EXHIBIT 10.22
NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT (this "Agreement") made and entered into as of
June 22, 1999, by and among Beacon Power Corporation, a Delaware corporation
(the "Company"), Perseus Capital, L.L.C., a Delaware limited liability company
("Perseus"), Duquesne Enterprises, a Pennsylvania corporation ("Duquesne"),
Micro Generation Technology Fund, L.L.C., a Delaware limited liability company
("Micro"), and SatCon Technology Corporation, a Delaware corporation ("SatCon"
and together with Perseus, Duquesne and Micro, the "Purchasers"). Certain
capitalized terms used in this Agreement are defined in Exhibit A attached
hereto.
Recitals
A. Perseus, Duquesne and Micro acquired shares of the Company's Class D
Preferred Stock pursuant to a Securities Purchase Agreement dated as
of October 23, 1998 by and among the Company and the Purchasers (the
"October Agreement").
B. The Company plans to raise additional capital through a bridge
financing to be consummated promptly after the date hereof having
terms substantially as specified in Exhibit B hereto (the "Bridge
Financing").
C. The Company needs funds to operate its business operations prior to
completion of the Bridge Financing and in furtherance thereof
desires to issue and sell to each of the Purchasers one or more
promissory notes substantially in the form attached hereto as
Exhibit C with the respective principal amounts specified herein
(the "Notes"), and the Purchasers are willing to acquire the Notes,
all on the terms and subject to the conditions set forth in this
Agreement.
D. To induce the Purchasers to acquire the Notes, the Company has
agreed to issue to each Purchaser, under the circumstances specified
herein, a warrant to acquire shares of the Company's Common Stock,
par value $0.01 per share (the "Common Stock"), substantially in the
form attached hereto as Exhibit D (the "Warrants").
Agreement
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. Issuance of Securities.
1.1 Purchase and Sale of the Notes. (a) On the terms and subject to
the conditions hereof, at the First Closing, the Company shall issue and sell to
each of the Purchasers, and each of the Purchasers shall purchase from the
Company, a Note with the principal amount specified below for the purchase price
specified below:
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Purchaser Principal Amount Purchase Price
--------- ---------------- --------------
Perseus $250,000 $250,000
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SatCon 125,000 125,000
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Micro 50,000 50,000
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Duquesne 50,000 50,000
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(b) In addition, on the terms and subject to the conditions hereof, at the
Second Closing, the Company shall issue and sell to SatCon, and SatCon shall
purchase from the Company, an additional Note with a principal amount of
$125,000 for a purchase price of $125,000.
1.2 Issuance of Warrants. In the event that the Notes are not repaid
or exchanged in full for Bridge Securities on or prior to September 22, 1999
(other than as a result of good faith computation errors), the Company shall
issue and deliver to each Purchaser a Warrant to acquire a number of shares of
Common Stock equal to the number of dollars constituting the original principal
amounts of such Purchaser's Notes (including in the case of SatCon, the Note
issued at the Second Closing). Notwithstanding the foregoing, the Company shall
not be required to issue any Warrants under this Section 1.2 to any Purchaser
that does not use reasonable efforts to consummate its share of the Bridge
Financing substantially on the terms set forth in Exhibit B hereto subject to
completion of definitive documentation and subject to there being no material
adverse change in the business of the Company after the date hereof.
2. Closings.
2.1 Closings. The sales and purchases contemplated by Section 1(a)
of this Agreement shall take place at a closing (the "First Closing") to be held
at the offices of Xxxxxx & Xxxxxx, 000 Xxxxxxx Xxxxxx, X.X. Xxxxxxxxxx XX on
June 23, 1999, or at such other time, date and place as are mutually agreeable
to the Company and to the Purchasers. The sale and purchase contemplated by
Section 1(b) of this Agreement shall take place at a closing (the "Second
Closing") to be held at the principal executive offices of the Company at 10
a.m. local time on July 6, 1999, or at such other time, date and place as are
mutually agreeable to the Company and to the Purchasers. The date of the First
Closing is hereinafter referred to as the "First Closing Date."
2.2 Deliveries. At each Closing, the Company will deliver to each
Purchaser the Note to be issued to such Purchaser at such Closing fully executed
by the Company, and each Purchaser will deliver to the Company the purchase
price therefor by wire transfer thereof to the Company Account (or in the case
of Micro, by delivery to the Company of a check made payable to the order of the
Company). The parties shall also deliver all documents required to be delivered
at the First Closing pursuant to Section 2.3 hereof.
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2.3 Conditions to First Closing.
(a) Conditions to Obligations of the Purchaser. The
obligations of the Purchasers to purchase the Notes at the First Closing are
subject to the fulfillment on or prior to the First Closing Date of the
following conditions, any of which may be waived by the Purchasers:
(i) Representations and Warranties Correct: Performance
of Obligations. The representations and warranties made by the Company in
Section 3 hereof shall have been true and correct in all material respects when
made, and shall be true and correct in all material respects on the First
Closing Date with the same force and effect as if they had been made on and as
of such date, and the Company shall have performed all obligations, covenants
and agreements herein required to be performed by it on or prior to the First
Closing.
(ii) Consents and Waivers. The Company shall have
obtained any and all consents (including all governmental or regulatory
consents, approvals or authorizations required in connection with the valid
execution and delivery of this Agreement and the Related Agreements), permits
and waivers necessary or appropriate for consummation of the transactions
contemplated by this Agreement or any Related Agreement.
(iii) Perfection of Security Interests. The Company
shall have taken all actions requested by the Purchasers to perfect the security
interests granted under the Notes.
(iv) Compliance Certificate. The Company shall have
delivered to the Purchasers a certificate, executed by its President, dated as
of the First Closing Date, certifying the fulfillment of the conditions
specified in subsections (a)(i) and (ii) of this Section 2.3.
(v) Secretary's Certificate. The Company shall have
delivered to the Purchasers a certificate, executed by its Secretary, dated as
of the First Closing Date, certifying the authenticity of attached copies of
resolutions of its Board of Directors approving the transactions contemplated
hereby and by the Related Agreements.
(vi) Other Purchasers. The other Purchasers shall have
simultaneously consummated their purchases of Notes at the First Closing in
accordance with the terms hereof.
(vii) Other Documents. The Purchasers shall have
received such other certificates and documents as they shall have reasonably
requested.
(a) Conditions to Obligations of the Company. The Company's
obligations to issue and sell the Notes at the First Closing are subject to the
fulfillment on or prior to the First Closing Date of the following condition,
which may be waived by the Company: the representations and warranties made by
the Purchasers in Section 5 hereof shall have been true and
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correct when made, and shall be true and correct on such First Closing Date with
the same force and effect as if they had been made on and as of such date.
2.4 Conditions to Second Closing. The obligations of the Company and
SataCon to consummate the issuance, sale and purchase of the Note to be issued,
sold and purchased at the Second Closing shall be subject to satisfaction of the
following condition: the First Closing shall have occurred and the Notes to be
issued, sold and purchased at the First Closing shall have been issued, sold and
purchased. The obligations of the Company to consummate the issuance and sale of
the Note to be issued and sold at the Second Closing shall also be subject to
satisfaction of the following additional condition: the representations and
warranties made by SatCon in Section 5 hereof shall have been true and correct
when made, and shall be true and correct on such Second Closing Date with the
same force and effect as if they had been made on and as of such date.
2.5 Registration Rights. Any shares of Common Stock issued upon the
exercise or conversion of any Warrants shall constitute "Registrable Securities"
under the Registration Rights Statement attached as Exhibit F to the October
Agreement, and such definition is hereby amended in such respect.
3. Representations and Warranties Relating to the Company. Except as
otherwise set forth in the Disclosure Schedule attached hereto as Exhibit I to
the October Agreement, as supplemented by the Supplemental Disclosure Schedule
attached hereto as Exhibit E (collectively, the "Company Disclosure Schedule"),
the Company represents and warrants to the Purchasers as set forth below.
3.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has full corporate power and authority to carry
on its business as now conducted and as it is proposed to be conducted, and is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the nature of its business or properties makes such
qualification or licensing necessary, except where the failure to so qualify or
be licensed would not have a Material Adverse Effect.
3.2 Power. Authorization and Validity. The Company has the corporate
power, legal capacity and corporate authority to enter into and perform its
obligations under this Agreement and each of the Related Agreements to which it
is a party. The execution, delivery and performance by the Company of this
Agreement and each of the Related Agreements to which it is a party have been
duly and validly approved and authorized by all necessary corporate action on
its part. No authorization, consent, or approval, governmental or otherwise, is
necessary to enable the Company to enter into the Agreement or any Related
Agreement to which it is a party and to perform its obligations hereunder or
thereunder. This Agreement is, and each of the Related Agreements to which it is
a party when executed and delivered by the Company will be, the valid and
binding obligations of the Company, enforceable in accordance with their
respective terms. Upon their issuance pursuant to the Warrants, all shares of
Common Stock issued pursuant to the Warrants shall be duly authorized, validly
issued, fully-paid and nonassessable.
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3.3 No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement or any Related Agreement to which it is a party nor
the consummation of the transactions or performance of the Company's obligations
contemplated hereby or thereby will conflict with, result in a material breach
or violation of, or cause a default under, any provision of the Company's
Certificate of Incorporation or Bylaws, each as is currently in effect, any
instrument, contract or agreement that is material to the business of the
Company or any judgment, writ, decree, order, law, statute, ordinance, rule or
regulation applicable to the Company.
3.4 Financial Statements.
(a) The Company's unaudited consolidated balance sheets
as of December 31, 1998 and April 30, 1999 and statements of operations and cash
flows for the year ended December 31, 1998 and the four months ended April 30,
1999, including the notes thereto (collectively the "Company Financial
Statements"), all of which are attached to the Company Disclosure Schedule, have
been prepared in all material respects in accordance with GAAP (except that the
April 30, 1999 statements may not contain all footnotes required by GAAP). The
Company Financial Statements have been prepared in accordance with the books and
records of the Company and present fairly in all material respects the financial
position, results of operations, cash flows and equity transactions of the
Company as of and for the periods ending on their dates. Except and to the
extent reflected or reserved against in the Company Financial Statements, the
Company does not have, as of the dates of the Company Financial Statements, any
liabilities or obligations (absolute or contingent) of a nature required to be
or customarily reflected in a balance sheet (or the notes thereto) prepared in
accordance with GAAP. The reserves, if any, reflected on the Company Financial
Statements are adequate in light of the contingencies with respect to which they
are made. There has been no material change in the Company's accounting policies
except as described in the notes to the Company Financial Statements.
(b) The Company has no debts, liabilities, or
obligations in a material amount, either individually or in the aggregate, of
any nature, whether accrued, absolute, contingent, or otherwise, and whether due
or to become due, that is not reflected or reserved against in the Company
Financial Statements. All material debts, liabilities, and obligations incurred
after the date of the Company Financial Statements were incurred in the ordinary
course of business, and are usual and normal in amount, both individually and in
the aggregate. Since December 31, 1998, the Company has not experienced a
Material Adverse Change.
3.5 No Brokers. Neither the Company nor, to the Company's knowledge,
any Company shareholder is obligated for the payment of fees or expenses of any
broker or finder in connection with the origin, negotiation or execution of this
Agreement or any Related Agreement or in connection with any transaction
contemplated hereby or thereby.
3.6 Disclosure. The statements by the Company contained in this
Agreement, the exhibits hereto, and the certificates and documents required to
be delivered by the Company to the Purchasers under this Agreement, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements contained herein and
therein not misleading in light of the circumstances under which such statements
were
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made.
3.7 Securities Act. Subject to the accuracy of the Purchaser's
representations in Section 5 hereof, the offer, sale and issuance of the Notes
and the Warrants in conformity with the terms of this Agreement constitute
transactions exempt from the registration requirements of Section 5 of the
Securities Act of 1933, as amended, and the qualification or registration
requirements of any applicable state securities laws as such laws exist on the
date hereof.
3.8 Other Representations and Warranties. The representations and
warranties of the Company set forth in Section 3 of the October Agreement are
true and correct as of the date hereof in all material respects.
4. [INTENTIONALLY OMITTED.]
5. Representations and Warranties of the Purchasers and Restrictions on
Transfer Imposed by the Securities Act of 1933 and Applicable State Securities
Laws.
5.1 Representations and Warranties by the Purchaser. Each Purchaser
represents and warrants to the Company severally as to itself alone and not
jointly as follows:
(a) The Note to be issued to such Purchaser at each Closing
and any Warrants to be issued hereunder will be acquired by such Purchaser for
its own account, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), or applicable
state securities laws.
(b) Such Purchaser understands that (i) the Note to be issued
to it at such Closing and any Warrant issued hereunder have not been, and upon
their issuance will not be, registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2) thereof and
have not been, and upon their issuance will not be, qualified under any state
securities laws on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration thereunder, and (ii)
the Company's reliance on such exemptions is predicated on such Purchaser's
representations set forth herein. Such Purchaser understands that the resale of
its Note and any Warrants may be restricted indefinitely, unless a subsequent
disposition thereof is registered under the Securities Act and registered under
any state securities law or is exempt from such registration.
(c) Such Purchaser is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act. Such
Purchaser is able to bear the economic risk of the purchase of its Note and any
Warrant pursuant to the terms of this Agreement, including a complete loss of
the Purchaser's investment therein.
(d) Such Purchaser has the full right, power and authority to
enter into and perform such Purchaser's obligations under this Agreement and
each Related Agreement to
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which it is or becomes a party, and this Agreement and each Related Agreement to
which it is or becomes a party constitute valid and binding obligations of such
Purchaser enforceable in accordance with their terms.
(e) No consent, approval or authorization of or designation,
declaration or filing with any Governmental Body on the part of such Purchaser
is required in connection with the valid execution and delivery of this
Agreement or any Related Agreement to which it or becomes a party.
5.2 Legend. The Notes and any Warrants may be endorsed with the
legends appearing on the first page thereof. The Company may instruct its
transfer agent not to register the transfer of the Note, unless the conditions
specified in the foregoing legends are satisfied.
5.3 Removal of Legend and Transfer Restrictions.
Any legend endorsed on any Note or Warrant pursuant to Section
5.2 relating to compliance with federal or state securities laws and the stop
transfer instructions with respect to the Notes and the Warrants relating
thereto shall be removed and the Company shall issue a new promissory note or
warrant, as the case may be, without such legend to the holder thereof (1) if
such Note or Warrant is registered under the Securities Act and a prospectus
meeting the requirements of Section 10 of the Securities Act is available, (2)
if such legend may be properly removed under the terms of Rule 144 promulgated
under the Securities Act, or (3) if such holder provides the Company with an
opinion of counsel for such holder, reasonably satisfactory to legal counsel for
the Company to the effect that a sale, transfer or assignment of the Note or
Warrant may be made without registration.
6. Additional Covenants.
6.1 Use of Proceeds. The Company hereby covenants and agrees that
all of the net proceeds received by it from the issuance and sale of the Notes
shall be used for the purpose of developing and conducting its business, which
is the development, manufacturing and marketing of flywheel energy storage
systems for use in energy storage applications, and no part of such net proceeds
shall be used to (i) repay any Person any funds expended by it or advanced by it
to the Company prior to the First Closing, unless agreed to in writing by the
Purchasers or (ii) pay any broker's fees or commissions or similar payments of
any kind.
