BEACON POWER CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
Beacon Power Corporation, a Delaware corporation (the "Company")
establishes this Beacon Power Corporation Employee Stock Purchase Plan (the
"Plan") to provide eligible employees of the Company and Affiliated Companies,
if any, who wish to become shareholders (or to increase their shareholdings) in
the Company with a convenient method of doing so. The Company believes that
employee participation in the ownership of the equity of the Company will be to
the mutual benefit of the employees and the Company.
1. Purpose.
The Plan provides Eligible Employees an opportunity to acquire shares of
Company Common Stock, $.01 par value, under circumstances which enable them to
obtain the income tax benefits described in Code Section 423. The Plan is
intended to provide employees incentive to continue to promote the Company's
best interests and to enhance its long-term performance.
2. Definitions.
Wherever used, the following words and phrases will have the meanings
stated below unless a different meaning is plainly required by the context:
"Affiliated Company" means any subsidiary corporation of the Company, as
defined in Code Sections 424(f).
"Applicable Grant Date" means, for any Option, the date on which such
Option was granted. The first Applicable Grant Date shall be the Effective Date,
the second Applicable Grant Date shall be May 16, 2001 and thereafter, each
other Applicable Grant Date shall be a Semiannual Grant Date.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee appointed by the Board to which the Board may
delegate its powers to administer the Plan.
"Common Stock" means shares of the common stock of the Company, $.01 par
value.
"Company" means Beacon Power Corporation, a Delaware corporation.
"Compensation" means the total cash remuneration a Participant receives
during an Exercise Period as salary or wages, including overtime pay and bonuses
and excluding all other forms of remuneration.
"Disability" means permanent and total disability as defined in Code
Section 22(e)(3).
"Effective Date" means the effective date of a registration statement under
the Securities Act of 1933, as amended, for the shares of Common Stock to be
issued pursuant to the Plan. Filing of any such registration statement is at the
discretion of the Company.
"Eligible Employee" means each person who, on the Effective Date or on an
Applicable Grant Date, is employed by the Company or an Affiliated Company on a
full or part-time basis and has been an employee for three or more months at
that date. No employee will be eligible if he or she is an owner of 5% or more
of the stock of the Company or an Affiliated Company, as determined under Code
Section 423(b)(3).
"Exchange Act" means the Securities Exchange Act of 1934.
"Exercise Date" means any date on which an Eligible Employee purchases
Common Stock pursuant to an Option under this Plan, which shall, with respect to
each Option, be the last day of the Exercise Period in which such Option is
granted.
"Exercise Period" means the six-month period commencing on an Applicable
Grant Date and ending at 5 p.m. on October 31 or April 30 as applicable, except
that the first Exercise Period shall be the period beginning on the Effective
Date and ending at 5 p.m. on April 30, 2001. If the Plan is terminated, then the
Exercise Period in which it is terminated shall end on the date immediately
preceding the effective date of such termination. If any of the preceding ending
dates falls on a Saturday, Sunday or legal holiday in the Commonwealth of
Massachusetts, then that Exercise Period shall end on the day most closely
preceding such date which is not a Saturday, Sunday or legal holiday in the
Commonwealth of Massachusetts.
"Fair Market Value Per Share of Common Stock" shall mean the closing sales
price on such day on the New York Stock Exchange, or, if the Common Stock is not
then listed or admitted to trading on the New York Stock Exchange, on such other
principal stock exchange on which such stock is then listed or admitted to
trading, or, if no sales take place on such day on any such exchange, the
average of the closing bid and asked prices on such day as officially quoted on
any such exchange, or, if the Common Stock is not then listed or admitted to
trading on any stock exchange, the market price for each such trading day shall
be the last sale reported on the NASDAQ National Market System as published in
The Wall Street Journal or, if no such sale is so reported, the average of the
reported closing bid and asked prices on such day in the over-the-counter
market, as furnished by the National Association of Securities Dealers Automated
Quotation system, or, if such price at the time is not available from such
system, as furnished by any similar system then engaged in the business of
reporting such prices and selected by the Board or, if there is no such system,
as furnished by any member of the National Association of Securities Dealers,
selected by the Board. If the Common Stock is neither listed on a national
securities exchange nor reported on the NASDAQ National Market System nor traded
on the over-the-counter market, fair market value shall be such value as the
Board, in good faith, determines.
