Document:

<PAGE>

                                                                   EXHIBIT 10.52

                        NINTH LOAN MODIFICATION AGREEMENT

     THIS NINTH LOAN MODIFICATION AGREEMENT (the "Agreement") is made as of the
23rd day of June, 2004, by and among:

     CADLEROCK JOINT VENTURE, L. P. ("CadleRock"), an Ohio limited partnership
with a principal place of business at 100 North Center Street, Newton Falls, OH
44444-1321;

     SIGHT RESOURCE CORPORATION (hereinafter, "Sight Resource"), a Delaware
corporation with a principal place of business at 6725 Miami Avenue, Cincinnati,
Ohio 45243;

     CAMBRIDGE EYE ASSOCIATES, INC. (hereinafter, "Cambridge Eye"), a Delaware
corporation with a principal place of business at One Highland Avenue, Unit 3B,
Malden, MA 02148

     DOUGLAS VISION WORLD, INC. (hereinafter, "Douglas Vision"), a Delaware
corporation with a principal place of business at One Highland Avenue, Unit 3B,
Malden, MA 02148;

     E. B. BROWN OPTICIANS, INC. (hereinafter, "E. B. Brown"), a Delaware
corporation with a principal place of business at 1549 East 30th Street,
Cleveland, OH 44114-4385;

     EYEGLASS EMPORIUM, INC. (hereinafter, "Eyeglass Emporium"), a Delaware
corporation with a principal place of business at c/o Sight Resource
Corporation, 6725 Miami Avenue, Cincinnati, OH 45243;

     KENT EYES, INC. f/k/a KENT OPTICAL COMPANY (hereinafter, "Kent Optical"), a
Delaware corporation with a principal place of business at c/o Sight Resource
Corporation, 6725 Miami Avenue, Cincinnati, OH 45243;

     SHAWNEE OPTICAL, INC. (hereinafter, "Shawnee Optical"), a Delaware
corporation with a principal place of business at c/o Sight Resource
Corporation, 6725 Miami Avenue, Cincinnati, OH 45243;

     VISION PLAZA CORP. (hereinafter, "Vision Plaza"), a Delaware corporation
with a principal place of business at 3301 Veterans Memorial Boulevard, Suite
54E, Metairie, LA 70002-4888;

     KENT OPTOMETRIC PROVIDERS, INC. f/k/a KENT OPTOMETRIC PROVIDERS P.C.
(hereinafter, "Kent PC"), a Michigan professional corporation with a principal
place of business at c/o Sight Resource Corporation, 6725 Miami Avenue,
Cincinnati, OH 45243;

     Hereinafter, Sight Resource, Cambridge Eye, Douglas Vision, E. B. Brown,
Eyeglass Emporium, Kent Optical, Shawnee Optical, Vision Plaza, and Kent PC and
shall be referred to individually and collectively, jointly, and severally, as
the "Obligors" or the "Obligor."

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                                 R E C I T A L S

     A. Reference is hereby made to certain loan arrangements (hereinafter, the
"Loan Arrangements") entered into by and between Sight Resource, Cambridge Eye,
Douglas Vision, E. B. Brown, Eyeglass Emporium, Kent Optical, Shawnee Optical,
Vision Plaza (hereinafter, individually and collectively, the "Original
Borrowers") and Fleet National Bank (as successor-in-interest to Sovereign Bank,
as successor-in-interest to Fleet National Bank, hereinafter referred to as
"Fleet"), evidenced by, among other things, the following documents,
instruments, and agreements (hereinafter collectively, together with this
Agreement and all documents, instruments, and agreements executed incidental
hereto, and contemplated hereby, the "Loan Documents"):

          1. Loan Agreement (hereinafter, as amended, the "Loan Agreement")
dated April 15, 1999, entered into by and between Fleet and the Original
Borrowers;

          2. Secured Revolving Line Note (hereinafter, the "Revolving Note")
dated April 15, 1999 in the maximum principal amount of $3,000,000.00 made by
the Original Borrowers payable to Fleet;

          3. Secured Term Note (hereinafter, the "Term Note") dated April 15,
1999 in the original principal amount of $7,000,000.00 made by the Original
Borrowers payable to Fleet;

