Unassociated Document


    
      Exhibit
10.1

    

     

    COMMON
STOCK PURCHASE AGREEMENT

     

    This
Common Stock Purchase Agreement (this “Agreement”) is dated
as of February 19, 2009, by and between Beacon Power Corporation, a Delaware
corporation (the “Company”), and
Seaside 88, LP, a Florida limited partnership (such investor, including its
successors and assigns, “Seaside”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Company
desires to issue and sell to Seaside, and Seaside desires to purchase from the
Company, up to $18,000,000 of shares of Common Stock on the Closing
Dates;

     

    NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and Seaside agree as follows:

     

    ARTICLE
I.

    DEFINITIONS

     

    1.1           Definitions.  In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms have the meanings indicated in this Section
1.1:

     

    “Action” shall have
the meaning ascribed to such term in Section 3.1(j).

     

    “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person as such terms are
used in and construed under Rule 144.

     

    “Cap” shall have the
meaning ascribed to such term in Section 2.2.

     

    “Closing” means the
Initial Closing and each Subsequent Closing.

     

    “Closing Dates” means
the Initial Closing Date and each Subsequent Closing Date.

     

    “Commission” means the
Securities and Exchange Commission.

     

    “Common Stock” means
the common stock of the Company, par value $0.01 per share, and any securities
into which such common stock may hereafter be reclassified.

     

    “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

     

    “Company Counsel”
means Edwards Angell Palmer & Dodge, LLP, or other counsel (including
in-house counsel) reasonably acceptable to Seaside.

     

    “DTC” means the
Depository Trust Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “DWAC” means DTC’s
Deposit Withdrawal Agent Commission system.

     

    “Delay Period” shall
have the meaning ascribed to such term in Section 2.6.

     

    “Disclosure Schedules”
means the disclosure schedules of the Company delivered concurrently herewith as
updated from time to time.

     

    “Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(l).

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

     

    “First Extended Term”
shall have the meaning ascribed to such term in Section 5.1.

     

    “GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).

     

    “Initial Closing”
means the closing of the purchase and sale of the Common Stock pursuant to
Section 2.1.

     

    “Initial Closing Date”
means February 20, 2009 or such later date when all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) Seaside’s obligations to purchase the Shares and
(ii) the Company’s obligations to deliver the Shares have been satisfied or
waived.

     

    “Initial Term” shall
have the meaning ascribed to such term in Section 5.1.

     

    “Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

     

    “Material Adverse
Effect” shall have the meaning ascribed to such term in Section
3.1(b).

     

    “New Equity” shall
have the meaning ascribed to such term in Section 4.7.

     

    “Per Share Purchase
Price” shall be an amount equal to the daily volume weighted average of
actual trading prices measured in hundredths of cents of the Common Stock of the
Company on the Trading Market for the five consecutive trading days prior to a
Closing Date multiplied by 80%.

     

    “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

     

    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.

     

    “Prospectus
Supplement” means the supplement to the base prospectus contained in the
Registration Statement to be filed in connection with the sale to Seaside, or
the resale by Seaside, of the Shares.

     

    
      
         

      

      
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    “Registration
Statement” means the registration statement of the Company, Commission
File No. 333-152140, as amended, covering the sale to Seaside, or the resale by
Seaside, of the Shares.

     

    “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

     

    “Rule 144” means Rule
144 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such
Rule.

     

    “Seaside Party” shall
have the meaning ascribed to such term in Section 4.5.

     

    “SEC Reports” shall
have the meaning ascribed to such term in Section 3.1(h).

     

    “Second Extended Term”
shall have the meaning ascribed to such term in Section 5.1.

     

    “Securities Act” means
the Securities Act of 1933, as amended.

     

    “Shares” means the
shares of Common Stock issued or issuable to Seaside pursuant to this
Agreement.

     

    “Short Sales” shall
include, without limitation, all “short sales” as defined in Rule 200 of
Regulation SHO of the Exchange Act, but does not include any reservation or
location of borrowable shares.

     

    “Subsequent Closing”
means each closing of the purchase and sale of the Common Stock pursuant to
Section 2.2.

     

    “Subsequent Closing
Date” means the 20th day of each month commencing with March 2009 (or, if
such day is not a Trading Day, then the first day thereafter that is a Trading
Day) during the term of this Agreement in accordance with Section 5.1 hereof,
except that there shall be no Subsequent Closing Date during any Delay
Period.

     

    “Subsidiary” shall
have the meaning ascribed to such term in Section 3.1(a).

     

    “Trading Day” means a
day on which the Common Stock is traded on a Trading Market.

     

    “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the New York Stock Exchange, the NYSE
Alternext Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market or the OTCBB.

