Subscription Agreement
Exhibit 10
Ladies and Gentlemen:
The undersigned (the “Investor”) hereby confirms and agrees with you as follows:
1. The subscription terms set forth herein (this “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) the number of shares (the “Shares”) of common stock, par
value $0.001 per share, of the Company (the “Common Stock”) set forth on the signature page hereto
(the “Signature Page”), and (ii) Warrants in the form attached hereto as Exhibit B (the
“Warrants”, and together with the Shares, the “Securities”), to purchase the number of shares of
Common Stock set forth on the Signature Page for a purchase price of $14.90 per unit. Each unit
consists of ten Shares and Warrants to purchase three shares of Common Stock. 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, (the “Exchange Act”) is expected to occur on or about September 23, 2008. The
date on which this Subscription actually closes is referred to herein as the “Closing Date”. At
the Closing, (a) the Company shall release or cause its transfer agent to release to the Investor
the number of Securities being purchased by the Investor and (b) the Investor will deliver to the
Company the aggregate purchase price for the Securities being purchased by the Investor (the
“Purchase Price”). 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. If the Investor delivers the Purchase Price to the Company
prior to the Closing Date, then (i) the Company shall promptly deposit and hold the Purchase Price
in a separate interest bearing or money market account (the “Account”) of the Company at a
financial institution of nationally recognized standing, free and clear of all liens, security
interests, pledges and other encumbrances, until the Closing occurs (and the Company agrees that,
while in the Account, the Purchase Price shall remain the property of the Investor) and (ii) the
Company will immediately return the Purchase Price to the Investor (by wire transfer if the
Investor shall have provided appropriate wire transfer instructions), together with a pro rata
portion of any interest or dividends earned on the funds in the Account for each day while the
Purchase Price received from such Investor was in the Account, if the Closing does not occur on or
before September 26, 2008 or the Placement Agreement (as defined below) is terminated, unless
otherwise agreed in writing by the Investor.
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 third-party investors and intends to offer and sell (the “Offering”) up to an
aggregate of 21,485,660 shares of Common Stock and Warrants to purchase up to an aggregate of
6,445,698 shares of Common Stock pursuant to the Registration Statement and Prospectus. The
Investor acknowledges and agrees that there is no minimum offering amount. If the Company enters
into a subscription with a third-party investor in this Offering on terms and conditions that are
more favorable than the terms and conditions set forth herein, the Company agrees to amend this
Subscription to reflect such terms and conditions.
5. The Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement (File No.
333-128164), including all amendments thereto, if any, the exhibits and any schedules thereto and the documents otherwise deemed to be a part thereof or included therein by the rules and regulations of the Commission (collectively, and including any related registration statement that the Company may file pursuant to Rule 462(b) under the Securities Act (as defined below) to register a portion of the Securities, the “Registration Statement”), in conformity with the Securities Act of 1933, as amended (the “Securities Act”), and the Company has prepared or will prepare, as the case may be, (i) the preliminary prospectus supplement dated September 16, 2008 (the “Preliminary Prospectus Supplement”) and the related prospectus dated September 14, 2005 (the “Base Prospectus” and, together with the Preliminary Prospectus Supplement, the “Preliminary Prospectus”), (ii) the Preliminary Term Sheet dated September 15, 2008 relating to the Offering (including the exhibits thereto, the “Preliminary Term Sheet”), (iii) the Final Term Sheet dated September 17, 2008 relating to the Offering (including the exhibits thereto, the “Final Term Sheet”) and (iv) a final prospectus supplement and related base prospectus (together, the “Prospectus”).
333-128164), including all amendments thereto, if any, the exhibits and any schedules thereto and the documents otherwise deemed to be a part thereof or included therein by the rules and regulations of the Commission (collectively, and including any related registration statement that the Company may file pursuant to Rule 462(b) under the Securities Act (as defined below) to register a portion of the Securities, the “Registration Statement”), in conformity with the Securities Act of 1933, as amended (the “Securities Act”), and the Company has prepared or will prepare, as the case may be, (i) the preliminary prospectus supplement dated September 16, 2008 (the “Preliminary Prospectus Supplement”) and the related prospectus dated September 14, 2005 (the “Base Prospectus” and, together with the Preliminary Prospectus Supplement, the “Preliminary Prospectus”), (ii) the Preliminary Term Sheet dated September 15, 2008 relating to the Offering (including the exhibits thereto, the “Preliminary Term Sheet”), (iii) the Final Term Sheet dated September 17, 2008 relating to the Offering (including the exhibits thereto, the “Final Term Sheet”) and (iv) a final prospectus supplement and related base prospectus (together, the “Prospectus”).
