SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X]
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14a-6(e)(2))
Beacon Power Corporation
(Name of Registrant as Specified In Its Charter)
Beacon Power Corporation
(Name of Person(s) Filing Proxy Statement)
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[LOGO]
234 BALLARDVALE STREET
WILMINGTON, MASSACHUSETTS 01887
April 27, 2001
Dear Stockholder:
I am pleased to invite you to the 2001 Annual Meeting of Stockholders of
Beacon Power Corporation, which will be held on Thursday, May 24, 2001, at
10:00 a.m., at the offices of Beacon, 234 Ballardvale Street, Wilmington,
Massachusetts.
The accompanying Notice of Annual Meeting of Stockholders and proxy
statement contain the matters to be considered and acted upon. Please read these
materials carefully.
Matters scheduled for consideration at the Annual Meeting are the election
of directors and the ratification of Beacon's independent auditors.
I hope you will be able to attend the meeting, but if you cannot do so, it
is important that your shares be represented and voted. ACCORDINGLY, I URGE YOU
TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE RETURN
ENVELOPE PROVIDED.
Very truly yours,
/s/ William E. Stanton
William E. Stanton
President and Chief Executive Officer
BEACON POWER CORPORATION
234 BALLARDVALE STREET
WILMINGTON, MA 01887
NOTICE OF ANNUAL MEETING
MAY 24, 2001
To the Stockholders of
Beacon Power Corporation:
We are hereby notifying you that Beacon Power Corporation will be holding
its Annual Meeting of Stockholders at the offices of the Company, 234
Ballardvale Street, Wilmington, Massachusetts, on Thursday, May 24, 2001 at
10:00 a.m., Eastern Daylight Time, for the following purposes:
(1) To elect members of the Company's Board of Directors for the specified term
of office, and until their successors are duly elected and qualified.
(2) To ratify the selection of Deloitte & Touche LLP as independent auditors to
audit our books and accounts for the fiscal year ending December 31, 2001.
(3) To transact such other business as may properly come before the meeting or
any adjournment thereof.
By Order of the Board of Directors,
Beacon Power Corporation
/s/ Maureen A. Lister
Maureen A. Lister
Secretary
April 27, 2001
Mailed at Boston, Massachusetts
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT AS PROMPTLY AS
POSSIBLE. IF YOU ATTEND THE MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE
USED.
BEACON POWER CORPORATION
234 BALLARDVALE STREET
WILMINGTON, MASSACHUSETTS 01887
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 2001
INTRODUCTION
We are furnishing you with this Proxy Statement in connection with the
solicitation of proxies to be used at the Annual Meeting of Stockholders
("Annual Meeting") of Beacon Power Corporation ("Beacon", "we", "us", "our") to
be held on May 24, 2001 and at any adjournment of the Annual Meeting, for the
purposes set forth in the accompanying notice of the meeting. All holders of our
Common Stock of record at the close of business on April 11, 2001 will be
entitled to vote at this meeting. The stock transfer books have not been closed.
SOLICITATION OF PROXIES
We are soliciting proxies in the form enclosed on behalf of the Board of
Directors. We will vote any such signed proxy, if received in time for the
voting and not revoked, at the Annual Meeting according to your directions. We
will vote any proxy that fails to specify a choice on any matter to be acted
upon for the election of each nominee for director and in favor of each other
proposal to be acted upon. If you submitted a signed proxy in the form enclosed,
you will have the power to revoke it at any time before we exercise it by filing
a later proxy with us, by attending the Annual Meeting and voting in person, or
by notifying us of the revocation in writing addressed to the President of
Beacon Power Corporation at 234 Ballardvale Street, Wilmington, MA 01887.
We will begin mailing the Proxy Statement and accompanying proxy card to our
stockholders on April 27, 2001.
We will pay for all expenses of preparing, assembling, printing and mailing
the material used in the solicitation of proxies by the Board. In addition to
the solicitation of proxies by use of the mails, officers and regular Beacon
employees may solicit proxies on behalf of the Board by telephone, telegram or
personal interview, and we will bear the expenses of such efforts. We also may
make arrangements with brokerage houses and other custodians, nominees and
fiduciaries to forward soliciting materials to the beneficial owners of stock
held of record by such persons at our expense.
VOTING RIGHTS
As of April 11, 2001, we had 42,349,064 shares of our Common Stock, par
value $0.01 per share ("Common Stock"), issued and outstanding. Each share of
Common Stock that you own entitles you to one vote on each matter to be voted
upon at the Annual Meeting. All holders of Common Stock vote together as one
class. We will count abstentions and broker non-votes in determining whether a
quorum is present. If you withhold a vote with regard to the election of
directors, such vote will be excluded entirely from the calculation and will
have no effect. You may abstain on all proposals other than the election of
directors and you will be counted as present for purposes of the item on which
the abstention is noted. An abstention on the ratification of accountants will
have the same legal effect as a vote against such matter. Brokers holding shares
in street name have the authority to vote on certain matters when they have not
received instructions from the beneficial owners. Brokers that do not receive
instructions are permitted to vote on the election of directors and the
ratification of accountants and, as a result, broker non-votes will have no
effect on the outcome of these matters.
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We will have a quorum for the transaction of business at the Annual Meeting
if the holders of a majority of the issued and outstanding shares of Common
Stock entitled to vote are present in person or represented by proxy. If we do
not have a quorum, we may postpone the Annual Meeting from time to time until
stockholders holding the requisite number of shares of Common Stock are present
or represented by proxy.
All common stock information gives effect to a 1.125-for-1 stock split of
our common stock effective in October 1998 and a 2-for-1 stock split of our
common stock effective in November 2000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2001, certain information
concerning the ownership of shares of Common Stock by (i) each person or group
that we know owns beneficially more than five percent of the issued and
outstanding shares of Common Stock, (ii) each director and nominee for director,
(iii) each named executive officer described in "Compensation of Executive
Officers" below, and (iv) all directors and executive officers as a group.
Except as otherwise indicated, each person named has sole investment and voting
power with respect to his or its shares of Common Stock shown.
NUMBER OF
SHARES PERCENTAGE OF
BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED(2)(3) BENEFICIALLY OWNED(2)(3)
- --------------------------------------- ------------ ------------------------
William E. Stanton(4)....................................... 309,318 *
Robert D. French............................................ 74,717 *
Matthew L. Lazarewicz(5).................................... 169,217 *
Maureen A. Lister........................................... 132,175 *
James M. Spiezio............................................ 67,717 *
Philip J. Deutch............................................ 10,000 *
David B. Eisenhaure(6)...................................... 9,899,614 23.3%
Alan P. Goldberg............................................ 20,000 *
Kenneth M. Socha............................................ 10,000 *
Eric R. Stoltz.............................................. 10,000 *
Nancy Hawthorne............................................. 2,499 *
SatCon Technology Corporation(7)............................ 9,879,614 23.2%
Perseus Capital, L.L.C.(8).................................. 11,604,147 24.8%
DQE Enterprises, Inc.(9).................................... 3,764,970 8.9%
Mechanical Technology, Incorporated(10)..................... 3,866,650 9.1%
GE Capital Equity Investments, Inc.(11)..................... 4,320,475 9.8%
Micro-Generation Technology Fund, L.L.C.(12)................ 3,171,250 7.3%
The Beacon Group Energy Investment Fund II, L.P.(13)........ 3,160,856 7.3%
All directors and executive officers as a group
(13 persons)................................................ 10,720,257 24.9%
- ------------------------
* Less than 1%.
(1) The address for all executive officers and directors is c/o Beacon Power
Corporation, 234 Ballardvale Street, Wilmington, MA 01887. Messrs. Stanton,
French, Lazarewicz and Spiezio and Ms. Lister are executive officers of
Beacon. Messrs. Deutch, Eisenhaure, Goldberg, Socha and Stoltz and
Ms. Hawthorne are directors of Beacon.
(2) The number of shares beneficially owned by each stockholder is determined
under rules issued by the Securities and Exchange Commission and includes
voting or investment power with respect to those securities. Under these
rules, beneficial ownership includes any shares as to which the individual
or entity has sole or shared voting power or investment power and includes
any shares
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as to which the individual or entity has the right to acquire beneficial
ownership within 60 days after March 31, 2001 through the exercise of any
warrant, stock option or other right. The inclusion in this proxy statement
of these shares, however, does not constitute an admission that the named
stockholder is a direct or indirect beneficial owner of those shares. The
number of shares of common stock outstanding used in calculating the
percentage for each listed person includes the shares of common stock
underlying warrants or options held by that person that are exercisable or
convertible within 60 days of March 31, 2001, but excludes shares of common
stock underlying warrants or options held by any other person.
(3) Includes the following number of shares of common stock issuable upon the
exercise of stock options which may be exercised on or before May 30, 2001:
Mr. Stanton, 76,668; Mr. Doherty, 15,000; Mr. French, 66,667; Mr. Spanos, 0;
Mr. Spiezio, 66,668; Mr. Lazarewicz, 83,333; Ms. Lister, 132,000;
Mr. Deutch, 10,000; Mr. Eisenhaure, 10,000; Mr. Goldberg, 10,000;
Mr. Socha, 10,000; Mr. Stoltz, 10,000; and Ms. Hawthorne 2,499.
(4) Includes 1,000 shares of common stock held by Mr. Stanton's wife.
Mr. Stanton disclaims beneficial ownership of these shares.
(5) Includes 2,500 shares of common stock held in trust for Mr. Lazarewicz' wife
and sister-in-law for which Mr. Lazarewicz acts as sole trustee.