          4. (i) Eight (8) Security Agreements (All Assets) dated April 15, 1999
respectively, by each of the Original Borrowers, as amended and confirmed by
certain Ratifications and Amendments of Security Agreements dated January 31,
2002, and (ii) Security Agreement (All Assets) dated July 31, 2002 by Kent PC
(hereinafter, collectively, the "Security Agreements"), pursuant to which each
of the Obligors granted Fleet a security interest in the Collateral (as defined
in the Security Agreements);

          5. Security Agreement (Pledged Collateral) dated April 15, 1999,
pursuant to which Sight Resource assigned, transferred, and delivered to Fleet
all of the Collateral (as defined therein);

          6. Modification Agreement (hereinafter, the "Modification Agreement")
dated March 31, 2000 entered into by Fleet and the Original Borrowers;

          7. Second Modification Agreement (hereinafter, the "Second
Modification Agreement") dated November 30, 2000 entered into by Fleet and the
Original Borrowers;

          8. Amended and Restated Third Modification Agreement (hereinafter, the
"Third Modification Agreement") dated May 14, 2001 entered into by Fleet and the
Original Borrowers;

          9. Fourth Modification Agreement (hereinafter, the "Fourth
Modification Agreement") dated July 31, 2002 entered into by Fleet and the
Obligors, pursuant to which, among other things, Kent PC became co-borrower with
the Original Borrowers under the Loan Documents, as amended, and became jointly
and severally liable with the Original Borrowers for all Obligations under the
Loan Documents, as amended;

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          10. Fifth Modification Agreement (hereinafter, the "Fifth Modification
Agreement") dated November 15, 2002 entered into by Fleet and the Obligors;

          11. Sixth Loan Modification Agreement (hereinafter, the "Sixth
Modification Agreement" dated December 27, 2002 entered into by CadleRock, as
successor to Fleet, and the Obligors;

          12. Seventh Loan Modification Agreement (hereinafter, the "Seventh
Modification Agreement") dated December, 2003 entered into by CadleRock, as
successor to Fleet, and the Obligators;

          13. Eighth Loan Modification Agreement (hereinafter, the "Eighth
Modification Agreement") dated June 23, 2004 entered into by CadleRock, as
successor to Fleet, and the Obligors; and

          14. Common Stock Purchase Warrant dated March 31, 2000 issued by Sight
Resource in favor of Fleet.

     B. The outstanding principal balance owing by the Obligors to CadleRock
under the Loan Documents as of the date hereof is $233,944.45. Accrued interest
as of this date is $388.89 (hereinafter, "Accrued Interest"). Such outstanding
principal balance plus all Accrued Interest, late charges, penalties, fees,
expenses and other amounts owing by the Obligors or any of them under or in
respect of the Loan Documents are collectively hereinafter referred to as the
"Existing Total Indebtedness," and as of this date, total $234,333.34.

     C. The Obligors and CadleRock have determined that it would be in their
mutual best interests for CadleRock to advance to the Obligors $275,000.00 under
the Revolving Note in order to provide additional financing to the Obligors for
use in connection with their reorganization proceedings under chapter 11 of
title 11 of the United States Code.

     D. The Obligors are willing to borrow an additional $275,000.00 under the
Revolving Note and CadleRock is willing to increase the Total Indebtedness as
contemplated by the preceding paragraph based upon, and in consideration of, the
terms and conditions stated herein as follows:

     1. Increase in Revolving Note. Upon the execution hereof, CadleRock shall
make an Advance (as defined in the Loan Agreement) to the Obligors under and,
except as otherwise provided herein, pursuant to the terms of, the Revolving
Note in the amount of $275,000.00 and the Obligors hereby shall be deemed to
have provided CadleRock with a "Notice of Borrowing" in that amount.

     2. Repayment of Advance. Notwithstanding anything to the contrary in the
Loan Agreement, the Revolving Note or any of the other Loan Documents, the
Obligors jointly and severally shall repay the $275,000.00 advance, plus
interest thereon at the non-default rate specified in the Revolving Note, in ten
(10) equal installments of principal and interest beginning on July 6, 2004 and
continuing on the next nine weekly anniversaries of such date until paid in
full.

     3. New Total Indebtedness. Effective upon receipt by the Obligors of the
$275,000 advance, the principal amount of the Existing Total Indebtedness shall
be increased to $508,944,45 (the "New Total Indebtedness").

