Exhibit 10.1.3
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "AGREEMENT") is entered into as
of April 7, 2000, by and among Beacon Power Corporation, a Delaware corporation
(the "COMPANY"), Perseus Capital, L.L.C., a Delaware limited liability company
("PERSEUS"), Duquesne Enterprises, Inc., a Pennsylvania corporation
("DUQUESNE"), Micro Generation Technology Fund, L.L.C., a Delaware limited
liability company ("MICRO"), and SatCon Technology Corporation, a Delaware
corporation ("SATCON," and together with Perseus, Duquesne and Micro,
collectively, the "PURCHASERS" and each individually, a "PURCHASER"). Certain
capitalized terms used in this Agreement are defined in EXHIBIT A attached
hereto.
RECITALS
A.The Purchasers each acquired one or more promissory notes and one or
more warrants to acquire shares of the Company's Class E Preferred Stock (the
"BRIDGE TWO NOTES AND WARRANTS" sometimes referred to separately herein as the
"BRIDGE TWO NOTES" and the "BRIDGE TWO WARRANTS") pursuant to a Note and Warrant
Purchase Agreement between the Company and the Purchasers dated August 2, 1999,
as amended (the "BRIDGE TWO NOTE AND WARRANT PURCHASE AGREEMENT").
B. The Purchasers each acquired one or more promissory notes from the
Company (the "BRIDGE THREE NOTES") pursuant to a Note and Warrant Purchase
Agreement between the Company and the Purchasers dated January 7, 2000, as
amended (the "BRIDGE THREE NOTE AND WARRANT PURCHASE AGREEMENT") (the Bridge Two
Notes and Warrants and the Bridge Three Notes are hereinafter referred to,
collectively, as the "BRIDGE DOCUMENTS").
C. The Company desires to issue to the Purchasers shares of the
Company's Class E Preferred Stock $.01 par value per share (the "PREFERRED
STOCK") and warrants (the "WARRANTS") to purchase additional shares of the
Preferred Stock, in exchange for the Bridge Documents, all on the terms and
subject to the conditions set forth in this Agreement.
AGREEMENT
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. AUTHORIZATION AND SALE OF THE PREFERRED STOCK AND WARRANTS.
1.1 AUTHORIZATION; AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION. Prior to the Closing (as defined below) the Company shall have
filed with the State of Delaware the
Third Amended and Restated Certificate of Incorporation of the Company in
substantially the form attached hereto as EXHIBIT 1.1 (the "RESTATED
CERTIFICATE") authorizing the Preferred Stock and the Warrants.
1.2 ISSUANCE AND SALE; EXCHANGE OF NOTES; WARRANTS.
(a) Subject to all of the terms and conditions hereof
and in reliance on the representations and warranties set forth herein,
including, without limitation, the satisfaction by the Purchasers of the
conditions set forth in Section 2.3(b) hereof, at the Closing (as defined below)
the Company will issue and sell to the Purchasers, and Purchasers will each
purchase from the Company, (i) that number of shares of Preferred Stock
(collectively, the "PREFERRED SHARES") and (ii) Warrants, in substantially the
form attached hereto as EXHIBIT 1.2(A), exercisable for that number of Preferred
Stock as set forth opposite the name of such Purchaser below in exchange for the
Bridge Documents representing the aggregate purchase price therefor set forth
opposite the name of such Purchaser below (the Preferred Shares and Warrants are
hereafter referred to collectively as the "PURCHASED SECURITIES"). The sale of
the Purchased Securities to each Purchaser at the Closing shall constitute a
separate sale hereunder.
--------------- -------------- --------------- --------------- ---------------- --------------- --------------- ----------------
NUMBER OF
SHARES
COVERED BY
BRIDGE TWO TOTAL AMOUNT THE WARRANT TOTAL NUMBER
AND BRIDGE OF BRIDGE 2 EQUAL TO 25% OF PREFERRED
BRIDGE TWO BRIDGE THREE THREE NOTES TWO AND TOTAL NUMBER OF TOTAL SHARES TO BE
NOTE(S) NOTE(S) ACCRUED BRIDGE THREE OF SHARES AT PREFERRED ISSUED (SHARES
PURCHASER AMOUNT AMOUNT INTEREST INVESTMENT $3.12/SHARE SHARES ISSUED AND WARRANTS)
--------------- -------------- --------------- --------------- ---------------- --------------- --------------- ----------------
Perseus $1,350,000 $250,000 $117,622 $1,717,622 550,520 137,630 688,150
--------------- -------------- --------------- --------------- ---------------- --------------- --------------- ----------------
SatCon $1,000,000 $0 $83,911 $1,083,911 347,407 86,852 434,259
--------------- -------------- --------------- --------------- ---------------- --------------- --------------- ----------------
Duquesne $500,000 $90,000 $48,965 $638,965 204,797 51,199 255,996
--------------- -------------- --------------- --------------- ---------------- --------------- --------------- ----------------
Micro $300,000 $60,000 $25,061 $385,061 123,417 30,854 154,271
--------------- -------------- --------------- --------------- ---------------- --------------- --------------- ----------------
Total: $3,150,000 $400,000 $275,559 $3,825,559 1,226,141 306,535 1,532,676
--------------- -------------- --------------- --------------- ---------------- --------------- --------------- ----------------
1.3 REGISTRATION RIGHTS AGREEMENT. The Purchasers and the
Company shall enter into a Registration Rights Agreement, a form of which is
attached as EXHIBIT 1.3 hereto.
2. CLOSING.
2.1 CLOSING. The closing (the "CLOSING") of the sale and
purchase of the Purchased Securities under this Agreement shall take place at
the offices of Xxxxxxx & Xxxxxx, LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 at
10:00 a.m. on April 7, 2000, or at such other
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time, date and place as are mutually agreeable to the Company and to the
Purchasers. The date of the Closing is hereinafter referred to as the "CLOSING
DATE."
2.2 DELIVERIES.
(a) At the Closing:
(i) the Purchasers will deliver to the
Company in accordance with Section 1.2(a), above, (i) all the Bridge Two Notes
and Bridge Three Notes each with the following legend bearing the signature of
the respective Purchasers: "Paid in full and all obligations hereunder fully
discharged" and (ii) all the Bridge Two Warrants each with the legend bearing
the signature of the respective Purchasers: "Cancelled". It is acknowledged
herein by the parties that the warrants issuable under the Bridge Three Notes
were not issued to the Purchasers and except as provided herein, the Purchasers
have no further rights in or to such warrants.
(ii) the Company will deliver to the
Purchasers (i) certificates registered in each Purchaser's name representing the
respective number of shares of Preferred Stock, and (ii) warrants adjusted
respectively for the number of shares of Preferred Stock to be issued and sold
by the Company to each Purchaser pursuant to Section 1.2(a), above..
(b) The parties shall deliver all documents required
to be delivered at the Closing pursuant to Section 2.3 hereof.
2.3 CONDITIONS TO CLOSING.
(a) CONDITIONS TO OBLIGATIONS OF THE PURCHASERS. The
obligations of the Purchasers to purchase the Purchased Securities at the
Closing are subject to the fulfillment on or prior to the Closing Date of the
following conditions, any of which may be waived by the Purchasers:
(i) REPRESENTATIONS AND WARRANTIES CORRECT;
PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the
Company in Section 3 hereof shall have been true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of such date, and the Company shall have performed all obligations, covenants
and agreements herein required to be performed by it on or prior to the Closing
Date.
(ii) CONSENTS AND WAIVERS. The Company shall
have obtained any and all consents (including all governmental or regulatory
consents, approvals or authorizations required in connection with the valid
execution and delivery of this Agreement and the Related Agreements), permits
and waivers necessary or appropriate for consummation of the transactions
contemplated by this Agreement or any Related Agreement.
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(iii) RELATED AGREEMENTS. Each of the
Related Agreements shall have been executed and delivered by the parties
thereto.
(iv) OTHER PURCHASERS' OBLIGATIONS. The
Purchasers shall have performed all of their obligations hereunder required to
be performed on or prior to the Closing Date.
(v) RESTATED CERTIFICATE. The Restated
Certificate shall have been filed with the Delaware Secretary of State and a
certified copy thereof shall have been delivered to the Purchasers.
