EXHIBIT 10.23
NOTE AND WARRANT PURCHASE AGREEMENT
NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement") made and entered
into as of August 2, 1999, 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,
the "Purchasers"). Certain capitalized terms used in this Agreement are defined
in Exhibit A attached hereto.
Recitals
A. Perseus, Duquesne and Micro acquired shares of the Company's Class D
Preferred Stock pursuant to a Securities Purchase Agreement dated as of October
23, 1998 by and among the Company and the Purchasers (the "October Agreement").
B. The Purchasers acquired promissory notes from the Company on June 22, 1999
and July 6, 1999 (the "Tranche One Notes") pursuant to a Note Purchase Agreement
between the Company and the Purchasers dated June 22, 1999 (the "Tranche One
Note Purchase Agreement").
C. The Company needs funds to operate and expand its business operations and in
furtherance thereof desires to amend and restate the Tranche One Notes held by
each of the Purchasers, to read substantially as attached hereto as Exhibit B-1,
with the respective principal amounts specified herein (the "Notes"), and the
Purchasers are willing to acquire the Notes, all on the terms and subject to the
conditions set forth in this Agreement.
D. To induce the Purchasers to acquire the Notes, the Company has agreed to
issue to each Purchaser, under the circumstances specified herein, a warrant to
acquire shares of the Company's Class E Preferred Stock, the terms and
conditions of which will be negotiated at the time the conversion of the Notes
take place (the "Class E Preferred Stock"), substantially in the form attached
hereto as Exhibit C (the "Warrants").
Agreement
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. Amendment, Restatement and Issuance of Securities. On the terms and
subject to the conditions hereof:
(a) At the First Closing (as defined below), the Company shall
amend, restate and issue and sell to each of the Purchasers, and each of the
Purchasers shall purchase from the Company, a Note with the amended principal
amount specified below for the net purchase price shown below, along with a
Warrant for the type of shares as specified in the Warrant, in such number of
shares as is specified below:
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Purchaser Tranche Amended/Restated Net Purchase Compute Number of Shares Covered
One Note Principal Amount Price by Warrant by dividing Warrant Price
Amount in Warrant into the Amount Shown Below:
(col. 1) (col. 2) (col. 3) (col. 4) (col. 5)
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Perseus $250,000 $1,350,000.00 $1,100,000.00 $337,500.00
--------------------------------------------------------------------------------------------------
SatCon 250,000 333,333.33 83,333.34 83,333.34
--------------------------------------------------------------------------------------------------
Micro 50,000 150,000.00 100,000.00 37,500.00
--------------------------------------------------------------------------------------------------
Duquesne 50,000 500,000.00 450,000.00 125,000.00
--------------------------------------------------------------------------------------------------
Total: 600,000 2,333,333.33 1,733,333.34 583,333.34
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(b) At each Subsequent Closing (as defined below), the Company shall
issue and sell to SatCon, and SatCon shall purchase from the Company, a Note in
the form attached as Exhibit B-2, with the principal amount of $333,333.33 for
the price of $333,333.33 and a Warrant to purchase a number of shares computed
by dividing $83,333.34, by the Warrant Price defined in the Warrant, and
otherwise on terms as specified in such Warrant.
(c) At the Closing, the Purchasers shall surrender the Tranche One
Notes and in consideration thereof the new Notes shall be issued.
2. Closings.
2.1 Closings. The sales and purchases contemplated by Section 1 of this
Agreement shall take place at a closing (the "First Closing") to be held at the
offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇ as promptly
as practicable on or after the date hereof, or at such other time, date and
place as are mutually agreeable to the Company and to the Purchasers and at two
(2) subsequent closings (the "Subsequent Closings" and with the First Closing,
the "Closings") to be held at the principal executive offices of the Company at
10 a.m. local time no earlier than August 4 and October 1, 1999, respectively,
and no later than the earliest of (a) October 15, 1999 and November 15, 1999,
respectively, (b) two days after SatCon closes on a new equity or debt
securities financing after the date hereof, or (c) at such other times, dates
and places as are mutually agreeable to the Company and to SatCon. The date of
the First Closing is hereinafter referred to as the "First Closing Date" and the
date of a Subsequent Closing is hereinafter referred to as a "Subsequent Closing
Date."
2.2 Deliveries. At the First Closing (and in the case of SatCon, at each
Subsequent Closing), the Company will deliver to each Purchaser the Note and
Warrant to be issued to such Purchaser at the First Closing, in each case, fully
executed by the Company, and each Purchaser will deliver to the Company the
purchase price therefor by wire transfer thereof to the Company Account. The
parties shall also deliver all documents required to be delivered at the First
Closing pursuant to Section 2.3 hereof. Additionally, as provided in the Tranche
One Note Purchase Agreement, at the First Closing, the Tranche One Notes shall
be cancelled in exchange for Notes in substantially the form attached hereto as
Exhibit B-1.
2.3 Conditions to First Closing.
(a) Conditions to Obligations of the Purchaser. The obligations of
the Purchasers to purchase the Notes and Warrants at the First Closing are
subject to the fulfillment on or prior to the First 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 First
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 First
Closing.
(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.
(iii) Perfection of Security Interests. The Company
shall have taken all actions requested by the Purchasers to perfect the security
interests granted under the Notes.
(iv) Compliance Certificate. The Company shall have
delivered to the Purchasers a certificate, executed by its President, dated as
of the First Closing Date, certifying the fulfillment of the conditions
specified in subsections (a)(i) and (ii) of this Section 2.3.
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(v) Officers' Certificate. The Company shall have
delivered to the Purchasers a certificate, executed by one of its Officers,
dated as of the First Closing Date, certifying the authenticity of attached
copies of resolutions of its Board of Directors approving the transactions
contemplated hereby and by the Related Agreements.
(vi) Other Purchasers. The other Purchasers shall have
simultaneously consummated their purchases of Notes and Warrants at the First
Closing in accordance with the terms hereof.
(vii) Other Documents. The Purchasers shall have
received such other certificates and documents as they shall have reasonably
requested, including an opinion of ▇▇▇▇▇▇▇ & Angel, counsel to the Company, in
reasonable form and content.
(b) Conditions to Obligations of the Company. The Company's
obligations to issue and sell the Notes and Warrants at the First Closing are
subject to the fulfillment on or prior to the First Closing Date of the
following condition, which may be waived by the Company: the representations and
warranties made by the Purchasers in Section 5 hereof shall have been true and
correct when made, and shall be true and correct on such First Closing Date with
the same force and effect as if they had been made on and as of such date.
2.4 Conditions to Subsequent Closings. The obligations of the
Company and SatCon to consummate the issuance, sale and purchase of the Notes
and Warrants to be issued, sold and purchased at the Subsequent Closings shall
be subject to satisfaction of the following condition: the First Closing shall
have occurred and the Notes and Warrants to be issued, sold and purchased at the
First Closing shall have been issued, sold and purchased. The obligations of the
Company to consummate the issuance and sale of the Notes and Warrants to be
issued and sold at the Subsequent Closings shall also be subject to satisfaction
of the following additional condition: the representations and warranties made
by the SatCon in Section 5 hereof shall have been true and correct when made,
and shall be true and correct on such Subsequent Closing Dates with the same
force and effect as if they had been made on and as of such date.
2.5 Registration Rights. The holder of a Warrant for the issue of
shares of Class E Preferred Stock shall obtain registration rights (relating to
the registration of the Common Shares issuable upon conversion of the Class F
Preferred under the Securities Act of 1933) on a basis consistent with the
registration rights which are obtained by other purchasers of such Class E
Preferred Stock, so long as the holder signs the appropriate registration rights
agreement relating thereto. Moreover, if the Warrant becomes exercisable into
shares other than Class E Preferred, measures will be taken so that the Common
Shares issued upon exercise of the Warrant (or the Common Shares issued upon
conversion of whatever convertible security may be issuable upon such exercise)
will constitute "Registrable Securities" under the Registration Rights Statement
attached as Exhibit F to the October Agreement.
3. Representations and Warranties Relating to the Company. Except as
otherwise set forth in the Disclosure Schedule attached as Exhibit I to the
October Agreement, as supplemented by the Supplemental Disclosure Schedule
attached hereto as Exhibit D (collectively, the "Company Disclosure Schedule"),
the Company represents and warrants to 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 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 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
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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. Upon their issuance pursuant to the Warrants, all shares of
Common Stock issued pursuant to the Warrants shall be duly authorized, validly
issued, fully paid and nonassessable.
3.3 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
Certificate of Incorporation 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.
3.4 Financial Statements.
(a) The Company's unaudited consolidated balance sheets
as of December 31, 1998 and June 30, 1999 and statements of operations and cash
flows for the year ended December 31, 1998 and the six months ended June 30,
1999, including the notes thereto (collectively the "Company Financial
Statements"), all of which are attached to the Company Disclosure Schedule (or
have previously been provided to the Purchasers), have been prepared in all
material respects in accordance with GAAP (except that the June 30, 1999
statements may not contain all footnotes required by 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. Since December 31, 1998, the Company has not experienced a
Material Adverse Change.
3.5 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.
3.6 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.
3.7 Securities Act. Subject to the accuracy of the Purchaser's
representations in Section 5 hereof, the offer, sale and issuance of the Notes
and the Warrants in conformity with the terms of this Agreement 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.
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3.8 Other Representations and Warranties. The representations and
warranties of the Company set forth in Section 3 of the October Agreement are
true and correct as of the date hereof in all material respects.
4. [INTENTIONALLY OMITTED.]
5. Representations and Warranties of the Purchasers and Restrictions on
Transfer Imposed by the Securities Act of 1933 and Applicable State Securities
Laws.
5.1 Representations and Warranties by the Purchaser. Each Purchaser
represents and warrants to the Company severally as to itself alone and not
jointly as follows:
(a) The Note and Warrant to be issued to such Purchaser at
each Closing will be acquired by such Purchaser for its 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) Such Purchaser understands that (i) the Notes and Warrants
to be issued to it at such Closing have not been, and upon their issuance will
not be, 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, and upon
their issuance will not be, 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 such Purchaser's representations set forth herein.
Such Purchaser understands that the resale of its Notes and Warrants 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) Such Purchaser is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act. Such
Purchaser is able to bear the economic risk of the purchase of its Notes and
Warrant pursuant to the terms of this Agreement, including a complete loss of
the Purchaser's investment therein.
(d) Such 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 or becomes a party, and this Agreement and
each Related Agreement to which it is or becomes 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 or becomes a party.
5.2 Legend. The Notes and any Warrants may be endorsed with the
legends appearing on the first page thereof. The Company may instruct its
transfer agent not to register the transfer of any Note, unless the conditions
specified in the foregoing legends are satisfied.
5.3 Removal of Legend and Transfer Restrictions.
Any legend endorsed on any Note or Warrant pursuant to Section
5.2 relating to compliance with federal or state securities laws and the stop
transfer instructions with respect to the Notes and the Warrants relating
thereto shall be removed and the Company shall issue a new promissory note or
warrant, as the case may be, without such legend to the holder thereof (1) if
such Note or Warrant is 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 the Note or
Warrant may be made without registration.
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6. Additional Covenants.
6.1 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 Notes
and Warrants shall be used for the purpose of developing and conducting its
business, which is the development, manufacturing and marketing of flywheel
energy storage systems for use in energy storage applications, and no part of
such net proceeds shall be used to pay any broker's fees or commissions relating
to the transactions contemplated by this Agreement or similar payments of any
kind. The above net proceeds shall not be used to repay any obligation incurred
by the Company under the Tranche One Notes or the Tranche One Note Purchase
Agreement other than legal expenses incurred in connection therewith.
6.2 Special Approvals. Without the consent of 60% in economic
interest of the Notes, while the Notes are outstanding, the Company will not (1)
pay dividends on any class of its shares of common stock or any class of its
preferred stock (except stock dividends to holders of its preferred stock) or
(2) issue any securities or incur any indebtedness except for commercial bank
and institutional lender financings and equipment leases ranking equivalent or
senior to the Notes.
6.3 Best Efforts. The Company will use best efforts to: (a) identify
and hire a Chairman of the Company; (b) identify and begin negotiations with a
strategic partner; (c) negotiate a significant contract with ▇▇▇▇ Atlantic or
another significant customer to purchase equipment from the Company; and (d)
identify and engage an investment banker with a view to preparing and
structuring the Company for an initial public offering within a reasonable
period.
7. Miscellaneous.
7.1 Waivers and Amendments. 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.
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 Commonwealth of Massachusetts 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
Closings 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
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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
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer
With a required copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Perseus:
Perseus Capital, L.L.C.
The Army and Navy Club Building
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to SatCon:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
President
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇▇▇▇ ▇. Carp, Esq.
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Duquesne:
▇▇▇▇▇▇ ▇▇▇▇▇
Vice President
One Northshore Center
Suite 100
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No: ▇▇▇-▇▇▇-▇▇▇▇
With a required copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No: ▇▇▇-▇▇▇-▇▇▇▇
If to Micro:
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Arete Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 shall bear its 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
(but in no event shall the Company be responsible for aggregate expenses of more
than $25,000 per Purchaser).
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.l2 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, and the Purchasers, 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.
BEACON POWER CORPORATION DUQUESNE ENTERPRISES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By:
---------------------- ----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name:
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Title: President & CEO Title:
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PERSEUS CAPITAL, L.L.C. MICRO-GENERATION
TECHNOLOGY FUND, L.L.C.
By:
----------------------
Name: By: ARETE CORPORATION, Its Manager
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Title:
-------------------- By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President
SATCON TECHNOLOGY CORPORATION
By:
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Name:
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Title:
--------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
BEACON POWER CORPORATION DUQUESNE ENTERPRISES, INC.
By: By:
---------------------- ----------------------
Name: Name:
-------------------- --------------------
Title: Title:
------------------- --------------------
PERSEUS CAPITAL, L.L.C. MICRO-GENERATION
TECHNOLOGY FUND, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: ARETE CORPORATION, Its Manager
---------------------
Title: Managing Director
-------------------- By:
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President
SATCON TECHNOLOGY CORPORATION
By:
----------------------
Name:
---------------------
Title:
--------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
BEACON POWER CORPORATION DUQUESNE ENTERPRISES, INC.
By: By:
---------------------- ----------------------
Name: Name:
-------------------- --------------------
Title: Title:
------------------- --------------------
PERSEUS CAPITAL, L.L.C. MICRO-GENERATION
TECHNOLOGY FUND, L.L.C.
By:
----------------------
Name: By: ARETE CORPORATION, Its Manager
---------------------
Title:
-------------------- By:
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President
SATCON TECHNOLOGY CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------
Title: President
--------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
BEACON POWER CORPORATION DUQUESNE ENTERPRISES, INC.
By: By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------- ----------------------
Name: Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------- --------------------
Title: Title: Vice President & Treasurer
------------------- ---------------------------
PERSEUS CAPITAL, L.L.C. MICRO-GENERATION
TECHNOLOGY FUND, L.L.C.
By:
----------------------
Name: By: ARETE CORPORATION, Its Manager
---------------------
Title:
-------------------- By:
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President
SATCON TECHNOLOGY CORPORATION
By:
----------------------
Name:
---------------------
Title:
--------------------
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
BEACON POWER CORPORATION DUQUESNE ENTERPRISES, INC.
By: By:
---------------------- ----------------------
Name: Name:
-------------------- --------------------
Title: Title:
------------------- --------------------
PERSEUS CAPITAL, L.L.C. MICRO-GENERATION
TECHNOLOGY FUND, L.L.C.
By:
----------------------
Name: By: ARETE CORPORATION, Its Manager
---------------------
Title:
-------------------- By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., President
SATCON TECHNOLOGY CORPORATION
By:
----------------------
Name:
---------------------
Title:
--------------------
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement to which this Exhibit A is attached, the
following terms have the following meanings:
"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 New York, the
Commonwealth of Massachusetts, or the District of Columbia are authorized to be
closed.
"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.
"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).
"Material Adverse Change" means a change which would have a Material
Adverse Effect.
"Material Adverse Effect." 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.
"Related Agreements" means (a) the Notes; (b) the Warrants; 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.
EXHIBIT B-1
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
[Principal Amount] August ___, ▇▇▇▇
▇▇▇▇▇▇, ▇▇
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of _________________, or its registered
assigns (the "Holder"), the principal sum of $__________ or such lesser amount
as shall then equal the outstanding principal amount hereof, together with
interest computed in the following fashion:
(a) Interest accrued to date on the note which this Note amends and
restates (and known in the Purchase Agreement referenced below as the Tranche
One Note), amounting to $____________; and
(b) Interest accruing from the date of issuance of this Note on the unpaid
principal balance hereof at a rate equal to twelve and one-half percent (12
1/2%) per annum, computed on the basis of the actual number of days elapsed and
a year of 365 days; provided that if the Funding Date does not occur within six
(6) months from the date hereof, such interest rate shall increase effective as
of the close of business on the such day to occur six (6) months from the date
hereof to fifteen percent (15%) per annum.
All unpaid principal, together with any accrued but unpaid interest and
other amounts payable hereunder, shall be due and payable on the earlier of (i)
the date of conversion (or, absent a conversion, demand by the holder) as
referenced below in Section 6 (the "Maturity Date") or (ii) upon or after the
occurrence of an Event of Default (as defined below), when such amounts are
declared due and payable by the Holder or made automatically due and payable.
This Note is issued pursuant to the Note and Warrant Purchase Agreement
(the "Purchase Agreement") dated as of August 2, 1999 by and among the Company,
Perseus Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology
Fund, L.L.C. and SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
(a) "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 or the State of New York are authorized to be closed.
(b) "Funding Date" means the date on which all or any part of
funding of transactions contemplated by the Class E Preferred Commitment are
first consummated.
(c) "Obligations" means the principal, interest and other amounts
payable under this Note.
