Exhibit 4.01





Exhibit 4.01




Execution Version




 





SECURITIES PURCHASE AGREEMENT




by and between




FUELCELL ENERGY, INC.




and




POSCO POWER




June 9, 2009




 




 


 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 1 PURCHASE AND SALE OF SECURITIES
	 	 	1	 
	1.1 Purchase and Sale of Securities
	 	 	1	 
	1.2 Payment
	 	 	1	 
	1.3 Adjustment
	 	 	2	 
	1.4 Closing Date
	 	 	2	 
	1.5 Additional Purchaser Deliveries at the Closing
	 	 	2	 
	1.6 Additional Company Deliveries at the Closing
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	 	 	2	 
	2.1 Organization and Qualification
	 	 	2	 
	2.2 Authorization; Enforcement
	 	 	3	 
	2.3 Capitalization
	 	 	3	 
	2.4 Issuance of Shares
	 	 	4	 
	2.5 No Conflicts; Government Consents and Permits
	 	 	4	 
	2.6 SEC Documents, Financial Statements
	 	 	5	 
	2.7 Disclosure Controls and Procedures
	 	 	5	 
	2.8 Accounting Controls
	 	 	6	 
	2.9 Absence of Litigation
	 	 	6	 
	2.10 Intellectual Property Rights
	 	 	6	 
	2.11 No Material Adverse Change
	 	 	7	 
	2.12 Taxes
	 	 	7	 
	2.13 Real and Personal Property
	 	 	7	 
	2.14 Material Contracts
	 	 	8	 
	2.15 Employee Benefit Plans; Employee Matters
	 	 	8	 
	2.16 Environmental Laws
	 	 	8	 
	2.17 Compliance with Law
	 	 	9	 
	2.18 Insurance
	 	 	9	 
	2.19 Foreign Corrupt Practices
	 	 	9	 
	2.20 Related Party Transactions
	 	 	9	 
	2.21 No Integration; General Solicitation
	 	 	9	 
	2.22 No Registration Rights
	 	 	10	 
	2.23 NASDAQ
	 	 	10	 
	2.24 Investment Company
	 	 	10	 
	2.25 Acknowledgment Regarding Purchaser’s Purchase of Shares
	 	 	10	 
	2.26 Accountants
	 	 	11	 
	2.27 Takeover Provision
	 	 	11	 
	2.28 No Manipulation of Stock
	 	 	11	 
	2.29 Form S-3 Eligibility
	 	 	11	 
	2.30 Vote Required
	 	 	11	 
	2.31 Board Approval
	 	 	11	 
	2.32 Sarbanes-Oxley Act
	 	 	11	 
	2.33 Books and Records
	 	 	12	 
	2.34 Transfer Taxes
	 	 	12	 






 


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	 	 	Page	 
	 
	2.35 Fees
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 3 PURCHASER’S REPRESENTATIONS AND WARRANTIES
	 	 	12	 
	3.1 Investment Purpose
	 	 	12	 
	3.2 Purchaser Status; Questionnaires
	 	 	12	 
	3.3 Reliance on Exemptions
	 	 	12	 
	3.4 Information
	 	 	13	 
	3.5 Acknowledgement of Risk
	 	 	13	 
	3.6 Governmental Review
	 	 	13	 
	3.7 Transfer or Resale
	 	 	14	 
	3.8 Legends
	 	 	14	 
	3.9 Authorization; Enforcement
	 	 	15	 
	3.10 Residency
	 	 	15	 
	3.11 No Short Sales
	 	 	15	 
	3.12 Brokers
	 	 	15	 
	3.13 Additional Representations by Non-US Person
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 4 COVENANTS
	 	 	16	 
	4.1 Reporting Status and Public Information
	 	 	16	 
	4.2 Financial Information
	 	 	16	 
	4.3 Securities Laws Disclosure; Publicity
	 	 	16	 
	4.4 Covenants Pending Closing
	 	 	16	 
	4.5 Limits on Additional Issuances
	 	 	17	 
	4.6 Sales by Purchaser
	 	 	17	 
	4.7 Further Assurances
	 	 	17	 
	4.8 Consents and Approvals
	 	 	17	 
	4.9 No Solicitation
	 	 	17	 
	4.10 Form D and Blue Sky
	 	 	17	 
	4.11 Efforts to Satisfy Conditions
	 	 	18	 
	4.12 Use of Proceeds
	 	 	18	 
	4.13 Expenses
	 	 	18	 
	4.14 Additional Right of Purchaser
	 	 	18	 
	4.15 Pro rata Rights
	 	 	19	 
	4.16 Due Diligence
	 	 	19	 
	4.17 Indemnification
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 5 CONDITIONS TO CLOSING
	 	 	20	 
	5.1 Conditions to Obligations of the Company
	 	 	20	 
	5.2 Conditions to Purchaser’s Obligations at the Closing
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 6 REGISTRATION RIGHTS
	 	 	22	 
	6.1 Mandatory Registration
	 	 	22	 
	6.2 Demand Registrations
	 	 	23	 
	6.3 Piggy-Back Registrations
	 	 	23	 
	6.4 Ineligibility for Form S-3
	 	 	24	 
	6.5 Failure to File, Obtain and Maintain Effectiveness of Registration Statement
	 	 	24	 
	6.6 Related Obligations
	 	 	24	 






 


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	 	 	Page	 
	 
	6.7 Obligations of the Holder
	 	 	29	 
	6.8 Expenses of Registration
	 	 	30	 
	6.9 Indemnification
	 	 	30	 
	6.10 Assignment and Transfer
	 	 	32	 
	6.11 Amendment and Waiver of Registration Rights
	 	 	33	 
	6.12 Lock-Up Period
	 	 	33	 
	 
	 	 	 	 
	ARTICLE 7 MISCELLANEOUS
	 	 	33	 
	7.1 Termination
	 	 	33	 
	7.2 Effect of Termination
	 	 	34	 
	7.3 Governing Law; Jurisdiction
	 	 	34	 
	7.4 Counterparts; Signatures by Facsimile
	 	 	34	 
	7.5 Headings
	 	 	34	 
	7.6 Severability
	 	 	34	 
	7.7 Entire Agreement; Amendments; Waiver
	 	 	34	 
	7.8 Notices
	 	 	35	 
	7.9 Successors and Assigns
	 	 	36	 
	7.10 Third Party Beneficiaries
	 	 	36	 
	7.11 No Strict Construction
	 	 	36	 
	7.12 Equitable Relief
	 	 	36	 
	7.13 Survival of Representations and Warranties
	 	 	36	 
	7.14 Limitation on Enforcement of Remedies
	 	 	36	 
	7.15 Aggregation of Stock
	 	 	36	 
	7.16 Reproduction of Documents
	 	 	36	 
	7.17 Lost, etc. Certificates Evidencing Shares; Exchange
	 	 	37	 
	7.18 Draftsmanship
	 	 	37	 







 


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SECURITIES PURCHASE AGREEMENT




This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of June 9, 2009, is
made by and between FUELCELL ENERGY, INC., a Delaware corporation (the “Company”), and
POSCO POWER, a Korean corporation, together with its permitted transferee (the
“Purchaser”). Capitalized terms used herein and not otherwise defined have the meanings
given to them in Exhibit A.



RECITALS:




A. The Company and the Purchaser are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section 4(2) of the Securities Act and/or
Regulation D under the Securities Act or Regulation S thereunder.



B. The Purchaser desires to purchase and the Company desires to sell, subject to the terms and
conditions stated in this Agreement, 6,963,788 shares of Common Stock.



C. As set forth herein, the Company has agreed to provide certain registration rights with
respect to the Shares under the Securities Act and the rules and regulations promulgated
thereunder, and applicable state securities laws.



AGREEMENT




In consideration of the premises and the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company
and the Purchaser hereby agree as follows:



ARTICLE 1




PURCHASE AND SALE OF SECURITIES




1.1 Purchase and Sale of Securities. Subject to the terms and conditions set forth in
this Agreement and to the conditions set forth herein, and in reliance upon the Company’s and the
Purchaser’s representations set forth herein, at the Closing, the Company will issue and sell to
the Purchaser, and the Purchaser will purchase from the Company 6,963,788 shares of Common Stock
(each a “Share” and collectively, the “Shares”), free and clear of any Liens. At
the Closing, the Purchaser shall pay the Company, as consideration for the Shares, cash in an
amount equal to the product of (i) the number of Shares and (ii) the Market Price (the
“Purchase Price”). The “Market Price” shall be equal to the average of the
respective last sale prices per share of Common Stock on the Nasdaq Stock Market (“NASDAQ”)
on the ten (10) most recent trading days prior to the date hereof.



1.2 Payment. At the Closing, the Purchaser shall pay the Purchase Price by wire
transfer of immediately available funds, in US dollars, in accordance with wire instructions
provided by the Company to the Purchaser at least three (3) Business Days prior to the Closing.
The Company will instruct its transfer agent to deliver to the Purchaser at Closing a certificate
evidencing the Shares registered in the name of the Purchaser, or in the name of a nominee
designated by the Purchaser, against delivery of the Purchase Price on the Closing Date.


 


 









 





1.3 Adjustment. The number of Shares to be purchased by the Purchaser at the Closing
pursuant to Sections 1.1 and 1.2 and the Purchase Price shall be proportionately
adjusted for any subdivision or combination of Common Stock (by stock split, reverse stock split,
dividend, reorganization, recapitalization or otherwise).



1.4 Closing Date. The closing of the transaction contemplated by this Agreement (the
“Closing”) will take place within 60 days of the date hereof or such other date and time as
shall be agreed in writing by the Company and the Purchaser, unless this Agreement has been earlier
terminated pursuant to its terms (the actual time and date of the Closing being referred to herein
as the “Closing Date”). The Closing will be held at the offices of Patterson Belknap Webb
& Tyler LLP, 1133 Avenue of the Americas, New York, New York 10036 or at such other time and place
as shall be agreed upon by the Company and the Purchaser. At the Closing, the Company and the
Purchaser shall make certain deliveries, as specified in Sections 1.2, 1.5 and
1.6, and all such deliveries, regardless of chronological sequence, shall be deemed to
occur contemporaneously and simultaneously on the occurrence of the last delivery and none of such
deliveries shall be effective until the last of the same has occurred.



1.5 Additional Purchaser Deliveries at the Closing. At the Closing, the Purchaser
shall deliver to the Company, subject to Section 1.2, the certificates, agreements,
instruments and other documents referred to in Section 5.1.



1.6 Additional Company Deliveries at the Closing. At the Closing, the Company shall
deliver to the Purchaser, subject to Section 1.2, the certificates, opinions, agreements,
instruments and other documents referred to in Section 5.2.



ARTICLE 2




REPRESENTATIONS AND WARRANTIES OF THE COMPANY




Except as specifically contemplated by this Agreement or as set forth in the Disclosure
Schedules, which Disclosure Schedules shall be deemed a part hereof, the Company hereby represents
and warrants as follows:



2.1 Organization and Qualification. The Company is duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, with full corporate power
and authority to conduct its business as currently conducted as disclosed in the SEC Documents.
Each of the Company’s Subsidiaries is duly formed, validly existing and in good standing under the
laws of the laws of its jurisdiction of organization, with full corporate power and authority to
conduct its business as currently conducted. The Company owns all of the capital stock or
membership interests of each Subsidiary free and clear of any and all Liens, and all of the
outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights. The Company and each of its Subsidiaries
is duly qualified to do business and is in good standing in each jurisdiction in which the nature
of the business conducted by it 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 be
reasonably likely to have a Material Adverse Effect and, to the Company’s knowledge, no proceeding
has been instituted in any such jurisdiction revoking, limiting or



 


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curtailing, or seeking to revoke, limit or curtail, such corporate power and authority or
qualification.



2.2 Authorization; Enforcement. The Company has all requisite corporate power and
corporate authority to enter into and to perform its obligations under this Agreement (and each of
the other agreements entered into by the parties hereto in connection with the Offering)
(collectively, the “Related Agreements”), to consummate the transactions contemplated
hereby and thereby and to issue the Shares in accordance with the terms hereof and thereof. The
execution, delivery and performance of this Agreement and the Related Agreements by the Company and
the consummation by it of the transactions contemplated hereby and thereby in accordance with the
respective terms hereof and thereof (including the issuance of the Shares) have been duly
authorized by all necessary corporate proceedings on the part of the Company. This Agreement and
the Related Agreements have been duly executed by the Company and, when delivered in accordance
with the terms hereof and thereof, will constitute legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, or moratorium
or similar laws affecting creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity and except as rights to indemnity and
contribution may be limited by applicable laws or public policy underlying such laws.




2.3 Capitalization.



(a) The authorized capital stock of the Company consists of 150,000,000 shares of its Common
Stock and 250,000 shares of preferred stock, par value $0.01 per share (the “Preferred
Stock”). As of the date hereof, the issued and outstanding shares of capital stock of the
Company consisted of 70,304,465 shares of Common Stock and 64,120 shares of Preferred Stock.



(b) All the outstanding shares of capital stock of Common Stock have been duly and validly
issued and are fully paid and non-assessable, and were issued in accordance with the registration
or qualification requirements of the Securities Act and any relevant state securities laws or
pursuant to valid exemptions therefrom.