                                       24
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     4. Acknowledgment by Obligors. Subject to and as modified by this
Agreement, the Obligors each hereby (a) acknowledge the validity and
enforceability of the Loan Documents, and (b) acknowledge and agree that they
have no offsets, defenses, claims or counterclaims against CadleRock as holder
of the Loan Documents. Each Obligor hereby ratifies, confirms and agrees that,
except as modified by this Agreement, all terms and conditions of the Loan
Documents shall remain in full force and effect.

     5. Further Assurances. The Obligors shall, upon request by CadleRock from
time to time after execution of this Agreement, execute and deliver to CadleRock
such additional documents, instruments and agreements as CadleRock may
reasonably request in order to vest or perfect the Loan Documents (as modified
hereby) and the collateral granted therein more securely in CadleRock.

     6. Indemnification/Hold Harmless. The Obligors hereby indemnify and hold
harmless CadleRock, their partners, directors, officers and stockholders and the
successors and assigns of all of them (collectively the "Indemnitees") from,
against and in respect of any claim by the Obligors or any other person to the
effect that, the Obligors, or any person claiming by, through or under any of
them, has any claim of any type against the Indemnitees for any action taken or
not taken by the Indemnitees prior to this date. The Obligors hereby release and
discharge Indemnitees from any such and all such claims, and the Obligors
further agree to indemnify and hold harmless Indemnitees against any and all
such claims and to pay Indemnitees' attorney fees and costs in the defense of
same.

     7. Acknowledgement of Payment Obligation. Notwithstanding anything to the
contrary contained in this Agreement, the Existing Total Indebtedness shall
remain due and payable in full on June 30, 2004, after which interest shall
accrue thereon at the default interest rate as stated in the Sixth Modification
Agreement.

     8. No Waiver of Existing Defaults. Any defaults, events of defaults or
existing matters that with the passage of time would mature into a default under
the Loan Documents prior to the date of this Agreement are not waived and shall
be in full force and effect.

     9. Miscellaneous.

          (a) This Agreement and the other documents referred to herein contain
the entire Agreement among the parties with respect to the transactions
contemplated hereby, and supersede all negotiations, representations,
warranties, commitments and offers whether oral or written, prior to the date
hereof.

          (b) No modification or amendment of any provision of this Agreement
shall be effective unless made in a written instrument, duly executed by the
party to be bound thereby, which refers specifically to this Agreement and
states that an amendment or modification is being made in the respects set forth
in such instrument.

          (c) If any term, provision, covenant or condition of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the provisions shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. This Agreement is, and shall be
deemed to be, the product of joint drafting by the

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parties hereto and shall not be construed against any of them as the drafter
hereof.

          (d) This Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. No assignment of this Agreement shall, however, relieve
the assigning party of its obligations hereunder.

          (e) This Agreement shall be governed by and construed and enforced
with accordance with the laws of the State of Ohio as applicable to contracts
executed and fully performed in the State of Ohio.

          (f) No waiver of any provision of this Agreement shall be effective
unless in writing. The waiver by any party of a breach of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.

          (g) The captions contained in this Agreement have been inserted for
convenience of reference only and shall not affect the interpretation of this
Agreement.

          (h) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. With regard to this
Agreement, and any other document relating to the transactions to be consummated
under this Agreement, a party's execution may be evidenced by, and a party's
delivery may be effected by, facsimile transmission.

          (i) Each party hereto represents and warrants that it has full
authority to execute this agreement, that the representative executing this
agreement on its behalf has full authority to do so, that upon the execution
hereof, this agreement becomes fully binding on such party and enforceable
against such party in accordance with the terms hereof and that no party is
under any restriction of any kind against the execution of this agreement or the
performance of any obligation stated herein.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first stated above.

                     [Signatures Continued on Separate Page]

                                       26
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<TABLE>
<CAPTION>

CADLEROCK JOINT VENTURE, L. P.                       SIGHT RESOURCE CORPORATION
<S>                                                 <C>

By:  CadleRock, Inc., its general partner

By:      /s/ Victor O. Buente, Jr.                   By:      /s/ Donald L. Radcliff
   ---------------------------------                    --------------------------------
Name:  Victor O. Buente, Jr.                         Name:  Donald L. Radcliff
Title:  Vice President                               Title:   Chief Financial Officer

CAMBRIDGE EYE ASSOCIATES, INC.                       DOUGLAS VISION WORLD, INC.

