Document:

Exhibit 10.1

 

CONFIDENTIAL TREATMENT

REQUESTED PURSUANT TO

RULE 24b-2 OF THE SECURITIES

EXCHANGE ACT OF 1934

 

 

Certain portions of
this exhibit have been omitted pursuant to a request for confidential treatment
under Rule 24b-2

of the Securities Exchange Act of 1934. The omitted materials have been filed
separately with the

Securities and Exchange Commission.

 

 

Amendment No. 1 to Hologram Agreement

 

This Amendment
No. 1 to the Hologram Agreement dated as of February 28, 2003 (the “Agreement”)
by and between MasterCard International Incorporated, a Delaware corporation
with offices at 2000 Purchase Street, Purchase, New York 10577-2509
(“MasterCard”), and American Bank Note Holographics, Inc., a Delaware
corporation with offices at 399 Executive Blvd., Elmsford, NY 10523 (“ABNH”),
is made as of September 29, 2003.

 

The parties to
the Agreement, in consideration of the mutual promises, covenants, and
conditions set forth herein, agree as follows:

 

1.0                                 The Agreement is
hereby amended to include the manufacture and supply of holograms having the
specifications set forth on Exhibit A1 attached hereto (the “Debit
Holograms”).  ABNH shall manufacture,
and MasterCard shall purchase, the Debit Holograms under the Agreement pursuant
to the same terms and in the same manner as the holograms described in Exhibit
A of the Agreement.  For the removal of
doubt, the purchase price for the Debit Holograms shall equal the purchase
price for the standard holograms as set forth in Section 5.1 of the Agreement.

 

2.0                                 The Agreement is
hereby amended by deleting the first sentence of Section 1.3 and substituting
the following sentence in lieu thereof: “This Agreement shall be effective as
of the date first set forth  above and
shall remain in effect for a period of eight years from such date, unless
terminated earlier or extended as provided herein (the  “Term”).”

 

3.0                                 The Agreement is
hereby amended by inserting the following new sentence at the beginning of
Section 4.1 of the Agreement:  “ABNH
hereby licenses to MasterCard all copyright rights it owns or may acquire in
each MasterCard hologram.” For the removal of doubt, pursuant to Section 4 of
the Agreement, MasterCard shall have and retain ownership of each MasterCard
hologram design.

 

4.0                                 The parties agree the
purchase price for the holograms specified in Section 5.1 of the Agreement that
are applicable as of January 1, 2006 shall remain in effect from that date
through the end of the term of the Agreement.

 

5.0                                 The parties agree that
except as set forth herein, the Agreement shall remain unchanged and in full
force and effect.

 

1

 

6.0                                 This Amendment shall
in all respects be governed, interpreted and enforced in accordance with the
internal laws of the State of New York without reference to principles and
conflicts of law, whose courts sitting in New York County or Westchester County
shall have sole jurisdiction in all claims.

 

IN WITNESS WHEROF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.

 

	
  MASTERCARD
  INTERNATIONAL INCORPORATED

  	
   

  	
  AMERICAN
  BANK NOTE HOLOGRAPHICS, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Ann
  Schmitt

  	
   

  	
  By:

  	
  /s/ Kenneth
  H. Traub

  	
   

  
	
  Title:

  	
  VP, Risk
  Solutions and Management

  	
   

  	
  Title:

  	
  President
  and CEO

  	
   

  
								

 

2

 

EXHIBIT A1

 

DEBIT HOLOGRAM SPECIFICATIONS

 

1.0                                               MATERIAL

 

[*]

 

2.0                                               DESIGN

 

[*]

 

3.0                                               DIMENSIONS

 

[*]

 

4.0                                               HOLOGRAM
CHARACTERISTICS

 

[*]

 

 

*
Confidential.

 

3Exhibit 10.1

 

SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE

 

AGREEMENT

 

Dated
as of October 31, 2003

 

among

 

SATCON
TECHNOLOGY CORPORATION

 

and

 

THE
PURCHASERS LISTED ON EXHIBIT A

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I
  Purchase and Sale of Preferred Stock

  
	
   

  	
   

  
	
  Section 1.1

  	
  Purchase
  and Sale of Stock

  
	
  Section 1.2

  	
  The
  Conversion Shares

  
	
  Section 1.3

  	
  Purchase
  Price and Closing

  
	
   

  	
   

  
	
  ARTICLE II
  Representations and Warranties

  
	
   

  	
   

  
	
  Section 2.1

  	
  Representations
  and Warranties of the Company

  
	
  Section 2.2

  	
  Representations
  and Warranties of the Purchasers

  
	
   

  	
   

  
	
  ARTICLE III
  Covenants

  
	
   

  	
   

  
	
  Section 3.1

  	
  Securities
  Compliance

  
	
  Section 3.2

  	
  Registration
  and Listing

  
	
  Section 3.3

  	
  Inspection
  Rights

  
	
  Section 3.4

  	
  Compliance
  with Laws

  
	
  Section 3.5

  	
  Keeping
  of Records and Books of Account

  
	
  Section 3.6

  	
  Reporting
  Requirements

  
	
  Section 3.7

  	
  Status of Dividends

  
	
  Section 3.7

  	
  Amendments

  
	
  Section 3.8

  	
  Other
  Agreements

  
	
  Section 3.9

  	
  Distributions

  
	
  Section 3.10

  	
  Status
  of Dividends

  
	
  Section 3.11

  	
  Intentionally
  Omitted

  
	
  Section 3.12

  	
  Future
  Financings; Right of First Offer and Refusal

  
	
  Section 3.13

  	
  Reservation
  of Shares

  
	
  Section 3.14

  	
  Transfer
  Agent Instructions

  
	
  Section 3.15

  	
  Disposition
  of Assets

  
	
  Section 3.16

  	
  Form
  S-3 Eligibility

  
	
  Section 3.17

  	
  Silicon
  Valley Bank

  
	
   

  	
   

  
	
  ARTICLE IV
  Conditions

  
	
   

  	
   

  
	
  Section 4.1

  	
  Conditions
  Precedent to the Obligation of the Company to Sell the Shares

  
	
  Section 4.2

  	
  Conditions
  Precedent to the Obligation of the Purchasers to Purchase the Shares

  
	
   

  	
   

  
	
  ARTICLE V
  Intentionally Omitted

  

 

 

	
  ARTICLE VI
  Stock Certificate Legend

  
	
   

  	
   

  
	
  Section 6.1

  	
  Legend

  
	
   

  	
   

  
	
  ARTICLE VII
  Intentionally Omitted

  
	
   

  	
   

  
	
  ARTICLE VIII
  Indemnification

  
	
   

  	
   

  
	
  Section 8.1

  	
  General
  Indemnity

  
	
  Section 8.2

  	
  Indemnification
  Procedure

  
	
   

  	
   

  
	
  ARTICLE IX
  Miscellaneous

  
	
   

  	
   

  
	
  Section 9.1

  	
  Fees
  and Expenses

  
	
  Section 9.2

  	
  Specific
  Enforcement, Consent to Jurisdiction

  
	
  Section 9.3

  	
  Entire
  Agreement; Amendment

  
	
  Section 9.4

  	
  Notices

  
	
  Section 9.5

  	
  Waivers

  
	
  Section 9.6

  	
  Headings

  
	
  Section 9.7

  	
  Successors
  and Assigns

  
	
  Section 9.8

  	
  No
  Third Party Beneficiaries

  
	
  Section 9.9

  	
  Governing
  Law

  
	
  Section 9.10

  	
  Survival

  
	
  Section 9.11

  	
  Counterparts

  
	
  Section 9.12

  	
  Publicity

  
	
  Section 9.13

  	
  Severability

  
	
  Section 9.14

  	
  Further
  Assurances

  

 

ii

 

SERIES
B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

 

This SERIES B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the
“Agreement”) is dated as of October 31, 2003 by and among SatCon
Technology Corporation, a Delaware corporation (the “Company”), and each of the
Purchasers of shares of Series B Convertible Preferred Stock of the Company
whose names are set forth on Exhibit A hereto (individually, a
“Purchaser” and collectively, the “Purchasers”).

 

The parties hereto agree as follows:

 

ARTICLE I

 

Purchase and Sale
of Preferred Stock

 

Section 1.1             Purchase and Sale
of Stock.  Upon the following terms
and conditions, the Company shall issue and sell to the Purchasers and each of
the Purchasers shall purchase from the Company, the number of shares of the
Company’s Series B Convertible Preferred Stock, par value $.01 per share (the
“Preferred Shares”), at a purchase price of $5,000 per share, set forth
opposite such Purchaser’s name on Exhibit A hereto. Upon the following
terms and conditions, each of the Purchasers shall be issued Warrants, in
substantially the form attached hereto as Exhibit B (the “Warrants”), to
purchase the number of shares of the Company’s Common Stock, par value $.01 per
share (the “Common Stock”) set forth opposite such Purchaser’s name on Exhibit
A hereto.  The aggregate purchase
price for the Preferred Shares and the Warrants shall be up to $8,000,000.  The designation, rights, preferences and
other terms and provisions of the Series B Convertible Preferred Stock are set
forth in the Certificate of Designation of the Relative Rights and Preferences
of the Series B Convertible Preferred Stock attached hereto as Exhibit C
(the “Certificate of Designation”).  The
Company and the Purchasers are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “Securities Act”) or Section 4(2)
of the Securities Act.

 

Section 1.2             The Conversion
Shares. The Company has authorized and has reserved and covenants to
continue to reserve, free of preemptive rights and other similar contractual
rights of stockholders, such number of shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all of the Preferred
Shares and exercise of the Warrants then outstanding; provided that the
number of shares of Common Stock so reserved shall at no time be less than 120%
of its authorized but unissued shares of its Common Stock required to effect
the conversion of the Preferred Shares (excluding dividends) and exercise of
the Warrants.  Any shares of Common
Stock issuable upon conversion of the Preferred Shares and exercise of the
Warrants (and such shares when issued) are herein referred to as the
“Conversion Shares” and the “Warrant Shares”, respectively.  The Preferred Shares, the Conversion Shares
and the Warrant Shares are sometimes collectively referred to as the “Shares”.

 

 

Section 1.3             Purchase Price and
Closing.  The Company agrees to
issue and sell to the Purchasers and, in consideration of and in express
reliance upon the representations, warranties, covenants, terms and conditions
of this Agreement, the Purchasers, severally but not jointly, agree to purchase
that number of the Preferred Shares and Warrants set forth opposite their
respective names on Exhibit A.  The
aggregate purchase price of the Preferred Shares and Warrants being acquired by
each Purchaser is set forth opposite such Purchaser’s name on Exhibit A (for
each such purchaser, the “Purchase Price” and collectively referred to as the
“Purchase Prices”).  The closing of the
purchase and sale of the Preferred Shares and Warrants shall take place at the
offices of Jenkens & Gilchrist Parker Chapin LLP, The Chrysler Building,
405 Lexington Avenue, New York, New York 10174 (the “Closing”) at 1:00 p.m.
(eastern time) upon the satisfaction of each of the conditions set forth in
Article IV hereof (the “Closing Date”). Funding with respect to the
Closing shall take place by wire transfer of immediately available funds on or
prior to the Closing Date.

 

Section 1.4             Warrants.  The Company agrees to issue to each of the
Purchasers Warrants to purchase the number of shares of Common Stock set forth
opposite such Purchaser’s name on Exhibit A hereto.  The Warrants shall have an exercise price
equal to the Warrant Price (as defined in the Warrant) and shall expire five
(5) years from the Closing Date.

 

ARTICLE II

 

Representations
and Warranties

 

Section 2.1             Representations
and Warranties of the Company.  The
Company hereby makes the following representations and warranties to the
Purchasers, except as set forth in the Company’s disclosure
schedule delivered with this Agreement as follows:

 

(a)           Organization, Good
Standing and Power.  The Company is
a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power to own,
lease and operate its properties and assets and to conduct its business as it
is now being conducted.  The Company
does not have any subsidiaries except as set forth in the Company’s Form 10-K,
as amended, for the year ended September 30, 2002, including the
accompanying financial statements (the “Form 10-K”), or in the Company’s Forms
10-Q, as amended, for the fiscal quarters ended December 28, 2002,
March 29, 2003 or June 28, 2003 (collectively, the “Form 10-Q”), or
on Schedule 2.1(a) hereto. 
The Company and each such subsidiary is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary except for any jurisdiction(s) (alone or in the
aggregate) in which the failure to be so qualified will not have a Material
Adverse Effect (as defined in Section 2.1(c) hereof) on the Company’s
financial condition.

 

(b)           Authorization;
Enforcement.  The Company has the
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement attached hereto as Exhibit D
(the “Registration Rights Agreement”), the Irrevocable Transfer Agent
Instructions (as defined in Section 3.14), the Certificate of Designation,
and the Warrants (collectively, the “Transaction Documents”) and to issue and
sell the Shares and the Warrants in accordance with the terms hereof.  The execution, delivery and performance of
the

 

2

 

Transaction
Documents by the Company and, except as disclosed on Schedule 2.1(b)
hereto, the consummation by it of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate
action, and no further consent or authorization of the Company or its Board of
Directors or stockholders is required. 
This Agreement has been duly executed and delivered by the Company.  The other Transaction Documents will have
been duly executed and delivered by the Company at the Closing.  Each of the Transaction Documents
constitutes, or shall constitute when executed and delivered, a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.