6.2 Bridge Financing. Upon consummation of the Bridge Financing and
exchange of the Notes for the Bridge Securities, each Purchaser shall have all
of the rights that such Purchaser would have obtained if it had acquired such
Bridge Securities as part of the Bridge Financing, including without limitation
any security interests, guaranties, co-sale, preemptive, participation,
registration, voting, management or other rights, all representations,
warranties, and indemnities made to or in favor of an investor in the Bridge
Financing shall also be made to or in favor of such Purchaser, and such
Purchaser shall be entitled to rely on an opinion of counsel delivered in
connection with the Bridge Financing.
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7. Miscellaneous.
7.1 Waivers and Amendments. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
7.2 Arbitration. Any controversy or claim arising out of or relating
to this Agreement or any of the Related Agreements, or the breach hereof or
thereof, shall be settled by arbitration administered by the American
Arbitration Association under its Commercial Arbitration Rules, and judgment on
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. Such arbitration shall be conducted by a panel of three
arbitrators, each party having the right to select one arbitrator with the third
arbitrator to be selected in accordance with the rules of the American
Arbitration Association.
7.3 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of New York without regards to the principles of
conflicts of laws thereof.
7.4 Survival. The representations, warranties, covenants and
agreements made herein shall survive the execution of this Agreement and the
Closing of the transactions contemplated hereby.
7.5 Successors and Assigns. Except as otherwise expressly provided
herein and subject to the Related Agreements and applicable law, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
7.6 Entire Agreement. This Agreement, the Related Agreements and
other exhibits to this Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
7.7 Notices, etc. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been duly given at the
time of receipt if delivered by hand or by facsimile transmission or three days
after being mailed, registered or certified mail, return receipt requested, with
postage prepaid, to the address or facsimile number (as the case may be) listed
for each such party below or, if any party shall have designated a different
address or facsimile number by notice to the other party given as provided
above, then to the last address or facsimile number so designated.
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If to the Company:
Beacon Power Corporation
0X Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
Attn: Chief Executive Officer
With a required copy to:
Xxxxxx X. Xxxxx
Xxxxxxx & Xxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
If to the Perseus:
Perseus Capital, L.L.C.
The Army and Navy Club Building
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxx
Fax No. (000) 000-0000
With a required copy to:
Xxxxxx & Xxxxxx
000 x0xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxx
Fax No.: (000) 000-0000
If to SatCon:
Xxxxx Xxxxxxxxxx
President
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No.: (000) 000-0000
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With a required copy to:
Xxxxxxx X. Carp, Esq.
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Fax No.: (000) 000-0000
If to Duquesne:
Xxxxxx Xxxxx
Vice President
One Northshore Center
Suite 100
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax No: 000-000-0000
With a required copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
Fax No: 000-000-0000
If to Micro:
c/o Xxxxxx X. Xxxx, Xx.
Arete Corporation
X.X. Xxx 0000
Xxxxxx Xxxxxx, Xxx Xxxxxxxxx 00000
Fax No.: (000) 000-0000
7.8 Separability. In case any provision of this Agreement shall be
declared invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
7.9 Expenses. The Company bear its expenses and legal fees incurred
with respect to this Agreement, each of the Related Agreements and the
transactions contemplated hereby and thereby. All reasonable costs and expenses
of the Purchasers relating to this Agreement, each of the Related Agreements and
the transactions contemplated hereby and thereby, including reasonable fees and
expenses of legal counsel, shall be promptly paid or reimbursed by the Company.
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7.10 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.12 Publicity. None of the parties to this Agreement, nor any of
their affiliates, shall issue any press release or otherwise make any public
announcement or disclosure with respect to this Agreement, any of the Related
Agreements or any of the transactions contemplated hereby or thereby without the
prior written consent of each of the Company, and the Purchasers, unless such
disclosure is required by applicable law.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
BEACON POWER CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
--------------------------------
Title: President & CEO
-------------------------------
PERSEUS CAPITAL, L.L.C.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SATCON TECHNOLOGY CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
BEACON POWER CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
PERSEUS CAPITAL, L.L.C.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SATCON TECHNOLOGY CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxxxx
--------------------------------
Title: President, SatCon
-------------------------------
11
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
BEACON POWER CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
PERSEUS CAPITAL, L.L.C.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------------
Title: Managing Director
-------------------------------
SATCON TECHNOLOGY CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
11
DUQUESNE ENTERPRISES
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
MICRO-GENERATION
TECHNOLOGY FUND, L.L.C.
BY ARETE CORPORATION,
ITS MANAGER
By: /s/ Xxxxxx X. Xxxx, Xx.
----------------------------------
Xxxxxx X. Xxxx, Xx.
President
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement to which this Exhibit A is attached, the
following terms have the following meanings:
"Bridge Securities" means the securities issued to investors as part of
the Bridge Financing, including without limitation any warranties, options or
rights to acquired additional securities of the Company or any of its
affiliates.
"Business Day" means any day other than a Saturday, Sunday or other day on
which the national or state banks located in the State of New York, the State of
Massachusetts, or the District of Columbia are authorized to be closed.
"Company Account" means an account of the Company designated in a written
notice delivered to the Purchasers at least two Business Days prior to the date
of any required payment by the Purchasers to the Company under the Agreement.
"GAAP" means United States generally accepted accounting principles
consistently applied.
"Governmental Body" means any: (a) nation, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government; or (c)
governmental or quasi-governmental authority of any nature (including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or entity and any court or other tribunal).
"Material Adverse Change" means a change which would have a Material
Adverse Effect.
"Material Adverse Effect." An event, violation or other matter will be
deemed to have a "Material Adverse Effect" on the Company if such event,
violation or other matter would be material in impact or amount to the Company's
business, intellectual property rights or condition, or, taken as a whole, its
assets, liabilities, operations, or financial performance.
"Person" means any individual, entity or Governmental Body.
"Related Agreements" means (a) the Notes; (b) any Warrants; and (c) any
other agreement or document entered into by any of the parties in connection
with the Agreement or any of the transactions contemplated thereby.
EXHIBIT C
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
[Principal Amount] June 22, 0000
XXXXXX, XX
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of ____________,or its registered
assigns (the "Holder"), the principal sum of $__________ or such lesser amount
as shall then equal the outstanding principal amount hereof, together with
interest from the date of issuance of this Note on the unpaid principal balance
hereof at a rate equal to twelve and one-half percent (12 1/2%) per annum,
computed on the basis of the actual number of days elapsed and a year of 365
days; provided that if this Note is not repaid in full on or prior to the
Maturity Date, such interest rate shall increase effective as of the close of
business on the Maturity Date to fifteen percent (15%) per annum. All unpaid
principal, together with any accrued but unpaid interest and other amounts
payable hereunder, shall be due and payable on the earlier of (i) September 22,
1999 (the "Maturity Date") or (ii) upon or after the occurrence of an Event of
Default (as defined below), when such amounts are declared due and payable by
the Holder or made automatically due and payable. Interest on this Note shall be
payable on the Maturity Date.
This Note is issued pursuant to the Note Purchase Agreement (the "Purchase
Agreement") dated as of June 22, 1999 by and among the Company, Perseus Capital,
L.L.C., Duquesne Enterprises, Micro Generation Technology Fund, L.L.C. and
SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
(a) "Business Day" means any day other than a Saturday, Sunday or
other day on which the national or state banks located in the State of
Massachusetts or the State of New York are authorized to be closed.
(b) "Bridge Financing" has the meaning specified in the Purchase
Agreement.
(c) "Bridge Securities" has the meaning specified in the Purchase
Agreement.
(d) "Obligations" means the principal, interest and other amounts
payable under this Note.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 30 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking
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liquidation, reorganization or other relief with respect to the Company or the
debts thereof under any bankruptcy, insolvency or other similar law now or
hereafter in effect shall be commenced and an order for relief entered, or such
case or proceeding shall not be dismissed or discharged within 45 days of
commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest
in all of the Company's right, title and interest in and to the following,
whether now owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in
-3-
and to all mortgages, security agreements, leases or other contracts securing or
otherwise relating to any of the same;
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable
inventions and (i) the inventions and improvements described and claimed
therein; (ii) any continuation, division, renewal, extension, substitute or
reissue thereof or any legal equivalent in a foreign country for the full term
thereof or the terms for which the same may be granted; (iii) all rights to
income, royalties, profits, awards, damages and other rights relating to said
patents, applications and inventions, including the right to xxx for past,
present and future infringement and (iv) any other rights and benefits relating
to said patents, applications and inventions including any rights as a licensor
or licensee of said patents, applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service xxxx registrations and service xxxx
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to xxx for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
xxxx (the "Trademarks");
(iii) all copyrights, copyright registrations and
copyright applications, including without limitation those copyrights for
computer programs, computer databases, flow diagrams, maskworks, maskwork
applications, source codes and object codes, computer software, technical
knowledge and processes, trade secrets, know-how, customer lists, franchises,
systems, inventions, designs, blueprints, formal or informal licensing
arrangements, and all property embodying or incorporating such copyrights and
(i) any similar rights or amendments, modifications and renewals thereof and any
legal equivalent in a foreign country for the full term or terms for which the
same may be granted; (ii) all rights to income, past, present and future
infringement and (iii) any other rights and benefits relating to said copyrights
(the "Copyrights");
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
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The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by any means upon any
Collateral will not bar realization upon any other Collateral; and (z) the
security interest hereby created is a continuing security interest and will
cover and secure the payment of all Obligations both present and future of the
Company to Holder pursuant to this Note and the other Transaction Documents. The
Company further covenants and agrees to take all actions requested by the Holder
to establish or perfect the security interest granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder. Any such prepayment shall be applied first to the payment of
expenses due under this Note, second to interest accrued on this Note and third,
if the amount of prepayment exceeds the amount of all such expenses and accrued
interest, to the payment of principal of this Note. An exchange pursuant to
Section 6 hereof shall not constitute a prepayment for purposes of this Section
5.
6. Exchange.
(a) Exchange For Bridge Securities. Upon consummation of the Bridge
Financing, this Note shall automatically be exchanged for (without any action on
the part of the Company or the Holder) the number of Bridge Securities that an
investor in the Bridge Financing would acquire for an aggregate purchase price
equal to the sum of the then outstanding principal amount of this Note plus all
accrued but unpaid interest hereon.
(b) Mechanics and Effect of Exchange. No fractional shares of
capital stock of the Company shall be issued upon exchange of this Note. Upon
such exchange of all of the principal and accrued interest outstanding under
this Note, in lieu of the Company issuing any fractional shares to the Holder,
the Company shall pay to the Holder the amount of outstanding principal or
interest that is not so exchanged. Upon full exchange of this Note, the Company
shall be forever released from all its obligations and liabilities under this
Note.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such
-5-
restrictions. Subject to the foregoing, transfers of this Note shall be
registered upon registration books maintained for such purpose by or on behalf
of the Company. Prior to presentation of this Note for registration of transfer,
the Company shall treat the registered holder hereof as the owner and holder of
this Note for the purpose of receiving all payments of principal and interest
hereon and for all other purposes whatsoever, whether or not this Note shall be
overdue and the Company shall not be affected by notice to the contrary.
10. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by the Company, without the prior written
consent of the Holder.
11. Treatment of Note. To the extent permitted by generally accepted
accounting principles, the Company will treat, account and report the Note as
debt and not equity for accounting purposes and with respect to any returns
filed with federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses; Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of laws provisions
of the State of New York or of any other state. In the event of any dispute
among or between any of the parties to this Note arising out of the terms of
this Note, the parties hereby consent to the exclusive jurisdiction of the
federal and state courts located in the State of New York for resolution of such
dispute, and agree not to contest such exclusive jurisdiction or seek to
transfer any action relating to such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER COPORATION
By:
-----------------------------
Name:
---------------------------
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Title:
--------------------------
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EXHIBIT D
THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE SOLD, TRANSFERRED, OR ASSIGNED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN
ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT, OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF SUCH SECURITIES REASONABLY SATISFACTORY TO
THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
No.:
----
WARRANT
TO PURCHASE COMMON STOCK
OF
BEACON POWER CORPORATION
(void after September 23, 2005)
1. Issuance of Warrant. FOR VALUE RECEIVED, on and after the date of
issuance of this Warrant, and subject to the terms and conditions herein set
forth, the Holder (as defined below) is entitled to purchase from Beacon Power
Corporation, a Delaware corporation (the "Company"), at any time before 5:00
p.m. New York time on September 23, 2005 (the "Termination Date"), at a price
per share equal to the Warrant Price (as defined below and subject to adjustment
as described below), the Warrant Stock (as defined below and subject to
adjustment as described below) upon exercise of this warrant (this "Warrant")
pursuant to Section 6 hereof. This Note is issued pursuant to the Note and
Warrant Purchase Agreement (as defined below).
2. Definitions. As used in this Warrant, the following terms have the
definitions ascribed to them below:
(a) "Business Day" means any day other than a Saturday, Sunday or
other day on which the national or state banks located in the State of
Massachusetts or the State of New York or the District of Columbia are
authorized to be closed.
(b) "Change-In-Control Event" means the occurrence after the
Commencement Date of any of the following: (i) the acquisition of voting
securities of the Company by any person or group of persons that results in such
person or group, together with its affiliates, becoming, directly or indirectly,
the beneficial owner of in excess of 50% of the outstanding voting securities of
the Company; (ii) a merger or consolidation of the Company with any other
corporation or legal entity regardless of which entity is the survivor, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or being converted into voting securities of
the surviving entity) in excess of 50% of the voting securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation; or (iii) the sale or disposition of all or substantially all of
the Company's assets other than in a transaction in which holders of the voting
securities of the Company immediately prior to such transaction receive voting
securities of the acquiror of such assets or its affiliate that represent in
excess of 50% of the voting securities of such entity after consummation of such
transaction.
(c) "Commencement Date" means September 23, 1999.
(d) "Common Stock" means the common stock, par value $0.01 per
share, of the Company.
(e) "Holder" means _______________,or its assigns.
(f) "Note Purchase Agreement" means the Note Purchase Agreement
dated as of June 22, 1999 by and among the Company, Perseus Capital, L.L.C.,
Duquesne Enterprises, Micro Generation Technology Fund, L.L.C., and SatCon
Technology Corporation.
(g) "Warrant Price" means $1.00 per share, subject to adjustment as
described in Section 3 below.
(h) "Warrant Stock" means the shares of Common Stock (or other
securities) purchasable upon exercise of this Warrant or issuable upon
conversion of this Warrant. The total number of shares to be issued upon the
exercise of this Warrant shall be _______, subject to adjustment as described in
Section 3 below.
3. Adjustments and Notices. The Warrant Price and/or the number of shares
of Warrant Stock shall be subject to adjustment from time to time in accordance
with this Section 3. The Warrant Price and/or the number of Warrant Shares shall
be adjusted to reflect all of the following events that occur on or after June
22, 1999.