(c) On the Closing Date, except as disclosed in the SEC Documents or on Section 2.3 of
the Disclosure Schedules, there will be no shares of Common Stock or any other equity security of
the Company issuable upon conversion, exchange or exercise of any security of the Company or any of
its Subsidiaries, nor will there be any rights, options, calls or warrants outstanding or other
agreements to acquire shares of Common Stock or capital stock of any Subsidiary nor will the
Company or any of its Subsidiaries be contractually obligated to purchase, redeem or otherwise
acquire any of their respective outstanding shares. Except as disclosed in the SEC Documents, no
stockholder of the Company is entitled to any preemptive or similar rights to subscribe for shares
of capital stock of the Company and no stockholder of the Company has any rights, contractual or
otherwise, to designate members of the Company’s Board of Directors (the “Board”), other
than in accordance with the DGCL. Except as disclosed in the SEC Documents, there are no
stockholder, voting or other agreements relating to the rights and obligations of the Company’s
stockholders.


 


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(d) The Company’s Certificate of Incorporation (the “Certificate of Incorporation”),
as in effect on the date hereof, and the Company’s Bylaws (the “Bylaws”) as in effect on
the date hereof, are each filed as exhibits to the SEC Documents.



2.4 Issuance of Shares. The Shares are duly authorized and, upon issuance, sale and
delivery as contemplated by this Agreement, the Shares will be validly issued, fully paid and
non-assessable securities of the Company, free and clear of any and all Liens, other than
restrictions on transfer imposed by federal or state securities laws. Assuming the accuracy of all
representations and warranties of the Purchaser set out in Article 3, the offer and
issuance by the Company of the Shares is exempt from registration under the Securities Act and all
applicable “blue sky” laws.




2.5 No Conflicts; Government Consents and Permits.



(a) The execution, delivery and performance of this Agreement and the Related Agreements by
the Company and the consummation by the Company of the transactions contemplated hereby and thereby
(including the issuance of the Shares) will not (i) conflict with or result in a violation of any
provision of its Certificate of Incorporation or Bylaws; (ii) except as described or referred to in
Section 2.5(a) of the Disclosure Schedules, violate or conflict with, or result in a breach
of any provision of, or constitute 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 notice, consent, termination,
amendment, acceleration or cancellation of, any agreement, indenture, or instrument to which the
Company or any of its Subsidiaries is a party, or (iii) subject to receipt of the Required
Approvals, result in a violation of any law, rule, regulation, order, judgment or decree (including
United States federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its securities are subject) applicable to the
Company or any of its Subsidiaries, except in the case of clauses (ii) and (iii) only, for such
conflicts, breaches, defaults and violations as would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect. Except as set forth in Section 2.5(a)
of the Company Disclosure Schedule, the execution, delivery and performance of this Agreement and
the Related Agreements by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including the issuance of the Shares) will not be deemed a change
of control under any agreement, instrument or indenture to which the Company or any of its
Subsidiaries is a party.



(b) The Company is not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency or any regulatory or self regulatory
agency in order for it to execute, deliver or perform any of its obligations under this Agreement
or any of the Related Documents in accordance with the terms hereof and thereof, or to issue and
sell the Shares in accordance with the terms hereof and thereof, other than such as have been made
or obtained, and except for (i) the registration of the Shares under the Securities Act pursuant to
Section 6 hereof, (ii) any filings required to be made under U.S. federal or state or
foreign securities laws, or (iii) any filings or notifications required by NASDAQ (collectively,
the “Required Approvals”).



(c) Each of the Company and its Subsidiaries have all franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as now being



 


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conducted by it as described in the SEC Documents, except for such franchise, permit, license
or similar authority, the lack of which would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect (“Material Permits”). Neither the Company nor any
of its Subsidiaries has received any actual notice of any proceeding relating to revocation or
modification of any Material Permit.



2.6 SEC Documents, Financial Statements. The Company has filed all reports required
to be filed by it under the Securities Act and the Exchange Act (all of the foregoing filed at
least ten (10) days prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits) incorporated by reference
therein, being hereinafter referred to 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 Document prior to the
expiration of any such extension. The Company has delivered to the Purchaser or its respective
representatives true, correct and complete copies of SEC Documents not available on the EDGAR
system, dated after March 31, 2009. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act or the Securities Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any
untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective dates, the Financial Statements and
the related notes complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto. The
Financial Statements and the related notes have been prepared in accordance with accounting
principles generally accepted in the United States, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in the Financial Statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they may not include
footnotes, may be condensed or summary statements or may conform to the SEC’s rules and
instructions for Reports on Form 10-Q) and fairly present in all material respects the consolidated
financial position of the Company as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).



2.7 Disclosure Controls and Procedures. The Company has established and maintains
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that
are effective in all material respects to ensure that material information relating to the Company,
including any consolidated Subsidiaries, is made known to its chief executive officer and chief
financial officer by others within those entities. The Company’s certifying officers have
evaluated the effectiveness of the Company’s controls and procedures as of the end of the period
covered by the most recently filed quarterly or annual periodic report under the Exchange Act (such
date, the “Evaluation Date”). The Company presented in its most recently filed quarterly
or annual periodic report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant changes in the
Company’s internal controls (as such term is defined in Item 307(b) of Regulation S-K under the
Exchange Act) or, to the Company’s knowledge, in other factors that could significantly affect the
Company’s internal controls.


 


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2.8 Accounting Controls. The Company maintains a system of accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting
principles as applied in the United States and to maintain accountability for assets, (iii) access
to assets is permitted only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.



2.9 Absence of Litigation. Except as disclosed in the SEC Documents, there is no
action, suit, proceeding or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the Company’s knowledge, threatened against the
Company or any of its Subsidiaries that if determined adversely to the Company or any of its
Subsidiaries would be reasonably likely to have a Material Adverse Effect. Neither the Company or
any of its Subsidiaries, nor any director or officer thereof is, or within the last ten years has
been, the subject of any action involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty relating to the Company. There has
not been, and to the knowledge of the Company, there is not pending or contemplated, any
investigation by the SEC involving the Company or any of its Subsidiaries or any director or
officer thereof. The Company has not received any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the Exchange Act or the
Securities Act and, to the Company’s knowledge, the SEC has not issued any such order.




2.10 Intellectual Property Rights.



(a) The Company and its Subsidiaries own, or have sufficient rights to use and otherwise
exercise and exploit and license, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar rights necessary
or material for use in connection with (or otherwise used or anticipated to be used in) their
respective businesses as currently being conducted as described in the SEC Documents, as previously
conducted and as proposed to be conducted (collectively, the “Intellectual Property
Rights”), except where the failure to own or license such Intellectual Property Rights would
not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect.
Except as set forth in the SEC Documents, neither the Company nor any Subsidiary has received any
notice (including any offer of a license) that any past, current or proposed activity of (or any
Intellectual Property Rights used, exploited or exercised by) the Company or any Subsidiary may
violate or infringe upon the rights of any Person and neither has any reason to anticipate that any
such notice may be forthcoming (or that there is or may be any basis therefor). Except as set
forth in the SEC Documents, to the knowledge of the Company, all of the Intellectual Property
Rights are enforceable and there is no existing or expected infringement (or challenge) by another
Person of (or to) any of the Intellectual Property Rights. To the Company’s knowledge, no present
or former employee, officer or director of the Company or any of its Subsidiaries, or agent or
outside contractor of the Company or any of its Subsidiaries, holds any right, title or interest,
directly or indirectly, in whole or in part, in or to any Intellectual Property Rights, except
those formally assigned or transferred to the Company by such employees. The Company does not
believe it is or will be necessary to utilize any inventions of any of its employees (or people it
currently intends to



 


- 6 -









 






hire) made prior to their employment by the Company, except those formally assigned or
transferred to the Company by such employees.



(b) To the Company’s knowledge: (i) no trade secret of the Company or any of its Subsidiaries
has been used, disclosed or appropriated to the detriment of the Company or any of its Subsidiaries
for the benefit of any Person other than the Company or its Subsidiaries; and (ii) no employee,
independent contractor or agent of the Company or any of its Subsidiaries has misappropriated any
trade secrets or other confidential information of any other Person in the course of the
performance of his or her duties as an employee, independent contractor or agent of the Company or
its Subsidiaries, except in the cases of clauses (i) and (ii) as would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect.



2.11 No Material Adverse Change. Since December 31, 2008, except as disclosed in the
SEC Documents or has occurred in the ordinary course of business, there has been no (i) change,
circumstance, development or event which, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect, (ii) declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of the Company, (iii) issuance of capital stock
(other than pursuant to (1) the exercise of options, warrants, or convertible securities
outstanding at such date or (2) employee benefit plans) or options, warrants or rights to acquire
capital stock (other than the rights granted (1) to the Purchaser hereunder or (2) pursuant to
employee benefit plans), (iv) material loss, destruction or damage to any property of the Company
or any of its Subsidiaries, whether or not insured, (v) acceleration of any indebtedness for
borrowed money or the refunding of any such indebtedness, (vi) labor trouble involving the Company
or any of its Subsidiaries or any material change in their personnel or the terms and conditions of
employment, (vii) waiver of any valuable right in favor of the Company or any of its Subsidiaries,
(viii) loan or extension of credit to any officer of the Company or any of its Subsidiaries or to
any employee of the Company or any of its Subsidiaries in an amount in excess of $25,000 or
(ix) acquisition or disposition of any material assets (or any contract or arrangement therefor),
or any other material transaction by the Company or any of its Subsidiaries otherwise than for fair
value in the ordinary course of business. The Company has not taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy proceedings.



2.12 Taxes. The Company and its Subsidiaries have filed (or have obtained an
extension of time within which to file) all necessary federal, state and foreign income and
franchise tax returns and has paid all taxes shown as due on such tax returns, except where the
failure to so file or the failure to so pay would not, individually or in the aggregate, have a
Material Adverse Effect. Each of the Company and its Subsidiaries has complied in all material
respects with all applicable legal requirements relating to the payment and withholding of taxes
and, within the time and in the manner prescribed by law, has withheld from wages, fees and other
payments and paid over to the proper governmental or regulatory authorities all amounts required.



2.13 Real and Personal Property. The Company and its Subsidiaries have good and
marketable title to, or have valid rights to lease or otherwise use, all items of real and personal
property that are material to the business of the Company and its Subsidiaries, free and clear of
all liens, encumbrances, claims and defects and imperfections of title except those that (i) do not



 


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materially interfere with the use of such property by the Company and its Subsidiaries or (ii)
would not, individually or in the aggregate, be reasonably likely to have a Material Adverse
Effect.




2.14 Material Contracts.



(a) Except for contracts filed as exhibits to the SEC Documents (“Material Contracts”)
and except for this Agreement and the Related Agreements, the Company does not have any agreements,
contracts and commitments that are material to the business, financial condition, assets, prospects
or operations of the Company or any of its Subsidiaries that would be required to be filed under
the Exchange Act.



(b) The Company is not in material default under or in violation of, nor to the Company’s
knowledge, is there any valid basis for any claim of default under or violation of, any Material
Contract.



(c) All agreements, contracts and commitments required to be filed by the Company under the
Exchange Act or the Securities Act have been filed in a timely manner with the SEC.



2.15 Employee Benefit Plans; Employee Matters. The consummation of the transactions
contemplated by this Agreement and the Related Agreements will not (i) entitle any current or
former employee or other service provider of the Company or any of its Subsidiaries to severance
benefits or any other payment, compensation or benefit (including forgiveness of indebtedness),
except as expressly provided by this Agreement, or (ii) accelerate the time of payment or vesting,
or increase the amount of compensation or benefit due any such employee or service provider, alone
or in conjunction with any other possible event (including termination of employment). The Company
and its Subsidiaries are in compliance in all material respects with all currently applicable laws
and regulations respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment practices, and is not
engaged in any unfair labor practice. To the Company’s knowledge, no employees of the Company or
its Subsidiaries are in material violation of any term of any material employment contract, patent
disclosure agreement, noncompetition agreement, or any restrictive covenant to a former employer
relating to the right of any such employee to be employed by the Company (or its Subsidiaries)
because of the nature of the business conducted or presently proposed to be conducted by the
Company or its Subsidiaries or to the use of trade secrets or proprietary information of others.
No key employee of the Company or any of its Subsidiaries has given written notice to the Company
or its Subsidiaries, and the Company is not otherwise aware, that any such key employee intends to
terminate his or her employment with the Company or any of its Subsidiaries.



2.16 Environmental Laws. The Company is not in violation of any applicable statute,
law or regulation relating to the environment or occupational health and safety, violation of which
would, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect.
None of the premises or any properties owned, occupied or leased by the Company or any of its
Subsidiaries have been used by the Company or any of its Subsidiaries, or to the Company’s
knowledge, by any other Person to manufacture, treat, store, or dispose of any substance that have
been designated to be a “hazardous substance” under applicable environmental laws in violation of



 


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any applicable environmental laws, violation of which would, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect.



2.17 Compliance with Law. Neither the Company nor any of its Subsidiaries is in
violation of any laws, ordinances, governmental rules or regulations to which it is subject,
including ,without limitation laws or regulations relating to the environment or to occupational
health and safety, except for violations that would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect, and no material expenditures are known to be
or expected to be required in order to cause its current operations or properties to comply with
any such law, ordinances, governmental rules or regulations.



