CAPSTONE TURBINE CORPORATION WARRANT TO PURCHASE ________ SHARES OF COMMON STOCK
Exhibit 4
CAPSTONE TURBINE CORPORATION
WARRANT TO PURCHASE ________ SHARES OF
COMMON STOCK
COMMON STOCK
| Warrant No. ___ | Original Issue Date: September ___, 2008 |
FOR VALUE RECEIVED, ____________ (“Holder”) is entitled to purchase, subject to the provisions of
this Warrant, from CAPSTONE TURBINE CORPORATION, a Delaware corporation (“Company”), at any time
prior to 5:00 P.M., New York City time, on September ___, 2013 (the “Expiration Time”), at an
exercise price per share equal to $1.92 (the “Exercise Price”), _________ shares (“Warrant Shares”)
of the Company’s common stock, par value $0.001 per share (“Common Stock”). The number of Warrant
Shares purchasable upon exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time as described herein.
This Warrant is being issued pursuant to that certain Subscription Agreement, dated September
17, 2008, by and between the Company and the purchaser identified therein (the “Subscription
Agreement”). The original issuance of this Warrant by the Company pursuant to the Subscription
Agreement has been registered pursuant to a registration statement on Form S-3, File No. 333-128164
and, if applicable, any related registration statement filed by the Company pursuant to Rule 462(b)
of the Securities Act of 1933, as amended (the “Securities Act”), in connection with the offering
of this Warrant (collectively with any successor registration statement covering the Warrant Shares
that the Company may file with the Securities Exchange Commission (the “Commission”) under the
Securities Act and that shall have become effective under the Securities Act, the “Registration
Statement”). This Warrant was originally issued on September ___, 2008 (the “Original Issue Date”),
and is one of a series of Warrants of like tenor issued by the Company on the Original Issue Date
covering an aggregate of 6,445,698 shares of Common Stock (collectively, and including, without
limitation, this Warrant, the “Company Warrants”).
Section 1. Registration. The Company shall maintain books for the transfer and
registration of this Warrant. Upon the initial issuance of this Warrant, the Company shall issue
and register this Warrant in the name of the Holder. The Company may deem and treat the registered
Holder as the absolute owner hereof for the purpose of any exercise hereof or any distribution to
the Holder, and for all other purposes, absent actual notice to the contrary.
Section 2. Transfers. The Company shall transfer this Warrant from time to time upon
the books to be maintained by the Company for that purpose, upon surrender hereof for transfer,
properly endorsed or accompanied by appropriate instructions for transfer and such other documents
as may be reasonably required by the Company. Upon any such transfer, a new Warrant in
substantially the form of this Warrant, evidencing the portion of this Warrant so transferred shall
be issued to the transferee and a new Warrant evidencing the remaining portion of this Warrant not
so transferred, if any, shall be issued to the transferring Holder.
Section 3. Exercise of Warrant.
(a) The Holder may exercise this Warrant in whole or in part at any time and from time to time
prior to the earlier of the Expiration Time and any cancellation of this Warrant in whole pursuant
to Section 4 as follows:
(i) Subject to the provisions of Section 3(a)(ii), this Warrant may be
exercised by delivery of a Notice of Exercise in the form attached hereto as Appendix
A and payment by cash, certified check or wire transfer for the aggregate Exercise Price
for that number of Warrant Shares then being purchased, to the Company during normal
business hours on any day other than a Saturday or Sunday on which banks are open for
business in New York City (a “Business Day”) at the Company’s principal executive offices
(or such other office or agency of the Company as the Company may designate by notice to the
Holder).
