Beacon Power Corp.: Agreement on New Financing

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TYNGSBORO, Mass.----Feb. 20, 2009-- Beacon Power Corporation, a company that designs and develops advanced products and services to support more stable, reliable and efficient electricity grid operation, announced that it has entered into a common stock purchase agreement with Seaside 88, LP (“Seaside”), valued at up to $18 million. The agreement requires Seaside to buy $1 million of Beacon common stock from the Company once each month for up to 18 months, beginning on February 20, 2009, and on the 20th day of each month thereafter (or the next closest business day).


“We expect this agreement to provide some of the funds necessary to manufacture our flywheel systems and the containers to house them,” said Bill Capp, Beacon Power president and CEO. “The structure of this agreement, with its reasonable pause and extension options, gives us considerable flexibility to minimize shareholder dilution as we execute our business plan.”


“In addition to this financing,” Capp continued, “we remain optimistic about receiving a loan under the Department of Energy’s loan guarantee program. Our application is in the final stage of due diligence. The loan would cover a majority of the capital requirements for our 20 MW frequency regulation plant in Stephentown, New York.”


The agreement is structured in three six-month tranches, or segments, each covering monthly closings of $1 million each, for up to $6 million total. Beacon is committed to only the first six-month tranche, but has the option, exercisable at the Company’s sole discretion, to extend the agreement for up to two additional six-month periods (each for up to $6 million), for a total of up to $18 million over the three tranches. Beacon has paid Seaside $100,000 for the right to exercise the first optional extension (although it has not actually exercised that extension), and would pay an additional $50,000 if it wishes to exercise the second such extension. Additionally, the Company at its sole discretion can freeze the monthly transactions for up to six months by paying a fee to Seaside of $100,000.


At each monthly closing, the number of shares of common stock to be issued will be determined by applying a 20% discount to the weighted average trading price during the five trading days preceding the closing. If in any month the five-day weighted average trading price of the Company’s common stock is below $0.25, then the closing for that month will not occur and will not be made up. There are no warrants associated with this agreement.


In addition to the minimum share price limitation, the Company will not issue shares to Seaside under this agreement that constitute more than 19.9% of the total number of outstanding shares at the date of this agreement without shareholder approval.


About Beacon Power

Beacon Power Corporation designs, develops and is taking steps to commercialize advanced products and services to support stable, reliable and efficient electricity grid operation. The Company’s primary business strategy is to commercialize its patented flywheel energy storage technology to perform frequency regulation services on the grid. Beacon’s Smart Energy Matrix, which is now in production, is a non-polluting, megawatt-level, utility-grade flywheel-based solution to provide sustainable frequency regulation services. Beacon is a publicly traded company with its research, development and manufacturing facility in the U.S. For more information, visit www.beaconpower.com.


Source: Beacon Power Corporation

Beacon Power Corporation
James Spiezio, 978-694-9121
spiezio@beaconpower.com
or
Gene Hunt, 978-661-2825
hunt@beaconpower.com
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