Exhibit 4
CAPSTONE
TURBINE CORPORATION
WARRANT
TO PURCHASE COMMON STOCK
Warrant No.:
Number of Shares
of Common Stock:
Date of Issuance: September 17,
2009 (“Issuance Date”)
Capstone Turbine
Corporation, a Delaware corporation (the “Company”),
hereby certifies that, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,
,
the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms
set forth below, to purchase from the Company, at the Exercise Price (as
defined below) then in effect, upon surrender of this Warrant to Purchase
Common Stock (including any Warrants to Purchase Common Stock issued in
exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the Issuance Date,
but not after 11:59 p.m., New York time, on the Expiration Date (as
defined below),
( )
fully paid nonassessable shares of Common Stock (as defined below) (the “Warrant
Shares”). Except as otherwise
defined herein, capitalized terms in this Warrant shall have the meanings set
forth in Section 15. This Warrant
is the Warrant to purchase Common Stock issued pursuant to (i) that
certain Warrant Exercise Agreement (the “Agreement”),
dated as of the Issuance Date, by and between the Company and the Holder, and (ii) the
Company’s Registration Statement on Form S-3 (File number 333-156459) (the
“Registration Statement”).
1. EXERCISE OF WARRANT.
(a) Mechanics of Exercise.
Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder on any Business Day on or after the Issuance Date and
on or before the Expiration Date, in whole or in part, by (i) delivery of
a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election
to exercise this Warrant and (ii) (A) payment to the Company of an
amount equal to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or by
wire transfer of immediately available funds or (B) provided the
conditions for cashless exercise set forth in Section 1(d) are
satisfied, by notifying the Company that this Warrant is being exercised
pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver
the original Warrant in order to effect an exercise hereunder, but shall
deliver the original Warrant within five Business Days thereafter. Execution and delivery of the Exercise Notice
with respect to less than all of the Warrant Shares shall have the same effect
as cancellation of the original Warrant and issuance of a new Warrant
evidencing the right to purchase the remaining number of Warrant Shares. On or before the first (1st) Business
Day following the date on which the Company has received each of the Exercise
Notice and the Aggregate Exercise Price (or notice of a Cashless Exercise) (the
“Exercise Delivery Documents”),
the Company shall transmit by facsimile an acknowledgment of confirmation of
receipt of the Exercise Delivery Documents to the Holder and the Company’s
transfer agent (the “Transfer Agent”). On or before the third (3rd) Business
Day following the date on which the Company has received all of the Exercise
Delivery Documents (the “Share Delivery Date”),
the Company shall (X) provided that the Transfer Agent is participating in
The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program, upon the request of the Holder,
credit such aggregate number of Warrant Shares to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account
with DTC through its Deposit Withdrawal Agent Commission system, or (Y) if
the Transfer Agent is not
participating in the DTC
Fast Automated Securities Transfer Program, issue and dispatch by overnight
courier to the address as specified in the Exercise Notice, a certificate,
registered in the Company’s share register in the name of the Holder or its
designee, for the number of shares of Common Stock to which the Holder is
entitled pursuant to such exercise. Upon
delivery of the Exercise Delivery Documents, the Holder shall be deemed for all
corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date
such Warrant Shares are credited to the Holder’s DTC account or the date of
delivery of the certificates evidencing such Warrant Shares, as the case may
be. If this Warrant is submitted in
connection with any exercise pursuant to this Section 1(a) and the
number of Warrant Shares represented by this Warrant submitted for exercise is
greater than the number of Warrant Shares being acquired upon an exercise, then
the Company shall as soon as practicable and in no event later than three
Business Days after any exercise and at its own expense, issue a new Warrant
(in accordance with Section 7(d)) representing the right to purchase the
number of Warrant Shares purchasable immediately prior to such exercise under
this Warrant, less the number of Warrant Shares with respect to which this
Warrant is exercised. No fractional
shares of Common Stock are to be issued upon the exercise of this Warrant, but
rather the number of shares of Common Stock to be issued shall be rounded down
to the nearest whole number; provided, however, that if any fractional share of
Common Stock would otherwise be deliverable upon such exercise, the Company, in
lieu of delivering such fractional share, shall pay to the Holder an amount in
cash equal to the Market Price of such fractional share of Common Stock on the
date of exercise. The Company shall pay any and all documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the
exercise of this Warrant. The Holder shall be responsible for any income taxes
due under federal, state or other law, if any such tax is due.
