Document:

Exhibit
10.4

NEITHER THESE SECURITIES NOR THE
SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.  THESE SECURITIES AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES, SUBJECT TO THE TERMS
OF THIS LEGEND AND THE SECURITIES ACT.

SATCON TECHNOLOGY CORPORATION

WARRANT B

Warrant B No. [  ]                                                                                                                                          Dated:  July 19, 2006

SatCon Technology Corporation, a Delaware corporation
(the “Company”), hereby certifies
that, for value received, [Name of Holder] or its registered assigns (the “Holder”), is entitled to purchase from the
Company (a) up to a total of [          ]
shares of common stock, $0.01 par value per share (the “Common Stock”), of the Company (each such
share, a “Warrant Share” and all
such shares, the “Warrant Shares”)
at an exercise price equal to $1.68 per share (as adjusted from time to time as
provided in Section 9, the “Exercise
Price”), and (b) only as part of and in connection with the purchase
of the Warrant Shares, warrants in the form attached to the Purchase Agreement
(as hereinafter defined) as Exhibit B-3 to acquire up to 0.50 shares of
Common Stock for each Warrant Share purchased (the “Additional Warrants”), at any time and from time to time from
and after the six month anniversary of the Closing Date and through and
including the 90th Trading Day following the later of (i) the
Effective Date, but not including the Effective Date and (ii) the six month
anniversary of the Closing Date (the “Expiration
Date”), and subject to the following terms and conditions.  This Warrant (this “Warrant”) is one of a series of similar
warrants issued pursuant to that certain Securities Purchase Agreement, dated
as of the date hereof, by and among the Company and the Purchasers identified
therein (the “Purchase Agreement”).  All such warrants are referred to herein,
collectively, as the “Warrants.”  Common Stock issuable upon exercise of the
Additional Warrants shall be known herein as the “Additional Warrant Shares”.

 

 

1.             Definitions.  In addition to the terms defined elsewhere in
this Warrant, capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement.

2.             Registration
of Warrant.  The Company shall
register this Warrant, upon records to be maintained by the Company for that
purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes,
absent actual notice to the contrary.

3.             Registration
of Transfers.  The Company shall register
the assignment and transfer of any portion of this Warrant in the Warrant
Register, upon surrender of this Warrant, with the Form of Assignment attached
hereto on Annex B duly completed and signed, to the Company at its
address specified herein.  Upon any such
registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a “New Warrant”), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. 
The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance by such transferee of all of the rights and obligations
of a holder of a Warrant.

4.             Exercise
and Duration of Warrants.

(a)           This Warrant shall be exercisable by the registered Holder at
any time and from time to time on or after the six month anniversary of the
Closing Date to and including the Expiration Date.  At 6:30 P.M., New York City time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value. Notwithstanding anything to the contrary
herein, the Expiration Date shall be extended for each day following the
Effective Date that the Registration Statement is not effective.

(b)           A Holder may exercise this Warrant by delivering to the
Company (i) an exercise notice, in the form attached hereto on Annex A
(the “Exercise
Notice”), appropriately
completed and duly signed, and (ii) payment of the Exercise Price for the
number of Warrant Shares and Additional Warrants as to which this Warrant is
being exercised, and the date such items are delivered to the Company (as determined
in accordance with the notice provisions hereof) is an “Exercise Date.”  The
Holder shall not be required to deliver the original Warrant in order to effect
an exercise hereunder.  Execution and
delivery of the Exercise Notice shall have the same effect as cancellation of
the original Warrant and issuance of a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares and Additional Warrants.

5.             Delivery
of Warrant Shares and Additional Warrants.

(a)           Upon exercise of this Warrant, the Company shall promptly
(but in no event later than three Trading Days after the Exercise Date) issue
or cause to be issued and cause to be delivered to or upon the written order of
the Holder and in such name or names as the Holder may designate, a certificate
for the Warrant Shares and Additional Warrants issuable 

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upon
such exercise.  The Company shall cause
the certificate for the Warrant Shares to be issued free of restrictive legends
unless a registration statement covering the resale of the Warrant Shares and
naming the Holder as a selling stockholder thereunder is not then effective and
the Warrant Shares are not freely transferable without volume restrictions
pursuant to Rule 144 under the Securities Act. 
The Holder, or any Person so designated by the Holder to receive Warrant
Shares and Additional Warrants, shall be deemed to have become holder of record
of such Warrant Shares and Additional Warrants as of the Exercise Date.  The Company shall, upon request of the
Holder, use its best efforts to deliver Warrant Shares hereunder electronically
through the Depository Trust Corporation or another established clearing
corporation performing similar functions.

(b)           This Warrant is exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares and Additional
Warrants.  Upon surrender of this Warrant
following one or more partial exercises, the Company shall issue or cause to be
issued, at its expense, a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares and Additional Warrants.

(c)           In addition to any other rights available to a Holder, if the
Company fails to deliver to the Holder a certificate representing Warrant
Shares and Additional Warrants by the third Trading Day after exercise of this
Warrant in full compliance with Section 4(b), and if after such third Trading
Day the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares or Additional Warrant Shares that the Holder anticipated receiving from
the Company (a “Buy-In”), then the Company shall, within three
Trading Days after the Holder’s request and in the Holder’s discretion, either
(i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased (the “Buy-In
Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such Common
Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Common Stock and pay
cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common Stock, times (B)
the Closing Price on the date of the event giving rise to the Company’s
obligation to deliver such certificate.

(d)           The Company’s obligations to issue and deliver Warrant Shares
and Additional Warrants in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares and Additional Warrants.  Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the
Warrant  as required pursuant to the
terms hereof.

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6.             Charges,
Taxes and Expenses.   Issuance and
delivery of certificates for shares of Common Stock and Additional Warrants
upon exercise of this Warrant shall be made without charge to the Holder for
any issue or transfer tax, withholding tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the Holder or an Affiliate
thereof.  The Holder shall be responsible
for all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving Warrant Shares and Additional Warrants
upon exercise hereof.

7.             Replacement
of Warrant.  If this Warrant is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation hereof, or in
lieu of and substitution for this Warrant, a New Warrant, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if requested.

8.             Reservation
of Warrant Shares and Additional Warrant Shares.  The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant and
Additional Warrants as herein provided or in the Additional Warrant Shares upon
exercise of the Additional Warrants as provided in the Additional Warrants, the
number of Warrant Shares which are then issuable and deliverable upon the
exercise of this entire Warrant and the number of Additional Warrant Shares issuable
and deliverable upon the exercise of any Additional Warrants, free from
preemptive rights or any other contingent purchase rights of persons other than
the Holder (taking into account the adjustments and restrictions of Section
9).  The Company covenants that all
Warrant Shares and Additional Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, or the Additional Warrants, be duly and validly
authorized, issued and fully paid and nonassessable.  The Company will take all such action as may
be necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of
any requirements of any securities exchange or automated quotation system upon
which the Common Stock may be listed.

9.             Certain
Adjustments.  The Exercise Price and
number of Warrant Shares issuable upon exercise of this Warrant are subject to
adjustment from time to time as set forth in this Section 9.  The exercise price and number of Additional
Warrant Shares issuable upon exercise of the Additional Warrants shall be
subject to adjustment from time to time as set forth in Section 9 of the
Additional Warrants.

(a)           Stock Dividends and Splits.  If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be the number of

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shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event.  Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution, and any adjustment pursuant
to clause (ii) or (iii) of this paragraph shall become effective immediately
after the effective date of such subdivision or combination.

(b)           Pro Rata Distributions.  If the Company, at any time while this
Warrant is outstanding, distributes to holders of Common Stock (i) evidences of
its indebtedness, (ii) any security (other than a distribution of Common Stock
covered by the preceding paragraph), (iii) rights or warrants to subscribe
for or purchase any security, or (iv) any other asset (in each case, “Distributed Property”), then in each such case the Exercise Price
in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution shall be adjusted (effective
on such record date) to equal the product of such Exercise Price times a
fraction of which the denominator shall be the average of the Closing Prices
for the five Trading Days immediately prior to (but not including) such record
date and of which the numerator shall be such average less the then fair market
value of the Distributed Property distributed in respect of  one outstanding share of Common Stock, as
determined by the Company’s independent certified public accountants that
regularly examine the financial statements of the Company, (an “Appraiser”).  In
such event, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case such fair market value
shall be deemed to equal the average of the values determined by each of the Appraiser
and such appraiser.  As an alternative to
the foregoing adjustment to the Exercise Price, at the request of the Holder
delivered to the Company in writing before the 45th day after such record date,
the Company will deliver to such Holder, within five Trading Days after such
request (or, if later, on the effective date of such distribution), the
Distributed Property that such Holder would have been entitled to receive in
respect of the Warrant Shares for which this Warrant could have been exercised immediately
prior to such record date.  If such
Distributed Property is not delivered to a Holder pursuant to the preceding
sentence, then upon expiration of or any exercise of the Warrant that occurs
after such record date, such Holder shall remain entitled to receive, in
addition to the Warrant Shares otherwise issuable upon such exercise (if
applicable), such Distributed Property.

