Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of
May 23, 2000, by and among Beacon Power Corporation, a Delaware corporation (the
"COMPANY"), and each of the purchasers listed on SCHEDULE A attached hereto
(each individually, a "PURCHASER" and collectively, the "PURCHASERS"). Certain
capitalized terms used in this Agreement are defined in EXHIBIT A attached
hereto.
R E C I T A L S
A. The Company desires to raise capital to finance its business
operations, and in furtherance thereof the Company desires to issue to the
Purchasers up to 7,023,810 shares ( the "PREFERRED SHARES") of the Company's
Class F Preferred Stock, $.01 par value per share (the "CLASS F PREFERRED
STOCK"), and warrants (the "WARRANTS") to acquire shares of the Company's
Common Stock, all on the terms and subject to the conditions set forth in
this Agreement.
B. Each of the Purchasers, other than DQE Enterprises, Inc. ("DQE")
and GE Capital Equity Investments, Inc. (the "BRIDGE PARTICIPATING
PURCHASERS"), has acquired from the Company a convertible promissory note (a
"BRIDGE NOTE") and a warrant (a "BRIDGE WARRANT") to acquire shares of the
Company's Common Stock pursuant to a Note and Warrant Purchase Agreement
between the Company and the Purchasers dated as of April 21, 2000 (the
"BRIDGE NOTE AND WARRANT PURCHASE AGREEMENT"), and each of Perseus Capital,
L.L.C, DQE and Micro-Generation Technology Fund, L.L.C. (the "INTERIM
FINANCING PURCHASERS") has acquired from the Company certain demand
promissory notes issued on February 11, 2000 and/or March 16, 2000 (each a
"DEMAND NOTE").
C. In accordance with the Bridge Notes and Warrant Purchase Agreement,
the Bridge Notes will be tendered by the Bridge Participating Purchasers to
the Company for cancellation, and in accordance with the terms of the Demand
Notes, such Demand Notes will be tendered by the Interim Financing Purchasers
to the Company for cancellation, in each case in partial payment of the
purchase price for the Preferred Shares to be acquired under 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 SHARES 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
Secretary of State of the State of Delaware the Fourth Amended and Restated
Certificate of Incorporation of the Company in substantially the form attached
hereto as EXHIBIT 1.1 (the "RESTATED CERTIFICATE") creating the
Class F Preferred Stock and shall have taken all other action necessary to
authorize the issuance and sale of the Preferred Shares and Warrants as
contemplated by this Agreement.
1.2 ISSUANCE AND SALE OF PREFERRED SHARES. On the terms and subject
to the conditions hereof, at the Closing, the Company will issue and sell to
each Purchaser, and each Purchaser will purchase from the Company, the number of
Preferred Shares specified adjacent to such Purchaser's name on Schedule A
hereto, at a purchase price of $4.20 per share (the "PURCHASE PRICE"). The
Company's agreement with each of the Purchasers hereunder is a separate
agreement and the sale of Preferred Shares to each of the Purchasers is a
separate sale.
1.3 WARRANTS. As a further inducement to the Purchasers to acquire
the Preferred Shares, at the Closing, the Company shall issue and deliver to
each of the Purchasers a Warrant to acquire shares of the Company's Common
Stock. The terms of each Warrant shall be substantially as set forth in the form
attached hereto as EXHIBIT 1.3.
1.4 PAYMENT OF PURCHASE PRICE. At the Closing, each Purchaser shall
pay to the Company the aggregate Purchase Price for such Purchaser's Preferred
Shares and Warrant as specified adjacent to such Purchaser's name on SCHEDULE A
hereto, by (i) if such Purchaser is a Bridge Participating Purchaser and/or
Interim Financing Purchaser, delivering to the Company for cancellation the
Bridge Note and/or Demand Note issued to such Purchaser, and (ii) paying to the
Company the cash portion of such Purchaser's aggregate Purchase Price as
specified adjacent to such Purchaser's name on SCHEDULE A hereto (the "CASH
CONSIDERATION").
1.5 USE OF PROCEEDS. The Company hereby covenants and agrees that all
of the net cash proceeds received by it from the issuance and sale of the
Preferred Shares, the Warrants and any Warrant Shares shall be used for the
purpose of developing and conducting its business, by augmenting its working
capital and providing funds to expand its design, development and manufacturing
capacity.
1.6 INVESTORS RIGHTS AGREEMENT. The Purchasers shall have the rights
specified in the Investors Rights Agreement attached as EXHIBIT 1.6 hereto,
which shall be executed and delivered by the Company, the Purchasers, SatCon
Technology Corp. and certain other Persons at the Closing.