     

    “Transaction
Documents” means this Agreement and any other documents or agreements
executed in connection with the transactions contemplated
hereunder.

     

    
      
         

      

      
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    ARTICLE
II.

    PURCHASE
AND SALE

     

    2.1           Initial Closing.  On
the Initial Closing Date, Seaside shall purchase from the Company, and the
Company shall issue and sell to Seaside, that number of Shares equal to
$1,000,000 divided by the Per Share Purchase Price.  Upon satisfaction
or waiver of the conditions set forth in Sections 2.3, 2.4 and 2.5, the Initial
Closing shall occur at the offices of White White & Van Etten PC, 55
Cambridge Parkway, Cambridge, MA 02142, or such other location as the
parties shall mutually agree.

     

    2.2          Subsequent
Closings.  On each Subsequent Closing Date, Seaside shall
purchase from the Company, and the Company shall issue and sell to Seaside, that
number of Shares equal to $1,000,000 divided by the Per Share Purchase Price;
provided, however, that in no event shall the Company issue and sell more than
21,295,288 Shares without first obtaining stockholder approval of the issuance,
or potential issuance, of such excess Shares (the “Cap”).  In the
event that the Per Share Purchase Price, as calculated with respect to any
Subsequent Closing Date, is less than $0.20, then such Subsequent Closing will
not occur that month, nor will the final Subsequent Closing Date be extended; in
each such event, there will be one fewer Subsequent Closing pursuant to this
Agreement and the aggregate value of Shares to be purchased hereunder shall be
reduced by $1,000,000.  Upon satisfaction or waiver of the conditions
set forth in Sections 2.3, 2.4 and 2.5, each Subsequent Closing shall occur at
the offices of White White & Van Etten PC, 55 Cambridge Parkway, Cambridge,
MA 02142, or such other location as the parties shall mutually
agree.

     

    2.3           Deliveries by the
Company.  On each Closing Date, the Company shall deliver
or cause to be delivered to Seaside the following:

     

    (a)           the
number of Shares equal to $1,000,000 divided by the Per Share Purchase Price,
registered in the name of Seaside, via the DTC DWAC system, as specified on the
signature pages hereto;

     

    (b)           an
officer’s certificate of the Company’s Chief Executive Officer or Chief
Financial Officer, in form reasonably acceptable to Seaside, certifying the
accuracy in all material respects (without giving effect to any limitation as to
“materiality” or “knowledge” set forth therein) of the Company’s representations
and warranties made in this Agreement as of the Closing Date and the Company’s
performance of the covenants to be performed by it pursuant to this Agreement at
or prior to the Closing;  and

     

    (c)           a
legal opinion of Company Counsel, in the form of Exhibit A attached
hereto.

     

    2.4           Deliveries by Seaside.   On
each Closing Date, Seaside shall deliver or cause to be delivered to the
Company:

     

    (a)           
$1,000,000 by wire transfer to the account as specified in writing by the
Company less the amount due Seaside for reimbursement of its expenses as
described in Section 5.2 hereof; and

     

    
      
         

      

      
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    (b)           a
certificate of the general partner of Seaside, in form reasonably acceptable to
the Company, certifying the accuracy in all material respects (without giving
effect to any limitation as to “materiality” or “knowledge” set forth therein)
of Seaside’s representations and warranties made in this Agreement as of the
Closing Date and Seaside’s performance of the covenants to be performed by it
pursuant to this Agreement at or prior to the Closing.

     

    2.5           Closing
Conditions.

     

    (a)         The
obligations of the Company hereunder in connection with each Closing are subject
to the following conditions being met:

     

    (i)         
 the accuracy in all material respects (without giving effect to any
limitation as to “materiality” or “knowledge” set forth therein) when made and
on the Closing Date of the representations and warranties of Seaside contained
herein;

     

    (ii)         
 all obligations, covenants and agreements of Seaside required to be
performed at or prior to the Closing Date shall have been
performed;

     

    (iii)           the
delivery by Seaside of the items set forth in Section 2.4 of this Agreement;
and

     

    (iv)           with
respect to any Subsequent Closing, to the extent that the purchase and sale of
Shares hereunder would cause the Cap to be exceeded, then stockholder approval
of the issuance of such excess Shares shall have been obtained.