 

(c)           Capitalization.  The authorized capital stock of the Company
and the shares thereof currently issued and outstanding as of October 24,
2003 are set forth on Schedule 2.1(c) hereto.  All of the outstanding shares of the
Company’s Common Stock and Series B Convertible Preferred Stock have been duly
and validly authorized.  Except as set
forth in this Agreement and the Registration Rights Agreement and as set forth on
Schedule 2.1(c) hereto, no shares of Common Stock are entitled to
preemptive rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company. 
Furthermore, except as set forth in this Agreement and the Registration
Rights Agreement or on Schedule 2.1(c), there are no contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of the capital stock of the Company or
options, securities or rights convertible into shares of capital stock of the
Company.  Except for customary transfer
restrictions contained in agreements entered into by the Company in order to
sell restricted securities or as set forth on Schedule 2.1(c)
hereto, the Company is not a party to any agreement granting registration or
anti-dilution rights to any person with respect to any of its equity or debt
securities.  The Company is not a party
to, and it has no knowledge of, any agreement restricting the voting or
transfer of any shares of the capital stock of the Company.  Except as set forth on Schedule 2.1(c)
hereto, the offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing
complied with all applicable Federal and state securities laws, and no
stockholder has a right of rescission or claim for damages with respect thereto
which would have a Material Adverse Effect (as defined below) on the Company’s
financial condition or operating results. 
The Company has furnished or made available to the Purchasers true and
correct copies of the Company’s Certificate of Incorporation as in effect on
the date hereof (the “Certificate”), and the Company’s Bylaws as in effect on
the date hereof (the “Bylaws”).  For the
purposes of this Agreement, “Material Adverse Effect” means any material
adverse effect on the business, operations, properties, prospects, or financial
condition of the Company and its subsidiaries, taken as a whole and/or any
condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to perform any of its
obligations under this Agreement in any material respect.

 

(d)           Issuance of Shares.  Except as disclosed on Schedule 2.1(d)
hereto, the Preferred Shares and the Warrants to be issued at the Closing have
been duly authorized by all

 

3

 

necessary
corporate action and the Preferred Shares, when paid for or issued in
accordance with the terms hereof, shall be validly issued and outstanding,
fully paid and nonassessable and entitled to the rights and preferences set
forth in the Certificate of Designation. 
Except as disclosed on Schedule 2.1(d) hereto, when the
Conversion Shares and the Warrant Shares are issued in accordance with the
terms of the Certificate of Designation and the Warrants, respectively, such
shares will be duly authorized by all necessary corporate action and validly
issued and outstanding, fully paid and nonassessable, and the holders shall be
entitled to all rights accorded to a holder of Common Stock.

 

(e)           No Conflicts.  Except as disclosed on Schedule 2.1(e)
hereto, the execution, delivery and performance of the Transaction Documents by
the Company, the performance by the Company of its obligations under the
Certificate of Designation and the consummation by the Company of the
transactions contemplated herein and therein do not and will not (i) violate
any provision of the Company’s Certificate or Bylaws, (ii) conflict with, 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 termination,
amendment, acceleration or cancellation of, any agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Company is a party or by which it or its properties or
assets are bound, (iii) create or impose a lien, mortgage, security interest,
charge or encumbrance of any nature on any property of the Company under any
agreement or any commitment to which the Company is a party or by which the
Company is bound or by which any of its respective properties or assets are
bound, or (iv) result in a violation of any federal, state, local or foreign
statute, rule, regulation, order, judgment or decree (including Federal and
state securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, except, in all cases other than violations
pursuant to clauses (i) and (iv) above, for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect.  The business of the Company and its
subsidiaries is not being conducted in violation of any laws, ordinances or
regulations of any governmental entity, except for possible violations which
singularly or in the aggregate do not and will not have a Material Adverse
Effect.  The Company is not required
under Federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of
its obligations under the Transaction Documents, or issue and sell the Preferred
Shares, the Warrants, the Conversion Shares and the Warrant Shares in
accordance with the terms hereof or thereof (other than any filings which may
be required to be made by the Company with the Commission or state securities
administrators subsequent to the Closing, any registration statement which may
be filed pursuant hereto, and the Certificate of Designation); provided
that, for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchasers herein.

 

(f)            Commission
Documents, Financial Statements. 
The Common Stock is registered pursuant to Section 12(b) or 12(g)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and,
except as disclosed on Schedule 2.1(f) hereto, since
September 30, 2002, the Company has timely filed all reports, schedules,
forms, statements and other

 

4

 

documents required
to be filed by it with the Commission pursuant to the reporting requirements of
the Exchange Act, including material filed pursuant to Section 13(a) or
15(d) of the Exchange Act (all of the foregoing including filings incorporated
by reference therein being referred to herein as the “Commission Documents”;
for purposes of this Agreement, such term shall also include the sections
entitled “Risk Factors,” “Description of the Transaction” and “Description of
Capital Stock” contained in the Company’s registration statement on Form S-3,
as amended (File No. 333-103950)).  The
Company has delivered or made available to each of the Purchasers true and
complete copies of the Commission Documents filed with the Commission since
September 30, 2002.  The Company
has not provided to the Purchasers any material non-public information or other
information which, according to applicable law, rule or regulation, was
required to have been disclosed publicly by the Company but which has not been
so disclosed, other than with respect to the transactions contemplated by this
Agreement.  As of their respective
dates, the Form 10-K and the Form 10-Q complied in all material respects with
the requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder and other federal, state and local laws,
rules and regulations applicable to such documents, and, as of their respective
dates, none of the Form 10-K and the Form 10-Q 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.  The financial statements of the Company
included in the Commission Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the Commission or other applicable rules and regulations with respect
thereto.  Such financial statements have
been prepared in accordance with United States generally accepted accounting
principles (“GAAP”) applied on a consistent basis during the periods involved
(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 or may be condensed or summary
statements), and fairly present in all material respects the financial position
of the Company and its subsidiaries as of the dates thereof and the results of
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

 

(g)           Subsidiaries.  Schedule 2.1(g) hereto sets
forth each subsidiary of the Company, showing the jurisdiction of its
incorporation or organization.  The Company
owns, directly or indirectly, all of the outstanding stock or other interests
of such subsidiary.  For the purposes of
this Agreement, “subsidiary” shall mean any corporation or other entity of
which at least a majority of the securities or other ownership interest having
ordinary voting power (absolutely or contingently) for the election of
directors or other persons performing similar functions are at the time owned
directly or indirectly by the Company and/or any of its other subsidiaries.  All of the outstanding shares of capital
stock of each subsidiary have been duly authorized and validly issued, and are
fully paid and nonassessable.  There are
no outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon any subsidiary for the purchase
or acquisition of any shares of capital stock of any subsidiary or any other
securities convertible into, exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock.  Neither the Company nor any subsidiary is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of the capital stock of any subsidiary or any convertible
securities, rights, warrants or options of the type described in the preceding
sentence.  Neither the Company nor any
subsidiary

 

5

 

is party to, nor
has any knowledge of, any agreement restricting the voting or transfer of any
shares of the capital stock of any subsidiary.

 

(h)           No Material Adverse
Change.  Since September 30,
2002, the Company has not experienced or suffered any Material Adverse Effect,
except as disclosed on Schedule 2.1(h) hereto or in the Commission
Documents.

 

(i)            No Undisclosed
Liabilities.  Except as set forth on
Schedule 2.1(i) hereto or in the Commission Documents, neither the
Company nor any of its subsidiaries has any liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) other than those incurred in the ordinary course of
the Company’s or its subsidiaries respective businesses since
September 30, 2002 and which, individually or in the aggregate, do not or
would not have a Material Adverse Effect on the Company or its subsidiaries.

 

(j)            No Undisclosed
Events or Circumstances.  Except as
set forth on Schedule 2.1(j) hereto, no event or circumstance has
occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial
condition, which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed.

 

(k)           Indebtedness.  The 
Commission Documents or Schedule 2.1(k) hereto sets forth as
of a recent date all outstanding secured and unsecured Indebtedness of the
Company or any subsidiary, or for which the Company or any subsidiary has
commitments.  For the purposes of this
Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or
amounts owed in excess of $100,000 (other than trade accounts payable incurred
in the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business; and (c) the present value of any lease payments in excess of $25,000
due under leases required to be capitalized in accordance with GAAP.  Except as set forth on Schedule 2.1(k),
neither the Company nor any subsidiary is in default with respect to any
Indebtedness.

 

(l)            Title to Assets.  Each of the Company and the subsidiaries has
good and marketable title to all of its real and personal property reflected in
the Form 10-K, free and clear of any mortgages, pledges, charges, liens,
security interests or other encumbrances, except for those indicated in the
Commission Documents or on Schedule 2.1(l) hereto or such that,
individually or in the aggregate, do not cause a Material Adverse Effect on the
Company’s financial condition or operating results.  All said leases of the Company and each of its subsidiaries are
valid and subsisting and in full force and effect.

 

(m)          Actions Pending.  There is no action, suit, claim,
investigation, arbitration, alternate dispute resolution proceeding or any
other proceeding pending or, to the knowledge of the Company, threatened
against the Company or any subsidiary which questions the validity of this
Agreement or any of the other Transaction Documents or the transactions
contemplated

 

6

 

hereby or thereby
or any action taken or to be taken pursuant hereto or thereto.  Except as set forth in the Commission
Documents or on Schedule 2.1(m) hereto, there is no action, suit,
claim, investigation, arbitration, alternate dispute resolution proceeding or
any other proceeding pending or, to the knowledge of the Company, threatened,
against or involving the Company, any subsidiary or any of their respective
properties or assets which could, if there were an unfavorable decision,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.  Except as set
forth in the Commission Documents or Schedule 2.1(m) hereto, there
are no outstanding orders, judgments, injunctions, awards or decrees of any
court, arbitrator or governmental or regulatory body against the Company or any
subsidiary or any officers or directors of the Company or subsidiary in their
capacities as such.

 

(n)           Compliance with Law.  The business of the Company and the
subsidiaries has been and is presently being conducted in accordance with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances, except as set forth in the Commission Documents, or such that,
individually or in the aggregate, do not cause a Material Adverse Effect.  The Company and each of its subsidiaries
have all franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals necessary for the conduct of its business
as now being conducted by it unless the failure to possess such franchises,
permits, licenses, consents and other governmental or regulatory authorizations
and approvals, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

 

(o)           Taxes.  Except as set forth in the Commission
Documents, the Company and each of the subsidiaries has accurately prepared and
filed all federal, state and other material tax returns required by law to be
filed by it, has paid or made provisions for the payment of all taxes shown to
be due and all additional assessments, and adequate provisions have been and
are reflected in the financial statements of the Company and the subsidiaries
for all material current taxes and other charges to which the Company or any
subsidiary is subject and which are not currently due and payable.  None of the federal income tax returns of
the Company or any subsidiary have been audited by the Internal Revenue Service.  The Company has no knowledge of any
additional assessments, adjustments or contingent tax liability (whether
federal or state) of any nature whatsoever, whether pending or threatened
against the Company or any subsidiary for any period, nor of any basis for any
such assessment, adjustment or contingency.

 

(p)           Certain Fees.  Except as set forth in this Agreement or on Schedule 2.1(p)
hereto, no brokers, finders or financial advisory fees or commissions will be
payable by the Company or any subsidiary or any Purchaser with respect to the
transactions contemplated by this Agreement.

 

(q)           Disclosure.  To the best of the Company’s knowledge,
neither this Agreement or the Schedules hereto nor any other documents,
certificates or instruments furnished to the Purchasers by or on behalf of the
Company or any subsidiary in connection with the transactions contemplated by
this Agreement contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under which they were made herein or
therein, not misleading.

 

7

 

(r)            Operation of
Business.  Except as set forth in
the Commission Documents, the Company and each of the subsidiaries owns or possesses
all patents, trademarks, domain names (whether or not registered) and any
patentable improvements or copyrightable derivative works thereof, websites and
intellectual property rights relating thereto, service marks, trade names,
copyrights, licenses and authorizations that are necessary or material for use
in connection with their respective businesses as described in the Form 10-K
and which the failure to so have could, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any subsidiary has
received a written notice that the foregoing intellectual property rights used
by the Company or any subsidiary violates or infringes upon the rights of any
other party.

 

(s)           Environmental
Compliance.  The Company and each of
its subsidiaries have obtained all material approvals, authorization,
certificates, consents, licenses, orders and permits or other similar
authorizations of all governmental authorities, or from any other person, that
are required under any  Environmental
Laws.  The Commission Documents describe
all material permits, licenses and other authorizations issued under any
Environmental Laws to the Company or its subsidiaries.  “Environmental Laws” shall mean all
applicable laws relating to the protection of the environment including,
without limitation, all requirements pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions, discharges,
releases or threatened releases of hazardous substances, chemical substances,
pollutants, contaminants or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature, into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, material or wastes,
whether solid, liquid or gaseous in nature. 
The Company has all necessary material governmental approvals required
under all Environmental Laws and used in its business or in the business of any
of its subsidiaries.  The Company and
each of its subsidiaries are also in material compliance with all other
limitations, restrictions, conditions, standards, requirements, schedules and
timetables required or imposed under all Environmental Laws.  Except for such instances as would not
individually or in the aggregate have a Material Adverse Effect, there are no
past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its subsidiaries
that violate or may violate any Environmental Law after the Closing Date or
that may give rise to any environmental liability, or otherwise form the basis
of any claim, action, demand, suit, proceeding, hearing, study or investigation
(i) under any Environmental Law, or (ii) based on or related to the
manufacture, processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport or handling,
or the emission, discharge, release or threatened release of any hazardous
substance.

 

(t)            Books and Record
Internal Accounting Controls.  The
books and records of the Company and its subsidiaries accurately reflect in all
material respects the information relating to the business of the Company and
the subsidiaries, the location and collection of their assets, and the nature
of all transactions giving rise to the obligations or accounts receivable of
the Company or any subsidiary.  The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient, in the judgment of the Company, to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial

 

8

 

statements in
conformity with GAAP and to maintain asset accountability, (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
the existing assets at reasonable intervals and appropriate actions is taken
with respect to any differences.