(b) Exercise Price.
For purposes of this Warrant, “Exercise
Price” means $1.42, subject to adjustment as provided herein.
(c) Company’s Failure to Timely Deliver
Securities. If the Company shall fail for any reason or
for no reason to issue to the Holder within three (3) Business Days of
receipt of the Exercise Delivery Documents in compliance with the terms of this
Section 1, a certificate for the number of shares of Common Stock to which
the Holder is entitled and register such shares of Common Stock on the Company’s
share register or to credit the Holder’s balance account with DTC for such
number of shares of Common Stock to which the Holder is entitled upon the
Holder’s exercise of this Warrant, and if on or after such Trading Day the
Holder purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of shares of Common
Stock issuable upon such exercise that the Holder anticipated receiving from
the Company (a “Buy-In”), then the
Company shall, within three (3) Business Days after the Holder’s request
and in the Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such Warrant Shares) shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder
a certificate or certificates representing such Warrant Shares and pay cash to
the Holder in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Common Stock, times (B) the
Closing Bid Price on the date of exercise.
(d) Cashless Exercise. Notwithstanding anything contained
herein to the contrary, if a registration statement covering the Warrant Shares
that are the subject of the Exercise Notice, or an exemption from registration, is not available
for the resale of such Warrant Shares (the “Unavailable
Warrant Shares”), the Holder may, in its sole discretion, exercise
this Warrant in whole or in part and, in lieu of making the cash payment
otherwise contemplated to be made to
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the Company upon such
exercise in payment of the Aggregate Exercise Price, elect instead to receive
upon such exercise the “Net Number” of shares of Common Stock determined
according to the following formula (a “Cashless
Exercise”):
Net Number = (A
x B) - (A x C)
B
For purposes of
the foregoing formula:
A= the total number of
shares with respect to which this Warrant is then being exercised.
B= the arithmetic average
of the Closing Sale Prices of the shares of Common Stock for the five (5) consecutive
Trading Days ending on the date immediately preceding the date of the Exercise
Notice.
C= the Exercise
Price then in effect for the applicable Warrant Shares at the time of such
exercise.
(e) Rule 144.
For purposes of Rule 144(d) promulgated under the Securities
Act, as in effect on the date hereof, assuming the Holder is not an affiliate
of the Company, it is intended that the Warrant Shares issued in a Cashless
Exercise shall be deemed to have been acquired by the Holder, and the holding
period for the Warrant Shares shall be deemed to have commenced, on the date
this Warrant was originally issued pursuant to the Agreement.
(f) Disputes. In the case
of a dispute as to the determination of the Exercise Price or the arithmetic
calculation of the Warrant Shares, the Company shall promptly issue to the
Holder the number of Warrant Shares that are not disputed.
(g) Beneficial Ownership.
