THIS WARRANT AND THE SHARES PURCHASABLE HEREUNDER HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION IN EFFECT UNDER SUCH ACT UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY ACCEPTABLE TO IT DEMONSTRATING
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT.
Common Stock Purchase Warrant
To Purchase Shares of Common Stock of
Beacon Power Corporation
May 24, 2005
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), hereby grants to Perseus 2000 Expansion Fund, L.L.C. (together with
its permitted successors and assigns, the "Registered Holder"), the right to
purchase at any time up to and including May 24, 2010 (the "Termination Date"),
the number of shares of fully paid and nonassessable Common Stock of the
Company, $0.01 par value per share (the "Common Stock", and those shares of
Common Stock purchasable under this Warrant being the "Warrant Shares"), equal
to the product of (i) 806,400 divided by (ii) the Warrant Price (as defined
below) then in effect, for a purchase price of 120% of the Per Share Price as of
the date hereof (as defined in the Investment Agreement, dated as of the date
hereof, by and among the Company, the Registered Holder and Perseus Capital,
L.L.C. ("Investment Agreement")), which Per Share Price may be adjusted from
time to time for purposes of this Warrant and the calculation of the Warrant
Price only during the six-month period following the date hereof pursuant to
Section 2.4 of the Investment Agreement (the "Warrant Price"). For the avoidance
of doubt, any adjustments to the Per Share Price under the terms of the
Investment Agreement that may occur after the six-month period following the
date hereof shall be disregarded for purposes of calculating the Warrant Price
hereunder.
1. EXERCISE.
(a) This Warrant may be exercised by the Registered Holder on or before the
Termination Date, in whole or in part, by surrendering this Warrant, with the
purchase form appended hereto as Exhibit I duly executed by the Registered
Holder at the principal executive offices of the Company, or at such other
office or agency as the Company may designate, accompanied by payment in full,
in lawful money of the United States, of the Warrant Price payable in respect of
the number of Warrant Shares purchased upon such exercise.
(b) The Registered Holder may, at its option, elect to pay some or all of
the Warrant Price payable upon an exercise of this Warrant by surrender of this
Warrant at the principal executive office of the Company, or at such other
office or agency as the Company may designate, together with the purchase form
attached hereto as Exhibit I to exercise by means of a net issuance exercise, in
which event the Company shall issue to the Registered Holder that number of
Warrant Shares equal to the total number of Warrant Shares, minus the product
obtained by multiplying (x) the total number of Warrant Shares (or, if only a
portion of the Warrant is being exercised, the portion of the Warrant being
cancelled, at the date of such calculation) by (y) a fraction, the numerator of
which shall be the Warrant Price per share and the denominator of which shall be
the Fair Market Value per share of Common Stock as of the Exercise Date. The
"Fair Market Value" per share of Common Stock shall be determined as follows:
(i) As long as the Common Stock is listed on a national securities
exchange, the NASDAQ Small Cap Market, the NASDAQ National Market or
another nationally recognized trading system as of the Exercise Date, the
Fair Market Value per share of Common Stock shall be deemed to be the
average of the high and low reported sale prices per share of Common Stock
thereon on the trading day immediately preceding the Exercise Date
(provided that if no such price is reported on such day, the Fair Market
Value per share of Common Stock shall be determined pursuant to clause
(ii)).
(ii) In all other cases, the Fair Market Value per share of Common
Stock shall be deemed to be the amount most recently determined by the
Board of Directors to represent the fair market value per share of the
Common Stock. Notwithstanding the foregoing, if the Board of Directors has
not made such a determination within the three-month period prior to the
Exercise Date, then (A) the Board of Directors shall make a determination
of the Fair Market Value per share of the Common Stock within 20 days of a
request by the Registered Holder that it do so, and (B) the exercise of
this Warrant pursuant to this subsection 1(b) shall be delayed until such
determination is made.
(c) Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this Warrant
shall have been surrendered to the Company as provided in subsection 1(a) above
(the "Exercise Date"). At such time, the person or persons in whose name or
names any certificates for Warrant Shares shall be issuable upon such exercise
as provided in subsection 1(d) below shall be deemed to have become the holder
or holders of record of the Warrant Shares represented by such certificates.