Mr. Lazarewicz disclaims beneficial ownership of these shares.
(6) Includes the shares and warrants held by SatCon of which Mr. Eisenhaure is
the President, Chief Executive Officer and Chairman of the Board of
Directors. Mr. Eisenhaure disclaims beneficial ownership of these shares.
(7) Includes shares of common stock issuable upon exercise of warrants to
purchase 173,704 shares of common stock. SatCon's address is 161 First
Street, Cambridge, MA 02142.
(8) Includes shares of common stock issuable upon exercise of warrants to
purchase 4,512,593 shares of common stock. Perseus Capital's address is 2099
Pennsylvania Avenue, N.W., Suite 900, Washington, DC 20006.
(9) DQE Enterprises' address is One Northshore Center, Suite 100, 12 Federal
Street, Pittsburgh, PA 15212.
(10) Mechanical Technology's address is 30 South Pearl Street, Albany, NY 12207.
(11) Includes shares of common stock issuable upon exercise of warrants to
purchase 1,573,333 shares of common stock and options to purchase 10,000
shares of common stock. Also includes shares of common stock issuable upon
exercise of options to purchase 120,000 shares of common stock issued to GE
Corporate Research and Development. GE Equity's address is 120 Long Ridge
Road, Stamford, CT 06927.
(12) Includes shares of common stock issuable upon exercise of warrants to
purchase 1,189,152 shares of common stock. Micro-Generation's address is c/o
Arete Corporation, P.O. Box 1299, Center Harbor, NH 03226.
(13) Includes shares of common stock issuable upon exercise of warrants to
purchase 1,018,000 shares of common stock. Beacon Group's address is c/o
J.P. Morgan Partners, 1221 Avenue of the Americas, 40th Floor, New York, NY
10021.
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PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors has nominated the persons named below for election at
the Annual Meeting as directors. The directors who are elected shall hold office
until their respective successors shall have been duly elected and qualified. In
accordance with Delaware General Corporation Law, each nominee for director
needs a plurality of the votes of shares present in person or represented by
proxy at the Annual Meeting in order to gain election.
All nominees are members of the present Board. Each of the nominees for
director has consented to being named a nominee in this Proxy Statement and has
agreed to serve as a director, if elected at the Annual Meeting. The persons
named in the proxy intend to vote for the following nominees.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE
NOMINEES FOR DIRECTOR LISTED BELOW.
NAME, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- -------------------- -----------------------------------------------------
TERMS EXPIRING IN 2004
David B. Eisenhaure, 55...................... Mr. Eisenhaure has served as President, Chief
Nominating Committee Executive Officer, and Chairman of the board of
directors of SatCon since 1985. Prior to founding
SatCon, Mr. Eisenhaure was associated with the
Charles Stark Draper Laboratory from 1974 to 1985,
and with its predecessor, the Massachusetts Institute
of Technology's Instrumentation Laboratory, from 1967
to 1974. Mr. Eisenhaure holds S.B. and S.M. degrees
in Mechanical Engineering, as well as a Mechanical
Engineering degree, from the Massachusetts Institute
of Technology. In addition to his duties at SatCon,
Mr. Eisenhaure holds an academic position at M.I.T.,
serving as a lecturer in the Department of Mechanical
Engineering. Mr. Eisenhaure also has served on the
board of directors of Mechanical Technology,
Incorporated since 1997. Mr. Eisenhaure has served as
a director since our inception in May 1997.
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NAME, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- -------------------- -----------------------------------------------------
Kenneth M. Socha, 54......................... Mr. Socha has served as Senior Managing Director of
Chairperson, Compensation Committee Perseus, L.L.C. and its predecessor since 1992. He
practiced corporate and securities law from 1970 to
1992, and was one of the founders of The Clarion
Securities Group Incorporated, a registered
broker-dealer and a NASD member. He resigned as
President of Clarion Securities in 1985 to return to
the practice of law full time as a partner of the New
York office of Lane & Edson, and became a partner of
Dewey Ballantine LLP in New York City in 1988. Mr.
Socha left Dewey Ballantine LLP in February 1992 to
devote additional time to the predecessor to Perseus,
L.L.C. which he had joined in May 1991 as Executive
Vice President. Mr. Socha serves on the board of
directors of MGI Software Inc. and several private
corporations. Mr. Socha is a graduate of the
University of Notre Dame and the Duke University
School of Law. Mr. Socha has served as a director
since October 1998.
TERMS EXPIRING IN 2003
William E. Stanton, 57....................... Mr. Stanton has served as our President and Chief
Financing Committee; Nominating Committee Executive Officer since January 1998 and a director
since 1997. Prior to January 1998, he served as our
general manager. Prior to joining Beacon, Mr. Stanton
was the Chief Operating Officer of SatCon from
September 1995 to May 1997, where he managed
operations and the strategy development to convert
SatCon from a contract research and development
company to a commercial product organization. This
strategy included the formation of Beacon Power.
Prior to joining SatCon, Mr. Stanton was one of two
Vice Presidents of Operations at the Charles Stark
Draper Laboratory where he managed between
$50,000,000 and $75,000,000 of contract research and
development annually. At Draper, he had also served
as the Vice President of Corporate Development, where
he led strategic planning, developed and managed a
$25,000,000 annual corporate research and development
program, and helped create new business units that
were generating over $30,000,000 in software and
avionics products annually. Mr. Stanton received a
Bachelor's Degree in Electrical Engineering from the
University of Maine, a Master's Degree in
Instrumentation and Control from the Massachusetts
Institute of Technology, and an Master's in Business
Administration from the Harvard Business School.
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NAME, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- -------------------- -----------------------------------------------------
Philip J. Deutch, 36......................... Mr. Deutch has served as a Managing Director of
Financing Committee; Nominating Committee Perseus, L.L.C. since 1997. In this position, Mr.
Deutch has led Perseus, L.L.C.'s investments in
numerous energy technology companies. From 1991 to
1997, Mr. Deutch was an attorney at Williams &
Connolly LLP. Mr. Deutch worked in the Mergers and
Acquisitions Department of Morgan Stanley Dean Witter
& Co. in New York City. In this position, Mr. Deutch
was a member of execution teams for acquisitions,
divestitures, and leveraged buyouts. Mr. Deutch is a
graduate, with distinction, of Stanford Law School
and of Amherst College where he was elected a member
of Phi Beta Kappa. Mr. Deutch is a term member of the
Council of Foreign Relations and a Trustee of the
Washington Performing Arts Society. Mr. Deutch has
served as a director since October 1998.
Eric R. Stoltz, 43........................... Mr. Stoltz serves as a Vice President and as
Compensation Committee Treasurer of DQE Enterprises, Inc., a wholly owned
subsidiary of DQE, Inc., which acquires and develops
businesses involved in energy services and
technologies, communications and electronic commerce.
Mr. Stoltz is responsible for identifying and
managing strategic investment opportunities. Mr.
Stoltz has served in various management positions
within DQE since 1988, including business
development, marketing and real estate. Mr. Stoltz
has served as Vice President of DQE Enterprises, Inc.
since February 1999 and as Treasurer of DQE
Enterprises, Inc. since July 1999. He has also served
as President of Property Ventures Ltd., a wholly
owned subsidiary of DQE Enterprises, Inc., since
February 1999. Previously, he had served as Vice
President of Property Ventures Ltd. and as a Director
of DQE Enterprises, Inc. from January 1998 to January
1999. He also served as a Director of Property
Ventures Ltd. from January 1994 to December 1997. Mr.
Stoltz holds a Master's in Business Administration
from Carnegie Mellon University. Mr. Stoltz has
served as a director since October 1999.
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NAME, AGE AND PRINCIPAL OCCUPATION AND
COMMITTEE MEMBERSHIP OTHER INFORMATION
- -------------------- -----------------------------------------------------
TERMS EXPIRING IN 2002
Alan P. Goldberg, 55......................... Mr. Goldberg joined us as a director in June 2000.
Audit Committee; Financing Committee Mr. Goldberg has served as President and Co-Chief
Executive Officer of First Albany Companies Inc., an
investment bank, since 1993 and as a Director of
First Albany Companies Inc. since 1985. Mr. Goldberg
also has served on the board of directors of
Mechanical Technology, Incorporated since 1996 and of
SatCon since 1999. Mr. Goldberg is active in industry
and civic organizations and serves on the board of
several non-profit institutions. He received a B.A.
degree in Government from Tufts University.
Nancy Hawthorne, 50.......................... Ms. Hawthorne joined us as a director in February
Chairperson, Audit Committee; Chairperson, 2001. Ms. Hawthorne served as Chief Financial Officer
Financing Committee; Nominating Committee of Continental Cablevision, Inc. until 1996. Upon
Continental's merger with US West and subsequent
renaming as MediaOne, she became that company's
executive vice president. She departed MediaOne in
1997. Subsequently, she has served on several
corporate boards, including Avid Technology, Life
F/X, Inc., Perini Corporation, New England Zenith
Fund and CGU (formerly Commercial Union). She is also
a private investor in and advisor to various
early-stage companies including WorldClinic, Inc.,
whose Board of Directors she chairs. Ms. Hawthorne is
active in industry and civic organizations and serves
on the board of several non-profit institutions.
Ms. Hawthorne received a bachelor's degree from
Wellesley College in 1973 and an MBA from Harvard
Business School in 1977.