(vi) OFFICER'S CERTIFICATE. The Company
shall have delivered to the Purchasers a certificate, executed by the President
of the Company, dated as of the Closing Date, certifying as to (a) the
fulfillment of the conditions specified in subsections (a)(i) and (ii) of this
Section 2.3. and (b) the authenticity of attached copies of the Company's
Restated Certificate, Bylaws and resolutions of the Board of Directors of the
Company approving the transactions contemplated hereby.
(vii) OPINIONS OF COMPANY'S COUNSEL. The
Purchasers shall have received from Xxxxxxx & Xxxxxx, LLP an opinion, dated as
of the Closing Date, substantially in the form attached hereto as EXHIBIT
2.3(A)(VII).
(viii) OTHER DOCUMENTS. The Purchasers shall
have received such other certificates and documents as they shall have
reasonably requested.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
Company's obligation to sell and issue the Purchased Securities at the Closing
is subject to the fulfillment on or prior to the Closing Date of the following
conditions, any of which may be waived by the Company:
(i) REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by the Purchasers in Section 4 hereof shall
have been true and correct when made, and shall be true and correct on the
Closing Date with the same force and effect as if they had been made on and as
of such date.
(ii) RELATED AGREEMENTS. Each of the Related
Agreements shall have been executed and delivered by the parties hereto.
3. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY.
Except as otherwise set forth in the disclosure schedule attached
hereto as EXHIBIT 3 (the "COMPANY DISCLOSURE SCHEDULE"), the Company represents
and warrants to the Purchasers as set forth below:
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3.1 ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has full corporate power and authority to
carry on its business as now conducted and as it is proposed to be conducted,
and is duly qualified or licensed to do business and in good standing in each
jurisdiction in which the nature of its business or properties makes such
qualification or licensing necessary, except where the failure to so qualify or
be licensed would not have a Material Adverse Effect.
3.2 CAPITAL STRUCTURE. As of the date hereof, the authorized
capital stock of the Company consists of the following shares, and all of the
issued and outstanding shares as hereinafter set forth have been duly authorized
and validly issued, are fully paid and nonassessable and have been offered,
issued, sold and delivered by the Company in compliance with all applicable
federal and state securities laws:
(a) PREFERRED STOCK. A total of 10,000,007 authorized
shares of Preferred Stock, $.01 par value (the "Preferred Stock"), consisting of
5,000,000 shares designated as Class A Preferred Stock, of which 4,767,907
shares are issued and outstanding; one share designated as Class B Preferred
Stock, none of which is issued and outstanding; six shares designated as Class C
Preferred Stock, all of which are issued and outstanding; 3,000,000 shares
designated as Class D Preferred Stock, 1,900,000 of which are issued and
outstanding; and 2,000,000 shares designated as Class E Preferred Stock, none of
which are issued and outstanding prior to the consummation of the transactions
contemplated hereby.
(b) COMMON STOCK. A total of 15,000,000 authorized
shares of Common Stock, of which 8,409 shares are issued and outstanding.
(c) OPTIONS, WARRANTS, RESERVED SHARES, TREASURY
STOCK. Except (i) as disclosed on Section 3.2(c) of the Company Disclosure
Schedule and (ii) except for the conversion privileges of the Class A Preferred
Stock, the Class B Preferred Stock, the Class C Preferred Stock and the Class D
Preferred Stock, there are no outstanding options, warrants, rights (including
conversion or preemptive rights) or agreements for the purchase or acquisition
from the Company of any shares of the Company's capital stock or any securities
convertible into or ultimately exchangeable or exercisable for any shares of the
Company's capital stock, nor is the Company obligated in any manner to issue any
shares of its capital stock or other securities. Apart from the exceptions noted
in this SECTION 3.2(C), none of the Company's outstanding capital stock, or
stock issuable upon exercise or exchange of any outstanding options, warrants or
rights, is subject to any preemptive rights, rights of first refusal or other
rights to purchase such stock (whether in favor of the Company or any other
person), pursuant to any agreement or commitment of the Company. The Company
holds no shares of its capital stock in its treasury.
(d) SECURITY HOLDERS. Section 3.2(d) of the Company
Disclosure Schedule contains a complete and accurate list of the names of all
current stockholders of the Company and all current holders of outstanding
warrants, options, or other rights ultimately exchangeable, exercisable or
convertible for or into capital stock, segregated by the type of
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security held by each such holder and setting forth the amount of such security
held by such holder and, in the case of securities, exchangeable, exercisable or
convertible into Common Stock, the amount of Common Stock into which such
securities are exchangeable, exercisable or convertible.
3.3 POWER, AUTHORIZATION AND VALIDITY. The Company has the
corporate power, legal capacity and corporate authority to enter into and
perform its obligations under this Agreement and each of the Related Agreements
to which it is a party. The execution, delivery and performance by the Company
of this Agreement and each of the Related Agreements to which it is a party have
been duly and validly approved and authorized by all necessary corporate action
on its part. No authorization, consent, or approval, governmental or otherwise,
is necessary to enable the Company to enter into the Agreement or any Related
Agreement to which it is a party and to perform its obligations hereunder or
thereunder. This Agreement is, and each of the Related Agreements to which it is
a party when executed and delivered by the Company will be, the valid and
binding obligations of the Company, enforceable in accordance with their
respective terms.
3.4 NO VIOLATION OF EXISTING AGREEMENTS. Neither the execution
and delivery of this Agreement or any Related Agreement to which it is a party
nor the consummation of the transactions or performance of the Company's
obligations contemplated hereby or thereby will conflict with, result in a
material breach or violation of, or cause a default under, any provision of the
Company's Restated Certificate or Bylaws, each as is currently in effect, any
instrument, contract or agreement that is material to the business of the
Company or any judgment, writ, decree, order, law, statute, ordinance, rule or
regulation applicable to the Company.
3.5 REPRESENTATIONS REGARDING PREFERRED STOCK, CONVERSION
SHARES AND WARRANT SHARES. All corporate action has been taken on the part of
the Company, its officers, directors and shareholders necessary for the
authorization and creation, issuance and delivery of the Preferred Stock, the
Conversion Shares, the Warrants and the Warrant Shares. The Preferred Stock, the
Conversion Shares, and the Warrant Shares when issued in compliance with the
provisions of this Agreement and the Restated Certificate or the Warrants, as
the case may be, will be validly issued, fully paid and nonassessable and,
assuming the accuracy of each Purchaser's representation in Section 4 of this
Agreement, issued in compliance with all applicable federal and state securities
laws. None of the Preferred Stock or Warrants issued pursuant to this Agreement,
and none of the Conversion Shares or Warrant Shares are subject to any
preemptive rights, rights of first refusal, or other rights to purchase such
stock (whether in favor of the Company or any other person), pursuant to any
agreement or commitment of the Company.
3.6 NO SUBSIDIARY. The Company does not own of record or
beneficially any capital stock or equity interest or investment in any
corporation, association, partnership, limited partnership, limited liability
company, trust or other entity.
3.7 FINANCIAL STATEMENTS.
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(a) The Company's unaudited consolidated balance
sheets as of December 31, 1998 and December 31, 1999 and statements of
operations, cash flows and changes in stockholders' equity for the year ended
December 31, 1998 and December 31, 1999, including the notes thereto
(collectively the "COMPANY FINANCIAL STATEMENTS"), all of which are attached to
the Company Disclosure Schedule, have been prepared in all material respects in
accordance with GAAP. The Company Financial Statements have been prepared in
accordance with the books and records of the Company and present fairly in all
material respects the financial position, results of operations, cash flows and
equity transactions of the Company as of and for the periods ending on their
dates. Except and to the extent reflected or reserved against in the Company
Financial Statements, the Company does not have, as of the dates of the Company
Financial Statements, any liabilities or obligations (absolute or contingent) of
a nature required to be or customarily reflected in a balance sheet (or the
notes thereto) prepared in accordance with GAAP. The reserves, if any, reflected
on the Company Financial Statements are adequate in light of the contingencies
with respect to which they are made. There has been no material change in the
Company's accounting policies except as described in the notes to the Company
Financial Statements.
(b) The Company has no debts, liabilities, or
obligations in a material amount, either individually or in the aggregate, of
any nature, whether accrued, absolute, contingent, or otherwise, and whether due
or to become due, that is not reflected or reserved against in the Company
Financial Statements. All material debts, liabilities, and obligations incurred
after the date of the Company Financial Statements were incurred in the ordinary
course of business, and are usual and normal in amount, both individually and in
the aggregate.