2.18 Insurance. The Company and its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as the
Company believes are prudent and customary for a company (i) in the business and stage of
development and locations in which the Company or any of its Subsidiaries are engaged and (ii) with
the resources of the Company and its Subsidiaries. The Company has not received any written notice
that the Company or its Subsidiaries will not be able to renew its existing insurance coverage as
and when such coverage expires. All of such policies are in full force and effect and are valid
and enforceable in accordance with their terms, and the Company has complied with all material
terms and conditions of such policies, including premium payments. The Company believes it will be
able to obtain similar coverage at reasonable cost from similar insurers as may be necessary to
continue its business.



2.19 Foreign Corrupt Practices. Neither the Company or any of its Subsidiaries, nor
to the Company’s knowledge, any director, officer, agent, employee or other Person acting on behalf
of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of,
the Company or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of in any material respect any provision of the
U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made or received any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to or from any foreign
or domestic government official or employee.



2.20 Related Party Transactions. Except with respect to the transactions that are
contemplated hereby or in the Related Agreements to the extent an Affiliate of any director or
officer of the Company purchases Shares in the Offering and except with respect to transactions
involving amounts less than $60,000, all transactions, including, without limitation, any contract,
agreement or other arrangement providing for the furnishing of services, providing for rental of
real estate or personal property or otherwise involving payments or obligations, that have occurred
between or among the Company, on the one hand, and any of its officers or directors, or any
Affiliate or Affiliates of any such executive officer or director, on the other hand, prior to the
date hereof have been disclosed in the SEC Documents in accordance with the requirements of Item
404 of Regulation S-K under the Securities Act.



2.21 No Integration; General Solicitation. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any
offers or



 


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sales of any security or solicited any offers to buy any security, under circumstances that
would cause the Offering to be integrated with any prior offering by the Company for purposes of
the Securities Act or any applicable stockholder approval provisions including, without limitation,
under the rules and regulations of any exchange or quotation system on which any of the securities
of the Company are listed or designated. Neither the Company nor any of its Affiliates, nor any
Person acting on its or their behalf, has offered or sold, or authorized the offer or sale of, any
of the Shares by any form of general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act. The Company has not publicly distributed and will not publicly
distribute prior to the Closing Date any offering material in connection with the Offering. The
Company has offered the Shares for sale only to the Purchaser and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act and Persons who are not “US
persons” within the meaning of Rule 902(k) under the Securities Act. The Company shall not
directly or indirectly take, and shall not permit any of its directors, or officers indirectly to
take, any action (including any offering or sale to any Person of the Shares) that will make
unavailable the exemption from registration under the Securities Act being relied upon by the
Company for the offer and sale to the Purchaser of the Shares as contemplated by this Agreement and
the Related Agreements.



2.22 No Registration Rights. No Person other than the Purchaser has the right to
(i) prohibit, delay or suspend the Company from filing the Registration Statement and fully
performing its obligations with respect thereto as contemplated hereunder or (ii) except for
obligations under warrant agreements disclosed in the SEC Documents, require the Company to
register any securities for sale under the Securities Act by reason of the filing of the
Registration Statement and no other registration rights exist with respect to the issuance or
registration of securities by the Company under the Securities Act which have not been satisfied.
The granting and performance of the registration rights under this Agreement will not violate or
conflict with, or result in a breach of any provision of, or constitute a default under, any
agreement, indenture, or instrument to which the Company or any of its Subsidiaries is a party.



2.23 NASDAQ. The Common Stock is registered pursuant to Section 12(g) of the Exchange
Act, and is listed on NASDAQ, and trading in the Common Stock has not been suspended and the
Company has taken no action designed to, or that is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common Stock from the
NASDAQ. To the Company’s knowledge, the Company and the Common Stock meet the criteria for
continued listing and trading on NASDAQ.



2.24 Investment Company. The Company is not and, after giving effect to the offering
and sale of the Shares, will not be an “investment company” as such term is defined in the
Investment Company Act of 1940, as amended (the “Investment Company Act”). The Company
shall conduct its business in a manner so that it will not become subject to the Investment Company
Act.



2.25 Acknowledgment Regarding Purchaser’s Purchase of Shares. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length
purchaser with respect to this Agreement and the Related Agreements and the transactions
contemplated hereby and thereby. 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



 


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the Company) with respect to this Agreement and the Related Agreements and the transactions
contemplated hereby and thereby and any advice given by the Purchaser or any of its respective
representatives or agents to the Company in connection with this Agreement and the Related
Agreements and the transactions contemplated hereby and thereby is merely incidental to the
Purchaser’s purchase of the Shares. The Company further represents to the Purchaser that the
Company’s decision to enter into this Agreement and the Related Agreements has been based on the
independent evaluation of the transactions contemplated hereby and thereby by the Company and its
representatives.



2.26 Accountants. KPMG LLP, which the Company expects will express its opinion with
respect to the audited financial statements and schedules to be included as a part of the
Registration Statement prior to the filing of the Registration Statement, has advised the Company
that it is, and to the best knowledge of the Company it is, an independent accountant as required
by the Sarbanes-Oxley Act of 2002, the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder.



2.27 Takeover Provision. The Company and its Board have taken all necessary action in
order to render inapplicable any corporate takeover provision under laws of the State of Delaware,
including Section 203 of the DGCL, or any other state or federal “fair price”, “moratorium”,
“control share acquisition”, “business combination” or other similar anti-takeover statute or
regulation, poison pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation or the Bylaws (each, a “Takeover
Provision”) which is, or could be, applicable to the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the Shares and
the Purchaser’s ownership, voting (to the extent applicable) or disposition of the Shares.



2.28 No Manipulation of Stock. The Company has not taken, nor will it take, directly
or indirectly, any action outside the ordinary course of business designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price of the Common Stock
to facilitate the sale or resale of the Shares.



2.29 Form S-3 Eligibility. The Company is eligible to register the resale of its
Common Stock by the Purchaser under Form S-3 promulgated under the Securities Act.



2.30 Vote Required. No vote of the holders of any class or series of the Company’s
capital stock, including the Common Stock, is necessary to approve the issuance of the Shares and
any other transactions contemplated by this Agreement or the Related Agreements.



2.31 Board Approval. The Board, at a meeting duly called and held, has (a) determined
that the Offering is fair to, advisable and in the best interests of the Company and the
stockholders of the Company, and (b) approved the Offering and this Agreement and the Related
Agreements.



2.32 Sarbanes-Oxley Act. The Company is in compliance with any and all applicable
requirements of the Sarbanes-Oxley Act of 2002, and any and all applicable rules and regulations
promulgated by the SEC thereunder, except where such noncompliance would not, individually or in
the aggregate, be reasonably likely to have a Material Adverse Effect.


 


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2.33 Books and Records. The books of account, minute books, stock record books and
other records of the Company and its Subsidiaries are complete and correct in all material respects
and have been maintained in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Exchange Act, including an adequate system of internal controls.



2.34 Transfer Taxes. On the Closing Date, all stock transfer or other taxes (other
than income taxes) which are required to be paid in connection with the sale and transfer of the
Shares hereunder will be, or will have been, fully paid or provided for by the Company and the
Company will have complied with all laws imposing such taxes.



2.35 Fees. The Company has taken no action that would give rise to any claim by any
Person for brokerage commissions, placement agent’s fees or similar payments relating to this
Agreement or the transactions contemplated hereby.



ARTICLE 3




PURCHASER’S REPRESENTATIONS AND WARRANTIES





The Purchaser represents and warrants to the Company as follows:



3.1 Investment Purpose. The Purchaser is purchasing the Shares for its own account
for investment and not with a present view toward the public sale or distribution thereof and has
no intention of selling or distributing any of such Shares or any arrangement or understanding with
any other Persons regarding the sale or distribution of such Shares except as contemplated by this
Agreement or the Related Agreements and in compliance with the Securities Act. The Purchaser will
not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares except in
accordance with the provisions of this Agreement or the Related Agreements and in compliance with
applicable securities laws. In making the representation herein, however, the Purchaser does not
agree to hold any of the Shares for any minimum or other specified term and reserves the right to
dispose of the Shares at any time in compliance with the Securities Act.



3.2 Purchaser Status; Questionnaires. At the time Purchaser was offered the Shares,
it was, and at the date hereof it is: (i) an “accredited investor” as defined in Rule 501(a)(1),
(a)(2), (a)(3), (a)(7) and (a)(8) under the Securities Act or (ii) a Person who is not a “US
person” (as defined in Rule 902(k) under the Securities Act (a “Non-US Person”). All
information provided by the Purchaser to the Company in connection with the Purchaser’s purchase of
the Shares, including, but not limited to, the information provided in the Pre-Closing Securities
Ownership Questionnaire attached hereto as Exhibit B, was accurate and correct when
provided or delivered and is accurate and correct as of the date hereof.



3.3 Reliance on Exemptions. The Purchaser understands that the Shares are being
offered and sold to it in reliance upon specific exemptions from or non-application of the
registration requirements of United States federal and state securities laws and that the Company
is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in



 


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order to determine the availability of such exemptions and the eligibility of the Purchaser to
acquire the Shares.



3.4 Information. The Purchaser acknowledges that it has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the offering of the Shares
and the merits and risks of investing in the Shares; (ii) access to information about the Company
and its financial condition, results of operations, businesses, properties, management and
prospects sufficient to enable it to evaluate its investment, including, without limitation, the
Company’s SEC Documents, and the Purchaser has had the opportunity to review the SEC Documents; and
(iii) the opportunity to obtain such additional information that the Company possesses or can
acquire without unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other due diligence
investigation conducted by such Purchaser or any of its advisors or representatives shall modify,
amend or affect such Purchaser’s right to rely on the Company’s and its Subsidiaries
representations, warranties and covenants contained herein or in the Related Agreements.




3.5 Acknowledgement of Risk.



(a) The Purchaser acknowledges and understands that its investment in the Shares involves a
significant degree of risk, including, without limitation, (i) the Company has a history of
operating losses and requires substantial funds in addition to the proceeds from the sale of the
Shares; (ii) an investment in the Company is speculative, and only the Purchaser who can afford the
loss of their entire investment should consider investing in the Company and the Shares; (iii) the
Purchaser may not be able to liquidate its investment; (iv) transferability of the Shares is
limited; (v) in the event of a disposition of the Shares, the Purchaser could sustain the loss of
its entire investment; and (vi) the Company has not paid any dividends on its Common Stock since
inception and does not anticipate the payment of dividends in the foreseeable future. Such risks
are more fully set forth in the SEC Documents.



(b) The Purchaser is able to bear the economic risk of holding the Shares for an indefinite
period, and has knowledge and experience in financial and business matters such that it is capable
of evaluating the risks of the investment in the Shares.



(c) The Purchaser has, in connection with the Purchaser’s decision to purchase the Shares and
with respect to all matters relating to this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby, relied solely upon the advice of such Purchaser’s own
counsel and has not relied upon or consulted any counsel to the Company.



(d) The Purchaser is not purchasing the Shares as a result of any form of general solicitation
or general advertising within the meaning of Rule 502(c) under the Securities Act.



3.6 Governmental Review. The Purchaser understands that no United States federal or
state or foreign agency or any other government or governmental agency has passed upon or made any
recommendation or endorsement of the Shares or an investment therein.


 


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3.7 Transfer or Resale. The Purchaser understands that:



(a) the Shares have not been and are not being registered under the Securities Act (other than
as contemplated in Article 6 of this Agreement) or any applicable state securities laws
and, consequently, the Purchaser may have to bear the risk of owning the Shares for an indefinite
period of time because the Shares may not be transferred unless (i) the resale of the Shares is
registered pursuant to an effective registration statement under the Securities Act or exempt from
the registration requirements of the Securities Act under Rule 144 thereunder; or (ii) the
Purchaser has delivered to the Company an opinion of counsel to the Purchaser (in form, substance
and scope customary for opinions of counsel in comparable transactions) to the effect that the
Shares to be sold or transferred may be sold or transferred pursuant to an exemption from such
registration, provided that no opinion shall be required by the Company in the case of transfers
under Rule 144; and



(b) except as set forth in Article 6 of this Agreement, neither the Company nor any
other Person is under any obligation to register the resale of any Shares under the Securities Act
or any state or foreign securities laws or to comply with the terms and conditions of any exemption
thereunder.




3.8 Legends.



(a) The Purchaser understands the certificates representing the Shares will bear a restrictive
legend in substantially the following form (and a stop-transfer order may be placed against
transfer of the certificates for such securities):




“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OF THE
UNITED STATES IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR REGULATION S THEREUNDER, AND
ACCORDINGLY, MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED
OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES 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
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.”



(b) The Purchaser may request that the Company remove, and the Company agrees to authorize the
removal of any legend from the Shares (i) following any sale of the Shares pursuant to an effective
Registration Statement, or (ii) if such Shares are eligible for sale without restrictions under
Rule 144 or under any no-action letter issued by the SEC. Following the time a legend is no longer
required for any Shares hereunder, the Company will, no later than five (5)



 


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Business Days following the delivery by the Purchaser to the Company or the Company’s transfer
agent of a legended certificate representing such Shares, accompanied by such additional
information as the Company or the Company’s transfer agent may reasonably request, deliver or cause
to be delivered to the Purchaser a certificate representing such Shares that is free from all
restrictive and other legends.