CERTAIN INFORMATION REGARDING OUR BOARD OF DIRECTORS
BOARD COMPOSITION
Our board of directors currently consists of seven members, six of whom are
outside directors. Beginning with this annual meeting, our directors will be
divided, with respect to the time for which they severally hold office, into
three classes, as nearly equal in number as possible, with the term of office of
the first class to expire at the 2002 annual meeting of our stockholders, the
term of office of the second class to expire at the 2003 annual meeting of our
stockholders and the term of office of the third class to expire at the 2004
annual meeting of our stockholders, with each director to hold office until his
or her successor shall have been duly elected and qualified or until his or her
earlier removal or resignation. At each annual meeting of our stockholders,
commencing with the 2002 annual meeting, directors elected to succeed those
directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of our stockholders after their
election.
There are no family relationships among any of our directors or executive
officers.
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MEETINGS AND COMMITTEES
GENERAL. The board of directors held a total of seven meetings during 2000.
Each member of the board of directors attended at least 75% of the aggregate
number of meetings of the board of directors and each committee on which he or
she served. Our board of directors has an audit committee, a compensation
committee, a nominating committee and a finance committee. No member of the
audit or compensation committee is an employee of Beacon.
AUDIT COMMITTEE. The members of the audit committee are responsible for
recommending to the board of directors the engagement of our independent
auditors and reviewing our accounting controls and the results and scope of
audits and other services provided by our auditors. The current members of the
audit committee are Mr. Goldberg and Ms. Hawthorne. The audit committee held no
meetings during the last fiscal year that were not part of a full meeting of the
board of directors. We are required by the Rules of the Nasdaq to satisfy
certain requirements with respect to the audit committee. In conformity with
those requirements, our board of directors has approved the audit committee's
written charter. A copy of the audit committee's charter is included as
Appendix A to this proxy statement. In addition, our board of directors has
determined that all of the members of the audit committee satisfy the
independence and other applicable requirements of the Nasdaq's listing
standards.
COMPENSATION COMMITTEE. The compensation committee is responsible for
reviewing and recommending to the board of directors the amount and type of
non-stock and stock compensation to be paid to senior management and
establishing and reviewing general policies relating to compensation and
benefits of employees. The current members of the compensation committee are
Messrs. Socha and Stoltz. The compensation committee held no meetings during the
last fiscal year that were not part of a full meeting of the board of directors.
NOMINATING COMMITTEE. The members of the nominating committee are
responsible for recommending nominee directors to our board of directors. The
board as a whole then reviews the qualifications of nominee directors and
recommends to the stockholders the election of our directors. A stockholder may
nominate a person for election as a director by complying with Section 2.2 of
our By-Laws, which provides that advance notice of a nomination must be
delivered to Beacon and must contain the name and certain information concerning
the nominee and the stockholders who support the nominee's election. A copy of
this By-Law provision may be obtained by writing to Beacon Power Corporation,
Attn: Secretary, 234 Ballardvale Street, Wilmington, MA 01887. The current
members of the nominating committee are Mr. Stanton, Mr. Eisenhaure, Mr. Deutch
and Ms. Hawthorne. The nominating committee was formed in 2001 and thus held no
meetings in 2000.
FINANCING COMMITTEE. The financing committee is responsible for evaluating
and making recommendations to the board concerning Beacon's financing strategy.
The current members of the financing committee are Ms. Hawthorne, Mr. Goldberg,
Mr. Deutch and Mr. Stanton. The financing committee was formed in 2001 and thus
held no meetings in 2000.
DIRECTOR COMPENSATION
We have adopted a compensation package that consists of stock options and
cash designed to compensate board members who are not our employees
("non-employee directors"). All non-employee directors serving on our board of
directors have received options to purchase 10,000 shares of our common stock.
Options granted to directors who were on the board of directors prior to our
initial public offering are fully vested with an exercise price equal to $6.00.
Non-employee directors who joined our board of directors after September 22,
2000 or who join in the future receive options to purchase 10,000 shares of our
common stock that vest monthly over a 12-month period and have an exercise price
equal to the fair market value of the common stock on the date of grant. On the
8
anniversary date of each particular non-employee director's appointment to our
board, each non-employee director will receive options to purchase 10,000 shares
of our common stock that vest monthly over a 12-month period and have an
exercise price equal to the fair market value of the common stock on the date of
grant.
Non-employee directors will also receive an annual retainer of $10,000,
payable quarterly, plus $2,000 for each board of directors meeting attended and
$500 for each telephonic meeting attended. Committee members receive $500 per
meeting. We also reimburse members of our board of directors for reasonable
out-of-pocket expenses.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Our certificate of incorporation limits the liability of our directors,
officers and various other parties whom we have requested to serve as directors,
officers, trustees or in similar capacities with other entities to us or our
stockholders for any liability arising from an action to which such persons were
party by reason of the fact that they were serving us or at our request to the
fullest extent not prohibited by the Delaware General Corporation Law.
We have entered into indemnification agreements with our directors and
officers. Subject to certain limited exceptions, under these agreements, we will
be obligated, to the fullest extent not prohibited by the Delaware General
Corporation Law, to indemnify such directors and officers against all expenses,
judgments, fines and penalties incurred in connection with the defense or
settlement of any actions brought against them by reason of the fact that they
were our directors or officers. We also maintain liability insurance for our
directors and officers in order to limit our exposure to liability for
indemnification of our directors and officers.
TERM OF OFFICE FOR OUR EXECUTIVE OFFICERS
Our officers serve until their successors are appointed by our board of
directors.
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COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth the total compensation earned in the years
ended December 31, 2000, 1999 and 1998 by our chief executive officer and four
of our other executive officers whose aggregate compensation exceeded $100,000
in 2000.
SUMMARY COMPENSATION TABLE(1)
ANNUAL COMPENSATION
-------------------- SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) UNDERLYING OPTIONS COMPENSATION(2)
- --------------------------- -------- --------- -------- ------------------ ---------------
WILLIAM E. STANTON................. 2000 $228,778 $217,069 900,000 $4,987
President and Chief Executive
Officer 1999 157,769 -- 190,000 --
1998 157,500 -- 180,000 --
ROBERT D. FRENCH(3)................ 2000 $ 91,346 $ 16,707 200,000 $1,880
Vice President of Manufacturing
MATTHEW L. LAZAREWICZ(4)........... 2000 $155,769 $ 50,000 50,000 $1,174
Vice President of Engineering 1999 113,723 -- 250,000 --
MAUREEN A. LISTER.................. 2000 $125,000 $115,241 118,000 $ 539
Vice President of Operations 1999 83,323 -- 132,000 --
Management and Chief 1998 58,364 -- -- --
Administrative Officer
JAMES M. SPIEZIO(5)................ 2000 $111,712 $100,241 200,000 $3,717
Vice President of Finance and Chief
Financial Officer
- ------------------------
(1) Columns required by the rules and regulations of the Securities and Exchange
Commission that contain no entries have been omitted.
(2) Amounts represent term life insurance premiums paid by the executive and
reimbursed by Beacon plus an amount to reimburse the executive for taxes
paid on the amount of the premium.
(3) We hired Mr. French in April 2000.
(4) We hired Mr. Lazarewicz in February 1999.
(5) We hired Mr. Spiezio in May 2000.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with Messrs. Stanton, Spiezio,
Lazarewicz, French and Ms. Lister for, in the case of our chief executive
officer, three years, and, in the case of all other executive officers, two
years. The current base salary under these agreements is $220,000 in the case of
Mr. Stanton; $160,000 in the case of Mr. Spiezio; $140,000 in the case of
Ms. Lister; $150,000 in the case of Mr. Lazarewicz; and $140,000 in the case of
Mr. French. In the event of the termination of an employment agreement by us
without cause or resignation by the executive for good reason, we must pay the
executive a severance payment equal to between one and two years of the
executive's base salary depending on the duration of the executive's employment.
Additionally, in the event of such a termination or resignation, we are
obligated to continue to provide benefits to the executive for one year, pay the
executive a prorated bonus to the date of termination and accelerate the
executive's vesting of his or her stock options by up to 66% depending on the
duration of the executive's employment. In the event that the executive's
employment is terminated as a result of death or disability, we are obligated to
pay the executive or his or her estate severance equal to three months
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salary, provide benefits for one year from the date of termination and
accelerate the vesting of the executive's stock options by up to 66%. If, in
connection with a payment under an employment agreement, an executive incurs any
excise tax liability on the receipt of "excess parachute payments" as defined in
Section 280G of the Internal Revenue Code of 1986, as amended, the employee
agreements provide for gross-up payments to return them to the after-tax
position they would have been in if no excise tax had been imposed. As used in
the employment agreements, "cause" means an act constituting fraud, embezzlement
or other felony committed by the executive, a material breach of the executive's
obligations to us or of our policies or the engagement by the executive in
willful misconduct. As used in the employment agreements, "for good reason"
means a material diminution of the executive's duties, a material breach by us
of our obligations to the executive, a breach by us of the requirement that the
executive provide primary services in a location that is no more than fifty
miles from Wilmington, Massachusetts, a sale of us or, in the case of our chief
executive officer, the failure to appoint him as a member of our board of
directors or the removal of him from our board of directors without cause.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options granted
during 2000 to our executive officers listed in the Summary Compensation Table.
