incurred to, nor has any event or
circumstance occurred, nor will any event or circumstance occur prior to the
Closing Date, which could result in such a liability being asserted by, the
Pension Benefit Guaranty Corporation ("PBGC") with respect to any Employee Plan
(other than the payment of annual premiums under Section 4007 of ERISA or
benefits payable in accordance with the terms of such Employee Plan); (iii) no
Employee Plan that is subject to Part 3 of Subtitle B of Title I of ERISA or
Section 412 of the Code, or both, incurred any "accumulated funding deficiency"
(as defined in ERISA), whether or not waived; (iv) neither the Company nor any
Affiliate has failed to pay any amounts due and owing as required by the terms
of any Employee Plan; (v) there has been no "reportable event" within the
meaning of Section 4043(b)(1)-(9) of ERISA, or any event described in Section
4063(a) of ERISA, with respect to any Employee Plan, other than as disclosed
herein or on accompanying schedules; (vi) neither Company nor any Affiliate has
failed to make any payment to an Employee Plan required under Section 302 of
ERISA nor has any lien ever been imposed under Section 302(f) of ERISA; (vii)
neither the Company nor any Affiliate has adopted an amendment to any Employee
Plan which requires the provision of security under Section 307 of ERISA, (viii)
the PBGC has not instituted any proceedings to terminate an Employee Plan
pursuant to Section 4042 of ERISA.
(d) Multiemployer Plans. Schedule 3.19 lists each and every
------------------- -------------
multiemployer plan to which the Company or its Affiliates contribute, are
required to contribute at any time since October 1, 1996. No multiemployer plan
listed in Schedule 3.14 is in "reorganization" (as defined in Section 4241 of
-------------
ERISA) or "insolvent" (as defined in Section 4245 of ERISA). Neither the
Company nor any Affiliate has withdrawn or is reasonably expected to withdraw
from a multiemployer plan in a complete or partial withdrawal which has resulted
or will result in "withdrawal liability," as defined for purposes of Part I of
Subtitle E of Part IV of ERISA, with respect to any such plan which has not been
satisfied in full. The Company and its Affiliates have made all contributions
to any such plan as are required through the Closing Date under the terms of any
such plans or applicable statutes, regulations, rulings and other applicable
law; and no event has occurred, or can occur prior to the Closing Date, which
could give rise to any other liability (other than a continuing obligation to
contribute to such plan(s) under the terms of any applicable collective
bargaining agreements) on the part of the Company or the Buyer, or their
Affiliates, officers, employees or directors with respect to such plan(s).
(e) Retiree Benefits. Except as set forth in Schedule 3.19, no
---------------- -------------
Employee Plan provides health or life insurance benefits for retirees. No such
plan contains any provisions, and no commitments or agreements exist, which in
any way would limit or prohibit the Buyer from amending any such plan to reduce
or eliminate such retiree benefits.
18
<PAGE>
(f) Copies of Employee Plans and Related Documents. The Company
----------------------------------------------
has previously delivered to the Buyer true, correct and complete copies of all
Employee Plans which have been reduced to writing and written descriptions of
all Employee Plans which have not been reduced to writing, and all agreements,
including trust agreements and insurance contracts, related to such Employee
Plans, and the Summary Plan Description and all modifications thereto for each
Employee Plan communicated to employees. The Company does not have and is not
required to contribute to an Employee Plan that is a "defined benefit plan," as
such term is defined in Section 3(35) of ERISA (the "Defined Benefit Plans").
(g) Qualifications. Each Employee Plan intended to qualify under
--------------
Section 401(a) of the Code has been determined by the Internal Revenue Service
to so qualify, and the trusts created thereunder have been determined to be
exempt from tax under the provisions of Section 501(a). Each Employee Plan
which is a funded welfare benefit plan intended to be exempt from tax under the
provisions of Section 501(c)(9) of the Code has been determined by the Internal
Revenue Service to be so exempt. Copies of all determination letters with
respect to each such Employee Plan have been previously delivered by the Company
to the Buyer, and nothing has since occurred, or will occur prior to the Closing
Date, which might cause the loss of such qualification or exemption, no such
Employee Plan has been operated in a manner which would cause it to be
disqualified in operation, and all such Employee Plans have been administered in
compliance with and consistent with all applicable requirements of the Code and
ERISA, including, without limitation, all reporting, notice, and disclosure
requirements.
(h) Funding Status, Etc.
-------------------
(1) Except as set forth on Schedule 3.19, neither the Company
-------------
nor any corporation or trade or business (whether or not incorporated) which
would be treated as a member of the controlled group of the Company under
Section 4001(a)(14) of ERISA would be liable for (A) any amount pursuant to
Section 4062, 4063, 4064, 4068 or 4069 of ERISA if any of the Employee Plans
which are subject to Title IV of ERISA were to terminate or (B) any amount
pursuant to Section 4201 of ERISA if a complete or partial withdrawal from any
multiemployer plan listed on Schedule 3.19 occurred before the Closing. Except
-------------
as set forth on Schedule 3.19, all Employee Plans which are subject to Title IV
-------------
of ERISA have no unfunded benefit liabilities, as defined in Section 4001(a)(18)
of ERISA. There is no unpaid contribution due with respect to the plan year of
any such Defined Benefit Plan ended prior to the Closing Date, as required under
the minimum funding requirements of Section 412 of ERISA.
(2) With respect to each Employee Plan which is a qualified
defined contribution pension, profit-sharing or stock bonus plan, as defined in
ERISA, all employer contributions accrued for plan years ending prior to the
Closing Date under the Plan terms and applicable law have been made by the
Company.
19
<PAGE>
(3) All premiums or other payments required by the terms of
any group or individual insurance policies and programs maintained by the
Company and covering any present or former employees of the Company with respect
to all periods up to and including the Closing Date have been fully paid for the
length of the obligation.
(i) Claims and Litigation. Except as set forth on Schedule 3.19,
--------------------- -------------
to the best of the Company's knowledge, there are no threatened or pending
claims, suits or other proceedings by present or former employees of the Company
or its affiliates, plan participants, beneficiaries or spouses of any of the
above, the Internal Revenue Service, the PBGC, or any other person or entity
involving any Employee Plan including claims against the assets of any trust,
involving any Employee Plan, or any rights or benefits thereunder, other than
ordinary and usual claims for benefits by participants or beneficiaries
including claims pursuant to domestic relations orders.
(j) No Implied Rights. Nothing expressed or implied herein shall
-----------------
confer upon any past or present employee of the Company, his or her
representatives, beneficiaries, successors and assigns, nor upon any collective
bargaining agent, any rights or remedies of any nature, including, without
limitation, any rights to employment or continued employment with the Company,
the Buyer, or any successor or affiliate.
(k) Liabilities. Except as heretofore accrued on the Current
-----------
Financial Statements and except with respect to the period between August 22,
1999 and the Closing Date, there are no liabilities with respect to any Employee
Plan which liability relates to any period prior to the Closing Date, including,
without limitation, any taxes, accrued vacation or sick pay (whether or not
vested), accrued vacation, sick and personal leaves, employee policies, employee
benefit claims or liability to the Pension Benefit Guaranty Corporation. The
Company does not have a policy or any contractual obligation to pay severance
pay.
3.20 Environmental Matters.
---------------------
(a) Hazardous Materials have not at any time been generated,
used, treated or stored on any property, plants or other facility now or
formerly owned, leased, or operated by the Company or any Subsidiary or their
predecessors, in violation in any material respect of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, and none of the Company or any of its
Subsidiaries or their predecessors have received any notice of any such
violation with respect to Hazardous Materials.
20
<PAGE>
(b) There has been no spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto any property now owned or leased by
the Company or any of its Subsidiaries or their predecessors, or into the
environment surrounding any such property, of Hazardous Materials, other than
those releases permissible under applicable environmental laws.
(c) The Company or any of its Subsidiaries or their predecessors,
their operations and any property owned, leased or operated by the Company, the
Subsidiaries or their predecessors are in compliance in all material respects
with all applicable Environmental Laws and the requirements of any permits
issued under such laws.
(d) There are no past, pending or, to the best knowledge of the
Parent, threatened Environmental Claims against the Company or any of the
Subsidiaries or their predecessors, or which involves or relates to any property
now or previously owned, leased or operated by the Company or any of the
Subsidiaries, or their predecessors.
(e) There is no condition or occurrence on any property now or
previously owned, leased or operated by the Company, the Subsidiaries, or their
predecessors or any property adjoining or in the vicinity of any such property
that to the best knowledge of the Parent could reasonably be anticipated (i) to
form the basis of an Environmental Claim against the Company or any of the
Subsidiaries or their predecessors or (ii) to cause any property of the Company,
the Subsidiaries or their predecessors, to be subject to any restrictions on the
ownership, occupancy, use or transferability of such property under any
Environmental Law.
(f) Schedule 3.20 is a list of all documents (whether in hard copy or
-------------
electronic form) that contain any environmental reports, investigations and
audits relating to premises currently or previously owned, leased or operated by
the Company or any Subsidiary or other predecessors (whether conducted by or on
behalf of the Company or a Subsidiary or a third party, and whether done at the
initiative of the Company or a Subsidiary or directed by a Governmental Entity
or other third party) which were issued or conducted during the past five years
and which the Company has possession of or access to. A complete and accurate
copy of each such document has been provided to the Buyer.
(g) For purposes of this Agreement, "Hazardous Materials" shall refer
to (a) any petroleum or petroleum products, radioactive materials, asbestos in
any form that is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of
21
<PAGE>
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance exposure to which is prohibited, limited or
regulated by any governmental authority; "Environmental Law" means any federal,
-----------------
state or local statute, law, rule, regulation, ordinance, code, policy or rule
of common law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including without limitation the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA") 42 U.S.C.' 9601 et seq.; the Hazardous Materials
------ -- ---
Transportation Act, as amended, 49 U.S.C.' 1801 et seq.; the Resource
Conservation and Recovery Act, as amended, 42 U.S.C.' 6901 et seq.; the Federal
-- ---
Water Pollution Control Act, as amended, 33 U.S.C.' 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C.' 2601 et seq.; the Clean Air Act, 42 U.S.C.'
-- ---
7401 et seq.; the Safe Drinking Water Act, 42 U.S.C." 3808 et seq.; and their
-- --- -- ---
counterparts under any state or local laws; "Environmental Claims" means any and
--------------------
all administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation, investigations
or proceedings relating in any way to any Environmental Law or any permit issued
under any such Law (hereafter "Claims"), including without limitation (a) any
------
and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages, fines or
penalties pursuant to any applicable Environmental Law, and (b) any and all
Claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
environment.
3.21 Absence of Certain Changes or Events.
------------------------------------
(a) Except as set forth on Schedule 3.21 attached hereto, since
-------------
August 22, 1999, neither the Company nor any of the Subsidiaries has entered
into any transaction which is not in the usual and ordinary course of business,
and, without limiting the generality of the foregoing, neither the Company nor
any of the Subsidiaries has:
(1) incurred any material obligation or liability for
borrowed money;
(2) discharged or satisfied any Lien or paid any obligation
or liability other than current liabilities reflected in the Current Balance
Sheet;
(3) mortgaged, pledged or subjected to Lien any of their
respective properties or assets;
(4) sold or purchased, assigned or transferred any of its
tangible assets or cancelled any debts or claims, except for inventory sold and
raw materials purchased in the ordinary course of business;
22
<PAGE>
(5) made any material amendment to or termination of any
Contract or done any act or omitted to do any act which would cause the breach
of any Contract;
(6) except for the Starsine Unit shipped in August which
was lost and with respect to which an insurance claim has been made, suffered
any losses of personal or real property, whether insured or uninsured, and
whether or not in the control of the Company or the relevant Subsidiary, as the
case may be, in excess of $75,000 in the aggregate, or waived any rights of any
value;
(7) authorized any declaration or payment of dividends by
the Company or any Subsidiary which is not wholly owned by the Company, or paid
any such dividends, or authorized any transfer of assets of any kind whatsoever
by the Company or any such Subsidiary to any of their respective stockholders
with respect to any shares of their capital stock;
(8) authorized or issued recall notices for any of its
products or initiated any safety investigations;
(9) received notice of any litigation, warranty claim or
products liability claims;
(10) made any material change in the terms, status or
funding condition of any Employee Plan, as defined in Subsection 3.19 hereof;
(11) other than has previously been disclosed in writing to
the Buyer; engaged any new employee for a salary in excess of $50,000 per annum;
(12) other than the release of incentive compensation to the
Company's sales force, made, or committed to make, any changes in the
compensation payable to any officer, director, employee or agent of the Company
or any Subsidiary, or any bonus payment or similar arrangements made to or with
any of such officers, directors, employees or agents;
(13) incurred any capital expenditure in excess of $50,000
in any instance or $100,000 in the aggregate;
(14) made any material alteration in the manner of keeping
the books, accounts or records of the Company or any Subsidiary, or in the
accounting practices therein reflected; or
(b) Except as set forth on Schedule 3.21 or disclosed to the
Buyer in writing prior to the Closing, since September 30, 1998, neither the
Company nor any Subsidiary has suffered any material adverse change in the
consolidated
23
<PAGE>
results of operations, condition (financial or otherwise), assets, liabilities
(whether absolute, accrued, contingent or otherwise), business or prospects of
the Company and the Subsidiaries taken as a whole.
(c) To the best of the Parent's knowledge, there is no existing
or threatened occurrence, event or development which, as far as can be
reasonably foreseen, could have a material adverse effect on the business,
properties, assets, condition (financial or otherwise) or prospects of the
Company and the Subsidiaries taken as a whole.
3.22 Suppliers. Schedule 3.22 attached hereto sets forth a true,
---------
correct and complete list of the present sole source suppliers of significant
goods or services, other than utilities, for any product with respect to which
practical alternative sources of supply are not available on comparable terms
and conditions, indicating the contractual arrangements for continued supply
from each such supplier. Except as set forth on Schedule 3.22, (a) the Company
and each of the Subsidiaries has good relations with all of its sole source
suppliers, and (b) neither the Company nor any of the Subsidiaries is more than
60 days in arrears in any trade accounts payable or other payments owing to any
supplier, except for amounts which the Company is disputing in good faith.
3.23 Warranty and Product Liability Claims. Other than as set forth on
-------------------------------------
Schedule 3.23 attached hereto neither the Company nor the U.K. Subsidiary has
suffered any nor has any outstanding warranty and product liability claims
against the Company or any of the Subsidiaries from October 1, 1997 through the
date hereof in excess of $10,000 per occurrence or $100,000 on the aggregate for
such period.
3.24 Prepayments and Deposits. Neither the Company nor the U.K.
------------------------
Subsidiary has received any prepayments and deposits, from customers for
products to be shipped, or services to be performed, after the Closing Date.
3.25 Indebtedness to and from Officers, Directors and Parent. Except
-------------------------------------------------------
as set forth on Schedule 3.25 attached hereto and except for intercompany
indebtedness payable among the Company and any Subsidiary or among the
Subsidiaries, neither the Company nor any of the Subsidiaries is indebted,
directly or indirectly, to any person who is an officer, director or stockholder
of any of the foregoing entities or any affiliate of any such person in any
amount whatsoever other than for salaries for services rendered or reimbursable
business expenses, all of which have been reflected on the Current Balance
Sheet, and no such officer, director, stockholder or affiliate is indebted to
the Company or any of the Subsidiaries except for advances made to employees of
the Company or any of the Subsidiaries in the ordinary course of business to
meet reimbursable business expenses anticipated to be incurred by such obligor.
The total intercompany indebtedness on the Closing Date (approximately
$7,000,000) will be contributed to the equity of the Company prior to the
Closing.
24
<PAGE>
3.26 Banking Facilities. Schedule 3.26 attached hereto sets forth a
------------------
true, correct and complete list of:
(a) each bank, savings and loan or similar financial institution
in which the Company or any of the Subsidiaries has an account or safety deposit
box and the numbers of the accounts or safety deposit boxes maintained by the
Company or any of the Subsidiaries thereat; and
(b) the names of all persons authorized to draw on each such
account or to have access to any such safety deposit box facility, together with
a description of the authority (and conditions thereof, if any) of each such
person with respect thereto.
3.27 Powers of Attorney and Suretyships. Except as set forth on
----------------------------------
Schedule 3.27 attached hereto, neither the Company nor any of the Subsidiaries
has any general or special powers of attorney outstanding (whether as grantor or
grantee thereof) or has any obligation or liability (whether actual, accrued,
accruing, continent or otherwise) as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any person,
corporation, partnership, joint venture, association, organization or other
entity, except as endorser or maker of checks or letters of credit,
respectively, endorsed or made in the ordinary course of business.
3.28 Conflicts of Interest. Except as set forth on Schedule 3.28
---------------------
attached hereto and except for the existence of transactions for the supply of
goods or services between the Buyer and affiliates of the Parent, neither the
Parent nor any officer or director of the Company or any Subsidiary nor, to the
best knowledge of the Parent, any affiliate of any such person, now has or
within the last three (3) years had, either directly or indirectly:
(a) an equity or debt interest in any corporation, partnership,
joint venture, association, organization or other person or entity which
furnishes or sells or during such period furnished or sold services or products
to the Company or any of the Subsidiaries, or purchases or during such period
purchased from the Company or any of the Subsidiaries any goods or services, or
otherwise does nor during such period did business with the Company or any of
the Subsidiaries; or
(b) a beneficial interest in any contract, commitment or
agreement to which the Company or any of the Subsidiaries is or was a party or
under which any of them is or was obligated or bound or to which any of their
respective properties may be or may have been subject, other than stock options
and other contracts, commitments or agreements between the Company or any of the
Subsidiaries and such persons in their capacities as employees, officers or
directors of the Company or such Subsidiary.
25
<PAGE>
3.29 Regulatory Approvals. All consents, approvals, authorizations or
--------------------
other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Company or any of the Subsidiaries and which are
necessary for the execution and delivery by the Parent and the Company of this
Agreement or any documents to be executed and delivered by the Parent or the
Company in connection herewith are set forth on Schedule 3.29 attached hereto
and have been, or prior to the Closing Date will be, obtained and satisfied.
3.30 Year 2000 Compliance.
--------------------
(a) The Company has conducted "year 2000" audits with respect to
(i) all of the Company's internal systems that are material to the business or
operations of the Company, including, without limitation, computer hardware
systems, software applications, firmware, equipment containing embedded
microchips and other embedded systems ("Internal Systems") and (ii) all of the
software, hardware, firmware and other technology ("Products") which constitute
part of the products and services manufactured, marketed or sold by the Company
or licensed by the Company to third parties. The Company has obtained "year
2000" certifications with respect to all third-party systems that are material
to the business or operations of the Company, including without limitation
systems belonging to the Company's suppliers, service providers and customers.
The Company has furnished to the Buyer true and correct copies of all "year
2000" audits, certifications, reports and other similar documents that have been
prepared or performed by or on behalf of the Company or any third party with
respect to the Company's business or operations.
(b) The Company has developed a remediation plan reasonably
designed to cause all of its Internal Systems and Products to be Year 2000
Compliant, and to have such compliance tested prior to December 1999 (the "Year
2000 Program"). A complete and accurate copy of the Year 2000 Program has
previously been provided to the Buyer. Except as set forth on Schedule 3.30, the
Company is on schedule and within budget in implementing the Year 2000 Program
and has no reason to believe that the remainder of the year 2000 Program can not
be implemented and tested prior to December 1999 with no more than the budgeted
expenditures.
(c) For purposes of this Agreement, "Year 2000 Compliant" means
that the applicable system or item:
(1) will accurately receive, record, store, provide,
recognize and process all date and time data from, during, into and between the
twentieth and twenty-first centuries, the years 1999 and 2000 and all leap
years;
(2) will accurately perform all date-dependent calculations
and operations (including, without limitation, mathematical operations, sorting,
comparing and reporting) from, during, into and between the twentieth and
twenty-first centuries, the years 1999 and 2000 and all leap years; and
26
<PAGE>
(3) will not malfunction, cease to function or provide
invalid or incorrect results as a result of (x) the change of years from 1999 to
2000 or from 2000 to 2001, (y) date data, including date data which represents
or references different centuries, different dates during 1999 and 2000, or more
than one century or (z) the occurrence of any particular date;
in each case without human intervention, other than original data
entry or revisions to computer code that can be implemented at reasonable cost
and with reasonable effort; provided, in each case, that all applications,
hardware and other systems used in conjunction with such system or item which
are not owned or licensed by the Company correctly exchange date data with or
provide data to such system or item.
(d) Except as set forth on Schedule 3.30, the Company has not
-------------
provided any guarantee or warranty for any product sold or licensed, or service
provided, by the Company to the effect that such product or service (i) complies
with or accounts for the fact of the arrival of the year 2000, (ii) will not be
adversely affected with respect to functionality, interoperability, performance
or volume capacity (including without limitation the processing and reporting of
data) by virtue of the arrival of the year 2000 or (iii) is otherwise Year 2000
Compliant.
3.31 Disclosure. The information concerning the Company and the
----------
Subsidiaries set forth in this Agreement, the Exhibits and Schedules attached
hereto and any document, statement or certificate furnished or to be furnished
to the Buyer pursuant hereto, does not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated herein
or therein or necessary to make the statements and facts contained herein or
therein, in light of the circumstances in which they are made, not false and
misleading. The Parent and the Company have disclosed to the Buyer all material
facts pertaining to the transactions contemplated by this Agreement and the
Exhibits hereto. Copies of all documents heretofore or hereafter delivered or
made available to the Buyer pursuant to this Agreement were or will be complete
and accurate copies of such documents.
3.32 Broker's Fees. Except for the fee payable by the Parent to FAC
-------------
Equities, no fees or commissions or similar payments with respect to the
transactions contemplated by this Agreement have been paid or will be payable by
the Parent, the Company or any Subsidiary to any broker, financial advisor,
finder, investment banker, or bank. The Buyer shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section 3.32 that may be due in
connection with the transactions contemplated by this Agreement.
3.33 Securities Representations.
--------------------------
27
<PAGE>
(a) Parent is an "accredited investor" within the meaning of the
Securities Act. Parent has knowledge and experience in financial and business
matters such that it is capable of evaluating the merits and risks of the
investment in the SatCon Shares and is financially able to undertake the risks
involved in such an investment. Parent understands that (i) the SatCon Shares
have not been registered under the Securities Act, or any state securities law
by reason for their issuance in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) and Regulation D
promulgated thereunder and an exemption under the applicable state securities
law and (ii) such SatCon Shares must be held indefinitely unless a registration
statement covering the resale of such shares is effective under the Securities
Act and such state law or unless an exemption from registration under the
Securities Act and such state law is available.
(b) Parent agrees that SatCon Shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act, or (ii) the Buyer first shall have been furnished with an
opinion of legal counsel, reasonably satisfactory to the Parent and which may be
counsel to the Buyer, to the effect that such sale or transfer is exempt from
the registration requirements of the Securities Act. The SatCon Shares may be
pledged and transferred to Key Bank, N.A. in connection with the Parent's credit
facility. Each certificate representing SatCon Shares shall bear a legend
substantially in the following form:
"The securities represented by this certificate
have not been registered under the Securities Act of 1933,
as amended, and may not be offered, sold or otherwise
transferred, pledged or hypothecated without the consent of
SatCon Technology Corporation and unless and until such
securities are registered under such Act or an opinion of
counsel satisfactory to SatCon Technology Corporation is
obtained to the effect that such registration is not
required."
(c) The Buyer has granted the Parent and its attorneys or other
representatives access to all information about the Buyer which Parent has
requested; and the Parent has had the opportunity to ask questions of, and
receive answers from, representatives of the Buyer to ask questions of, and
receive answers from, representatives of the Buyer concerning such information
and the Buyer's financial condition and prospects.
(d) The principal office of the Parent and the place at which the
decision by the Parent to participate in this Agreement and the transactions
contemplated hereby was made is located in New York.
Any information furnished in the schedules of the Parent, Company or U.K.
28
<PAGE>
Subsidiary (a "Disclosure Schedule") shall be deemed to modify all of the
Parent's representations and warranties. The inclusion of any information in the
Disclosure Schedule shall not be deemed to be an admission or acknowledgment, in
and of itself, that such information is required by the terms hereof to be
disclosed, is material to the Disclosure Schedule, has or would have a material
adverse effect. For purposes of this Agreement, the terms "to the best of the
Company's knowledge," "to the best of the Parent's knowledge," "known by the
Company," "known to the Parent" or other words of similar meaning shall mean the
actual knowledge of George McNamee, Cynthia Scheuer or James Clemens without any
obligation of investigation, and shall not refer to the knowledge of any other
person or entity.
4. Representation and Warranties of the Buyer.
------------------------------------------
The Buyer represents and warrants to the Parent as follows:
4.1 Organization and Qualification. The Buyer is a corporation duly
------------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite corporate power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Except for Beacon Power Corporation or ("Beacon") and as set forth on Schedule
4.1, the Buyer has no subsidiaries (collectively, the "Buyer Subsidiaries"); it
being agreed that for purpose of this Agreement Beacon is not a Buyer Subsidiary
of the Buyer. Each of the Buyer Subsidiaries (which, except as provided in the
prior sentence, for purposes of this Agreement means any entity in which the
Buyer, directly or indirectly, owns the majority of such entity's capital stock
or holds an equivalent equity or similar interest) is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the full
corporate power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Each of the Buyer and the Buyer
Subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not, individually or in the aggregate, (x) adversely
affect the legality, validity or enforceability of any of this Agreement or any
of the material transactions contemplated hereby, (y) have or result in a
material adverse effect on the results of operations, assets, or financial
condition of the Buyer and the Buyer Subsidiaries, taken as a whole or (z)
impair the Buyer's ability to perform in all material respects on a timely basis
its material obligations under this Agreement (any of (x), (y) or (z), being a
"Buyer Material Adverse Effect"). The Buyer has on file with the Securities
Exchange Commission true and correct copies of the Buyer's Certificate of
Incorporation, as amended and as in effect on the date hereof (the "Certificate
of Incorporation"), and the Buyer's Bylaws, as in effect on the date hereof (the
"Bylaws").
29
<PAGE>
4.2 Authorization; Enforcement. The Buyer has the requisite corporate
--------------------------
power and authority to enter into and to consummate the transactions
contemplated by this Agreement, and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of this Agreement
and the consummation by it of the transactions contemplated hereby have been
duly authorized by all necessary corporate action. This Agreement has been duly
executed by the Buyer and constitutes the valid and binding obligation of the
Buyer enforceable against the Buyer in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application and except that rights to
indemnification and contribution may be limited by Federal or state securities
laws or public policy relating thereto. Neither the Buyer nor any Buyer
Subsidiary is in any material violation of any of the provisions of its
respective certificate of incorporation, bylaws or other charter documents such
that any right of a holder of the SatCon Shares would be affected.
4.3 Capitalization. As of the date hereof, the authorized capital
--------------
stock of the Buyer is as set forth in Schedule 4.3. All of such outstanding
shares of capital stock, except as disclosed in the Buyer SEC Documents (as
defined in Section 4.10) have been, or upon issuance will be, validly authorized
and issued, fully paid and nonassessable and were issued in accordance with the
registration or qualification provisions of the Securities Act, or pursuant to
valid exemptions therefrom. Except as disclosed in Schedule 4.3 or in the Buyer
SEC Documents, (i) no shares of the Buyer's capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Buyer, nor is any holder of the SatCon Common Stock
entitled to preemptive or similar rights arising out of any agreement or
understanding with the Buyer by virtue of this Agreement, (ii) there are no
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, or giving any Person (as defined below)
any right to subscribe for or acquire, any shares of capital stock of the Buyer
or any of its Buyer Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Buyer or any of its Buyer Subsidiaries is or may
become bound to issue additional shares of capital stock of the Buyer or any of
its Buyer Subsidiaries or options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Buyer or any of its Buyer
Subsidiaries, (iii) there are no outstanding debt securities of the Buyer or any
of its Buyer Subsidiaries, (iv) there are no agreements or arrangements under
which the Buyer or any of its Buyer Subsidiaries is obligated to register the
sale of any of their securities under the Securities Act, (v) there are no
outstanding securities of the Buyer or any of its Buyer Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Buyer or any of its
Buyer Subsidiaries is or may become bound to redeem a security of the Buyer or
any of its Buyer Subsidiaries, (vi) there are no securities or instruments
containing anti-
30
<PAGE>
dilution or similar provisions that will be triggered by the issuance of the
SatCon Common Stock, (vii) the Buyer does not have any stock appreciation rights
or "phantom stock" plans or agreements or any similar plan or agreement and
(viii) except for the put rights granted to the holders of the Class D Preferred
Stock of Beacon and except as specifically disclosed in the Buyer SEC Documents,
to the knowledge of the Buyer no Person (as defined below) or group of related
Persons beneficially owns (as determined pursuant to Rule 13d-3 promulgated
under the Exchange Act or has the right to acquire by agreement with or by
obligation binding upon the Buyer beneficial ownership of in excess of 5% of the
Common Stock. "Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
Buyer, joint stock Buyer, government (or an agency or subdivision thereof) or
other entity of any kind.
4.4 Authorization and Validity; Issuance of Shares. The SatCon Shares
----------------------------------------------
are duly authorized and reserved for issuance and will be validly issued, fully
paid and non-assessable, free and clear of all liens, encumbrances and rights of
first refusal, other than Liens created by the Parent and will not be subject to
any preemptive or similar rights. Assuming the accuracy of the Parent's
representation in Section 3.34. The issuance by the Buyer of the SatCon Shares
is exempt from registration under the Securities Act.
4.5 No Conflicts. The execution, delivery and performance of this
------------
Agreement by the Buyer and the consummation by the Buyer of the transactions
contemplated hereby do not and will not (i) conflict with or violate any
provision of the Certificate of Incorporation, Bylaws or other organizational
documents of the Buyer or any of the Buyer Subsidiaries, (ii) subject to
obtaining the consents referred to in Section 4.6, conflict with, or constitute
a breach or a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument (evidencing a Buyer or Buyer Subsidiary debt or
otherwise) to which the Buyer or any Buyer Subsidiary is a party or by which any
property or asset of the Buyer or any Buyer Subsidiary is bound or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Buyer or any Buyer Subsidiary is subject (including Federal and
state securities laws and regulations and the rules and regulations of the
principal market or exchange on which the Common Stock is traded or listed)
applicable to the Buyer or any of its Buyer Subsidiaries (except for any
shareholder approval that may be required pursuant to the rules of the NASDAQ),
or by which any material property or asset of the Buyer or any Buyer Subsidiary
is bound or affected except, in each such case, for any violation, conflict,
default or breach which is not reasonably expected to have a Buyer Material
Adverse Effect.
4.6 Consents and Approvals. Except as specifically set forth on
----------------------
Schedule 4.6, neither the Buyer nor any Buyer Subsidiary is required to obtain
any
31
<PAGE>
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal or state governmental
authority, regulatory or self regulatory agency, or other Person in connection
with the execution, delivery and performance by the Buyer of this Agreement,
other than (i) the application(s) or any letter(s) acceptable to the National
Market System of Nasdaq Stock Market ("Nasdaq") for the listing of the SatCon
Common Stock with Nasdaq (and with any other national securities exchange or
market on which the Common Stock is then listed), (ii) any filings, notices or
registrations under applicable state securities laws, (iii) the filing of a form
D with the Securities and Exchange Commission (the "Commission"), and (iv) the
approval of the Buyer's Board of Directors (together with the consents, waivers,
authorizations, orders, notices and filings referred to on Schedule 4.6, the
"Buyer Required Approvals").
4.7 Litigation; Proceedings. Except as specifically set forth on
-----------------------
Schedule 4.7, there is no action, suit, notice of violation, proceeding or
investigation pending or, to the knowledge of the Buyer or any of its Buyer
Subsidiaries, threatened against or affecting the Buyer or any of its Buyer
Subsidiaries or any of their respective properties or assets before or by any
court, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) which (i) adversely affects or challenges the
legality, validity or enforceability of any of this Agreement or (ii) could
reasonably be expected to, individually or in the aggregate, to have a Buyer
Material Adverse Effect.
4.8 No Default or Violation. Except as specifically set forth on
-----------------------
Schedule 4.8, neither the Buyer nor any Buyer Subsidiary (i) is in default under
or in violation of any indenture, loan or other credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties or assets is bound and which is required to be included as an exhibit
to any Buyer SEC Document (as defined in Section 4.10 hereof) or will be
required to be included as an exhibit to the Buyer's next filing under either
the Securities Act or Exchange Act, (ii) is in violation of any order of any
court, arbitrator or governmental body applicable to it, (iii) is in violation
of any statute, rule or regulation of any governmental authority to which it is
subject, (iv) is in default under or in violation of its Certificate of
Incorporation, Bylaws or other organizational documents, respectively, or (v) is
in default under or in violation of any of the listing requirements of Nasdaq as
in effect on the date hereof and is not aware of any facts which would
reasonably lead to delisting or suspension of the Common Stock by Nasdaq in the
foreseeable future except, in each such case, for any violation or default which
is not reasonably expected to have a Buyer Materially Adverse Effect. The
business of the Buyer and its Buyer Subsidiaries is not being conducted, and has
not been conducted, in violation of any law, ordinance, rule or regulation of
any governmental entity, except where such violations have not resulted or would
not reasonably result, individually or in the aggregate, in a Buyer Material
Adverse Effect. Neither the Buyer nor any of its Buyer Subsidiaries is in breach
of any agreement where such breach, individually or in the aggregate, would have
a Buyer Material Adverse Effect.