(a) Subdivision, Stock Dividends or Combinations. In case the
Company shall at any time subdivide the outstanding shares of Common Stock or
shall issue a stock dividend with
-2-
respect to the Common Stock, the Warrant Price in effect immediately prior to
such subdivision or the issuance of such dividend shall be proportionately
decreased, and in case the Company shall at any time combine the outstanding
shares of the Common Stock, the Warrant Price in effect immediately prior to
such combination shall be proportionately increased, in each case effective at
the close of business on the date of such subdivision, dividend or combination,
as the case may be.
(b) Reclassification, Exchange, Substitution, In-Kind Distribution.
Upon any reclassifications, exchange, substitution or other event that results
in a change of the number and/or class of the securities issuable upon exercise
or conversion of this Warrant or upon the payment of a dividend in securities or
property other than shares of Common Stock, the Holder shall be entitled to
receive, upon exercise or conversion of this Warrant, the number and kind of
securities and property that Holder would have received if this Warrant had been
exercised or converted immediately before the record date for such
reclassification, exchange, substitution, or other event or immediately prior to
the record date for such dividend. The Company or its successor shall promptly
issue to Holder a new warrant for such new securities or other property. The new
warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Section 3 including,
without limitation, adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise or conversion of the new warrant.
The provisions of this Section 3(b) shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events and successive
dividends.
(c) Reorganization, Merger etc. In case of any (i) merger or
consolidation of the Company into or with another corporation where the Company
is not the surviving corporation, (ii) sale, transfer or lease (but not
including a transfer or lease by pledge or mortgage to a bona fide lender) of
all or substantially all of the assets of the Company or (iii) sale by the
Company's shareholders of 50% or more of the Company's outstanding securities in
one or more related transactions, the Company, or such successor or purchasing
corporation, as the case may be, shall, as a condition to closing any such
reorganization, merger or sale, duly execute and deliver to the Holder hereof a
new warrant so that the Holder shall have the right to receive, at a total
purchase price not to exceed that payable upon the exercise or conversion of the
unexercised or unconverted portion of this Warrant, and in lieu of the shares of
the Common Stock theretofore issuable upon exercise or conversion of this
Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reorganization, merger or sale by the Holder of
the number of shares of Common Stock then purchasable under this Warrant. Such
new warrant shall provide for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 3. The
provisions of this subparagraph (c) shall similarly apply to successive
reorganizations, mergers and sales.
(d) Dilutive Issuances. (i) If the Company, at any time or from time
to time after June 22, 1999, shall issue any Additional Stock (as defined below)
without consideration or for a consideration per Common Stock Equivalent Share
less than the Warrant Price in effect immediately prior to the issuance of such
Additional Stock, then the Warrant Price in effect immediately prior to each
such issuance shall forthwith be adjusted to a price determined by
-3-
multiplying such Warrant Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of Common Stock that the aggregate
consideration received by the Company for such issuance would purchase at such
Warrant Price; and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issuance plus the number of
shares of such Additional Stock. For purposes of this clause (i), the number of
shares of Common Stock outstanding at a given time shall be deemed to be the
number of shares of Common Stock that are then issued and outstanding plus the
number of shares of Common Stock then issuable upon exercise of all then
outstanding warrants, options or similar rights to purchase Common Stock or
securities convertible into Common Stock plus the number of shares of Common
Stock then issuable upon conversion of such convertible securities and all other
convertible securities of the Company then outstanding.
(ii) In the case of the issuance of Common Stock for cash, the
consideration received therefor shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by the company for any underwriting or
otherwise in connection with the issuance and sale thereof.
(iii) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash received therefor shall be deemed to be the fair value thereof as
reasonably determined by the Board of Directors of the Company in its good faith
judgment irrespective of any accounting treatment.
(iv) In the case of the issuance, whether before, on or after
the Commencement Date, of options to purchase or rights to subscribe for Common
Stock, securities by their terms convertible into or exchangeable for Common
Stock or options to purchase or rights to subscribe for such convertible or
exchangeable securities (which are not excluded from the definition of
Additional Stock), the following provisions shall apply:
(A) The aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in clauses (ii) or (iii)), if any, received
by the Company upon the issuance of such options or rights plus the minimum
purchase price provided in such options or rights (without taking into account
potential anti-dilution adjustments) for the Common Stock covered thereby.
(B) The aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to purchase or rights to
subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options or rights were issued and for a
consideration equal to the consideration, if any, received by the corporation
for any such securities and related options or rights (excluding any cash
received on account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the
-4-
Company upon the conversion or exchange of such securities or the exercise of
any related options or rights (the consideration in each case to be determined
in the manner provided in clauses (ii) or (iii)).
(C) In the event of any change in the number of shares
of Common Stock deliverable or any increase in the consideration payable to this
corporation upon exercise of such options or rights or upon conversion of or in
exchange for such convertible or exchangeable securities, including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Warrant Price obtained with respect to the adjustment that was made upon the
issuance of such options, rights or securities, and any subsequent adjustments
based thereon, shall be recomputed to reflect such change, but no further
adjustment shall be made for the actual issuance of Common Stock or any payment
of such consideration upon the exercise of any such options or rights or the
conversion or exchange of such securities.
(D) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Warrant Price obtained with respect to the adjustment which was made upon
the issuance of such options, rights or securities or options or rights related
to such securities, and any subsequent adjustments based thereon, shall be
recomputed to reflect the issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options or rights, upon the conversion
or exchange of such securities or upon the exercise of the options or rights
related to such securities. Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
only the number of shares of Common Stock actually issued upon the exercise of
such options or rights, upon the conversion or exchange of such securities or
upon the exercise of the options or rights related to such securities shall
continue to be deemed to be issued.
(E) The number of shares of Common Stock deemed issued
and the consideration deemed paid therefor pursuant to clauses (iv)(A) and
(iv)(B) of this Section 3(d) shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either clause (iv)(C)
or (iv)(D) of this Section 3(d).
(v) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to clause (iv) of this Section
3(d)) by the Company after June 22, 1999 other than shares of Common Stock
issued or issuable:
(A) to officers, directors, employees and consultants of
the Company directly or pursuant to a stock option plan or restricted stock plan
approved by the Board of Directors of the Company;
(B) upon conversion of the Class A, B, C or D Preferred
Stock of the Company or the exercise of the Warrants issued under the Securities
Purchase Agreement;
-5-
(C) to persons or entities with which the Company has
business relationships provided such issuances are for other than primarily
equity financing purposes and provided that at the time of any such issuance,
the aggregate of such issuance and similar issuances in the preceding
twelve-month period do not exceed 2% of the then outstanding Common Stock of the
Company (assuming full conversion and exercise of all convertible and
exercisable securities then outstanding) or such issuance is expressly approved
by a majority of the director representatives of the holders of Class D
Preferred Stock on the Company's Board of Directors.
(vi) "Common Stock Equivalent Share" means with respect to any
security that is ultimately convertible into shares of Common Stock or
ultimately exercisable for shares of Common Stock, the total number of shares of
Common Stock that may be acquired upon full exercise of all such rights.
(e) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Warrant Price, the Corporation, at its own expense, shall
cause its Chief Financial Officer to compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to the Holder. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based. No adjustment of the Warrant Price shall be
required to be made unless it would result in an increase or decrease of at
least one cent, but any adjustments not made because of this sentence shall be
carried forward and taken into account in any subsequent adjustment otherwise
required hereunder.
(f) Adjustment to Number of Shares of Warrant Stock. In the event
the Warrant Price is adjusted under any provision of this Section 3, the number
of shares of Warrant Stock shall be simultaneously adjusted by multiplying the
number of shares of Warrant Stock by a fraction, the numerator of which is the
Warrant Price in effect immediately prior to such adjustment and the denominator
of which is the Warrant Price in effect immediately after such adjustment.
(g) No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out all of the provisions of
this Section 3 and in taking all such action as may be necessary or appropriate
to protect the Holder's rights under this Section 3 against impairment. If the
Company takes any action affecting the Common Stock other than as described
above that adversely affects the Holder's rights under this Warrant, the Warrant
Price shall be adjusted downward.
(h) Fractional Shares. No fractional shares shall be issuable upon
exercise or conversion of the Warrant and the number of shares to be issued
shall be rounded down to the nearest whole share. If a fractional share interest
arises upon any exercise or conversion of the
-6-
Warrant, the Company shall eliminate such fractional share interest by paying
the Holder an amount computed by multiplying the fractional interest by the fair
market value of a full share.
4. No Shareholder Rights. This Warrant, by itself, as distinguished from
any shares purchased hereunder, shall not entitle its Holder to any of the
rights of a shareholder of the Company.
5. Reservation of Stock. On and after the Commencement Date, the Company
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of Warrant Stock upon the exercise or
conversion of this Warrant. Issuance of this Warrant shall constitute full
authority to the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for shares of
Warrant Stock issuable upon the exercise or conversion of this Warrant.
6. Exercise of Warrant. This Warrant may be exercised as a whole or part
by the Holder, at any time after the date hereof prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise and Investment Representation Statement in the forms attached hereto as
Attachments 1 and 2, respectively, duly completed and executed at the principal
office of the Company, specifying the portion of the Warrant to be exercised and
accompanied by payment in full of the Warrant Price in cash or by check with
respect to the shares of Warrant Stock being purchased. Alternatively, the
Holder may pay the Warrant Price as a whole or in part) by surrendering to the
Company all or a portion of any Note (as defined in the Note Purchase
Agreement), in which case the portion of the Note surrendered plus all accrued
but unpaid interest thereon shall be credited towards payment of the Warrant
Price. If less the entire Note is surrendered in payment of the Warrant Price,
the Company shall issue to the Holder a new promissory note identical to the
surrendered Note except that the principal amount thereof shall equal the
unsurrendered portion of the principal amount of the surrendered Note. This
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the
person entitled to receive the shares of Warrant Stock issuable upon such
exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date. As promptly as practicable
after such date, the Company shall issue and deliver to the person or persons
entitled to receive the same a certificate or certificates for the number of
full shares of Warrant Stock issuable upon such exercise. If this Warrant shall
be exercised for less than the total number of shares of Warrant Stock then
issuable upon exercise, promptly after surrender of this Warrant upon such
exercise, the Company will execute and deliver a new warrant, dated the date
hereof, evidencing the right of the Holder to the balance of this Warrant Stock
purchasable hereunder upon the same terms and conditions set forth herein.
7. Conversion. In lieu of exercising this Warrant or any portion hereof,
at any time after the occurrence of a Change-In-Control Event or the filing of a
registration statement for an initial underwritten public offering of securities
by the Company, the Holder hereof shall have the right to convert this Warrant
or any portion hereof into Warrant Stock by executing and delivering to the
Company at its principal office the written Notice of Conversion and Investment
-7-
Representation Statement in the forms attached hereto as Attachments 2 and 3,
specifying the portion of the Warrant to be converted, and accompanied by this
Warrant. The number of shares of Warrant Stock to be issued to Holder upon such
conversion shall be computed using the following formula:
X=(P)(Y)(A-B)/A
where X = the number of shares of Common Stock to be issued to the
Holder for the portion of the Warrant being converted.
P = the portion of the Warrant being converted expressed as
a decimal fraction.
Y = the total number of shares of Common Stock issuable upon
exercise of the Warrant in full.
A = the fair market value of one share of Warrant Stock
which means (i) the fair market value of the Warrant
Stock as of the last Business Day immediately prior to
the date the notice of conversion is received by the
Company, as reported in the principal market for such
securities or, if no such market exists, as determined
in good faith by the Company's Board of Directors, or
(ii) if this Warrant is being converted in conjunction
with a public offering of stock the price to the public
per share pursuant to the offering.
B = the Warrant Price on the date of conversion.
Any portion of this Warrant that is converted shall be immediately canceled.
This Warrant or any portion hereof shall be deemed to have been converted
immediately prior to the close of business on the date of its surrender for
conversion as provided above, and the person entitled to receive the shares of
Warrant Stock issuable upon such conversion shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable after such date, the Company shall issue and deliver to
the person or persons entitled to receive the same a certificate or certificates
for the number of full shares of Warrant Stock issuable upon such conversion. If
the Warrant shall be converted for less than the total number of shares of
Warrant Stock then issuable upon conversion, promptly after surrender of the
Warrant upon such conversion, the Company will execute and deliver a new
warrant, dated the date hereof, evidencing the right of the Holder to the
balance of the Warrant Stock purchasable hereunder upon the same terms and
conditions set forth herein. If this Warrant is converted, as a whole or in
part, after the occurrence of a Change-In-Control Event as to which Section 3(c)
is applicable, the Holder shall receive the consideration contemplated by
Section 3(c) in lieu of Common Stock of the Company.
-8-
8. Transfer of Warrant. This Warrant may be transferred or assigned by the
Holder hereof in whole or in part, provided that the transferor provides, at the
Company's request, an opinion of counsel satisfactory to the Company that such
transfer does not require registration under the Securities Act and the
securities law applicable with respect to any other applicable jurisdiction.
9. Termination. This Warrant shall terminate on 5:00 p.m. New York time on
the Termination Date.
10. Miscellaneous. This Warrant shall be governed by the laws of the State
of New York, as such laws are applied to contracts to be entered into and
performed entirely in New York by New York residents. In the event of any
dispute among the Holder and the Company arising out of the terms of this
Warrant, the parties hereby consent to the exclusive jurisdiction of the federal
and state courts located in the State of New York for resolution of such
dispute, and agree not to contest such exclusive jurisdiction or seek to
transfer any action relating to such dispute to any other jurisdiction. The
headings in this Warrant are for purposes of convenience and reference only, and
shall not be deemed to constitute a part hereof. Neither this Warrant nor any
term hereof may be changed or waived orally, but only by an instrument in
writing signed by the Company and the Holder of this Warrant. All notices and
other communications from the Company to the Holder of this Warrant shall be
delivered personally or by facsimile transmission or mailed by first class mail,
postage prepaid, to the address or facsimile number furnished to the Company in
writing by the last Holder of this Warrant who shall have furnished an address
or facsimile number to the Company in writing, and if mailed shall be deemed
given three days after deposit in the United States mail.
ISSUED: _______________
BEACON POWER CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
-9-
Attachment 1
NOTICE OF EXERCISE
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to purchase ________________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------------
(Name)
---------------------------------------
(Address)
----------------------------------- --------------------------------------
(Date) (Name of Warrant Holder)
By:
-----------------------------------
Title:
--------------------------------
Attachment 2
INVESTMENT REPRESENTATION STATEMENT
Shares of the Common Stock
(as defined in the attached Warrant) of
BEACON POWER CORPORATION
In connection with the purchase of the above-listed securities, the
undersigned hereby represents to Beacon Power Corporation (the "Company") as
follows:
(a) The securities to be received upon the exercise of the Warrant (the
"Securities") will be acquired for investment for its own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part
thereof, and the undersigned has no present intention of selling, granting
participation in or otherwise distributing the same, but subject, nevertheless,
to any requirement of law that the disposition of its property shall at all
times be within its control. By executing this statement, the undersigned
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any Securities issuable upon
exercise of the Warrant.