3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS. Since December 31,
1999, the Company has not:
(a) suffered any Material Adverse Change;
(b) suffered any damage, destruction or loss, whether
or not covered by insurance, in an amount in excess of $50,000;
(c) granted or agreed to make any increase in the
compensation payable or to become payable by the Company to any of its officers
or employees, except for normal raises for nonexecutive personnel made in the
ordinary course of business that are usual and normal in amount;
(d) declared, set aside or paid any dividend or made
any other distribution on or in respect of the shares of capital stock of the
Company or declared or agreed to any direct or indirect redemption, retirement,
purchase or other acquisition by the Company of such shares;
(e) issued any shares of capital stock of the Company
or any warrants, rights, options or entered into any commitment relating to the
shares of capital stock of the
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Company, except as disclosed on EXHIBIT 3, the Company's Disclosure Statement,
attached hereto;
(f) made any change in the accounting methods or
practices it follows, whether for general financial or tax purposes, or any
change in depreciation or amortization policies or rates adopted therein;
(g) sold, leased, abandoned or otherwise disposed of
any real property or any machinery, equipment or other operating property other
than in the ordinary course of its business;
(h) sold, assigned, transferred, licensed or
otherwise disposed of any patent, trademark, trade name, brand name, copyright
(or pending application for any patent, trademark or copyright), invention, work
of authorship, process, know-how, formula or trade secret or interest thereunder
or other intangible asset except in the ordinary course of its business;
(i) been involved in any dispute involving any
employee which may result in a Material Adverse Change;
(j) engaged in any activity or entered into any
material commitment or transaction (including without limitation any borrowing
or capital expenditure);
(k) incurred any material liabilities, contingent or
otherwise, either matured or unmatured (whether or not required to be reflected
in financial statements in accordance with GAAP, and whether due or to become
due), except for accounts payable or accrued salaries that have been incurred by
the Company since December 31, 1999, in the ordinary course of its business and
consistent with the Company's past practices;
(l) permitted or allowed any of its material property
or assets to be subjected to any mortgage, deed of trust, pledge, lien, security
interest or other encumbrance of any kind, except those permitted under Section
3.9 hereof, other than any purchase money security interests incurred in the
ordinary course of its business;
(m) made any capital expenditure or commitment for
additions to property, plant or equipment individually in excess of $50,000, or
in the aggregate, in excess of $100,000;
(n) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets to, or entered into any agreement
or arrangement with any of its affiliates within the meaning of the rules and
regulations promulgated under the Securities Act of 1933 ("AFFILIATES"),
officers, directors or shareholders or, to the Company's knowledge, any
Affiliate or associate of any of the foregoing;
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(o) made any amendment to or terminated any agreement
that, if not so amended or terminated, would be material to the business,
assets, liabilities, operations or financial performance of the Company;
(p) entered into any agreement in contemplation of
the transactions specified herein other than this Agreement and the Related
Agreements; or
(q) agreed to take any action described in this
Section 3.8 or outside of the ordinary course of its business or which would
constitute a breach of any of the representations or warranties contained in
this Agreement.
3.9 TITLE TO PROPERTY AND ASSETS. The Company owns and
possesses its properties and assets that are material to its business free and
clear of all mortgages, deeds of trust, liens, encumbrances, security interests
and claims except as reflected in the Company Financial Statements and except
for statutory liens for the payment of current taxes that are not yet delinquent
and liens, encumbrances and security interests that arise in the ordinary course
of its business and do not affect material properties and assets of the Company.
With respect to the property and assets it leases that are material to its
business, the Company is in compliance with such leases in all material
respects. The Company holds valid leasehold interests to its material leased
properties and assets free of any liens, encumbrances or security interests of
any party other than the lessors of such property and assets. The Company's
properties and assets are in all material respects in good operating condition
and repair.
3.10 PROPRIETARY ASSETS.
(a) Section 3.10(a)(i) of the Company Disclosure
Schedule sets forth, with respect to each Proprietary Asset of the Company
registered with or issued by any Governmental Body or for which an application
has been filed with any Governmental Body, (i) a brief description of such
Proprietary Asset, and (ii) the names of the jurisdictions covered by the
applicable registration or application or in which the Proprietary Asset has
been issued. Section 3.10(a)(ii) of the Company Disclosure Schedule identifies
and provides a brief description of each Proprietary Asset licensed to the
Company by any Person (other than software licenses that are relating to
unmodified commercial computer software that is generally available in the
ordinary course of business), and identifies the license agreement under which
such Proprietary Asset is being licensed to the Company. The Company has good
and marketable title to all Proprietary Assets used in or necessary for its
business as currently conducted and as proposed to be conducted, free and clear
of all material liens and other encumbrances, except for third party rights
licensed to it, as to which the Company has a valid right to use such
Proprietary Assets (all of the foregoing are referred to herein as the "COMPANY
PROPRIETARY RIGHTS"). The Company is not obligated to make any material payment
to any Person for the use of any Proprietary Asset. The Company has not
developed jointly with any other Person any Proprietary Asset with respect to
which such other Person has any rights or the Company has any obligations.
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(b) The Company has taken all measures required under
the License Agreement and all other reasonable and customary measures and
precautions necessary to protect and maintain the confidentiality and secrecy of
all its Proprietary Assets (except trademarks, issued patents and other
Proprietary Assets similarly known to the public and Proprietary Assets whose
value would be materially unimpaired by public disclosure) and otherwise to
maintain and protect the value of all its Proprietary Assets.
(c) Except where such infringement, misappropriation
or unlawful use, would not and could not reasonably be expected to be material
in impact or amount, either individually or in the aggregate, the Company is not
infringing, misappropriating or making any unlawful use of, and the Company has
not at any time infringed, misappropriated or made any unlawful use of, any
Proprietary Asset owned or used by any other Person. No claims or notices (in
writing or otherwise) with respect to Proprietary Assets have been communicated
to the Company: (i) to the effect that the manufacture, Sale, license or use of
any Proprietary Asset or product, practice of any process or provision of any
service as now made, sold, practiced, used practiced or provided or currently
offered or proposed by the Company infringes or potentially infringes, or
constitutes a misappropriation or unlawful use of any copyright, patent, trade
secret or other intellectual property right of a third party, or (ii)
challenging the ownership or validity of any of the Company's rights to or
interest in such Proprietary Assets. The Company has received no notice to the
effect that any patents or registered trademarks, service marks or registered
copyrights held by the Company are invalid or not subsisting except for failures
to be valid and subsisting that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company. To
the Company's knowledge, no other Person is infringing, misappropriating or
making any unlawful use of, and no Proprietary Asset owned or used by any other
Person infringes or conflicts with, any Proprietary Asset used in or pertaining
to the business of the Company.
(d) The Proprietary Assets owned by the Company or
licensed by the Company and identified in Section 3.10(a)(ii) of the Disclosure
Schedule constitute all the Proprietary Assets necessary, in the Company's
reasonable judgment, to enable the Company to conduct its business in the manner
in which such business has been, is being and is intended to be conducted. The
Company has not licensed any of its Proprietary Assets to any Person on an
exclusive basis and the Company has not entered into any covenant not to compete
or contract limiting its ability to exploit fully any of its Proprietary Assets
or to transact business in any market or geographical area or with any Person.
(e) All current and former employees of the Company
have executed and delivered to the Company an agreement (containing no
exceptions to or exclusions from the scope of its coverage relevant to the
Company's business) that is substantially identical to the form of the Employee
Agreement previously delivered to the Purchasers, and all current and former
consultants and independent contractors to the Company providing technical
services relating to the Company's Proprietary Assets have executed and
delivered to the Company an agreement (containing no exceptions to or exclusions
from the scope of its coverage relevant to the Company's business), the material
provisions of which are in substance as protective to the
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Company as the terms of the form of Employee Agreement previously delivered to
the Purchasers.
3.11 CONTRACTS.
(a) Section 3.11 (a) of the Company Disclosure
Schedule identifies each material license agreement, development agreement,
manufacturing agreement, distribution agreement, OEM agreement or other
agreement to which the Company is a party.
