Document:

EXHIBIT
10.2

 

FORM OF SECURITIES PURCHASE AGREEMENT

 

Microvision, Inc.

19910 North Creek Parkway

Bothell, Washington 98011

Attention: Chief Executive
Officer

 

Ladies and
Gentlemen:

 

Microvision, Inc.,
a Washington corporation (the “Company”), proposes to issue and sell to certain
investors shares (the “Shares”) of Common Stock, no par value (the “Common
Stock”), of the Company.  The Company
intends to engage C.E. Unterberg, Towbin (the “Placement Agent”) as its exclusive placement
agent in connection with such issuance and sale.  The Shares are described in and offered under the Prospectus that
is referred to below.

 

The Company has
prepared and filed, in accordance with the provisions of the Securities Act of
1933, as amended, and the rules and regulations thereunder (collectively, the
“Act”), with the Securities and Exchange Commission (the “Commission”) a
registration statement under the Act on Form S-3 (File No. 333-102244)
dated December 27, 2002 (the “registration statement”).  The registration statement has been declared
by the Commission to be effective under the Act.  The Company will next file with the Commission pursuant to
Rule 424(b) under the Act a final prospectus supplement to the Basic
Prospectus (as defined below), describing the Shares and the offering thereof,
in such form as has been provided to or discussed with, and approved, by the
Placement Agent.

 

The term “Registration Statement” as used in this
Agreement means the registration statement, at the time it became effective and
as supplemented or amended prior to the execution of this Agreement, including
(i) all financial schedules and exhibits thereto and (ii) all
documents incorporated by reference or deemed to be incorporated by reference
therein.  The term “Basic Prospectus” as
used in this Agreement means the basic prospectus dated as of March 3, 2003
that is part of the registration statement for use in connection with the offer
and/or sale of the Shares pursuant to this Agreement.  The term “Prospectus Supplement” as used in this Agreement means
any final prospectus supplement specifically relating to the Shares, in the
form filed with, or transmitted for filing to, the Commission pursuant to
Rule 424 under the Act.  The term
“Prospectus” as used in this Agreement means the Basic Prospectus together with
the Prospectus Supplement except that if such Basic Prospectus is amended or
supplemented on or prior to the date on which the Prospectus Supplement was
first filed pursuant to Rule 424, the term “Prospectus” shall refer to the
Basic Prospectus as so amended or supplemented and as supplemented by the
Prospectus Supplement.  Any reference
herein to the registration statement, the Registration Statement, the Basic
Prospectus, any Prospectus Supplement or the Prospectus shall be deemed to
refer to and include (i) the documents incorporated by reference therein
pursuant to Form S-3 (the “Incorporated Documents”) and (ii) the copy of the
Registration Statement, the Basic Prospectus, the Prospectus Supplement, the
Prospectus or the Incorporated Documents filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”).  Any reference herein to the terms “amend,”
“amendment” or “supplement” with respect to the Registration Statement, the Prospectus
Supplement or the Prospectus shall be deemed to refer to and include the filing
of any document under the Securities Exchange Act of 1934, as amended, and the
rules and regulations

 

 

thereunder (collectively, the “Exchange Act”) after
the effective date of the Registration Statement, or the date of the
Prospectus, as the case may be, deemed to be incorporated therein by reference.

 

The undersigned,
                              
(the “Investor”), hereby confirms its agreement with you as follows:

 

1.             This Purchase Agreement (the “Agreement”) is made as of
                ,
2003 between the Company and the Investor.

 

2.             The Company and the Investor agree that the Investor
will purchase from the Company and the Company will issue and sell to the
Investor             
Shares, for a purchase price of
$              
per share, or an aggregate purchase price of
$                         .  The Investor acknowledges that the offering
of the Shares is not a firm commitment underwriting.

 

3.             The completion of the purchase and sale of the Shares
(the “Closing”) shall occur on
                       ,
2003 (the “time of purchase”).  At the
Closing, the Company shall deliver to the Investor, using customary book-entry
procedures, the number of Shares as set forth above in Section 2, and the
Investor shall deliver, or cause to be delivered, to the Company Federal Funds
wire transfer in the full amount of the purchase price for the Shares being
purchased.

 

4.             This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law.

 

5.             This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.

 

6.             The Company represents and warrants to Investor that:
the Registration Statement has been declared effective under the Act; no stop
order of the Commission preventing or suspending the use of the Basic
Prospectus, the Prospectus Supplement or the Prospectus or the effectiveness of
the Registration Statement has been issued and no proceedings for such purpose
have been instituted or, to the Company’s knowledge, are threatened by the
Commission; the Company is eligible to use Form S-3; such registration
statement at the date of this Agreement meets, and the offering of the Shares
complies with, the requirements of Rule 415 under the Act.  The Registration Statement complied when it
became effective, complies and will comply, at the time of purchase, and the
Basic Prospectus, the Prospectus Supplement and the Prospectus conformed as of
its date, conform and will conform at the time of purchase in all material
respects with the requirements of the Act (including said Rule 415); any
statutes, regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement have been and will be so described or
filed; the conditions to the use of Form S-3 have been satisfied; and the
Registration Statement did not at the time of effectiveness, does not and will
not at the time of purchase contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Basic Prospectus, the
Prospectus Supplement and the Prospectus did not as of its date, does not and
will not at the time of purchase contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; the documents incorporated by reference in the Basic
Prospectus, the Prospectus Supplement, the Registration Statement and the Prospectus,
at the time they became effective or were filed with the Commission, complied
in all material respects with the requirements of the Exchange Act and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be

 

 

stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and the Company has not distributed and will not distribute any
offering material in connection with the offering or sale of the Shares other
than the Registration Statement, the then most recent Prospectus Supplement and
the Prospectus.

 

Please confirm that the
foregoing correctly sets forth the agreement between us by signing in the space
provided below for that purpose.

	
   

  	
   

  	
   

  
	
   

  	
  Name of
  Investor (Print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
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  Facsimile:

  	
   

  
	
   

  	
   

  	
   

  	
  Email
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
  Nominee
  (name in which Investor Shares are

  
	
   

  	
   

  	
   

  	
  to be
  registered, if different than name of

  
	
   

  	
   

  	
   

  	
  Investor):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address of
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  Taxpayer ID.
  Number:

  	
   

  
	
   

  	
   

  	
   

  	
  (if acquired
  in the name of a nominee, the

  
	
   

  	
   

  	
   

  	
  taxpayer ID.
  number of such nominee)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Broker:

  	
   

  
	
   

  	
   

  	
   

  	
  Broker
  Contact Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Broker
  Contact Telephone:

  	
   

  
	
   

  	
   

  	
   

  	
  Broker
  Contact Facsimile:

  	
   

  
	
   

  	
   

  	
   

  	
  Broker Contact
  E-mail Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  DTC account
  number:

  	
   

  
																			

 

	
  AGREED AND ACCEPTED:

  
	
  Microvision,
  Inc.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:Exhibit
10.3

 

THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR SATCON TECHNOLOGY CORPORATION SHALL HAVE
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SATCON TECHNOLOGY
CORPORATION THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

 

WARRANT TO PURCHASE

 