(b) The undersigned understands that the Securities issuable upon exercise of
the Warrant at the time of issuance may not be registered under the Securities
Act of 1933, as amended (the "Securities Act"), and applicable state securities
laws, on the ground that the issuance of such securities is exempt pursuant to
Section 4(2) of the Securities Act and state law exemptions relating to offers
and sales not by means of a public offering, and that the Company's reliance on
such exemptions is predicated on the undersigned's representations set forth
herein.
(c) The undersigned agrees that in no event will it make a disposition of any
Securities acquired upon the exercise of the Warrant unless and until (i) it
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
proposed disposition, and (ii) it shall have furnished the Company with an
opinion of counsel satisfactory to the Company and Company's counsel to the
effect that (A) appropriate action necessary for compliance with the Securities
Act and any applicable state securities laws has been taken or an exemption from
the registration requirements of the Securities Act and such laws is available,
and (B) the proposed transfer will not violate any of said laws.
(d) The undersigned acknowledges that an investment in the Company is highly
speculative and represents that it is able to fend for itself in the
transactions contemplated by this statement, has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investments, and has the ability to bear the economic risks
(including the risk of a total loss) of its investment. The undersigned
represents that it has had the opportunity to ask questions of the Company
concerning the Company's business and assets and to obtain any additional
information which it considered necessary to verify the accuracy of or to
amplify the Company's disclosures, and has had all questions which have been
asked by it satisfactorily answered by the Company
(e) The undersigned acknowledges that the Securities issuable upon exercise or
conversion of the Warrant must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The undersigned is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the shares, the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold from the Company or any affiliate of the Company, the sale
being through a "broker's transaction" or in transactions directly with a
"market maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three month period not exceeding specified limitations.
Dated:
--------------------
--------------------------------------
(Typed or Printed Name)
By:
-----------------------------------
(Signature)
--------------------------------------
(Title)
-2-
Attachment 3
NOTICE OF CONVERSION
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to acquire _______________ shares of the
Warrant Stock of Beacon Power Corporation pursuant to the terms of the attached
Warrant, by conversion of _________ percent (_____%) of the Warrant.
2. Please issue a certificate or certificates representing said shares of
Warrant Stock in the name of the undersigned or in such other name as is
specified below:
---------------------------------------
(Name)
---------------------------------------
(Address)
----------------------------- --------------------------------------
(Date) (Name of Warrant Holder)
By:
-----------------------------------
Title:
--------------------------------
(Title and signature of authorized person)
Beacon Power Corporation
Exhibit D to the Note Purchase Agreement
Supplemental Disclosure Schedule
[The following numbers correspond to the Section numbers in the Note Purchase
Agreement]
3.1 The Company is not in good standing in Massachusetts as it has not filed
its Annual Report. The Annual Report is currently being prepared by the
Company and will be filed upon completion.
3.4(b) The Company has experienced a Material Adverse Change since December 31,
1998 as it has exhausted all of its working capital.
3.8 Other Representations and Warranties
The following exceptions are taken to the representations and warranties
of the company set forth in Section 3 of the October Agreement and, where
applicable, certain representations and warranties made in the October Agreement
(each an "Original Representation and Warrant") have been eliminated and
superseded in their entirety by representations and warranties made in this Note
Purchase Agreement:
[The following numbers correspond to the Section numbers in the October
Agreement]
3.1 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.1 of this Note
Purchase Agreement.
3.2(b) The number of issued and outstanding shares of Common Stock
of the Company is 8,409.
3.3 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.2 of this Note
Purchase Agreement.
3.4 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.3 of this Note
Purchase Agreement.
3.7 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.4 of this Note
Purchase Agreement.
3.8(c) The Company has increased the compensation payable to certain
executive officers.
3.8(d) The Company has declared and paid a $30,000 dividend to the
holders of Class C Preferred Stock.
3.8(j) The Company has entered into a real property lease relating
to approximately 4,000 square feet of office space.
3.12 The Company has entered into a Registration Rights Agreement,
dated as of May 28, 1997, with Duquesne Enterprises and executed
Registration Rights Statements on October 23, 1998 which are
attached as Exhibits F and G to the October Agreement.
3.20 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.5 of this Note
Purchase Agreement.
3.22 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.6 of this Note
Purchase Agreement.
3.23 The Original Representation and Warranty is superseded by the
representation and warranty contained in Section 3.7 of this Note
Purchase Agreement.
The following amendments are hereby made to the Company's Exhibit I
Disclosure Schedule originally delivered as part of the October Agreement.
[The following numbers correspond to the Section numbers in Exhibit I to the
October Agreement]
3.2(c)(i) The Company has increased the option pool to 1,500,000 shares by vote
of the Board of Directors. Of this amount options to purchase 806,438 have been
granted and approved by the Board of Directors.
3.2(d) SatCon Technology Corporation holds 1,671 shares of Common Stock on a
post-split basis (not 1,686). The total number of shares of Common Stock
outstanding on a post split-basis is 8,409 (not 8,424). Annex A is amended to
include new shares granted.
3.7 Relates to Section 3.4 of the Note Purchase Agreement and is hereby
renumbered to number 3.4.
3.7(b)(ii) Is eliminated in its entirety.
3.7(b)(iii) Is eliminated in its entirety.
-2-
3.7(b)(iv) Is eliminated in its entirety
3.8(ii) Is eliminated in its entirety.
3.8(iv) Is eliminated in its entirety.
3.10(e) & 3.11 (ix) The Company has entered into Invention and/or Non-Disclosure
Agreements with the members of the Engineering Department and Senior Management.
3.11(x) Is eliminated in its entirety.
3.14 The Company's benefit providers have changed since the October Agreement,
however, the current providers provide comparable benefits.
3.15 Insurance coverage has increased since the October Agreement.
-3-
EXHIBIT I
Beacon Power Corporation
Exhibit I
Beacon Disclosure Schedule
3.2 Capital Structure
(c) The outstanding warrants, options, conversion rights, pre-emptive and
subscription rights are as follows:
(i) The Company has established an option pool of 562,500 shares. Of this
amount options to purchase 393,750 shares of Common Stock have been granted and
options to purchase 25,313 are in the process of being granted.
(ii) A Warrant (the "Duquesne Warrant") held by Duquesne Enterprises
("Duquesne") to purchase 562,500 shares of Common Stock.
(iii) Duquesne has pre-emptive rights with respect to issuances of Common
Stock and securities convertible into Common Stock pursuant to the Duquesne
Warrant.
(d)
Outstanding Post 1:1.125 Split
----------- ------------------
Common Stock, $0.01 par value per share
---------------------------------------
SatCon Technology Corporation 1,499 1,686
Xxxxx X. Xxxxxx 999 1,123
Xxxxxx X. Xxxxxxx 999 1,123
Xxxxxxx X. Xxxxxx 999 1,123
Xxxxxxx X. X'Xxxxxx 999 1,123
Xxxx X. X'Xxxxxxxx 999 1,123
Xxxxxx X. Xxxxxxxxx 999 1,123
-----
8,424
Class A Preferred Stock,
$0.01 par value per share
Convertible into Common Stock on a 1 to
1 basis (subject to adjustment)
-1-
SatCon Technology Corporation 3,998,501 4,498,313
Class B Preferred Stock,
$0.01 par value per share
Convertible into Common Stock on a 1 to
1 basis (subject to adjustment)
No shares outstanding
Class C Preferred Stock,
$0.01 par value per share
Convertible into Common Stock on a 1 to
1 basis (Subject to adjustment)
Xxxxx X. Xxxxxx 1 1
Xxxxxx X. Xxxxxxx 1 1
Xxxxxxx X. Xxxxxx 1 1
Xxxxxxx X. X'Xxxxxx 1 1
Xxxx X. X'Xxxxxxxx 1 1
Xxxxxx X. Xxxxxxxxx 1 1
The Duquesne Warrant entitles Duquesne to purchase up to 562,500 shares of
Common Stock.
The following person hold options to purchase Common Stock
Optionholder Number of Shares of Common Stock Issuable
------------ -----------------------------------------
See Annex A
3.5 Representations Regarding Preferred Shares
(i) Duquesne is entitled to pre-emptive rights pursuant to the Duquesne
Warrant.
3.7(b) Financial Statements
(i) The Company Financial Statements for the periods ended December 31,
1997 and July 31, 1998 are attached hereto as Annex B and C, respectively. The
Company notes that (i) the number of authorized shares reflected in the
financial
-2-
statements is inaccurate, with the correct number being reflected in the Second
Amended and Restated Certificate of Incorporation and (ii) the 1:1.125 stock
split reflected in the financial statements did not take place until October 23,
1998.
(ii) At October 5, 1998, the outstanding indebtedness to Duquesne is
$400,000, all of which is outstanding pursuant to the loan agreement, dated July
17, 1998, between the Company and Duquesne. At October 5, 1998, an aggregate of
$668,949 (including the $70,000 referred to in (iii) below) of advances to the
Company were outstanding from SatCon Technology Corporation.
(iii) $70,000 of advances to the Company were outstanding for Xxxxxxx
Xxxxxxx.
(iv) The Company has declared but not yet paid a dividend to holders of
Class C Preferred Stock on October 23, 1998 in the aggregate amount of $30,000.
3.8 Absence of Certain Changes and Events
(i) The Company's cash balance has declined and its financial condition
has declined since July 31, 1998.
(ii) The Company has declared but not yet paid a dividend to holders of
Class C Preferred Stock on October 23, 1998 in the aggregate amount of $30,000.
(iii) The Board of Directors and Stockholders of the Company have approved
a 1:1.125 stock split.
(iv) At October 5, 1998, the outstanding indebtedness to Duquesne is
$400,000, all of which is outstanding pursuant to the loan agreement, dated July
17, 1998, between the Company and Duquesne. In connection with such loan, the
Company granted a security interest in its assets to Duquesne. At October 5,
1998, an aggregate of $668,949 (including $70,000 advanced as a loan to Xx.
Xxxxxxx) of advances to the Company were outstanding from SatCon.
3.10 Proprietary Assets
(a)(i) None.
(a)(ii) See Exhibit A to the Amended and Restated License Agreement, dated May
28, 1997, between the Company and SatCon Technology Corporation.
(d) Pursuant to the Securities Purchase Agreement, dated as of May 28, 1997,
between Duquesne, SatCon and the Company:
-3-
SatCon has granted to the Company a perpetual, world-wide, royalty free
license to all patents, patent applications, technical knowledge,
information and know-how in existence (May 97) which relate to the field
of flywheel energy storage products, systems and applications, but not for
satellite or other non-terrestrial, stationary applications.
The Company does not have the right to sublicense such technology other
than in connection with its manufacturing and distribution operations. The
Company has granted SatCon a perpetual, royalty free license to use any
improvements upon the flywheel energy storage technology for
non-terrestrial applications made by the Company.
(e) See Section 3.11 for a list of employees of the Company who have entered
into Invention and Non-Disclosure Agreements.
3.11 Contracts
(i) Amended and Restated License Agreement, dated as of May 28, 1998, between
the Company and SatCon.
(ii) Securities Purchase Agreement, dated as of May 28, 1997, among the Company,
SatCon and Duquesne.
(iii) Warrant, dated as of May 28, 1997, issued to Duquesne.
(iv) Registration Rights Agreement, dated May 28, 1997, between the Company and
Duquesne.
(v) The Company is in the process of entering into a registration rights
agreement with SatCon.
(vi) Consulting Agreement, dated May 28, 1997, between the Company and Duquesne.
(vii) Services Agreement, dated May 28, 1997, between SatCon and the Company.
(viii) Letter Agreement (relating to exclusive distribution rights granted by
the Company to Duquesne), dated May 28, 1997, between the Company and Duquesne.
(ix) Invention and Non-disclosure agreements between the Company and the
following individuals:
Xxxxxxx Xxxxxxx
Xxxxxx Xxxxxx
-4-
Xxxxx X'Xxxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx
(x) Loan Agreement, dated July 17, 1998, between Duquesne and the Company.
(xi) The Company has obligations under a subcontract arrangement with SatCon on
a project for the Naval Surface Warfare Center (United States Marine Corp.
Contract)
(xii) San Diego Gas & Electric, beta site agreement dated December 4, 1996.
(xiii) Commercial Lease (as amended), dated December 1, 1997 between the Company
and Xxxxxxxx Properties Management, Inc.
(xiv) ABB Power T&D Company, Inc. beta site agreement dated August 1, 1998.
(xv) Xxxx Atlantic beta site agreement dated June 1, 1998.
(xvi) GTE Mobile Communications Service Corporation beta site agreement, dated
September 3, 1998.
3.12 Registration Rights
The Company has granted registration rights to SatCon and Duquesne.
3.13 Tax Matters
The Company was included in the consolidated tax returns of SatCon until
September, 1997.
3.14 Employee Benefit Plans
The Company's benefit brochure is attached as Annex D
The Company has employment contracts with the following persons:
None
3.15 Insurance
Summary of the Company's insurance is attached as Annex E.
-5-
3.18 Litigation
Certain of the Company's creditors have commenced collection proceedings.
3.21 Related Party Transaction
See Sections 3.7(b)(i) and 3.11(i)-(viii)
-6-
Beacon Power Corporation
Exhibit J
SatCon Disclosure Schedule
4.2 SatCon may be obligated to reinstate and increase the number of shares
issuable under certain warrants issued to the underwriters in connection with
SatCon's initial public offering in November 1992. The maximum number of
additional shares issuable pursuant to such warrants will not exceed 100,000
shares of Common Stock.
4.6 Litigation matters referred to in SatCon's report under the Securities
Exchange Act of 1934, and incorporated by reference in this Schedule.
Immediately prior to the filing of SatCon's Form 10-Q for the quarter ended June
30, 1998, a person who sold his business to SatCon commenced litigation relating
to the value of certain assets received by SatCon in such transaction.
4.8 SatCon has granted registration rights to Duquesne and the holders of the
Warrants referred to in item 4.2 above.