(b) (i) The Company has no agreements, contracts or
commitments that call for prospective fixed and/or contingent payments or
expenditures by or to the Company of more than $50,000 other than those entered
into in the ordinary course of its business concerning the sale of Company
Products;
(ii) The Company has no purchase agreement,
contract or commitment that calls for fixed and/or contingent payments by the
Company that are in excess of the normal, ordinary and usual requirements of the
Company's business;
(iii) There is no outstanding sales
contract, commitment or proposal (including, without limitation, development
projects) of the Company that is reasonably likely to result, either
individually or in the aggregate, in any Material Adverse Change to the Company
upon completion or performance thereof;
(iv) The Company has no outstanding
agreements, contracts or commitments with officers, employees, agents,
consultants, advisors, salesmen, sales representatives, distributors or dealers
that are not cancelable by it on notice of not longer than thirty days and
without liability, penalty or premium exceeding $50,000 in any single instance
or $75,000 in the aggregate;
(v) The Company has not entered into any
employment, independent contractor or similar agreement, contract or commitment
that is not terminable on not more than thirty days' notice without penalty or
liability of any type, including without limitation severance or termination
pay;
(vi) The Company has no collective
bargaining or union agreements, contracts or commitments;
(vii) The Company is not restricted by
agreement from competing with any person, from carrying on its business anywhere
in the world or otherwise operating its business in any manner it deems
appropriate;
(viii) The Company has not guaranteed any
obligations of other Persons or made any agreements to acquire or guarantee any
obligations of other Persons; and
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(ix) The Company has no outstanding loan or
advance to any Person; nor is it party to any line of credit, standby financing,
revolving credit or other similar financing arrangement of any sort that would
permit the borrowing by the Company of any sum not reflected in the Company
Financial Statements.
(c) The Company has delivered to the Purchasers
accurate and complete copies of all written contracts identified in Section 3.11
(a) and (b) of the Company Disclosure Schedule, including all amendments
thereto. Sections 3.1l (a) and (b) of the Company Disclosure Schedule contain a
complete list of all the material contracts to which the Company is a party. The
Company has not entered into any material oral contracts. Each contract
identified in Sections 3.11 (a) and (b) of the Company Disclosure Schedule (a
"COMPANY MATERIAL CONTRACT") is valid and in full force and effect, is
enforceable by the Company in accordance with its terms, subject to (i) laws of
general application relating to insolvency and the relief of debtors and (ii)
rules of law governing specific performance, injunctive relief and other
equitable remedies, and will continue to be so immediately following the Closing
Date. No such contract, agreement or instrument contains any liquidated damages,
penalty or similar provision. To the Company's knowledge, no party to any such
contract, agreement or instrument intends to cancel, withdraw, modify or amend
such contract, agreement or instrument.
(d) (i) The Company has not violated or breached, or
committed any default under, any Company Material Contract in any material
respect, and, to the Company's knowledge, no other Person has violated or
breached, or committed any default under, any Company Material Contract in any
material respect; and
(ii) to the Company's knowledge, no event
has occurred, and no circumstance or condition exists, that (with or without
notice or lapse of time) will, or could reasonably be expected to, (A) result in
a material violation or breach of any of the provisions of any Company Material
Contract, (B) give any Person the right to declare a default or exercise any
remedy under any Company Material Contract, (C) give any Person the right to
accelerate the maturity or performance of any Company Material Contract or (D)
give any Person the right to cancel, terminate or modify any Company Material
Contract.
(e) None of the Company's Material Contracts contains
any provision which would require the consent of third parties to the sale and
issuance of the Purchased Securities or the subsequent sale of the shares of
Preferred Stock and Warrant Shares pursuant to Section 1.2(b), above, or any of
the other transactions as contemplated hereunder or under any of the Related
Agreements or which would be altered as a result of such transaction.
3.12 REGISTRATION RIGHTS. Except as disclosed in Section 3.12
of the Company Disclosure Schedule, the Company has not granted or agreed to
grant to any person or entity any rights (including piggyback registration
rights) to have any securities of the Company registered with the U.S.
Securities and Exchange Commission ("SEC") or any other governmental authority.
-12-
3.13 TAXES.
(a) The Company has fully and timely, properly and
accurately filed all tax returns and reports required to be filed by it,
including all federal, foreign, state and local tax returns and estimates for
all years and periods (and portions thereof) for which any such returns, reports
or estimates were due. All such returns, reports and estimates were prepared in
the manner required by applicable law in all material respects. All income,
sales, use, occupation, property or other taxes or assessments due from the
Company prior to the Closing Date have been paid or will be paid on or before
the Closing Date. There are no pending assessments, asserted deficiencies or
claims for additional taxes that have not been paid. The reserves for taxes, if
any, reflected on the Company Financial Statements are adequate, and there are
no tax liens on any property or assets of the Company (other than liens for
taxes not yet due and payable). There have been no audits or examinations of any
tax returns or reports of the Company by any Governmental Body. No state of
facts exists or has existed which would constitute grounds for the assessment of
any penalty or any further tax liability in a material amount, either
individually or in the aggregate, beyond that shown on the respective tax
reports, returns or estimates. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any federal, foreign,
state or local tax return or report for any period.
(b) All taxes that the Company has been required to
collect or withhold have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority.
(c) Other than the Tax Sharing Agreement (the "TAX
SHARING AGREEMENT") effective as of May 30, 1997 with SatCon, the Company is not
a party to any tax-sharing agreement or similar arrangement with any other
Person.
(d) At no time has the Company been included in the
federal consolidated income tax return of any affiliated group of corporations.
(e) Other than the Tax Sharing Agreement, the Company
is not currently under any contractual obligation to pay to any Governmental
Body any tax obligations of, or with respect to any transaction relating to, any
other Person or to indemnify any other Person with respect to any tax, other
than pursuant to this Agreement.
3.14 EMPLOYEES. The Company is not a party to any collective
bargaining agreements and, to its knowledge, there are no attempts to organize
the employees of the Company. Section 3.14 of the Company Disclosure Schedule
lists all employee benefit plans and programs of the Company and employment
contracts, arrangements and understandings with its employees, other than those
terminable, without penalty, at will or within thirty days. Copies of any of the
foregoing plans, programs, contracts, arrangements or understandings have been
made available to the Purchasers or their counsel. To the knowledge of the
Company, no employee of the Company is subject to any judgment, decree or order
of any court or administrative agency, or any other restriction that would
materially interfere with the use of his
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or her best efforts to carry out his or her duties for the Company or that would
conflict with the Company's business as currently conducted. The Company has
received no written notice from any former employer that an employee of the
Company has prior obligations to a former employer that would interfere or
conflict with such employee's ability to perform his or her intended services
for the Company. To the Company's knowledge, no employee or advisor of the
Company is or is now expected to be in violation of any term of any employment
contract, disclosure agreement, proprietary information and inventions agreement
or any other contract or agreement or any restrictive covenant or any other
common law obligation to a former employer relating to the right of any such
employee to be employed by the Company because of the nature of the business
conducted or to be conducted by the Company or to the use of trade secrets or
proprietary information of others, and the employment of the Company's employees
does not subject the Company or the Company's shareholders to any liability.
There is neither pending nor, to the Company's knowledge, threatened any
actions, suits, proceedings or claims, or, to its knowledge, any basis therefor
or threat thereof with respect to any contract, agreement, covenant or
obligation referred to in the preceding sentence.
3.15 INSURANCE. The Company maintains and keeps in force with
nationally recognized insurance companies fire, public liability, property
damage and other insurance in such amounts and with such coverage or risks as
are customary for similar businesses and adequate to the needs of the Company.
The Company Disclosure Schedule sets forth a list of such insurance, stating the
name and address of the insurance provider and the amount of insurance. The
Company has not done anything, either by way of action or inaction, that might
reasonably be expected to invalidate any of its insurance policies as a whole or
in part.
3.16 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS. The Company
has obtained all material permits, licenses and other authorizations which are
required under federal, foreign, state and local laws applicable to the Company
and relating to pollution or protection of the environment, including laws or
provisions relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials, substances, or wastes
into air, surface water, groundwater, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials, substances, or wastes. The Company is in material compliance with all
terms and conditions of the required permits, licenses and authorizations. The
Company is not aware of, nor has the Company received written notice of, any
conditions, circumstances, activities, practices, incidents, or actions which
might reasonably form the basis of a claim, action, suit, proceeding, hearing,
or investigation of, by, against or relating to the Company, based on or related
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, or hazardous or
toxic substance, material or waste.
