Document:

Exhibit 10.8

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”)
is made and entered into as of June 16, 2010, by and between SatCon
Technology Corporation, a Delaware corporation (the “Company”) and Compass Horizon Funding Company, LLC, a Delaware
limited liability company (“Horizon”). 
Unless otherwise provided in this Agreement, capitalized terms used
herein have the meanings given to them in Section 1.1 hereof.

 

WHEREAS,
in connection with the transactions contemplated by the Venture Loan and
Security Agreement, dated as of June 16, 2010, among the Company, Horizon,
and other signatories thereto, the Company issued to Horizon a Warrant to
Purchase Common Stock of the Company, of even date herewith (the “Warrant”); and

 

WHEREAS,
under the terms of the Warrant, the Company has agreed to grant registration
rights to the holder of the Warrant, to be evidenced by this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1         Definitions.  As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

 

“Affiliate”
means any Person who is an “affiliate” as defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.

 

“Agreement”
means this Agreement as the same may be amended, supplemented or modified in
accordance with the terms hereof.

 

“Board
of Directors” means the Board of Directors of the Company.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in the State of New York are authorized or required by law or
executive order to close.

 

“Common
Stock” means the common stock, par value $0.01 per share, of the Company and
any other capital stock of the Company into which such stock is reclassified or
reconstituted.

 

 

“Common
Stock Equivalents” means any security or obligation which is by its terms,
directly or indirectly, convertible into or exchangeable or exercisable into or
for shares of Common Stock, including, without limitation, the Warrant and any
option, warrant or other subscription or purchase right with respect to Common
Stock.

 

“Designated
Holder” means Horizon and any permitted transferee of Horizon to whom
Registrable Securities have been transferred in accordance with the terms of
the Warrant, other than a transferee to whom Registrable Securities have been
transferred pursuant to a Registration Statement under the Securities Act or
Rule 144 under the Securities Act (or any successor rule thereto),
but in each case solely for so long as Horizon or transferee continues to be a
holder of Registrable Securities.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC thereunder.

 

“Horizon”
has the meaning set forth in the preamble to this Agreement and shall also
include any permitted transferee thereof.

 

“Knowledge”  means the knowledge of the directors,
officers and other managers of the Company or any material subsidiary after due
inquiry.

 

“NASD”
means the National Association of Securities Dealers, Inc.

 

“Person”
means any individual, firm, corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint venture,
joint stock company, limited liability company, government (or an agency or
political subdivision thereof) or other entity of any kind, and shall include
any successor (by merger or otherwise) of such entity.

 

“Registrable
Securities” means (a) shares of Common Stock issued or issuable upon
exercise of the Warrant, and (b) any Common Stock issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which
is issued as) a dividend or other distribution with respect to, or in exchange
for or in replacement of the securities referenced in clauses (a).

 

“Registration
Statement” means a registration statement filed pursuant to the Securities Act.

 

“SEC”
means the United States Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

 

2

 

ARTICLE II

 

GENERAL; SECURITIES SUBJECT
TO THIS AGREEMENT

 

2.1         Grant of Rights.  The Company hereby grants registration rights
to the Designated Holder upon the terms and conditions set forth in this
Agreement.

 

2.2         Registrable Securities.  For the purposes of this Agreement,
securities of the Company listed in the definition of “Registrable Securities”
in Section 1.1 hereof will cease to be Registrable Securities, when
(i) a Registration Statement covering such Registrable Securities has been
declared effective under the Securities Act by the SEC and such Registrable
Securities have been disposed of pursuant to such effective Registration
Statement, (ii) the entire amount of the Registrable Securities owned by a
Designated Holder may be sold in a single sale, in the opinion of counsel
satisfactory to the Company and such Designated Holder, each in their
reasonable judgment (it being agreed that Greenberg Traurig, LLP shall be
satisfactory counsel), without any limitation as to volume pursuant to
Rule 144(k) (or any successor provision then in effect) under the
Securities Act or (iii) such Registrable Securities have been sold
pursuant to Rule 144 under the Securities Act.

 

2.3         Holders of Registrable
Securities.  A Person is
deemed to be a holder of Registrable Securities whenever such Person owns of
record Registrable Securities.  If the
Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company may
act upon the basis of the instructions, notice or election received from the
registered owner of such Registrable Securities.

 

ARTICLE III

 

REGISTRATION

 

3.1         Registration on Form S-3;
Request for Incidental Registration.

 

(a)          To the extent legally
permissible, promptly after the Date of Grant (as defined in the Warrant),  the Company shall file with the SEC a shelf
registration pursuant to Rule 415 of the Securities Act (the “Shelf
Registration Statement”) on Form S-3 (or any successor form thereto),
or if Form S-3 may not be used by the Company, on Form S-1 (or any
successor form thereto), as selected by the Company, with respect to the
resale, from time to time, covering all of the Registrable Securities held by
the Designated Holder.  The disposition
of Registrable Securities from the Shelf Registration Statement may occur in
one or more underwritten offerings, bloc transactions, broker transactions, at-market
transactions or in such other manner or manners as may be specified by the
Designated Holder.  The Company shall use
its reasonable best efforts to cause the Shelf Registration Statement to become
effective as soon as practicable after the filing of the Shelf Registration
Statement and shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective under the Securities Act, subject
to the provisions of Section 4.4.

 

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(b)         At any time after the date
hereof, if the Company proposes to file a Registration Statement under the
Securities Act with respect to an offering for the account of any stockholder
of the Company other than the Designated Holder (“Other Stockholders”),
then the Company shall give written notice of such proposed filing to the
Designated Holder at least twenty (20) days before the anticipated filing date,
and such notice shall describe the proposed registration and distribution and
offer the Designated Holder the opportunity to register the number of
Registrable Securities as the Designated Holder may request (an “Incidental Registration”).  The Company shall use its reasonable best
efforts (within twenty (20) days of the notice by the Designated Holder
provided for below in this sentence) to permit the Designated Holder who has
requested in writing to the Company within ten (10) Business Days of the
giving of the notice by the Company to participate in the Incidental
Registration to include its, his or her Registrable Securities in such offering
on the same terms and conditions as the securities of the Other Stockholders
included therein.  If the SEC or the
staff of the SEC has indicated through comment letters or otherwise that some
or all of the securities to be registered on the Incidental Registration are
not eligible to be resold under Rule 415 of the Securities Act or
otherwise, and the Company is required to reduce the number of securities being
sold thereunder, then (i) in the case of a registration under Section 3.1(a),
then the Company shall include in such registration the Registrable Securities
to be offered for the account of the Designated Holder pari passu with the
securities to be offered for the account of any Other Stockholders; provided,
however, that no such reduction shall reduce the Registrable Securities held by
the Designated Holder included in the registration below ten percent (10%) of
the total amount of securities included in such registration; and (ii) in
the case of a registration under Section 3.1(b), then the Company shall
include in such Incidental Registration first, all of the securities to be
offered for the account of such Other Stockholders who have priority of
registration over the Designated Holder, including those stockholders party to
the Registration Rights Agreement dated as of November 8, 2007, as amended
to date, and second, the Registrable Securities to be offered for the account
of the Designated Holder.

 

3.2         Right to Terminate
Registration.  The Company
shall have the right to terminate or withdraw any registration initiated by it
under Article III gprior to the effectiveness of such registration whether
or not the Designated Holder has elected to include Registrable Securities in
such registration.  A Designated Holder
shall have the right, by written notice to the Company, to exclude all or any
portion of the Designated Holder’s Registrable Securities from any Registration
Statement effected pursuant to this Article III at any time prior to its
effectiveness.

 

3.3         Expenses.  The Company shall bear all Registration
Expenses in connection with any Incidental Registration pursuant to this Article III,
whether or not such Incidental Registration becomes effective.

 

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ARTICLE IV

 

REGISTRATION PROCEDURES

 

4.1         Obligations of the Company.  Whenever registration of Registrable
Securities has been requested pursuant to Article III of this Agreement,
the Company shall use its reasonable best efforts to effect the registration of
such Registrable Securities in accordance with the intended method of
distribution thereof, and in connection with any such request, the Company
shall, as expeditiously as possible:

 

(a)          before filing a Registration
Statement or prospectus or any amendments or supplements thereto relating to
Registrable Securities, the Company shall provide to counsel selected by the
Designated Holder (“Holder’s Counsel”)
with an adequate and appropriate opportunity to review and comment on such
Registration Statement and each prospectus included therein (and each amendment
or supplement thereto) to be filed with the SEC, subject to such documents
being under the Company’s control, provided, that
in no event shall such review period be required to be more than five (5) days,
and the Company shall notify the Holder’s Counsel and each seller of
Registrable Securities of any stop order issued or threatened by the SEC
relating to Registrable Securities and use all reasonable efforts to prevent
the entry of such stop order or to remove it if entered;

 

(b)         prepare and file with the
SEC such amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be reasonably necessary to keep
such Registration Statement effective for the lesser of (i) 180 days
and (ii) such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold and shall
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement;

 

(c)          furnish to each seller of
Registrable Securities, prior to filing a Registration Statement relating to
Registrable Securities, at least one copy of such Registration Statement as is
proposed to be filed, and thereafter such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such Registration Statement
(including each preliminary prospectus) and any prospectus filed under
Rule 424 under the Securities Act as each such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;

 

(d)         register or qualify such
Registrable Securities under such other securities or “blue sky” laws of such
jurisdictions as any seller of Registrable Securities may reasonably request,
and continue such registration or qualification in effect in such jurisdiction
for as long as permissible pursuant to the laws of such jurisdiction, or for as
long as any such seller reasonably requests or until all of such Registrable
Securities are sold, whichever is shortest, and do any and all other acts and
things which may be reasonably necessary or advisable to

 

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enable any such seller to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such seller; provided, however, that the Company shall not be
required to (A) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section 4.1(d),
(B) subject itself to taxation in any such jurisdiction or
(C) consent to general service of process in any such jurisdiction;

 

(e)          notify each seller of
Registrable Securities: (i) when a prospectus, any prospectus supplement,
a Registration Statement or a post-effective amendment to a Registration
Statement (but only if relating to Registrable Securities) has been filed with
the SEC, and, with respect to a Registration Statement or any post-effective
amendment (but only if relating to Registrable Securities), when the same has
become effective; (ii) of any request by the SEC or any other federal or
state governmental authority for amendments or supplements to a Registration
Statement or related prospectus or for additional information (but only if
relating to Registrable Securities); (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement relating to Registrable
Securities or the initiation or threatening of any proceedings for that
purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceedings for such purpose; (v) of the
existence of any fact or happening of any event (including the passage of time)
of which the Company has Knowledge which makes any statement of a material fact
in such Registration Statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue or which
would require the making of any changes in the Registration Statement or
prospectus in order that, in the case of the Registration Statement, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of such prospectus, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; and
(vi) determination by counsel of the Company that a post-effective
amendment to a Registration Statement relating to Registrable Securities is
advisable;

 

(f)            upon the occurrence of any
event contemplated by clause (v) of Section 4.1(e), as promptly
as practicable, prepare a supplement or amendment to such Registration
Statement or related prospectus and furnish to each seller of Registrable
Securities a reasonable number of copies of such supplement to or an amendment
of such Registration Statement or prospectus as may be necessary so that, after
delivery to the purchasers of such Registrable Securities, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case
of such prospectus, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

 

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(g)         furnish, at the request of
any seller of Registrable Securities on the date such securities are delivered
to the underwriters for sale pursuant to such registration or, if such
securities are not being sold through underwriters, on the date the
Registration Statement with respect to such securities becomes effective and
dated as of such date, an opinion of counsel representing the Company for the
purposes of such registration, addressed to the underwriters, if any, and to
the seller making such request, covering such legal matters with respect to the
registration in respect of which such opinion is being given as the
underwriters, if any, and such seller may reasonably request and are
customarily included in such opinions;

 

(h)         if such sale is pursuant to
an underwritten offering, (A) obtain “comfort” letters dated the effective
date of the Registration Statement and the date of the closing under the
underwriting agreement from the Company’s independent public accountants in
customary form and covering such matters of the type customarily covered by “comfort”
letters as holder’s Counsel or the managing underwriter reasonably requests; (B) enter
into a customary underwriting agreement or purchase agreement with the
underwriter containing representations and warranties, covenants and legal
opinion addressed to the Designated Holder and the underwriters in form,
substance and scope as would customarily made by the Company to underwriters
and the Designated Holder in similar offerings of securities; or (C) deliver
such documents and certificates as may be reasonably requested and as are
customarily delivered in similar offerings to the Designated Holder and to the
underwriter(s);

 

(i)             comply with all applicable rules and
regulations of the SEC, and make generally available to its security holders,
as soon as reasonably practicable but no later than fifteen (15) months after
the effective date of the Registration Statement, an earnings statement
covering a period of twelve (12) months beginning after the effective date of
the Registration Statement, in a manner which satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;

 

(j)             cause all such Registrable
Securities to be listed on each securities exchange on which similar securities
issued by the Company are then listed; provided,
that the applicable listing requirements are satisfied;

 

(k)          keep Holders’ Counsel
reasonably advised in writing as to the initiation and progress of any
registration under Article III hereunder;

 

(l)             provide reasonable
cooperation to each seller of Registrable Securities and each underwriter
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
NASD; provided, that the Company shall not be
required to incur material expenses or obligations in connection with its
obligations under this Section 4.1(l); and

 

(m)       take all other steps
reasonably necessary to effect the registration of the Registrable Securities
contemplated hereby.

 

7

 

4.2         Seller Information.  The Company may require each seller of
Registrable Securities as to which any registration is being effected to
furnish, and such seller shall furnish, to the Company such information
regarding the distribution of such securities as the Company may from time to
time reasonably request in writing.  The
furnishing of such information shall be a condition to the inclusion of the
seller’s shares in such registration.

 

4.3         Registration Expenses.  The Company shall pay all expenses arising
from or incident to its performance of, or compliance with, this Agreement,
including, without limitation, (i) SEC, stock exchange and NASD
registration and filing fees, (ii) all fees and expenses incurred in
complying with securities or “blue sky” laws, (iii) all printing,
messenger and delivery expenses, and (iv) the fees, charges and expenses
of counsel to the Company and of its independent public accountants and any
other accounting fees, charges and expenses incurred by the Company (including,
without limitation, any expenses arising from any “cold comfort” letters or any
special audits incident to or required by any registration or qualification),
regardless of whether such Registration Statement is declared effective.  All of the expenses described in the
preceding sentence of this Section 4.3 are referred to herein as “Registration Expenses.”  The Designated Holder of Registrable
Securities sold pursuant to a Registration Statement shall bear the expense of
any legal fees or broker’s commission or underwriter’s discount or commission
relating to registration and sale of such Designated Holder’s Registrable
Securities.

 

4.4         Notice to Discontinue.  The Designated Holder agrees that, upon
receipt of any notice from the Company of the happening of any event of the
kind described in clause (v) of Section 4.1(e) or Section 4.5
hereof, the Designated Holder shall forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Designated Holder’s receipt of the copies of
the supplemented or amended prospectus contemplated by Section 4.1(f) and,
if so directed by the Company, the Designated Holder shall deliver to the
Company all copies, other than permanent file copies then in the Designated
Holder’s possession, of the prospectus covering such Registrable Securities
which is current at the time of receipt of such notice.  If the Company shall give any such notice,
the Company shall extend the period during which such Registration Statement
shall be maintained effective pursuant to this Agreement (including, without
limitation, the period referred to in Section 4.1(b)) by the number of
days during the period from and including the date of the giving of such notice
pursuant to clause (v) of Section 4.1(e) to and including
the date when sellers of such Registrable Securities under such Registration
Statement shall have received the copies of the supplemented or amended
prospectus contemplated by, and meeting the requirements of,
Section 4.1(f).