(c)           Fundamental Transactions.  If, at any time while this Warrant is
outstanding, (i) the Company effects any merger or consolidation of the Company
with or into another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the Company or another Person)
is completed pursuant to which holders of Common Stock are permitted to tender
or exchange their shares for other securities, cash or property, or (iv) the
Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into
or exchanged for other securities, cash or property (other than as a result of
a subdivision or combination of shares of Common Stock covered by Section 9(a)
above) (in any such case, a “Fundamental
Transaction”), then the
Holder shall have the right thereafter to receive, upon exercise of this
Warrant, the same amount and kind of securities, cash or property as it would
have been entitled to receive upon the occurrence of such Fundamental Transaction
if it had been, immediately prior to such 

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Fundamental
Transaction, the holder of the number of Warrant Shares then issuable upon
exercise in full of this Warrant (the “Alternate Consideration”).  The aggregate Exercise Price for this Warrant
will not be affected by any such Fundamental Transaction, but the Company shall
apportion such aggregate Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration.  If holders
of Common Stock are given any choice as to the securities, cash or property to
be received in a Fundamental Transaction, then the Holder shall be given the
same choice as to the Alternate Consideration it receives upon any exercise of
this Warrant following such Fundamental Transaction.  In the event of a Fundamental Transaction,
the Company or the successor or purchasing Person, as the case may be, shall
execute with the Holder a written agreement providing that:

(x)   this Warrant shall thereafter entitle the
Holder to purchase the Alternate Consideration in accordance with this section
9(c),

(y)  in the case of any such successor or
purchasing Person, upon such consolidation, merger, statutory exchange,
combination, sale or conveyance such successor or purchasing Person shall be
jointly and severally liable with the Company for the performance of all of the
Company’s obligations under this Warrant and the Purchase Agreement, and

(z)   if registration or qualification is required
under the Exchange Act or applicable state law for the public  resale by the Holder of shares of stock and
other securities so issuable upon exercise of this Warrant, such registration
or qualification shall be completed prior to such reclassification, change,
consolidation, merger, statutory exchange, combination or sale.

If,
in the case of any Fundamental Transaction, the Alternate Consideration
includes shares of stock, other securities, other property or assets of a
Person other than the Company or any such successor or purchasing Person, as
the case may be, in such Fundamental Transaction, then such written agreement
shall also be executed by such other Person and shall contain such additional
provisions to protect the interests of the Holder as the Board of Directors of
the Company shall reasonably consider necessary by reason of the
foregoing.  At the Holder’s request, any
successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and evidencing the Holder’s right to purchase the Alternate Consideration for
the aggregate Exercise Price upon exercise thereof.  The terms of any agreement pursuant to which
a Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this paragraph
(c) and insuring that the Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. If any Fundamental Transaction constitutes or results in a Change
of Control, then at the request of the Holder delivered to the Company in
writing before the 45th day after such Fundamental Transaction, the Company (or
any such successor or surviving entity) will purchase the Warrant from the
Holder for a purchase price, payable in cash within five Trading Days after
such request (or, if later, on the effective date of the Fundamental
Transaction), equal to the Black-Scholes value of the remaining unexercised
portion of this Warrant on the date of such request.

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(d)           Subsequent Equity Sales.

(i)            For so long as this
Warrant is outstanding, the Company or any Subsidiary shall not issue
additional shares of Common Stock or rights, warrants, options or other securities
or debt convertible, exercisable or exchangeable for shares of Common Stock or
otherwise entitling any Person to acquire shares of Common Stock (collectively,
“Common Stock Equivalents”) at an effective price per share of Common
Stock (prior to deducting fees, commissions and other expenses related to such
issuance) (the “Effective
Price”) less than the
Conversion Price (as defined in the Notes) (as adjusted to such date) (a “Prohibited Issuance”).  For purposes of this paragraph, in connection
with any issuance of any Common Stock Equivalents, (A) the maximum number of
shares of Common Stock potentially issuable at any time upon conversion,
exercise or exchange of such Common Stock Equivalents (the “Deemed Number”) shall be deemed to be outstanding upon
issuance of such Common Stock Equivalents, (B) the Effective Price applicable
to such Common Stock shall equal the minimum dollar value of consideration
payable to the Company to purchase such Common Stock Equivalents and to
convert, exercise or exchange them into Common Stock (prior to deducting any
fees, commissions and other expenses related thereto), divided by the Deemed
Number, and (C) the actual issuance of Common Stock upon conversion, exercise
or exchange of such Common Stock Equivalents shall not be subject again to this
Section 9(d)(i).

(ii)           If, at any time while this Warrant is
outstanding, the Company or any Subsidiary issues Common Stock Equivalents with
an Effective Price or a number of underlying shares that floats or resets or
otherwise varies or is subject to adjustment based (directly or indirectly) on
market prices of the Common Stock (a “Floating Price Security”),
then for purposes of applying the preceding paragraph, whether Section
9(d)(i) has been violated will be determined separately each time such
adjustment occurs.

(iii)          In the event the Company breaches Section
9(d)(i), then at the request of the Holder delivered to the Company in
writing before the 45th day after such Prohibited Issuance, the Company (or any
such successor or surviving entity) will purchase this Warrant from the Holder
for a purchase price, payable in cash within five Trading Days after such
request, equal to the Black-Scholes value of the remaining unexercised portion
of this Warrant on the date of such request.

(iv)          Notwithstanding the foregoing, the
Company shall be permitted to issue Excluded Stock.

(e)           Number of Warrant Shares.  Simultaneously with any adjustment to the
Exercise Price pursuant to paragraphs (a) or (b) of this Section, the number of
Warrant Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price in
effect immediately prior to such adjustment.

(f)            Calculations.  All calculations under this Section 9
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable.  The number of shares of
Common 

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Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Stock.

(g)           Notice of Adjustments.  Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly
compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment, including a statement of
the adjusted Exercise Price and adjusted number or type of Warrant Shares or
other securities issuable upon exercise of this Warrant (as applicable),
describing the transactions giving rise to such adjustments and showing in
detail the facts upon which such adjustment is based.  The Company will promptly deliver a copy of
each such certificate to the Holder within 10 Trading Days of the occurrence of
such adjustment.

(h)           Notice of Corporate Events.  If the Company  (i) declares a dividend or any other distribution
of cash, securities or other property in respect of its Common Stock, including
without limitation any granting of rights or warrants to subscribe for or
purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or
approves, enters into any agreement contemplating or solicits stockholder
approval for any Fundamental Transaction or (iii) authorizes the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall deliver to the Holder a notice describing the material terms and
conditions of such transaction, at least 20 calendar days prior to the
applicable record or effective date on which a Person would need to hold Common
Stock in order to participate in or vote with respect to such transaction, and
the Company will take all steps reasonably necessary in order to insure that
the Holder is given the practical opportunity to exercise this Warrant prior to
such time so as to participate in or vote with respect to such transaction;
provided, however, that the failure to deliver such notice or any defect
therein shall not affect the validity of the corporate action required to be
described in such notice.

10.           Payment
of Exercise Price.  The Holder shall
pay the Exercise Price in cash in immediately available funds.