2. CLOSING.
2.1 CLOSING. The closing (the "CLOSING") of the sale and purchase of
the Preferred Shares and Warrants to be acquired hereunder (the "PURCHASED
SECURITIES") shall take place at the offices of Xxxxxxx & Xxxxxx, LLP, 000
Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 at 10:00 a.m. on May 23, 2000, or at such other
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."
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2.2 DELIVERIES.
At the Closing:
(a) Each Bridge Participating Purchaser and Interim Financing
Purchaser shall deliver to the Company in accordance with Section 1.4 above (i)
such Purchaser's Bridge Note and/or Demand Note with the following legend
bearing the signature of such Purchaser: "Paid in full and all obligations
hereunder fully discharged".
(b) Each Purchaser shall pay to the Company the Cash
Consideration for the Purchased Securities, as specified in SCHEDULE A hereto,
by wire transfer thereof to the Company Account.
(c) The Company shall deliver to each Purchaser (i) a
certificate registered in such Purchaser's name representing the respective
number of shares of Preferred Shares acquired by such Purchaser under this
Agreement, and (ii) a Warrant to acquire the number of shares of Common Stock
specified in SCHEDULE A with respect to such Purchaser.
(d) 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 each of the Purchasers to purchase the Purchased Securities to be acquired by
such Purchaser at the Closing are subject to the fulfillment prior to the
Closing of the following conditions, any of which may be waived by such
Purchaser:
(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 prior to the Closing.
(ii) CONSENTS AND WAIVERS. The Company shall have obtained
any and all consents approvals, authorizations, permits and waivers required in
connection with the valid execution, delivery and performance by the Company of
this Agreement and each of the Related Agreements).
(iii) RELATED AGREEMENTS. Each of the Related Agreements
shall have been executed and delivered by the parties thereto other than such
Purchaser.
(iv) OTHER PURCHASERS' OBLIGATIONS. All other Purchasers
shall have performed all of their obligations hereunder required to be performed
at the Closing.
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(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 such Purchaser.
(vi) OFFICER'S CERTIFICATE. The Company shall have delivered
to such Purchaser 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 and by the Related Agreements.
(vii) OPINION 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) ANNUAL BUDGET. The Company shall have approved and
adopted a budget for the Company for the current fiscal year, which budget shall
be subject to approval by the Purchasers prior to its adoption.
(ix) 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 issue and sell the Purchased Securities to each of the Purchasers
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 such Purchaser in Section 4 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.
(ii) RELATED AGREEMENTS. Each of the Related Agreements
shall have been executed and delivered by the parties hereto other than the
Company.
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 each of the Purchasers as set forth below:
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
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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. After giving effect to the filing of the
Restated Certificate, a total of 21,500,007 authorized shares of Preferred
Stock, $.01 par value (the "Preferred Stock"), consisting of 6,000,000 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; 6,000,000 shares designated as Class D
Preferred Stock, 1,900,000 of which are issued and outstanding; 2,000,000 shares
designated as Class E Preferred Stock, 1,226,141 shares of which are issued and
outstanding; and 7,500,000 shares designated as Class F Preferred Stock, none of
which shall be issued and outstanding prior to the consummation of the
transactions contemplated hereby.
(b) COMMON STOCK. A total of 30,000,000 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, the Class D Preferred Stock and
the Class E 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. The
Company has reserved a sufficient number of shares of Common Stock for issuance
upon the conversion of the Preferred Shares and upon exercise of the Bridge
Warrants and the Warrants.
(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
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exchangeable, exercisable or convertible for or into capital stock, segregated
by the type of 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 this 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 stockholders necessary for the authorization and
creation, issuance and delivery of the Preferred Shares, the Conversion Shares,
the Warrants and the Warrant Shares. The Preferred Shares, 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 Shares 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, 1999 and March 31, 2000 and statements of operations, cash flows
and changes in stockholders' equity for the years ended December 31, 1998 and
December 31, 1999 and the three-months ended March 31, 2000, 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 condition, 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. The Company maintains an
adequate system of internal accounting controls. There has been no material
change in the Company's accounting policies except as described in the notes to
the Company Financial Statements. The Company has no reason to believe that the
audited financial statements for the years ended December 31, 1998 and December
31, 1999 will differ in any material respect from the Company Financial
Statements for such periods.
(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 fully 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. Except as set forth on
Section 3.8 of the Company Disclosure Schedule, since March 31, 2000, 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;
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(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 Company;
(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 Proprietary 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 March 31, 2000, 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 stockholders 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) other than the Bridge Note and Warrant Agreement, 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,
outside of the ordinary course of its business or that 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 all
license agreements 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. 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, each of
whom is identified in Section 3.10(e) of the Company Disclosure Schedule, 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 non-disclosure agreement for
employees previously delivered or made available 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
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in substance at least as protective to the Company as the terms of the
non-disclosure agreement for employees previously delivered or made available 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) Except as set forth on Section 3.11(b) of the Company
Disclosure Schedule:
(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 or their legal
counsel 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 any of the
Preferred Shares, Conversion Shares and Warrant Shares, 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 set forth in Section 3.12 of the
Company Disclosure Schedule, upon execution and delivery of the Investors Rights
Agreement, except for the Investors Rights Agreement, the Company shall not have
granted or agreed to grant to any person or entity any rights (including
piggyback registration rights) to have any securities of the
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Company registered with the U.S. Securities and Exchange Commission ("SEC") or
any other governmental authority.