 

4.5         Suspension of Sales.  Notwithstanding anything in this Agreement to
the contrary, so long as the Registration Statement is on Form S-1 or on
any other form that does not allow for forward incorporation by reference of
reports and other materials filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act, the Company may suspend sales under such
Registration Statement as follows:  (i) for
the period commencing at the time that the Company disseminates a press release
announcing its preliminary financial results for any fiscal period and ending
on the third Business Day after the earlier of (A) the date that the
related report on Form 

 

8

 

10-K or 10-Q, as applicable, under the Exchange Act
is filed with the SEC and (B) the date on which such report is required to
be filed under the Exchange Act (giving effect to Rule 12b-25 promulgated
thereunder); (ii) for the period commencing at the time that the Company
disseminates a press release announcing a material development that would make
a statement of a material fact in such Registration Statement untrue or
misleading and ending on the third Business Day after the earlier of (A) the
date that the related report on Form 8-K is filed with the SEC and (B) the
date on which such report is required to be filed under the Exchange Act
(giving effect to Rule 12b-25 promulgated thereunder), and (iii) to
the extent necessary to allow any post-effective amendment to the Registration
Statement or supplement to the prospectus to be prepared and, if necessary,
filed with the SEC and, in the case of a post-effective amendment, declared
effective.  In addition, the Company may
suspend sales under any Registration Statement for a period during which the
Company, in the good faith opinion of the Board of Directors, determines that
the disclosure of material, non-public information concerning the Company or
any of its subsidiaries would be materially detrimental to the Company; provided, that the Company shall promptly notify the
Designated Holders in writing of (I) the existence of such material,
non-public information (provided that in each notice the Company will not
disclose the content of such material, non-public information to the Designated
Holders), (II) the date on which such suspension will begin, and (III) the
date on which such suspension ends.  The
Company will use its reasonable best efforts to minimize periods during which
the Registration Statement is not effective.

 

ARTICLE V

 

INDEMNIFICATION;
CONTRIBUTION

 

5.1         Indemnification by the
Company.  The Company agrees to
indemnify and hold harmless the Designated Holder, its general or limited
partners, members, directors, officers, Affiliates and each Person who controls
(within the meaning of Section 15 of the Securities Act) any of the
foregoing from and against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) (each, a “Liability” and collectively, “Liabilities”), (i) arising
out of or based upon any untrue, or allegedly untrue, statement of a material
fact contained in any Registration Statement, prospectus or preliminary, final
or summary prospectus or notification or offering circular (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or (ii) arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which such statements were made, except insofar as such
Liability arises out of or is based upon any untrue statement or omission
contained in such Registration Statement, preliminary prospectus or final
prospectus in reliance and in conformity with information concerning the
Designated Holder furnished in writing to the Company by the Designated Holder
specifically for use therein or is due to the grossly negligent wrongful action
or wrongful inaction of the Designated Holder, to deliver or to cause to be
delivered the prospectus, including a corrected prospectus, furnished by the
Company to the Designated Holder (or made available by the Company if the
Designated Holder is notified of its availability in writing in a timely
manner); 

 

9

 

provided, however, that the foregoing indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
indemnified Person from whom the Person asserting such losses, claims, damages,
liabilities, expenses and judgments purchased securities if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the prospectus and a copy
of the prospectus shall not have been furnished to such Person in a timely
manner due to the wrongful action or wrongful inaction of such indemnified
Person, whether as a result of negligence or otherwise.  The Company shall also provide customary
indemnities to any underwriters of the Registrable Securities, their officers,
directors and employees and each Person who controls such underwriters (within
the meaning of Section 15 of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Designated Holder of
Registrable Securities.

 

5.2         Indemnification by Designated
Holders.  In connection with any
Registration Statement in which the Designated Holder is participating pursuant
to Article III hereof, the Designated Holder shall promptly furnish to the
Company in writing such information with respect to the Designated Holder as
the Company may reasonably request or as may be required by law for use in
connection with any such Registration Statement or prospectus and all
information required to be disclosed in order to make the information
previously furnished to the Company by the Designated Holder not materially
misleading or necessary to cause such Registration Statement or prospectus not
to omit a material fact with respect to the Designated Holder necessary in
order to make the statements therein not misleading.  The Designated Holder agrees to indemnify and
hold harmless the Company, its directors, officers, Affiliates, any underwriter
retained by the Company and each Person who controls the Company or such
underwriter (within the meaning of Section 15 of the Securities Act) to
the same extent as the foregoing indemnity from the Company to the Designated
Holder, but only if such untrue statement or omission was made in reliance upon
and in conformity with information with respect to the Designated Holder
furnished in writing to the Company by such Designated Holder specifically for
use in such Registration Statement or preliminary, final or summary prospectus
or amendment or supplement, or a document incorporated by reference into any of
the foregoing or, due to the grossly negligent wrongful action or wrongful
inaction of the Designated Holder, to deliver or to cause to be delivered the
prospectus, including a corrected prospectus, furnished by the Company to the
Designated Holder (or made available by the Company if the Designated Holder is
notified of its availability in writing in a timely manner); provided, however,
that the total amount to be indemnified by the Designated Holder pursuant to
this Section 5.2 shall be limited to the net proceeds (after deducting the
underwriters’ discounts and commissions) received by the Designated Holder in
the offering to which the Registration Statement or prospectus relates.

 

5.3         Conduct of Indemnification
Proceedings.  Any Person
entitled to indemnification hereunder (the “Indemnified Party”) agrees to give prompt written notice to
the indemnifying party (the “Indemnifying
Party”) after the receipt by the Indemnified Party of any written
notice of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which the Indemnified Party intends to claim
indemnification or contribution 

 

10

 

pursuant to this Agreement; provided, however,
that the failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of any Liability that it may have to the Indemnified Party
hereunder (except to the extent that the Indemnifying Party is materially
prejudiced or otherwise forfeits substantive rights or defenses by reason of
such failure).  If notice of commencement
of any such action is given to the Indemnifying Party as above provided, the
Indemnifying Party shall be entitled to participate in and, to the extent it
may wish, jointly with any other Indemnifying Party similarly notified, to
assume the defense of such action at its own expense, with counsel chosen by it
and reasonably satisfactory to such Indemnified Party.  The Indemnified Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be paid by the
Indemnified Party unless (i) the Indemnifying Party agrees to pay the
same, (ii) the Indemnifying Party fails to assume the defense of such
action with counsel reasonably satisfactory to the Indemnified Party or
(iii) the named parties to any such action (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party and such
parties have been advised by such counsel that either (x) representation
of such Indemnified Party and the Indemnifying Party by the same counsel would
be inappropriate under applicable standards of professional conduct or
(y) there may be one or more legal defenses available to the Indemnified
Party which are different from or additional to those available to the
Indemnifying Party, in any of such cases, the Indemnifying Party shall not have
the right to assume the defense of such action on behalf of such Indemnified
Party, it being understood, however, that the Indemnifying Party shall not be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all Indemnified Parties.  No Indemnifying Party shall be liable for any
settlement entered into without its written consent, which consent shall not be
unreasonably withheld.  No Indemnifying
Party shall, without the consent of such Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which such
Indemnified Party is a party and indemnity has been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability for claims that are the subject
matter of such proceeding.

 

5.4         Contribution.

 

(a)          If the indemnification
provided for in this Article V from the Indemnifying Party is unavailable
to an Indemnified Party hereunder in respect of any Liabilities referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such Liabilities in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions which resulted in such Liabilities, as well as any
other relevant equitable considerations. 
The relative faults of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been made by, or
relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action. 
The amount paid or payable by a party as a result of the Liabilities
referred to above shall be deemed 

 

11

 

to include, subject to the limitations
set forth in Sections 5.1 and 5.2, any legal or other fees, charges or
expenses reasonably incurred by such party in connection with any investigation
or proceeding; provided, that the
total amount to be contributed by the Designated Holder shall be limited to the
net proceeds (after deducting the underwriters’ discounts and commissions)
received by the Designated Holder in the offering.  No Person involved in the sale of Registrable
Securities who is guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) in connection with such sale
shall be entitled to indemnification or contribution from any Person involved
in such sale of Registrable Securities who is not guilty of fraudulent
misrepresentation.

 

(b)         The parties hereto agree
that it would not be just and equitable if contribution pursuant to this
Section 5.4 were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations referred
to in Section 5.4(a).  No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

 

ARTICLE VI

 

COVENANTS

 

6.1         Rule 144.  The Company covenants that from and after the
date hereof it shall use its reasonable best efforts to (a) file any
reports required to be filed by it under the Exchange Act and (b) take
such further action as the Designated Holder may reasonably request (including
providing any information necessary to comply with Rule 144 under the
Securities Act), all to the extent required from time to time to enable the
Designated Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by
(i) Rule 144 under the Securities Act, as such rule may be
amended from time to time, or Regulation S under the Securities Act or
(ii) any similar rules or regulations hereafter adopted by the
SEC.  The Company shall, upon the request
of the Designated Holder, deliver to the Designated Holder a written statement
as to whether it has complied with such requirements.

 

6.2         Inconsistent Agreements.  After the date of this Agreement, the Company
shall not enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Designated Holder in this Agreement
or grant any additional registration rights to any Person which are not
Registrable Securities which are prior in right to or inconsistent with the
rights granted in this Agreement, except with the prior written consent of the
Designated Holder.

 

12

 

ARTICLE VII

 

MISCELLANEOUS

 

7.1   Recapitalizations, Exchanges, etc.  The provisions of this Agreement shall apply
to the full extent set forth herein with respect to (a) the shares of
Common Stock and the Common Stock Equivalents, (b) any and all shares of
voting common stock of the Company into which the shares of Common Stock or
Common Stock Equivalents are converted, exchanged or substituted in any
recapitalization or other capital reorganization by the Company and
(c) any and all equity securities of the Company or any successor or
assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in conversion of, in exchange for
or in substitution of, the shares of Common Stock or Common Stock Equivalents
and shall be appropriately adjusted for any stock dividends, splits, reverse
splits, combinations, recapitalizations and the like occurring after the date
hereof.  The Company shall use its
reasonable best efforts to cause any successor or assign (whether by merger,
consolidation, sale of assets or otherwise) to enter into a new registration
rights agreement with the Designated Holder on terms substantially the same as
this Agreement as a condition of any such transaction.

 

7.2   Remedies.  The
Designated Holder, in addition to being entitled to exercise all rights granted
by law, including recovery of damages, shall be entitled to specific
performance of their rights under this Agreement.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Agreement and hereby agrees to waive in any
action for specific performance the defense that a remedy at law would be
adequate.

 

7.3   Notices.  All
notices, demands and other communications provided for or permitted hereunder
shall be made in writing and shall be personally delivered or sent by certified
mail, postage prepaid, return receipt requested, by prepaid nationally
recognized overnight courier, or by prepaid facsimile, at the addresses set
forth below:

 

If to the Company:             SatCon Technology
Corporation

27 Drydock Avenue

Boston, Massachusetts 02210

Attention: General Counsel and Chief Financial Officer

Fax:

Phone:

 

If to Horizon:                                        Compass Horizon
Funding Company LLC

76 Batterson Park Road

Farmington, CT 06032

Attention: Legal Department

Fax: (860) 676-8655

Ph: (860) 676-8654

 

13

 

The parties hereto may change the address at which
they are to receive notices hereunder, by notice in writing in the foregoing
manner given to the other.

 

7.4   Successors and Assigns; Third Party Beneficiaries.  This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of the parties hereto
as hereinafter provided.  The rights of
the Designated Holder contained in this Agreement shall be automatically
transferred to the transferee of any Registrable Security, provided, that (i) such transferee
agrees to become a party to this Agreement and be fully bound by, and subject
to, all of the terms and conditions of the Agreement as though an original
party hereto; (ii) the Company is, within a reasonable time after such
transfer, furnished with written notice of (a) the name and address of
such transferee, and (b) the securities with respect to which such
registration rights are being transferred; (iii) immediately following
such transfer the further disposition of such securities by the transferee is
restricted under the Securities Act or applicable state securities laws if so
required; and (iv) such transfer shall have been conducted in accordance
with all applicable federal and state securities laws.  All of the obligations of the Company
hereunder shall survive any such transfer. 
Except as provided in Article V, no Person other than the parties
hereto and their successors and permitted assigns are intended to be a
beneficiary of this Agreement.

 

7.5   Amendments and Waivers. 
Except as otherwise provided herein, the provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless consented to in
writing by the Company and the Designated Holder.

 

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

 

7.7   Counterparts.  This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.  The parties hereto
confirm that any facsimile copy of another party’s executed counterpart of this
Agreement (or its signature page thereof) will be deemed to be an executed
original thereof.

 

7.8   Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

7.9       GOVERNING LAW; CONSENT TO JURISDICTION.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.

 

14

 

7.10     Severability.  If
any one or more of the provisions contained herein, or the application thereof
in any circumstance, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions hereof shall not be in
any way impaired, unless the provisions held invalid, illegal or unenforceable
shall substantially impair the benefits of the remaining provisions hereof.

 

7.11     Rules of Construction.  Unless the context otherwise requires,
references to sections or subsections refer to sections or subsections of this
Agreement.

 

7.12     Entire Agreement. 
This Agreement is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto with respect to the subject
matter contained herein.  There are no
restrictions, promises, representations, warranties or undertakings with
respect to the subject matter contained herein, other than those set forth or
referred to herein.  This Agreement
supersedes all prior agreements and understandings among the parties with
respect to such subject matter.

 

7.13     Further Assurances. 
Each of the parties shall execute such documents and perform such
further acts (including, without limitation, obtaining any consents,
exemptions, authorizations or other actions by, or giving any notices to, or
making any filings with, any governmental authority or any other Person) as may
be reasonably required or desirable to carry out or to perform the provisions
of this Agreement.

 

7.14     Other Agreements. 
Nothing contained in this Agreement shall be deemed to be a waiver of,
or release from, any obligations any party hereto may have under, or any
restrictions on the transfer of Registrable Securities or other securities of
the Company imposed by, any other agreement including, but not limited to, the Company’s
certificate of incorporation, as amended from time to time, the Company’s
By-Laws, as amended from time to time, and the Warrant.

 

7.15     Termination. 
Except for the liabilities or obligations under Section 4.3 or
Article V, all of which shall remain in effect in accordance with their
terms, this Agreement and the obligations of the parties hereunder shall
terminate upon the earlier to occur of such time as (i) all Registrable
Securities have been disposed of pursuant to an effective Registration Statement,
(ii) the entire amount of the Registrable Securities owned by a Designated
Holder may be sold in a single sale, in the opinion of counsel satisfactory to
the Company and such Designated Holder, each in their reasonable judgment (it
being agreed that Greenberg Traurig, LLP shall be satisfactory counsel),
without any limitation as to volume pursuant to Rule 144(k) (or any
successor provision then in effect) under the Securities Ac, and (iii) all
Registrable Securities have been sold pursuant to Rule 144 under the
Securities Act.