11.           Limitation
on Exercise.

(a)           Notwithstanding anything to the contrary
contained herein, the number of shares of
Common Stock that may be acquired by the Holder upon any exercise of this
Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other issuance), the
total number of shares of Common Stock then beneficially owned by such Holder
and its Affiliates and any other Persons whose beneficial ownership of Common
Stock would be aggregated with the Holder’s for purposes of Section 13(d) of
the Exchange Act, does not exceed 4.999% 
(the “Threshold Percentage”) or 9.999% (the “Maximum Percentage”) of the total number of
issued and outstanding shares of Common Stock (including for such purpose the
shares of Common Stock issuable upon such exercise).  For
such purposes, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  Each delivery of an Exercise
Notice hereunder will constitute a representation by the Holder that it has
evaluated the limitations set forth in this paragraph and determined that
issuance of the full number of Warrant Shares requested in such Exercise Notice
is permitted under this paragraph.  The
Company’s 

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obligation to issue shares of Common Stock in excess of the limitation
referred to in this Section shall be suspended (and shall not terminate or
expire notwithstanding any contrary provisions hereof) until such time, if any,
as such shares of Common Stock may be issued in compliance with such
limitation.  By written notice to the
Company, the Holder shall have the right (x) at any time and from time to time
to reduce its Maximum Percentage immediately upon notice to the Company in the
event and only to the extent that Section 16 of the Exchange Act or the rules
promulgated thereunder (or any successor statute or rules) is changed to reduce
the beneficial ownership percentage threshold thereunder to a percentage less
than 9.999% and (y) at any time and from time to time, to waive the provisions
of this Section insofar as they relate to the Threshold Percentage or to
increase or decrease its Threshold Percentage (but not in excess of the Maximum
Percentage) unless the Holder shall have, by written instrument delivered to
the Company, irrevocably waived its rights to so increase or decrease its
Threshold Percentage, but (i) any such waiver, increase or decrease will not be
effective until the 61st day after such notice is delivered to the Company, and
(ii) any such waiver or increase or decrease will apply only to the Holder and
not to any other holder of Warrants.

(b)           Notwithstanding anything to the contrary
contained herein, the number of shares of
Common Stock that may be acquired by the Holder upon any exercise of this
Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to insure that, following such exercise (or other issuance), the
total number of shares of Common Stock then beneficially owned by such Holder
and its Affiliates and any other Persons whose beneficial ownership of Common
Stock would be aggregated with the Holder’s for purposes of Section 13(d) of
the Exchange Act, does not exceed 19.999% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise).  For such purposes, beneficial ownership shall
be determined in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder.

12.           Fractional
Shares.  The Company shall not be
required to issue or cause to be issued fractional Warrant Shares or Additional
Warrants to purchase fractional Additional Warrant Shares on the exercise of
this Warrant.  If any fraction of a
Warrant Share or if any Additional Warrant to purchase a fraction of an
Additional Warrant Share would, except for the provisions of this Section, be
issuable upon exercise of this Warrant, the number of Warrant Shares and/or
Additional Warrant Shares issuable upon exercise of the Additional Warrants, as
the case may be, to be issued will be rounded up to the nearest whole share or
right to purchase the nearest whole share, as the case may be.

13.           Notices.  Any and all notices or other communications
or deliveries hereunder (including without limitation any Exercise Notice)
shall be in writing and shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior to 6:30 p.m.
(New York City time) on a Trading Day, (ii) the next Trading Day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section on a day that is not a Trading
Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the
Trading Day following the date of mailing, if sent by a nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given.  The
address for such notices or communications shall be as set forth in the
Purchase Agreement.

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14.           Warrant
Agent.  The Company shall serve as
warrant agent under this Warrant.  Upon
30 days’ notice to the Holder, the Company may appoint a new warrant
agent.  Any corporation into which the
Company or any new warrant agent may be merged or any corporation resulting
from any consolidation to which the Company or any new warrant agent shall be a
party or any corporation to which the Company or any new warrant agent
transfers substantially all of its corporate trust or shareholders services
business shall be a successor warrant agent under this Warrant without any further
act.  Any such successor warrant agent
shall promptly cause notice of its succession as warrant agent to be mailed (by
first class mail, postage prepaid) to the Holder at the Holder’s last address
as shown on the Warrant Register.

15.           Call
Right.

(a)           If following the Effective Date, the
Closing Prices for any 20 consecutive Trading Days exceeds 150% of the Exercise
Price (the “Threshold Price”, and
such 20 day period, the “Threshold Period”),
then the Company will have the right, but not obligation (the “Call Right”), on prior written notice in
accordance with Section 15(b) to the Holder, to require the Holder to exercise
any unexercised portion of this Warrant for which an Exercise Notice has not
yet been delivered (the “Call Amount”);
provided that the Call Right must be exercised within 20 Trading Days of the
last day of the Threshold Period.

(b)           To exercise this Call Right, the Company
shall deliver to the Holder an irrevocable written notice (a “Call Notice”), indicating the Call Amount.  The date that the Company delivers the Call
Notice to the Holders will be referred to as the “Call Date.” Within 15 Trading Days of receipt of the Call
Notice, the Holder shall exercise this Warrant for the entire Call Amount in
accordance with Section 4(b) above.  The
date on which the Call Amount is exercised is referred to herein as the “Forced Exercise Date”.  Any
unexercised portion of this Warrant to which the Call Notice does not pertain
(the “Remaining Portion”) will be unaffected by such Call Notice.  The Company covenants and agrees that it will
honor any Exercise Notice with respect to the Call Amount that are tendered
from the Call Date through and including 6:30 p.m. (New York City time) on the
Forced Exercise Date.

Notwithstanding anything to
the contrary set forth in this Warrant, the Company may not require the
cancellation of any unexercised Call Amount (and any Call Notice will be void),
unless from the beginning of the 20 consecutive Trading Days used to determine
whether the Common Stock has achieved the Threshold Price through the Forced
Exercise Date (the “Call
Period”) (i) the Closing
Prices for each Trading Day during such Call Period exceeds the Threshold
Price, (ii) the Company shall have honored in accordance with the terms of this
Warrant any Exercise Notice delivered by 6:30 p.m. (New York City time) on the
Forced Exercise Date, (iii) the Equity Conditions (as defined in the Notes) are
satisfied (or waived in writing by the applicable Holder) on each Trading Day
with respect to all Underlying Shares issuable upon exercise of the Call
Amount, and (iv) the average daily trading volume as reported on Bloomberg,
L.P. during such Call Period (determined by calculating the arithmetic average
of the daily trading volume for each Trading Day in such Call Period) is
greater than 100,000 shares.

(c)           Notwithstanding anything herein to the
contrary, (i) in connection with the Company’s exercise of a Call Right, the
Threshold Percentage limitation on exercise set forth in 

 10
 

 

 

Section 11 shall not apply and (ii) if after the Call Right is
exercised, the stated Expiration Date of this Warrant would occur prior to the
Forced Exercise Date, the “Expiration Date” hereof shall be extended to end of
the Forced Exercise Date solely to the extent necessary to enable this Warrant
to be exercised for the Call Amount on the Forced Exercise Date.

16.           Miscellaneous.

(a)           Subject to the restrictions on transfer
set forth on the first page hereof, this Warrant may be assigned by the Holder.
This Warrant may not be assigned by the Company except to a successor in the
event of a Fundamental Transaction. This Warrant shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns.  Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant.  This Warrant may be
amended only in writing signed by the Company and the Holder and their
successors and assigns.

(b)           The Company will not, by amendment of
its governing documents or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder against
impairment.  Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any Warrant Shares or Additional Warrant Shares above the amount payable
therefor on such exercise, (ii) will take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares or Additional Warrant Shares
on the exercise of this Warrant and the Additional Warrants, respectively, and
(iii) will not close its shareholder books or records in any manner which
interferes with the timely exercise of this Warrant.

(c)           GOVERNING
LAW; VENUE; WAIVER OF JURY TRIAL. 
ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND
INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF
NEW YORK, BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE
TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT
IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER.  EACH PARTY HEREBY IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR
CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) 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 

 11
 

 

 

CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN
ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  THE COMPANY HEREBY WAIVES ALL RIGHTS TO A
TRIAL BY JURY.

(d)           The headings herein are for convenience
only, do not constitute a part of this Warrant and shall not be deemed to limit
or affect any of the provisions hereof.

(e)           In case any one or more of the
provisions of this Warrant shall be invalid or unenforceable in any respect,
the validity and enforceability of the remaining terms and provisions of this
Warrant shall not in any way be affected or impaired thereby and the parties
will attempt in good faith to agree upon a valid and enforceable provision
which shall be a commercially reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

 12
 

 

 

IN WITNESS WHEREOF, the
Company has caused this Warrant B to be duly executed by its authorized officer
as of the date first indicated above.

	
  

  	
  SATCON TECHNOLOGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: David B. Eisenhaure

  
	
   

  	
  Title: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name: David E. O’Neil

  
	
   

  	
  Title: Vice President of Finance and Treasurer

  

 

 13

 

 

Annex A

FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to
purchase shares of Common Stock under the foregoing Warrant)

To:  SatCon
Technology Corporation

The undersigned is the Holder of Warrant B No. _______
(the “Warrant”) issued by SatCon
Technology Corporation, a Delaware corporation (the “Company”).  Capitalized
terms used herein and not otherwise defined have the respective meanings set
forth in the Warrant.