By:      /s/ Donald L. Radcliff                      By:      /s/ Donald L. Radcliff
   -----------------------------------------            --------------------------------
Name:  Donald L. Radcliff                            Name:  Donald L. Radcliff
Title:  Chief Financial Officer                      Title:  Chief Financial Officer

E. B. BROWN OPTICIANS, INC.                          EYEGLASS EMPORIUM, INC.

By:      /s/ Donald L. Radcliff                      By:      /s/ Donald L. Radcliff
   -----------------------------------------            --------------------------------
Name:  Donald L. Radcliff                            Name:  Donald L. Radcliff
Title:  Chief Financial Officer                      Title:  Chief Financial Officer

KENT EYES, INC. f/k/a                                SHAWNEE OPTICAL, INC.
KENT OPTICAL COMPANY

By:      /s/ Donald L. Radcliff                      By:      /s/ Donald L. Radcliff
   -----------------------------------------            --------------------------------
Name:  Donald L. Radcliff                            Name:  Donald L. Radcliff
Title:  Chief Financial Officer                      Title:  Chief Financial Officer

VISION PLAZA CORP.                                   KENT OPTOMETRIC PROVIDERS, INC,
                                               f/k/a KENT OPTOMETRIC PROVIDERS, P.C.

By:      /s/ Donald L. Radcliff                      By:      /s/ Donald L. Radcliff
   -----------------------------------------            --------------------------------
Name:  Donald L. Radcliff                            Name:  Donald L. Radcliff
Title:  Chief Financial Officer                      Title:  Chief Financial Officer

</TABLE>

                                       27Unassociated Document

 

	
 
	
 
	
APPENDIX D

	
 
	
 
	
 

	
No. ________
	
ELECTRO ENERGY INC.
	
______ Shares

	
 
	
 
	
 

WARRANT TO PURCHASE COMMON STOCK

VOID AFTER 5:30 P.M., EASTERN STANDARD

TIME, ON THE EXPIRATION DATE

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.

FOR VALUE RECEIVED, ELECTRO ENERGY, INC., a Delaware corporation (the “Company”), hereby agrees to sell upon the terms and on the conditions hereinafter set forth, but no later than 5:30 p.m., Eastern Standard Time, on the Expiration Date (as hereinafter defined) to ______________________, or registered assigns (the “Holder”), under the terms as hereinafter set forth, _____________________ (__________) fully paid and non-assessable shares of the Company’s Common Stock, par value $.001 per share (the “Warrant Stock”), at a purchase price per share of Two Dollars Fifty Cents ($2.50) (the “Warrant Price”), pursuant to this warrant (this “Warrant”). The number of shares of Warrant Stock to be so issued and the Warrant Price are subject to adjustment in certain events as hereinafter set forth. The term “Common Stock” shall mean, when used herein, unless the context otherwise requires, the stock and other securities and property at the time receivable upon the exercise of this Warrant.

This Warrant is one of a series of the Company’s Warrants to purchase Common Stock (collectively, the “Warrants”), issued pursuant to the Confidential Private Placement Memorandum, dated April 8, 2004 (as the same may be supplemented from time to time, the “Memorandum”). Capitalized terms used and not otherwise defined herein shall have the respective meanings attributed thereto in Section 10.

1.   Exercise of Warrant.

(a)   The Holder may exercise this Warrant according to its terms by surrendering this Warrant to the Company at the address set forth in Section 11, the subscription form attached hereto having then been duly executed by the Holder, accompanied by cash, certified check or bank draft in payment of the purchase price, in lawful money of the United States of America, for the number of shares of the Warrant Stock specified in the subscription form, or as otherwise provided in this Warrant, prior to 5:30 p.m., Eastern Standard Time, on the date which is three years from the date of the issuance of this Warrant (the “Expiration Date”).

(b)   This Warrant may be exercised in whole or in part so long as any exercise in part hereof would not involve the issuance of fractional shares of Warrant Stock. If exercised in part, the Company shall deliver to the Holder a new Warrant, identical in form, in the name of the Holder, evidencing the right to purchase the number of shares of Warrant Stock as to which this Warrant has not been exercised, which new Warrant shall be signed by the Chairman, Chief Executive Officer or President and the Secretary or Assistant Secretary of the Company. The term Warrant as used herein shall include any subsequent Warrant issued as provided herein.

