EXHIBIT 10.4
THIS WARRANT AND THE SHARES PURCHASABLE HEREUNDER HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION IN EFFECT UNDER SUCH ACT UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY ACCEPTABLE TO IT DEMONSTRATING
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT.
Common Stock Purchase Warrant
To Purchase Shares of Common Stock of
Beacon Power Corporation
June 13, 2005
FOR VALUE RECEIVED, Beacon Power Corporation, a Delaware corporation (the
"Company"), hereby grants to Perseus 2000 Expansion, L.L.C. (together with its
permitted successors and assigns, the "Registered Holder"), the right to
purchase at any time up to and including June 13, 2010 (the "Termination Date"),
the number of shares of fully paid and nonassessable Common Stock of the
Company, $0.01 par value per share (the "Common Stock", and those shares of
Common Stock purchasable under this Warrant being the "Warrant Shares"), equal
to the product of (i) 139,745 divided by (ii) the Warrant Price (as defined
below) then in effect, for a purchase price of 120% of the Per Share Price (as
defined in the Investment Agreement, dated as of April 22, 2005, by and among
the Company, the Registered Holder and Perseus Capital, L.L.C. ("Investment
Agreement")), which Per Share Price may be adjusted from time to time for
purposes of this Warrant and the calculation of the Warrant Price only during
the six-month period following the date hereof pursuant to Section 2.4 of the
Investment Agreement (the "Warrant Price"). For the avoidance of doubt, any
adjustments to the Per Share Price under the terms of the Investment Agreement
that may occur after the six-month period following the date hereof shall be
disregarded for purposes of calculating the Warrant Price hereunder.
1. EXERCISE.
(a) This Warrant may be exercised by the Registered Holder on
or before the Termination Date, in whole or in part, by surrendering this
Warrant, with the purchase form appended hereto as Exhibit I duly executed by
the Registered Holder at the principal executive offices of the Company, or at
such other office or agency as the Company may designate, accompanied by payment
in full, in lawful money of the United States, of the Warrant Price payable in
respect of the number of Warrant Shares purchased upon such exercise.
(b) The Registered Holder may, at its option, elect to pay
some or all of the Warrant Price payable upon an exercise of this Warrant by
surrender of this Warrant at the principal executive office of the Company, or
at such other office or agency as the Company may designate, together with the
purchase form attached hereto as Exhibit I to exercise by means of a net
issuance exercise, in which event the Company shall issue to the Registered
Holder that number of Warrant Shares equal to the total number of Warrant
Shares, minus the product obtained by multiplying (x) the total number of
Warrant Shares (or, if only a portion of the Warrant is being exercised, the
portion of the Warrant being cancelled, at the date of such calculation) by (y)
a fraction, the numerator of which shall be the Warrant Price per share and the
denominator of which shall be the Fair Market Value per share of Common Stock as
of the Exercise Date. The "Fair Market Value" per share of Common Stock shall be
determined as follows:
(i) As long as the Common Stock is listed on a
national securities exchange, the NASDAQ Small Cap
Market, the NASDAQ National Market or another nationally recognized trading
system as of the Exercise Date, the Fair Market Value per share of Common Stock
shall be deemed to be the average of the high and low reported sale prices per
share of Common Stock thereon on the trading day immediately preceding the
Exercise Date (provided that if no such price is reported on such day, the Fair
Market Value per share of Common Stock shall be determined pursuant to clause
(ii)).
(ii) In all other cases, the Fair Market Value
per share of Common Stock shall be deemed to be the
amount most recently determined by the Board of Directors to represent the fair
market value per share of the Common Stock. Notwithstanding the foregoing, if
the Board of Directors has not made such a determination within the three-month
period prior to the Exercise Date, then (A) the Board of Directors shall make a
determination of the Fair Market Value per share of the Common Stock within 20
days of a request by the Registered Holder that it do so, and (B) the exercise
of this Warrant pursuant to this subsection 1(b) shall be delayed until such
determination is made.
(c) Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in subsection
1(a) above (the "Exercise Date"). At such time, the person or persons in whose
name or names any certificates for Warrant Shares shall be issuable upon such
exercise as provided in subsection 1(d) below shall be deemed to have become the
holder or holders of record of the Warrant Shares represented by such
certificates.