 

(u)           Material Agreements.  Except as set forth in the Commission
Documents  or on Schedule 2.1(u)
hereto, neither the Company nor any subsidiary is a party to any written or
oral contract, instrument, agreement, commitment, obligation, plan or
arrangement, a copy of which would be required to be filed with the Commission
as an exhibit to a registration statement on Form S-3 or applicable form
(collectively, “Material Agreements”) if the Company or any subsidiary were
registering securities under the Securities Act.  Except as set forth on Schedule 2.1(u) or in the
Commission Documents, the Company and each of its subsidiaries has in all
material respects performed all the obligations required to be performed by
them to date under the foregoing agreements, have received no notice of default
and, to the best of the Company’s knowledge are not in default under any
Material Agreement now in effect, the result of which could cause a Material
Adverse Effect.  Except as set forth on Schedule 2.1(u)
or in the Commission Documents, no written or oral contract, instrument,
agreement, commitment, obligation, plan or arrangement of the Company or of any
subsidiary limits or shall limit the payment of dividends on the Company’s
Preferred Shares, other Preferred Stock, if any, or its Common Stock.

 

(v)           Transactions with
Affiliates.  Except as set forth in
the Commission Documents or on Schedule 2.1(v) hereto, there are no
loans, leases, agreements, contracts, royalty agreements, management contracts
or arrangements or other continuing transactions between (a) the Company or any
subsidiary on the one hand, and (b) on the other hand, any officer or director
of the Company, or any of its subsidiaries, or any person owning any capital
stock of the Company or any subsidiary or any member of the immediate family of
such officer or director or any corporation or other entity controlled by such
officer, director or stockholder, or a member of the immediate family of such
officer, director or stockholder.

 

(w)          Securities Act of
1933.  Based in material part upon
the representations herein of the Purchasers, the Company has complied and will
comply with all applicable federal and state securities laws in connection with
the offer, issuance and sale of the Shares and the Warrants hereunder.  Neither the Company nor anyone acting on its
behalf, directly or indirectly, has or will sell, offer to sell or solicit
offers to buy any of the Shares, the Warrants or similar securities to, or
solicit offers with respect thereto from, or enter into any preliminary
conversations or negotiations relating thereto with, any person, or has taken
or will take any action so as to bring the issuance and sale of any of the
Shares and the Warrants under the registration provisions of the Securities Act
and applicable state securities laws, and neither the Company nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
any of the Shares and the Warrants.

 

(x)            Governmental
Approvals.  Except as set forth in
the Commission Documents, and except for the filing of any notice prior or
subsequent to the Closing Date that may be required under applicable state
and/or Federal securities laws (which if required, shall be

 

9

 

filed on a timely
basis), including the filing of a Form D and a registration statement or statements
pursuant to the Registration Rights Agreement, and the filing of the
Certificate of Designation with the Secretary of State for the State of
Delaware, no authorization, consent, approval, license, exemption of, filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution or delivery of the Preferred Shares
and the Warrants, or for the performance by the Company of its obligations
under the Transaction Documents.

 

(y)           Employees.  Neither the Company nor any subsidiary has
any collective bargaining arrangements or agreements covering any of its
employees, except as set forth in the Commission Documents.  Except as set forth in the Commission
Documents, neither the Company nor any subsidiary has any employment contract,
agreement regarding proprietary information, non-competition agreement,
non-solicitation agreement, confidentiality agreement, or any other similar
contract or restrictive covenant, relating to the right of any officer or
employee to be employed by the Company or such subsidiary.  Since September 30, 2002, no officer or
key employee of the Company or any subsidiary whose termination, either individually
or in the aggregate, could have a Material Adverse Effect, has terminated or,
to the knowledge of the Company, has any present intention of terminating his
or her employment with the Company or any subsidiary.

 

(z)            Absence of Certain
Developments.  Except as provided on
Schedule 2.1(z) hereto or in the Commission Documents, since
September 30, 2002, neither the Company nor any subsidiary has:

 

(i)            issued
any stock, bonds or other corporate securities or any rights, options or
warrants with respect thereto;

 

(ii)           borrowed any amount or
incurred or become subject to any liabilities (absolute or contingent) except
current liabilities incurred in the ordinary course of business which are
comparable in nature and amount to the current liabilities incurred in the
ordinary course of business during the comparable portion of its prior fiscal
year, as adjusted to reflect the current nature and volume of the Company’s or
such subsidiary’s business;

 

(iii)          discharged or satisfied
any lien or encumbrance or paid any obligation or liability (absolute or
contingent), other than current liabilities paid in the ordinary course of
business;

 

(iv)          declared or made any
payment or distribution of cash or other property to stockholders with respect
to its stock, or purchased or redeemed, or made any agreements so to purchase
or redeem, any shares of its capital stock;

 

(v)           sold, assigned or
transferred any other tangible assets, or canceled any debts or claims, except
in the ordinary course of business;

 

10

 

(vi)          sold, assigned or
transferred any patent rights, trademarks, trade names, copyrights, trade
secrets or other intangible assets or intellectual property rights, or
disclosed any proprietary confidential information to any person except to
customers in the ordinary course of business or to the Purchasers or their
representatives;

 

(vii)         suffered any substantial
losses or waived any rights of material value, whether or not in the ordinary
course of business, or suffered the loss of any material amount of prospective
business;

 

(viii)        made any changes in
employee compensation except in the ordinary course of business and consistent
with past practices;

 

(ix)           made capital
expenditures or commitments therefor that aggregate in excess of $100,000;

 

(x)            entered into any other
transaction other than in the ordinary course of business, or entered into any
other material transaction, whether or not in the ordinary course of business;

 

(xi)           made charitable
contributions or pledges in excess of $25,000;

 

(xii)          suffered any material
damage, destruction or casualty loss, whether or not covered by insurance;

 

(xiii)         experienced any material
problems with labor or management in connection with the terms and conditions
of their employment;

 

(xiv)        effected any two or more
events of the foregoing kind which in the aggregate would be material to the
Company or its subsidiaries; or

 

(xv)         entered into an
agreement, written or otherwise, to take any of the foregoing actions.

 

(aa)         Use of Proceeds.  The proceeds from the sale of the Preferred
Shares will be used by the Company for working capital and general corporate
purposes.

 

(bb)         Public Utility Holding
Company Act and Investment Company Act Status.  The Company is not a “holding company” or a “public utility
company” as such terms are defined in the Public Utility Holding Company Act of
1935, as amended.  The Company is not,
and as a result of and immediately upon the Closing will not be, an “investment
company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended.

 

(cc)         ERISA.  No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company or any of
its subsidiaries which is or would be materially adverse to the Company and its
subsidiaries.  The execution and
delivery of

 

11

 

this Agreement and
the issuance and sale of the Preferred Shares will not involve any transaction
which is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975 of
the Internal Revenue Code of 1986, as amended, provided that, if any of the
Purchasers, or any person or entity that owns a beneficial interest in any of
the Purchasers, is an “employee pension benefit plan” (within the meaning of
Section 3(2) of ERISA) with respect to which the Company is a “party in
interest” (within the meaning of Section 3(14) of ERISA), the requirements
of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met.  As used in this Section 2.1(ac), the
term “Plan” shall mean an “employee pension benefit plan” (as defined in
Section 3 of ERISA) which is or has been established or maintained, or to
which contributions are or have been made, by the Company or any subsidiary or
by any trade or business, whether or not incorporated, which, together with the
Company or any subsidiary, is under common control, as described in
Section 414(b) or (c) of the Code.

 

(dd)         Dilutive Effect.  The Company understands and acknowledges
that the number of Conversion Shares issuable upon conversion of the Preferred
Shares and the Warrant Shares issuable upon exercise of the Warrants will
increase in certain circumstances.  The
Company further acknowledges that its obligation to issue Conversion Shares
upon conversion of the Preferred Shares in accordance with this Agreement and
the Certificate of Designation and its obligations to issue the Warrant Shares
upon the exercise of the Warrants in accordance with this Agreement and the
Warrants, is, in each case, absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interest of other
stockholders of the Company.

 

(ee)         Independent Nature of
Purchasers.  The Company
acknowledges that the obligations of each Purchaser under the Transaction
Documents are several and not joint with the obligations of any other
Purchaser, and no Purchaser shall be responsible in any way for the performance
of the obligations of any other Purchaser under the Transaction Documents.  The decision of each Purchaser to purchase
Shares pursuant to this Agreement has been made by such Purchaser independently
of any other purchase and independently of any information, materials,
statements or opinions as to the business, affairs, operations, assets,
properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of its subsidiaries which may have
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any Purchaser (or any other person) relating to or arising from
any such information, materials, statements or opinions.  The Company further acknowledges that
nothing contained herein, or in any Transaction Document, and no action taken
by any Purchaser pursuant hereto or thereto, including any renegotiation,
amendment, early conversion, exercise, termination or other modification of the
Transaction Documents or the transactions related thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert or as a “group” for purposes of Section 13(d) of
the Exchange Act with respect to such obligations or the transactions
contemplated by the Transaction Documents. 
Each Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.  For
reasons of administrative convenience only, at the request of

 

12

 

the Company,
Purchasers and their respective counsel have chosen to communicate with the
Company through Jenkens & Gilchrist Parker Chapin LLP, counsel for one of
the Purchasers.  Such counsel does not
represent any other Purchaser and each Purchaser has retained its own legal
counsel in connection with the negotiation and review of the transaction
documents and any other documents or filings in connection therewith.  The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested by the Purchasers.

 

(ff)           No Integrated Offering.  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 sales of any security or solicited any offers to
buy any security under circumstances that would cause the offering of the
Shares pursuant to this Agreement to be integrated with prior offerings by the
Company for purposes of the Securities Act which would prevent the Company from
selling the Shares pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any
of its affiliates or subsidiaries take any action or steps that would cause the
offering of the Shares to be integrated with other offerings.  The Company does not have any registration
statement pending before the Commission or currently under the Commission’s
review.

 

(gg)         Delisting Notification.  Except as set forth on Schedule 2.1(gg)
hereto, the Company has not received a delisting notification from the Nasdaq
National Market.

 

(hh)         Sarbanes-Oxley Act.  The Company is in substantial compliance
with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”), and the rules and regulations promulgated thereunder,
that are effective and intends to comply substantially with other applicable
provisions of the Sarbanes-Oxley Act, and the rules and regulations promulgated
thereunder, upon the effectiveness of such provisions.

 

Section 2.2             Representations
and Warranties of the Purchasers. 
Each of the Purchasers hereby makes the following representations and
warranties to the Company with respect solely to itself and not with respect to
any other Purchaser:

 

(a)           Organization and
Standing of the Purchasers.  If the
Purchaser is an entity, such Purchaser is a corporation or partnership duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization.

 

(b)           Authorization and
Power.  The Purchaser has the
requisite power and authority to enter into and perform this Agreement and to
purchase the Preferred Shares and Warrants being sold to it hereunder.  The execution, delivery and performance of
this Agreement and the Registration Rights Agreement by such Purchaser and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate or partnership action, and no
further consent or authorization of such Purchaser or its Board of Directors,
stockholders, or partners, as the case may be, is required.  Each of this Agreement and the Registration
Rights Agreement has been duly authorized, executed and delivered by such
Purchaser and constitutes, or shall constitute when executed and delivered, a
valid and binding obligation of the Purchaser enforceable against the Purchaser
in accordance

 

13

 

with the terms
thereof.

 

(c)           No Conflicts.  The execution, delivery and performance of
this Agreement and the Registration Rights Agreement and the consummation by
such Purchaser of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of such Purchaser’s
charter documents or bylaws or other organizational documents or (ii) conflict
with, 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
termination, amendment, acceleration or cancellation of any agreement,
indenture or instrument or obligation to which such Purchaser is a party or by
which its properties or assets are bound, or result in a violation of any law,
rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to such Purchaser or its properties (except for
such conflicts, defaults and violations as would not, individually or in the
aggregate, have a material adverse effect on such Purchaser).  Such Purchaser is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or the Registration Rights
Agreement or to purchase the Preferred Shares or acquire the Warrants in
accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, such Purchaser is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.

 

(d)           Acquisition for
Investment.  Such Purchaser is
acquiring the Preferred Shares and the Warrants solely for its own account for
the purpose of investment and not with a view to or for sale in connection with
distribution.  Such Purchaser does not
have a present intention to sell the Preferred Shares or the Warrants, nor a
present arrangement (whether or not legally binding) or intention to effect any
distribution of the Preferred Shares or the Warrants to or through any person
or entity; provided, however, that by making the representations
herein and subject to Section 2.2(f) below, such Purchaser does not agree
to hold the Shares or the Warrants for any minimum or other specific term and
reserves the right to dispose of the Shares or the Warrants at any time in
accordance with Federal and state securities laws applicable to such
disposition.  Such Purchaser
acknowledges that it is able to bear the financial risks associated with an
investment in the Preferred Shares and the Warrants and that it has been given
full access to such records of the Company and the subsidiaries and to the
officers of the Company and the subsidiaries and received such information as
it has deemed necessary or appropriate to conduct its due diligence
investigation and has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company’s stage of development
so as to be able to evaluate the risks and merits of its investment in the
Company.

 

(e)           Status of Purchasers.  Such Purchaser is an “accredited investor”
as defined in Regulation D promulgated under the Securities Act.  Such Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act and
such Purchaser is not a broker-dealer.

 

(f)            Opportunities for
Additional Information.  Each
Purchaser acknowledges that such Purchaser has had the opportunity to ask
questions of and receive answers from, or obtain additional information from,
the executive officers of the Company concerning the

 

14

 

financial and
other affairs of the Company, and to the extent deemed necessary in light of
such Purchaser’s personal knowledge of the Company’s affairs, such Purchaser
has asked such questions and received answers from the Company, and such
Purchaser desires to invest in the Company.