32
<PAGE>
4.9 Disclosure; Absence of Certain Changes. None of this Agreement,
--------------------------------------
the Schedules to this Agreement, the Buyer SEC Documents (as amended to date)
contained as of their respective dates, any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
made herein and therein, in light of the circumstances under which they were
made, not misleading. Except as disclosed on Schedule 4.9 or in Buyer SEC
Documents filed on EDGAR through the date hereof, since the filing of the
Buyer's quarterly report on Form 10-Q on August 16, 1999, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial condition, liabilities or results of
operations of the Buyer or the Buyer Subsidiaries. The Buyer has not taken any
steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Buyer or any of its Buyer
Subsidiaries have any knowledge or reason to believe that its creditors intend
to initiate involuntary bankruptcy proceedings.
4.10 Buyer SEC Documents; Financial Statements. The Common Stock of
-----------------------------------------
the Buyer is registered pursuant to Section 12(g) of the Exchange Act. The Buyer
has filed during its current fiscal year all reports, schedules, forms,
statements and other documents required to be filed by it with the Commission
pursuant to the reporting requirements of the Exchange Act, including pursuant
to Section 13, 14 or 15(d) thereof (the foregoing materials and financial
statements and schedules thereto being collectively referred to herein as the
"Buyer SEC Documents"), on a timely basis or has received a valid extension of
such time of filing and has filed any such Buyer SEC Documents prior to the
expiration of any such extension. The Buyer has delivered to each of the
Purchasers or its representatives true, complete and accurate copies of the
Buyer SEC Documents that were not filed pursuant to EDGAR. As of their
respective dates and giving effect to all amendments thereto filed with the
Commission, the financial statements of the Buyer included in the Buyer SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
the Buyer as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements,
to normal, year-end audit adjustments. The Buyer acknowledges that the Parent
will be trading in the securities of the Buyer in reliance on the foregoing
representation and warranty.
4.11 Broker's Fees. No fees or commissions or similar payments with
-------------
respect to the transactions contemplated by this Agreement have been paid or
will be payable by the Buyer to any broker, financial advisor, finder,
investment banker, or bank. Parent shall have no obligation with respect to any
fees or with respect to any
33
<PAGE>
claims made by or on behalf of other Persons for fees of a type contemplated in
this Section 4.11 that may be due in connection with the transactions
contemplated by this Agreement.
4.12 Form S-3 Eligibility. The Buyer is, and at the Closing Date will
--------------------
be, eligible to register the SatCon Common Stock for resale with the Commission
under Form S-3 (or any successor form) promulgated under the Securities Act.
4.13 Listing and Maintenance Requirements Compliance. The principal
-----------------------------------------------
market on which the Buyer's Common Stock is currently traded is Nasdaq. Except
as disclosed on Schedule 4.13, the Buyer has not in the three years preceding
the date hereof received notice (written or oral) from Nasdaq (or any stock
exchange, market or trading facility on which the Common Stock is or has been
listed (or on which it has been quoted)) to the effect that the Buyer is not in
compliance with the listing or maintenance requirements of such market or
exchange. The Buyer is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by Nasdaq. After giving effect to
the transactions contemplated by this Agreement and the Transaction Documents,
the Buyer is and will be in compliance with all such maintenance requirements
except for any approval required under the NASD rules.
4.14 Intellectual Property Rights. To the best of the knowledge of the
----------------------------
Buyer, the Buyer owns or possesses, or can obtain by payment of royalties in
amounts which, in the aggregate, will not have a Buyer Material Adverse Effect,
all of the patents, trademarks, service marks, trade names, copyrights,
proprietary rights, trade secrets, and licenses or rights to the foregoing,
necessary for the conduct of the business of the Buyer as currently conducted.
To the best of the Buyer's knowledge, the business of the Buyer does not cause
the Buyer to infringe or violate any of the patents, trademarks, service marks,
trade names, copyrights, licenses or proprietary rights of any person or entity.
4.15 Registration Rights; Rights of Participation. Except as described
--------------------------------------------
on Schedule 4.15 hereto, (i) the Buyer has not granted or agreed to grant to any
Person any rights (including "piggy-back" registration rights) to have any
securities of the Buyer registered with the Commission or any other governmental
authority which has not been satisfied and (ii) no Person, including, but not
limited to, current or former stockholders of the Buyer, underwriters, brokers
or agents, has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by this Agreement.
4.16 Tax Status; Firpta. Except as set forth on Schedule 4.16, the
------------------
Buyer and each of the Buyer Subsidiaries has made or filed all federal and state
income and all other Tax Returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Buyer and each of its Buyer Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported Taxes) and has
paid all Taxes and other governmental
34
<PAGE>
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith (which are set forth on Schedule 4.16 hereof), and has set aside on
it books provisions reasonably adequate for the payment of all Taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid Taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Buyer know of no basis
for any such claim. The Buyer is not a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code.
4.17 Transactions With Affiliates. Except as set forth on Schedule
----------------------------
4.17, none of the officers, directors, or employees of the Buyer is presently a
party to any transaction with the Buyer or any of its Buyer Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Buyer, any corporation, partnership, trust or entity in which
any officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
4.18 Material Contracts. Except for this Agreement, the other
------------------
agreements to be entered into pursuant to the terms of this Agreement, contracts
attached as exhibits to the Buyer's SEC Documents and the contracts of the Buyer
and its Subsidiaries set forth on Schedule 4.18 attached hereto (collectively,
-------------
the "Contracts"), neither the Buyer nor its Subsidiaries are a party to or
otherwise bound by any written or oral:
(a) written contract for the employment of any officer, employee
or other person on a full-time or consulting basis, which is not terminable on
thirty (30) days' notice without cost or liability to the Buyer or any
Subsidiary, except normal severance arrangements and accrued vacation pay;
(b) bonus, pension, profit-sharing, retirement, hospitalization,
insurance, stock purchase, stock option or other plan, contract or understanding
pursuant to which benefits are provided to any employee of the Buyer or any
Subsidiary (other than group insurance plans applicable to employees generally);
(c) agreement or indenture relating to the borrowing of money or
to the mortgaging or pledging of, or otherwise placing a lien or security
interest on, any asset of the Buyer or Subsidiary or any agreement or instrument
evidencing any guaranty by the Buyer or any Subsidiary of payment or performance
by any other Person;
(d) voting trust or agreement, stockholders' agreement, pledge
agreement, buy-sell agreement or first refusal or preemptive rights agreement
relating to
35
<PAGE>
any securities of the Buyer;
(e) agreement or obligation (contingent or otherwise) to issue,
sell or otherwise distribute or to repurchase or otherwise acquire or retire any
shares of its capital stock or any of its other equity securities;
(f) agreement under which the Buyer or any Subsidiary has granted
any person any registration rights, other than this Agreement;
(g) agreement providing for disposition of the business, assets
or shares of the Buyer or its Subsidiaries, agreement of merger or consolidation
to which the Buyer or any Subsidiary is a party or letter of intent with respect
to the foregoing;
(h) agreement or letter of intent (other than the acquisition of
Ling Electronics, Inc.) with respect to the acquisition of the business, assets
or shares of any other Person.
4.19 ERISA. Set forth in Schedule 4.19 is a list and brief description
----- -------------
of each "employee pension benefit plan," as such term is defined in Section 3(2)
of ERISA, now or formerly maintained by the Buyer or any of their respective
Subsidiaries, to which the Buyer or any Subsidiary is now or will be obligated
to contribute. Except as described in Schedule 4.19, no event has occurred, or
-------------
to the knowledge of the Buyer or its Subsidiaries, is threatened or about to
occur, which would constitute a reportable event within the meaning of Section
4043(b) of ERISA, and no notice of termination has been filed by the plan
administrator pursuant to Section 4041 of ERISA or issued by the Pension Benefit
Guaranty Corporation (the "PBGC") pursuant to Section 4042 of ERISA with respect
----
to any pension benefit plan described in Schedule 4.19 subject to ERISA. To the
-------------
best knowledge of the Buyer, no prohibited transaction (as defined in Section
4975 of the Code) has occurred with respect to any employee benefit plan
maintained by the Buyer or any of its Subsidiaries. Neither the Buyer nor any of
their respective Subsidiaries nor any of their respective ERISA Affiliates is or
has been a participant in any multiemployer plan as defined in ERISA. "ERISA
-----
Affiliate" means with respect to any Person, any entity that would be considered
- ---------
to be under common control with such person for purposes of Title IV of ERISA.
4.20 Environmental Matters.
(a) Hazardous Materials have not at any time been generated,
used, treated or stored on any property, plants or other facilities now owned,
leased, or operated by the Buyer or any Subsidiary (or at any property, plant or
other facilities ever owned, leased or operated by any predecessor entity at
such locations), in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, and none of the Buyer, its Subsidiaries or its predecessors
have received any notice of any such violation with
36
<PAGE>
respect to Hazardous Materials except for such violations that the Buyer
reasonably does not expect will have a material adverse effect on the Buyer;
(b) There has been no spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto any property now owned or
leased by the Buyer, its Subsidiaries or any predecessor (or onto any other
property ever owned or leased by it, or by any predecessor entity at any such
location), or into the environment surrounding any such property, of Hazardous
Materials, other than those releases permissible under such regulations, laws or
statutes or allowable under applicable permits and except for such violations
that the Buyer reasonably does not expect will have a material adverse effect on
the Buyer;
(c) The Buyer, its Subsidiaries or its predecessor, their
operations and any property owned by the Buyer, its Subsidiaries or its
predecessor are in material compliance with all material Environmental Laws and
the material requirements of any permits issued under such laws;
(d) There are no past, pending or, to the best of the Buyer's
knowledge, threatened Environmental Claims against the Buyer, its Subsidiaries
or its predecessor or any property now or previously owned or leased by the
Buyer, its Subsidiaries or its predecessor;
(e) To the best of the Buyer's knowledge, there is no condition
or occurrence on any property now or previously owned or leased by the Buyer,
its Subsidiaries or its predecessor or any property adjoining or in the vicinity
of any such property that could reasonably be anticipated (i) to form the basis
of an Environmental Claim against the Buyer, its Subsidiaries or its predecessor
or (ii) to cause any property of the Buyer, its Subsidiaries or its predecessor
to be subject to any restrictions on the ownership, occupancy, use or
transferability of such property under any Environmental Law.
(f) For purposes of this Agreement, "Hazardous Materials" shall
refer to (a) any petroleum or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar import, under
any applicable Environmental Law; and (c) any other chemical, material or
substance exposure to which is prohibited, limited or regulated by any
governmental authority; "Environmental Law" means any federal, state or local
-----------------
statute, law, rule, regulation, ordinance, code, policy or rule of common law
now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the
37
<PAGE>
environment, health, safety or Hazardous Materials, including without limitation
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA") 42 U.S.C. (S) 9601 et seq.; the Hazardous Materials
------ -- ---
Transportation Act, as amended, 49 U.S.C. (S) 1801 et seq.; the Resource
-- ---
Conservation and Recovery Act, as amended, 42 U.S.C. (S)6901 et seq.; the
-- ---
Federal Water Pollution Control Act, as amended, 33 U.S.C. (S) 1251 et seq.; the
-- ---
Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq.; the Clean Air Act, 42
U.S.C. (S) 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S) 3808 et
-- --- --
seq.; and their counterparts under any state or local laws; "Environmental
- --- -------------
Claims" means any and all administrative, regulatory or judicial actions, suits,
- ------
demands, demand letters, claims, liens, notices of non-compliance or violation,
investigations or proceedings relating in any way to any Environmental Law or
any permit issued under any such Law (hereafter "Claims"), including without
limitation (a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages,
fines or penalties pursuant to any applicable Environmental Law, and (b) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.
4.21 Year 2000 Matters. The Buyer's statements regarding "Year 2000
-----------------
Risk" set forth in the SEC Documents are true and correct in all material
respects.
"Year 2000 Risk" means the risk that computer applications used by the
Buyer and/or its suppliers, vendors and customers may be unable to recognize and
perform without error date-sensitive functions involving certain dates prior to
and any date after December 31, 1999, including, without limitation, September
9, 1999.
4.22 Private Offering. The Buyer and all Persons acting on its behalf
----------------
have not made within the six months preceding the Closing Date, directly or
indirectly, and will not make, offers or sales of any securities or solicited
any offers to buy any security at any time within six months after the Closing
Date under circumstances that would require registration of the Securities, the
Warrants or the Warrant Shares or the issuance of such securities under the
Securities Act.
4.23 Investment Company. The Buyer is not, and is not controlled by
------------------
or under common control with an affiliate (an "Affiliate") of an "investment
---------
company" within the meaning of the Investment Company Act of 1940, as amended.
Any information furnished in the schedules of the Buyer (a "Buyer
Disclosure Schedule") shall be deemed to modify all of the Buyer's
representations and warranties. The inclusion of any information in the Buyer
Disclosure Schedule shall not be deemed to be an admission or acknowledgment, in
and of itself, that such information is required by the terms hereof to be
disclosed, is material to the Buyer, has or would have a Buyer Material Adverse
Effect. For purposes of this Agreement, the terms "to the Buyer's knowledge,"
"known by the Buyer" or other words of similar meaning shall mean the actual
knowledge of David Eisenhaure or Michael Turmelle without any
38
<PAGE>
obligation of investigation, and shall not refer to the knowledge of any other
person or entity.
5. Public Announcements. The parties agree that all general public
--------------------
pronouncements or other general public communications concerning this Agreement
and the transaction contemplated hereby, and the timing, manner and content of
such disclosures, shall be subject to the mutual agreement of the Parent and the
Buyer.
6. Conditions to Obligations of the Buyer.
--------------------------------------
The obligations of the Buyer under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Buyer:
6.1 Continued Truth of Representations and Warranties of the Parent
---------------------------------------------------------------
and the Company; Compliance with Covenants and Obligations. The representations
- ----------------------------------------------------------
and warranties of the Parent, the Company and the U.K. Subsidiary shall be true
on and as of the Closing Date as though such representations and warranties were
made on and as of such date (even though they purport to have been given on a
date prior to the Closing Date), except for any changes permitted by the terms
hereof or consented to in writing by the Buyer. The Parent, the Company and the
U.K. Subsidiary shall have performed and complied with all terms, conditions,
covenants, obligations, agreements and restrictions required by this Agreement
to be performed or complied with by each of them prior to or at the Closing
Date.
6.2 Performance by the Parent and the Company. At the Closing, the
-----------------------------------------
Parent and the Company shall have delivered to the Buyer a certificate signed by
the Chief Financial Officer of the Company and the Parent, as the case may be,
as to their compliance with Subsection 6.01 hereof.
6.3 Governmental Approvals. All governmental agencies, department,
----------------------
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Parent, the Company or the Subsidiaries of the
transactions contemplated by this Agreement and the operation of the business of
the Company and the Subsidiaries by the Buyer shall have consented to,
authorized, permitted or approved such transactions.
6.4 Consent of Lenders, Lessors and Other Third Parties. The Parent,
---------------------------------------------------
the Company and the Subsidiaries shall have received all requisite consents and
approvals of all lenders, lessors and other third parties whose consent or
approval is required in order for the Parent, the Company and the Subsidiaries
to consummate the transactions contemplated by this Agreement, including without
limitation, those set forth on Schedules 3.4. In addition, except as set forth
on Schedule 6.4, there shall be no Liens on the assets of the Company and the
Company shall deliver termination
39
<PAGE>
statements in forms acceptable to the Buyer with respect to each security
interest or other encumbrance outstanding in or on the assets of the Company.
6.5 Adverse Proceedings. No action or proceeding by or before any
-------------------
court or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Buyer to own the Shares or to own or operate the business of
the Company and the Subsidiaries after the Closing.
6.6 Opinion of Counsel. The Buyer shall have received an opinion of
------------------
Catherine S. Hill PLLC, counsel to the Parent, the Company and the Subsidiaries,
dated as of the Closing Date, in substantially the form attached hereto as
Exhibit A, and as to such other matters as may be reasonably requested by the
Buyer or its counsel.
6.7 Employment Contracts. On or prior to the Closing Date, the Buyer
--------------------
shall have executed employment contracts and other arrangements with the
individuals listed on Schedule 6.7 attached hereto, upon substantially the terms
set forth in Schedule 6.7.
6.8 Repayment of Indebtedness. On the Closing Date, the Company and
-------------------------
the Subsidiaries shall not have any indebtedness other than accounts payable
incurred in the ordinary course of business. In addition, on or before the
Closing Date, the Parent shall contribute the intercompany loan balance to the
Company of approximately $7,000,000, the amount of intercompany indebtedness to
be determined at the Closing.
6.9 Closing Deliveries. The Buyer shall have received at or prior to
------------------
the Closing such documents, instruments or certificates as the Buyer may
reasonably request including, without limitation:
(a) the stock certificates representing the Shares and the U.K.
shares duly endorsed in accordance with Subsection 1.01 of this Agreement
(together with any lost stock affidavits provided to the Company by the Parent);
(b) a copy of the Election to Reattribute Losses in the form
executed by the Company and the Parent;
(c) such certificates of the Company's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 6
as the Buyer shall reasonably request;
(d) a certificate of the Parent's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 6
as the Buyer shall reasonably request;
40
<PAGE>
(e) a certificate of the Secretary of State of the State of
California as to the legal existence and good standing (including tax) of the
Company in California;
(f) a certificate of the Secretary of State of the State of New
York as to the legal existence and good standing (including tax) of the Parent
in New York.
(g) certificates of the Secretary of the Company attesting to the
incumbency of the Company's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents delivered pursuant
to Subsection 3.01;
(h) certificates of the Secretary of the Parent attesting to the
incumbency of the Parent's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents delivered pursuant
to Subsection 3.01;
(i) Estoppel certificates in the form attached hereto as Exhibit
-------
B from each lessor from whom the Company or any Subsidiary leases real or
- -
personal property consenting to the acquisition of the Shares by the Buyer and
the other transactions contemplated hereby, and representing that there are no
outstanding claims against the Company or such Subsidiary under such Lease;
provided, however, that the parties agree that such estoppel certificates may be
delivered after Closing but before November 15, 1999, if not reasonably
available at the Closing, provided that if not delivered to the Buyer by
November 15, 1999, the Parent agrees to indemnify the Buyer against any Losses
(as defined in Section 8.1) arising out of the failure of any assertions in the
form of estoppel certificate to be complete and correct.
(j) written resignations of all members of the Company's Board of
Directors;
(k) the corporate minute books of the Company and all corporate
seals; and
(l) a cross receipt executed by the Buyer and the Parent; and
(m) if requested by the Buyer, (i) the Company and the
Subsidiaries will delivery to the Buyer and to the Internal Revenue Services
notices that the Securities are not a "U.S. real property interest" in
accordance with the Treasury Regulations under Section 897 and 1445 of the Code,
or (ii) the Parent will delivery to the Buyer certificates of non-foreign status
in accordance with the Treasury Regulations under Section 1445 of the Code.
7. Conditions to Obligations of the Parent.
---------------------------------------
41
<PAGE>
The obligations of the Parent under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Parent:
7.1 Continued Truth of Representations and Warranties of the Buyer;
---------------------------------------------------------------
Compliance with Covenants and Obligations. The representations and warranties
- -----------------------------------------
of the Buyer in this Agreement shall be true on and as of the Closing Date as
though such representations and warranties were made on and as of such date,
except for any changes consented to in writing by the Parent. The Buyer shall
have performed and complied with all terms, conditions, covenants, obligations,
agreements and restrictions required by this Agreement to be performed or
complied with by it prior to or at the Closing Date.
7.2 Corporate Proceedings. All corporate and other proceedings
---------------------
required to be taken on the part of the Buyer to authorize or carry out this
Agreement shall have been taken.
7.3 Governmental Approvals. All governmental agencies, departments,
----------------------
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Buyer of the transactions contemplated by this Agreement
shall have consented to, authorized, permitted or approved such transactions.
7.4 Consents of Lenders, Lessors and Other Third Parties. The Buyer
----------------------------------------------------
shall have received all requisite consents and approvals of all lenders, lessors
and other third parties whose consent or approval is required in order for the
Buyer to consummate the transactions contemplated by this Agreement, including,
without limitation, those set forth on Schedule 4.6 attached hereto.
7.5 Adverse Proceedings. No action or proceeding by or before any
-------------------
court or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Parent to transfer the Shares.
7.6 Opinion of Counsel. The Parent shall have received an opinion of
------------------
Hale and Dorr LLP, counsel to the Buyer, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit C.
7.7 Closing Deliveries. The Parent shall have received at or prior
------------------
to the Closing such documents, instruments or certificates as the Buyer may
reasonably request including, without limitation:
42
<PAGE>
(a) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 7
as the Parent shall reasonably request;
(b) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing (including tax) of the
Buyer in Delaware;
(c) a certificate of the Secretary of the Buyer attesting to the
incumbency of the Buyer's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents and bylaws
delivered pursuant to Subsection 7.01;
(d) Issuance of the SatCon Shares; and
(e) a cross receipt executed by the Buyer and the Parent.
7.8 Buyer Registration Rights Agreement. The Buyer and the Parent
-----------------------------------
shall have executed the Registration Rights Agreement, dated as of the Closing
Date, in substantially the form attached hereto as Exhibit D, pursuant to which
the Buyer shall grant certain registration rights to the Parent with respect to
the SatCon Shares.
8. Indemnification.
---------------
8.1 By the Parent and the Company. The Parent hereby indemnifies and
-----------------------------
holds harmless the Buyer from and against all claims, damages, losses,
liabilities, costs and expenses (including, without limitation, settlement costs
and any legal, accounting or other expenses for investigating or defending any
actions or threatened actions) (collectively, the "Losses") in connection with
each and all of the following:
(a) any misrepresentation or breach of any representation or
warranty made by the Parent or the Company in this Agreement;
(b) any breach of any covenant, agreement or obligation of the
Parent or the Company contained in this Agreement or any other agreement,
instrument or document contemplated by this Agreement;
(c) any material misrepresentation contained in any certificate
or schedule furnished by the Parent or the Company pursuant to this Agreement;
(d) any claim of an employee of the Company or a former employee
of the Company for payment pursuant to any bonus, change in control, stay-pay,
severance payment, deferred compensation or similar arrangement for or with
respect to any period prior to the Closing Date, or for any severance or
obligations pursuant to a contractual arrangement in effect at or prior to the
Closing; or any claim
43
<PAGE>
of an employee or former employee of the Company arising out of the termination
of vesting of such employee's options under the Parent's stock option plan;
(e) any failure of the Parent to provide the Buyer good, valid
and marketable title to the Shares or Parent Warrant free and clear of all
liens, charges, encumbrances, adverse claims, restrictions or other rights; and
(f) any claim by a stockholder or former stockholder of the
Company, or any other person or entity, seeking to assert, or based upon: (i)
ownership or rights to ownership of any shares of stock of the Company; (ii) any
rights of a stockholder of the Company, including any option, preemptive rights
or rights to notice or to vote; (iii) any rights under the Certificate of
Incorporation or By-laws of the Company; or (iv) any claim that his, her or its
shares were wrongfully repurchased by the Company.
8.2 By the Buyer. The Buyer hereby indemnifies and holds harmless the
------------
Parent from and against all Losses in connection with each and all of the
following:
(a) any misrepresentation or breach of any representation or
warranty made by the Buyer in this Agreement;
(b) any breach of any covenant, agreement or obligation of the
Buyer contained in this Agreement or any other agreement, instrument or document
contemplated by this Agreement;
(c) any claim against the Parent based on the employee's
termination from the Company after the Closing Date;
(d) any material misrepresentation contained in any certificate
or schedule furnished by the Buyer pursuant to this Agreement; and
(e) any failure of the Buyer to provide the Parent with good,
valid and marketable title to the SatCon Shares and the SatCon Warrant free and
clear of all liens, charges, encumbrances, adverse claims or other rights.
8.3 Indemnification Claims.
----------------------
(a) A party entitled, or seeking to assert rights, to
indemnification under this Section 8 (an "Indemnified Party") shall give written
notification to the party from whom indemnification is sought (an "Indemnifying
Party") of the commencement of any suit or proceeding relating to a third party
claim for which indemnification pursuant to this Section 8 may be sought. Such
notification shall be given within 20 days after receipt by the Indemnified
Party of notice of such suit or proceeding, and shall describe in reasonable
detail (to the extent known by the Indemnified Party) the facts constituting the
basis for such suit or proceeding and the
44
<PAGE>
amount of the claimed damages; provided, however, that no delay on the part of
the Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party of any liability or obligation hereunder except to the extent
of any damage or liability caused by or arising out of such failure. Within 20
days after delivery of such notification, the Indemnifying Party may, upon
written notice thereof to the Indemnified Party, assume control of the defense
of such suit or proceeding with counsel reasonably satisfactory to the
Indemnified Party; provided that (i) the Indemnifying Party may only assume
control of such defense if it acknowledges in writing to the Indemnified Party
that any damages, fines, costs or other liabilities that may be assessed against
the Indemnified Party in connection with such suit or proceeding constitute
Losses for which the Indemnified Party shall be indemnified pursuant to this
Section 8 and (ii) the Indemnifying Party may not assume control of the defense
of a suit or proceeding involving criminal liability or in which equitable
relief is sought against the Indemnified Party. If the Indemnifying Party does
not so assume control of such defense, the Indemnified Party shall control such
defense. The party not controlling such defense (the "Non-controlling Party")
may participate therein at its own expense; provided that if the Indemnifying
Party assumes control of such defense and the Indemnified Party reasonably
concludes that the Indemnifying Party and the Indemnified Party have conflicting
interests or different defenses available with respect to such suit or
proceeding, the reasonable fees and expenses of counsel to the Indemnified Party
shall be considered "Losses" for purposes of this Agreement. The party
controlling such defense (the "Controlling Party") shall keep the Non-
controlling Party advised of the status of such suit or proceeding and the
defense thereof and shall consider in good faith recommendations made by the
Non-controlling Party with respect thereto. The Non-controlling Party shall
furnish the Controlling Party with such information as it may have with respect
to such suit or proceeding (including copies of any summons, complaint or other
pleading which may have been served on such party and any written claim, demand,
invoice, billing or other document evidencing or asserting the same) and shall
otherwise cooperate with and assist the Controlling Party in the defense of such
suit or proceeding. The Indemnifying Party shall not agree to any settlement of,
or the entry of any judgment arising from, any such suit or proceeding without
the prior written consent of the Indemnified Party, which shall not be
unreasonably withheld or delayed. The Indemnified Party shall not agree to any
settlement of, or the entry of any judgment arising from, any such suit or
proceeding without the prior written consent of the Indemnifying Party, which
shall not be unreasonably withheld or delayed.
(b) In order to seek indemnification under this Section 8, an
Indemnified Party shall give written notification (a "Claim Notice") to the
Indemnifying Party which contains (i) a description and the amount (the "Claimed
Amount") of any Losses incurred or reasonably expected to be incurred by the
Indemnified Party, (ii) a statement that the Indemnified Party is entitled to
indemnification under this Section 8 for such Losses and a reasonable
explanation of the basis therefor, and (iii) a demand for payment (in the manner
provided in paragraph (c) below) in the amount of such Losses.
45
<PAGE>
(c) Within 20 days after delivery of a Claim Notice, the
Indemnifying Party shall deliver to the Indemnified Party a written response
(the "Response") in which the Indemnifying Party shall: (i) agree that the
Indemnified Party is entitled to receive all of the Claimed Amount (in which
case the Response shall be accompanied by a payment by the Indemnifying Party to
the Indemnified Party of the Claimed Amount, by check or by wire transfer, (ii)
agree that the Indemnified Party is entitled to receive part, but not all, of
the Claimed Amount (the "Agreed Amount") (in which case the Response shall be
accompanied by a payment by the Indemnifying Party to the Indemnified Party of
the Agreed Amount, by check or by wire transfer, or (iii) dispute that the
Indemnified Party is entitled to receive any of the Claimed Amount. If the
Indemnifying Party in the Response disputes its liability for all or part of the
Claimed Amount, the Indemnifying Party and the Indemnified Party shall follow
the procedures set forth in Section 8.03(d) for the resolution of such dispute
(a "Dispute").
(d) During the 60-day period following the delivery of a Response
that reflects a Dispute, the Indemnifying Party and the Indemnified Party shall
use good faith efforts to resolve the Dispute. If the Dispute is not resolved
within such 60-day period, the Indemnifying Party and the Indemnified Party
shall discuss in good faith the submission of the Dispute to a mutually
acceptable alternative dispute resolution procedure (which may be non-binding or
binding upon the parties, as they agree in advance) (the "ADR Procedure"). In
the event the Indemnifying Party and the Indemnified Party agree upon an ADR
Procedure, such parties shall, in consultation with the chosen dispute
resolution service (the "ADR Service"), promptly agree upon a format and
timetable for the ADR Procedure, agree upon the rules applicable to the ADR
Procedure, and promptly undertake the ADR Procedure. The provisions of this
Section 8.03(d) shall not obligate the Indemnifying Party and the Indemnified
Party to pursue an ADR Procedure or prevent either such party from pursuing the
Dispute in a court of competent jurisdiction; provided that, if the Indemnifying
Party and the Indemnified Party agree to pursue an ADR Procedure, neither the
Indemnifying Party nor the Indemnified Party may commence litigation or seek
other remedies with respect to the Dispute prior to the completion of such ADR
Procedure. Any ADR Procedure undertaken by the Indemnifying Party and the
Indemnified Party shall be considered a compromise negotiation for purposes of
federal and state rules of evidence, and all statements, offers, opinions and
disclosures (whether written or oral) made in the course of the ADR Procedure by
or on behalf of the Indemnifying Party, the Indemnified Party or the ADR Service
shall be treated as confidential and, where appropriate, as privileged work
product. Such statements, offers, opinions and disclosures shall not be
discoverable or admissible for any purposes in any litigation or other
proceeding relating to the Dispute (provided that this sentence shall not be
construed to exclude from discovery or admission any matter that is otherwise
discoverable or admissible). The fees and expenses of any ADR Service used by
the Indemnifying Party and the Indemnified Party shall be shared equally by the
Indemnifying Party and the Indemnified Party.
46
<PAGE>
(e) Notwithstanding the other provisions of this Section 8.03, if
a third party asserts (other than by means of a lawsuit) that an Indemnified
Party is liable to such third party for a monetary or other obligation which may
constitute or result in Losses for which such Indemnified Party may be entitled
to indemnification pursuant to this Section 8, and such Indemnified Party
reasonably determines that it has a valid business reason to fulfill such
obligation, then (i) such Indemnified Party shall be entitled to satisfy such
obligation, without prior notice to or consent from the Indemnifying Party, (ii)
such Indemnified Party may subsequently make a claim for indemnification in
accordance with the provisions of this Section 8, and (iii) such Indemnified
Party shall be reimbursed, in accordance with the provisions of this Section 8,
for any such Losses for which it is entitled to indemnification pursuant to this
Section 8 (subject to the right of the Indemnifying Party to dispute the
Indemnified Party's entitlement to indemnification, or the amount for which it
is entitled to indemnification, under the terms of this Section 8).
8.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained in this Agreement, shall (a) survive the Closing and
any investigation at any time made by or on behalf of an Indemnified Party and
(b) shall expire on the date 18 months following the Closing Date, except that
(i) the representations and warranties set forth in Sections 2, 3.1, 3.2, 3.4,
4.1, 4.2, 4.3 and 4.4 shall survive the Closing without limitation, (ii) the
representations and warranties set forth in Sections 3.14, 3.19, 4.16 and 4.19
shall survive until 30 days following expiration of all statutes of limitation
applicable to the matters referred to therein and (iii) the representation and
warranties in Section 3.20 and 4.20 shall survive for two years after the
Closing Date. If an Indemnified Party delivers to an Indemnifying Party, before
expiration of a representation or warranty, either a Claim Notice based upon a
breach of such representation or warranty, or a notice that, as a result a legal
proceeding instituted by or written claim made by a third party, the Indemnified
Party reasonably expects to incur Losses as a result of a breach of such
representation or warranty (an "Expected Claim Notice"), then such
representation or warranty shall survive until, but only for purposes of, the
resolution of the matter covered by such notice. If the legal proceeding or
written claim with respect to which an Expected Claim Notice has been given is
definitively withdrawn or resolved in favor of the Indemnified Party, the
Indemnified Party shall promptly so notify the Indemnifying Party.