(d) As soon as practicable after the exercise of this Warrant
in full or in part, and in any event within twenty (20) days thereafter, the
Company, at its expense, will cause to be issued in the name of, and delivered
to, the Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:
(i) a certificate or certificates for the number
of Warrant Shares to which the Registered Holder
shall be entitled upon such exercise; and
(ii) in case such exercise is in part only, a new
warrant or warrants (dated the date hereof) of like
tenor, calling in the aggregate on the face or faces thereof for the number of
Warrant Shares equal (without giving effect to any adjustment therein) to the
number of such shares called for on the face of this Warrant minus the sum of:
(a) the number of such shares purchased by the Registered Holder upon such
exercise and (b) the number of Warrant Shares (if any) covered by the portion of
this Warrant cancelled in payment of the total Warrant Price payable upon such
exercise pursuant to subsection 1(b) above.
2. ADJUSTMENTS.
(a) Adjustment for Stock Splits and Combinations. If the
Company shall at any time or from time to time after the date on which this
Warrant was first issued (the "Original Issue Date") effect a subdivision of the
outstanding Common Stock, the number of Warrant Shares then in effect
immediately before that subdivision shall be proportionately increased and the
Warrant Price shall be proportionately decreased. If the Company shall at any
time or from time to time after the Original Issue Date combine the outstanding
shares of Common Stock, the number of Warrant Shares shall be proportionately
decreased and the Warrant Price shall be proportionately increased. Any
adjustment under this paragraph shall become effective at the close of business
on the date the subdivision or combination becomes effective.
(b) Adjustments for Other Dividends and Distributions. In the
event the Company at any time or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Company or in cash or other property, then and in each such
event the Registered Holder shall receive upon exercise hereof, in addition to
the number of shares of Common Stock issuable hereunder, the kind and amount of
securities of the Company and/or cash and other property which the Registered
Holder would have been entitled to receive had this Warrant been exercised on
the date of such event and had the Registered Holder thereafter, during the
period from the date of such event to and including the Exercise Date, retained
any such securities receivable, giving application to all adjustments called for
during such period under this Section 2 with respect to the rights of the
Registered Holder.
(c) Adjustment for Mergers or Reorganizations, etc. If there
shall occur any reclassification, reorganization, recapitalization,
consolidation, sale of all or substantially all assets or merger involving the
Company in which the Common Stock is converted into or exchanged for securities,
cash or other property (other than a transaction covered by subsection 2(a)
above), then, following any such reclassification, reorganization,
recapitalization, consolidation, sale of all or substantially all assets or
merger, and without payment of any additional consideration thereof, the
Registered Holder shall receive upon exercise hereof the kind and amount of
securities, cash or other property which the Registered Holder would have been
entitled to receive if, immediately prior to such reclassification,
reorganization, recapitalization, consolidation or merger, sale of all or
substantially all assets, the Registered Holder had held the number of shares of
Common Stock subject to this Warrant, giving application to all adjustments
called for during such period under this Section 2 with respect to the rights of
the Registered Holder.
The foregoing provisions of this Section 2(c) shall similarly apply to
successive reorganizations, consolidations, mergers, sales and transfers and to
the stock or securities of any other corporation that are at the time receivable
upon the exercise of this Warrant. If the per share consideration payable to the
holder hereof for Warrant Shares in connection with any such transaction is in a
form other than cash or marketable securities, then the value of such
consideration shall be determined in good faith by the Company's Board of
Directors. In all events, appropriate adjustment (as determined in good faith by
the Company's Board of Directors) shall be made in the application of the
provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.
(d) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 2, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Registered Holder a certificate setting
forth such adjustment or readjustment (including the kind and amount of
securities, cash or other property for which this Warrant shall be exercisable,
the Warrant Price and the method of calculation of each) and showing in detail
the facts upon which such adjustment or readjustment is based.
3. FRACTIONAL SHARES. The Company shall not be required upon the
exercise of this Warrant to issue any fractional shares, and shall round any
fractional shares to the next highest whole number of shares. If a fractional
share interest arises upon any exercise or conversion of the Warrant, the
Company shall eliminate such fractional share interest by paying the Registered
Holder an amount computed by multiplying the fractional interest by the Fair
Market Value of a full share of common Stock.