(ii) At any time when a Restrictive Legend Event (as defined below) has occurred and is
continuing, the Holder may only exercise this Warrant if the Market Price (as defined below)
of one Warrant Share is greater than the Exercise Price. In such event, the Holder may
exercise this Warrant by delivery of a Notice of Exercise in the form attached hereto as
Appendix B to the Company during normal business hours on any Business Day at the
Company’s principal executive offices (or such other office or agency of the Company as the
Company may designate by notice to the Holder), without the payment by the Holder of the
aggregate Exercise Price in respect of the Warrant Shares to be acquired hereunder in cash,
but instead by surrendering to the Company a portion of the Warrant Shares that would
otherwise have been issuable upon exercise of this Warrant or the portion hereof so
exercised, as the case may be, determined as provided below. Thereupon, the Company shall
issue to the Holder such number of fully paid, validly issued and nonassessable shares of
Common Stock as is computed using the following formula:
X = Y(A-B)
A
A
where
X = the number of shares of Common Stock to be issued to the Holder;
Y = the number of Warrant Shares covered by this Warrant that the Holder is
surrendering at such time for cashless exercise (including both shares to be issued to the
Holder and shares to be canceled as payment therefor);
A = the Market Price of one share of Common Stock as of the exercise date; and
B = the Exercise Price in effect under this Warrant as of the exercise date.
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“Market Price” as of a particular date (the “Valuation Date”) means the following: (i)
if the Common Stock is then listed on a Trading Market (as defined below), the closing sale
price of one share of Common Stock on such Trading Market on the last Trading Day (as
defined below) prior to the Valuation Date; (ii) if the Common Stock is
not then listed on a Trading Market, the closing sale price of one share of Common
Stock on the OTC Bulletin Board (the “Bulletin Board”) on the last Trading Day prior to the
Valuation Date or, if no such closing sale price is available, the average of the high bid
and the low asked price quoted thereon on the last Trading Day prior to the Valuation Date;
(iii) if the Common Stock is not then listed on a Trading Market or quoted on the Bulletin
Board, the closing sale price of one share of Common Stock as reported in the Pink Sheets
published by Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices) on the last Trading Day prior to the Valuation Date or, if no
such closing sale price is available, the average of the high bid and the low asked price
reported by Pink Sheets LLC on the last Trading Day prior to the Valuation Date; or (iv) if
the Common Stock is not then listed on a Trading Market, quoted on the Bulletin Board or
reported in Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices), the fair market value of one share of Common Stock as of the
Valuation Date shall be determined in good faith by the Board of Directors of the Company
(the “Board”). If the Common Stock is not then listed on a Trading Market, quoted on the
Bulletin Board or reported in Pink Sheets LLC (or any similar organization or agency
succeeding to its functions of reporting prices), the Board shall respond promptly, in
writing, to an inquiry by the Holder prior to the exercise hereunder as to the fair market
value of a share of Common Stock as determined by the Board.
For purposes of this Warrant (i) a “Trading Day” means (A) a day on which the Common
Stock is traded on a Trading Market (as defined below), or (B) if the Common Stock is not
listed on a Trading Market, a day on which the Common Stock is traded on the Bulletin Board,
or (C) if the Common Stock is not listed on a Trading Market or quoted on the Bulletin
Board, a day on which prices for the Common Stock are reported in the Pink Sheets published
by Pink Sheets LLC (or any similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock is not listed, quoted
or reported as set forth in (A), (B) and (C) hereof, then Trading Day shall mean a Business
Day and (ii) “Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the Nasdaq Global Select
Market, the Nasdaq Global Market, The Nasdaq Capital Market, the American Stock Exchange or
the New York Stock Exchange.