(d) As soon as practicable after the exercise of this Warrant in full or in
part, and in any event within twenty (20) days thereafter, the Company, at its
expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number of Warrant Shares to
which the Registered Holder shall be entitled upon such exercise; and
(ii) in case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, calling in the aggregate on the face
or faces thereof for the number of Warrant Shares equal (without giving
effect to any adjustment therein) to the number of such shares called for
on the face of this Warrant minus the sum of: (a) the number of such shares
purchased by the Registered Holder upon such exercise and (b) the number of
Warrant Shares (if any) covered by the portion of this Warrant cancelled in
payment of the total Warrant Price payable upon such exercise pursuant to
subsection 1(b) above.
2. ADJUSTMENTS.
(a) Adjustment for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date on which this Warrant was first
issued (the "Original Issue Date") effect a subdivision of the outstanding
Common Stock, the number of Warrant Shares then in effect immediately before
that subdivision shall be proportionately increased and the Warrant Price shall
be proportionately decreased. If the Company shall at any time or from time to
time after the Original Issue Date combine the outstanding shares of Common
Stock, the number of Warrant Shares shall be proportionately decreased and the
Warrant Price shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(b) Adjustments for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the Original Issue Date shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Company or in cash or other property, then and in each such
event the Registered Holder shall receive upon exercise hereof, in addition to
the number of shares of Common Stock issuable hereunder, the kind and amount of
securities of the Company and/or cash and other property which the Registered
Holder would have been entitled to receive had this Warrant been exercised on
the date of such event and had the Registered Holder thereafter, during the
period from the date of such event to and including the Exercise Date, retained
any such securities receivable, giving application to all adjustments called for
during such period under this Section 2 with respect to the rights of the
Registered Holder.
(c) Adjustment for Mergers or Reorganizations, etc. If there shall occur
any reclassification, reorganization, recapitalization, consolidation, sale of
all or substantially all assets or merger involving the Company in which the
Common Stock is converted into or exchanged for securities, cash or other
property (other than a transaction covered by subsection 2(a) above), then,
following any such reclassification, reorganization, recapitalization,
consolidation, sale of all or substantially all assets or merger, and without
payment of any additional consideration thereof, the Registered Holder shall
receive upon exercise hereof the kind and amount of securities, cash or other
property which the Registered Holder would have been entitled to receive if,
immediately prior to such reclassification, reorganization, recapitalization,
consolidation or merger, sale of all or substantially all assets, the Registered
Holder had held the number of shares of Common Stock subject to this Warrant,
giving application to all adjustments called for during such period under this
Section 2 with respect to the rights of the Registered Holder.
The foregoing provisions of this Section 2(c) shall similarly apply to
successive reorganizations, consolidations, mergers, sales and transfers and to
the stock or securities of any other corporation that are at the time receivable
upon the exercise of this Warrant. If the per share consideration payable to the
holder hereof for Warrant Shares in connection with any such transaction is in a
form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company's Board of
Directors. In all events, appropriate adjustment (as determined in good faith by
the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant. (d) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 2, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Registered Holder a certificate setting
forth such adjustment or readjustment (including the kind and amount of
securities, cash or other property for which this Warrant shall be exercisable,
the Warrant Price and the method of calculation of each) and showing in detail
the facts upon which such adjustment or readjustment is based.
3. FRACTIONAL SHARES.
The Company shall not be required upon the exercise of this Warrant to
issue any fractional shares, and shall round any fractional shares to the next
highest whole number of shares. If a fractional share interest arises upon any
exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying the Registered Holder an amount computed by
multiplying the fractional interest by the Fair Market Value of a full share of
common Stock.
4. REPRESENTATIONS AND WARRANTIES BY THE REGISTERED HOLDER.
The Registered Holder represents and warrants to the Company as follows:
(a) Upon each exercise hereof, the Registered Holder must reaffirm to the
Company that the Registered Holder is an "accredited investor" as that term is
defined in Rule 501 under the Securities Act of 1933, as amended (the "Act").