Notwithstanding any provision of the Plan to the contrary, no determination
made with respect to the Fair Market Value of Common Stock subject to an Option
shall be inconsistent with Code Section 423.
"Initial Notice Period" means the period beginning on the Effective Date
and ending on the 15th day thereafter.
"IPO" means an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933 covering the offer and
sale of Common Stock by the Company.
"IPO Price" means the price at which the Company's stock is initially
offered for sale by the Company's underwriters in the IPO.
"Notice Period" means that period beginning 45 days prior to the beginning
of the Applicable Grant Date and ending on the 30th day prior to the beginning
of such date and solely for purposes of a Participant's voluntary discontinuance
from the Plan pursuant to Section 6(c)(i) hereof, "Notice Period" shall include
the period beginning 45 days prior to the Exercise Date and ending on the 30th
day prior to such Exercise Date.
"Option" means an option granted hereunder which will entitle an Eligible
Employee to purchase shares of Common Stock.
"Option Price" means the lower of: (1) 85% of the Fair Market Value per
share of Common Stock as of the Applicable Grant Date on which the Option being
exercised was granted or (2) 85% of the Fair Market Value per share of Common
Stock as of the Exercise Date on which such Option is exercised; provided,
however, that in the case of the First Exercise Period, the price determined
under clause (1) above shall be the IPO Price.
"Participant" means an Eligible Employee who has elected to participate in
the Plan during the period between such election and the termination of such
Eligible Employee's participation in the Plan.
"Plan" means Beacon Power Corporation Employee Stock Purchase Plan as set
forth herein.
"Retirement" is a termination on or after the first day of the month of a
Participant's 65th birthday.
"Semiannual Grant Date" means each May 1 and November 1. If any of the
dates falls on a Saturday, Sunday or legal holiday in the Commonwealth of
Massachusetts, then that Exercise Period shall end on the day most closely
succeeding such date which is not a Saturday, Sunday or legal holiday in the
Commonwealth of Massachusetts.
"Withholding Account" means a bookkeeping record of all amounts withheld
during an Exercise Period for a specific Eligible Employee, which are available
for the exercise of an Option granted hereunder. Specific segregation of funds
is not required.
3. Administration.
The Plan shall be administered by the Board, which, to the extent it shall
determine, may delegate its powers with respect to the administration of the
Plan (except its powers to terminate or amend the Plan) to the Committee. If the
Board chooses to appoint a Committee, references hereinafter to the Board shall
be deemed to refer to the Committee. Subject to the express provisions of the
Plan, the Board may interpret the Plan, prescribe, amend and rescind rules and
regulations relating to it, determine the terms and provisions of the Options
granted hereunder and make all other determinations necessary or advisable for
the administration of the Plan; provided, however, that all such
interpretations, rules, determinations, terms and conditions shall be made and
prescribed in the context of preserving the tax treatment of the Options under
this Plan granted to Eligible Employees subject to United States Federal Income
Taxation and the Plan itself under Section 423 of the Code. In addition, this
Plan is intended to comply in all respects with Rule 16b-3 or its successor
promulgated under the 1934 Act with respect to participants who are subject to
Section 16 of the 1934 Act. Any provision in this Plan with respect to such
persons contrary to Rule 16b-3 shall be modified to the extent necessary for
such provision to comply with Rule 16b-3 to the extent permissible by law and
deemed appropriate by the Board. The determinations of the Board on all matters
regarding the Plan shall be conclusive.
