REORGANIZED PRIVATECO SERVICES AGREEMENT
EXHIBIT 10.3
REORGANIZED PRIVATECO SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this “Agreement”), effective as of December 7, 2023 (the “Effective Date”), is entered into by and among Capstone Green Energy LLC, a Delaware limited liability company (“Capstone”), and Capstone Distributor Support Services Corporation (f/k/a Capstone Green Energy Corporation), a Delaware corporation (“Reorganized PrivateCo”). Each of Capstone and Reorganized PrivateCo are referred to herein as a “Party” and together as the “Parties.”
WHEREAS, pursuant to the Plan (as defined below), (i) all liabilities and assets of Reorganized PrivateCo (other than (x) the stock of Capstone Turbine International, Inc., (y) those liabilities and assets directly related to the Retained Assets (as described in the Plan) and (z) obligations under the DIP Financing Agreement (as defined below) and Pre-Petition Secured Debt (as defined in the Plan)) were transferred to Capstone; (ii) the common units and preferred units of Capstone were issued to Reorganized PrivateCo; and (iii) Reorganized PrivateCo contributed the common units of Capstone to Reorganized PublicCo and retained the preferred units of Capstone.
WHEREAS, in connection with the transactions contemplated by the Plan and in order to assist Reorganized PrivateCo in the operation of the Retained Assets, Capstone and Reorganized PrivateCo have each agreed to provide certain services to the other, in each case in accordance with the terms of this Agreement; and
WHEREAS, it is a condition to the consummation of the transactions contemplated by the Plan that this Agreement be executed substantially concurrently with the Plan’s effective date.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
1. | Definitions and Construction. |
“Affiliate” means, as to any Person, any other Person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either (a) to vote at least a majority of the securities of such Person having ordinary voting power for the election of directors of such Person or (b) to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise; provided, however, that in no event shall Reorganized PrivateCo and its equityholders, on the one hand, and Capstone or its subsidiaries or common equity holders, on the other hand, be considered Affiliates of one another for purposes of this Agreement.
“Agreement” has the meaning set forth in the Preamble.
“Authorized Persons” has the meaning set forth in Section 5.1.
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“Business Day” means any day other than a Saturday, Sunday or day on which banks located in New York, New York or Wilmington, Delaware are authorized or required by Law to be closed for business.
“Capstone” has the meaning set forth in the Preamble.
“Capstone Indemnified Party” has the meaning set forth in Section 7.2.
“Capstone Personnel” has the meaning set forth in Section 3.2.
“Capstone Trademarks” has the meaning set forth in Section 6.2.
“Capstone Work Product” has the meaning set forth in Section 6.1(b).
“Confidential Information” has the meaning set forth in Section 5.1.
“Contract” means any agreement, contract, license, arrangement, understanding, obligation or commitment to which a party is bound or to which its assets or properties are subject, whether oral or written, and any amendments and supplements thereto.
“DIP Financing Agreement” means the Super-Priority Senior Secured Debtor-in-Possession Note Purchase Agreement, as in effect on October 2, 2023, by and among Reorganized PublicCo, the other debtor parties thereto, Broad Street Credit Holdings LLC and Xxxxxxx Xxxxx Specialty Lending Group, L.P.
“Discloser” has the meaning set forth in Section 5.1.
“Effective Date” has the meaning set forth in the Preamble.
“Force Majeure” means an event beyond the reasonable control of Capstone (or any Person acting on its behalf), including acts of God, storms, floods, riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military authorities, acts of war (declared or undeclared), pandemics or epidemics, or armed hostilities or other national or international calamity or one or more acts of terrorism or failure of energy sources.
“Governmental Authority” means any nation or government, any foreign or domestic federal, state, county, municipal or other political instrumentality or subdivision thereof and any foreign or domestic agency, entity or body exercising executive, legislative, judicial, regulatory, administrative or taxing functions of or pertaining to government, including any court, arbitrator or tribunal of competent jurisdiction.
“Indemnifiable Losses” has the meaning set forth in Section 7.1.