During 2000, we granted options to purchase an aggregate of 3,123,688 shares of
common stock to employees, 60,000 shares of common stock to directors and
160,000 shares of common stock to consultants. The exercise price per share for
these options was equal to the fair market value of the common stock as of the
grant date as determined by our board of directors.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
NUMBER OF INDIVIDUAL GRANTS RATES OF STOCK PRICE
SECURITIES PERCENT OF TOTAL -------------------------------- APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED TO TERM(1)
OPTIONS EMPLOYEES IN FISCAL EXERCISE PRICE -----------------------
NAME GRANTED YEAR ($/SHARE) EXPIRATION DATE 5%($) 10%($)
- ---- ---------- ------------------- -------------- --------------- ---------- ----------
William E. Stanton..... 300,000 9.6% $2.50 June 5, 2010 $1,221,671 $1,945,307
300,000 9.6% 3.10 June 5, 2010 1,514,872 2,412,180
300,000 9.6% 6.00 June 5, 2010 2,932,010 4,668,736
Robert D. French....... 200,000 6.4% 0.89 April 1, 2010 289,943 461,686
Matthew L.
Lazarewicz........... 30,000 1.0% 2.50 June 5, 2010 122,167 194,531
20,000 0.6% 2.50 June 5, 2010 81,445 129,687
Maureen A. Lister...... 72,000 2.3% 2.50 June 5, 2010 293,201 466,874
46,000 1.5% 2.50 June 5, 2010 187,323 298,288
James M. Spiezio....... 50,000 1.6% 2.50 June 5, 2010 203,218 324,218
140,000 4.5% 2.10 May 10, 2010 478,895 762,560
10,000 0.3% 2.10 May 10, 2010 34,207 54,469
- ------------------------
(1) The dollar amounts under these columns represent the potential realizable
value of each grant assuming that the market value of our common stock
appreciates from the date of grant to the expiration of the option at
annualized rates of 5% and 10%. These assumed rates of appreciation have
been specified by the SEC for illustrative purposes only and are not
intended to forecast future financial performance or possible future
appreciation in the price of our common stock. The actual amount the
executive officer may realize will depend on the extent to which the stock
price exceeds the exercise price of the options on the date the option is
exercised.
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FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT FISCAL
FISCAL YEAR-END(#) YEAR-END($)(1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
William E. Stanton............................. 0 1,040,000 -- $10,400,000
Robert D. French............................... 0 200,000 -- $ 2,000,000
Matthew L. Lazarewicz.......................... 0 216,666 -- $ 2,166,660
Maureen A. Lister.............................. 88,000 162,000 $880,000 $ 1,620,000
James M. Spiezio............................... 0 200,000 -- $ 2,000,000
- ------------------------
(1) Based on a per share price of $10.00, the closing price of our common stock
on the Nasdaq National Market on December 31, 2000.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of Beacon's board of directors (the "Committee")
has the authority to set the compensation of Beacon's Chief Executive Officer
and all executive officers and makes the following report for the year 2000. The
Committee has the responsibility to review the design, administration and
effectiveness of all programs and policies concerning executive compensation.
The Committee administers Beacon's Amended and Restated 1998 Stock Incentive
Plan. The Committee also administers Beacon's Employee Stock Purchase Plan. In
addition, the Committee has responsibility for the review and approval of the
Management Incentive Program(s) to be in effect for the Chief Executive Officer,
executive officers and key employees each fiscal year. The Committee is
currently composed of two non-employee directors.
GENERAL COMPENSATION PHILOSOPHY. Beacon operates in the competitive and
rapidly changing power technology industry. The Committee strives to maintain
compensation programs that allow Beacon to respond to the competitive pressures
within this industry. Beacon's compensation philosophy is to offer compensation
opportunities that are linked to Beacon's business objectives and performance,
individual performance and contributions to Beacon's success, and enhanced
shareholder value. These compensation opportunities are intended to be
competitive within this industry and enable Beacon to attract, retain and
motivate the management talent necessary to achieve Beacon's overall business
objectives and ensure Beacon's long-term growth.
COMPENSATION COMPONENTS. It is the Committee's objective to have a
substantial portion of each executive officer's compensation opportunity
conditional ("at risk") upon Beacon's performance, as well as his or her
contribution to Beacon's meeting its objectives and to design a total
compensation and incentive structure to motivate and reward success, balancing
short and long-term goals. Beacon's executive compensation program consists of
three major components: (i) base salary; (ii) an annual management incentive
bonus; and (iii) long-term incentives. The second and third elements constitute
the "at risk" portion of Beacon's overall compensation program.
BASE SALARY. The Committee annually reviews each executive officer's base
salary. The base salary for each officer reflects the salary levels for
comparable positions in the industry and in published surveys. These surveys
include companies with whom Beacon competes for senior-level executives. (Some
of the companies included in the surveys are included in the CIBC World Markets
Power Technology & Growth Index used in the graph set forth under "Corporate
Performance.") In addition, the Committee considers the executive's individual
performance and Beacon's success in achieving its annual business objectives.
The Committee exercises its judgment based upon the above criteria and does not
apply a specific formula or assign a weight to each factor considered. The
relative weight
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given to each factor varies with each individual in the sole discretion of the
Committee. Each executive officer's base salary is adjusted each year on the
basis of (i) the Committee's evaluation of the officer's personal performance
for the year and (ii) the competitive marketplace for persons in comparable
positions. The Committee attempts to fix base salaries on a basis generally in
line with base salary levels for comparable companies.
ANNUAL MANAGEMENT INCENTIVE BONUS. The annual management incentive bonus is
the first "at risk" executive compensation element in Beacon's executive
compensation program. At the beginning of each year, the Committee establishes
objectives for the management incentive bonus program drawn from the fiscal year
business plan approved by the Board of Directors. Additionally, at the beginning
of each year, the Committee establishes bonus award targets for the Executive
Officers. The bonus plan has a threshold level of performance by Beacon that
must be achieved before any bonuses are awarded. The bonus amounts payable to
each Executive Officer are then determined by considering Beacon's performance
and individual performance.
LONG-TERM INCENTIVE PROGRAM ("LTIP"). The LTIP is the second "at risk"
element of Beacon's compensation program in which executive officers and all
other employees participate. This program has consisted solely of stock options,
not cash. The Committee views the granting of stock options as a significant
method of aligning management's long-term interests with those of the
shareholders, which bring into balance short and long-term compensation with
Beacon's goals, fostering the retention of key executive and management
personnel, and stimulating the achievement of superior performance over time.
Awards to executives are based upon criteria which include an individual's
current position with Beacon, total compensation, unvested stock options, the
executive's performance in the recent period, expected contributions to the
achievement of Beacon's long-term performance goals, and current competitive
practice. The relative weight given to each of these factors will vary from
executive to executive at the Committee's discretion. After giving consideration
to the criteria deemed relevant by the Committee, including prior option grants
made to Beacon executives, a competitive analysis of Beacon's option program and
overall compensation programs against the programs of companies of similar size
and industry, and the recommendations of Beacon's management, the Committee
approved the stock option grants to the executive officers listed in the summary
Compensation Table set forth in the option grant table. The Committee also
approved a stock option grant to two other executive officers hired in 2001.
These stock options were granted at exercise prices equal to the fair market
value of the stock at the effective date of the grant, become exercisable over
three years and have a term of ten years.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. William E. Stanton, Beacon's Chief
Executive Officer and President, receives competitive compensation and regular
benefits in effect for senior executives of Beacon. During 2000, the Committee
increased Mr. Stanton's annual base salary from $150,000 to $210,000 as
determined on the same basis as other senior executives of Beacon, based on the
factors noted above in "Compensation Committee Report--Base Salary."
Mr. Stanton also received a cash bonus in the amount of $217,069. This amount
was determined by the Committee after taking into account Mr. Stanton's efforts
in successfully completing Beacon's class E and F preferred stock financings and
initial public offering. In addition to such cash compensation, Mr. Stanton also
received options to acquire an aggregate of 900,000 shares of Common Stock at
exercise prices equal to the fair market value of the Common Stock on the date
of grant. The vesting of all of such options accelerates upon a sale of Beacon.
EMPLOYEE STOCK PURCHASE PLAN. Beacon maintains an employee stock purchase
plan that qualifies under Section 423 of the Internal Revenue Code and permits
substantially all of its U.S. employees to purchase shares of its common stock.
Participating employees may purchase common stock at a purchase price equal to
85% of the lower of the fair market value of the common stock at the beginning
of an offering period or on the exercise date. Employees may designate up to 15%
of their
13
base compensation for the purchase of common stock under this plan. Beacon's
executive officers are eligible to participate in this program, subject to any
applicable tax laws.
RETIREMENT PLANS. Beacon maintains a plan that complies with the provisions
of Section 401(k) of the Internal Revenue Code. Substantially all U.S. employees
are eligible to participate in this plan, and eligibility for participation
commences upon hiring. Beacon's executive officers are eligible to participate
in this program, subject to any applicable tax laws.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code disallows a tax deduction to publicly held companies for
compensation paid to certain of their executive officers, to the extent that
compensation exceeds $1 million per covered officer in any fiscal year. The
limitation applies only to compensation that is not considered to be
performance-based. Beacon's Amended and Restated 1998 Stock Incentive Plan has
been structured so that any compensation deemed paid in connection with the
exercise of option grants made under that plan with an exercise price equal to
the fair market value of the option shares on the grant date will qualify as
performance-based compensation which will not be subject to the $1 million
limitation. Cash and other non-performance based compensation paid to Beacon's
executive officers for fiscal 2000 did not exceed the $1 million limit per
officer, and the Committee does not anticipate that the non-performance based
compensation to be paid to Beacon executive officers will exceed that limit.
Because it is unlikely that the cash compensation payable to any of Beacon's
executive officers in the foreseeable future will approach the $1 million limit,
the Committee has decided at this time not to take any action to limit or
restructure the elements of cash compensation payable to Beacon's executive
officers. The Committee will reconsider this decision should the individual cash
compensation of any executive officer ever approach the $1 million level.