-7-
Annex A
Beacon Power
--------------------------------------------------------------------------------------------------------------
Summary of Options
--------------------------------------------------------------------------------------------------------------
Granted
--------------------------------------------------------------------------------------------------------------
Pre-Split Post-Split In-Process
--------------------------------------------------------------------------------------------------------------
Options Pool 500,000 562,500 562,500
--------------------------------------------------------------------------------------------------------------
Options "Granted" 350,000 393,750 419,063
--------------------------------------------------------------------------------------------------------------
Options available 150,000 168,750 143,438
--------------------------------------------------------------------------------------------------------------
Strike Price $2.00 $1.78
--------------------------------------------------------------------------------------------------------------
Prior Grants
--------------------------------------------------------------------------------------------------------------
Granted Granted Granted
Pre-Split Post-Split Start Date
--------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxx 50,000 56,250 6/1/97
--------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx 22,500 25,313 1/14/98
--------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxxx 40,000 45,000 3/9/98
--------------------------------------------------------------------------------------------------------------
Xxx XxXxxxxxx 1,000 1,125 6/1/97
--------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx 5,000 5,625 6/1/97
--------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxx 4,000 4,500 10/27/97
--------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx 2,000 2,250 11/1/97
--------------------------------------------------------------------------------------------------------------
Xxx X'Xxxxxx 50,000 56,250 6/1/97
--------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxxxx 22,500 25,313 7/28/97
--------------------------------------------------------------------------------------------------------------
Xxx Xxxxxx 65,000 73,125 6/1/97
--------------------------------------------------------------------------------------------------------------
Xxxx Xxxx 0 0 7/21/97 5000 recovered: termination
--------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxx 80,000 90,000 6/1/97
--------------------------------------------------------------------------------------------------------------
Xxxxxxx Strangeways 2,000 2,250 11/1/97
--------------------------------------------------------------------------------------------------------------
Xxx Xxxxxxxxx 2,000 2,250 11/1/97
--------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxxx 4,000 4,500 1/14/98
--------------------------------------------------------------------------------------------------------------
Options Granted 350,000 393,750
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
In-Process
--------------------------------------------------------------------------------------------------------------
Xxxxxxx Calla 0 0 4/20/98
--------------------------------------------------------------------------------------------------------------
Jennny Hezzell 2,000 2,250 2/17/98 Approved not granted
--------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx 5,000 5,625 2/17/98 Approved not granted
--------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxx 0 0 5/18/98
--------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxx 4500 5,063 7/27/98 Offered not Approved
--------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxx 2,000 2,250 3/9/98 Approved not granted
--------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx 0 0 4/27/98
--------------------------------------------------------------------------------------------------------------
Xxx Xxxx 4,500 5,063 6/22/98 Offered not Approved
--------------------------------------------------------------------------------------------------------------
Xxxxx Xxxx 4,500 5,063 9/28/98 Offered not Approved
--------------------------------------------------------------------------------------------------------------
0
--------------------------------------------------------------------------------------------------------------
0
--------------------------------------------------------------------------------------------------------------
Total New Grants 22,500 25,313
--------------------------------------------------------------------------------------------------------------
Total Grants 372,500 419,063
--------------------------------------------------------------------------------------------------------------
Notes:
1. Awards do not account for the 9 for 8 stock split
o Grants have a $2.00 strike price
2. Following the stock split
o Stock amounts are increased by 9/8
o Strike price decreases by 8/9
Annex B
BEACON POWER CORPORATION
FINANCIAL STATEMENTS
For the quarter ended December 31, 1997 and
the period May 8, 1997 (Inception) to September 30, 1997
(Unaudited)
TABLE OF CONTENTS
Page
----
Balance Sheets ............................................. 3
Statements of Operations ................................... 4
Statements of Changes in Stockholders' Equity .............. 5
Statements of Cash Flows ................................... 6
Notes to Financial Statements .............................. 7
2
BEACON POWER CORPORATION
BALANCE SHEETS
(Unaudited)
December 31, September 30,
1997 1997
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents ................... $ 2,078,067 $ 2,929,718
Accounts receivable ......................... 31,437 174,733
Inventory ................................... 16,788 --
Prepaid expenses and other assets ........... 26,588 --
----------- -----------
Total current assets ..................... 2,152,880 3,104,451
Property and equipment, net ...................... 1,415,786 962,035
----------- -----------
Total assets ............................. $ 3,568,666 $ 4,066,486
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Customer Advances ............................ $ 95,000 $ 95,000
Accrued expenses ............................. 32,298 --
----------- -----------
Total current liabilities ................. 127,298 95,000
STOCKHOLDERS' EQUITY
Preferred stock; $.01 par value, 5,000,000(1)
and 1,000,000 shares authorized;
4,498,319(2) and 0 shares issued and
outstanding, at December 31, 1997
and September 30, 1997, respectively .......... 44,983 --
Common stock, $.01 par value, 20,000,000(1)
and 5,000,000 shares authorized; 8,424(2)
and 4,500,000(2) shares issued and
outstanding, at December 31, 1997
and September 30, 1997, respectively .......... 84 45,000
Additional paid-in capital ....................... 4,984,933 4,955,000
Retained earnings/(loss) ......................... (1,588,632) (1,028,514)
----------- -----------
Total stockholders' equity ................ 3,441,368 3,971,486
----------- -----------
Total liabilities and stockholders' ... $ 3,568,666 $ 4,066,486
=========== ===========
The accompanying notes are an integral part of the financial statements.
---------------------
(1) Amounts have been adjusted to reflect increase in authorized capital (See
Note H).
(2) Amounts have been adjusted to reflect 1:1.125 stock split (See Note H).
3
BEACON POWER CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
For the For the period For the period
Quarter May 8,1997 May 8,1997
ended (Inception) to (Inception) to
December 31, September 30, December 31,
1997 1997 1997
----------- ----------- -----------
Revenue .......................................... $ 1,090 $ 186,226 $ 187,316
----------- ----------- -----------
Cost of sales .................................... 982 160,812 161,794
Selling, general and administrative expenses ..... 363,846 733,190 1,097,036
Research and development expenses ................ 237,707 396,059 633,766
----------- ----------- -----------
Total operating expenses ......................... 602,535 1,290,061 1,892,596
----------- ----------- -----------
Operating loss ................................... (601,445) (1,103,835) (1,705,280)
Interest income, net ............................. 41,327 75,321 116,648
----------- ----------- -----------
Net loss ......................................... $ (560,118) $(1,028,514) $(1,588,632)
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
4
BEACON POWER CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Since May 8, 1997 (Inception) to December 31,1997
(Unaudited)
Additional Retained Total
Common Common Preferred Preferred Paid-In Earnings Stockholders'
Shares(1) Stock(1) Shares(1) Stock(1) Capital (Loss) Equity
---------- --------- --------- -------- ----------- ----------- -----------
May 8, 1997 .................. 4,499,999 $ 45,000 -- -- $ 4,955,000 -- $ 5,000,000
Net Loss ..................... $(1,028,514) (1,028,514)
---------- --------- --------- -------- ----------- ----------- -----------
Balance, September 30, 1997 .. 4,499,999 $ 45,000 -- -- $ 4,955,000 $(1,028,514) $ 3,971,486
Net Loss ..................... (560,118) (560,118)
Recapitalization ............. (4,491,575) $ (44,916) 4,498,319 $ 44,983 29,933 30,000
---------- --------- --------- -------- ----------- ----------- -----------
Balance, December 31, 1997 ... 8,424 $ 84 4,498,319 $ 44,983 $ 4,984,933 $(1,588,632) $ 3,441,368
========== ========= ========= ======== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
--------------------
(1) Amounts have been adjusted to reflect 1:1.125 stock split (See Note H).
5
BEACON POWER CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
For the For the Period
Quarter May 8,1997
ended (Inception)
December to September
30, 1997 30, 1997
----------- -----------
Cash flows from operating activities:
Net income/(loss) .......................................... $ (560,118) $(1,028,514)
Adjustments to reconcile net income/(loss) to net
cash provided by/(used in) operating activities:
Depreciation ...................................... 1,283 126
Changes in operating assets and liabilities:
Accounts receivable ............................. 143,296 (174,733)
Prepaid expenses and other assets ............... (26,588) --
Inventory ....................................... (16,788) --
Accrued payroll and related expenses ............ 32,298 --
Deferred revenue ................................ -- 95,000
----------- -----------
Total adjustments ....................................... 93,501 (79,607)
----------- -----------
Net cash provided by/(used in) operating activities ........ (426,617) (1,108,121)
----------- -----------
Cash flows from investing activities:
Capital Expenditures .................................... (455,034) (962,161)
----------- -----------
Net cash provided by/(used in) investing activities ........ (455,034) (962,161)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of stock ......................... 30,000 5,000,000
----------- -----------
Net cash provided by financing activities .................. 30,000 5,000,000
----------- -----------
Net increase/(decrease) in cash ............................ (851,651) 2,929,718
Cash at beginning of period ................................ 2,929,718 --
----------- -----------
Cash and cash equivalents at end of period ................. $ 2,078,067 $ 2,929,718
=========== ===========
The accompanying notes are an integral part of the financial statements.
6
BEACON POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Organization
Beacon Power Corporation (the "Company" or "Beacon"), an affiliate of SatCon
Technology Corporation ("SatCon") was incorporated in Delaware in May of 1997.
Beacon is engaged in the development, marketing and manufacturing of flywheel
devices for storing and transmitting kinetic energy. The Company intends
initially to market its flywheel energy storage devices and related products to
industries which require back-up sources of power to maintain services,
specifically the cable television ("cable") and telecommunications industries.
The Company believes these industries will accept a flywheel system as a
preferable alternative to battery based energy at remote locations. Once the
reliability of a flywheel system is demonstrated by its acceptance by cable and
telecommunication companies, the Company intends to expand its marketing efforts
to the larger uninterruptable power supply ("UPS") market and internationally.
Revenue Recognition
The Company designs and manufactures flywheel devices. Revenue from product
sales is recognized upon shipment.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits and highly
liquid investments with a maturity of three months or less when acquired.
Inventory
Inventories are stated at the lower of cost or market and costs are determined
based on the first-in, first-out method of accounting.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over the asset's estimated useful life. The estimated
useful lives of property and equipment are as follows:
Estimated Lives
------------------------------
Computer equipment and software ........... 3 - 5 Years
Electronic laboratory and shop equipment .. 5 Years
Mechanical laboratory and shop equipment .. 10 Years
Sales and demonstration equipment ......... 3 - 10 Years
Furniture and fixtures .................... 7 - 10 Years
Leasehold improvements .................... Lesser of the life of the
lease or the useful life of
the improvement
When assets are retired or otherwise disposed of, the cost and related
depreciation are eliminated from the accounts and any resulting gain or loss is
reflected in other income.
7
BEACON POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies (Continued)
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions and
disclosure of contingencies at the date of the financial statements. Actual
results could differ from these estimates.
Income Taxes
The Company accounts for income taxes in accordance with Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which requires a
balance sheet approach for accounting for income taxes. Under SPAS 109, deferred
tax assets and deferred tax liabilities are recognized based on temporary
differences between the basis of assets and liabilities using statutory rates.
The Company has, as required under the Internal Revenue Code, switched from the
cash to accrual method for tax reporting purposes.
Concentration of Credit Risk
Financial instruments which subject the Company to concentrations of credit risk
consist principally of cash equivalents.
The Company deposits its cash with a regional commercial bank. Credit exposure
to any one entity is limited by Company policy.
B. Inventory
At December 31, 1997, inventory consists of raw materials.
C. Property and Equipment
Property and equipment consist of the following:
December 31, September 30,
1997 1997
-------------- ---------------
Property and equipment, cost ...... $ 1,417,069 $ 962,161
Less accumulated depreciation ..... 1,283 126
-------------- ---------------
$ 1,415,786 $ 962,035
============== ===============
D. Preferred Stock
At December 31, 1997, the Company was authorized, subject to limitations
prescribed by law, to issue, from time to time, up to an aggregate of 4,498,320
shares of Preferred Stock, of which 4,498,313 had been designated Class A
Preferred Stock, $0.01 par value per share, one had been designated as Class B
Preferred Stock, $0.01 par value per share, and 6 had been designated as Class C
Preferred Stock, $0.01 par value per share. (See Note H for change in authorized
capital stock subsequent to December 31, 1997). Each series of preferred Stock
shall have such number of shares, designations, preferences, powers,
qualifications and special or relative rights or priveleges as shall be
determined by the Company, which may include, among others, dividend rights,
voting rights, redemption and sinking fund provisions, liquidation preferences,
conversion rights and preemptive rights.
8
BEACON POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
E. Stock Warrant
The Company has issued a warrant (the "Warrant") to purchase 562,498 shares of
the Company's Common Stock and one share of Class B Preferred Stock at a
purchase price of approximately $5.33 per share. The warrant also grants the
holder the right to participate in future private equity offerings to the extent
necessary to permit the holder to maintain a 20% equity interest in the Company.
The Company has also agreed with the holder that as long as the holder maintains
50% of the shares aquired pursuant to the Warrant, the Company will not sell any
equity securities in a private transaction to any entity which, directly or
through an affiliate, derives revenues during the most recent year of $10
million or more through the distribution of electricity or natural gas. In
addition, the Company has agreed that while the holder maintains such an equity
interest in the Company, the Company shall not, without the holder's approval,
make any material change to its principal business activity or license its
flywheel energy storage technology.
F. Recapitalization
On December 24, 1997, the Company engaged in a recapitalization (the
"recapitalization") of the Company pursuant to which SatCon exchanged 4,498,313
shares of the Company's Common Stock for 4,498,313 shares of the Company's Class
A Preferred Stock, $0.01 par value per share.
In connection with the recapitalization, the Company issued 6,738 shares of the
Company's Common Stock, $0.01 par value per share and 6 shares of the Company's
Class C Preferred Stock, $0.01 par value per share, for an aggregate purchase
price of $30,000 and at a price of $5,000 per unit of 1,123 shares of Common
Stock and one share of Class C Preferred Stock.
G. Commitments and Contingencies
Operating Leases
The Company occupies approximately 10,439 square feet of executive and
administrative offices and light manufacturing space at 6-D Gill Street, Woburn,
Massachesetts under a primary lease expiring on November 30, 1999. The monthly
payment is $9,525.58 plus its pro rata share of operating expenses and real
estate taxes.
9
BEACON POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
H. Subsequent Events
Stock Option
On January 30, 1998, the Company established an employee stock incentive plan
pursuant to which the Company may issue options to purchase up to 562,500 shares
of Common Stock. Through March 10, 1998, the Company has issued options to
purchase 399,375 shares of Common Stock to certain of its employees at an
average purchase price of approximately $1.78 per share. The options vest over a
period of three or four years. Options to purchase 163,125 share of Common Stock
remain available to issuance to future employees.
Stock Split
Effective March 11, 1998, the Company effected a 1:1.125 stock split. The
amounts presented in the Balance Sheets, Statements of Stockholders' Equity and
Notes to the Financial Statements reflect the effect of the stock split for each
period presented.
Authorized Capital Stock
Effective March ii, 1998, the Company's authorized capital stock consists of
20,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock, $0.01
par value per share of which 4,498,313 shares have been designated Class A
Preferred Stock, $0.01 par value, 1 share has been designated Class B Preferred
Stock, $0.01 par value, and 6 shares have been designated Class C Preferred
Stock, $0.01 par value.