(d) "Class E Preferred Commitment" means a written commitment to the
Company by a strategic investor(s), made within four (4) months from the date
hereof, to purchase at least $5 million of the Class E Preferred Stock.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 10 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (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) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) 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 or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
-2-
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest,
senior to all other security interests except for any now or hereafter existing
commercial bank or institutional lender financings and equipment leases, in all
of the Company's right, title and interest in and to the following, whether now
owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable
inventions and (i) the inventions and improvements described and claimed
therein; (ii) any continuation, division, renewal, extension, substitute or
reissue thereof or any legal equivalent in a foreign country for the full term
thereof or the terms for which the same may be granted; (iii) all rights to
income, royalties, profits, awards, damages and other rights relating to said
patents, applications and inventions, including the right to ▇▇▇ for past,
present and future infringement and (iv) any other rights and benefits relating
to said patents, applications and inventions including any rights as a licensor
or licensee of said patents, applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations,
trademark applications, service marks, service ▇▇▇▇ registrations and service
▇▇▇▇ applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to ▇▇▇ for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
▇▇▇▇ (the "Trademarks");
(iii) all copyrights, copyright registrations and
copyright applications, including without limitation those copyrights for
computer programs, computer databases, flow diagrams, maskworks, maskwork
applications, source codes and object codes, computer software, technical
knowledge and processes, trade secrets, know-how, customer lists, franchises,
systems, inventions, designs, blueprints, formal or informal licensing
arrangements, and all property embodying or incorporating such copyrights and
(i) any similar rights or amendments, modifications and renewals thereof and any
legal equivalent in a foreign country for the full term or terms for which the
same may be granted; (ii) all rights to income, past, present and future
infringement and (iii) any other rights and benefits relating to said copyrights
(the "Copyrights");
-3-
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by any means upon any
Collateral will not bar realization upon any other Collateral; and (z) the
security interest hereby created is a continuing security interest and will
cover and secure the payment of all Obligations both present and future of the
Company to Holder pursuant to this Note and the other Transaction Documents. The
Company further covenants and agrees to take all actions requested by the Holder
to establish or perfect the security interest granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder, provided that nothing in this Section 5 shall limit the Holder's
conversion rights set forth in Section 6 herein during such notice period. Any
such prepayment shall be applied first to the payment of expenses due under this
Note, second to interest accrued on this Note and third, if the amount of
prepayment exceeds the amount of all such expenses and accrued interest, to the
payment of principal of this Note.
6. Conversion. If there is a Funding Date within six (6) months of the
date hereof, all outstanding principal and accrued interest under this Note will
be converted into Class E Preferred Stock on such Funding Date on terms
substantially the same as those issued pursuant to the Class E Preferred
Commitment.
If there is no Class E Preferred Commitment within four (4) months
of the date hereof or if a Funding Date does not occur within six (6) months of
the date hereof, then at the option of the Holder, (a) all outstanding principal
and accrued interest under this Note will convert to the Company's common or
preferred stock at a price and on terms to be negotiated at that time between
the Holder and the Company, or (b) if no agreement can be reached between the
Holder and the Company within 60 days of the expiration of the four (4) month or
six (6) month period, as the case may be, at the Holder's option, exercisable by
the Holder at any time after expiration of the 60 day period, the Holder may
declare in writing that such Note has become a demand obligation, and thereafter
may make demand for payment of the Note at any time thereafter. Any such demand
shall be in writing, and require payment by the Company no earlier than 10 days
after such demand.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the
-4-
Securities Act, unless in the opinion of counsel for the Company such legend is
not required in order to ensure compliance with the Securities Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions. Subject to the foregoing, transfers of this Note shall be
registered upon registration books maintained for such purpose by or on behalf
of the Company. Prior to presentation of this Note for registration of transfer,
the Company shall treat the registered holder hereof as the owner and holder of
this Note for the purpose of receiving all payments of principal and interest
hereon and for all other purposes whatsoever, whether or not this Note shall be
overdue and the Company shall not be affected by notice to the contrary.
10. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, as a whole or in part, by the Company, without the prior written
consent of the Holder.
11. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses: Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to conflict of
laws provisions of the Commonwealth of Massachusetts or of any other state. In
the event of any dispute among or between any of the parties to this Note
arising out of the terms of this Note, the parties hereby consent to the
exclusive jurisdiction of the federal and state courts located in the
Commonwealth of Massachusetts for resolution of such dispute, and agree not to
contest such exclusive jurisdiction or seek to transfer any action relating to
such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
-5-
EXHIBIT B-2
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
$333,333.33 ____________ ___, ▇▇▇▇
▇▇▇▇▇▇, ▇▇
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of SatCon Technology Corporation or its
registered assigns (the "Holder"), the principal sum of $333,333.33 or such
lesser amount as shall then equal the outstanding principal amount hereof,
together with interest from the date of issuance of this Note on the unpaid
principal balance hereof at a rate equal to twelve and one-half percent (12
1/2%) per annum, computed on the basis of the actual number of days elapsed and
a year of 365 days; provided that if the Funding Date does not occur within six
(6) months from the date hereof, such interest rate shall increase effective as
of the close of business on the such day to occur six (6) months from the date
hereof to fifteen percent (15%) per annum.
All unpaid principal, together with any accrued but unpaid interest and
other amounts payable hereunder, shall be due and payable on the earlier of (i)
the date of conversion (or absent a conversion, demand by the holder) as
referenced below in Section 6 (the "Maturity Date") or (ii) upon or after the
occurrence of an Event of Default (as defined below), when such amounts are
declared due and payable by the Holder or made automatically due and payable.
This Note is issued pursuant to the Note and Warrant Purchase Agreement
(the "Purchase Agreement") dated as of August 2, 1999 by and among the Company,
Perseus Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology
Fund, L.L.C. and SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
(a) "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 or the State of New York are authorized to be closed.
(b) "Funding Date" means the date on which all or any part of
funding of transactions contemplated by the Class E Preferred Commitment are
first consummated.
(c) "Obligations" means the principal, interest and other amounts
payable under this Note.
(d) "Class E Preferred Commitment" means a written commitment to the
Company by a strategic investor(s), made within four (4) months from the date
hereof, to purchase at least $5 million of the Class E Preferred Stock.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 10 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (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) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) 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 or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
-2-
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest,
senior to all other security interests except for any now or hereafter existing
commercial bank or institutional lender financings and equipment leases, in all
of the Company's right, title and interest in and to the following, whether now
owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable
inventions and (i) the inventions and improvements described and claimed
therein; (ii) any continuation, division, renewal, extension, substitute or
reissue thereof or any legal equivalent in a foreign country for the full term
thereof or the terms for which the same may be granted; (iii) all rights to
income, royalties, profits, awards, damages and other rights relating to said
patents, applications and inventions, including the right to ▇▇▇ for past,
present and future infringement and (iv) any other rights and benefits relating
to said patents, applications and inventions including any rights as a licensor
or licensee of said patents, applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service ▇▇▇▇ registrations and service ▇▇▇▇
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to ▇▇▇ for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
▇▇▇▇ (the "Trademarks");
(iii) all copyrights, copyright registrations and
copyright applications, including without limitation those copyrights for
computer programs, computer databases, flow diagrams, maskworks, maskwork
applications, source codes and object codes, computer software, technical
knowledge and processes, trade secrets, know-how, customer lists, franchises,
systems, inventions, designs, blueprints, formal or informal licensing
arrangements, and all property embodying or incorporating such copyrights and
(i) any similar rights or amendments, modifications and renewals thereof and any
legal equivalent in a foreign country for the full term or terms for which the
same may be granted; (ii) all rights to income, past, present and future
infringement and (iii) any other rights and benefits relating to said copyrights
(the "Copyrights");
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all
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payments under insurance or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by any means upon any
Collateral will not bar realization upon any other Collateral; and (z) the
security interest hereby created is a continuing security interest and will
cover and secure the payment of all Obligations both present and future of the
Company to Holder pursuant to this Note and the other Transaction Documents. The
Company further covenants and agrees to take all actions requested by the Holder
to establish or perfect the security interest granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder, provided that nothing in this Section 5 shall limit the Holder's
conversion rights set forth in Section 6 herein during such notice period. Any
such prepayment shall be applied first to the payment of expenses due under this
Note, second to interest accrued on this Note and third, if the amount of
prepayment exceeds the amount of all such expenses and accrued interest, to the
payment of principal of this Note.
6. Conversion.
If there is a Funding Date within six (6) months of the date hereof,
all outstanding principal and accrued interest under the Note will be converted
into Class E Preferred Stock on such Funding Date on terms substantially the
same as those issued pursuant to the Class E Preferred Commitment.
If there is no Class E Preferred Commitment within four (4) months
of the date hereof or if a Funding Date does not occur within six (6) months of
the date hereof, then at the option of the Holder, (a) all outstanding principal
and accrued interest under this Note will convert to the Company's common or
preferred stock at a price and on terms to be negotiated at that time between
the Holder and the Company, or (b) if no agreement can be reached between the
Holder and the Company within 60 days of the expiration of the four (4) month or
six (6) month period, as the case may be, at the Holder's option, exercisable by
the Holder at any time after expiration of the 60 day period, the Holder may
declare in writing that such Note has become a demand obligation, and thereafter
may make demand for payment of the Note at any time thereafter. Any such demand
shall be in writing, and require payment by the Company no earlier than 10 days
after such demand.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by
or on behalf of the Company. Prior to presentation of this Note for registration
of transfer, the Company shall treat the registered holder hereof as the owner
and holder of this Note for the purpose of receiving all payments of principal
and interest hereon and for all other purposes whatsoever, whether or not this
Note shall be overdue and the Company shall not be affected by notice to the
contrary.
10. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations
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hereunder may be assigned, by operation of law or otherwise, in whole or in
part, by the Company, without the prior written consent of the Holder.
11. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses: Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to conflict of
laws provisions of the Commonwealth of Massachusetts or of any other state. In
the event of any dispute among or between any of the parties to this Note
arising out of the terms of this Note, the parties hereby consent to the
exclusive jurisdiction of the federal and state courts located in the
Commonwealth of Massachusetts for resolution of such dispute, and agree not to
contest such exclusive jurisdiction or seek to transfer any action relating to
such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER CORPORATION
By:_______________________
Name:_____________________
Title:____________________
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EXHIBIT C
THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT'), AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE 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, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
No.:___
WARRANT
TO PURCHASE CLASS E PREFERRED STOCK
OF
BEACON POWER CORPORATION
(void after August 2, 2004)
1. Issuance of Warrant. FOR VALUE RECEIVED, on and after the date of
issuance of this Warrant, and subject to the terms and conditions herein set
forth, the Holder (as defined below) is entitled to purchase from Beacon Power
Corporation, a Delaware corporation (the "Company"), at any time before 5:00
p.m. New York time on August 2, 2004 (the "Termination Date"), at a price per
share equal to the Warrant Price (as defined below and subject to adjustment as
described below), the Warrant Stock (as defined below and subject to adjustment
as described below) upon exercise of this warrant (this "Warrant") pursuant to
Section 6 hereof. This Warrant is issued pursuant to the Note and Warrant
Purchase Agreement (as defined below).
2. Definitions. As used in this Warrant, the following terms have the
definitions ascribed to them below:
(a) "Additional Stock" is defined in Section 3(d)(iv).
(b) "Base Price" means as of August 2, 1999, $1.78 per share of
Common
Stock, which shall be subject to adjustment as provided in Section 3(d).
(c) "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 or the State of New York or the District of Columbia are
authorized to be closed.
(d) "Change-In-Control Event" means the occurrence after the
Commencement Date of any of the following: (i) the acquisition of voting
securities of the Company by any person or group of persons that results in such
person or group, together with its affiliates, becoming, directly or indirectly,
the beneficial owner of in excess of 50% of the outstanding voting securities of
the Company; (ii) a merger or consolidation of the Company with any other
corporation or legal entity regardless of which entity is the survivor, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or being converted into voting securities of
the surviving entity) in excess of 50% of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation; or (iii) the sale or disposition of all or substantially all of
the Company's assets other than in a transaction in which holders of the voting
securities of the Company immediately prior to such transaction receive voting
securities of the acquiror of such assets or its affiliate that represent in
excess of 50% of the voting securities of such entity after consummation of such
transaction.
(e) "Commencement Date" means the date of issue of this Warrant.
(f) "Common Stock" means the Company's Common Stock, $.0l par value
per share.
(g) "Holder" means ________________, or its assigns.
(h) "Note and Warrant Purchase Agreement" means the Note and Warrant
Purchase Agreement dated as of August 2, 1999 by and among the Company, Perseus
Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology Fund,
L.L.C., and SatCon Technology Corporation (collectively, the "Purchasers"), and
"Note" means the Note issued to the holder pursuant to such Agreement.
(i) "Class E Preferred Stock" means the Class E Preferred Stock of
the Company proposed to be issued to the Purchasers as part of the equity
financing in which the Note is to be converted, as described in the Note and
Warrant Purchase Agreement.
(j) "Warrant Price" means, (i) in the event that a purchase of at
least $5 million of the Class E Preferred Stock is consummated within six (6)
months from the date hereof, the per share price at which such purchase is made,
or (ii) in the event that no such purchase is consummated, $2.50, in either
event subject to adjustment as described in Section 3 below.
(k) "Warrant Stock" means the shares of Company stock which are
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purchasable upon exercise or conversion of this Warrant, consisting of Class E
Preferred Stock (or other Company securities) into which the Note is converted
if such conversion actually occurs, or consisting of shares of Common Stock if
the Note is not so converted. The total number of shares to be issued upon the
exercise of this Warrant shall be computed by dividing $____________ by the
Warrant Price, subject to adjustment as described in Section 3 below.
(l) "Warrant Stock Definition Date" means the date on which the Note
is converted (or if not converted, then the date on which the holder of the Note
notifies the Company that it has become a demand note, as described in the Note.
3. Adjustments and Notices. The Warrant Price and/or the number of shares
of Warrant Stock shall be subject to adjustment from time to time in accordance
with this Section 3. The Warrant Price and/or the number of Warrant Shares shall
be adjusted to reflect all of the following events that occur on or after the
Commencement Date. However, if on the Warrant Stock Definition Date, the Warrant
Stock is determined to consist of preferred stock of the Company, then the
following provisions in Section 3 shall not apply to shares issued on or after
the Warrant Stock Definition Date.
(a) Subdivision, Stock Dividends or Combinations. In case the
Company shall at any time subdivide the outstanding shares of Warrant Stock or
shall issue a stock dividend with respect to the Warrant Stock, the Warrant
Price in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in case the Company shall at
any time combine the outstanding shares of the Warrant Stock, the Warrant Price
in effect immediately prior to such combination shall be proportionately
increased, in each case effective at the close of business on the date of such
subdivision, dividend or combination, as the case may be.
(b) Reclassification, Exchange, Substitution, In-Kind Distribution.
Upon any reclassifications, exchange, substitution or other event that results
in a change of the number and/or class of the securities issuable upon exercise
or conversion of this Warrant or upon the payment of a dividend in securities or
property other than shares of Warrant Stock, the Holder shall be entitled to
receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received if this Warrant had been
exercised or converted immediately before the record date for such
reclassification, exchange, substitution, or other event or immediately prior to
the record date for such dividend. The Company or its successor shall promptly
issue to Holder a new warrant for such new securities or other property. The new
warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise or conversion of the new warrant.
The provisions of this Section 3(b) shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events and successive
dividends.
(c) Reorganization, Merger etc. In case of any Change-In-Control
Event, the Company, or such successor or purchasing corporation, as the case may
be, shall, as a condition
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to closing any such reorganization, merger or sale, duly execute and deliver to
the Holder hereof a new warrant so that the Holder shall have the right to
receive, at a total purchase price not to exceed that payable upon the exercise
or conversion of the unexercised or unconverted portion of this Warrant, and in
lieu of the shares of the Warrant Stock theretofore issuable upon exercise or
conversion of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reorganization, merger or
sale by the Holder of the number of shares of Warrant Stock then purchasable
under this Warrant. Such new warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 3. The provisions of this subparagraph (c) shall similarly apply to
successive Change-In-Control Events.
(d) Dilutive Issuances Adjustment of Number of Shares and Warrant
Price. In order to prevent dilution of the rights granted under this Warrant,
the number of shares of Warrant Stock obtainable upon exercise of this Warrant
and the Warrant Price shall be subject to adjustment from time to time as
provided in this Section 3(d).
(i) Adjustment of Warrant Price upon Issuance of Additional
Stock. If and whenever after the Commencement, the Company issues, or in
accordance with Section 3(d)(ii) is deemed to have issued, any Additional Stock
to any person for a consideration per share less than the Base Price then in
effect, then the Warrant Price in effect immediately before each such issuance
shall forthwith be adjusted to a price determined by multiplying such Warrant
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the number of
shares of Common Stock that the aggregate consideration received by the Company
for such issuance would purchase at such Warrant Price; and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of shares of such Additional Stock.
(ii) Effect of Certain Events. For purposes of determining
under Section (d)(i) the adjusted number of shares of Warrant Stock acquirable
upon exercise of this Warrant, the following shall be applicable:
(A) Issuance of Rights or Options. If the Company in any
manner issues, grants or sells (or otherwise becomes subject to) any
options, rights, or warrants (collectively, "Options") to purchase Common
Stock or securities that are convertible into or exchangeable for Common
Stock ("Convertible Securities"), then the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to
have been sold on the date of issuance, grant or sale of such Options and
to be outstanding, and the total maximum consideration receivable for such
issue, grant and sale of the Options, Convertible Securities and Common
Stock shall be deemed to have been received by the Company.
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(B) Issuance of Convertible Securities. If the Company
in any manner grants, issues or sells (or otherwise becomes subject to)
any Convertible Securities, then the maximum number of shares of Common
Stock issuable upon conversion or exchange of such Convertible Securities
shall be deemed to have been sold on the date of issuance, grant or sale
of such Convertible Securities and to be outstanding, and the total
maximum consideration receivable for such grant, issue and sale of the
Convertible Securities and Common Stock shall be deemed to have been
received by the Company.
(C) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible Securities
without the exercise of such Option or right, the number of shares of
Warrant Stock acquirable hereunder shall be adjusted to the number of
shares which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination, never
been issued and the consideration for such exercise never been received.
(D) Treasury Shares. The number of shares of Common
Stock outstanding at any given time does not include shares owned or held
by or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held shall be considered an issuance
or sale of Common Stock.
(E) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(iii) In the case of the issuance of Additional Stock for
cash, the consideration received therefor shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by the company for any underwriting or
otherwise in connection with the issuance and sale thereof. In the case of the
issuance of Additional Stock for a consideration in whole or in part other than
cash, the consideration other than cash received therefor shall be deemed to be
the fair value thereof as reasonably determined by the Board of Directors of the
Company in its good faith judgment irrespective of any accounting treatment.