     

    (b)           The
respective obligations of Seaside hereunder in connection with each Closing are
subject to the following conditions being met:

     

    (i)          
 the accuracy in all material respects (without giving effect to any
limitation as to “materiality” or “knowledge” set forth therein) on the Closing
Date of the representations and warranties of the Company contained
herein;

     

    (ii)        
  all obligations, covenants and agreements of the Company required to
be performed at or prior to the Closing Date shall have been
performed;

     

    (iii)           the
delivery by the Company of the items set forth in Section 2.3 of this
Agreement;

     

    (iv)           there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof, that has not been publicly announced by the Company at least six
business days prior to such Closing;

     

    (v)      
    with respect to any Subsequent Closing, to the extent
that the purchase and sale of Shares hereunder would cause the Cap to be
exceeded, then stockholder approval of the issuance of such excess Shares shall
have been obtained; and

     

    (vi)           from
the date hereof to each Closing Date, trading in the Common Stock shall not have
been suspended by the Commission and trading in securities generally as reported
by Bloomberg Financial Markets shall not have been suspended or limited, or
minimum prices shall not have been established on securities whose trades are
reported by such service, or on any Trading Market, nor shall a banking
moratorium have been declared either by the United States or New York State
authorities nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such magnitude in its
effect on liquidity in the Trading Market that in the reasonable judgment of
Seaside, makes it impracticable or inadvisable to purchase the Shares at the
Closing because the Shares cannot be resold as readily.

     

    
      
         

      

      
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    2.6           Delay
Periods.  No less than twenty (20) days before any Subsequent
Closing, the Company may elect at its sole option to delay that and all other
Subsequent Closings for a period (the “Delay Period”) of up to six (6) months by
giving notice of such Delay Period to Seaside and paying Seaside
$100,000.  The Company’s rights to elect a Delay Period shall be
limited to once in each of the Initial Term, the First Extended Term and the
Second Extended Term.

     

    ARTICLE
III.

    REPRESENTATIONS
AND WARRANTIES

     

    3.1           Representations and
Warranties of the Company.  Except as set forth under the
corresponding section of the Disclosure Schedules, which Disclosure Schedules
may be updated before any Closing and shall be deemed a part hereof, the Company
hereby makes the representations and warranties set forth below to Seaside as of
each Closing Date:

     

    (a)           Subsidiaries.  All
of the direct and indirect subsidiaries of the Company are listed in the
Company’s most recent Annual Report on Form 10-K (each a “Subsidiary”).  The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.  If the Company has no
subsidiaries, then references in the Transaction Documents to the Subsidiaries
will be disregarded.

     

    (b)           Organization and
Qualification.  The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation or
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the Company and the Subsidiaries taken as a whole, or
(iii) a material adverse effect on the Company’s ability to perform in any
material respect on a timely basis its obligations under any Transaction
Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and, to the knowledge of the Company, no Proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing or seeking
to revoke, limit or curtail such power and authority or
qualification.

     

    
      
         

      

      
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    (c)           Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
thereunder.  The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and its stockholders, except for stockholder approval for
the issuance of Shares in excess of the Cap, and no further action is required
by the Company or its stockholders in connection therewith other than in
connection with the Required Approvals.  Each Transaction Document has
been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.

     

    (d)           No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Shares and
the consummation by the Company of the other transactions contemplated thereby
do not and will not (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, violate or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary pursuant to, or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.

     

    (e)           Filings, Consents and
Approvals.  The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority, the Trading Market or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) the filing of the Prospectus Supplement, (ii) any
notice filings as are required to be made following each Closing Date under
applicable federal and state securities laws or under applicable rules and
regulations of the Trading Market and (iii) stockholder approval for the
issuance of Shares in excess of the Cap (collectively, the “Required
Approvals”).

     

    
      
         

      

      
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    (f)           Issuance of the
Shares.  The Shares are duly authorized and, when issued and
paid for in accordance with the Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens imposed by the
Company other than restrictions on transfer provided for in the Transaction
Documents or applicable federal and state securities laws.  The
Company has reserved, or will reserve prior to the applicable Closing, from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to this Agreement.  The issuance by the Company, or
the resale by Seaside, of the Shares has been registered under the Securities
Act and all of the Shares when delivered will be freely transferable and
tradable on the Trading Market by Seaside without restriction (other than any
restrictions arising solely from an act or omission of a
Seaside).  The Registration Statement is effective and available for
the issuance or resale of the Shares thereunder and the Company has not received
any notice that the Commission has issued or intends to issue a stop-order with
respect to the Registration Statement or that the Commission otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened in writing to do
so.  The “Plan of Distribution” section under the Registration
Statement as supplemented by the Prospectus Supplement permits the issuance and
sale or resale of the Shares hereunder.