SHARES OF COMMON STOCK

 

OF

 

SATCON TECHNOLOGY CORPORATION

 

 

Expires October 31, 2008

 

	
  No.: W-B-03-    

  	
   

  	
  Number of Shares:
                      

  
	
  Date of Issuance: October 31, 2003

  	
   

  	
   

  

 

 

FOR VALUE RECEIVED, subject to the provisions
hereinafter set forth, the undersigned, SatCon Technology Corporation, a
Delaware corporation (together with its successors and assigns, the “Issuer”),
hereby certifies that
                                                       
or its registered assigns is entitled to subscribe for and purchase, during the
Term (as hereinafter defined), up to                                                                     
(                        )
shares (subject to adjustment as hereinafter provided) of the duly authorized,
validly issued, fully paid and non-assessable Common Stock of the Issuer, at an
exercise price per share equal to the Warrant Price then in effect, subject,
however, to the provisions and upon the terms and conditions hereinafter set
forth.  Capitalized terms used in this
Warrant and not otherwise defined herein shall have the respective meanings specified
in Section 8 hereof.

 

1.                                       Term.  The term of this Warrant shall commence on
October 31, 2003 and shall expire at 5:00 p.m., eastern time, on October 31,
2008 (such period being the “Term”).

 

2.                                       Method
of Exercise Payment; Issuance of New Warrant; Transfer and Exchange.

 

(a)                                  Time
of Exercise.  The purchase rights
represented by this Warrant may be exercised in whole or in part during the
Term commencing on April 30, 2004 and expiring on October 31, 2008.

 

 

(b)                                 Method
of Exercise.  The Holder hereof may
exercise this Warrant, in whole or in part, by the surrender of this Warrant
(with the exercise form attached hereto duly executed) at the principal office
of the Issuer, and by the payment to the Issuer of an amount of consideration
therefor equal to the Warrant Price in effect on the date of such exercise
multiplied by the number of shares of Warrant Stock with respect to which this
Warrant is then being exercised, payable at such Holder’s election (i) by
certified or official bank check or by wire transfer to an account designated
by the Issuer, (ii) commencing one (1) year following the Original Issue Date,
by “cashless exercise” in accordance with the provisions of subsection (c) of
this Section 2, but only when a registration statement under the Securities Act
providing for the resale of the Warrant Stock is not then in effect, or (iii)
by a combination of the foregoing methods of payment selected by the Holder of
this Warrant.

 

(c)                                  Cashless
Exercise.  Notwithstanding any
provisions herein to the contrary and commencing one (1) year following the
Original Issue Date, if (i) the Per Share Market Value of one share of Common
Stock is greater than the Warrant Price (at the date of calculation as set
forth below) and (ii) a registration statement under the Securities Act
providing for the resale of the Warrant Stock is not then in effect, in lieu of
exercising this Warrant by payment of cash, the Holder may exercise this
Warrant by a cashless exercise and shall receive the number of shares of Common
Stock equal to an amount (as determined below) by surrender of this Warrant at
the principal office of the Issuer together with the properly endorsed Notice
of Exercise in which event the Issuer shall issue to the Holder a number of
shares of Common Stock computed using the following formula:

 

X = Y - (A)(Y)

B

 

Where                                                            X
=                             the
number of shares of Common Stock to be issued to the Holder.

 

Y =                              the
number of shares of Common Stock purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised, the portion of
the Warrant being exercised.

 

A =                            the
Warrant Price.

 

B =                              the
Per Share Market Value of one share of Common Stock.

 

(d)                                 Issuance
of Stock Certificates.  In the event
of any exercise of the rights represented by this Warrant in accordance with
and subject to the terms and conditions hereof, (i) certificates for the shares
of Warrant Stock so purchased shall be dated the date of such exercise and
delivered to the Holder hereof within a reasonable time, not exceeding three
(3) Trading Days after such exercise or, at the request of the Holder (provided
that a registration statement under the Securities Act providing for the resale
of the Warrant Stock is then in effect), issued and delivered to the Depository
Trust Company (“DTC”) account on the Holder’s behalf via the Deposit
Withdrawal Agent Commission System (“DWAC”) within a reasonable time,
not exceeding three (3) Trading Days after such exercise, and the Holder hereof
shall be deemed for all purposes to be the holder of the shares of Warrant
Stock so purchased as of the date of such exercise and (ii) unless this

 

2

 

Warrant has expired, a new Warrant representing the number of shares of
Warrant Stock, if any, with respect to which this Warrant shall not then have been
exercised (less any amount thereof which shall have been canceled in payment or
partial payment of the Warrant Price as hereinabove provided) shall also be
issued to the Holder hereof at the Issuer’s expense within such time.  Notwithstanding the foregoing to the
contrary, the Issuer or its designated transfer agent shall only be required to
issue and deliver the shares to the DTC on a Holder’s behalf via DWAC if such
exercise is in connection with a sale and all requirements to effect such DWAC
have been met, including, but not limited to, the prospectus delivery
requirements.  If the Issuer or its
designated transfer agent cannot issue the shares to a Holder via DWAC because
the aforementioned conditions are not satisfied, the Issuer shall deliver physical
certificates to the Holder.

 

(e)                                  Transferability
of Warrant.  Subject to Section
2(g), this Warrant may be transferred by a Holder without the consent of the
Issuer.  If transferred pursuant to this
paragraph and subject to the provisions of subsection (g) of this Section 2,
this Warrant may be transferred on the books of the Issuer by the Holder hereof
in person or by duly authorized attorney, upon surrender of this Warrant at the
principal office of the Issuer, properly endorsed (by the Holder executing an
assignment in the form attached hereto) and upon payment of any necessary
transfer tax or other governmental charge imposed upon such transfer.  This Warrant is exchangeable at the
principal office of the Issuer for Warrants for the purchase of the same
aggregate number of shares of Warrant Stock, each new Warrant to represent the
right to purchase such number of shares of Warrant Stock as the Holder hereof
shall designate at the time of such exchange. 
All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
name of the Holder or the number of shares of Warrant Stock, as applicable.

 

(f)                                    Continuing
Rights of Holder.  The Issuer will,
at the time of or at any time after each exercise of this Warrant, upon the
request of the Holder hereof, acknowledge in writing the extent, if any, of its
continuing obligation to afford to such Holder all rights to which such Holder
shall continue to be entitled after such exercise in accordance with the terms
of this Warrant, provided that if any such Holder shall fail to make any
such request, the failure shall not affect the continuing obligation of the
Issuer to afford such rights to such Holder.

 

(g)                                 Compliance
with Securities Laws.

 

(i)                                     The
Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant or
the shares of Warrant Stock to be issued upon exercise hereof are being
acquired solely for the Holder’s own account and not as a nominee for any other
party, and for investment, and that the Holder will not offer, sell or
otherwise dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration statement, or
an exemption from registration, under the Securities Act and any applicable
state securities laws.

 

3

 

(ii)                                  Except
as provided in paragraph (iii) below, this Warrant and all certificates
representing shares of Warrant Stock issued upon exercise hereof shall be
stamped or imprinted with a legend in substantially the following form:

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR SATCON TECHNOLOGY
CORPORATION SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO SATCON TECHNOLOGY CORPORATION THAT REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED.