	 
	 	D-1	 
	

	 

 

(c)   No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. The Company shall pay cash in lieu of fractions with respect to the Warrants based upon the fair market value of such fractional shares of Common Stock (which shall be the closing price of such shares on the exchange or market on which the Common Stock is then traded) at the time of exercise of this Warrant.

(d)   In the event of any exercise of the rights represented by this Warrant, a certificate or certificates for the Warrant Stock so purchased, registered in the name of the Holder, shall be delivered to the Holder within a reasonable time after such rights shall have been so exercised. The person or entity in whose name any certificate for the Warrant Stock is issued upon exercise of the rights represented by this Warrant shall for all purposes be deemed to have become the holder of record of such shares immediately prior to the close of business on the date on which the Warrant was surrendered and payment of the Warrant Price and any applicable taxes was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the opening of business on the next succeeding date on which the stock transfer books are open. Except as provided in Section 4 hereof, the Company shall pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on exercise of this Warrant.

2.   Disposition of Warrant Stock and Warrant.

(a)   The Holder hereby acknowledges that this Warrant and any Warrant Stock purchased pursuant hereto are not being registered (i) under the Act on the ground that the issuance of this Warrant is exempt from registration under Section 4(2) of the Act as not involving any public offering or (ii) under any applicable state securities law because the issuance of this Warrant does not involve any public offering; and that the Company’s reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Holder that it is acquiring this Warrant and will acquire the Warrant Stock for investment for its own account, with no present intention of dividing its participation with others or reselling or otherwise distributing the same, subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control.

The Holder hereby agrees that it will not sell or transfer all or any part of this Warrant and/or Warrant Stock unless and until it shall first have given notice to the Company describing such sale or transfer and furnished to the Company either (i) an opinion, reasonably satisfactory to counsel for the Company, of counsel (skilled in securities matters, selected by the Holder and reasonably satisfactory to the Company) to the effect that the proposed sale or transfer may be made without registration under the Act and without registration or qualification under any state law, or (ii) an interpretative letter from the Securities and Exchange Commission to the effect that no enforcement action will be recommended if the proposed sale or transfer is made without registration under the Act.

(b)   If, at the time of issuance of the shares issuable upon exercise of this Warrant, no registration statement is in effect with respect to such shares under applicable provisions of the Act, the Company may at its election require that the Holder provide the Company with written reconfirmation of the Holder’s investment intent and that any stock certificate delivered to the Holder of a surrendered Warrant shall bear legends reading substantially as follows:

	 
	 	D-2	 
	

	 

 

“TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE WARRANT PURSUANT TO WHICH THESE SHARES WERE PURCHASED FROM THE COMPANY. COPIES OF THOSE RESTRICTIONS ARE ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY, AND NO TRANSFER OF SUCH SHARES OR OF THIS CERTIFICATE, OR OF ANY SHARES OR OTHER SECURITIES (OR CERTIFICATES THEREFOR) ISSUED IN EXCHANGE FOR OR IN RESPECT OF SUCH SHARES, SHALL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS THEREIN SET FORTH SHALL HAVE BEEN COMPLIED WITH.”

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

In addition, so long as the foregoing legend may remain on any stock certificate delivered to the Holder, the Company may maintain appropriate “stop transfer” orders with respect to such certificates and the shares represented thereby on its books and records and with those to whom it may delegate registrar and transfer functions.

3.   Reservation of Shares. The Company hereby agrees that at all times there shall be reserved for issuance upon the exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance upon exercise of this Warrant. The Company further agrees that all shares which may be issued upon the exercise of the rights represented by this Warrant will be duly authorized and will, upon issuance and against payment of the exercise price, be validly issued, fully paid and non-assessable, free from all taxes, liens, charges and preemptive rights with respect to the issuance thereof, other than taxes, if any, in respect of any transfer occurring contemporaneously with such issuance and other than transfer restrictions imposed by federal and state securities laws.

4.   Exchange, Transfer or Assignment of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations, entitling the Holder or Holders thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants that carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof.