4. REPRESENTATIONS AND WARRANTIES BY THE REGISTERED HOLDER. The
Registered Holder represents and warrants to the Company as follows:
(a) Upon each exercise hereof, the Registered Holder must
reaffirm to the Company that the Registered Holder is an "accredited investor"
as that term is defined in Rule 501 under the Securities Act of 1933, as amended
(the "Act"). The Registered Holder is purchasing the Warrant and the Warrant
Shares for such Registered Holder's own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Act. The Registered Holder understands that the
Warrant and the Warrant Shares have not been registered under the Act by reason
of their issuance in a transaction exempt from the registration and prospectus
delivery requirements of the Act pursuant to Section 4(2) thereof, which
exemption depends upon, among other things, the bona fide nature of Registered
Holder's investment intent as expressed herein. In this connection, the
Registered Holder understands that, in the view of the U.S. Securities and
Exchange Commission (the "SEC"), the statutory basis for such exemption may be
unavailable if the Registered Holder's representation was predicated solely upon
a present intention to hold the Warrant or the Warrant Shares for the minimum
capital gains period specified under tax statutes, for a deferred sale, for or
until an increase or decrease in the market price of the Warrant or the Warrant
Shares, or for a period of one year or any other fixed period in the future.
(b) The Registered Holder understands that the Warrant and the
Warrant Shares must be held by the Registered Holder indefinitely, and that the
Registered Holder must therefore bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Act or is exempted from such registration. The Registered Holder further
understands that the Warrant and the Warrant Shares have not been qualified
under any state's blue sky laws by reason of their issuance in a transaction
exempt from the qualification requirements of applicable blue sky laws, which
exemptions depend upon, among other things, the bona fide nature of the
Registered Holder's investment intent expressed above. In addition, the
Registered Holder understands that any certificate evidencing the Warrant and
the Warrant Shares will be imprinted with a legend that prohibits the transfer
of the Warrant and the Warrant Shares unless they are registered or such
registration is not required in the opinion of counsel for the Company.
(c) The Registered Holder is familiar with the provisions of
Rule 144, promulgated under the Act, which, in substance, permits limited public
resale of "restricted securities" acquired, directly or indirectly, from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions.
(d) The Registered Holder further understands that in the
event all of the applicable requirements of Rule 144 are not satisfied,
registration under the Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact that
Rule 144 is not exclusive, the staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.
5. REQUIREMENTS FOR TRANSFER.
(a) This Warrant and the Warrant Shares shall not be sold or
transferred unless either (i) they first shall have been registered under the
Act and under applicable state securities or blue sky laws, or (ii) the Company
first shall have been furnished with an opinion of legal counsel, reasonably
satisfactory to the Company, to the effect that such sale or transfer is exempt
from the registration requirements of the Act.
(b) Each certificate representing Warrant Shares shall bear a
legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION IN EFFECT UNDER SUCH ACT UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY ACCEPTABLE TO IT
DEMONSTRATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT."
The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as (i) they
become eligible for resale pursuant to an effective registration statement or
Rule 144(k) under the Act or (ii) the Company shall have received either an
opinion of counsel or a "no-action" letter from the SEC to the effect that any
transfer of the Warrant Shares represented by such certificates will not violate
the Act and applicable state securities laws.
6. NO IMPAIRMENT. The Company will not, by amendment of its charter
through reorganization, transfer of assets, consolidation, merger, dissolution,
issuance or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Warrant against impairment.
7. NOTICES OF RECORD DATE, ETC. In the event:
(a) that the Company shall take a record of the holders of its
Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right; or
(b) of any capital reorganization of the Company, any
reclassification of the Common Stock of the Company, any consolidation or merger
of the Company with or into another corporation (other than a consolidation or
merger in which the Company is the surviving entity and its Common Stock is not
converted into or exchanged for any other securities or property), or any
transfer of all or substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company, then, and in each such case, the Company will mail
or cause to be mailed to the Registered Holder a notice specifying, as the case
may be, (i) the record date for such dividend, distribution or right, and the
amount and character of such dividend, distribution or right, or (ii) the
effective date on which such reorganization, reclassification, consolidation,
merger, transfer, dissolution, liquidation or winding-up is to take place, and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such other stock or securities at the time deliverable upon the
exercise of this Warrant) shall be entitled to exchange their shares of Common
Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
transfer, dissolution, liquidation or winding-up. Such notice shall be mailed at
least ten days prior to the record date or effective date for the event
specified in such notice.