4. Maximum Shares to be Granted under the Plan.
The aggregate number of shares of Common Stock available for grant as
Options pursuant to Section 5 shall not exceed 500,000 subject to adjustment
pursuant to Section 9. Shares of Common Stock granted pursuant to the Plan
either may be authorized but unissued shares or shares now or hereafter held in
the treasury of the Company. In the event that any Option granted pursuant to
Section 5 expires or is terminated, surrendered or canceled without being
exercised, in whole or in part, for any reason, the number of shares of Common
Stock theretofore subject to such Option shall again be available for grant as
an Option pursuant to Section 5 and shall not reduce the aggregate number of
shares of Common Stock available for grant as such Options, as set forth in the
first sentence of this Section.
5. Eligibility for Participation and Granting of Options.
(a) Each employee of the Company who is an Eligible Employee on an
Applicable Grant Date shall be eligible to participate in the Plan by completing
an election notice provided by the Company and filing it with the designated
representative of the Company within the applicable Notice Period; provided,
however with respect to the First Exercise Period, each Eligible Employee of the
Company shall be automatically enrolled in the Plan and shall not be required to
file an election notice.
(b) For each Exercise Period, a Participant shall be granted without any
further action by Company an Option hereunder which will entitle him or her to
purchase, on the immediately following Exercise Date, a number of whole shares
of Common Stock determined by dividing the amount to be withheld for
participation in the Plan and applied to such Exercise Period by the Option
Price; provided, however, that for the First Exercise Period, the number of
shares of Common Stock to be purchased by the Participant pursuant to the Option
shall be determined by dividing 10% of the Participant's Compensation by the
Option Price unless otherwise determined by the Participant following the
Effective Date and during the Initial Notice Period.
(c) If the number of shares of Common Stock for which Options are granted
pursuant to paragraph 5(a) exceeds the applicable number set forth in Section 4,
then the Options granted under paragraph 5(a) to all Eligible Employees shall,
in a nondiscriminatory manner, be reduced on a pro rata basis in a manner which
the Board determines to be consistent with Code Section 423.
(d) Notwithstanding any provision herein to the contrary, no Eligible
Employee shall be granted an Option under the Plan which permits such employee
to purchase Common Stock with a Fair Market Value (determined at the time of the
grant of such Option) in excess of $25,000 per calendar year under this Plan and
all other employee stock purchase plans of the Company and any Affiliated
Company. Any Option granted under the Plan shall be deemed to be modified to the
extent necessary to satisfy this provision.
6. Terms of Options.
(a) Each Option shall automatically be exercised on the last day of the
Exercise Period for such Option, using the funds which have accrued in a
Participant's Withholding Account as of such day, unless the Participant
withdraws from the Plan or is deemed to have withdrawn from the Plan during the
Exercise Period. An Option granted hereunder may be exercised only through the
use of the funds which have accrued in a Participant's Withholding Account, or,
with respect to the First Exercise Period, through the payment by the
Participant for the number of whole shares being purchased by the Participant.
Any Option, to the extent unexercised on the Exercise Date, shall expire on the
Exercise Date.
(b) As soon as reasonably possible following exercise in accordance with
Paragraph 6(a) and upon the Participant's written request, a certificate
representing the whole number of shares of Common Stock purchased, registered in
the name of the Optionee, shall be delivered to the Optionee or to such other
person designated by Optionee including, without limitation, the Participant's
broker.
(c) A Participant shall be deemed to have withdrawn from participation in
the Plan upon the occurrence of any of the following:
(i) Voluntary discontinuance while employed. A Participant may
discontinue his or her election and withdraw from this Plan as of the last day
of the Exercise Period by giving written notice to the Company during the Notice
Period within that Exercise Period, specifying that the Participant is so
withdrawing from the Plan, provided, however, that a Participant who shall have
discontinued his or her election to participate and withdrawn from this Plan may
resubscribe to this Plan only in a Notice Period subsequent to that in which
participation was terminated.
(ii) Termination of employment. Unless employment has terminated due
to Retirement, Disability or death, a Participant will be deemed to have
discontinued participation on the first day of the Exercise Period in which
termination occurs and amounts withheld from compensation during the Exercise
Period will be refunded without election to the Participant.