10
Annex C
Beacon Power Corporation
Balance Sheet
as of July 31, 1998
ASSETS
------
Current Assets:
Cash $ 70,498
A/R 31,437
1 Intercompany 34,906
Inventory 16,788
Prepaid Expenses 29,500
Placement Fees 84,801
------------------
Total Current Assets: 267,931
------------------
Property and Equipment
Furniture & Fixtures 50,158
Equipment & Machinery 1,684,283
Computers & Telephone 56,723
LHI 1,741
------------------
Total Property & Equipment 1,792,905
------------------
Patents 7,088
------------------
Total Other Assets 7,088
------------------
TOTAL ASSETS: $ 2,067,924
==================
LIABILITIES & CAPITAL
Current Liabilities:
2 Accounts Payable $ 741,405
Accrued Expenses 54,497
Duquesne Loan 200,000
3 SatCon Loan 65,000
------------------
Total Current Liabilities 1,060,902
------------------
4 Walpole Co-op Lease 54,311
Peoples Heritage Lease 42,026
5 Deferred Revenue 95,000
------------------
Total Long Term Liabilities 191,338
------------------
------------------
TOTAL LIABILITIES 1,252,240
------------------
Preferred Stock 44,983
Common Stock 84
Paid in Capital 4,984,933
Retained Earnings (1,588,632)
Net Income (2,625,684)
------------------
Total Capital 815,684
------------------
TOTAL LIABILITIES & CAPITAL $ 2,067,924
==================
Beacon Power Corporation
Balance Sheet-Notes
as of July 31, 1998
SIGNIFICANT ACCOUNTING POLICIES
Organization
Beacon Power Corp (the "Company" or "Beacon"), an affiliate of Satcon Technology
Corporation ("SatCon") was incorporated in Delaware in May of 1997. Beacon is
engaged in the development of flywheel devices for storing and transmitting
kinetic energy.
Cash and Cash Equivalent
Beacon considers investments purchased with a maturity of three months or less
to be cash equivalents.
Accounts receivable
Receivables are stated in the balance sheet at their expected realizable value.
Plant Assets and Depreciation
Plant assets are carried at cost. Maintenance and repairs are expensed as
incurred.
Inventories
Inventories are stated at the lower of cost or market.
1. Intercompany (Related Party Transactions)
Remaining balance of Capital Investment from Duquesne Enterprises. Balance
represents amounts due SatCon for support and expenditures for May 1998.
Balance @ 12/31/97 2,048,067.00
Cash Transfers to Beacon (1,600,000.00)
SatCon Expenditures & Support Jan thru April 1998 (413,161.00)
-------------
Remaining Balance 34,906.00
=============
2. Account Payable
Includes Related party transactions totaling $ 73.689.25. Amount represents
invoices for time and materials of engineering services provided by Satcon Corp.
from June 1998. An additional $ 35,000.00 is expected for August.
3. Loan from Satcon
12% interest bearing (same basis as DQE), Unsecured advances of working capital
from Satcon corp. Balance is expected to be paid in full upon receipt of
funding. An additional $ 240,000. of working capital has been advanced in August
and September.
4. Leases
Beacon has certain capital lease agreements
Amount of Capitalized Lease assets by Major category:
Telephone Equipment $22,688
Furniture & Fixtures $44,933
Computer & Machinery $44,198
Minimum monthly lease payments total $ 5,499.29
5. Deferred Revenue
Deferred revenue represents monies received for future delivery of a beta unit.
--------------------------------------------------------------------------------
Flexible
Reimbursement
Accounts
These programs let employees pay for health care expenses not covered
under the health plans, as well as dependent care expenses with pre-tax dollars.
Employee
Assistance
Program
Beacon Power recognizes its employees may experience problems of a
personal nature and that at times these problems may interfere with job
performance. When this occurs both the employee and Beacon Power suffer. To
address these mutual concerns we participate in an Employee Assistance Program
which provides problem assessment, short-term counseling, and referral services
through an independent counseling agency.
--------------------------------------------------------------------------------
Note: Benefits described pertain to regular full-time employees. The
descriptions of the benefits and policies outlined here are summary
statements only and are not intended to be definitive. In all instances,
the full text of the plan, policy or other appropriate document must be
reviewed to determine the rights, benefits, and obligations of employees
and Bea-
Beacon Power Corporation
0 Xxxx Xxxxxx
Xxxxxx Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000-0000
Beacon
Power's
Benefits
in Brief
--------------------------------------------------------------------------------
Vacation
-----------------------------
Length of Service
1 mo. but less than 2 yrs.:
5/6 of a day/mo. (10 days)
-----------------------------
2 yrs. but less than 9 yrs.:
1-1/4 days/mo. (15 days)
-----------------------------
9 yrs. or more:
1-2/3 days/mo. (20 days)
-----------------------------
Holidays
Beacon Power observes 11 holidays per year. One of these is a floating
holiday designated by the employee.
Paid Sick Leave
Sick leave is a benefit provided to regular full-time employees to assist
them with paid time when illness or medical requirements prevent them from
working. A maximum of 10 days (accrued at a rate of 6 2/3 hours per month) per
calendar year is paid.
Long-Term
Disability
All regular full-time employees are eligible for LTD insurance. These
benefits are payable following three months of total disability. Eligible
employees receive a monthly disability benefit in the amount equal to 60% of
monthly base earnings at the time they become totally disabled, up to a maximum
monthly benefit of $7,500.
Medical Plan
Beacon Power offers two forms of health insurance. The options are:
o Blue Cross & Blue Shield Blue Choice New England
This Point of Service Plan (POS) combines the managed care full coverage
features of HMO Blue with the freedom of choice offered by the
Comprehensive Major Medical Plan.
o Harvard Community Health Plan
This HMO is a complete health care system offering coverage for all health
needs. All services are generally performed by or under the direction of a
primary care physician.
All health coverages:
Eligibility: First day actively at work.
Cost: Shared by you and Beacon Power.
Dental Plan
Delta Dental is the dental insurance offered at Beacon Power. The plan has
three benefit groups. Preventative benefits such as x-rays, regular exams and
fillings, are covered 100%. The basic benefits, which include bondings,
extractions, root canals, etc., are covered 80%. The third group, which includes
complete or partial dentures, fixed bridges and crowns, inlays and onlays, is
covered at 50%. With the exception of preventative services, dental services are
subject to a $50 deductible per person and a $150 maximum per family. There is a
$1,500 maximum per covered individual per calendar year. Orthodontia is not
covered.
Eligibility: First day actively at work.
Cost: Shared by you and Beacon Power.
401K Plan
Beacon Power offers a retirement plan allowing employees to defer up to
15% of salary each year on a tax favorable basis. Beacon Power typically makes a
Matching Contribution of .50 on a dollar up to an employee contribution of 6% in
any given plan quarter.
Eligibility: Plan covers all employees who are age 21 or older who have worked
for Beacon Power for at least six months (working 1000 or more
hours per year). Employees may participate in the plan on January
1st or July 1st after they meet the eligibility requirements.
Group Life
Insurance
Beacon Power will furnish regular full-time employees with a 2X annual
salary life insurance policy.
Eligibility: First day actively at work.
Cost: Company paid benefit.
Accidental Death
and
Dismemberment
Insurance
Benefit equal to the amount of your life insurance policy.
Eligibility: First day actively at work.
Cost: Company paid benefit.
--------------------------------------------------------------------------------
Annex E
----------------------------------------------------------------------------
Executive Risk Specialty Home Office: [GRAPHIC]
Insurance Company 00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
-----------------------
DECLARATIONS POLICY NUMBER:
000-000000-00
-----------------------
THE POWER(SM)
DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICY
INCLUDING EMPLOYMENT PRACTICES LIABILITY COVERAGE
AND DEFENSE COST COVERAGE
NOTICE: THIS IS A CLAIMS MADE INDEMNITY POLICY WHICH APPLIES ONLY TO "CLAIMS"
FIRST MADE DURING THE "POLICY PERIOD," OR, IF PURCHASED, THE EXTENDED REPORTING
PERIOD. THE LIMIT OF LIABILITY AVAILABLE TO PAY DAMAGES OR SETTLEMENTS WILL BE
REDUCED- BY THE PAYMENT OF "DEFENSE EXPENSES," AND "DEFENSE EXPENSES" WILL BE
APPLIED AGAINST THE APPLICABLE RETENTION. THE COVERAGE AFFORDED UNDER THIS
POLICY DIFFERS IN SOME RESPECTS FROM THAT AFFORDED UNDER OTHER POLICIES. PLEASE
READ THE ENTIRE POLICY CAREFULLY.
OPTIONAL COVERAGE UNDER INSURING AGREEMENT (D) IS AVAILABLE UNDER THIS POLICY.
---------------------------------------------------------------------------------------------------------------------
ITEM 1. PARENT CORPORATION - NAME AND PRINCIPAL ADDRESS: ITEM 2. POLICY PERIOD:
Beacon Power Corp (a) Inception Date: June 2, 0000
0X Xxxx Xxxxxx (b) Expiration Date: June 2, 1999
Xxxxxx, XX 00000 at 12:01 a.m. both dates at the Principal
Address in ITEM 1.
---------------------------------------------------------------------------------------------------------------------
ITEM 3. LIMITS OF LIABILITY (inclusive of Defense Expenses):
(a) $5,000,000.00 maximum aggregate limit of liability for all Claims made under Insuring Agreements (A),
(B) (1), (B)(2) and (C).
(b) $100,000.00 maximum aggregate limit of liability for all Claims made under Insuring Agreement (D).
(c) $5,000,000.00 maximum aggregate limit of liability for all Claims under this Policy.
---------------------------------------------------------------------------------------------------------------------
ITEM 4. PREMIUM:
$30,000.00 total prepaid premium.
---------------------------------------------------------------------------------------------------------------------
ITEM 5. RETENTIONS:
(a) $0.00 each Insured Person each Claim, but only for Loss as to which indemnification by the
Company Is not legally permissible or is not made solely by reason of the Company's
financial Insolvency.
(b) $25,000.00 each Claim, for Loss as to which indemnification by the Company is legally permissible.
(c) $25,000.00 each Claim under Insuring Agreement (B)(2).
(d) $5,000.00 each Claim under Insuring Agreement (D).
---------------------------------------------------------------------------------------------------------------------
ITEM 6. LENGTH OF EXTENDED ITEM 7. ADDITIONAL PREMIUM FOR EXTENDED
REPORTING PERIOD: REPORTING PERIOD: $22,500.00
365 day
---------------------------------------------------------------------------------------------------------------------
ITEM 8. NOTICE UNDER CONDITIONS (G)(1) AND (G)(2) MUST BE ADDRESSED TO:
Vice President of Claims
Executive Risk Management Associates
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
---------------------------------------------------------------------------------------------------------------------
ITEM 9. ENDORSEMENTS ATTACHED AT ISSUANCE:
B22671 D25691
D25024 D26057
D25025
D25064
D25085
---------------------------------------------------------------------------------------------------------------------
These Declarations, the signed and completed Application and the Policy, with
endorsements, will constitute the entire agreement between the Underwriter, the
Company and the Insured Persons.
--------------------------------------------------------------------------------
EXECUTIVE RISK SPECIALTY INSURANCE COMPANY by (Authorized Company
Representative):
--------------------------------------------------------------------------------
XXXXX(TM) CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YY)
03/12/1998
--------------------------------------------------------------------------------
PRODUCER (000) 000-0000 FAX (000) 000-0000
Xxxxxx X. Xxxxxxxxx & Company
Harbor South Tower
000 Xxxxxxx Xxxxxx
X. Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx Ext: 348
--------------------------------------------------------------------------------
INSURED
Beacon Power Corporation
a division of Satcon Technology Corp.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS
UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER
THE COVERAGE AFFORDED BY THE POLICIES BELOW.
--------------------------------------------------------------------------------
COMPANIES AFFORDING COVERAGE
--------------------------------------------------------------------------------
COMPANY A St Xxxx Fire and Marine
--------------------------------------------------------------------------------
COMPANY B General
--------------------------------------------------------------------------------
COMPANY C
--------------------------------------------------------------------------------
COMPANY D
--------------------------------------------------------------------------------
[ILLEGIBLE]
--------------------------------------------------------------------------------
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOT WITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO
WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY
THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND
CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
--------------------------------------------------------------------------------
POLICY POLICY
EFFECTIVE EXPIRATION
CO DATE DATE
LTR TYPE OF INSURANCE POLICY NUMBER (MM/DD/YY) (MM/DD/YY) LIMITS
----------------------------------------------------------------------------------------------------------------------------------
GENERAL LIABILITY GENERAL AGGREGATE $2,000,000
--------------------------------------
[X] COMMERCIAL GENERAL LIABILITY PRODUCTS - COMPROP AGG $2,000,000
--------------------------------------
[ ] CLAIMS MADE [X] OCCUR PERSONAL & ADV INJURY $1,000,000
--------------------------------------
A [ ] OWNERS & CONTRACTORS PROT TE06901001 10/30/1997 10/30/1998 EACH OCCURRENCE $1,000,000
--------------------------------------
[ ] FIRE DAMAGE (Any one ind) $ 250,000
---------------------------- --------------------------------------
[ ] MED EXP (Any one person) $ 10,000
----------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY The limits of
liability shown COMBINED SINGLE UNIT $
[ ] ANY AUTO reflect the limits at --------------------------------------
[ ] ALL OWNED AUTOS inception. Xxxxxx X. XXXXXX INJURY
[ ] SCHEDULED AUTOS Xxxxxxxx & Co. does (Per person) $
[ ] HIRED AUTOS not assume any --------------------------------------
[ ] NON-OWNED AUTOS responsibility for BODILY INJURY
[ ] notification in the (Per accident) $
-------------------------------- event of depletion of --------------------------------------
[ ] the aggregate. PROPERTY DAMAGE $
----------------------------------------------------------------------------------------------------------------------------------
GARAGE LIABILITY AUTO ONLY - EA ACCIDENT $
--------------------------------------
[ ] ANY AUTO OTHER THAN AUTO ONLY
--------------------------------------
[ ] EACH ACCIDENT $
-------------------------------- --------------------------------------
[ ] AGGREGATE $
----------------------------------------------------------------------------------------------------------------------------------
EXCESS LIABILITY TE06901001 10/30/1997 10/30/1998 EACH OCCURRENCE $4,000,000
--------------------------------------
A [X] UMBRELLA FORM AGGREGATE $4,000,000
--------------------------------------
[ ] OTHER THAN UMBRELLA FORM Retention $ 10,000
----------------------------------------------------------------------------------------------------------------------------------
WORKERS COMPENSATION AND [ ] WC STATU- [ ] OTH-
EMPLOYERS' LIABILITY TORY LIMITS ER
--------------------------------------
THE PROPRIETOR/ EL EACH ACCIDENT $
PARTNERS/EXECUTIVE [ ] INCL --------------------------------------
OFFICERS ARE [ ] EXCL EL DISEASE - POLICY LIMIT $
--------------------------------------
EL DISEASE - EA EMPLOYEE $
----------------------------------------------------------------------------------------------------------------------------------
OTHER
----------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS & LOCATIONS/VEHICLES/SPECIAL ITEMS
----------------------------------------------------------------------------------------------------------------------------------
[ILLEGIBLE]
--------------------------------------------------------------------------------
SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION
DATE THEREOF, THE ISSUING COMPANY WILL ENDEAVOR TO MAIL 10 DAYS WRITTEN NOTICE
TO THE CERTIFICATE HOLDER NAMED TO THE LEFT, BUT FAILURE TO MAIL SUCH NOTICE
SHALL IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE COMPANY, ITS AGENTS
OR REPRESENTATIVES.