     

    (g)           Capitalization.  The
capitalization of the Company is as set forth in the Disclosure
Schedules.  No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents.  Except as
disclosed in the SEC Reports or Schedule 3.1(g), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may
become bound to issue additional shares of Common Stock or Common Stock
Equivalents.  Except as disclosed in the SEC Reports or Schedule
3.1(g), the issue and sale of the Shares will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than Seaside)
and will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such
securities.  All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been issued in
material compliance with all federal and state securities laws and requirements
of the Trading Market, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities.  No further approval or authorization of any
stockholder or the Board of Directors of the Company is required for the
issuance and sale of the Shares, except for stockholder approval for the
issuance of Shares in excess of the Cap.  There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders.

     

    
      
         

      

      
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    (h)           SEC Reports; Financial
Statements.  The Company has filed or furnished all reports,
schedules, forms, statements and other documents required to be filed or
furnished by it under the Securities Act and the Exchange Act (including all
required exhibits thereto), including pursuant to Section 13(a) or 15(d)
thereof, for the 12 months preceding the date hereof (or such shorter period as
the Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) and any
notices, reports or other filings pursuant to applicable requirements of the
Trading Market on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing.  Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis during the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, year-end audit
adjustments.

     

    (i)           Material
Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse Effect,
except as has been reasonably cured by the Company (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option and
incentive plans.  The Company does not have pending before the
Commission any request for confidential treatment of information.

     

    (j)           Litigation.  Except
as disclosed in the SEC Reports, there is no action, suit, notice of violation,
or proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Shares or (ii) could,
if there were an unfavorable decision, have or reasonably be expected to result
in a Material Adverse Effect.  Neither the Company nor any Subsidiary,
nor, to the knowledge of the Company, any director or officer thereof, is or has
been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty.
There has not been and, to the knowledge of the Company, there is not currently
pending or contemplated, any investigation by the Commission involving the
Company or any current or former director or officer of the
Company.  The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Securities Act and, to the
Company’s knowledge, no proceeding for such purpose is pending before or
threatened by the Commission.

     

    
      
         

      

      
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    (k)           Compliance.  Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, could reasonably be expected to result in a default by the Company
or any Subsidiary under), nor has the Company or any Subsidiary received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
order of any court, arbitrator or governmental body, or (iii) is in violation of
any statute, rule or regulation of any governmental authority or the Trading
Market, including without limitation all foreign, federal, state and local laws
applicable to its business, except in each case as would not have a Material
Adverse Effect.

     

    (l)           Sarbanes-Oxley; Internal
Accounting Controls.  The Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002 that are applicable to it
as of the Closing Date.  The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. 
The Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the Exchange Act,
as the case may be, is being prepared.  The Company’s certifying
officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of a date prior to the filing date of the most recently filed
periodic report under the Exchange Act (such date, the “Evaluation
Date”).  The Company presented in its most recently filed
periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the Company’s disclosure controls and
procedures based on their evaluations as of the Evaluation
Date.  Since the Evaluation Date, there have been no changes in the
Company’s internal controls over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
controls over financial reporting.

     

    
      
         

      

      
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    (m)           Listing and Maintenance
Requirements.  The Company’s Common Stock is registered
pursuant to Section 12(b) of the Exchange Act, and the Company has taken no
action designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration.  The Company has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such Trading
Market.  The Company is, and immediately after the consummation of the
transactions contemplated hereby will be, in compliance with all such listing
and maintenance requirements.

     

    (n)           Application of Takeover
Protections.  The Company and its Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
Certificate of Incorporation (or similar charter documents) that is or could
become applicable to Seaside as a result of Seaside and the Company entering
into this Agreement.

     

    (o)           Disclosure.  The
Company confirms that, neither the Company nor any officer, director or employee
of the Company acting on its behalf has provided Seaside or its agents or
counsel with any information that constitutes or might constitute material,
non-public information.  The Company understands and confirms that
Seaside will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company.  All disclosure provided to
Seaside regarding the Company, its business and the transactions contemplated
hereby furnished by or on behalf of the Company with respect to the
representations and warranties made herein are true and correct with respect to
such representations and warranties and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.  The Company acknowledges and agrees that
Seaside does not make and has not made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 3.2 hereof.

     

    (p)           Effective Registration
Statement.  The Registration Statement has been declared
effective by the Commission and the Company knows of no reason why the
Registration Statement will not continue to remain effective for the foreseeable
future.  The Company is eligible to use Form S-3 registration
statements for the issuance of securities.

     

    (q)           Acknowledgment Regarding
Seaside’s Purchase of Shares.  The Company acknowledges and
agrees that Seaside is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby.  The Company further acknowledges that Seaside is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by Seaside or any of its respective representatives
or agents in connection with this Agreement and the transactions contemplated
hereby is merely incidental to Seaside’s purchase of the Shares.  The
Company further represents to Seaside that the Company’s decision to enter into
this Agreement has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its
representatives.