The Registered Holder is purchasing the Warrant and the Warrant Shares for such
Registered Holder's own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Act. The Registered Holder understands that the Warrant and the
Warrant Shares have not been registered under the Act by reason of their
issuance in a transaction exempt from the registration and prospectus delivery
requirements of the Act pursuant to Section 4(2) thereof, which exemption
depends upon, among other things, the bona fide nature of Registered Holder's
investment intent as expressed herein. In this connection, the Registered Holder
understands that, in the view of the U.S. Securities and Exchange Commission
(the "SEC"), the statutory basis for such exemption may be unavailable if the
Registered Holder's representation was predicated solely upon a present
intention to hold the Warrant or the Warrant Shares for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Warrant or the Warrant Shares,
or for a period of one year or any other fixed period in the future.
(b) The Registered Holder understands that the Warrant and the Warrant
Shares must be held by the Registered Holder indefinitely, and that the
Registered Holder must therefore bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Act or is exempted from such registration. The Registered Holder further
understands that the Warrant and the Warrant Shares have not been qualified
under any state's blue sky laws by reason of their issuance in a transaction
exempt from the qualification requirements of applicable blue sky laws, which
exemptions depend upon, among other things, the bona fide nature of the
Registered Holder's investment intent expressed above. In addition, the
Registered Holder understands that any certificate evidencing the Warrant and
the Warrant Shares will be imprinted with a legend that prohibits the transfer
of the Warrant and the Warrant Shares unless they are registered or such
registration is not required in the opinion of counsel for the Company.
(c) The Registered Holder is familiar with the provisions of Rule 144,
promulgated under the Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof, in a non-public offering subject to the satisfaction of certain
conditions.
(d) The Registered Holder further understands that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
5. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares shall not be sold or transferred
unless either (i) they first shall have been registered under the Act and under
applicable state securities or blue sky laws, or (ii) the Company first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.
(b) Each certificate representing Warrant Shares shall bear a legend
substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION IN EFFECT UNDER SUCH ACT UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY ACCEPTABLE TO IT
DEMONSTRATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.
The foregoing legend shall be removed from the certificates representing
any Warrant Shares, at the request of the holder thereof, at such time as (i)
they become eligible for resale pursuant to an effective registration statement
or Rule 144(k) under the Act or (ii) the Company shall have received either an
opinion of counsel or a "no-action" letter from the SEC to the effect that any
transfer of the Warrant Shares represented by such certificates will not violate
the Act and applicable state securities laws.
6. NO IMPAIRMENT.
The Company will not, by amendment of its charter through reorganization,
transfer of assets, consolidation, merger, dissolution, issuance or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against impairment.
7. NOTICES OF RECORD DATE, ETC. In the event:
(a) that the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time deliverable upon the exercise of this
Warrant) for the purpose of entitling or enabling them to receive any dividend
or other distribution, or to receive any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right; or
(b) of any capital reorganization of the Company, any reclassification of
the Common Stock of the Company, any consolidation or merger of the Company with
or into another corporation (other than a consolidation or merger in which the
Company is the surviving entity and its Common Stock is not converted into or
exchanged for any other securities or property), or any transfer of all or
substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation or winding-up
of the Company, then, and in each such case, the Company will mail or cause to
be mailed to the Registered Holder a notice specifying, as the case may be, (i)
the record date for such dividend, distribution or right, and the amount and
character of such dividend, distribution or right, or (ii) the effective date on
which such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such other
stock or securities at the time deliverable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed at least ten days prior
to the record date or effective date for the event specified in such notice.
8. STOCK FULLY PAID, RESERVATION OF STOCK.
All of the Warrant Shares issuable upon the exercise of the rights
represented by this Warrant will, upon issuance and receipt of the purchase
price therefor, be validly issued, fully paid and nonassessable, and free from
all taxes, liens and charges except for restrictions on transfer provided for
herein or under applicable federal and state securities laws. The Company will
at all times reserve and keep available, solely for issuance and delivery upon
the exercise of this Warrant, such number of shares of Common Stock and other
securities, cash and/or property, as from time to time shall be issuable upon
the exercise of this Warrant.