The Holder shall not have the right to exercise this Warrant, to the
extent that after giving effect to such exercise, the Holder (together with the
Holder’s affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of
Common Stock outstanding immediately after giving effect to such exercise. The
Company shall be entitled to rely on receipt of an Exercise Notice as an
indication that Holder will not, pursuant to such exercise, exceed the Maximum
Percentage. For purposes of the foregoing sentence, the aggregate number of
shares of Common Stock beneficially owned by such Holder and its affiliates
shall include the number of shares of Common Stock issuable upon exercise of
this Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise
of the remaining, unexercised portion of this Warrant beneficially owned by
such Holder and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
beneficially owned by such Holder and its affiliates (including, without
limitation, any convertible notes or convertible preferred stock or warrants)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein. Except as set forth in
the preceding sentence, for purposes of this paragraph, beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), it being acknowledged by the Holder that the
Company is not representing to the Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in accordance
therewith. For purposes of this Warrant,
in determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as reflected in the
most recent of (1) the Company’s most recent Form 10-K, Form 10-Q,
Current Report on Form 8-K or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a public
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announcement by the
Company or (3) any other notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written
or oral request of the Holder, the Company shall within two (2) Business
Days confirm orally and in writing to the Holder the number of shares of Common
Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder
may from time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase
will not be effective until the sixty-first (61st) day after such notice is delivered to
the Company, and (ii) any such increase or decrease will apply only to the
Holder. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 1(h) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with
the intended beneficial ownership limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such
limitation.
2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER
OF WARRANT SHARES. The Exercise Price and the number of Warrant
Shares shall be adjusted from time to time as follows:
(a) Adjustment upon Issuance of Shares of
Common Stock. If and whenever on or after the Issuance
Date, the Company issues or sells, or in accordance with this Section 2 is
deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but excluding shares of Common Stock deemed to have been issued
by the Company in connection with any Excluded Issuance) for a consideration
per share (the “New Issuance Price”)
less than a price (the “Applicable Price”)
equal to the Exercise Price in effect immediately prior to such issue or sale
or deemed issuance or sale (the foregoing a “Dilutive
Issuance”), then immediately after such Dilutive Issuance, the
Exercise Price then in effect shall be reduced to the product of (A) the
Exercise Price in effect immediately prior to such Dilutive Issuance and (B) the
quotient determined by dividing (1) the sum of (I) the product
derived by multiplying the Exercise Price in effect immediately prior to such
Dilutive Issuance and the number of shares of Common Stock Deemed Outstanding
immediately prior to such Dilutive Issuance plus (II) the consideration,
if any, received by the Company upon such Dilutive Issuance, by (2) the
product derived by multiplying (I) the Exercise Price in effect
immediately prior to such Dilutive Issuance by (II) the number of shares
of Common Stock Deemed Outstanding immediately after such Dilutive Issuance.
For purposes of determining the adjusted Exercise Price under this Section 2(a),
the following shall be applicable:
(i) Issuance of Options.
If the Company in any manner grants any Options and the lowest price per
share for which one share of Common Stock is issuable upon the exercise of any
such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option is less than the
Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share. For purposes of this Section 2(a)(i),
the “lowest price per share for which one share of Common Stock is issuable
upon exercise of such Options or upon conversion, exercise or exchange of such
Convertible Securities issuable upon exercise of any such Option” shall be
equal to the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock upon
the granting or sale of the Option, upon exercise of the Option and upon
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conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such
Option. No further adjustment of the
Exercise Price or number of Warrant Shares shall be made upon the actual
issuance of such shares of Common Stock or of such Convertible Securities upon
the exercise of such Options or upon the actual issuance of such shares of
Common Stock upon conversion, exercise or exchange of such Convertible
Securities.
(ii) Issuance of Convertible Securities.
If the Company in any manner issues or sells any Convertible Securities
and the lowest price per share for which one share of Common Stock is issuable
upon the conversion, exercise or exchange thereof is less than the Applicable
Price, then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the issuance or sale of
such Convertible Securities for such price per share. For the purposes of this Section 2(a)(ii),
the “lowest price per share for which one share of Common Stock is issuable
upon the conversion, exercise or exchange thereof” shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
Company with respect to one share of Common Stock upon the issuance or sale of
the Convertible Security and upon conversion, exercise or exchange of such
Convertible Security. No further
adjustment of the Exercise Price or number of Warrant Shares shall be made upon
the actual issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which
adjustment of this Warrant has been or is to be made pursuant to other
provisions of this Section 2(a), no further adjustment of the Exercise
Price or number of Warrant Shares shall be made by reason of such issue or
sale.