1.                               The Warrant is currently
exercisable to purchase a total of ______________ Warrant Shares.

2.                               The undersigned Holder
hereby exercises its right to purchase _________________ Warrant Shares
pursuant to the Warrant and Additional Warrants exercisable for _______________
shares of Common Stock.

3.                               In satisfaction of the
Exercise Price, the holder shall pay the sum of $____________ to the Company in
accordance with the terms of the Warrant.

4.                               Pursuant to this exercise,
the Company shall deliver to the holder _______________ Warrant Shares and
Additional Warrants exercisable for _______________ shares of Common Stock in
accordance with the terms of the Warrant.

5.                               Following this exercise, the
Warrant shall be exercisable to purchase a total of _____________ Warrant
Shares and Additional Warrants exercisable for _____________ shares of Common
Stock.

	
  Dated: _________________, ____

  	
   

  	
  Name of Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print) 
  ___________________________

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:  
  _____________________________

  
	
   

  	
   

  	
  Name: 
  ___________________________

  
	
   

  	
   

  	
  Title:  ____________________________

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform in all respects to name of
  holder as specified on the face of the Warrant)

  

 

 

 

Annex  B

FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of
Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto ________________________________ the right
represented by the within Warrant to purchase 
____________ shares of Common Stock and warrants to purchase shares of
the Common Stock of SatCon Technology Corporation to which the within Warrant
relates and appoints ________________ attorney to transfer said right on the
books of SatCon Technology Corporation with full power of substitution in the
premises.

	
  Dated:  __________________, ____

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature must conform in all respects to name of
  holder as specified on the face of the Warrant)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address of Transferee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  In the presence
  of:Exhibit
10.5

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of July 19, 2006
(the “Agreement”) is by and among SatCon Technology Corporation, a
company duly organized and validly existing under the laws of Delaware (the “Company”),
the Purchasers identified on the signature pages hereto (each, a “Purchaser”
and collectively, the “Purchasers”) and Iroquois Master Fund Ltd., as
agent for the Purchasers (in such capacity, together with its successors in
such capacity, the “Agent”).

The Company and each of the Purchasers are parties to
a Securities Purchase Agreement dated as of July 19, 2006 (as modified and
supplemented and in effect from time to time, the “Purchase Agreement”),
that provides, subject to the terms and conditions thereof, for the issuance
and sale by the Company to each of the Purchasers, severally and not jointly,
Notes and Warrants as more fully described in the Purchase Agreement.

To induce each of the Purchasers to enter into the
Purchase Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company has agreed to
pledge and grant a security interest in the Collateral (as hereinafter defined)
as security for the Secured Obligations (as hereinafter defined).  Accordingly, the parties hereto agree as
follows:

Section 1.               Definitions.  Each capitalized term used herein and not
otherwise defined shall have the meaning assigned to such term in the Purchase
Agreement.  In addition, as used herein:

“Accounts” shall have the meaning ascribed
thereto in Section 3(d) hereof.

“Business” shall mean the businesses from time
to time, now or hereafter, conducted by the Company and its Subsidiaries.

“Collateral” shall have the meaning ascribed
thereto in Section 3 hereof.

“Copyright Collateral” shall mean all
Copyrights, whether now owned or hereafter acquired by the Company, that are
associated with the Business.

“Copyrights” shall mean all copyrights,
copyright registrations and applications for copyright registrations,
including, without limitation, all renewals and extensions thereof, the right
to recover for all past, present and future infringements thereof, and all
other rights of any kind whatsoever accruing thereunder or pertaining thereto.

“Documents” shall have the meaning ascribed
thereto in Section 3(j) hereof.

“Equipment” shall have the meaning ascribed
thereto in Section 3(h) hereof.

 

 

“Event of Default” shall have the meaning
ascribed thereto in Section 8 of the Notes.

“Excluded Collateral” shall mean the assets of
the Company which secure the Permitted Indebtedness and the assets listed on Annex
2 hereto.

“Instruments” shall have the meaning ascribed
thereto in Section 3(e) hereof.

“Intellectual Property” shall mean,
collectively, all Copyright Collateral, all Patent Collateral and all Trademark
Collateral, together with (a) all inventions, processes, production methods,
proprietary information, know-how and trade secrets used or useful in the
Business; (b) all licenses or user or other agreements granted to the Company
with respect to any of the foregoing, in each case whether now or hereafter
owned or used including, without limitation, the licenses or other agreements
with respect to the Copyright Collateral, the Patent Collateral or the
Trademark Collateral; (c) all customer lists, identification of suppliers,
data, plans, blueprints, specifications, designs, drawings, recorded knowledge,
surveys, manuals, materials standards, processing standards, catalogs, computer
and automatic machinery software and programs, and the like pertaining to the
operation by the Company of the Business; (d) all sales data and other
information relating to sales now or hereafter collected and/or maintained by
the Company that pertain to the Business; (e) all accounting information which
pertains to the Business and all media in which or on which any of the
information or knowledge or data or records which pertain to the Business may
be recorded or stored and all computer programs used for the compilation or
printout of such information, knowledge, records or data; (f) all licenses,
consents, permits, variances, certifications and approvals of governmental
agencies now or hereafter held by the Company pertaining to the operation by
the Company and its Subsidiaries of the Business; and (g) all causes of action,
claims and warranties now or hereafter owned or acquired by the Company in
respect of any of the items listed above.

“Inventory” shall have the meaning ascribed
thereto in Section 3(f) hereof.

“Issuers” shall mean, collectively, the
respective entities identified on Annex 1 hereto, and all other entities
formed by the Company or entities in which the Company owns or acquires any
capital stock or similar interest.

 “Motor
Vehicles” shall mean motor vehicles, tractors, trailers and other like property,
whether or not the title thereto is governed by a certificate of title or
ownership.

“Patent Collateral” shall mean all Patents,
whether now owned or hereafter acquired by the Company that are associated with
the Business.

“Patents” shall mean all patents and patent
applications, including, without limitation, the inventions and improvements
described and claimed therein together with the reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, all
income, royalties, damages and payments now or hereafter due and/or payable
under and with respect thereto, including, without limitation, damages and
payments for past or future infringements thereof, the right to sue for past,
present and future infringements thereof, and all rights corresponding thereto
throughout the world.

 

 

“Permitted Indebtedness” shall mean the Company’s
existing indebtedness, liabilities and obligations as disclosed on Annex 5
hereto, any future capitalized leases, purchase money indebtedness or other
indebtedness of the Company permitted under the Purchase Agreement and the
Notes.

“Permitted Liens” shall mean (i) the Company’s
existing Liens as disclosed in the Current SEC Report and Annex 6
hereto, (ii) the security interests created by this Agreement, (iii) Liens of
local or state authorities for franchise, real estate or other like taxes, (iv)
statutory Liens of landlords and liens of carriers, warehousemen, bailees,  mechanics, materialmen and other like Liens
imposed by law, created in the ordinary course of business and for amounts
which are not more than sixty days past due, (v) Liens for taxes which are not
yet due and payable or are being contested in good faith and by appropriate
proceedings, and (vi) Liens which do not materially affect the value of the
Company’s property and do not materially interfere with the use made and
proposed to be made of such property by the Company and the Subsidiaries.

“Pledged Stock” shall have the meaning ascribed
thereto in Section 3(a) hereof.

“Real Estate” shall have the meaning ascribed
thereto in Section 3(l) hereof.

“Secured Obligations” shall mean, collectively,
the principal of and interest on the Notes issued or issuable (as applicable)
by the Company and held by the applicable Purchaser, and all other amounts from
time to time owing to such Purchasers by the Company under the Purchase
Agreement and the Notes.

 “Stock
Collateral” shall mean, collectively, the Collateral described in clauses
(a) through (c) of Section 3 hereof and the proceeds of and to any such
property and, to the extent related to any such property or such proceeds, all
books, correspondence, credit files, records, invoices and other papers.

“Trademark Collateral” shall mean all
Trademarks, whether now owned or hereafter acquired by the Company, that are
associated with the Business. 
Notwithstanding the foregoing, the Trademark Collateral does not and
shall not include any Trademark which would be rendered invalid, abandoned,
void or unenforceable by reason of its being included as part of the Trademark
Collateral.

“Trademarks” shall mean all trade names,
trademarks and service marks, logos, trademark and service mark registrations,
and applications for trademark and service mark registrations, including,
without limitation, all renewals of trademark and service mark registrations,
all rights corresponding thereto throughout the world, the right to recover for
all past, present and future infringements thereof, all other rights of any
kind whatsoever accruing thereunder or pertaining thereto, together, in each
case, with the product lines and goodwill of the business connected with the
use of, and symbolized by, each such trade name, trademark and service mark.