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
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available to the Purchasers or their counsel. Each such plan complies in all
material respects with applicable law, including but not limited to the Employee
Retirement Income Security Act of 1974, as amended; all contributions, premiums
or other payments (including all employer contributions and employee salary
reduction contributions) which are due from the Company have been paid to each
such plan. 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 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. There
are no 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,
-14-
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 with all applicable laws,
statutes, rules, and regulations of all governmental and regulatory authorities
to the extent such compliance 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, in 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
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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 REAL PROPERTY HOLDING COMPANY. The Company is not a real property
holding company within the meaning of Section 897 of the Code.
3.22 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 contained herein and
therein not misleading in light of the circumstances under which such statements
were made.
3.23 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 Preferred Shares and any
Warrant Shares upon exercise or conversion of any Warrants 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
-16-
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 listed on SCHEDULE A hereto.
(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.
(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 EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
SOLD, TRANSFERRED, OR ASSIGNED OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
COVERING SUCH SECURITIES, THE SALE IS MADE IN COMPLIANCE WITH RULE 144 UNDER THE
SECURITIES ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
SUCH SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE,
TRANSFER, OR ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES 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.
-17-
5. INDEMNITY.
5.1 INDEMNITY.
The Company hereby agrees to indemnify and defend and hold harmless each of
the Purchasers, its respective Affiliates, successors and assigns and each of
their respective officers, directors, employees and agents (an "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
(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, including but not limited to any third party claims
arising or resulting from such breach or failure. 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 or under the Restated Certificate
or Related Agreements.
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
-18-
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 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. COVENANTS OF THE COMPANY. After the Closing and until the occurrence
of a Qualified Initial Public Offering (as defined in the Investor Rights
Agreement), the Company shall (a) maintain and keep in force with nationally
recognized insurance companies fire, public liability, property damage,
directors and officers liability insurance, 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, (b) maintain term insurance on the life of
Xxxxxxx X. Xxxxxxx, each in
-19-
the amount of at least $1 million, with the proceeds payable solely to the
Company, and (c) comply with all applicable laws, statutes, rules, and
regulations of all governmental and regulatory authorities to the extent such
compliance is material to the Company or its assets or business. In addition,
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. The Company shall
enter into an Indemnification Agreement with each director representative of a
Purchaser substantially in the form attached hereto as EXHIBIT 6.
7. MISCELLANEOUS.
7.1 WAIVERS AND AMENDMENTS. Only upon the written consent of the
record or beneficial holders of more than a two-thirds majority of the Preferred
Shares issued and sold under this Agreement (including any Conversion Shares or
any and all securities obtained upon conversion of such Preferred Shares or
exchange of such Preferred Shares or Conversion Shares and as adjusted for stock
dividends, stock splits, recapitalizations and the like), may the obligations of
the Company and the rights of the holders of such Preferred Shares under this
Agreement be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), and only with such same consent may the Company, when authorized
by resolution of its Board of Directors, 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 Shares 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 Shares 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 Shares 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; WAIVER OF JURY TRIAL. This Agreement shall be
governed in all respects by the laws of the State of Delaware without regards to
the principles of conflicts of laws thereof. Each of the parties hereto hereby
waives any right to trial by jury in any action,
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suit or proceeding that may arise out of or relate to this Agreement, any
Related Agreement or any of the transactions contemplated by this Agreement or
any Related Agreement, whether the matter asserted in such action, suit or
proceeding is grounded in tort, contract or otherwise.
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.
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 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 any Purchaser, to such addresses provided for such Purchaser
on SCHEDULE A.
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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.
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, except that (i) the Company shall pay up to $50,000 of legal (for lead
Purchaser counsel), accounting, travel and living expenses incurred by the
Purchasers in connection with this Agreement, the Related Agreements and the
transactions contemplated hereby and thereby, (ii) the Company shall pay up to
$25,000 of consulting fees incurred by the Purchasers in connection with this
Agreement, the Related Agreements and transactions contemplated hereby and
thereby, and (iii) the Company shall pay up to $15,000 of legal fees and
expenses incurred by each Purchaser for its individual counsel (other than fees
and expenses for lead Purchaser counsel, which are provided for in clause (i)).
7.10 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.
7.11 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.