--------------------------------------------------------------------------------
AUTHORIZED REPRESENTATIVE XXXXXX X. XXXXXXXXX & CO.
/s/ XX Xxxx
AUTHORIZED SIGNATURE
--------------------------------------------------------------------------------
WORKERS COMPENSATION AND EMPLOYERS LIABILITY
COVERAGE CERTIFICATE
Massachusetts High Technology Self-Insurance Group, Inc.,
c/o Management Services, Inc.
INFORMATION PAGE - Certificate Number WP8-11B-251272-018
Date of Issue: February 2, 1998
1. Name of Member SatCon Technology Corporation
Mailing Address: 000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Form of Business Organization: Corporation
Workplace: 000 Xxxxx Xxxxxx Xxxxxxxxx, XX 00000
Additional Insureds: K & D Magmotor Corporation
Additional Workplaces: X.0. Xxx 000, Xxxxxxxxx, XX 00000
Additional Insureds: Beacon Power Company
Additonal Workplaces: 0X Xxxx Xxxxxx, Xxxxxx, XX 00000
2. The certificate period is from 1/1/98 to 1/1/99, standard time at the
member's mailing address.
3. A. Workers Compensation Coverage: Part One of the Certificate applies
to the Workers Compensation Law of the Commonwealth of
Massachusetts.
B. Employers Liability Coverage: Part Two of the Certificate applies to
the workplace(s) listed under Item 1.
The limits of our liability under Part Two are:
Bodily Injury by Accident: $1,000,000 each accident
Bodily Injury by Disease: $1,000,000 each employee
Bodily Injury by Disease: $1,000,000 coverage limit
C. This certificate includes the Information Page and the following
endorsements and schedules: WC & Employers Liability Coverage,
Miscellaneous Duties, Massachusetts Limits Liability For Employers
Premium Discount, Voluntary Compensation & Employer Liability,
Premium Discount Redetermination, WC & Employers Liability Coverage
Policy, WC & Employers Liability Coverage Maritime Exclusion,
Xxxxxxxxx & Harbor Workers' Compensation Coverage, and Foreign
Coverage
4. The premium for this certificate will be determined by our Manuals of Rule
Classifications, Rates and Rating Plans. All information required is
subject verification and change by audit.
5. Total Estimated Annual Premium: $29,361.09
MASSACHUSETTS HIGH TECHNOLOGY SELF-INSURANCE GROUP, INC.
/s/ Xxxxxxx X. Xxxxxx BY: /s/ X. X. Xxxxxx
----------------------------------- --------------------------
Clerk President
1
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
$250,000.00 June 23, 0000
XXXXXX, XX
FOR VALUE RECEIVED. Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of Perseus Capital, L.L.C., or its
registered assigns (the "Holder"), the principal sum of Two Hundred Fifty
Thousand Dollars or such lesser amount as shall then equal the outstanding
principal amount hereof, together with interest from the date of issuance of
this Note on the unpaid principal balance hereof at a rate equal to twelve and
one-half percent (12 1/2%) per annum, computed on the basis of the actual number
of days elapsed and a year of 365 days; provided that if this Note is not repaid
in full on or prior to the Maturity Date, such interest rate shall increase
effective as of the close of business on the Maturity Date to fifteen percent
(15%) per annum. All unpaid principal, together with any accrued but unpaid
interest and other amounts payable hereunder, shall be due and payable on the
earlier of(i) September 23, 1999 (the "Maturity Date") or (ii) upon or after the
occurrence of an Event of Default (as defined below), when such amounts are
declared due and payable by the Holder or made automatically due and payable.
Interest on this Note shall be payable on the Maturity Date.
This Note is issued pursuant to the Note Purchase Agreement (the "Purchase
Agreement") dated as of June 22, 1999 by and among the Company, Perseus Capital,
L.L.C., Duquesne Enterprises, Micro Generation Technology Fund, L.L.C. and
SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
(a) "Business Day" means any day other than a Saturday, Sunday or
other day on which the national or state banks located in the State of
Massachusetts or the State of New York are authorized to be closed.
(b) "Bridge Financing" has the meaning specified in the Purchase
Agreement.
(c) "Bridge Securities" has the meaning specified in the Purchase
Agreement.
(d) "Obligations" means the principal, interest and other amounts
payable under this Note.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 30 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged
-2-
within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest
in all of the Company's right, title and interest in and to the following,
whether now owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
-3-
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable inventions
and (i) the inventions and improvements described and claimed therein; (ii) any
continuation, division, renewal, extension, substitute or reissue thereof or any
legal equivalent in a foreign country for the full term thereof or the terms for
which the same may be granted; (iii) all rights to income, royalties, profits,
awards, damages and other rights relating to said patents, applications and
inventions, including the right to xxx for past, present and future infringement
and (iv) any other rights and benefits relating to said patents, applications
and inventions including any rights as a licensor or licensee of said patents,
applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service xxxx registrations and service xxxx
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to xxx for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
xxxx (the "Trademarks");
(iii) all copyrights, copyright registrations and copyright
applications, including without limitation those copyrights for computer
programs, computer databases, flow diagrams, maskworks, maskwork applications,
source codes and object codes, computer software, technical knowledge and
processes, trade secrets, know-how, customer lists, franchises, systems,
inventions, designs, blueprints, formal or informal licensing arrangements, and
all property embodying or incorporating such copyrights and (i) any similar
rights or amendments, modifications and renewals thereof and any legal
equivalent in a foreign country for the full term or terms for which the same
may be granted; (ii) all rights to income, past, present and future infringement
and (iii) any other rights and benefits relating to said copyrights (the
"Copyrights");
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by
-4-
any means upon any Collateral will not bar realization upon any other
Collateral; and (z) the security interest hereby created is a continuing
security interest and will cover and secure the payment of all Obligations both
present and future of the Company to Holder pursuant to this Note and the other
Transaction Documents. The Company further covenants and agrees to take all
actions requested by the Holder to establish or perfect the security interest
granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder. Any such prepayment shall be applied first to the payment of
expenses due under this Note, second to interest accrued on this Note and third,
if the amount of prepayment exceeds the amount of all such expenses and accrued
interest, to the payment of principal of this Note. An exchange pursuant to
Section 6 hereof shall not constitute a prepayment for purposes of this Section
5.
6. Exchange.
(a) Exchange For Bridge Securities. Upon consummation of the Bridge
Financing, this Note shall automatically be exchanged for (without any action on
the part of the Company or the Holder) the number of Bridge Securities that an
investor in the Bridge Financing would acquire for an aggregate purchase price
equal to the sum of the then outstanding principal amount of this Note plus all
accrued but unpaid interest hereon.
(b) Mechanics and Effect of Exchange. No fractional shares of
capital stock of the Company shall be issued upon exchange of this Note. Upon
such exchange of all of the principal and accrued interest outstanding under
this Note, in lieu of the Company issuing any fractional shares to the Holder,
the Company shall pay to the Holder the amount of outstanding principal or
interest that is not so exchanged. Upon full exchange of this Note, the Company
shall be forever released from all its obligations and liabilities under this
Note.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by
or on behalf of the Company. Prior to presentation of this Note for registration
of transfer, the Company shall treat the registered holder hereof as the
-5-
principles, the Company will treat, account and report the Note as debt and not
equity for accounting purposes and with respect to any returns filed with
federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses: Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of laws provisions
of the State of New York or of any other state. In the event of any dispute
among or between any of the parties to this Note arising out of the terms of
this Note, the parties hereby consent to the exclusive jurisdiction of the
federal and state courts located in the State of New York for resolution of such
dispute, and agree not to contest such exclusive jurisdiction or seek to
transfer any action relating to such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER COPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
---------------------
Title: President & CEO
--------------------
-6-
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
$125,000.00 June 23, 0000
XXXXXX, XX
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of SatCon Technology Corporation, or
its registered assigns (the "Holder"), the principal sum of One Hundred Twenty
Five Thousand Dollars or such lesser amount as shall then equal the outstanding
principal amount hereof, together with interest from the date of issuance of
this Note on the unpaid principal balance hereof at a rate equal to twelve and
one-half percent (12 1/2%) per annum, computed on the basis of the actual number
of days elapsed and a year of 365 days; provided that if this Note is not repaid
in full on or prior to the Maturity Date, such interest rate shall increase
effective as of the close of business on the Maturity Date to fifteen percent
(15%) per annum. All unpaid principal, together with any accrued but unpaid
interest and other amounts payable hereunder, shall be due and payable on the
earlier of(i) September 23, 1999 (the "Maturity Date") or (ii) upon or after the
occurrence of an Event of Default (as defined below), when such amounts are
declared due and payable by the Holder or made automatically due and payable.
Interest on this Note shall be payable on the Maturity Date.
This Note is issued pursuant to the Note Purchase Agreement (the "Purchase
Agreement") dated as of June 22, 1999 by and among the Company, Perseus
Capital, L.L.C., Duquesne Enterprises, Micro Generation Technology
Fund, L.L.C. and SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
(a) "Business Day" means any day other than a Saturday, Sunday or
other day on which the national or state banks located in the State of
Massachusetts or the State of New York are authorized to be closed.
(b) "Bridge Financing" has the meaning specified in the Purchase
Agreement.
(c) "Bridge Securities" has the meaning specified in the Purchase
Agreement.
(d) "Obligations" means the principal, interest and other amounts
payable under this Note.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 30 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or
-2-
shall hereafter be created, which default shall have resulted in indebtedness of
at least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest
in all of the Company's right, title and interest in and to the following,
whether now owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable
inventions and (i) the inventions and improvements described and claimed
therein; (ii) any continuation, division, renewal, extension, substitute or
reissue thereof or any legal equivalent in a foreign country for the full term
thereof or the terms for which the same may be granted; (iii) all rights to
income, royalties, profits, awards, damages and other rights relating to said
patents, applications
-3-
and inventions, including the right to xxx for past, present and future
infringement and (iv) any other rights and benefits relating to said patents,
applications and inventions including any rights as a licensor or licensee of
said patents, applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service xxxx registrations and service xxxx
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to xxx for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
xxxx (the "Trademarks");
(iii) all copyrights, copyright registrations and
copyright applications, including without limitation those copyrights for
computer programs, computer databases, flow diagrams, maskworks. maskwork
applications, source codes and object codes, computer software, technical
knowledge and processes, trade secrets, know-how, customer lists, franchises,
systems, inventions, designs, blueprints, formal or informal licensing
arrangements, and all property embodying or incorporating such copyrights and
(i) any similar rights or amendments, modifications and renewals thereof and any
legal equivalent in a foreign country for the full term or terms for which the
same may be granted; (ii) all rights to income, past, present and future
infringement and (iii) any other rights and benefits relating to said copyrights
(the "Copyrights");
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by any means upon any
Collateral will not bar realization upon any other Collateral; and (z) the
security interest hereby created is a continuing security interest and will
cover and secure the payment of all Obligations both present and future of the
Company to Holder pursuant to this Note and the other Transaction Documents. The
Company further covenants and agrees to take all actions requested by the Holder
to establish or perfect the security interest granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to
-4-
the Maturity Date upon at least ten Business Days prior written notice to the
Holder. Any such prepayment shall be applied first to the payment of expenses
due under this Note, second to interest accrued on this Note and third, if the
amount of prepayment exceeds the amount of all such expenses and accrued
interest, to the payment of principal of this Note. An exchange pursuant to
Section 6 hereof shall not constitute a prepayment for purposes of this Section
5.
6. Exchange.
(a) Exchange For Bridge Securities. Upon consummation of the Bridge
Financing, this Note shall automatically be exchanged for (without any action on
the part of the Company or the Holder) the number of Bridge Securities that an
investor in the Bridge Financing would acquire for an aggregate purchase price
equal to the sum of the then outstanding principal amount of this Note plus all
accrued but unpaid interest hereon.
(b) Mechanics and Effect of Exchange. No fractional shares of
capital stock of the Company shall be issued upon exchange of this Note. Upon
such exchange of all of the principal and accrued interest outstanding under
this Note, in lieu of the Company issuing any fractional shares to the Holder,
the Company shall pay to the Holder the amount of outstanding principal or
interest that is not so exchanged. Upon full exchange of this Note, the Company
shall be forever released from all its obligations and liabilities under this
Note.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by
or on behalf of the Company. Prior to presentation of this Note for registration
of transfer, the Company shall treat the registered holder hereof as the owner
and holder of this Note for the purpose of receiving all payments of principal
and interest hereon and for all other purposes whatsoever, whether or not this
Note shall be overdue and the Company shall not be affected by notice to the
contrary.
10. Assignment by the Company. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by the Company, without the prior written
consent of the Holder.
11. Treatment of Note. To the extent permitted by generally accepted
accounting
-5-
principles, the Company will treat, account and report the Note as debt and not
equity for accounting purposes and with respect to any returns filed with
federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses; Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of laws provisions
of the State of New York or of any other state. In the event of any dispute
among or between any of the parties to this Note arising out of the terms of
this Note, the parties hereby consent to the exclusive jurisdiction of the
federal and state courts located in the State of New York for resolution of such
dispute, and agree not to contest such exclusive jurisdiction or seek to
transfer any action relating to such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER COPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
---------------------
Title: President & CEO
--------------------
-6-
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
$50,000.00 June 23, 0000
XXXXXX, XX
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of Duquesne Enterprises, or its
registered assigns (the "Holder"), the principal sum of Fifty Thousand Dollars
or such lesser amount as shall then equal the outstanding principal amount
hereof, together with interest from the date of issuance of this Note on the
unpaid principal balance hereof at a rate equal to twelve and one-half percent
(12 1/2%) per annum, computed on the basis of the actual number of days elapsed
and a year of 365 days; provided that if this Note is not repaid in full on or
prior to the Maturity Date, such interest rate shall increase effective as of
the close of business on the Maturity Date to fifteen percent (15%) per annum.
All unpaid principal, together with any accrued but unpaid interest and other
amounts payable hereunder, shall be due and payable on the earlier of(i)
September 23, 1999 (the "Maturity Date") or (ii) upon or after the occurrence of
an Event of Default (as defined below), when such amounts are declared due and
payable by the Holder or made automatically due and payable. Interest on this
Note shall be payable on the Maturity Date.