(c) Notwithstanding anything herein to the contrary, the Company acknowledges and agrees that
the Company will not require an opinion of counsel in connection with the transfer by the Purchaser
of any Shares to an Affiliate of the Purchaser.



3.9 Authorization; Enforcement. The Purchaser is duly organized, validly existing and
in good standing under the laws of its jurisdiction of formation and has the requisite power and
authority to enter into this Agreement and the Related Agreements and to consummate the
transactions contemplated hereby and thereby. The Purchaser has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the Related Agreements.
Upon the execution and delivery of this Agreement and the Related Agreements, this Agreement and
the Related Agreements shall constitute a valid and binding obligation of the Purchaser enforceable
in accordance with its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general principles of
equity and except as rights to indemnity and contribution may be limited by applicable securities
laws or public policy underlying such laws.




3.10 Residency. The Purchaser is a resident of the Republic of Korea.



3.11 No Short Sales. Between the time the Purchaser learned about the Offering and
the public announcement of the Offering, the Purchaser has not engaged in any short sales or
similar transactions with respect to the Common Stock, nor has the Purchaser, directly or
indirectly, caused any Person to engage in any short sales or similar transactions with respect to
the Common Stock.



3.12 Brokers. The Purchaser has not engaged any brokers, finders or agents and has
not incurred, and will not incur, directly or indirectly, any liability for brokerage for finder’s
fees or agent’s commissions or any similar charges in connection with this Agreement and the
Related Agreements.



3.13 Additional Representations by Non-US Person. The Purchaser who is a Non-US
Person further represents and warrants to the Company with respect to itself and its purchase
hereunder that: (i) the Purchaser’s principal address is outside of the United States; (ii) the
Purchaser was located outside the United States at the time any offer to buy the Shares was made to
it and at the time the buy order was originated by the Purchaser; (iii) the Purchaser is not an
“affiliate” (as defined in Rule 144) of the Company or acting on behalf of an affiliate of the
Company; and (iv) the Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation
D under the Securities Act. The Purchaser who is a Non-US Person hereby expressly agrees not to
engage in hedging transactions with regard to the Shares unless in compliance with the Securities
Act and the terms of this Agreement.


 


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ARTICLE 4




COVENANTS




4.1 Reporting Status and Public Information. The Common Stock is registered under
Section 12 of the Exchange Act. During the Registration Period, the Company agrees to use
commercially reasonable efforts to (a) timely file all documents with the SEC, (b) make and keep
public information available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times, (c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act and (d) so long as a Holder owns any
Registrable Securities, furnish to such Holder, upon any reasonable request, a written statement by
the Company as to its compliance with Rule 144 under the Securities Act, and of the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such other reports and
documents of the Company as such Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing a Holder to sell any such securities without registration. During
the Registration Period, the Company will not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder
would permit such termination.



4.2 Financial Information. The financial statements of the Company to be included in
any documents filed with the SEC will be prepared in accordance with accounting principles
generally accepted in the United States, consistently applied (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes, may be condensed or summary
statements or may conform to the SEC’s rules and instructions for Reports on Form 10-Q), and will
fairly present in all material respects the consolidated financial position of the Company and
consolidated results of its operations and cash flows as of, and for the periods covered by, such
financial statements (subject, in the case of unaudited statements, to normal year-end audit
adjustments).




4.3 Securities Laws Disclosure; Publicity.



(a) Except as may be required by law or the rules of the SEC or NASDAQ, neither the Company
nor any Subsidiary shall use the name of, or make reference to, the Purchaser or any of its
Affiliates in any press release or in any public manner (including any reports or filings made by
the Company under the Exchange Act) without the Purchaser’s prior written consent, which consent
shall not be unreasonably withheld or delayed. Any press release of the Company shall be approved
by the Purchaser, which approval will not be unreasonably withheld or delayed.



(b) Within four (4) Business Days after the Closing Date, the Company shall file a Current
Report on Form 8-K with the SEC describing the terms of the transactions contemplated by this
Agreement and the Related Agreements and including as an exhibit to such Current Report on Form 8-K
this Agreement, in the form required by the Exchange Act.



4.4 Covenants Pending Closing. Prior to the Closing, the Company shall maintain its
existence and conduct and cause its Subsidiaries to conduct their respective businesses in usual,
regular and ordinary course in substantially the same manner as heretofore conducted,



 


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and shall not, and shall not permit its Subsidiaries to, without the prior written consent of
the Purchaser, such consent not to be unreasonably withheld, delayed or conditioned, take any
action which would result in any of the representations or warranties contained in this Agreement
not being true or correct at and as of the time immediately after such action, or in any of the
covenants contained in this Agreement becoming incapable of performance. The Company will promptly
advise the Purchaser of any action or event of which it becomes aware which has the effect of
making materially incorrect any of such representations or warranties or which has the effect of
rendering any of such covenants incapable of performance.



4.5 Limits on Additional Issuances. Neither the Company, any of its Subsidiaries nor
any of their respective Affiliates will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any “security” (as defined in the Securities Act) that could be integrated
with the sale of the Securities in a manner that could require the registration of the Securities
under the Securities Act.



4.6 Sales by Purchaser. The Purchaser agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection with the sales of
Registrable Securities pursuant to the Registration Statement or otherwise comply with the
requirements for an exemption from registration under the Securities Act and the rules and
regulations promulgated thereunder. The Purchaser will not make any sale, transfer, pledge or
other disposition of the Shares in violation of U.S. federal or state or foreign securities laws or
the terms of this Agreement.



4.7 Further Assurances. Each of the parties shall execute such documents and other
papers and take such further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby. Each such party shall use its
reasonable efforts to fulfill or obtain the fulfillment of the conditions to the Closing as
promptly as practicable.



4.8 Consents and Approvals. From and after the date hereof, the Company shall use its
reasonable best efforts to obtain as promptly as practicable any consent or approval of any Person,
including any regulatory authority, required in connection with the transactions contemplated
hereby.



4.9 No Solicitation. The Company will not, and will not permit any of its
Subsidiaries or any of their respective Affiliates to, engage in any form of general solicitation
or general advertising (as those terms are used in Regulation D under the Securities Act) in
connection with the offering of the Shares or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.



4.10 Form D and Blue Sky. The Company agrees to timely file a Form D with the SEC
with respect to the Shares to the extent required under Regulation D of the Securities Act and to
provide, upon request, a copy thereof to the Purchaser. The Company shall, on or before the
Closing Date, take such action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify the Shares for, sale to the Purchaser at the Closing
pursuant to this Agreement under applicable securities and “blue sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall provide evidence of
any such action



 


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so taken to the Purchaser on or prior to the Closing Date. The Company shall make all timely
filings and reports relating to the offer and sale of the Shares required under applicable
securities and “blue sky” laws of the states of the United States following the Closing Date. The
Company shall pay all fees and expenses in connection with satisfying its obligations under this
Section 4.10.



4.11 Efforts to Satisfy Conditions. Each party shall use its commercially reasonable
efforts to satisfy each of the conditions to be satisfied by it as provided in Article 5 of
this Agreement.



4.12 Use of Proceeds. The proceeds received by the Company from the issuance and sale
of the Shares shall be used by the Company for working capital and other general corporate
purposes.



4.13 Expenses. The Company and the Purchaser is liable for, and will pay, its own
expenses incurred in connection with the negotiation, preparation, execution and delivery of this
Agreement, including, without limitation, attorneys’ and consultants’ fees and expenses.




4.14 Additional Right of Purchaser.



So long as Purchaser (i) owns at least the number of shares of Common Stock that it owns
immediately following the Closing (as adjusted for any stock split, stock dividend, combination, or
other recapitalization or reclassification effected after the date hereof), and (ii) has executed
and delivered a confidentiality agreement with the Company that is consistent with the Company’s
obligations under Regulation FD promulgated under the Securities Act (an “FD Confidentiality
Agreement”), the Company shall deliver to Purchaser in the case of (i) below or will inform the
Purchaser of, and discuss with the Purchaser, any of the actions and matters described in (ii)
through (iv) below:



(i) such material information relating to the financial condition, business, prospects, or
corporate affairs of the Company (including the minutes, notices, consents and other materials that
it provides to its directors);



(ii) incurring, issuing or assuming any indebtedness that, in the aggregate, collectively
among the Company and its Subsidiaries, exceeds US $25,000,000 in one transaction or a series of
related transactions;



(iii) incurring any capital expenditure that exceeds US $25,000,000 in one transaction or a
series of related transactions;



(iv) selling, transferring or otherwise disposing of any material assets of the Company or any
Subsidiary (including, but not limited to, its technologies and intellectual property rights) in
any transaction or series of related transactions with a value that exceeds US $10,000,000;



provided, however, that the Company shall not be obligated under this Section 4.14 to provide
information specified in (i) through (iv) above (A) that the Company reasonably determines in good
faith to be a trade secret or confidential information (unless covered by an enforceable
confidentiality agreement, in form acceptable to the Company and the Purchaser) or (B) the



 


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disclosure of which would adversely affect the attorney-client privilege between the Company and
its counsel or put the Company at a competitive disadvantage.



4.15 Pro rata Rights. If at any time the Company wishes to issue any new equity
securities other than Excluded Securities (such Securities other than Excluded Securities the “New
Securities”) to any person (“Proposed Recipient”) the Company shall, to the extent reasonably
possible, promptly deliver a notice of its intention to issue such New Securities (the “New Issue
Notice”) to the Purchaser at least 5 days prior to the planned date of issuance setting forth the
type, number and description of the New Securities to be issued, the proposed subscription price
thereof, the identity of the Proposed Recipients (if known at such time) and any other proposed
material terms and conditions of such issuance. If the Company is unable to give prior notice of
such issuance, it will notify the Purchaser on the date of the issuance which later notice shall in
no event prevent the Purchaser from fully exercising its rights hereunder in a subsequent issuance
and closing. The Purchaser shall have the right, upon written notice to the Company within 10 days
following receipt of the New Issue Notice whether such notice is provided before or after the
issuance (the “Exercise Period”), to elect to subscribe for, at the price and on the terms stated
in the New Issue Notice, such number of New Securities equal to the product obtained by multiplying
the number of New Securities (calculated on an as-converted basis) by a fraction, the numerator of
which is the number of equity securities (calculated on an as-converted basis) held by the
Purchaser on the date of such New Issue Notice (and prior to the issuance) and the denominator of
which is the total number of equity securities (calculated on an as-converted basis) issued and
outstanding on the date of such New Issue Notice (and prior to the issuance). If all or any
portion of the New Securities are not subscribed to by the Purchaser as described above, then the
Company may, at its election, during a period of 30 days following the expiration of the Exercise
Period, issue the remaining New Securities to the Proposed Recipient at a price and upon terms not
more favorable to the Proposed Recipient than those stated in such New Issue Notice. In the event
the Company has not issued the New Securities to the Proposed Recipient within such 30 day period,
the Company shall not thereafter issue any New Securities without first offering such securities to
the Purchaser in the manner provided in this Section. Failure by the Purchaser to exercise its
option to subscribe with respect to one offering and issuance of New Securities shall not affect
its option to subscribe for equity securities in any subsequent offering and issuance. This
Section 4.15 shall not apply to “Excluded Securities” issued by the Company which shall mean (i)
securities issued as a dividend or distribution on outstanding securities, (ii) securities issued
upon conversion or exercise of outstanding securities, (iii) securities issued to employees,
directors or consultants pursuant to a plan, agreement or arrangement approved by the Company’s
Board of Directors, (iv) securities issued pursuant to the acquisition of another corporation or
its assets by the Company, or (v) up to $5,000,000 in securities issued by the Company to fund
obligations to make cash dividends or interest payments on outstanding securities.



4.16 Due Diligence. The Company shall cooperate in good faith in the limited due
diligence to be performed by the Purchaser in connection with its investment in the Shares.



4.17 Indemnification. The Company and the Purchaser will indemnify and hold the other
(the “Indemnified Party”) and its respective directors, officers, stockholders, members, partners,
employees and agents harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation that the Indemnified Party
and



 


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its directors, officers, stockholders, members, partners, employees and agents may suffer or
incur as a result of any breach of any of the representations, warranties, covenants or agreements
made by the other in this Agreement. The detailed procedures for the indemnification under this
Section 4.17 shall follow the procedures set forth in Sections 6.9(c) and 6.9 (d).



ARTICLE 5




CONDITIONS TO CLOSING




5.1 Conditions to Obligations of the Company. The obligation of the Company to issue
and deliver the Shares on the Closing Date shall be subject to the performance by the Purchaser of
its agreements theretofore to be performed hereunder and to the satisfaction (or waiver), prior
thereto or concurrently therewith, of the following further conditions:



(a) Receipt of Purchase Price. The Company shall have received payment of the
Purchase Price for the Shares being purchased hereunder. The Purchase Price shall be paid in
immediately available funds, in US dollars.



(b) Representations and Warranties. The representations and warranties of the
Purchaser contained in Article 3 shall be true in all material respects on and as of the
Closing Date (except for such representations and warranties that are qualified as to materiality,
which shall be true in all respects) as though such representations and warranties were made at and
as of such date.