 

(g)           No General
Solicitation.  Each Purchaser
acknowledges that the Preferred Shares and the Warrants were not offered to
such Purchaser by means of any form of general or public solicitation or
general advertising, or publicly disseminated advertisements or sales
literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of communications.

 

(h)           Rule 144.  Such Purchaser understands that the Shares
must be held indefinitely unless such Shares are registered under the
Securities Act or an exemption from registration is available.  Such Purchaser acknowledges that such
Purchaser is familiar with Rule 144 of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act (“Rule
144”), and that such person has been advised that Rule 144 permits resales only
under certain circumstances.  Such
Purchaser understands that to the extent that Rule 144 is not available, such
Purchaser will be unable to sell any Shares without either registration under
the Securities Act or the existence of another exemption from such registration
requirement.

 

(i)            General.  Such Purchaser understands that the Shares
are being offered and sold in reliance on a transactional exemption from the
registration requirement of Federal and state securities laws and the Company
is relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of such Purchaser set forth
herein in order to determine the applicability of such exemptions and the
suitability of such Purchaser to acquire the Shares.

 

(j)            Independent
Investment.  No Purchaser has agreed
to act with any other Purchaser for the purpose of acquiring, holding, voting
or disposing of the Shares purchased hereunder for purposes of
Section 13(d) under the Exchange Act, and each Purchaser is acting
independently with respect to its investment in the Shares.

 

15

 

ARTICLE III

 

Covenants

 

The Company covenants with each of the Purchasers as follows, which
covenants are for the benefit of the Purchasers and their permitted assignees
(as defined herein).

 

Section 3.1             Securities
Compliance.  (a) The Company shall
notify the Commission in accordance with their rules and regulations, of the
transactions contemplated by any of the Transaction Documents, including filing
a Form D with respect to the Preferred Shares, Warrants, Conversion Shares and
Warrant Shares as required under Regulation D, and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Preferred
Shares, the Warrants, the Conversion Shares and the Warrant Shares to the
Purchasers or subsequent holders.

 

(b)           Unless waived by a
Purchaser by means of providing sixty-one (61) days notice to the Company, in
connection with a Voluntary Conversion (as such term is defined in the
Certificate of Designation) or the exercise of the Warrants, the Company
covenants and agrees that upon receipt of a Conversion Notice pursuant to
Section 5(b)(ii) of the Certificate of Designation or Exercise Form
pursuant to Section 2(b) of the Warrants that it will not convert such
number of shares that, when aggregated with all other shares of Common Stock
then owned by a Purchaser beneficially or deemed beneficially owned by a
Purchaser, would result in a Purchaser owning more than 4.99% of all of such
Common Stock as would be outstanding on such date of conversion or such date of
exercise of the Warrant, as determined in accordance with Section 13 of
the Exchange Act and the regulations promulgated thereunder; provided, however,
that if pursuant to this Section the Company does not convert or issue the
number of shares requested under the applicable Conversion Notice or Exercise
Form, the Company will not be subject to Sections 5(b)(v) and 9 of the
Certificate of Designation as a result of such failure to convert.

 

(c)           Unless waived by a
Purchaser by means of providing sixty-one (61) days notice to the Company, in
connection with a Voluntary Conversion (as such term is defined in the
Certificate of Designation) or the exercise of the Warrants, the Company
covenants and agrees that upon receipt of a Conversion Notice pursuant to
Section 5(b)(ii) of the Certificate of Designation or Exercise Form
pursuant to Section 2(b) of the Warrants that it will not convert such
number of shares that, when aggregated with all other shares of Common Stock
then owned by a Purchaser beneficially or deemed beneficially owned by a
Purchaser, would result in a Purchaser owning more than 9.99% of all of such
Common Stock as would be outstanding on such date of conversion or such date of
exercise of the Warrant, as determined in accordance with Section 13 of
the Exchange Act and the regulations promulgated thereunder; provided, however,
that if pursuant to this Section the Company does not convert or issue the
number of shares requested under the applicable Conversion Notice or Exercise
Form, the Company will not be subject to Sections 5(b)(v) and 9 of the
Certificate of Designation as a result of such failure to convert.

 

16

 

Section 3.2             Registration and
Listing.  The Company will cause its
Common Stock to continue to be registered under Sections 12(b) or 12(g) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, will comply with all requirements related
to any registration statement filed pursuant to this Agreement or the
Registration Rights Agreement, and will not take any action or file any
document (whether or not permitted by the Securities Act or the rules
promulgated thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. 
The Company will take all action necessary to continue the listing or
trading of its Common Stock on the Nasdaq National Market, or if such listing
is no longer available, the Nasdaq SmallCap Market, or if such listing is no
longer available, on the over-the-counter electronic bulletin board.

 

Section 3.3             Inspection Rights.  The Company shall permit, during normal
business hours and upon reasonable request and reasonable notice, each
Purchaser or any employees, agents or representatives thereof, so long as such
Purchaser shall be obligated hereunder to purchase the Preferred Shares or
shall beneficially own any Preferred Shares, or shall own Conversion Shares
which, in the aggregate, represent more than 2% of the total combined voting
power of all voting securities then outstanding, for purposes reasonably
related to such Purchaser’s interests as a stockholder to examine and make
reasonable copies of and extracts from the records and books of account of, and
visit and inspect the properties, assets, operations and business of the
Company and any subsidiary, and to discuss the affairs, finances and accounts
of the Company and any subsidiary with any of its officers, consultants,
directors, and key employees.  Prior to
any Purchaser exercising its right under this Section 3.3, the Purchaser
and the Company shall enter into a confidentiality agreement in a form
acceptable to the parties.

 

Section 3.4             Compliance with
Laws.  The Company shall comply, and
cause each subsidiary to comply, with all applicable laws, rules, regulations
and orders, noncompliance with which could have a Material Adverse Effect.

 

Section 3.5             Keeping of Records
and Books of Account.  The Company
shall keep and cause each subsidiary to keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
its subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation,
depletion, obsolescence, amortization, taxes, bad debts and other purposes in
connection with its business shall be made.

 

Section 3.6             Reporting
Requirements.  If the Commission
ceases making periodic reports filed under Section 13 of the Exchange Act
available via its Electronic Data Gathering, Analysis and Retrieval System,
then at a Purchaser’s request the Company shall furnish the following to such
Purchaser so long as such Purchaser shall be obligated hereunder to purchase
the Preferred Shares or shall beneficially own any Preferred Shares, or shall
own Conversion Shares which, in the aggregate, represent more than 2% of the
total combined voting power of all voting securities then outstanding:

 

(a)           Quarterly Reports filed
with the Commission on Form 10-Q as soon as practical after the document is
filed with the Commission, and in any event within fifty-five (55)

 

 

17

 

days after the end
of each of the first three fiscal quarters of the Company;

 

(b)           Annual Reports filed
with the Commission on Form 10-K as soon as practical after the document is
filed with the Commission, and in any event within one hundred (100) days after
the end of each fiscal year of the Company; and

 

(c)           Copies of all notices
and information, including without limitation notices and proxy statements in
connection with any meetings, that are provided to holders of shares of Common
Stock, contemporaneously with the delivery of such notices or information to
such holders of Common Stock.

 

Section 3.7             Amendments.  Subject to Section 10 of the
Certificate of Designation, the Company shall not amend or waive any provision
of the Certificate or Bylaws of the Company in any way that would adversely
affect the liquidation preferences, dividends rights, conversion rights, voting
rights or redemption rights of the Preferred Shares; provided, however,
that any creation and issuance of another series of Junior Stock (as defined in
the Certificate of Designation) or any other class or series of equity
securities which by its terms shall rank on parity with the Preferred Shares
shall not be deemed to materially and adversely affect such rights, preferences
or privileges.

 

Section 3.8             Other Agreements.  The Company shall not enter into any agreement
in which the terms of such agreement would materially restrict or impair the
right or ability to perform of the Company or any subsidiary under any
Transaction Document.

 

Section 3.9             Distributions.  Except with the vote or consent of at least
75% of the Preferred Shares then outstanding, the Company agrees that it shall
not (i) effect any distribution with respect to Junior Stock or (ii) purchase
or otherwise acquire for value, directly or indirectly, any Common Stock or
other equity security of the Company (other than pursuant to Section 8 of
the Certificate of Designation).

 

Section 3.10           Status of Dividends.  The Company covenants and agrees that (i) no
Federal income tax return or claim for refund of Federal income tax or other
submission to the Internal Revenue Service will adversely affect the Preferred
Shares, any other series of its Preferred Stock, or the Common Stock, and any
deduction shall not operate to jeopardize the availability to Purchasers of the
dividends received deduction provided by Section 243(a)(1) of the Code or
any successor provision, (ii) in no report to shareholders or to any
governmental body having jurisdiction over the Company or otherwise will it
treat the Preferred Shares other than as equity capital or the dividends paid
thereon other than as dividends paid on equity capital unless required to do so
by a governmental body having jurisdiction over the accounts of the Company or
by a change in generally accepted accounting principles required as a result of
action by an authoritative accounting standards setting body, and (iii) other
than pursuant to this Agreement or the Certificate of Designation, it will take
no action which would result in the dividends paid by the Company on the
Preferred Shares out of the Company’s current or accumulated earnings and
profits being ineligible for the dividends received deduction provided by
Section 243(a)(1) of the Code.  The
preceding sentence shall not be deemed to prevent the Company from designating
the Preferred Stock as “Convertible Preferred Stock” in its annual

 

18

 

and quarterly financial statements in accordance with
its prior practice concerning other series of preferred stock of the
Company.  Notwithstanding the foregoing,
the Company shall not be required to restate or modify its tax returns for
periods prior to the Closing Date.  In
the event that the Purchasers have reasonable cause to believe that dividends
paid by the Company on the Preferred Shares out of the Company’s current or
accumulated earnings and profits will not be treated as eligible for the
dividends received deduction provided by Section 243(a)(1) of  the Code, or any successor provision, the
Company will, at the reasonable request of the Purchasers of 51% of the
outstanding Preferred Shares, join with the Purchasers in the submission to the
Service of a request for a ruling that dividends paid on the Shares will be so
eligible for Federal income tax purposes, at the Purchasers’ expense.  In addition, the Company will reasonably
cooperate with the Purchasers (at Purchasers’ expense) in any litigation,
appeal or other proceeding challenging or contesting any ruling, technical
advice, finding or determination that earnings and profits are not eligible for
the dividends received deduction provided by Section 243(a)(1) of the
Code, or any successor provision to the extent that the position to be taken in
any such litigation, appeal, or other proceeding is not contrary to any
provision of the Code or incurred in connection with any such submission,
litigation, appeal or other proceeding. 
Notwithstanding the foregoing, nothing herein contained shall be deemed
to preclude the Company from claiming a deduction with respect to such dividends
if (i) the Code shall hereafter be amended, or final Treasury regulations
thereunder are issued or modified, to provide that dividends on the Preferred
Shares or Conversion Shares should not be treated as dividends for Federal
income tax purposes or that a deduction with respect to all or a portion of the
dividends on the Shares is allowable for Federal income tax purposes, or (ii)
in the absence of such an amendment, issuance or modification and after a
submission of a request for ruling or technical advice, the service shall rule
or advise that dividends on the shares should not be treated as dividends for
Federal income tax purposes.  If the
Service determines that the Preferred Shares or Conversion Shares constitute
debt, the Company may file protective claims for refund.

 

Section 3.11           Intentionally
Omitted.

 

Section 3.12           Future Financings;
Right of First Offer and Refusal. 
(a) For purposes of this Agreement, a “Subsequent Financing” shall be
defined as any subsequent offer or sale to, or exchange with (or other type of
distribution to), any third party of Common Stock or any securities
convertible, exercisable or exchangeable into Common Stock, including debt
securities so convertible, in a private transaction (collectively, the
“Financing Securities”) other than a Permitted Financing (as defined
hereinafter).  For purposes of this
Agreement, “Permitted Financing” shall mean any transaction involving (i) the
Company’s issuance of any Financing Securities (other than for cash) in
connection with a merger and/or acquisition, consolidation, sale or disposition
of all or substantially all of the Company’s assets, (ii) the Company’s
issuance of Financing Securities in connection with strategic license
agreements so long as such issuances are not for the purpose of raising
capital, (iii) the Company’s issuance of Financing Securities in connection
with underwritten public offerings of its securities, (iv) the Company’s
issuance of Common Stock or the issuance or grants of options to purchase
Common Stock pursuant to the Company’s stock option plans and employee stock
purchase plans outstanding on the date hereof or the issuance of Common Stock
or the issuance or grants of options to purchase Common Stock pursuant to
amendments to existing stock incentive or employee stock purchase plans or new
stock incentive or employee stock purchase plans adopted after the date of this
Agreement

 

19

 

which are approved by the Board of Directors as long
as such issuances in the aggregate do not exceed 1,700,000 shares of Common
Stock, (v) as a result of the exercise of options or warrants or conversion of
convertible notes or preferred stock which are granted or issued as of the date
of this Agreement, (vi) the issuance of any Financing Securities contemplated by
Section 5(e)(x) of the Certificate of Designation, or (vii) any issuances
of Common Stock pursuant to Company 401(k) matches.