“Uniform Commercial Code” shall mean the
Uniform Commercial Code as in effect in the State of New York from time to
time.

 

 

Section 2.               Representations and Warranties.  The Company represents and warrants to each
of the Purchasers that:

a.                                       the
Company is the sole beneficial owner of the Collateral and no Lien exists or
will exist upon any Collateral at any time (and, with respect to the Stock
Collateral, no right or option to acquire the same exists in favor of any other
Person), except for Permitted Liens and the pledge and security interest in
favor of each of the Purchasers created or provided for herein, which pledge
and security interest constitutes a first priority perfected pledge and
security interest in and to all of the Collateral (other than Intellectual
Property registered or otherwise located outside of the United States of
America);

b.                                      the
Pledged Stock directly or indirectly owned by the Company in the entities
identified in Annex 1 hereto is, and all other Pledged Stock, whether
issued now or in the future, will be, duly authorized, validly issued, fully
paid and nonassessable, free and clear of all Liens other than Permitted Liens,
and none of such Pledged Stock is or will be subject to any contractual
restriction, preemptive and similar rights, or any restriction under the
charter or by-laws of the respective Issuers of such Pledged Stock, upon the
transfer of such Pledged Stock (except for any such restriction contained
herein;

c.                                       the
Pledged Stock directly or indirectly owned by the Company in the entities
identified in Annex 1 hereto constitutes all of the issued and
outstanding shares of capital stock of any class of such Issuers beneficially
owned by the Company on the date hereof (whether or not registered in the name
of the Company), and said Annex 1 correctly identifies, as at the date
hereof, the respective Issuers of such Pledged Stock;

d.                                      the
Company owns and possesses the right to use, and has done nothing to authorize
or enable any other Person to use, all of its Copyrights, Patents and
Trademarks, and all registrations of its material Copyrights, Patents and
Trademarks are valid and in full force and effect.  Except as may be set forth in said Annex 3
and except for Permitted Liens, the Company owns and possesses the right to use
all material Copyrights, Patents and Trademarks, necessary for the operation of
the Business;

e.                                       to
the Company’s knowledge, (i) except as set forth in Annex 3 hereto,
there is no violation by others of any right of the Company with respect to any
material Copyrights, Patents or Trademarks, respectively, and (ii) the Company
is not, in connection with the Business, infringing in any respect upon any
Copyrights, Patents or Trademarks of any other Person; and no proceedings have
been instituted or are pending against the Company or, to the Company’s
knowledge, threatened, and no claim against the Company has been received by
the Company, alleging any such violation, except as may be set forth in said Annex
3, and except, in each case for 

 

 

matters which
singly or in the aggregate could not reasonably be expected to have a Material
Adverse Effect; and

f.                                         the
Company does not own any material Trademarks registered in the United States of
America to which the last sentence of the definition of Trademark Collateral
applies.

Section 3.               Collateral.  As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Secured Obligations, the Company hereby pledges, grants, assigns,
hypothecates and transfers to the Agent, on behalf of the Purchasers as
hereinafter provided, a security interest in and Lien upon all of the Company’s
right, title and interest in, to and under all personal property and other
assets of the Company, whether now owned or hereafter acquired by or arising in
favor of the Company, whether now existing or hereafter coming into existence,
and regardless of where located, except for the Excluded Collateral (all being
collectively referred to herein as “Collateral”), including:

a.                                       the
Company’s direct or indirect ownership interest in the respective shares of
capital stock of the Issuers and all other shares of capital stock of whatever
class of the Issuers, now or hereafter owned by the Company, together with in
each case the certificates evidencing the same (collectively, the “Pledged
Stock”);

b.                                      all
shares, securities, moneys or property representing a dividend on any of the
Pledged Stock, or representing a distribution or return of capital upon or in
respect of the Pledged Stock, or resulting from a split-up, revision,
reclassification or other like change of the Pledged Stock or otherwise
received in exchange therefor, and any subscription warrants, rights or options
issued to the holders of, or otherwise in respect of, the Pledged Stock;

c.                                       without
affecting the obligations of the Company under any provision prohibiting such
action hereunder or under the Purchase Agreement or the Notes, in the event of
any consolidation or merger in which any Issuer is not the surviving
corporation, all shares of each class of the capital stock of the successor
corporation (unless such successor corporation is the Company itself) formed by
or resulting from such consolidation or merger (the Pledged Stock, together
with all other certificates, shares, securities, properties or moneys as may
from time to time be pledged hereunder pursuant to clause (a) or (b) above and
this clause (c) being herein collectively called the “Stock Collateral”);

d.                                      all
accounts and general intangibles (each as defined in the Uniform Commercial
Code) of the Company constituting any right to the payment of money, including
(but not limited to) all moneys due and to become due to the Company in respect
of any loans or advances for the purchase price of Inventory or Equipment or
other goods sold or leased or for services rendered, all moneys due and to
become due to the Company under any 

 

 

guarantee
(including a letter of credit) of the purchase price of Inventory or Equipment
sold by the Company and all tax refunds (such accounts, general intangibles and
moneys due and to become due being herein called collectively “Accounts”);

e.                                       all
instruments, chattel paper or letters of credit (each as defined in the Uniform
Commercial Code) of the Company evidencing, representing, arising from or
existing in respect of, relating to, securing or otherwise supporting the payment
of, any of the Accounts, including (but not limited to) promissory notes,
drafts, bills of exchange and trade acceptances (herein collectively called “Instruments”);

f.                                         all
inventory (as defined in the Uniform Commercial Code) of the Company and all goods
obtained by the Company in exchange for such inventory (herein collectively
called “Inventory”);

g.                                      all
Intellectual Property and all other accounts or general intangibles of the
Company not constituting Intellectual Property or Accounts;

h.                                      all
equipment (as defined in the Uniform Commercial Code) of the Company (herein
collectively called “Equipment”);

i.                                          each
contract and other agreement of the Company relating to the sale or other
disposition of Inventory or Equipment;

j.                                          all
documents of title (as defined in the Uniform Commercial Code) or other
receipts of the Company covering, evidencing or representing Inventory or
Equipment (herein collectively called “Documents”);

k.                                       all
rights, claims and benefits of the Company against any Person arising out of,
relating to or in connection with Inventory or Equipment purchased by the
Company, including, without limitation, any such rights, claims or benefits
against any Person storing or transporting such Inventory or Equipment;

l.                                          all
estates in land together with all improvements and other structures now or
hereafter situated thereon, together with all rights, privileges, tenements,
hereditaments, appurtenances, easements, including, but not limited to, rights
and easements for access and egress and utility connections, and other rights
now or hereafter appurtenant thereto (“Real Estate”);

m.                                    all
other tangible or intangible property of the Company, including, without
limitation, all proceeds, products and accessions of and to any of the property
of the Company described in clauses (a) through (l) above in this Section 3
(including, without limitation, any proceeds of insurance thereon), and, to the
extent related to any property described in said clauses or such proceeds,
products and accessions, all books, 

 

 

correspondence,
credit files, records, invoices and other papers, including without limitation
all tapes, cards, computer runs and other papers and documents in the
possession or under the control of the Company or any computer bureau or
service company from time to time acting for the Company.