(iii) Change in Option Price or Rate of
Conversion. If the purchase price provided for in any
Options, the additional consideration, if any, payable upon the issue,
conversion, exercise or exchange of any Convertible Securities, or the rate at
which any Convertible Securities are convertible into or exercisable or
exchangeable for shares of Common Stock increases or decreases at any time,
then the Exercise Price and the number of Warrant Shares in effect at the time
of such increase or decrease shall be adjusted to the Exercise Price and the
number of Warrant Shares which would have been in effect at such time had such
Options or Convertible Securities provided for such increased or decreased
purchase price, additional consideration or increased or decreased conversion
rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2(a)(iii),
if the terms of any Option or Convertible Security that was outstanding as of
the date of issuance of this Warrant are increased or decreased in the manner
described in the immediately preceding sentence, then such Option or
Convertible Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such increase or decrease.
No adjustment pursuant to this Section 2(a) shall be made if
such adjustment would result in an increase of the Exercise Price then in
effect or a decrease in the number of Warrant Shares.
(iv) Calculation of Consideration Received.
In case any Option is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction, (x) the
Options will be deemed to have been issued for a value determined by use of the
Black Scholes Option Pricing Model (the “Option
Value”) and (y) the other securities issued or sold in such
integrated transaction shall be deemed to have been issued for the difference
of (I) the aggregate consideration received by the
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Company, less (II) the
Option Value. If any shares of Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be
deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or
Convertible Securities are issued or sold for a consideration other than cash,
the amount of such consideration received by the Company will be the fair value
of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will be the
Weighted Average Price of such security on the date of receipt. If any shares of Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in
connection with any merger in which the Company is the surviving entity, the
amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be. The fair value of
any consideration other than cash or securities will be determined jointly by
the Company and the Holder. If such
parties are unable to reach agreement within ten (10) days after the
occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will
be determined within five (5) Business Days after the tenth (10th) day
following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Holder.
The determination of such appraiser shall be final and binding upon all
parties absent manifest error, and the fees and expenses of such appraiser
shall be borne equally by the Company and the Holder.
(v) Record Date.
If the Company takes a record of the holders of shares of Common Stock
for the purpose of entitling them (A) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase shares of Common Stock,
Options or Convertible Securities, then such record date will be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(vi) Voluntary Adjustment By Company.
The Company may at any time during the term of this Warrant reduce the
then current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
(b) Adjustment upon Subdivision or
Combination of Common Stock. If the
Company at any time on or after the Issuance Date subdivides (by any stock
split, stock dividend, recapitalization, reorganization, scheme, arrangement or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced and the number of Warrant Shares
will be proportionately increased. If
the Company at any time on or after the Issuance Date combines (by any stock
split, stock dividend, recapitalization, reorganization, scheme, arrangement or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to
such combination will be proportionately increased and the number of Warrant
Shares will be proportionately decreased.
Any adjustment under this Section 2(b) shall become effective
at the close of business on the date the subdivision or combination becomes
effective.
(c) Other Events.
If any event occurs of the type contemplated by the provisions of this Section 2
but not expressly provided for by such provisions (including, without
limitation,
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the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features), then the Company’s Board of Directors will make an appropriate
adjustment in the Exercise Price and the number of Warrant Shares so as to
protect the rights of the Holder; provided that no such adjustment pursuant to
this Section 2(c) will increase the Exercise Price or decrease the
number of Warrant Shares as otherwise determined pursuant to this Section 2.