(iv) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to clause (ii) of this Section
3(d)) by the Company after the Commencement Date, other than shares of Common
Stock issued or issuable:
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(A) to officers, directors, employees and consultants of
the Company directly or pursuant to a stock option plan or restricted
stock plan approved by the Board of Directors of the Company;
(B) upon conversion of the Class A, B, C, or D Preferred
Stock (or, if authorized, the Class E Preferred Stock) of the Company or
the exercise of warrants issued by the Company before or on the
Commencement Date;
(C) upon issue of Warrants to be issued to SatCon per
the Note and Warrant Purchase Agreement.
(v) Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 3(d) but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's board of directors shall make an appropriate adjustment in
the number of shares of Warrant Stock obtainable upon exercise of this Warrant
and in the Warrant Price so as to protect the rights of the holders of the
Warrants; provided that no such adjustment shall decrease the number of shares
of Warrant Stock obtainable as otherwise determined pursuant to this Section 3.
(e) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Warrant Price, the Corporation, at its own expense, shall
cause its Chief Financial Officer to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. No adjustment of the Warrant Price shall be
required to be made unless it would result in an increase or decrease of at
least one cent, but any adjustments not made because of this sentence shall be
carried forward and taken into account in any subsequent adjustment otherwise
required hereunder.
(f) No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all of the provisions of
this Section 3 and in taking all such action as may be necessary or appropriate
to protect the Holder's rights under this Section 3 against impairment. If the
Company takes any action affecting the Class E Preferred Stock other than as
described above that adversely affects the Holder's rights under this Warrant,
the Warrant Price shall be adjusted downward.
(g) Fractional Shares. No fractional shares shall be issuable upon
exercise or conversion of the Warrant and the number of shares to be issued
shall be rounded down to the nearest whole share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying the Holder an
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amount computed by multiplying the fractional interest by the fair market value
of a full share.
4. No Shareholder Rights. This Warrant, by itself, as distinguished from
any shares purchased hereunder, shall not entitle its Holder to any of the
rights of a shareholder of the Company.
5. Reservation of Stock. On and after the Warrant Stock Definition Date,
the Company will reserve from its authorized and unissued stock a sufficient
number of shares to provide for the issuance of Warrant Stock upon the exercise
or conversion of this Warrant. Issuance of this Warrant shall constitute full
authority to the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Warrant Stock issuable upon the exercise or conversion of this Warrant.
6. Exercise of Warrant. This Warrant may be exercised as a whole or part
by the Holder, at any time after the date hereof prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise and Investment Representation Statement in the forms attached hereto as
Attachments 1 and 2, respectively, duly completed and executed at the principal
office of the Company, specifying the portion of the Warrant to be exercised and
accompanied by payment in full of the Warrant Price in cash or by check with
respect to the shares of Warrant Stock being purchased. Alternatively, the
Holder may pay the Warrant Price as a whole or in part) by surrendering to the
Company all or a portion of any Note (as defined in the Note and Warrant
Purchase Agreement), in which case the portion of the Note surrendered plus all
accrued but unpaid interest thereon shall be credited towards payment of the
Warrant Price. If less the entire Note is surrendered in payment of the Warrant
Price, the Company shall issue to the Holder a new promissory note identical to
the surrendered Note except that the principal amount thereof shall equal the
unsurrendered portion of the principal amount of the surrendered Note. This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Warrant Stock issuable upon such
exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date. As promptly as practicable
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Warrant Stock issuable upon such exercise. If this Warrant shall
be exercised for less than the total number of shares of Warrant Stock then
issuable upon exercise, promptly after surrender of this Warrant upon such
exercise, the Company will execute and deliver a new warrant, dated the date
hereof, evidencing the right of the Holder to the balance of this Warrant Stock
purchasable hereunder upon the same terms and conditions set forth herein.
7. Conversion. In lieu of exercising this Warrant or any portion
hereof, at any time after the occurrence of a Change-In-Control Event or the
filing of a registration statement for an initial underwritten public offering
of securities by the Company, the Holder hereof shall have the right to
convert this Warrant or any portion hereof into Warrant Stock by executing and
delivering to the Company at its principal office the written Notice of
Conversion and Investment Representation Statement in the forms attached
hereto as Attachments 2 and 3, specifying the portion of the Warrant to be
converted, and accompanied by this Warrant. The
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number of shares of Warrant Stock to be issued to Holder upon such conversion
shall be computed using the following formula:
X=(P)(Y)(A-B)/A
where X = the number of shares of Warrant Stock to be issued to the
Holder for the portion of the Warrant being converted.
P = the portion of the Warrant being converted expressed as
a decimal fraction.
Y = the total number of shares of Warrant Stock issuable
upon exercise of the Warrant in full.
A = the fair market value of one share of Warrant Stock
which means (i) the fair market value of the Warrant
Stock as of the last Business Day immediately prior to
the date the notice of conversion is received by the
Company, as reported in the principal market for such
securities or, if no such market exists, as determined
in good faith by the Company's Board of Directors, or
(ii) if this Warrant is being converted in conjunction
with a public offering of stock the price to the public
per share pursuant to the offering.
B = the Warrant Price on the date of conversion.
Any portion of this Warrant that is converted shall be immediately canceled.
This Warrant or any portion hereof shall be deemed to have been converted
immediately prior to the close of business on the date of its surrender for
conversion as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such conversion shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Warrant Stock issuable upon such conversion. If
the Warrant shall be converted for less than the total number of shares of
Warrant Stock then issuable upon conversion, promptly after surrender of the
Warrant upon such conversion, the Company will execute and deliver a new
warrant, dated the date hereof, evidencing the right of the Holder to the
balance of the Warrant Stock purchasable hereunder upon the same terms and
conditions set forth herein. If this Warrant is converted, as a whole or in
part, after the occurrence of a Change-In-Control Event as to which Section 3(c)
is applicable, the Holder shall receive the consideration contemplated by
Section 3(c) in lieu of Warrants Stock of the Company.
8. Transfer of Warrant. This Warrant may be transferred or assigned by the
Holder hereof in whole or in part, provided that the transferor provides, at the
Company's request, an
-8-
opinion of counsel satisfactory to the Company that such transfer does not
require registration under the Securities Act and the securities law applicable
with respect to any other applicable jurisdiction.
9. Termination. This Warrant shall terminate on 5:00 p.m. New York time on
the Termination Date.
10. Miscellaneous. This Warrant shall be governed by the laws of the
Commonwealth of Massachusetts, as such laws are applied to contracts to be
entered into and performed entirely in Massachusetts by Massachusetts residents.
In the event of any dispute among the Holder and the Company arising out of the
terms of this Warrant, the parties hereby consent to the exclusive jurisdiction
of the federal and state courts located in the Commonwealth of Massachusetts for
resolution of such dispute, and agree not to contest such exclusive jurisdiction
or seek to transfer any action relating to such dispute to any other
jurisdiction. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be
-9-
deemed to constitute a part hereof. Neither this Warrant nor any term hereof may
be changed or waived orally, but only by an instrument in writing signed by the
Company and the Holder of this Warrant. All notices and other communications
from the Company to the Holder of this Warrant shall be delivered personally or
by facsimile transmission or mailed by first class mail, postage prepaid, to the
address or facsimile number furnished to the Company in writing by the last
Holder of this Warrant who shall have furnished an address or facsimile number
to the Company in writing, and if mailed shall be deemed given three days after
deposit in the United States mail.
ISSUED: ________________
BEACON POWER CORPORATION
By:____________________________________
Name:________________________________________
Title:_______________________________________
-10-
Attachment 1
NOTICE OF EXERCISE
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to purchase ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________
(Name)
_______________________________
(Address)
_________________________________ _________________________________
(Date) (Name of Warrant Holder)
By:__________________________
Title:_______________________
Attachment 2
INVESTMENT REPRESENTATION STATEMENT
Shares of the Class E Preferred Stock
(as defined in the attached Warrant) of
BEACON POWER CORPORATION
In connection with the purchase of the above-listed securities, the
undersigned hereby represents to Beacon Power Corporation (the "Company") as
follows:
(a) The securities to be received upon the exercise of the Warrant (the
"Securities") will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting
participation in or otherwise distributing the same, but subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. By executing this statement, the undersigned
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any Securities issuable upon
exercise of the Warrant.
(b) The undersigned understands that the Securities issuable upon exercise of
the Warrant at the time of issuance may not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state securities
laws, on the ground that the issuance of such securities is exempt pursuant to
Section 4(2) of the Securities Act and state law exemptions relating to offers
and sales not by means of a public offering, and that the Company's reliance on
such exemptions is predicated on the undersigned's representations set forth
herein.
(c) The undersigned agrees that in no event will it make a disposition of any
Securities acquired upon the exercise of the Warrant unless and until (i) it
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and (ii) it shall have furnished the Company with an
opinion of counsel satisfactory to the Company and Company's counsel to the
effect that (A) appropriate action necessary for compliance with the Securities
Act and any applicable state securities laws has been taken or an exemption from
the registration requirements of the Securities Act and such laws is available,
and (B) the proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the Company is highly
speculative and represents that it is able to fend for itself in the
transactions contemplated by this statement, has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investments, and has the ability to bear the economic risks
(including the risk of a total loss) of its investment. The undersigned
represents that it has had the opportunity to ask questions of the Company
concerning the Company's business and assets and to obtain any additional
information which it considered necessary to verify the accuracy of or to
amplify the Company's disclosures, and has had all questions which have been
asked by it satisfactorily answered by the Company
(e) The undersigned acknowledges that the Securities issuable upon exercise or
conversion of the Warrant must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The undersigned is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold from the Company or any affiliate of the Company, the sale
being through a "broker's transaction" or in transactions directly with a
"market maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three month period not exceeding specified limitations.
Dated:_______________
_________________________________
(Typed or Printed Name)
By:______________________________
(Signature)
_________________________________
(Title)
Attachment 3
NOTICE OF CONVERSION
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to acquire ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the attached
Warrant, by conversion of __________ percent(____%) of the Warrant.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________
(Name)
_______________________________
(Address)
_________________________________ _________________________________
(Date) (Name of Warrant Holder)
By:___________________________________________
Title:________________________________________
(Title and signature of authorized person)
Beacon Power Corporation
Exhibit D to the Note and Warrant Purchase Agreement
Supplemental Disclosure Schedule
[The following numbers correspond to the Section numbers in the Note and
Warrant Purchase Agreement]
3.4(b) Delay in financing has materially delayed the completion of the
manufacturing composite laboratory, the hiring of key personnel, and the
pursuit of securing intellectual property protection (as detailed below),
because such matters could not be advanced without the money with which
to fund the company's activities. The IPR delays consist of having
temporarily halted (during April 1999) the writing of seven patents, and
having similarly halted efforts to file for foreign counterpart patents.
With the closing of this bridge financing, the Company has the funds with
which to recommence the patent work referenced above, and it has been
advised by patent counsel that sufficient time remains before the
applicable regulatory deadlines in order to complete the required work.
So long as such work is so completed, no Material Adverse Effect is
expected to result from such halt in such patent prosecution.
3.8 Other Representations and Warranties
The following exceptions are taken to the representations and warranties
of the company set forth in Section 3 of the October Agreement and, where
applicable, certain representations and warranties made in the October Agreement
(each an "Original Representation and Warrant") have been eliminated and
superseded in their entirety by representations and warranties made in this Note
and Warrant Purchase Agreement:
[The following numbers correspond to the Section numbers in the October
Agreement]
3.1 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.1 of this Note
and Warrant Purchase Agreement.
3.2(b) The number of issued and outstanding shares of Common Stock
of the Company is 8,409.
3.3 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.2 of this Note
and Warrant Purchase Agreement.
3.4 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.3 of this Note
and Warrant Purchase Agreement.
3.7 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.4 of this Note
and Warrant Purchase Agreement.
3.8(c) The Company has increased the compensation payable to certain
executive officers.
3.8(d) The Company has declared and paid a $30,000 dividend to the
holders of Class C Preferred Stock.
3.8(j) The Company has entered into a real property lease relating
to approximately 4,000 square feet of office space.
3.12 The Company has entered into a Registration Rights Agreement,
dated as of May 28, 1997, with Duquesne Enterprises and executed
Registration Rights Statements on October 23, 1998 which are
attached as Exhibits F and G to the October Agreement.
3.20 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.5 of this Note
and Warrant Purchase Agreement.
3.22 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.6 of this Note
and Warrant Purchase Agreement.
3.23 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.7 of this Note
and Warrant Purchase Agreement.
The following amendments are hereby made to the Company's Exhibit I
Disclosure Schedule originally delivered as part of the October Agreement.
[The following numbers correspond to the Section numbers in Exhibit I to the
October Agreement]
3.2(c)(i) The Company has increased the option pool to 1,500,000 shares by vote
of the Board of Directors. Of this amount options to purchase 885,094 have been
granted and approved by the Board of Directors.
3.2(d) SatCon Technology Corporation holds 1,671 shares of Common Stock on a
post-split basis (not 1,686). The total number of shares of Common Stock
outstanding on a post split-basis is 8,409 (not 8,424). Annex A is amended to
include new shares granted.
-2-
3.7 Relates to Section 3.4 of the Note and Warrant Purchase Agreement and is
hereby renumbered to number 3.4.
3.7(b)(ii) Is eliminated in its entirety.
3.7(b)(iii) Is eliminated in its entirety.
3.7(b)(iv) Is eliminated in its entirety
3.8(u) Is eliminated in its entirety.
3.8(iv) Is eliminated in its entirety.
3.10(e) & 3.11 (ix) The Company has entered into Invention and/or Non-Disclosure
Agreements with the members of the Engineering Department and Senior Management.
3.11(x) Is eliminated in its entirety.
3.14 The Company's benefit providers have changed since the October Agreement,
however, the current providers provide comparable benefits.
3.15 Insurance coverage has increased since the October Agreement.
-3-
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
$333,333.33 August 2, ▇▇▇▇
▇▇▇▇▇▇, ▇▇
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of SatCon Technology Corporation, or
its registered assigns (the "Holder"), the principal sum of $333,333.33 or such
lesser amount as shall then equal the outstanding principal amount hereof,
together with interest computed in the following fashion:
(a) Interest accrued to date on the note which this Note amends and
restates (and known in the Purchase Agreement referenced below as the Tranche
One Note), amounting to $2,654.11; and
(b) Interest accruing from the date of issuance of this Note on the unpaid
principal balance hereof at a rate equal to twelve and one-half percent
(12 1/2%) per annum, computed on the basis of the actual number of days elapsed
and a year of 365 days; provided that if the Funding Date does not occur within
six (6) months from the date hereof, such interest rate shall increase effective
as of the close of business on the such day to occur six (6) months from the
date hereof to fifteen percent (15%) per annum.
All unpaid principal, together with any accrued but unpaid interest and
other amounts payable hereunder, shall be due and payable on the earlier of (i)
the date of conversion (or, absent a conversion, demand by the holder) as
referenced below in Section 6 (the "Maturity Date") or (ii) upon or after the
occurrence of an Event of Default (as defined below), when such amounts are
declared due and payable by the Holder or made automatically due and payable.
This Note is issued pursuant to the Note and Warrant Purchase Agreement
(the "Purchase Agreement") dated as of July 30, 1999 by and among the Company,
Perseus Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology
Fund, L.L.C. and SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
(a) "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 or the State of New York are authorized to be closed.
(b) "Funding Date" means the date on which all or any part of
funding of transactions contemplated by the Class E Preferred Commitment are
first consummated.
(c) "Obligations" means the principal, interest and other amounts
payable under this Note.
(d) "Class E Preferred Commitment" means a written commitment to the
Company by a strategic investor(s), made within four (4) months from the date
hereof, to purchase at least $5 million of the Class E Preferred Stock.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 10 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (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) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) 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 or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
- 2 -
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest,
senior to all other security interests except for any now or hereafter existing
commercial bank or institutional lender financings and equipment leases, in all
of the Company's right, title and interest in and to the following, whether now
owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable inventions
and (i) the inventions and improvements described and claimed therein; (ii) any
continuation, division, renewal, extension, substitute or reissue thereof or any
legal equivalent in a foreign country for the full term thereof or the terms for
which the same may be granted; (iii) all rights to income, royalties, profits,
awards, damages and other rights relating to said patents, applications and
inventions, including the right to ▇▇▇ for past, present and future infringement
and (iv) any other rights and benefits relating to said patents, applications
and inventions including any rights as a licensor or licensee of said patents,
applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service ▇▇▇▇ registrations and service ▇▇▇▇
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to ▇▇▇ for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
▇▇▇▇ (the "Trademarks");
(iii) all copyrights, copyright registrations and copyright
applications, including without limitation those copyrights for computer
programs, computer databases, flow diagrams, maskworks, maskwork applications,
source codes and object codes, computer software, technical knowledge and
processes, trade secrets, know-how, customer lists, franchises, systems,
inventions, designs, blueprints, formal or informal licensing arrangements, and
all property embodying or incorporating such copyrights and (i) any similar
rights or amendments, modifications and renewals thereof and any legal
equivalent in a foreign country for the full term or terms for which the same
may be granted; (ii) all rights to income, past, present and future infringement
and (iii) any other rights and benefits relating to said copyrights (the
"Copyrights");
- 3 -
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by any means upon any
Collateral will not bar realization upon any other Collateral; and (z) the
security interest hereby created is a continuing security interest and will
cover and secure the payment of all Obligations both present and future of the
Company to Holder pursuant to this Note and the other Transaction Documents. The
Company further covenants and agrees to take all actions requested by the Holder
to establish or perfect the security interest granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder, provided that nothing in this Section 5 shall limit the Holder's
conversion rights set forth in Section 6 herein during such notice period. Any
such prepayment shall be applied first to the payment of expenses due under this
Note, second to interest accrued on this Note and third, if the amount of
prepayment exceeds the amount of all such expenses and accrued interest, to the
payment of principal of this Note.
6. Conversion. If there is a Funding Date within six (6) months of the
date hereof, all outstanding principal and accrued interest under this Note will
be converted into Class E Preferred Stock on such Funding Date on terms
substantially the same as those issued pursuant to the Class E Preferred
Commitment.
