Exhibit 10.1
SUBSCRIPTION AGREEMENT
Capstone Turbine Corporation
21211 Nordhoff Street
Chatsworth, California 91311
Gentlemen:
     The undersigned (the “Investor”) hereby confirms its agreement with
Capstone Turbine Corporation, a Delaware corporation (the “Company”), as
follows:
     1. This Subscription Agreement, including the Terms and Conditions for
Purchase of Units attached hereto as Annex I (collectively, this “Agreement”) is
made as of the date set forth below between the Company and the Investor.
     2. The Company has authorized the sale and issuance to certain investors of
up to an aggregate of 14,450,868 units (the “Units”), subject to adjustment by
the Company’s Board of Directors or a committee thereof, with each Unit
consisting of (i) one share (the “Share,” collectively, the “Shares”) of its
common stock, par value $0.001 per share (the “Common Stock”), and (ii) one
warrant (the “Warrant,” collectively, the “Warrants”) to purchase 0.75 shares of
Common Stock (and the fractional amount being the “Warrant Ratio”), in
substantially the form attached hereto as Exhibit B, for a purchase price of
$0.865 per Unit (the “Purchase Price”). Units will not be issued or
certificated. The Shares and Warrants are immediately separable and will be
issued separately. The shares of Common Stock issuable upon exercise of the
Warrants are referred to herein as the “Warrant Shares” and, together with the
Units, the Shares and the Warrants, are referred to herein as the “Securities”).
     3. The offering and sale of the Units (the “Offering”) are being made
pursuant to (a) an effective Registration Statement on Form S-3, No. 333-156459
(the “Registration Statement”) filed by the Company with the Securities and
Exchange Commission (the “Commission”), including the Prospectus contained
therein (the “Base Prospectus”), (b) if applicable, certain “free writing
prospectuses” (as that term is defined in Rule 405 under the Securities Act of
1933, as amended (the “Act”)), that have been or will be filed, if required,
with the Commission and delivered to the Investor on or prior to the date hereof
(the “Issuer Free Writing Prospectus”), containing certain supplemental
information regarding the Units, the terms of the Offering and the Company,
(c) a Preliminary Prospectus Supplement (the “Preliminary Prospectus
Supplement”) containing certain supplemental information regarding the Units,
the Offering and the Company that will be filed with the Commission and
delivered to the Investor, and (d) a Prospectus Supplement (the “Prospectus
Supplement” and, together with the Base Prospectus, the “Prospectus”) containing
certain supplemental information regarding the Units and terms of the Offering
that will be filed with the Commission and delivered to the Investor (or made
available to the Investor by the filing by the Company of an electronic version
thereof with the Commission).
     4. The Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor the Units set
forth below for the aggregate purchase price set forth below. The Units shall be
purchased pursuant to the Terms and Conditions for Purchase of Units attached
hereto as Annex I and incorporated herein by this reference as if fully set
forth herein. The Investor acknowledges that the Offering is not being
underwritten by the Placement

 

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Agent (the “Placement Agent”) named in the Prospectus Supplement and that there
is no minimum offering amount.
     5. The manner of settlement of the Shares included in the Units purchased
by the Investor shall be as follows:
Delivery versus payment (“DVP”) through the Depository Trust Company (“DTC”)
(i.e., on the Closing Date, the Company shall instruct Mellon Investor Services
LLC, its “Transfer Agent”, to issue the Shares registered in the Investor’s name
and address as set forth below and released by the Transfer Agent to the
Investor through DTC at the Closing directly to the account(s) at Lazard Capital
Markets LLC (“LCM”) identified by the Investor; upon receipt of such Shares, LCM
shall promptly electronically deliver such Shares to the Investor, and
simultaneously therewith payment shall be made by LCM by wire transfer to the
Company). NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS
AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

  (I)   NOTIFY LCM OF THE ACCOUNT OR ACCOUNTS AT LCM TO BE CREDITED WITH THE
SHARES BEING PURCHASED BY SUCH INVESTOR, AND     (II)   CONFIRM THAT THE ACCOUNT
OR ACCOUNTS AT LCM TO BE CREDITED WITH THE SHARES BEING PURCHASED BY THE
INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE
UNITS BEING PURCHASED BY THE INVESTOR.

IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR
CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR
SETTLEMENT BY WAY OF DVP IN A TIMELY MANNER. IF THE INVESTOR DOES NOT DELIVER
THE AGGREGATE PURCHASE PRICE FOR THE UNITS OR DOES NOT MAKE PROPER ARRANGEMENTS
FOR SETTLEMENT IN A TIMELY MANNER, THE SHARES AND WARRANTS MAY NOT BE DELIVERED
AT CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING
ALTOGETHER.
     6. The executed Warrant shall be delivered in accordance with the terms
thereof.
     7. The Investor represents that, except as set forth below, (a) 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, (b) it
is not a member of the Financial Industry Regulatory Authority, Inc. or an
Associated Person (as such term is defined under the NASD Membership and
Registration Rules Section 1011) as of the Closing, and (c) neither the Investor
nor any group of Investors (as identified in a public filing made with the
Commission) of which the Investor is a part in connection with the Offering of
the Units, acquired, or obtained the right to acquire, 20% or more of the Common
Stock (or securities convertible into 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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     8. The Investor represents that it has received (or otherwise had made
available to it by the filing by the Company of an electronic version thereof
with the Commission) the Base Prospectus, dated February 4, 2009, which is a
part of the Company’s Registration Statement, the Preliminary Prospectus
Supplement, the documents incorporated by reference therein and any free writing
prospectus (collectively, the “Disclosure Package”), prior to or in connection
with the receipt of this Agreement. The Investor acknowledges that, prior to the
delivery of this Agreement to the Company, the Investor will receive certain
additional information regarding the Offering, including pricing information
(the “Offering Information”). Such information may be provided to the Investor
by any means permitted under the Act, including the Preliminary Prospectus
Supplement, Prospectus Supplement, a free writing prospectus and oral
communications.
     9. No offer by the Investor to buy Units will be accepted and no part of
the Purchase Price will be delivered to the Company until the Investor has
received the Offering Information and the Company has accepted such offer by
countersigning a copy of this Agreement, and any such offer may be withdrawn or
revoked, without obligation or commitment of any kind, at any time prior to the
Company (or Placement Agent on behalf of the Company) sending (orally, in
writing or by electronic mail) notice of its acceptance of such offer. An
indication of interest will involve no obligation or commitment of any kind
until the Investor has been delivered the Offering Information and this
Agreement is accepted and countersigned by or on behalf of the Company.
     10. The Company acknowledges that the only material, non-public information
relating to the Company it has provided to the Investor in connection with the
Offering prior to the date hereof is the existence of the Offering and certain
information included in the Preliminary Prospectus Supplement.
     11. For so long as any Warrants remain outstanding, the Company shall not,
in any manner, issue or sell any rights, warrants or options to subscribe for or
purchase Common Stock, or directly or indirectly convertible into or
exchangeable for Common Stock at a price which resets as a function of market
price of the Common Stock, unless the conversion, exchange or exercise price of
any such security cannot be less than the then applicable Exercise Price (as
defined in the Warrants) with respect to the Common Stock into which any Warrant
is exercisable (other than as a result in the ordinary course of business of the
issuance of Common Stock issued pursuant to the exercise of stock options under
the Company’s stock plans, the issuance of Common Stock under the Company’s
stock plans, and the issuance of Common Stock pursuant to employee stock
purchase plans)

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Number of Units: ______________________________
Purchase Price Per Unit: $________________________
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: May 4, 2009
        INVESTOR
      By:           Print Name:

      Title:           Address:

           