It is the opinion of the Committee that the executive compensation policies
and plans provide the necessary total remuneration program to properly align
Beacon's performance and the interests of Beacon's stockholders through the use
of competitive and equitable executive compensation in a balanced and reasonable
manner, for both the short and long-term.
Submitted by the Compensation
Committee:
Kenneth M. Socha, Chairperson
Eric R. Stoltz
14
AUDIT COMMITTEE REPORT
In connection with the preparation and filing of our Annual Report on
Form 10-K for the year ended December 31, 2000, the Audit Committee
(i) reviewed and discussed the audited financial statements with management,
(ii) discussed with Deloitte & Touche LLP, our independent auditors, the matters
required to be discussed by Statement of Auditing Standards 61 (as modified or
supplemented) and (iii) received the written disclosures and the letter from
Deloitte & Touche LLP required by Independence Standards Board Standard No. 1
(as modified or supplemented) and discussed the independence of Deloitte &
Touche LLP with Deloitte & Touche LLP. Based on the review and discussions
referred to above, among other things, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Corporation's Annual Report on Form 10-K for the year ended December 31, 2000.
Submitted by the Audit Committee:
Nancy Hawthorne, Chairperson
Alan P. Goldberg
CORPORATE PERFORMANCE
The line graph below compares the cumulative total stockholder return for
the year ended December 31, 2000 of our common stock against the cumulative
total return of the Nasdaq Stock Market Index and the CIBC World Markets Power
Technology & Growth Index. The graph and table assume that $100 was invested on
November 17, 2000, the first date on which our common stock began trading
following our initial public offering, in each of our common stock, the Nasdaq
Stock Market Index and the CIBC World Markets Power Technology & Growth Index,
and that all dividends were reinvested. No cash dividends have been declared on
our common stock.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Index Value
PERIOD ENDING
11/17/00 11/30/00 12/31/00
Beacon Power Corporation $100.00 $118.23 $166.67
CIBC World Markets Power Technology & Growth Index $100.00 $75.46 $88.00
Nasdaq Stock Market index $100.00 $85.82 $81.61
Total Return Performance
* STOCKHOLDER RETURNS OVER THE INDICATED PERIOD SHOULD NOT BE CONSIDERED
INDICATIVE OF FUTURE STOCKHOLDER RETURNS.
15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than 10% of a registered class of our
equity securities ("Insiders"), to file reports of ownership and changes in
ownership with the SEC. Insiders are required by SEC regulation to furnish us
with copies of all Section 16(a) forms they file. Based solely on review of the
copies of such forms furnished to us and on written representations from our
Insiders, we believe that during 2000 all of our Insiders met their
Section 16(a) filing requirements with the exception of Ms. Lister who
inadvertently failed to file a timely Form 4 to report a transaction occurring
in November 2000 which involved a total of 125 shares; Mr. Lazarewicz who
inadvertently failed to file a timely Form 4 to report two transactions
occurring in November 2000 which involved a trust of which he is the trustee and
a total of 1500 shares; and Perseus Capital, L.L.C. that inadvertently failed to
include on its Form 3 filed with the Securities and Exchange Commission an
additional holding of 5,786 shares. All of such transactions have been
subsequently reported by the applicable Insider.
OTHER INFORMATION RELATING TO DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
GENERAL
We effected a 2-for-1 stock split of our common stock immediately prior to
the consummation of our initial public offering. Each outstanding share of our
preferred stock was converted simultaneously with the consummation of that
offering into two shares of common stock as a result of this split. The issued
and outstanding preferred stock referred to in this section is not adjusted for
this conversion.
AGREEMENT WITH GE CORPORATION RESEARCH AND DEVELOPMENT
As a result of the investment in our company by GE Capital Equity
Investments, Inc., we have entered into an agreement with GE Corporate Research
and Development ("GE CR&D"), under which GE CR&D will provide us with technical
expertise in controls and materials. Under the terms of that agreement, GE CR&D
has agreed to make available to us up to $2,000,000 of its services at cost and
we have issued GE Equity a warrant to purchase 240,000 shares of our common
stock at an exercise price of $2.10 per share. Of these warrants, 120,000 vested
immediately and 120,000 will vest ratably to the extent to which we use GE
CR&D's services. This agreement terminates, and any unvested options are
forfeited, on November 1, 2003. GE Equity is a shareholder in our company.
DQE ENTERPRISES DISTRIBUTION AGREEMENT
In connection with our May 1997 formation, DQE Enterprises, a subsidiary of
DQE, Inc., entered into a letter agreement with us pursuant to which, among
other things, we have agreed to appoint DQE Enterprises or one of its affiliates
as our exclusive distributor of our flywheel products for stationary energy
storage applications in the states of Pennsylvania, New York, Ohio, West
Virginia, Maryland, Delaware, Virginia and the District of Columbia. Under this
agreement, we retained the right to make sales in this territory to cable and
telephone companies and to electric utilities for their internal use. DQE
Enterprises also has a nonexclusive right to distribute the products outside
this territory, which we have the right to terminate at any time. The
distribution rights have a term of 20 years from the commencement of commercial
production of our products, provided that the rights may be terminated earlier
if DQE Enterprises does not meet sales targets to be agreed upon in the future.
We have agreed to sell our products to DQE Enterprises at the lower of (i) cost
of goods sold (including certain overhead expenses) plus 30% and (ii) the lowest
price at which the products are sold to others. DQE Enterprises is a shareholder
in our company. Eric Stoltz, a Vice-President of DQE Enterprises, serves as a
member of our board of directors. The terms of the license agreement were
determined on the basis of arms-length negotiations.
16
LICENSES WITH SATCON
SatCon has granted us a perpetual, exclusive, royalty-free, worldwide right
and license to all patents, patent applications, technical knowledge,
information and know-how in existence in May 1997 and any improvements on that
intellectual property developed by SatCon prior to the completion of our initial
public offering which relate to the field of flywheel energy storage products,
systems and processes for stationary terrestrial (in or on ground or affixed to
structures on ground) applications, but not for satellite or other
non-terrestrial, stationary applications. We do not have the right to sublicense
this technology other than in connection with our manufacturing and distribution
operations. We will not have any rights to future improvements to its flywheel
technology that SatCon develops after our initial public offering. We have
granted SatCon a perpetual, worldwide, royalty-free, exclusive right and license
to use any improvements upon the flywheel energy storage technology for any
applications made by us other than stationary terrestrial applications. SatCon's
rights to further improvements made by us in our flywheel technology terminated
upon the consummation of our initial public offering. The license from SatCon is
terminable by SatCon in certain limited circumstances, including our bankruptcy,
upon the material breach of our obligations under the license, the exercise of
certain put rights granted by SatCon to certain of our investors and upon notice
by SatCon that the license agreement infringes upon the rights of a third party.
SatCon is a shareholder in our company. David Eisenhaure, SatCon's president and
chief executive officer and chairman of the board of directors of SatCon, serves
as a member of our board of directors.
INITIAL FORMATION
SatCon formed us on May 8, 1997 and funded our initial operations on
May 28, 1997, using an investment in SatCon of $5,000,000 made by DQE
Enterprises. Pursuant to the terms of a securities purchase agreement dated
May 28, 1997 among us, SatCon and DQE Enterprises, DQE Enterprises made an
initial investment in SatCon totaling $5,000,000 in cash to fund flywheel
product development and received a warrant to purchase 1,125,500 shares of our
common stock, at a purchase price of $2.67 per share. These warrants expired
unexercised on May 28, 1999. We granted DQE Enterprises registration rights
which were terminated by the registration rights agreement entered into in
connection with the class E preferred stock financing described below. As part
of the agreement, SatCon invested $5,000,000 in cash in us and received
6,750,000 shares of our common stock and 1,125,000 shares of our class A
preferred stock and granted us the perpetual, exclusive, royalty-free right and
license described above.
1997 RECAPITALIZATION
On December 19, 1997, we issued 13,476 shares of our common stock and six
shares of our class C preferred stock to six individuals, none of whom were or
are affiliates of our company. In connection with this investment, SatCon
exchanged 6,746,626 shares of our common stock for 3,373,313 shares of our
class A preferred stock.
In connection with that transaction, the six investors and SatCon entered
into a voting agreement under which the stockholders agreed to vote to elect
designated directors and as to certain other matters. This agreement, as
amended, terminated upon consummation of our initial public offering.
CLASS D PREFERRED STOCK SECURITIES PURCHASE AGREEMENT
Pursuant to the terms of a securities purchase agreement dated October 23,
1998, among us, Perseus Capital, L.L.C. ("Perseus Capital") DQE Enterprises,
Micro-Generation and SatCon:
- the purchasers purchased from us 1,900,000 shares of our class D preferred
stock at a purchase price of $2.50 per share; and
17
- we were contractually obligated to issue to the purchasers warrants to
purchase in the aggregate 4,455,000 shares of our common stock if we did
not meet certain financing goals by October 23, 1999 and April 23, 2000.
The aggregate consideration we received was $4,750,000. The terms of the
securities purchase agreement were determined on the basis of arms-length
negotiations. Prior to the execution of the securities purchase agreement,
neither we nor SatCon had any material relationship with Perseus Capital or
Micro-Generation. Perseus Capital and Micro-Generation are shareholders in our
company. Philip Deutch, a Managing Director of Perseus Capital, and Kenneth
Socha, Senior Managing Partner of Perseus Capital, serve as members of our board
of directors.