If there is no Class E Preferred Commitment within four (4) months
of the date hereof or if a Funding Date does not occur within six (6) months of
the date hereof, then at the option of the Holder, (a) all outstanding principal
and accrued interest under this Note will convert to the Company's common or
preferred stock at a price and on terms to be negotiated at that time between
the Holder and the Company, or (b) if no agreement can be reached between the
Holder and the Company within 60 days of the expiration of the four (4) month or
six (6) month period, as the case may be, at the Holder's option, exercisable by
the Holder at any time after expiration of the 60 day period, the Holder may
declare in writing that such Note has become a demand obligation, and thereafter
may make demand for payment of the Note at any time thereafter. Any such demand
shall be in writing, and require payment by the Company no earlier than 10 days
after such demand.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by
or on behalf of the Company. Prior to presentation of this Note
- 4 -
for registration of transfer, the Company shall treat the registered holder
hereof as the owner and holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other purposes whatsoever,
whether or not this Note shall be overdue and the Company shall not be affected
by notice to the contrary.
10. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, as a whole or in part, by the Company, without the prior written
consent of the Holder.
11. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses; Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to conflict of
laws provisions of the Commonwealth of Massachusetts or of any other state. In
the event of any dispute among or between any of the parties to this Note
arising out of the terms of this Note, the parties hereby consent to the
exclusive jurisdiction of the federal and state courts located in the
Commonwealth of Massachusetts for resolution of such dispute, and agree not to
contest such exclusive jurisdiction or seek to transfer any action relating to
such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Title: President & CEO
-------------------------------
- 5 -
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
$1,350,000.00 August 2, ▇▇▇▇
▇▇▇▇▇▇, ▇▇
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of Perseus Capital, L.L.C., or its
registered assigns (the "Holder"), the principal sum of $1,350,000.00 or such
lesser amount as shall then equal the outstanding principal amount hereof,
together with interest computed in the following fashion:
(a) Interest accrued to date on the note which this Note amends and
restates (and known in the Purchase Agreement referenced below as the Tranche
One Note), amounting to $3,424.66; and
(b) Interest accruing from the date of issuance of this Note on the unpaid
principal balance hereof at a rate equal to twelve and one-half percent
(12 1/2%) per annum, computed on the basis of the actual number of days elapsed
and a year of 365 days; provided that if the Funding Date does not occur within
six (6) months from the date hereof, such interest rate shall increase effective
as of the close of business on the such day to occur six (6) months from the
date hereof to fifteen percent (15%) per annum.
All unpaid principal, together with any accrued but unpaid interest and
other amounts payable hereunder, shall be due and payable on the earlier of(i)
the date of conversion (or, absent a conversion, demand by the holder) as
referenced below in Section 6 (the "Maturity Date") or (ii) upon or after the
occurrence of an Event of Default (as defined below), when such amounts are
declared due and payable by the Holder or made automatically due and payable.
This Note is issued pursuant to the Note and Warrant Purchase Agreement
(the "Purchase Agreement") dated as of July 30, 1999 by and among the Company,
Perseus Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology
Fund, L.L.C. and SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
(a) "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 or the State of New York are authorized to be closed.
(b) "Funding Date" means the date on which all or any part of
funding of transactions contemplated by the Class E Preferred Commitment are
first consummated.
(c) "Obligations" means the principal, interest and other amounts
payable under this Note.
(d) "Class E Preferred Commitment" means a written commitment to the
Company by a strategic investor(s), made within four (4) months from the date
hereof, to purchase at least $5 million of the Class E Preferred Stock.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 10 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (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) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) 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 or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
- 2 -
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest,
senior to all other security interests except for any now or hereafter existing
commercial bank or institutional lender financings and equipment leases, in all
of the Company's right, title and interest in and to the following, whether now
owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable inventions
and (i) the inventions and improvements described and claimed therein; (ii) any
continuation, division, renewal, extension, substitute or reissue thereof or any
legal equivalent in a foreign country for the full term thereof or the terms for
which the same may be granted; (iii) all rights to income, royalties, profits,
awards, damages and other rights relating to said patents, applications and
inventions, including the right to ▇▇▇ for past, present and future infringement
and (iv) any other rights and benefits relating to said patents, applications
and inventions including any rights as a licensor or licensee of said patents,
applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service ▇▇▇▇ registrations and service ▇▇▇▇
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to ▇▇▇ for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
▇▇▇▇ (the "Trademarks");
(iii) all copyrights, copyright registrations and copyright
applications, including without limitation those copyrights for computer
programs, computer databases, flow diagrams, maskworks, maskwork applications,
source codes and object codes, computer software, technical knowledge and
processes, trade secrets, know-how, customer lists, franchises, systems,
inventions, designs, blueprints, formal or informal licensing arrangements, and
all property embodying or incorporating such copyrights and (i) any similar
rights or amendments, modifications and renewals thereof and any legal
equivalent in a foreign country for the full term or terms for which the same
may be granted; (ii) all rights to income, past, present and future infringement
and (iii) any other rights and benefits relating to said copyrights (the
"Copyrights");
- 3 -
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by any means upon any
Collateral will not bar realization upon any other Collateral; and (z) the
security interest hereby created is a continuing security interest and will
cover and secure the payment of all Obligations both present and future of the
Company to Holder pursuant to this Note and the other Transaction Documents. The
Company further covenants and agrees to take all actions requested by the Holder
to establish or perfect the security interest granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder, provided that nothing in this Section 5 shall limit the Holder's
conversion rights set forth in Section 6 herein during such notice period. Any
such prepayment shall be applied first to the payment of expenses due under this
Note, second to interest accrued on this Note and third, if the amount of
prepayment exceeds the amount of all such expenses and accrued interest, to the
payment of principal of this Note.
6. Conversion. If there is a Funding Date within six (6) months of the
date hereof, all outstanding principal and accrued interest under this Note will
be converted into Class E Preferred Stock on such Funding Date on terms
substantially the same as those issued pursuant to the Class E Preferred
Commitment.
If there is no Class E Preferred Commitment within four (4) months
of the date hereof or if a Funding Date does not occur within six (6) months of
the date hereof, then at the option of the Holder, (a) all outstanding principal
and accrued interest under this Note will convert to the Company's common or
preferred stock at a price and on terms to be negotiated at that time between
the Holder and the Company, or (b) if no agreement can be reached between the
Holder and the Company within 60 days of the expiration of the four (4) month or
six (6) month period, as the case may be, at the Holder's option, exercisable by
the Holder at any time after expiration of the 60 day period, the Holder may
declare in writing that such Note has become a demand obligation, and thereafter
may make demand for payment of the Note at any time thereafter. Any such demand
shall be in writing, and require payment by the Company no earlier than 10 days
after such demand.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by
or on behalf of the Company. Prior to presentation of this Note
- 4 -
for registration of transfer, the Company shall treat the registered holder
hereof as the owner and holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other purposes whatsoever,
whether or not this Note shall be overdue and the Company shall not be affected
by notice to the contrary.
10. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, as a whole or in part, by the Company, without the prior written
consent of the Holder.
11. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
12. Notices. Any notice, request or other conununication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses; Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
counection with this Note shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to conflict of
laws provisions of the Commonwealth of Massachusetts or of any other state. In
the event of any dispute among or between any of the parties to this Note
arising out of the terms of this Note, the parties hereby consent to the
exclusive jurisdiction of the federal and state courts located in the
Commonwealth of Massachusetts for resolution of such dispute, and agree not to
contest such exclusive jurisdiction or seek to transfer any action relating to
such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: President & CEO
--------------------------------
- 5 -
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
$500,000.00 August 2, ▇▇▇▇
▇▇▇▇▇▇, ▇▇
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of Duquesne Enterprises, Inc., or its
registered assigns (the "Holder"), the principal sum of $500,000.00 or such
lesser amount as shall then equal the outstanding principal amount hereof,
together with interest computed in the following fashion:
(a) Interest accrued to date on the note which this Note amends and
restates (and known in the Purchase Agreement referenced below as the Tranche
One Note), amounting to $684.93; and
(b) Interest accruing from the date of issuance of this Note on the unpaid
principal balance hereof at a rate equal to twelve and one-half percent
(12 1/2%) per annum, computed on the basis of the actual number of days elapsed
and a year of 365 days; provided that if the Funding Date does not occur within
six (6) months from the date hereof, such interest rate shall increase effective
as of the close of business on the such day to occur six (6) months from the
date hereof to fifteen percent (15%) per annum.
All unpaid principal, together with any accrued but unpaid interest and
other amounts payable hereunder, shall be due and payable on the earlier of(i)
the date of conversion (or, absent a conversion, demand by the holder) as
referenced below in Section 6 (the "Maturity Date") or (ii) upon or after the
occurrence of an Event of Default (as defined below), when such amounts are
declared due and payable by the Holder or made automatically due and payable.
This Note is issued pursuant to the Note and Warrant Purchase Agreement
(the "Purchase Agreement") dated as of July 30, 1999 by and among the Company,
Perseus Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology
Fund, L.L.C. and SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
(a) "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 or the State of New York are authorized to be closed.
(b) "Funding Date" means the date on which all or any part of
funding of transactions contemplated by the Class E Preferred Commitment are
first consummated.
(c) "Obligations" means the principal, interest and other amounts
payable under this Note.
(d) "Class E Preferred Commitment" means a written commitment to the
Company by a strategic investor(s), made within four (4) months from the date
hereof, to purchase at least $5 million of the Class E Preferred Stock.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 10 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (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) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) 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 or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
- 2 -
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest,
senior to all other security interests except for any now or hereafter existing
commercial bank or institutional lender financings and equipment leases, in all
of the Company's right, title and interest in and to the following, whether now
owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable inventions
and (i) the inventions and improvements described and claimed therein; (ii) any
continuation, division, renewal, extension, substitute or reissue thereof or any
legal equivalent in a foreign country for the full term thereof or the terms for
which the same may be granted; (iii) all rights to income, royalties, profits,
awards, damages and other rights relating to said patents, applications and
inventions, including the right to ▇▇▇ for past, present and future infringement
and (iv) any other rights and benefits relating to said patents, applications
and inventions including any rights as a licensor or licensee of said patents,
applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service ▇▇▇▇ registrations and service ▇▇▇▇
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to ▇▇▇ for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
▇▇▇▇ (the "Trademarks");
(iii) all copyrights, copyright registrations and copyright
applications, including without limitation those copyrights for computer
programs, computer databases, flow diagrams, maskworks, maskwork applications,
source codes and object codes, computer software, technical knowledge and
processes, trade secrets, know-how, customer lists, franchises, systems,
inventions, designs, blueprints, formal or informal licensing arrangements, and
all property embodying or incorporating such copyrights and (i) any similar
rights or amendments, modifications and renewals thereof and any legal
equivalent in a foreign country for the full term or terms for which the same
may be granted; (ii) all rights to income, past, present and future infringement
and (iii) any other rights and benefits relating to said copyrights (the
"Copyrights");
- 3 -
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by any means upon any
Collateral will not bar realization upon any other Collateral; and (z) the
security interest hereby created is a continuing security interest and will
cover and secure the payment of all Obligations both present and future of the
Company to Holder pursuant to this Note and the other Transaction Documents. The
Company further covenants and agrees to take all actions requested by the Holder
to establish or perfect the security interest granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder, provided that nothing in this Section 5 shall limit the Holder's
conversion rights set forth in Section 6 herein during such notice period. Any
such prepayment shall be applied first to the payment of expenses due under this
Note, second to interest accrued on this Note and third, if the amount of
prepayment exceeds the amount of all such expenses and accrued interest, to the
payment of principal of this Note.
6. Conversion. If there is a Funding Date within six (6) months of the
date hereof, all outstanding principal and accrued interest under this Note will
be converted into Class E Preferred Stock on such Funding Date on terms
substantially the same as those issued pursuant to the Class E Preferred
Commitment.
If there is no Class E Preferred Commitment within four (4) months
of the date hereof or if a Funding Date does not occur within six (6) months of
the date hereof, then at the option of the Holder, (a) all outstanding principal
and accrued interest under this Note will convert to the Company's common or
preferred stock at a price and on terms to be negotiated at that time between
the Holder and the Company, or (b) if no agreement can be reached between the
Holder and the Company within 60 days of the expiration of the four (4) month or
six (6) month period, as the case may be, at the Holder's option, exercisable by
the Holder at any time after expiration of the 60 day period, the Holder may
declare in writing that such Note has become a demand obligation, and thereafter
may make demand for payment of the Note at any time thereafter. Any such demand
shall be in writing, and require payment by the Company no earlier than 10 days
after such demand.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by
or on behalf of the Company. Prior to presentation of this Note
- 4 -
for registration of transfer, the Company shall treat the registered holder
hereof as the owner and holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other purposes whatsoever,
whether or not this Note shall be overdue and the Company shall not be affected
by notice to the contrary.
10. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, as a whole or in part, by the Company, without the prior written
consent of the Holder.
11. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses; Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
counection with this Note shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to conflict of
laws provisions of the Commonwealth of Massachusetts or of any other state. In
the event of any dispute among or between any of the parties to this Note
arising Out of the terms of this Note, the parties hereby consent to the
exclusive jurisdiction of the federal and state courts located in the
Commonwealth of Massachusetts for resolution of such dispute, and agree not to
contest such exclusive jurisdiction or seek to transfer any action relating to
such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: President & CEO
--------------------------------
- 5 -
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
$150,000.00 August 2, ▇▇▇▇
▇▇▇▇▇▇, ▇▇
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of Micro Generation Technology Fund,
L.L.C., or its registered assigns (the "Holder"), the principal sum of
$150,000.00 or such lesser amount as shall then equal the outstanding principal
amount hereof, together with interest computed in the following fashion:
(a) Interest accrued to date on the note which this Note amends and
restates (and known in the Purchase Agreement referenced below as the Tranche
One Note), amounting to $667.81;and
(b) Interest accruing from the date of issuance of this Note on the
unpaid principal balance hereof at a rate equal to twelve and one-half percent
(12 1/2%) per annum, computed on the basis of the actual number of days elapsed
and a year of 365 days; provided that if the Funding Date does not occur within
six (6) months from the date hereof, such interest rate shall increase effective
as of the close of business on the such day to occur six (6) months from the
date hereof to fifteen percent (15%) per annum.
All unpaid principal, together with any accrued but unpaid interest and
other amounts payable hereunder, shall be due and payable on the earlier of (i)
the date of conversion (or, absent a conversion, demand by the holder) as
referenced below in Section 6 (the "Maturity Date") or (ii) upon or after the
occurrence of an Event of Default (as defined below), when such amounts are
declared due and payable by the Holder or made automatically due and payable.
This Note is issued pursuant to the Note and Warrant Purchase Agreement
(the "Purchase Agreement") dated as of July 30, 1999 by and among the Company,
Perseus Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology
Fund, L.L.C. and SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms
have the following meanings:
(a) "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 or the State of New York are authorized to be closed.
(b) "Funding Date" means the date on which all or any part of
funding of transactions contemplated by the Class E Preferred Commitment are
first consummated.
(c) "Obligations" means the principal, interest and other amounts
payable under this Note.
(d) "Class E Preferred Commitment" means a written commitment to the
Company by a strategic investor(s), made within four (4) months from the date
hereof, to purchase at least $5 million of the Class E Preferred Stock.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 10 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (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) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) 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 or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
- 2 -
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest,
senior to all other security interests except for any now or hereafter existing
commercial bank or institutional lender financings and equipment leases, in all
of the Company's right, title and interest in and to the following, whether now
owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable inventions
and (i) the inventions and improvements described and claimed therein; (ii) any
continuation, division, renewal, extension, substitute or reissue thereof or any
legal equivalent in a foreign country for the full term thereof or the terms for
which the same may be granted; (iii) all rights to income, royalties, profits,
awards, damages and other rights relating to said patents, applications and
inventions, including the right to ▇▇▇ for past, present and future infringement
and (iv) any other rights and benefits relating to said patents, applications
and inventions including any rights as a licensor or licensee of said patents,
applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service ▇▇▇▇ registrations and service ▇▇▇▇
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to ▇▇▇ for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
▇▇▇▇ (the "Trademarks");
(iii) all copyrights, copyright registrations and copyright
applications, including without limitation those copyrights for computer
programs, computer databases, flow diagrams, maskworks, maskwork applications,
source codes and object codes, computer software, technical knowledge and
processes, trade secrets, know-how, customer lists, franchises, systems,
inventions, designs, blueprints, formal or informal licensing arrangements, and
all property embodying or incorporating such copyrights and (i) any similar
rights or amendments, modifications and renewals thereof and any legal
equivalent in a foreign country for the full term or terms for which the same
may be granted; (ii) all rights to income, past, present and future infringement
and (iii) any other rights and benefits relating to said copyrights (the
"Copyrights");
- 3 -
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by any means upon any
Collateral will not bar realization upon any other Collateral; and (z) the
security interest hereby created is a continuing security interest and will
cover and secure the payment of all Obligations both present and future of the
Company to Holder pursuant to this Note and the other Transaction Documents. The
Company further covenants and agrees to take all actions requested by the Holder
to establish or perfect the security interest granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder, provided that nothing in this Section 5 shall limit the Holder's
conversion rights set forth in Section 6 herein during such notice period. Any
such prepayment shall be applied first to the payment of expenses due under this
Note, second to interest accrued on this Note and third, if the amount of
prepayment exceeds the amount of all such expenses and accrued interest, to the
payment of principal of this Note.
6. Conversion. If there is a Funding Date within six (6) months of the
date hereof, all outstanding principal and accrued interest under this Note will
be converted into Class E Preferred Stock on such Funding Date on terms
substantially the same as those issued pursuant to the Class E Preferred
Commitment.
If there is no Class E Preferred Commitment within four (4) months
of the date hereof or if a Funding Date does not occur within six (6) months of
the date hereof, then at the option of the Holder, (a) all outstanding principal
and accrued interest under this Note will convert to the Company's common or
preferred stock at a price and on terms to be negotiated at that time between
the Holder and the Company, or (b) if no agreement can be reached between the
Holder and the Company within 60 days of the expiration of the four (4) month or
six (6) month period, as the case may be, at the Holder's option, exercisable by
the Holder at any time after expiration of the 60 day period, the Holder may
declare in writing that such Note has become a demand obligation, and thereafter
may make demand for payment of the Note at any time thereafter. Any such demand
shall be in writing, and require payment by the Company no earlier than 10 days
after such demand.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by
or on behalf of the Company. Prior to presentation of this Note
- 4 -
for registration of transfer, the Company shall treat the registered holder
hereof as the owner and holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other purposes whatsoever,
whether or not this Note shall be overdue and the Company shall not be affected
by notice to the contrary.
10. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, as a whole or in part, by the Company, without the prior written
consent of the Holder.
11. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses; Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and constmed in accordance with
the laws of the Commonwealth of Massachusetts, without regard to conflict of
laws provisions of the Commonwealth of Massachusetts or of any other state. In
the event of any dispute among or between any of the parties to this Note
arising out of the terms of this Note, the parties hereby consent to the
exclusive jurisdiction of the federal and state courts located in the
Commonwealth of Massachusetts for resolution of such dispute, and agree not to
contest such exclusive jurisdiction or seek to transfer any action relating to
such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Title: President & CEO
---------------------------------
- 5 -
THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE 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, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
No.: 1
WARRANT
TO PURCHASE CLASS E PREFERRED STOCK
OF
BEACON POWER CORPORATION
(void after August 2, 2004)
1. Issuance of Warrant. FOR VALUE RECEIVED, on and after the date of
issuance of this Warrant, and subject to the terms and conditions herein set
forth, the Holder (as defined below) is entitled to purchase from Beacon Power
Corporation, a Delaware corporation (the "Company"), at any time before 5:00
p.m. New York time on August 2, 2004 (the "Termination Date"), at a price per
share equal to the Warrant Price (as defined below and subject to adjustment as
described below), the Warrant Stock (as defined below and subject to adjustment
as described below) upon exercise of this warrant (this "Warrant") pursuant to
Section 6 hereof. This Warrant is issued pursuant to the Note and Warrant
Purchase Agreement (as defined below).
2. Definitions. As used in this Warrant, the following terms have the
definitions ascribed to them below:
(a) "Additional Stock" is defined in Section 3(d)(iv).
(b) "Base Price" means as of August 2, 1999, $1.78 per share of
Common Stock, which shall be subject to adjustment as provided in Section 3(d).
(c) "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 or the State of New York or the District of Columbia are
authorized to be closed.
(d) "Change-In-Control Event" means the occurrence after the
Commencement Date of any of the following: (i) the acquisition of voting
securities of the Company by any person or group of persons that results in such
person or group, together with its affiliates, becoming, directly or indirectly,
the beneficial owner of in excess of 50% of the outstanding voting securities of
the Company; (ii) a merger or consolidation of the Company with any other
corporation or legal entity regardless of which entity is the survivor, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or being converted into voting securities of
the surviving entity) in excess of 50% of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation; or (iii) the sale or disposition of all or substantially all of
the Company's assets other than in a transaction in which holders of the voting
securities of the Company immediately prior to such transaction receive voting
securities of the acquiror of such assets or its affiliate that represent in
excess of 50% of the voting securities of such entity after consummation of such
transaction.
(e) "Commencement Date" means the date of issue of this Warrant.
(f) "Common Stock" means the Company's Common Stock, $.01 par value
per share.
(g) "Holder" means Perseus Capital, L.L.C., or its assigns.
(h) "Note and Warrant Purchase Agreement" means the Note and Warrant
Purchase Agreement dated as of August 2, 1999 by and among the Company, Perseus
Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology Fund,
L.L.C., and SatCon Technology Corporation (collectively, the "Purchasers"), and
"Note" means the Note issued to the holder pursuant to such Agreement.
(i) "Class E Preferred Stock" means the Class E Preferred Stock of
the Company proposed to be issued to the Purchasers as part of the equity
financing in which the Note is to be converted, as described in the above Note
and Warrant Purchase Agreement.
(j) "Warrant Price" means, (i) in the event that a purchase of at
least $5 million of the Class E Preferred Stock is consummated within six (6)
months from the date hereof, the per share price at which such purchase is made,
or (ii) in the event that no such purchase is consummated, $2.50, in either
event subject to adjustment as described in Section 3 below.
(k) "Warrant Stock" means the shares of Company stock which are
purchasable upon exercise or conversion of this Warrant, consisting of Class E
Preferred Stock (or other Company securities) into which the Note is converted
if such conversion actually
-2-
occurs, or consisting of shares of Common Stock if the Note is not so converted.
The total number of shares to be issued upon the exercise of this Warrant shall
be computed by dividing $337,500.00 by the Warrant Price, subject to adjustment
as described in Section 3 below. The "Warrant Stock Definition Date" means the
date on which the Note is converted (or if not converted, then the date on which
the holder of the Note notifies the Company that it has become a demand note, as
described in the Note.
3. Adjustments and Notices. The Warrant Price and/or the number of shares
of Warrant Stock shall be subject to adjustment from time to time in accordance
with this Section 3. The Warrant Price and/or the number of Warrant Shares shall
be adjusted to reflect all of the following events that occur on or after the
Commencement Date. However, if the Warrant Stock becomes defined to be preferred
stock of the Company, then the following provisions in Section 3 shall not apply
to shares issued on or after the Warrant Stock Definition Date.
(a) Subdivision, Stock Dividends or Combinations. In case the
Company shall at any time subdivide the outstanding shares of Warrant Stock or
shall issue a stock dividend with respect to the Warrant Stock, the Warrant
Price in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in case the Company shall at
any time combine the outstanding shares of the Warrant Stock, the Warrant Price
in effect immediately prior to such combination shall be proportionately
increased, in each case effective at the close of business on the date of such
subdivision, dividend or combination, as the case may be.
(b) Reclassification, Exchange, Substitution, In-Kind Distribution.
Upon any reclassifications, exchange, substitution or other event that results
in a change of the number and/or class of the securities issuable upon exercise
or conversion of this Warrant or upon the payment of a dividend in securities or
property other than shares of Warrant Stock, the Holder shall be entitled to
receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received if this Warrant had been
exercised or converted immediately before the record date for such
reclassification, exchange, substitution, or other event or immediately prior to
the record date for such dividend. The Company or its successor shall promptly
issue to Holder a new warrant for such new securities or other property. The new
warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise or conversion of the new warrant.
The provisions of this Section 3(b) shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events and successive
dividends.
(c) Reorganization, Merger etc. In case of any Change-In-Control
Event, the Company, or such successor or purchasing corporation, as the case may
be, shall, as a condition to closing any such reorganization, merger or sale,
duly execute and deliver to the Holder hereof a new warrant so that the Holder
shall have the right to receive, at a total purchase price not to exceed that
payable upon the exercise or conversion of the unexercised or unconverted
portion of this Warrant, and in lieu of the shares of the Warrant Stock
theretofore issuable upon exercise or
-3-
conversion of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reorganization, merger or
sale by the Holder of the number of shares of Warrant Stock then purchasable
under this Warrant. Such new warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 3. The provisions of this subparagraph (c) shall similarly apply to
successive Change-In-Control Events. (d) Dilutive Issuances Adjustment of Number
of Shares and Warrant Price. In order to prevent dilution of the rights granted
under this Warrant, the number of shares of Warrant Stock obtainable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time as provided in this Section 3(d).
(i) Adjustment of Warrant Price upon Issuance of Additional
Stock. If and whenever after the Commencement Date, the Company issues, or in
accordance with Section 3(d)(ii) is deemed to have issued, any Additional Stock
to any person for a consideration per share less than the Base Price then in
effect, then the Warrant Price in effect immediately before each such issuance
shall forthwith be adjusted to a price determined by multiplying such Warrant
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the number of
shares of Common Stock that the aggregate consideration received by the Company
for such issuance would purchase at such Warrant Price; and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of shares of such Additional Stock.
(ii) Effect of Certain Events. For purposes of determining
under Section (d)(i) the adjusted number of shares of Warrant Stock acquirable
upon exercise of this Warrant, the following shall be applicable:
(A) Issuance of Rights or Options. If the Company in any
manner issues, grants or sells (or otherwise becomes subject to) any
Options or Options for Convertible Securities, then the total maximum
number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been sold on the date of issuance, grant or sale of such
Options and to be outstanding.
(B) Issuance of Convertible Securities. If the Company
in any manner grants, issues or sells (or otherwise becomes subject to)
any Convertible Securities, then the maximum number of shares of Common
Stock issuable upon conversion or exchange of such Convertible Securities
shall be deemed to have been sold on the date of issuance, grant or sale
of such Convertible Securities and to be outstanding.
(C) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible Securities
without the exercise of such Option or right, the number of shares of
Warrant Stock acquirable hereunder shall be adjusted to the number of
shares which would have been in effect at the time of such expiration or
termination
-4-
had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
(D) Treasury Shares. The number of shares of Common
Stock outstanding at any given time does not include shares owned or held
by or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held shall be considered an issuance
or sale of Common Stock.
(E) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(iii) In the case of the issuance of Additional Stock for
cash, the consideration received therefor shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by the company for any underwriting or
otherwise in connection with the issuance and sale thereof. In the case of the
issuance of Additional Stock for a consideration in whole or in part other than
cash, the consideration other than cash received therefor shall be deemed to be
the fair value thereof as reasonably determined by the Board of Directors of the
Company in its good faith judgment irrespective of any accounting treatment.
(iv) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to clause (ii) of this Section
3(d)) by the Company after the Commencement Date, other than shares of Common
Stock issued or issuable:
(A) to officers, directors, employees and consultants of
the Company directly or pursuant to a stock option plan or restricted
stock plan approved by the Board of Directors of the Company;
(B) upon conversion of the Class A, B, C, or D Preferred
Stock (or, if authorized, the Class E Preferred Stock) of the Company or
the exercise of warrants issued by the Company before or on the
Commencement Date;
(v) Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 3(d) but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's board of directors shall make an appropriate adjustment in
the number of shares of Warrant Stock obtainable upon exercise of this Warrant
and in the Warrant Price so as to protect the rights of the holders of the
Warrants; provided that no such adjustment shall decrease the number of shares
of Warrant Stock obtainable as otherwise
-5-
determined pursuant to this Section 3.
(e) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Warrant Price, the Corporation, at its own expense, shall
cause its Chief Financial Officer to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. No adjustment of the Warrant Price shall be
required to be made unless it would result in an increase or decrease of at
least one cent, but any adjustments not made because of this sentence shall be
carried forward and taken into account in any subsequent adjustment otherwise
required hereunder.
(f) No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all of the provisions of
this Section 3 and in taking all such action as may be necessary or appropriate
to protect the Holder's rights under this Section 3 against impairment. If the
Company takes any action affecting the Class E Preferred Stock other than as
described above that adversely affects the Holder's rights under this Warrant,
the Warrant Price shall be adjusted downward.
(g) Fractional Shares. No fractional shares shall be issuable upon
exercise or conversion of the Warrant and the number of shares to be issued
shall be rounded down to the nearest whole share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying the Holder an amount computed
by multiplying the fractional interest by the fair market value of a full share.
4. No Shareholder Rights. This Warrant, by itself, as distinguished from
any shares purchased hereunder, shall not entitle its Holder to any of the
rights of a shareholder of the Company.
5. Reservation of Stock. On and after the Warrant Stock Definition Date,
the Company will reserve from its authorized and unissued stock a sufficient
number of shares to provide for the issuance of Warrant Stock upon the exercise
or conversion of this Warrant. Issuance of this Warrant shall constitute full
authority to the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Warrant Stock issuable upon the exercise or conversion of this Warrant.
6. Exercise of Warrant. This Warrant may be exercised as a whole or part
by the Holder, at any time after the date hereof prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise and Investment Representation Statement in the forms attached hereto as
Attachments 1 and 2, respectively, duly completed and executed at the principal
office of the Company, specifying the portion of the Warrant to be exercised and
-6-
accompanied by payment in full of the Warrant Price in cash or by check with
respect to the shares of Warrant Stock being purchased. Alternatively, the
Holder may pay the Warrant Price as a whole or in part) by surrendering to the
Company all or a portion of any Note (as defined in the Note and Warrant
Purchase Agreement), in which case the portion of the Note surrendered plus all
accrued but unpaid interest thereon shall be credited towards payment of the
Warrant Price. If less the entire Note is surrendered in payment of the Warrant
Price, the Company shall issue to the Holder a new promissory note identical to
the surrendered Note except that the principal amount thereof shall equal the
unsurrendered portion of the principal amount of the surrendered Note. This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Warrant Stock issuable upon such
exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date. As promptly as practicable
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Warrant Stock issuable upon such exercise. If this Warrant shall
be exercised for less than the total number of shares of Warrant Stock then
issuable upon exercise, promptly after surrender of this Warrant upon such
exercise, the Company will execute and deliver a new warrant, dated the date
hereof, evidencing the right of the Holder to the balance of this Warrant Stock
purchasable hereunder upon the same terms and conditions set forth herein.
7. Conversion, In lieu of exercising this Warrant or any portion hereof,
at any time after the occurrence of a Change-In-Control Event or the filing of a
registration statement for an initial underwritten public offering of securities
by the Company, the Holder hereof shall have the right to convert this Warrant
or any portion hereof into Warrant Stock by executing and delivering to the
Company at its principal office the written Notice of Conversion and Investment
Representation Statement in the forms attached hereto as Attachments 2 and 3,
specifying the portion of the Warrant to be converted, and accompanied by this
Warrant. The number of shares of Warrant Stock to be issued to Holder upon such
conversion shall be computed using the following formula:
X=(P)(Y)(A-B)/A
where X = the number of shares of Warrant Stock to be issued to the
Holder for the portion of the Warrant being converted.
P = the portion of the Warrant being converted expressed
as a decimal fraction.
Y = the total number of shares of Warrant Stock issuable
upon exercise of the Warrant in full.
A = the fair market value of one share of Warrant Stock
which means (i) the fair market value of the Warrant
Stock as of the last Business Day immediately prior to
the date the notice of
-7-
conversion is received by the Company, as reported in
the principal market for such securities or, if no such
market exists, as determined in good faith by the
Company's Board of Directors, or (ii) if this Warrant is
being converted in conjunction with a public offering of
stock the price to the public per share pursuant to the
offering.
B = the Warrant Price on the date of conversion.
Any portion of this Warrant that is converted shall be immediately canceled.
This Warrant or any portion hereof shall be deemed to have been converted
immediately prior to the close of business on the date of its surrender for
conversion as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such conversion shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Warrant Stock issuable upon such conversion. If
the Warrant shall be converted for less than the total number of shares of
Warrant Stock then issuable upon conversion, promptly after surrender of the
Warrant upon such conversion, the Company will execute and deliver a new
warrant, dated the date hereof, evidencing the right of the Holder to the
balance of the Warrant Stock purchasable hereunder upon the same terms and
conditions set forth herein. If this Warrant is converted, as a whole or in
part, after the occurrence of a Change-In-Control Event as to which Section 3(c)
is applicable, the Holder shall receive the consideration contemplated by
Section 3(c) in lieu of Warrants Stock of the Company.
8. Transfer of Warrant. This Warrant may be transferred or assigned by the
Holder hereof in whole or in part, provided that the transferor provides, at the
Company's request, an opinion of counsel satisfactory to the Company that such
transfer does not require registration under the Securities Act and the
securities law applicable with respect to any other applicable jurisdiction.
9. Termination. This Warrant shall terminate on 5:00 p.m. New York time on
the Termination Date.
10. Miscellaneous. This Warrant shall be governed by the laws of the
Commonwealth of Massachusetts, as such laws are applied to contracts to be
entered into and performed entirely in Massachusetts by Massachusetts residents.
In the event of any dispute among the Holder and the Company arising out of the
terms of this Warrant, the parties hereby consent to the exclusive jurisdiction
of the federal and state courts located in the Commonwealth of Massachusetts for
resolution of such dispute, and agree not to contest such exclusive jurisdiction
or seek to transfer any action relating to such dispute to any other
jurisdiction. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be
-8-
deemed to constitute a part hereof. Neither this Warrant nor any term hereof may
be changed or waived orally, but only by an instrument in writing signed by the
Company and the Holder of this Warrant. All notices and other communications
from the Company to the Holder of this Warrant shall be delivered personally or
by facsimile transmission or mailed by first class mail, postage prepaid, to the
address or facsimile number furnished to the Company in writing by the last
Holder of this Warrant who shall have furnished an address or facsimile number
to the Company in writing, and if mailed shall be deemed given three days after
deposit in the United States mail.
ISSUED: August 2, 1999
BEACON POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: PRESIDENT & CEO
-----------------------
-9-
Attachment 1
NOTICE OF EXERCISE
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to purchase ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
________________________
(Name)
________________________
(Address)
___________________________________ ________________________________
(Date) (Name of Warrant Holder)
By:___________________________
Title:________________________
Attachment 2
INVESTMENT REPRESENTATION STATEMENT
Shares of the Class E Preferred Stock
(as defined in the attached Warrant) of
BEACON POWER CORPORATION
In connection with the purchase of the above-listed securities, the
undersigned hereby represents to Beacon Power Corporation (the "Company") as
follows:
(a) The securities to be received upon the exercise of the Warrant (the
"Securities") will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting
participation in or otherwise distributing the same, but subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. By executing this statement, the undersigned
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any Securities issuable upon
exercise of the Warrant.
(b) The undersigned understands that the Securities issuable upon exercise of
the Warrant at the time of issuance may not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state securities
laws, on the ground that the issuance of such securities is exempt pursuant to
Section 4(2) of the Securities Act and state law exemptions relating to offers
and sales not by means of a public offering, and that the Company's reliance on
such exemptions is predicated on the undersigned's representations set forth
herein.
(c) The undersigned agrees that in no event will it make a disposition of any
Securities acquired upon the exercise of the Warrant unless and until (i) it
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and (ii) it shall have furnished the Company with an
opinion of counsel satisfactory to the Company and Company's counsel to the
effect that (A) appropriate action necessary for compliance with the Securities
Act and any applicable state securities laws has been taken or an exemption from
the registration requirements of the Securities Act and such laws is available,
and (B) the proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the Company is highly
speculative and represents that it is able to fend for itself in the
transactions contemplated by this statement, has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investments, and has the ability to bear the economic risks
(including the risk of a total loss) of its investment. The undersigned
represents that it has had the opportunity to ask questions of the Company
concerning the Company's business and assets and to obtain any additional
information which it considered necessary to verify the accuracy of or to
amplify the Company's disclosures, and has had all questions which have been
asked by it satisfactorily answered by the Company
(e) The undersigned acknowledges that the Securities issuable upon exercise or
conversion of the Warrant must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The undersigned is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold from the Company or any affiliate of the Company, the sale
being through a "broker's transaction" or in transactions directly with a
"market maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three month period not exceeding specified limitations.