Agreed and Accepted
this 4th day of May, 2009:
CAPSTONE TURBINE CORPORATION

                By:           Title:               

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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF UNITS
     1. Authorization and Sale of the Units. Subject to the terms and conditions
of this Agreement, the Company has authorized the sale of the Units.
     2. Agreement to Sell and Purchase the Units; Placement Agent.
          2.1 At the Closing (as defined in Section 3.1), the Company will sell
to the Investor, and the Investor will purchase from the Company, upon the terms
and conditions set forth herein, the number of Units set forth on the last page
of the Agreement to which these Terms and Conditions for Purchase of Units are
attached as Annex I (the “Signature Page”) for the aggregate purchase price
therefor set forth on the Signature Page.
          2.2 The Company proposes to enter into substantially this same form of
Subscription Agreement with certain other investors (the “Other Investors”) and
expects to complete sales of Units to them. The Investor and the Other Investors
are hereinafter sometimes collectively referred to as the “Investors,” and this
Agreement and the Subscription Agreements executed by the Other Investors are
hereinafter sometimes collectively referred to as the “Agreements.”
          2.3 Investor acknowledges that the Company has agreed to pay Lazard
Capital Markets LLC (the “Placement Agent”) a fee (the “Placement Fee”) in
respect of the sale of Units to the Investor.
          2.4 The Company has entered into a Placement Agent Agreement, dated
May 4, 2009 (the “Placement Agreement”), with the Placement Agent that contains
certain representations, warranties, covenants and agreements of the Company
that may be relied upon by the Investor, which shall be a third party
beneficiary thereof.
     3. Closing and Delivery of the Shares, Warrants and Funds.
          3.1 Closing. The completion of the purchase and sale of the Units (the
“Closing”) shall occur at a place and time (the “Closing Date”) to be specified
by the Company and the Placement Agent, and of which the Investors will be
notified in advance by the Placement Agent, in accordance with Rule 15c6-1
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). At the Closing, (a) the Company shall cause the Transfer Agent to deliver
to the Investor the number of Shares set forth on the Signature Page registered
in the name of the Investor or, if so indicated on the Investor Questionnaire
attached hereto as Exhibit A, in the name of a nominee designated by the
Investor, (b) the Company shall cause to be delivered to the Investor a Warrant
to purchase a number of whole Warrant Shares determined by multiplying the
number of Shares set forth on the signature page by the Warrant Ratio and
rounding down to the nearest whole number and (c) the aggregate purchase price
for the Units being purchased by the Investor will be delivered by or on behalf
of the Investor to the Company.

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          3.2 Conditions to the Obligations of the Parties.
               (a) Conditions to the Company’s Obligations. The Company’s
obligation to issue and sell the Units to the Investor shall be subject to:
(i) the receipt by the Company of the purchase price for the Units 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) Conditions to the Investor’s Obligations. The Investor’s
obligation to purchase the Units will be subject to the accuracy of the
representations and warranties made by the Company and the fulfillment of those
undertakings of the Company to be fulfilled prior to the Closing Date, including
without limitation, those contained in the Placement Agreement, and 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 the closing in the Placement Agreement have not been satisfied. The
Investor’s obligations are expressly not conditioned on the purchase by any or
all of the Other Investors of the Units that they have agreed to purchase from
the Company. The Investor understands and agrees that, in the event that the
Placement Agent in its sole discretion determines that the conditions to closing
in the Placement Agreement have not been satisfied or if the Placement Agent
Agreement may be terminated for any other reason permitted by such Agreement,
then the Placement Agent may, but shall not be obligated to, terminate such
Agreement, which shall have the effect of terminating this Subscription
Agreement pursuant to Section 14 below.
          3.3 Delivery of Funds.
               (a) Delivery Versus Payment through The Depository Trust Company.
The Investor elects to settle the Shares purchased by such Investor by delivery
versus payment through DTC. No later than one (1) business day after the
execution of this Agreement by the Investor and the Company, the Investor shall
confirm that the account or accounts at the Placement Agent to be credited with
the Units being purchased by the Investor have a minimum balance equal to the
aggregate purchase price for the Units being purchased by the Investor.
          3.4 Delivery of Shares.
               (a) Delivery Versus Payment through The Depository Trust Company.
The Investor elects to settle the Shares purchased by such Investor by delivery
versus payment through DTC. No later than one (1) business day after the
execution of this Agreement by the Investor and the Company, the Investor shall
notify the Placement Agent of the account or accounts at the Placement Agent to
be credited with the Shares being purchased by such Investor. On the Closing
Date, the Company shall deliver the Shares to the Investor through DTC directly
to the account(s) at the Placement Agent identified by Investor and
simultaneously therewith payment shall be made by the Placement Agent by wire
transfer to the Company.
     4. Representations, Warranties and Covenants of the Investor.
     The Investor acknowledges, represents and warrants to, and agrees with, the
Company and the Placement Agent that:

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          4.1 The Investor (a) is knowledgeable, sophisticated and experienced
in making, and is qualified to make decisions with respect to, investments in
shares presenting an investment decision like that involved in the purchase of
the Units, including investments in securities issued by the Company and
investments in comparable companies, (b) has answered all questions on the
Signature Page and the Investor Questionnaire and the answers thereto are true
and correct as of the date hereof and will be true and correct as of the Closing
Date and (c) in connection with its decision to purchase the number of Units set
forth on the Signature Page, has received and is relying only upon the
Disclosure Package and the documents incorporated by reference therein and the
Offering Information..
          4.2 (a) No action has been or will be taken in any jurisdiction
outside the United States by the Company or the Placement Agent that would
permit an offering of the Units, or possession or distribution of offering
materials in connection with the issue of the Securities in any jurisdiction
outside the United States where action for that purpose is required, (b) if the
Investor is outside the United States, it will comply with all applicable laws
and regulations in each foreign jurisdiction in which it purchases, offers,
sells or delivers Securities or has in its possession or distributes any
offering material, in all cases at its own expense and (c) the Placement Agent
is not authorized to make and has not made any representation, disclosure or use
of any information in connection with the issue, placement, purchase and sale of
the Units, except as set forth or incorporated by reference in the Base
Prospectus, the Preliminary Prospectus Supplement, the Prospectus Supplement or
any free writing prospectus.
          4.3 (a) The Investor has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (b) this Agreement constitutes 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)
and except as to the enforceability of any rights to indemnification or
contribution that may be violative of the public policy underlying any law, rule
or regulation (including any federal or state securities law, rule or
regulation).
          4.4 The Investor understands that nothing in this Agreement, the
Preliminary Prospectus Supplement, the Prospectus, the Disclosure Package, the
Offering Information or any other materials presented to the Investor in
connection with the purchase and sale of the Units constitutes legal, tax or
investment advice. The Investor has consulted such legal, tax and investment
advisors and made such investigation as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of Units. The Investor
also understands that there is no established public trading market for the
Warrants being offered in the Offering, and that the Company does not expect
such a market to develop. In addition, the Company does not intend to apply for
listing the Warrants on any securities exchange. Without an active market, the
liquidity of the Warrants will be limited.
          4.5 Since the date on which the Placement Agent first contacted the
Investor about the Offering, the Investor has not disclosed any information
regarding the Offering to any third parties (other than its legal, accounting
and other advisors) and has not engaged in any purchases or sales involving the
securities of the Company (including, without limitation, any Short Sales
involving the Company’s securities). The Investor covenants that it will not
engage in any purchases or sales