3.17 COMPLIANCE WITH CORPORATE INSTRUMENTS AND LAWS. The
Company is not in violation of any provisions of its Restated Certificate or
Bylaws as currently in effect. The Company is in compliance in all material
respects with all applicable laws, statutes, rules, and regulations of all
governmental and regulatory authorities which are applicable and the
-14-
compliance with which is material to the Company or its assets or business. The
Company has complied in all material respects at all times with any and all
applicable federal, state and foreign laws, rules, regulations, proclamations
and orders relating to the importation or exportation of its products. All
licenses, franchises, permits and other governmental authorizations held by the
Company and which are material to its business are valid and sufficient in all
respects for the business presently carried on by the Company.
3.18 LITIGATION. There is no suit, action, proceeding, claim
or investigation pending or, to the Company's knowledge, threatened against the
Company before any court or administrative agency which could have a Material
Adverse Effect or which questions or challenges the validity of this Agreement
or any Related Agreement. There is no judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against the Company.
3.19 NO BROKERS. Neither the Company nor, to the Company's
knowledge, any Company shareholder is obligated for the payment of fees or
expenses of any broker or finder in connection with the origin, negotiation or
execution of this Agreement or any Related Agreement or in connection with any
transaction contemplated hereby or thereby.
3.20 RELATED PARTY TRANSACTIONS.
(a) None of the Company's Affiliates, officers,
directors, shareholders or employees, or any Affiliate of any of such Person,
has any material interest in any property, real or personal, tangible or
intangible, including Proprietary Assets used in or pertaining to the business
of the Company, except for the normal rights of a stockholder, or, to the
knowledge of the Company, any supplier, distributor or customer of the Company.
(b) Except for the Agreement and the Related
Agreements, there are no agreements, understandings or proposed transactions
between the Company and any of its officers, directors, employees, Affiliates,
or, to the Company's knowledge, any Affiliate thereof.
(c) To the best of the Company's knowledge, no
employee, officer or director of the Company has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, other than SatCon or Duquesne,
except that employees, officers or directors of the Company may own stock in
publicly traded companies that may compete with the Company. To the Company's
knowledge, no member of the immediate family of any officer or director of the
Company is directly or indirectly interested in any material contract with the
Company.
3.21 DISCLOSURE. The statements by the Company contained in
this Agreement, the exhibits hereto, and the certificates and documents required
to be delivered by the Company to the Purchasers under this Agreement, taken as
a whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements
-15-
contained herein and therein not misleading in light of the circumstances under
which such statements were made.
3.22 SECURITIES ACT. Subject to the accuracy of each
Purchaser's representations in Section 4 hereof, the offer, sale and issuance of
the Purchased Securities in conformity with the terms of this Agreement and the
issuance of Conversion Shares upon conversion of the Bridge Documents and shares
of Preferred Stock issued pursuant to Section 1.2(b), above, constitute or will
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act of 1933, as amended, and the qualification or registration
requirements of any applicable state securities laws as such laws exist on the
date hereof.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS AND RESTRICTIONS ON
TRANSFER IMPOSED BY THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES
LAWS.
4.1 REPRESENTATIONS AND WARRANTIES BY EACH PURCHASER. Each
Purchaser (severally, and not jointly and as to itself only) represents and
warrants to the Company as follows:
(a) The Purchased Securities (collectively, the
"SECURITIES") are being or will be acquired for each Purchaser's own account,
for investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities Act
of 1933, as amended (the "SECURITIES ACT"), or applicable state securities laws.
(b) Each Purchaser understands that (i) the
Securities have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act pursuant to Section 4(2) thereof and have not
been qualified under any state securities laws on the grounds that the offering
and sale of securities contemplated by this Agreement are exempt from
registration thereunder, and (ii) the Company's reliance on such exemptions is
predicated on the Purchasers' representations set forth herein. Each Purchaser
understands that the resale of the Securities may be restricted indefinitely,
unless a subsequent disposition thereof is registered under the Securities Act
and registered under any state securities law or is exempt from such
registration.
(c) Each Purchaser is an "Accredited Investor" as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act. Each Purchaser is able to bear the economic risk of the purchase
of the Securities pursuant to the terms of this Agreement, including a complete
loss of such Purchaser's investment in the Securities. The principal place of
business of each Purchaser is as follows: Perseus - the District of Columbia,
Duquesne - Pennsylvania, Micro - New Hampshire and SatCon - Massachusetts.
(d) Each Purchaser has the full right, power and
authority to enter into and perform such Purchaser's obligations under this
Agreement and each Related Agreement to which it is a party, and this Agreement
and each Related Agreement to which it is a party constitute valid and binding
obligations of such Purchaser enforceable in accordance with their terms.
-16-
(e) No consent, approval or authorization of or
designation, declaration or filing with any Governmental Body on the part of
such Purchaser is required in connection with the valid execution and delivery
of this Agreement or any Related Agreement to which it is a party.
4.2 LEGEND. Each certificate representing the Securities may
be endorsed with the following legends:
(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER
THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE
DISTRIBUTED EXCEPT (I) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SHARES UNDER THE ACT, OR (II) IN COMPLIANCE WITH RULE 144 OR (III)
OTHERWISE PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
ACT.
(b) Any other legends required by applicable
securities laws.
The Company may instruct its transfer agent not to register the
transfer of the Securities, unless the conditions specified in the foregoing
legends are satisfied.
4.3 REMOVAL OF LEGEND AND TRANSFER RESTRICTIONS.
Any legend endorsed on a certificate pursuant to Section 4.2(a) and the stop
transfer instructions with respect to such Securities shall be removed and the
Company shall issue a certificate without such legend to the holder thereof (1)
if such Securities are registered under the Securities Act and a prospectus
meeting the requirements of Section 10 of the Securities Act is available, (2)
if such legend may be properly removed under the terms of Rule 144 promulgated
under the Securities Act, or (3) if such holder provides the Company with an
opinion of counsel for such holder, reasonably satisfactory to legal counsel for
the Company to the effect that a sale, transfer or assignment of such Securities
may be made without registration.
5. INDEMNITY.
5.1 INDEMNITY.
(a) The Company hereby agrees to indemnify and defend
and hold harmless each of the Purchasers, its respective Affiliates, successors
and assigns and each of its respective officers, directors, employees and agents
(the "INDEMNIFIED PARTY" or collectively the "INDEMNIFIED PARTIES") from and
against, and agrees to pay or cause to be paid to the Indemnified Parties all
amounts equal to the sum of, any and all claims, demands, costs, expenses,
losses and other liabilities of any kind that the Indemnified Parties may incur
or suffer
-17-
(including without limitation all reasonable legal fees and expenses) which
arise or result from any breach of or failure by the Company to perform any of
its representations, warranties, covenants or agreements in this Agreement or
any Related Agreement. The rights of the Purchasers hereunder shall be in
addition to, and not in lieu of, any other rights and remedies which may be
available to them by law.
5.2 PROCEDURES.
(a) If a third party shall notify an Indemnified
Party with respect to any matter that may give rise to a claim for
indemnification under the indemnity set forth above in Section 5. 1, the
procedure set forth below shall be followed.
(i) NOTICE. The Indemnified Party shall give
to the party providing indemnification (the "INDEMNIFYING PARTY") written notice
of any claim, suit, judgment or matter for which indemnity may be sought under
Section 5.1 promptly but in any event within thirty days after the Indemnified
Party receives notice thereof; PROVIDED, HOWEVER, that failure by the
Indemnified Party to give such notice shall not relieve the Indemnifying Party
from any liability it shall otherwise have pursuant to this Agreement except to
the extent that the Indemnifying Party is actually prejudiced by such failure.
Such notice shall set forth in reasonable detail (i) the basis for such
potential claim and (ii) the dollar amount of such claim. The Indemnifying Party
shall have a period of fifteen days within which to respond thereto. If the
Indemnifying Party does not respond within such fifteen day period, the
Indemnifying Party shall be deemed to have accepted responsibility for such
indemnity.