5.   Capital Adjustments. This Warrant is subject to the following further provisions:

	 
	 	D-3	 
	

	 

 

(a)   Recapitalization, Reclassification and Succession. If any recapitalization of the Company or reclassification of its Common Stock or any merger or consolidation of the Company into or with a corporation or other business entity, or the sale or transfer of all or substantially all of the Company’s assets or of any successor corporation’s assets to any other corporation or business entity (any such corporation or other business entity being included within the meaning of the term “successor corporation”) shall be effected, at any time while this Warrant remains outstanding and unexpired, then, as a condition of such recapitalization, reclassification, merger, consolidation, sale or transfer, lawful and adequate provision shall be made whereby the Holder of this Warrant thereafter shall have the right to receive upon the exercise hereof as provided in Section 1 and in lieu of the shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant, such shares of capital stock, securities or other property as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant had such recapitalization, reclassification, merger, consolidation, sale or transfer not taken place, and in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.

(b)   Subdivision or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the number of shares of Warrant Stock purchasable upon exercise of this Warrant and the Warrant Price shall be proportionately adjusted.

(c)   Stock Dividends and Distributions. If the Company at any time while this Warrant is outstanding and unexpired shall issue or pay the holders of its Common Stock, or take a record of the holders of its Common Stock for the purpose of entitling them to receive, a dividend payable in, or other distribution of, Common Stock, then (i) the Warrant Price shall be adjusted in accordance with Section 5(e) and (ii) the number of shares of Warrant Stock purchasable upon exercise of this Warrant shall be adjusted to the number of shares of Common Stock that Holder would have owned immediately following such action had this Warrant been exercised immediately prior thereto.

(d)   Stock and Rights Offering to Shareholders. If at any time after the date of issuance of this Warrant, the Company shall issue or sell, or fix a record date for the purposes of entitling holders of its Common Stock to receive, (i) Common Stock or (ii) rights, options or warrants entitling the holders thereof to subscribe for or purchase Common Stock (or securities convertible or exchangeable into or exercisable for Common Stock), in any such case, at a price per share (or having a conversion, exchange or exercise price per share) that is less than the closing price per share of the Company’s Common Stock on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or traded on any such exchange, on the National Market or SmallCap Market of the National Association of Securities Dealers Automated Quotations System (“NASDAQ”), or if not listed or traded on any such exchange or system, the average of the bid and asked price per share on NASDAQ or, if such quotations are not available, the fair market value per share of the Company’s Common Stock as reasonably determined by the Board of Directors of the Company (the “Closing Price”) on the date of such issuance or sale or on such record date then, immediately after the date of such issuance or sale or on such record date, (x) the Warrant Price shall be adjusted in accordance with Section 5(e), and (y) the number of shares of Warrant Stock purchasable upon exercise of this Warrant shall be adjusted to that number determined by multiplying the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately before the date of such issuance or sale or such record date by a fraction, the denominator of which will be the number of shares of Common Stock outstanding on such date plus the number of shares of Common Stock that the aggregate offering price of the total number of shares so offered for subscription or purchase (or the aggregate initial conversion price, exchange price or exercise price of the convertible securities or exchangeable securities or rights, options or warrants, as the case may be, so offered) would purchase at such Closing Price, and the numerator of which will be the number of shares of Common Stock outstanding on such date plus the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible or exchangeable securities or rights, options or warrants so offered are initially convertible or exchangeable or exercisable, as the case may be).

	 
	 	D-4	 
	

	 

 

If the Company shall at any time after the date of issuance of this Warrant distribute to all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings or current year’s or prior year’s earnings of the Company) or rights or warrants to subscribe for or purchase any of its securities (excluding those referred to in the immediately preceding paragraph) (any of the foregoing being hereinafter in this paragraph called the “Securities”), then in each such case, the Company shall reserve shares or other units of such securities for distribution to the Holder upon exercise of this Warrant so that, in addition to the shares of the Common Stock to which such Holder is entitled, such Holder will receive upon such exercise the amount and kind of such Securities which such Holder would have received if the Holder had, immediately prior to the record date for the distribution of the Securities, exercised this Warrant.

(e)   Warrant Price Adjustment. Whenever the number of shares of Warrant Stock purchasable upon exercise of this Warrant is adjusted, as herein provided, the Warrant Price payable upon the exercise of this Warrant shall be adjusted to that price determined by multiplying the Warrant Price immediately prior to such adjustment by a fraction (i) the numerator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately prior to such adjustment, and (ii) the denominator of which shall be the number of shares of Warrant Stock purchasable upon exercise of this Warrant immediately thereafter.

