Subscription Terms
Exhibit
10.1
Subscription Terms
Ladies and Gentlemen:
The undersigned (the “Investor”) hereby confirms and agrees with you as follows:
1. The subscription terms set forth herein (the “Subscription”) are made as of the date
set forth below between Capstone Turbine Corporation, a Delaware corporation (the “Company”), and
the Investor.
2. As of the Closing (as defined below) and subject to the terms and conditions hereof,
the Company and the Investor agree that the Investor will purchase from the Company and the Company
will issue and sell to the Investor (i) such number of shares (the “Shares”) of common stock, par
value $0.001 per share, of the Company (the “Common Stock”), and (ii) such number of Warrants to
purchase Common Stock (the “Warrants” in the form attached hereto as Exhibit B, and
together with the Shares, the “Securities”) as is set forth on the signature page hereto (the
“Signature Page”) for a purchase price of $1.14 per unit. The Investor acknowledges that the
offering is not a firm commitment underwriting and that there is no minimum offering amount.
3. The completion of the purchase and sale of the Securities shall occur at a closing
(the “Closing”) that, in accordance with Rule 15c6-1 promulgated under the Securities Exchange Act
of 1934, as amended, is expected to occur on or about January 24, 2007. At the Closing, (a) the
Company shall cause its transfer agent to release to the Investor the number of Securities being
purchased by the Investor and (b) the aggregate purchase price for the Securities being purchased
by the Investor will be delivered by or on behalf of the Investor to the Company. The Investor
shall settle the Shares via Deposit/Withdrawal At Custodian (“DWAC”) and the provisions set forth
in Exhibit A hereto shall be incorporated herein by reference as if set forth fully herein.
4. The offering and sale of the Securities are being made pursuant to the Registration
Statement and the Prospectus (as such terms are defined below). The Investor acknowledges that the
Company intends to enter into subscriptions in substantially the same form as this Subscription
with certain other investors and intends to offer and sell (the “Offering”) up to an aggregate of
40,000,000 shares of Common Stock and Warrants to
purchase 20,000,000 shares of Common Stock pursuant to
the Registration Statement and Prospectus. The Investor acknowledges and agrees that there is no
minimum offering amount.
5. The Company has filed with the Securities and Exchange Commission (the “Commission”) a
prospectus (the “Base Prospectus”) and will promptly file a final prospectus supplement
(collectively, the “Prospectus”) with respect to the registration statement (File No. 333-128164)
reflecting the Offering, including all amendments thereto, the exhibits and any schedules thereto,
the documents otherwise deemed to be a part thereof or included therein by the rules and
regulations of the Commission (the “Rules and Regulations”) and any registration statement relating
to the Offering and filed pursuant to Rule 462(b) under the Rules and Regulations (collectively,
the “Registration Statement”), in conformity with the Securities Act of 1933, as amended (the
“Securities Act”), including Rule 424(b) thereunder. The Investor hereby confirms that it has had
full access to the Base Prospectus and the Company’s periodic reports and other information
incorporated by reference therein, and was able to read, review, download and print such materials.
6. The Company has entered into a Placement Agency Agreement (the “Placement Agreement”),
dated January 18, 2007 with X.X. Xxxxxxx & Sons, Inc. (the “Placement Agent”), which will act as
the Company’s placement agent with respect to the Offering and receive a fee in connection with the
sale of the Securities. The Placement Agreement contains certain representations and warranties of
the Company. The Company acknowledges and agrees that the Investor may rely on the representations
and warranties made by it to the Placement Agent in Section 3 of the Placement Agreement, to the
same extent as if such representations and warranties had been incorporated in full herein and made
directly to the Investor. Capitalized terms used, but not otherwise defined, herein shall have the
meanings ascribed to such terms in the Placement Agreement.
7. The obligations of the Company and the Investor to complete the transactions
contemplated by this Subscription shall be subject to the following:
a. The Company’s obligation to issue and sell the Securities to the Investor shall be subject
to: (i) the receipt by the Company of the purchase price for the Securities being purchased
hereunder as set forth on the Signature Page and (ii) the accuracy of the representations and
warranties made by the Investor and the fulfillment of those undertakings of the Investor to be
fulfilled prior to the Closing Date.
b. The Investor’s obligation to purchase the Securities will be subject to the condition that
the Placement Agent shall not have: (i) terminated the Placement Agreement pursuant to the terms
thereof or (ii) determined that the conditions to closing in the Placement Agreement have not been
satisfied.