 

(iii)                               The
restrictions imposed by this subsection (e) upon the transfer of this Warrant
or the shares of Warrant Stock to be purchased upon exercise hereof shall
terminate (A) when such securities shall have been resold pursuant to an
effective registration statement under the Securities Act, (B) upon the
Issuer’s receipt of an opinion of counsel, in form and substance reasonably
satisfactory to the Issuer, addressed to the Issuer to the effect that such
restrictions are no longer required to ensure compliance with the Securities
Act and state securities laws or (C) upon the Issuer’s receipt of other
evidence reasonably satisfactory to the Issuer that such registration and
qualification under the Securities Act and state securities laws are not
required.  Whenever such restrictions shall
cease and terminate as to any such securities, the Holder thereof shall be
entitled to receive from the Issuer (or its transfer agent and registrar),
without expense (other than applicable transfer taxes, if any), new Warrants
(or, in the case of shares of Warrant Stock, new stock certificates) of like
tenor not bearing the applicable legend required by paragraph (ii) above
relating to the Securities Act and state securities laws.

 

(h)                                 In
no event may the Holder exercise this Warrant in whole or in part unless the
Holder is an “accredited investor” as defined in Regulation D under the
Securities Act.

 

4

 

3.                                       Stock
Fully Paid; Reservation and Listing of Shares; Covenants.

 

(a)                                  Stock
Fully Paid.  The Issuer represents,
warrants, covenants and agrees that all shares of Warrant Stock which may be
issued upon the exercise of this Warrant or otherwise hereunder will, when
issued in accordance with the terms of this Warrant, be duly authorized,
validly issued, fully paid and non-assessable and free from all taxes, liens
and charges created by or through Issuer. 
The Issuer further covenants and agrees that during the period within
which this Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant.

 

(b)                                 Reservation.  If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise provided
hereunder require registration or qualification with any governmental authority
under any federal or state law before such shares may be so issued, the Issuer
will in good faith use its reasonable best efforts as expeditiously as possible
at its expense to cause such shares to be duly registered or qualified.  If the Issuer shall list any shares of
Common Stock on any securities exchange or market it will, at its expense, list
thereon, maintain and increase when necessary such listing, of, all shares of
Warrant Stock from time to time issued upon exercise of this Warrant or as
otherwise provided hereunder (provided that such Warrant Stock has been
registered pursuant to a registration statement under the Securities Act then
in effect), and, to the extent permissible under the applicable securities
exchange rules, all unissued shares of Warrant Stock which are at any time
issuable hereunder, so long as any shares of Common Stock shall be so
listed.  The Issuer will also so list on
each securities exchange or market, and will maintain such listing of, any
other securities which the Holder of this Warrant shall be entitled to receive
upon the exercise of this Warrant if at the time any securities of the same
class shall be listed on such securities exchange or market by the Issuer.

 

(c)                                  Covenants.  The Issuer shall not by any action
including, without limitation, amending the Certificate of Incorporation or the
by-laws of the Issuer, or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of the Holder hereof against
dilution (to the extent specifically provided herein) or impairment.  Without limiting the generality of the
foregoing, the Issuer will (i) not permit the par value, if any, of its Common
Stock to exceed the then effective Warrant Price, (ii) not amend or modify any
provision of the Certificate of Incorporation or by-laws of the Issuer in any
manner that would adversely affect the rights of the Holders of the Warrants in
their capacity as Holders of the Warrants, (iii) take all such action as may be
reasonably necessary in order that the Issuer may validly and legally issue
fully paid and nonassessable shares of Common Stock, free and clear of any
liens, claims, encumbrances and restrictions (other than as provided herein)
upon the exercise of this Warrant, and (iv) use its reasonable best efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be reasonably necessary to
enable the Issuer to perform its obligations under this Warrant.

 

5

 

(d)                                 Loss,
Theft, Destruction of Warrants. 
Upon receipt of evidence satisfactory to the Issuer of the ownership of
and the loss, theft, destruction or mutilation of any Warrant and, in the case
of any such loss, theft or destruction, upon receipt of indemnity or security
satisfactory to the Issuer or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Issuer will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like tenor and representing the right to purchase the same number of shares of
Common Stock.

 

4.                                       Adjustment
of Warrant Price and Warrant Share Number. 
The number of shares of Common Stock for which this Warrant is
exercisable, and the price at which such shares may be purchased upon exercise
of this Warrant, shall be subject to adjustment from time to time as set forth
in this Section 4. The Issuer shall give the Holder notice of any event
described below which requires an adjustment pursuant to this Section 4 in
accordance with Section 5.

 

(a)                                  Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or Sale.

 

(i)  In case
the Issuer after the Original Issue Date shall do any of the following (each, a
“Triggering Event”): (a) consolidate or merge with or into another
corporation where the holders of outstanding Voting Stock prior to such merger
or consolidation do not own over 50% of the outstanding Voting Stock of the
merged or consolidated entity immediately after such merger or consolidation,
or (b) sell all or substantially all of its properties or assets to any other
Person, or (c) change the Common Stock to the same or different number of
shares of any class or classes of stock, whether by reclassification, exchange,
substitution or otherwise (other than by way of a stock split or combination of
shares or stock dividends or distributions provided for in Section 4(b) or
Section 4(c)), or (d) effect a capital reorganization (other than by way of a
stock split or combination of shares or stock dividends or distributions
provided for in Section 4(b) or Section 4(c)), then, and in the case of each
such Triggering Event, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Warrant, the Holder of this
Warrant shall be entitled upon the exercise hereof at any time after the
consummation of such Triggering Event, to the extent this Warrant is not
exercised prior to such Triggering Event, to receive at the Warrant Price in
effect at the time immediately prior to the consummation of such Triggering
Event in lieu of the Common Stock issuable upon such exercise of this Warrant
prior to such Triggering Event, the securities, cash and property to which such
Holder would have been entitled upon the consummation of such Triggering Event
if such Holder had exercised the rights represented by this Warrant immediately
prior thereto, subject to adjustments (subsequent to such corporate action) as
nearly equivalent as possible to the adjustments provided for elsewhere in this
Section 4.  The Issuer will not effect
any consolidation, merger or sale or conveyance unless prior to the
consummation thereof, the successor or acquiring entity (if other than the
Issuer) and, if an entity different from the successor or acquiring entity, the
entity whose capital stock or assets the holders of the Common Stock of the
Issuer are entitled to receive as a result of such consolidation, merger or
sale or conveyance assumes by written instrument the obligations under this
Section 4 and the obligations to deliver to the holder of this Warrant

 

6

 

such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the holder may be entitled to acquire.