 

(b)           During the period
commencing on the Closing Date and ending on the date that is eighteen (18)
months following the Closing Date, the Company covenants and agrees to promptly
notify (in no event later than five (5) days after making or receiving an
applicable offer) in writing (a “Rights Notice”) each Purchaser of the terms
and conditions of any proposed Subsequent Financing.  The Rights Notice shall describe, in reasonable detail, the
proposed Subsequent Financing, the proposed closing date of the Subsequent
Financing, which shall be within thirty (30) calendar days from the date of the
Rights Notice (the “Rights Closing Date”), including, without limitation, all
of the terms and conditions thereof. 
The Rights Notice shall provide each Purchaser an option (the “Rights
Option”) during the five (5) trading days following delivery of the Rights
Notice (the “Option Period”) to inform the Company whether such Purchaser will
purchase up to fifty percent (50%) of its Purchase Price for the securities
being offered in such Subsequent Financing on the same, absolute terms and
conditions as contemplated by such Subsequent Financing (the “First Refusal
Rights”).  Delivery of any Rights Notice
constitutes a representation and warranty by the Company that there are no
other material terms and conditions, arrangements, agreements or otherwise
except for those disclosed in the Rights Notice, to provide additional
compensation to any party participating in any proposed Subsequent Financing,
including, but not limited to, additional compensation based on changes in the
Purchase Price or any type of reset or adjustment of a purchase or conversion price
or to issue additional securities at any time after the closing date of a
Subsequent Financing.  If the Company
does not receive notice of exercise of the Rights Option from the Purchasers
within the Option Period, the Company shall have the right to close the
Subsequent Financing on the scheduled closing date with a third party; provided
that all of the material terms and conditions of the closing are the same as
those provided to the Purchasers in the Rights Notice.  If the closing of the proposed Subsequent
Financing does not occur on the Rights Closing Date or within ten (10) calendar
days thereof, any closing of the contemplated Subsequent Financing or any other
Subsequent Financing shall be subject to all of the provisions of this
Section 3.12, including, without limitation, the delivery of a new Rights
Notice.  The provisions of this
Section 3.12(b) shall not apply to issuances of Financing Securities in a
Permitted Financing.  Notwithstanding
the foregoing, if any proposed Subsequent Financing were to be aggregated by
Nasdaq with the private placement of Preferred Shares and Warrants contemplated
by this Agreement and the combined total financing would, in the opinion of
Nasdaq, require shareholder approval under the rules of Nasdaq, then the Purchasers
may participate in such Subsequent Financing only to the extent that
shareholder approval would not be required under the rules of Nasdaq, unless
the Company first seeks and receives such shareholder approval prior to such
Subsequent Financing.  Each Purchaser
who is also a party to (i) that certain Series A Convertible Preferred Stock
Purchase Agreement, dated as of February 18, 2003, by and among the
Company and the purchasers named therein and/or (ii) that certain Note and
Warrant Purchase Agreement, dated as of February 18, 2003, by and among
the Company and the purchasers named therein (such agreements, the “Previous
Financing Agreements”), hereby

 

20

 

agrees that the
rights granted to such Purchaser in this Section 3.12(b) replace in their
entirety, and supercede, the rights granted to such Purchaser in
Section 3.12(b) of each of the Previous Financing Agreements and,
accordingly, agrees that Section 3.12(b) of each of the Previous Financing
Agreements is no longer of force or effect with respect to such Purchaser.

 

(c)           During the period
commencing on the Closing Date and ending on the first (1st) anniversary
following the Effectiveness Date (as defined in the Registration Rights
Agreement), if the Company enters into any Subsequent Financing on terms more
favorable than the terms governing the Preferred Shares, then the Purchasers in
their sole discretion may exchange the Preferred Shares, valued at their stated
value, together with accrued but unpaid dividends (which dividends shall be
payable, at the sole option of the Purchasers, (i) either in cash or in the
form of the new securities to be issued in the Subsequent Financing, at the
sole option of the Company or (ii) either in cash or in shares of Common Stock,
at the sole option of the Company) for the securities issued or to be issued in
the Subsequent Financing; provided, however, that if such
exchange would, in the opinion of Nasdaq, require shareholder approval under
the rules of Nasdaq, then the Purchasers may make such exchange only to the
extent that shareholder approval would not be required under the rules of
Nasdaq, unless the Company first seeks and receives such shareholder approval
prior to such Subsequent Financing.  The
Company covenants and agrees to promptly notify in writing the Purchasers of
the terms and conditions of any such proposed Subsequent Financing.  Notwithstanding the foregoing to the
contrary, if the Company consummates a Subsequent Financing and receives gross
proceeds of at least $5,000,000 at a price per share equal to or greater than
the Conversion Price (as defined in the Certificate of Designation), the rights
of the Purchasers contained in this Section 3.12(c) shall terminate and be
of no further force or effect.

 

Section 3.13           Reservation of
Shares.  So long as any of the
Preferred Shares or Warrants remain outstanding, the Company shall take all
action necessary to at all times have authorized, and reserved for the purpose
of issuance, no less than 120% of the aggregate number of shares of Common
Stock needed to provide for the issuance of the Conversion Shares and the
Warrant Shares.

 

Section 3.14           Transfer Agent
Instructions.  The Company shall
issue irrevocable instructions to its transfer agent, and any subsequent
transfer agent, to issue certificates, registered in the name of each Purchaser
or its respective nominee(s), for the Conversion Shares and the Warrant Shares
in such amounts as specified from time to time by each Purchaser to the Company
upon conversion of the Preferred Shares or exercise of the Warrants in the form
of Exhibit E attached hereto (the “Irrevocable Transfer Agent
Instructions”).  Prior to registration
of the Conversion Shares and the Warrant Shares under the Securities Act, all
such certificates shall bear the restrictive legend specified in
Section 6.1 of this Agreement.  The
Company warrants that no instruction other than the Irrevocable Transfer Agent
Instructions referred to in this Section 3.14 will be given by the Company
to its transfer agent and that the Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement and the Registration Rights Agreement.  Nothing in this Section 3.14 shall
affect in any way each Purchaser’s obligations and agreements set forth in
Section 6.1 to comply with all applicable prospectus delivery
requirements, if any, upon resale of the Shares.  If a Purchaser provides the Company with an opinion of counsel,
in a generally acceptable form, to

 

21

 

the effect that a public sale, assignment or transfer
of the Shares may be made without registration under the Securities Act or the
Purchaser provides the Company with reasonable assurances that the Shares can
be sold pursuant to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be immediately sold,
the Company shall permit the transfer, and, in the case of the Conversion
Shares and the Warrant Shares, promptly instruct its transfer agent to issue
one or more certificates in such name and in such denominations as specified by
such Purchaser and without any restrictive legend.  The Company acknowledges that a breach by it of its obligations
under this Section 3.14 will cause irreparable harm to the Purchasers by
vitiating the intent and purpose of the transaction contemplated hereby.  Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Section 3.14
will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section 3.14, that the Purchasers
shall be entitled, in addition to all other available remedies, to an order
and/or injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond
or other security being required.

 

Section 3.15           Disposition of
Assets.  So long as the Preferred
Shares remain outstanding, neither the Company nor any Subsidiary shall sell,
transfer or otherwise dispose of any of its properties, assets and rights
including, without limitation, its software and intellectual property, to any
person except for sales to customers in the ordinary course of business or with
the prior written consent of the holders of a majority of the Preferred Shares
then outstanding, except for the sale of (i) patents and other technology
associated with Smart Predictive Line Controller, (ii) shares of stock of
Beacon Power Corporation held by the Company, (iii) all or any portion of the
Northrup Grumman hybrid electric vehicle patent portfolio, or (iv) assets,
properties or rights which in the aggregate have a book value of less than
$2,000,000.

 

Section 3.16           Form S-3 Eligibility.
The Company meets the requirements for the use of Form S-3 under the Securities
Act to register for re-sale the shares of Common Stock pursuant to the
Registration Rights Agreement.

 

Section 3.17           Silicon Valley Bank.  The Company shall not incur any indebtedness
other than under the Company’s senior credit facility with Silicon Valley Bank
as the same may be amended from time to time.

 

ARTICLE IV

 

CONDITIONS

 

Section 4.1             Conditions
Precedent to the Obligation of the Company to Sell the Shares.  The obligation hereunder of the Company to
issue and sell the Preferred Shares and the Warrants to the Purchasers is
subject to the satisfaction or waiver, at or before the Closing, of each of the
conditions set forth below.  These
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion.

 

(a)           Accuracy of Each
Purchaser’s Representations and Warranties.  The representations and warranties of each Purchaser shall be
true and correct in all material respects as of the date when made and as of
the Closing Date as though made at that time, except for

 

22

 

representations
and warranties that are expressly made as of a particular date, which shall be
true and correct in all material respects as of such date.

 

(b)           Performance by the
Purchasers.  Each Purchaser shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Purchaser at or prior to the
Closing.

 

(c)           No Injunction.  No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement.

 

(d)           Delivery of Purchase
Price.  The Purchase Price for the
Preferred Shares and Warrants has been delivered to the Company at the Closing
Date.

 

(e)           Delivery of
Transaction Documents.  The
Transaction Documents have been duly executed and delivered by the Purchasers
to the Company.

 

(f)            No Proceeding or Litigation.  No
action, suit or proceeding shall have been commenced or investigation
threatened by any governmental authority against the Company or any subsidiary
seeking to restrain, prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such transactions.

 

(g)           Conversion of Series
A Preferred Stock and Convertible Notes / Exercise of Series B Warrants.  Each holder of the Company’s Series A
Convertible Preferred Stock (“Series A Preferred Stock”) issued pursuant to the
Series A Convertible Preferred Stock Purchase Agreement dated as of
February 18, 2003 (the “Series A Purchase Agreement”) and each holder of
the Company’s secured convertible promissory notes (the “Notes”) issued
pursuant to the Note and Warrant Purchase Agreement dated as of February 18,
2003 (the “Note and Warrant Purchase Agreement”) and each holder of the
Company’s Series B Warrants (the “Series B Warrants”) issued pursuant to the
Series A Purchase Agreement and Note and Warrant Purchase Agreement shall have
converted all of his, her or its remaining shares of Series A Preferred Stock
and Notes into shares of Common Stock, shall have exercised all of his, her or
its Series B Warrants into shares of Common Stock and shall have waived, and
released the Company from any liability associated with, any and all penalties
arising out of, or associated with, the filing of the registration statement on
Form S-3 pursuant to that certain Registration Rights Agreement, dated
February 18, 2003, between the Company and the Purchasers (as defined
therein).

 

Section 4.2             Conditions
Precedent to the Obligation of the Purchasers to Purchase the Shares.  The obligation hereunder of each Purchaser
to acquire and pay for the Preferred Shares and the Warrants is subject to the
satisfaction or waiver, at or before the Closing, of each of the conditions set
forth below.  These conditions are for
each Purchaser’s sole benefit and may be waived by such Purchaser at any time
in its sole discretion.

 

23

 

(a)           Accuracy of the
Company’s Representations and Warranties. 
Each of the representations and warranties of the Company shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time, except for representations and
warranties that are expressly made as of a particular date, which shall be true
and correct in all material respects as of such date.

 

(b)           Performance by the
Company.  The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing.

 

(c)           No Suspension, Etc.  From the date hereof to the Closing Date,
trading in the Company’s Common Stock shall not have been suspended by the
Commission (except for any suspension of trading of limited duration agreed to
by the Company, which suspension shall be terminated prior to the Closing),
and, at any time prior to the Closing, trading in securities generally as
reported by Bloomberg Financial Markets (“Bloomberg”) shall not have been
suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by Bloomberg, or on the New York Stock
Exchange, nor shall a banking moratorium have been declared either by the
United States or New York State authorities, nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity or crisis of such magnitude in its effect on, or any
material adverse change in any financial market which, in each case, in the
judgment of such Purchaser, makes it impracticable or inadvisable to purchase
the Preferred Shares.

 

(d)           No Injunction.  No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.

 

(e)           No Proceedings or
Litigation.  No action, suit or
proceeding before any arbitrator or any governmental authority shall have been
commenced, and no investigation by any governmental authority shall have been
threatened, against the Company or any subsidiary, or any of the officers,
directors or affiliates of the Company or any subsidiary seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or seeking
damages in connection with such transactions.

 

(f)            Certificate of
Designation of Rights and Preferences. 
Prior to the Closing, the Certificate of Designation in the form of Exhibit
C attached hereto shall have been filed with the Secretary of State of
Delaware.

 

(g)           Opinion of Counsel,
Etc. At the Closing, the Purchasers shall have received an opinion of
counsel to the Company, dated the date of the Closing, in substantially the
form of Exhibit F hereto, and such other certificates and documents as
the Purchasers or its counsel shall reasonably require incident to the Closing.

 

24

 

(h)           Registration Rights
Agreement.  At the Closing, the
Company shall have executed and delivered the Registration Rights Agreement to
each Purchaser.

 

(i)            Certificates.  The Company shall have executed and
delivered to the Purchasers the certificates (in such denominations as such
Purchaser shall  request) for the
Preferred Shares and Warrants being acquired by such Purchaser at the Closing.

 

(j)            Resolutions.  The Board of Directors of the Company shall
have adopted resolutions consistent with Section 2.1(b) above in a form
reasonably acceptable to such Purchaser (the “Resolutions”).

 

(k)           Reservation of
Shares.  As of the Closing Date, the
Company shall have reserved out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Preferred Shares and
the exercise of the Warrants, a number of shares of Common Stock equal to at
least 120% of the aggregate number of Conversion Shares issuable upon
conversion of the Preferred Shares outstanding on the Closing Date and the
number of Warrant Shares issuable upon exercise of the number of Warrants
assuming such Warrants were granted on the Closing Date (after giving effect to
the Preferred Shares and the Warrants to be issued on the Closing Date and
assuming all such Preferred Shares and Warrants were fully convertible or
exercisable on such date regardless of any limitation on the timing or amount
of such conversions or exercises).

 

(l)            Transfer Agent
Instructions.  The Irrevocable
Transfer Agent Instructions, in the form of Exhibit E attached hereto,
shall have been delivered to and acknowledged in writing by the Company’s
transfer agent.

 

(m)          Secretary’s
Certificate.  The Company shall have
delivered to such Purchaser a secretary’s certificate, dated as of the Closing
Date, as to (i) the Resolutions, (ii) the Certificate, (iii) the Bylaws, (iv)
the Certificate of Designation, each as in effect at the Closing, and (iv) the
authority and incumbency of the officers of the Company executing the
Transaction Documents and any other documents required to be executed or
delivered in connection therewith.