(c) Compliance with Agreement. The Purchaser shall have performed and complied in all
material respects with all agreements, covenants and conditions contained in this Agreement which
are required to be performed or complied with by them prior to or on the Closing Date.



(d) Absence of Litigation. No proceeding challenging this Agreement or the Related
Agreements or the transactions contemplated hereby or thereby, or seeking to prohibit, alter,
prevent or materially delay the Closing, shall have been instituted or be pending before any court,
arbitrator, governmental body, agency or official.



(e) No Governmental Prohibition or Third Party Approval. The sale of the Shares by
the Company shall not be prohibited by any law or governmental order or regulation and any
government regulatory or third party consents or approvals, if any, necessary for the sale of the
Shares shall have been received.



(f) Purchaser Certificate. The Company shall have received a certificate from the
Purchaser, dated the Closing Date, signed by a duly authorized representative of the Purchaser,
certifying that the conditions specified in Sections 5.1(b) and 5.1(c) hereof have
been fulfilled.



(g) Pre-Closing Securities Ownership Questionnaire. The Purchaser shall have
delivered to the Company a properly completed and executed Pre-Closing Securities Ownership
Questionnaire, substantially in the form attached hereto as Exhibit B.


 


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(h) Closing Deliverables. The Company shall have received all documents and other
items required to be delivered by the Purchaser to the Company pursuant to Section 1.5 and
as are reasonably required to be delivered by the Purchaser to effectuate the transactions
contemplated by this Agreement and the Related Agreements.



5.2 Conditions to Purchaser’s Obligations at the Closing. The obligation of the
Purchaser to purchase and pay for the Shares on the Closing Date shall be subject to the
performance by the Company of its agreements theretofore to be performed hereunder and to the
satisfaction (or waiver), prior thereto or concurrently therewith, of the following further
conditions:



(a) Representations and Warranties. The representations and warranties of the Company
contained in this Agreement shall be true on and as of the Closing Date in all material respects
(except for such representations and warranties that are qualified as to materiality, which shall
be true in all respects) as though such representations and warranties were made at and as of such
date.



(b) Compliance with Agreement. The Company shall have performed and complied in all
material respects with all agreements, covenants and conditions contained in this Agreement which
are required to be performed or complied with by the Company prior to or on the Closing Date.



(c) Compliance with Laws. The purchase of the Shares by the Purchaser hereunder shall
be legally permitted by all laws and regulations to which the Purchaser or the Company is subject
(including all applicable federal, state and foreign securities laws).



(d) Legal Opinion. The Purchaser shall have received an opinion, dated the Closing
Date from the Company’s counsel substantially in the form of Exhibit C attached hereto.



(e) No Material Adverse Effect. There shall have been no developments in the business
of the Company or its Subsidiaries which would be reasonably likely to have a Material Adverse
Effect.



(f) Absence of Litigation. No proceeding challenging this Agreement or the Related
Agreements or the transactions contemplated hereby or thereby, or seeking to prohibit, alter,
prevent or materially delay the Closing, shall have been instituted or be pending before any court,
arbitrator, governmental body, agency or official.



(g) No Governmental Prohibition or Third Party Consents. The sale of the Shares by
the Company shall not be prohibited by any law or governmental order or regulation and any
governmental, regulatory or third party consents or approvals, if any, necessary for the sale of
the Shares shall have been received.



(h) NASDAQ Trading. Trading in the Common Stock shall not have been suspended by the
SEC or NASDAQ, and trading in securities generally as reported by NASDAQ shall not have been
suspended or limited, and the Common Stock shall not have been delisted on NASDAQ.


 


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(i) Officer’s Certificate. The Purchaser shall have received a certificate, dated the
Closing Date, signed by a duly authorized executive officer of the Company, certifying that the
conditions specified in the foregoing Sections 5.2(a), 5.2(b), 5.2(e),
5.2(f), 5.2(g) and 5.2(i) hereof have been fulfilled.



(j) Secretary’s Certificate. The Purchaser shall have received a certificate, dated
the Closing Date, of the Secretary of the Company attaching: (i) a true and complete copy of the
Certificate of Incorporation, in effect as of such date; (ii) a true and complete copy of the
Bylaws, in effect as of such date; (iii) a certificate, dated within thirty (30) days prior to the
Closing Date, from the Secretary of State of the State of Delaware as to the good standing of the
Company; (iv) certificates of good standing, dated within thirty (30) days prior the Closing Date,
from the appropriate officials of the jurisdictions in each state in which the Company is qualified
to do business as a foreign corporation; and (iv) resolutions of the Board authorizing the
execution and delivery of this Agreement, the transactions contemplated hereby, the approvals
contemplated by Sections 2.30 and 2.31 herein and the issuance of the Shares.



(k) Approval of Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement, and all documents incident thereto, shall be
satisfactory in form and substance to the Purchaser and its counsel. The Purchaser shall have
received copies of all documents or other evidence which they and their counsel may reasonably
request in connection with such transactions and of all records of corporate proceedings in
connection therewith in form and substance reasonably satisfactory to the Purchaser and their
counsel.



(l) Closing Deliverables. The Purchaser shall have received all documents and other
items required to be delivered by the Company to the Purchaser pursuant to Section 1.6 and
as are reasonably required to be delivered by the Company to effectuate the transactions
contemplated by this Agreement and the Related Agreements.



(m) Technology Transfer Agreement. The parties shall have entered into a technology
transfer, distribution and licensing agreement (the “TTA”) under which the Company shall provide
certain technology and “know-how” and other assistance and support necessary for the Purchaser to
assemble, test, manufacture, use, sell, distribute, maintain, service and/or repair fuel cell stack
modules for DFC® Power Plants designated DFC®300MA, DFC®
1500MA, DFC®1500B and DFC®3000.



ARTICLE 6




REGISTRATION RIGHTS




6.1 Mandatory Registration. As soon as reasonably practicable after six (6) months
after the Closing, the Company shall prepare, and, as soon as practicable, but in no event later
than thirty (30) days after such date (the “Filing Deadline”), file with the SEC a
Registration Statement or Registration Statements (as necessary) on Form S-3. In the event that
Form S-3 is unavailable for such a registration, the Company shall use such other form as is
available for such a registration, subject to the provisions of Section 6.4. The Company
shall use its best efforts to


 


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cause such Registration Statement to be declared effective
by the SEC  as soon as possible, but in no event later than the fifth Business Day after the SEC advises the Company that either (A)
it will not review such Registration Statement or (B) it has no further comments with respect to
such Registration Statement (the “Effectiveness Deadline”).



6.2 Demand Registrations. If for any reason prior to the expiration of the
Registration Period, a Registration Statement required to be filed pursuant to Section 6.1
ceases to be effective or fails to cover all of the Registrable Securities required to be covered
by such Registration Statement, a Holder may demand registration pursuant to the terms of and
within the time frames set forth in Section 6.1 by providing written demand registration
notice to the Company (a “Demand Registration”). The Company shall amend the applicable
Registration Statement, or file a new Registration Statement (on the short form available
therefore, if applicable), or both, so as to cover all of the Registrable Securities required to be
covered by a Registration Statement hereunder, as soon as practicable, but in any event not later
than ten (10) Business Days after the date that the Demand Registration notice is delivered to the
Company. The Company shall use its best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing thereof. The compliance
by the Company with the provisions of this Section 6.2 shall not relieve the Company of any
liability for a breach of this Agreement, including, without limitation, any breach by the Company
of Section 6.1 hereof, and the Holder shall retain any remedies available at law or in
equity with respect thereto.



6.3 Piggy-Back Registrations. If at any time prior to the expiration of the
Registration Period, the number of shares of Common Stock available for sale under a Registration
Statement is insufficient to cover all of the Registrable Securities and the Company proposes to
file with the SEC a Registration Statement relating to an offering for its own account or the
account of others under the Securities Act of any of its securities (other than on Form S-4 or Form
S-8 (or their equivalents at such time) relating to securities to be issued solely in connection
with any acquisition of any entity or business or to equity securities issuable in connection with
stock option or other employee benefit plans approved by the Board), the Company shall promptly
send to the Holder written notice of the Company’s intention to file a Registration Statement and
of the Holder’s rights under this Section 6.3 and, if within twenty (20) days after receipt
of such notice, the Holder shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities the Holder requests to be
registered, subject to the priorities set forth in this Section 6.3 below. No right to
registration of Registrable Securities under this Section 6.3 shall be construed to limit
any registration required under Section 6.1 or 6.2. The obligations of the Company
under this Section 6.3 may be waived by the Holder, provided such Holder is not named as a
selling security holder in any Registration Statement. If an offering in connection with which a
Holder is entitled to registration under this Section 6.3 is an underwritten offering, then
such Holder whose Registrable Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to the provisions of this
Article 6, on the same terms and conditions as other shares of Common Stock included in
such underwritten offering. If a registration pursuant to this Section 6.3 is to be an
underwritten public offering and the managing underwriter(s) advise the Company in writing that, in
their reasonable good faith opinion, marketing or other factors dictate that a limitation on the
number of shares of Common Stock which may be included in the Registration



 


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Statement is necessary
to facilitate and not adversely affect the proposed offering, then the
Company shall include in such registration: (1) first, all securities the Company proposes to
sell for its own account and (2) second, up to the full number of securities proposed to be
registered for the account of the Holder entitled to registration under this Section 6.3,
pro rata to such Holder on the basis of the number of Registrable Securities that it requested to
be included in such registration.



6.4 Ineligibility for Form S-3. Subject to Section 6.1 as it relates to the
use of Form S-1, in the event that Form S-3 is not available for any registration of Registrable
Securities hereunder, the Company shall (i) register the sale of the Registrable Securities on
another appropriate form reasonably acceptable to the Holder and (ii) undertake to register the
Registrable Securities on Form S-3 as soon as such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then in effect until such
time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.



6.5 Failure to File, Obtain and Maintain Effectiveness of Registration Statement.
If a Registration Delay occurs the Company shall pay to a Holder of Registrable Securities (the
“Registration Delay Payments”), as partial relief for the damages to such Holder by reason of any
such Registration Delay, and calculated for each share of Common Stock for which a Registration
Statement is required to be filed pursuant to the terms of Section 6.1 then outstanding that is a
Registrable Security and not covered for resale at such time pursuant to the terms of a
Registration Statement, an accruing amount per each such share equal to the Delay Payment Rate for
each week (or portion thereof) during the Damages Accrual Period. The Registration Delay Payments
shall accrue from the first day of the applicable Registration Delay through the date it is cured
(the “Damages Accrual Period”), and shall be payable in cash to the record holder of the
Registrable Securities entitled thereto on the earlier of the (i) last Business Day of each
calendar month during which such Registration Delay Payments are incurred and (ii) the third
Business Day after the event of failure giving rise to the Registration Delay Payments is cured.
Nothing shall preclude a Holder from pursuing or obtaining any available remedies at law, specific
performance or other equitable relief with respect to this Article 6 in accordance with
applicable law.



6.6 Related Obligations. At such time as the Company is obligated to file a
Registration Statement with the SEC pursuant to Section 6.1, the Company will use its best
efforts to effect the registration of the Registrable Securities in accordance with the intended
method of distribution thereof and, pursuant thereto, the Company shall have the following
obligations during the Registration Period (as hereinafter defined):



(a) The Company shall promptly prepare and file with the SEC a Registration Statement with
respect to the Registrable Securities (but in no event later than the Filing Deadline) and use its
best efforts to cause such Registration Statement relating to the Registrable Securities to become
effective as soon as practicable after such filing (but in no event later than the applicable
Effectiveness Deadline). The Company shall keep each Registration Statement effective pursuant to
Rule 415 at all times until the earliest of (i) the three-year anniversary of the Closing Date;
(ii) the date as of which the Holder may sell all of the Registrable Securities covered by such
Registration Statement without restriction pursuant to Rule 144 promulgated under the Securities



 


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Act (or successor thereto) or (iii) the date on which the Holder shall have sold all the
Registrable Securities covered by such Registration Statement either pursuant to the Registration
Statement or in one or more transactions in which the Holder obtained unlegended certificates
representing the Registrable Securities so purchased in accordance with applicable securities laws
(the “Registration Period”), which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any 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 the case of any prospectus only, in light of the circumstances under
which they were made) not misleading.



(b) The Company shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used in connection with
such Registration Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under
the Securities Act, as may be necessary to keep such Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable Securities shall have
been disposed of in accordance with the intended methods of distribution by the seller or sellers
thereof as set forth in such Registration Statement. In the case of amendments and supplements to
a Registration Statement which are required to be filed pursuant to this Article 6
(including pursuant to this Section 6.6(b)) by reason of the Company filing a report on
Form 10-K, Form 10-Q or Form 8-K or any analogous report under the Exchange Act), the Company shall
have incorporated such report by reference into the Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on which the Exchange Act report
is filed which created the requirement for the Company to amend or supplement the Registration
Statement.