 

(ii)                                  Notwithstanding
anything contained in this Warrant to the contrary, a Triggering Event shall
not be deemed to have occurred if, prior to the consummation thereof, each
Person (other than the Issuer) which may be required to deliver any securities,
cash or property upon the exercise of this Warrant as provided herein shall
assume, by written instrument delivered to, and reasonably satisfactory to, the
Holder of this Warrant, (A) the obligations of the Issuer under this Warrant
(and if the Issuer shall survive the consummation of such Triggering Event,
such assumption shall be in addition to, and shall not release the Issuer from,
any continuing obligations of the Issuer under this Warrant) and (B) the
obligation to deliver to such Holder such shares of securities, cash or
property as, in accordance with the foregoing provisions of this subsection
(a), such Holder shall be entitled to receive, and such Person shall have
similarly delivered to such Holder a written acknowledgement executed by the
President or Chief Financial Officer of the Issuer, stating that this Warrant
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this subsection (a))
shall be applicable to the securities, cash or property which such Person may
be required to deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.

 

(b)                                 Stock
Dividends, Subdivisions and Combinations. 
If at any time the Issuer shall:

 

(i)                                     make
or issue or set a record date for the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, shares of Common Stock,

 

(ii)                                  effect
a stock split of its outstanding shares of Common Stock into a larger number of
shares of Common Stock, or

 

(iii)                               combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock,

 

then (1) the
number of shares of Common Stock for which this Warrant is exercisable
immediately after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number of
shares of Common Stock for which this Warrant is exercisable immediately prior
to the occurrence of such event would own or be entitled to receive after the
happening of such event, and (2) the Warrant Price then in effect shall be
adjusted to equal (A) the Warrant Price then in effect multiplied by the number
of shares of Common Stock for which this Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares of Common Stock for
which this Warrant is exercisable immediately after such adjustment.

 

Notwithstanding the foregoing, if such record date shall have been
fixed and such dividend

 

7

 

is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Warrant Price shall be adjusted pursuant to this paragraph
as of the time of actual payment of such dividends or distributions.

 

(c)                                  Certain
Other Distributions.  If at any time
the Issuer shall make or issue or set a record date for the determination of
the holders of its Common Stock for the purpose of entitling them to receive
any dividend or other distribution of:

 

(i)                                     cash
(other than a cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the jurisdiction of
incorporation of the Issuer),

 

(ii)                                  any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property of any nature whatsoever (other than cash, Common Stock
Equivalents or Additional Shares of Common Stock), or

 

(iii)                               any
warrants or other rights to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property of any nature whatsoever (other than cash, Common Stock Equivalents or
Additional Shares of Common Stock),

 

then (1) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B)
the denominator of which shall be such Per Share Market Value minus the amount allocable
to one share of Common Stock of any such cash so distributable and of the fair
value (as determined in good faith by the Board of Directors of the Issuer and
supported by an opinion from an investment banking firm of recognized national
standing acceptable to (but not affiliated with) the Holder) of any and all
such evidences of indebtedness, shares of stock, other securities or property
or warrants or other subscription or purchase rights so distributable, and (2)
the Warrant Price then in effect shall be adjusted to equal (A) the Warrant
Price then in effect multiplied by the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to the adjustment divided
by (B) the number of shares of Common Stock for which this Warrant is
exercisable immediately after such adjustment. 
A reclassification of the Common Stock (other than a change in par
value, or from par value to no par value or from no par value to par value)
into shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Issuer to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 4(c)
and, if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be,
of the outstanding shares of Common Stock within the meaning of Section 4(b).

 

Notwithstanding the foregoing, if such record date shall have been
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the

 

8

 

Warrant Price shall be adjusted pursuant to this Section 4(c) as of the
time of actual payment of such dividends or distributions.

 

(d)                                 Issuance
of Additional Shares of Common Stock.

 

(i)                                     In
the event the Issuer shall at any time following the Original Issue Date issue
any Additional Shares of Common Stock (otherwise than as provided in the
foregoing subsections (a) through (c) of this Section 4), at a price per share
less than the Warrant Price then in effect or without consideration, then the
Warrant Price upon each such issuance shall be adjusted to that price
determined by multiplying the Warrant Price then in effect by a fraction:

 

(A)                              the
numerator of which shall be equal to the sum of (x) the number of shares of
Outstanding Common Stock immediately prior to the issuance of such Additional
Shares of Common Stock plus (y) the number of shares of Common Stock
(rounded to the nearest whole share) which the aggregate consideration for the
total number of such Additional Shares of Common Stock so issued would purchase
at a price per share equal to the Warrant Price then in effect, and

 

(B)                                the
denominator of which shall be equal to the number of shares of Outstanding
Common Stock immediately after the issuance of such Additional Shares of Common
Stock.

 

(ii)                                  No
adjustment of the number of shares of Common Stock for which this Warrant shall
be exercisable shall be made under paragraph (i) of Section 4(d) upon the
issuance of any Additional Shares of Common Stock which are issued pursuant to
the exercise of any Common Stock Equivalents, if any such adjustment shall
previously have been made upon the issuance of such Common Stock Equivalents
(or upon the issuance of any warrant or other rights therefor) pursuant to
Section 4(f).

 

(e)                                  Intentionally
Omitted.

 

(f)                                    Issuance
of Common Stock Equivalents.  If at
any time the Issuer shall issue or sell any Common Stock Equivalents, whether
or not the rights to exchange or convert thereunder are immediately
exercisable, and the aggregate price per share for which Common Stock is
issuable upon such conversion or exchange plus the consideration received by
the Issuer for issuance of such Common Stock Equivalent divided by the number
of shares of Common Stock issuable pursuant to such Common Stock Equivalent
shall be less than the Warrant Price in effect immediately prior to the time of
such issue or sale, then the number of shares of Common Stock for which this
Warrant is exercisable and the Warrant Price then in effect shall be adjusted
as provided in Section 4(d) on the basis that the maximum number of Additional Shares
of Common Stock necessary to effect the conversion or exchange of all such
Common Stock Equivalents shall be deemed to have been issued and outstanding
and the Issuer shall have received all of the consideration payable therefor,
if any, as of the date of actual issuance of such Common Stock
Equivalents.  No further adjustment of
the number of shares of Common Stock for which this Warrant is exercisable and
the Warrant Price then in effect shall be made under this

 

9

 

Section 4(f) upon the issuance of any Common Stock Equivalents which
are issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights pursuant to this
Section 4(f).  No further adjustments of
the number of shares of Common Stock for which this Warrant is exercisable and
the Warrant Price then in effect shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Common Stock Equivalents.

 

(g)                                 Superseding
Adjustment.  If, at any time after
any adjustment of the number of shares of Common Stock for which this Warrant
is exercisable and the Warrant Price then in effect shall have been made
pursuant to Section 4(f) as the result of any issuance of Common Stock
Equivalents, and (i) such Common Stock Equivalents, or the right of conversion
or exchange in such Common Stock Equivalents, shall expire, and all or a
portion of such or the right of conversion or exchange with respect to all or a
portion of such Common Stock Equivalents, as the case may be, shall not have
been exercised, or (ii) the consideration per share for which shares of Common
Stock are issuable pursuant to such Common Stock Equivalents shall be
increased, then such previous adjustment shall be rescinded and annulled and
the Additional Shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation.  Upon the occurrence of an
event set forth in this Section 4(g) above, there shall be a recomputation made
of the effect of such Common Stock Equivalents on the basis of: (i) treating
the number of Additional Shares of Common Stock theretofore actually issued or
issuable pursuant to the previous exercise of Common Stock Equivalents or any
such right of conversion or exchange, as having been issued on the date or
dates of any such exercise and for the consideration actually received and
receivable therefor, and (ii) treating any such Common Stock Equivalents which
then remain outstanding as having been granted or issued immediately after the
time of such increase of the consideration per share for which Additional
Shares of Common Stock are issuable under such Common Stock Equivalents;
whereupon a new adjustment of the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect shall be made,
which new adjustment shall supersede the previous adjustment so rescinded and
annulled.