 

(n)           Officer’s
Certificate.  The Company shall have
delivered to the Purchasers a certificate of an executive officer of the Company,
dated as of the Closing Date, confirming the accuracy of the Company’s
representations, warranties and covenants as of the Closing Date and confirming
the compliance by the Company with the conditions precedent set forth in this
Section 4.2 as of the Closing Date.

 

(o)           Material Adverse
Effect.  No Material Adverse Effect
shall have occurred at or before the Closing Date.

 

(p)           Credit Facility.
Except as set forth in the disclosure schedules to this Agreement, the Company
shall be in full compliance with the terms and conditions of the Company’s
senior credit facility with Silicon Valley Bank as the same may be amended from

 

 

25

 

time to time.

 

(q)           Consent of Silicon
Valley Bank.  The Company shall have
received the consent of Silicon Valley Bank to enter into the transactions
contemplated by this Agreement.

 

(r)            Applied Materials,
Inc.  The Company shall have
provided notice to Applied Materials, Inc. in accordance with the Global Supply
Agreement between the Company and Applied Materials, Inc. dated as of
November 21, 2002 in connection with the consummation of the transactions
contemplated by this Agreement.

 

(s)           Conversion of Series
A Preferred Stock and Convertible Notes / Exercise of Series B Warrants.  Each holder of the Series A Preferred Stock
issued pursuant to the Series A Purchase Agreement and each holder of the Notes
issued pursuant to the Note and Warrant Purchase Agreement and each holder of
the Series B Warrants issued pursuant to the Series A Purchase Agreement and
Note and Warrant Purchase Agreement shall have converted all of his, her or its
remaining shares of Series A Preferred Stock and Notes into shares of Common
Stock and shall have exercised all of his, her or its Series B Warrants into
shares of Common Stock.

 

ARTICLE V

 

Intentionally
Omitted

 

ARTICLE VI

 

Stock Certificate
Legend

 

Section 6.1             Legend.  Each certificate representing the Preferred
Shares and the Warrants, and, if appropriate, securities issued upon conversion
thereof, shall be stamped or otherwise imprinted with a legend substantially in
the following form (in addition to any legend required by applicable state
securities or “blue sky” laws):

 

THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”)
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR SATCON TECHNOLOGY CORPORATION
SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH
SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.

 

The Company agrees to reissue certificates representing the Shares
without the legend set forth above if at such time, prior to making any
transfer of any Shares or Shares, such holder

 

26

 

thereof shall give written notice to the Company describing the manner
and terms of such transfer and removal as the Company may reasonably request,
and (x) the Shares have been registered for sale under the Securities Act and
the holder is selling such shares and is complying with its prospectus delivery
requirement under the Securities Act, (y) the holder is selling such Shares in
compliance with the provisions of Rule 144 or (z) the provisions of paragraph
(k) of Rule 144 apply to such Shares.

 

ARTICLE VII

 

Intentionally
Omitted.

 

ARTICLE VIII

 

Indemnification

 

Section 8.1             General Indemnity.  The Company agrees to indemnify and hold
harmless the Purchasers and any finder (and their respective directors,
officers, affiliates, agents, successors and assigns) from and against any and
all losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys’ fees, charges and disbursements)
incurred by the Purchasers as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company herein.  Each Purchaser severally but not jointly
agrees to indemnify and hold harmless the Company and its directors, officers,
affiliates, agents, successors and assigns from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys’ fees, charges and disbursements) incurred by
the Company as result of any inaccuracy in or breach of the representations,
warranties or covenants made by such Purchaser herein.  The maximum aggregate liability of each
Purchaser pursuant to its indemnification obligations under this Article 8
shall not exceed the portion of the Purchase Price paid by such Purchaser
hereunder.

 

Section 8.2             Indemnification
Procedure.  Any party entitled to indemnification
under this Article VIII (an “indemnified party”) will give written notice
to the indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VIII except
to the extent that the indemnifying party is actually prejudiced by such
failure to give notice.  In case any
action, proceeding or claim is brought against an indemnified party in respect
of which indemnification is sought hereunder, the indemnifying party shall be
entitled to participate in and, unless in the reasonable judgment of the
indemnified party a conflict of interest between it and the indemnifying party
may exist with respect of such action, proceeding or claim, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party.  In the event that the
indemnifying party advises an indemnified party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any action,
proceeding or claim (or discontinues its defense at any time after it commences
such defense), then the indemnified party may, at its option, defend, settle or

 

27

 

otherwise compromise or pay such action or claim.  In any event, unless and until the
indemnifying party elects in writing to assume and does so assume the defense
of any such claim, proceeding or action, the indemnified party’s costs and
expenses arising out of the defense, settlement or compromise of any such
action, claim or proceeding shall be losses subject to indemnification
hereunder.  The indemnified party shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
indemnified party which relates to such action or claim.  The indemnifying party shall keep the
indemnified party fully apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto.  If the indemnifying party elects to defend any such action or
claim, then the indemnified party shall be entitled to participate in such
defense with counsel of its choice at its sole cost and expense.  The indemnifying party shall not be liable
for any settlement of any action, claim or proceeding effected without its
prior written consent.  Notwithstanding
anything in this Article VIII to the contrary, the indemnifying party shall
not, without the indemnified party’s prior written consent, settle or
compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect
of such claim.  The indemnification
required by this Article VIII shall be made by periodic payments of the
amount thereof during the course of investigation or defense, as and when bills
are received or expense, loss, damage or liability is incurred, so long as the
indemnified party irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not
entitled to indemnification.  The
indemnity agreements contained herein shall be in addition to (a) any cause of
action or similar rights of the indemnified party against the indemnifying
party or others, and (b) any liabilities the indemnifying party may be subject
to pursuant to the law.

 

ARTICLE IX

 

Miscellaneous

 

Section 9.1             Fees and Expenses.  Except as otherwise set forth in this
Agreement, the Registration Rights Agreement or the Certificate of Designation,
each party shall pay the fees and expenses of its advisors, counsel,
accountants and other experts, if any, and all other expenses, incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement, provided that the Company shall pay, at
the Closing (i) all actual attorneys’ fees and expenses (exclusive of
disbursements and out-of-pocket expenses) incurred by the Purchasers up to
$40,000 in connection with the preparation, negotiation, execution and delivery
of this Agreement, the Registration Rights Agreement and the transactions
contemplated thereunder, and (ii) in connection with the filing and declaration
of effectiveness by the Commission of the Registration Statement (as defined in
the Registration Rights Agreement) and any amendments, modifications or waivers
of this Agreement or any of the other Transaction Documents.  In addition, the Company shall pay all
reasonable fees and expenses incurred by the Purchasers in connection with the
enforcement of this Agreement or any of the other Transaction Documents,
including, without limitation, all reasonable attorneys’

 

28

 

fees and expenses. 
The Company shall pay all stamp or other similar taxes and duties levied
in connection with issuance of the Preferred Shares pursuant hereto.

 

Section 9.2             Specific
Enforcement, Consent to Jurisdiction. 

 

(a)           The Company and the
Purchasers acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement, the Certificate of
Designation or the Registration Rights Agreement were not performed in
accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches
of the provisions of this Agreement or the Registration Rights Agreement and to
enforce specifically the terms and provisions hereof or thereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.

 

(b)           Each of the Company and
the Purchasers (i) hereby irrevocably submits to the exclusive jurisdiction of
the United States District Court sitting in the Southern District of New York
and the courts of the State of New York located in New York county for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement or any of the other Transaction Documents or the transactions
contemplated hereby or thereby and (ii) hereby waives, and agrees not to assert
in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such court, that the suit, action or proceeding
is brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper.  Each of the
Company and the Purchasers consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof.  Nothing in this
Section 9.2 shall affect or limit any right to serve process in any other
manner permitted by law.

 

Section 9.3             Entire Agreement;
Amendment.  This Agreement contains
the entire understanding of the parties with respect to the matters covered
hereby and, except as specifically set forth herein or in the Transaction
Documents or the Certificate of Designation, 
neither the Company nor any of the Purchasers makes any representations,
warranty, covenant or undertaking with respect to such matters and they
supersede all prior understandings and agreements with respect to said subject
matter, all of which are merged herein. 
No provision of this Agreement may be waived or amended other than by a
written instrument signed by the Company and the holders of at least 75% of the
Preferred Shares then outstanding, and no provision hereof may be waived other
than by an a written instrument signed by the party against whom enforcement of
any such amendment or waiver is sought; provided  that this
Section 9.3 may not be amended or waived other than by a written
instrument signed by each holder of the Preferred Shares.  No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Preferred Shares
then outstanding.  No consideration
shall be offered or paid to any person to amend or consent to a waiver or
modification of any provision of any of the Transaction Documents or the
Certificate of Designation unless the same consideration is also offered to all
of the parties to the Transaction Documents or holders of Preferred Shares, as
the case may be.

 

29

 

Section 9.4             Notices.  Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer
back received), telecopy or facsimile at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first
occur.  The addresses for such
communications shall be:

 

	
  If to the Company:

  	
   

  	
  SatCon Technology Corporation

  161 First Street

  Cambridge, MA 02142

  Attention: David B. Eisenhaure

  Tel. No.: (617) 661-0540

  Fax No.:  (617) 349-0898

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
  Greenberg Traurig LLP

  One International Place

  Boston, MA 02110

  Attention: Jonathan Bell, Esq.

  Tel. No.:  (617) 310-6038

  Fax No.: (617) 279-8438

  
	
   

  	
   

  	
   

  
	
  If to any Purchaser:

  	
   

  	
  At the address of such Purchaser set forth on

  Exhibit A to this Agreement, with copies to

  Purchaser’s counsel as set forth on Exhibit A or as

  specified in writing by such Purchaser.

  

 

Any party hereto may from time to time change its address for notices
by giving at least ten (10) days written notice of such changed address to the
other party hereto.

 

Section 9.5             Waivers.  No waiver by either party of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any  such right accruing to it
thereafter.

 

Section 9.6             Headings.  The article, section and
subsection headings in this Agreement are for convenience only and shall
not constitute a part of this Agreement for any other purpose and shall not be
deemed to limit or affect any of the provisions hereof.

 

Section 9.7             Successors and
Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns.

 

30

 

Section 9.8             No
Third Party Beneficiaries.  This
Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other person.

 

Section 9.9             Governing Law.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York,
without giving effect to the choice of law provisions.  This Agreement shall not interpreted or
construed with any presumption against the party causing this Agreement to be
drafted.

 

Section 9.10           Survival.  The representations and warranties of the
Company and the Purchasers contained in Sections 2.1(o) and (s) should survive
indefinitely and those contained in Article II, with the exception of
Sections 2.1(o) and (s), shall survive the execution and delivery hereof and
the Closing until the date three (3) years from the Closing Date, and the agreements
and covenants set forth in Articles I, III, VIII and IX of this Agreement shall
survive the execution and delivery hereof and the Closing hereunder until the
Purchasers in the aggregate beneficially own (determined in accordance with
Rule 13d-3 under the Exchange Act) less than 10% of the total combined voting
power of all voting securities then outstanding, provided, that Sections 3.1,
3.2, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.12, 3.13 and 3.14 shall not expire
until the Registration Statement required by Section 2 of the Registration
Rights Agreement is no longer required to be effective under the terms and
conditions of Registration Rights Agreement.

 

Section 9.11           Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart.  In the event any signature is delivered by facsimile
transmission, the party using such means of delivery shall cause four
additional executed signature pages to be physically delivered to the other
parties within five days of the execution and delivery hereof.

 

Section 9.12           Publicity;
Confidentiality.  The Company shall
issue a press release describing the material terms of the transactions
contemplated hereby (the “Press Release”) immediately upon Closing; provided,
however, that if Closing occurs after 4:00 P.M. Eastern Time on any trading
day, the Company shall issue the Press Release no later than 9:00 A.M. Eastern
Time on the first trading day following the Closing Date.  The Company shall also file with the Commission
a Current Report on Form 8-K (the “Form 8-K”) describing the material terms of
the transactions contemplated hereby (and attaching as exhibits thereto this
Agreement, the Registration Rights Agreement and the form of Warrant) as soon
as practicable following the date of execution of this Agreement but in no
event more than five (5) trading days following the date of execution of this
Agreement, which Press Release and Form 8-K shall be subject to prior review
and comment by Jenkens & Gilchrist Parker Chapin LLP.  Jenkens & Gilchrist Parker Chapin LLP
shall have the right to review a reasonable period of time before issuance of
any press releases, filings with the Commission (except for such filings which
the disclosure of the transaction contemplated hereby is consistent with the
disclosure of the transaction in the Form 8-K), NASD or any stock exchange or
interdealer quotation system, or any other public statements with respect to
the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of Jenkens &
Gilchrist Parker Chapin LLP, to make any press release or public filings with
respect to such transactions

 

31

 

as is required by applicable law and regulations
(although Jenkens & Gilchrist Parker Chapin LLP shall be consulted by the
Company in connection with any such press release or public filing prior to its
release or filing and shall be provided with a copy thereof and be given an
opportunity to comment thereon, except for such filings which the disclosure of
the transaction contemplated hereby is consistent with the disclosure of the
transaction in the Form 8-K).  The
Company agrees that it will not disclose, and will not include in any public
announcement, the name of the Purchasers without the consent of the Purchasers
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement.  The Purchasers agree to hold in strict confidence information
regarding the transactions contemplated by this Agreement, as well as any
material, non-public information contained in the disclosure schedules to this
Agreement, until such time that the Company has made such information public.

