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Exhibit 10.4
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 OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED
UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
COVERING SUCH SECURITIES, THE SALE IS MADE IN COMPLIANCE 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 OR ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES 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 INVESTORS RIGHTS AGREEMENT BY AND AMONG THE COMPANY AND CERTAIN
STOCKHOLDERS 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 May 23, 2005)
1. ISSUANCE OF WARRANT. FOR VALUE RECEIVED, from and after the
Commencement Time, 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
City time on May 23, 2005 (the "Termination Date"), the Warrant Stock (as
defined below) at a price per share equal to the Warrant Price (as defined
below) upon exercise of this Warrant pursuant to Section 6 hereof. This Warrant
is issued pursuant to the Securities 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 Commonwealth of
Massachusetts, the State of New York or the District of Columbia are authorized
to be closed.
(b) "Commencement Time" means immediately prior to the
consummation of a Liquidity Event.
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(c) "Common Stock" means the Company's Common Stock, $.01 par
value per share.
(d) "Holder" means _____________, or its assigns.
(e) "Liquidity Event" means (i) the consummation of the sale or
other disposition of all or substantially all of the assets of the Company to
another Person or the acquisition of at least a majority of the outstanding
voting stock of the Company by another Person by means of a merger,
consolidation or otherwise, in either case on financial terms that reflect a
total equity value of at least $200 million for the Company immediately prior to
the consummation of such transaction (a "Sale Transaction") or (ii) the
consummation of an underwritten public offering of Common Stock pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
that (a) results in the Company receiving at least $30 million in gross proceeds
and (b) is made at an initial offering price per share (the "Initial Price")
that reflects a market capitalization value of at least $200 million for the
Company (a "Qualified Public Offering").
(f) "Person" means any individual, corporation, partnership,
limited liability company, or other entity.
(g) "Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of May 23, 2000 by and among the Company, Perseus Capital,
L.L.C., DQE Enterprises, Inc., Micro Generation Technology Fund, L.L.C., GE
Capital Equity Investments, Inc., Mechanical Technologies Incorporated, Penske
Corporation, and The Beacon Group, LLC (collectively, the "Purchasers").
(h) "Warrant Price" means 75% of the lower of (i) the effective
price per share of Common Stock paid by the acquirer in a Sale Transaction as
determined by a nationally recognized investment banking firm chosen by the
Company and approved by Purchasers that hold a majority of the aggregate
Preferred Shares and Conversion Shares (as such terms are defined in the
Securities Purchase Agreement) as of the date of consummation of such Sale
Transaction and (ii) the Initial Price in first Qualified Offering, in each case
subject to adjustment under Section 3.
(i) "Warrant Stock" means a number of shares of Common Stock equal
to the quotient obtained by dividing (i) 50% of the aggregate stated value of
the Preferred Shares acquired by the initial Holder of this Warrant pursuant to
the Securities Purchase Agreement by (ii) the Warrant Price, subject to
adjustment under Section 3.
(j) "Warrant Stock Class" means the class of capital stock or
other securities that includes the Warrant Stock.
3. ADJUSTMENTS AND NOTICES. The Warrant Price and/or the Warrant Stock
shall be subject to adjustment from time to time in accordance with this Section
3. The Warrant Price and/or the Warrant Stock shall be adjusted to reflect all
of the following events that occur on or after the Commencement Time.
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(a) SUBDIVISION, STOCK DIVIDENDS OR COMBINATIONS. In case the
Company shall at any time subdivide the outstanding shares of the Warrant Stock
Class or shall issue a stock dividend with respect to the Warrant Stock Class,
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 Warrant Stock
Class, 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 the Warrant Stock Class, 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
Warrant 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 Warrant 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 transactions of the
type described in this subparagraph (c).
(d) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment
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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.
(e) 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 Warrant Stock Class other than as
described above that adversely affects the Holder's rights under this Warrant,
the Warrant Price shall be adjusted downward.
(f) 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 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. The Company will reserve from its authorized
and unissued 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 in
part by the Holder, at any time from and after the Commencement Time and 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.
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
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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 the
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 from and after the Commencement Time and prior to the
termination of this Warrant, 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 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 Warrant 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 Warrant Stock issuable
upon exercise of the Warrant in full.
A = the fair market value of one share of the Warrant
Stock Class which means (i) the fair market value of
one share of the Warrant Stock Class 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
Liquidity Event, 133.33% of the Warrant Price then in
effect.
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
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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
transaction as to which Section 3(c) is applicable, the Holder shall receive the
consideration contemplated by Section 3(c) in lieu of Warrant Stock of the
Company.
8. NOTICE OF LIQUIDITY EVENT.The Company shall provide the Holder with
at least 10 Business Days advance written notice prior to the consummation of
any Liquidity Event describing in reasonable detail the terms and conditions of
such Liquidity Event and an estimate of the Warrant Price derivable from such
Liquidity Event.
9. TRANSFER OF WARRANT. This Warrant may be transferred or assigned by
the Holder hereof as a 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.
10. TERMINATION. This Warrant shall terminate at 5:00 p.m. New York
City time on the Termination Date.
11. MISCELLANEOUS. This Warrant shall be governed by the laws of the
State of Delaware, as such laws are applied to contracts to be entered into and
performed entirely in Delaware by Delaware residents. 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.
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ISSUED: ___________________
BEACON POWER CORPORATION
By: /s/ William E. Stanton
---------------------------------------
Name: William E. Stanton
-------------------------------------
Title: President
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ATTACHMENT 1
NOTICE OF EXERCISE
TO: BEACON POWER CORPORATION
1. The undersigned hereby elects to purchase _______________ shares of 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:
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(Name)
-------------------------------
(Address)
--------------------------------------- -----------------------------------
(Date) (Name of Warrant Holder)
By:
-------------------------------
Title:
----------------------------
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ATTACHMENT 2
INVESTMENT REPRESENTATION STATEMENT
In connection with the purchase of the shares of Warrant Stock upon
exercise of the enclosed Warrant, 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
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(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:
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(Typed or Printed Name)
By:
------------------------------------
(Signature)
---------------------------------------
(Name)
---------------------------------------
(Title)
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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:
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(Name)
------------------------------
(Address)
--------------------------------------- -----------------------------------
(Date) (Name of Warrant Holder)
By:
-------------------------------
Title:
----------------------------
(Title and signature of
authorized person)