 

(h)                                 Purchase
of Common Stock by the Issuer.  If
the Issuer at any time while this Warrant is outstanding shall, directly or
indirectly through a Subsidiary or otherwise, purchase, redeem or otherwise
acquire any shares of Common Stock at a price per share greater than the Per
Share Market Value, other than from an employee, consultant or director of the
Issuer pursuant to a restricted stock or similar agreement, then the Warrant
Price upon each such purchase, redemption or acquisition shall be adjusted to
that price determined by multiplying such Warrant Price by a fraction (i) the
numerator of which shall be the number of shares of Outstanding Common Stock
immediately prior to such purchase, redemption or acquisition minus the number
of shares of Common Stock which the aggregate consideration for the total
number of such shares of Common Stock so purchased, redeemed or acquired would
purchase at the Per Share Market Value; and (ii) the denominator of which shall
be the number of shares of Outstanding Common Stock immediately after such
purchase, redemption or acquisition. 
For the purposes of this

 

10

 

subsection (h), the date as of which the Per Share Market Price shall
be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock.  For the purposes of
this subsection (h), a purchase, redemption or acquisition of a Common Stock
Equivalent shall be deemed to be a purchase of the underlying Common Stock, and
the computation herein required shall be made on the basis of the full
exercise, conversion or exchange of such Common Stock Equivalent on the date as
of which such computation is required hereby to be made, whether or not such
Common Stock Equivalent is actually exercisable, convertible or exchangeable on
such date.

 

(i)                                     Other
Provisions applicable to Adjustments under this Section.  The following provisions shall be applicable
to the making of adjustments of the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect provided for
in this Section 4:

 

(i)                                   Limit
to Adjustment of Warrant Price. 
Notwithstanding anything to the contrary set forth in Sections 4(d), (f)
and (h) hereof, in no event shall the Warrant Price be adjusted pursuant to
Sections 4.1(d), (f) or (h) to a price that is less than the Per Share Market
Value of a share of Common Stock on the date immediately preceding the date of
issuance of this Warrant (as the same may be adjusted pursuant to Sections 4(b)
and 4(c) hereof).

 

(ii)                                  Computation
of Consideration.  To the extent
that any Additional Shares of Common Stock or any Common Stock Equivalents (or
any warrants or other rights therefor) shall be issued for cash consideration,
the consideration received by the Issuer therefor shall be the amount of the
cash received by the Issuer therefor, or, if such Additional Shares of Common
Stock or Common Stock Equivalents are offered by the Issuer for subscription,
the subscription price, or, if such Additional Shares of Common Stock or Common
Stock Equivalents are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price (in any such
case subtracting any amounts paid or receivable for accrued interest or accrued
dividends and without taking into account any compensation, discounts or
expenses paid or incurred by the Issuer for and in the underwriting of, or
otherwise in connection with, the issuance thereof).  In connection with any merger or consolidation in which the
Issuer is the surviving corporation (other than any consolidation or merger in
which the previously outstanding shares of Common Stock of the Issuer shall be
changed to or exchanged for the stock or other securities of another corporation),
the amount of consideration therefore shall be, deemed to be the fair value, as
determined reasonably and in good faith by the Board, of such portion of the
assets and business of the nonsurviving corporation as the Board may determine
to be attributable to such shares of Common Stock or Common Stock Equivalents,
as the case may be.  The consideration
for any Additional Shares of Common Stock issuable pursuant to any warrants or
other rights to subscribe for or purchase the same shall be the consideration
received by the Issuer for issuing such warrants or other rights plus the
additional consideration payable to the Issuer upon exercise of such warrants
or other rights.  The consideration for
any Additional Shares of

 

11

 

Common Stock issuable pursuant to the terms of any Common Stock
Equivalents shall be the consideration received by the Issuer for issuing
warrants or other rights to subscribe for or purchase such Common Stock
Equivalents, plus the consideration paid or payable to the Issuer in respect of
the subscription for or purchase of such Common Stock Equivalents, plus the
additional consideration, if any, payable to the Issuer upon the exercise of
the right of conversion or exchange in such Common Stock Equivalents.  In the event of any consolidation or merger
of the Issuer in which the Issuer is not the surviving corporation or in which
the previously outstanding shares of Common Stock of the Issuer shall be
changed into or exchanged for the stock or other securities of another
corporation, or in the event of any sale of all or substantially all of the
assets of the Issuer for stock or other securities of any corporation, the
Issuer shall be deemed to have issued a number of shares of its Common Stock
for stock or securities or other property of the other corporation computed on
the basis of the actual exchange ratio on which the transaction was predicated,
and for a consideration equal to the fair market value on the date of such
transaction of all such stock or securities or other property of the other
corporation.  In the event any
consideration received by the Issuer for any securities consists of property
other than cash, the fair market value thereof at the time of issuance or as
otherwise applicable shall be as determined in good faith by the Board.  In the event Common Stock is issued with
other shares or securities or other assets of the Issuer for consideration
which covers both, the consideration computed as provided in this Section 4(i)(ii)
shall be allocated among such securities and assets as determined in good faith
by the Board.

 

(iii)                               When Adjustments to
Be Made.  The adjustments required
by this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number
of shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of the Common Stock, as provided for in Section 4(b)) up
to, but not beyond the date of exercise if such adjustment either by itself or
with other adjustments not previously made adds or subtracts less than one
percent (1%) of the shares of Common Stock for which this Warrant is
exercisable immediately prior to the making of such adjustment.  Any adjustment representing a change of less
than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close
of business on the date of its occurrence.

 

(iv)                              Fractional
Interests.  In computing adjustments
under this Section 4, fractional interests in Common Stock shall be taken into
account to the nearest one one-hundredth (1/100th) of a share.

 

(v)                                 When
Adjustment Not Required.  If the
Issuer shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or distribution or subscription or
purchase rights and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then thereafter no adjustment
shall

 

12

 

be required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.

 

(j)                                     Form
of Warrant after Adjustments.  The
form of this Warrant need not be changed because of any adjustments in the
Warrant Price or the number and kind of Securities purchasable upon the
exercise of this Warrant.

 

(k)                                  Escrow
of Warrant Stock.  If after any
property becomes distributable pursuant to this Section 4 by reason of the
taking of any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, and the Holder
exercises this Warrant, any shares of Common Stock issuable upon exercise by
reason of such adjustment shall be deemed the last shares of Common Stock for
which this Warrant is exercised (notwithstanding any other provision to the
contrary herein) and such shares or other property shall be held in escrow for
the Holder by the Issuer to be issued to the Holder upon and to the extent that
the event actually takes place, upon payment of the current Warrant Price.  Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to occur or
is rescinded, then such escrowed shares shall be cancelled by the Issuer and
escrowed property returned.