Dated:_________________________
_______________________________
(Typed or Printed Name)
By:____________________________
(Signature)
_______________________________
(Title)
-2-
Attachment 3
NOTICE OF CONVERSION
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to acquire ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the attached
Warrant, by conversion of _________ percent (____%) of the Warrant.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
________________________
(Name)
________________________
(Address)
___________________________________ ________________________________
(Date) (Name of Warrant Holder)
By:___________________________
Title:________________________
(Title and signature of authorized person)
THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE 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, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
No.: 2
WARRANT
TO PURCHASE CLASS E PREFERRED STOCK
OF
BEACON POWER CORPORATION
(void after August 2, 2004)
1. Issuance of Warrant. FOR VALUE RECEIVED, on and after the date of
issuance of this Warrant, and subject to the terms and conditions herein set
forth, the Holder (as defined below) is entitled to purchase from Beacon Power
Corporation, a Delaware corporation (the "Company"), at any time before 5:00
p.m. New York time on August 2, 2004 (the "Termination Date"), at a price per
share equal to the Warrant Price (as defined below and subject to adjustment as
described below), the Warrant Stock (as defined below and subject to adjustment
as described below) upon exercise of this warrant (this "Warrant") pursuant to
Section 6 hereof. This Warrant is issued pursuant to the Note and Warrant
Purchase Agreement (as defined below).
2. Definitions. As used in this Warrant, the following terms have the
definitions ascribed to them below:
(a) "Additional Stock" is defined in Section 3(d)(iv).
(b) "Base Price" means as of August 2, 1999, $1.78 per share of
Common Stock, which shall be subject to adjustment as provided in Section 3(d).
(c) "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 or the State of New York or the District of Columbia are
authorized to be closed.
(d) "Change-In-Control Event" means the occurrence after the
Commencement Date of any of the following: (i) the acquisition of voting
securities of the Company by any person or group of persons that results in such
person or group, together with its affiliates, becoming, directly or indirectly,
the beneficial owner of in excess of 50% of the outstanding voting securities of
the Company; (ii) a merger or consolidation of the Company with any other
corporation or legal entity regardless of which entity is the survivor, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or being converted into voting securities of
the surviving entity) in excess of 50% of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation; or (iii) the sale or disposition of all or substantially all of
the Company's assets other than in a transaction in which holders of the voting
securities of the Company immediately prior to such transaction receive voting
securities of the acquiror of such assets or its affiliate that represent in
excess of 50% of the voting securities of such entity after consummation of such
transaction.
(e) "Commencement Date" means the date of issue of this Warrant.
(f) "Common Stock" means the Company's Common Stock, $.0l par value
per share.
(g) "Holder" means SatCon Technology Corporation, or its assigns.
(h) "Note and Warrant Purchase Agreement" means the Note and Warrant
Purchase Agreement dated as of August 2, 1999 by and among the Company, Perseus
Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology Fund,
L.L.C., and SatCon Technology Corporation (collectively, the "Purchasers"), and
"Note" means the Note issued to the holder pursuant to such Agreement.
(i) "Class E Preferred Stock" means the Class E Preferred Stock of
the Company proposed to be issued to the Purchasers as part of the equity
financing in which the Note is to be converted, as described in the above Note
and Warrant Purchase Agreement.
(j) "Warrant Price" means, (i) in the event that a purchase of at
least $5 million of the Class E Preferred Stock is consummated within six (6)
months from the date hereof, the per share price at which such purchase is made,
or (ii) in the event that no such purchase is consummated, $2.50, in either
event subject to adjustment as described in Section 3 below.
(k) "Warrant Stock" means the shares of Company stock which are
purchasable upon exercise or conversion of this Warrant, consisting of Class E
Preferred Stock (or other Company securities) into which the Note is converted
if such conversion actually
-2-
occurs, or consisting of shares of Common Stock if the Note is not so converted.
The total number of shares to be issued upon the exercise of this Warrant shall
be computed by dividing $83,333.34 by the Warrant Price, subject to adjustment
as described in Section 3 below. The "Warrant Stock Definition Date" means the
date on which the Note is converted (or if not converted, then the date on which
the holder of the Note notifies the Company that it has become a demand note, as
described in the Note.
3. Adjustments and Notices. The Warrant Price and/or the number of shares
of Warrant Stock shall be subject to adjustment from time to time in accordance
with this Section 3. The Warrant Price and/or the number of Warrant Shares shall
be adjusted to reflect all of the following events that occur on or after the
Commencement Date. However, if the Warrant Stock becomes defined to be preferred
stock of the Company, then the following provisions in Section 3 shall not apply
to shares issued on or after the Warrant Stock Definition Date.
(a) Subdivision, Stock Dividends or Combinations. In case the
Company shall at any time subdivide the outstanding shares of Warrant Stock or
shall issue a stock dividend with respect to the Warrant Stock, the Warrant
Price in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in case the Company shall at
any time combine the outstanding shares of the Warrant Stock, the Warrant Price
in effect immediately prior to such combination shall be proportionately
increased, in each case effective at the close of business on the date of such
subdivision, dividend or combination, as the case may be.
(b) Reclassification, Exchange, Substitution, In-Kind Distribution.
Upon any reclassifications, exchange, substitution or other event that results
in a change of the number and/or class of the securities issuable upon exercise
or conversion of this Warrant or upon the payment of a dividend in securities or
property other than shares of Warrant Stock, the Holder shall be entitled to
receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received if this Warrant had been
exercised or converted immediately before the record date for such
reclassification, exchange, substitution, or other event or immediately prior to
the record date for such dividend, The Company or its successor shall promptly
issue to Holder a new warrant for such new securities or other property. The new
warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise or conversion of the new warrant.
The provisions of this Section 3(b) shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events and successive
dividends.
(c) Reorganization, Merger etc. In case of any Change-In-Control
Event, the Company, or such successor or purchasing corporation, as the case may
be, shall, as a condition to closing any such reorganization, merger or sale,
duly execute and deliver to the Holder hereof a new warrant so that the Holder
shall have the right to receive, at a total purchase price not to exceed that
payable upon the exercise or conversion of the unexercised or unconverted
portion of this Warrant, and in lieu of the shares of the Warrant Stock
theretofore issuable upon exercise or
-3-
conversion of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reorganization, merger or
sale by the Holder of the number of shares of Warrant Stock then purchasable
under this Warrant. Such new warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 3. The provisions of this subparagraph (c) shall similarly apply to
successive Change-In-Control Events. (d) Dilutive Issuances Adjustment of Number
of Shares and Warrant Price. In order to prevent dilution of the rights granted
under this Warrant, the number of shares of Warrant Stock obtainable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time as provided in this Section 3(d).
(i) Adjustment of Warrant Price upon Issuance of Additional
Stock. If and whenever after the Commencement Date, the Company issues, or in
accordance with Section 3(d)(ii) is deemed to have issued, any Additional Stock
to any person for a consideration per share less than the Base Price then in
effect, then the Warrant Price in effect immediately before each such issuance
shall forthwith be adjusted to a price determined by multiplying such Warrant
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the number of
shares of Common Stock that the aggregate consideration received by the Company
for such issuance would purchase at such Warrant Price; and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of shares of such Additional Stock.
(ii) Effect of Certain Events. For purposes of determining
under Section (d)(i) the adjusted number of shares of Warrant Stock acquirable
upon exercise of this Warrant, the following shall be applicable:
(A) Issuance of Rights or Options. If the Company in any
manner issues, grants or sells (or otherwise becomes subject to) any
Options or Options for Convertible Securities, then the total maximum
number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been sold on the date of issuance, grant or sale of such
Options and to be outstanding.
(B) Issuance of Convertible Securities. If the Company
in any manner grants, issues or sells (or otherwise becomes subject to)
any Convertible Securities, then the maximum number of shares of Common
Stock issuable upon conversion or exchange of such Convertible Securities
shall be deemed to have been sold on the date of issuance, grant or sale
of such Convertible Securities and to be outstanding.
(C) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible Securities
without the exercise of such Option or right, the number of shares of
Warrant Stock acquirable hereunder shall be adjusted to the number of
shares which would have been in effect at the time of such expiration or
termination
-4-
had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
(D) Treasury Shares. The number of shares of Common
Stock outstanding at any given time does not include shares owned or held
by or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held shall be considered an issuance
or sale of Common Stock.
(E) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(iii) In the case of the issuance of Additional Stock for
cash, the consideration received therefor shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by the company for any underwriting or
otherwise in connection with the issuance and sale thereof. In the case of the
issuance of Additional Stock for a consideration in whole or in part other than
cash, the consideration other than cash received therefor shall be deemed to be
the fair value thereof as reasonably determined by the Board of Directors of the
Company in its good faith judgment irrespective of any accounting treatment.
(iv) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to clause (ii) of this Section
3(d)) by the Company after the Commencement Date, other than shares of Common
Stock issued or issuable:
(A) to officers, directors, employees and consultants of
the Company directly or pursuant to a stock option plan or restricted
stock plan approved by the Board of Directors of the Company;
(B) upon conversion of the Class A, B, C, or D Preferred
Stock (or, if authorized, the Class E Preferred Stock) of the Company or
the exercise of warrants issued by the Company before or on the
Commencement Date;
(v) Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 3(d) but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's board of directors shall make an appropriate adjustment in
the number of shares of Warrant Stock obtainable upon exercise of this Warrant
and in the Warrant Price so as to protect the rights of the holders of the
Warrants; provided that no such adjustment shall decrease the number of shares
of Warrant Stock obtainable as otherwise
-5-
determined pursuant to this Section 3.
(e) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Warrant Price, the Corporation, at its own expense, shall
cause its Chief Financial Officer to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. No adjustment of the Warrant Price shall be
required to be made unless it would result in an increase or decrease of at
least one cent, but any adjustments not made because of this sentence shall be
carried forward and taken into account in any subsequent adjustment otherwise
required hereunder.
(f) No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all of the provisions of
this Section 3 and in taking all such action as may be necessary or appropriate
to protect the Holder's rights under this Section 3 against impairment. If the
Company takes any action affecting the Class E Preferred Stock other than as
described above that adversely affects the Holder's rights under this Warrant,
the Warrant Price shall be adjusted downward.
(g) Fractional Shares. No fractional shares shall be issuable upon
exercise or conversion of the Warrant and the number of shares to be issued
shall be rounded down to the nearest whole share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying the Holder an amount computed
by multiplying the fractional interest by the fair market value of a full share.
4. No Shareholder Rights. This Warrant, by itself, as distinguished from
any shares purchased hereunder, shall not entitle its Holder to any of the
rights of a shareholder of the Company.
5. Reservation of Stock. On and after the Warrant Stock Definition Date,
the Company will reserve from its authorized and unissued stock a sufficient
number of shares to provide for the issuance of Warrant Stock upon the exercise
or conversion of this Warrant. Issuance of this Warrant shall constitute full
authority to the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Warrant Stock issuable upon the exercise or conversion of this Warrant.
6. Exercise of Warrant. This Warrant may be exercised as a whole or part
by the Holder, at any time after the date hereof prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise and Investment Representation Statement in the forms attached hereto as
Attachments 1 and 2, respectively, duly completed and executed at the principal
office of the Company, specifying the portion of the Warrant to be exercised and
-6-
accompanied by payment in full of the Warrant Price in cash or by check with
respect to the shares of Warrant Stock being purchased. Alternatively, the
Holder may pay the Warrant Price as a whole or in part) by surrendering to the
Company all or a portion of any Note (as defined in the Note and Warrant
Purchase Agreement), in which case the portion of the Note surrendered plus all
accrued but unpaid interest thereon shall be credited towards payment of the
Warrant Price. If less the entire Note is surrendered in payment of the Warrant
Price, the Company shall issue to the Holder a new promissory note identical to
the surrendered Note except that the principal amount thereof shall equal the
unsurrendered portion of the principal amount of the surrendered Note. This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Warrant Stock issuable upon such
exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date. As promptly as practicable
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Warrant Stock issuable upon such exercise. If this Warrant shall
be exercised for less than the total number of shares of Warrant Stock then
issuable upon exercise, promptly after surrender of this Warrant upon such
exercise, the Company will execute and deliver a new warrant, dated the date
hereof, evidencing the right of the Holder to the balance of this Warrant Stock
purchasable hereunder upon the same terms and conditions set forth herein.
7. Conversion, In lieu of exercising this Warrant or any portion hereof,
at any time after the occurrence of a Change-In-Control Event or the filing of a
registration statement for an initial underwritten public offering of securities
by the Company, the Holder hereof shall have the right to convert this Warrant
or any portion hereof into Warrant Stock by executing and delivering to the
Company at its principal office the written Notice of Conversion and Investment
Representation Statement in the forms attached hereto as Attachments 2 and 3,
specifying the portion of the Warrant to be converted, and accompanied by this
Warrant. The number of shares of Warrant Stock to be issued to Holder upon such
conversion shall be computed using the following formula:
X=(P)(Y)(A-B)/A
where X = the number of shares of Warrant Stock to be issued to the
Holder for the portion of the Warrant being converted.
P = the portion of the Warrant being converted expressed
as a decimal fraction.
Y = the total number of shares of Warrant Stock issuable
upon exercise of the Warrant in full.
A = the fair market value of one share of Warrant Stock
which means (i) the fair market value of the Warrant
Stock as of the last Business Day immediately prior to
the date the notice of
-7-
conversion is received by the Company, as reported in
the principal market for such securities or, if no such
market exists, as determined in good faith by the
Company's Board of Directors, or (ii) if this Warrant is
being converted in conjunction with a public offering of
stock the price to the public per share pursuant to the
offering.
B = the Warrant Price on the date of conversion.
Any portion of this Warrant that is converted shall be immediately canceled.
This Warrant or any portion hereof shall be deemed to have been converted
immediately prior to the close of business on the date of its surrender for
conversion as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such conversion shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Warrant Stock issuable upon such conversion. If
the Warrant shall be converted for less than the total number of shares of
Warrant Stock then issuable upon conversion, promptly after surrender of the
Warrant upon such conversion, the Company will execute and deliver a new
warrant, dated the date hereof, evidencing the right of the Holder to the
balance of the Warrant Stock purchasable hereunder upon the same terms and
conditions set forth herein. If this Warrant is converted, as a whole or in
part, after the occurrence of a Change-In-Control Event as to which Section 3(c)
is applicable, the Holder shall receive the consideration contemplated by
Section 3(c) in lieu of Warrants Stock of the Company.
8. Transfer of Warrant. This Warrant may be transferred or assigned by the
Holder hereof in whole or in part, provided that the transferor provides, at the
Company's request, an opinion of counsel satisfactory to the Company that such
transfer does not require registration under the Securities Act and the
securities law applicable with respect to any other applicable jurisdiction.
9. Termination. This Warrant shall terminate on 5:00 p.m. New York time on
the Termination Date.
10. Miscellaneous. This Warrant shall be governed by the laws of the
Commonwealth of Massachusetts, as such laws are applied to contracts to be
entered into and performed entirely in Massachusetts by Massachusetts residents.
In the event of any dispute among the Holder and the Company arising out of the
terms of this Warrant, the parties hereby consent to the exclusive jurisdiction
of the federal and state courts located in the Commonwealth of Massachusetts for
resolution of such dispute, and agree not to contest such exclusive jurisdiction
or seek to transfer any action relating to such dispute to any other
jurisdiction. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be
-8-
deemed to constitute a part hereof. Neither this Warrant nor any term hereof may
be changed or waived orally, but only by an instrument in writing signed by the
Company and the Holder of this Warrant. All notices and other communications
from the Company to the Holder of this Warrant shall be delivered personally or
by facsimile transmission or mailed by first class mail, postage prepaid, to the
address or facsimile number furnished to the Company in writing by the last
Holder of this Warrant who shall have furnished an address or facsimile number
to the Company in writing, and if mailed shall be deemed given three days after
deposit in the United States mail.
ISSUED: August 2, 1999
BEACON POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: PRESIDENT & CEO
-----------------------
-9-
Attachment 1
NOTICE OF EXERCISE
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to purchase ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
________________________
(Name)
________________________
(Address)
___________________________________ ________________________________
(Date) (Name of Warrant Holder)
By:___________________________
Title:________________________
Attachment 2
INVESTMENT REPRESENTATION STATEMENT
Shares of the Class E Preferred Stock
(as defined in the attached Warrant) of
BEACON POWER CORPORATION
In connection with the purchase of the above-listed securities, the
undersigned hereby represents to Beacon Power Corporation (the "Company") as
follows:
(a) The securities to be received upon the exercise of the Warrant (the
"Securities") will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting
participation in or otherwise distributing the same, but subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. By executing this statement, the undersigned
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any Securities issuable upon
exercise of the Warrant.
(b) The undersigned understands that the Securities issuable upon exercise of
the Warrant at the time of issuance may not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state securities
laws, on the ground that the issuance of such securities is exempt pursuant to
Section 4(2) of the Securities Act and state law exemptions relating to offers
and sales not by means of a public offering, and that the Company's reliance on
such exemptions is predicated on the undersigned's representations set forth
herein.
(c) The undersigned agrees that in no event will it make a disposition of any
Securities acquired upon the exercise of the Warrant unless and until (i) it
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and (ii) it shall have furnished the Company with an
opinion of counsel satisfactory to the Company and Company's counsel to the
effect that (A) appropriate action necessary for compliance with the Securities
Act and any applicable state securities laws has been taken or an exemption from
the registration requirements of the Securities Act and such laws is available,
and (B) the proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the Company is highly
speculative and represents that it is able to fend for itself in the
transactions contemplated by this statement, has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investments, and has the ability to bear the economic risks
(including the risk of a total loss) of its investment. The undersigned
represents that it has had the opportunity to ask questions of the Company
concerning the Company's business and assets and to obtain any additional
information which it considered necessary to verify the accuracy of or to
amplify the Company's disclosures, and has had all questions which have been
asked by it satisfactorily answered by the Company
(e) The undersigned acknowledges that the Securities issuable upon exercise or
conversion of the Warrant must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The undersigned is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold from the Company or any affiliate of the Company, the sale
being through a "broker's transaction" or in transactions directly with a
"market maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three month period not exceeding specified limitations.