8. STOCK FULLY PAID, RESERVATION OF STOCK. All of the Warrant Shares
issuable upon the exercise of the rights represented by this Warrant will, upon
issuance and receipt of the purchase price therefor, be validly issued, fully
paid and nonassessable, and free from all taxes, liens and charges except for
restrictions on transfer provided for herein or under applicable federal and
state securities laws. The Company will at all times reserve and keep available,
solely for issuance and delivery upon the exercise of this Warrant, such number
of shares of Common Stock and other securities, cash and/or property, as from
time to time shall be issuable upon the exercise of this Warrant.
9. EXCHANGE OF WARRANTS. Upon the surrender of this Warrant by the
Registered Holder, properly endorsed, to the Company at the principal executive
offices of the Company, the Company will, subject to the provisions of Sections
4 and 5 hereof, issue and deliver to or upon the order of such Holder, at the
Company's expense, a new Warrant or Warrants of like tenor, in the name of the
Registered Holder or as the Registered Holder (upon payment by the Registered
Holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock (or other
securities, cash and/or property) then issuable upon exercise of this Warrant.
10. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (without any obligation for a surety or other security
therefor) in an amount reasonably satisfactory to the Company, or (in the case
of mutilation) upon surrender and cancellation of this Warrant, the Company will
issue, in lieu thereof, a new Warrant of like tenor.
11. TRANSFERS, ETC.
(a) The Company will maintain a register containing the name
and address of the Registered Holder of this Warrant. The Registered Holder may
change its or his address as shown on the warrant register by written notice to
the Company requesting such change.
(b) This Warrant and all rights hereunder are transferable, in
whole or in part, upon surrender of this Warrant with a properly executed
assignment in a form reasonably acceptable to the Company at the principal
executive offices of the Company.
(c) Until any transfer of this Warrant is made in the Warrant
register, the Company may treat the Registered Holder as the absolute owner
hereof for all purposes; provided, however, that if and when this Warrant is
properly assigned in blank, the Company may (but shall not be obligated to)
treat the bearer hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
12. MAILING OF NOTICES, ETC. All notices and other communications from
the Company to the Registered Holder shall be mailed by first-class certified or
registered mail, postage prepaid, to the address last furnished to the Company
in writing by the Registered Holder. All notices and other communications from
the Registered Holder or in connection herewith to the Company shall be mailed
by first-class certified or registered mail, postage prepaid, to the Company at
its principal executive office. If the Company should at any time change the
location of its principal executive office to a place other than as set forth
below, it shall give prompt written notice to the Registered Holder and
thereafter all references in this Warrant to the location of its principal
executive office at the particular time shall be as so specified in such notice.
13. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the
Registered Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company.
15. CHANGE OR WAIVER. Any term of this Warrant may be amended or waived
upon the written consent of the Company and the Registered Holder.
16. SECTION HEADINGS. The Section headings in this Warrant are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
17. GOVERNING LAW. This Warrant will be governed by and construed in
accordance with the internal laws of the State of Delaware without giving effect
to the conflict or choice of law provision thereof that would give rise the
application of the domestic substantive law of any other jurisdiction.
EXECUTED as of the Date of Issuance indicated above.
BEACON POWER CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
EXHIBIT I
PURCHASE FORM
To: Beacon Power Corporation Dated: ____________
The undersigned, pursuant to the provisions set forth in the attached Warrant,
hereby irrevocably elects to purchase (check applicable box):
|_| _____ shares of the Common Stock covered by such Warrant; or
|_| the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth
in Section 1(b).
The undersigned herewith makes payment of the full Warrant Price for such
shares at the price per share provided for in such Warrant, which is $____.
Such payment takes the form of (check applicable box or boxes):
|_| $______ in lawful money of the United States; and/or
|_| the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in Section
1(b), to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless
exercise procedure set forth in Section 1(b).
Please issue a certificate representing said shares of Common Stock in the name
of the undersigned or in such other name as is specified below:
The undersigned is an "accredited investor" as defined in Regulation D
promulgated under the Securities Act of 1933, as amended.
Name of Entity:
-------------------------------------
Signature of
Authorized Person:
-----------------------------------
Address:
--------------------------------------------
Date:
--------------------------------------------