(c) The Company shall (i) permit a legal counsel for the Holder to review and comment upon
those sections of (a) the Registration Statement which are applicable to the Holder at least five
(5) Business Days prior to its filing with the SEC and (b) all other Registration Statements and
all amendments and supplements to all Registration Statements which are applicable to the Holder
(except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K and any similar or successor reports) within a reasonable number of days prior to their filing
with the SEC and (b) not file any Registration Statement (including any amendment or supplement
thereto) or document in a form to which such legal counsel reasonably objects. The Company shall
furnish to such legal counsel, without charge, (i) any correspondence from the SEC or the staff of
the SEC to the Company or its representatives relating to any Registration Statement, provided the
legal counsel shall keep such correspondence confidential and shall not provide copies thereof to
the Holder without the Company’s prior consent, (ii) promptly after the same is prepared and filed
with the SEC, one copy of any Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by reference, if requested
by a Holder, and all exhibits, and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all amendments and supplements
thereto. The Company shall reasonably cooperate with a Holder’s legal counsel in performing the
Company’s obligations pursuant to Section 6.6.


 


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(d) The Company shall furnish to the Holder whose Registrable Securities are included in any
Registration Statement, without charge, (i) promptly after the same is prepared and filed with the
SEC, at least one copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by reference, if requested
by such Holder, and all exhibits and each preliminary prospectus, (ii) upon the effectiveness of
any Registration Statement, ten (10) copies of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of copies as such Holder
may reasonably request) and (iii) such other documents, including copies of any preliminary or
final prospectus, as such Holder may reasonably request from time to time in order to facilitate
the disposition of the Registrable Securities owned by such Holder.



(e) If required under applicable law, the Company shall use its best efforts to (i) register
and qualify the Registrable Securities covered by a Registration Statement under all other
securities or “blue sky” laws of such jurisdictions in the United States, (ii) prepare and file in
those jurisdictions, such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration Period, and
(iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any change in the Company’s
Certificate of Incorporation or Bylaws that the Board determines in good faith to be contrary to
the best interests of the Company and its stockholders, (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this Section
6.6(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general
consent to service of process in any such jurisdiction. The Company shall promptly notify a Holder
who holds Registrable Securities of the receipt by the Company of any notification with respect to
the suspension of the registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threat of any proceeding for such purpose.



(f) As promptly as practicable after becoming aware of such event or development, the Company
shall notify a Holder in writing of the happening of any event as a result of which the prospectus
included in a Registration Statement, as then in effect, includes an untrue statement of a material
fact or omission 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, and
promptly prepare a supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or amendment to the Holder
(or such other number of copies as such Holder may reasonably request). The Company shall also
promptly notify a Holder in writing (i) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a Registration Statement or any post-effective
amendment has become effective (notification of such effectiveness shall be delivered to a Holder
by facsimile on the same day of such effectiveness and by overnight mail), (ii) of any request by
the SEC for amendments or supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company’s reasonable determination that a post-effective amendment to
a Registration Statement would be appropriate.


 


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(g) The Company shall use its best efforts to prevent the issuance of any stop order or other
suspension of effectiveness of a Registration Statement, or the suspension of the qualification of
any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension
is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and
to notify a Holder who holds Registrable Securities being sold of the issuance of such order and
the resolution thereof or its receipt of actual notice of the initiation or threat of any
proceeding for such purpose.



(h) At the reasonable request of a Holder and at such Holder’s expense, the Company shall use
its best efforts to furnish to such Holder, on the date of the effectiveness of the Registration
Statement and thereafter from time to time on such dates as a Holder may reasonably request (i) a
letter, dated such date, from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to underwriters in an
underwritten public offering, and (ii) an opinion, dated as of such date, of counsel representing
the Company for purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the Holder.



(i) The Company shall, upon reasonable notice and during normal business hours, make available
for inspection by (i) the Holder, (ii) any legal counsel representing an Holder and (iii) one firm
of accountants or other agents retained by such Holder (collectively, the “Inspectors”) all
pertinent financial and other records, and pertinent corporate documents and properties of the
Company (collectively, the “Records”), which are requested for any purpose reasonably
related to a Holder’s rights and/or the Company’s obligations under this Article 6, and
cause the Company’s officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector which is not a party
hereto shall agree in writing prior to obtaining access to any Records, and a Holder hereby agrees,
to hold in strict confidence and shall not make any disclosure (except to a Holder similarly bound
by the terms hereof) or use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the Securities Act, (b) the release of such
Records is ordered pursuant to a final, non-appealable subpoena or order from a court or government
body of competent jurisdiction, or (c) the information in such Records has been made generally
available to the public other than by disclosure in violation of this or any other agreement of
which the Inspector has knowledge. The Holder receiving the Records agrees that it shall, if
permitted by applicable law, upon learning that disclosure of such Records is sought in or by a
court or governmental body of competent jurisdiction or through other means, give prompt notice to
the Company prior to making any such disclosure and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. The Holder undertaking an inspection pursuant to this Section 6.6(i)
shall, and shall instruct its other Inspectors to, use commercially reasonable efforts to perform
any such inspection in a manner designed to not materially disrupt the business activities of the
Company. Nothing herein (or in any other confidentiality agreement between the Company and a
Holder) shall be deemed to limit the Holder’s ability to sell Registrable Securities in a manner
which is otherwise consistent with applicable laws and regulations.


 


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(j) 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 is necessary to comply
with federal or state securities laws or the rules of NASDAQ, (ii) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by disclosure in violation
of this Article 6 or any other agreement, or (v) such Holder expressly consents in writing
to the form and content of any such disclosure. The Company agrees that it shall, if permitted by
applicable law, 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
written notice to such Holder prior to making any such disclosure and allow such Holder, at the
Holder’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, such information.



(k) The Company shall use its best efforts either to (i) cause all the Registrable Securities
covered by a Registration Statement to be listed on each securities exchange on which securities of
the same class or series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or (ii) secure
designation and quotation of the Shares on NASDAQ. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 6.6(k).



(l) The Company shall cooperate with the Holder who holds Registrable Securities being offered
and, to the extent applicable, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant
to a Registration Statement and enable such certificates to be in such denominations or amounts, as
the case may be, as such Holder may reasonably request and registered in such names as such Holder
may request.



(m) If requested by a Holder, the Company shall (i) as soon as practicable incorporate in a
prospectus supplement or post-effective amendment, as necessary, such information as a Holder
requests to be included therein relating to the Holder and the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the number of Registrable
Securities being offered or sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering; (ii) as soon as practicable,
make all required filings of such prospectus supplement or post-effective amendment after being
notified of the matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) as soon as practicable, supplement or make amendments to any Registration
Statement if reasonably requested by a Holder holding Registrable Securities.



(n) The Company shall use its best efforts to cause the Registrable Securities covered by the
applicable Registration Statement to be registered with or approved by such other governmental
agencies or authorities as may be necessary to consummate the disposition of such Registrable
Securities within the United States.



(o) The Company shall otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC in connection with any registration hereunder.


 


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(p) Notwithstanding anything to the contrary in this Section 6.6, at any time after
the applicable Registration Statement has been declared effective by the SEC, the Company may delay
the disclosure of material non-public information concerning the Company the disclosure of which at
the time is not, in the good faith opinion of the Board and its counsel, in the best interest of
the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace
Period”); provided, that the Company shall promptly (i) notify the Holder in writing of
the existence of material non-public information giving rise to a Grace Period (provided that in
each notice the Company will not disclose the content of such material non-public information to
the Holder) and the date on which the Grace Period will begin, and (ii) notify the Holder in
writing of the date on which the Grace Period ends; and, provided further, that no
Grace Periods shall exceed sixty (60) consecutive days and during any consecutive three hundred
sixty (360) day period, such Grace Periods shall not exceed an aggregate of one hundred twenty
(120) days and the first day of any Grace Period must be at least five (5) trading days after the
last day of any prior Grace Period (an “Allowable Grace Period”). For purposes of
determining the length of a Grace Period above, the Grace Period shall begin on and include the
date the Holder receives the notice referred to in clause (i) and shall end on and include the
later of the date the Holders receive the notice referred to in clause (ii) and the date referred
to in such notice. The provisions of Section 6.6(g) hereof shall not be applicable during
the period of any Allowable Grace Period. Upon expiration of the Grace Period, the Company shall
again be bound by the first sentence of Section 6.6(f) with respect to the information
giving rise thereto unless such material non-public information is no longer applicable. In the
event that the Company shall exercise its right to effect a Grace Period hereunder, the
Registration Period during which the Registration Statement is to remain effective shall be
extended by a period of time equal to the duration of any Grace Periods.



(q) At the end of the Registration Period the Holder shall discontinue sales of shares
pursuant to the Registration Statement upon receipt of notice from the Company of its intention to
remove from registration the shares covered by such Registration Statement which remain unsold, and
such Holder shall notify the Company of the number of shares registered which remain unsold
immediately upon receipt of such notice by the Company.




6.7 Obligations of the Holder.



(a) At least seven (7) days prior to the first anticipated filing date of a Registration
Statement, the Company shall notify a Holder in writing of the information the Company requires
from such Holder if such Holder elects to have any of its Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Article 6 with respect to such Registrable
Securities that such Holder shall furnish to the Company information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such registration as the
Company may reasonably request, in each case within seven (7) Business Days of being notified by
the Company of its necessity.



(b) A Holder by its acceptance of the Registrable Securities agrees to cooperate with the
Company as reasonably requested by the Company in connection with the preparation and filing of any
Registration Statement hereunder, unless such Holder has notified the Company in



 


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writing of such Holder’s election to exclude all of such Holder’s Registrable Securities from
such Registration Statement.



(c) A Holder agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 6.6(g) or the first sentence of Section
6.6(f), such Holder will immediately discontinue disposition of Registrable Securities pursuant
to any Registration Statement(s) covering such Registrable Securities until such Holder’s receipt
of the copies of the supplemented or amended prospectus contemplated by Section 6.6(g) or
the first sentence of Section 6.6(f) or receipt of notice that no supplement or amendment
is required. 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 this Agreement in connection with any sale of Registrable Securities with respect to which
a Holder has entered into a contract for sale prior to such Holder’s receipt of a notice from the
Company of the happening of any event of the kind described in Section 6.6(g) or the first
sentence of Section 6.6(f) and for which such Holder has not yet settled.



(d) As promptly as practicable after becoming aware of such event, a Holder shall notify the
Company in writing of the happening of any event as a result of which the information provided in
writing by such Holder to the Company expressly for use in the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a material fact or
omission 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;
provided, however, that no separate written notification shall be required for any
event disclosed by such Holder in a timely filing with the SEC relating to the Company’s
securities.



6.8 Expenses of Registration. All expenses incurred in connection with registrations,
filings or qualifications pursuant to Sections 6.1 through 6.8 of this Article
6, including, without limitation, all registration, listing and qualifications fees, printers
and accounting fees, transfer agent fees and fees and disbursements of counsel for the Company, but
excluding underwriting discounts and commissions, shall be paid by the Company. The Company shall
also reimburse any Holder for the reasonable and documented fees and disbursements of its attorneys
in connection with registration, filing or qualification pursuant to Sections 6.1 through
6.6 of this Article 6. The Company shall pay all of such Holder’s reasonable costs
(including fees and disbursements of its attorneys) incurred in connection with the successful
enforcement of the Holder’s rights under this Article 6.



6.9 Indemnification. In the event any Registrable Securities are included in a
Registration Statement under this Article 6:



(a) To the extent permitted by law, the Company shall indemnify any Holder, the directors,
officers, members, partners, employees, agents or other representatives of and each Person
controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to
which any registration that has been effected pursuant to this Agreement, against all claims,
losses, damages, liabilities, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts
paid in settlement or expenses, joint or several, (collectively, “Claims”) (or action in
respect thereof), including any Claims incurred in settlement of any litigation, commenced or
threatened (subject to Section 6.9(c) below), arising out of or based on (i) any untrue
statement (or



 


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alleged untrue statement) of a material fact contained in the Registration Statement,
prospectus (final or preliminary), any amendment or supplement thereof, issuer free-writing
prospectus, circular, or other document incident to any such registration, qualification or
compliance or based on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, (ii) any violation by the Company of any rule or regulation
promulgated by the Securities Act, the Exchange Act, or any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement applicable to the Company
and relating to any action or inaction required of the Company in connection with any such
registration, qualification or compliance, or (iii) any violation by the Company of the terms of
this Article 6, and will reimburse any Holder, the directors, officers, members, partners,
employees, agents or other representatives of and each Person controlling such Holder, for
reasonable legal and other out-of-pocket expenses reasonably incurred in connection with
investigating or defending any such Claim as incurred; provided that the Company will not
be liable in any such case to the extent that any untrue statement or omission or allegation
thereof is made in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder for use in preparation of such Registration Statement,
prospectus, amendment or supplement; provided, further that the Company will not be
liable in any such case where the Claim results from the material failure of such Holder to comply
with the covenants and agreements contained in this Article 6 respecting sales of
Registrable Securities.



(b) The Purchaser will indemnify the Company, the directors, officers, employees, agents,
legal counsel and other representatives and each Person who controls the Company within the meaning
of Section 15 of the Securities Act, against all Claims (or actions in respect thereof), including
any Claims incurred in settlement of any litigation, commenced or threatened (subject to
Section 6.9(c) below), arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in the Registration Statement, prospectus (final or
preliminary), any amendment or supplement thereof, issuer free-writing prospectus, circular or
other documents, incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the circumstances in which
they were made, and will reimburse the Company, the directors, officers, employees, agents, legal
counsel and other representatives and each Person controlling the Company for reasonable legal and
any other expenses reasonably incurred in connection with investigating or defending any such Claim
as incurred, in each case to the extent, that such untrue statement or omission or allegation
thereof is made in reliance upon and in conformity with written information furnished to the
Company by or on behalf of a Holder for use in preparation of the Registration Statement,
prospectus, amendment or supplement. Notwithstanding the foregoing, a Holder’s aggregate liability
pursuant to subsection (b) and (d) of this Section 6.9 shall not exceed the
net proceeds received by such Holder from the sale of the Registrable Securities pursuant to the
Registration Statement giving rise to such liability.