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involving the securities of the Company (including Short Sales) prior to the
time that the transactions contemplated by this Agreement are publicly
disclosed. The Investor agrees that it will not use any of the Securities
acquired pursuant to this Agreement to cover any short position in the Common
Stock if doing so would be in violation of applicable securities laws. For
purposes hereof, “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 sales 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-US broker dealers or foreign regulated brokers.
     5. Survival of Representations, Warranties and Agreements; Third Party
Beneficiary. Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements, representations
and warranties made by the Company and the Investor herein will survive the
execution of this Agreement, the delivery to the Investor of the Shares and
Warrants being purchased and the payment therefor. The Placement Agent and
Lazard Fréres & Co. shall be third party beneficiaries with respect to the
representations, warranties and agreements of the Investor in Section 4 hereof.
     6. Notices. All notices, requests, consents and other communications
hereunder will be in writing, will be mailed (a) if within the domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile or (b) if delivered
from outside the United States, by International Federal Express or facsimile,
and (c) will be deemed given (i) if delivered by first-class registered or
certified mail domestic, three business days after so mailed, (ii) if delivered
by nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days after so
mailed and (iv) if delivered by facsimile, upon electronic confirmation of
receipt and will be delivered and addressed as follows:
               (a) if to the Company, to:
Capstone Turbine Corporation
21211 Nordhoff Street
Chatsworth, California 91311
Attention: Chief Financial Officer
Facsimile: (818) 734-5321
with copies to:
Waller Lansden Dortch & Davis, LLP
511 Union Street, Suite 2700
Nashville, Tennessee 37219
Attention: J. Chase Cole, Esq.
Facsimile: (615) 244-6804
     (b) if to the Investor, at its address on the Signature Page hereto, or at
such other address or addresses as may have been furnished to the Company in
writing.

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7. Changes. This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Investor.
8. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and will not be deemed to be part of
this Agreement.
9. Severability. In case any provision contained in this Agreement 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.
10. Governing Law. This Agreement 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.
11. Counterparts. This Agreement may be executed in two 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. The Company and the Investor acknowledge and agree that the
Company shall deliver its counterpart to the Investor along with the Prospectus
Supplement (or the filing by the Company of an electronic version thereof with
the Commission).
12. Confirmation of Sale. The Investor acknowledges and agrees that such
Investor’s receipt of the Company’s signed counterpart to this Agreement,
together with the Prospectus Supplement (or the filing by the Company of an
electronic version thereof with the Commission), shall constitute written
confirmation of the Company’s sale of Units to such Investor.
13. Press Release. The Company and the Investor agree that the Company shall,
prior to the opening of the financial markets in New York City on the business
day immediately after the date hereof, (a) issue a press release announcing the
Offering and disclosing all material information regarding the Offering and
(b) file a Current Report on Form 8-K with the Securities and Exchange
Commission including a form of this Agreement and a form of Warrant as exhibits
thereto.
14. Termination. In the event that the Placement Agreement is terminated by the
Placement Agent pursuant to the terms thereof, this Agreement shall terminate
without any further action on the part of the parties hereto.

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Exhibit A
CAPSTONE TURBINE CORPORATION
INVESTOR QUESTIONNAIRE
     Pursuant to Section 3 of Annex I to the Agreement, please provide us with
the following information:

         
1.
  The exact name that your Shares and Warrants are to be registered in. You may
use a nominee name if appropriate:   _____________________
 
       
2.
  The relationship between the Investor and the registered holder listed in
response to item 1 above:   _____________________
 
       
3.
  The mailing address of the registered holder listed in response to item 1
above:   _____________________
 
       
4.
  The Social Security Number or Tax Identification Number of the registered
holder listed in the response to item 1 above:   _____________________
 
       
5.
  Name of DTC Participant (broker-dealer at which the account or accounts to be
credited with the Shares are maintained):   _____________________
 
       
6.
  DTC Participant Number:   _____________________
 
       
7.
  Name of Account at DTC Participant being credited with the Shares:  
_____________________
 
       
8.
  Account Number at DTC Participant being credited with the Shares:  
_____________________

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EXHIBIT B
FORM OF WARRANT