 

Section 9.13           Severability.  The provisions of this Agreement, the
Certificate of Designation and the Registration Rights Agreement are severable
and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of the provisions contained in this Agreement,
the Certificate of Designation or the Registration Rights Agreement shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision or part of a provision of this Agreement, the Certificate of
Designation or the Registration Rights Agreement shall be reformed and
construed as if such invalid or illegal or unenforceable provision, or part of
such provision, had never been contained herein, so that such provisions would
be valid, legal and enforceable to the maximum extent possible.

 

Section 9.14           Further Assurances.  From and after the date of this Agreement,
upon the request of any Purchaser or the Company, each of the Company and the
Purchasers shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement, the
Preferred Shares, the Conversion Shares, the Warrants, the Warrant Shares, the
Certificate of Designation, and the Registration Rights Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

32

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael Loew

  	
   

  
	
   

  	
   

  	
  Name:  Michael Loew

  
	
   

  	
   

  	
  Title:  

  
						

 

33

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Robert A. Melnick

  	
   

  
	
   

  	
   

  	
  Name:  Robert A. Melnick

  
	
   

  	
   

  	
  Title:  

  
						

 

 

34

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Jason and
  Cass Adelman JTWROS

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Jason Adelman

  	
   

  
	
   

  	
   

  	
  Name:  

  
	
   

  	
   

  	
  Title:  

  
						

 

 

35

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective authorized officer as of the date first above written.

 

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Robert J. Neborsky, MD Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Robert J. Neborsky

  	
   

  
	
   

  	
   

  	
  Name:  Robert J. Neborsky

  
	
   

  	
   

  	
  Title:  

  
						

 

36

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  OTAPE LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  [Illegible]

  	
   

  
	
   

  	
   

  	
  Name:  [Illegible]

  
	
   

  	
   

  	
  Title:  CFO

  
						

 

37

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Crestview
  Capital Fund II, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Richard Levy

  	
   

  
	
   

  	
   

  	
  Name:  Richard Levy

  
	
   

  	
   

  	
  Title:  

  
						

 

 

38

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Stonestreet
  Limited Partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  M. Finkelstein

  	
   

  
	
   

  	
   

  	
  Name:  

  
	
   

  	
   

  	
  Title:  President

  
						

 

39

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  RHP Master
  Fund, Ltd.

  
	
   

  	
  By:  Rock Hill Investment Management, L.P.

  
	
   

  	
  By:  RHP General Partner LLC

  
	
   

  	
  By:

  	
    /s/
  Keith Marlowe

  	
   

  
	
   

  	
   

  	
  Name:  Keith Marlowe

  
	
   

  	
   

  	
  Title:  Director

  
						

 

40

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  SDS Merchant
  Fund, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Scott E. Derby

  	
   

  
	
   

  	
   

  	
  Name:  Scott E. Derby

  
	
   

  	
   

  	
  Title:  General Counsel

  
						

 

41

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Alpha
  Capital AG

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  K. Ackerman

  	
   

  
	
   

  	
   

  	
  Name:  Konrad Ackerman

  
	
   

  	
   

  	
  Title:  Director

  
						

 

42

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Ellis
  Enterprises, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  John D. Cabot

  	
   

  
	
   

  	
   

  	
  Name:  John D. Cabot

  
	
   

  	
   

  	
  Title:  Officer

  
						

 

43

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Baystar
  Capital II, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Steve Derby

  	
   

  
	
   

  	
   

  	
  Name:  Steve Derby

  
	
   

  	
   

  	
  Title:  Managing Member

  
						

 

44

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Vertical
  Ventures LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Joshua Silverman

  	
   

  
	
   

  	
   

  	
  Name:  Joshua Silverman

  
	
   

  	
   

  	
  Title:  Partner

  
						

 

 

45

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Crescent
  International Ltd.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Maxi Brezzi

  	
   

  
	
   

  	
   

  	
  Name:  Maxi Brezzi

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  
						

 

46

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Gamma
  Opportunity Capital Partners, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Christopher Rossman

  	
   

  
	
   

  	
   

  	
  Name:  Christopher Rossman

  
	
   

  	
   

  	
  Title:  Managing Director

  
						

 

47

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Michael S. Liss

  	
   

  
	
   

  	
   

  	
  Name:  Michael S. Liss

  
	
   

  	
   

  	
  Title:  

  
						

 

48

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Platinum
  Partners Value Arbitrage Fund, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Mark Nordlicht

  	
   

  
	
   

  	
   

  	
  Name:  Mark Nordlicht

  
	
   

  	
   

  	
  Title:  GP

  
						

 

49

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  North Sound
  Legacy Fund LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Thomas McAuley

  	
   

  
	
   

  	
   

  	
  Name:  Thomas McAuley

  
	
   

  	
   

  	
  Title:  Chief Investment Officer

  
						

 

 

	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  North Sound
  Legacy Institutional Fund Ltd.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Thomas McAuley

  	
   

  
	
   

  	
   

  	
  Name:  Thomas McAuley

  
	
   

  	
   

  	
  Title:  Chief Investment Officer

  
					

 

	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  North Sound
  Legacy International LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Thomas McAuley

  	
   

  
	
   

  	
   

  	
  Name:  Thomas McAuley

  
	
   

  	
   

  	
  Title:  Chief Investment Officer

  
					

 

50

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Bristol
  Investment Fund Ltd.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Paul Kessler

  	
   

  
	
   

  	
   

  	
  Name:  Paul Kessler

  
	
   

  	
   

  	
  Title:  Director

  
						

 

51

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Mark
  Capital, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Evan Levine

  	
   

  
	
   

  	
   

  	
  Name:  Evan Levine

  
	
   

  	
   

  	
  Title:  Managing Member

  
						

 

52

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Portside
  Growth and Opportunity Fund

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  [Illegible]

  	
   

  
	
   

  	
   

  	
  Name:  [Illegible]

  
	
   

  	
   

  	
  Title:  [Illegible]

  
						

 

53

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
  Barucha LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ezra Birnbaum

  	
   

  
	
   

  	
   

  	
  Name:  Ezra Birnbaum

  
	
   

  	
   

  	
  Title:  [Illegible]

  
						

 

54

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.

 

	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ralph M. Norwood

  	
   

  
	
   

  	
   

  	
  Name:  Ralph M. Norwood

  
	
   

  	
   

  	
  Title: Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Andrew Muir

  	
   

  
	
   

  	
   

  	
  Name:  Andrew Muir

  
	
   

  	
   

  	
  Title:  

  
						

 

55

 

 

EXHIBIT
A to the

SERIES
B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

FOR
SATCON TECHNOLOGY CORPORATION

 

 

	
  Names and Addresses

  of Purchasers

  	
   

  	
  Number of
  Preferred Shares

  & Warrants Purchased

  	
   

  	
  Dollar
  Amount of

  Investment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Michael Loew

  507 E. 80th St., Apt. 4F

  New York, NY 10021

  Fax No.: (212) 585-1154

  	
   

  	
  Preferred Shares: 5

  Warrants: 4,000

  	
   

  	
  $

  	
  25,000

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Robert A. Melnick

  1074 Bonnie Brae Blvd.

  Denver, CO 80209

  Fax No.: N/A

  	
   

  	
  Preferred Shares: 5

  Warrants: 4,000

  	
   

  	
  $

  	
  25,000

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jason and Cass Adelman JTWROS

  900 Park Avenue, #25A

  New York, NY 10021

  Fax No. : (212) 980-9466

  	
   

  	
  Preferred Shares: 5

  Warrants: 4,000

  	
   

  	
  $

  	
  25,000

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Robert J. Neborsky, MD Inc.

  317 14th St.

  Del mar, CA 92014

  Attention: Robert J. Neborsky

  Fax No.: (858) 481-0490

  	
   

  	
  Preferred Shares: 15

  Warrants: 12,000

  	
   

  	
  $

  	
  75,000

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OTAPE LLC

  One Manhattanville Rd.

  Purchase, N.Y. 10527

  Attention: Paul Masters

  Fax No.: (914) 694-6335

  	
   

  	
  Preferred Shares: 60

  Warrants: 48,000

  	
   

  	
  $

  	
  300,000

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Crestview Capital Fund II, LP

  95 Revere Dr., Suite F

  Northbrook, IL 60062

  Attention: Richard Levy

  Fax No.: (847) 559-5807

  	
   

  	
  Preferred Shares: 80

  Warrants: 64,000

  	
   

  	
  $

  	
  400,000

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stonestreet Limited Partnership

  c/o Canaccord Capital

  320 Bay Street, Suite 1300

  Toronto, ON M5H 4A6

  Attention:  Tricia Webb

  Fax No.: (416) 956-8989

  	
   

  	
  Preferred Shares: 90

  Warrants: 72,000

  	
   

  	
  $

  	
  450,000

  

  

  

  

  	
   

  

 

56

 

	
  RHP Master Fund, Ltd.

  c/o Rock Hill Investment

  Management, L.P.

  Three Bala Plaza-East, Suite 585

  Cynwyd, PA 19004

  Attention: Legal Dept. / Keith Marlowe

  Fax No.: (610) 949-9600

  	
   

  	
  Preferred Shares: 200

  Warrants: 160,000

  	
   

  	
  $

  	
  1,000,000

  

  

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SDS Merchant Fund, L.P.

  c/o SDS Capital Partners, LLC

  53 Forest Avenue, Second Floor

  Old Greenwich, CT 06870

  Attention: Steve Derby

  Fax No.: (203) 967-5851

  	
   

  	
  Preferred Shares: 136

  Warrants: 108,800

  	
   

  	
  $

  	
  680,000

  

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alpha Capital AG

  c/o L.H. Financial

  160 Central Park South, Suite 2701

  New York, NY 10019

  Attention: Ari Kluger

  Fax No.: (212) 586-8244

  	
   

  	
  Preferred Shares: 90

  Warrants: 72,000

  	
   

  	
  $

  	
  450,000

  

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Ellis Enterprises Inc.

  212 Juniper Circle North

  Lawrence, NY 11559

  Attention: Matt Drillman

  Fax No.: (212) 750-2088

  	
   

  	
  Preferred Shares: 60

  Warrants: 48,000

  	
   

  	
  $

  	
  300,000

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Baystar Capital II, LP

  53 Forest Avenue, Second Floor

  Old Greenwich, CT 06870

  Attention: Steve Derby

  Fax No.: (203) 967-5851

  	
   

  	
  Preferred Shares: 144

  Warrants: 115,200

  	
   

  	
  $

  	
  720,000

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Vertical Ventures LLC

  641 Lexington Avenue

  New York, NY 10022

  Attention: Josh Silverman

  Fax No.: (212) 207-3452

  	
   

  	
  Preferred Shares: 100

  Warrants: 80,000

  	
   

  	
  $

  	
  500,000

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Crescent International Ltd.

  La Tour Cointrin, 84

  av. Louis-Casal, PO

  Box 161, CH-1216

  Cointrin, Switzerland

  Attention: Maxi Brezzi

  Fax No.: 011 41 22 929 53 64

  	
   

  	
  Preferred Shares: 130

  Warrants: 104,000

  	
   

  	
  $

  	
  650,000

  

  

  

  

  

  	
   

  

 

57

 

	
  Gamma Opportunity Capital Partners

  LP, c/o L.H. Financial

  160 Central Park South, Suite 2701

  New York, NY 10019

  Attention: Ari Kluger

  Fax No.: (212) 586-8244

  	
   

  	
  Preferred Shares: 60

  Warrants: 48,000

  	
   

  	
  $

  	
  300,000

  

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Michael Liss

  3 Obry Drive

  Scarsdale, NY 10583

  Fax No.: (212) 405-8920

  	
   

  	
  Preferred Shares: 5

  Warrants: 4,000

  	
   

  	
  $

  	
  25,000

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Platinum Partners Value Arbitrage

  Fund, LP

  152 West 57th Street, 54th Floor

  New York, NY 10019

  Attention: Frank Georgio

  Fax No.: (212) 581-0002

  	
   

  	
  Preferred Shares: 40

  Warrants: 32,000

  	
   

  	
  $

  	
  200,000

  

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North Sound Legacy Fund LLC

  c/o North Sound Capital LLC

  53 Forest Avenue, Suite 202

  Old Greenwich, CT 06870

  Attention: Andrew Wilder

  Fax No.: (203) 967-5851

  	
   

  	
  Preferred Shares: 6.3

  Warrants: 5,040

  	
   

  	
  $

  	
  31,500

  

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North Sound Legacy International Ltd.

  c/o North Sound Capital LLC

  53 Forest Avenue, Suite 202

  Old Greenwich, CT 06870

  Attention: Andrew Wilder

  Fax No.: (203) 967-5851

  	
   

  	
  Preferred Shares: 78.4

  Warrants: 62,720

  	
   

  	
  $

  	
  392,000

  

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  North Sound Legacy Institutional

  Fund LLC

  c/o North Sound Capital LLC

  53 Forest Avenue, Suite 202

  Old Greenwich, CT 06870

  Attention: Andrew Wilder

  Fax No.: (203) 967-5851

  	
   

  	
  Preferred Shares: 55.3

  Warrants: 44,240

  	
   

  	
  $

  	
  276,500

  

  

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bristol Investment Fund Ltd.