Dated:_________________________
_______________________________
(Typed or Printed Name)
By:____________________________
(Signature)
_______________________________
(Title)
-2-
Attachment 3
NOTICE OF CONVERSION
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to acquire ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the attached
Warrant, by conversion of _________ percent (____%) of the Warrant.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
________________________
(Name)
________________________
(Address)
___________________________________ ________________________________
(Date) (Name of Warrant Holder)
By:___________________________
Title:________________________
(Title and signature of authorized person)
THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE 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, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
No.: 3
WARRANT
TO PURCHASE CLASS E PREFERRED STOCK
OF
BEACON POWER CORPORATION
(void after August 2, 2004)
1. Issuance of Warrant. FOR VALUE RECEIVED, on and after the date of
issuance of this Warrant, and subject to the terms and conditions herein set
forth, the Holder (as defined below) is entitled to purchase from Beacon Power
Corporation, a Delaware corporation (the "Company"), at any time before 5:00
p.m. New York time on August 2, 2004 (the "Termination Date"), at a price per
share equal to the Warrant Price (as defined below and subject to adjustment as
described below), the Warrant Stock (as defined below and subject to adjustment
as described below) upon exercise of this warrant (this "Warrant") pursuant to
Section 6 hereof. This Warrant is issued pursuant to the Note and Warrant
Purchase Agreement (as defined below).
2. Definitions. As used in this Warrant, the following terms have the
definitions ascribed to them below:
(a) "Additional Stock" is defined in Section 3(d)(iv).
(b) "Base Price" means as of August 2, 1999, $1.78 per share of
Common Stock, which shall be subject to adjustment as provided in Section 3(d).
(c) "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 or the State of New York or the District of Columbia are
authorized to be closed.
(d) "Change-In-Control Event" means the occurrence after the
Commencement Date of any of the following: (i) the acquisition of voting
securities of the Company by any person or group of persons that results in such
person or group, together with its affiliates, becoming, directly or indirectly,
the beneficial owner of in excess of 50% of the outstanding voting securities of
the Company; (ii) a merger or consolidation of the Company with any other
corporation or legal entity regardless of which entity is the survivor, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or being converted into voting securities of
the surviving entity) in excess of 50% of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation; or (iii) the sale or disposition of all or substantially all of
the Company's assets other than in a transaction in which holders of the voting
securities of the Company immediately prior to such transaction receive voting
securities of the acquiror of such assets or its affiliate that represent in
excess of 50% of the voting securities of such entity after consummation of such
transaction.
(e) "Commencement Date" means the date of issue of this Warrant.
(f) "Common Stock" means the Company's Common Stock, $.01 par value
per share.
(g) "Holder" means Duquesne Enterprises, Inc., or its assigns.
(h) "Note and Warrant Purchase Agreement" means the Note and Warrant
Purchase Agreement dated as of August 2, 1999 by and among the Company, Perseus
Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology Fund,
L.L.C., and SatCon Technology Corporation (collectively, the "Purchasers"), and
"Note" means the Note issued to the holder pursuant to such Agreement.
(i) "Class E Preferred Stock" means the Class E Preferred Stock of
the Company proposed to be issued to the Purchasers as part of the equity
financing in which the Note is to be converted, as described in the above Note
and Warrant Purchase Agreement.
(j) "Warrant Price" means, (i) in the event that a purchase of at
least $5 million of the Class E Preferred Stock is consummated within six (6)
months from the date hereof, the per share price at which such purchase is made,
or (ii) in the event that no such purchase is consummated, $2.50, in either
event subject to adjustment as described in Section 3 below.
(k) "Warrant Stock" means the shares of Company stock which are
purchasable upon exercise or conversion of this Warrant, consisting of Class E
Preferred Stock (or other Company securities) into which the Note is converted
if such conversion actually
-2-
occurs, or consisting of shares of Common Stock if the Note is not so converted.
The total number of shares to be issued upon the exercise of this Warrant shall
be computed by dividing $125,000.00 by the Warrant Price, subject to adjustment
as described in Section 3 below. The "Warrant Stock Definition Date" means the
date on which the Note is converted (or if not converted, then the date on which
the holder of the Note notifies the Company that it has become a demand note, as
described in the Note.
3. Adjustments and Notices. The Warrant Price and/or the number of shares
of Warrant Stock shall be subject to adjustment from time to time in accordance
with this Section 3. The Warrant Price and/or the number of Warrant Shares shall
be adjusted to reflect all of the following events that occur on or after the
Commencement Date. However, if the Warrant Stock becomes defined to be preferred
stock of the Company, then the following provisions in Section 3 shall not apply
to shares issued on or after the Warrant Stock Definition Date.
(a) Subdivision. Stock Dividends or Combinations. In case the
Company shall at any time subdivide the outstanding shares of Warrant Stock or
shall issue a stock dividend with respect to the Warrant Stock, the Warrant
Price in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in case the Company shall at
any time combine the outstanding shares of the Warrant Stock, the Warrant Price
in effect immediately prior to such combination shall be proportionately
increased, in each case effective at the close of business on the date of such
subdivision, dividend or combination, as the case may be.
(b) Reclassification, Exchange, Substitution. In-Kind Distribution.
Upon any reclassifications, exchange, substitution or other event that results
in a change of the number and/or class of the securities issuable upon exercise
or conversion of this Warrant or upon the payment of a dividend in securities or
property other than shares of Warrant Stock, the Holder shall be entitled to
receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received if this Warrant had been
exercised or converted immediately before the record date for such
reclassification, exchange, substitution, or other event or immediately prior to
the record date for such dividend, The Company or its successor shall promptly
issue to Holder a new warrant for such new securities or other property. The new
warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise or conversion of the new warrant.
The provisions of this Section 3(b) shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events and successive
dividends.
(c) Reorganization. Merger etc. In case of any Change-In-Control
Event, the Company, or such successor or purchasing corporation, as the case may
be, shall, as a condition to closing any such reorganization, merger or sale,
duly execute and deliver to the Holder hereof a new warrant so that the Holder
shall have the right to receive, at a total purchase price not to exceed that
payable upon the exercise or conversion of the unexercised or unconverted
portion of this Warrant, and in lieu of the shares of the Warrant Stock
theretofore issuable upon exercise or
-3-
conversion of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reorganization, merger or
sale by the Holder of the number of shares of Warrant Stock then purchasable
under this Warrant. Such new warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 3. The provisions of this subparagraph (c) shall similarly apply to
successive Change-In-Control Events. (d) Dilutive Issuances Adjustment of Number
of Shares and Warrant Price. In order to prevent dilution of the rights granted
under this Warrant, the number of shares of Warrant Stock obtainable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time as provided in this Section 3(d).
(i) Adjustment of Warrant Price upon Issuance of Additional
Stock. If and whenever after the Commencement Date, the Company issues, or in
accordance with Section 3(d)(ii) is deemed to have issued, any Additional Stock
to any person for a consideration per share less than the Base Price then in
effect, then the Warrant Price in effect immediately before each such issuance
shall forthwith be adjusted to a price determined by multiplying such Warrant
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the number of
shares of Common Stock that the aggregate consideration received by the Company
for such issuance would purchase at such Warrant Price; and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of shares of such Additional Stock.
(ii) Effect of Certain Events. For purposes of determining
under Section (d)(i) the adjusted number of shares of Warrant Stock acquirable
upon exercise of this Warrant, the following shall be applicable:
(A) Issuance of Rights or Options. If the Company in any
manner issues, grants or sells (or otherwise becomes subject to) any
Options or Options for Convertible Securities, then the total maximum
number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been sold on the date of issuance, grant or sale of such
Options and to be outstanding.
(B) Issuance of Convertible Securities. If the Company
in any manner grants, issues or sells (or otherwise becomes subject to)
any Convertible Securities, then the maximum number of shares of Common
Stock issuable upon conversion or exchange of such Convertible Securities
shall be deemed to have been sold on the date of issuance, grant or sale
of such Convertible Securities and to be outstanding.
(C) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible Securities
without the exercise of such Option or right, the number of shares of
Warrant Stock acquirable hereunder shall be adjusted to the number of
shares which would have been in effect at the time of such expiration or
termination
-4-
had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
(D) Treasury Shares. The number of shares of Common
Stock outstanding at any given time does not include shares owned or held
by or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held shall be considered an issuance
or sale of Common Stock.
(E) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(iii) In the case of the issuance of Additional Stock for
cash, the consideration received therefor shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by the company for any underwriting or
otherwise in connection with the issuance and sale thereof. In the case of the
issuance of Additional Stock for a consideration in whole or in part other than
cash, the consideration other than cash received therefor shall be deemed to be
the fair value thereof as reasonably determined by the Board of Directors of the
Company in its good faith judgment irrespective of any accounting treatment.
(iv) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to clause (ii) of this Section
3(d)) by the Company after the Commencement Date, other than shares of Common
Stock issued or issuable:
(A) to officers, directors, employees and consultants of
the Company directly or pursuant to a stock option plan or restricted
stock plan approved by the Board of Directors of the Company;
(B) upon conversion of the Class A, B, C, or D Preferred
Stock (or, if authorized, the Class E Preferred Stock) of the Company or
the exercise of warrants issued by the Company before or on the
Commencement Date;
(v) Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 3(d) but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's board of directors shall make an appropriate adjustment in
the number of shares of Warrant Stock obtainable upon exercise of this Warrant
and in the Warrant Price so as to protect the rights of the holders of the
Warrants; provided that no such adjustment shall decrease the number of shares
of Warrant Stock obtainable as otherwise
-5-
determined pursuant to this Section 3.
(e) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Warrant Price, the Corporation, at its own expense, shall
cause its Chief Financial Officer to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. No adjustment of the Warrant Price shall be
required to be made unless it would result in an increase or decrease of at
least one cent, but any adjustments not made because of this sentence shall be
carried forward and taken into account in any subsequent adjustment otherwise
required hereunder.
(f) No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all of the provisions of
this Section 3 and in taking all such action as may be necessary or appropriate
to protect the Holder's rights under this Section 3 against impairment. If the
Company takes any action affecting the Class E Preferred Stock other than as
described above that adversely affects the Holder's rights under this Warrant,
the Warrant Price shall be adjusted downward.
(g) Fractional Shares. No fractional shares shall be issuable upon
exercise or conversion of the Warrant and the number of shares to be issued
shall be rounded down to the nearest whole share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying the Holder an amount computed
by multiplying the fractional interest by the fair market value of a full share.
4. No Shareholder Rights. This Warrant, by itself, as distinguished from
any shares purchased hereunder, shall not entitle its Holder to any of the
rights of a shareholder of the Company.
5. Reservation of Stock. On and after the Warrant Stock Definition Date,
the Company will reserve from its authorized and unissued stock a sufficient
number of shares to provide for the issuance of Warrant Stock upon the exercise
or conversion of this Warrant. Issuance of this Warrant shall constitute full
authority to the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Warrant Stock issuable upon the exercise or conversion of this Warrant.
6. Exercise of Warrant. This Warrant may be exercised as a whole or part
by the Holder, at any time after the date hereof prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise and Investment Representation Statement in the forms attached hereto as
Attachments 1 and 2, respectively, duly completed and executed at the principal
office of the Company, specifying the portion of the Warrant to be exercised and
-6-
accompanied by payment in full of the Warrant Price in cash or by check with
respect to the shares of Warrant Stock being purchased. Alternatively, the
Holder may pay the Warrant Price as a whole or in part) by surrendering to the
Company all or a portion of any Note (as defined in the Note and Warrant
Purchase Agreement), in which case the portion of the Note surrendered plus all
accrued but unpaid interest thereon shall be credited towards payment of the
Warrant Price. If less the entire Note is surrendered in payment of the Warrant
Price, the Company shall issue to the Holder a new promissory note identical to
the surrendered Note except that the principal amount thereof shall equal the
unsurrendered portion of the principal amount of the surrendered Note. This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Warrant Stock issuable upon such
exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date. As promptly as practicable
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Warrant Stock issuable upon such exercise. If this Warrant shall
be exercised for less than the total number of shares of Warrant Stock then
issuable upon exercise, promptly after surrender of this Warrant upon such
exercise, the Company will execute and deliver a new warrant, dated the date
hereof, evidencing the right of the Holder to the balance of this Warrant Stock
purchasable hereunder upon the same terms and conditions set forth herein.
7. Conversion, In lieu of exercising this Warrant or any portion hereof,
at any time after the occurrence of a Change-In-Control Event or the filing of a
registration statement for an initial underwritten public offering of securities
by the Company, the Holder hereof shall have the right to convert this Warrant
or any portion hereof into Warrant Stock by executing and delivering to the
Company at its principal office the written Notice of Conversion and Investment
Representation Statement in the forms attached hereto as Attachments 2 and 3,
specifying the portion of the Warrant to be converted, and accompanied by this
Warrant. The number of shares of Warrant Stock to be issued to Holder upon such
conversion shall be computed using the following formula:
X=(P)(Y)(A-B)/A
where X = the number of shares of Warrant Stock to be issued to the
Holder for the portion of the Warrant being converted.
P = the portion of the Warrant being converted expressed
as a decimal fraction.
Y = the total number of shares of Warrant Stock issuable
upon exercise of the Warrant in full.
A = the fair market value of one share of Warrant Stock
which means (i) the fair market value of the Warrant
Stock as of the last Business Day immediately prior to
the date the notice of
-7-
conversion is received by the Company, as reported in
the principal market for such securities or, if no such
market exists, as determined in good faith by the
Company's Board of Directors, or (ii) if this Warrant is
being converted in conjunction with a public offering of
stock the price to the public per share pursuant to the
offering.
B = the Warrant Price on the date of conversion.
Any portion of this Warrant that is converted shall be immediately canceled.
This Warrant or any portion hereof shall be deemed to have been converted
immediately prior to the close of business on the date of its surrender for
conversion as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such conversion shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Warrant Stock issuable upon such conversion. If
the Warrant shall be converted for less than the total number of shares of
Warrant Stock then issuable upon conversion, promptly after surrender of the
Warrant upon such conversion, the Company will execute and deliver a new
warrant, dated the date hereof, evidencing the right of the Holder to the
balance of the Warrant Stock purchasable hereunder upon the same terms and
conditions set forth herein. If this Warrant is converted, as a whole or in
part, after the occurrence of a Change-In-Control Event as to which Section 3(c)
is applicable, the Holder shall receive the consideration contemplated by
Section 3(c) in lieu of Warrants Stock of the Company.
8. Transfer of Warrant. This Warrant may be transferred or assigned by the
Holder hereof in whole or in part, provided that the transferor provides, at the
Company's request, an opinion of counsel satisfactory to the Company that such
transfer does not require registration under the Securities Act and the
securities law applicable with respect to any other applicable jurisdiction.
9. Termination. This Warrant shall terminate on 5:00 p.m. New York time on
the Termination Date.
10. Miscellaneous. This Warrant shall be governed by the laws of the
Commonwealth of Massachusetts, as such laws are applied to contracts to be
entered into and performed entirely in Massachusetts by Massachusetts residents.
In the event of any dispute among the Holder and the Company arising out of the
terms of this Warrant, the parties hereby consent to the exclusive jurisdiction
of the federal and state courts located in the Commonwealth of Massachusetts for
resolution of such dispute, and agree not to contest such exclusive jurisdiction
or seek to transfer any action relating to such dispute to any other
jurisdiction. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be
-8-
deemed to constitute a part hereof. Neither this Warrant nor any term hereof may
be changed or waived orally, but only by an instrument in writing signed by the
Company and the Holder of this Warrant. All notices and other communications
from the Company to the Holder of this Warrant shall be delivered personally or
by facsimile transmission or mailed by first class mail, postage prepaid, to the
address or facsimile number furnished to the Company in writing by the last
Holder of this Warrant who shall have furnished an address or facsimile number
to the Company in writing, and if mailed shall be deemed given three days after
deposit in the United States mail.
ISSUED: August 2, 1999
BEACON POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: PRESIDENT & CEO
-----------------------
-9-
Attachment 1
NOTICE OF EXERCISE
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to purchase ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
________________________
(Name)
________________________
(Address)
___________________________________ ________________________________
(Date) (Name of Warrant Holder)
By:___________________________
Title:________________________
Attachment 2
INVESTMENT REPRESENTATION STATEMENT
Shares of the Class E Preferred Stock
(as defined in the attached Warrant) of
BEACON POWER CORPORATION
In connection with the purchase of the above-listed securities, the
undersigned hereby represents to Beacon Power Corporation (the "Company") as
follows:
(a) The securities to be received upon the exercise of the Warrant (the
"Securities") will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting
participation in or otherwise distributing the same, but subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. By executing this statement, the undersigned
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any Securities issuable upon
exercise of the Warrant.
(b) The undersigned understands that the Securities issuable upon exercise of
the Warrant at the time of issuance may not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state securities
laws, on the ground that the issuance of such securities is exempt pursuant to
Section 4(2) of the Securities Act and state law exemptions relating to offers
and sales not by means of a public offering, and that the Company's reliance on
such exemptions is predicated on the undersigned's representations set forth
herein.
(c) The undersigned agrees that in no event will it make a disposition of any
Securities acquired upon the exercise of the Warrant unless and until (i) it
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and (ii) it shall have furnished the Company with an
opinion of counsel satisfactory to the Company and Company's counsel to the
effect that (A) appropriate action necessary for compliance with the Securities
Act and any applicable state securities laws has been taken or an exemption from
the registration requirements of the Securities Act and such laws is available,
and (B) the proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the Company is highly
speculative and represents that it is able to fend for itself in the
transactions contemplated by this statement, has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investments, and has the ability to bear the economic risks
(including the risk of a total loss) of its investment. The undersigned
represents that it has had the opportunity to ask questions of the Company
concerning the Company's business and assets and to obtain any additional
information which it considered necessary to verify the accuracy of or to
amplify the Company's disclosures, and has had all questions which have been
asked by it satisfactorily answered by the Company
(e) The undersigned acknowledges that the Securities issuable upon exercise or
conversion of the Warrant must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The undersigned is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold from the Company or any affiliate of the Company, the sale
being through a "broker's transaction" or in transactions directly with a
"market maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three month period not exceeding specified limitations.