(iii) Retirement. In the event a Participant's employment terminates
because of Retirement during the first three months of an Exercise Period, the
Participant will be deemed to have discontinued participation on the first day
of the Exercise Period in which Retirement occurs and amounts withheld from
Compensation during the Exercise Period will be refunded. If Retirement occurs
during the last three months of the Exercise Period, the Participant will
continue to participate through the balance of the Exercise Period in which
Retirement occurs (without further withholding) unless he or she elects a
voluntary discontinuance within the Notice Period for that Exercise Period.
(iv) Death or Disability. In the event the employment of the
Participant by the Company or an Affiliated Company terminates as a result of
the Participant's Disability or Death, the Participant will be deemed to
participate (without further withholding) through the balance of the Exercise
Period in which death or Disability occurs, unless he or she (or the executor,
administrator or representative, as the case may be) elects a voluntary
discontinuance within the Notice Period for that Exercise Period.
(v) Levy or attachment. The filing with or levying upon the Company or
the custodian of any judgment, attachment, garnishee, or other Court order
affecting the Participant's account under this Plan will terminate his or her
participation.
(vi) Plan Termination/Expiration. The termination of this Plan by the
Company prior to its expiration or its expiration upon allocation of all
available shares will terminate participation.
(d) A Participant's employment shall not be deemed terminated by reason of
a transfer to another employer which is related to the Company within the
meaning of Code Sections 423(e) or (f). A Participant who has elected
participation under the Plan who is absent from work with the Company or with an
Affiliated Company because of temporary disability (any disability other than a
permanent and total Disability) or who is on leave of absence for a period of
less than 90 days shall not, during the period any such absence, be deemed, by
virtue of such absence alone, to have terminated employment. In the case of a
leave of absence which is longer than 90 days, a Participant will not be deemed
to have terminated employment until the later of the 91st day of such leave, if
later, such date as the Participant's reemployment rights are not protected by
contract or law.
(e) Upon the discontinuance of an election and withdrawal from this Plan by
a Participant, all withheld amounts in the account which are attributable to
such Participant shall be transferred to such Participant within thirty (30)
days of such discontinuance and withdrawal, except to the extent such withheld
amounts are applied to the exercise of an Option as provided above. In no event
shall any amounts be withheld from a Participant's Compensation for allocation
to such Participant's Withholding Account after the date such Participant's
employment shall cease.
(f) In no event may any discontinuance of a Participant's election and
withdrawal from this Plan be in respect to a portion rather than all of such
Participant's Withholding Account on such date.
7. Payment for Common Stock Through Withholding.
(a) Employee Contributions.
With respect to each Exercise Period, each Eligible Employee may elect to
participate in this Plan by filing an enrollment application and payroll
withholding form with his or her employer's payroll department during a Notice
Period, which election shall be effective for the next Exercise Period and for
all subsequent Exercise Periods, until, in any case, such Participant's
participation in the Plan terminates. Each Eligible Employee who elects to
participate shall specify the amount of his or her contributions to be made by
payroll deduction by specifying a whole percentage from 1% to 10% of such
Participant's Compensation payable for each payroll period. With respect to the
First Exercise Period, following the Effective Date and during the Initial
Notice Period, an Eligible Employee may file a payroll withholding form to
designate payroll deductions as the manner of payment for the Option and/or to
decrease the percentage of Compensation used to purchase shares of Common Stock
pursuant to the Option.
No interest shall accrue or be payable to any Participant in the Plan with
respect to any sums withheld at the Participant's election, whether such sums be
applied to purchase Common Stock, or are returned to the Participant.
Payroll deductions may be increased by a Participant only during a
subsequent Notice Period, but may be decreased during a subsequent Notice Period
or within the last 10 days of a calendar quarter, upon the Participant's written
election, effective as of the first payroll period for which it is
administratively practical to put the decrease into effect.
(b) Application of Payroll Contributions.
