Item 1.01 Entry into a Material Definitive Agreement
On October 18, 2016, Capstone Turbine Corporation (the
Company
) entered into a securities purchase agreement (the
Purchase Agreement
) with certain accredited investors (the
Purchasers
), pursuant to which the Company agreed to sell to the Purchasers (i) in a registered offering, 3,600,000 shares of the Companys common stock, $0.001 par value per share (
Common Stock
), and pre-funded Series B warrants to purchase up to 2,700,000 shares of Common Stock, which will be sold in lieu of Common Stock to those Purchasers whose purchase of Common Stock in the offering otherwise would result in the Purchaser beneficially owning more than 9.99% of the Companys outstanding Common Stock following the completion of the offering (
Series B Warrants
); and (ii) in a concurrent private placement, Series A warrants to purchase up to 6,300,000 shares of Common Stock (
Series A Warrants
).
Pursuant to a placement agent agreement, dated as of October 18, 2016 (the
Placement Agent Agreement
), the Company engaged Oppenheimer & Co. Inc. as the lead placement agent for the offering and Roth Capital Partners, LLC as co-placement agent for the offering (collectively, the
Placement Agents
). The Company has agreed to pay the Placement Agents a placement agent fee equal to 6.7% of the aggregate purchase price of the securities sold in this offering. The Company also has agreed to reimburse the Placement Agents for certain of their expenses, in an amount equal to $10,000, as set forth in the Placement Agent Agreement.
Each share of Common Stock will be sold at a price of $1.20. Each Series B Warrant will have an exercise price of $1.20 per share of Common Stock, $1.19 of which will be pre-funded at closing and $0.01 of which will be payable upon exercise. Each Series A Warrant will have an initial exercise price of $1.34 per share of Common Stock, and the exercise price (but not the number of underlying shares of Common Stock) will be subject to a full ratchet anti-dilution adjustment if the Company issues or is deemed to have issued securities during the two and one-half year period following the issuance of the Series A Warrants at a price lower than the then-applicable exercise price.
The net proceeds to the Company from the offering, after deducting the placement agent fees and other estimated offering expenses, are expected to be approximately $6.8 million, without giving any effect to any exercise of the Series B Warrants or any sale or exercise of the Series A Warrants. The Company intends to use the proceeds from the offering to fund general working capital requirements and for other general corporate purposes. The closing of the offering is expected to take place on or about October 21, 2016, subject to the satisfaction of customary closing conditions.
The Purchase Agreement and the Placement Agent Agreement contain customary representations, warranties, covenants and agreements by the Company, indemnification obligations of the Company and the Placement Agents, including for liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Purchase Agreement and the Placement Agent Agreement were made only for purposes of the applicable agreement and as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by the contracting parties.
The Company is offering the Common Stock, the Series B Warrants and the Common Stock issuable upon exercise of the Series B Warrants pursuant to the Companys shelf registration statement on Form S-3 (Registration No. 333-203431) declared effective by the Securities and Exchange Commission on June 23, 2015, a related prospectus dated June 23, 2015 and a prospectus supplement to be dated October 18, 2016. The Company is offering the Series A Warrants and the Common Stock issuable upon exercise of the Series A Warrants in a private placement pursuant to the exemption provided in Section 4(a)(2) under the Securities Act of 1933, as amended, and Rule 506(b) promulgated thereunder, and neither the Series A Warrants nor the Common Stock issuable upon exercise thereof are being registered under the Securities Act or offered pursuant to the Companys shelf registration statement on Form S-3 (Registration No. 333-203431) or by means of the related prospectus dated June 23, 2015 or prospectus supplement to be dated October 18, 2016.
The Company has reduced the dollar amount of its current at-the-market equity offering to $12,183,864 as a result of this offering.