3. RIGHTS UPON DISTRIBUTION OF ASSETS.
If the Company shall declare or make any dividend or other distribution
of its assets (or rights to acquire its assets) to holders of shares of Common
Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property or options by way
of a dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case:
(a) any Exercise Price in effect immediately
prior to the close of business on the record date fixed for the determination
of holders of shares of Common Stock entitled to receive the Distribution shall
be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Exercise Price by a fraction of which (i) the
numerator shall be the Closing Bid Price of the shares of Common Stock on the
Trading Day immediately preceding such record date minus the value of the
Distribution (as determined in good faith by the Company’s Board of Directors)
applicable to one share of Common Stock, and (ii) the denominator shall be
the Closing Bid Price of the shares of Common Stock on the Trading Day
immediately preceding such record date; and
(b) the number of Warrant Shares shall be
increased to a number of shares equal to the number of shares of Common Stock
obtainable immediately prior to the close of business on the record date fixed
for the determination of holders of shares of Common Stock entitled to receive
the Distribution multiplied by the reciprocal of the fraction set forth in the
immediately preceding paragraph (a); provided
that in the event that the Distribution is of shares of Common Stock (or common
stock) (“Other Shares of Common Stock”)
of a company whose common shares are traded on a national securities exchange
or a national automated quotation system, then the Holder may elect to receive
a warrant to purchase Other Shares of Common Stock in lieu of an increase in
the number of Warrant Shares, the terms of which shall be identical to those of
this Warrant, except that such warrant shall be exercisable into the number of
shares of Other Shares of Common Stock that would have been payable to the
Holder pursuant to the Distribution had the Holder exercised this Warrant
immediately prior to such record date and with an aggregate exercise price
equal to the product of the amount by which the exercise price of this Warrant
was decreased with respect to the Distribution pursuant to the terms of the
immediately preceding paragraph (a) and the number of Warrant Shares
calculated in accordance with the first part of this paragraph (b).
4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
(a) Purchase Rights.
In addition to any adjustments pursuant to Section 2 above, if at
any time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant (without regard to any limitations on the exercise of this
Warrant) immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the
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record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.
(b) Fundamental Transactions.
The Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes this Warrant in accordance with
the provisions of this Section (4)(b), including agreements to deliver to
each holder of Warrants in exchange for such Warrants a security of the
Successor Entity evidenced by a written instrument substantially similar in
form and substance to this Warrant, including, without limitation, an adjusted
exercise price equal to the value for the shares of Common Stock reflected by
the terms of such Fundamental Transaction, and exercisable for a corresponding
number of shares of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such Fundamental
Transaction. Upon the occurrence of any
Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under
this Warrant with the same effect as if such Successor Entity had been named as
the Company herein. In addition to and
not in substitution for any other rights hereunder, prior to the consummation
of any Fundamental Transaction pursuant to which holders of shares of Common
Stock are entitled to receive securities or other assets with respect to or in
exchange for shares of Common Stock (a “Corporate
Event”), the Company shall make appropriate provision to insure that
the Holder will thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the Fundamental Transaction but
prior to the Expiration Date, in lieu of the shares of the Common Stock (or
other securities, cash, assets or other property) purchasable upon the exercise
of the Warrant prior to such Fundamental Transaction, such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants
or other purchase or subscription rights) which the Holder would have been
entitled to receive upon the happening of such Fundamental Transaction had the
Warrant been exercised immediately prior to such Fundamental Transaction. If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the
consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. The provisions
of this Section shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events and shall be applied without
regard to any limitations on the exercise of this Warrant. Notwithstanding the foregoing, in the event
of a Fundamental Transaction, at the request of the Holder delivered before the
15th day after consummation of such Fundamental Transaction, the Company (or
the Successor Entity) shall purchase this Warrant from the Holder by paying to
the Holder, within five Business Days after such request (or, if later, within
two Business Days after the effective date of the Fundamental Transaction),
cash in an amount equal to the Black Scholes Value of the remaining unexercised
portion of this Warrant on the date of such Fundamental Transaction.
5. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by
amendment of its Certificate of Incorporation, Bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, and will at all times in good faith carry out all the
provisions of this Warrant. Without
limiting the generality of the foregoing, the Company (i) shall not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, (ii) shall
take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this
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Warrant, and (iii) shall, so long as this Warrant
is outstanding, take all action necessary to reserve and keep available out of
its authorized and unissued shares of Common Stock, solely for the purpose of
effecting the exercise of this Warrant, 100% of the number of shares of Common
Stock issuable upon exercise of this Warrant then outstanding (without regard
to any limitations on exercise).
6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.
Except as otherwise specifically provided herein, the Holder, solely in
such Person’s capacity as a holder of this Warrant, shall not be entitled to
vote or receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, solely in such Person’s capacity as the
Holder of this Warrant, any of the rights of a stockholder of the Company or
any right to vote, give or withhold consent to any corporate action (whether
any reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of
the Warrant Shares which such Person is then entitled to receive upon the due exercise
of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on the
Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a stockholder of the Company, whether such liabilities are asserted by
the Company or by creditors of the Company.
7. REISSUANCE OF WARRANTS.
(a) Transfer of Warrant.
If this Warrant is to be transferred, the Holder shall surrender this
Warrant to the Company, whereupon the Company will forthwith issue and deliver
upon the order of the Holder a new Warrant (in accordance with Section 7(d)),
registered as the Holder may request, representing the right to purchase the
number of Warrant Shares being transferred by the Holder and, if less then the
total number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the Holder
representing the right to purchase the number of Warrant Shares not being
transferred.
(b) Lost, Stolen or Mutilated Warrant.
Upon receipt by the Company of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant, and, in
the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary form and, in the case of mutilation,
upon surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.
(c) Exchangeable for Multiple Warrants.
This Warrant is exchangeable, upon the surrender hereof by the Holder at
the principal office of the Company, for a new Warrant or Warrants (in
accordance with Section 7(d)) representing in the aggregate the right to
purchase the number of Warrant Shares then underlying this Warrant, and each
such new Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such surrender;
provided, however, that no Warrants for fractional shares of Common Stock shall
be given.
(d) Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to the
terms of this Warrant, such new Warrant (i) shall be of like tenor with
this Warrant, (ii) shall represent, as indicated on the face of such new
Warrant, the right to purchase the Warrant Shares then underlying this Warrant
(or in the case of a new Warrant being issued pursuant to Section 7(a) or
Section 7(c), the Warrant Shares designated by the Holder which, when
added to the number of shares of Common Stock underlying the other new Warrants
issued in connection with such issuance, does not exceed the number of Warrant
Shares then
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underlying
this Warrant), (iii) shall have an issuance date, as indicated on the face
of such new Warrant which is the same as the Issuance Date, and (iv) shall
have the same rights and conditions as this Warrant.
8. NOTICES. Whenever notice is required to be given under
this Warrant, unless otherwise provided herein, such notice shall be given in
accordance with Section 5(d) to the Agreement. The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant, including
in reasonable detail a description of such action and the reason therefore.
9. AMENDMENT AND
WAIVER. Except as otherwise provided
herein, the provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, upon the written consent of
the Company and the Holder.
10. GOVERNING LAW. This Warrant shall be governed by and
construed and enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New York.
11. CONSTRUCTION;
HEADINGS. This
Warrant shall be deemed to be jointly drafted by the Company and the Holder and
shall not be construed against any person as the drafter hereof. The headings of this Warrant are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant.
12. DISPUTE
RESOLUTION. In the case
of a dispute as to the determination of the Exercise Price or the arithmetic
calculation of the Warrant Shares, the Company shall submit the disputed
determinations or arithmetic calculations via facsimile within two (2) Business
Days of receipt of the Exercise Notice giving rise to such dispute, as the case
may be, to the Holder. If the Holder and
the Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three Business Days of such disputed
determination or arithmetic calculation being submitted to the Holder, then the
Company shall, within two (2) Business Days submit via facsimile (a) the
disputed determination of the Exercise Price to an independent, reputable
investment bank selected by the Company and approved by the Holder or (b) the
disputed arithmetic calculation of the Warrant Shares to the Company’s
independent, outside accountant. The
Company shall cause at its expense the investment bank or the accountant, as
the case may be, to perform the determinations or calculations and notify the
Company and the Holder of the results no later than ten Business Days from the
time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.