CLASS E BRIDGE LOANS
On June 22, 1999, SatCon, Perseus Capital, DQE Enterprises and
Micro-Generation made bridge loans to us in the respective principal amounts of
$250,000, $250,000, $50,000 and $50,000. These loans accrued interest at a rate
of 12.5% per annum increasing to 15% per annum in the event the loans went into
default or were not paid in full by September 23, 1999.
On August 2, 1999, SatCon, Perseus Capital, DQE Enterprises and
Micro-Generation committed to make, and on or subsequent to that date made,
bridge loans to us in the respective principal amounts of $1,000,000,
$1,350,000, $500,000 and $300,000. As consideration for these loans, we received
$2,550,000 in cash and cancelled the loans in the principal amount of $600,000
made to us on June 22, 1999 by the same participants. These loans accrued
interest at a rate of 12.5% per annum, increasing to 15% per annum in the event
we had not sold $5,000,000 or more of our class E preferred stock by
February 2, 2000.
On January 7, 2000, SatCon, Perseus Capital, DQE Enterprises and Micro
Generation made similar bridge loans to us in the respective principal amounts
of $200,000, $250,000, $90,000 and $60,000. These loans accrued interest at a
rate of 12.5% per annum, increasing to 15% per annum in the event we had not
sold $5,000,000 or more of our class E preferred stock by May 7, 2000. The
principal and interest on these loans was payable in cash or, in the event the
bridge loans were converted into shares of class E preferred stock, in shares of
class E preferred stock at the price per share at which the class E preferred
stock was issued.
As part of these transactions, SatCon, Perseus Capital, DQE Enterprises and
Micro-Generation received warrants to purchase shares of our class E preferred
stock. In the August bridge financing, these investors received warrants to
purchase shares in an aggregate amount equal to $787,500 divided by the per
share price equal to the price we sold at least $5,000,000 of our class E
preferred stock, or, if such transaction was not consummated within 6 months,
$2.50 per share. No such transaction was consummated and as a result these
warrants were exercisable for an aggregate of 315,000 shares of our class E
preferred stock at an exercise price of $2.50 per share. In the January bridge
financing, these investors received the right to be issued a warrant under their
notes in the event there was a sale of at least $5,000,000 of our class E
preferred stock by February 2, 2000 and the investors demanded that either the
notes be paid in full or the investors purchased class E preferred stock. No
such sale occurred and these warrants were never issued.
All of these bridge loans and warrants were converted into the class E
preferred stock and class E warrants described below, except for the principal
and interest accrued on the SatCon $200,000 loan made on January 7, 2000 which
was repaid in full prior to the consummation of the class E preferred stock
financing.
The terms of the bridge loan agreements were determined on the basis of
arms-length negotiations.
18
CLASS E PREFERRED STOCK SECURITIES PURCHASE AGREEMENT
Pursuant to the terms of a securities purchase agreement, dated April 7,
2000, by and among us, SatCon, Perseus Capital, DQE Enterprises and
Micro-Generation:
- the purchasers purchased from us 1,226,141 shares of our class E preferred
stock at a purchase price of $3.12 per share; and
- we issued warrants to purchase 306,535 shares of our class E preferred
stock at an exercise price of $2.50 per share.
The class E preferred stock and these warrants were issued in consideration
of the cancellation of $3,550,000 principal amount of the bridge loans and
$275,559 accrued interest on those bridge loans and cancellation of the warrants
issued in connection with the bridge loans. The terms of the securities purchase
agreement were determined on the basis of arms-length negotiations.
FEBRUARY AND MARCH, 2000 INTERIM FINANCINGS
During February and March, 2000 we borrowed $600,000 from Perseus Capital,
$300,000 from SatCon, $300,000 from DQE Enterprises and $200,000 from
Micro-Generation under demand promissory notes convertible into our class F
preferred stock. The loans accrued interest at a rate of 6% per annum.
The principal on the Perseus Capital, DQE Enterprises and Micro-Generation
notes was converted into class F preferred stock upon consummation of the
class F preferred stock financing and accrued interest paid in cash. The
principal and interest accrued on the SatCon note was repaid in full prior to
the consummation of the class F preferred stock financing.
The terms of these interim financings were determined on the basis of
arms-length negotiations.
CLASS F BRIDGE LOAN
On April 21, 2000, Perseus Capital, Micro-Generation, Mechanical Technology
Incorporated, The Beacon Group Energy Investment Fund II, L.P. and Penske
Corporation made bridge loans to us in the respective principal amounts of
$1,200,000, $400,000, $1,200,000, $900,000 and $400,000. These loans accrued
interest at a rate of 6% per annum. The principal and interest on these loans
were payable in cash or, in the event the bridge loan was converted into shares
of class F preferred stock, in shares of class F preferred stock at the price
per share at which the class F preferred stock was issued.
As part of these transactions, Perseus Capital, Micro-Generation, Mechanical
Technology, Beacon Group and Penske Corporation received warrants to purchase in
the aggregate 82,000 shares of our common stock. These bridge warrants expire on
April 21, 2005 and have an exercise price of $2.10 per share.
The principal and interest accrued on these bridge loans were converted into
the class F preferred stock described below. Mechanical Technology and Penske
Company LLC, an affiliate of Penske Corporation, are shareholders of our
company. Alan Goldberg, a director of Mechanical Technology, serves as a member
of our board of directors.
The terms of the class F bridge loan were determined on the basis of
arms-length negotiations.
19
CLASS F PREFERRED STOCK SECURITIES PURCHASE AGREEMENT
Pursuant to the terms of a securities purchase agreement, dated May 23,
2000, by and among us, Perseus Capital, DQE Enterprises, Micro-Generation,
Mechanical Technology, Beacon Group, Penske Corporation and GE Capital Equity
Investments, Inc.:
- the purchasers purchased from us 6,785,711 shares of our class F preferred
stock at a purchase price of $4.20 per share; and
- we issued warrants to purchase 6,333,333 shares of our common stock at an
exercise price of $2.25 per share.
The class F preferred stock and these warrants were issued in consideration
of an aggregate of $23,300,000 in cash and the cancellation of $5,200,000
principal amount of the bridge loans. We also repaid the interest on the bridge
loans at the closing of the class F preferred stock financing. The terms of the
securities purchase agreement were determined on the basis of arms-length
negotiations.
In connection with the class F preferred stock financing, we entered into an
investors rights agreement. Also as part of this financing, we granted the
purchasers and SatCon rights to demand registration of their shares of our
capital stock under certain circumstances and to participate as selling
stockholders in any offering registered by us.
CONSULTING AGREEMENTS
We entered into Amended/Restated Consulting Agreements with each of DQE
Enterprises, Micro-Generation and Perseus Capital, each dated as of November 1,
1999, under which they acted as independent contractors and provided us with
consulting and advisory services with respect to:
- Flywheel applications in utility and related markets;
- Economic analysis of product opportunities in utility and related markets;
- Energy market trends and developments; and
- Other matters relating to our business that we shall reasonably request.
The terms of these consulting agreements were determined on the basis of
arms-length negotiations. Each of these agreements terminated immediately prior
to the effective date of our initial public offering.
DQE ENTERPRISES CONSULTING AGREEMENT. Our Amended/Restated Consulting
Agreement with DQE Enterprises replaced a consulting agreement with them entered
into in 1997.
Under this agreement, we issued DQE Enterprises 60,000 shares of our
class A preferred stock as of May 1998, 60,000 shares of our class A preferred
stock as of May 1999, 25,000 shares of our class A preferred stock as of
November 1999, 60,000 shares of our class A preferred stock on October 31, 2000
and 127,232 shares of our class A preferred stock on November 22, 2000. Each of
these shares converted into two shares of common stock upon consummation of our
initial public offering.
MICRO-GENERATION CONSULTING AGREEMENT. Our Amended/Restated Consulting
Agreement with Micro-Generation replaced a consulting agreement with them
entered into in 1998. Under this agreement, we issued Micro-Generation 24,000
shares of our class A preferred stock in November 1999 in replacement of common
stock to which they were entitled as of October 1998 and October 1999 and 1,446
shares of our class A preferred stock on November 22, 2000. Each of these shares
converted into two shares of common stock upon consummation of our initial
public offering.
PERSEUS CAPITAL CONSULTING AGREEMENT. Our Amended/Restated Consulting
Agreement with Perseus Capital replaced a consulting agreement with them entered
into in 1998. Under this agreement, we
20
issued Perseus Capital 96,000 shares of our class A preferred stock in
November 1999 in replacement of common stock to which they were entitled as of
October 1998 and October 1999 and 5,786 shares of our class A preferred stock on
November 22, 2000. Each of these shares converted into two shares of common
stock upon consummation of our initial public offering.
NEW FRONTIER ENTERPRISES INC. CONSULTING AGREEMENT
We were a party to a consulting agreement in 1999 and 2000 with New Frontier
Enterprises Inc. under which New Frontier provided us with business development
services. Under this agreement, we paid New Frontier $58,979 in 1999 and
$159,649 in 2000. John Doherty, one of our executive officers, served as
President of, and owned 50% of the equity in, New Frontier.
SATCON SERVICES
During 1997, 1998, 1999 and 2000, SatCon performed research and development,
administrative and other services on our behalf. Amounts paid to SatCon for
these services amounted to approximately $1,351,000, $443,000, $59,000 and
$551,000 during the period from inception to December 31, 1997, the year ended
December 31, 1998, the year ended December 31, 1999 and the year ended
December 31, 2000, respectively.