 

5.                                       Notice
of Adjustments.  Whenever the
Warrant Price or Warrant Share Number shall be adjusted pursuant to Section 4
hereof (for purposes of this Section 5, each an “adjustment”), the Issuer shall
cause its Chief Financial Officer to prepare and execute a certificate setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment.  Any dispute between the Issuer and the
Holder of this Warrant with respect to the matters set forth in such
certificate may at the option of the Holder of this Warrant be submitted to one
of the national accounting firms currently known as the “big four” selected by
the Holder, provided that the Issuer shall have ten (10) days after
receipt of notice from such Holder of its selection of such firm to object
thereto, in which case such Holder shall select another such firm and the
Issuer shall have no such right of objection. 
The firm selected by the Holder of this Warrant as provided in the
preceding sentence shall be instructed to deliver a written opinion as to such
matters to the Issuer and such Holder within thirty (30) days after submission
to it of such dispute.  Such opinion
shall be final and binding on the parties hereto.

 

6.                                       Fractional
Shares.  No fractional shares of
Warrant Stock will be issued in connection with and exercise hereof, but in
lieu of such fractional shares, the Issuer shall make a cash payment therefor
equal in amount to the product of the applicable fraction multiplied by the Per
Share Market Value then in effect.

 

7.                                       Ownership
Cap and Certain Exercise Restrictions. 
(a)  Notwithstanding anything to
the contrary set forth in this Warrant, at no time may a Holder of this Warrant
exercise this Warrant if the number of shares of Common Stock to be issued
pursuant to such exercise would exceed, when aggregated with all other shares
of Common Stock

 

13

 

owned by such Holder at such time, the number of shares of Common Stock
which would result in such Holder owning more than 4.999% of all of the Common
Stock outstanding at such time; provided, however, that upon a holder of this
Warrant providing the Issuer with sixty-one (61) days notice (pursuant to
Section 12 hereof) (the “Waiver Notice”) that such Holder would like to waive
this Section 7(a) with regard to any or all shares of Common Stock issuable
upon exercise of this Warrant, this Section 7(a) will be of no force or effect
with regard to all or a portion of the Warrant referenced in the Waiver Notice;
provided, further, that this provision shall be of no further force or effect
during the sixty-one (61) days immediately preceding the expiration of the term
of this Warrant.

 

(b)                                 The
Holder may not exercise the Warrant hereunder to the extent such exercise would
result in the Holder beneficially owning (as determined in accordance with
Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.999%
of the then issued and outstanding shares of Common Stock, including shares
issuable upon exercise of the Warrant held by the Holder after application of
this Section; provided, however, that upon a holder of this
Warrant providing the Issuer with a Waiver Notice that such holder would like
to waive this Section 7(b) with regard to any or all shares of Common Stock
issuable upon exercise of this Warrant, this Section 7(b) shall be of no force
or effect with regard to those shares of Warrant Stock referenced in the Waiver
Notice; provided, further, that this provision shall be of no
further force or effect during the sixty-one (61) days immediately preceding
the expiration of the term of this Warrant.

 

8.                                       Call.  Notwithstanding anything herein to the
contrary, commencing thirty-six (36) months following the effective date of the
registration statement under the Securities Act registering the resale of the
Warrant Stock, the Issuer, at its option, may call up to one hundred percent
(100%) of this Warrant if the Per Share Market Value of the Common Stock has
been equal to or greater than 200% of the Warrant Price for a period of ten
(10) consecutive Trading Days immediately prior to the date of delivery of the
Call Notice (a “Call Notice Period”) by providing the Holder of this
Warrant written notice pursuant to Section 13 (the “Call Notice”); provided,
that a registration statement under the Securities Act providing for the resale
of the Warrant Stock is then in effect and has been effective, without lapse or
suspension of any kind, for a period of 60 consecutive calendar days (unless
such registration statement is no longer required to be effective pursuant to
the Registration Rights Agreement dated as October 31, 2003 among the Issuer,
the Holder and the other holders named therein (the “Registration Rights Agreement”));
provided, further, that a registration statement under the
Securities Act providing for the resale of the Warrant Stock is in effect from
the date of delivery of the Call Notice until the date which is the later of
(i) the date the Holder exercises the Warrant pursuant to the Call Notice and
(ii) the 20th day after the Holder receives the Call Notice (the “Early
Termination Date”) (unless such registration statement is no longer
required to be effective pursuant to the Registration Rights Agreement).  The rights and privileges granted pursuant
to this Warrant with respect to the shares of Warrant Stock subject to the Call
Notice (the “Called Warrant Shares”) shall expire on the Early
Termination Date if this Warrant is not exercised with respect to such Called
Warrant Shares prior to such Early Termination Date.  In the event this Warrant is not exercised with respect to the
Called Warrant Shares, the Issuer shall remit to the Holder of this Warrant (i)
$.001 per Called Warrant Share and (ii) a new Warrant representing the number
of shares of Warrant

 

14

 

Stock, if any, which shall not have been subject to the Call Notice
upon the Holder tendering to the Issuer the applicable Warrant certificate.

 

9.                Definitions.  For the purposes of this Warrant, the
following terms have the following meanings:

 

“Additional Shares of
Common Stock” means all shares of Common Stock issued by the Issuer after
the Original Issue Date, and all shares of Other Common, if any, issued by the
Issuer after the Original Issue Date, except: (i) securities issued pursuant to
an underwritten public offering of the Issuer’s securities, (ii) securities
issued pursuant to the conversion or exercise of convertible or excercisable securities
issued or outstanding on or prior to the date hereof or issued pursuant to the
Purchase Agreement, (iii) the Warrant Stock, (iv) securities issued in
connection with a merger and/or acquisition, consolidation, sale or disposition
of all or substantially all of the Issuer’s assets, (v) securities issued in
connection with strategic license agreements so long as such issuances are not
for the purpose of raising capital, (vi) Common Stock issued or options to
purchase Common Stock granted or issued pursuant to the Issuer’s stock option
plans and employee stock purchase plans as they now exist, (vii) Common Stock
issued or options to purchase Common Stock issued or granted pursuant to any
future stock option plan or employee stock purchase plan or any amendment to
the Issuer’s existing stock option plans and employee stock purchase plans so
long as such issuances in the aggregate do not exceed 1,700,000 shares of
Common Stock, (viii) securities issued in any transaction where the first use
of proceeds from such transaction would be used to redeem all of the shares of
Series B Preferred Stock of the Issuer (or the Common Stock issued in
connection with the exercise of any warrants) in accordance with the
Certificate of Designation, (ix) Common Stock or warrants therefore issued in
connection with any acquisition of assets, product lines or businesses so long
as such issuances in the aggregate do not exceed twenty percent (20%) of the
Issuer’s issued and outstanding shares of Common Stock as of the date hereof,
(x) Common Stock issued pursuant to the Issuer’s 401(k) matches; (xi)
securities issued to consultants, financial advisers, public relations
consultants or secured lenders to the Issuer so long as such issuances to such
secured lenders do not in the aggregate exceed ten percent (10%) of the
Issuer’s issued and outstanding shares of Common Stock as of the date hereof,
(xii) any warrants issued to a Holder pursuant to such Purchase Agreement,
(xiii) any warrants issued to the placement agent for the transactions
contemplated by the Purchase Agreement, (xiv) the payment of any dividend on
the Series B Preferred Stock of the Issuer and the payment of any interest on
the secured convertible promissory notes issued pursuant to the Note and
Warrant Purchase Agreement, (xv) securities issued pursuant to Section 3.12 of
the Purchase Agreement relating to the Series B financing, (xvi) securities
issued to the holders of Series B Preferred Stock of the Issuer as payment of a
penalty upon redemption of those shares or otherwise, and (xvii) Common Stock
issued upon the exercise or conversion of any securities described in clauses
(i) through (xvii) above.