13. REMEDIES, OTHER
OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall
be cumulative and in addition to all other remedies available under this
Warrant, at law or in equity (including a decree of specific performance and/or
other injunctive relief), and nothing herein shall limit the right of the
Holder to pursue actual damages for any failure by the Company to comply with
the terms of this Warrant.
14. TRANSFER. Subject to
applicable law, this Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company.
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15. CERTAIN
DEFINITIONS. For
purposes of this Warrant, the following terms shall have the following
meanings:
(a) “Black Scholes Value” means the value of
this Warrant based on the Black and Scholes Option Pricing Model obtained from
the “OV” function on Bloomberg using (i) a price per share of Common Stock
equal to the Weighted Average Price of the Common Stock for the Trading Day
immediately preceding the date of consummation of the applicable
Fundamental Transaction, (ii) a risk-free interest rate corresponding to
the U.S. Treasury rate for a period equal to the remaining term of this Warrant
as of the date of consummation of the applicable Fundamental Transaction and (iii) an
expected volatility equal to the
greater of 70% and the 30-day volatility obtained from the HVT function
on Bloomberg determined as of the Trading Day immediately following the public
announcement of the applicable Fundamental Transaction.
(b) “Bloomberg” means Bloomberg Financial
Markets.
(c) “Business Day” means any day other than
Saturday, Sunday or other day on which commercial banks in The City of New York
are authorized or required by law to remain closed.
(d) “Closing Bid Price” and “Closing Sale Price” means, for any security
as of any date, the last closing bid price and last closing trade price,
respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last closing bid
price or last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed or traded
as reported by Bloomberg, or if the foregoing do not apply, the last closing
bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the
bid prices, or the ask prices, respectively, of any market makers for such
security as reported in the “pink sheets” by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.).
If the Closing Bid Price or the Closing Sale Price cannot be calculated
for a security on a particular date on any of the foregoing bases, the Closing
Bid Price or the Closing Sale Price, as the case may be, of such security on
such date shall be the fair market value as mutually determined by the Company
and the Holder. All such determinations
to be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period.
(e) “Common Stock” means (i) the Company’s
shares of Common Stock, par value $0.001 per share, and (ii) any share
capital into which such Common Stock shall have been changed or any share
capital resulting from a reclassification of such Common Stock.
(f) “Convertible Securities” means any stock or
securities (other than Options) directly or indirectly convertible into or
exercisable or exchangeable for shares of Common Stock.
(g) “Eligible Market” means the Principal
Market, The New York Stock Exchange, Inc., The American Stock Exchange,
The NASDAQ Global Select Market or The NASDAQ Capital Market.
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(h) “Excluded Issuance” means the issuance of (A) capital
stock, Options or Convertible Securities issued to directors, officers,
employees or consultants of the Company in connection with their service as
directors of the Company, their employment by the Company or their retention as
consultants by the Company pursuant to an equity compensation program approved
by the Board or the compensation committee of the Board, (B) shares of
Common Stock issued upon the conversion, exercise or exchange of Options or
Convertible Securities issued prior to the Issuance Date; provided that neither
the conversion price, exercise price nor number of shares issuable under such
Options or Convertible Securities is amended, modified or changed after the
Issuance Date other than pursuant to the provisions of such Options or
Convertible Securities as they exist as of the Issuance Date, and (C) securities
issued pursuant to the Subscription Agreement and the other similar subscription
agreements entered into by the Company and the purchasers of the other warrants
issued on the Issuance Date or the shares of Common Stock issued upon exercise
of this Warrant or the other warrants issued on the Issuance Date.
(i) “Expiration Date” means May 7, 2016,
or, if such date falls on a day other than a Business Day or on which trading
does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.