The Company shall provide to the Holder prompt written notice of any time the Company
is unable to issue the Warrant Shares via DWAC (as defined below) transfer or otherwise
without restrictive legend because (i) the Commission has issued a stop order with respect
to the Registration Statement, (ii) the Commission otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently, (iii) the
Company has suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently or (iv) otherwise (each a “Restrictive Legend Event”); provided
that nothing in the foregoing clause (iii) shall permit the Company to suspend or withdraw
the effectiveness of the Registration Statement, either temporarily or permanently. If a
Restrictive Legend Event occurs after the Holder has exercised this Warrant in accordance
with Section 3(a)(i) but prior to the delivery of the Warrant Shares issuable upon
such exercise, then (i) the Company shall
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not issue such Warrant Shares to the Holder, (ii) the Company shall return to the
Holder all consideration paid to the Company in connection with the Holder’s attempted
exercise of this Warrant and (iii) if the Market Price of one Warrant Share is greater than
the Exercise Price as of the applicable exercise date, the Holder may, by written notice to
the Company, elect to convert its exercise of this Warrant to an exercise in accordance with
this Section 3(a)(ii). The Company will use its reasonable best efforts to prevent
the occurrence of any Restrictive Legend Event and, if a Restrictive Legend Event shall
occur, shall use its reasonable best efforts to terminate or cause the termination thereof.
The Company shall give prompt written notice to the Holder of the cessation of a Restrictive
Legend Event. Notwithstanding anything to the contrary contained herein, if the Expiration
Time occurs after a Restrictive Legend Event occurs but before the cessation of the
Restrictive Legend Event, then the Expiration Time will be extended until 5:00 P.M., New
York City time on the fifth Trading Day after the Company gives notice to the Holder of the
cessation of the Restrictive Legend Event.
Notwithstanding the foregoing provisions of this Section 3(a)(ii), if a
Restrictive Legend Event has occurred and is continuing and no exemption from the
registration requirements of the Securities Act is available for the issuance of the Warrant
Shares upon an exercise of this Warrant, including, without limitation under Section 3(a)(9)
of the Securities Act by virtue of a cashless exercise under this Section 3(a)(ii),
then this Warrant shall not be exercisable until such Restrictive Legend Event shall have
ceased or there shall be an available exemption from the registration requirements under the
Securities Act.
For purposes of Rule 144 promulgated under the Securities Act, it is intended that the
Warrant Shares issued in a cashless exercise under this Section 3(a)(ii) 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 Original Issue Date.
Anything herein to the contrary notwithstanding (including, without limitation, the
foregoing provisions of this Section 3(a)(ii)), the Company shall maintain the
effectiveness under the Securities Act of the Registration Statement covering all of the
Warrants Shares (and any other securities which may from time to time be issuable upon
exercise of this Warrant) and the availability of a current prospectus relating thereto at
all times prior to, and, without limitation of the foregoing, shall not suspend or withdraw
the effectiveness of the Registration Statement, either temporarily or permanently, until
after the earliest of (i) the Expiration Time (or if as of the Expiration Time, any portion
of this Warrant shall have been exercised but the Warrant Shares (or any other securities
which may from time to time be issuable upon exercise of this Warrant) issuable upon such
exercise shall not have been delivered to the Holder or its designee, the date after the
Expiration Time that such Warrant Shares (or such other securities) have been so delivered),
(ii) any cancellation of this Warrant in whole pursuant to Section 4 or (iii) the
exercise in full of this Warrant.
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(b) The Warrant ▇▇▇▇▇▇ purchased hereunder shall be deemed to be issued to the Holder or the
Holder’s designee, as the record owner of such shares, as of 5:00 P.M. New York City time on the
date on which the completed and signed Notice of Exercise shall have
been delivered and, in the case of an exercise pursuant to Section 3(a)(i), the
aggregate Exercise Price for the Warrant Shares purchased shall have been paid. Certificates for
the Warrant Shares so purchased, representing the aggregate number of shares specified in the
Notice of Exercise, shall be transmitted by the Company’s transfer agent by crediting the account
of the Holder’s prime broker with The Depository Trust Company (“DTC”) through its Deposit /
Withdrawal At Custodian (“DWAC”) system if the Company is a participant in such system, and
otherwise by physical delivery of certificates to the address specified by the Holder in the Notice
of Exercise, within a reasonable time, not exceeding three Trading Days after this Warrant shall
have been so exercised, including the delivery of a completed Notice of Exercise and, in the case
of an exercise pursuant to Section 3(a)(i), delivery of the aggregate Exercise Price for
the Warrant Shares purchased (the “Warrant Share Delivery Date”). The Warrant Shares so delivered
shall be in such denominations as may be requested by the Holder and shall be registered in the
name of the Holder or such other name as shall be designated by the Holder in the Notice of
Exercise.