Dated:_________________________
_______________________________
(Typed or Printed Name)
By:____________________________
(Signature)
_______________________________
(Title)
-2-
Attachment 3
NOTICE OF CONVERSION
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to acquire ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the attached
Warrant, by conversion of _________ percent (____%) of the Warrant.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
________________________
(Name)
________________________
(Address)
___________________________________ ________________________________
(Date) (Name of Warrant Holder)
By:___________________________
Title:________________________
(Title and signature of authorized person)
THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE 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, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
No.: 4
WARRANT
TO PURCHASE CLASS E PREFERRED STOCK
OF
BEACON POWER CORPORATION
(void after August 2, 2004)
1. Issuance of Warrant. FOR VALUE RECEIVED, on and after the date of
issuance of this Warrant, and subject to the terms and conditions herein set
forth, the Holder (as defined below) is entitled to purchase from Beacon Power
Corporation, a Delaware corporation (the "Company"), at any time before 5:00
p.m. New York time on August 2, 2004 (the "Termination Date"), at a price per
share equal to the Warrant Price (as defined below and subject to adjustment as
described below), the Warrant Stock (as defined below and subject to adjustment
as described below) upon exercise of this warrant (this "Warrant") pursuant to
Section 6 hereof. This Warrant is issued pursuant to the Note and Warrant
Purchase Agreement (as defined below).
2. Definitions. As used in this Warrant, the following terms have the
definitions ascribed to them below:
(a) "Additional Stock" is defined in Section 3(d)(iv).
(b) "Base Price" means as of August 2, 1999, $1.78 per share of
Common Stock, which shall be subject to adjustment as provided in Section 3(d).
(c) "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 or the State of New York or the District of Columbia are
authorized to be closed.
(d) "Change-In-Control Event" means the occurrence after the
Commencement Date of any of the following: (i) the acquisition of voting
securities of the Company by any person or group of persons that results in such
person or group, together with its affiliates, becoming, directly or indirectly,
the beneficial owner of in excess of 50% of the outstanding voting securities of
the Company; (ii) a merger or consolidation of the Company with any other
corporation or legal entity regardless of which entity is the survivor, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or being converted into voting securities of
the surviving entity) in excess of 50% of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation; or (iii) the sale or disposition of all or substantially all of
the Company's assets other than in a transaction in which holders of the voting
securities of the Company immediately prior to such transaction receive voting
securities of the acquiror of such assets or its affiliate that represent in
excess of 50% of the voting securities of such entity after consummation of such
transaction.
(e) "Commencement Date" means the date of issue of this Warrant.
(f) "Common Stock" means the Company's Common Stock, $.01 par value
per share.
(g) "Holder" means Micro Generation Technology Fund, L.L.C., or its
assigns.
(h) "Note and Warrant Purchase Agreement" means the Note and Warrant
Purchase Agreement dated as of August 2, 1999 by and among the Company, Perseus
Capital, L.L.C., Duquesne Enterprises, Inc., Micro Generation Technology Fund,
L.L.C., and SatCon Technology Corporation (collectively, the "Purchasers"), and
"Note" means the Note issued to the holder pursuant to such Agreement.
(i) "Class E Preferred Stock" means the Class E Preferred Stock of
the Company proposed to be issued to the Purchasers as part of the equity
financing in which the Note is to be converted, as described in the above Note
and Warrant Purchase Agreement.
(j) "Warrant Price" means, (i) in the event that a purchase of at
least $5 million of the Class E Preferred Stock is consummated within six (6)
months from the date hereof, the per share price at which such purchase is made,
or (ii) in the event that no such purchase is consummated, $2.50, in either
event subject to adjustment as described in Section 3 below.
(k) "Warrant Stock" means the shares of Company stock which are
purchasable upon exercise or conversion of this Warrant, consisting of Class E
Preferred Stock
-2-
(or other Company securities) into which the Note is converted if such
conversion actually occurs, or consisting of shares of Common Stock if the Note
is not so converted. The total number of shares to be issued upon the exercise
of this Warrant shall be computed by dividing $37,500.00 by the Warrant Price,
subject to adjustment as described in Section 3 below. The "Warrant Stock
Definition Date" means the date on which the Note is converted (or if not
converted, then the date on which the holder of the Note notifies the Company
that it has become a demand note, as described in the Note.
3. Adjustments and Notices. The Warrant Price and/or the number of shares
of Warrant Stock shall be subject to adjustment from time to time in accordance
with this Section 3. The Warrant Price and/or the number of Warrant Shares shall
be adjusted to reflect all of the following events that occur on or after the
Commencement Date. However, if the Warrant Stock becomes defined to be preferred
stock of the Company, then the following provisions in Section 3 shall not apply
to shares issued on or after the Warrant Stock Definition Date.
(a) Subdivision, Stock Dividends or Combinations. In case the
Company shall at any time subdivide the outstanding shares of Warrant Stock or
shall issue a stock dividend with respect to the Warrant Stock, the Warrant
Price in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in case the Company shall at
any time combine the outstanding shares of the Warrant Stock, the Warrant Price
in effect immediately prior to such combination shall be proportionately
increased, in each case effective at the close of business on the date of such
subdivision, dividend or combination, as the case may be.
(b) Reclassification, Exchange, Substitution, In-Kind Distribution.
Upon any reclassifications, exchange, substitution or other event that results
in a change of the number and/or class of the securities issuable upon exercise
or conversion of this Warrant or upon the payment of a dividend in securities or
property other than shares of Warrant Stock, the Holder shall be entitled to
receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received if this Warrant had been
exercised or converted immediately before the record date for such
reclassification, exchange, substitution, or other event or immediately prior to
the record date for such dividend, The Company or its successor shall promptly
issue to Holder a new warrant for such new securities or other property. The new
warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise or conversion of the new warrant.
The provisions of this Section 3(b) shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events and successive
dividends.
(c) Reorganization, Merger etc. In case of any Change-In-Control
Event, the Company, or such successor or purchasing corporation, as the case may
be, shall, as a condition to closing any such reorganization, merger or sale,
duly execute and deliver to the Holder hereof a new warrant so that the Holder
shall have the right to receive, at a total purchase price not to exceed that
payable upon the exercise or conversion of the unexercised or unconverted
portion of
-3-
this Warrant, and in lieu of the shares of the Warrant Stock theretofore
issuable upon exercise or conversion of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reorganization, merger or sale by the Holder of the number of shares of Warrant
Stock then purchasable under this Warrant. Such new warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of this subparagraph
(c) shall similarly apply to successive Change-In-Control Events. (d) Dilutive
Issuances Adjustment of Number of Shares and Warrant Price. In order to prevent
dilution of the rights granted under this Warrant, the number of shares of
Warrant Stock obtainable upon exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time as provided in this Section
3(d).
(i) Adjustment of Warrant Price upon Issuance of Additional
Stock. If and whenever after the Commencement Date, the Company issues, or in
accordance with Section 3(d)(ii) is deemed to have issued, any Additional Stock
to any person for a consideration per share less than the Base Price then in
effect, then the Warrant Price in effect immediately before each such issuance
shall forthwith be adjusted to a price determined by multiplying such Warrant
Price by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the number of
shares of Common Stock that the aggregate consideration received by the Company
for such issuance would purchase at such Warrant Price; and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of shares of such Additional Stock.
(ii) Effect of Certain Events. For purposes of determining
under Section (d)(i) the adjusted number of shares of Warrant Stock acquirable
upon exercise of this Warrant, the following shall be applicable:
(A) Issuance of Rights or Options. If the Company in any
manner issues, grants or sells (or otherwise becomes subject to) any
Options or Options for Convertible Securities, then the total maximum
number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been sold on the date of issuance, grant or sale of such
Options and to be outstanding.
(B) Issuance of Convertible Securities. If the Company
in any manner grants, issues or sells (or otherwise becomes subject to)
any Convertible Securities, then the maximum number of shares of Common
Stock issuable upon conversion or exchange of such Convertible Securities
shall be deemed to have been sold on the date of issuance, grant or sale
of such Convertible Securities and to be outstanding.
(C) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible Securities
without the exercise of such Option or right, the number of shares of
Warrant Stock acquirable hereunder shall be adjusted to the number
-4-
of shares which would have been in effect at the time of such expiration
or termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such expiration or termination, never
been issued.
(D) Treasury Shares. The number of shares of Common
Stock outstanding at any given time does not include shares owned or held
by or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held shall be considered an issuance
or sale of Common Stock.
(E) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(iii) In the case of the issuance of Additional Stock for
cash, the consideration received therefor shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts, commissions or
other expenses allowed, paid or incurred by the company for any underwriting or
otherwise in connection with the issuance and sale thereof. In the case of the
issuance of Additional Stock for a consideration in whole or in part other than
cash, the consideration other than cash received therefor shall be deemed to be
the fair value thereof as reasonably determined by the Board of Directors of the
Company in its good faith judgment irrespective of any accounting treatment.
(iv) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to clause (ii) of this Section
3(d)) by the Company after the Commencement Date, other than shares of Common
Stock issued or issuable:
(A) to officers, directors, employees and consultants of
the Company directly or pursuant to a stock option plan or restricted
stock plan approved by the Board of Directors of the Company;
(B) upon conversion of the Class A, B, C, or D Preferred
Stock (or, if authorized, the Class E Preferred Stock) of the Company or
the exercise of warrants issued by the Company before or on the
Commencement Date;
(v) Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 3(d) but not expressly provided
for by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's board of directors shall make an appropriate adjustment in
the number of shares of Warrant Stock obtainable upon exercise of this Warrant
and in the Warrant Price so as to protect the rights of the holders of the
Warrants; provided that
-5-
no such adjustment shall decrease the number of shares of Warrant Stock
obtainable as otherwise determined pursuant to this Section 3.
(e) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Warrant Price, the Corporation, at its own expense, shall
cause its Chief Financial Officer to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. No adjustment of the Warrant Price shall be
required to be made unless it would result in an increase or decrease of at
least one cent, but any adjustments not made because of this sentence shall be
carried forward and taken into account in any subsequent adjustment otherwise
required hereunder.
(f) No Impairment, The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all of the provisions of
this Section 3 and in taking all such action as may be necessary or appropriate
to protect the Holder's rights under this Section 3 against impairment. If the
Company takes any action affecting the Class E Preferred Stock other than as
described above that adversely affects the Holder's rights under this Warrant,
the Warrant Price shall be adjusted downward.
(g) Fractional Shares. No fractional shares shall be issuable upon
exercise or conversion of the Warrant and the number of shares to be issued
shall be rounded down to the nearest whole share. If a fractional share interest
arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying the Holder an amount computed
by multiplying the fractional interest by the fair market value of a full share.
4. No Shareholder Rights. This Warrant, by itself, as distinguished from
any shares purchased hereunder, shall not entitle its Holder to any of the
rights of a shareholder of the Company.
5. Reservation of Stock. On and after the Warrant Stock Definition Date,
the Company will reserve from its authorized and unissued stock a sufficient
number of shares to provide for the issuance of Warrant Stock upon the exercise
or conversion of this Warrant. Issuance of this Warrant shall constitute full
authority to the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Warrant Stock issuable upon the exercise or conversion of this Warrant.
6. Exercise of Warrant. This Warrant may be exercised as a whole or part
by the Holder, at any time after the date hereof prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise and Investment Representation Statement in the forms attached hereto as
Attachments 1 and 2, respectively, duly completed and executed at
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the principal office of the Company, specifying the portion of the Warrant to be
exercised and accompanied by payment in full of the Warrant Price in cash or by
check with respect to the shares of Warrant Stock being purchased.
Alternatively, the Holder may pay the Warrant Price as a whole or in part) by
surrendering to the Company all or a portion of any Note (as defined in the Note
and Warrant Purchase Agreement), in which case the portion of the Note
surrendered plus all accrued but unpaid interest thereon shall be credited
towards payment of the Warrant Price. If less the entire Note is surrendered in
payment of the Warrant Price, the Company shall issue to the Holder a new
promissory note identical to the surrendered Note except that the principal
amount thereof shall equal the unsurrendered portion of the principal amount of
the surrendered Note. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such exercise shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Warrant Stock issuable upon such exercise. If
this Warrant shall be exercised for less than the total number of shares of
Warrant Stock then issuable upon exercise, promptly after surrender of this
Warrant upon such exercise, the Company will execute and deliver a new warrant,
dated the date hereof, evidencing the right of the Holder to the balance of this
Warrant Stock purchasable hereunder upon the same terms and conditions set forth
herein.
7. Conversion, In lieu of exercising this Warrant or any portion hereof,
at any time after the occurrence of a Change-In-Control Event or the filing of a
registration statement for an initial underwritten public offering of securities
by the Company, the Holder hereof shall have the right to convert this Warrant
or any portion hereof into Warrant Stock by executing and delivering to the
Company at its principal office the written Notice of Conversion and Investment
Representation Statement in the forms attached hereto as Attachments 2 and 3,
specifying the portion of the Warrant to be converted, and accompanied by this
Warrant. The number of shares of Warrant Stock to be issued to Holder upon such
conversion shall be computed using the following formula:
X=(P)(Y)(A-B)/A
where X = the number of shares of Warrant Stock to be issued to the
Holder for the portion of the Warrant being converted.
P = the portion of the Warrant being converted expressed
as a decimal fraction.
Y = the total number of shares of Warrant Stock issuable
upon exercise of the Warrant in full.
A = the fair market value of one share of Warrant Stock
which means (i) the fair market value of the Warrant
Stock as of the last
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Business Day immediately prior to the date the notice of
conversion is received by the Company, as reported in
the principal market for such securities or, if no such
market exists, as determined in good faith by the
Company's Board of Directors, or (ii) if this Warrant is
being converted in conjunction with a public offering of
stock the price to the public per share pursuant to the
offering.
B = the Warrant Price on the date of conversion.
Any portion of this Warrant that is converted shall be immediately canceled.
This Warrant or any portion hereof shall be deemed to have been converted
immediately prior to the close of business on the date of its surrender for
conversion as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such conversion shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Warrant Stock issuable upon such conversion. If
the Warrant shall be converted for less than the total number of shares of
Warrant Stock then issuable upon conversion, promptly after surrender of the
Warrant upon such conversion, the Company will execute and deliver a new
warrant, dated the date hereof, evidencing the right of the Holder to the
balance of the Warrant Stock purchasable hereunder upon the same terms and
conditions set forth herein. If this Warrant is converted, as a whole or in
part, after the occurrence of a Change-In-Control Event as to which Section 3(c)
is applicable, the Holder shall receive the consideration contemplated by
Section 3(c) in lieu of Warrants Stock of the Company.
8. Transfer of Warrant. This Warrant may be transferred or assigned by the
Holder hereof in whole or in part, provided that the transferor provides, at the
Company's request, an opinion of counsel satisfactory to the Company that such
transfer does not require registration under the Securities Act and the
securities law applicable with respect to any other applicable jurisdiction.
9. Termination. This Warrant shall terminate on 5:00 p.m. New York time on
the Termination Date.
10. Miscellaneous. This Warrant shall be governed by the laws of the
Commonwealth of Massachusetts, as such laws are applied to contracts to be
entered into and performed entirely in Massachusetts by Massachusetts residents.
In the event of any dispute among the Holder and the Company arising out of the
terms of this Warrant, the parties hereby consent to the exclusive jurisdiction
of the federal and state courts located in the Commonwealth of Massachusetts for
resolution of such dispute, and agree not to contest such exclusive jurisdiction
or seek to transfer any action relating to such dispute to any other
jurisdiction. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be
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deemed to constitute a part hereof Neither this Warrant nor any term hereof may
be changed or waived orally, but only by an instrument in writing signed by the
Company and the Holder of this Warrant. All notices and other communications
from the Company to the Holder of this Warrant shall be delivered personally or
by facsimile transmission or mailed by first class mail, postage prepaid, to the
address or facsimile number furnished to the Company in writing by the last
Holder of this Warrant who shall have furnished an address or facsimile number
to the Company in writing, and if mailed shall be deemed given three days after
deposit in the United States mail.
ISSUED: August 2, 1999
BEACON POWER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: PRESIDENT & CEO
-----------------------
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Attachment 1
NOTICE OF EXERCISE
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to purchase ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
________________________
(Name)
________________________
(Address)
___________________________________ ________________________________
(Date) (Name of Warrant Holder)
By:___________________________
Title:________________________
Attachment 2
INVESTMENT REPRESENTATION STATEMENT
Shares of the Class E Preferred Stock
(as defined in the attached Warrant) of
BEACON POWER CORPORATION
In connection with the purchase of the above-listed securities, the
undersigned hereby represents to Beacon Power Corporation (the "Company") as
follows:
(a) The securities to be received upon the exercise of the Warrant (the
"Securities") will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting
participation in or otherwise distributing the same, but subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. By executing this statement, the undersigned
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any Securities issuable upon
exercise of the Warrant.
(b) The undersigned understands that the Securities issuable upon exercise of
the Warrant at the time of issuance may not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state securities
laws, on the ground that the issuance of such securities is exempt pursuant to
Section 4(2) of the Securities Act and state law exemptions relating to offers
and sales not by means of a public offering, and that the Company's reliance on
such exemptions is predicated on the undersigned's representations set forth
herein.
(c) The undersigned agrees that in no event will it make a disposition of any
Securities acquired upon the exercise of the Warrant unless and until (i) it
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and (ii) it shall have furnished the Company with an
opinion of counsel satisfactory to the Company and Company's counsel to the
effect that (A) appropriate action necessary for compliance with the Securities
Act and any applicable state securities laws has been taken or an exemption from
the registration requirements of the Securities Act and such laws is available,
and (B) the proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the Company is highly
speculative and represents that it is able to fend for itself in the
transactions contemplated by this statement, has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investments, and has the ability to bear the economic risks
(including the risk of a total loss) of its investment. The undersigned
represents that it has had the opportunity to ask questions of the Company
concerning the Company's business and assets and to obtain any additional
information which it considered necessary to verify the accuracy of or to
amplify the Company's disclosures, and has had all questions which have been
asked by it satisfactorily answered by the Company
(e) The undersigned acknowledges that the Securities issuable upon exercise or
conversion of the Warrant must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The undersigned is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold from the Company or any affiliate of the Company, the sale
being through a "broker's transaction" or in transactions directly with a
"market maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three month period not exceeding specified limitations.
Dated:_________________________
_______________________________
(Typed or Printed Name)
By:____________________________
(Signature)
_______________________________
(Title)
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Attachment 3
NOTICE OF CONVERSION
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to acquire ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the attached
Warrant, by conversion of _________ percent (____%) of the Warrant.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
________________________
(Name)
________________________
(Address)
___________________________________ ________________________________
(Date) (Name of Warrant Holder)
By:___________________________
Title:________________________
(Title and signature of authorized person)