(j) “Fundamental Transaction” means that the
Company shall, directly or
indirectly, in one or more related transactions, (i) consolidate or merge
with or into (whether or not the Company is the surviving corporation) another
Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company to another
Person, or (iii) allow another Person to make a purchase, tender or
exchange offer that is accepted by the holders of more than the 50% of the
outstanding shares of Common Stock (not
including any shares of Common Stock held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the
50% of the outstanding shares of Common Stock
(not including any shares of Common Stock held by the other Person or other
Persons making or party to, or associated or affiliated with the other Persons
making or party to, such stock purchase agreement or other business
combination), (v) reorganize,
recapitalize or reclassify its Common Stock, or (vi) any “person” or “group”
(as these terms are used for purposes of Sections 13(d) and 14(d) of
the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of 50% of the aggregate
ordinary voting power represented by issued and outstanding Common Stock.
(k) “Options” means any rights, warrants or
options to subscribe for or purchase shares of Common Stock or Convertible
Securities.
(l) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable
Person and whose common stock or equivalent equity security is quoted
or listed on an Eligible Market,
or, if there is more than one such Person or Parent Entity, the Person or
Parent Entity with the largest public market capitalization as of the date of
consummation of the Fundamental Transaction.
(m) “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and a government or any
department or agency thereof.
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(n) “Principal Market” means The NASDAQ Global
Market.
(o) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction or the
Person (or, if so elected by the Holder, the Parent Entity) with which such
Fundamental Transaction shall have been entered into.
(p) “Trading Day” means any day on which the
Common Stock are traded on the Principal Market, or, if the Principal Market is
not the principal trading market for the Common Stock, then on the principal
securities exchange or securities market on which the Common Stock are then
traded; provided that “Trading
Day” shall not include any day on which the Common Stock are scheduled to trade
on such exchange or market for less than 4.5 hours or any day that the Common
Stock are suspended from trading during the final hour of trading on such exchange
or market (or if such exchange or market does not designate in advance the
closing time of trading on such exchange or market, then during the hour ending
at 4:00:00 p.m., New York time).
(q) “Weighted Average Price” means, for any
security as of any date, the dollar volume-weighted average price for such
security on the Principal Market during the period beginning at 9:30:01 a.m.,
New York City time, and ending at 4:00:00 p.m., New York City time, as
reported by Bloomberg through its “Volume at Price” function or, if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York City
time, and ending at 4:00:00 p.m., New York City time, as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such
security as reported in the “pink sheets” by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.).
If the Weighted Average Price cannot be calculated for such security on
such date on any of the foregoing bases, the Weighted Average Price of such
security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section 12 with
the term “Weighted Average Price” being substituted for the term “Exercise
Price.” All such determinations shall be appropriately adjusted for any share
dividend, share split or other similar transaction during such period.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this
Warrant to Purchase Common Stock to be duly executed as of the Issuance Date
set out above.
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CAPSTONE TURBINE CORPORATION
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By:
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Name:
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Title:
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EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS
WARRANT TO PURCHASE COMMON STOCK
CAPSTONE TURBINE CORPORATION
The
undersigned holder hereby exercises the right to purchase
of the shares of Common Stock (“Warrant
Shares”) of CAPSTONE TURBINE
CORPORATION, a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase
Common Stock (the “Warrant”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the
Exercise Price shall be made as:
a “Cash Exercise” with respect to
Warrant Shares; and/or
a “Cashless Exercise” with respect to
Warrant Shares.
2. Payment of Exercise Price. In the event that the holder has elected a
Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum
of
$
to the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the holder
Warrant Shares in accordance with the terms of the Warrant.
Date:
,
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Name
of Registered Holder
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ACKNOWLEDGMENT
The
Company hereby acknowledges this Exercise Notice and hereby directs Mellon
Investor Services LLC to issue the above indicated number of shares of Common
Stock.
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CAPSTONE TURBINE CORPORATION
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By:
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Name:
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Title:
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