Section 4.               Further Assurances; Remedies.  In furtherance of the grant of the pledge and
security interest pursuant to Section 3 hereof, the Company hereby agrees with
the Agent and each of the Purchasers as follows:

4.01         Delivery
and Other Perfection.  The Company
shall:

a.                                       if
any of the above-described shares, securities, monies or property required to
be pledged by the Company under clauses (a), (b) and (c) of Section 3 hereof
are received by the Company, forthwith either (x) transfer and deliver to the
Agent such shares or securities so received by the Company (together with the
certificates for any such shares and securities duly endorsed in blank or
accompanied by undated stock powers duly executed in blank) all of which
thereafter shall be held by the Agent, pursuant to the terms of this Agreement,
as part of the Collateral or (y) take such other action as the Agent shall
reasonably deem necessary or appropriate to duly record the Lien created
hereunder in such shares, securities, monies or property referred to in said
clauses (a), (b) and (c) of Section 3;

b.                                      deliver
and pledge to the Agent, at the Agent’s request, any and all Instruments,
endorsed and/or accompanied by such instruments of assignment and transfer in
such form and substance as the Agent may request; provided, that so long as no
Event of Default shall have occurred and be continuing, the Company may retain
for collection in the ordinary course any Instruments received by it in the
ordinary course of business and the Agent shall, promptly upon request of the
Company, make appropriate arrangements for making any other Instrument pledged
by the Company available to it for purposes of presentation, collection or
renewal (any such arrangement to be effected, to the extent deemed appropriate
by the Agent, against trust receipt or like document);

c.                                       give,
execute, deliver, file and/or record any financing statement, notice,
instrument, document, agreement or other papers that may be necessary (in the
reasonable judgment of the Agent) to create, preserve, perfect or validate any
security interest granted pursuant hereto or to enable the Agent to exercise
and enforce its rights hereunder with respect to such security interest,
including, without limitation, causing any or all of the Stock Collateral to be
transferred of record into the name of the Agent or its nominee (and the Agent
agrees that if any Stock Collateral is transferred into its name or the name of
its nominee, the Agent will thereafter promptly give to the Company copies of
any notices and 

 

 

communications
received by it with respect to the Stock Collateral), provided that notices to
account debtors in respect of any Accounts or Instruments shall be subject to
the provisions of Section 4.09 below;

d.                                      upon
the acquisition after the date hereof by the Company of any Equipment covered
by a certificate of title or ownership cause the Agent to be listed as the
lienholder on such certificate of title and within 120 days of the acquisition
thereof deliver evidence of the same to the Agent;

e.                                       keep
accurate books and records relating to the Collateral, and stamp or otherwise
mark such books and records in such manner as the Agent may reasonably require
in order to reflect the security interests granted by this Agreement;

f.                                         furnish
to the Agent from time to time (but, unless an Event of Default shall have
occurred and be continuing, no more frequently than quarterly) statements and
schedules further identifying and describing the Copyright Collateral, the Patent
Collateral and the Trademark Collateral, respectively, and such other reports
in connection with the Copyright Collateral, the Patent Collateral and the
Trademark Collateral, as the Agent may reasonably request, all in reasonable
detail;

g.                                      permit
representatives of the Agent, upon reasonable notice, at any time during normal
business hours to inspect and make abstracts from its books and records
pertaining to the Collateral, and permit representatives of the Agent to be
present at the Company’s place of business to receive copies of all
communications and remittances relating to the Collateral, and forward copies
of any notices or communications by the Company with respect to the Collateral,
all in such manner as the Agent may reasonably require; and

h.                                      upon
the occurrence and during the continuance of any Event of Default, upon request
of the Agent, promptly notify each account debtor in respect of any Accounts or
Instruments that such Collateral has been assigned to the Agent hereunder, and
that any payments due or to become due in respect of such Collateral are to be
made directly to the Agent.

4.02         Other
Financing Statements and Liens. 
Except with respect to Permitted Indebtedness, Permitted Liens or as
otherwise permitted under Schedule 3.1(a) of the Purchase Agreement, without
the prior written consent of the Agent, the Company shall not file or suffer to
be on file, or authorize or permit to be filed or to be on file, in any
jurisdiction, any financing statement or like instrument with respect to the
Collateral in which the Agent is not named as the sole secured party for the
benefit of each of the Purchasers.

4.03         Preservation
of Rights.  The Agent shall not be
required to take steps necessary to preserve any rights against prior parties
to any of the Collateral.

4.04         Special Provisions Relating to Certain Collateral.

 

 

a.                                       Stock
Collateral.

(1)                                  The Company will
cause the Stock Collateral to constitute at all times 100% of the total number
of shares of each class of capital stock of each Issuer then outstanding that
is owned directly or indirectly by the Company.

(2)                                  So long as no Event
of Default shall have occurred and be continuing, the Company shall have the
right to exercise all voting, consensual and other powers of ownership
pertaining to the Stock Collateral for all purposes not inconsistent with the
terms of this Agreement, the Purchase Agreement, the Notes or any other
instrument or agreement referred to herein or therein, provided that the
Company agrees that it will not vote the Stock Collateral in any manner that is
inconsistent with the terms of this Agreement, the Purchase Agreement, the
Notes or any such other instrument or agreement; and the Agent shall execute
and deliver to the Company or cause to be executed and delivered to the Company
all such proxies, powers of attorney, dividend and other orders, and all such
instruments, without recourse, as the Company may reasonably request for the
purpose of enabling the Company to exercise the rights and powers which it is
entitled to exercise pursuant to this Section 4.04(a)(2).

(3)                                  Unless and until an
Event of Default has occurred and is continuing, the Company shall be entitled
to receive and retain any dividends on the Stock Collateral paid in cash out of
earned surplus.

(4)                                  If any Event of
Default shall have occurred, then so long as such Event of Default shall
continue, and whether or not the Agent exercises any available right to declare
any Secured Obligations due and payable or seeks or pursues any other relief or
remedy available to it under applicable law or under this Agreement, the
Purchase Agreement, the Notes or any other agreement relating to such Secured
Obligations, all dividends and other distributions on the Stock Collateral
shall be paid directly to the Agent and retained by it as part of the Stock
Collateral, subject to the terms of this Agreement, and, if the Agent shall so
request in writing, the Company agrees to execute and deliver to the Agent
appropriate additional dividend, distribution and other orders and documents to
that end, provided that if such Event of Default is cured, any such dividend or
distribution theretofore paid to the Agent shall, upon request of the Company
(except to the extent theretofore applied to the Secured Obligations) be
returned by the Agent to the Company.

 

 

b.                                      Intellectual
Property.

(1)                                  For the purpose of
enabling the Agent to exercise rights and remedies under Section 4.05 hereof at
such time as the Agent shall be lawfully entitled to exercise such rights and
remedies, and for no other purpose, the Company hereby grants to the Agent, to
the extent assignable, an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to the Company) to use,
assign, license or sublicense any of the Intellectual Property (other than the
Trademark Collateral or goodwill associated therewith) now owned or hereafter
acquired by the Company, wherever the same may be located, including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer programs used for the compilation or
printout thereof.

(2)                                  Notwithstanding
anything contained herein to the contrary, so long as no Event of Default shall
have occurred and be continuing, the Company will be permitted to exploit, use,
enjoy, protect, license, sublicense, assign, sell, dispose of or take other
actions with respect to the Intellectual Property in the ordinary course of the
business of the Company.  In furtherance
of the foregoing, unless an Event of Default shall have occurred and is
continuing, the Agent shall from time to time, upon the request of the Company,
execute and deliver any instruments, certificates or other documents, in the
form so requested, which the Company shall have certified are appropriate (in
its judgment) to allow it to take any action permitted above (including
relinquishment of the license provided pursuant to clause (1) immediately above
as to any specific Intellectual Property). 
Further, upon the payment in full of all of the Secured Obligations or
earlier expiration of this Agreement or release of the Collateral, the Agent
shall grant back to the Company the license granted pursuant to clause (1)
immediately above.  The exercise of
rights and remedies under Section 4.05 hereof by the Agent shall not terminate
the rights of the holders of any licenses or sublicenses theretofore granted by
the Company in accordance with the first sentence of this clause (2).

4.05         Events of Default, etc.  During the period during which an Event of Default
shall have occurred and be continuing:

a.                                       the Company
shall, at the request of the Agent, assemble the Collateral owned by it at such
place or places, reasonably convenient to both the Agent and the Company,
designated in its request;

 

 

b.                                      the Agent may
make any reasonable compromise or settlement deemed desirable with respect to
any of the Collateral and may extend the time of payment, arrange for payment
in installments, or otherwise modify the terms of, any of the Collateral;

c.                                       the Agent shall
have all of the rights and remedies with respect to the Collateral of a secured
party under the Uniform Commercial Code (whether or not said Code is in effect
in the jurisdiction where the rights and remedies are asserted) and such
additional rights and remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted, including, without limitation, the right, to the maximum extent
permitted by law, to exercise all voting, consensual and other powers of
ownership pertaining to the Collateral as if the Agent were the sole and
absolute owner thereof (and the Company agrees to take all such action as may
be appropriate to give effect to such right);

d.                                      the Agent in its
discretion may, in its name or in the name of the Company or otherwise, demand,
sue for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral, but shall be
under no obligation to do so; and

e.                                       the Agent may,
upon 10 Business Days, prior written notice to the Company of the time and
place, with respect to the Collateral or any part thereof which shall then be
or shall thereafter come into the possession, custody or control of the Agent,
or any of its respective agents, sell, lease, assign or otherwise dispose of
all or any of such Collateral, at such place or places as the Agent deems best,
and for cash or on credit or for future delivery (without thereby assuming any
credit risk), at public or private sale, without demand of performance or
notice of intention to effect any such disposition or of time or place thereof
(except such notice as is required above or by applicable statute and cannot be
waived) and the Agent or anyone else may be the purchaser, lessee, assignee or
recipient of any or all of the Collateral so disposed of at any public sale
(or, to the extent permitted by law, at any private sale), and thereafter hold
the same absolutely, free from any claim or right of whatsoever kind, including
any right or equity of redemption (statutory or otherwise), of the Company, any
such demand, notice or right and equity being hereby expressly waived and
released.  In the event of any sale,
assignment, or other disposition of any of the Trademark Collateral, the
goodwill of the Business connected with and symbolized by the Trademark
Collateral subject to such disposition shall be included, and the Company shall
supply to the Agent or its designee, for inclusion in such sale, assignment or
other disposition, all Intellectual Property relating to such Trademark
Collateral.  The Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time 

 

 

by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned.