 

“Board” shall mean
the Board of Directors of the Issuer.

 

15

 

“Capital Stock”
means and includes (i) any and all shares, interests, participations or other
equivalents of or interests in (however designated) corporate stock, including,
without limitation, shares of preferred or preference stock, (ii) all
partnership interests (whether general or limited) in any Person which is a
partnership, (iii) all membership interests or limited liability company
interests in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.

 

“Certificate of
Incorporation” means the Certificate of Incorporation of the Issuer as in
effect on the Original Issue Date, and as hereafter from time to time amended,
modified, supplemented or restated in accordance with the terms hereof and
thereof and pursuant to applicable law.

 

“Common Stock”
means the Common Stock, par value $.01 per share, of the Issuer and any other
Capital Stock into which such stock may hereafter be changed.

 

“Common Stock
Equivalent” means any Convertible Security or warrant, option or other
right to subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Security.

 

“Convertible
Securities” means evidences of Indebtedness, shares of Capital Stock or
other Securities which are or may be at any time convertible into or
exchangeable for Additional Shares of Common Stock.  The term “Convertible Security” means one of the Convertible
Securities.

 

“Governmental
Authority” means any governmental, regulatory or self-regulatory entity,
department, body, official, authority, commission, board, agency or
instrumentality, whether federal, state or local, and whether domestic or
foreign.

 

“Holders” mean the
Persons who shall from time to time own any Warrant.  The term “Holder” means one of the Holders.

 

“Independent Appraiser”
means a nationally recognized or major regional investment banking firm or firm
of independent certified public accountants of recognized standing (which may
be the firm that regularly examines the financial statements of the Issuer)
that is regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which is not
affiliated with either the Issuer or the Holder of any Warrant.

 

“Issuer” means
SatCon Technology Corporation, a Delaware corporation, and its successors.

 

“Majority Holders”
means at any time the Holders of Warrants exercisable for a majority of the
shares of Warrant Stock issuable under the Warrants at the time outstanding.

 

16

 

“Nasdaq” means the
Nasdaq National Market or the Nasdaq SmallCap Market.

 

“Original Issue Date”
means October 31, 2003.

 

“OTC Bulletin Board”
means the over-the-counter electronic bulletin board.

 

“Other Common”
means any other Capital Stock of the Issuer of any class which shall be
authorized at any time after the date of this Warrant (other than Common Stock)
and which shall have the right to participate in the distribution of earnings
and assets of the Issuer without limitation as to amount.

 

“Outstanding Common
Stock” means, at any given time, the aggregate amount of outstanding shares
of Common Stock, assuming full exercise, conversion or exchange (as applicable)
of all options, warrants and other Securities which are convertible into or
exercisable or exchangeable for, and any right to subscribe for, shares of
Common Stock that are outstanding at such time.

 

“Person” means an
individual, corporation, limited liability company, partnership, joint stock
company, trust, unincorporated organization, joint venture, Governmental
Authority or other entity of whatever nature.

 

“Per Share Market
Value” means on any particular date (a) the average of the closing bid and
asked price per share of the Common Stock on such date on Nasdaq or another
registered national stock exchange on which the Common Stock is then listed, or
if there is no such price on such date, then the average of the closing bid and
asked price on such exchange or quotation system on the date nearest preceding
such date, or (b) if the Common Stock is not listed then on Nasdaq or any
registered national stock exchange, the closing bid price for a share of Common
Stock in the over-the-counter market, as reported by the OTC Bulletin Board or
in the National Quotation Bureau Incorporated or similar organization or agency
succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the Common Stock is not then reported by the OTC Bulletin
Board or the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices), then the average of
the “Pink Sheet” quotes for the relevant conversion period, as determined in
good faith by the holder, or (d) if the Common Stock is not then publicly
traded the fair market value of a share of Common Stock as determined by an
Independent Appraiser selected in good faith by the Majority Holders; provided,
however, that the Issuer, after receipt of the determination by such
Independent Appraiser, shall have the right to select an additional Independent
Appraiser, in which case, the fair market value shall be equal to the average
of the determinations by each such Independent Appraiser; and provided, further
that all determinations of the Per Share Market Value shall be appropriately
adjusted for any stock dividends, stock splits or other similar transactions
during such period.  The determination
of fair market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as between a
willing buyer and a willing seller and taking into account all relevant factors
determinative of value, and shall be final

 

17

 

and binding on all parties.  In determining the fair market value of any shares of Common
Stock, no consideration shall be given to any restrictions on transfer of the
Common Stock imposed by agreement or by federal or state securities laws, or to
the existence or absence of, or any limitations on, voting rights.

 

“Purchase Agreement”
means the Series B Convertible Preferred Stock Purchase Agreement dated as of
October 31, 2003, among the Issuer and the investors a party thereto.

 

“Securities” means any
debt or equity securities of the Issuer, whether now or hereafter authorized,
any instrument convertible into or exchangeable for Securities or a Security,
and any option, warrant or other right to purchase or acquire any
Security.  “Security” means one of the
Securities.

 

“Securities Act”
means the Securities Act of 1933, as amended, or any similar federal statute
then in effect.

 

“Subsidiary” means
any corporation at least 50% of whose outstanding Voting Stock shall at the
time be owned directly or indirectly by the Issuer or by one or more of its
Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

 

“Term” has the
meaning specified in Section 1 hereof.

 

“Trading Day”
means (a) a day on which the Common Stock is traded on Nasdaq, or (b) if the
Common Stock is not listed on Nasdaq, a day on which the Common Stock is traded
on any other registered national stock exchange, or (c) if the Common Stock is
not traded on any other registered national stock exchange, a day on which the
Common Stock is traded on the OTC Bulletin Board, or (d) if the Common Stock is
not traded on the OTC Bulletin Board, a day on which the Common Stock is quoted
in the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the
Common Stock is not listed or quoted as set forth in (a), (b) or (c) hereof,
then Trading Day shall mean any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York are authorized or required by law or other government action to close.

 

“Voting Stock”
means, as applied to the Capital Stock of any corporation, Capital Stock of any
class or classes (however designated) having ordinary voting power for the
election of a majority of the members of the Board of Directors (or other
governing body) of such corporation, other than Capital Stock having such power
only by reason of the happening of a contingency.