     

    
      
         

      

      
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    (r)           Approvals.  The
issuance and listing on the Trading Market of the Shares requires no further
approvals, including but not limited to, the approval of stockholders, except
for stockholder approval for the issuance of Shares in excess of the
Cap.

     

    (s)           Intellectual
Property.  The Company possesses such right, title and interest
in and to, patents, patent rights, trade secrets, inventions, know-how,
trademarks, trade names, copyrights, service marks and other proprietary rights
(“Intellectual
Property”) material to the conduct of the Company’s business except
Intellectual Property the failure to possess of which would not have a Material
Adverse Effect. Except as disclosed in the SEC Reports, the Company has not
received any notice of infringement, misappropriation of conflict from any third
party as to such that has not been resolved or disposed of, which infringement,
misappropriation or conflict would if adversely decided individually or in the
aggregate have a Material Adverse Effect.  To the Company’s knowledge,
it has not infringed, misappropriated, or otherwise conflicted with Intellectual
Property of any third parties, which infringement, misappropriation of conflict
would individually or in the aggregate have a Material Adverse
Effect.

     

    (t)           Permits.  The
Company has made all filings, applications and submissions required by, and possesses all
approvals, licenses, certificates, certifications, clearances, consents,
exemptions, marks, notifications, orders, permits and other authorizations
issued by, the appropriate federal, state or foreign regulatory authorities
necessary to own or lease its properties or to conduct its businesses
(collectively, “Permits”), except for
such Permits the failure of which to possess, obtain or make the same would not
reasonably be expected to have a Material Adverse Effect; and the Company has
not received any written notice of proceedings relating to the limitation,
revocation, cancellation, suspension, modification or non-renewal of any such
Permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect, and has no
reason to believe that any such license, certificate, permit or authorization
will not be renewed in the ordinary course.

     

    Seaside
acknowledges and agrees that the Company does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.1.

     

    3.2           Representations and
Warranties of Seaside.  Seaside hereby makes the
representations and warranties set forth below to the Company as of each Closing
Date:

     

    (a)           Organization;
Authority.  Seaside is a limited partnership duly organized,
validly existing and in good standing under the laws of the state of Florida,
with full right, power and authority to own and use its properties and assets
and to carry on its business as currently conducted and to enter into and to
consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations hereunder or thereunder.  The
execution, delivery and performance by Seaside of the transactions contemplated
by this Agreement and each other Transaction Document have been duly authorized
by all necessary action on the part of Seaside and no such further action is
required.  Each Transaction Document to which it is a party has been
(or upon delivery will have been) duly executed by Seaside, and, when delivered
by Seaside in accordance with the terms thereof, will constitute the valid and
legally binding obligation of Seaside, enforceable against it in accordance with
its terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

     

    
      
         

      

      
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    (b)           Seaside
Representation.  Seaside does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Shares.  Seaside is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act or otherwise.

     

    (c)           Experience of
Seaside.  Seaside, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Shares, and has so evaluated the merits and
risks of such investment.  Seaside is able to bear the economic risk
of an investment in the Shares and, at the present time, is able to afford a
complete loss of such investment.  Seaside is an “accredited investor”
as that term is defined in Regulation D under the Securities Act.

     

    (d)           Short
Sales.  Seaside has not directly or indirectly executed any
Short Sales in the securities of the Company after the date of this
Agreement.

     

    (e)           Ownership of
Shares.  The purchase of Shares at a Subsequent Closing from
the Company shall not cause Seaside’s beneficial ownership of the Company’s
Common Stock, calculated in accordance with Rule 13d-3 promulgated by the
Commission, to exceed 20%.

     

    The
Company acknowledges and agrees that Seaside does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.

     

    ARTICLE
IV.

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1         
 No Transfer
Restrictions.  Certificates evidencing the Shares shall not
contain any legend restricting their transferability by Seaside unless there is
an effective Registration Statement registering their resale by
Seaside.  The Company shall cause its counsel to issue a legal opinion
to the Company’s transfer agent if required by the Company’s transfer agent to
effect a transfer of any of the Shares; such opinion shall be provided by the
Company’s counsel at no expense to Seaside.

     

    4.2           Furnishing of
Information.  As long as Seaside owns Shares, the Company
covenants to use commercially reasonable best efforts to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act.  As long as Seaside owns Shares that are “restricted
securities” as that term is defined in Rule 144 that it has owned for less than
one year in accordance with Rule 144(d), if the Company is not required to file
reports pursuant to the Exchange Act, it will prepare and furnish to Seaside and
make publicly available in accordance with Rule 144(c) such information as is
required for Seaside to sell the Shares under Rule 144.