The proceeds of each collection, sale or other
disposition under this Section 4.05, including by virtue of the exercise of the
license granted to the Agent in Section 4.04(b)(1) hereof, shall be applied in
accordance with Section 4.09 hereof.

The Company recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, the Agent may be compelled, with respect to
any sale of all or any part of the Collateral, to limit purchasers to those who
will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to the distribution or resale thereof.  The Company acknowledges that any such
private sales to an unrelated third party in an arm’s length transaction may be
at prices and on terms less favorable to the Agent than those obtainable
through a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Agent shall have no
obligation to engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the respective Issuer
thereof to register it for public sale.

4.06         Deficiency.  If
the proceeds of sale, collection or other realization of or upon the Collateral
pursuant to Section 4.05 hereof are insufficient to cover the costs and
expenses of such realization and the payment in full of the Secured
Obligations, the Company shall remain liable for any deficiency.

4.07         Removals, etc. 
Without at least 30 days’ prior written notice to the Agent or unless
otherwise required by law, the Company shall not (i) maintain any of its books
or records with respect to the Collateral at any office or maintain its chief
executive office or its principal place of business at any place, or permit any
Inventory or Equipment to be located anywhere other than at the address
indicated for the Company in Section 7.4 of the Purchase Agreement or at one of
the locations identified in Annex 4 hereto or in transit from one of
such locations to another or (ii) change its corporate name, or the name under
which it does business, from the name shown on the signature page hereto.

4.08         Private Sale. 
The Agent shall incur no liability as a result of the sale of the
Collateral, or any part thereof, at any private sale to an unrelated third party
in an arm’s length transaction pursuant to Section 4.05 hereof conducted in a
commercially reasonable manner.  The
Company hereby waives any claims against the Agent arising by reason of the
fact that the price at which the Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale or was less than the aggregate amount of the Secured Obligations, even if
the Agent accepts the first offer received and does not offer the Collateral to
more than one offeree.

4.09         Application of Proceeds.  Except as otherwise herein expressly
provided, the proceeds of any collection, sale or other realization of all or
any part of the Collateral pursuant hereto, and any other cash at the time held
by the Agent under this Section 4, shall be applied by the Agent:

 

 

First, to the payment of the costs
and expenses of such collection, sale or other realization, including
reasonable out-of-pocket costs and expenses of the Agent and the fees and
expenses of its agents and counsel, and all expenses, and advances made or incurred
by the Agent in connection therewith;

Next, to the payment in full of the
Secured Obligations in each case equally and ratably in accordance with the
respective amounts thereof then due and owing to each of the Purchasers; and

Finally, to the payment to the
Company, or its successors or assigns, or as a court of competent jurisdiction
may direct, of any surplus then remaining.

As used in this Section 4, “proceeds” of
Collateral shall mean cash, securities and other property realized in respect
of, and distributions in kind of, Collateral, including any thereof received
under any reorganization, liquidation or adjustment of debt of the Company or
any issuer of or obligor on any of the Collateral.

4.10         Attorney-in-Fact. 
Without limiting any rights or powers granted by this Agreement to the
Agent while no Event of Default has occurred and is continuing, upon the
occurrence and during the continuance of any Event of Default, the Agent is
hereby appointed the attorney-in-fact of the Company for the purpose of
carrying out the provisions of this Section 4 and taking any action and
executing any instruments which the Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. 
Without limiting the generality of the foregoing, so long as the
Purchasers shall be entitled under this Section 4 to make collections in
respect of the Collateral, the Agent shall have the right and power to receive,
endorse and collect all checks made payable to the order of the Company
representing any dividend, payment, or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same.

4.11         Perfection. 
(i) Prior to or concurrently with the execution and delivery of this
Agreement, the Company shall file such financing statements and other documents
in such offices as the Agent may request to perfect the security interests
granted by Section 3 of this Agreement, and (ii) at any time requested by the
Agent, the Company shall deliver to the Agent all share certificates of capital
stock directly or indirectly owned by the Company in the entities identified in
Annex 1 hereto, accompanied by undated stock powers duly executed in
blank.

4.12         Termination. 
When all Secured Obligations shall have been paid in full under the
Purchase Agreement, this Agreement shall terminate, and the Agent shall
forthwith cause to be assigned, transferred and delivered, against receipt but
without any recourse, warranty or representation whatsoever, any remaining
Collateral and money received in respect thereof, to or on the order of the
Company and to be released and cancelled all licenses and rights referred to in
Section 4.04(b)(1) hereof.  The Agent
shall also execute and deliver to the Company upon such termination such
Uniform Commercial Code termination statements, certificates for terminating
the Liens on the Motor Vehicles and such other documentation as shall be
reasonably requested by the Company to effect the termination and release of
the Liens on the Collateral.

 

 

4.13         Expenses.  The
Company agrees to pay to the Agent all out-of-pocket expenses (including
reasonable expenses for legal services of every kind) of, or incident to, the
enforcement of any of the provisions of this Section 4, or performance by the
Agent of any obligations of the Company in respect of the Collateral which the
Company has failed or refused to perform upon reasonable notice, or any actual
or attempted sale, or any exchange, enforcement, collection, compromise or
settlement in respect of any of the Collateral, and for the care of the
Collateral and defending or asserting rights and claims of the Agent in respect
thereof, by litigation or otherwise, including expenses of insurance, and all such
expenses shall be Secured Obligations to the Agent secured under Section 3
hereof.

4.14         Further Assurances. 
The Company agrees that, from time to time upon the written request of
the Agent, the Company will execute and deliver such further documents and do
such other acts and things as the Agent may reasonably request in order fully
to effect the purposes of this Agreement.

4.15         Indemnity. 
Each of the Purchasers hereby jointly and severally covenants and agrees
to reimburse, indemnify and hold the Agent harmless from and against any and
all claims, actions, judgments, damages, losses, liabilities, costs, transfer
or other taxes, and expenses (including, without limitation, reasonable
attorneys’ fees and expenses) incurred or suffered without any bad faith or
willful misconduct by the Agent, arising out of or incident to this Agreement
or the administration of the Agent’s duties hereunder, or resulting from its
actions or inactions as Agent.

Section 5.               Miscellaneous.

5.01         No Waiver.  No
failure on the part of the Agent or any of its agents to exercise, and no
course of dealing with respect to, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise by the Agent or any of its agents of any right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy.  The
remedies herein are cumulative and are not exclusive of any remedies provided
by law.

5.02         Governing Law. 
This Agreement shall be governed by, and construed in accordance with,
the law of the State of New York, including Sections 5-1401 and 5-1402 of the
New York General Obligations Law.

5.03         Notices.  All
notices, requests, consents and demands hereunder shall be in writing and
facsimile (facsimile confirmation required) or delivered to the intended
recipient at its address or telex number specified pursuant to Section 7.4 of
the Purchase Agreement and shall be deemed to have been given at the times specified
in said Section 7.4.

5.04         Waivers, etc. 
The terms of this Agreement may be waived, altered or amended only by an
instrument in writing duly executed by the Company and the Agent.  Any such amendment or waiver shall be binding
upon each of the Purchasers and the Company.

5.05         Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the Company
and each of the 

 

 

Purchasers (provided, however, that the
Company shall not assign or transfer its rights hereunder without the prior
written consent of the Agent).

5.06         Counterparts. 
This Agreement may be executed in any number of counterparts, all of
which together shall constitute one and the same instrument and any of the
parties hereto may execute this Agreement by signing any such counterpart.

5.07         Agent.  Each
Purchaser agrees to appoint Iroquois Master Fund Ltd. as its Agent for purposes
of this Agreement.  The Agent may employ
agents and attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.