6. The Company has entered into a Placement Agency Agreement (the “Placement Agreement”),
dated September 17, 2008 with Wachovia Capital Markets, LLC (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, warranties, covenants and agreements made by it in Sections 3 and 4 of the
Placement Agreement, to the same extent as if such representations, warranties, covenants and
agreements had been set forth in full herein and made directly to the Investor.
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.
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(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 (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 or 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 to 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 or received copies of
the Registration Statement, including the prospectus therein, it has received copies of the
Preliminary Term Sheet, Preliminary Prospectus and the Final Term Sheet and it has had full
access to or received copies of Company’s periodic reports and other information filed with
the Commission and incorporated or deemed to be incorporated by reference in any of the
foregoing, prior to or in connection with its receipt of this Subscription, (ii) it is
knowledgeable, 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.
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(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 duly 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 or entity 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 (as defined below) involving the Company’s
securities) since the time that the Investor was first contacted by the Placement Agent or
the Company with respect to the transactions contemplated hereby. “Short Sales” include,
without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation
SHO under 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 or entity 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. The Investor agrees
that it will not use any of the Securities acquired pursuant to this Subscription to cover
any Short Sale in the Common Stock in violation of applicable securities laws.
(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 or entities known to it to be affiliates of the Company, (ii) it is not a member
of the Financial Industry Regulatory Authority Inc. (“FINRA”) or an associated person (as
such term is defined under the FINRA Membership and Registration Rules Section 1011) of any
such member 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 outstanding
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.”)
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10. Notwithstanding anything to the contrary contained herein, the number of Warrants that may
be acquired by the Investor pursuant to this Subscription shall be limited to the extent necessary
to insure that, following the exercise thereof (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Investor and its affiliates and any other persons or
entities 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.
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. 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.
17. The Placement Agent is an intended third party beneficiary of the representations,
warranties, covenants and agreements of the Company and the Investor set forth herein.
18. If any material breach by the Company of any representation, warranty, covenant or
agreement in the Placement Agreement occurs, the Company will send a written notice to the
Investor that describes such breach in reasonable detail, promptly after gaining knowledge
thereof.
[Signature Page Follows]
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INVESTOR SIGNATURE PAGE
Number of Shares: ____________
Warrants to purchase __________________ shares of Common Stock
(such number to be equal to 30% of the number of Shares being purchased by the Investor)
Purchase Price Per Unit: $14.90
(each unit consists of ten shares of Common Stock and Warrants to purchase three shares of Common Stock)
(each unit consists of ten shares of Common Stock and Warrants to purchase three shares of Common Stock)
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: September 17, 2008
| INVESTOR | ||
| By: |
| Print Name: |
| Title: |
| Name in which 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 17th day of September 2008:
CAPSTONE TURBINE CORPORATION
| By: | ||||
| Name: | ||||
| Title: | ||||
Sales of the Securities purchased hereunder will be 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
The Shares will be delivered 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 ___where the account or accounts to be credited with the Shares are maintained) |
||
DTC Participant Number |
||
Name of Account at DTC Participant being credited with the Shares |
||
Account Number at DTC Participant being credited with the Shares |
||
NO LATER THAN ONE 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: |
| Bank Name: | Mellon Bank, Mellon Financial Corporation | |||
| Xxx Xxxxxx Xxxxxx | ||||
| Xxxxxxxxxx, XX 00000-000 XXX | ||||
| ABA#: 0000-0000-0 | ||||
| Swift Code: XXXXXX0X | ||||
| Account Name: Merrill, Lynch, Xxxxxx, Xxxxxx & Xxxxx | ||||
| Account No.: 000-0000-00 | ||||
| For Further Credit To: Capstone Turbine Corporation | ||||
| Account No.: 88Q07307 | ||||
A-1
EXHIBIT B
FORM OF WARRANT
FORM OF WARRANT
B-1