(f)   Certain Shares Excluded. The number of shares of Common Stock outstanding at any given time for purposes of the adjustments set forth in this Section 5 shall exclude any shares then directly or indirectly held in the treasury of the Company.

(g)   Deferral and Cumulation of De Minimis Adjustments. The Company shall not be required to make any adjustment pursuant to this Section 5 if the amount of such adjustment would be less than one percent (1%) of the Warrant Price in effect immediately before the event that would otherwise have given rise to such adjustment. In such case, however, any adjustment that would otherwise have been required to be made shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to not less than one percent (1%) of the Warrant Price in effect immediately before the event giving rise to such next subsequent adjustment.

(h)   Duration of Adjustment. Following each computation or readjustment as provided in this Section 5, the new adjusted Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant shall remain in effect until a further computation or readjustment thereof is required.

	 
	 	D-5	 
	

	 

 

6.   Notice to Holders.

(a)   Notice of Record Date. In case:

(i)   the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend payable out of earned surplus of the Company) or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right;

(ii)        of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation with or merger of the Company into another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation; or

(iii)        of any voluntary dissolution, liquidation or winding-up of the Company;

then, and in each such case, the Company will mail or cause to be mailed to the Holder hereof at the time outstanding a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any, is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution or winding-up. Such notice shall be mailed at least thirty (30) days prior to the record date therein specified, or if no record date shall have been specified therein, at least thirty (30) days prior to such specified date.

(b)   Certificate of Adjustment. Whenever any adjustment shall be made pursuant to Section 5 hereof, the Company shall promptly make a certificate signed by its Chairman, Chief Executive Officer, President or Vice President and by its Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, setting forth in reasonable detail the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Warrant Price and number of shares of Warrant Stock purchasable upon exercise of this Warrant after giving effect to such adjustment, and shall promptly cause copies of such certificates to be mailed (by first class mail, postage prepaid) to the Holder of this Warrant.

7.   Loss, Theft, Destruction or Mutilation. Upon receipt by the Company of evidence satisfactory to it, in the exercise of its reasonable discretion, of the ownership and the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of indemnity reasonably satisfactory to the Company and, in the case of mutilation, upon surrender and cancellation thereof, the Company will execute and deliver in lieu thereof, without expense to the Holder, a new Warrant of like tenor dated the date hereof.

	 
	 	D-6	 
	

	 

 

8.   Warrant Holder Not a Stockholder. The Holder of this Warrant, as such, shall not be entitled by reason of this Warrant to any rights whatsoever as a stockholder of the Company.

9.   Registration Rights. This Warrant and the shares of Common Stock issuable upon exercise of this Warrant will be accorded the registration rights under the Act set forth in that certain Subscription Agreement between the Company and the Holders, a form of which agreement is being furnished concurrently herewith.

10.        Definitions. As used herein, unless the context otherwise requires, the following terms have the respective meanings:

(a)   “Affiliate”: with respect to any Person, the following: (i) any other Person that at such time directly or indirectly through one or more intermediaries controls, or is controlled by or is under common control with such first Person or (ii) any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% of more of any class of voting or equity interests. As used in such definition, “controls,” “controlled by” and “under common control,” as used with respect to an Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

(b)   “Person”: any natural person, corporation, division of a corporation, partnership, limited liability company, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof.

(c)   “Subsidiaries”: with respect to any Person, any corporation, association or other business entity (whether now existing or hereafter organized) of which at least a majority of the securities or other ownership interests having ordinary voting power for the election of directors is, at the time as of which any determination is being made, owned or controlled by such Person or one or more subsidiaries of such Person.

11.        Notices. Any notice required or contemplated by this Warrant shall be deemed to have been duly given if transmitted by registered or certified mail, return receipt requested, or nationally recognized overnight delivery service, to the Company at Electro Energy, Inc. 30 Shelter Rock Road, Danbury, CT 06810. Attention: Chief Executive Officer, or to the Holder at the name and address set forth in the Warrant Register maintained by the Company.

12.        Choice of Law. THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAW RULES.

	
 

	 	D-7	 
	

	 

IN WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its behalf, in its corporate name and by its duly authorized officers, as of this _____ day of _________ 2004.

 

	 	ELECTRO ENERGY INC.
	 	 	 
	
 
	
By:
	
 

			

	
 
	
 
	
Michael Eskra

	
 
	
 
	
President and Chief Operating Officer

	
 

	 	D-8

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