 

[Remainder of page intentionally left blank]

 

15

 

IN
WITNESS WHEREOF, the undersigned have executed, or have caused to be executed,
this Registration Rights Agreement on the date first written above.

 

 

	
   

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Donald R. Peck

  
	
   

  	
   

  	
   

  	
  Name:
   Donald R. Peck

  
	
   

  	
   

  	
   

  	
  Title:
  Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HORIZON:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPASS
  HORIZON FUNDING COMPANY LLC

  
	
   

  	
   

  	
  By:
  Horizon Technology Finance Management LLC, its adviser

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/
  Robert D. Pomeroy, Jr.

  
	
   

  	
   

  	
   

  	
  Name:
   Robert D. Pomeroy, Jr.

  
	
   

  	
   

  	
   

  	
  Title:    Chief Executive OfficerExhibit 10.10

 

Confidential Treatment Requested as to certain
information contained in this Exhibit and filed separately with the
Securities and Exchange Commission.

 

MANUFACTURING AND PURCHASE AGREEMENT

 

by and between

 

ESGW INTERNATIONAL LIMITED

 

and

 

SATCON TECHNOLOGY CORPORATION

 

Dated: 
December 18, 2008

 

 

TABLE OF CONTENTS

 

	
  Recitals 

  	
  4

  
	
   

  	
   

  	
   

  
	
  Article I

  	
  Definitions 

  	
  4

  
	
   

  	
   

  	
   

  
	
  Article II

  	
  Scope of Agreement 

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article III

  	
  Manufacturing and Assembly of Products

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article IV

  	
  Product Prices

  	
  11

  
	
   

  	
   

  	
   

  
	
  Article V

  	
  Purchase of Products

  	
  13

  
	
   

  	
   

  	
   

  
	
  Article VI

  	
  Delivery and Shipment

  	
  16

  
	
   

  	
   

  	
   

  
	
  Article VII

  	
  Warranties and Remedies

  	
  17

  
	
   

  	
   

  	
   

  
	
  Article VIII

  	
  Additional Covenants

  	
  19

  
	
   

  	
   

  	
   

  
	
  Article IX

  	
  Intellectual Property

  	
  20

  
	
   

  	
   

  	
   

  
	
  Article X

  	
  Term and Termination

  	
  21

  
	
   

  	
   

  	
   

  
	
  Article XI

  	
  Confidentiality

  	
  23

  
	
   

  	
   

  	
   

  
	
  Article XII

  	
  Indemnification

  	
  24

  
	
   

  	
   

  	
   

  
	
  Article XIII

  	
  General Terms

  	
  25

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
  Products

  	
  29

  
	
   

  	
   

  	
   

  
	
  Schedule 2

  	
  Pricing Formula

  	
  30

  
	
   

  	
   

  	
   

  
	
  Schedule 3

  	
  Epidemic
  Warranty Conditions

  	
  31

  
	
   

  	
   

  	
   

  
	
  Schedule 4

  	
  Workmanship Standards

  	
  32

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Consignment Agreement

  	
  38

  

 

2

 

List of Schedules and Exhibits

 

	
  Schedules:

  	
   

  
	
   

  	
   

  
	
  Schedule
  1 — Products

  	
   

  
	
   

  	
   

  
	
  Schedule
  2 — Pricing Formula

  	
   

  
	
   

  	
   

  
	
  Schedule
  3 — Epidemic Warranty Conditions

  	
   

  
	
   

  	
   

  
	
  Schedule
  4 — Workmanship Standards

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Exhibit:

  	
   

  
	
   

  	
   

  
	
  Exhibit A — Consignment Agreement

  	
   

  

 

3

 

MANUFACTURING AND PURCHASE AGREEMENT

 

This
Manufacturing and Purchase Agreement (this “Agreement”), is made and entered
into as of December 18, 2008 (the “Effective Date”),
by and between ESGW International Limited, a company registered under the laws
of the British Virgin Islands, having a principal mailing address at c/o
ExcelStor Technology Limited, Suite 1507, Greenfield Tower, Concordia
Plaza, Number 1, Science Museum Road, Tsimshatsui East, Hong Kong SAR
(hereinafter referred to as “ExcelStor”), of the one part; and Satcon Technology Corporation, a company registered under the laws
of the state of Delaware of the United States of America, having a principal
place of business at 27 Drydock Avenue, Boston, MA 02210, U.S.A. (hereinafter
referred to as “Satcon”), of the other part. 
ExcelStor and  Satcon are sometimes
hereinafter referred to collectively as the “Parties” or individually as a “Party.”

 

RECITALS

 

WHEREAS, ExcelStor is in the business of contract manufacturing;

 

WHEREAS, Satcon possesses the right to certain
designs, data, ideas, and processes
in connection with Products (as defined herein);

 

WHEREAS, the Parties are in possession of
information regarding their respective supply chains and would like to share
such information with the other Party for their
mutual benefit; and

 

WHEREAS, Satcon desires to contract ExcelStor to
manufacture Products for Satcon and its Affiliates and ExcelStor desires to
manufacture and supply such Products for Satcon and its
Affiliates pursuant to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the
mutual promises, covenants and obligations contained herein, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

Certain
capitalized terms used in this Agreement shall have the specific meanings set
forth below:

 

Affiliates.  The
term “Affiliates” means all entities of a
Party that control, are controlled by, or are under common control with,
that Party. An entity “controls”
another entity when it owns more than fifty percent of the voting stock or
other ownership interest of that entity or has the ability to direct its
management.

 

Approved Facility.  The term “Approved Facility” means the facilities of ExcelStor Great Wall Information Products (Shenzhen)
Ltd. and any additional ExcelStor facility that is approved in writing by Satcon for the manufacturing of Products under this
Agreement.

 

4

 

AVL.  The term “AVL”
means a listing of vendors, in addition to part descriptions and part numbers,
approved by Satcon for the manufacturing of Products.  All AVLs and the information contained
therein shall be jointly owned by both Satcon and ExcelStor, and neither shall
assert the other Party’s rights to
deal with the vendors on the AVL are limited.

 

Business Day.  The term “Business Day” means any day other
than Saturday, Sunday or a day on which banks in the United States of America,
P.R. China or the Hong Kong SAR are authorized or required by law or other
governmental action to close.

 

Confidential Information.  The term “Confidential Information” means any
confidential information of a Person relating to any designs, know-how,
inventions, technical data, ideas, uses, processes, methods, formulae,
compositions, compounds, manuals, instructions specifications, research and
development activities, work in process, any information owned, licensed or
used by a Party or any scientific,
engineering, manufacturing, marketing, business plan, financial or personnel
matter relating to such Person, its present or future products, sales,
suppliers, customers, employees, investors or business, whether in oral,
written, graphic or electronic form (which is marked confidential or
acknowledged as being confidential prior to disclosure).  If the Confidential Information is disclosed
orally or visually, it shall be identified as such at the time of disclosure
and confirmed in writing by the disclosing Person within thirty (30) calendar
days of disclosure.  Notwithstanding the
foregoing, confidential Information shall also include any other information in
oral, written, graphic or electronic form, which given the circumstances
surrounding such disclosure a reasonable person would considered confidential.

 

Consigned
Inventory.  The term “Consigned Inventory” means any parts, components, Semi
Assemblies and Products that are in the custody of ExcelStor but to which Satcon has full titles and ownership.

 

End of Life Products.  The term “End of Life Products” means any Products, including its components and Sub  Assemblies incorporated
into the Products that will no longer be available for purchase under this
Agreement.

 

Engineering Change Order.  The term “Engineering Change Order” means an engineering change
order submitted by Satcon to ExcelStor for the purpose of making an engineering change to the Products under this Agreement.

 

Epidemic Warranty Conditions.  The term “Epidemic Warranty Conditions” shall
mean those conditions listed in Schedule
3 attached hereto.

 

ExcelStor Technology Rights.  The term “ExcelStor Technology Rights” means
any ExcelStor Intellectual Property Rights, ExcelStor’s manufacturing processes
and such production designs not acquired by Satcon pursuant to this Agreement
and any rights licensed to ExcelStor by any other Person (other than Satcon) to
use any Intellectual Property of such Person.

 

Forecast.  The term “Forecast”
means an up to six (6) months rolling
forecast estimating the amount of the Products that anticipates
purchasing per month, as issued by
Satcon once a month.

 

5

 

Intellectual Property Rights.  The term “Intellectual Property Rights” means
all trademarks, service marks, trade dress, logos, copyrights, rights of
authorship, inventions, patents, rights of inventorship, moral rights, rights
of publicity and privacy, trade secrets, rights under unfair competition and
unfair trade practices laws, and all other intellectual and industrial property
rights related thereto, worldwide.

 

MW.  The
abbreviation “MW” means megawatts.

 

NRE.  The term “NRE”
means any non-recurring engineering,
design, documentation, supplier and part qualification, documentation,
training, scheduling, and other relevant charges incurred by ExcelStor in connection
with the development, preparation for
manufacturing or modification of a part or Product to achieve
certain specifications or characteristics, as requested by Satcon from time to
time. The Parties agree and acknowledge that
ExcelStor’s labor cost for factory assembly and test overhead items such as
supervision, supply chain management and logistics, shall not be included in
the NRE.

 

Person.  The term “Person”
means an individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.

 

Product(s).  The
term “Product(s)” means those certain products set forth on Schedule
1 attached hereto, and their components and
Sub Assemblies, as may be amended by mutual agreement of the Parties
from time to time, to be manufactured by ExcelStor in accordance with a
Production Design, pursuant to Purchase Orders issued by Satcon from time to time under this Agreement.

 

Product Engineering.  The term “Product Engineering” means any
research, development and engineering conducted by ExcelStor, whether or not at the
request of Satcon, to substantially improve or modify the Production Design of
any Product.

 

Product Engineering
Results.  The term “Product Engineering
Results” means the results of ExcelStor’s Product Engineering rendered in a written format, including, without
limitation, the NRE and the Production BOM for such Product.

 

Product Prices.  The term “Product Prices” means the prices of Products based
on the Production BOM, such prices  as determined in accordance with the Pricing Formula set out on Schedule
2 hereto.

 

Production BOM.  The term “Production BOM” means a Bill of
Materials prepared by ExcelStor, which lists all components necessary to
manufacture a Product, including, without limitation, the prices of each component;
provided that such Bill of Materials shall be approved by Satcon.

 

Production Design.  The term “Production Design” means  product design information
provided to ExcelStor in order to allow ExcelStor to manufacture a Product, as
amended, modified, supplemented or restated from time to time in accordance
herewith, that is approved by Satcon for manufacturing.  As used herein, Production Design includes, without limitation, product design
schematics, Specifications and Production BOM.

 

6

 

Purchase
Order.  The term “Purchase
Order” means an order for Products or components, which shall specify at least
the following, for Products or components: 
(i) model number; (ii) quantity; (iii) Purchase Order Delivery Date; (iv) unitary prices, and (v) other
order terms and conditions mutually agreed upon by the Parties.  Purchase Orders may additionally identify the
specific Product configuration and other matters specific to each separate sale
by Satcon or its Affiliate to a customer. 
If the terms and conditions of a Purchase Order conflict with this
Agreement, this Agreement will control as to the conflicting term(s) unless
the conflicting terms have been mutually agreed upon by the Parties.  If the terms and
conditions of a Purchase Order add to this Agreement, the applicable Purchase
Order, if accepted by ExcelStor, will control as to the additional term(s).

 

Purchase
Order Delivery Date.  The term “Purchase Order Delivery Date” means the delivery date(s) specified by Satcon in any Purchase Order.

 

Quarterly Business Review.  The term “Quarterly Business Review” means the quarterly business
review meetings between Satcon and ExcelStor held within fifteen (15) days after the beginning
of each quarter during the Term.  The
venue of the Quarterly Business Review shall be agreed upon by the Parties from
time to time.

 

Satcon Technology Rights.  The term “Satcon Technology Rights” means any
(i) Satcon Intellectual Property and (ii) any rights licensed to
Satcon by any other Person to use any Intellectual Property of such Person.

 

Specifications.  The term “Specifications” means a detailed
listing of the components, functionality, features, physical specifications
and performance, security and standard compliance information, available
support, ordering and pricing procedures and/or information and acceptance
criteria for each Product, including, without limitation, the Production Design
for such Product.

 

Statement of Work.  The term “Statement of Work” means a written
statement from Satcon to ExcelStor requesting ExcelStor’s Product Engineering services and setting forth certain objectives,
improvements, changes or modifications to a Production Design or Product.

 

Sub Assemblies.  The
term “Sub Assemblies” means combinations of parts and labor into a semi
finished goods, which can then be combined into a final Product.

 

ARTICLE II

SCOPE OF AGREEMENT

 

2.1.                              Scope.  ExcelStor shall, at Satcon’s
request, (a) manufacture and supply Products, (b) provide
Product Engineering services, and (c) assist
Satcon with the development and management of a common supply chain, under
which Satcon may purchase directly from the suppliers that ExcelStor solely
develops or helps Satcon develop. 
ExcelStor shall disclose to Satcon  information in connection with the pricing for contract manufacturing
and supply chain services, including, but not limited to, various costs and each component of manufacturing value add, the
names and addresses of ExcelStor’s suppliers and
vendors, and information regarding best
business practices at the locations where ExcelStor
and its Affiliates conduct business.

 

7

 

ARTICLE III

MANUFACTURING AND ASSEMBLY OF PRODUCTS

 

3.1.                              Delivery of a Production Design.  Satcon shall deliver a Production Design to
ExcelStor and ExcelStor shall notify Satcon within fifteen (15) Business Days
of receipt of such Production Design whether ExcelStor is capable of
manufacturing a product in accordance with such Production Design and whether
ExcelStor agrees to manufacture such product. Any
rejection
of a Production Design by ExcelStor shall include an explanation of the basis
for the rejection; provided that ExcelStor may not reject any version of a
Production Design for a Product set forth on Schedule 1 or which
ExcelStor has previously manufactured for Satcon unless (i) the Production
Design utilizes parts, components or subassemblies no longer available, (ii) a
third party has asserted that the Production Design conflicts with or infringes
on its intellectual property rights, or (iii) some other cause beyond the
reasonable control of ExcelStor makes the use of that Production Design
commercially impractical.

 

3.2.                              Development
Phase.

 

3.2.1.                     Product Engineering.

 

(a)                                  Satcon may
request the Product Engineering services of
ExcelStor by submitting to ExcelStor a Statement of Work for the development of a new Product or the modification of a Production Design. Within ten (10) Business Days of ExcelStor’s
receipt of such Statement of Work, ExcelStor shall provide Satcon with a statement  of NRE with detailed information on each component
of the NRE for such Product Engineering services. Satcon shall notify ExcelStor whether it agrees
to the amount of the NRE and the right, title and interest which it shall
own in and to the results of such Product Engineering set forth in
the Statement of Work.

 

(b)                                 Satcon shall
have the right, title and interest in and to the tangible deliverable results
of any Product Engineering upon payment
for such Product Engineering; provided,
that Satcon’s rights to any Intellectual Property Rights arising from such
Product Engineering shall be in accordance with
the terms and conditions set forth in Section 9.1 hereof, and Satcon shall
not receive any Intellectual Property Rights in the ExcelStor Technology Rights
including by way of illustration and not of limitation, ExcelStor’s
manufacturing processes, background materials and intellectual property not
related to or developed for Satcon.