(ii) DEFENSE OF CLAIM. With respect to a
claim by a third party against an Indemnified Party for which indemnification
may be sought under this Agreement, the Indemnifying Party shall have the right,
at its option, to be represented by counsel of its choice and to assume the
defense or otherwise control the handling of any claim, suit, judgment or matter
for which indemnity is sought, which is set forth in the notice sent by the
Indemnified Party, by notifying the Indemnified Party in writing to such effect
within fifteen days of receipt of such notice; PROVIDED, HOWEVER, that the
Indemnified Party shall have the right to employ counsel to represent it if, in
the Indemnified Party's reasonable judgment based upon the advice of counsel, it
is advisable in light of the separate interests of the Indemnified Party, to be
represented by separate counsel, and in that event the reasonable fees and
expenses of such separate counsel shall be paid by the Indemnifying Party. If
the Indemnifying Party does not give timely notice in accordance with the
preceding sentence, the Indemnifying Party shall be deemed to have given notice
that it does not wish to control the handling of such claim, suit or judgment.
In the event the Indemnifying Party elects (by notice in writing within such
fifteen day period) to assume the defense of or otherwise control the handling
of any such claim, suit, judgment or matter for which indemnity is sought, the
Indemnifying Party shall indemnify and hold harmless the Indemnified Party from
and against any and all reasonable professional fees (including attorneys' fees,
accountants, consultants and engineering fees) and investigation expenses
incurred by the Indemnifying Party prior to such election, notwithstanding the
fact that the Indemnifying Party may not have been so liable to the Indemnified
Party had the
-18-
Indemnifying Party not elected to assume the defense of or to otherwise control
the handling of such claim, suit, judgment or other matter. In the event that
the Indemnifying Party does not assume the defense or otherwise control the
handling of such matter, the Indemnified Party may retain counsel, as an
indemnification expense, to defend such claim, suit, judgment or matter.
(iii) FINAL AUTHORITY. The parties shall
cooperate in the defense of any such claim or litigation and each shall make
available all books and records which are relevant in connection with such claim
or litigation. In connection with any claim, suit or other proceeding with
respect to which the Indemnifying Party has assumed the defense or control, the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to any matter which does not include a provision
whereby the plaintiff or claimant in the matter releases the Indemnified Party
from all liability with respect thereto, without the written consent of the
Indemnified Party. In connection with any claim, suit or other proceeding with
respect to which the Indemnifying Party has not assumed the defense or control,
the Indemnified Party may not compromise or settle such claim without the
consent of the Indemnifying Party, which shall not be unreasonably withheld and
shall be deemed to have been given if the Indemnified Party provides the
Indemnifying Party with a written notice setting forth the material terms of
such compromise or settlement and the Indemnifying Party does not object thereto
in writing within ten days of its receipt of such notice.
(b) CLAIMS BETWEEN THE INDEMNIFYING PARTY AND THE
INDEMNIFIED PARTY. Any claim for indemnification under this Agreement which does
not result from the assertion of a claim by a third party shall be asserted by
written notice given by the Indemnified Party to the Indemnifying Party. The
Indemnifying Party shall have a period of thirty days within which to respond
thereto. If the indemnifying Party does respond within such thirty day period
and rejects such claim in whole or in part or does not respond, the Indemnified
Party shall submit the dispute to arbitration in accordance with Section 7.2
hereof.
6. ADDITIONAL COVENANTS.
6.1 RIGHT OF FIRST OFFER. Subject to the terms and conditions
specified in this Section 6.1, the Company hereby grants to each of the
Purchasers a right of first offer with respect to future sales by the Company of
its Shares (as hereinafter defined). Each Purchaser shall be entitled to
apportion the right of first offer hereby granted it among itself and its
members, partners and affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or any securities
convertible into or exercisable or exchangeable for any shares of, any class of
its capital stock (collectively, "SHARES"), the Company shall first make an
offering of such Shares to each Investor in accordance with the following
provisions:
(a) The Company shall deliver a notice by certified
mail (a "SALES NOTICE") to each Purchaser stating (i) its bona fide intention to
offer such Shares, (ii) the number of such Shares to be offered, and (iii) the
price and terms, if any, upon which it proposes to offer such Shares.
-19-
(b) Within 20 Business Days after receipt of a Sales
Notice, each Investor that desires to purchase any of the Shares specified in
such Sales Notice at the price and on the terms specified in such Sales Notice
(for purposes of this Section 6, an "Investor"), shall provide to the Company a
written notice (a "Purchase Notice") setting forth the number of such Shares
such Investor is willing to purchase. If the total number of Shares specified in
all of the Purchase Notices received by the Company within such period exceeds
the total number of Shares specified in such Sales Notice or such greater number
of Shares that the Company is willing to sell at the price and on the terms
specified in such Sales Notice, then the Shares to be sold shall be allocated as
follows (provided that no Investor shall be allocated more Shares than it has
agreed to purchase in its Purchase Notice):
(i) Up to 25 1/2% to Duquesne, until
immediately before the closing by the Company of an initial public offering;
(ii) Up to 32 1/2% to Perseus, until
immediately before the closing by the Company of an initial public offering;
(iii) Up to 6% to Micro, until immediately
before the closing by the Company of an initial public offering;
(iv) Up to 7.5% to SatCon Technology, until
immediately before the closing by the Company of an initial public offering; and
(v) All Shares not allocated pursuant to
clauses (i)-(iv) above shall be allocated among the Investors in the same
proportion that each such Investor's Common Share Equivalents bear to the total
Common Share Equivalents owned by all of the Investors; provided that if such
allocation would result in any Investor being allocated Shares under this
subsection (b) in excess of the total number of Shares that it specified in its
Purchase Notice, such excess Shares shall be allocated among the other Investors
that have not been allocated Shares equal to the number of Shares specified in
their Purchase Notices in a manner that results in such other Investors
receiving in the aggregate under this subsection (b) an equal percentage of the
total number of Shares specified in their respective Purchase Notices.
All allocations made pursuant to this subsection (b) shall be rounded to the
nearest whole Share. The Shares allocated to each Investor under this subsection
(b) shall be purchased by such Investor at the price and on the terms specified
in the Sales Notice at a closing to be held within 30 Business Days after the
delivery of the Sales Notice. Such date shall be specified by the Company in a
written notice delivered to each Investor participating in such sale at least 10
Business Days prior thereto.
(c) If all Shares that the Purchasers are entitled to
obtain pursuant to Section 6.1(b) are not elected to be obtained as provided in
Section 6.1(b) hereof, the Company may, during the 120-day period following the
expiration of the period provided in Section 6.1(b) hereof, offer the remaining
unsubscribed portion of such Shares to any Person or Persons at a price not less
than, and upon terms no more favorable to the offeree than, those specified in
the Sales Notice with respect thereto. If the Company does not enter into an
agreement for the sale
-20-
of such Shares within such period, or if such agreement is not consummated
within 30 days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such Shares shall not be offered unless first reoffered
to the Investors in accordance herewith.
(d) The right of first offer granted in this Section
6.1 shall not be applicable (i) to the issuance or sale of Common Stock (or
options therefor) to consultants, officers, directors and employees for the
primary purpose of soliciting or retaining their employment or services in a
transaction or pursuant to a plan approved by the Company's Board of Directors,
(ii) as part of or after an Initial Public Offering that results in aggregate
net cash proceeds to the Company of $25,000,000 or greater, (iii) the issuance
of securities pursuant to the conversion or exercise of outstanding convertible
securities or warrants, options or similar rights, (iv) the issuance of
securities in connection with a bona fide business acquisition by the Company,
whether by merger, consolidation, sale of assets, sale or exchange of stock or
otherwise, (v) the issuance of warrants, options or similar securities to a bank
or other institutional lender as consideration for the extension of credit by
such lender to the Company, (vi) the issuance of stock, warrants or other
securities or rights to persons or entities with which the Company has business
relationships provided such issuances are for other than primarily equity
financing purposes and provided that at the time of any such issuance, the
aggregate of such issuance and similar issuances in the preceding twelve-month
period do not exceed 2% of the then outstanding Common Stock of the Company
(assuming full conversion and exercise of all convertible and exercisable
securities then outstanding) or such issuance is expressly approved by a
majority of the director representatives of the Purchasers on the Company's
Board of Directors, or (vii) the issuance of the Preferred Stock and Warrants
pursuant to the terms of this Agreement.