“Income” means cash actually received (i) directly from Capstone’s distributors or (ii) from Capstone, including (A) as part of its collection of Distributor Support Services fees from Capstone’s distributors and (B) any payments in consideration for use of any intellectual property
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(including the Capstone Trademarks).
“Invoice” has the meaning set forth in Section 3.3(a).
“Law” means any law, Order, statute, code, regulation, ordinance, decree, rule, or other requirement with similar effect of any Governmental Authority.
“Legally Requested Disclosure” has the meaning set forth in Section 5.3.
“Litigation” has the meaning set forth in Section 8.1(c).
“Order” means any judgment, order, writ, injunction, decision, ruling, decree or award of any Governmental Authority.
“Party” and “Parties” has the meaning set forth in the Preamble.
“Person” means any individual, person, entity, general partnership, limited partnership, limited liability partnership, limited liability company, corporation, joint venture, trust, business trust, cooperative, association, Governmental Authority, foreign trust or foreign business organization and the heirs, executors, administrators, legal representatives, successors and assigns of the “Person” when the context so permits.
“Plan” means the Joint Prepackaged Chapter 11 Plan of Reorganization of Capstone Green Energy Corporation and Its Debtor Affiliates (as may be amended, supplemented, or otherwise modified from time to time in accordance with its terms and the terms of the Transaction Support Agreement, and including all exhibits and supplements thereto).
“Recipient” has the meaning set forth in Section 5.1.
“Reorganized PrivateCo” has the meaning set forth in the Preamble.
“Reorganized PrivateCo Indemnified Party” has the meaning set forth in Section 7.1.
“Reorganized PrivateCo Work Product” has the meaning set forth in Section 6.1(a).
“Reorganized PublicCo” means Capstone Green Energy Holdings, Inc. (f/k/a Capstone Turbine International, Inc.), a Delaware corporation.
“Requested Services” has the meaning set forth in Section 2.5.
“Retained Information” has the meaning set forth in Section 4.4.
“SA Coordinators” has the meaning set forth in Section 2.4.
“Sales Taxes” has the meaning set forth in Section 3.4(a).
“Service Consent” has the meaning set forth in Section 2.6.
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“Service Fees” has the meaning set forth in Section 3.1
“Service Periods” has the meaning set forth in Section 2.1.
“Service Schedules” has the meaning set forth in Section 2.1.
“Services” has the meaning set forth in Section 2.1.
“Systems” has the meaning set forth in Section 5.5.
“Term” has the meaning set forth in Section 4.1.
“Third-Party Costs” has the meaning set forth in Section 3.1.
“Trademark License Agreement” has the meaning set forth in Section 6.2.
“Transaction Support Agreement” means the transaction support agreement, dated September 28, 2023, by and among Reorganized PublicCo and Broad Street Credit Holdings LLC.
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5. | Confidential Information. |
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6. | Intellectual Property and Data Privacy. |
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7. | Indemnification. |
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Notices to Reorganized PrivateCo:
Capstone Distributor Support Services Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Dallas, TX 75201
Attention: Xxxx Xxxxxx
Email: Xxxx.Xxxxxx@xx.xxx
with a copy to (which shall not constitute notice): Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP
One Liberty Plaza
New York, NY 10006
Attention: Xxxx X’Xxxx Xxxxx: xxxxxx@xxxx.xxx
Notices to Capstone:
Capstone Green Energy LLC
00000 Xxxxx Xxxxxx
Xxx Xxxx, CA 91406
Attention: Xxxx Xxxxx
Email: xxxxxx@xxxxxxxxxx.xxx
with a copy to (which shall not constitute notice): Xxxxxx Xxxxxx Xxxxxxxx LLP
000 Xxxx Xxxxxx Xxxxxx
Chicago, Il 60661
Attention: Xxxx X. Xxxx, Esq
Email: xxxx.xxxx@xxxxxx.xxx
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[Signature Pages Follow]
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The Parties have caused this Services Agreement to be executed by their respective duly authorized representatives as of the Effective Date.