 

(c)                                  Should Satcon request the Product Engineering services of ExcelStor,
ExcelStor shall purchase from Satcon at Satcon’s cost the initial two (2) sets
of components for PowerGate Plus Solar PV Inverters ranging from 30 kW to 135
kW power levels (“Final Qualification Unit(s)”).  Upon completion of Product Engineering
services relating to the Final Qualification Units, ExcelStor shall sell to
Satcon the Final Qualification Units at the price at which ExcelStor purchased
the Final Qualification Units from Satcon, plus a ***  markup from the purchase
price.  Invoices relating to all Final
Qualification Units shall be due and payable sixty (60) days after receipt of
the invoices.  Final Qualification Unit
prices are FCA 

 

  *** 
Represents text omitted pursuant to a request for confidential treatment.  The omitted material has been filed
separately with the Securities and Exchange Commission.

 

8

 

(INCOTERMS 2000) Burlington, Ontario, Canada, or
FCA (INCOTERMS 2000) Hong Kong SAR, as the case may be.

 

3.2.2.                     Production
Design.  At the conclusion of any
Product Engineering, ExcelStor shall deliver to
Satcon within five (5) Business Days the Product Engineering Results, if
any. Satcon, in its reasonable discretion, may accept or reject the Product
Engineering Results, if any. Upon receipt of authorization to create a
Production Design, ExcelStor shall promptly provide Satcon with the Production
Design and Production BOM for such Product and a datasheet for such Product,
which datasheet shall include, among other things, the Specifications, Product
plans, sketches and the entire documentation required for manufacturing such
Product with the same features, capabilities and performance.

 

3.2.3.                     Change to the Products. ExcelStor shall not make any
changes to the Products or
changes to the processes, Production BOM, materials,
Production Design, tools, or locations
used to manufacture, assemble, or package the Products without Satcon’s prior written approval, which shall not be
unreasonably withheld. ExcelStor shall provide Satcon with prior written notice of any intent to make any
change covered by this Paragraph and request Satcon’s  approval.   ExcelStor shall provide Satcon  with a minimum of three (3) months notice prior to any intended change to: (i) the Production Design, content, form, fit, or function of any
Products; or (ii) the location of manufacture, assembly, or packaging of the
Products.  Satcon may request changes to the Products by
issuing an Engineering Change Order to ExcelStor from time to time. Subject to
the last sentence of this Section 3.2.3, ExcelStor shall immediately
implement the changes and all applicable Purchase Orders will be deemed amended
to incorporate the changes. ExcelStor agrees to make commercially
reasonable efforts to comply with Satcon’s
requested changes. If the
changes result in a significant change to ExcelStor’s cost or in the time for performance or exposes
ExcelStor to the risk a third party will assert a violation of its intellectual
property rights, however, ExcelStor shall
advise Satcon in writing with details of the change to the cost or time or the
risk of adverse claims by a  third party,
and ExcelStor shall not implement the changes until Satcon gives ExcelStor
written authorization to do so and provides adequate compensation.

 

3.2.4.                     Evaluation and
Upgrades of Products.  ExcelStor
shall share suggestions for improvement of Production Designs and/or Products
that arise from time to time.

 

3.2.5.                     Certification.  ExcelStor
shall obtain an initial UL certification for the Approved Facility.  All costs arising and relating to obtaining
the initial UL certification for the Approved Facility shall be borne by
ExcelStor.  Satcon shall bear all
expenses arising and related to the Approved Facility’s UL re-certification
should re-certification be necessary and caused by a Satcon initiated change in
Production Design.  With the exception of
expedited freight and handling costs relating to UL certification, which shall be expressly borne by Excelstor, Satcon shall bear costs
arising and related to the Production Design’s UL certification.

 

3.3.                              Production
Phase.

 

3.3.1.                     Manufacturing
of Products.

 

9

 

(a)                                  ExcelStor shall
manufacture and sell to Satcon Products
ordered by Satcon pursuant to Purchase Orders
submitted by Satcon to ExcelStor in accordance with Article V hereof.  Further, ExcelStor shall manufacture and
deliver such Products to Satcon on or prior to the Purchase Order Delivery Date
in accordance with Article VI hereof.

 

(b)                                 ExcelStor shall
manufacture and assemble the Products in strict compliance with the Production
Design and Specifications for such Product
at the Approved Facility.

 

(c)                                  ExcelStor agrees that all parts and components used to manufacture
the Products shall be sourced from vendors contained in the AVL.  Parts and components from vendors not
contained in the AVL shall not be used without Satcon’s prior written
approval, which shall not be unreasonably withheld.

 

(d)                                 ExcelStor agrees that no independent contractors or sub-contractors shall be used to manufacture the Products
without Satcon’s prior written approval.

 

(e)                                  ExcelStor shall
have the right to use its Affiliates for manufacturing the Products, subject to
the Approved Facility definition above.

 

(f)                                    ExcelStor
agrees to permit Satcon to audit its manufacturing process at the Approved Facility upon five (5) days
advance notice to ExcelStor, and shall provide such assistance which is
reasonably necessary for Satcon to evaluate the quality of the Products.  All Satcon personnel shall comply with
ExcelStor’s reasonable requirements while at the Approved Facility.

 

3.4.                              Quality.  ExcelStor covenants that it shall manufacture
and assemble all Products from entirely new materials, free from any
counterfeit parts, materials or components, in
accordance with the Specifications and the Workmanship Standards set out in Schedule
4 attached hereto.  If the Specifications require so, ExcelStor must use materials certified
by UL, CSA, CE or other governing agency certifications as required.  ExcelStor
further covenants to perform all manufacturing, testing and other quality
assurance procedures according to the ISO 9001:2001 Standards.  ExcelStor shall
serialize the Products and provide lot
or serial number information for all materials, components  and  Sub Assemblies that comprise each particular Product.  ExcelStor shall make
available to Satcon production quality and
supplier quality information upon  two (2) days prior written notice.  ExcelStor shall designate an individual as a  Quality Representative to be responsible for Satcon’s quality inquires and communications.  If deemed necessary by both ExcelStor and Satcon, ExcelStor shall send appropriate employees for quality trainings at Satcon’s location during normal business hours.   ExcelStor shall bear
all costs and expenses associated with said
trainings unless otherwise agreed in
writing by the Parties.

 

3.5.                              Consignment
of Equipment and Materials.  Certain equipment and tooling, which is
required for manufacturing the Products will be consigned by Satcon to ExcelStor for use (the “Satcon Tooling”) at no expense to
ExcelStor.  The Satcon Tooling and all
drawings, plans, specifications, or other materials furnished by Satcon to
ExcelStor relating to Satcon Tooling shall be and remain the property of
Satcon, and shall be used by ExcelStor only for the 

 

10

 

purposes
of effectuating ExcelStor’s performance of this Agreement.  Satcon Tooling shall be returned to Satcon at
Satcon’s expense, upon request, to a destination specified by Satcon, in operative condition, except for normal wear and tear.  The Parties shall execute a Consignment
Agreement substantially in the form as set forth in Exhibit A attached.

 

ARTICLE IV

PRODUCT PRICES

 

4.1.                              Payment
and Pricing.

 

4.1.1.                     Product Prices.  The Product Prices shall be determined by the Pricing Formulas as set
forth on Schedule 2 attached hereto. Product Prices are FCA (INCOTERMS
2000) Hong Kong SAR unless otherwise provided by
a Purchase Order.

 

4.1.2.                     Payment.  ExcelStor shall invoice Satcon or its
Affiliate placing the Purchase Order for all Products manufactured under this
Agreement at or after the time that such Products are placed with the forwarder for shipment
or the Purchase Order Delivery Date, whichever is later.  All invoices shall be due and payable sixty
(60) days after ExcelStor delivers the Products to the forwarder in Hong Kong and sends the invoices.  In the event of nonpayment
pursuant to the terms herein, ExcelStor, after providing fifteen (15) days
written notice to Satcon or its applicable Affiliate,
shall be entitled to full payment of all amounts due, together with one percent
(1.0%) per month interest thereon up to a cap of twelve percent (12%) of the
amounts. Although as a matter of administrative convenience ExcelStor has
agreed to accept Purchase Orders from Satcon’s Affiliates, Satcon shall remain
primarily liable for the full amount of all Purchase Orders, including those
placed by its Affiliates.

 

4.1.3.                     Currency. All payments
under this Agreement shall be made in lawful currency of the United States of
America.

 

4.1.4.                     Taxes.              Satcon or its Affiliate will be responsible for and only for any
and all sales, use, VAT, or similar taxes, or any other such assessment however
designated imposed on sales of the Products incurred
after the Products are delivered by ExcelStor to the freight forwarder in Hong
Kong (FCA Hong Kong SAR).  ExcelStor shall separately state on
each applicable invoice (and not include them in the Product Prices), any export duties or
sales, use, VAT, excise or
similar tax.  ExcelStor shall not charge taxes if Satcon is exempt from
such taxes and furnishes ExcelStor with a
certificate of exemption in a form reasonably acceptable to ExcelStor.

 

4.1.5.                     NRE.                     The Parties shall mutually agree in writing reasonable NRE charges
incurred by ExcelStor.  Satcon will
reimburse ExcelStor for such charges within sixty (60) day after the invoice
date.

 

4.2.                              Price Adjustments.

 

4.2.1.                     Once they are
determined in according with the Pricing Formula, the Product Prices shall not be increased for at least twelve (12) months, unless the Parties agree
upon in writing price adjustments at the Quarterly Business Review.  The Parties shall not agree upon a price
increase that takes effect sooner than twelve (12) months after the date the
then-

 

11

 

current
price was set unless it is caused by (i) extraordinary circumstances
beyond the control of ExcelStor, such as
market driven allocation and obsolescence, (ii) Satcon’s failure to meet the
Minimum Annual Purchase Volume (as defined in Paragraph 4.2.3 herein), or (iii) unachievable
pricing assumptions.

 

4.2.2.                     ExcelStor shall provide Satcon
with an updated Production BOM with costs for each material, component and Sub Assemblies for each
Product in an electronic format at least quarterly or in exceptional
circumstances, within five (5) days after any
request by Satcon.

 

4.2.3.                     Minimum Annual Purchase Volume. The
Parties agree and acknowledge that the Pricing Formula are prepared based upon
a minimum volume of Products and Sub Assemblies purchased by Satcon is ***  in the calendar year of 2009, ***
in the calendar year of 2010 and *** in the calendar year of 2011 respectively
(the “Minimum Annual Purchase Volume”). 
If, through no fault of ExcelStor (e.g. ExcelStor rejects Satcon’s
Purchase Orders without justification), Satcon purchases significantly (15% or
higher) less than the Minimum Annual Purchase Volume in any particular twelve (12)
months, the Product Prices shall be equitably increased by an amount reflecting
ExcelStor’s verified additional costs to manufacture the lower volume of
Products actually purchased by Satcon. 
If Satcon purchases significantly (15% or higher) more than the Minimum
Annual Purchase Volume in any particular twelve (12) months, the Product Prices
shall be equitably decreased by an amount reflecting ExcelStor’s verified saved
costs to manufacture the larger volume of Products actually purchased by
Satcon.  In the event that Sub Assemblies
are purchased under this Agreement, the portion of the Minimum Annual Purchase
Volume those Sub Assemblies represent will be determined by dividing the
purchase price of those Sub Assemblies by a price per watt mutually agreed upon
in writing to calculate an MW figure for those Sub Assemblies.

 

4.2.4.                     During the Term, the Parties shall meet within fifteen (15) days after the beginning of
each quarter to review, among other things, the Product Prices (the “Quarterly
Business Review”).  At the Quarterly Business
Review, subject to the Parties’ agreement, price adjustments shall be made for:

 

(i) extraordinary circumstances
beyond the control of ExcelStor, such as
market driven allocation and obsolescence, or unachievable pricing assumptions;

 

(ii) the Minimum Annual Purchase Volume scheme
as provided in Paragraph 4.2.3 herein;

 

(iii) the foreign exchange rate between RMB
and USD has fluctuated by more than 5% in the preceding twelve (12) months,
using an initial baseline exchange rate of 6.85 RMB / USD as of the Effective
Date; and/or

 

(iv) the Cost Reduction Program as provided in
Paragraph 4.2.5 herein.

 

4.2.5.                     Cost
Reduction Program

 

  *** 
Represents text omitted pursuant to a request for confidential
treatment.  The omitted material has been
filed separately with the Securities and Exchange Commission.

 

12

 

(i) The Parties’ goal is to achieve a minimum
cost reduction of *** per year during
the Term after the Product are fully transitioned to ExcelStor’s local supply base.  The
Parties shall formally developed a cost reduction plans
to explore and effect cost reductions in each aspect of the manufacture and
supply of the Products including, but not limited to, supply chain, local
sourcing, labor efficiency, design improvements, freight, packaging, logistics,
quality and business processes (“Cost Reduction Program”).

 

(ii) For any Products which are in the first six (6) months of their volume
manufacturing, Satcon will receive the full benefit of any Cost Reduction
Program initiated by any Party.

 

(iii) For any Products which are beyond the
first six (6) months of their volume manufacturing, (a) if Satcon
initiates a Cost Reduction Program, Satcon will receive ***  benefit of a Cost Reduction
Program immediately after the existing inventory of the relevant Products is
exhausted and any of ExcelStor’s additional costs incurred by the Cost
Reduction Program are recovered; and (b) if ExcelStor initiates a Cost
Reduction Program, ExcelStor shall receive *** of the benefit of a Cost
Reduction Program in the first two (2) full quarters following Satcon’s
approval of the relevant Engineering Change Order.  After the first two (2) full quarters,
Satcon will receive *** benefit of the Cost Reduction Program.

 

(iv) Any adjustments to the Product Prices
under this Paragraph 4.2.5 shall not be effective unless they are agreed upon
by the Parties in writing at the Quarterly Business Review.  The new Product Prices shall include without
limitation the applicable and corresponding cost reductions in material
overhead, direct labor and profit.

 

ARTICLE V

PURCHASE OF PRODUCTS

 

5.1.                              Purchase
Order.  Subject to the terms and conditions of this Agreement, ExcelStor
agrees to offer for sale to Satcon during the
Term of this Agreement, those Products specified in each Purchase Order
submitted by Satcon to
ExcelStor.  Purchase Orders must be placed
either be in writing (fax or registered mail) or
electronically via a system generated format. 
No verbal communication or simple, plain text email will be accepted as
a binding Purchase Order.

 

5.1.1.                     Purchase Order
Confirmation.  ExcelStor
shall promptly notify Satcon in writing (a “Purchase Order Confirmation”) but
in any event within three (3) Business Days  of receipt of a
Purchase Order, whether it accepts or rejects such Purchase Order.  Any
rejection
of a Purchase Order by ExcelStor
shall include an explanation of the basis for the rejection.  If, for any reason,
ExcelStor fails to deliver a Purchase Order Confirmation to Satcon within the
timeframe specified above, ExcelStor shall be deemed to automatically accept
such Purchase Order.

 

5.1.2.                     Rejection of a
Purchase Order.  A Purchase
Order may only be rejected if:

 

  *** 
Represents text omitted pursuant to a request for confidential
treatment.  The omitted material has been
filed separately with the Securities and Exchange Commission.