7.12 FACSIMILE DELIVERY. This Agreement, each of the Related
Agreements, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine, shall be treated in all manner and
respects as an original agreement or instrument and shall be considered to have
the same binding legal effect as if it were the original signed version thereof
delivered in person. At the request of any party hereto or to any such agreement
or instrument, each other party hereto or thereto shall reexecute original forms
thereof and deliver them to all other parties. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine to deliver a
signature or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine as a defense
to the formation or enforceability of a contract and each such party forever
waives any such defense.
7.13 PUBLICITY. None of the Investors, 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 the Company, unless such disclosure is required by applicable law.
Neither the Company nor any of its 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, including but not limited to any disclosure which includes
any name, trade name or xxxx of any Investor, without the prior written consent
of the Investors, unless such disclosure is required by applicable law.
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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 X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------
Title: Managing Director
--------------------------------
DQE ENTERPRISES, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
---------------------------------
Title: Vice President and Treasurer
--------------------------------
MICRO-GENERATION
TECHNOLOGY FUND, L.L.C.
BY ARETE CORPORATION,
ITS MANAGER
By: /s/ Xxxxxx X. Xxxx, Xx.
-----------------------------------
Xxxxxx X. Xxxx, Xx.
President
-23-
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------------
Name: Xxxx Xxxxxx
---------------------------------
Title: Vice President
--------------------------------
MECHANICAL TECHNOLOGY, INC.
By: /s/ Xxxxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxx
----------------------------------
Title: Vice President
---------------------------------
PENSKE CORPORATION
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name: Xxxxx X. Xxxx
----------------------------------
Title: Vice President and Treasurer
---------------------------------
THE BEACON GROUP ENERGY INVESTMENT
FUND II, L.P.
By: Beacon Energy Investors II, L.P.,
its general partner,
By: /s/ Xxxxxxx Xxxx
------------------------------------
Authorized Signatory
-24-
SCHEDULE OF EXHIBITS
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.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day
on which the national or state banks located in the District of Columbia or
State of Massachusetts or New York are authorized to be closed.
"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 Purchasers at least two Business Days prior to
the date of any required payment by the Purchasers 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 Class F Preferred Stock.
-26-
"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.
"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.
"PROPRIETARY ASSET" means: (a) any patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name, domain 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 Investors Rights Agreement
substantially in the form attached as EXHIBIT 1.6 to the Agreement; (b) the
Warrant substantially in the form attached as EXHIBIT 1.3 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.
"WARRANT SHARES" means shares of Common Stock issuable upon the
exercise of the Warrants.
-27-
SCHEDULE A
LIST OF PURCHASERS
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
NAME AND ADDRESS OF AMOUNT OF ADDITIONAL NUMBER OF PREFERRED
PURCHASER DEMAND NOTE CLASS F BRIDGE CAPITAL CONTRIBUTION SHARES
AMOUNTS NOTE AMOUNT
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
1. Perseus Capital, L.L.C. $600,000 $1,200,000 $4,200,000 1,428,571
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
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
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
2. DQE Enterprises, Inc. 300,000 1,700,000 476,190
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
Xxxx Xxxxxx
One Northshore Center
Suite 100
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax No.: 000-000-0000
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
With a required copy to:
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
Xxxxx X. Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
Fax No.: 000-000-0000
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
3. Micro-Generation 200,000 400,000 1,400,000 476,190
Technology Fund, L.L.C.
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
X/x Xxxxxx X. Xxxx, Xx.
Xxxxx Xxxxxxxxxxx
X.X. Xxx 0000
Xxxxxx Xxxxxx, XX 00000
Fax No.: 000-000-0000
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
4. Mechanical Technology 1,200,000 4,800,000 1,428,571
Inc.
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
Xxxxx Xxxx
00 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Fax No.: 000- 000-0000
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
With a required copy to:
Mintz, Levin, Cohn,
Ferris, Glovsky & Popeo
0 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Fax No.: 000-000-0000
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
29
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
5. GE Capital Equity 6,000,000 1,428,571
Investments, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: General Counsel
Fax No.: 000-000-0000
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
6. The Beacon Group Energy 900,000 3,600,000 1,071,428
Investment Fund II, L.P.
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
Xxxx Xxxx, Manager
Director
Beacon Group
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: 000-000-0000
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
With a required copy to:
King & Xxxxxxxxx
0000 Xxxxxx xx xxx
Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attn: Xxxx Xxxxxxxxx
Fax No.: (000) 000-0000
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
7. Penske Corporation 400,000 1,600,000 476,190
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
Xxxxxxx Xxxxxx
00000 Xxxxx Xxxxx Xxxx,
X00
Xxxxxxx, XX 00000
Fax No.: 000-000-0000
-------------------------------- ----------------- ---------------- ----------------------- ----------------------
30