(c) Each party entitled to indemnification under this Section 6.9 (the
“Indemnified Party”) shall give notice to the party required to provide indemnification
(the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of
any claim as to which indemnity may be sought, and shall permit the Indemnifying Party (at its
expense) to



 


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assume the defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and
the Indemnified Party may participate in such defense at such Indemnified Party’s expense, and
provided, further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement,
unless such failure is materially prejudicial to the Indemnifying Party in defending such claim or
litigation. Notwithstanding the foregoing, an Indemnified Party shall have the right to retain its
own counsel, with the fees and expenses to be paid by the Indemnifying Party, if representation of
such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due
to actual or potential differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. An Indemnifying Party shall not be liable for any
settlement of an action or claim effected without its written consent (which consent will not be
unreasonably withheld). No Indemnifying Party, in its defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such
claim or litigation.



(d) If the indemnification provided for in this Section 6.9 is held by a court of
competent jurisdiction to be unavailable to an Indemnified Party with respect to any Claim referred
to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a result of such Claim
in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and of the Indemnified Party on the other in connection with the statements or omissions
which resulted in such Claim as well as any other relevant equitable considerations. The relative
fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission provided, that in no event shall any
contribution by a Holder hereunder when combined with amounts paid pursuant to subsection
(b) of this Section 6.9 exceed the net proceeds received by such Holder upon the sale
of the Registrable Securities giving rise to such contribution obligation.



6.10 Assignment and Transfer. The rights to cause the Company to register Registrable
Securities granted to the Purchaser by the Company in this Article 6 may be assigned to a
Holder, provided that such Holder is an Affiliate of the Purchaser, in connection with a transfer
by such Holder of all or a portion of its Registrable Securities; provided,
however, that such transfer must be made at least five (5) days prior to the Filing
Deadline and that (a) such transfer may otherwise be effected in accordance with applicable
securities laws, including establishing the transferee’s qualification as an “accredited investor”
within the meaning of the Securities Act; (b) such Holder gives prior written notice to the Company
at least five (5) days prior to the Filing Deadline; and (c) such transferee agrees in writing with
the Company to comply with and be bound by all of the provisions of this Agreement; and (d) such
transfer is otherwise in accordance with the applicable requirements of this Agreement. Except as
specifically permitted by this Section 6.10, the rights of a Holder with respect to
Registrable Securities as set out herein



 


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shall not be transferable to any other Person, and any attempted transfer shall cause all
rights of such Holder therein to be forfeited. Notwithstanding the foregoing provisions of this
Section 6.10, no such restriction shall apply to a transfer by a Holder that is: (i) a
partnership transferring to its partners or former partners in accordance with partnership
interests; (ii) a corporation transferring to a wholly-owned subsidiary or a parent corporation
that owns all of the capital stock of the Holder; (iii) a limited liability company transferring to
its members or former members in accordance with their interest in the limited liability company;
(iv) an affiliated investment fund transferring to another affiliated investment fund; or (v) an
individual transferring to the Holder’s family member or trust for the benefit of an individual
Holder; provided that in each case the transfer is effected in accordance with applicable
securities laws, including establishing the transferee’s qualification as an “accredited investor”
within the meaning of the Securities Act, and the transferee agrees in writing to be subject to the
terms of this Agreement to the same extent as if the transferee were an original Holder hereunder.



6.11 Amendment and Waiver of Registration Rights. The rights of any Holder under the
provisions of this Article 6 may be waived (either generally or in a particular instance,
either retroactively or prospectively and either for a specified period of time or indefinitely) or
amended by an instrument in writing signed by such Holder. Any amendment or waiver effected in
accordance with this Section 6.11 shall be binding upon any Holder and the Company. By
acceptance of the benefits under this Article 6, any Holder of the Registrable Securities
hereby agree to be bound by the provisions hereof.



6.12 Lock-Up Period. For a period of six (6) months from the Closing Date, the
Purchaser agrees not to offer, sell, contract to sell, pledge, grant any option to purchase, make
any short sale or otherwise dispose of any Shares, or any securities convertible into, exchangeable
for or that represent the right to receive the Shares, whether now owned or hereinafter acquired,
owned directly by the Purchaser or with respect to which the Purchaser has beneficial ownership
within the rules and regulations of the SEC.



ARTICLE 7




MISCELLANEOUS




7.1 Termination. This Agreement may be terminated at any time with respect to the
applicable parties prior to the Closing:




(a) By mutual written agreement of the Company and the Purchaser;



(b) By either the Company or the Purchaser, by written notice to the other parties (provided
the terminating party is not then in material breach of any representation, warranty, covenant or
other agreement contained in this Agreement or the Related Agreements) if the Closing shall not
have been consummated on or before December 9, 2009;



(c) By either the Company or the Purchaser by giving written notice to the other party or
parties if any governmental entity shall have issued an injunction or other ruling prohibiting the
consummation of any of the transactions contemplated by this Agreement and the



 


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Related Agreements and such injunction or other ruling shall not be subject to appeal or shall
have become final and unappealable;



(d) By the Purchaser, if there shall have occurred an event or events constituting a Material
Adverse Effect;



(e) By the Purchaser, if the Company shall have materially breached the terms of this
Agreement and such breach is not cured within five (5) Business Days after receiving notice
thereof;



(f) By the Company if the Purchaser shall have materially breached the terms of this Agreement
and such breach is not cured within five (5) Business Days after receiving notice thereof; or




(g) By the Purchaser if the TTA has not been executed by 60 days of the date hereof.



7.2 Effect of Termination. In the event of any termination of this Agreement pursuant
to Section 7.1, all rights and obligations of the parties hereunder shall terminate without
any liability on the part of any party or its Affiliates in respect thereof; provided,
however, that such termination shall not relieve the Company or the Purchaser of any
liability for any willful breach of this Agreement.



7.3 Governing Law; Jurisdiction. This Agreement will be governed by and interpreted
in accordance with the laws of the State of New York.



7.4 Counterparts; Signatures by Facsimile. This Agreement may be executed in two or
more counterparts, all of which are considered one and the same agreement and will become effective
when counterparts have been signed by each party and delivered to the other parties. This
Agreement, once executed by a party, may be delivered to the other parties hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so delivering this
Agreement.



7.5 Headings. The headings of this Agreement are for convenience of reference only,
are not part of this Agreement and do not affect its interpretation.



7.6 Severability. If any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision will be deemed modified in order
to conform with such statute or rule of law. Any provision hereof that may prove invalid or
unenforceable under any law will not affect the validity or enforceability of any other provision
hereof.



7.7 Entire Agreement; Amendments; Waiver. This Agreement and the Related Agreements
(including all schedules and exhibits hereto and thereto) constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to herein or therein.
This Agreement and the Related Agreements supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof.


 


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Except as otherwise provided herein, no provision of this Agreement may be amended or waived
other than by an instrument in writing signed by the Company and the Purchaser, or in the case of a
waiver, by the party against whom enforcement of such waiver is sought. Any amendment effected in
accordance with this Section 7.7 shall be binding upon the holder of any Shares purchased
under this Agreement at the time outstanding, each future holder of all such securities and the
Company.



7.8 Notices. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when
sent by confirmed email, telex or facsimile if sent during normal business hours of the recipient,
if not, then on the next business day, (c) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one business day after deposit
with a nationally recognized overnight courier, specifying next day delivery, with written
verification of receipt. The addresses for such communications are:



	 	 	 
	If to the Company:

	 	FuelCell Energy, Inc.
	 

	 	3 Great Pasture Road
	 

	 	Danbury, CT 06813
	 

	 	Facsimile: (203) 825-6069
	 

	 	Attention: Ross Levine
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	Patterson Belknap Webb & Tyler LLP
	 

	 	1133 Avenue of the Americas
	 

	 	New York, New York 10036
	 

	 	Facsimile: (212) 336-2313
	 

	 	Attention: Peter J. Schaeffer
	 
	 	 
	If the Purchaser:

	 	POSCO Power
	 

	 	Posteel Tower 20th floor, 735-3
	 

	 	Yeoksam-dong, Gangnam-gu
	 

	 	Seoul 135-080, Korea
	 

	 	Facsimile: 82-2-3469-5959
	 

	 	Attention: Tae-Hyoung Kim
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	Bae, Kim & Lee LLC
	 

	 	647-15 Yoksam-dong, Kangnam-gu
	 

	 	Seoul 135-723, Korea
	 

	 	Facsimile: 82-2-3404-7304
	 

	 	Attention: Nelson K. Ahn, Esq.






Each party will provide ten (10) days’ advance written notice to the other parties of any change in
its address.


 


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7.9 Successors and Assigns. This Agreement is binding upon and inures to the benefit
of the parties and their successors and permitted assigns. The Company will not assign this
Agreement or any rights or obligations hereunder without the prior written consent of the
Purchaser, and the Purchaser may assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Company, except as permitted in accordance with
Section 6.10 hereof.



7.10 Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto, their respective permitted successors and assigns, and is not for the benefit of,
nor may any provision hereof be enforced by, any other person.



7.11 No Strict Construction. The language used in this Agreement is deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict construction
will be applied against any party.



7.12 Equitable Relief. The Company recognizes that, if it fails to perform or
discharge any of its obligations under this Agreement, any remedy at law may prove to be inadequate
relief to the Purchaser. The Company therefore agrees that the Purchaser is entitled to seek
temporary and permanent injunctive relief in any such case. The Purchaser also recognizes that, if
it fails to perform or discharge any of its obligations under this Agreement, any remedy at law may
prove to be inadequate relief to the Company. The Purchaser therefore agrees that the Company is
entitled to seek temporary and permanent injunctive relief in any such case.



7.13 Survival of Representations and Warranties. Notwithstanding any investigation
made by any party to this Agreement, all representations and warranties made by the Company and the
Purchaser herein shall survive for a period of one (1) year from the Closing Date. All covenants
contained herein shall survive the execution of this Agreement and the Closing of the transactions
contemplated hereby (except to the extent expressly provided in this Agreement).



7.14 Limitation on Enforcement of Remedies. The Company hereby agrees that it will
not assert against the shareholders, limited partners or any members of the Purchaser any claim it
may have under this Agreement by reason of any failure or alleged failure by such Purchaser to meet
its obligations hereunder.



7.15 Aggregation of Stock. All shares of Registrable Securities held or acquired by
affiliated Person or Persons under common management or control shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.



7.16 Reproduction of Documents. This Agreement and all documents relating thereto,
including, without limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents received by the Purchaser on the Closing Date (except for certificates
evidencing the Shares themselves), and (iii) financial statements, certificates and other
information previously or hereafter furnished to the Purchaser, may be reproduced by the Purchaser
by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar
process and the Purchaser may destroy any original document so reproduced. All parties hereto
agree and stipulate that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the original is in



 


- 36 -









 






existence and whether or not such reproduction was made by the Purchaser in the regular course
of business) and that any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.



7.17 Lost, etc. Certificates Evidencing Shares; Exchange. Upon receipt by the Company
of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any
certificate evidencing any Shares owned by the Purchaser and (in the case of loss, theft or
destruction) of an unsecured indemnity satisfactory to it, and upon reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation of such
certificate, if mutilated, the Company will make and deliver in lieu of such certificate a new
certificate of like tenor and for the number of securities evidenced by such certificate which
remain outstanding. The Purchaser’s agreement of indemnity shall constitute indemnity satisfactory
to the Company for purposes of this Section 7.17. Upon surrender of any certificate
representing any Shares, for exchange at the office of the Company, the Company at its expense will
cause to be issued in exchange therefor new certificates in such denomination or denominations as
may be requested for the same aggregate number of Shares represented by the certificate so
surrendered and registered as such holder may request. The Company will also pay the cost of all
deliveries of certificates for such Shares to the office of the Purchaser (including the cost of
insurance against loss or theft in an amount satisfactory to the holders) upon any exchange
provided for in this Section 7.18.



7.18 Draftsmanship. Each of the parties hereto has been represented by its own
counsel and acknowledges that it has participated in the drafting of this Agreement, and any
applicable rule of construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in connection with the construction or interpretation of this
Agreement. Whenever required by the context hereof, the singular number shall include the plural,
and vice versa; the masculine gender shall include the feminine and neuter genders; and the neuter
gender shall include the masculine and feminine genders.



[Signature Page Follows]



 


- 37 -









 





IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of the
date first above written.