 

13

 

(a)                                  The Purchase Order, as defined herein, does not contain all
required information;

 

(b)                                 The Product set forth in the Purchase Order does not comply with the
terms and conditions hereof;

 

(c)                                  Any Product Prices, fees, costs or expenses not contested by Satcon in
good faith are due and payable by Satcon
to ExcelStor and such Product Prices, fees, costs or expenses exceeds Satcon’s credit limit
as established by ExcelStor and published to Satcon, if
any or have remained outstanding for more than 60 days;

 

(d)                                 The Purchase
Order contains terms that conflict with or add to the terms of this Agreement
that are not mutually agreed upon;

 

(e)                                  The Product set forth in the Purchase Order has a Production Design or
Specifications different from previously provided Product;

 

(f)                                    The Production
Design requires the use of parts, components or sub assemblies that are no
longer in production or otherwise available;

 

(g)                                 A third party has asserted that the Production Design
conflicts with or infringes on its intellectual property rights; or

 

(h)                                 Some other cause beyond the reasonable control of ExcelStor
makes the use of that Production Design specified in the Purchase Order
commercially impractical.

 

5.2.                              Forecasts.

 

5.2.1.                     Once every month, Satcon will provide ExcelStor with a six month rolling Forecast of Products to be purchased.  All six (6) months will be in monthly
quantities.  Additionally, Satcon will
also provide ExcelStor with market and macroeconomic trends for up to an
additional six (6) months solely intended to assist ExcelStor in planning
its capacity levels.

 

5.2.2.                     Subject to Paragraph 5.2.3 herein, the Forecasts submitted by Satcon to ExcelStor are non-binding and solely
intended to assist ExcelStor in ensuring that it has the ability to meet the
Purchase Orders quantities that may be submitted by Satcon.

 

5.2.3.                     Committed
Forecast. Satcon commits to place Purchase Orders for a minimum volume of the
Products in a Forecast as determined by the formula as follows (“Committed
Forecast”): one hundred percent (100%) of the forecasted purchase volume for
the first two (2) months in the Forecast; seventy-five percent (75%)  of the forecasted purchase volume for the second two (2) months in
the Forecast; and fifty percent (50%) of the forecasted purchase volume for the
last two (2) months in the Forecast.

 

5.2.4.                     Unless
ExcelStor notifies Satcon in writing
within five (5) calendar days after receipt of a Forecast that it will not be able to supply the quantity of Products specified in a 

 

14

 

Forecast,
ExcelStor shall use its best efforts to provide the quantity of Products
specified in such Forecast upon receipt of corresponding Purchase Orders from
Satcon.

 

5.3.                              Unfulfilled Committed Forecasts and Cancellation
of Purchase Orders.

 

5.3.1.                     Material
Inventory Management. ExcelStor  shall purchase parts to manufacture the
Products according to the quantity and delivery schedules set forth in the Forecasts and the Purchase Orders during the term of this
Agreement. Only with Satcon’s prior written consent, ExcelStor may purchase parts in excess of Purchase Order requirements, such as
long lead time components or components which can be purchased in volume at a
lower price (“Long Lead Time Materials”). All parts  will be consumed on a first-in, first-out basis (i.e. the oldest parts
will be completed first and applied to fulfill the quantity requested in the
next scheduled delivery of the Products). Fluctuations
upward in the Forecasts will be applied to offset fluctuations downward in the Forecasts.

 

5.3.2.                     Cancelled Purchase Orders.  In the
event that Satcon cancels a Purchase Order, Satcon’s sole liability will be
for the actual costs of parts,
work-in-progress, and finished goods that
ExcelStor has ordered or completed to support the cancelled Purchase Order to the
extent that ExcelStor complies with the material inventory management as
described in Paragraph 5.3.1 herein, provided: i) ExcelStor’s work
or order was reasonably necessary to support the  cancelled Purchase Order or the
order for the Long Lead Time Materials was approved by Satcon in writing; and ii) ExcelStor uses best efforts to mitigate Satcon’s liability including but not limited to attempting
to cancel or return its orders for a refund, and using the parts, work-in-progress and finished goods in question for other products.

 

5.3.3.                     Unfulfilled
Committed Forecasts and Excess Inventory. 
On a quarterly basis ExcelStor shall provide Satcon a list of any
material that is excess inventory because Satcon
failed to fulfill a Committed Forecast, and the most recent Forecast
does not show such excess material inventory will be used in the next six (6) months.  ExcelStor shall also provide Satcon evidence
and history of materials purchased for purposes of fulfilling a Committed
Forecast at the request of Satcon.  Satcon shall, at its own option, either (a) reimburse
ExcelStor for ExcelStor’s carrying costs in the amount of one percent (1%) per
month of the verified cost of the excess materials inventory not projected to
be used in the next six (6) months under the current Forecast, or (b) purchase
from ExcelStor the excess materials inventory not projected to be used in the
next six (6) months under the current Forecast, at ExcelStor’s cost, to the extent that ExcelStor complies with the material inventory
management as described in Paragraph 5.3.1 and Paragraph 5.2.3 herein, provided: i) ExcelStor’s order was reasonably necessary to support the  unfulfilled Committed Forecast; and ii) ExcelStor uses best
efforts to mitigate Satcon’s liability
including but not limited to attempting to cancel or return its orders for a
refund, and using the material or
work-in-progress in question for other products.  If any material remains excess
inventory because Satcon failed to fulfill
Committed Forecasts for more than twelve (12) months, and ExcelStor complied
with the material inventory management as described in Paragraph 5.3.1 and
Paragraph 5.2.3 herein and clauses i) and ii) of the preceding sentence, then
Satcon shall, at ExcelStor’s request, immediately purchase from ExcelStor such
excess materials inventory at ExcelStor’s cost.

 

15

 

5.3.4.                     Obsolete Inventory.  Satcon shall reimburse ExcelStor, at
ExcelStor’s verified costs, those parts purchased by ExcelStor for purposes of
fulfilling a Committed Forecast or Purchase Order which are at the material’s
end of life cycle and unfit for incorporation into Products or any other
products for other customers (“Obsolete Inventory”).  Satcon reimbursement of Obsolete Inventory shall be due and payable sixty (60) days after receipt of notice that
materials have become Obsolete Inventory, provided that ExcelStor can provide
Satcon evidence and history of the initial purchase of the Obsolete Inventory.

 

ARTICLE VI

DELIVERY AND SHIPMENT

 

6.1.                              Production Lead Times.  ExcelStor’s delivery
commitments and pricing under this Agreement are based upon ExcelStor’s ability
to supply Products to Satcon within lead times as agreed to by the
Parties.  Production Lead times shall be
initially set at two (2) weeks and to be reviewed and adjusted, if
necessary, by the Parties on a quarterly basis. 
Lead times shall only be valid if the amount of Products purchased by Satcon,
as evidenced in the Purchase Order, are within fifteen percent (15%) of the
applicable Forecast.  If Satcon submits a
Purchase Order for an amount of Products greater than fifteen percent (15%) of
the applicable Forecast, ExcelStor shall use best efforts to commit to Satcon’s
requested lead times.

 

6.2.                              Delivery.  ExcelStor represents and
warrants that it shall deliver the Products to Satcon’s freight forwarder in
the Hong Kong SAR on or within three (3) calendar days prior to the
applicable Purchase Order Delivery Date unless
otherwise agreed upon in writing by the Parties. If ExcelStor is unable to
deliver such Products on or within (3) calendar days prior to such Purchase Order Delivery Date, ExcelStor shall immediately notify Satcon in writing of the reason for the delay or premature
delivery and the date by which such Products will be or was delivered, as the
case may be.

 

6.3.                              Late or
Premature Delivery.  If ExcelStor fails to deliver Products by the applicable Purchase Order Delivery Date in any
Purchase Order, ExcelStor shall use its best efforts to deliver
the delayed Products so that the delayed Products are delivered as soon as
practicable. If ExcelStor is unable deliver the delayed Products within
fourteen (14) days of the applicable Purchase Order Delivery Date, ExcelStor shall be liable to Satcon for liquidated
damages in the amount of ***  per month up to a cap of
*** of the Product Prices of the delayed Products, plus expedited delivery charges that will include any air freight
expenses.  Thereafter, Satcon may also immediately cancel, without liability, all Purchase Orders or portions of Purchase
Orders for Products delayed more than thirty (30) days.  For Products delayed more than thirty (30)
days that Satcon continues to require ExcelStor to provide, ExcelStor shall use best
efforts to expedite delayed Products and shall pay all expediting costs.  If ExcelStor delivers Products prior to seven
(7) calendar days from the applicable Purchase Order Delivery Date,
ExcelStor shall reimburse Satcon for all verified storage, rescheduling, and
related out-of-pocket expenses incurred by Satcon as a result of the ExcelStor’s
premature delivery.

 

  *** 
Represents text omitted pursuant to a request for confidential
treatment.  The omitted material has been
filed separately with the Securities and Exchange Commission.

 

16

 

6.4.                              Reschedule Delivery.  Satcon may, without liability
to ExcelStor, reschedule delivery of all or any part of an Purchase Order no later than five (5) days prior to the original
Purchase Order Delivery Date, as long as the rescheduled
delivery date is not extended by more than thirty
(30) days from the original Purchase Order Delivery Date.

 

6.5.                              Delivery
Performance Guarantees with Satcon’s customers.  In the event that Satcon agrees to provide delivery performance guarantees to its customers, Satcon will
advise ExcelStor of the agreement
and the Parties will negotiate to whether ExcelStor will agree to
share the potential exposures and the
associated costs.

 

6.6.                              Packing;
Packaging.  All
Products ordered by Satcon shall be
packed for shipment and storage in a manner designated
by Satcon no later than in the Purchase Order for the Product. ExcelStor
shall apply notices, in a form previously approved in writing by Satcon, to any
Products that it manufactures or has manufactured on behalf of Satcon and all
packaging materials relating thereto.

 

All
Products shall
be shipped including a packing list (the “Packing List”), complying with
international standards for such documents. 
The Packing List shall be delivered inside an external easy-access
pouch, safely attached to the shipping box. 
Every shipment shall be packaged according to international standards
and generally accepted methods and practices used in the electronics industry.

 

6.7.                              Certificates of Origin.  Upon
Satcon’s request, ExcelStor shall, at its own cost, provide Satcon with
certificates of origin with each shipment of the Products.

 

6.8.                              Passing of Title and Risk of Loss.  Title
and risk of loss to the Products shall pass to
Satcon at the time that such Products are placed with the freight forwarder in the Hong Kong SAR for shipment.

 

ARTICLE VII

 

WARRANTIES AND REMEDIES

 

7.1.                              Warranties.

 

7.1.1.                     Satcon represents and warrants that: (i) Satcon has no knowledge of and that there are no
unresolved claims, demands, or pending litigation alleging that the Products
infringe, or misappropriate any Intellectual Property Rights of any third
party, (ii) Satcon has obtained
all necessary rights under any Intellectual Property Rights of third parties
necessary (A) to permit ExcelStor to manufacture Products pursuant to the
Production Design and (B) for the sale, use, or other distribution of the
Products supplied to Satcon under this
Agreement, and (iii) the Products
delivered under this Agreement do not infringe or misappropriate any
Intellectual Property Rights of any third party.

 

7.1.2.                     Unless a
different period is mutually agreed upon by the Parties, for a period of
sixteen (16) months from the respective delivery date of each Product,
ExcelStor expressly warrants that all Products are free from defects in
materials and workmanship, are 

 

17

 

appropriately
labeled and packaged, and conform to the Specifications requested by
Satcon.  The Product Engineering Results
provided by ExcelStor shall be free of design defects.  All warranties survive any inspection, acceptance,
payment, or resale by Satcon.

 

7.1.3.                     Satcon represents and warrants
that the Production Design complies with all applicable laws, regulations and
ordinances of any government, agency or public authority having jurisdiction
over the manufacture and delivery of Products in the country where the Approved
Facility is located and where the Products will be sold or used.

 

7.1.4.                     ExcelStor warrants that
the Products provided under this Agreement are wholly new and contain new
components and parts throughout. ExcelStor further
warrants that it has good and warrantable title to the Products, free and clear
of any liens, encumbrances, or other restrictions on use or distribution.

 

7.1.5.                     ExcelStor agrees that its representations and warranties are
reaffirmed with each shipment or delivery of Products.

 

7.1.6.                     ExcelStor shall
pass through all warranties provided by any of
the suppliers, vendors  and manufacturers of parts, components and Sub Assemblies that it purchases to
manufacture the Products.  ExcelStor
shall use reasonable commercial efforts to negotiate at least a five (5) year
transferrable warranties on critical
components, such as transformers and reactors contained within the Products.
Where Satcon incurs labor and material costs to repair or replace any
defective materials, components and Sub Assemblies, ExcelStor shall assist Satcon in
recovering such costs
from the vendors, suppliers or
manufacturers under the applicable
warranties, if any.

 

7.2.                              Remedies.

 

7.2.1.                     If ExcelStor delivers Products that fail to comply with the
warranties in this Agreement, or which experience an
Epidemic Warranty Condition (“Affected
Products”), whether or not apparent upon inspection, ExcelStor shall promptly and at its sole expense, at Satcon’s option:  (i) repair or replace the Affected Products and (ii) pay to Satcon all costs of repairing or replacing Products that
incorporate or are otherwise impacted by the Affected
Products, including but not limited to actual
materials costs and labor charges on an hourly basis.  The hourly labor rates referred to in clause (ii) of
the preceding sentence shall be mutually agreed upon at the first quarterly
business meeting between the Parties, and the costs referred to in such clause (ii) for
a given Product shall not exceed the cost of that Product.  ExcelStor agrees that the foregoing
remedies are in addition to any other remedies provided elsewhere in this
Agreement and remedies available under law or equity. the exclusive remedies to
which it will be entitled.

 

7.2.2.                     In addition to
the other rights and remedies provided in this Agreement, if at any time one or
more of the Products experiences an Epidemic Warranty Condition, Satcon shall
have the right to immediately suspend all Purchase Orders and/or Forecasts, and
ExcelStor, at its sole expense, shall
take immediate remedial action for affected and potentially affected Products,
according to a corrective action plan approved by Satcon.  If within a reasonable time mutually agreed
upon by the Parties, ExcelStor has not remedied the Epidemic Warranty 

 

18

 

Condition,
Satcon may reschedule or cancel
all Purchase Orders and/or Forecasts for the affected Products without liability of any kind, including but not limited to liability
for raw materials, inventory, work-in-process,
or finished goods ExcelStor may have
on-hand for the Purchase Orders or the Forecast.

 

ARTICLE VIII

ADDITIONAL COVENANTS

 

8.1.                              Most
Favored Customer.

 

8.1.1.                     ExcelStor
agrees to treat Satcon at least as well as its most favored customers.  ExcelStor agrees that the prices, warranties,
benefits and other material terms being provided hereunder and to be provided
hereafter are and shall be equivalent to or better than the terms being offered
by ExcelStor to its current and future customers; provided, however, ExcelStor
may offer other customers volume discounts in accordance with the volume
discounts offered to Satcon.  This
obligation requires ExcelStor to provide Satcon with at least pari passu treatment with other customers (i) as
to quantity of Products made available to Satcon in a shortage situation and (ii) as
to the Purchase Order Delivery Dates for Purchase Orders.