INDEMNIFICATION AND INSURANCE
We entered into indemnification agreements with all of our directors and
executive officers and have purchased directors' and officers' liability
insurance. In addition, our certificate of incorporation limits the personal
liability of our directors, officers and various other parties with whom we have
requested to serve as directors, officers, trustees or in similar capacities
with other entities to us or our stockholders for any liability arising from an
action to which such persons were party by reason of the fact that they were
serving us or at our request to the fullest extent not prohibited by the
Delaware General Corporation Law.
REGISTRATION RIGHTS AGREEMENT
Beginning 180 days after the closing of our initial public offering, Perseus
Capital, DQE Enterprises, Micro-Generation, Mechanical Technology, Beacon Group,
Penske, SatCon and GE Capital Equity Investments, Inc., will have the right to
demand that we register their shares on up to two occasions, provided the
anticipated aggregate offering is at least $500,000. In addition, these holders
may require us to file additional registration statements on Form S-3. These
holders will also have the right to include the shares of common stock they hold
or acquire upon the exercise of the warrants in any registration statements we
file with the Securities Exchange Commission, other than registration statements
filed with respect to employee benefit plans or in connection with an
acquisition. We are not required to file more than one registration statement in
any six-month period. We are required to bear the costs of the exercise of these
registration rights.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Socha and Stoltz served as members of the Compensation Committee
during 2000. Because of their respective relationships with Perseus Capital and
DQE Enterprises, Messrs. Socha and Stoltz may be deemed to have a material
interest in the transactions described above between Beacon and each of the
applicable entities. During 2000, there were no "interlocking" or cross-board
memberships that are required to be disclosed under SEC rules.
21
PROPOSAL 2
RATIFICATION OF SELECTION OF AUDITORS
We are submitting for ratification at the Annual Meeting the selection, by a
majority of the members of the Board who are not officers or employees of
Beacon, of Deloitte & Touche LLP ("Deloitte") as independent auditors to audit
the books and accounts of Beacon for the fiscal year ending December 31, 2001.
Such ratification requires the affirmative vote of a majority of the shares
entitled to vote thereon present in person or represented by proxy at the Annual
Meeting when a quorum is present. Representatives of Deloitte will be present at
the Annual Meeting and will be given an opportunity to make a statement if they
desire to do so and will respond to appropriate questions of stockholders.
Deloitte has advised us that neither it nor any of its members has any
direct financial interest in Beacon as a promoter, underwriter, voting trustee,
director, officer or employee.
AUDIT FEES
The aggregate fees billed for professional services rendered for the audit
of our annual financial statements for the fiscal year ended December 31, 2000,
were $180,280, all of which were paid to Deloitte.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Deloitte did not render professional services relating to financial
information systems design and implementation for the fiscal year ended
December 31, 2000.
ALL OTHER FEES
The aggregate fees billed by Deloitte for services rendered to us, other
than the services described above under "Audit Fees" for the fiscal year ended
December 31, 2000, were $655,021. These services related to the audit of our
annual financial statements for the fiscal years ended 1999, 1998 and 1997 in
connection with our initial public offering, the review of the other financial
information included in our Form S-1 filed in connection with our initial public
offering and tax advice.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF DELOITTE AS
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
OTHER MATTERS
Management does not know of any matters that will be brought before the
Annual Meeting other than those specified in the Notice of Annual Meeting.
However, if any other matters properly come before the Annual Meeting, the
persons named in the form of proxy, or their substitutes, will vote on such
matters in accordance with their best judgment.
FINANCIAL STATEMENTS
The Beacon 2000 Annual Report to Stockholders is provided to stockholders
along with this form of Proxy and contains the financial statements of Beacon.
The Annual Report and the financial statements contained therein are not to be
considered as a part of this soliciting material.
22
STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
In order to be included in proxy materials for the 2002 Annual Meeting of
Stockholders, stockholders' proposed resolutions must be received by Beacon at
its offices, 234 Ballardvale Street, Wilmington, Massachusetts 01887 on or
before December 24, 2001. Beacon suggests that proponents submit their proposals
by certified mail, return receipt requested, addressed to the Secretary of
Beacon.
If a stockholder of Beacon wishes to present a proposal before the 2002
Annual Meeting of Stockholders, but does not wish to have the proposal
considered for inclusion in Beacon's proxy statement and proxy card, such
stockholder must give written notice to the Secretary of Beacon at the address
noted above. The Secretary must receive such notice by January 23, 2002. If a
stockholder fails to provide timely notice of a proposal to be presented at the
2002 Annual Meeting of Stockholders, the proxies designated by the Board of
Directors of Beacon will have discretionary authority to vote on any such
proposal.
By order of the Board of Directors,
Beacon Power Corporation
/s/ Maureen A. Lister
Maureen A. Lister
Secretary
Wilmington, Massachusetts
April 27, 2001
23
Appendix A
BEACON POWER CORPORATION
AUDIT COMMITTEE CHARTER
ARTICLE I
PURPOSE
The purpose of the Audit Committee (the "Committee") of the Board of
Directors (the "Board") of Beacon Power Corporation, a Delaware corporation (the
"Corporation"), is to provide assistance to the Board in fulfilling their
responsibility to the stockholders, potential stockholders and the investment
community relating to the corporate accounting and reporting practices of the
Corporation, and the quality and integrity of financial reports of the
Corporation. In so doing, it is the objective of the Committee to establish and
maintain free and open communication between the Corporation's directors,
independent auditors, internal auditors and financial management.
ARTICLE II
COMMITTEE MEMBERSHIP
2.1 NUMBER OF COMMITTEE MEMBERS. The authorized number of members of the
Committee shall be three (3) and all members of the Committee shall be composed
of directors independent of the Corporation and otherwise duly qualified under
the relevant sections of the Nasdaq National Market Rules, attached hereto and
incorporated by reference as Schedule 1. The Board may designate one or more
directors as alternate Committee members, who may replace any absent member at
any meeting of the Committee.
2.2 APPOINTMENT AND TERM OF OFFICE OF COMMITTEE MEMBERS. Committee members
shall be appointed by the Board to hold office until replaced by a resolution of
the Board. Each Committee member, including a member elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified, except in the case of the death,
resignation, or removal of such a member.
2.3 REMOVAL. The entire Committee or any individual Committee member may be
removed from office without cause by the affirmative vote of a majority of the
Board.
2.4 RESIGNATION AND VACANCIES. Any Committee member may resign effective upon
giving oral or written notice to the Chairman of the Board, the Secretary of the
Corporation or the Board, unless the notice specifies a later time for the
effectiveness of such resignation. If the resignation of a Committee member is
effective at a future time, the Board may elect a successor to take office when
the resignation becomes effective.
The Board may fill vacancies on the Committee. Each Committee member so
elected shall hold office until a successor has been elected and qualified by
the Board, or until his or her death, resignation or removal. A vacancy or
vacancies in the Committee shall be deemed to exist (i) in the event of the
death, resignation or removal of any Committee member, (ii) if the Board by
resolution declares vacant the office of a Committee member who has been
declared of unsound mind by an order of court or convicted of a felony or
(iii) if the authorized number of Committee members is increased.
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ARTICLE III
COMMITTEE PROCESS
3.1 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. Regular meetings of the Committee
may be held at any place within or outside the State of Delaware that has been
designated from time to time by the Chairman of the Committee. In the absence of
such a designation, regular meetings shall be held at the principal executive
office of the Corporation. Special meetings of the Committee may be held at any
place within or outside the State of Delaware that has been designated in the
notice of the meeting or, if not stated in the notice or if there is no notice,
at the principal executive office of the Corporation.
Members of the Committee may participate in a meeting through the use of
conference telephone or similar communications equipment, so long as all
Committee members participating in such meeting can hear one another.
Participation in a meeting pursuant to this paragraph constitutes presence in
person at such meeting.
3.2 REGULAR MEETINGS. Regular meetings of the Committee may be held without
notice if the time and place of such meetings are fixed by resolution of the
Board or by resolution of the Committee.
3.3 SPECIAL MEETINGS; NOTICE. Subject to the provisions of the following
paragraph, special meetings of the Committee for any purpose or purposes may be
called at any time by the Chairman of the Committee, by the Board or by two
(2) Committee members.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telegram, charges prepaid, or by facsimile or electronic mail, addressed to each
Committee member at that member's address as it is shown on the records of the
Corporation. If the notice is mailed, it shall be deposited in the United States
mail at least four (4) days before the time of the holding of the meeting. If
the notice is delivered personally or by telephone or by facsimile, telegram or
electronic mail, it shall be delivered personally or by telephone or by
facsimile or to the telegraph company at least forty-eight (48) hours before the
time of the holding of the meeting. Any oral notice given personally or by
telephone may be communicated either to the Committee member or to a person at
the office of the member who the person giving the notice has reason to believe
will promptly communicate it to the member. The notice need not specify the
purpose of the meeting.
3.4 QUORUM. A majority of the authorized number of Committee members shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 3.6 of this Charter. Every act or decision done or made by a
majority of the directors present at a meeting duly held at which a quorum is
present is the act of the Committee, subject to certain provisions of the
Delaware General Corporation Law, the Corporation's Certificate of
Incorporation, as amended, and other applicable law.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of Committee members, if any action
taken is approved by at least a majority of the required quorum for such
meeting.
3.5 WAIVER OF NOTICE. Notice of a meeting need not be given to any Committee
member who signs a waiver of notice or a consent to holding the meeting or an
approval of the minutes thereof, whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to such member. All such waivers, consents, and approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting. A waiver of notice need not specify the purpose of any regular or
special meeting of the Committee.