5.08         Severability. 
If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction
and shall be liberally construed in favor of the Purchasers in order to carry
out the intentions of the parties hereto as nearly as may be possible and (ii)
the invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other
jurisdiction.

 

 

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

	
  COMPANY:

  	
  SATCON TECHNOLOGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ David B. Eisenhaure

  
	
   

  	
  Name: David B. Eisenhaure

  
	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ David E.
  O’Neil

  
	
   

  	
  Name: David E. O’Neil

  
	
   

  	
  Title: Vice President of Finance and Treasurer

  
	
   

  	
   

  	
   

  
	
  AGENT:

  	
  IROQUOIS MASTER FUND LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Joshua Silverman

  
	
   

  	
  Name: Joshua Silverman

  
	
   

  	
  Title: Authorized Signatory

  

 

 

 

PURCHASERS:

	
  IROQUOIS MASTER FUND LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Joshua Silverman

  	
   

  
	
  Name: Joshua Silverman

  	
   

  
	
  Title: Authorized Signatory

  	
   

  

 

 

 

OTHER PURCHASERS:

	
  ROCKMORE INVESTMENT MASTER FUND LTD 

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Bruce Bernstein 

  	
   

  
	
  Name: Bruce Bernstein er

  	
   

  
	
  Title: Managing Memb

  	
   

  
	
   

  	
   

  	
   

  
	
  HIGHBRIDGE INTERNATIONAL LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Highbridge Capital Management, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Adam J.
  Chill 

  	
   

  
	
  Name: Adam J. Chill 

  	
   

  
	
  Title: Managing Director

  	
   

  
	
   

  	
   

  	
   

  
	
  NITE CAPITAL LP 

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Keith A. Goodman 

  	
   

  
	
  Name: Keith A. Goodman 

  	
   

  
	
  Title: Manager of the General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RHP MASTER FUND, LTD 

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  Rock Hill Investment Management, L.P. 

  	
   

  
	
  By: 

  	
  RHP General Partner, LLC 

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Wayne Bloch 

  	
   

  
	
  Name: Wayne Bloch 

  	
   

  
	
  Title: Managing Partner

  	
   

  
	
   

  	
   

  	
   

  
	
  BRISTOL INVESTMENT FUND, LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Paul Kessler 

  	
   

  
	
  Name: Paul Kessler 

  	
   

  
	
  Title: Director

  	
   

  

 

 

 

 

	
  HUDSON BAY FUND, LP

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Yoav Roth

  	
   

  
	
  Name: Yoav Roth

  	
   

  
	
  Title: Principal/ Portfolio Manager

  	
   

  
	
   

  	
   

  	
   

  
	
  HUDSON BAY OVERSEAS FUND, LTD

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Yoav Roth

  	
   

  
	
  Name: Yoav Roth

  	
   

  
	
  Title: Principal/ Portfolio Manager

  	
   

  
	
   

  	
   

  	
   

  
	
  CAPITAL VENTURES INTERNATIONAL

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  Heights Capital Management, Inc., its authorized
  agent

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Martin Kobinge

  	
   

  
	
  Name: Martin Kobinger

  	
   

  
	
  Title: Investment Manager

  	
   

  
	
   

  	
   

  	
   

  
	
  ENABLE GROWTH PARTNERS LP

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Brendan O’Neil

  	
   

  
	
  Name: Brendan O’Neil

  	
   

  
	
  Title: Principal and Portfolio Manager

  	
   

  
	
   

  	
   

  	
   

  
	
  ENABLE OPPORTUNITY PARTNERS LP

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Brendan O’Neil

  	
   

  
	
  Name: Brendan O’Neil

  	
   

  
	
  Title: Principal and Portfolio Manager

  	
   

  

 

 

 

 

	
  PIERCE
  DIVERSIFIED STRATEGY MASTER FUND LLC, ENA

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Brendan O’Neil

  	
   

  
	
  Name: Brendan O’Neil

  	
   

  
	
  Title: Principal and Portfolio Manager

  	
   

  
	
   

  	
   

  	
   

  
	
  ALPHA CAPITAL ANSTALT

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Konrad Ackermann

  	
   

  
	
  Name: Konrad Ackermann r

  	
   

  
	
  Title: Directo

  	
   

  

 

 

 

ANNEX 1

ENTITIES IN WHICH THE COMPANY IS PLEDGING ITS CAPITAL STOCK

	
  

  	
   

  	
  Approximate

  	
   

  
	
  Entity

  	
   

  	
  Percentage Interest

  	
   

  
	
  SatCon Power
  Systems US

  	
   

  	
  100

  	
  %

  
	
  SatCon Power Systems, LTD

  	
   

  	
  100

  	
  %

  
	
  SatCon Electronics

  	
   

  	
  100

  	
  %

  
	
  SatCon Applied Technology

  	
   

  	
  100

  	
  %

  

 

 

 

ANNEX 2

EXCLUDED COLLATERAL

None

 

 

ANNEX 3

EXCEPTIONS FOR COPYRIGHTS, PATENTS AND TRADEMARKS

None

 

 

ANNEX 4

LIST OF LOCATIONS

SatCon Technology
Corporation

27 DryDock Avenue

Boston,
MA  02110

SatCon Applied Technology
Corporation

27 DryDock Avenue

Boston,
MA  02110

SatCon Applied Technology
Corporation

1745A West Nursery Road

Linthicum,
MD 21090

SatCon Electronics
Corporation

165 Cedar Hill Street

Marlborough,
MA 01753

SatCon Power Systems

7 Coppage Drive

Worcester,
MA 01603

SatCon Power Systems Ltd,
Canada

835 Harrington Court

Burlington, Ontario  L7N 3P3

Canada

 

 

ANNEX 5

EXISTING INDEBTEDNESS

Indebtedness.  Set forth below are all of the Company’s
liabilities as of April 1, 2006:

	
  Current liabilities:

  	
   

  	
  April 1, 2006

  	
   

  
	
  Line of credit

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Accounts payable

  	
   

  	
  3,251,198

  	
   

  
	
  Accrued payroll
  and payroll related expenses

  	
   

  	
  1,622,344

  	
   

  
	
  Deferred revenue

  	
   

  	
  2,431,142

  	
   

  
	
  Other accrued
  expenses

  	
   

  	
  1,802,711

  	
   

  
	
  Intercompany
  transactions.

  	
   

  	
  —

  	
   

  
	
  Accrued
  restructuring costs.

  	
   

  	
  —

  	
   

  
	
  Short term
  portion of long term debt

  	
   

  	
  158,269

  	
   

  
	
  Total current liabilities.

  	
   

  	
  $

  	
  11,265,664

  	
   

  
	
  Long
  term liabilities:

  	
   

  	
   

  	
   

  
	
  Long term debt

  	
   

  	
  76,416

  	
   

  
	
  Other long-term
  liabilities

  	
   

  	
  333,004

  	
   

  
	
  Subordinated
  convertible debentures

  	
   

  	
  —

  	
   

  
	
  Total long term
  liabilities

  	
   

  	
  $

  	
  409,420

  	
   

  

 

In addition the following
indebtedness exists as of April 1, 2006:

We
lease equipment and office space under non-cancelable capital and operating
leases. Future minimum rental payments, as of April 1, 2006, under the capital
and operating leases with non-cancelable terms are as follows:

	
  Fiscal Years ended September 30,

  	
   

  	
  Capital Leases

  	
   

  	
  Operating Leases

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2006

  	
   

  	
  $

  	
  83,794

  	
   

  	
  $

  	
  660,360

  	
   

  
	
  2007

  	
   

  	
  143,590

  	
   

  	
  1,337,019

  	
   

  
	
  2008

  	
   

  	
  —

  	
   

  	
  1,288,074

  	
   

  
	
  2009

  	
   

  	
  —

  	
   

  	
  1,250,992

  	
   

  
	
  2010

  	
   

  	
  —

  	
   

  	
  495,796

  	
   

  
	
  Thereafter

  	
   

  	
  —

  	
   

  	
  227,726

  	
   

  
	
  Total

  	
   

  	
  $

  	
  227,384

  	
   

  	
  $

  	
  5,259,967

  	
   

  

 

In addition, from time to
time, the Company has trade accounts payable balances that are aged over 60
days. Currently such trade account payable balances total approximately
$211,000 at July 12, 2006.

All amounts outstanding
under the Silicon Valley Bank Credit Agreement will be paid down prior to
closing and the agreement will be terminated.

 

 

ANNEX 6

EXISTING LIENS

None (subsequent to pay
down of amounts outstanding and termination of Silicon Valley Bank Agreement)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]