8.5 Limitations.
-----------
(a) Notwithstanding anything to the contrary herein, (i) the
aggregate liability of the Parent, on the one hand, and the Buyer, on the other
hand, for Losses under this Section 8 shall not exceed $7,000,000, and (ii) the
Parent and the Buyer shall be liable under this Section 8 for only that portion
of the aggregate Losses for which they or it would otherwise be liable which
exceeds $500,000; provided that the limitation set forth in clause (ii) above
shall not apply to a claim pursuant to
47
<PAGE>
Section 8.1 or 8.2 relating to a breach of the representations and warranties
set forth in Section 2, 3.1, 3.2, 3.4, 3.14, 3.19, 3.20, 4.1, 4.2, 4.3, 4.4 ,
4.16, 4.19 and 4.20 to a breach of the covenants set forth in Section 10. For
purposes solely of this Section 8, all representations and warranties of the
Parent and the Company in Sections 2 and 3 (other than Section 3.31 and all
representations and warranties of the Buyer in Section 4 hereof (other than
Section 4.9) shall be construed as if the term "material"(and variations
thereof) were omitted from such representations and warranties. On and after the
Closing, the Parent shall have no recourse to, and no right of contribution from
the Company or any Subsidiary, with respect to any matter whatsoever, including
a breach of any representation, warranty, covenant or agreement set forth in
this Agreement.
(b) Except with respect to claims based on fraud, after the
Closing, the rights of the Indemnified Parties under this Section 8 shall be the
exclusive remedy of the Indemnified Parties with respect to claims resulting
from or relating to any misrepresentation, breach of warranty or failure to
perform any covenant or agreement contained in this Agreement.
9. Tax Matters.
-----------
9.1 Preparation and Filing of Tax Returns.
-------------------------------------
(a) The Parent shall cause to be prepared and timely filed all
Tax Returns of the Company and the Subsidiaries required to be filed prior to
the Closing Date when such filings are due (taking into account extensions).
(b) The Buyer shall prepare and timely file or shall cause to be
prepared and timely filed all other Tax Returns with respect to the Company and
the Subsidiaries or in respect of their businesses, assets or operations.
9.2 Tax Indemnification by the Parent.
---------------------------------
(a) In addition to any indemnification provided under Section 8,
the Parent shall indemnify the Buyer in respect of, and hold the Buyer harmless,
on an after-Tax basis, against (x) Losses resulting from, relating to, or
constituting a breach of any representation contained in Section 3.14 hereof,
(y) the failure to perform any covenant or agreement set forth in this Section
9, and (z), without duplication, the following Taxes with respect to the Company
and the Subsidiaries:
(1) Any and all Taxes due and payable by the Company or any
Subsidiaries for any taxable period that ends (or is deemed pursuant to Section
9.3(b) to end) on or before the Closing Date;
48
<PAGE>
(2) Any liability of such entities for Taxes of other
entities as transferee or successor or pursuant to any contractual obligation
for any period that ends (or is deemed pursuant to Section 9.3(b) to end) on or
before the Closing Date; and
(3) Any sales, use, transfer, stamp, conveyance, value
added, recording, registration, documentary, filing or other similar Taxes and
fees, whether levied on the Buyer, the Parent, the Company, a Subsidiary or any
of their respective Affiliates, on account of this Agreement or the transactions
contemplated hereby.
(b) The amounts specified in paragraphs (i), (ii), and (iii)
shall be reduced (but not below zero) by the amount of any accruals for Tax
liabilities on the Current Balance Sheet (exclusive of any accruals for
"deferred taxes" or similar items that reflect timing differences between Tax
and financial accounting principles) and the amounts of any estimated Tax
payments made on or before the Closing Date.
(c) Amounts payable pursuant to this Section 9.2 shall be
computed after taking into account all Tax consequences to the Buyer (or its
Affiliates) of (i) the receipt of (or the right to receive) the indemnification
payment and (ii) the incurrence of the liability that gave rise to the right to
receive the indemnification payment. Thus, it is the intention of the Parties
that the Buyer be held harmless with respect to the liability that gave rise to
the right to the indemnification payment on an after-Tax basis.
(d) All claims for indemnification pursuant to this Section 9
shall be made in accordance with Section 8 hereof.
9.3 Allocation of Certain Taxes.
---------------------------
(a) The Buyer and the Parent agree that if the Company or any
Subsidiary is permitted but not required under applicable foreign, state or
local Tax laws to treat the Closing Date as the last day of a taxable period,
the Buyer and the Parent shall treat such day as the last day of a taxable
period.
(b) Any Taxes for a taxable period beginning before the Closing
Date and ending after the Closing Date with respect to the Company and/or the
Subsidiaries shall be apportioned for purposes of Section 9.2 between the
portion of the period ending on the Closing Date and the portion of the period
commencing on the day immediately following the Closing Date based on the actual
operations of the Company and/or the Subsidiaries, as the case may be, during
such portions of the periods, and each such portion of such period shall be
deemed to be a taxable period (whether or not it is in fact a taxable period).
9.4 Cooperation on Tax Matters.
--------------------------
49
<PAGE>
(a) The Buyer and the Parent and their respective Affiliates
shall cooperate in the preparation of all Tax Returns for any Tax periods for
which one party could reasonably require the assistance of the other party in
obtaining any necessary information. Such cooperation shall include, but not be
limited to, furnishing prior years' Tax Returns or return preparation packages
illustrating previous reporting practices or containing historical information
relevant to the preparation of such Tax Returns, and furnishing such other
information within such party's possession requested by the party filing such
Tax Returns as is relevant to their preparation. Such cooperation and
information also shall include without limitation provision of powers of
attorney for the purpose of signing Tax Returns and defending audits, promptly
forwarding copies of appropriate notices and forms or other communications
received from or sent to any taxing authority which relate to the Company or the
Subsidiaries, and providing copies of all relevant Tax Returns, together with
accompanying schedules and related workpapers, documents relating to rulings or
other determinations by any taxing authority and records concerning the
ownership and tax basis of property, which the requested party may possess.
(b) If the Buyer or any of the Company and the Subsidiaries (as
the case may be) on the one hand, or the Parent on the other, fails to provide
any information requested by the other party within a reasonable period, or
otherwise fails to do any act required of it under this Section 9.5, then the
party failing to provide the information or do such act shall be obligated,
notwithstanding any other provision of this Agreement, to indemnify the party
requesting the information or act and shall so indemnify the requesting party
and hold such party harmless from and against any and all costs, claims or
damages, including, without limitation, all Taxes or deficiencies thereof,
payable as a result of such failure. Notwithstanding the foregoing, the party
that failed to deliver the information or do the act requested shall in no event
be obligated to make any payments pursuant to this Section 7.5(b) if such party
used all reasonable commercial efforts to provide the requested information or
perform the requested act.
9.5 Termination of Tax-Sharing Agreements. All Tax-sharing agreements
-------------------------------------
or similar arrangements with respect to or involving the Company and the
Subsidiaries shall be terminated prior to the Closing Date and, after the
Closing Date, the Company and the Subsidiaries shall not be bound thereby or
have any liability thereunder for amounts due in respect of periods ending on or
before the Closing Date.
9.6 Certain Tax Elections. The Parent shall not elect, cause to be
---------------------
elected, or participate in any election pursuant to Treasury Regulation Section
1.1502-76(b)(2) (or any comparable provisions of foreign or state law) to
allocate items of income and expense of the Company and the Subsidiaries between
the taxable year of the Parent ending on the Closing Date and its taxable year
commencing on the day after the Closing Date on a proportionate method based on
the number of days contained in each such taxable year. The Buyer shall not
elect, cause to be elected, or participate in any election pursuant to Section
338(h)(10) or 338(g) with respect to the
50
<PAGE>
transactions contemplated herein. The Buyer shall cooperate with the Parent in
reallocation of the Company and the Subsidiary Net Operating Losses.
10. Post-Closing Agreements.
-----------------------
The Parent and the Buyer agree that from and after the Closing Date:
10.1 Proprietary Information.
-----------------------
(a) The Parent and each of its affiliates (as such term is
defined in the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder) (individually, an "Affiliate" and collectively
"Affiliates") shall hold in confidence and shall use their best efforts to have
all officers, directors and personnel who continue after the Closing to be
employed by the Parent or any Affiliate thereof to hold in confidence all
knowledge and information of a secret or confidential nature with respect to the
business of the Company and the Subsidiaries and not to disclose, publish or
make use of the same without the consent of the Buyer, except to the extent that
such information shall have become public knowledge other than by breach of this
Agreement by the Parent or pursuant to subpoena or court order.
(b) If (i) the employment of an officer, director or other
employee of the Parent or any Affiliate thereof, to whom secret or confidential
knowledge or information concerning the business of the Company or the
Subsidiaries has been disclosed, is terminated and (ii) such individual is
subject to an obligation to maintain such knowledge or information in confidence
after such termination, the Parent shall, upon request by the Buyer, take all
reasonable steps at their expense to enforce such confidentiality obligation in
the event of an actual or threatened breach thereof.
(c) Parent agrees that the remedy at law for any breach of this
Subsection 10.1 would be inadequate and that the Buyer shall be entitled to
injunctive relief in addition to any other remedy it may have upon breach of any
provision of this Subsection 10.1.
10.2 No Solicitation or Hiring of Former Employees. Except as
---------------------------------------------
provided by law, for a period of three years after the Closing Date and except
that the Parent may employ James Clemens on a part time basis until September
30, 2003, provided that such employment date not interfere with Mr. Clemens
obligation to the Buyer, neither Parent nor any Affiliate thereof (including the
Parent) shall (a) solicit any person who was an employee of the Parent or any of
the Subsidiaries on the date hereof or the Closing Date to terminate his
employment with the Buyer (or the Company or any of the Subsidiaries, as the
case may be) or to become an employee of the Parent or Affiliate, or (b) hire
any person who was such an employee on the date hereof or on the Closing Date.
51
<PAGE>
10.3 Non-Competition Agreement.
-------------------------
(a) For a period of five years after the Closing Date, neither Parent
nor any Subsidiary thereof shall: (i) develop, manufacture, market or sell any
product which competes with any existing or proposed product manufactured by
either the Company or any of the Subsidiaries on or prior to the Closing Date,
or (ii) engage in any business competitive with the business of the Company or
any of the Subsidiaries as conducted on the date hereof or on the Closing Date,
in the United States or any other country in which the Company or any of the
Subsidiaries conducted its business during the two years prior to the Closing
Date.
(b) The parties hereto agree that the duration and geographic scope of
the non-competition provision set forth in this Subsection 10.3 are reasonable.
In the event that any court of competent jurisdiction determines that the
duration or the geographic scope, or both, are unreasonable and that such
provision is to that extent unenforceable, the parties hereto agree that the
provision shall remain in full force and effect for the greatest time period and
in the greatest area that would not render it unenforceable. The parties intend
that this non-competition provision shall be deemed to be a series of separate
covenants, one for each and every county of each and every state of the United
States of America and each and every political subdivision of each and every
country outside the United States of America where this provision is intended to
be effective. The Parent agrees that damages are an inadequate remedy for any
breach of this provision and that the Buyer shall, whether or not it is pursuing
any potential remedies at law, be entitled to equitable relief in the form of
preliminary and permanent injunctions without bond or other security upon any
actual or threatened breach of this non-competition provision.
10.4 Board Representation.
---------------------
(a) The Buyer agrees to nominate and recommend to its
shareholders the election to the Buyer's Board of Directors two person
designated by the Parent and acceptable to the Buyer's Board of Directors acting
reasonably (it being agreed that in acting reasonably the Buyer's Board of
Directors may consider the desirability of having two members of the Buyer's
Board of Directors affiliated with the Parent). The Buyer's obligations under
this Section 10.4(a) shall terminate if the Parent does not own five percent
(5%) or more of the Buyer's outstanding Common Stock on or before July 31, 2000
or ceases to own five percent (5%) or more of the Buyer's outstanding Common
Stock thereafter. The initial nominee to the Buyer's Board of Directors will be
Alan Goldberg.
(b) The Parent agrees to nominate and recommend to its
shareholders the election to the Parent's Board of Directors one person
designated by the Buyer. The initial nominee will be David Eisenhaure. The
Parent's obligations under this Section 10.4 shall terminate if the Purchaser
ceases to own five percent (5%)
52
<PAGE>
or more of the Buyer's outstanding Common Stock or the Buyer's obligations under
Section 3.10(a) ceases, whichever occurs first.
(c) Both parties will endeavor to have the representatives set
forth above elected or appointed to their boards as soon as possible, but in no
event later than December 1, 1999. The Parent shall have no obligation to
appoint or elect the Buyer's nominee to its Board of Directors until the Buyer
has appointed or elected the Parent's nominees to the Buyer's Board of
Directors.
10.5 Benefit Transition.
------------------
Parent and Buyer shall cooperate to take whatever steps are
necessary to effect, as promptly as practicable after the Closing Date, to the
extent elected by participants, the distribution and direct rollover to Buyer's
401(k) Plan of the accrued benefit as of the Closing Date of the Company's
employees under the 401(k) Plan. With respect to such rollover: (i) Buyer shall
provide to Parent written assurances that Buyer's 401(k) is an "eligible
retirement plan" and (ii) Parent shall provide to Buyer written assurances that
Parent's 401(k) Plan are or are part of an "eligible retirement plan." For
purposes of this Section 10.5, the term "eligible retirement plan." For purpose
of this Section 10.5, the term "eligible retirement plan" shall have the meaning
set forth in Sections 401(a)(31)(D) and 402(c)(8)(B) of the Code.
10.6 Co-operation in Financial and Other Reparation.
-------------------------------------------------
Each of Parent and Buyer agrees to fully cooperate with each other in
(i) the preparation and audit by the Buyer and its independent public
accountants of financial statements of the Company for such periods as are
necessary for the Buyer to comply with its reporting obligations under the
Exchange Act and the rules and regulations thereunder, (ii) the preparation and
audit Parent and its independent public accountants of the financial statements
of the Parent and its consolidated subsidiaries for the fiscal year ended
September 30, 1999, (iii) preparation of Tax Returns and in connection with
other audits, including but not limited to sales tax, workers compensation and
(iv) the preparation by the Buyer of a balance sheet as of the Closing Date and
a statement of income for the period then ended. Each of Parent and Buyer agrees
to take such other steps as the other party shall reasonably request (at the
expense of the requesting party) in order to permit compliance by a party hereto
with its reporting obligations under the Exchange Act.
11. Notices.
-------
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by telex, federal
express, registered or certified mail, postage prepaid, addressed as follows or
to such other address of which the parties may have given notice:
53
<PAGE>
To the Buyer: SatCon Technology Corporation
161 First Street
Cambridge, MA 02142
Attention: President and
Chief Financial Officer
Facsimile: (617) 576-7455
With a copy to: Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: Jeffrey N. Carp, Esq.
David C. Phelan, Esq.
Facsimile: (617) 526-5000
To the Parent or the Company: Mechanical Technology Incorporated
968 Albany-Shaker Road
Latham, New York 12110
Attention: Cynthia A. Scheuer,
Chief Financial Officer
Facsimile: (518) 785-2211
With a copy to: Catherine S. Hill PLLC
4 Global View
Troy, New York 12180
Attention: Catherine S. Hill
Facsimile: (518) 285-7564
Unless otherwise specified herein, such notices or other communications shall be
deemed received (a) on the date delivered, if delivered personally, (b) three
business days after being sent, if sent by registered or certified mail or (c)
the day after the day such notice is sent by fax or a reputable overnight
courier.
12. Successors and Assigns.
----------------------
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
Buyer, on the one hand, and the Parent, the Company and the Subsidiaries, on the
other hand, may not assign their respective obligations hereunder without the
prior written consent of the other party; provided, however, that the Buyer may
assign this Agreement, and its rights and obligations hereunder, to a subsidiary
or Affiliate of the Buyer. Any assignment in contravention of this provision
shall be void. No assignment shall release the Buyer, the Parent, the Company or
the Subsidiaries from any obligation or liability under this Agreement.
13. Entire Agreement; Amendments; Attachments.
-----------------------------------------
54
<PAGE>
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties.
(b) If the provisions of any Schedule or Exhibit to this
Agreement are inconsistent with the provisions of this Agreement, the provisions
of the Agreement shall prevail. The Exhibits and Schedules attached hereto or to
be attached hereafter are hereby incorporated as integral parts of this
Agreement.
14. Severability.
------------
Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
15. Investigation of the Parties.
----------------------------
All representations and warranties contained herein which are made
to the best knowledge of a party shall require that such party make reasonable
investigation and inquiry with respect thereto to ascertain the correctness and
validity thereof.
16. Expenses.
--------
Except as otherwise expressly provided herein, the Buyer, on the one
hand, and the Purchaser, on the other hand, will pay all of their own fees and
expenses (including, without limitation, legal and accounting fees and expenses)
incurred by them in connection with the transactions contemplated hereby. The
fees and expenses of the Company and the Subsidiaries in connection with the
transactions contemplated hereby shall be borne solely by the Parent and not by
the Company or any Subsidiary. The Parent shall be responsible for the payment
of all sales or transfer taxes arising out of the conveyance of the Shares owned
by such Stockholder.
17. Submission to Jurisdiction.
--------------------------
The Parent, Company and Buyer each irrevocably consent and commit
themselves to the jurisdiction of all of the federal and state courts situated
in the Commonwealth of Massachusetts and the United States District Court for
the District of Boston for any and all matters and/or disputes arising out of
this Agreement or the transactions contemplated hereby.
55
<PAGE>
18. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
19. Section Headings.
----------------
The section headings are for the convenience of the parties and in
no way alter, modify, amend, limit, or restrict the contractual obligations of
the parties.
20. Counterparts.
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
56
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
--------------------------------------
Name: David B. Eisenhaure
Title: President
MECHANICAL TECHNOLOGY INCORPORATED
By: /s/ Cynthia A. Scheuer
--------------------------------------
Name: Cynthia A. Scheuer
Title: Vice President and CFO
LING ELECTRONICS, INC.
By: /s/ Cynthia A. Scheuer
--------------------------------------
Name: Cynthia A. Scheuer
Title: Secretary/Treasurer
LING ELECTRONICS, LTD.
By: /s/ Cynthia A. Scheuer
--------------------------------------
Name: Cynthia A. Scheuer
Title: Member/Board of Directors
57
<PAGE>
Omitted Schedules
-----------------
Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, SatCon Technology
Corporation has, with respect to the Stock Purchase Agreement among Mechanical
Technology Incorporated, Ling Electronics, Inc., Ling Electronics, Ltd., and
SatCon Technology Corporation, dated as of October 21, 1999, omitted to file the
related schedules (listed below). These schedules will be supplementally
furnished to the Commission upon request.
Schedules
---------
<TABLE>
<S> <C>
3.3(b) Liens on Stock 4.1 Subsidiaries
3.3(c) Exceptions to Good Standing 4.3 Capitalization
3.3(e) Assets and Liabilities of Ling Electronics 4.6 Consents and Approvals
3.4 Required Consents 4.7 Litigation; Proceedings
3.6 Absence of Undisclosed Liabilities 4.8 No Default or Violation
3.7 Litigation 4.9 Disclosure; Absence of
3.8 Insurance Certain Changes
3.9 Personal Property Liens 4.13 Listing and Maintenance
3.10 Intangible Property Requirements Compliance
3.11 Real Estate and Leases 4.15 Registration Rights
3.13 Accounts Receivable and Accounts Payable 4.16 Tax Status; Firpta
3.14 Tax Matters 4.17 Transaction with Affiliates
3.16 Contracts and Commitments 4.18 Material Contracts
3.17 Compliance with Agreements and Laws 4.19 ERISA
3.18 Employee Relations
3.19 Employee Benefit Plans
3.20 List of Environmental Reports
3.21 Absence of Certain Changes or Events
3.22 Sole Source Suppliers
3.23 Warranty and Product Liability Claims
3.25 Indebtedness to and from Officers, Directors and Parent
3.26 Banking Facilities
3.27 Powers of Attorney and Suretyships
3.28 Conflicts of Interest
3.29 Regulatory Approvals
3.30 Y2K Compliance
</TABLE>
<PAGE>
Exhibit 10.28
================================================================================
SECURITIES PURCHASE AGREEMENT
between
SATCON TECHNOLOGY CORPORATION
and
MECHANICAL TECHNOLOGY INCORPORATED
Dated as of October 21, 1999
================================================================================
<PAGE>
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is dated as of
---------
October 21, 1999, between SatCon Technology Corporation, a Delaware corporation
(the "Company"), and Mechanical Technology Incorporated, a New York corporation
-------
(the "Purchaser").
---------
WHEREAS, the Company and the Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D as promulgated by the United States
Securities and Exchange Commission (the "Commission") under Section 4(2) of the
----------
Securities Act of 1933, as amended (the "Securities Act");
--------------
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell 370,800 shares ("Primary
-------
Closing Shares") of the Company's Common Stock par value $0.01 per share
- --------------
("Common Stock") and a stock purchase warrant (the "A Warrant") to purchase up
- -------------- ---------
to 36,000 shares of the Company's Common Stock in the form of Exhibit A annexed
---------
hereto; and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Purchaser desires to purchase the Primary Closing Shares and the
A Warrant in exchange for $2,570,000 in cash and a stock purchase warrant (the
"MA Warrant") to purchase up to 36,000 shares of the Purchaser's $1.00 par value
Common Stock in the form of Exhibit B annexed hereto; and
---------
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company desires to issue and sell 659,200 shares ("Secondary
---------
Closing Shares", together with the Primary Closing Shares, collectively the
- --------------
"Shares") of Common Stock and a stock purchase warrant (the "B Warrant",
- ------- ---------
together with the A Warrant, collectively the "Warrants") to purchase up to
--------
64,000 shares of the Company's Common Stock, in the form of Exhibit A annexed
---------
hereto, if the Company achieves certain Milestones (as defined below) or the
Purchaser elects to waive such Milestones, prior to January 31, 2000; and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Purchaser desires to purchase Secondary Closing Shares and the B
Warrant in exchange for $4,500,000 in cash and a stock purchase warrant (the "MB
Warrant") to purchase up to 64,000 shares of the Purchaser's $1.00 par value
Common Stock in the form of Exhibit B annexed hereto; and
---------
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form of Exhibit C attached hereto (the "STC
--------- ---
Registration Rights Agreement") pursuant to which the Company has agreed to
- -----------------------------
provide certain registration rights under the Securities Act and the rules and
regulations promulgated thereunder, and applicable state securities laws; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement substantially in the form of Exhibit D attached hereto (the "MTI
---------
Registration Rights Agreement") pursuant to which the
1
<PAGE>
Company has agreed to provide certain registration rights under the Securities
Act and the rules and regulations promulgated thereunder and applicable state
securities laws.
NOW THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter, the Company and the Purchaser hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE OF THE SECURITIES AND WARRANTS
1.1 Purchase and Sale. Subject to the terms and conditions set forth
-----------------
herein, the Company shall issue and sell to the Purchaser, and the Purchaser
shall purchase from the Company, on the Primary Closing Date, the Primary
Closing Shares and the A Warrant. The aggregate purchase price of the Primary
Closing Shares and the A Warrant shall be $2,570,000 and the MA Warrant. Subject
to the terms and conditions set forth herein, the Company shall issue and sell
to the Purchaser, and the Purchaser shall purchase from the Company, on the
Secondary Closing Date, the Secondary Closing Shares and the B Warrant. The
aggregate purchase price of the Secondary Closing Shares and the B Warrant shall
be $4,500,000 and the MB Warrant.
1.2 Closings.
--------
Primary Closing. The closing of the purchase and sale of the Primary
---------------
Closing Shares and the A Warrant (the "Primary Closing") shall take place at the
---------------
offices of Mechanical Technology Incorporated in Latham, New York, or by
transmission by facsimile and overnight courier, immediately following the
execution hereof or such later date or different location as the parties shall
agree, but not prior to the date that the conditions set forth in Section 4.1
have been satisfied or waived by the appropriate party (the "Primary Closing
---------------
Date"). At the Primary Closing:
- ----
(1) The Purchaser shall deliver, as directed by the Company, two
million, five hundred seventy thousand dollars ($2,570,000) in United States
dollars in immediately available funds to an account or accounts designated in
writing by the Company;
(2) The Purchaser shall deliver to the Company the MA Warrant, in
the form of Exhibit B hereto;
---------
(3) The Company shall deliver to the Purchaser a certificate
evidencing the Primary Closing Shares;
(4) The Company shall deliver to the Purchaser the A Warrant, in
the form of Exhibit A hereto; and
---------
(5) The parties shall execute and deliver each of the documents
referred to in Section 4.1 hereof.
Secondary Closing. The closing of the purchase and sale of the Secondary
-----------------
Closing Shares and the B Warrant (the "Secondary Closing") shall take place at
-----------------
the offices of Mechanical Technology Incorporated in Latham, New York or by
transmission by facsimile and overnight courier on a date on or prior to January
31, 2000 selected by the Purchaser (the "Secondary Closing Date"). At the
----------------------
Secondary Closing,
2
<PAGE>
(1) The Purchaser shall deliver, as directed by the Company, four
million five hundred thousand dollars ($4,500,000) in United States dollars in
immediately available funds to an account or accounts designated in writing by
the Company;
(2) The Purchaser shall deliver to the Company the MB Warrant, in
the form of Exhibit B hereto;
---------
(3) The Company shall deliver to the Purchaser a certificate
evidencing the Secondary Closing Shares;
(4) The Company shall deliver to the Purchaser the B Warrant, in
the form of Exhibit A hereto; and
---------
(5) The parties shall execute and deliver each of the documents
referred to in Section 4.2 hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations, Warranties and Agreements of the Company. The
---------------------------------------------------------
Company hereby makes the following representations and warranties to the
Purchaser:
a. Organization and Qualification. The Company is a corporation
------------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Except for Beacon Power Corporation ("Beacon") or as set forth on
Schedule 2.1(a), the Company has no subsidiaries (collectively, the
- ---------------
"Subsidiaries"); it being agreed that for purposes of this Agreement Beacon is
- -------------
not a subsidiary of the Company. Each of the Subsidiaries (which, except as
provided in the prior sentence, for purposes of this Agreement means any entity
in which the Company, directly or indirectly, owns the majority of such entity's
capital stock or holds an equivalent equity or similar interest) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization (as applicable),
with the full corporate power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Each of the Company
and the Subsidiaries is duly qualified as a foreign corporation to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of any of this
Agreement or the Transaction Documents (as defined in Section 2.1(b)) or any of
the material transactions contemplated hereby or thereby, (y) have or result in
a material adverse effect on the results of operations, assets, or financial
condition of the Company and its Subsidiaries, taken as a whole or (z) impair
the Company's ability to perform in all material respects on a timely basis its
material obligations under any Transaction Document (any of (x), (y) or (z),
being a "Material Adverse Effect"). The Company has on file with the Securities
-----------------------
Exchange Commission true and correct copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the "Certificate
-----------
of Incorporation"), and the Company's Bylaws, as in effect on the date hereof
- ----------------
(the "Bylaws").
------
3
<PAGE>
b. Authorization; Enforcement. The Company has the requisite
--------------------------
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement, the A Warrant, the B Warrant and the
Registration Rights Agreement (collectively, the "Transaction Documents"), and
---------------------
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of each of this Agreement and the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action. This
Agreement has been duly executed by the Company and the A Warrant and
Registration Rights Agreement at the Primary Closing will be duly executed by
the Company. Subject to the terms and conditions contained herein, the B
Warrant at the Secondary Closing will be duly executed by the Company. When
delivered in accordance with the terms hereof, the Transaction Documents will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application and except that rights to indemnification and contribution may be
limited by Federal or state securities laws or public policy relating thereto.
Neither the Company nor any Subsidiary is in any material violation of any of
the provisions of its respective certificate of incorporation, bylaws or other
charter documents such that any right of a holder of the Common Stock would be
affected.
c. Capitalization. As of the date hereof, the authorized capital
--------------
stock of the Company is as set forth in Schedule 2.1(c). All of such
---------------
outstanding shares of capital stock have been, or upon issuance will be, validly
authorized and issued, fully paid and nonassessable (except as disclosed in the
SEC Documents (as defined in Section 2.1(p)) and were issued in accordance with
the registration or qualification provisions of the Securities Act, or pursuant
to valid exemptions therefrom. Except as disclosed in Schedule 2.1(c), (i) no
---------------
shares of the Company's capital stock are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the
Company, nor is any holder of the Common Stock entitled to preemptive or
similar rights arising out of any agreement or understanding with the Company by
virtue of any Transaction Document, (ii) there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, or giving any Person (as defined below) any right to subscribe for or
acquire, any shares of capital stock of the Company or any of its Subsidiaries,
or contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, (iii) there are no outstanding
debt securities of the Company or any of its Subsidiaries, (iv) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the Securities
Act (except the Registration Rights Agreement), (v) there are no outstanding
securities of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the shares of Common Stock, the A Warrant or the B Warrant as described in this
Agreement or upon the exercise of the A Warrant or the B Warrant, (vii) the
Company does not have any stock appreciation rights or "phantom stock" plans or
agreements or any similar plan or
4
<PAGE>
agreement and (viii) except for the put rights granted to the holders of the
Class D Preferred Stock of Beacon or pursuant to this Agreement or the Warrants
issued to investment funds managed by Brown Simpson Capital Management, LLC, no
Person (as defined below) or group of related Persons beneficially owns (as
determined pursuant to Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) or has the right to acquire by
------------
agreement with or by obligation binding upon the Company beneficial ownership of
in excess of 5% of the Common Stock. "Person" means an individual or
------
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind.
d. Authorization and Validity; Issuance of Shares. The Common Stock
----------------------------------------------
issued pursuant to this Agreement and the Common Stock issuable upon exercise of
the A Warrant and, when issued, the B Warrant will at all times hereafter
continue to be duly authorized and reserved for issuance and the shares of
Common Stock issued upon the exercise of the A Warrant and, when issued, the B
Warrant (the "Warrant Shares") will be validly issued, fully paid and non-
--------------
assessable, free and clear of all liens, encumbrances and Company rights of
first refusal, other than liens and encumbrances created by the Purchaser
(collectively, "Liens") and will not be subject to any preemptive or similar
-----
rights. Assuming the accuracy of the Purchaser's representations in Section
2.2, the issuance by the Company of the Common Stock, the A Warrant, the B
Warrant and the Warrant Shares is exempt from registration under the Securities
Act.
e. No Conflicts. The execution, delivery and performance of this
------------
Agreement and each of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including the issuance of the Warrant Shares) do not and will not (i) conflict
with or violate any provision of the Certificate of Incorporation, Bylaws or
other organizational documents of the Company or any of the Subsidiaries, (ii)
subject to obtaining the consents referred to in Section 2.1(f), conflict with,
or constitute a breach or a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture, patent, patent license or instrument (evidencing a Company or
Subsidiary debt or otherwise) to which the Company or any Subsidiary is a party
or by which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or any Subsidiary is subject (including Federal
and state securities laws and regulations and the rules and regulations of the
principal market or exchange on which the Common Stock is traded or listed)
applicable to the Company or any of its Subsidiaries, or by which any material
property or asset of the Company or any Subsidiary is bound or affected except,
in each such case, for any violation, conflict, default or breach which is not
reasonably expected to have a Material Adverse Effect.
f. Consents and Approvals. Except as specifically set forth on
----------------------
Schedule 2.1(f), neither the Company nor any Subsidiary is required to obtain
- ---------------
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal or state governmental
authority, regulatory or self regulatory agency, or other Person in connection
with the execution, delivery and performance by the Company of this Agreement or
the Transaction Documents, other than (i) the filing of a registration statement
with the Commission, which shall be filed in accordance with and in the time
periods set forth in the Registration Rights Agreement, (ii) the application(s)
or any letter(s) acceptable to the National Market System of Nasdaq Stock Market
("Nasdaq") for the listing of the Shares and the Warrant Shares with Nasdaq (and
------
with any
5
<PAGE>
other national securities exchange or market on which the Common Stock is then
listed), (iii) any filings, notices or registrations under applicable state
securities laws, and (iv) the filing of a form D with the Commission (together
with the consents, waivers, authorizations, orders, notices and filings referred
to on Schedule 2.1(f), the "Required Approvals").