     

    
      
         

      

      
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    4.3           Securities Laws Disclosure;
Publicity.  The Company shall, by 9:00 a.m. Eastern time on the
Trading Day following the date hereof file a Current Report on Form 8-K which
attaches as exhibits all agreements relating to this transaction, in each case
reasonably acceptable to Seaside, if Seaside is readily available to review such
Form 8-K in a timely manner, disclosing the material terms of the transactions
contemplated hereby.

     

    4.4           Non-Public
Information.  The Company covenants and agrees that neither it
nor any other Person acting on its behalf will provide Seaside or its agents or
counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto Seaside shall have executed a
written agreement regarding the confidentiality and use of such
information.  The Company understands and confirms that Seaside shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.

     

    4.5           Indemnification of
Seaside.  Subject to the provisions of this Section 4.5, the
Company will indemnify and hold Seaside, Seaside’s Affiliates and their
respective directors, officers, stockholders, partners, members, employees and
agents (each, a “Seaside Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation reasonably incurred in connection with defending or investigating
any suit or action in respect thereof to which any Seaside Party may become a
party under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses
arise out of or are based on (a) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus Supplement, or (b) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that the
Company will not be liable in any such case to the extent that any such
liability, obligation, claim, contingency, damage, cost or expense arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by and regarding Seaside expressly for
inclusion therein.  If any action shall be brought against any Seaside
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Seaside Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing.  Any Seaside Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Seaside Party
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Seaside Party.  The Company will not be liable to
any Seaside Party under this Agreement (i) for any settlement by a Seaside Party
effected without the Company’s prior written consent; or (ii) to the extent, but
only to the extent, that a loss, claim, damage or liability is attributable to
any Seaside Party’s breach of any of the representations, warranties, covenants
or agreements made by Seaside in this Agreement or in the other Transaction
Documents.

     

    
      
         

      

      
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    4.6           Listing of Common
Stock.  The Company hereby agrees to use best efforts to
maintain the listing of the Common Stock on a Trading Market.  The
Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will include in such application all of the
Shares and will take such other action as is necessary to cause all of the
Shares to be listed on such other Trading Market as promptly as
possible.  The Company will take all action reasonably necessary to
continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market.

     

    4.7           Right of First
Offer.

     

    (a)           Subject
to Section 4.7(b), from the date hereof until the earlier of: (i) one month
after the last Subsequent Closing Date or (ii) the first date on which Seaside
fails to perform its obligations under Sections 2.1 and 2.2, the Company shall
not issue shares of Common Stock or preferred stock, nor shall it issue
convertible debt, for cash without first offering Seaside, in the manner set
forth herein, the right to purchase such Common Stock, preferred stock or
convertible debt (collectively, “New Equity”).  The company shall give
notice to Seaside of any proposed issuance of New Equity for cash which notice
shall state the maximum number of shares or debt to be offered and the price at
which they are to be offered, which may be stated as a
formula.  Seaside shall have three (3) Trading Days from the date of
such notice to notify the Company of its election to purchase all of the New
Equity to be offered at the proposed price at which the New Equity is to be
offered and, if it so elects, ten (10) days after the date of such election to
purchase the New Equity.  If Seaside either does not notify the
Company of its election to purchase the New Equity at the offering price or does
not purchase the New Equity in each case within the time period provided, then
the Company may offer and issue and sell to any person the maximum New Equity
set forth in the notice to Seaside (or fewer shares or debt) at the offering
price set forth in the notice (or a higher price) for a period of 120 days after
the date of the notice to Seaside.

     

    (b)           This
Section 4.7 shall in no event apply to issuances of securities by the Company in
connection with (i) a firm commitment underwritten public offering; (ii)
entering into any business combination, joint venture, loan or other commercial
agreement; or (iii) issuances to any officer, director or employee of the
Company or any subsidiary of the Company.

     

    4.8           Approval of Subsequent
Equity Sales.  The Company shall not issue shares of Common
Stock or Common Stock Equivalents, if such issuance requires stockholder
approval pursuant to applicable rules of the Trading Market, unless and until
such stockholder approval is obtained.

     

    4.9           Short
Sales.  Seaside covenants that neither it nor any Affiliates
acting on its behalf or pursuant to any understanding with it will execute any
Short Sales before the final Subsequent Closing contemplated
hereby.