8. The Company hereby makes the following representations, warranties and covenants to
the Investor:
a. The Company has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this Subscription and otherwise to carry out its obligations
hereunder. The execution and delivery of this Subscription by the Company and the consummation by
it of the transactions contemplated hereunder have been duly authorized by all necessary action on
the part of the Company. This Subscription has 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 as may be limited
by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws affecting the enforcement of creditors’ rights generally or by general principles of equity.
b. The Company shall (i) before the opening of trading on The Nasdaq Global Market on the next
trading day after the date hereof, issue one or more press releases disclosing all material aspects
of the transactions contemplated hereby and any preliminary financial information for the third
quarter ended December 31, 2006 contained in the Prospectus and (ii) make such other filings and
notices in the manner and time required by the Commission with respect to the transactions
contemplated hereby. Upon the issuance of one or more press releases
described in the immediately preceding sentence, the Investor will
not be in receipt of any material, non-public information provided to
it by the Company, its officers or directors. The Company shall not identify the Investor by name in any press release or
public filing, or otherwise publicly disclose the Investor’s name, without the Investor’s prior
written consent, unless required by law or the rules and regulations of any self-regulatory
organization which the Company or its securities are subject.
9. The Investor hereby makes the following representations, warranties and covenants to
the Company:
a. The Investor represents that (i) it has had full access to the Base Prospectus, the
Prospectus Supplement and the Company’s periodic reports and other information incorporated by
reference therein, prior to or in connection with its receipt of this Subscription, (ii) it is
knowledgeable,
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sophisticated and experienced in making, and is qualified to make, decisions with respect to
investments in securities representing an investment decision like that involved in the purchase of
the Securities, and (iii) it does not have any agreement or understanding, directly or indirectly,
with any person or entity to distribute any of the Securities.
b. The Investor has the requisite power and authority to enter into this Subscription and to
consummate the transactions contemplated hereby. The execution and delivery of this Subscription
by the Investor and the consummation by it of the transactions contemplated hereunder have been
duly authorized by all necessary action on the part of the Investor. This Subscription has been
executed by the Investor and, when delivered in accordance with the terms hereof, will constitute a
valid and binding obligation of the Investor enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights
generally and except as enforceability may be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at law).
c. The Investor understands that nothing in this Subscription or any other materials presented
to the Investor in connection with the purchase and sale of the Securities constitutes legal, tax
or investment advice. The Investor has consulted such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its purchase of
Securities.
d. Neither the Investor nor any Person acting on behalf of, or pursuant to any understanding
with or based upon any information received from, the Investor has, directly or indirectly, engaged
in any transactions in the securities of the Company (including, without limitation, any Short
Sales involving the Company’s securities) since the earlier to occur of (i) the time that the
Investor was first contacted by the Placement Agent or the Company with respect to the transactions
contemplated hereby and (ii) the date that is the tenth (10th) trading day prior to the date of
this Subscription. “Short Sales” include, without limitation, all “short sales” as defined in Rule
200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), whether or not against the box, and all types of direct and indirect stock
pledges, forward sale contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (including
on a total return basis), and sales and other transactions through non-U.S. broker dealers or
foreign regulated brokers. The Investor covenants that neither it, nor any Person acting on behalf
of, or pursuant to any understanding with or based upon any information received from, the Investor
will engage in any transactions in the securities of the Company (including Short Sales) prior to
the time that the transactions contemplated by this Subscription are publicly disclosed.
e. The Investor represents that, except as set forth below, (i) it has had no position, office
or other material relationship within the past three years with the Company or persons known to it
to be affiliates of the Company, (ii) it is not a, and it has no direct or indirect affiliation or
association with any, NASD member or an Associated Person (as such term is defined under the NASD
Membership and Registration Rules Section 1011) as of the date hereof, and (iii) neither it nor any
group of investors (as identified in a public filing made with the Commission) of which it is a
member, acquired, or obtained the right to acquire, 20% or more of the Common Stock (or securities
convertible or exercisable for Common Stock) or the voting power of the Company on a
post-transaction basis. Exceptions:
(If no exceptions, write “none.” If left blank, response will be deemed to be “none.”)
10.
Notwithstanding anything to the contrary contained herein, the
number of Warrant Shares that may be acquired by the Investor upon exercise of the Warrant shall be limited to the extent
necessary to insure
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that, following such exercise (or other issuance), the total number of shares of Common Stock then
beneficially owned by such Investor and its Affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Investor’s for purposes of Section 13(d) of
the Exchange Act, does not exceed 9.999% of the total number of issued and outstanding shares of
Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise).
For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
11. Notwithstanding any investigation made by any party to this Subscription, all
covenants, agreements, representations and warranties made by the Company and the Investor herein
will survive the execution of this Subscription, the delivery to the Investor of the Securities
being purchased and the payment therefor.
12. This Subscription may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.
13. In case any provision contained in this Subscription should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions
contained herein will not in any way be affected or impaired thereby.