This Note is issued pursuant to the Note Purchase Agreement (the "Purchase
Agreement") dated as of June 22, 1999 by and among the Company, Perseus Capital,
L.L.C., Duquesne Enterprises, Micro Generation Technology Fund, L.L.C. and
SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions under this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest
in all of the Company's right, title and interest in and to the following,
whether now owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
-3-
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable
inventions and (i) the inventions and improvements described and claimed
therein; (ii) any continuation, division, renewal, extension, substitute or
reissue thereof or any legal equivalent in a foreign country for the full term
thereof or the terms for which the same may be granted; (iii) all rights to
income, royalties, profits, awards, damages and other rights relating to said
patents, applications and inventions, including the right to xxx for past,
present and future infringement and (iv) any other rights and benefits relating
to said patents, applications and inventions including any rights as a licensor
or licensee of said patents, applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service xxxx registrations and service xxxx
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to xxx for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
xxxx (the "Trademarks");
(iii) all copyrights, copyright registrations and
copyright applications, including without limitation those copyrights for
computer programs, computer databases, flow diagrams, maskworks, maskwork
applications, source codes and object codes, computer software, technical
knowledge and processes, trade secrets, know-how, customer lists, franchises,
systems, inventions, designs, blueprints, formal or informal licensing
arrangements, and all property embodying or incorporating such copyrights and
(i) any similar rights or amendments, modifications and renewals thereof and any
legal equivalent in a foreign country for the full term or terms for which the
same may be granted; (ii) all rights to income, past, present and future
infringement and (iii) any other rights and benefits relating to said copyrights
(the "Copyrights");
(d) all substitutions and replacements for, and all rights to
exploit, all of the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by
-4-
any means upon any Collateral will not bar realization upon any other
Collateral; and (z) the security interest hereby created is a continuing
security interest and will cover and secure the payment of all Obligations both
present and future of the Company to Holder pursuant to this Note and the other
Transaction Documents. The Company further covenants and agrees to take all
actions requested by the Holder to establish or perfect the security interest
granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder. Any such prepayment shall be applied first to the payment of
expenses due under this Note, second to interest accrued on this Note and third,
if the amount of prepayment exceeds the amount of all such expenses and accrued
interest, to the payment of principal of this Note. An exchange pursuant to
Section 6 hereof shall not constitute a prepayment for purposes of this Section
5.
6. Exchange.
(a) Exchange For Bridge Securities. Upon consummation of the Bridge
Financing, this Note shall automatically be exchanged for (without any action on
the part of the Company or the Holder) the number of Bridge Securities that an
investor in the Bridge Financing would acquire for an aggregate purchase price
equal to the sum of the then outstanding principal amount of this Note plus all
accrued but unpaid interest hereon.
(b) Mechanics and Effect of Exchange. No fractional shares of
capital stock of the Company shall be issued upon exchange of this Note. Upon
such exchange of all of the principal and accrued interest outstanding under
this Note, in lieu of the Company issuing any fractional shares to the Holder,
the Company shall pay to the Holder the amount of outstanding principal or
interest that is not so exchanged. Upon full exchange of this Note, the Company
shall be forever released from all its obligations and liabilities under this
Note.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by
or on behalf of the Company. Prior to presentation of this Note for registration
of transfer, the Company shall treat the registered holder hereof as the
-5-
principles, the Company will treat, account and report the Note as debt and not
equity for accounting purposes and with respect to any returns filed with
federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses; Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of laws provisions
of the State of New York or of any other state. In the event of any dispute
among or between any of the parties to this Note arising out of the terms of
this Note, the parties hereby consent to the exclusive jurisdiction of the
federal and state courts located in the State of New York for resolution of such
dispute, and agree not to contest such exclusive jurisdiction or seek to
transfer any action relating to such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER COPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
---------------------
Title: President & CEO
--------------------
-6-
SENIOR SECURED CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND COMPLIANCE WITH SUCH STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND/OR
COMPLIANCE IS NOT REQUIRED.
THE SALE OR TRANSFER AND CERTAIN OTHER RIGHTS RELATING TO THE SECURITIES
REPRESENTED BY THIS DOCUMENT ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN SHAREHOLDER AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN SHAREHOLDERS
OF THE COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF
THE COMPANY.
$50,000.00 June 23,1999
WOBURN, MA
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), promises to pay to the order of Micro Generation Technology Fund,
L.L.C., or its registered assigns (the "Holder"), the principal sum of Fifty
Thousand Dollars or such lesser amount as shall then equal the outstanding
principal amount hereof, together with interest from the date of issuance of
this Note on the unpaid principal balance hereof at a rate equal to twelve and
one-half percent (12 1/2%) per annum, computed on the basis of the actual number
of days elapsed and a year of 365 days; provided that if this Note is not repaid
in full on or prior to the Maturity Date, such interest rate shall increase
effective as of the close of business on the Maturity Date to fifteen percent
(15%) per annum. All unpaid principal, together with any accrued but unpaid
interest and other amounts payable hereunder, shall be due and payable on the
earlier of (i) September 23, 1999 (the "Maturity Date") or (ii) upon or after
the occurrence of an Event of Default (as defined below), when such amounts are
declared due and payable by the Holder or made automatically due and payable.
Interest on this Note shall be payable on the Maturity Date.
This Note is issued pursuant to the Note Purchase Agreement (the "Purchase
Agreement") dated as of June 22, 1999 by and among the Company, Perseus Capital,
L.L.C., Duquesne Enterprises, Micro Generation Technology Fund, L.L.C. and
SatCon Technology Corporation.
The following is a statement of the rights of the Holder and the
conditions to which this Note is subject, and to which the Holder hereof, by the
acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following capitalized terms have
the following meanings:
(a) "Business Day" means any day other than a Saturday, Sunday or
other day on which the national or state banks located in the State of
Massachusetts or the State of New York are authorized to be closed.
(b) "Bridge Financing" has the meaning specified in the Purchase
Agreement.
(c) "Bridge Securities" has the meaning specified in the Purchase
Agreement.
(d) "Obligations" means the principal, interest and other amounts
payable under this Note.
(e) "Transaction Documents" shall mean this Note, the Purchase
Agreement, and any other promissory note issued pursuant to the Purchase
Agreement.
2. Events of Default. The occurrence of any of the following shall
constitute an "Event of Default" under this Note:
(a) Failure to Pay. The Company shall fail to pay (i) when due any
principal payment on this Note or (ii) any interest or other payment required
under the terms of this Note or any other Transaction Document within five
Business Days of its due date; or
(b) Breaches of Other Covenants. The Company shall materially fail
to observe or to perform any other covenant, obligation, condition or agreement
contained in this Note or the other Transaction Documents, other than those
specified in Section 2(a) hereof, and such failure shall continue for 30 days
after written notice thereof to the Company; or
(c) Voluntary Bankruptcy or Insolvency Proceedings. The Company
shall (i) apply for or consent to the appointment of a receiver, trustee,
liquidator or custodian of itself or of all or a substantial part of its
property, (ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated in full or in part, (v)
become insolvent (as such term may be defined or interpreted under any
applicable statute), (vi) commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or consent to any such relief or to the appointment of or taking possession of
its property by any official in an involuntary case or other proceeding
commenced against it or (vii) take any action for the purpose of effecting any
of the foregoing; or
(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings
for the appointment of a receiver, trustee, liquidator or custodian of the
Company or of all or a substantial part of the property thereof, or an
involuntary case or other proceedings seeking liquidation, reorganization or
other relief with respect to the Company or the debts thereof under any
bankruptcy, insolvency or other similar law now or hereafter in effect shall be
commenced and an order for relief entered, or such case or proceeding shall not
be dismissed or discharged
-2-
within 45 days of commencement; or
(e) Cross-Default. The Company or any of its subsidiaries shall
default under any bond, debenture, note or other evidence of indebtedness for
money borrowed (excluding any capital lease), under any guarantee or under any
mortgage, or indenture pursuant to which there shall be issued or by which there
shall be secured or evidenced any indebtedness for money borrowed by the Company
or any of its subsidiaries, whether such indebtedness now exists or shall
hereafter be created, which default shall have resulted in indebtedness of at
least $10,000 being due and payable prior to the date on which it would
otherwise become due and payable and shall not have been issued by the Company
or waived by the lender; or
(f) Undischarged Judgment. One or more judgments for the payment of
money in an amount in excess of $10,000 in the aggregate shall be rendered
against the Company or any of its subsidiaries (or any combination thereof) and
shall remain undischarged for a period of ten consecutive days during which
execution shall not be effectively stayed, or any action is legally taken by a
judgment creditor to levy upon any such judgment.
3. Rights of Holder Upon Default. Upon the occurrence or existence of any
Event of Default (other than an Event of Default referred to in Sections 2(c)
and 2(d) hereof) and at any time thereafter during the continuance of such Event
of Default, the Holder may declare all outstanding Obligations payable by the
Company hereunder to be immediately due and payable without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. Upon the occurrence or existence of any Event of
Default described in Sections 2(c) and 2(d) hereof, immediately and without
notice, all outstanding Obligations payable by the Company hereunder shall
automatically become immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in the other Transaction Documents to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, the Holder may exercise any
other right, power or remedy granted to it by the Transaction Documents or
otherwise permitted to it by law, either by suit in equity or by action at law,
or both.
4. Collateral. To secure the Company's payment and performance of the
Obligations and to secure the Company's prompt, full and faithful performance
and observance of all of the provisions tinder this Note and the other
Transaction Documents, the Company hereby grants the Holder a security interest
in all of the Company's right, title and interest in and to the following,
whether now owned or hereafter acquired or existing and wherever located:
(a) All inventory and equipment, and all parts thereof, attachments,
accessories and accessions thereto, products thereof and documents therefor;
(b) All accounts, contract rights, chattel paper, instruments,
deposit accounts, general intangibles and other obligations of any kind, and all
rights now or hereafter existing in and to all mortgages, security agreements,
leases or other contracts securing or otherwise relating to any of the same;
-3-
(c) All intellectual property and trade secrets, including, without
limitation,
(i) all patents, patent applications and patentable
inventions and (i) the inventions and improvements described and claimed
therein; (ii) any continuation, division, renewal, extension, substitute or
reissue thereof or any legal equivalent in a foreign country for the full term
thereof or the terms for which the same may be granted; (iii) all rights to
income, royalties, profits, awards, damages and other rights relating to said
patents, applications and inventions, including the right to xxx for past,
present and future infringement and (iv) any other rights and benefits relating
to said patents, applications and inventions including any rights as a licensor
or licensee of said patents, applications and inventions (the "Patents");
(ii) all trademarks, trademark registrations, trademark
applications, service marks, service xxxx registrations and service xxxx
applications, trade names, fictitious business name, tradestyles, and the
goodwill underlying those trademarks and service marks and (i) any similar marks
or amendments, modifications and renewals thereof and the goodwill represented
by those and any legal equivalent in a foreign country for the full term or
terms for which the same may be granted; (ii) all rights to income, royalties,
profits, damages and other rights relating to said trademarks and service marks
including the right to xxx for past, present or future infringement and (iii)
any other rights and benefits relating to said trademarks and service marks
including any rights as a licensor or licensee of said trademark and service
xxxx (the "Trademarks");
(iii) all copyrights, copyright registrations and
copyright applications, including without limitation those copyrights for
computer programs, computer databases, flow diagrams, maskworks, maskwork
applications, source codes and object codes, computer software, technical
knowledge and processes, trade secrets, know-how, customer lists, franchises,
systems, inventions, designs, blueprints, formal or informal licensing
arrangements, and all property embodying or incorporating such copyrights and
(i) any similar rights or amendments, modifications and renewals thereof and any
legal equivalent in a foreign country for the full term or terms for which the
same may be granted; (ii) all rights to income, past, present and future
infringement and (iii) any other rights and benefits relating to said copyrights
(the "Copyrights");
(d) all substitutions and replacements for, and all rights to
exploit, all o the foregoing;
(e) all books and records pertaining to any of the foregoing; and
(f) all proceeds of all of the foregoing and, to the extent not
otherwise included, all payments under insurance or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing.
All of the above assets are hereinafter collectively referred to as
"Collateral."
The Company covenants and agrees with Holder that: (x) the security interest
granted under this Note is in addition to any other security interest from time
to time held by the Holder; (y) the Holder may realize upon all or part of any
Collateral in any order it desires and any realization by
-4-
any means upon any Collateral will not bar realization upon any other
Collateral; and (z) the security interest hereby created is a continuing
security interest and will cover and secure the payment of all Obligations both
present and future of the Company to Holder pursuant to this Note and the other
Transaction Documents. The Company further covenants and agrees to take all
actions requested by the Holder to establish or perfect the security interest
granted under this Note.
5. Prepayment. This Note may be prepaid as a whole or in part at any time
prior to the Maturity Date upon at least ten Business Days prior written notice
to the Holder. Any such prepayment shall be applied first to the payment of
expenses due under this Note, second to interest accrued on this Note and third,
if the amount of prepayment exceeds the amount of all such expenses and accrued
interest, to the payment of principal of this Note. An exchange pursuant to
Section 6 hereof shall not constitute a prepayment for purposes of this Section
5.
6. Exchange.
(a) Exchange For Bridge Securities. Upon consummation of the Bridge
Financing, this Note shall automatically be exchanged for (without any action on
the part of the Company or the Holder) the number of Bridge Securities that an
investor in the Bridge Financing would acquire for an aggregate purchase price
equal to the sum of the then outstanding principal amount of this Note plus all
accrued but unpaid interest hereon.
(b) Mechanics and Effect of Exchange. No fractional shares of
capital stock of the Company shall be issued upon exchange of this Note. Upon
such exchange of all of the principal and accrued interest outstanding under
this Note, in lieu of the Company issuing any fractional shares to the Holder,
the Company shall pay to the Holder the amount of outstanding principal or
interest that is not so exchanged. Upon full exchange of this Note, the Company
shall be forever released from all its obligations and liabilities tinder this
Note.
7. Successors and Assigns. Subject to the restrictions on transfer
described in Sections 9 and 10 hereof, the rights and obligations of the Company
and the Holder of this Note shall be binding upon and benefit the successors,
assigns, heirs, administrators and transferees of the parties.
8. Waiver and Amendment. Any provision of this Note may be amended, waived
or modified only as to the Holder of this Note upon the written consent of the
Company and the Holder.
9. Transfer of this Note or Securities Issuable on Conversion Hereof. This
Note may not be transferred in violation of any restrictive legend set forth
hereon. Each new Note issued upon transfer of this Note shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance
with the Securities Act, unless in the opinion of counsel for the Company such
legend is not required in order to ensure compliance with the Securities Act.
The Company may issue stop transfer instructions to its transfer agent in
connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by
or on behalf of the Company. Prior to presentation of this Note for registration
of transfer, the Company shall treat the registered holder hereof as the
-5-
principles, the Company will treat, account and report the Note as debt and not
equity for accounting purposes and with respect to any returns filed with
federal, state or local tax authorities.
12. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier, personal delivery or facsimile
transmission at the respective addresses or facsimile number of the parties as
set forth in the Purchase Agreement or on the register maintained by the
Company. Any party hereto may by notice so given change its address or facsimile
number for future notice hereunder. Notice shall conclusively be deemed to have
been given when received.
13. Expenses; Waivers. If action is instituted to collect this Note, the
Company promises to pay all costs and expenses, including, without limitation,
reasonable attorneys' fees and costs, incurred in connection with such action.
The Company hereby waives notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor and all other notices or demands
relative to this instrument.
14. Governing Law. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of laws provisions
of the State of New York or of any other state. In the event of any dispute
among or between any of the parties to this Note arising out of the terms of
this Note, the parties hereby consent to the exclusive jurisdiction of the
federal and state courts located in the State of New York for resolution of such
dispute, and agree not to contest such exclusive jurisdiction or seek to
transfer any action relating to such dispute to any other jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.
BEACON POWER COPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
---------------------
Title: President & CEO
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