3.6 ADJOURNMENT. A majority of the Committee members present, whether or not a
quorum is present, may adjourn any meeting to another time and place.
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3.7 NOTICE OF ADJOURNMENT. If the meeting is adjourned for more than
twenty-four (24) hours, notice of any adjournment to another time and place
shall be given prior to the time of the adjourned meeting to the Committee
members who were not present at the time of the adjournment.
3.8 COMMITTEE ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action required
or permitted to be taken by the Committee may be taken without a meeting, if all
Committee members individually or collectively consent in writing to such
action. Such written consent or consents shall be filed with the minutes of the
proceedings of the Committee. Such action by written consent shall have the same
force and effect as a unanimous vote of the Committee.
ARTICLE IV
COMMITTEE STRUCTURE
4.1 CHAIRMAN OF THE COMMITTEE. The Chairman of the Committee, if such an
officer be elected, shall, if present, preside at meetings of the Committee and
exercise and perform such other powers and duties as may from time to time be
assigned by the Board or as may be prescribed by this Charter. The Chairman of
the Committee shall be elected by resolution of the Board. In the absence or
disability of the Chairman of the Committee, the Board shall appoint an
alternative Chairman to preside at the Committee meetings.
4.2 SECRETARY. The Secretary of the Committee shall keep or cause to be kept,
at the principal executive office of the Corporation or such other place as the
Board may direct, a book of minutes of all meetings and actions of the
Committee. The minutes shall show the time and place of each meeting, whether
regular or special (and, if special, how authorized and the notice given), the
names of those present and the proceedings thereof. The Secretary shall give, or
cause to be given, notice of all meetings of the Committee required to be given
by law, this Charter or by the Corporation's Bylaws.
ARTICLE V
RECORDS AND REPORTS
5.1 MAINTENANCE AND INSPECTION OF CHARTER. The Corporation shall keep at its
principal executive office the original or a copy of this Charter as amended to
date, which shall be open to inspection by the stockholders at all reasonable
times during office hours.
5.2 MINUTES AND REPORTS. The Committee shall keep regular minutes of its
proceedings, which shall be filed with the Secretary of the Corporation. All
action by the Committee shall be reported to the Board at the next meeting
thereof, and, insofar as rights of third parties shall not be affected thereby,
shall be subject to revision and alteration by the Board.
5.3 MAINTENANCE AND INSPECTION OF MINUTES. The records and the minutes of
proceedings of the Committee shall be kept at such place or places as are
designated by the Board or, in absence of such designation, at the principal
executive office of the Corporation. The minutes shall be kept in written form,
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form.
ARTICLE VI
RESPONSIBILITIES
In carrying out its responsibilities, the Committee believes its policies
and procedures should remain flexible, in order best to react to changing
conditions and to ensure to the directors and
A-3
stockholders that the corporate accounting and reporting practices of the
Corporation are in accordance with all requirements and are of the highest
quality. The Committee shall:
6.1 DOCUMENTS/REPORTS REVIEW.
(a) Review the annual audited financial statements with management and the
independent auditors, including major issues regarding accounting and
auditing principles and practices as well as the adequacy of internal
controls that could significantly affect the Corporation's financial
statements, and recommend that the audited financial statements be
included in the Corporation's Annual Report on Form 10-K.
(b) Review with management and the independent auditors the Corporation's
quarterly financial statements.
(c) Review with management and the independent auditors the significant
financial reporting issues and judgments made in connection with the
preparation of the Corporation's financial statements and discuss any
other matters communicated to the Committee by the independent auditors.
(d) Prepare the report of the Committee required by the rules and
regulations of the Securities and Exchange Commission to be included in
the Corporation's annual proxy statement.
6.2 ACCOUNTING AND FINANCIAL CONTROLS FRAMEWORK.
(a) Review major changes to the Corporation's auditing and accounting
principles and practices as suggested by the independent auditors or
management.
(b) Review with the independent auditors any management letter provided by
the independent auditors and the Corporation's responses to that letter.
6.3 INDEPENDENT AUDITORS.
(a) Recommend to the Board the appointment of the independent auditors,
which firm is ultimately accountable to the Committee and the Board.
(b) Approve the fees to be paid to the independent auditors.
(c) Receive disclosures from the independent auditors regarding the
auditors' independence required by Independence Standards Board Standard
No. 1, discuss such reports with the independent auditors, and, if so
determined by the Committee, recommend that the Board take appropriate
action to satisfy itself of the independence of the auditors.
(d) Evaluate together with the Board the performance of the independent
auditors and, if so determined by the Committee, recommend that the Board
replace the independent auditors.
(e) Meet with the independent auditors prior to the audit to review the
planning and staffing of the audit.
(f) Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
6.4 GENERAL AUTHORITY AND RESPONSIBILITIES. The Committee shall have the
authority to retain special legal, accounting or other consultants to advise the
Committee. The Committee may request any officer or employee of the Corporation
or the Corporation's outside counsel or independent auditors to attend a meeting
of the Committee or to meet with any members of, or consultants to, the
Committee.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Corporation's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditors. Nor is it the duty of
A-4
the Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditors or to assure compliance with
laws and regulations.
The Committee shall review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board.
6.5 DUTIES AS NEEDED.
(a) Review reports received from regulators and other legal and regulatory
matters that may have a material effect on the financial statements or
related Corporation compliance policies.
(b) Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
ARTICLE VII
INDEMNIFICATION
Every person who was or is a party to, or is threatened to be made a party
to, or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a Committee member of the
Corporation shall be indemnified and held harmless to the fullest extent legally
permissible under the laws of the State of Delaware from time to time against
all expenses, liability and loss, including attorneys' fees, judgments, fines
and amounts paid or to be paid in settlement, reasonably incurred or suffered by
him in connection therewith. Such right of indemnification shall be a contract
right which may be enforced in any manner desired by such person.
This indemnification is intended to provide at all times the fullest
indemnification permitted by the laws of the State of Delaware and the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a Committee member of the corporation against any liability asserted
against such person and incurred in any such capacity or arising out of such
status, whether or not the corporation would have the power to indemnify such
person.
ARTICLE VIII
AMENDMENTS
8.1 AMENDMENT BY THE BOARD. This Charter and any provision contained herein may
be amended or repealed by the Board.
8.2 RECORD OF AMENDMENTS. Whenever an amendment or a new Charter is adopted, it
shall be copied in the book of minutes with the original Charter. If any
provision of this Charter is repealed, the fact of repeal, with the date of the
meeting at which the repeal was enacted or written consent was filed, shall be
stated in said book.
A-5
DETACH HERE
PROXY
BEACON POWER CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 24,
2001, OR ANY ADJOURNMENTS THEREOF.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS DIRECTED BY THEIR
STOCKHOLDER(S).
The undersigned stockholder of Beacon Power Corporation (the "Corporation")
hereby appoints William E. Stanton and James M. Spiezio (each a "Proxy Agent"),
jointly and severally with full power of substitution to each as proxies for and
on behalf of the undersigned, to attend the Annual Meeting of Stockholders of
the Corporation, to be held at the offices of the Corporation, 234 Ballardvale
Street, Wilmington, Massachusetts 01887 on Thursday, May 24, 2001, at 10:00
a.m., or any adjournments thereof, and to vote as directed below all stock of
the Corporation which the undersigned would be entitled to vote if personally
present.
By acceptance, each Proxy Agent agrees that this Proxy will be voted in the
manner directed by the stockholder giving this Proxy. If no direction is
specified, the Proxy will be voted FOR the election of the nominees for Director
and FOR the ratification of Deliotte & Touche, LLP to be the Corporation's
independent auditors for 2001. DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO
ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF. This Proxy, if properly executed and delivered, will revoke all other
Proxies.
- ------------------------- -------------------
SEE REVERSE SIDE CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE SEE REVERSE SIDE
- ------------------------- -------------------
DETACH HERE
- ---
X PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
- ---
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES AND
FOR THE RATIFICATION OF DELIOTTE & TOUCHE, LLP TO BE THE CORPORATION'S
INDEPENDENT AUDITORS FOR 2001. THE BOARD OF DIRECTORS OF THE
CORPORATION RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES AND
"FOR" THE RATIFICATION OF DELIOTTE & TOUCHE, LLP AS THE CORPORATION'S
INDEPENDENT AUDITORS FOR 2001.
1. Election of directors. Nominees:
Three-year term: (01) David B. Eisenhaure and
(02) Kenneth M. Socha
Two-year term: (03) William E. Stanton,
(04) Philip J. Deutch and
(05) Eric R. Stoltz
One-year term: (06) Alan P. Goldberg and
(07) Nancy Hawthorne
For Withheld
all nominees from all nominees
/ / / /
/ /
---------------------------------------------
For all nominees except as noted above
2. Ratification of Deliotte & Touche, LLP as the Corporation's
independent auditors for 2001.
For Against Abstain
/ / / / / /
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY CARD IN THE
ACCOMPANYING ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PLEASE SIGN EXACTLY AS NAME(S) APPEAR HEREON. WHEN
SIGNING AS ADMINISTRATOR, ATTORNEY, EXECUTOR, GUARDIAN
OR TRUSTEE, PLEASE GIVE YOUR FULL TITLE. IF THE SIGNER
IS A CORPORATION OR PARTNERSHIP, PLEASE SIGN FULL
CORPORATE OR PARTNERSHIP NAME BY ANY AUTHORIZED OFFICER
OR PERSON. IF SHARES ARE HELD JOINTLY, EACH JOINT OWNER
SHOULD SIGN.
SIGNATURE: ___________ DATE: ___________ SIGNATURE: __________ DATE: _____