--------------- ------------------
g. Litigation; Proceedings. Except as specifically set forth on
-----------------------
Schedule 2.1(g), there is no action, suit, notice of violation, proceeding or
- ---------------
investigation pending or, to the knowledge of the Company or any of its
Subsidiaries, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties or assets before or by any
court, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) which (i) adversely affects or challenges the
legality, validity or enforceability of any of this Agreement or the Transaction
Documents or (ii) could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.
h. Material Contracts. Except for this Agreement, the other
------------------
agreements to be entered into pursuant to the terms of this Agreement, contracts
attached as exhibits to the Company's SEC Documents and the contracts of the
Company and its Subsidiaries set forth on Exhibit 2.1(h) attached hereto
--------------
(collectively, the "Contracts"), neither the Company nor its Subsidiaries are a
party to or otherwise bound by any written or oral:
(1) written contract for the employment of any officer, employee
or other person on a full-time or consulting basis, which is not terminable on
thirty (30) days' notice without cost or liability to the Company or any
Subsidiary, except normal severance arrangements and accrued vacation pay;
(2) bonus, pension, profit-sharing, retirement, hospitalization,
insurance, stock purchase, stock option or other plan, contract or understanding
pursuant to which benefits are provided to any employee of the Company or any
Subsidiary (other than group insurance plans applicable to employees generally);
(3) agreement or indenture relating to the borrowing of money or
to the mortgaging or pledging of, or otherwise placing a lien or security
interest on, any asset of the Company or Subsidiary or any agreement or
instrument evidencing any guaranty by the Company or any Subsidiary of payment
or performance by any other Person;
(4) voting trust or agreement, stockholders' agreement, pledge
agreement, buy-sell agreement or first refusal or preemptive rights agreement
relating to any securities of the Company;
(5) agreement or obligation (contingent or otherwise) to issue,
sell or otherwise distribute or to repurchase or otherwise acquire or retire any
shares of its capital stock or any of its other equity securities;
(6) agreement under which the Company or any Subsidiary has
granted any person any registration rights, other than this Agreement;
(7) agreement providing for disposition of the business, assets
or shares of the Company or its Subsidiaries, agreement of merger or
consolidation to which the Company or any Subsidiary is a party or letter of
intent with respect to the foregoing;
6
<PAGE>
(8) agreement or letter of intent (other than the acquisition of
Ling Electronics, Inc.) with respect to the acquisition of the business, assets
or shares of any other Person.
i. ERISA. Set forth in Exhibit 2.1(i) is a list and brief
----- --------------
description of each "employee pension benefit plan," as such term is defined in
Section 3(2) of ERISA, now or formerly maintained by the Company or any of their
respective Subsidiaries, to which the Company or any Subsidiary is now or will
be obligated to contribute. Except as described in Exhibit 2.1(i), no event has
--------------
occurred, or to the knowledge of the Company or its Subsidiaries, is threatened
or about to occur, which would constitute a reportable event within the meaning
of Section 4043(b) of ERISA, and no notice of termination has been filed by the
plan administrator pursuant to Section 4041 of ERISA or issued by the Pension
Benefit Guaranty Corporation (the "PBGC") pursuant to Section 4042 of ERISA with
----
respect to any pension benefit plan described in Exhibit 2.1(i) subject to
--------------
ERISA. To the best knowledge of the Company, no prohibited transaction (as
defined in Section 4975 of the Code) has occurred with respect to any employee
benefit plan maintained by the Company or any of its Subsidiaries. Neither the
Company nor any of their respective Subsidiaries nor any of their respective
ERISA Affiliates is or has been a participant in any multiemployer plan as
defined in ERISA. "ERISA Affiliate" means with respect to any Person, any
---------------
entity that would be considered to be under common control with such person for
purposes of Title IV of ERISA.
j. Environmental Matters.
---------------------
(1) Hazardous Materials have not at any time been generated,
used, treated or stored on any property, plants or other facilities now owned,
leased, or operated by the Company or any Subsidiary (or at any property, plant
or other facilities ever owned, leased or operated by any predecessor entity at
such locations), in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, and none of the Company, its Subsidiaries or its predecessors
have received any notice of any such violation with respect to Hazardous
Materials except for such violations that the Company reasonably does not expect
will have a Material Adverse Effect;
(2) There has been no spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto any property now owned or
leased by the Company, its Subsidiaries or any predecessor (or onto any other
property ever owned or leased by it, or by any predecessor entity at any such
location), or into the environment surrounding any such property, of Hazardous
Materials, other than those releases permissible under such regulations, laws or
statutes or allowable under applicable permits and except for such violations
that the Company reasonably does not expect will have a material adverse effect
on the Company;
(3) The Company, its Subsidiaries or its predecessor, their
operations and any property owned by the Company, its Subsidiaries or its
predecessor are in material compliance with all material Environmental Laws and
the material requirements of any permits issued under such laws;
(4) There are no past, pending or, to the best of the Company's
knowledge, threatened Environmental Claims against the Company, its Subsidiaries
or its predecessor or any property now or previously owned or leased by the
Company, its Subsidiaries or its predecessor;
7
<PAGE>
(5) To the best of the Company's knowledge, there is no condition
or occurrence on any property now or previously owned or leased by the Company,
its Subsidiaries or its predecessor or any property adjoining or in the vicinity
of any such property that could reasonably be anticipated (i) to form the basis
of an Environmental Claim against the Company, its Subsidiaries or its
predecessor or (ii) to cause any property of the Company, its Subsidiaries or
its predecessor to be subject to any restrictions on the ownership, occupancy,
use or transferability of such property under any Environmental Law.
(6) For purposes of this Agreement, "Hazardous Materials" shall
refer to (a) any petroleum or petroleum products, radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar import, under
any applicable Environmental Law; and (c) any other chemical, material or
substance exposure to which is prohibited, limited or regulated by any
governmental authority; "Environmental Law" means any federal, state or local
-----------------
statute, law, rule, regulation, ordinance, code, policy or rule of common law
now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") 42 U.S.C. (S) 9601 et seq.; the Hazardous Materials Transportation
------
Act, as amended, 49 U.S.C. (S) 1801 et seq.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. (S)6901 et seq.; the Federal Water Pollution
-- ---
Control Act, as amended, 33 U.S.C. (S) 1251 et seq.; the Toxic Substances
-- ---
Control Act, 15 U.S.C. (S) 2601 et seq.; the Clean Air Act, 42 U.S.C. (S) 7401
-- ---
et seq.; the Safe Drinking Water Act, 42 U.S.C. (S) 3808 et seq.; and their
- -- --- -- ---
counterparts under any state or local laws; "Environmental Claims" means any and
--------------------
all administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation, investigations
or proceedings relating in any way to any Environmental Law or any permit issued
under any such Law (hereafter "Claims"), including without limitation (a) any
------
and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages, fines or
penalties pursuant to any applicable Environmental Law, and (b) any and all
Claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from Hazardous Materials
or arising from alleged injury or threat of injury to health, safety or the
environment.
k. Year 2000 Matters. The Company's statements regarding "Year 2000
-----------------
Risk" set forth in the SEC Documents are true and correct in all material
respects.
"Year 2000 Risk" means the risk that computer applications used by the
Company and/or its suppliers, vendors and customers may be unable to recognize
and perform without error date-sensitive functions involving certain dates prior
to and any date after December 31, 1999, including, without limitation,
September 9, 1999.
l. No Default or Violation. Except as specifically set forth on
-----------------------
Schedule 2.1(l), neither the Company nor any Subsidiary (i) is in default under
or in violation of any indenture, loan or other credit agreement or any other
agreement or instrument to which it is a party or by which it or
8
<PAGE>
any of its properties or assets is bound and which is required to be included as
an exhibit to any SEC Document (as defined in Section 2.1(o) hereof) or will be
required to be included as an exhibit to the Company's next filing under either
the Securities Act or Exchange Act, (ii) is in violation of any order of any
court, arbitrator or governmental body applicable to it, (iii) is in violation
of any statute, rule or regulation of any governmental authority to which it is
subject, (iv) is in default under or in violation of its Certificate of
Incorporation, Bylaws or other organizational documents, respectively, or (v) is
in default under or in violation of any of the listing requirements of Nasdaq as
in effect on the date hereof and is not aware of any facts which would
reasonably lead to delisting or suspension of the Common Stock by Nasdaq in the
foreseeable future except, in each such case, for any violation or default which
is not reasonably expected to have a Materially Adverse Effect. The business of
the Company and its Subsidiaries is not being conducted, and has not been
conducted, in violation of any law, ordinance, rule or regulation of any
governmental entity, except where such violations have not resulted or would not
reasonably result, individually or in the aggregate, in a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is in breach of any
agreement where such breach, individually or in the aggregate, would have a
Material Adverse Effect
m. Disclosure; Absence of Certain Changes. None of this Agreement,
--------------------------------------
the Schedules to this Agreement, the Transaction Documents, the SEC Documents
(as amended to date) contained as of their respective dates, any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements made herein and therein, in light of the
circumstances under which they were made, not misleading. Except as disclosed
on Schedule 2.1(m) or in SEC Documents filed on EDGAR through the date hereof,
---------------
since the filing of the Company's quarterly report on Form 10-Q on August 16,
1999, there has been no material adverse change and no material adverse
development in the business, properties, operations, financial condition,
liabilities or results of operations of the Company or the Subsidiaries. The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company or
any of its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings.
n. Private Offering. The Company and all Persons acting on its
----------------
behalf have not made within the six months preceding the Closing Date, directly
or indirectly, and will not make, offers or sales of any securities or solicited
any offers to buy any security at any time within six months after the Closing
Date under circumstances that would require registration of the Securities, the
Warrants or the Warrant Shares or the issuance of such securities under the
Securities Act.
o. SEC Documents; Financial Statements. The Common Stock of the
-----------------------------------
Company is registered pursuant to Section 12(g) of the Exchange Act. The
Company has filed during its current fiscal year all reports, schedules, forms,
statements and other documents required to be filed by it with the Commission
pursuant to the reporting requirements of the Exchange Act, including pursuant
to Section 13, 14 or 15(d) thereof (the foregoing materials and financial
statements and schedules thereto being collectively referred to herein as the
"SEC Documents"), on a timely basis or has received a valid extension of such
-------------
time of filing and has filed any such SEC Documents prior to the expiration of
any such extension. The Company has delivered to the Purchaser or its
representatives true, complete and accurate copies of the SEC Documents that
were not filed pursuant to EDGAR. As of their respective dates and giving effect
to all amendments thereto filed with the Commission, the financial statements of
the Company included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with United
States generally accepted
9
<PAGE>
accounting principles applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
the Company as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments. The Company acknowledges that
the Purchaser will be trading in the securities of the Company in reliance on
the foregoing representation and warranty.
p. Investment Company. The Company is not, and is not controlled by
------------------
or under common control with an affiliate (an "Affiliate") of an "investment
---------
company" within the meaning of the Investment Company Act of 1940, as amended.
q. Broker's Fees. No fees or commissions or similar payments with
-------------
respect to the transactions contemplated by this Agreement or the Transaction
Documents have been paid or will be payable by the Company to any broker,
financial advisor, finder, investment banker, or bank, other than as set forth
in Schedule 2.1(q). The Purchaser shall have no obligation with respect to any
---------------
fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section 2.1(q) that may be due in connection
with the transactions contemplated by this Agreement and the Transaction
Documents.
r. Form S-3 Eligibility. The Company is, and at the Closing Date
--------------------
will be, eligible to register securities (including the Shares and the Warrant
Shares) for resale with the Commission under Form S-3 (or any successor form)
promulgated under the Securities Act.
s. Listing and Maintenance Requirements Compliance. The principal
-----------------------------------------------
market on which the Common Stock is currently traded is Nasdaq. Except as
disclosed on Schedule 2.1(s), the Company has not in the three years preceding
---------------
the date hereof received notice (written or oral) from Nasdaq (or any stock
exchange, market or trading facility on which the Common Stock is or has been
listed (or on which it has been quoted)) to the effect that the Company is not
in compliance with the listing or maintenance requirements of such market or
exchange. The Company is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by Nasdaq. After giving effect to
the transactions contemplated by this Agreement and the Transaction Documents,
the Company is and will be in compliance with all such maintenance requirements
except for any approval required under the NASD rules.
t. Intellectual Property Rights. To the best of the knowledge of
----------------------------
the Company, the Company owns or possesses, or can obtain by payment of
royalties in amounts which, in the aggregate, will not have a Material Adverse
Effect, all of the patents, trademarks, service marks, trade names, copyrights,
proprietary rights, trade secrets, and licenses or rights to the foregoing,
necessary for the conduct of the business of the Company as currently conducted.
To the best of the Company's knowledge, the business of the Company does not
cause the Company to infringe or violate any of the patents, trademarks, service
marks, trade names, copyrights, licenses or proprietary rights of any person or
entity.
u. Registration Rights; Rights of Participation. Except as
--------------------------------------------
described on Schedule 2.1(u) hereto, (i) the Company has not granted or agreed
---------------
to grant to any Person any rights (including "piggy-back" registration rights)
to have any securities of the Company registered with the Commission or any
other governmental authority which has not been satisfied and (ii) no Person,
including, but not limited to, current or former stockholders of the Company,
underwriters, brokers
10
<PAGE>
or agents, has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by this Agreement or any Transaction Document.
v. Tax Status; Firpta. Except as set forth on Schedule 2.1(v), the
------------------ ---------------
Company and each of the Subsidiaries has made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its Subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith (which are set forth on
Schedule 2.1(v) hereof), and has set aside on it books provisions reasonably
- ---------------
adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim. The Company is not a "United States real property holding corporation"
within the meaning of Section 847(c)(2) of the Internal Revenue Code of 1986, as
amended.
w. Transactions With Affiliates. Except as set forth on Schedule
---------------------------- --------
2.1(c) or Schedule 2.1(w), none of the officers, directors, or employees of the
- ------ ---------------
Company is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
x. Application to Takeover Protection. The Company and its Board of
----------------------------------
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination or other
similar anti-takeover provision under the Certificate of Incorporation, Bylaws
or the laws of the state of incorporation which is or could become applicable to
the Purchaser or the Transaction Documents as a result of the transactions
contemplated by this Agreement or the Transaction Documents. None of the
transactions contemplated by this Agreement or the Transaction Documents,
including the exercise of the A Warrant or the B Warrant, will trigger any
poison pill provisions of any of the Company's stockholders' rights or similar
agreements.
y. Solicitation Materials. The Company has not (i) distributed any
----------------------
offering materials in connection with the offering and sale of the Shares or the
A Warrant or the B Warrant, other than the SEC Documents, the Schedules to this
Agreement, any amendments and supplements thereto, material or information
requested by the Purchaser or its representative in connection with the
transaction contemplated by this Agreement, and the materials listed on Schedule
--------
2.1(y), or (ii) solicited any offer to buy or sell the Shares, the A Warrant or
- ------
the B Warrant by means of any form of general solicitation or advertising.
Neither the Company, nor any of its Affiliates, nor any Person acting on its or
their behalf, has engaged or will engage in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Shares or Warrants.
z. Acknowledgment of Dilution. The Company understands and
--------------------------
acknowledges the potentially dilutive effect to the Common Stock upon the
issuance of the Warrant Shares upon exercise of the Warrants. The Company
further acknowledges that its obligation to issue Warrant
11
<PAGE>
Shares upon exercise of the Warrants in accordance with this Agreement, and the
Warrants is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the
Company.
aa. Acknowledgment Regarding Purchaser' Purchase of Securities. The
----------------------------------------------------------
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm's length Purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any statement made by any Purchaser or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Purchaser' purchase of the securities. The Company further
represents to each Purchaser that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.
bb. Other Agreements. The Company has not, directly or indirectly,
----------------
made any agreements with the Purchaser relating to the terms and conditions of
the transactions contemplated by the Transaction Documents except as set forth
in the Transaction Documents.
cc. Investment Intent. The Company is acquiring the MA Warrant and
-----------------
the MB Warrant and any shares of stock it receives upon exercise of the MA
Warrant or the MB Warrant (the "M Shares") for its own account and not with a
present view to or for distributing or reselling the M Shares, the MA Warrant,
the MB Warrant or any part thereof or interest therein in violation of the
Securities Act; provided, however, that by making the representations herein,
-------- -------
the Company does not agree to hold any of the M Shares, the MA Warrant or the MB
Warrant for any minimum or other specific term and reserves the right to dispose
of the M Shares, the MA Warrant or the MB Warrant at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act.
dd. Company Status. At the time the Company was offered the MA
--------------
Warrant, the MB Warrant, and at the Primary Closing Date and Secondary Closing
Date, (i) it was and will be an "accredited investor" as defined in Rule 501
under the Securities Act and (ii) the Company, either alone or together with its
representatives, had and will have such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of the prospective investment in the Shares and the Warrants.
ee. Reliance. The Company understands and acknowledges that (i) the
--------
M Shares, the MA Warrant and the MB Warrant are being offered and sold to the
Company without registration under the Securities Act in a private placement
that is exempt from the registration provisions of the Securities Act under
Section 4(2) of the Securities Act or Regulation D promulgated thereunder and
(ii) the availability of such exemption depends in part on, and the Purchaser
will rely upon the accuracy and truthfulness of, the representations set forth
in this Section 2.1 and the Company hereby consents to such reliance.
ff. Governmental Review. The Company understands that no United
-------------------
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the M Shares, the
MA Warrant or the MB Warrant.
12
<PAGE>
Any information furnished in the schedules to Section 2.1 (a "Disclosure
Schedule") shall be deemed to modify all of the Company's representations and
warranties. The inclusion of any information in the Disclosure Schedule shall
not be deemed to be an admission or acknowledgment, in and of itself, that such
information is required by the terms hereof to be disclosed, is material to the
company, has or would have a Material Adverse Effect. For purposes of this
Agreement, the terms "to the Company's knowledge," "known by the Company" or
other words of similar meaning shall mean the actual knowledge of David
Eisenhaure or Michael Turmelle without any obligation of investigation, and
shall not refer to the knowledge of any other person or entity.
2.2 Representations and Warranties of the Purchaser. The Purchaser hereby
-----------------------------------------------
represents and warrants to the Company as follows:
a. Organization; Authority. The Purchaser is a corporation duly
-----------------------
formed, validly existing and in good standing under the laws of the jurisdiction
of its incorporation or formation with the requisite power and authority,
corporate or otherwise, to enter into and to consummate the transactions
contemplated hereby and by the Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The purchase by the Purchaser of the
Shares, the A Warrant and the B Warrant hereunder has been duly authorized by
all necessary action on the part of the Purchaser. Each of this Agreement and
the Registration Rights Agreement has been duly executed and delivered by the
Purchaser and constitutes the valid and legally binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
b. Authorization and Validity; Issuance of Shares. The common
----------------------------------------------
stock issuable upon exercise of the MA Warrant and, when issued, the MB Warrant,
will at all times hereafter continue to be duly authorized and reserved for
issuance and the shares of common stock issued upon the exercise of the MA
Warrant, and when issued, the MB Warrant, will be validly issued, fully paid and
non-assessable, free and clear of all liens, encumbrances, and Purchaser rights
of first refusal, other than liens and encumbrances created by the Company and
will not be subject to any preemptive or similar rights. Assuming the accuracy
of the Company's representations in Section 2.1, the issuance by the Purchaser
of the MA Warrant, the MB Warrant and any shares upon exercise of such warrants
is exempt from registration under the Securities Act.
c. Purchaser SEC Documents; Financial Statements. The Common Stock
---------------------------------------------
of the Purchaser is registered pursuant to Section 12(g) of the Exchange Act.
The Purchaser has filed during its current fiscal year all reports, schedules,
forms, statements and other documents required t be filed by it with the
Commission pursuant to the reporting requirements of the Exchange Act, including
pursuant to Section 13, 14 or 15(d) thereof (the foregoing materials and
financial statements and schedules thereto being collectively referred to herein
as the "Purchaser SEC Documents"), on a timely basis or has received a valid
extension of such time of filing and has filed any such Purchaser SEC Documents
prior to the expiration of any such extension. The Purchaser has delivered to
the Company or its representatives true, complete and accurate copies of the
Purchaser SEC Documents that were not filed pursuant to EDGAR. As of their
respective financial statements of the Purchasers included in the Purchaser SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial
13
<PAGE>
statements or the notes thereto, and fairly present in all material respects the
financial position of the Purchaser as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, year-end audit adjustments. The
Purchaser acknowledges that the Company will be trading in the securities of the
Purchaser in reliance on the foregoing representation and warranty.
d. Disclosure; Absence of Certain Changes. None of this Agreement,
--------------------------------------
the Schedules to this Agreement, the Purchaser SEC Documents (as amended to
date) contained as of their respective dates, any untrue statement of a material
fact or omitted to state any material fact necessary in order to make the
statements made herein and therein, in light of the circumstances under which
they were made, not misleading. Except as disclosed in Purchaser SEC Documents
files on EDGAR through the date hereof, since the filing of the Purchaser
quarterly report on Form 10-Q on August 6, 1999, there has been no Material
Adverse Change and no material adverse development in the business, properties,
operations, financial condition, liabilities or results of operations of the
Purchaser. The Purchaser has not taken any steps, and does not currently expect
to take any steps, to seek protection pursuant to any bankruptcy law nor does
the Purchaser or any of its Purchaser Subsidiaries have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
e. Investment Intent. The Purchaser is acquiring the Shares, the A
-----------------
Warrant and the B Warrant for its own account and not with a present view to or
for distributing or reselling the Shares, the A Warrant, the B Warrant or the
Warrant Shares or any part thereof or interest therein in violation of the
Securities Act; provided, however, that by making the representations herein,
-------- -------
the Purchaser does not agree to hold any of the Shares, the A Warrant, the B
Warrant or the Warrant Shares for any minimum or other specific term and
reserves the right to dispose of the Shares, the A Warrant, the B Warrant or the
Warrant Shares at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act.
f. Purchaser Status. At the time the Purchaser was offered the
----------------
Shares, the A Warrant, the B Warrant, and at the Primary Closing Date and
Secondary Closing Date, (i) it was and will be an "accredited investor" as
defined in clause (a)(7) of Rule 501 under the Securities Act and (ii) the
Purchaser, either alone or together with its representatives, had and will have
such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of the prospective
investment in the Shares and the Warrants.
g. Reliance. The Purchaser understands and acknowledges that (i)
--------
the Shares, the A Warrant and the B Warrant are being offered and sold to the
Purchaser without registration under the Securities Act in a private placement
that is exempt from the registration provisions of the Securities Act under
Section 4(2) of the Securities Act or Regulation D promulgated thereunder and
(ii) the availability of such exemption depends in part on, and the Company will
rely upon the accuracy and truthfulness of, the representations set forth in
this Section 2.2 and the Purchaser hereby consents to such reliance.
h. Governmental Review. The Purchaser understands that no United
-------------------
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Shares, the A
Warrant or the B Warrant.
i. Residency. The Purchaser is a resident of the State of New York.
---------
14
<PAGE>
The Company acknowledges and agrees that the Purchaser makes no
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 2.2.
ARTICLE III.
OTHER AGREEMENTS
3.1 Transfer Restrictions.
---------------------
a. If the Purchaser should decide to dispose of the Shares, the A
Warrant, the B Warrant or the Warrant Shares held by it, the Purchaser
understands and agrees that it may do so only pursuant to an effective
registration statement under the Securities Act, to the Company or pursuant to
an available exemption from the registration requirements of the Securities Act,
including Rule 144 promulgated under the Securities Act ("Rule 144"). In
--------
connection with any transfer of any Shares, A Warrant, B Warrant or Warrant
Shares other than pursuant to an effective registration statement, Rule 144 or
to the Company, the Company may require the transferor thereof to provide to the
Company a written opinion of counsel experienced in the area of United States
securities laws selected by the transferor, the form and substance of which
opinion shall be customary for opinions of counsel in comparable transactions,
to the effect that such transfer does not require registration of such
transferred securities under the Securities Act; provided, however, that if the
-------- -------
Shares, A Warrant, B Warrant or Warrant Shares may be sold pursuant to Rule
144(k), no written opinion of counsel shall be required from the Purchaser if
the Purchaser provides reasonable assurances that such security can be sold
pursuant to Rule 144(k). Notwithstanding the foregoing, the Company hereby
consents to and agrees to register any transfer by the Purchaser to an Affiliate
of the Purchaser, provided that the transferee certifies to the Company that it
is an "accredited investor" as defined in Rule 501(a) under the Securities Act.
Any such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Transaction Documents. If the Purchaser provides the Company with an opinion of
counsel, the form and substance of which opinion shall be customary for opinions
of counsel in comparable transactions, to the effect that a public sale,
assignment or transfer of the Shares, A Warrant, B Warrant and the Warrant
Shares may be made without registration under the Securities Act or the
Purchaser provides the Company with reasonable assurances that the Shares, A
Warrant, B Warrant and the Warrant Shares can be sold pursuant to Rule 144
without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Company shall permit the
transfer, and, in the case of the Warrant Shares, promptly instruct its transfer
agent to issue one or more certificates in such name and in such denominations
as specified by the Purchaser and without any restrictive legend.
Notwithstanding the foregoing or anything else contained herein to the contrary,
the securities may be pledged as collateral in connection with a bona fide
---- ----
margin account or other lending arrangement.
b. The Purchaser agrees to the imprinting by the Company, so long as
is required by this Section 3.1(b), of the following legend on the Shares, the A
Warrant, the B Warrant and the Warrant Shares:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES
15
<PAGE>
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
Neither the Shares, the A Warrant, the B Warrant nor the Warrant
Shares shall be required to contain the legend set forth above (or any other
legend) (i) at any time after transfer pursuant to a registration statement is
effective under the Securities Act covering such security, (ii) if in the
written opinion of counsel to the Company or the Purchaser experienced in the
area of United States securities laws such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) or
(iii) if such Shares, the A Warrant, the B Warrant or the Warrant Shares are
sold pursuant to Rule 144. When requested, which request will be accompanied by
the certificate representing such shares, the Company agrees that it will
provide the Purchaser with a certificate or certificates representing the
Shares, the A Warrant, the B Warrant or the Warrant Shares, free from such
legend at such time as such legend is no longer required hereunder. If such
certificate or certificates had previously been issued with such a legend or any
other legend, the Company shall, upon request, receive such certificate or
certificates free of any legend.
c. Notwithstanding the foregoing, the Purchaser's disposition of the
Warrant Shares shall be subject to Suspension Periods (as defined in the
Registration Rights Agreement) set forth in Section 3(r) of the Registration
Rights Agreement.
3.2 Stop Transfer Instruction. The Company may not make any notation on
-------------------------
its records or give instructions to any transfer agent of the Company which
enlarge the restrictions on transfer set forth in Section 3.1.
3.3 Furnishing of Information. Until the Shares, the A Warrant, the B
-------------------------
Warrant or the Warrant Shares have been sold pursuant to a registration
statement under the Securities Act or are eligible for sale pursuant to Rule
144(k), the Company will cause its Shares to continue at all times to be
registered under Section 12(g) of the Exchange Act, will timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
Section 13, 14 or 15(d) of the Exchange Act and, unless filed by EDGAR, promptly
furnish, but in no event later than two (2) business days after the filing
thereof with the Commission, the Purchaser with true and complete copies of all
such filings, and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such reporting and filing obligations. Until the Shares, the A Warrant, the B
Warrant or the Warrant Shares have been sold pursuant to a registration
statement under the Securities Act or are eligible for sale pursuant to Rule
144(k), if the Company is not required to file reports pursuant to Section 13(a)
or 15(d) of the Exchange Act, it will prepare and furnish to the Purchaser and
make publicly available in accordance with Rule 144(c) promulgated under the
Securities Act annual and quarterly financial statements, together with a
discussion and analysis of such financial statements in form and substance
substantially similar to those that would otherwise be required to be included
in reports required by Section 13(a) or 15(d) of the Exchange Act, as well as
any other information required thereby, in the time period that such filings
would have been required to have been made under the Exchange Act. The Company
further covenants that it will take such further action as any holder of the
Shares, the A Warrant, the B Warrant or the
16
<PAGE>
Warrant Shares may reasonably request, all to the extent required from time to
time to enable such Person to sell the Shares, the A Warrant, the B Warrant or
the Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including the legal opinion referenced above in Section 3.1(b).
3.4 Blue Sky Laws. In accordance with the Registration Rights Agreement,
-------------
the Company shall (i) qualify the Warrant Shares under the securities or "blue
sky" laws of such jurisdictions as the Purchaser may request (or to obtain an
exemption from such qualification), (ii) shall provide evidence of any such
action so taken to the Purchaser on or prior to the Closing Date and (iii) shall
continue such qualification at all times through the resale of all Warrant
Shares, but in any event not past the 4/th/ anniversary of the Closing Date.
3.5 Integration. The Company shall not sell, offer for sale or solicit
-----------
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Shares, the A Warrant, the B Warrant or the Warrant Shares in a manner
that would require the registration under the Securities Act or the sale of the
Shares, the A Warrant, the B Warrant or the Warrant Shares to any Purchaser or
cause the offering of such securities to be integrated with any other offering
of securities by the Company for the purpose of any stockholder approval
provision applicable to the Company or its securities.
3.6 Listing and Reservation of Warrant Shares.
-----------------------------------------
a. The Company shall (i) not later than three (3) business days
after each Closing Date prepare and file with Nasdaq (as well as any other
national securities exchange or market on which the Common Stock is then listed)
an additional shares listing application or a letter acceptable to Nasdaq
covering and listing a number of shares of Common Stock which are issued at such
Closing or issuable pursuant to the Warrants issuable at such Closing which is
at least equal to 1 times the maximum number of Warrant Shares then issuable,
(ii) take all steps necessary to cause such shares of Common Stock to be
approved for listing on Nasdaq (as well as on any other national securities
exchange or market on which the Common Stock is then listed) as soon as possible
thereafter, (iii) maintain, so long as any other shares of Common Stock shall be
so listed, such listing of all such Warrant Shares, and (iv) provide to the
Purchaser evidence of such listing. Neither the Company nor any of its
Subsidiaries shall take any action which may result in the delisting or
suspension of the Common Stock on Nasdaq. Prior to the effectiveness of the
Initial Registration Statement (as defined in the Registration Rights
Agreement), the Company shall promptly provide to the Purchaser copies of any
notices it receives from Nasdaq regarding the continued eligibility of the
Common Stock for listing on such automated quotation system, so long as such
notice does not include material, nonpublic information. The Company shall pay
all fees and expenses in connection with satisfying its obligations under this
Section 3.6(a).
b. The Company at all times shall reserve a sufficient number of
shares of its authorized but unissued Common Stock to provide for 1 times the
full exercise of the outstanding Warrants. If at any time the number of shares
of Common Stock authorized and reserved for issuance is insufficient to cover
100% of the number of Warrant Shares issued and issuable upon exercise of the
Warrants (based on the Exercise Price (as defined in the Warrants) of the
Warrants in effect from time to time) without regard to any limitation on
conversions or exercises, the Company will promptly take all corporate action
necessary to authorize and reserve 100% of such shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company's obligations under this Section 3.6(b), in the case
of an insufficient number of
17
<PAGE>
authorized shares, and using its best efforts to obtain stockholder approval of
an increase in such authorized number of shares. In addition, upon the
occurrence of an adjustment of the Exercise Price (as defined in the Warrant),
the Company shall be required to file, within ten (10) business days of such
event, a registration statement covering the product of 1.0 and the number
Warrant Shares, less the number of Warrant Shares for which a registration
statement is then effective. The Company shall use its best efforts to cause
such registration statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, but in any event on or prior to
that date which is one hundred and twenty (120) days after the filing date
thereof. All calculations of the above amount shall be made without regard to
any limitation on exercises of Warrants.
3.7 Notice of Breaches.
------------------
a. The Company and the Purchaser shall give prompt written notice to
the other of any breach by it of any representation, warranty or other agreement
contained in this Agreement or in the Transaction Documents. However, no
disclosure by either party pursuant to this Section 3.7 shall be deemed to cure
any breach of any representation, warranty or other agreement contained herein
or in the Transaction Documents.
b. Notwithstanding the generality of Section 3.7(a), the Company
shall promptly notify, provided such notification will not constitute material
non-public information, the Purchaser of any notice or claim (written or oral)
that it receives from any lender of the Company or any Subsidiary to the effect
that the consummation of the transactions contemplated hereby and by the
Registration Rights Agreement violates or would violate any written agreement or
understanding between such lender and the Company or any Subsidiary, and the
Company shall promptly furnish by facsimile to the Purchaser a copy of any
written statement in support of or relating to such claim or notice.
c. The default by any Purchaser of any of its obligations,
representations or warranties under this Agreement or the Transaction Documents
shall not be imputed to, and shall have no effect upon, any other Purchaser or
affect the Company's obligations under this Agreement or any Transaction
Document to any non-defaulting Purchaser.
3.8 Form D. The Company agrees to file a Form D with respect to the
------
Shares, A Warrant and B Warrant as required by Rule 506 under Regulation D and
to provide a copy thereof to the Purchaser promptly after such filing.
3.9 Use of Proceeds. The Company intends to use the proceeds from the
---------------
sale of the Common Stock and the exercise of the Warrants (i) to enhance the
Company's ability to satisfy purchase orders that both parties anticipate that
the Company will receive from Plug Power, (ii) otherwise to develop the
Company's module manufacturing capability or (iii) in connection with the
transition and integration of Ling Electronics into the Company's other
operations and not to fund future investment in Beacon Power Corporation. The
Company is free to use the proceeds of the offering for other corporate purposes
if the board of directors of the Company determines that it is in the best
interest of the Company to do so. The Purchaser acknowledges that the Company
may, in the future, acquire cash from other sources and that it may invest such
cash in Beacon Power Corporation. It is not the intention of the parties to
establish an auditable trail between receipt of the proceeds and the use of such
funds.