	 	 	 	 	 
	 	FUELCELL ENERGY, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	R. Daniel Brdar 	 
	 	 	Title:  	President, CEO and Chairman 	 
	 
	 	POSCO POWER

 	 
	 	By:  	 	 
	 	 	Name:  	Soung-Sik Cho 	 
	 	 	Title:  	President & CEO 	 



SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT




 


 









 





EXHIBIT A




DEFINITIONS




Capitalized terms used in this Agreement and not otherwise defined in this Agreement shall
have the following meanings:



“Affiliate” means, with respect to any Person, any other Person controlling, controlled by or
under direct or indirect common control with such Person (for the purposes of this definition
“control,” when used with respect to any specified Person, shall mean the power to direct the
management and policies of such person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise; and the terms “controlling” and “controlled” shall have
meanings correlative to the foregoing).




“Allowable Grace Period” has the meaning set out in Section 6.6(p).




“Board” has the meaning set forth in Section 2.3(c).



“Business Day” means a day Monday through Friday on which banks are generally open for
business in New York City.




“Bylaws” has the meaning set forth in Section 2.3(d).




“Certificate of Incorporation” has the meaning set forth in Section 2.3(d).




“Claims” has the meaning set forth in Section 6.9(a).




“Closing” has the meaning set forth in Section 1.4.




“Closing Date” has the meaning set forth in Section 1.4.




“Common Stock” means the common stock, par value $0.0001 per share, of the Company.




“Company” has the meaning set forth in the introductory paragraph.




“Damages Accrual Period” has the meaning set forth in Section 6.5.



“Delay Payment Rate” means during the Damages Accrual Period, an amount per week (or portion
thereof) per share of Common Stock equal to 1% of the per share Purchase Price of such Share.




“Demand Registration” has the meaning set forth in Section 6.2.




“DGCL” means the Delaware General Corporation Law.



SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT



 


 









 





“Disclosure Schedule” means the Disclosure Schedules of the Company delivered concurrently
herewith and incorporated herein by reference.




“Effectiveness Deadline” has the meaning set forth in Section 6.1.




“Evaluation Date” has the meaning set forth in Section 2.7.




“Exchange Act” means the Securities Exchange Act of 1934, as amended.




“FD Confidentiality Agreement” has the meaning set forth in Section 4.14(a).




“Filing Deadline” has the meaning set forth in Section 6.1.



“Financial Statements” means the financial statements of the Company included in the SEC
Documents.




“Grace Period” has the meaning set forth in Section 6.6(p).



“Holder” means the Purchaser and any Person to whom the Purchaser, in accordance with Section
6.10 hereof, transfers its rights under Article 6 of this Agreement.




“Indemnified Party” has the meaning set forth in Section 6.9(c).




“Indemnifying Party” has the meaning set forth in Section 6.9(c).




“Inspectors” has the meaning set forth in Section 6.6(i).




“Intellectual Property Rights” has the meaning set forth in Section 2.10(a).




“Investment Company Act” has the meaning set forth in Section 2.24.



“Liens” means security interests, pledges, liens, charges, claims, options, restrictions on
transfer, mortgages, rights of first refusal, preemptive or similar rights, proxies and voting or
other agreements, or other encumbrances of any nature whatsoever.




“Market Price” has the meaning set forth in Section 1.1.



“Material Adverse Effect” means an event, change or occurrence that individually, or together
with any other event, change or occurrence, has had or reasonably could be expected to have a
material adverse effect on (a) the business, operations, assets, prospects or financial condition
of the Company and its Subsidiaries, taken together as a whole, or (b) the ability of the Company
to perform its obligations pursuant to the transactions contemplated by this Agreement and the
Related Agreements.




“Material Contracts” has the meaning set forth in Section 2.14(a).




“Material Permits” has the meaning set forth in Section 2.5(c).




“NASDAQ” has the meaning set forth in Section 1.1.


 


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“Offering” means the offer, sale, issuance and purchase of the Shares contemplated by this
Agreement.




“Non-US Person” has the meaning set forth in Section 3.2.




“Per Share Purchase Price” has the meaning set forth in Section 1.1.



“Person” means any person, individual, corporation, limited liability company, partnership,
trust or other nongovernmental entity or any governmental agency, court, authority or other body
(whether foreign, federal, state, local or otherwise).




“Preferred Stock” has the meaning set forth in Section 2.3(a).




“Purchaser” has the meaning set forth in the introductory paragraph.




“Purchase Price” has the meaning set forth in Section 1.1.




“Records” has the meaning set forth in Section 6.6(i).



The terms “register,” “registered” and “registration” refer to the registration effected by
preparing and filing a registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration statement.



“Registrable Securities” means the Shares; provided, however, that securities
shall only be treated as Registrable Securities if and only for so long as they (A) have not been
disposed of pursuant to a Registration Statement declared effective by the SEC, (B) have not been
sold in a transaction exempt from the registration and prospectus delivery requirements of the
Securities Act so that all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale or (C) are held by a Holder or a permitted transferee
pursuant to Section 6.10.



“Registration Delay” means the occurrence of any of (i) a Registration Statement covering all
of the Registrable Securities is not filed with the SEC on or before the Filing Deadline or is not
declared effective on or before the Effectiveness Deadline, (ii) a Registration Statement in
connection with a Demand Registration covering all of the Registrable Securities required to be
covered thereby is not filed with the SEC on or before the deadline described in the last sentence
of Section 6.2, (iii) on any day during the Registration Period (other than during an Allowable
Grace Period), all of the Registrable Securities required to be included in such Registration
Statement cannot be sold pursuant to such Registration Statement as a matter of law or because the
Company has failed to perform the applicable time period required for such performance (including,
without limitation, because of a failure to keep such Registration Statement effective, to disclose
such information as is necessary for sales to be made pursuant to such Registration Statement, or
to register a sufficient number of Shares, or (iv) a Grace Period exceeds the length of an
Allowable Grace Period.




“Registration Delay Payments” has the meaning set forth in Section 6.5.




“Registration Period” has the meaning set forth in Section 6.6(a).


 


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“Registration Statement” means a registration statement or registration statements of the
Company filed under the Securities Act covering the Registrable Securities.




“Related Agreements” has the meaning set forth in Section 2.2.




“Required Approvals” has the meaning set forth in Section 2.5(b).




“Rule 144” means Rule 144 promulgated under the Securities Act, or any successor rule.



“Sarbanes-Oxley Act of 2002” means the Sarbanes-Oxley Act of 2002, as amended, and the related
rules and regulations promulgated under such act or the Exchange Act.




“SEC” means the United States Securities and Exchange Commission.




“SEC Documents” has the meaning set forth in Section 2.6.



“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute.




“Share” and “Shares” has the meaning set forth in Section 1.1.



“Subsidiary” and “Subsidiaries” of any person shall mean any corporation, partnership, limited
liability company, joint venture or other legal entity of which such Person (either above or
through or together with any other subsidiary) owns, directly or indirectly, more than 50% of the
stock or other equity interests the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such corporation or other legal
entity.




“Takeover Provision” has the meaning set forth in Section 2.27.



“Technology Transfer Agreement” means the Technology Transfer, License and Distribution
Agreement dated as of the date hereof between the Company and the Purchaser.


 


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EXHIBIT B




PRE-CLOSING SECURITIES OWNERSHIP QUESTIONNAIRE




The undersigned (“Potential Purchaser”) hereby provides the following information to
the Company and its legal counsel and represents and warrants that such information is accurate of
the date hereof and shall be accurate as of the Closing Date:




	1.	 	Name.
	 
	 	 	Full Legal Name of Potential Purchaser
	 
	2.	 	Address of Potential Purchaser.
	 
	 	 	Mailing Address:
	 	 	Telephone:
	 	 	Fax:
	 	 	Contact Person:
	 	 	E-mail address of Contact Person:
	 
	3.	 	Residency.
	 
	(a)	 	State/Country of Residency of Potential Purchaser:
	 
	(b)	 	Is the Potential
Purchaser a “US
Person” as defined
in Rule 901(k) of
Regulation S under
the Securities Act? o
Yes o No
	 
	(c)	 	Is the Potential
Purchaser an
“accredited
investor” as
defined in Rule
501(a)(1), (a)(2),
(a)(3), (a)(7) or
(a)(8) under the
Securities Act? o Yes o No
	 
	4.	 	Beneficial Ownership of Company Securities Prior to the Offering.





Except as set forth below in this Item 4, the Potential Purchaser is not the beneficial or
registered owner of any Securities of the Company.




	(a)	 	As of [                    ],
200[_____], the Purchaser owned outright (including shares registered
in the Purchaser’s name individually or jointly with others, shares held in the name of a
bank, broker, nominee, depository or in “street name” for its account), [____] shares of
Company’s capital stock. If “zero,” please so state.




 


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	(b)	 	In addition to the number of shares Purchaser owned outright as indicated in Item 4(a) above,
as of [                    ], 200[_____], the Purchaser had or shared voting power or investment
power, directly or indirectly, through a contract, arrangement, understanding, relationship or
otherwise, [_____] shares of the Company’s capital stock. If “zero,” please so state.





If the answer to Item 4(b) is not “zero,” please complete the following tables:




Shared Voting Power:




Number of Shares With Whom Shared Nature of Relationship




Shared Investment Power:




Number of Shares With Whom Shared Nature of Relationship




	(c)	 	As of [                    ], 200[_____], the Potential Purchaser had the right to acquire the following
shares of the Company’s common stock pursuant to the exercise of outstanding stock options,
warrants or other rights. If “none”, please so state.




 


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SIGNATURE




The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the
information provided in this Questionnaire that may occur subsequent to the date hereof at any time
prior the Closing Date.



The undersigned understands and agrees that the information provided herein will be relied upon by
the Company and its legal counsel in evaluating the availability of certain exemptions from
registration under US federal and state securities laws and the applicability of shareholder
approval and other requirements of the NASDAQ Marketplace Rules.



IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Questionnaire to be
executed and delivered either in person or by its duly authorized agent.



Dated:



Name of Potential Purchaser:



	 	 	 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 




PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT
MAIL, TO:



	 	 	 
	 

	 	[                    ]
	 

	 	Facsimile: [                    ]
	 

	 	Attention: [                    ]
	 
	 	 
	With a copy to:
	 	 
	 
	 	 
	 

	 	[                    ]

Facsimile: [                    ]

Attention: [                    ]







 


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EXHIBIT C




FORM OF LEGAL OPINION




[Capitalized terms used but not defined herein shall have the

meaning assigned to them in the Securities Purchase Agreement.]





	(i)	 	The Company is duly organized and validly existing in good standing under the laws of
Delaware, has the all requisite corporate power and authority to own its properties and to
carry on its business as now conducted. The Company has all requisite corporate power and
authority to execute and deliver the Agreement and to perform its obligations thereunder.






	(ii)	 	Except as set forth in the Agreement, no stockholder of the Company is entitled to any
statutory preemptive right or, to the best knowledge of such counsel, other similar rights to
subscribe for shares of capital stock of the Company.






	(iii)	 	When issued in accordance with the terms of the Agreement, the Shares will be duly
authorized, validly issued, fully paid and non-assessable shares of the Company, free of all
statutory preemptive, or to our knowledge, contractual preemptive or similar rights.






	(iv)	 	The Company has duly authorized the execution, delivery, and performance of the Agreement and
each of the transactions and agreements contemplated thereby, and no other corporate action is
necessary to authorize such execution, delivery or performance. The Agreement has been duly
executed and delivered on behalf of the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with its terms,
except as such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to creditors’ rights and
general principles of equity, and except that any rights of indemnification may be limited by
public policy.






	(v)	 	The execution and delivery by the Company of the Agreement, the performance by the Company of
its obligations thereunder and the consummation by the Company of the transactions
contemplated thereby do not require the Company to obtain any consent, approval or action of,
or make any filing with or give any notice to, any corporation, person or firm or any public,
governmental or judicial authority of the United States or the State of Delaware except such
as have been duly obtained or made, as the case may be, and are in full force and effect.






	(vi)	 	The execution and delivery of the Agreement will not, (A) result in a material breach of any
of the terms, conditions or provisions of, or constitute a default under, any agreement filed
as an exhibit to the Company’s Annual Report on Form 10-K for the fiscal year ended
[                    ], (B) violate the Certificate of Incorporation or Bylaws, or any federal or
Delaware state law, rule or regulation known to such counsel of any court or federal, state of
Delaware or other regulatory board or body or administrative agency having jurisdiction over
the Company or over its properties or businesses or (C) conflict with or constitute a




 


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default under any federal or Delaware State judgment, writ, decree or order known to such
counsel to be applicable by its terms to the Company.1




	(vii)	 	To the best knowledge of such counsel, there is no action, suit, investigation or proceeding
pending or threatened, against the Company or any of its properties or assets by or before any
court, arbitrator or governmental body, department, commission, board, bureau, agency or
instrumentality, which questions the validity of the Agreement or any action taken or to be
taken pursuant thereto.2






	(viii)	 	The Company is not required to, and will not as a result of the consummation of the
transactions contemplated by the Agreement be required to, register under the Investment
Company Act of 1940, as amended.






	(ix)	 	The issuance and sale of the Shares do not require registration under Section 5 of the
Securities Act or qualification under any state securities or blue sky laws of the State of
Delaware.





In rendering such opinion, such counsel may refrain from expressing an opinion concerning any
law other than the federal law of the United States, the law of the State of New York and the
Delaware General Corporation Law.



 



	 	 	 
	1	 	This may be given by in-house counsel.
	 
	2	 	This may be given by in-house counsel.





 


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