  Caledonian House

  Jennett Street

  George Town

  Grand Caymen, Cayman Islands

  Attention: Amy Wang

  Fax No.: (323) 468—8307

  	
   

  	
  Preferred Shares: 80

  Warrants: 64,000

  	
   

  	
  $

  	
  400,000

  

  

  

  

  

  	
   

  

 

58

 

	
  Mark Capital, LLC

  300 Felton Drive

  Menlo Park, CA 94025

  Attention: Evan Levine

  Fax No.:  N/A

  	
   

  	
  Preferred Shares: 5

  Warrants: 4,000

  	
   

  	
  $

  	
  25,000

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Portside Growth and Opportunity Fund

  666 Third Avenue, 26th Floor

  New York, NY 10017

  Attention: Roger Anscher

  Fax No.: (212) 845-7995

  	
   

  	
  Preferred Shares: 50

  Warrants: 40,000

  	
   

  	
  $

  	
  250,000

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Barucha LLC

  Rosalind Place

  Lawrence, NY 11559

  Attention: Ezra Birnbaum

  Fax No.: (718) 853-7472

  	
   

  	
  Preferred Shares: 20

  Warrants: 16,000

  	
   

  	
  $

  	
  100,000

  

  

  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Andrew Redvers Muir

  481 Jerusalem Road

  Cohasset, MA 02025

  Fax No.: (781) 383-2110

  	
   

  	
  Preferred Shares: 15

  Warrants: 12,000

  	
   

  	
  $

  	
  75,000

  

  

  	
   

  

 

59

 

EXHIBIT
B to the

SERIES
B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

SATCON
TECHNOLOGY CORPORATION

 

FORM
OF WARRANT

 

60

 

EXHIBIT
C to the

SERIES
B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

SATCON
TECHNOLOGY CORPORATION

 

FORM
OF CERTIFICATE OF DESIGNATION

 

61

 

EXHIBIT
D to the

SERIES
B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

SATCON
TECHNOLOGY CORPORATION

 

 

FORM
OF REGISTRATION RIGHTS AGREEMENT

 

62

 

EXHIBIT
E to the

SERIES
B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

SATCON
TECHNOLOGY CORPORATION

 

FORM
OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

 

SATCON
TECHNOLOGY CORPORATION

 

 

	
   

  	
  as of October 31, 2003

  

 

 

[Name and address of Transfer Agent]

 

Attn: 
               

 

 

Ladies and Gentlemen:

 

Reference is made to that certain Series B Convertible Preferred Stock
Purchase Agreement (the “Purchase Agreement”), dated as of October 31, 2003, by
and among SatCon Technology Corporation, a Delaware corporation (the “Company”),
and the purchasers named therein (collectively, the “Purchasers”) pursuant to
which the Company is issuing to the Purchasers shares of its Series B
Convertible Preferred Stock, par value $.01 per share, (the “Preferred
Shares”) and warrants (the “Warrants”) to purchase shares of the
Company’s common stock, par value $.01 per share (the “Common Stock”).  This letter shall serve as our irrevocable
authorization and direction to you (subject to Section 3.1(a) of the Purchase
Agreement and provided that you are the transfer agent of the Company at such
time) to issue shares of Common Stock upon conversion of the Preferred Shares
(the “Conversion
Shares”) and exercise of the Warrants (the “Warrant Shares”) to or upon
the order of a Purchaser from time to time upon (i) surrender to you or the
Company of a properly completed and duly executed Conversion Notice or Exercise
Notice, as the case may be, in the form attached hereto as Exhibit I and
Exhibit II, respectively, (ii) in the case of the conversion of Preferred
Shares, a copy of the certificates (with the original certificates delivered to
the Company) representing Preferred Shares being converted or, in the case of
Warrants being exercised, a copy of the Warrants (with  the original Warrants delivered to the
Company) being exercised (or, in each case, an indemnification undertaking with
respect to such share certificates or the warrants in the case of their loss,
theft or destruction), and (iii) delivery of a treasury order or other
appropriate order duly executed by a duly authorized officer of the
Company.  So long as you have previously
received (x) written confirmation from counsel to the Company that a registration
statement covering resales of the Conversion Shares or Warrant Shares, as
applicable, has been declared effective by the Securities and Exchange
Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”),
and no subsequent notice by the Company or its counsel of the suspension or
termination of its effectiveness and (y) a copy of such registration statement,
and if the Purchaser represents in writing that the Conversion Shares or the
Warrant Shares, as the case may be, were sold pursuant to the Registration
Statement and that the prospectus delivery requirements were met, then
certificates representing the Conversion Shares and the Warrant Shares, as the
case may be, shall not bear any legend restricting transfer of the Conversion
Shares and the Warrant Shares, as the case may be, thereby and should not be
subject to any stop-transfer restriction. 
Provided, however, that if you have not previously received (i) written
confirmation from counsel to the Company that a registration statement covering
resales of the Conversion Shares or Warrant Shares, as applicable, has been
declared effective by the SEC under the 1933 Act, and (ii) a copy of such
registration statement and a representation of the Purchaser in writing that
the Conversion Shares or the Warrant Shares, as the case may be, were sold

 

63

 

pursuant to the Registration
Statement and that the prospectus delivery requirements were met, then the
certificates for the Conversion Shares and the Warrant Shares shall bear the
following legend:

 

“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR SATCON TECHNOLOGY
CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL THAT REGISTRATION OF
SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED.”

 

and, provided further, that the Company may from time to time notify
you to place stop-transfer restrictions on the certificates for the Conversion
Shares and the Warrant Shares in the event a registration statement covering
the Conversion Shares and the Warrant Shares is subject to amendment for events
then current.

 

A form of written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares and the
Warrant Shares has been declared effective by the SEC under the 1933 Act is
attached hereto as Exhibit III.

 

Please be advised that the Purchasers are relying upon this letter as
an inducement to enter into the Securities Purchase Agreement and, accordingly,
each Purchaser is a third party beneficiary to these instructions.

 

Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions.  Should you have any questions concerning
this matter, please contact me at
                         .

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  SATCON TECHNOLOGY
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

 

ACKNOWLEDGED AND AGREED:

 

[TRANSFER AGENT]

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
				

 

64

 

EXHIBIT
I

 

SATCON
TECHNOLOGY CORPORATION

CONVERSION
NOTICE

 

Reference is made to the Certificate of Designation of the Relative
Rights and Preferences of the Series B Preferred Stock of SatCon Technology
Corporation (the “Certificate of Designation”).  In accordance with and pursuant to the Certificate of
Designation, the undersigned hereby elects to convert the number of shares of
Series B Preferred Stock, par value $.01 per share (the “Preferred Shares”), of
SatCon Technology Corporation, a Delaware corporation (the “Company”),
indicated below into shares of Common Stock, par value $.01 per share (the
“Common Stock”), of the Company, by tendering the stock certificate(s)
representing the share(s) of Preferred Shares specified below as of the date
specified below.

 

Date of Conversion:

 

Number of
Preferred Shares to be converted:

 

Stock certificate no(s). of Preferred Shares to be converted:

 

The Common Stock have been sold pursuant to the Registration Statement
(as defined in the Registration Rights Agreement): YES
                NO        

 

Please confirm the following information:

 

Conversion Price: 

 

Number of shares of Common Stock

to be issued:

 

Number of shares of Common Stock beneficially owned or deemed
beneficially owned by the Holder on the Date of Conversion:

 

Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

 

Issue to:

 

 

Facsimile Number:

 

Authorization:

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  
						

 

 

PRICES ATTACHED

 

65

 

EXHIBIT
II

 

FORM
OF EXERCISE NOTICE

 

EXERCISE FORM

 

SATCON TECHNOLOGY CORPORATION

 

The undersigned
                              ,
pursuant to the provisions of the within Warrant, hereby elects to purchase
               
shares of Common Stock of SatCon Technology Corporation covered by the within
Warrant.

 

 

	
  Dated:

  	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

Number of shares of Common Stock beneficially owned or deemed
beneficially owned by the Holder on the date of Exercise:
                   

 

ASSIGNMENT

 

FOR VALUE
RECEIVED,                                     
hereby sells, assigns and transfers unto
                                   
the within Warrant and all rights evidenced thereby and does irrevocably
constitute and appoint
                           ,
attorney, to transfer the said Warrant on the books of the within named
corporation.

 

	
  Dated:

  	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

PARTIAL ASSIGNMENT

 

FOR VALUE RECEIVED,
                                        
hereby sells, assigns and transfers unto
                                       
the right to purchase
                     
shares of Warrant Stock evidenced by the within Warrant together with all
rights therein, and does irrevocably constitute and appoint
                                        ,
attorney, to transfer that part of the said Warrant on the books of the within
named corporation.

 

	
  Dated:

  	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

FOR USE BY THE ISSUER ONLY:

 

This Warrant No.
W-            canceled
(or transferred or exchanged) this
             
day of                     ,
          , shares of Common
Stock issued therefor in the name of
                      ,
Warrant No. W-          issued for
         shares of Common Stock in the
name of
                                    .

 

66

 

EXHIBIT
III

 

FORM
OF NOTICE OF EFFECTIVENESS

OF
REGISTRATION STATEMENT

 

[Name and address of Transfer Agent]

Attn: 
                          

 

Re:          SatCon
Technology Corporation

 

Ladies and Gentlemen:

 

We are counsel to SatCon Technology Corporation, a Delaware corporation
(the “Company”),
and have represented the Company in connection with that certain Series B
Convertible Preferred Stock Purchase Agreement (the “Purchase Agreement”), dated
as of October 31, 2003, by and among the Company and the purchasers named
therein (collectively, the “Purchasers”) pursuant to which the Company
issued to the Purchasers shares of its Series B Convertible Preferred Stock,
par value $.01 per share, (the “Preferred Shares”) and warrants (the “Warrants”)
to purchase shares of the Company’s common stock, par value $.01 per share (the
“Common
Stock”).  Pursuant to the
Purchase Agreement, the Company has also entered into a Registration Rights
Agreement with the Purchasers (the “Registration Rights Agreement”), dated as
of October 31, 2003, pursuant to which the Company agreed, among other things,
to register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon conversion of
the Preferred Shares and exercise of the Warrants, under the Securities Act of
1933, as amended (the “1933 Act”).  In connection with the Company’s obligations under the
Registration Rights Agreement, on
                                 ,
2003, the Company filed a Registration Statement on Form S-3 (File No.
333-              )
(the “Registration
Statement”) with the Securities and Exchange Commission (the “SEC”)
relating to the resale of the Registrable Securities which names each of the
present Purchasers as a selling stockholder thereunder.

 

In connection with the foregoing, we advise you that a member of the
SEC’s staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have
no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and accordingly,
the Registrable Securities are available for resale under the 1933 Act pursuant
to the Registration Statement.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [COMPANY COUNSEL]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  cc:

  	
  [LIST NAMES OF
  PURCHASERS]

  	
   

  
					

 

67

 

EXHIBIT
F to the

SERIES
B CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR

SATCON
TECHNOLOGY CORPORATION

 

FORM
OF OPINION OF COUNSEL

 

1.             The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the state of Delaware and has the requisite
corporate power to own, lease and operate its properties and assets, and to
carry on its business as presently conducted. 
The company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary.

 

2.             The
Company has the requisite corporate power and authority to enter into and
perform its obligations under the Transaction Documents and to issue the
Preferred Stock, the Warrants and the Common Stock issuable upon conversion of
the Preferred Stock and exercise of the Warrants.  The execution, delivery and performance of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required.  Each of the Transaction Documents have been
duly executed and delivered, and the Preferred Stock and the Warrants have been
duly executed, issued and delivered by the Company and each of the Transaction
Documents constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its respective terms.  The Common Stock issuable upon conversion of
the Preferred Stock and exercise of the Warrants are not subject to any
preemptive rights under the Certificate of Incorporation or the Bylaws.

 

3.             The
Preferred Stock and the Warrants have been duly authorized and, when delivered
against payment in full as provided in the Purchase Agreement, will be validly
issued, fully paid and nonassessable. 
The shares of Common Stock issuable upon conversion of the Preferred
Stock and exercise of the Warrants, have been duly authorized and reserved for
issuance,  and, when delivered upon
conversion or against payment in full as provided in the Certificate of
Designation and the Warrants, as applicable, will be validly issued, fully paid
and nonassessable.

 

4.             The
execution, delivery and performance of and compliance with the terms of the
Transaction Documents and the issuance of the Preferred Stock, the Warrants and
the Common Stock issuable upon conversion of the Preferred Stock and exercise
of the Warrants do not (i) violate any provision of the Certificate of
Incorporation or Bylaws, (ii) conflict with, 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 termination, amendment, acceleration or
cancellation of, any material agreement, mortgage, deed of trust, indenture,
note, bond, license, lease agreement, instrument or obligation to which the
Company is a party, (iii) create or impose a lien, charge or encumbrance on any
property of the Company under any agreement or any commitment to which the
Company is a party or by which the Company is bound or by which any of its
respective properties or assets are bound, or (iv) (a) result in a violation of
any federal, state, local or foreign statute, rule, regulation, order,
judgment, injunction or decree (including Federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected, except, in all cases other than violations
pursuant to clause (i) above, for such conflicts, default, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect.

 

5.             No
consent, approval or authorization of or designation, declaration or filing
with any governmental authority on the part of the Company is required under
Federal, state or local law, rule

 

68

 

or regulation in connection
with the valid execution and delivery of the Transaction Documents, or the
offer, sale or issuance of the Preferred Stock, the Warrants or the Common
Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants other than the Certificate of Designation and the Registration
Statement.

 

6.             There
is no action, suit, claim, investigation or proceeding pending or threatened
against the Company which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto.  There is no action,
suit, claim, investigation or proceeding pending, or to our knowledge,
threatened, against or involving the Company or any of its properties or assets
and which, if adversely determined, is reasonably likely to result in a
Material Adverse Effect.  There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or governmental or regulatory body against the Company or any
officers or directors of the Company in their capacities as such.

 

7.             The
offer, issuance and sale of the Preferred Stock and the Warrants and the offer,
issuance and sale of the shares of Common Stock issuable upon conversion of the
Preferred Stock and exercise of the Warrants pursuant to the Purchase Agreement,
the Certificate of Designation and the Warrants, as applicable, are exempt from
the registration requirements of the Securities Act.

 

8.             The
Company is not, and as a result of and immediately upon Closing will not be, an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended.

 

 

Very truly
yours,

 

69

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