3.10 Board Representation.
--------------------
18
<PAGE>
a. The Company agrees to nominate and recommend to its shareholders
the election to the Company's Board of Directors two person designated by the
Purchaser and acceptable to the Company's Board of Directors acting reasonably
(it being agreed that in acting reasonably the Company's Board of Directors may
consider the desirability of having two members of the Company's Board of
Directors affiliated with the Purchaser). The Company's obligations under this
Section 3.10(a) shall terminate if the Purchaser does not own five percent (5%)
or more on or before July 31, 2000 or ceases to own five percent (5%) or more of
the Company's outstanding Common Stock. The initial nominee to the Company's
Board of Directors will be Alan Goldberg.
b. The Purchaser agrees to nominate and recommend to its
shareholders the election to the Company's Board of Directors one person
designated by the Company. The initial nominee will be David Eisenhaure. The
Purchaser's obligations under this Section 3.10(b) shall terminate if the
Purchaser ceases to own five percent (5%) or more of the Company's outstanding
Common Stock or the Company's obligations under Section 3.10(a) ceases,
whichever occurs first.
c. Both parties will endeavor to have the representatives set forth
above elected or appointed to their boards as soon as possible, but in no event
later than December 1, 1999. The Purchaser shall have no obligation to appoint
or elect the Company's nominee to its Board of Directors until the Company has
appointed or elected the Purchaser's nominees to the Company's Board of
Directors.
3.11 Transactions with Affiliates. So long as any Shares, A Warrant or B
----------------------------
Warrant are outstanding, the Company shall not, and shall cause each of its
Subsidiaries not to, enter into, amend, modify or supplement, or permit any
Subsidiary to enter into, amend, modify or supplement, any agreement,
transaction, commitment or arrangement with any of its or any Subsidiary's
officers, directors or persons who were officers or directors at any time during
the previous two years, stockholders who beneficially own 5% or more of the
Common Stock, or Affiliates or any individual related by blood, marriage or
adoption to any such individual or with any entity in which any such entity or
individual owns a 5% or more beneficial interest (each a "Related Party"),
-------------
except for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any agreement, transaction, commitment or arrangement on
an arms-length basis on terms no less favorable than terms which would have been
obtainable from a Person other than such Related Party, or (c) any agreement,
transaction, commitment or arrangement which is approved by a majority of the
disinterested directors of the Company. For purposes hereof, any director who
is also an officer of the Company or any Subsidiary of the Company shall not be
a disinterested director with respect to any such agreement, transaction,
commitment or arrangement. "Affiliate" for purposes of this section only means,
---------
with respect to any person or entity, another person or entity that, directly or
indirectly, (i) has a 5% or more equity interest in that person or entity, (ii)
has 5% or more common ownership with that person or entity, (iii) controls that
person or entity, or (iv) shares common control with that person or entity.
"Control" or "Controls" for purposes of this section means that a person or
------- --------
entity has the power, direct or indirect, to conduct or govern the policies of
another person or entity.
3.12 Transfer Agent Instructions. At the Primary Closing the Company shall
---------------------------
issue irrevocable instructions to its transfer agent (and shall issue to any
subsequent transfer agent as required), to issue certificates, registered in the
name of the Purchaser or its respective nominee(s), for the Warrant Shares
issuable pursuant to the A Warrant in such amounts as specified from time to
time by the Purchaser to the Company in a form acceptable to the Purchaser (the
"Primary Closing
---------------
19
<PAGE>
Irrevocable Transfer Agent Instructions"). At the Secondary Closing the Company
- ---------------------------------------
shall issue irrevocable instructions to its transfer agent (and shall issue to
any subsequent transfer agent as required), to issue certificates, registered in
the name of the Purchaser or its respective nominee(s), for the Warrant Shares
issuable pursuant to the B Warrant in such amounts as specified from time to
time by the Purchaser to the Company in a form acceptable to the Purchaser (the
"Secondary Closing Irrevocable Transfer Agent Instructions"). So long as
---------------------------------------------------------
required pursuant to Section 3.1(b), all such certificates shall bear the
restrictive legend specified in Section 3.1(b) of this Agreement. The Company
warrants that no instruction other than the Primary Closing Irrevocable Transfer
Agent Instructions and the Secondary Closing Irrevocable Transfer Agent
Instructions referred to in this Section 3.12, and stop transfer instructions to
give effect to Section 3.1 hereof (in the case of the Warrant Shares, prior to
registration of the Shares under the Securities Act) will be given by the
Company to its transfer agent and that the Shares, the A Warrant, the B Warrant
or the Warrant Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
Transaction Documents. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Purchaser by violating
the intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Section 3.12 will be inadequate and agrees, in the event of a beach
or threatened breach by the Company of the provisions of this Section 3.12, that
the Purchaser, shall be entitled, in addition to all other available remedies,
to an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.
3.13 Press Release; Filing of Form 8-K. Subject to the provisions of
---------------------------------
Section 6.10 hereof, prior to the opening of Nasdaq on October 21, 1999, the
Company and the Purchaser shall file a joint press release in form and substance
acceptable to the Company and the Purchaser.
3.14 Purchaser Transfer Agent Instructions. At the Primary Closing the
-------------------------------------
Purchaser shall issue irrevocable instructions to its transfer agent (and shall
issue to any subsequent transfer agent as required), to issue certificates,
registered in the name of the Company or its respective nominee(s), for the M
Shares issuable pursuant to the MA Warrant in such amounts as specified from
time to time by the Company to the Purchaser in a form acceptable to the Company
(the "Primary Closing Irrevocable Transfer Agent Instructions"). At the
-------------------------------------------------------
Secondary Closing the Purchaser shall issue irrevocable instructions to its
transfer agent (and shall issue to any subsequent transfer agent as required),
to issue certificates, registered in the name of the Company or its respective
nominee(s), for the M Shares issuable pursuant to the MB Warrant in such amounts
as specified from time to time by the Company to the Purchaser in a form
acceptable to the Company (the "Secondary Closing Irrevocable Transfer Agent
--------------------------------------------
Instructions"). So long as required pursuant to Section 3.15(b), all such
- ------------
certificates shall bear the restrictive legend specified in Section 3.15(b) of
this Agreement. The Purchaser warrants that no instruction other than the
Primary Closing Irrevocable Transfer Agent Instructions and the Secondary
Closing Irrevocable Transfer Agent Instructions referred to in this Section
3.14, and stop transfer instructions to give effect to Section 3.15 hereof (in
the case of the M Shares, prior to registration of the Shares under the
Securities Act) will be given by the Purchaser to its transfer agent and that
the M Shares, the MA Warrant or the MB Warrant shall otherwise be freely
transferable on the books and records of the Purchaser as and to the extent
provided in this Agreement and the Transaction Documents. The Purchaser
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Company by violating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Purchaser acknowledges that
the remedy at law for a breach of its obligations under this Section 3.14 will
be inadequate and agrees, in the
20
<PAGE>
event of a beach or threatened breach by the Purchaser of the provisions of this
Section 3.14, that the Company, shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
3.15 Purchaser Transfer Restrictions.
-------------------------------
a. If the Company should decide to dispose of the M Shares, the MA
Warrant or the MB Warrant held by it, the Company understands and agrees that it
may do so only pursuant to an effective registration statement under the
Securities Act, to the Company or pursuant to an available exemption from the
registration requirements of the Securities Act, including Rule 144 promulgated
under the Securities Act ("Rule 144"). In connection with any transfer of any M
--------
Shares, MA Warrant or MB Warrant other than pursuant to an effective
registration statement, Rule 144 or to the Purchaser, the Purchaser may require
the transferor thereof to provide to the Purchaser a written opinion of counsel
experienced in the area of United States securities laws selected by the
transferor, the form and substance of which opinion shall be customary for
opinions of counsel in comparable transactions, to the effect that such transfer
does not require registration of such transferred securities under the
Securities Act; provided, however, that if the M Shares, MA Warrant or MB
-------- -------
Warrant may be sold pursuant to Rule 144(k), no written opinion of counsel shall
be required from the Company if the Company provides reasonable assurances that
such security can be sold pursuant to Rule 144(k). Notwithstanding the
foregoing, the Purchaser hereby consents to and agrees to register any transfer
by the Company to an Affiliate of the Company, provided that the transferee
certifies to the Purchaser that it is an "accredited investor" as defined in
Rule 501(a) under the Securities Act. Any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a Company under this Agreement and the Transaction Documents. If the Company
provides the Purchaser with an opinion of counsel, the form and substance of
which opinion shall be customary for opinions of counsel in comparable
transactions, to the effect that a public sale, assignment or transfer of the M
Shares, MA Warrant and MB Warrant may be made without registration under the
Securities Act or the Purchaser provides the Company with reasonable assurances
that the M Shares, MA Warrant and the MB Warrant can be sold pursuant to Rule
144 without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Purchaser shall permit
the transfer, and, in the case of the M Shares, promptly instruct its transfer
agent to issue one or more certificates in such name and in such denominations
as specified by the Company and without any restrictive legend. Notwithstanding
the foregoing or anything else contained herein to the contrary, the securities
may be pledged as collateral in connection with a bona fide margin account or
---- ----
other lending arrangement.
b. The Company agrees to the imprinting by the Purchaser, so long as
is required by this Section 3.15(b), of the following legend on the M Shares,
the MA Warrant and the MB Warrant:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
21
<PAGE>
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
Neither the M Shares, the MA Warrant nor the MB Warrant shall be
required to contain the legend set forth above (or any other legend) (i) at any
time after transfer pursuant to a registration statement is effective under the
Securities Act covering such security, (ii) if in the written opinion of counsel
to the Purchaser of the Company experienced in the area of United States
securities laws such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission) or (iii) if such M Shares, the MA Warrant or the MB
Warrant are sold pursuant to Rule 144. When requested, which request will be
accompanied by the certificate representing such shares, the Purchaser agrees
that it will provide the Company with a certificate or certificates representing
the M Shares, the MA Warrant or the MB Warrant, free from such legend at such
time as such legend is no longer required hereunder. If such certificate or
certificates had previously been issued with such a legend or any other legend,
the Purchaser shall, upon request, receive such certificate or certificates free
of any legend.
3.16 Purchaser Stop Transfer Instruction. The Purchaser may not make any
-----------------------------------
notation on its records or give instructions to any transfer agent of the
Company which enlarge the restrictions on transfer set forth in Section 3.14.
3.17 Purchaser Furnishing of Information. Until the M Shares, the MA
-----------------------------------
Warrant or the MB Warrant have been sold pursuant to a registration statement
under the Securities Act or are eligible for sale pursuant to Rule 144(k), the
Purchaser will cause its M Shares to continue at all times to be registered
under Section 12(g) of the Exchange Act, will timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports
required to be filed by the Purchaser after the date hereof pursuant to Section
13, 14 or 15(d) of the Exchange Act and, unless filed by EDGAR, promptly
furnish, but in no event later than two (2) business days after the filing
thereof with the Commission, the Company with true and complete copies of all
such filings, and will not take any action or file any document (whether or not
permitted by the Exchange Act or the rules thereunder) to terminate or suspend
such reporting and filing obligations. Until the M Shares, the MA Warrant or
the MB Warrant have been sold pursuant to a registration statement under the
Securities Act or are eligible for sale pursuant to Rule 144(k), if the
Purchaser is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Company and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Purchaser further
covenants that it will take such further action as any holder of the M Shares,
the MA Warrant or the MB Warrant may reasonably request, all to the extent
required from time to time to enable such Person to sell the M Shares, the MA
Warrant or the MB Warrant without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including the legal opinion referenced above in Section 3.15(b).
3.18 Purchaser Blue Sky Laws. In accordance with the MTI Registration
-----------------------
Rights Agreement, the Purchaser shall (i) qualify the M Shares under the
securities or "blue sky" laws of such jurisdictions as the Company may request
(or to obtain an exemption from such qualification),
22
<PAGE>
(ii) shall provide evidence of any such action so taken to the Company on or
prior to the Primary Closing Date and (iii) shall continue such qualification at
all times through the resale of all M Shares, but in any event not past the
4/th/ anniversary of the Primary Closing Date.
3.19 Purchaser Listing and Reservation of M Shares.
---------------------------------------------
a. The Purchaser shall (i) not later than three (3) business days
after each Closing Date prepare and file with Nasdaq (as well as any other
national securities exchange or market on which the common stock is then listed)
an additional shares listing application or a letter acceptable to Nasdaq
covering and listing a number of shares of common stock which are issuable
pursuant to the Warrants issuable at such Closing which is at least equal to 1
times the maximum number of M Shares then issuable, (ii) take all steps
necessary to cause such shares of common stock to be approved for listing on
Nasdaq (as well as on any other national securities exchange or market on which
the Common Stock is then listed) as soon as possible thereafter, (iii) maintain,
so long as any other shares of common stock shall be so listed, such listing of
all such M Shares, and (iv) provide to the Company evidence of such listing.
Neither the Purchaser nor any of its Subsidiaries shall take any action which
may result in the delisting or suspension of the common stock on Nasdaq. The
Purchaser shall pay all fees and expenses in connection with satisfying its
obligations under this Section 3.19(a).
b. The Purchaser at all times shall reserve a sufficient number of
shares of its authorized but unissued common stock to provide for 1 times the
full exercise of the outstanding Warrants. If at any time the number of shares
of common stock authorized and reserved for issuance is insufficient to cover
100% of the number of Warrant Shares issued and issuable upon exercise of the
warrants (based on the Exercise Price (as defined in the Warrants) of the
Warrants in effect from time to time) without regard to any limitation on
conversions or exercises, the Purchaser will promptly take all corporate action
necessary to authorize and reserve 100% of such shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company's obligations under this Section 3.19(b), in the case
of an insufficient number of authorized shares, and using its best efforts to
obtain stockholder approval of an increase in such authorized number of shares.
3.20 Ordinary Course Brokerage and Trading. The Purchaser represents and
-------------------------------------
agrees that neither Purchaser, nor any person that is required by internal
policy to pre-clear securities transactions with the Purchaser will, enter into
any short sales of the Company's common stock, except in connection with an
intended sale of common stock, and in such event, only to the extent covered
within seven (7) Trading Days of such short sale. In addition, the Purchaser
represents and agrees on behalf of itself and each of the persons identified in
the preceding sentence that it will not establish a short position or sell any
of the Shares during (i) the twenty (20) Trading Day period prior to the one (1)
year anniversary of the Primary Closing Date or (ii) the seventy five (75)
Trading Days ending on August 28, 2003 and 2006.
23
<PAGE>
ARTICLE IV.
CONDITIONS
4.1 Primary Closing Conditions.
--------------------------
a. Conditions Precedent to the Obligation of the Company to Sell.
-------------------------------------------------------------
The obligation of the Company to sell the Shares, the A Warrant, the B Warrant
or the Warrant Shares hereunder is subject to the satisfaction or waiver (with
prior written notice to the Purchaser) by the Company, at or before the Primary
Closing, of each of the following conditions:
(1) Accuracy of the Purchaser's Representations and Warranties.
----------------------------------------------------------
The representations and warranties of the Purchaser in this Agreement shall be
true and correct in all material respects as of the date when made (except for
representations and warranties that speak as of a specific date) and as of the
Closing Date;
(2) Performance by the Purchaser. The Purchaser shall have
----------------------------
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Purchaser at or prior to the Primary Closing; and
(3) No Injunction. No statute, rule, regulation, executive order,
-------------
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Transaction Documents.
(4) Shares of Common Stock. The Purchaser shall have duly
----------------------
reserved the number of M Shares required by this Agreement and the Transaction
Documents to be reserved for issuance upon exercise of the MA Warrant;
(5) Transfer Agent Instructions. The Primary Closing Irrevocable
---------------------------
Transfer Agent Instructions, in a form acceptable to the Company, shall have
been delivered to and acknowledged in writing by the Purchaser's transfer agent
with a copy forwarded to each Company;
(6) Resolutions. The Board of Directors of the Purchaser shall
-----------
have adopted resolutions consistent with Section 2.1(b) and in a form reasonably
acceptable to the Company (the "Resolutions");
-----------
(7) Litigation. No litigation shall have been instituted or
----------
threatened against the Purchaser which could reasonably be expected to,
individually or in the aggregate, have an MTI Material Adverse Effect; and
(8) Adverse Changes. Since the date of the financial statements
---------------
included in the Purchaser's Quarterly Report on Form 10-Q or Annual Report on
Form 10-K, whichever is most recent, last filed prior to the date of this
Agreement, no event which had a Material Adverse Effect shall have occurred
which is not disclosed in the Schedules hereto (for purposes hereof, changes in
the market price of the Common Stock may be considered in determining whether
there has occurred an event which has had an MTI Material Adverse Effect).
24
<PAGE>
b. Conditions Precedent to the Obligation of the Purchaser to
----------------------------------------------------------
Purchase. The obligation of the Purchaser hereunder to acquire and pay for the
- --------
Primary Closing Shares and the A Warrant is subject to the satisfaction or
waiver (with prior written notice to the Company) by the Purchaser, at or before
the Primary Closing, of each of the following conditions:
(1) Accuracy of the Company's Representations and Warranties. The
--------------------------------------------------------
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all respects as of the date when made and as of the
Primary Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date);
(2) Performance by the Company. The Company shall have performed,
--------------------------
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Primary Closing;
(3) No Injunction. No statute, rule, regulation, executive order,
-------------
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement and the Transaction Documents;
(4) No Suspensions of Trading in Common Stock. The trading in the
-----------------------------------------
Common Stock shall not have been suspended by the Commission or on Nasdaq
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company);
(5) Listing of Common Stock. The Common Stock shall have been at
-----------------------
all times since the date hereof, and on the Primary Closing Date shall be,
listed for trading on Nasdaq;
(6) Required Approvals. All Required Approvals shall have been
------------------
obtained and copies thereof delivered to the Purchaser;
(7) Shares of Common Stock. The Company shall have duly reserved
----------------------
the number of Warrant Shares required by this Agreement and the Transaction
Documents to be reserved for issuance upon exercise of the A Warrant;
(8) Change of Control. No Change of Control shall have occurred
-----------------
between the date hereof and the Closing Date. "Change of Control" means the
-----------------
occurrence of any of (i) an acquisition after the date hereof by an individual
or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated under
the Exchange Act), other than the Purchaser or any of their Affiliates, of in
excess of 40% of the voting securities of the Company, (ii) a replacement of
more than one-half of the members of the Company's Board of Directors which is
not approved by those individuals who are members of the Board of Directors on
the date hereof in one or a series of related transactions, (iii) the merger of
the Company with or into another entity, consolidation or sale of all or
substantially all of the assets of the Company in one or a series of related
transactions, or (v) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in (i), (ii) , (iii), (iv) or (v);
25
<PAGE>
(9) Transfer Agent Instructions. The Primary Closing Irrevocable
---------------------------
Transfer Agent Instructions, in a form acceptable to the Purchaser, shall have
been delivered to and acknowledged in writing by the Company's transfer agent
with a copy forwarded to each Purchaser;
(10) Resolutions. The Board of Directors of the Company shall
-----------
have adopted resolutions consistent with Section 2.1(b) and in a form reasonably
acceptable to the Purchaser (the "Resolutions");
-----------
(11) Litigation. No litigation shall have been instituted or
----------
threatened against the Company which could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect; and
(12) Adverse Changes. Since the date of the financial statements
---------------
included in the Company's Quarterly Report on Form 10-Q or Annual Report on Form
10-K, whichever is most recent, last filed prior to the date of this Agreement,
no event which had a Material Adverse Effect shall have occurred which is not
disclosed in the Schedules hereto (for purposes hereof, changes in the market
price of the Common Stock may be considered in determining whether there has
occurred an event which has had a Material Adverse Effect).
c. Documents and Certificates. At the Primary Closing, the Company
--------------------------
shall have delivered to the Purchaser the following in form and substance
reasonably satisfactory to the Purchaser:
(1) Opinion. An opinion of the Company's legal counsel in the
-------
form attached hereto as Exhibit D dated as of the Primary Closing Date;
---------
(2) Common Stock Certificate. A Common Stock Certificate(s)
------------------------
representing the Primary Closing Shares, registered in the name of the
Purchaser, in form satisfactory to the Purchaser;
(3) Warrant. A warrant representing the A Warrant purchased by
-------
the Purchaser, registered in the name of the Purchaser;
(4) Registration Rights. The Company shall have executed and
-------------------
delivered the SatCon Registration Rights Agreement;
(5) Officer's Certificate. An Officer's Certificate dated the
---------------------
Primary Closing Date and signed by an executive officer of the Company
confirming the accuracy of the Company's representations, warranties and
covenants as of the Primary Closing Date and confirming the compliance by the
Company with the conditions precedent set forth in this Section 4.1 as of the
Primary Closing Date;
(6) Secretary's Certificate. A Secretary's Certificate dated the
-----------------------
Primary Closing Date and signed by the Secretary or Assistant Secretary of the
Company certifying (A) that attached thereto is a true and complete copy of the
Certificate of Incorporation of the Company, as in effect on the Closing Date,
(B) that attached thereto is a true and complete copy of the by-laws of the
Company, as in effect on the Closing Date and (C) that attached thereto is a
true and complete copy of the Resolutions duly adopted by the Board of Directors
of the Company authorizing the execution,
26
<PAGE>
delivery and performance of this Agreement and of the Transaction Documents, and
that such Resolutions have not been modified, rescinded or revoked;
(7) Certificates of Incorporation. The Company shall have
-----------------------------
delivered to the Purchaser a copy of a certificate evidencing the incorporation
and good standing of the Company and each Subsidiary, in such corporation's
state of incorporation issued by the Secretary of State of such state of
incorporation as of a date within ten days of the Primary Closing Date. The
Company shall have delivered to the Purchaser a copy of its Certificate of
Incorporation as certified by the Secretary of State of the State of Delaware
within ten days of the Primary Closing Date;
(8) Transfer Agent Letter. The Company shall have delivered to
---------------------
the Purchaser a letter from the Company's transfer agent certifying the number
of shares of Common Stock outstanding as of a date within five days of the
Primary Closing Date; and
(9) Other Documents. The Company shall have delivered to each
---------------
Purchaser such other documents relating to the transactions contemplated by the
Transaction Documents as the Purchaser or its counsel may reasonably request.
d. Purchaser Documents and Certificates. At the Primary Closing,
------------------------------------
the Purchaser shall have delivered to the Company the following in form and
substance reasonably satisfactory to the Company:
(1) Cash Payment. The Purchaser shall deliver, as directed by the
------------
Company, two million, five hundred seventy thousand dollars ($2,570,000) in
United States dollars in immediately available funds to an account or accounts
designated in writing by the Company;
(2) Warrant. A warrant representing the MA Warrant purchased by
-------
the Company, registered in the name of the Company;
(3) Registration Rights. The Purchaser shall have executed and
-------------------
delivered the MTI Registration Rights Agreement; and
(4) Officer's Certificate. An Officer's Certificate dated the
---------------------
Primary Closing Date and signed by an executive officer of the Purchaser
confirming the accuracy of the Purchaser's representations, warranties and
covenants as of the Primary Closing Date and confirming the compliance by the
Purchaser with the conditions precedent set forth in this Section 4.1 as of the
Primary Closing Date;
4.2 Secondary Closing Conditions.
----------------------------
a. Conditions Precedent to the Obligation of the Company to Sell.
-------------------------------------------------------------
The obligation of the Company to sell the Secondary Closing Shares and the B
Warrant hereunder is subject to the satisfaction or waiver (with prior written
notice to the Purchaser) by the Company, at or before the Secondary Closing, of
each of the following conditions:
(1) Accuracy of the Purchaser's Representations and Warranties.
----------------------------------------------------------
The representations and warranties of the Purchaser in this Agreement shall be
true and correct in all material respects as of the date when made (except for
representations and warranties that speak as of a specific date) and as of the
Secondary Closing Date;
27
<PAGE>
(2) Performance by the Purchaser. The Purchaser shall have
----------------------------
performed, satisfied and complied in all material respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Purchaser at or prior to the Secondary Closing; and
(3) No Injunction. No statute, rule, regulation, executive order,
-------------
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement or the Transaction Documents.
(4) Shares of Common Stock. The Purchaser shall have duly
----------------------
reserved the number of M Shares required by this Agreement and the Transaction
Documents to be reserved for issuance upon exercise of the MB Warrant;
(5) Transfer Agent Instructions. The Secondary Closing
---------------------------
Irrevocable Transfer Agent Instructions, in a form acceptable to the Company,
shall have been delivered to and acknowledged in writing by the Purchaser's
transfer agent with a copy forwarded to each Company;
(6) Resolutions. The Board of Directors of the Purchaser shall
-----------
have adopted resolutions consistent with Section 2.2(b) and in a form reasonably
acceptable to the Company (the "Resolutions");
(7) Litigation. No litigation shall have been instituted or
----------
threatened against the Purchaser which could reasonably be expected to,
individually or in the aggregate, have an MTI Material Adverse Effect; and
(8) Adverse Changes. Since the date of the financial statements
---------------
included in the Purchaser's Quarterly Report on Form 10-Q or Annual Report on
Form 10-K, whichever is most recent, last filed prior to the date of this
Agreement, no event which had a Material Adverse Effect shall have occurred
which is not disclosed in the Schedules hereto (for purposes hereof, changes in
the market price of the Common Stock may be considered in determining whether
there has occurred an event which has had an MTI Material Adverse Effect).
b. Conditions Precedent to the Obligation of the Purchaser to
----------------------------------------------------------
Purchase. The obligation of the Purchaser hereunder to acquire and pay for the
- --------
Secondary Closing Shares and the B Warrant at the Secondary Closing is subject
to the satisfaction or waiver (with prior written notice to the Company) by the
Purchaser, as of the date of the Secondary Closing, of each of the following
conditions:
(1) Accuracy of the Company's Representations and Warranties. The
--------------------------------------------------------
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects as of the date when made and as of
the Secondary Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date);
(2) Performance by the Company. The Company shall have performed,
--------------------------
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Secondary Closing;
28
<PAGE>
(3) No Injunction. No statute, rule, regulation, executive
-------------
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement and the Transaction Documents;
(4) No Suspensions of Trading in Common Stock. The trading in
-----------------------------------------
the Common Stock shall not have been suspended by the Commission or on Nasdaq
(except for any suspension of trading of limited duration solely to permit
dissemination of material information regarding the Company);
(5) Listing of Common Stock. The Common Stock shall have been at
-----------------------
all times since the date hereof, and on the Secondary Closing Date shall be,
listed for trading on Nasdaq;
(6) Required Approvals. All Required Approvals shall have been
------------------
obtained and copies thereof delivered to such Purchaser;
(7) Shares of Common Stock. The Company shall have duly reserved
----------------------
the number of Warrant Shares required by this Agreement and the Transaction
Documents to be reserved for issuance upon exercise of the Warrants;
(8) Change of Control. No Change of Control shall have occurred
-----------------
between the date hereof and the Secondary Closing Date. "Change of Control"
means the occurrence of any of (i) an acquisition after the date hereof by an
individual or legal entity or "group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act), other than the Purchasers or any of their
Affiliates, of in excess of 40% of the voting securities of the Company, (ii) a
replacement of more than one-half of the members of the Company's Board of
Directors which is not approved by those individuals who are members of the
Board of Directors on the date hereof in one or a series of related
transactions, (iii) the merger of the Company with or into another entity,
consolidation or sale of all or substantially all of the assets of the Company
in one or a series of related transactions, or (v) the execution by the Company
of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii) , (iii), (iv) or
(v);
(9) Transfer Agent Instructions. The Irrevocable Transfer Agent
---------------------------
Instructions, in a form acceptable to the Purchaser, shall have been delivered
to and acknowledged in writing by the Company's transfer agent with a copy
forwarded to the Purchaser;
(10) Litigation. No litigation shall have been instituted or
----------
threatened against the Company which could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect; and
(11) Adverse Changes. Since the date of the Primary Closing, no
---------------
event which had a Material Adverse Effect shall have occurred which is not
disclosed in the Schedules hereto (for purposes hereof, changes in the market
price of the Common Stock may be considered in determining whether there has
occurred an event which has had a Material Adverse Effect but shall not
themselves constitute a Material Adverse Effect).
c. Documents and Certificates. At the Secondary Closing, the Company
--------------------------
shall have delivered to the Purchaser the following in form and substance
reasonably satisfactory to the Purchaser:
29
<PAGE>
(1) Stock Certificate. A Stock Certificate representing the
-----------------
Secondary Closing Shares, registered in the name of the Purchaser, in form
satisfactory to the Purchaser;
(2) Warrant. A warrant representing the B Warrant purchased by
-------
the Purchaser, registered in the name of the Purchaser;
(3) Officer's Certificate. An Officer's Certificate dated the
---------------------
Secondary Closing Date and signed by an executive officer of the Company
confirming the accuracy of the Company's representations, warranties and
covenants as of the Secondary Closing Date and confirming the compliance by the
Company with the Milestones and the conditions precedent set forth in this
Section 4.1 as of the Secondary Closing Date;
(4) Certificates of Incorporation. The Company shall have
-----------------------------
delivered to each of the Purchasers a copy of a certificate evidencing the
incorporation and good standing of the Company and each Subsidiary, in such
corporation's state of incorporation issued by the Secretary of State of such
state of incorporation as of a date within ten days of the Secondary Closing
Date. The Company shall have delivered to the Purchaser a copy of its
Certificate of Incorporation as certified by the Secretary of State of the State
of Delaware within ten days of the Secondary Closing Date; and
(5) Other Documents. The Company shall have delivered to the
---------------
Purchaser such other documents relating to the transactions contemplated by the
Transaction Documents as the Purchaser or its counsel may reasonably request.
d. Purchaser Documents and Certificates. At the Secondary Closing,
------------------------------------
the Purchaser shall have delivered to the Company the following in form and
substance reasonably satisfactory to the Company:
(1) Cash Payment. The Purchaser shall deliver, as directed by the
------------
Company, four million, five hundred thousand dollars ($4,500,000) in United
States dollars in immediately available funds to an account or accounts
designated in writing by the Company;
(2) Warrant. A warrant representing the MB Warrant purchased by
-------
the Company, registered in the name of the Company;
(3) Officer's Certificate. An Officer's Certificate dated the
---------------------
Secondary Closing Date and signed by an executive officer of the Purchaser
confirming the accuracy of the Purchaser's representations, warranties and
covenants as of the Secondary Closing Date and confirming the compliance by the
Purchaser with the conditions precedent set forth in this Section 4.2 as of the
Secondary Closing Date;
ARTICLE V.
INDEMNIFICATION
5.1 Indemnification. In addition to all of the Company's other
---------------
obligations under this Agreement and the Transaction Documents, the Company
shall defend, protect, indemnify and hold harmless the Purchaser, its past and
present Affiliates and their successors and assigns (in accordance with the
provisions of Section 6.5 hereof), each other holder of the Warrant Shares and
all of their
30
<PAGE>
stockholders, officers, directors, employees and direct or indirect investors
and any of the foregoing Person's agents or other representatives (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Indemnitees") from and
-----------
against any and all actions, causes of action, suits, claims, losses,
proceedings, costs (as incurred), penalties, fees (including legal fees and
expenses), liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnity is a party to the action for which
indemnification hereunder is sought), and including interest, penalties and
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
-----------------------
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in this Agreement or in the Transaction Documents, or any other
certificate, instrument or document contemplated hereby or thereby or (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement or the Transaction Documents, or any other certificate, instrument or
document contemplated hereby or thereby. The indemnification obligations of the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any affiliate of the Purchaser and officers, directors, agents, employees and
controlling Persons (if any), as the case may be, of the Purchaser and any such
affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchaser and
any such affiliate and any such Person. The Company also agrees that neither the
Purchaser nor any such Affiliates, officers, directors, agents, employees or
controlling Persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company in connection with or
as a result of the consummation of this Agreement or any of the Transaction
Documents except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Company result from the gross negligence or willful
misconduct of the Purchaser or entity in connection with the transactions
contemplated by this Agreement or the Transaction Documents. To the extent that
the foregoing undertaking by the Company may be unenforceable for any reason,
the Company shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law.