CAPSTONE GREEN ENERGY LLC
a Delaware limited liability company
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Executive Vice President, Chief
Financial Officer and Secretary
CAPSTONE DISTRIBUTOR SUPPORT SERVICES CORPORATION (F/K/A CAPSTONE GREEN ENERGY CORPORATION)
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Director
[Signature Page to Services Agreement]
SCHEDULE A
ONGOING SERVICES
1. FINANCE AND OPERATIONS SERVICES
Item | Service Area | Service Description |
A1.01 | Accounts Payable | ●Xxxxxxxx will effectively act as an outsourced accounts payable function to Reorganized PrivateCo and carry out all accounts payable activities including receiving, recording, tracking, validating, and paying vendor invoices. ●Capstone will carry out these activities using its systems, processes, and people associated with its own day-to-day accounts payable function. ●Capstone will complete vendor payments relating to Reorganized PrivateCo from Reorganized PrivateCo bank accounts or will receive reimbursement for vendor payments when it invoices Reorganized PrivateCo for the Service Fees. |
A1.02 | Accounts Receivable and Billing | ●Capstone will manage all billing related activities including calculating, reviewing, producing and generating invoices in relation to the services that Reorganized PrivateCo provides, including any fees for the provision of distributor support services such as those described in section 3.1.7 of Capstone’s form of distributor agreement. ●Capstone will effectively act as an outsourced accounts receivable function to Reorganized PrivateCo and carry out all accounts receivable activities including calculating, producing, issuing, reconciling and collecting customer/distributor invoices. ●For customers/distributors who have contracted directly with Reorganized PrivateCo, Xxxxxxxx will carry out collection activities but such customers/distributors will be directed to pay funds directly to bank accounts owned and under the control of Reorganized PrivateCo. This relates to any amounts which Reorganized PrivateCo is entitled to receive directly from customer/distributors as described in Section 3.1.7 of Capstone’s form of distributor agreement. ●For customers/distributors who have not contracted directly with Reorganized PrivateCo, Xxxxxxxx will carry out collection activities with respect to any fees for the provision of distributor support services and such customers/distributors will pay funds on account of such services to Capstone. Capstone will promptly remit such funds to Reorganized PrivateCo following receipt from such customers/distributor, or off-set such funds against Service Fees, as agreed between Capstone and Reorganized PrivateCo. |
A1.03 | Banking and Treasury | ●Xxxxxxxx will support Reorganized PrivateCo with establishing, monitoring and managing bank accounts that are separate from Capstone bank accounts. |
A1.04 | Inventory, Consumables, Office Supplies, and Printing | ●Xxxxxxxx will carry out the ordering of inventory, consumables, office supplies, and printing, as reasonably requested by Reorganized PrivateCo, following the processes for vendor payments noted under A1.01 Accounts Payable. |
A1.05 | Accounting | ●Xxxxxxxx will carry out accounting and finance related activities, including maintaining the companies accounting records, providing general bookkeeping services, reconciling and maintaining financial records. ●Access to Reorganized PrivateCo accounting records that are maintained by Capstone will be available and information will be provided as soon as reasonably practicable following request of Reorganized PrivateCo employees, leadership, officers or shareholders. |
A1.06 | Books and Records | ●Xxxxxxxx will hold certain books and records including historical and future records relating to Reorganized PrivateCo, which shall not include organizational documents and capitalization records of Reorganized PrivateCo. ●Access to Reorganized PrivateCo books and records that are maintained by Xxxxxxxx will be available and information will be provided as soon as reasonably practicable following request of Reorganized PrivateCo employees, leadership, officers or shareholders. |
Schedule A
A1.07 | Fixed Assets, Physical Goods, Inventory or other Stock and Tangible Assets | ● Capstone will provide storage and security for fixed assets, physical goods, inventory, stock or other tangible fixed assets owned by Reorganized PrivateCo. ● Reorganized PrivateCo may request access to and use of assets with verbal or written notice. |