 

8.1.2.                     If ExcelStor enters into an agreement with any other
customer under circumstances substantially similar (as described above) to that
of Satcon and if ExcelStor provides such other customer with more favorable
terms, then this Agreement shall be deemed appropriately amended to provide
such terms to Satcon.  ExcelStor shall
promptly provide notice thereof to Satcon and shall provide to Satcon refund or
credits, if any, in an amount equal to the difference between the lower prices
charged to other customer and the amount paid by Satcon from the date the lower
prices went into effect with the other customers.

 

8.2.                              Interference
with Employees.  Neither any Party nor
any of its Affiliates shall during the Term and for a period of twelve
(12) months thereafter, without the prior written approval of another Party, directly or
indirectly, for itself or for any other person, firm, corporation, partnership,
association or other entity, attempt to employ or enter into any contractual
arrangement  for personal services with any
employee or former employee of such other Party or any of its Affiliates.  Each Party shall provide the other with a
list of its affiliates to which this covenant shall apply.  Notwithstanding the previous sentence, a
general solicitation not specifically targeted at the other Party’s employees
shall not be a breach of this Paragraph.

 

8.3.                              Exclusivity and Non-compete.                                   During the Term and for a
period of  two (2) years thereafter, unless otherwise
expressly provided for herein, neither ExcelStor
nor any of its Affiliates may directly or
indirectly engage, in any business which involves the product categories and
related services described in the
Paragraph immediately below (the “Restricted
Business”), including without limitation design, development, utilizing,
manufacturing, marketing, sales or distribution of any products within the
scope of the Restricted Business.

 

Restricted Business: Photovoltaic Inverters greater
than or equal to 30 kilowatts and all other Products which ExcelStor
manufactures for and supplies to Satcon under this Agreement from time to time.

 

19

 

8.4.                              Compliance
with Laws.  Each
Product shall be manufactured in accordance with all applicable laws,
regulations and ordinances of any government, agency or public authority having
jurisdiction over the manufacture and delivery of Products in the country where
the Approved Facility is located.  The Production Designs supplied by Satcon
shall comply with all applicable laws, regulations and ordinances of
any government, agency or public authority having jurisdiction over the
Products.  ExcelStor shall provide, upon
request, photocopies of all documents evincing ExcelStor’s compliance with this
Paragraph 8.4, including, but not limited to the building ownership certificate(s) of
the Approved Facility and the updated business license reflecting ExcelStor’s
legal capacity to manufacture Products.

 

8.5.                              End of Life Products. Before ExcelStor stops offering
any Products for sale to or for Satcon for any reason (“End
of Life Products”), ExcelStor shall give Satcon a minimum of twelve (12) months prior
written notice  (“End of Life
Period”).  During the End
of Life Period, Satcon will a)
provide ExcelStor with a forecast of
anticipated demand for the End of Life Products during the End of Life Period; and/or
b) may continue to place Purchase
Orders for the End of Life Products, with deliveries not to exceed the End of Life Period.  ExcelStor shall make reasonable
efforts to make available spare parts  for a period of
twelve (12) months after notice of discontinuance
of an End of Life Product.  At the
expiration of the twelve (12) month period, Satcon shall pay ExcelStor
full price for the End of Life Products and either (i) request ExcelStor
to retain possession of those End of Life Products for which ExcelStory shall
be paid an additional amount equal to one percent (1%) of the price per month
as a storage fee or (ii) direct ExcelStor to deliver the End of Life
Products to Satcon’s freight forwarder in Hong Kong SAR.

 

ARTICLE IX

INTELLECTUAL PROPERTY

 

9.1.                              Intellectual
Property Rights.

 

9.1.1.                     Without
prejudice to its rights under applicable law, each Party agrees and
acknowledges that as among the Parties,
the other  Party  is the owner of all right, title and interest in and to their own Intellectual Property Rights as of the
Effective Date and that no Party shall
obtain any ownership interest in any of the other Party’s Intellectual
Property Rights, or any license of such rights, except, with respect to
ExcelStor, the right to manufacture Products pursuant to this Agreement, the
right to disclose information to suppliers and vendors for the purpose of
purchasing parts components, sub assemblies and spares.

 

9.1.2.                     If at any time
during the Term any Party is aware
that any infringement of or act of unfair competition with respect to any of
the Satcon Technology Rights or ExcelStor Technology Rights is occurring or legal
action has been taken, then it shall promptly (i) notify the other Party, (ii) identify (if known) the infringer and
any other person responsible, (iii) to the extent known, the infringement
or acts of unfair competition complained of and (iv) furnish the
information which alerted it to such infringement or acts.

 

9.1.3.                     License of
Satcon Technology Rights and ExcelStor Intellectual Property Rights.

 

20

 

(a)                                  Satcon hereby
grants to ExcelStor (and each Affiliate that operates an Approved Facility) in
respect of each Product manufactured by ExcelStor for Satcon a non-exclusive,
worldwide license of the Satcon Technology Rights to the extent, and for the
period of time, required for ExcelStor to perform its obligations under this
Agreement, including the manufacturing of Products and their repair and
replacement.

 

(b)                                 ExcelStor
hereby grants a perpetual, non-exclusive, worldwide license of the ExcelStor
Intellectual Property Rights to Satcon in respect of each Product manufactured
by ExcelStor for Satcon to the extent required by Satcon to sell, service and
repair (but not refurbish or manufacture) the Products.

 

(c)                                  ExcelStor
hereby grants a perpetual, non-exclusive, worldwide license of the ExcelStor
Intellectual Property Rights to the users of the Products to the extent
required to use, service, repair (but not refurbish or manufacture) and resell
the Products.

 

9.1.4.                     Product
Ownership.

 

(a)                                  Each Party acknowledges
and agrees that any Intellectual Property Rights owned by any Party prior to the Effective Date, including,
without limitation, Intellectual Property Rights related to any Product
that was developed prior to the Effective
Date, is the sole and exclusive Intellectual Property Right of each
respective Party and the other Party will not, at
any time, deliberately act in a manner so as to infringe on such Intellectual
Property Rights.

 

(b)                                 ExcelStor
hereby acknowledges and agrees that Satcon shall exclusively own all right, title and interest in and to any Product
Engineering or Intellectual Property Rights arising from Product Engineering,
whether or not such Product Engineering was initiated at the request of Satcon
through a Statement of Work.

 

(c)                                  ExcelStor shall
have the rights to sell Products to parties other than Satcon under the
provisions of Paragraph 10.5.

 

ARTICLE X

TERM AND TERMINATION

 

10.1.                        Term.  This Agreement shall commence on the
Effective Date and shall continue for three
(3) years unless earlier terminated pursuant to Paragraph 10.3 (the “Term”). 
The Term shall also include any renewal term pursuant to Paragraph 10.2 hereof.

 

10.2.                        Renewal
Term.  The Parties
may mutually agree to renew this Agreement for additional two-year terms prior to the lapse of the initial Term, and thereafter,
prior to  the lapse of the
then-current two-year renewal
term.

 

10.3.                        Termination.

 

10.3.1.               This Agreement
will terminate in the event of any of the following:

 

(a)                                  Upon one hundred eighty (180) calendar days
after ExcelStor or Satcon, in its sole
discretion, gives  the other Party written notice;

 

21

 

(b)                                 Immediately upon the written agreement of the Parties to
terminate this Agreement;

 

(c)                                  Within 60 days
upon Satcon’s written notice in the event of an Epidemic Warranty Condition in
which ExcelStor does not make commercially
reasonable efforts to remedy and contain the Condition.

 

(d)                                 If Satcon or ExcelStor is in material or persistent breach of any
provisions of this Agreement and such breach, if capable of remedy, has not
been remedied within forty-five (45) days after receipt by the other Party of
notice of such breach; or

 

(e)                                  Any proceeding
shall be instituted by or against any Party seeking
to adjudicate it a bankrupt or an insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that is being
diligently contested by it in good faith, either such proceeding shall remain
undismissed or unstayed for a period of ninety (90) days or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or any substantial part of its property) shall
occur; or any Party shall take any
corporate action to authorize any of the actions set forth above in this subsection.

 

10.4.                        Effect of Termination.  Upon earlier expiration or termination of
this Agreement (i) ExcelStor shall no longer be authorized to utilize any
Satcon license previously utilized in connection with this Agreement except in
connection with ExcelStors obligation to provide end of life support under Paragraph 8.5 and under
Paragraph 10.5 described below and , (ii) each
Party shall return
to  the
other Party  all copies of the Confidential Information previously disclosed by the other Party and no  Party nor its Affiliates shall thereafter retain copies, transcriptions or summaries
of any portion of the foregoing, (iii) ExcelStor shall deliver and return to Satcon all Consigned
Inventory  and (iv) the Parties
shall remain liable for each of their respective liabilities hereunder that
accrued prior to the date of termination and for obligations hereunder that
survive termination.

 

10.5.                        ExcelStor’s Right to Sell Products in the Event of
Satcon’s Breach.  Without limiting ExcelStor’s remedies for
breach under applicable law, ExcelStor shall have the right to sell Products,
parts, components, and Sub Assemblies then in its possession or on order if
Satcon fails to cure a breach under this Agreement and ExcelStor terminates
this Agreement under 10.3.1(d).  Satcon
hereby grants ExcelStor a non-exclusive, worldwide license to make, have made,
use, distribute, sell, offer to sell, have sold, supply and otherwise
commercialize the Products, parts, components, and Sub Assemblies that are then
in ExcelStor inventory or on order in the event that ExcelStor terminates this
Agreement for Satcon’s breach pursuant to Paragraph 10.3.1(d).

 

10.6.                        Saton’s Right to Set Off in the Event of ExcelStor’s
Breach.  Without limiting Satcon’s remedies for breach
under applicable law, if Satcon terminates the Agreement pursuant 

 

22

 

to either Paragraph 10.3.1(c) or Paragraph
10.3.1(d) herein and such termination is held to be legitimate in an
arbitration conducted pursuant to Paragraph 13.13 herein, Satcon may set off
any obligations, payments, claims and liabilities due from Excelstor and/or its
Affiliates to Satcon and/or its Affiliates under this Agreement against all and
any amounts due from Satcon and/or its Affiliates to ExcelStor under this
Agreement.

 

ARTICLE XI

CONFIDENTIALITY

 

11.1.                        Disclosure
of Confidential Information.  Each
Party
may disclose to the other Party, from time to time during the Term, Confidential
Information pursuant to the terms of this Agreement.  All such Confidential Information disclosed to the receiving Party during the Term is and shall remain the
disclosing Party’s sole property and the
disclosing Party shall retain
all Intellectual Property Rights thereto.

 

11.2.                        Confidentiality.

 

11.2.1.               Each Party
shall (i) treat any other Party’s Confidential Information as confidential and shall not directly or
indirectly, use, divulge, publish or otherwise disclose or allow to be
disclosed any aspect of such other Party’s Confidential
Information, except with such other Party’s prior written consent and as specifically permitted by this Agreement
and (ii) refrain from any action or conduct which could reasonably be
expected to compromise the confidentiality or proprietary nature of such other Party’s Confidential Information.  Upon the written request of a Party, the other Party shall immediately return to the requesting Party all
originals and/or copies of any Confidential Information in the possession of
such other Party.

 

11.2.2.               The Parties
shall take all appropriate reasonable measures to prevent the unauthorized
disclosure of the other Party’s Confidential
Information exercising at least such care as it takes in respect of its own
Confidential Information, but in no event less than due care.

 

11.3.                        Information
Not Deemed Confidential Information.  The obligations and
restrictions set forth in this Article XI shall not apply to any
Confidential Information that falls within any of the exceptions set forth
below, so long as a Party produces credible written evidence that the alleged
Confidential Information:

 

(a)                                  is or has
become part of the public
domain without breach of this Agreement by the Party claiming this exception;

 

(b)                                 was
independently developed by or for a Party completely apart from the disclosures
hereunder;

 

(c)                                  was received
from a third party who lawfully acquires
such information without restriction, and without breach of this Agreement the
Party claiming this exception;

 

(d)                                 was required to
be disclosed by any securities exchange or regulatory or governmental body to
which that party is subject or submits, wherever situated, 

 

23

 

(only
to the extent so required) whether or not the requirement for information has
the force of law;

 

(e)                                  was disclosed
only to its professional advisers, auditors or bankers, contractors and
Affiliates necessary for the performance of this Agreement;

 

(f)                                    was in a Party’s
possession prior to the disclosure by the other Party; and/or

 

(g)                                 is released
pursuant to a binding court order or government regulation, provided that the
Party delivers a copy of such order or
action to the other Party and cooperates with the other Party if it elects to
contest such disclosure.

 

ARTICLE XII

INDEMNIFICATION

 

12.1.                        Indemnification
Obligation.

 

(a)                                  Each Party shall fully defend, indemnify, and hold harmless the other Party, their Affiliates, and their officers, directors,
employees, contractors, agents, attorneys, and insurers (“Indemnified Parties”) against any and all claims, damages, costs, expenses
(including, without limitation, court costs and attorneys’ fees), suits,
losses, or liabilities (“Claims”) of third parties for any death, injury, or
tangible property damage caused by or arising from negligent acts or omissions
of the indemnifying Party, its Affiliates, and their officers, directors,
employees, contractors, subcontractors, representatives, or agents (“Indemnifying
Parties”) arising from or
connected with the performance of this Agreement. The Indemnifying Parties shall
reimburse the Indemnified Parties for all
losses, costs, and expenses the Indemnified Parties incur as
a result of such Claims, including court costs and attorneys’ fees. To receive
the foregoing indemnities, the Party seeking
indemnification must promptly notify the other in writing of a Claim and
provide reasonable cooperation and full authority to defend or settle the
Claim. No party will have any
obligation to indemnify the other under any settlement made without its written
consent.

 

(b)                                 Satcon shall
fully defend, indemnify, and hold harmless ExcelStor,
its Affiliates, and its and their officers, directors,
employees, contractors, agents, attorneys, and insurers against any and all
Claims of third parties for any death, injury, or tangible property damage
caused by or arising from all Specifications, Production Design and
requirements established by Satcon for the Products.

 

(c)                                  ExcelStor shall
fully defend, indemnify, and hold harmless Satcon,
its Affiliates, and its and their officers, directors,
employees, contractors, agents, attorneys, and insurers against any and all
Claims of third parties for any death, injury, or tangible property damage
caused by or arising from Product Engineering provided by Exceltor and
manufacturing and workmanship defects attributable to ExcelStor.

 

12.2.                        Insurance. ExcelStor
shall maintain in full force and effect policies of (i) worker’s
compensation or employers’ liability insurance
as required by national or local law within statutory limits, (ii) general
liability insurance (with broad form general liability 

 

24

 

endorsement
naming Satcon as “additional insured” that provides products liability, a
vendor’s endorsement and insured contract coverage) with a limit of two and
one-half million US dollars
(US$2,500,000) per occurrence, and (iii) property insurance, with
reputable and financially secure insurance carriers in an amount which is
customarily carried by companies manufacturing electronic equipment with the
same volume as ExcelStor.  The applicable
insurance policy will be endorsed to provide that the insurance company will
endeavor to provide at least thirty (30) days prior notice of cancellation to
Satcon.  Upon request by Satcon, ExcelStor will provide to Satcon copies of said policies of insurance.