(c) In addition to any other rights available to the Holder, if the Company fails to deliver
to the Holder the applicable Warrant Shares pursuant to an exercise on or before the Warrant Share
Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open
market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall 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 issue and
deliver such Warrant Shares to the Holder shall terminate, or (ii) promptly issue and deliver such
Warrant Shares by crediting such Holder’s account with DTC or issuing physical certificates for
such Warrant Shares, as applicable, 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 Warrant Shares times (B) the Market
Price on the date of exercise. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect to the Buy-In, together with applicable confirmations and
other evidence reasonably requested by the Company. Nothing herein shall limit the Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s
failure to timely credit the Holder’s account with DTC or to issue physical certificates, as
applicable, upon exercise of this Warrant as required pursuant to the terms hereof. Anything
herein to the contrary notwithstanding, if a Restrictive Legend Event occurs and if the Holder
shall not have received actual notice of such Restrictive Legend Event from the Company prior to
any date on which such Holder or its designee shall have delivered a completed and signed Notice of
Exercise and, in the case of an exercise pursuant to Section 3(a)(i), the aggregate
Exercise Price payable in connection with such exercise, then, for purposes of this Section
3(c), such exercise shall be deemed a valid exercise of this Warrant, and, for purposes of
clarity, the Company hereby acknowledges and agrees that this Section 3(c) shall be
applicable to any failure by the Company to deliver the Warrant Shares that would have been
deliverable upon such exercise to the Holder on or before the applicable Warrant Share Delivery
Date, notwithstanding the fact that, pursuant to Section 3(a)(ii), this Warrant may not be
exercisable as a result of such Restrictive Legend Event.
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(d) Notwithstanding anything herein to the contrary, except as provided in Section 4,
the Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and this Warrant
has been exercised in full, in which case the Holder shall surrender this Warrant to the Company
for cancellation within three Trading Days of the date the final Notice of Exercise is delivered to
the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering the outstanding
number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of
Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of
Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection
to any Notice of Exercise within two Trading Days of receipt of such notice. In the event of any
dispute or discrepancy, the records of the Company’s transfer agent for the Common Stock shall be
controlling and determinative in the absence of manifest error. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this
Section 3(d), following the purchase of a portion of the Warrant Shares hereunder, the
number of Warrant Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.
(e) In addition to any other rights available to the Holder, if (i) the Company fails for any
reason other than the occurrence of a Restrictive Legend Event to deliver to the Holder the Warrant
Shares pursuant to an exercise on or before the Warrant Share Delivery Date by transfer pursuant to
the DWAC system or by delivery of physical certificates, as applicable (a “Delivery Failure”), or
(ii) a Restrictive Legend Event occurs, then (x) with respect to a Delivery Failure, the Company
shall be liable to the Holder for liquidated damages in an amount equal to 1.5% of the aggregate
Exercise Price of the Warrant Shares issuable pursuant to such exercise for each 30-day period (or
pro rata portion thereof) beginning on the day immediately after the Warrant Share Delivery Date to
but excluding the date on which such Warrant Shares are delivered to the Holder and (y) with
respect to a Restrictive Legend Event, the Company shall be liable to the Holder for liquidated
damages in an amount equal to 1.5% of the aggregate Exercise Price of all of the Warrant Shares
issuable upon exercise of this Warrant for each 30-day period (or pro rata portion thereof)
beginning on the day that such Restrictive Legend Event first occurs to but excluding the date on
which the Holder shall have received written notice of the cessation of such Restrictive Event
Legend from the Company. Such liquidated damages shall be payable in cash by wire transfer to the
Holder (if the Holder shall have provided wire transfer instructions to the Company) or by check
mailed to the address of the Holder as shown on the Company’s transfer books for this Warrant, and
shall be payable on the Business Day immediately following the last day of each such 30-day period
and, if applicable, on the day that such Warrant Shares are delivered to the Holder or the Business
Day immediately following the cessation of such Restrictive Legend Event, as the case may be.