14. This Subscription will be governed by, and construed in accordance with, the internal
laws of the State of New York, without giving effect to the principles of conflicts of law that
would require the application of the laws of any other jurisdiction.
15. This Subscription may be executed in one or more counterparts, each of which will
constitute an original, but all of which, when taken together, will constitute but one instrument,
and will become effective when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
16. The Investor acknowledges and agrees that such Investor’s receipt of the Company’s
counterpart to this Subscription shall constitute written confirmation of the Company’s sale of
Securities to such Investor.
17. In the event that the Placement Agreement is terminated by the Placement Agent
pursuant to the terms thereof, this Subscription shall terminate without any further action on the
part of the parties hereto.
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INVESTOR SIGNATURE PAGE
Number of Shares: ___________________________
Number of Warrants: __________________________
(such number to be equal to
50% of the number of Shares being purchased by the Investor)
Purchase
Price Per Security: $1.14
Aggregate Purchase Price: $ ___________________________
Please confirm that the foregoing correctly sets forth the agreement between us by signing in the
space provided below for that purpose.
Dated as
of: January 18, 2007
_________________________________________________
INVESTOR
By: ______________________________________
Print Name: ______________________________
Title: ___________________________________
Name that Securities are to be registered: ____________________________
Mailing Address: ____________________________
____________________________
____________________________
Taxpayer Identification Number: _________________________
Manner of Settlement of the Shares: DWAC (see Exhibit A for explanation and
instructions)
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Agreed and
Accepted this 18th day of January 2007:
CAPSTONE TURBINE CORPORATION
By: _______________________________________
Title: _______________________________________
Sales of the Securities purchased hereunder were made pursuant to a registration statement or in a
transaction in which a final prospectus would have been required to have been delivered in the
absence of Rule 172 promulgated under the Securities Act.
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EXHIBIT A
TO BE COMPLETED BY INVESTOR
SETTLING VIA DWAC
Delivery by electronic book-entry at The Depository Trust Company (“DTC”), registered in the
Investor’s name and address as set forth on the Signature Page of the Subscription to which this
Exhibit A is attached, and released by Mellon Investor Services LLC, the Company’s transfer
agent (the “Transfer Agent”), to the Investor at the Closing.
Name of DTC Participant (broker-dealer at |
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which the account or accounts to be credited |
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with the Shares are maintained) |
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DTC Participant Number |
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Name of Account at DTC Participant being credited with |
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the Shares |
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Account Number at DTC Participant being credited with |
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the Shares |
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| NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THE SUBSCRIPTION TO WHICH THIS EXHIBIT A IS ATTACHED BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL: |
| (I) | DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE SHARES ARE MAINTAINED TO SET UP A DEPOSIT/WITHDRAWAL AT CUSTODIAN (“DWAC”) INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND |
| (II) | REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SECURITIES BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT: |
PNC Bank New Jersey
ABA#: 000000000
Account Name: Xxxxxxxxxx Xxxxxxx Attorney Trust Special A/C IV
Account #: 8025720131
ABA#: 000000000
Account Name: Xxxxxxxxxx Xxxxxxx Attorney Trust Special A/C IV
Account #: 8025720131
Such funds shall be held in a non-interest bearing escrow pursuant to an escrow agreement
entered into between Xxxxxxxxxx Xxxxxxx PC (the “Escrow Agent”), the Placement Agent and the
Company (the “Escrow Agreement”) until the Closing and delivered by the Escrow Agent on behalf of
the Investor to the Company upon the satisfaction, in the sole judgment of the Placement Agent, of
the conditions set forth in Section 7(b) of the Subscription to which this Exhibit A is
attached. The Company and the Investor agree to indemnify and hold the Escrow Agent harmless from
and against any and all losses, costs, damages, expenses and claims (including, without limitation,
court costs and reasonable attorneys fees)
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(“Losses”) with respect to the funds held in escrow pursuant hereto or arising under the Escrow
Agreement, unless it is finally determined that such Losses resulted directly from the willful
misconduct or gross negligence of the Escrow Agent. Anything in this paragraph to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for any special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited to lost profits),
even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action.
Investor acknowledges that the Escrow Agent acts as counsel to the Placement Agent, and shall
have the right to continue to represent the Placement Agent, in any action, proceeding, claim,
litigation, dispute, arbitration or negotiation in connection with the Offering, and Investor
hereby consents thereto and waives any objection to the continued representation of the Placement
Agent by the Escrow Agent in connection therewith based upon the services of the Escrow Agent under
the Escrow Agreement, without waiving any duty or obligation the Escrow Agent may have to any other
person.
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EXHIBIT B
FORM OF WARRANT