     

    4.10         Prospectus
Supplement.  The Company will use its best efforts to file the
Prospectus Supplement in accordance with the requirements of Rule 424
promulgated under the Securities Act on or before the Initial Closing Date
or, in the event the Prospectus Supplement is being filed to add Seaside as a
selling stockholder, on or before the Subsequent Closing at which restricted
securities (as defined in Rule 144) are to be issued.

     

    
      
         

      

      
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    4.11         Stockholder
Approval.  The Company shall provide each stockholder entitled
to vote at the next meeting of the stockholders of the Company a proxy
statement, which has been previously reviewed by the Seaside and its counsel,
soliciting each such stockholder’s affirmative vote at such stockholder meeting
for approval of the Company’s issuance of all of the Shares as described in the
Transaction Documents in accordance with applicable law and the rules and
regulations of the Trading Market, and the Company shall use its reasonable best
efforts to solicit its stockholders’ approval of such issuance of the Securities
and to cause the Board of Directors of the Company to recommend to the
stockholders that they approve such proposal.  Seaside agrees not to
vote its Shares for or against approval of such proposal and shall certify to
the company the number of Shares it owns as of the record date and that it did
not vote such Shares on such proposal.

     

    4.12         No
Trading.  Seaside agrees to abstain from selling any of the
Shares during the five consecutive trading day period during which the Per Share
Purchase Price is calculated prior to each Subsequent Closing.

     

    ARTICLE
V.

    MISCELLANEOUS

     

    5.1           Term and Termination.

     

    (a)           Unless
extended by the Company as set forth below, this Agreement shall terminate after
the Initial Closing and five (5) Subsequent Closings (the “Initial
Term”).

     

    (b)           In
exchange for the payment by the Company to Seaside of $100,000 at the Initial
Closing, the Company shall have the right at its sole election to extend the
term of this Agreement for an additional six (6) Subsequent Closings commencing
in the calendar month next following the Initial Term (the “First Extended
Term”) by giving Seaside notice of its election no later than twenty (20) days
before the end of the Initial Term.  If the Company elects to extend
this Agreement for the First Extended Term, then this Agreement shall terminate
after the Initial Closing and eleven (11) Subsequent Closings, unless the
Company elects to further extend its term as set forth below.

     

    (c)           The
Company shall have the right at its sole election to extend the term of this
Agreement for an additional six (6) Subsequent Closings commencing in the
calendar month next following the First Extended Term (the “Second Extended
Term”) by giving Seaside notice of its election no later than twenty (20) days
before the end of the First Extended Term and paying Seaside
$50,000.  If the Company elects to extend this Agreement for the
Second Extended Term, then this Agreement shall terminate after the Initial
Closing and seventeen (17) Subsequent Closings.

     

    (d)           Either
party to this Agreement may terminate in the event of a default by the other of
its obligations under Article II hereof.  This Agreement may be
terminated by Seaside by written notice to the Company, if the Initial Closing
has not been consummated on or before February 25, 2009.  No
termination will affect the right of any party to sue for any breach by the
other party (or parties).

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    5.2           Fees and
Expenses.  Except as otherwise set forth in this Agreement and
as set forth in this Section 5.2 below, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this
Agreement.  The Company shall pay all stamp and other taxes and duties
levied in connection with the delivery of the Shares.  Notwithstanding
the foregoing, at the Initial Closing, the Company shall reimburse Seaside for
the fees and expenses of its counsel, White White & Van Etten PC, in an
amount equal to $18,000 and at each Subsequent Closing, the Company shall
reimburse Seaside for the fees and expenses of its counsel, White White &
Van Etten PC, in an amount equal to $9,000.

     

    5.3           Entire
Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.

     

    5.4           Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (Eastern time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Trading Day
or later than 5:30 p.m. (Eastern time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.

     

    5.5           Amendments;
Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and Seaside or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought.  No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.

     

    5.6           Headings.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.

     

    5.7           Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of
Seaside.  Seaside may assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
Company.

     

    
      
         

      

      
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    5.8           No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.5.

     

    5.9           Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law
thereof.  The parties hereby waive all rights to a trial by
jury.  If either party shall commence an action or proceeding to
enforce any provisions of the Transaction Documents, then the prevailing party
in such action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

     

    5.10         Survival.  The
representations and warranties herein shall survive the Closings and delivery of
the Shares.

     

    5.11         Execution.  This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile or email transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or email signature
page were an original thereof.

     

    5.12         Severability.  If
any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.

     

    5.13         Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents,
whenever Seaside exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then Seaside may rescind or
withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.

     

    5.14         Replacement of Shares.  If
any certificate or instrument evidencing any Shares is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested.  The applicants for
a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such replacement
Shares.