A1.08 | Payroll, Employee Benefits Administration and Employee Expense Reimbursement | ● Capstone will carry out all payroll and employee benefits administration related tasks for Reorganized PrivateCo employees. ● Capstone will seek to establish a sub-account structure under its own payroll processing system and maintain this account for Reorganized PrivateCo. ● Xxxxxxxx will seek to establish sub-accounts with the employee benefits administrators and maintain such accounts for Reorganized PrivateCo. ● Xxxxxxxx will manage review, approval and reimbursement of Reorganized PrivateCo employee expenses. Capstone will treat Reorganized PrivateCo employees as having the same expense policies and rules and Capstone has for its employees. |
A1.9 | Distributor Training | ● Capstone will develop, deliver, and maintain distributor training records, materials, courses and/or any other training or technical materials for distributors or customers in a manner consistent with Capstone’s business activities. ● Reorganized PrivateCo will support Capstone and distributors with delivery of these activities and services in a non-technical manner. This may include document design, structuring, and formatting, or other non-technical development of training and/or support services. |
A1.10 | Distributor Support | ● Capstone will provide support services to distributors, including technical support, sales support and/or any other forms of support requested from distributors to Reorganized PrivateCo. ● Reorganized PrivateCo will support Capstone and distributors with delivery of these activities and services in a non-technical manner. This may include document design, structuring, and formatting, or other non-technical development of training and/or support services. |
A1.11 | Trade Shows and Events | ● Reorganized PrivateCo will carry out activities relating to trade shows, events or other promotional activities. Xxxxxxxx will provide reasonably requested support and personnel for delivering and attending such events. |
A1.12 | Website | ● Capstone will be responsible for hosting, management and maintenance of the website and Reorganized PrivateCo employees will have access to update, develop, design and generally manage the Capstone website for the purposes of carrying out its marketing, promotional and brand development activities. |
A1.13 | Marketing Activities, Events and Marketing Materials | ● Xxxxxxxx will be responsible for the development of product catalogues but will work with Reorganized PrivateCo employees in respect of design. ● Capstone will support Reorganized PrivateCo through providing reasonably requested personnel, access to resources, systems and other general business tools so that Reorganized PrivateCo can carry out general marketing and promotional activities and fulfil its obligations to distributors generally. ● Reorganized PrivateCo will provide marketing, branding and promotional services and expertise for the benefit of the Capstone brand, Capstone, and the distributor network. Reorganized PrivateCo will support with the planning, administration, development and delivery or marketing events, trade events and other promotional activities and Capstone will support Reorganized PrivateCo with such activities, including the management and payment of vendors associated with such activities from Reorganized PrivateCo funds. |
A1.14 | Distributor Reimbursement Charges | ● Xxxxxxxx will calculate, validate and administer distributor reimbursement charges for all distributors and may add any amounts paid by Xxxxxxxx in respect of these charges to the Service Fee. |
A1.15 | Intellectual Property, Trademarks and Brand Names | ● Reorganized PrivateCo will hold the trademarks and logos for the Capstone brand and Reorganized PublicCo will pay $100,000.00 per annum for a limited license to the Capstone Trademarks, as more fully described in the Trademark License Agreement. |
A1.16 | Customer Data Management and Customer Relationship Management | ● Capstone will provide reasonably requested access to Reorganized PrivateCo to customer relationship management systems, records, tools, and databases. ● Reorganized PrivateCo will hold the license for the Customer Relationship Management Platform, Salesforce, and use this for managing leads, opportunities and general customer data. Further detail is provide in Schedule A item A2.02. |
Schedule A
A1.17 | Vendor Management | ● Capstone will maintain vendor records in its accounting and enterprise management system(s) on behalf of Reorganized PrivateCo and its vendors. |
A1.18 | Mail Processing, Freight and Shipping | ● Reorganized PrivateCo mail will be delivered to Xxxxxxxx’s office address and Capstone will receive inbound mail addressed to Reorganized PrivateCo. Mail items received by Capstone for Reorganized PrivateCo will be passed physically or digitally to Reorganized PrivateCo employees as soon as reasonably practicable after receipt. ● Capstone will support Reorganized PrivateCo with outbound shipping and freight requests. |