Notwithstanding the foregoing, in no event will the aggregate liquidated damages payable under this
Section 3(e) exceed 10% of the aggregate Exercise Price for all of the Warrant Shares
issuable hereunder.
(f) Notwithstanding anything to the contrary herein, the Holder shall not have the right to
exercise any portion of this Warrant, pursuant to this Section 3 or otherwise, to the
extent that after giving effect to such issuance after exercise, the Holder would beneficially own
in excess of 9.999% of the number of shares of the Common Stock outstanding immediately after
giving effect to such issuance. For purposes of the immediately preceding sentence, the number of
shares of Common Stock beneficially owned by the Holder shall include the number of shares of
Common Stock issuable upon the exercise of this Warrant with respect to which the
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determination pursuant to the immediately preceding sentence is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder and (B) exercise or
conversion of the unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other warrants) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the Holder. Except as
set forth in the preceding sentence, for purposes of this Section 3(f), 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 Section 3(f), 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 latest of (x) the Company’s most recent Form 10-Q or Form 10-K, as
the case may be, (y) a more recent public announcement by the Company or (z) any other more recent
notice by the Company or the Company’s transfer agent for the Common Stock setting forth the number
of shares of Common Stock outstanding. Following the written or oral request of the Holder, the
Company shall, or shall cause its transfer agent to, within two Trading 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 since
the date as of which such number of outstanding shares of Common Stock was reported.
Section 4. Call Right.
(a) If (i) the Registration Statement covering all of the shares of Common Stock (the “Company
Shares”) issuable upon exercise of all of the Company Warrants is effective and a current
prospectus relating to the Company Shares issuable upon exercise of all of the Company Warrants is
available, in each case at all times from and including the date that the applicable Call Notice
(as defined below) is sent by the Company through and including the fourth Trading Day after the
applicable Call Date (as defined below), or, if the Holder shall have duly exercised all or any
portion of this Warrant by 5:00 p.m., New York City time, on such Call Date, through and including
the date of delivery to the Holder of the Warrant Shares issuable upon such exercise, (ii) the
two-year anniversary of the Original Issue Date has occurred (iii) the average of the Market Price
of the Common Stock for any 20 Trading Days within a 30-Trading Day period ending no more than
three Trading Days prior to the date on which the Call Notice is delivered to the Holder (such
30-Trading Day period hereinafter called the “Measurement Period”) equals or exceeds $3.84 (the
"Threshold Price”) (subject to adjustment for reverse and forward stock splits, stock dividends,
stock combinations and other similar transactions of the Common Stock that occur after the Original
Issue Date), (iv) no Restrictive Legend Event has occurred and is continuing and (v) the Common
Stock is then listed on a Trading Market, then the Company may, no more than three Trading Days
after the last day of such Measurement Period, call for cancellation all or any portion of the
outstanding Company Warrants (including, without limitation, this Warrant) for which a Notice of
Exercise has not yet been delivered (such right, a “Call”). Any Call by the Company of only a
portion of the Company Warrants (including, without limitation, this Warrant) shall be exercised on
a pro rata basis among all the
outstanding Company Warrants (including, without limitation, this Warrant) based upon the
number of shares of Common Stock issuable upon exercise of all of the Company Warrants for which a
Notice of Exercise has not yet been delivered.