The Company shall maintain a separate account into which it shall deposit
all amounts withheld for payment of shares of Common Stock and shall maintain
sufficient records to show each Participant's Withholding Account.
On the last day of each Exercise Period all amounts in a Participant's
Withholding Account shall be paid over to the Company in payment of the Option
Price for the number of whole shares of Common Stock which can be purchased on
such date with such withheld total amount, unless otherwise directed in
accordance with Section 6 above. In lieu of fractional shares, unapplied cash
shall be carried forward to the next Exercise Period unless the Participant
requests a cash payment.
8. Transferability of Options and Common Stock.
(a) No Option may be transferred, assigned, pledged, or hypothecated
(whether by operation of law or otherwise), except as provided by will or the
applicable laws of descent or distribution, and no Option shall be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of an Option, or levy of attachment
or similar process upon the Option not specifically permitted herein shall be
null and void and without effect. An Option may be exercised only by the
Eligible Employee during his or her lifetime, or by his or her legal
representative if permitted by Section 423 of the Code, or pursuant to Section 6
by his or her estate or the person who acquires the right to exercise such
Option upon his or her death by bequest or inheritance.
(b) Participants in the Plan who wish to avail themselves of the favorable
tax benefits of Code Section 423 may not transfer or otherwise dispose of shares
of Common Stock acquired by them or on their behalf under this Plan (other than
in the case of a Participant's death) until after the later of one year from the
date of acquisition of said shares of two years after the Applicable Grant Date
of the Option pursuant to which said shares of Common Stock were acquired.
(c) Each Eligible Employee who receives shares of Common Stock pursuant to
this Plan agrees, by electing to participate, to notify the Company, in writing,
immediately after such Participant makes a Disqualifying Disposition of any
shares acquired pursuant to the exercise of an Option under this Plan. A
Disqualifying Disposition is an disposition (including any sale) of such shares
before the later of two years after the Applicable Grant Date for said Option or
one year after the receipt of shares pursuant to the exercise of said Option. If
the Participant has dies before such stock is sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
9. Adjustment Provisions.
The aggregate number of shares of Common Stock with respect to which
Options may be granted, the aggregate number of shares of Common Stock subject
to each outstanding Option, and the Option Price per share of each Option shall
all be approximately adjusted for any increase or decrease in the number of
shares of issued Common Stock resulting from a subdivision or consolidation of
shares, whether through reorganization, recapitalization, stock split-up, stock
distribution or combination of shares, or the payment of a share dividend or
other increase or decrease in the number of such shares outstanding effected
without receipt of consideration by the Company. Adjustments shall be made
according to the sole discretion of the Board, and its decision shall be binding
and conclusive.
10. Dissolution, Merger and Consolidation.
Upon the dissolution or liquidation of the Company, or upon a merger or
consolidation of the Company in which the Company is not the surviving
corporation, the holder of each Option then outstanding under the Plan will
thereafter be entitled to receive at the next Exercise Date upon the exercise of
such Option for each share as to which such Option shall be exercised, as nearly
as reasonably may be determined, the cash, securities and/or property which a
holder of one share of the Common Stock was entitled to receive upon and at the
time of such transaction. The Board shall take such steps in connection with
such transactions as the Board shall deem necessary to assure that the
provisions of this Section 10 shall thereafter be applicable, as nearly as
reasonably may be determined, in relation to the said cash, securities and/or
property as to which such holder of such Option might thereafter be entitled to
receive.
11. Shareholder Approval.
The Plan is subject to approval by the holders of a majority of the
outstanding shares of Common Stock (and the holders of any other class of stock
to the extent required by agreement or Code Section 423) within 12 months before
or after the date of adoption of the Plan by the Board. The Plan shall be null
and void and of no effect if the foregoing condition is not fulfilled.
12. Miscellaneous.
(a) Legal and Other Requirements. The obligations of the Company to sell
and deliver Common Stock under the Plan shall be subject to all applicable laws,
regulations, rules and approvals, including, but not by way of limitation, the
effectiveness of a registration statement under the Securities Act of 1933 if
deemed necessary or appropriate by the Company. Certificates for shares of
Common Stock issued hereunder may be legended as the Board shall deem
appropriate.