 

12.3.                        Limitation
of Liability. 
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NO PARTY SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR EXEMPLARY DAMAGES, WHETHER FORESEEABLE OR NOT, THAT ARE IN ANY
WAY RELATED TO THIS AGREEMENT.  FURTHER,
THE MAXIMUM LIABILITY OF EXCELSTOR UNDER THIS AGREEMENT FOR ANY REASON SHALL
NOT EXCEED FIVE MILLION US DOLLARS (US$5,000,000) IN THE AGGREGATE, AND THE
MAXIMUM LIABILITY OF EXCELSTOR FOR ANY PARTICULAR PRODUCT SHALL NOT EXCEED THE
PURCHASE PRICE FOR THAT PRODUCT.

 

ARTICLE XIII

GENERAL TERMS

 

13.1.                        Relationship
of Parties. 
Notwithstanding anything herein to the contrary, the relationship
between Satcon and ExcelStor is that of
independent contractors.  No Party is the
agent or legal representative of the other Party and no Party
has the right or authority to bind the other Party in any
manner.  This Agreement creates no
relationship as partners or a joint venture, and creates no pooling
arrangement.

 

13.2.                        Assignment; Transfer.  No
Party may assign or transfer its rights and
obligations under this Agreement without the prior written
consent of the other Party, except that Satcon may
assign and transfer its rights and obligations in entirety to an entity wholly
owned by Satcon to be incorporated after the Effective Date upon submitting a
written notice to the other Party.

 

13.3.                        Governing
Law.  The laws of the state of New
York disregarding its conflict of laws provisions, exclusively govern this
Agreement, all transactions and conduct related to this Agreement, and all
disputes and causes of action between the Parties (in
contract, warranty, tort, strict liability, by statute, regulation, or
otherwise). The Parties
specifically disclaim application of the United Nations Convention on Contracts
for the International Sale of Goods.

 

13.4.                        Counterparts.  This Agreement may be executed in several
counterparts that together shall be originals and constitute one and the same
instrument.

 

13.5.                        Waiver;
Remedies Cumulative.  The
failure of any Party to enforce any of its rights hereunder or at law shall not
be deemed a waiver or a continuing waiver of any of its rights or remedies
against another Party, unless such waiver is in writing and signed by the Party
to be charged.  All rights and remedies
conferred herein shall be cumulative and in addition to all of the rights and
remedies available to each Party at law, equity or otherwise.

 

25

 

13.6.                        Severability.  If any provision of this Agreement, or part
thereof, is declared by a court of competent jurisdiction to be invalid, void
or unenforceable, each and every other provision, or part thereof, shall
nevertheless continue in full force and effect.

 

13.7.                        Attorney’s
Fees.  In the event
a dispute arises regarding this Agreement, the prevailing Party shall be
entitled to its reasonable attorney’s fees and expenses incurred in addition to
any other relief to which it is entitled.

 

13.8.                        Notice.  All notices, requests or other communications
under this Agreement shall be in writing, and shall be sent to the designated
representatives of the Parties at the addresses set forth below, and shall be
deemed to have been duly given on the date of service if sent by facsimile
(provided a hard copy is sent in one of the manners specified herein), or on
the fourth (4th) day following
service if sent by air courier service with written confirmation of delivery,
or ten (10) calendar days after mailing if sent by first class, registered
or certified mail, return receipt requested. 
Each Party is required to notify the other Party in the above
manner of any change of address.

 

	
  If
  to Satcon:

  	
   

  	
  27 Drydock Avenue, Boston, MA 02210, USA  

  Facsimile: +1 617 8972401  

  Attention:
  Steve Rhoades, President and CEO

  
	
   

  	
   

  	
   

  
	
  If
  to ExcelStor:

  	
   

  	
  Suite 1507, Greenfield Tower, Concordia
  Plaza, No. 1 Science Museum Road, Kowloon, Hong Kong  

  Facsimile: +852 2620 6816 Attention: Y.C.
  Yu, VP of Manufacturing Services Business Unit

  

 

Any
notice given under this Agreement outside business hours in the place to which
it is addressed shall be deemed not to have been given until the start of the
next period of business hours in such place.

 

13.9.                        Further
Assurances.  The Parties
agree to execute such additional documents and perform such acts as are
reasonably necessary to effectuate the intent of this Agreement.

 

13.10.                  Entire
Agreement.  This
Agreement constitutes the entire agreement between the Parties regarding the
subject matter hereof, and supersedes all prior or contemporaneous understandings
or agreements regarding the subject matter hereof, whether oral or
written.  This Agreement shall be
modified or amended only by a written instrument executed by both Satcon and ExcelStor.

 

13.11.                  Authority.  The parties executing this Agreement on
behalf of Satcon and ExcelStor represent and
warrant that they have the authority from their respective governing bodies to
enter into this Agreement and to bind their respective companies to all the
terms and conditions of this Agreement.

 

13.12.                  Captions.  The captions of the Articles and Paragraphs in this Agreement are for convenience only and
shall not be used to interpret the provisions of this Agreement.

 

26

 

13.13.                  Arbitration.  In the case of any disputes, controversies, claims or differences which
may arise among
the Parties,
out of or in relation to or in connection with this Agreement, or for the
breach thereof, the Parties agree to good faith negotiation or mediation of any such
dispute.  In the event such dispute is
not resolved, such dispute shall be referred to and settled by arbitration
(without being submitted to any court), except as otherwise expressly provided
herein.  The arbitration shall take place in New York, in accordance with the rules of
procedure of the American Arbitration Association applying the substantive laws
of the State of New York.  The award
rendered shall be final and binding upon the  Parties
hereto, and judgment upon the award rendered may be entered in any court having
jurisdiction thereof.  In the event of
arbitration, the panel shall consist of three (3) arbitrators, one (1) of
whom shall be chosen by Satcon, one (1) of whom shall be chosen by ExcelStor, and one (1) of
whom shall be chosen by the two (2) arbitrators chosen by Satcon and ExcelStor.

 

[Signature page follows.]

 

27

 

IN WITNESS WHEREOF, and intending to be legally bound, the Parties have executed this
Agreement on the dates set forth below to be effective as of the date first set
forth above.

 

	
   

  	
   

  	
  SATCON
  TECHNOLOGY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
        /s/
  Charles S. Rhoades

  
	
   

  	
   

  	
   

  	
  Name:
  Charles S. Rhoades

  
	
   

  	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ESGW
  INTERNATIONAL LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      /s/
  Eddie Lui

  
	
   

  	
   

  	
   

  	
  Name:
  Eddie Lui

  
	
   

  	
   

  	
   

  	
  Title:
  President and Chief Executive Officer

  

 

 

SCHEDULE 1

 

Products

 

The initial Products to be manufactured by
ExcelStor include:

 

·                  Satcon PowerGate Plus Solar PV Inverters in these configurations:

 

·                  30 kW 208/240/480 V changeable

·                  50 kW 208/240/480 V changeable

·                  75 kW 208/240/480 V changeable

·                  100 kW 208/240V changeable

·                  100kW 400V

·                  100kW 480V

·                  135 kW 208/240V changeable

·                  135kW 480V

·                  150kW 400V

·                  225kW 208V

·                  225kW 480V

·                  250 kW 208/240V changeable

·                  250kW 400V

·                  250kW 480V

·                  375kW 480V

·                  500kW 480V

·                  500kW External Transformer/200VAC

·                  500kW External Transformer/265VAC

 

·                  All accessories included with such PowerGate Plus Solar PV Inverters
including combiner boxes, zone monitoring, software monitoring and weather
monitoring packages.

 

·                  All Sub Assemblies included in these Products for shipment to Satcon for
either on-going service requirements or for final assembly and test at another
Satcon facility.

 

 

SCHEDULE 2

 

PRICING FORMULA

 

Definitions

 

1)              Material Cost
($) = sum of the actual material-only costs incurred by ExcelStor for producing
the Products

 

2)              Material Overhead
(%) = Packaging, local transportation insurance, inbound freight and scrap
costs incurred on materials, expressed as a % of Material Cost

 

3)              Direct Labor
($) = Standard assembly and test hours/unit * Standard hourly factory rate,
which will include standard pay, an estimate of overtime pay and applicable
benefits and social insurance

 

4)              Overhead
($) = sum of actual indirect costs incurred by ExcelStor for producing the
Products.  Examples include indirect
supervision, supply chain management, logistics, direct utilities, direct
travel and manufacturing supplies.  These
costs should be broken into two distinct cost pools:

 

i.                  Initial overhead costs shall be amortized in Product Prices over 2-3
years based on projected volumes in either units or Megawatts, and then
disappear;

 

ii.               On-going overhead costs shall be allocated to individual Products based
on projected volumes in either units or Megawatts.

 

5)              Profit
(%) = Burden rate applied to total cost for the estimate of ExcelStor’s profit

 

Pricing Formula — Assemblies and Sub-Assemblies

 

1)              Total Cost
= Material Cost + Direct Labor + Overhead + (Material Overhead %) * Material
Cost

 

2)              Purchase Order Price
($) = Total Cost + (Total Cost * Profit %)

 

Pricing Formula — parts

 

1)              If parts are purchased directly from common suppliers, then Purchase
Order Price ($) = Material Cost ($)

 

2)              If parts are purchased directly from Excelstor, then Purchase Order
Price ($) = Material Cost + (Material Cost * Insurance and Freight %)

 

Pricing Appendix

 

Actual %s and examples will be in an appendix.  Specific variables will include:

 

1)              Material Overhead % initially set at ***  markup from Material Cost

 

2)              Direct Labor standard hourly rate initially set at ***

 

3)              One-time and on-going Overhead cost pools initially set at a ***
multiple of Direct Labor for 2009

 

4)              Profit % initially set at *** markup from Total Cost

 

 *** 
Represents text omitted pursuant to a request for confidential
treatment.  The omitted material has been
filed separately with the Securities and Exchange Commission.

 

30

 

SCHEDULE 3

 

EPIDEMIC WARRANTY CONDITIONS

 

An Epidemic Warranty Condition of Products exists when a
failure of Products to comply with the warranty in Paragraph 7.1.2 causes a
significant percentage of Products to fail in
Satcon’s application and more Products have the
potential to fail due to the same defect. 
The aforementioned percentage measures the actual failures of Products within some population of Products that share a
common production characteristic or event related to the defect such as time of
manufacture (same lot, batch or version), or that contain an identical suspect
element or have undergone a unique suspect process that could have produced the
defect (“Population”).  A calculation
resulting in a failure rate of over ten percent (10%) in the Population of
Products (where the Population is contains 50 or more units) that are under
warranty as provided in this Agreement, or the failure of five (5) units
(where the Population contains fewer than 50 units) that are under warranty as
provided in this Agreement, is deemed Epidemic.

 

In the event of such Epidemic Conditions, ExcelStor agrees to
expedite the replacement or repair of all Product in the Population,
immediately remedy the root cause of the defect and pay all reasonable costs
associated with any remedial action. 
Reasonable costs will include, but are not limited to, the cost to
repair or replace the Products, expedited air freight and shipping charges, and
direct costs incurred by Satcon or Satcon’s agents to remove and replace the non-conforming
products.

 

In addition to other remedies provided in any other
provision of this Agreement, if Satcon notifies ExcelStor that any Product shows evidence of an Epidemic Warranty Condition and ExcelStor confirms the
existence of such Epidemic Warranty Condition, ExcelStor shall use reasonable commercial efforts to prepare
and propose a corrective action plan (“CAP”) with respect to such Product
within five (5) days of said confirmation, addressing implementation and
procedure milestones for remedying such Epidemic Warranty
Condition(s). Satcon shall make
available in a timely manner samples of the Products evidencing an Epidemic Warranty Condition.

 

Epidemic failure excludes: Product failures directly due to action(s) that
voids the Product warranty under this Agreement, non-conformities expressly
approved by Satcon, and
failures occurring in the
Population outside of the warranty period in this Agreement.

 

31

 

SCHEDULE 4

 

WORKMANSHIP STANDARDS

 

1.               QUALITY

 

1.1.           Testing

 

ExcelStor will ensure all Products are tested in accordance
with the requirements set forth in the Quality Schedule attached as provided to
ExcelStor by Satcon (the “Quality Schedule”).

 

1.2.           Specifications and Quality Schedule

 

All
Products shall be manufactured in accordance with and conform to the
Specifications.  ExcelStor agrees
that all Products will conform to the Specifications current at the time of
manufacture.  Unless otherwise specified,
changes to the Specifications shall apply to all Products manufactured after
the effective date of the changes in the Specifications.  ExcelStor shall maintain the capability of
producing prior versions of a Product and shall deliver such prior version if
requested by Satcon; subject, however to the availability
of parts, components and subassemblies and the other limitations on ExcelStor’s
obligation to accept purchase orders set out in the Agreement to which this
schedule is attached.  ExcelStor agrees to comply with the Quality Schedule which sets out additional
quality requirements, as set forth below.

 

Quality Schedule

 

	
  Accuracy & Completeness:

  	
   

  	
  All
  reports, data, protocols, and processes required by this agreement and
  communicated from the Supplier to Satcon must be accurate and complete, based
  on best efforts of both Parties.

  

 

Target Failure Rate:

 

	
  Target
  Failure

  Rate

  	
   

  	
  2009

  	
   

  	
  2010

  	
   

  	
  2011

  	
   

  
	
  30

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  50

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  75

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  100

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  135

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  150

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  250

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  500

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  1000

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

	
   

  	
   

  	
  Target failure rate is listed as above.  Failure rates must consistently be below
  the targeted 

  

 

  *** 
Represents text omitted pursuant to a request for confidential
treatment.  The omitted material has been
filed separately with the Securities and Exchange Commission.

 

32

 

	
   

  	
   

  	
  value total on a per-month basis. This rate is
  defined on a month-to-month failure-to-number of units shipped rate.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For example, if 100 Inverters of Supplier’s units
  are shipped from one type in a given month, each time one of those units
  fails it will count against the monthly failure rate. Shipped date is
  Supplier to Satcon. The failures of monthly population (monthly population:
  Number of one model of Inverters shipped from Supplier to Satcon per month)
  will be cumulatively counted in relation to monthly population during the
  warranty period. At any point within the warranty period, monthly failure
  rate must be less than or equal to ***  in 2009, *** in 2010, and *** in
  2011.

  
	
   

  	
   

  	
   

  
	
  QA & QC Process Documentation:

  	
   

  	
  Supplier will provide documentation on quality
  assurance and quality control processes (control plans & process
  failure mode effect analysis) from initial start up of product to product
  end-of-life upon Satcon’s request.

  
	
   

  	
   

  	
   

  
	
  Quality Assurance Manuals:

  	
   

  	
  Supplier will share a Quality Assurance Manual
  (ISO 9001:2008 compliance) that documents the overall quality-management
  system upon Satcon’s request and proactively notify Satcon of any changes
  within 30 days.

  
	
   

  	
   

  	
   

  
	
  Supplier Quality System Compliance:

  	
   

  	
  Suppliers will meet quality and any associated
  standards (UL-1741 & IPC 610 class 3) outlined in the Satcon’s agreement
  or contract. Supplier agrees to quality audits as per schedule that may
  extend to supply chain processes, testing processes, evaluations, etc.