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(b) To exercise a Call, the Company must deliver to each registered holder of a Company
Warrant (including, without limitation, the Holder of this Warrant) an irrevocable written notice
(a “Call Notice”), indicating therein the unexercised portion of the Company Warrants registered in
the name of such holder to which such Call Notice applies and the time and date by which such
portion of such Company Warrants must be exercised to avoid cancellation thereof as described
below. Deposit of such Call Notice with a recognized overnight delivery service or with the U.S.
Postal Service within the above three Trading Day period shall be considered a timely Call. If the
conditions set forth above for such Call are satisfied (including, without limitation, the
condition set forth in clause (i) of Section 4(a)), then any portion of this Warrant
subject to such Call Notice for which a Notice of Exercise and (unless the exercise is to be by
cashless exercise pursuant to Section 3(a)(ii)) the applicable aggregate Exercise Price
shall not have been received by 5:00 p.m., New York City time, on the 60th calendar day after the
date the Call Notice is sent to the Holder or, if such day is not a Business Day, the next
succeeding Business Day (such date, the “Call Date”) will be cancelled automatically immediately
after 5:00 p.m., New York City time, on such Call Date. Any unexercised portion of this Warrant to
which the Call Notice does not pertain will be unaffected by such Call Notice. In furtherance
thereof, the Company covenants and agrees that it will honor all Notices of Exercise with respect
to Warrant Shares subject to a Call Notice that are tendered, with (unless the exercise is to be by
cashless exercise pursuant to Section 3(a)(ii)) the applicable aggregate Exercise Price
through 5:00 p.m., New York City time, on the Call Date. Any Notice of Exercise delivered
following a Call Notice shall first reduce to zero the number of Warrant Shares subject to such
Call Notice prior to reducing the remaining Warrant Shares available for purchase under this
Warrant. For example, if (x) this Warrant then permits the Holder to acquire 100 Warrant Shares,
(y) a Call Notice pertains to 75 of such Warrant Shares, and (z) prior to 5:00 p.m., New York City
time, on the Call Date the Holder tenders a Notice of Exercise in respect of 50 Warrant Shares,
then (1) on the Call Date the right under this Warrant to acquire 25 Warrant Shares will be
automatically cancelled, (2) the Company, in the time and manner required under Section 3,
will issue and deliver to the Holder 50 Warrant Shares (or such lesser number of Warrant Shares as
shall be issuable in the event of cashless exercise pursuant to Section 3(a)(ii)) in
respect of the exercise following receipt of the Call Notice, and (3) the Holder may, until the
Expiration Time, exercise this Warrant for 25 Warrant Shares (subject to adjustment as herein
provided and subject to subsequent Call Notices). The Company may, on the terms and subject to the
conditions set forth in this Section 4, deliver subsequent Call Notices for any unexercised
portion of the Company Warrants.
Section 5. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the exercise of this Warrant;
provided, however, that the Company shall not be required to pay any tax or taxes
which may be payable in respect of any transfer involved in the issuance or delivery of any Warrant
Shares in a name other than that of the Holder, and in such case, the Company shall not be required
to issue or deliver any Warrant Shares until the person requesting the same has paid to the Company
the amount of such tax or has established to the Company’s reasonable satisfaction that such tax
has been paid. The Holder shall be responsible for income taxes due under federal, state or other
law, if any such tax is due.
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Section 6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated,
lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon
cancellation of the mutilated Warrant, or in lieu of and substitution for this Warrant lost, stolen
or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares,
but only upon receipt of this mutilated Warrant or of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of this Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company.
Section 7. Reservation of Common Stock. The Company hereby represents and warrants
that there have been reserved, and the Company shall at all applicable times keep reserved until
issued as contemplated by this Section 7, out of the authorized and unissued shares of
Common Stock, sufficient shares of Common Stock to provide for the exercise of all outstanding
Company Warrants. The Company agrees that all Warrant Shares issued upon due exercise of this
Warrant shall be, at the time of delivery for such Warrant Shares, duly authorized, validly issued,
fully paid and non-assessable shares of Common Stock of the Company and shall be free and clear of
all liens, claims or encumbrances and the issuance thereof shall not be subject to any preemptive
or other similar rights.