(b) Termination and Amendment of Plan. Except as provided in the following
sentence, the Plan may be terminated or amended by the shareholders, by the
Board, or by the Committee, including amendment of the Plan from time to time to
designate corporations whose employees may be offered options under the plan
from among a group consisting of the Company and any corporation which is or
becomes its Affiliate. Amendments effecting: (1) any increase in the aggregate
number of shares which may be issued under the Plan (other than an increase
merely reflecting a change in capitalization such as a stock dividend or stock
split) or (2) changing the designation of corporations whose employees may be
offered options under the Plan, except designations described in the preceding
sentence, must be approved by the shareholders within twelve (12) months after
such amendment is adopted by the Board or by the Committee or such amendment is
void ab initio. No amendment shall affect any Options theretofore granted or any
Common Stock theretofore acquired by a Participant, unless such amendment shall
expressly so provide and unless any Participant to whom an Option has been
granted who would be adversely affect by such amendment consents in writing
thereto. If the scope of any amendment is such as to require shareholder
approval in order to comply with Rule 16b-3 under the 1934 Act, then such
amendment shall also require approval by the shareholders.
(c) Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to Options will be used for general corporate
purposes.
(d) Withholding Taxes. Upon a Disqualifying Disposition, within the meaning
of Paragraph 8(c), of any shares of Common Stock received pursuant to the
exercise of any Option under the Plan, the Company shall have the right to
require the Participant to remit to the Company an amount sufficient to satisfy
all federal, state and local requirements as to income tax withholding and
employee contributions to employment taxes or, alternatively, in the Board's
sole discretion, the Company may withhold all such amounts from other cash
compensation then being paid to the Participant by the Company.
(e) Right to Terminate Employment. Nothing in the Plan or any agreement
entered into pursuant to the Plan shall confer upon any Eligible Employee or
other optionee the right to continue in the employment of the Company or any
Affiliated Company or affect any right which the Company or any Affiliated
Company may have to terminate the employment of such Eligible Employee or other
optionee.
(f) Rights as a Shareholder. A Participant shall not have any right as a
shareholder with respect to shares of Common Stock issuable pursuant to the
exercise of an Option hereunder, unless and until a certificate or certificates
for such shares of Common Stock are issued to him or her or the Company reflects
the Participant's ownership in its stock ledger or other appropriate record of
Common Stock ownership.
(g) Leaves of Absence. The Board shall be entitled to make such rules,
regulations and determinations as it deems appropriate under the Plan in respect
of any leave of absence taken by any Eligible Employee, provided such rules are
consistent with Code Section 423.
(h) Notices. Every direction, revocation or notice authorized or required
by the Plan shall be deemed delivered to the Company (1) on the date it is
personally delivered to the Treasurer of the Company (or such other person as
may be designated by the Company from time to time with notice given to each
Participant) at its principal executive offices or (2) three business days after
it is sent by registered or certified mail, postage prepaid, addressed to the
Treasurer of the Company (or such other person as may be designated by the
Company from time to time with notice given to each Participant) at such
offices; and shall be deemed delivered to a Participant (1) on the date it is
personally delivered to him or her or (2) three business days after it is sent
by registered mail, postage prepaid, addressed to him or her at the last address
shown for him or her on the records of the Company or of any Affiliate.
(i) Rights and Privileges. All Eligible Employees shall have the same
rights and privileges under the Plan, except that the amount of Common Stock
which may be purchased under Options granted under this Plan shall bear a
uniform relationship to the Compensation of Eligible Employees. All rules and
determinations of the Board in the administration of the Plan shall be uniformly
and consistently applied to all persons in similar circumstances.
(j) Applicable Law. All questions pertaining to the validity, construction
and administration of the Plan and Options granted hereunder shall be determined
in conformity with the law of Delaware, to the extent not inconsistent with
Section 423 of the Code and regulations thereunder.