9. EXCHANGE OF WARRANTS.
Upon the surrender of this Warrant by the Registered Holder, properly
endorsed, to the Company at the principal executive offices of the Company, the
Company will, subject to the provisions of Sections 4 and 5 hereof, issue and
deliver to or upon the order of such Holder, at the Company's expense, a new
Warrant or Warrants of like tenor, in the name of the Registered Holder or as
the Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock (or other securities, cash
and/or property) then issuable upon exercise of this Warrant.
10. REPLACEMENT OF WARRANTS.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and (in the case of loss,
theft or destruction) upon delivery of an indemnity agreement (without any
obligation for a surety or other security therefor) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.
11. TRANSFERS, ETC.
(a) The Company will maintain a register containing the name and address of
the Registered Holder of this Warrant. The Registered Holder may change its or
his address as shown on the warrant register by written notice to the Company
requesting such change.
(b) This Warrant and all rights hereunder are transferable, in whole or in
part, upon surrender of this Warrant with a properly executed assignment in a
form reasonably acceptable to the Company at the principal executive offices of
the Company.
(c) Until any transfer of this Warrant is made in the Warrant register, the
Company may treat the Registered Holder as the absolute owner hereof for all
purposes; provided, however, that if and when this Warrant is properly assigned
in blank, the Company may (but shall not be obligated to) treat the bearer
hereof as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary.
12. MAILING OF NOTICES, ETC.
All notices and other communications from the Company to the Registered
Holder shall be mailed by first-class certified or registered mail, postage
prepaid, to the address last furnished to the Company in writing by the
Registered Holder. All notices and other communications from the Registered
Holder or in connection herewith to the Company shall be mailed by first-class
certified or registered mail, postage prepaid, to the Company at its principal
executive office. If the Company should at any time change the location of its
principal executive office to a place other than as set forth below, it shall
give prompt written notice to the Registered Holder and thereafter all
references in this Warrant to the location of its principal executive office at
the particular time shall be as so specified in such notice.
13. NO RIGHTS AS STOCKHOLDER.
Until the exercise of this Warrant, the Registered Holder shall not have or
exercise any rights by virtue hereof as a stockholder of the Company.
15. CHANGE OR WAIVER.
Any term of this Warrant may be amended or waived upon the written consent
of the Company and the Registered Holder.
16. SECTION HEADINGS.
The Section headings in this Warrant are for the convenience of the parties
and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.
17. GOVERNING LAW.
This Warrant will be governed by and construed in accordance with the
internal laws of the State of Delaware without giving effect to the conflict or
choice of law provision thereof that would give rise the application of the
domestic substantive law of any other jurisdiction.
EXECUTED as of the Date of Issuance indicated above.
BEACON POWER CORPORATION
By:/s/James M. Spiezio
------------------------------------
Name: James M. Spiezio
Title: Chief Financial Officer
EXHIBIT I
PURCHASE FORM
To: Beacon Power Corporation Dated: ____________
The undersigned, pursuant to the provisions set forth in the attached Warrant,
hereby irrevocably elects to purchase (check applicable box):
|_| _____ shares of the Common Stock covered by such Warrant; or
|_| the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth
in Section 1(b).
The undersigned herewith makes payment of the full Warrant Price for such shares
at the price per share provided for in such Warrant, which is $____. Such
payment takes the form of (check applicable box or boxes):
|_| $______ in lawful money of the United States; and/or
|_| the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in Section
1(b), to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless
exercise procedure set forth in Section 1(b).
Please issue a certificate representing said shares of Common Stock in the name
of the undersigned or in such other name as is specified below:
The undersigned is an "accredited investor" as defined in Regulation D
promulgated under the Securities Act of 1933, as amended.
Name of Entity:
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Signature of
Authorized Person:
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Address:
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Date:
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