  
	
   

  	
   

  	
   

  
	
  Quality Reviews:

  	
   

  	
  Quality reviews will be conducted between Satcon
  and the Supplier.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The goal of the meeting is to ensure that the test
  plan will be adequate, and the objective of the meeting is to review data
  (metrics) and establish the success of the product through the testing
  processes. Data must be provided in Microsoft application (Word, Excel or
  Access) or other format as agreed between Satcon and Supplier.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Daily Quality Assurance
  Performance Data:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  List of items below but not limited to additional
  requirements:

  
	
   

  	
   

  	
  Daily inspection data enter onto intranet or
  Satcon portal. (if applicable)

  
	
   

  	
   

  	
  Escalation process for critical issue per quality
  alert and deviation.

  
	
   

  	
   

  	
  Scrap
  and rework reports (where applicable).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Weekly Quality Assurance
  Performance Data:

   

  ·
  List of items below but not limited to additional requirements:

  All
  inspection data (pareto, SPC control charts, sampling plan).

  

 

  *** 
Represents text omitted pursuant to a request for confidential
treatment.  The omitted material has been
filed separately with the Securities and Exchange Commission.

 

33

 

	
   

  	
   

  	
  Trend
  charts - improvement over time / analysis to goal

  Bar
  graphs / pie charts / histograms

  Pareto
  charts - analysis of issues based on priority

  Paynter charts - analysis of actions over time

  Quality alerts and deviation issued or log.

  SCAR (supplier corrective action request) issued
  or log.

  Work instructions update.

  Weekly report on quality, reliability, health and
  safety (Hits and Misses).

  Open issue list.

  Weekly
  quality meeting.

   

  Monthly Quality Assurance Performance Data:

   

  ·
  List of items below but not limited to additional requirements:

  Layer audit metrics.

  Customer quality metrics (including warranty).

  Internal quality metrics.

  Supplier quality metrics.

  Test yield metrics.

  Calibration metrics (including all equipments
  used for factory acceptance test).

  Health and safety metrics.

  Corrective action (PPSR/8D) log.

  Corrective action/preventive action metrics (% on
  track).

  Document control metrics.

  Supplier reliability data.

  Process capability metrics.

  Monthly quality reporting meeting.

   

  Quarterly Quality Assurance Performance Review

   

  Review
  of item or items listed below.

  ·
  List of items below but not limited to additional requirements:

  ·                            Quality Open Issue List

  ·                            Quality strategy

  ·                            Quality Objectives

  ·                            Trend analysis

  ·                            Correlation and regression
  analysis

  ·                            Reliability analysis

  ·                            Capability analysis

  ·                            Quality metrics

  ·                            Quality roadmaps

  

 

34

 

	
   

  	
   

  	
  On-site visits by Satcon staff to evaluate
  supplier’s quality management system will occur prior to first production
  orders for each product and at least once per year thereafter. These site
  evaluations may be waived at Satcon’s discretion.

  
	
   

  	
   

  	
   

  
	
  Process and/or Product Changes:

  	
   

  	
  Process and/or product changes must be approved by
  Satcon prior to implementation. The Supplier will notify Satcon of production
  process changes and/or material changes to the components or design within
  the products supplied to Satcon. This includes but is not limited to
  temperature process changes, connection technology changes (solder,
  connectors, etc.), core component changes, and software changes.

  
	
   

  	
   

  	
   

  
	
  Closed-Loop Corrective-Action System:

  	
   

  	
  Supplier will provide documentation of procedures
  to determine the cause of nonconformances and implementing appropriate actions
  to prevent recurrence. The corrective-action system shall include provisions
  for supplier nonconformances, internal nonconformances, internal audit system
  nonconformances, and customer returns or corrective-action requests.
  Corrective action reports shall follow a standard format agreed upon by both
  the Supplier and Satcon. Corrective actions shall be reviewed with Satcon for
  effectiveness.

  
	
   

  	
   

  	
   

  
	
  Reliability

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Design Verification Test Plan:

  	
   

  	
  Where applicable, suppliers must inform Satcon and
  Satcon will provide a detailed test plan encompassing all of the relevant
  test and analyses that will be conducted from the design stage through the
  entitled state.

  
	
   

  	
   

  	
   

  
	
  Qualification Test Results and Proof of
  Functionality:

  	
   

  	
  Supplier will show and provide Satcon
  documentation of all test results leading to the qualification of new and
  enhanced products.  This shall include
  the listed items below.  In addition,
  where applicable, this may include design verification, field
  performance/reliability, mature tests for life-cycle, and user testing.

  

 

	
  Testing Strategy

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Testing or Inspection

  	
   

  	
  Frequency

  	
   

  	
  Responsible

  
	
  UL Qualification

  	
   

  	
  Certification
  testing

  	
   

  	
  Initial submission

  	
   

  	
  Satcon

  
	
  CSA Qualification

  	
   

  	
  Certification
  testing

  	
   

  	
  Initial submission

  	
   

  	
  Satcon

  
	
  CE Qualification

  	
   

  	
  Certification
  testing

  	
   

  	
  Initial submission

  	
   

  	
  Satcon

  

 

	
  CM Qualification Testing

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Article Full Testing

  	
   

  	
  Qualification
  testing each rating (30/50/75/100/135)

  	
   

  	
  1st Unit per rating

  	
   

  	
  Satcon/CM

  
	
   

  	
   

  	
  Satcon
  general inspection

  	
   

  	
   

  	
   

  	
  Satcon/CM

  
	
   

  	
   

  	
  Product
  Assembly Integrity

  	
   

  	
  Thermal
  Power Image Test

  	
   

  	
  Satcon/CM

  

 

35

 

	
  Sampling Plan Full Testing

  	
   

  	
  Qualification
  testing each rating (30/50/75/100/135)

  	
   

  	
  Sampling plan per MIL Standard

  	
   

  	
  Satcon/CM

  
	
   

  	
   

  	
  Satcon
  general inspection

  	
   

  	
   

  	
   

  	
  Satcon/CM

  
	
   

  	
   

  	
  Product
  Assembly Integrity

  	
   

  	
  Thermal
  Power Image Test

  	
   

  	
  Satcon/CM

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sampling Plan Production Testing

  	
   

  	
  Qualification
  testing each rating (30/50/75/100/135)

  	
   

  	
  Sampling plan per MIL Standard

  	
   

  	
  Satcon/CM

  
	
   

  	
   

  	
  Satcon
  general inspection

  	
   

  	
   

  	
   

  	
  Satcon/CM

  
	
   

  	
   

  	
  Product
  Assembly Integrity

  	
   

  	
  Thermal
  Power Image Test

  	
   

  	
  Satcon/CM

  

 

	
  Production Processes & Test Protocols:

  	
   

  	
  Supplier will show documentation of appropriately
  rigorous test protocols to qualify production units and processes. The
  documentation shall include all listed items below. Supplier will establish
  how tests ensure a repeatable process to assemble and ship a reliably
  designed product.

  

 

	
  CM Production Testing

  
	
   

  
	
  General
  Inspection

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Visual
  Inspection

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Component
  and Assembly Inspection

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Wiring
  Inspection

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product
  Assembly Integrity

  	
   

  	
  Thermal
  Power Image Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Insulation
  Test

  	
   

  	
   

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Logic
  Test

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Logic
  Power Supply Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Control
  Board Setup

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Gate
  Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Digital
  Input/Output Signals

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Fan
  Control Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Charging
  Circuit Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Functional
  Test

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Test
  Setup

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Command
  Signals Check

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Feedback
  Signal Calibration

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Analog
  Faults Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Customer
  Signals Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  HMI
  Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  

 

36

 

	
  Full
  Voltage/Power Test

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Trip
  level Setting

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Heat
  Run and Efficiency Test (if applicable)

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Reactive
  Power Control

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Maximum
  Power Point Tracking Test (if applicable)

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Voltage
  and Frequency Calibration Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Remote
  Control Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Modbus
  Communication Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Modbus
  Access Setting

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  Ground
  Fault Detector Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  
	
   

  	
   

  	
  KW
  Hour Test

  	
   

  	
  Every
  Unit

  	
   

  	
  CM

  

 

	
  Life Testing:

  	
   

  	
  Where
  applicable, supplier will establish accelerated life tests that provide long
  term reliability assurance of the product and share these protocols and
  results with Satcon. Evidence of the test’s correlation to accelerated real
  world conditions must be presented and accepted by Satcon.

  

 

37

 

EXHIBIT A

 

Consignment Agreement

 

This
Consignment Agreement (this “Consignment Agreement”), is made and entered into
as of December 18, 2008 (the “Effective
Date”), by and between ESGW International Limited, a company registered under
the laws of the British Virgin Islands, having a principal mailing address at
c/o ExcelStor Technology Limited, Suite 1507, Greenfield Tower, Concordia
Plaza, Number 1, Science Museum Road, Tsimshatsui East, Hong Kong Special
Administrative Region (hereinafter referred to as “Consignee”), and Satcon Technology Corporation, a company registered under the laws of the state of Delaware of the
United States of America, having a principal place of business at 27 Drydock
Avenue, Boston, MA 02210, U.S.A. (hereinafter referred to as “Consignor”)
(each Consignor and Consignee a “Party” and collectively, the “Parties”).

 

1.              Consignment. 
Consignor shall furnish on consignment in the custody of the Consignee, certain equipment, tooling,
and other materials to be used for manufacturing Products (as defined in Manufacturing and Purchase Agreement between the Parties, dated December 18, 2008 (the “Manufacturing Agreement”) as listed in Exhibit 1
attached, which may be amended by the Parties in writing from time to time (the
“Consigned Equipment”).  The Consigned
Equipment will be shipped to Consignee at its facility or its Affiliate’s facility in Shenzhen, P.R. China (the “Facility”) in operative status and at no other locations unless and until
Consignor agrees otherwise in
writing.  Consignee
shall use the Consigned Equipment only for the purposes of manufacturing
Products and providing other services for Consignor under the Manufacturing
Agreement. A duly authorized representative of Consignor shall have access at all
reasonable times, and with one (1) days prior notice, to the Facility to inspect the status and/or use of the Consigned Equipment.

 

2.              Ownership.  Consignor
shall at all times retain ownership and title of the Consigned Equipment.  Consignee shall give Consignor an immediate
notice in the event that any of the Consigned Equipment is levied upon or is
about to become liable or is threatened with seizure, and Consignee shall
indemnify Consignor against all loss and damages caused by such action.

 

3.              Risk of Loss.  Consignee shall bear all risks of loss, including, but not limited to, theft,
destruction or damage from fire or other natural causes, of the Consigned
Equipment while it is in its possession.  Consignee shall maintain
insurance with respect to the Consigned Equipment against all risks of loss, in
an amount equal to the full replacement cost of the Consigned Equipment in
Consignee’s possession, and shall cause Consignor to be named as an additional
insured under such insurance policies as Consignor’s interest may appear.  At Consignor’s request, Consignee shall
furnish to Consignor certificates of insurance reflecting the foregoing
coverage.

 

4.              Charges and Expenses.  Consignee does
not need to pay any charges to Consignor for using the Consigned Equipment in
accordance with the terms and conditions provided herein.  Consignee shall be responsible for all expenses of  storing, handling
and using the Consigned Equipment once it arrives at the Facility.

 

38

 

5.              Duration of Agreement and Termination.                  This Consignment Agreement shall take effect
on the date hereof and terminates upon the
termination or expiration of the Manufacturing Agreement.  Upon termination of this
Consignment Agreement, Consignee shall immediately return to Consignor all
Consigned Equipment in operative status at Consignee’s
expense. 
During the term of this Consignment Agreement, Consignor may recall any
or all of the Consigned Equipment upon ten (10) days
written notice to Consignee.

 

6.              No Liability.
Consignor shall not be responsible or liable for any loss, damage or injury to
the property or the body of Consignee, its Affiliates (as defined in the
Manufacturing Agreement), or their agents, employees, suppliers, or anyone
directly or indirectly employed by Consignee in connection with using any of
the Consigned Equipment. Consignee is encouraged to obtain appropriate
insurance against such risk of loss.

 

7.              Maintenance, Operation and Upgrade.  Consignee shall not remove,
alter, disfigure or cover up any numbering, lettering, or insignia displayed
upon the Consigned Equipment, and shall see that the Consigned Equipment is not
subjected to careless, unusually or needlessly rough usage; and Consignee shall
at its own expense maintain the Consigned Equipment
and its appurtenances in good repair and operative condition, and return it in
such condition to Consignor, ordinary wear and tear resulting from proper use
thereof alone expected. Consignee shall be responsible for, at its own cost,
all necessary upgrades of the Consigned Equipment.

 

8.              Repairs.
Consignee shall be responsible for the expense of all repairs, including labor,
material, parts and other items while the Consigned Equipment is in the
possession of Consignee.

 

9.              Operator.
Unless otherwise mutually agreed in writing, Consignee shall supply and pay all
operators on the Consigned Equipment during the term of this Consignment
Agreement. All operators shall be competent.

 

10.       Separation.  Consignee shall keep the Consigned Equipment reasonably segregated from
Consignee’s own tooling, equipment and other
materials, shall keep the Consigned Equipment identifiable as having been
consigned to Consignee pursuant to the provisions of this Consignment
Agreement, and shall maintain accurate records of all uses of the Consigned
Equipment.

 

11.       DISCLAIMER OF WARRANTIES.
CONSIGNOR, BEING NEITHER THE MANUFACTURER, NOR A SUPPLIER, NOR A DEALER IN THE
CONSIGNED EQUIPMENT, MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER
WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE CONDITION OF THE CONSIGNED
EQUIPMENT, ITS MERCHANTABILITY, ITS DESIGN, ITS CAPACITY, ITS
PERFORMANCE, ITS MATERIAL, ITS WORKMANSHIP, ITS FITNESS FOR
ANY PARTICULAR PURPOSE, OR THAT IT WILL
MEET THE REQUIREMENTS OF ANY LAWS, RULES, SPECIFICATIONS, OR CONTRACTS WHICH PROVIDE FOR SPECIFIC APPARATUS OR SPECIAL METHODS. CONSIGNOR
FURTHER DISCLAIMS ANY LIABILITY WHATSOEVER FOR LOSS, DAMAGE, OR INJURY TO
CONSIGNEE OR THIRD PARTIES AS A RESULT OF ANY DEFECTS, LATENT OR OTHERWISE, IN
THE CONSIGNED EQUIPMENT. CONSIGNOR SHALL NOT BE LIABLE IN ANY

 

39

 

EVENT TO CONSIGNEE FOR ANY LOSS, DELAY, OR
DAMAGE OF ANY KIND OR CHARACTER RESULTING FROM DEFECTS IN, OR INEFFICIENCY OF,
THE CONSIGNED EQUIPMENT HEREBY OR ACCIDENTAL BREAKAGE THEREOF.

 

12.       Indemnity.
Consignee shall indemnify Consignor against, and hold Consignor harmless from,
any and all liability for injury, disability and death of workmen and other
persons caused by the operation, use, control, handling, or transportation of
the Consigned Equipment during the term of this Consignment Agreement.  Consignee shall indemnify Consignor, and hold
Consignor harmless from all loss and damage to the Consigned Equipment while it
is in the possession of Consignee.

 

IN
WITNESS WHEREOF, Consignor and Consignee have executed this Consignment
Agreement as a sealed instrument as of the date first written above.

 

 

	
  Consignee:

  	
  ESGW
  International Limited

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Consignor:

  	
  Satcon
  Technology Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

40

 

Exhibit 1 to Consignment Agreement

 

Consigned Equipment

 

41

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