 

“Warrants” means
the Warrants issued and sold pursuant to the Purchase Agreement, including,
without limitation, this Warrant, and any other warrants of like tenor issued
in substitution or exchange for any thereof pursuant to the provisions of
Section 2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

 

18

 

“Warrant Price”
initially means U.S. $3.32, as such Warrant Price may be adjusted from time to
time as shall result from the adjustments specified in this Warrant, including
Section 4 hereto.

 

“Warrant Share Number”
means at any time the aggregate number of shares of Warrant Stock which may at
such time be purchased upon exercise of this Warrant, after giving effect to
all prior adjustments and increases to such number made or required to be made
under the terms hereof.

 

“Warrant Stock”
means Common Stock issuable upon exercise of any Warrant or Warrants or
otherwise issuable pursuant to any Warrant or Warrants.

 

10.                                 Other
Notices.  In case at any time:

 

(A)                              the
Issuer shall make any distributions to the holders of Common Stock; or

 

(B)                                the
Issuer shall authorize the granting to all holders of its Common Stock of
rights to subscribe for or purchase any shares of Capital Stock of any class or
other rights; or

 

(C)                                there
shall be any reclassification of the Capital Stock of the Issuer; or

 

(D)                               there
shall be any capital reorganization by the Issuer; or

 

(E)                                 there
shall be any (i) consolidation or merger involving the Issuer or (ii) sale,
transfer or other disposition of all or substantially all of the Issuer’s
property, assets or business (except a merger or other reorganization in which
the Issuer shall be the surviving corporation and its shares of Capital Stock
shall continue to be outstanding and unchanged and except a consolidation,
merger, sale, transfer or other disposition involving a wholly-owned
Subsidiary); or

 

(F)                                 there
shall be a voluntary or involuntary dissolution, liquidation or winding-up of
the Issuer or any partial liquidation of the Issuer or distribution to holders
of Common Stock;

 

then, in each of such cases, the Issuer shall give written notice to
the Holder of the date on which (i) the books of the Issuer shall close or a
record shall be taken for such dividend, distribution or subscription rights or
(ii) such reorganization, reclassification,

 

19

 

consolidation, merger, disposition, dissolution, liquidation or
winding-up, as the case may be, shall take place.  Such notice also shall specify the date as of which the holders
of Common Stock of record shall participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange their certificates for
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be.  Such notice shall be given at least twenty
(20) days prior to the record date or effective date for the event specified in
such notice.

 

11.                                 Amendment
and Waiver.  Any term, covenant,
agreement or condition in this Warrant may be amended, or compliance therewith
may be waived (either generally or in a particular instance and either
retroactively or prospectively), by a written instrument or written instruments
executed by the Issuer and the Majority Holders; provided, however,
that no such amendment or waiver shall reduce the Warrant Share Number,
increase the Warrant Price, shorten the period during which this Warrant may be
exercised or modify any provision of this Section 10 without the consent of the
Holder of this Warrant.

 

12.                                 Governing
Law.  THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. Each of the Issuer and the
Holder (i) hereby irrevocably submits to the exclusive jurisdiction of the
United States District Court sitting in the Southern District of New York and
the courts of the State of New York located in New York county for the purposes
of any suit, action or proceeding arising out of or relating to this Warrant or
any of the other Transaction Documents (as defined in the Purchase Agreement)
or the transactions contemplated hereby or thereby and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. 
Each of the Issuer and the Holder consents to process being served in
any such suit, action or proceeding by mailing a copy thereof to such party at
the address in effect for notices to it under the Purchase Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof.  Nothing in this Section
12 shall affect or limit any right to serve process in any other manner
permitted by law.

 

13.                                 Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earlier of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile telephone number specified for notice prior to 5:00 p.m., eastern
time, on a Trading Day, (ii) the Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice later than 5:00 p.m., eastern time, on
any date and earlier than 11:59 p.m., eastern time, on such date, (iii) the
Trading Day following the date of mailing, if sent by overnight delivery by
nationally recognized overnight courier service or (iv) actual receipt by the
party to whom such notice is required to be given.  The addresses for such communications shall be with respect to
the Holder of this Warrant or of Warrant Stock

 

20

 

issued pursuant hereto, addressed to such Holder at its last known
address or facsimile number appearing on the books of the Issuer maintained for
such purposes, or with respect to the Issuer, addressed to:

 

SatCon Technology Corporation

161 First Street

Cambridge, MA 02142

Attention: David B. Eisenhaure

Tel. No.: (617) 661-0540

Fax No.:  (617)
349-0898

 

Copies of notices to the Issuer shall be sent to Greenberg Traurig LLP,
One International Place, Boston, MA 02110, Attention: Jonathan Bell, Esq., Tel.
No.: (617) 310-6038, Fax No.: (617) 279-8438. 
Any party hereto may from time to time change its address for notices by
giving at least ten (10) days written notice of such changed address to the
other party hereto.

 

14.                                 Warrant
Agent.  The Issuer may, by written
notice to each Holder of this Warrant, appoint an agent having an office in New
York, New York for the purpose of issuing shares of Warrant Stock on the
exercise of this Warrant pursuant to subsection (b) of Section 2 hereof,
exchanging this Warrant pursuant to subsection (d) of Section 2 hereof or
replacing this Warrant pursuant to subsection (d) of Section 3 hereof, or any
of the foregoing, and thereafter any such issuance, exchange or replacement, as
the case may be, shall be made at such office by such agent.

 

15.                                 Remedies.  The Issuer stipulates that the remedies at
law of the Holder of this Warrant in the event of any default or threatened
default by the Issuer in the performance of or compliance with any of the terms
of this Warrant are not and will not be adequate and that, to the fullest
extent permitted by law, such terms may be specifically enforced by a decree
for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.

 

16.                                 Successors
and Assigns.  This Warrant and the
rights evidenced hereby shall inure to the benefit of and be binding upon the
successors and assigns of the Issuer, the Holder hereof and (to the extent
provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall
be enforceable by any such Holder or Holder of Warrant Stock.

 

17.                                 Modification
and Severability.  If, in any action
before any court or agency legally empowered to enforce any provision contained
herein, any provision hereof is found to be unenforceable, then such provision
shall be deemed modified to the extent necessary to make it enforceable by such
court or agency.  If any such provision
is not enforceable as set forth in the preceding sentence, the unenforceability
of such provision shall not affect the other provisions of this Warrant, but
this Warrant shall be construed as if such unenforceable provision had never
been contained herein.

 

18.                                 Headings.  The headings of the Sections of this Warrant
are for convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.

 

21

 

IN WITNESS WHEREOF, the Issuer has executed this
Warrant as of the day and year first above written.

 

 

	
   

  	
   

  	
   

  	
  SATCON TECHNOLOGY CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

22

 

EXERCISE FORM

SATCON
TECHNOLOGY CORPORATION

 

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

 

	
  Dated: 

  	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

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

 

ASSIGNMENT

 

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

 

	
  Dated: 

  	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

PARTIAL ASSIGNMENT

 

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

 

	
  Dated: 

  	
   

  	
   

  	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
							

 

FOR USE BY THE ISSUER
ONLY:

 

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

 

23

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