6.2 TRANSACTIONS WITH AFFILIATES. The Company shall not,
without the approval of a majority of the disinterested members of the Company's
Board of Directors, engage or continue in any loans, leases, contracts or other
similar transactions (including, but not by way of limitation, the payment of
dividends or the repurchase of securities) with any Affiliate of the Company, or
any members of their immediate family or entities controlled by them. For
purposes of this Section 6.2, "immediate family" shall be deemed to include
parents, children, siblings and spouse.
6.3 DELIVERY OF FINANCIAL STATEMENTS. The Company shall
deliver to the Purchasers for so long as the Purchasers (together with its
shareholders, partners and members and any other Persons whose securities are
aggregated with those of such Purchasers for purposes of the Shareholders'
Agreement dated October 23, 1998) holds Preferred Stock:
(a) as soon as practicable, but in any event within
120 days after the end of each fiscal year of the Company, an income statement
of the Company for such fiscal year, a cash flow statement of the Company for
such fiscal year, a balance sheet of the Company as of the end of such fiscal
year and a statement of changes in shareholder's equity of the Company as of the
end of such year, with each such financial statement to be in reasonable detail,
prepared in accordance GAAP, and audited and certified by a firm of independent
public accountants of nationally recognized standing selected by the Company;
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(b) as soon as practicable, but in any event within
sixty days after the end of each of the first three quarters of each fiscal year
of the Company, unaudited statements of income and cash flows of the Company for
such fiscal quarter and an unaudited balance sheet and a statement of changes in
shareholder's equity of the Company as of the end of such fiscal quarter;
(c) within thirty days of the end of each calendar
month, unaudited statements of income and cash flows and balance sheet of the
Company for and as of the end of such month, in reasonable detail;
(d) as soon as practicable, but in any event at least
thirty days prior to the end of each fiscal year, a budget and business plan of
the Company for the next fiscal year, prepared on a monthly basis, including
balance sheets and statements of cash flows for such months and, as soon as
prepared, any other budgets or revised budgets prepared by the Company;
(e) with respect to the financial statements called
for in subsection's (b) and (c) of this Section 6.3, an instrument executed by
the Chief Financial Officer or President of the Company certifying that such
financial statements were prepared in accordance with GAAP consistently applied
with prior practice for earlier periods (with the exception of footnotes that
may be required by GAAP) and fairly present the financial condition of the
Company and its results of operation, cash flows and changes in shareholders'
equity for the period specified, subject to year-end audit adjustments; and
(f) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as such
Purchasers or any transferee of such Purchasers may. from time to time request.
6.4 INSPECTION. During any period in which a Purchasers (or
its transferee) is entitled to receive the materials specified in Section 6.3
hereof, the Company shall permit the Purchasers, at the Purchasers' expense, to
visit and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times and upon reasonable notice as may be
requested by such Purchasers.
6.5 THE COMPANY'S BOARD OF DIRECTORS. The Company shall
promptly pay or reimburse each of the Purchasers for all reasonable costs and
expenses for the travel, lodging and related subsistence of their
representatives or observer, as the case may be, on the Company's Board of
Directors to meetings thereof or of any committee thereof.
6.6 USE OF PROCEEDS. The Company hereby covenants and agrees
that all of the net proceeds received by it from the issuance and sale of the
Preferred Stock and any Warrant Shares shall be used for the purpose of retiring
the Bridge Documents and no part of such net proceeds shall be used to pay any
broker's fees or commissions or similar payments of any kind. The Company has
previously provided the Purchasers its best estimate of the expenses it will
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incur in connection with the negotiation and execution of this Agreement and the
Related Agreements and the consummation of the transactions contemplated to be
consummated at the Closing.
6.7 PROTECTIVE PROVISIONS. The Company covenants and agrees
that the Company shall not, without the prior written consent of holders of
two-thirds of the Preferred Stock:
(a) make any material change in the principal
business activity of the Company as currently contemplated to be conducted; or
(b) enter into any license, arrangement or agreement
pursuant to which the Company grants rights in or to intellectual property of
the Company relating to the flywheel technology to a competitor of the Company.
6.8 VOLUNTARY BANKRUPTCY. The Purchasers shall not cause the
Company to take any of the following actions (each a "BANKRUPTCY ACTION"): (i)
apply for or consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property, (ii) admit
in writing its inability to pay its debts generally as they mature, (iii) make a
general assignment for the benefit of its creditors, (iv) be dissolved or
liquidated in full or in part, or (v) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the appointment of or
taking possession of its property by any official in an involuntary case or
other proceeding commenced against it, unless (a) SatCon has been delivered a
written notice of the Purchasers' intention to cause the Company to take such
Bankruptcy Action (a "Bankruptcy Notice") and (b) within five Business Days
after the delivery of such Bankruptcy Notice SatCon, SatCon has not delivered to
each of the Purchasers and to the Company a written acknowledgment and agreement
that a Put Event has occurred (a "SatCon Put Event Notice"); provided that no
such Bankruptcy Action may be taken more than 60 days after the deliver of a
Bankruptcy Notice. If the Purchasers and the Company receive a SatCon Put Event
Notice within such five Business Day period, then each of the Purchasers shall
have all of the rights granted to such Purchaser upon the occurrence of a Put
Event and the Purchasers shall not cause the Company to take any Bankruptcy
Action without the prior written consent of SatCon. The Purchasers shall not
provide to SatCon a Bankruptcy Notice unless they have a good faith belief that
the Company is insolvent or otherwise in a position where the taking of a
Bankruptcy Action is in the Company's best interests.
7. MISCELLANEOUS.
7.1 WAIVERS AND AMENDMENTS. With the written consent of the
record or beneficial holders of more than a majority of the Preferred Stock
issued and sold under this Agreement (including any Conversion Shares or any and
all securities obtained upon conversion of such Preferred Stock or exchange of
such Preferred Stock or Conversion Shares and as adjusted for stock dividends,
stock splits, recapitalizations and the like), the obligations of the
-23-
Company and the rights of the holders of such Preferred Stock under this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely), and with the same consent the Company, when authorized by
resolution of its Board of Directors, may enter into a supplementary agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement; provided, however, that no
such waiver or supplemental agreement shall reduce the aforesaid percentage of
Preferred Stock issued and sold under this Agreement the holders of which are
required to consent to any waiver or supplemental agreement without the consent
of the record or beneficial holders of all of the Preferred Stock issued and
sold under this Agreement. Upon the effectuation of each such waiver, consent or
agreement of amendment or modification the Company shall promptly give written
notice thereof to the record holders of the Preferred Stock who have not
previously consented thereto in writing. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by a statement in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought, except to the extent
provided in this subsection.
7.2 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement or any of the Related Agreements, or the breach
hereof or thereof, shall be settled by arbitration administered by the American
Arbitration Association under its Commercial Arbitration Rules, and judgment on
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Such arbitration shall be conducted by a panel of three
arbitrators, each party having the right to select one arbitrator with the third
arbitrator to be selected in accordance with the rules of the American
Arbitration Association.
7.3 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of New York without regards to the principles
of conflicts of laws thereof.
7.4 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the execution of this Agreement and the
Closing of the transactions contemplated hereby; provided however that the
provisions of Section 6.1, 6.4, 6.5 and 6.8 shall terminate upon the Company
completing and Initial Public Offering that raises at least $25,000,000 of gross
proceeds to the Company.
7.5 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein and subject to the Related Agreements and applicable law, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
7.6 ENTIRE AGREEMENT. This Agreement, the Related Agreements
and other exhibits to this Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
7.7 NOTICES, ETC. All notices, requests and other
communications hereunder shall be in writing and shall be deemed to have been
duly given at the time of receipt if delivered
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by hand or by facsimile transmission or three days after being mailed,
registered or certified mail, return receipt requested, with postage prepaid, to
the address or facsimile number (as the case may be) listed for each such party
below or, if any party shall have designated a different address or facsimile
number by notice to the other party given as provided above, then to the last
address or facsimile number so designated.
If to the Company:
Beacon Power Corporation
0X Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Attn: Chief Executive Officer
With a required copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxxx & Xxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
If to Perseus:
Perseus Capital, L.L.C.
The Army and Navy Club Building
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx Xxxxxx
Fax No. (000) 000-0000
With a required copy to:
Xxxxxx & Xxxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxx
Fax No.: (000) 000-0000
-25-
If to Duquesne:
Xxxx Xxxxxx
One Northshore Center
Suite 100
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax No.: 000-000-0000
With a required copy to:
Xxxxx Xxxxxx, Esq.