     

    
      
         

      

      
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    5.15         Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, Seaside and the Company will be entitled to
specific performance under the Transaction Documents.  The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of the obligations set forth herein and hereby
agree to waive in any such action for specific performance of any such
obligation the defense that a remedy at law would be adequate.

     

    5.16           Payment Set
Aside.  To the extent that either party hereto makes a payment
or payments to the other party hereto pursuant to any Transaction Document or
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the other party, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

     

    5.17         Construction. The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.

     

    (Signature
Pages Follow)

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Common Stock Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

     

    
      	 	
              Beacon
      Power Corporation

               

               

            	 	
              Address for
      Notice:

            
	By:	
               /s/ F. William Capp

            	 	
              65
      Middlesex Road

            
	 	
              Name:  William
      Capp

              Title:  Chief
      Executive Officer

            	 	      
              Tyngsboro,
      MA  01879

              Attention:  Chief
      Executive Officer

              Fax:  978-694-9127

            
	 	
              With
      a copy to (which shall not constitute notice):

               

               

               

            	 	
              Edwards
      Angell Palmer & Dodge, LLP

              111
      Huntington Avenue

              Boston,
      MA 02199-7613

              Attention:  Albert
      L. Sokol, Esq.

              Fax:  617-227-4420

            
	 	 	 	 
	 	 	 	 
	      
              Seaside
      88, LP

               

              By:  Seaside
      88 Advisors, LLC

            	 	      
              Address for
      Notice:

            
	 	 	 	 
	By:  	 /s/
      William J. Ritger	 	      
              750
      Ocean Royale Way

              Suite
      805

              North
      Palm Beach, FL 33408 

            
	 	
              Name:
      William J. Ritger

              Title:  Manager

            	 	      
              
                Attention:  William
      J. Ritger and

              Denis
      M. O’Donnell, M.D.

              Fax:  866-358-6721

            
	With
      a copy to (which shall not constitute notice):	 	      
              White
      White & Van Etten PC

              55
      Cambridge Parkway

              Cambridge,
      MA 02142

              Attention:  David
      A. White, Esq.

              Fax:  617-225-0205

            


    

     

    DWAC
Instructions for Common Stock:

    


    DTC # -
0571 -  

    Account
number - G53-1348923

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    


    DISCLOSURE
SCHEDULES

    


    3.1(g)
Beacon’s outstanding common stock and warrants and options are as
follows:

     

    
      	
              Total
      Shares Outstanding

            	 	 	107,433,190	 
	 	 	 	 	 
	
              Less:
      Treasury

            	 	 	(421,692	)
	 	 	 	 	 
	
              Shares
      Outstanding Less Treasury

            	 	 	107,011,498	 
	 
      	 	 	 	 
	
              Warrants
      Issued and Outstanding

            	 	 	41,048,484	 
	 	 	 	 	 
	
              Stock
      Options Issued and Outstanding

            	 	 	11,338,470	 


    

    


    3.1(j) 
A former director of the Company, Lisa Zappala, has been charged by the SEC in a
civil injunctive action alleging securities fraud and other
violations.  The charges arise from certain transactions that occurred
during her tenure as CFO of, Aspen Technology, Inc., during the time period from
1999 through 2002.  The complaint alleges that Ms. Zappala caused
Aspen to report inflated revenue in the company's publicly-filed financial
statements and in press releases on at least six software transactions during
fiscal years 1999 through 2002. The Complaint alleged that the three defendants
caused Aspen to recognize revenue during the relevant period despite knowing
that Aspen was prohibited from doing so under Generally Accepted Accounting
Principles because contracts were not signed within the appropriate quarter
and/or the earnings process was incomplete due to contingency arrangements which
changed the terms of the customers' payment commitments under the
contracts.

    


    The
Commission's action against Zappala remains pending. [SEC v. Lawrence B. Evans,
David L. McQuillin, and Lisa W. Zappala, Civil Action No. 07-CV-10027-JLT (D.
Mass)] (LR-20803)

    


    Ms.
Zappala was a director of Beacon Power from July 21, 2005 to June 25, 2007
annual meeting.

    


    3.1
(m)  The Company has not, in the 12 months preceding the date hereof,
received notice from any Trading Market on which the Common Stock is or has been
listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market.  Since
November 4, 2008 our stock has traded below the minimum bid price of
$1.

    


    Nasdaq
enacted a proposed rule change to temporarily suspend, through January 16, 2009,
the application of the continued listing requirements related to bid price and
market value of publicly held shares for listing on the Nasdaq Stock
Market.  On December 19, 2008 Nasdaq extended the suspension for
another 4 month period. Enforcement of these rules is expected to continue on
April 20, 2009.

     

    
      
         

      

      
        21