5.2 Purchaser Indemnification. In addition to all of the Purchaser's other
-------------------------
obligations under this Agreement and the Transaction Documents, the Purchaser
shall defend, protect, indemnify and hold harmless the Company, its past and
present Affiliates and their successors and assigns (in accordance with the
provisions of Section 6.5 hereof), each other holder of the M Shares and all of
their stockholders, officers, directors, employees and direct or indirect
investors and any of the foregoing Person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
-----------
from and against any and all actions, causes of action, suits, claims, losses,
proceedings, costs (as incurred), penalties, fees (including legal fees and
expenses), liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnity is a party to the action for which
indemnification hereunder is sought), and including interest, penalties and
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
-----------------------
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Purchaser in this Agreement or in the Transaction Documents, or any other
certificate, instrument or document contemplated hereby or thereby or (b) any
breach of any covenant, agreement or obligation of the Purchaser contained in
this Agreement or the Transaction Documents, or any other certificate,
instrument or document contemplated hereby or thereby. The indemnification
obligations of the Purchaser under this paragraph shall be in addition to any
liability which the Purchaser may otherwise have, shall extend upon the same
terms and conditions to any affiliate of the Company and officers, directors,
agents, employees and controlling Persons (if any), as the case may be, of the
31
<PAGE>
Company and any such affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Purchaser, the Company and any such affiliate and any such Person. The Purchaser
also agrees that neither the Company nor any such Affiliates, officers,
directors, agents, employees or controlling Persons shall have any liability to
the Purchaser or any Person asserting claims on behalf of or in right of the
Purchaser in connection with or as a result of the consummation of this
Agreement or any of the Transaction Documents except to the extent that any
losses, claims, damages, liabilities or expenses incurred by the Purchaser
result from the gross negligence or willful misconduct of the Company or entity
in connection with the transactions contemplated by this Agreement or the
Transaction Documents. To the extent that the foregoing undertaking by the
Purchaser may be unenforceable for any reason, the Purchaser shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
5.3 Procedures.
----------
a. If a third party shall notify an indemnified party (the
"Indemnified Party") with respect to any matter that may give rise to a claim
for indemnification under the indemnity set forth above in Sections 5.1 and 5.2,
the procedure set forth below shall be followed.
(1) 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.
(2) 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 indemnify
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
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
32
<PAGE>
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.
(3) 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.
ARTICLE VI.
MISCELLANEOUS
6.1 Entire Agreement. This Agreement, together with the Exhibits and
----------------
Schedules hereto and the Transaction Documents contain the entire understanding
of the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters.
6.2 Notices. Any notices, consents, waivers or other communications
-------
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile, provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party (if received by 7:00 p.m. EST where such
notice is received) or the first business day following such delivery (if
received after 7:00 p.m. EST where such notice is received); or (iii) one
business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
SatCon Technology Corporation
161 First Street
Cambridge, MA 02142-1221
Telephone: (617)
Facsimile: (617) 576-7455
Attention: President and Chief Executive Officer
With a copy to:
Hale & Dorr LLP
60 State Street
33
<PAGE>
Boston, MA 02109
Telephone: (617) 526-6468
Facsimile: (617) 526-5000
Attention: Jeffrey N. Carp, Esq.
If to Mechanical Technology Incorporated:
968 Albany-Shaker Road
Latham, New York 12110
Telephone: (518) 785-2211
Facsimile: (518) 785-2127
Attention: Cynthia A. Scheuer, Chief Financial Officer
With a copy, in the case of Notice to Mechanical Technology
Incorporated, to:
Catherine S. Hill, PLLC
4 Global View
Troy, New York 12180
Telephone: (518) 285-7586
Facsimile: (518) 285-7564
Attention: Catherine S. Hill
Each party shall provide written notice to the other party of any change in
address or facsimile number in accordance with the provisions hereof.
6.3 Amendments; Waivers. No provision of this Agreement may be waived or
-------------------
amended except in a written instrument signed, in the case of an amendment, by
both the Company and each of the Purchaser or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.
6.4 Headings. The headings herein are for convenience only, do not
--------
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
6.5 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties and their successors and permitted assigns.
Neither the Company nor the Purchaser may assign this Agreement or any rights or
obligations hereunder without the prior written consent of each of the other
party hereto. This provision shall not limit either the Purchaser's right or
the Company's right to transfer securities in accordance with all of the terms
of this Agreement or the Transaction Documents.
6.6 No Third-Party Beneficiaries. This Agreement is intended for the
----------------------------
benefit of the parties hereto and their respective permitted successors and
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
6.7 Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the internal laws of the State of New York without
regard to the principles of
34
<PAGE>
conflicts of law thereof. Each party hereby irrevocably submits to the
nonexclusive jurisdiction of the federal courts sitting in the City of Albany,
County of Albany or if diversity jurisdiction cannot be obtained, then in the
state courts sitting in the City of Albany, County of Albany for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
6.8 Survival. The representations and warranties of the Company and the
--------
Purchaser contained in Sections 2.1 and 2.2, the agreements and covenants set
forth in Section 3, and the indemnification provisions set forth in Section 5,
shall survive the Closing and any exercise of the A Warrant, the B Warrant and
the M Warrant regardless of any investigation made by or on behalf of the
Purchaser or by or on behalf of the Company, except that, in the case of
representations, warranties and indemnities such survival shall be limited to
the period of 18 months following the Closing Date on which they were made or
deemed to have been made, except for representations in 2.1(a), 2.1(b), 2.1(d),
2.1(i) and 2.1(v) which shall survive for the applicable statute of limitations
and 2.1(j) which shall survive for the period of two (2) years. This section
shall have no effect on the survival of the indemnification provisions of the
Registration Rights Agreement.
6.9 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
6.10 Publicity. The Company and the Purchaser shall consult with each other
---------
in issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby and neither party shall issue any such
press release or otherwise make any such public statement without the prior
written consent of the other, which consent shall not be unreasonably withheld
or delayed, except that no prior consent shall be required if such disclosure is
required by law, in which such case the disclosing party shall provide the other
party with prior notice of such public statement. The Company shall not
publicly or otherwise disclose the names of the Purchaser without the
Purchaser's prior written consent. Subject to the Company's review and
approval, the Purchaser and its affiliated companies shall, without further
cost, have the right to use in its advertising, marketing or other similar
materials, the Company's logo and trademarks and all or parts of the Company's
press releases that focus on the Transaction forming the subject matter of this
Agreement or which make reference to the Transaction; provided, however, that
Company approval is not required with regard to formal newspaper announcements
of transactions or "tombstones." The Purchaser understands that this grant by
the Company only waives objections that the Company
35
<PAGE>
might have to the use of such materials by the Purchaser and in no way
constitutes a representation by the Company that references in such materials to
the activities of third-parties have been cleared or constitute a fair use.
6.11 Severability. In case any one or more of the provisions of this
------------
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
6.12 Remedies. In addition to being entitled to exercise all rights
--------
provided herein or granted by law, including recovery of damages, the Purchaser
will be entitled to specific performance of the obligations of the Company under
this Agreement or the Transaction Documents without the showing of economic loss
and without any bond or other security being required. The Company and the
Purchaser (severally and not jointly) agree that monetary damages would not be
adequate compensation for any loss incurred by reason of any breach of its
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate.
6.13 Further Assurances. Each party shall do and perform, or cause to be
------------------
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
6.14 Fees and Expenses. Except as set forth in the Registration Rights
-----------------
Agreement, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Warrant Shares pursuant
hereto.
[SIGNATURE PAGE TO FOLLOW]
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
-----------------------
Name: David B. Eisenhaure
Title: President
MECHANICAL TECHNOLOGY INCORPORATED
By: /s/ Cynthia A. Scheuer
-----------------------
Name: Cynthia A., Scheuer
Title: Vice President and CFO
37
<PAGE>
EXHIBIT A
Form of SatCon Warrant
38
<PAGE>
EXHIBIT B
Form of MTI Warrant
39
<PAGE>
EXHIBIT C
Form of SatCon Registration Rights Agreement
40
<PAGE>
EXHIBIT D
Form of MTI Registration Rights Agreement
41
<PAGE>
Exhibit 10.29
SATCON REGISTRATION RIGHTS AGREEMENT
------------------------------------
This SatCon Registration Rights Agreement (this "Agreement") is made
---------
and entered into as of October 21, 1999, between SatCon Technology Corporation,
a Delaware corporation (the "Company"), and Mechanical Technology Incorporated,
--------
a New York corporation (the "Purchaser").
---------
This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof among the Company and the Purchasers (the "Purchase
--------
Agreement").
- ---------
The Company and the Purchasers hereby agree as follows:
1. Definitions
-----------
Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Advice" has meaning set forth in Section 3(m) hereof.
------
"Affiliate" means, with respect to any Person, any other Person that
---------
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
-------
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," controlling" and "controlled" have meanings
---------- ----------- ----------
correlative to the foregoing.
"Aggregate Price" has the meaning set forth in Section 2(d) hereof.
---------------
"AMEX" shall mean the American Stock Exchange.
----
"Business Day" means any day except Saturday, Sunday and any day which
------------
shall be a legal holiday or a day on which banking institutions in the State of
New York generally are authorized or required by law or other government actions
to close.
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" means the Company's Common Stock, par value $0.01 per
------------
share.
<PAGE>
"Effectiveness Date" means the earlier of the 180th day following the
------------------
(i) Primary Closing Date (with respect to the Common Stock and Underlying
Securities issuable upon the exercise of the Warrants issued on the Primary
Closing Date), (ii) Secondary Closing Date (with respect to the Common Stock and
Underlying Securities issuable upon the exercise of the Warrant issued on the
Secondary Closing Date or (iii) the fifth day after the Company has received
notice (written or oral) from the Commission that the Commission Staff will not
be reviewing the applicable Registration Statement or has no further comments on
the applicable Registration Statement.
"Effectiveness Period" has the meaning set forth in Section 2(a)
--------------------
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Event" has the meaning set forth in Section 2(d) hereof.
-----
"Filing Date" means as soon as practicable but in no event later than
-----------
the 90th day following the Primary Closing Date or the Secondary Closing Date,
as applicable.
"Holder" or "Holders" means the holder or holders, as the case may be,
------
from time to time of Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 5(c) hereof.
-----------------
"Indemnifying Party" has the meaning set forth in Section 5(c) hereof.
------------------
"Initial Registration Statement" has the meaning set forth in Section
------------------------------
2(a) hereof.
"Losses" has the meaning set forth in Section 5(a) hereof.
------
"Nasdaq" shall mean the Nasdaq Stock Market.
------
"NYSE" shall mean the New York Stock Exchange.
----
"Person" means an individual or a corporation, partnership, trust,
------
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Primary Closing Date" shall mean the Primary Closing Date as defined
--------------------
in the Purchase Agreement.
"Proceeding" means an action, claim, suit, investigation or proceeding
----------
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
----------
Statement (including, without limitation, a prospectus that includes any
information previously omitted
2
<PAGE>
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
"Registrable Securities" means the shares of Common Stock issued or
----------------------
issuable upon exercise of the Warrants, and any shares of the Company's capital
stock issued as a result of any stock split, stock dividend, recapitalization,
exchange or similar event; provided, that Registrable Securities shall not
include any such shares that are eligible for sale under Rule 144(k).
"Registration Statement" means the Initial Registration Statement and
----------------------
any additional registration statements contemplated by Sections 2(a) and 7(d),
including (in each case) the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference in
such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
--------
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to
--------
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
--------
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Secondary Closing Date" shall have the meaning set forth in the
----------------------
Purchase Agreement.
"Securities" means the Company's Common Stock issuable pursuant to the
----------
Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Special Counsel" means one special counsel to the Holders, for which
the Holders will be reimbursed by the Company to the extent provided in Section
4.
"Trading Day" means a day on which the Nasdaq (or in the event the
-----------
Common Stock is not traded on Nasdaq, such other securities market on which the
Common Stock is listed) is open for trading.
3
<PAGE>
"Underlying Shares" means the shares of Common Stock issuable upon
-----------------
exercise of the Warrants.
"Underwritten Registration or Underwritten Offering" means a
--------------------------------------------------
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective registration
statement.
"Warrants" means the warrants issuable pursuant to the Purchase
--------
Agreement.
2. Registration Requirements
-------------------------
(a) Filing and Effectiveness Obligations. On or prior to the Filing
------------------------------------
Date relating to each of the Primary Closing Date and the Secondary Closing
Date, the Company shall prepare and file with the Commission a Registration
Statement (the "Initial Registration Statement") which shall cover all
------------------------------
Registrable Securities issued to the Purchaser on such closing date for an
offering to be made on a continuous basis pursuant to a "Shelf" registration
statement under Rule 415. The Initial Registration Statement shall be on Form S-
3 or any successor form (except if the Company is not then eligible to register
for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith,
subject to the reasonable consent of the original Holders of the Registrable
Securities). The Company shall (i) not permit any securities other than the
Registrable Securities and securities with respect to which there are
outstanding demand or "piggy-back" registration rights as of the date of filing
of each Initial Registration Statement to be included in the Initial
Registration Statement and (ii) use commercially reasonable efforts to cause the
Initial Registration Statement to be declared effective under the Securities Act
as promptly as possible after the filing thereof, and prior to the Effectiveness
Date, and, except as provided herein, to keep such Initial Registration
Statement continuously effective under the Securities Act until the date which
is two years after the date that such Initial Registration Statement is declared
effective by the Commission or such earlier date when all Registrable Securities
covered by such Initial Registration Statement have been sold or may be sold
without volume restrictions pursuant to Rule 144 as determined by counsel to the
Company pursuant to a written opinion letter, addressed to the Holders and the
Company's transfer agent to such effect (the "Effectiveness Period"). The number
--------------------
of shares of Common Stock initially included in the Initial Registration
Statement with respect to each closing shall be the sum of the number of
Securities and shares of Common Stock that are then issuable upon the exercise
of the Warrants which were issued by the Company at such closing, without regard
to any limitation on the Investor's ability to exercise the Warrants. If at any
time the number of shares of Common Stock issuable pursuant to the Warrant is
adjusted in accordance with the terms thereof, and more shares are issuable
pursuant to the Warrants than remain available for sale pursuant to the Initial
Registration Statement, the Company shall immediately, but in no more than five
(5) Business Days, file a Registration Statement sufficient to register such
additional shares of Common Stock.
(b) Form S-3 Eligibility. The Company represents and warrants that
--------------------
it currently meets the registrant eligibility and transaction requirements for
the use of Form S-3 (for primary and secondary offerings) for the registration
of the sale of Registrable Securities by the Purchasers and any other Holders
and the Company shall file all reports required to be filed by
4
<PAGE>
the Company with the Commission in a timely manner so as to maintain such
eligibility for the use of Form S-3.
3. Registration Procedures
-----------------------
In connection with the Company's registration obligations hereunder
arising out of the Primary Closing Date transactions and the Secondary Closing
Date transactions (but specifically excluding the Company's obligations under
Section 7(c) hereof which shall be governed by Section 7(c) of the Brown Simpson
Agreement, the Company shall:
(a) Preparation of Registration Statement. Prepare and file with the
-------------------------------------
Commission on or prior to each Filing Date a Registration Statement on Form S-3
or its successor form (or if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3 such registration shall be on
another appropriate form in accordance herewith (which shall include a Plan of
Distribution substantially in the form of Exhibit A annexed hereto.
---------
(b) Amendments. (i) Prepare and file with the Commission such
----------
amendments, including post-effective amendments, to the Registration Statement
as may be necessary to keep the Registration Statement continuously effective
for the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424 (or any
similar provisions then in force) promulgated under the Securities Act; (iii)
respond as promptly as possible to any comments received from the Commission
with respect to the Registration Statement or any amendment thereto and as
promptly as possible provide the Holders true and complete copies of all
correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) Notifications. Notify the Holders of Registrable Securities to
-------------
be sold, as promptly as possible (and, in the case of (i)(A) below, not less
than five (5) days prior to such filing and, in the case of (i)(C) below, not
later than the first Business Day after effectiveness) and (if requested by any
such Person) confirm such notice in writing no later than one (1) Business Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or post-
effective amendment to the Registration Statement is proposed to be filed; (B)
when the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement and (C) with respect to the Registration Statement
or any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
5
<PAGE>
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (vi) of the occurrence of
any event that makes any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit 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 were made, not misleading.
(d) Suspensions. Use its reasonable efforts to avoid the issuance
-----------
of, or, if issued, obtain the withdrawal of (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.
(e) Supplements and Post-Effective Amendments. If requested by any
-----------------------------------------
managing underwriter or the Holders of a majority in interest of the Registrable
Securities to be sold in connection with an Underwritten Offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
-------- -------
Company shall not be required to take any action pursuant to this Section 3(e)
that would, in the opinion of counsel for the Company, violate applicable law or
if the Holders of a majority of the Registrable Securities consent to the delay
in taking, or the failure to take, any such action, which consent shall not be
unreasonably withheld.
(f) Copies of Registration Statement. Furnish to each Holder,
--------------------------------
without charge, at least one conformed copy of each Registration Statement and
each amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(g) Copies of Prospectus. Promptly deliver to each Holder, without
--------------------
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders and any underwriters in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
6
<PAGE>
(h) Blue Sky. Prior to any public offering of Registrable
--------
Securities, use commercially reasonable efforts to register or qualify or
cooperate with the selling Holders, in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder or underwriter
requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period and to do any and
all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required to qualify
-------- -------
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.
(i) Certificates. Cooperate with the Holder to facilitate the timely
------------
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates shall be free,
to the extent permitted by applicable law and the Purchase Agreement, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such managing underwriters or
Holders may request at least two (2) Business Days prior to any sale of
Registrable Securities.
(j) Supplements and Amendments. Upon the occurrence of any event
--------------------------
contemplated by Section 3(c)(vi), as promptly as possible, prepare a supplement
or amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration Statement
nor such Prospectus will 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.
(k) Listing. Cause all Registrable Securities relating to each
-------
Registration Statement to be listed on Nasdaq and any other securities exchange,
quotation system, market or over-the-counter bulletin board, if any, on which
similar securities issued by the Company are then listed as and when required
pursuant to the Purchase Agreement.
(l) Earnings Statement. Comply in all material respects with all
------------------
applicable rules and regulations of the Commission and make generally available
to its securityholders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 not later than 45 days after the end of
any 12-month period (or 90 days after the end of any 12-month period if such
period is a fiscal year), commencing on the first day of the first fiscal
quarter of the Company after the effective date of the Registration Statement,
which statement shall conform to the requirements of Rule 158.
(m) Information. The Company may require each selling Holder to
-----------
furnish to the Company information regarding such Holder and the distribution of
such Registrable Securities as is required by law to be disclosed in the
Registration Statement, and the Company
7
<PAGE>
may exclude from such registration the Registrable Securities of any such Holder
who unreasonably fails to furnish such information within a reasonable time
after receiving such request.
The Company shall hold in confidence and not make any disclosure of
information concerning a Holder provided to the Company unless (i) disclosure of
such information, in the opinion of counsel to the Company, is required by law,
(ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) disclosure of such
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities (provided, however, that the
-------- -------
Holder shall be given notice of any such pending disclosure so that the Holder
may seek a protective order), or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company agrees that it shall, upon learning that
disclosure of such information concerning a Holder is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to such Holder prior to making such disclosure, and allow the Holder, at
its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar Federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.
Each Holder agrees by its acquisition of such Registrable Securities
that, upon receipt of a notice from the Company of the occurrence of any event
of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or
3(c)(vi), such Holder will forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of a Holder in accordance with the terms of the Securities Purchase
Agreement in connection with any sale of Registrable Securities with respect to
which an Holder has entered into a contract for sale prior to the Holder's
receipt of a notice from the Company of
8
<PAGE>
the happening of any event of the kind described in Section 3(c)(ii), 3(c)(iii),
3(c)(iv), 3(c)(v) or 3(c)(vi) and for which the Holder has not yet settled.
(n) Responses to the Commission. The Company agrees to respond fully
---------------------------
and completely to any and all comments on a Registration Statement received from
the Commission staff as promptly as possible but, for non-Underwritten
Offerings, in no event later than ten (10) Business Days of the receipt of such
comments, regardless of whether such comments are in oral or written form.
(o) Confirmation of Effectiveness. Within two (2) Business Days
-----------------------------
after a Registration Statement which covers applicable Registrable Securities is
ordered effective by the Commission, the Company shall deliver, and shall cause
legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Holders whose Registrable Securities
are included in such Registration Statement) confirmation that such Registration
Statement has been declared effective by the Commission in the form attached
hereto as Exhibit B.
---------
(p) Notwithstanding any other provision of this Section 3, the
Company may delay the filing or effectiveness of any Registration Statement or
any amendment or supplement thereto and suspend the right of the Holders to
effect sales of Registrable Securities thereunder for one or more periods (each
a "Suspension Period") of up to 60 calendar days in the aggregate per twelve
(12) month period in the event that such filing, effectiveness or sale would
require the Company to disclose any non-public information that the Company is
not otherwise required to disclose or to file any financial statements that the
Company is not otherwise required to file, provided however, that no Suspension
Period shall exceed 45 consecutive calendar days.
(q) Notwithstanding any other provision of this Section 3, the
Holders shall not be permitted to effect sales of the Registrable Securities
under a Registration Statement during a period in which the Company is engaged
in the process of registering under the Securities Act in an underwritten
offering, for as long as the underwriter reasonably considers is necessary.
4. Registration Expenses
---------------------
All fees and expenses incident to the performance of or
compliance with this Agreement by the Company (other than Section 7(c) hereof
which will be governed by Section 7(c) of the Brown Simpson Agreement) shall be
borne by the Company, whether or not the Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with Nasdaq and each other securities exchange or
market on which Registrable Securities are required hereunder to be listed and
(B) in compliance with state securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel for the Holders in connection with
Blue Sky qualifications as determined by a majority in interest of the Holders),
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is requested by the holders
9
<PAGE>
of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) reasonable
fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder. The
Company shall not be required to pay selling concessions, discounts or other
compensation paid to brokers, underwriters or other agents in connection with
the sale of any Registrable Securities, whether or not incurred in an
Underwritten Offering, or fees and expenses incurred by a Holder that are not
specified in this Section.
5. Indemnification
---------------
(a) Indemnification by the Company. The Company shall,
------------------------------
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents (including any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), investment advisors and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all joint or several losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, "Losses"), as incurred, arising out of or
relating to (i) any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
Prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made),
except to the extent, but only to the extent, that such untrue statements or
omissions are based upon and in conformity with information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, or (ii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any other law, including, without limitation,
any state securities law, or any rule or regulation thereunder relating to the
offer or sale of Registrable Securities, provided, however, that the Company
shall not be required to indemnify any person with respect to a loss arising out
of a sale of any Registrable Securities during any period during which the
Company has advised the Holder to suspend sales pursuant to a registration
statement. The Company shall not, however, be liable for any Losses to any
Holder with respect to any untrue or alleged untrue statement of material fact
or omission or alleged omission of material fact if such statement or omission
was made in a preliminary Prospectus and such Holder did not
10
<PAGE>
receive copy of the final Prospectus (or any amendment or supplement thereto) at
or prior to the confirmation of the sale of the Registrable Securities in any
case where such delivery is required by the Securities Act and the untrue or
alleged untrue statement of material fact or omission or alleged omission of
material fact contained in such preliminary Prospectus was corrected in the
final Prospectus (or any amendment or supplement thereto), unless the failure to
deliver such final Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 3(g) of this Agreement. The Company
shall notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Holder. The Holder shall indemnify and hold
-------------------------
harmless the Company, the directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, arising solely out of
or based solely upon (i) any untrue statement of a material fact contained in
the Registration Statement, any Prospectus, or any form of prospectus, or
arising solely out of or based solely upon any omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by such Holder
to the Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus or such form of
prospectus or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of prospectus or (ii)
any violation or alleged violation by the Holders of the Securities Act, the
Exchange Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of
Registrable Securities; provided, however, that the indemnity agreement
-------- -------
contained in this Section 5(b) shall not apply to amounts paid in settlement of
any Losses if such settlement is effected without the prior written consent of
such Holder. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
--------------------------------------
be brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
-----------------
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
------------------
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided,
--------
however, that the failure of any Indemnified Party to give such notice shall not
- -------
relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
11
<PAGE>
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such 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 a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party because of a failure or refusal of a
court of competent jurisdiction to enforce such indemnification in accordance
with its terms (by reason of public policy or otherwise), then each Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses, in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 5(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection
12
<PAGE>
with any Proceeding to the extent such party would have been indemnified for
such fees or expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms. In no event shall any
selling Holder be required to contribute an amount under this Section 5(d) in
excess of the net proceeds received by such Holder upon sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such
contribution obligation.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Rule 144
--------
During the Effectiveness Period, as long as any Holder owns
Registrable Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
Section 13(a) or l5(d) of the Exchange Act. During the Effectiveness Period, as
long as any Holder owns Registrable Securities, if the Company is not required
to file reports pursuant to Section 13(a) or l5(d) of the Exchange Act, it will
prepare and furnish to the Holders and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will use
commercially reasonable efforts to take such further action as any Holder may
reasonably request, all to the extent required from time to time to enable such
Person to sell Underlying Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, including requesting of its counsel to provide any legal
opinions referred to in the Purchase Agreement. Upon the request of any Holder,
the Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such requirements of this
Section 6.
7. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company or by a Holder
--------
of any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide
13
<PAGE>
adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of its
--------------------------
subsidiaries has, as of the date hereof, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holder in this Agreement or otherwise conflicts with or limits the
provisions hereof. Except as disclosed in Schedule 2.1(a) of the Purchase
Agreement, neither the Company nor any of its subsidiaries has previously
entered into any agreement granting any registration rights with respect to any
of its securities to any Person. This Agreement, together with the Purchase
Agreement and the MTI Registration Rights Agreement, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
(c) Piggy-Back Registrations. Except as provided herein if, at any
------------------------
time when there is not an effective Registration Statement covering the
Registrable Securities, the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans (and other than a registration statement filed pursuant to Section
2(b) of the Registration Rights Agreement between the Company and Brown Simpson
Capital Management, LLC (and/or its affiliated fund), the Company shall send to
each Holder of Registrable Securities written notice of such determination and,
if within ten (10) days after receipt of such notice, any such Holder shall so
request in writing, (which request shall specify the Registrable Securities
intended to be disposed of by the Purchasers), the Company will use reasonable
efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Holder, to
the extent requisite to permit the disposition of the Registrable Securities so
to be registered, provided that if at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay expenses in accordance with Section 4 hereof), and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities being registered pursuant to this Section 7(c) for the
same period as the delay in registering such other securities. The Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that the
-------- -------
Company shall not be required to register any Registrable Securities pursuant to
this Section 7(c) that are eligible for sale pursuant to Rule 144(k) of the
Securities Act. In the case of an underwritten public offering,
14
<PAGE>
if the managing underwriter(s) or underwriter(s) should reasonably object to the
inclusion of the Registrable Securities in such registration statement, then if
the Company after consultation with the Underwriter's representative should
reasonably determine that the inclusion of such Registrable Securities would
materially adversely affect the offering contemplated in such registration
statement, and based on such determination recommends inclusion in such
registration statement of fewer Registrable Securities then proposed to be sold
by the Holders, then (x) the number of Registrable Securities of the Holder and
other holders of piggy-back registration rights included in such registration
statement shall be reduced pro rata among such Holders and other holders of
piggy-back registration rights (based upon the number of Registrable Securities
requested to be included in the registration) or, in the case of other holders
of piggy-back registration rights, in the manner provided for in that applicable
agreement, or (y) none of the Registrable Securities of the Holders shall be
included in such registration statement if the Company, after consultation with
the underwriter(s), recommends the inclusion of none of such Registrable
Securities; provided, however, that if securities are being offered for the
-------- -------
account of other persons or entities as well as the Company, such reduction
shall not represent a greater fraction of the number of Registrable Securities
intended to be offered by the Holders than the fraction of similar reductions
imposed on such other persons or entities (other than the Company).
Notwithstanding the foregoing, the Company shall not file any registration
statement under the Securities Act (other than on Form S-4 or Form S-8) relating
to the offer and sale of any equity securities of the Company, or offer or sell
any equity securities of the Company in a transaction exempt from registration
pursuant to Regulation S under the Securities Act, until such time as the
Initial Registration Statement has been effective for a period of sixty (60)
Trading Days, which period shall be tolled if the effectiveness of the Initial
Registration Statement is suspended for any reason whatsoever.
(d) Further Obligations of the Company. Whenever, under the preceding
----------------------------------
sections of this Agreement, the Company is required hereunder to register
Registrable Securities pursuant to Section 7(c) above, it agrees that it shall
also do the following:
(1) Unless and until the distribution of all Registrable
Securities requested to be registered under section 7(c) above is complete,
diligently prepare for filing with the Commission a registration statement and
such amendments and supplements to said registration statement and the
prospectus used in connection therewith as may be necessary to keep said
registration statement effective for a period of at least 120 days and to comply
with the provisions of the Securities Act with respect to the sale of securities
covered by said registration statement for the period necessary to complete the
proposed public offering;
(2) Furnish to any selling Holder of Registrable Securities such
copies of each preliminary and final prospectus and such other documents as such
Holder may reasonably request to facilitate the public offering of its
Registrable Securities;
(3) Enter into any underwriting agreement with provisions
reasonably required by the proposed underwriter for the selling Holder of
Registrable Securities, if any, and reasonably acceptable to the Company; and
15
<PAGE>
(4) Register or qualify the Registrable Securities covered by
said registration statement under the securities or "blue-sky" laws of such
jurisdictions as the selling Holder of Registrable Securities may reasonably
request.
(e) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the then outstanding Registrable
Securities; provided, however, that for the purposes of this sentence,
-------- -------
Registrable Securities that are owned, directly or indirectly, by the Company,
or an Affiliate of the Company are not deemed outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holder and that does not
directly or indirectly affect the rights of other Holder may be given by Holders
of at least a majority of the Registrable Securities to which such waiver or
consent relates; provided, however, that the provisions of this sentence may not
-------- -------
be amended, modified, or supplemented except in accordance with the provisions
of the immediately preceding sentence.
(f) Notices. Any notice or other communication required or permitted
-------
to be given hereunder shall be in writing and shall be deemed to have been
received (a) upon hand delivery (receipt acknowledged) or delivery by telex
(with correct answer back received), telecopy or facsimile (with transmission
confirmation report) at the address or number designated below (if received by
5:00 p.m. eastern time where such notice is to be received), or the first
Business Day following such delivery (if received after 5:00 p.m. eastern time
where such notice is to be received) or (b) on the second Business Day following
the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications are (i) if to the Company to SatCon
Technology Corporation, 161 First Street, Cambridge, MA 02142-1221, Attn:
President and Chief Executive Officer, fax no. (617) 576-7455, with copies to
Hale & Dorr LLP, 60 State Street, Boston, MA 02109, Attn: Jeffrey N. Carp, Esq.,
fax no. (617) 526-5000 and (ii) if to Purchaser to Mechanical Technology
Incorporated, 968 Albany-Shaker Road, Latham, New York 12110. Attention: Chief
Financial Officer with copies to Catherine S. Hill, PLLC, 4 Global View, Troy,
New York 12180 Attn: Catherine S. Hill, Esq., fax no. (518) 285-7564 or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.
(g) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of the Holder. The Company may not assign
its rights or obligations hereunder without the prior written consent of the
Holder. The Holder may assign its rights hereunder in the manner and to the
Persons as permitted under the Purchase Agreement. In addition, the rights of
the Holder hereunder, including the right to have the Company register for
resale Registrable Securities in accordance with the terms of this Agreement,
shall be automatically assignable by the Holder if: (i) the Holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b)
16
<PAGE>
the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment the further
disposition of such securities by the transferee or assignees is restricted
under the Securities Act and applicable state securities laws, (iv) at or before
the time the Company receives the written notice contemplated by clause (ii) of
this Section, the transferee or assignee agrees in writing with the Company to
be bound by all of the provisions of this Agreement, and (v) such transfer shall
have been made in accordance with the applicable requirements of the Purchase
Agreement. The rights to assignment shall apply to the Holders (and to
subsequent) successors and assigns.
(h) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
(i) Governing Law. The corporate laws of the State of Delaware shall
-------------
govern all issues concerning the relative rights of the Company and the
Purchaser as its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law. Each party hereby irrevocably submits
to the non-exclusive jurisdiction of the federal courts sitting in the City of
Albany, County of Albany or if diversity jurisdiction cannot be obtained, then
in the state courts sitting in the city of Albany, county of Albany, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consent to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
(j) Cumulative Remedies. The remedies provided herein are cumulative
-------------------
and not exclusive of any remedies provided by law.
(k) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
17
<PAGE>
(l) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(m) Shares Held by The Company and its Affiliates. Whenever the
---------------------------------------------
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(n) Revision of SEC Position on Warrants. In the event the rules and
------------------------------------
regulations of the Commission or the policies of the staff of the Commission are
modified and as a result thereof the Company determines in good faith that it
may be practicable and in the interests of the Company and the Holders to
register the exercise of the Warrants so that the Warrant Shares may be freely
resold without maintaining an effective registration statement under the
Securities Act for resales, the Company and the Holders agree to cooperate in
good faith to effect such amendments to this Agreement as may be appropriate to
provide that the Company may fulfill its obligations hereunder with respect to
the Warrants and the Warrant Shares by maintaining an effective registration
statement under the Securities Act covering the exercise of the Warrants rather
than the resale of the Warrant Shares.
[SIGNATURE PAGE TO FOLLOW]
18
<PAGE>
IN WITNESS WHEREOF, the parties have executed this SatCon Registration
Rights Agreement as of the date first written above.
SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
--------------------------
Name: David B. Eisenhaure
Title: President
MECHANICAL TECHNOLOGY INCORPORATED
By: /s/ Cynthia A. Scheuer
--------------------------
Name: Cynthia A. Scheuer
Title: Vice President and CFO
19
<PAGE>
EXHIBIT A
PLAN OF DISTRIBUTION
Our company is registering the shares of common stock on behalf of the
selling stockholders. All costs, expenses and fees in connection with the
registration of the shares offered by this prospectus will be borne by the
Company, other than brokerage commissions and similar selling expenses, if any,
attributable to the sale of shares which will be borne by the selling
stockholders. Sales of shares may be effected by selling stockholders from time
to time in one or more types of transactions (which may include block
transactions) on the Nasdaq National Market, in the over-the-counter market, in
negotiated transactions, through put or call options transactions relating to
the shares, through short sales of shares, or a combination of such methods of
sale, at market prices prevailing at the time of sale, or at negotiated prices.
Such transactions may or may not involve brokers or dealers. The selling
stockholders have advised our company that they have not entered into any
agreements, understandings or arrangements with any underwriters or broker-
dealers regarding the sale of their securities, nor is there an underwriter or
coordinated broker acting in connection with the proposed sale of shares by the
selling stockholders.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of the shares or of securities convertible into or exchangeable for the
shares in the course of hedging positions they assume with selling stockholders.
The selling stockholders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealers or other financial institutions of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as amended or supplemented to reflect such
transaction).
The selling stockholders may make these transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from selling stockholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular broker-
dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers that act in connection
with the sale of shares are "underwriters" within the meaning of Section 2(11)
of the Securities Act, and any commissions received by such broker-dealers or
any profit on the resale of the shares sold by them while acting as principals
might be deemed to be underwriting discounts or commissions under the Securities
Act. The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares
against certain liabilities, including liabilities arising under the Securities
Act.
20
<PAGE>
Because selling stockholders are "underwriters" within the meaning of
Section 2(11) of the Securities Act, the selling stockholders will be subject to
the prospectus delivery requirements of the Securities Act. Our company has
informed the selling stockholders that the anti-manipulative provisions of
Regulation M promulgated under the Exchange Act may apply to their sales in the
market.
Selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
Upon our company being notified by a selling stockholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:
the name of each such selling stockholder and of the participating
broker-dealer(s);
. the number of shares involved;
. the initial price at which such shares were sold;
. the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
. that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in
this prospectus; and
. other facts material to the transactions.
In addition, upon our company being notified by a selling stockholder that a
donee or pledgee intends to sell more than 500 shares, a supplement to this
prospectus will be filed.
21
<PAGE>
EXHIBIT B
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
Attn.:
Re: SatCon Technology Corporation
Ladies and Gentlemen:
We are counsel to SatCon Technology Corporation, a Delaware corporation
(the "Company"), and have represented the Company in connection with that
certain Securities Purchase Agreement (the "Purchase Agreement") entered into by
and among the Company and Mechanical Technology Incorporated (the "Holder")
pursuant to which the Company issued to the Holder its shares of the Company's
common stock, par value $0.01 per share (the "Common Stock"), and Warrants (the
"the Warrants") to acquire shares of Common Stock. Pursuant to the Purchase
Agreement, the Company also has entered into a Registration Rights Agreement
with the Holder (the "Registration Rights Agreement") pursuant to which the
Company agreed, among other things, to register the Registrable Securities (as
defined in the Registration Rights Agreement), including the shares of Common
Stock and shares of Common stock issuable upon exercise of the Warrants, under
the Securities Act of 1933, as amended (the "1933 Act"). In connection with the
Company's obligations under the Registration Rights Agreement, on
_______________, 1999, the Company filed a Registration Statement on Form S-3
(File No. 333-_____________) (the "Registration Statement") with the Securities
and Exchange Commission (the "SEC") relating to the Registrable Securities which
names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[ISSUER'S COUNSEL]
cc: [LIST NAMES OF HOLDERS]
22
<PAGE>
Exhibit 10.30
MTI REGISTRATION RIGHTS AGREEMENT
---------------------------------
This MTI Registration Rights Agreement (this "Agreement") is made and
---------
entered into as of October 21, 1999, between Mechanical Technology Incorporated,
a New York corporation (the "Company"), and SatCon Technology Corporation, a
-------
Delaware corporation (the "Purchaser").
---------
This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of the date hereof among the Company and the Purchasers (the "Purchase
--------
Agreement").
- ---------
The Company and the Purchasers hereby agree as follows:
1. Definitions
-----------
Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
---------
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
-------
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," controlling" and "controlled" have meanings
---------- ----------- ----------
correlative to the foregoing.
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" means the Company's Common Stock, par value $1.00 per
------------
share.
"Holder" or "Holders" means the holder or holders, as the case may be,
------ -------
from time to time of Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 4(c) hereof.
-----------------
"Indemnifying Party" has the meaning set forth in Section 4(c) hereof.
------------------
"Person" means an individual or a corporation, partnership, trust,
------
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
<PAGE>
"Registrable Securities" means the shares of Common Stock issued or
----------------------
issuable upon exercise of the Warrants, and any shares of the Company's capital
stock issued as a result of any stock split, stock dividend, recapitalization,
exchange or similar event; provided, that Registrable Securities shall not
include any such shares that are eligible for sale under Rule 144(k).
"Registration Statement" means the Initial Registration Statement and
----------------------
any additional registration statements contemplated by Section 3, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant to
--------
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant to
--------
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant to
--------
the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities" means the Company's Common Stock issuable pursuant to the
----------
Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Underlying Shares" means the shares of Common Stock issuable upon
-----------------
exercise of the Warrants.
"Underwritten Registration or Underwritten Offering" means a
--------------------------------------------------
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective registration
statement.
"Warrants" means the warrants issuable to the Purchaser pursuant to
--------
the Purchase Agreement.
2. Piggyback Registrations. Except as provided herein if, at any time
-----------------------
when there is not an effective Registration Statement covering the Registrable
Securities, the Company shall determine to prepare and file with the Commission
a registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-2 (but only in connection with a rights offering), S-4 or
Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely to existing
shareholders or solely in connection with any acquisition
2
<PAGE>
of any entity or business or equity securities issuable in connection with stock
option or other employee benefit plans, the Company shall send to each Holder of
Registrable Securities written notice of such determination and, if within ten
(10) days after receipt of such notice, any such Holder shall so request in
writing, (which request shall specify the Registrable Securities intended to be
disposed of by the Purchasers), the Company will use reasonable efforts to
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the Holder, to the extent
requisite to permit the disposition of the Registrable Securities so to be
registered, provided that if at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to such Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay expenses in accordance with this Agreement), and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities being registered pursuant to this Section 2 for the same
period as the delay in registering such other securities. The Company shall
include in such registration statement all or any part of such Registrable
Securities such Holder requests to be registered; provided, however, that the
-------- -------
Company shall not be required to register any Registrable Securities pursuant to
this Section 2 that are eligible for sale pursuant to Rule 144(k) of the
Securities Act. In the case of an underwritten public offering, if the managing
underwriter(s) or underwriter(s) should reasonably object to the inclusion of
the Registrable Securities in such registration statement, then if the Company
after consultation with the Underwriter's representative should reasonably
determine that the inclusion of such Registrable Securities would materially
adversely affect the offering contemplated in such registration statement, and
based on such determination recommends inclusion in such registration statement
of fewer Registrable Securities then proposed to be sold by the Holders, then
(x) the number of Registrable Securities of the Holder and other holders of
piggy-back registration rights included in such registration statement shall be
reduced pro rata among such Holders and other holders of piggy-back registration
rights (based upon the number of Registrable Securities requested to be included
in the registration) or, in the case of other holders of piggy-back registration
rights, in the manner provided for in that applicable agreement, or (y) none of
the Registrable Securities of the Holders shall be included in such registration
statement if the Company, after consultation with the underwriter(s), recommends
the inclusion of none of such Registrable Securities; provided, however, that if
-------- -------
securities are being offered for the account of other persons or entities as
well as the Company, such reduction shall not represent a greater fraction of
the number of Registrable Securities intended to be offered by the Holders than
the fraction of similar reductions imposed on such other persons or entities
(other than the Company).
3. Registration Expenses. In the event of a registration described in
---------------------
Section 2, all reasonable expenses of registration and of the offering effected
thereby of any Holder of Registrable Securities participating in the offering,
including, without limitation, printing expenses, fees and disbursements of
counsel and independent public accountants, counsel to the holders fees and
expenses (including counsel fees incurred in connection with complying with
state securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc. and fees of transfer agents and registrars), shall be
borne by the Company, except that each
3
<PAGE>
Holder of Registrable Securities shall bear underwriting commissions, individual
counsel fees, if any, and discounts attributable to such Holder's Registrable
Securities being registered.
4. Further Obligations of the Company. Whenever, under the preceding
----------------------------------
sections of this Agreement, the Company is required hereunder to register
Registrable Securities, it agrees that it shall also do the following:
(a) Unless and until the distribution of all Registrable Securities
requested to be registered under section 2 above is complete, diligently prepare
for filing with the Commission a registration statement and such amendments and
supplements to said registration statement and the prospectus used in connection
therewith as may be necessary to keep said registration statement effective for
a period of at least 120 days and to comply with the provisions of the
Securities Act with respect to the sale of securities covered by said
registration statement for the period necessary to complete the proposed public
offering;
(b) Furnish to any selling Holder of Registrable Securities such
copies of each preliminary and final prospectus and such other documents as such
Holder may reasonably request to facilitate the public offering of its
Registrable Securities;
(c) Enter into any underwriting agreement with provisions reasonably
required by the proposed underwriter for the selling Holder of Registrable
Securities, if any, and reasonably acceptable to the Company; and
(d) Register or qualify the Registrable Securities covered by said
registration statement under the securities or "blue-sky" laws of such
jurisdictions as the selling Holder of Registrable Securities may reasonably
request.
5. Indemnification
---------------
(a) Indemnification by the Company. The Company shall,
------------------------------
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents (including any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), investment advisors and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all joint or several losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively, together with actions,
proceedings or inquiries by any regulatory or self-regulatory organization,
whether commenced or threatened, "Losses"), as incurred, arising out of or
------
relating to (i) any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
Prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in
4
<PAGE>
light of the circumstances under which they were made) not misleading (in the
case of any Prospectus or form of prospectus or supplement thereto, in light of
the circumstances under which they were made), except to the extent, but only to
the extent, that such untrue statements or omissions are based upon and in
conformity with information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or (ii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any rule
or regulation thereunder relating to the offer or sale of Registrable
Securities, provided, however, that the Company shall not be required to
indemnify any person with respect to a loss arising out of a sale of any
Registrable Securities during any period during which the Company has advised
the Holder to suspend sales pursuant to a registration statement. The Company
shall not, however, be liable for any Losses to any Holder with respect to any
untrue or alleged untrue statement of material fact or omission or alleged
omission of material fact if such statement or omission was made in a
preliminary Prospectus and such Holder did not receive a copy of the final
Prospectus (or any amendment or supplement thereto) at or prior to the
confirmation of the sale of the Registrable Securities in any case where such
delivery is required by the Securities Act and the untrue or alleged untrue
statement of material fact or omission or alleged omission of material fact
contained in such preliminary Prospectus was corrected in the final Prospectus
(or any amendment or supplement thereto) and such final prospectus was provided
by the Company to the Holder prior to the time of such sale. The Company shall
notify the Holders promptly of the institution, threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Holder. The Holder shall indemnify and hold
-------------------------
harmless the Company, the directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, arising solely out of
or based solely upon (i) any untrue statement of a material fact contained in
the Registration Statement, any Prospectus, or any form of prospectus, or
arising solely out of or based solely upon any omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by such Holder
to the Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus or such form of
prospectus or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of prospectus or (ii)
any violation or alleged violation by the Holders of the Securities Act, the
Exchange Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of
Registrable Securities; provided, however, that the indemnity agreement
-------- -------
contained in this Section 4(b) shall not apply to amounts paid in settlement of
any Losses if such settlement is effected without the prior written consent of
such Holder. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
5
<PAGE>
(c) Conduct of Indemnification Proceedings. If any Proceeding shall
--------------------------------------
be brought or asserted against any Person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall notify the Person
-----------------
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
------------------
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided,
--------
however, that the failure of any Indemnified Party to give such notice shall not
- -------
relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such 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 a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section 4(a)
------------
or 4(b) is unavailable to an Indemnified Party because of a failure or refusal
of a court of competent jurisdiction to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified
6
<PAGE>
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 4(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. In no event shall any selling Holder be required to
contribute an amount under this Section 4(d) in excess of the net proceeds
received by such Holder upon sale of the Registrable Securities pursuant to the
Registration Statement giving rise to such contribution obligation.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 4(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.
6. Rule 144.
--------
During the period commencing on the date hereof and ending on the
second anniversary of the Secondary Closing (as defined in the Purchase
Agreement), as long as any Holder owns Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or l5(d) of the Exchange
Act. During the period commencing on the date hereof and ending on the second
anniversary of the Secondary Closing (as defined in the Purchase Agreement), as
long as any Holder owns Registrable Securities, if the Company is not required
to file reports pursuant to Section 13(a) or l5(d) of the Exchange Act, it will
prepare and furnish to the Holders and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will use
commercially
7
<PAGE>
reasonable efforts to take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Person to
sell Underlying Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including requesting of its counsel to provide any legal
opinions referred to in the Purchase Agreement. Upon the request of any Holder,
the Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such requirements of this
Section 5.
7. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company or by a Holder
--------
of any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of its
--------------------------
subsidiaries has, as of the date hereof, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holder in this Agreement or otherwise conflicts with or limits the
provisions hereof. Neither the Company nor any of its subsidiaries currently has
in force or effect any agreement granting any registration rights with respect
to any of its securities to any Person. This Agreement, together with the
Purchase Agreement and SatCon Registration Rights Agreement, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the then outstanding Registrable
Securities; provided, however, that for the purposes of this sentence,
-------- -------
Registrable Securities that are owned, directly or indirectly, by the Company,
or an Affiliate of the Company are not deemed outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holder and that does not
directly or indirectly affect the rights of other Holder may be given by Holders
of at least a majority of the Registrable Securities to which such waiver or
consent relates; provided, however, that the provisions of this sentence may not
-------- -------
be amended, modified, or supplemented except in accordance with the provisions
of the immediately preceding sentence.
(d) Notices. Any notice or other communication required or permitted
-------
to be given hereunder shall be in writing and shall be deemed to have been
received (a) upon hand
8
<PAGE>
delivery (receipt acknowledged) or delivery by telex (with correct answer back
received), telecopy or facsimile (with transmission confirmation report) at the
address or number designated below (if received by 5:00 p.m. eastern time where
such notice is to be received), or the first Business Day following such
delivery (if received after 5:00 p.m. eastern time where such notice is to be
received) or (b) on the second Business Day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications are (i) if to the Purchaser to SatCon Technology
Corporation, 161 First Street, Cambridge, MA 02142-1221, Attn: President and
Chief Executive Officer, fax no. (617) 576-7455, with copies to Hale & Dorr LLP,
60 State Street, Boston, MA 02109, Attn: Jeffrey N. Carp, Esq., fax no. (617)
526-5000 and (ii) if to Company to Mechanical Technology Incorporated, 968
Albany-Shaker Road, Latham, New York 12110. Attention: Chief Financial Officer
with copies to Catherine S. Hill, PLLC, 4 Global View, Troy, New York 12180
Attn: Catherine S. Hill, Esq., fax no. (518) 285-7564 or such other address as
may be designated in writing hereafter, in the same manner, by such Person.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of the Holder. The Company may not assign
its rights or obligations hereunder without the prior written consent of the
Holder. The Holder may assign its rights hereunder in the manner and to the
Persons as permitted under the Purchase Agreement. In addition, the rights of
the Holder hereunder, including the right to have the Company register for
resale Registrable Securities in accordance with the terms of this Agreement,
shall be automatically assignable by the Holder if: (i) the Holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement, and (v) such transfer shall have been made in accordance with
the applicable requirements of the Purchase Agreement. The rights to assignment
shall apply to the Holders (and to subsequent) successors and assigns.
(f) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.
(g) Governing Law. The corporate laws of the State of New York shall
-------------
govern all issues concerning the relative rights of the Company and the
Purchaser as its stockholders. All other questions concerning the construction,
validity, enforcement and
9
<PAGE>
interpretation of this Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the federal courts sitting in the City of Albany, County of
Albany, or if diversity jurisdiction cannot be obtained, then in the state
courts sitting in the City of Albany, County of Albany, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service
of process and consent to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.
(h) Cumulative Remedies. The remedies provided herein are cumulative
-------------------
and not exclusive of any remedies provided by law.
(i) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(k) Shares Held by The Company and its Affiliates. Whenever the
---------------------------------------------
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
(l) Revision of SEC Position on Warrants. In the event the rules and
------------------------------------
regulations of the Commission or the policies of the staff of the Commission are
modified and as a result thereof the Company determines in good faith that it
may be practicable and in the interests of the Company and the Holders to
register the exercise of the Warrants so that the Warrant Shares may be freely
resold without maintaining an effective registration statement under the
Securities Act for resales, the Company and the Holders agree to cooperate in
good faith to effect such amendments to this Agreement as may be appropriate to
provide that the Company may fulfill its obligations hereunder with respect to
the Warrants and the Warrant
10
<PAGE>
Shares by maintaining an effective registration statement under the Securities
Act covering the exercise of the Warrants rather than the resale of the Warrant
Shares.
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this MTI Registration Rights
Agreement as of the date first written above.
MECHANICAL TECHNOLOGY INCORPORATED
By: /s/Cynthia A. Scheuer
----------------------------------
Name: Cynthia A. Scheuer
Title: Vice President and CFO
SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
----------------------------------
Name: David B. Eisenhaure
Title: President
12
<PAGE>
Exhibit 10.31
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
October 21, 1999
__________ shares Warrant No. __
SATCON TECHNOLOGY CORPORATION
STOCK PURCHASE WARRANT
Registered Owner: ____________________________
This certifies that, for value received, SatCon Technology Corporation, a
Delaware corporation, the ("Company") grants the following rights to the
-------
Registered Owner, or assigns, of this Warrant:
1. Issue. Upon tender (in accordance with Section 5 hereof) to the
Company, the Company, within three (3) Business Days of the date thereof, shall
issue to the Registered Owner, or assigns, up to the number of shares specified
in Section 2 hereof of fully paid and nonassessable shares of Common Stock that
the Registered Owner, or assigns, is otherwise entitled to purchase.
2. Number of Shares. The total number of shares of Common Stock that the
Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant (the "Warrant Shares") is ________ shares, subject to
--------------
adjustment from time to time as to the number and kind of securities for which
this Warrant is exercisable, all as set forth in Section 6 hereof. The Company
shall at all times reserve and hold available out of its authorized and unissued
shares of Common Stock or other securities, as the case may be, sufficient
shares of Common Stock to satisfy all conversion and purchase rights represented
by outstanding convertible securities, options and warrants, including this
Warrant. The Company covenants and agrees that all shares of Common Stock or
other securities, as the case may be, that may be issued upon the exercise of
this Warrant shall, upon issuance, be duly and validly issued, fully paid and
nonassessable, free from all taxes, liens and charges with respect to the
purchase and
<PAGE>
the issuance of the shares, and shall not have any legend or restrictions on
resale, expect as required by Section 3.13 of the Purchase Agreement.
3. Exercise Price. The per share exercise price of this Warrant,
representing the price per share at which the shares of stock issuable upon
exercise of this Warrant may be purchased, is $8.80, subject to adjustment from
time to time pursuant to the provisions of Section 6 hereof (the "Exercise
--------
Price").
- -----
4. Exercise Period. This Warrant may be exercised from the Closing Date
(as defined in the Purchase Agreement) up to and including October 21, 2003 (the
"Exercise Period"). If not exercised during this period, this Warrant and all
---------------
rights granted under this Warrant shall expire and lapse.
5. Tender; Issuance of Certificates.
a. Subject to Section 15 hereof, this Warrant may be exercised, in
whole or in part, by (i) actual delivery of (a) the Exercise Price in cash, (b)
a duly executed Warrant Exercise Form, a copy of which is attached to this
Warrant as Exhibit A, properly executed by the Registered Owner, or assigns, of
---------
this Warrant, and (c) by surrender of this Warrant. The Warrant Shares so
purchased shall be deemed to be issued to the Registered Owner as of the close
of business on the date (the "Exercise Date") on which the last of the following
shall have occurred: (i) this Warrant shall have been surrendered and (ii) the
completed Warrant Exercise Form shall have been delivered and payment shall have
been made for such shares as set forth above. The payment and Warrant Exercise
Form must be delivered to the registered office of the Company either in person
or as set for in Section 11 hereof.
b. In lieu of physical delivery of the Warrant, provided the
Company's transfer agent is participating in the Depositary Trust Company's
("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the
--- ----
Registered Owner and in compliance with the provisions hereof, the Company shall
use its best efforts to cause its transfer agent to electronically transmit the
Warrant Shares to the Registered Owner by crediting the account of the
Registered Owner's Prime Broker with DTC through its Deposit Withdrawal Agent
Commission system. The time period for delivery described herein shall apply to
the electronic transmittals described herein.
c. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Warrant Exercise Form, and any
cash payments due under Section 13 hereof shall be delivered to the Registered
Owner within a reasonable time, not exceeding three (3) Business Days, after
this Warrant shall have been so exercised. The certificates so delivered shall
be in such denominations as may be requested by the Registered Owner and shall
be registered in the name of the Registered Owner or such other name as shall be
designated by such Registered Owner. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the Registered
Owner a new Warrant representing the number of shares with respect to which this
Warrant shall not then have been exercised.
6. Adjustment of Exercise Price.
2
<PAGE>
a. Common Stock Dividends; Common Stock Splits; Reverse Common Stock
-----------------------------------------------------------------
Splits. If the Company, at any time while this Warrant is outstanding, (a)
- ------
shall pay a stock dividend on its Common Stock, (b) subdivide outstanding shares
of Common Stock into a larger number of shares, (c) combine outstanding shares
of Common Stock into a smaller number of shares or (d) issue by reclassification
of shares of Common Stock any shares of capital stock of the Company, then (i)
the Exercise Price shall be multiplied by a fraction the numerator of which
shall be the number of shares of Common Stock (excluding treasury shares, if
any) outstanding before such event and the denominator of which shall be the
number of shares of Common Stock outstanding (excluding treasury shares, if any)
after such event and (ii) the number of Warrant Shares shall be multiplied by a
fraction, the numerator of which shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event and the
denominator of which shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event. Any adjustment made
pursuant to this paragraph (6)(a) shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b. Rights; Options; Warrants or Other Securities. If the Company,
---------------------------------------------
at any time while this Warrant is outstanding, shall fix a record date for the
issuance of rights, options, warrants or other securities to all of the holders
of Common Stock entitling them to subscribe for or purchase, convert to,
exchange for or otherwise acquire shares of Common Stock for no consideration or
at a price per share less than the Exercise Price, the Exercise Price shall be
multiplied by a fraction, the denominator of which shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding on the date of
issuance of such rights, options, warrants or other securities plus the number
of additional shares of Common Stock offered for subscription, purchase,
conversion, exchange or acquisition and the numerator of which shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
on the date of issuance of such rights, options, warrants or other securities
plus the number of shares which the aggregate offering price of the total number
of shares so offered would purchase at the Exercise Price. Such adjustment
shall be made whenever such rights, options, warrants or other securities are
issued, and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such rights, options, warrants
or other securities.
c. Subscription Rights. If the Company, at any time while this
-------------------
Warrant is outstanding, shall fix a record date for the distribution to all of
the holders of Common Stock evidence of its indebtedness or assets or rights,
options, warrants or other security entitling them to subscribe for or purchase,
convert to, exchange for or otherwise acquire any security (excluding those
referred to in paragraphs 6(a) and (b) above), then in each such case the
Exercise Price at which the Warrant shall thereafter be exercisable shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of shareholders entitled to receive such
distribution by a fraction, the denominator of which shall be the Per Share
Market Value of Common Stock determined as of the record date mentioned above,
and the numerator of which shall be such Per Share Market Value of the Common
Stock on such record date less the then fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding
3
<PAGE>
share of Common Stock as determined by the Board of Directors in good faith;
provided, however, that in the event of a distribution exceeding ten percent
- -------- -------
(10%) of the net assets of the Company, such fair market value shall be
determined in accordance with the Appraisal Procedure. Such adjustment shall be
made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
d. Rounding. All calculations under this Section 6 shall be made to
--------
the nearest cent or the nearest l/l00th of a share, as the case may be.
e. Notice of Adjustment. Whenever the Exercise Price is adjusted
--------------------
pursuant to paragraphs 6(a), (b) or (c), the Company shall promptly deliver to
the Registered Owner a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
f. Redemption Events. The following are "Redemption Events" under
----------------- -----------------
this Section 6(f): (A) any Change of Control or (B) any suspension from listing
or delisting of the Common Stock from the Nasdaq or any Subsequent Market on
which the Common Stock is listed for a period of five consecutive days. On and
after the date of any Redemption Event, the Registered Owner shall have the
option to require the Company to redeem (the "Redemption Right"), for a period
----------------
of thirty (30) days after the Registered Owner receives notice of Redemption
Event, in cash within 10 days of the Redemption Event, the Registered Owner's
shares of Common Stock immediately theretofore acquirable and receivable upon
the exercise of such Registered Owner's Warrant at a price per share equal to
the product of (i) the amount by which, if any, the Average Price immediately
preceding the latest of the effective date, the date of the closing, date of
occurrence or the date of the announcement, as the case may be, of the
Redemption Event triggering such Redemption Right exceeds the Exercise Price and
(ii) the number of shares of Common Stock issuable upon exercise of the Warrant
immediately prior to such Redemption Event. After the occurrence of (A), the
Registered Owner shall have the right at his or its option, in lieu of the
Redemption Right, to exercise the Warrant for shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such Redemption Event; the Registered Owner shall be
entitled upon such event to receive such amount of securities, cash or property
as if the Registered Owner had exercised the Warrant of the shares of the Common
Stock issuable upon exercise of the Warrant immediately prior to such Redemption
Event (without taking into account any limitations or restrictions on the
exercise of the Warrant). In the case of a transaction specified in (A) in
which holders of the Company's Common Stock receive cash, the Registered Owner
shall have the right at his or its option, in lieu of the Redemption Right, to
exercise the Warrant for such number of shares of the surviving company equal to
the amount of cash into which the Warrant is exercisable divided by the fair
market value of the shares of the surviving company on the effective date of the
merger. In the case of (A), the Company shall not effect any such Redemption
Event unless, prior to the consummation thereof, each Person (other than the
Company) which may be required to deliver any stock, securities, cash or
property upon the exercise of the Warrant as provided herein shall assume, by
written instrument delivered and reasonably satisfactory to, the Registered
Owner, (a) the obligations of the Company under the Warrant (and if the Company
shall survive the consummation of such transaction, such assumption shall be in
addition to, and shall not release the Company from, any continuing
4
<PAGE>
obligations of the Company under this Warrant), (b) the obligations of the
Company under the Purchase Agreement, the Warrant and the Registration Rights
Agreement, and (c) the obligation to deliver to the Registered Owner such shares
of stock, securities, cash or property as, in accordance with the foregoing
provisions of this Section 6(f), the Registered Owner may be entitled to
receive. Nothing in this Section 6(f) shall be deemed to authorize the Company
to enter into any transaction not otherwise permitted by the Purchase Agreement.
This provision shall similarly apply to successive Redemption Events.
g. Notice of Certain Events. If:
------------------------
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to the holders of
the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; or
(iv) the approval of any shareholders of the Company shall be
required in connection with any reclassification of the Common Stock
of the Company, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets
of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of exercise of this Warrant, and shall cause to be delivered to the
Registered Owner, at least 10 Business Days prior to the applicable record or
effective date hereinafter specified, a notice (provided such notice shall not
include any material non-public information) stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
h. Adjustment of Number of Shares. Upon each adjustment of the
------------------------------
Exercise Price as a result of the calculations made in this Section 6, this
Warrant shall thereafter evidence
5
<PAGE>
the right to receive, at the adjusted Exercise Price, that number of shares of
Common Stock (calculated to the nearest one-hundredth) obtained by dividing (i)
the product of the aggregate number of shares covered by this Warrant
immediately prior to such adjustment and the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price by (ii) the Exercise
Price in effect immediately after such adjustment of the Exercise Price.
7. Officer's Certificate. Whenever the number of shares purchasable upon
exercise shall be adjusted as required by the provisions of Section 6, the
Company shall forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office and with its stock transfer agent, if any, an
officer's certificate showing the adjusted Exercise Price, number of shares or
other securities determined as herein provided, setting forth in reasonable
detail the facts requiring such adjustment and the manner of computing such
adjustment. Each such officer's certificate shall be signed by the chairman,
president or chief financial officer of the Company and by the secretary or any
assistant secretary of the Company. Each such officer's certificate shall be
made available at all reasonable times for inspection by any Registered Owner of
the Warrants and the Company shall, forthwith after each such adjustment,
deliver a copy of such certificate to the each of the Registered Owners.
8. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement.
As used in this Warrant, the following terms have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
---------
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
-------
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
---------- ----------- ----------
correlative to the foregoing.
"Appraisal Procedure" shall have the following meaning. The independent
-------------------
directors of the Company shall determine the fair market value. The Holders
shall have ten (10) Business Days to provide the Company with written notice of
its approval or disapproval of such determination. If the Holders do not
respond within such ten (10) Business Day period, they will be deemed to have
approved the fair market value determination of the independent directors. If
the Holders appropriately respond that they do not approve of the determination
and the independent directors and Holders collectively can not agree on an
appropriate fair market value within 30 Business Days, then the Company, on the
one hand, and the Holders, on the other hand shall each appoint an Appraiser. A
neutral Appraiser shall be appointed by the two party-appointed Appraisers. The
three Appraisers shall collectively ascertain the fair market value, which
valuation shall be binding upon all parties absent manifest error.
"Appraiser" shall mean a nationally recognized or major regional
---------
investment banking firm or firm of independent certified public accountants of
recognized standing.
"Average Price" on any date means (x) the sum of the Per Share Market Value
-------------
for the ten (10) Trading Days immediately preceding such date minus (y) the
highest and lowest Per Share Market Value during the ten (10) Trading Days
immediately preceding such date, divided by (z)
6
<PAGE>
eight (8), or a similar calculation if another figure for the number of Trading
Days is set forth for clause (x) of this definition.
"Business Day" means any day except Saturday, Sunday and any day which
------------
shall be a legal holiday or a day on which banking institutions in the state of
New York generally are authorized or required by law or other government actions
to close.
"Change of Control" means the occurrence of any of (i) an acquisition after
-----------------
the date hereof by an individual or legal entity or "group" (as described in
Rule 13d-5(b)(1) promulgated under the Exchange Act), other than the Purchasers
or any of their Affiliates, of in excess of 40% of the voting securities of the
Company, (ii) a replacement of more than one-half of the members of the
Company's Board of Directors which is not approved by those individuals who are
members of the Board of Directors on the date hereof in one or a series of
related transactions, (iii) the merger of the Company with or into another
entity, consolidation or sale of all or substantially all of the assets of the
Company in one or a series of related transactions, or (v) the execution by the
Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii) , (iii), (iv) or
(v);
"Closing" means the closing of the purchase and sale of Common Stock and
-------
warrants as described in Section 1.2 and 1.3 of the Purchase Agreement.
"Common Stock" means the shares of the Company's Common Stock, par value
------------
$0.01 per share.
"Company" means SatCon Technology Corporation, a Delaware corporation.
-------
"Exercise Period" has the meaning assigned to it the Section 4 hereof.
---------------
"Exercise Price" has the meaning assigned to it in Section 3 hereof
--------------
"Per Share Market Value" means on any particular date (i) the closing bid
----------------------
price per share of the Common Stock on such date on the National Market System
of the Nasdaq Stock Market or other registered national stock exchange on which
the Common Stock is then listed or if there is no such price on such date, then
the closing bid price on such exchange or quotation system on the date nearest
preceding such date, or (ii) if the Common Stock is not listed then on the
National Market System of the Nasdaq Stock Market or any registered national
stock exchange, the closing bid price for a share of Common Stock in the over-
the-counter market, as reported by the National Quotation Bureau Incorporated
(or similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (iii) if the Common Stock is
not then publicly traded the fair market value of a share of Common Stock as
determined in accordance with the Appraisal Procedure. In addition, all
determinations of the Per Share Market Value shall be appropriately adjusted for
any stock dividends, stock splits or other similar transactions during such
period.
"Purchase Agreement" means that certain Securities Purchase Agreement,
------------------
dated October 13, 1999, among the Company and the Purchaser.
7
<PAGE>
"Purchaser" has the meaning set forth in the Purchase Agreement.