Xxxxxx Xxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
Fax No.: 000-000-0000
If to Micro:
c/o Xxxxxx X. Xxxx, Xx.
Arete Corporation
X.X. Xxx 0000
Xxxxxx Xxxxxx, Xxx Xxxxxxxxx 00000
Fax No.: (000) 000-0000
If to SatCon:
Xxxxx Xxxxxxxxxx
President
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
With a required copy to:
Xxxxxxx X. Carp, Esq.
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
7.8 SEPARABILITY. In case any provision of this Agreement
shall be declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
-26-
7.9 EXPENSES. The Company and each of the Purchasers shall
each bear its respective expenses and legal fees incurred with respect to this
Agreement, each of the Related Agreements and the transactions contemplated
hereby and thereby. All reasonable costs and expenses of the Purchasers relating
to this Agreement, each of the Related Agreements and the transactions
contemplated hereby and thereby, including reasonable fees and expenses of legal
counsel, shall be promptly paid or reimbursed by the Company.
7.10 EFFECT OF ISSUANCE. The parties confirm and agree that
the issuance of the Purchased Securities will not result in an adjustment of the
outstanding shares of the Company's Class D Preferred Stock (or warrants to
purchase such shares) and that the "Put Rights" granted to SatCon pursuant to
Section 1.4 of the Securities Purchase Agreement dated October 23, 1998 among
the Company and the Purchasers do not apply to the Purchased Securities.
7.11 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.12 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an, original, but all of which
together shall constitute. one instrument.
7.13 PUBLICITY. None of the parties to this Agreement, nor any
of their affiliates, shall issue any press release or otherwise make any public
announcement or disclosure with respect to this Agreement, any of the Related
Agreements or any of the transactions contemplated hereby or thereby without the
prior written consent of each of the Company, Perseus and SatCon, unless such
disclosure is required by applicable law.
-27-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THE COMPANY:
BEACON POWER CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
THE PURCHASERS:
PERSEUS CAPITAL, L.L.C.
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
DUQUESNE ENTERPRISES, INC.
By: /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
MICRO-GENERATION
TECHNOLOGY FUND, L.L.C.
BY ARETE CORPORATION,
ITS MANAGER
By: /s/ Xxxxxx X. Xxxx, Xx.
-------------------------------
Xxxxxx X. Xxxx, Xx.
President
-28-
SATCON TECHNOLOGY CORPORATION
By: /s/ Xxxxx Xxxxxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President
-29-
SCHEDULE OF EXHIBITS
A CERTAIN DEFINITIONS
1.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
1.2(a) FORM OF WARRANT
1.3 FORM OF REGISTRATION RIGHTS AGREEMENT
2.3(a)(vii) FORM OF OPINION OF XXXXXXX & XXXXXX, LLP
3 COMPANY DISCLOSURE SCHEDULE
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement to which this Exhibit A is attached, the
following terms have the following meanings:
"Affiliates" has the meaning specified in Section 3.8(n) to the
Agreement.
"Bankruptcy Action" has the meaning specified in Section 6.8 to the
Agreement.
"Bridge Three Notes" has the meaning specified in the Recitals to the
Agreement.
"Bridge Three Note and Warrant Purchase Agreement" has the meaning
specified in the Recital to the Agreement.
"Bridge Two Note and Warrant Purchase Agreement" has the meaning
specified in the Recitals to the Agreement.
"Bridge Two Notes and Warrants" has the meaning specified in the
Recitals to the Agreement.
"Business Day" means any day other than a Saturday, Sunday or other day
on which the national or state banks located in the State of Massachusetts are
authorized to be closed.
"Common Share Equivalent Price" means (a) in the case of the sale of
Common Stock of the Company, the per share price at which such Common Stock is
sold, and (b) in the case of the sale of securities convertible into Common
Stock of the Company, the effective per share price at which such securities are
convertible into Common Stock.
"Common Share Equivalents" means all shares of Common Stock that are
issued and outstanding or are issuable upon the exchange, exercise or conversion
of any other security of the Company. The number of Common Share Equivalents
owned by a Person shall equal the sum of the number of shares of Common Stock
owned by such Person plus the number of shares of Common Stock issuable upon the
exchange, exercise or conversion of any other security of the Company owned by
such Person.
"Common Stock" means the common stock, par value $0.01 per share, of
the Company.
"Company" means Beacon Power Corporation, a Delaware corporation.
"Company Account" means an account of the Company designated in a
written notice delivered to the Purchaser at least two Business Days prior to
the date of any required payment by the Purchaser to the Company under the
Agreement.
"Company Financial Statements" has the meaning specified in
Section 3.7(a) to the Agreement.
"Company Material Contract" has the meaning specified in
Section 3.11(c) to the Agreement.
"Company Products" means all versions and implementations, of any
product which has been, is being or is intended to be marketed by the Company.
"Company Proprietary Rights" has the meaning specified in
Section 3.10(a) to the Agreement.
"Conversion Shares" means shares of Common Stock issuable upon
conversion of the Preferred Shares.
"GAAP" means United States generally accepted accounting principles
consistently applied.
"Governmental Body" means any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; or
(c) governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or entity and any court or other tribunal).
"Indemnified Parties" has the meaning specified in Section 5.1(a) to
the Agreement.
"Indemnifying Party" has the meaning specified in Section 5.2(a) to the
Agreement.
"Initial Public Offering" means the consummation of a public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, that is underwritten by one or more nationally recognized
investment banking firms or a syndicate managed or comanaged by one or more
nationally recognized investment banking firms.
"Material Adverse Change" means a change which would have a Material
Adverse Effect.
"Material Adverse Effect" means an event, violation or other matter
will be deemed to have a "Material Adverse Effect" on the Company if such event,
violation or other matter would be material in impact or amount to the Company's
business, intellectual property rights or condition, or, taken as a whole, its
assets, liabilities, operations, or financial performance.
"Person" means any individual, entity or Governmental Body.
"Preferred Shares" has the meaning specified in Section 1.2(a) to the
Agreement.
"Preferred Stock" means the Class E Preferred Stock of the Company,
$.01 par value per share.
"Proprietary Asset" means: (a) any patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name, fictitious business name, service xxxx (whether registered or
unregistered), service xxxx application, copyright (whether registered or
unregistered), copyright application, maskwork, maskwork application, trade
secret, know-how, customer list, franchise, system, computer software, computer
program, invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset; and (b) any right to use or exploit any of the foregoing.
"Purchased Securities" means, collectively, the Preferred Shares and
Warrants.
"Related Agreements" means (a) the Registration Rights Agreement
substantially in the form attached as EXHIBIT 1.4 to the Agreement; (b) the
Warrant substantially in the form attached as EXHIBIT 1.2(A) to the Agreement;
and (c) any other agreement or document entered into by any of the parties in
connection with the Agreement or any of the transactions contemplated thereby.
"Restated Certificate" has the meaning specified in Section 1.1 to the
Agreement.
"Securities" has the meaning specified in Section 4.1(a) to the
Agreement.
"Shareholders' Agreement" has the meaning specified in Section 6.3 to
the Agreement.
"Warrant Shares" means shares of Common Stock issuable upon the
exercise of the Warrants.
EXHIBIT 1.1
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BEACON POWER CORPORATION
EXHIBIT 1.2(A)
WARRANT
TO PURCHASE CLASS E PREFERRED STOCK
OF
BEACON POWER CORPORATION
EXHIBIT 1.3
REGISTRATION RIGHTS AGREEMENT
EXHIBIT 2.3(A)(VII)
OPINION OF XXXXXXX & XXXXXX, LLP
EXHIBIT 3
COMPANY DISCLOSURE SCHEDULE
Omitted Schedules and Exhibits
Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended and the Securities Exchange Act of 1934, Beacon Power
Corporation has, with respect to the Securities Purchase Agreement (the
"Agreement") by and among Beacon Power Corporation Perseus Capital, L.L.C.,
Duquesne Enterprises, Micro-Generation Technology Fund, L.L.C. and SatCon
Technology Corporation dated April 7, 2000, omitted to file the schedules
and exhibits listed in the Agreement herewith. These schedules and exhibits
will be supplementally furnished to the Commission upon request.