Schedule A
2. IT AND SOFTWARE
Item | Service Area | Service Description |
A2.01 | IT and Office Technology | ●Capstone will provide access and use of office IT equipment including printers, projectors, label machines, telephony devices, charging docks and stations, televisions, computer displays and other general office IT hardware. ●Xxxxxxxx will be responsible for maintaining and replenishing all such equipment to the extent reasonably required, except in the event such equipment is for the exclusive use of Reorganized PrivateCo. |
A2.02 | Software Licenses | ●Capstone will hold and pay for master licenses for the following software tools and provide access to Reorganized PrivateCo and its employees as needed: oCanva oJack Xxxxx International oExtreme Wraps oEquisolve oResource 4 Signs oCoForce oUPrinting oNashbox Studios oReaction Concepts oXibeo oUS Translations oMicrosoft Office This list may be refreshed from time to time and as Capstone acquires new software licenses that Reorganized PrivateCo employees need access to, access will be provided. ●Reorganized PrivateCo will hold and pay for master licenses for the following software tools and provide access to Capstone and its employees as needed: oSalesforce oWeb Chat (eMatrix) oEquisolve oAdobe oPandadoc |
A2.03 | IT Support | ●Capstone will provide general IT support services to Reorganized PrivateCo in the same manner that it provides to its own employees. Reorganized PrivateCo employees will follow the same processes for requesting IT support as Capstone employees. This will include support for IT assets that are owned by Reorganized PrivateCo. |
A2.04 | Networking, Network Security and Shared Networks | ●Capstone will have overall ownership and responsibility for the IT and network infrastructure and network used in operating the Capstone and Reorganized PrivateCo businesses. Capstone will maintain IT security for all IT devices including external and local network security such as VLAN, inbound firewalls, antivirus, virus detection and IDS/IPS. |
A2.05 | Mobile Phones | ●Capstone will provide mobile phones to applicable Reorganized PrivateCo employees in a manner consistent with that which Capstone provides mobile phones to its own employees. |
Schedule A
SCHEDULE B
TRANSITION SERVICES
Item | Service Area | Service Description |
B1.01 | Banking and Treasury | ●Capstone will manage the reconciliation and transfer of customer and distributor funds received into the existing pre-bankruptcy Reorganized PrivateCo bank accounts to the relevant new Capstone or new Reorganized PrivateCo bank accounts. ●Receipts relating to Distributor Support Services (DSS) fees from the selected distributors will be paid directly to a new Reorganized PrivateCo bank account. ●Capstone will instruct distributors, customers and other parties making payment into the existing pre-bankruptcy Reorganized PrivateCo bank accounts to redirect funds. ●Capstone will complete the closure of the existing pre-bankruptcy Reorganized PrivateCo bank accounts six months from the Plan’s effective date. |
B1.02 | Payroll, Employee Benefits Administration and Employee Expense Reimbursement | ●Capstone will provide all payroll services to Reorganized PrivateCo staff through the existing payroll structure until such time that a new payroll account can be created and a separate system is created by Reorganized PrivateCo. ●Capstone will manage and maintain benefits packages for Reorganized PrivateCo employees under existing structures until such time that separate systems are created by Reorganized PrivateCo. |
Schedule B
SCHEDULE C
PREMISES AND PROPERTY SERVICES
Item | Service Area | Service Description |
C1.01 | Physical Office Space | ●Capstone will provide access to office space for all Reorganized PrivateCo employees, officers, shareholders, and other affiliates and will provide a minimum of three furnished office desks. ●Capstone is responsible for all maintenance, cleaning and security of the premises. ●Access to office space will be consistent with that provided to Capstone’s similarly situated employees. |
C1.02 | Building and Security | ●Capstone will manage all building security related matters. ●Reorganized PrivateCo employees, officers, shareholders and other affiliates will be granted reasonably requested access the Capstone office and any other locations where Reorganized PrivateCo employees carry out their business. |
C1.03 | Premises Insurance | ●Capstone will maintain building and contents insurance for the premises and contents. |
C1.04 | Other Insurance | ●Capstone will assist Reorganized PrivateCo in procuring and maintaining the necessary insurance policies for its business and employees. |
Schedule C