---------
"Redemption Event" has the meaning assigned to it in Section 6(f) hereof.
----------------
"Redemption Right" has the meaning assigned to it in Section 6(f) hereof.
----------------
"Registered Owner" means the person identified on the face of this Warrant
----------------
as the registered owner hereof or such other person as shown on the records of
the Company as being the registered owner of this Warrant or their assigns.
"SatCon Registration Rights Agreement" means that certain Registration
------------------------------------
Rights Agreement, dated October 13, 1999, among the Company and the Purchasers.
"Trading Day(s)" means any day on which the primary market on which shares
--------------
of Common Stock are listed is open for trading.
"Underlying Shares" means the shares of Common Stock issuable upon exercise
-----------------
of the Warrants.
"Warrant(s)" means the warrants issuable to Mechanical Technology
----------
Incorporated at the Closing.
9. Registration Rights. The Warrant Shares are subject to the
Registration Rights Agreement.
10. Reservation of Underlying Shares; Listing. The Company covenants that
it will at all times reserve and keep available out of its authorized shares of
Common Stock, free from preemptive rights, solely for the purpose of issue upon
exercise of the Warrants as herein provided, such number of shares of the Common
Stock as shall then be issuable upon the exercise of all outstanding Warrants
into Common Stock. The Company covenants that all shares of the Common Stock
issued upon exercise of the Warrant which shall be so issuable shall, when
issued, be duly and validly issued and fully paid and non-assessable. The
Company shall promptly secure the listing of the shares of Common Stock issuable
upon exercise of the Warrant upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this Warrant) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock form time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and shall
maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of the
same class shall be listed on such national securities exchange or automated
quotation system.
11. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if
8
<PAGE>
received by 5:00 p.m. eastern time where such notice is to be received), or the
first Business Day following such delivery (if received after 5:00 p.m. eastern
time where such notice is to be received) or (b) on the second Business Day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications are (i) if to the
Company to SatCon Technology Corporation, 161 First Street, Cambridge, MA
02142-1221, Attn: President and Chief Executive Officer, fax no. (617) 576-7455,
with copies to Hale & Dorr LLP, 60 State Street, Boston, MA 02109, Attn: Jeffrey
N. Carp, Esq., fax no. (617) 526-5000 and (ii) if to the Purchaser to Mechanical
Technology Incorporated at 968 Albany-Shaker Road, Latham, New York 12110,
Attention: Cynthia A. Scheuer, Chief Financial Officer with copies to Catherine
S. Hill, PLLC, 4 Global View, Troy, New York 12180, Attention: Catherine Hill,
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
12. Compliance With Governmental Requirements. The Company covenants that
if any shares of Common Stock required to be reserved for purposes of exercise
of Warrants hereunder require registration with or approval of any governmental
authority under any Federal or state law, or any national securities exchange,
before such shares may be issued upon exercise, the Company will use its best
efforts to cause such shares to be duly registered or approved, as the case may
be.
13. Fractional Shares. Upon any exercise hereunder, the Company shall not
be required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the
Registered Owner shall be entitled to receive, in lieu of the final fraction of
a share, one whole share of Common Stock.
14. Payment of Tax Upon Issue of Transfer. The issuance of certificates
for shares of the Common Stock upon exercise of the Warrants shall be made
without charge to the Registered Owners thereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon exercise in a name other than that of the
Registered Owner of such Warrant so converted and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
15. Warrants Owned by Company Deemed Not Outstanding. In determining
whether the holders of the outstanding Warrants have concurred in any direction,
consent or waiver under this Warrant, warrants which are owned by the Company or
by any person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding for the purpose of any such determination.
Warrants so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Company the
pledgee's right so to act with respect to such warrants and that the pledgee is
not the Company or any other obligor upon the securities or any Affiliate of the
Company or any other obligor on the warrants.
9
<PAGE>
16. Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction hereof.
17. No Rights as Stockholder. This Warrant shall not entitle the
Registered Owner to any rights as a stockholder of the Company, including
without limitation, the right to vote, to receive dividends and other
distributions, or to receive notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent converted into
shares of Common Stock in accordance with the terms hereof.
18. Certain Actions Prohibited. The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
19. Shareholder Rights Plan. Notwithstanding the foregoing, in the event
that the Company shall distribute "poison pill" rights pursuant to a "poison
pill" shareholder rights plan (the "Rights"), the Company shall, in lieu of
------
making any adjustment pursuant to Section 6 hereof, make proper provision so
that each Registered Owner who exercises a Warrant after the record date for
such distribution and prior to the expiration or redemption of the Rights shall
be entitled to receive upon such exercise, in addition to the shares of Common
Stock issuable upon such exercise, a number of Rights to be determined as
follows: (i) if such exercise occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates evidencing such
Rights (the "Distribution Date"), the same number of Rights to which a holder of
-----------------
a number of shares of Common Stock equal to the number of shares of Common Stock
issuable upon such exercise at the time of such exercise would be entitled in
accordance with the terms and provisions of and applicable to the Rights; and
(ii) if such exercise occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares into which the Warrant to
exercised was exercisable immediately prior to the Distribution Date would have
been entitled on the Distribution Date in accordance with the terms and
provisions of and applicable to the Rights, and in each case subject to the
terms and conditions of the Rights.
20. Successors and Assigns. This Warrant shall be binding upon and inure
to the benefit of the Registered Owners and its assigns, and shall be binding
upon any entity succeeding to the Company by merger or acquisition of all or
substantially all the assets of the Company. The Company may not assign this
Warrant or any rights or obligations hereunder without the prior written consent
of the Registered Owner. The Registered Owner may assign this Warrant without
the prior written consent of the Company.
10
<PAGE>
21. Transfers. The Company shall maintain a register (the "Register")
containing the name and address of the Registered Owner of this Warrant, which
Register can be relied upon by the Company as conclusive evidence of the
Registered Owner. If the Registered Owner transfers or assigns this Warrant it
shall promptly notify the Company in writing of the name and address of the
person to which such transfer or assignation was made. Upon receipt of such
notice the Company shall immediately update the Register to incorporate the new
Registered Owner.
22. Governing Law. This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of Albany, County of Albany, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Warrant and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first set forth above.
SATCON TECHNOLOGY CORPORATION
By: /s/ David B. Eisenhaure
----------------------------------------
Name: David B. Eisenhaure
Title: President
11
<PAGE>
EXHIBIT A
Warrant Exercise Form
---------------------
TO: SatCon Technology Corporation
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of SatCon Technology Corporation,
pursuant to Warrant No. ___ heretofore issued to ___________________ on
____________, 199__; (2) encloses either (a) a cash payment of $__________ or
(b) the cancellation of such portion of the attached Warrant as is exercisable
for a total of ______ Warrant Shares (using a Fair Market Value of $ _______ per
share for purposes of this calculation); and (3) requests that a certificate for
the shares be issued in the name of the undersigned and delivered to the
undersigned at the address specified below.
Date: _______________________________
Investor Name: _______________________________
Taxpayer Identification _______________________________
Number: _______________________________
By: _______________________________
Printed Name: _______________________________
Title: _______________________________
Address: _______________________________
_______________________________
_______________________________
Note: The above signature should correspond exactly with
the name on the face of this Warrant or with the name of
assignee appearing in assignment form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant is to be issued in the name of said undersigned
for the balance remaining of the shares purchasable thereunder less any fraction
of a share paid in cash and delivered to the address stated above.
12
<PAGE>
Exhibit 10.32
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
October 21, 1999
__________ shares Warrant No. __
MECHANICAL TECHNOLOGY INCORPORATED
STOCK PURCHASE WARRANT
Registered Owner: ____________________________
This certifies that, for value received, Mechanical Technology
Incorporated, a New York corporation, the ("Company") grants the following
-------
rights to the Registered Owner, or assigns, of this Warrant:
1. Issue. Upon tender (in accordance with Section 5 hereof) to the
Company, the Company, within three (3) Business Days of the date thereof, shall
issue to the Registered Owner, or assigns, up to the number of shares specified
in Section 2 hereof of fully paid and nonassessable shares of Common Stock that
the Registered Owner, or assigns, is otherwise entitled to purchase.
2. Number of Shares. The total number of shares of Common Stock that the
Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant (the "Warrant Shares") is ________ shares, subject to
--------------
adjustment from time to time as to the number and kind of securities for which
this Warrant is exercisable, all as set forth in Section 6 hereof. The Company
shall at all times reserve and hold available out of its authorized and unissued
shares of Common Stock or other securities, as the case may be, sufficient
shares of Common Stock to satisfy all conversion and purchase rights represented
by outstanding convertible securities, options and warrants, including this
Warrant. The Company covenants and agrees that all shares of Common Stock or
other securities, as the case may be, that may be issued upon the exercise of
this Warrant shall, upon issuance, be duly and validly issued, fully paid and
nonassessable, free from all taxes, liens and charges with respect to the
purchase and
<PAGE>
the issuance of the shares, and shall not have any legend or restrictions on
resale, expect as required by Section 3.13 of the Purchase Agreement.
3. Exercise Price. The per share exercise price of this Warrant,
representing the price per share at which the shares of stock issuable upon
exercise of this Warrant may be purchased, is $37.66, subject to adjustment from
time to time pursuant to the provisions of Section 6 hereof (the "Exercise
--------
Price").
- -----
4. Exercise Period. This Warrant may be exercised from the Closing Date
(as defined in the Purchase Agreement) up to and including October 21, 2003 (the
"Exercise Period"). If not exercised during this period, this Warrant and all
---------------
rights granted under this Warrant shall expire and lapse.
5. Tender; Issuance of Certificates.
a. Subject to Section 15 hereof, this Warrant may be exercised, in
whole or in part, by (i) actual delivery of (a) the Exercise Price in cash or
exchange of in-the-money warrants, (b) a duly executed Warrant Exercise Form, a
copy of which is attached to this Warrant as Exhibit A, properly executed by the
---------
Registered Owner, or assigns, of this Warrant, and (c) by surrender of this
Warrant. The Warrant Shares so purchased shall be deemed to be issued to the
Registered Owner as of the close of business on the date (the "Exercise Date")
on which the last of the following shall have occurred: (i) this Warrant shall
have been surrendered and (ii) the completed Warrant Exercise Form shall have
been delivered and payment shall have been made for such shares as set forth
above. The payment and Warrant Exercise Form must be delivered to the
registered office of the Company either in person or as set for in Section 12
hereof.
b. In lieu of physical delivery of the Warrant, provided the
Company's transfer agent is participating in the Depositary Trust Company's
("DTC") Fast Automated Securities Transfer ("FAST") program, upon request of the
--- ----
Registered Owner and in compliance with the provisions hereof, the Company shall
use its best efforts to cause its transfer agent to electronically transmit the
Warrant Shares to the Registered Owner by crediting the account of the
Registered Owner's Prime Broker with DTC through its Deposit Withdrawal Agent
Commission system. The time period for delivery described herein shall apply to
the electronic transmittals described herein.
c. The Registered Owner may, at its option, also elect to pay some
or all of the Exercise Price payable upon an exercise of this Warrant by
canceling a portion of this Warrant exercisable for such number of Warrant
Shares as is determined by dividing (i) the total Exercise Price payable in
respect of the number of Warrant Shares being purchased upon such exercise by
(ii) the excess of the Fair Market Value per share of Common Stock as of the
Exercise Date over the Exercise Price per share. If the Registered Owner wishes
to exercise this Warrant pursuant to this method of payment with respect to the
maximum number of Warrant Shares purchasable pursuant to this method, then the
number of Warrant Shares so purchasable shall be equal to the total number of
Warrant Shares, minus the product obtained by multiplying (x) the total number
of Warrant Shares by (y) a fraction, the numerator of which shall be the
Exercise Price per share and the denominator which shall be the Fair Market
Value per share of Common Stock as of the
2
<PAGE>
Exercise Date. The Fair Market Value per share of Common Stock shall be
determined as follows:
(i). If the Common Stock is listed on a national securities
exchange, the Nasdaq National Market or another nationally recognized
trading system as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the average of the high
and low reported sale prices per share of Common Stock thereon on the
trading day immediately preceding the Exercise Date (provided that if
no such price is reported on such day, the Fair Market Value per share
of Common Stock shall be determined pursuant to clause (ii)).
(ii). If the Common Stock is not listed on a national securities
exchange, the Nasdaq National Market or another nationally recognized
trading system as of the Exercise Date, the Fair Market Value per
share of Common Stock shall be deemed to be the amount most recently
determined by the Board of Directors to represent the fair market
value per share of the Common Stock (including, without limitation, a
determination for purposes of granting Common Stock options or issuing
Common Stock under an employee benefit plan of the Company); and upon
request of the Registered Owner, the Board of Directors (or a
representative thereof) shall promptly notify the Registered Owner of
the Fair Market Value per share of Common Stock.
Notwithstanding the foregoing, if the Board of Directors has not made such a
determination within the three-month period prior to the Exercise Date, then (A)
the Board of Directors shall make a determination of the Fair Market Value per
share of the Common Stock within 15 days of a request by the Registered Owner
that it do so, and (B) the exercise of this Warrant pursuant to this Section
6(c) shall be delayed until such determination is made.
d. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Warrant Exercise Form, and any
cash payments due under Section 14 hereof shall be delivered to the Registered
Owner within a reasonable time, not exceeding three (3) Business Days, after
this Warrant shall have been so exercised. The certificates so delivered shall
be in such denominations as may be requested by the Registered Owner and shall
be registered in the name of the Registered Owner or such other name as shall be
designated by such Registered Owner. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the Registered
Owner a new Warrant representing the number of shares with respect to which this
Warrant shall not then have been exercised.
6. Adjustment of Exercise Price.
a. Common Stock Dividends; Common Stock Splits; Reverse Common Stock
-----------------------------------------------------------------
Splits. If the Company, at any time while this Warrant is outstanding, (a)
- ------
shall pay a stock dividend on its Common Stock, (b) subdivide outstanding shares
of Common Stock into a larger number of shares, (c) combine outstanding shares
of Common Stock into a smaller number of shares or (d) issue by reclassification
of shares of Common Stock any shares of capital stock of the Company, then (i)
the Exercise Price shall be multiplied by a fraction the numerator of which
3
<PAGE>
shall be the number of shares of Common Stock (excluding treasury shares, if
any) outstanding before such event and the denominator of which shall be the
number of shares of Common Stock outstanding (excluding treasury shares, if any)
after such event and (ii) the number of Warrant Shares shall be multiplied by a
fraction, the numerator of which shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding after such event and the
denominator of which shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event. Any adjustment made
pursuant to this paragraph (6)(a) shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b. Rights; Options; Warrants or Other Securities. If the Company,
---------------------------------------------
at any time while this Warrant is outstanding, shall fix a record date for the
issuance of rights, options, warrants or other securities to all of the holders
of Common Stock entitling them to subscribe for or purchase, convert to,
exchange for or otherwise acquire shares of Common Stock for no consideration or
at a price per share less than the Exercise Price, the Exercise Price shall be
multiplied by a fraction, the denominator of which shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding on the date of
issuance of such rights, options, warrants or other securities plus the number
of additional shares of Common Stock offered for subscription, purchase,
conversion, exchange or acquisition and the numerator of which shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
on the date of issuance of such rights, options, warrants or other securities
plus the number of shares which the aggregate offering price of the total number
of shares so offered would purchase at the Exercise Price. Such adjustment
shall be made whenever such rights, options, warrants or other securities are
issued, and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such rights, options, warrants
or other securities.
c. Subscription Rights. If the Company, at any time while this
-------------------
Warrant is outstanding, shall fix a record date for the distribution to all of
the holders of Common Stock evidence of its indebtedness or assets or rights,
options, warrants or other security entitling them to subscribe for or purchase,
convert to, exchange for or otherwise acquire any security (excluding those
referred to in paragraphs 6(a) and (b) above), then in each such case the
Exercise Price at which the Warrant shall thereafter be exercisable shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of shareholders entitled to receive such
distribution by a fraction, the denominator of which shall be the Per Share
Market Value of Common Stock determined as of the record date mentioned above,
and the numerator of which shall be such Per Share Market Value of the Common
Stock on such record date less the then fair market value at such record date of
the portion of such assets or evidence of indebtedness so distributed applicable
to one outstanding share of Common Stock as determined by the Board of Directors
in good faith; provided, however, that in the event of a distribution exceeding
-------- -------
ten percent (10%) of the net assets of the Company, such fair market value shall
be determined in accordance with the Appraisal Procedure. Such adjustment shall
be made whenever any such distribution is made and shall become effective
immediately after the record date mentioned above.
4
<PAGE>
d. Rounding. All calculations under this Section 6 shall be made to
--------
the nearest cent or the nearest l/l00th of a share, as the case may be.
e. Notice of Adjustment. Whenever the Exercise Price is adjusted
--------------------
pursuant to paragraphs 6(a), (b) or (c), the Company shall promptly deliver to
the Registered Owner a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
f. Redemption Events. The following are "Redemption Events" under
----------------- -----------------
this Section 6(f): (A) any Change of Control or (B) any suspension from listing
or delisting of the Common Stock from the Nasdaq or any Subsequent Market on
which the Common Stock is listed for a period of five consecutive days. On and
after the date of any Redemption Event, the Registered Owner shall have the
option to require the Company to redeem (the "Redemption Right"), for a period
----------------
of thirty (30) days after the Registered Owner receives notice of Redemption
Event, in cash within 10 days of the Redemption Event, the Registered Owner's
shares of Common Stock immediately theretofore acquirable and receivable upon
the exercise of such Registered Owner's Warrant at a price per share equal to
the product of (i) the amount by which, if any, the Average Price immediately
preceding the latest of the effective date, the date of the closing, date of
occurrence or the date of the announcement, as the case may be, of the
Redemption Event triggering such Redemption Right exceeds the Exercise Price and
(ii) the number of shares of Common Stock issuable upon exercise of the Warrant
immediately prior to such Redemption Event. After the occurrence of (A), the
Registered Owner shall have the right at his or its option, in lieu of the
Redemption Right, to exercise the Warrant for shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
Common Stock following such Redemption Event; the Registered Owner shall be
entitled upon such event to receive such amount of securities, cash or property
as if the Registered Owner had exercised the Warrant of the shares of the Common
Stock issuable upon exercise of the Warrant immediately prior to such Redemption
Event (without taking into account any limitations or restrictions on the
exercise of the Warrant). In the case of a transaction specified in (A) in
which holders of the Company's Common Stock receive cash, the Registered Owner
shall have the right at his or its option, in lieu of the Redemption Right, to
exercise the Warrant for such number of shares of the surviving company equal to
the amount of cash into which the Warrant is exercisable divided by the fair
market value of the shares of the surviving company on the effective date of the
merger. In the case of (A), the Company shall not effect any such Redemption
Event unless, prior to the consummation thereof, each Person (other than the
Company) which may be required to deliver any stock, securities, cash or
property upon the exercise of the Warrant as provided herein shall assume, by
written instrument delivered and reasonably satisfactory to, the Registered
Owner, (a) the obligations of the Company under the Warrant (and if the Company
shall survive the consummation of such transaction, such assumption shall be in
addition to, and shall not release the Company from, any continuing obligations
of the Company under this Warrant), (b) the obligations of the Company under the
Purchase Agreement, the Warrant and the Registration Rights Agreement, and (c)
the obligation to deliver to the Registered Owner such shares of stock,
securities, cash or property as, in accordance with the foregoing provisions of
this Section 6(f), the Registered Owner may be entitled to receive. Nothing in
this Section 6(f) shall be deemed to authorize the Company to
5
<PAGE>
enter into any transaction not otherwise permitted by the Purchase Agreement.
This provision shall similarly apply to successive Redemption Events.
g. Notice of Certain Events. If:
------------------------
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
(ii) the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
(iii) the Company shall authorize the granting to the holders of
the Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights; or
(iv) the approval of any shareholders of the Company shall be
required in connection with any reclassification of the Common Stock
of the Company, any consolidation or merger to which the Company is a
party, any sale or transfer of all or substantially all of the assets
of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of exercise of this Warrant, and shall cause to be delivered to the
Registered Owner, at least 10 Business Days prior to the applicable record or
effective date hereinafter specified, a notice (provided such notice shall not
include any material non-public information) stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
h. Adjustment of Number of Shares. Upon each adjustment of the
------------------------------
Exercise Price as a result of the calculations made in this Section 6, this
Warrant shall thereafter evidence the right to receive, at the adjusted Exercise
Price, that number of shares of Common Stock (calculated to the nearest one-
hundredth) obtained by dividing (i) the product of the aggregate number of
shares covered by this Warrant immediately prior to such adjustment and the
Exercise Price in effect immediately prior to such adjustment of the Exercise
Price by (ii) the Exercise Price in effect immediately after such adjustment of
the Exercise Price.
6
<PAGE>
7. Officer's Certificate. Whenever the number of shares purchasable upon
exercise shall be adjusted as required by the provisions of Section 7, the
Company shall forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office and with its stock transfer agent, if any, an
officer's certificate showing the adjusted Exercise Price, number of shares or
other securities determined as herein provided, setting forth in reasonable
detail the facts requiring such adjustment and the manner of computing such
adjustment. Each such officer's certificate shall be signed by the chairman,
president or chief financial officer of the Company and by the secretary or any
assistant secretary of the Company. Each such officer's certificate shall be
made available at all reasonable times for inspection by any Registered Owner of
the Warrants and the Company shall, forthwith after each such adjustment,
deliver a copy of such certificate to the each of the Registered Owners.
8. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement.
As used in this Warrant, the following terms have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
---------
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
-------
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
---------- ----------- ----------
correlative to the foregoing.
"Appraisal Procedure" shall have the following meaning. The independent
-------------------
directors of the Company shall determine the fair market value. The Holders
shall have ten (10) Business Days to provide the Company with written notice of
its approval or disapproval of such determination. If the Holders do not
respond within such ten (10) Business Day period, they will be deemed to have
approved the fair market value determination of the independent directors. If
the Holders appropriately respond that they do not approve of the determination
and the independent directors and Holders collectively can not agree on an
appropriate fair market value within 30 Business Days, then the Company, on the
one hand, and the Holders, on the other hand shall each appoint an Appraiser. A
neutral Appraiser shall be appointed by the two party-appointed Appraisers. The
three Appraisers shall collectively ascertain the fair market value, which
valuation shall be binding upon all parties absent manifest error.
"Appraiser" shall mean a nationally recognized or major regional
---------
investment banking firm or firm of independent certified public accountants of
recognized standing.
"Average Price" on any date means (x) the sum of the Per Share Market Value
-------------
for the ten (10) Trading Days immediately preceding such date minus (y) the
highest and lowest Per Share Market Value during the ten (10) Trading Days
immediately preceding such date, divided by (z) eight (8), or a similar
calculation if another figure for the number of Trading Days is set forth for
clause (x) of this definition.
"Business Day" means any day except Saturday, Sunday and any day which
------------
shall be a legal holiday or a day on which banking institutions in the state of
New York generally are authorized or required by law or other government actions
to close.
7
<PAGE>
"Change of Control" means the occurrence of any of (i) an acquisition after
-----------------
the date hereof by an individual or legal entity or "group" (as described in
Rule 13d-5(b)(1) promulgated under the Exchange Act), other than the Purchasers
or any of their Affiliates, of in excess of 40% of the voting securities of the
Company, (ii) a replacement of more than one-half of the members of the
Company's Board of Directors which is not approved by those individuals who are
members of the Board of Directors on the date hereof in one or a series of
related transactions, (iii) the merger of the Company with or into another
entity, consolidation or sale of all or substantially all of the assets of the
Company in one or a series of related transactions, or (v) the execution by the
Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (i), (ii) , (iii), (iv) or
(v);
"Closing" means the closing of the purchase and sale of Common Stock and
-------
warrants as described in Section 1.2 and 1.3 of the Purchase Agreement.
"Common Stock" means the shares of the Company's Common Stock, par value
------------
$0.01 per share.
"Company" means SatCon Technology Corporation, a Delaware corporation.
-------
"Exercise Period" has the meaning assigned to it the Section 4 hereof.
---------------
"Exercise Price" has the meaning assigned to it in Section 3 hereof
--------------
"MTI Registration Rights Agreement" means that certain Registration Rights
---------------------------------
Agreement, dated October 13, 1999, among the Company and the Purchasers.
"Per Share Market Value" means on any particular date (i) the closing bid
----------------------
price per share of the Common Stock on such date on the National Market System
of the Nasdaq Stock Market or other registered national stock exchange on which
the Common Stock is then listed or if there is no such price on such date, then
the closing bid price on such exchange or quotation system on the date nearest
preceding such date, or (ii) if the Common Stock is not listed then on the
National Market System of the Nasdaq Stock Market or any registered national
stock exchange, the closing bid price for a share of Common Stock in the over-
the-counter market, as reported by the National Quotation Bureau Incorporated
(or similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (iii) if the Common Stock is
not then publicly traded the fair market value of a share of Common Stock as
determined in accordance with the Appraisal Procedure. In addition, all
determinations of the Per Share Market Value shall be appropriately adjusted for
any stock dividends, stock splits or other similar transactions during such
period.
"Purchase Agreement" means that certain Securities Purchase Agreement,
------------------
dated October 13, 1999, among the Company and the Purchaser.
"Purchaser" has the meaning set forth in the Purchase Agreement.
---------
"Redemption Event" has the meaning assigned to it in Section 6(f) hereof.
----------------
8
<PAGE>
"Redemption Right" has the meaning assigned to it in Section 6(f) hereof.
----------------
"Registered Owner" means the person identified on the face of this Warrant
----------------
as the registered owner hereof or such other person as shown on the records of
the Company as being the registered owner of this Warrant or their assigns.
"Trading Day(s)" means any day on which the primary market on which shares
--------------
of Common Stock are listed is open for trading.
"Underlying Shares" means the shares of Common Stock issuable upon exercise
-----------------
of the Warrants.
"Warrant(s)" means the warrants issuable to SatCon Technology Corporation
----------
at the Closing.
9. Registration Rights. The Warrant Shares are subject to the
Registration Rights Agreement.
10. Reservation of Underlying Shares; Listing. The Company covenants that
it will at all times reserve and keep available out of its authorized shares of
Common Stock, free from preemptive rights, solely for the purpose of issue upon
exercise of the Warrants as herein provided, such number of shares of the Common
Stock as shall then be issuable upon the exercise of all outstanding Warrants
into Common Stock. The Company covenants that all shares of the Common Stock
issued upon exercise of the Warrant which shall be so issuable shall, when
issued, be duly and validly issued and fully paid and non-assessable. The
Company shall promptly secure the listing of the shares of Common Stock issuable
upon exercise of the Warrant upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this Warrant) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock form time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and shall
maintain such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any shares of the
same class shall be listed on such national securities exchange or automated
quotation system.
11. Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 5:00 p.m.
eastern time where such notice is to be received), or the first Business Day
following such delivery (if received after 5:00 p.m. eastern time where such
notice is to be received) or (b) on the second Business Day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications are (i) if to the Purchaser to SatCon
Technology Corporation, 161 First Street, Cambridge, MA 02142-1221, Attn:
President and Chief Executive Officer, fax no. (617) 576-7455, with copies to
Hale & Dorr LLP, 60 State
9
<PAGE>
Street, Boston, MA 02109, Attn: Jeffrey N. Carp, Esq., fax no. (617) 526-5000
and (ii) if to the Company to Mechanical Technology Incorporated at 968 Albany-
Shaker Road, Latham, New York 12110, Attention: Cynthia A. Scheuer, Chief
Financial Officer with copies to Catherine S. Hill, PLLC, 4 Global View, Troy,
New York 12180, Attention: Catherine Hill, or such other address as may be
designated in writing hereafter, in the same manner, by such Person.
12. Compliance With Governmental Requirements. The Company covenants that
if any shares of Common Stock required to be reserved for purposes of exercise
of Warrants hereunder require registration with or approval of any governmental
authority under any Federal or state law, or any national securities exchange,
before such shares may be issued upon exercise, the Company will use its best
efforts to cause such shares to be duly registered or approved, as the case may
be.
13. Fractional Shares. Upon any exercise hereunder, the Company shall not
be required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the
Registered Owner shall be entitled to receive, in lieu of the final fraction of
a share, one whole share of Common Stock.
14. Payment of Tax Upon Issue of Transfer. The issuance of certificates
for shares of the Common Stock upon exercise of the Warrants shall be made
without charge to the Registered Owners thereof for any documentary stamp or
similar taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon exercise in a name other than that of the
Registered Owner of such Warrant so converted and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
15. Warrants Owned by Company Deemed Not Outstanding. In determining
whether the holders of the outstanding Warrants have concurred in any direction,
consent or waiver under this Warrant, warrants which are owned by the Company or
by any person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding for the purpose of any such determination.
Warrants so owned which have been pledged in good faith may be regarded as
outstanding if the pledgee establishes to the satisfaction of the Company the
pledgee's right so to act with respect to such warrants and that the pledgee is
not the Company or any other obligor upon the securities or any Affiliate of the
Company or any other obligor on the warrants.
16. Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction hereof.
17. No Rights as Stockholder. This Warrant shall not entitle the
Registered Owner to any rights as a stockholder of the Company, including
without limitation, the right to vote, to receive dividends and other
distributions, or to receive notice of, or to attend, meetings of
10
<PAGE>
stockholders or any other proceedings of the Company, unless and to the extent
converted into shares of Common Stock in accordance with the terms hereof.
18. Certain Actions Prohibited. The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
19. Shareholder Rights Plan. Notwithstanding the foregoing, in the event
that the Company shall distribute "poison pill" rights pursuant to a "poison
pill" shareholder rights plan (the "Rights"), the Company shall, in lieu of
------
making any adjustment pursuant to Section 6 hereof, make proper provision so
that each Registered Owner who exercises a Warrant after the record date for
such distribution and prior to the expiration or redemption of the Rights shall
be entitled to receive upon such exercise, in addition to the shares of Common
Stock issuable upon such exercise, a number of Rights to be determined as
follows: (i) if such exercise occurs on or prior to the date for the
distribution to the holders of Rights of separate certificates evidencing such
Rights (the "Distribution Date"), the same number of Rights to which a holder of
-----------------
a number of shares of Common Stock equal to the number of shares of Common Stock
issuable upon such exercise at the time of such exercise would be entitled in
accordance with the terms and provisions of and applicable to the Rights; and
(ii) if such exercise occurs after the Distribution Date, the same number of
Rights to which a holder of the number of shares into which the Warrant to
exercised was exercisable immediately prior to the Distribution Date would have
been entitled on the Distribution Date in accordance with the terms and
provisions of and applicable to the Rights, and in each case subject to the
terms and conditions of the Rights.
20. Successors and Assigns. This Warrant shall be binding upon and inure
to the benefit of the Registered Owners and its assigns, and shall be binding
upon any entity succeeding to the Company by merger or acquisition of all or
substantially all the assets of the Company. The Company may not assign this
Warrant or any rights or obligations hereunder without the prior written consent
of the Registered Owner. The Registered Owner may assign this Warrant without
the prior written consent of the Company.
21. Transfers. The Company shall maintain a register (the "Register")
containing the name and address of the Registered Owner of this Warrant, which
Register can be relied upon by the Company as conclusive evidence of the
Registered Owner. If the Registered Owner transfers or assigns this Warrant it
shall promptly notify the Company in writing of the name and address of the
person to which such transfer or assignation was made. Upon receipt of such
notice the Company shall immediately update the Register to incorporate the new
Registered Owner.
11
<PAGE>
22. Governing Law. This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the federal courts
sitting in the City of Albany, County of Albany, and if diversity jurisdiction
cannot be obtained, the state courts sitting in the City of Albany, County of
Albany for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Warrant and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first set forth above.
MECHANICALTECHNOLOGY INCORPORATED
By: /s/ David B. Eisenhaure
--------------------------
Name: David B. Eisenhaure
Title: President
12
<PAGE>
EXHIBIT A
Warrant Exercise Form
---------------------
TO: MECHANICAL TECHNOLOGY INCORPORATED
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of Mechanical Technology Incorporated,
pursuant to Warrant No. ___ heretofore issued to ___________________ on
____________, 199__; (2) encloses either (a) a cash payment of $__________ or
(b) the cancellation of such portion of the attached Warrant as is exercisable
for a total of _______ Warrant Shares (using a Fair Market Value of $ _____ per
share for purposes of this calculation); and (3) requests that a certificate for
the shares be issued in the name of the undersigned and delivered to the
undersigned at the address specified below.
Date: _____________________________
Investor Name: _____________________________
Taxpayer Identification _____________________________
Number: _____________________________
By: _____________________________
Printed Name: _____________________________
Title: _____________________________
Address: _____________________________
_____________________________
_____________________________
Note: The above signature should correspond exactly
with the name on the face of this Warrant or with the
name of assignee appearing in assignment form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant is to be issued in the name of said undersigned
for the balance remaining of the shares purchasable thereunder less any fraction
of a share paid in cash and delivered to the address stated above.
13