Section 8. Adjustments. The Exercise Price, the number of Warrant Shares issuable
upon exercise of this Warrant and the securities or other property issuable upon exercise of this
Warrant shall be subject to adjustment from time to time as set forth in this Section 8.
(a) If the Company shall, at any time or from time to time while this Warrant is outstanding,
(i) pay a dividend or make a distribution on its Common Stock in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock into a greater number of shares or (iii) combine
its outstanding shares of Common Stock into a smaller number of shares, then the Exercise Price in
effect immediately prior to the record date for any such dividend or distribution or the effective
date of any such subdivision or combination, shall be adjusted by multiplying such Exercise Price
by a fraction the numerator of which shall be the number of shares of Common Stock outstanding
immediately before such event and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event. Simultaneously with any adjustment to the Exercise
Price pursuant to this Section 8(a), the number of Warrant Shares purchasable hereunder
shall be adjusted by multiplying such number by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to such adjustment and the denominator of which shall be
the Exercise Price in effect immediately thereafter, so that after such adjustment the aggregate
Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the
aggregate Exercise Price in effect immediately prior to such adjustment. The adjustments provided
for under this Section 8(a) shall be made successively whenever any event listed above
shall occur.
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(b) If any capital reorganization, reclassification of the capital stock of the Company,
consolidation or merger of the Company with another corporation or other entity in which the
Company is not the survivor, or sale, transfer or other disposition of all or substantially
all of the Company’s assets to another corporation or other entity shall be effected (each, a
“Fundamental Transaction”), then, as a condition of such Fundamental Transaction, lawful and
adequate provision shall be made whereby each Holder shall thereafter have the right to exercise
this Warrant and receive upon the basis and upon the terms and conditions herein specified and in
lieu of the Warrant Shares immediately theretofore issuable upon exercise of this Warrant, such
shares of stock, securities, cash or other assets as would have been issuable or payable with
respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares
immediately theretofore issuable upon exercise of this Warrant, had this Warrant been exercised in
full immediately prior to such Fundamental Transaction (the “Transaction Consideration”), and in
any such case appropriate provision (as determined in good faith by the Board) shall be made with
respect to the rights and interests of the Holder to the end that the provisions of this Warrant
(including, without limitation, provisions relating to the adjustment of the Exercise Price, the
number of Warrant Shares issuable upon exercise of this Warrant and the securities or other
property issuable upon exercise of this Warrant) and all references in this Warrant to “Common
Stock” shall thereafter be applicable, as nearly equivalent as may be practicable in relation to
any Transaction Consideration deliverable upon the exercise hereof. The Company shall not effect
any such Fundamental Transaction unless prior to or simultaneously with the consummation thereof
the successor corporation or other entity (if other than the Company) resulting from any such
consolidation or merger, or the corporation or other entity purchasing or otherwise acquiring such
assets or other appropriate corporation or other entity shall assume in writing the obligation to
deliver to the Holder, at the last address of the Holder appearing on the books of the Company,
such Transaction Consideration as, in accordance with the foregoing provisions, the Holder may be
entitled to receive upon exercise hereof, and the other obligations under this Warrant. Without
limiting the generality of the foregoing, the terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such successor or surviving
corporation or other entity to comply with the provisions of this Section 8(b) and insuring
that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction. The aggregate Exercise Price for this Warrant
will not be affected by any such Fundamental Transaction, but the Company shall apportion such
aggregate Exercise Price among the Transaction Consideration in a reasonable manner reflecting the
relative value of any different components of the Transaction Consideration, if applicable. If
holders of Common Stock are given any choice as to the shares of stock, securities, cash or other
assets to be received in a Fundamental Transaction, then the Holder shall be given the same choice
as to the Transaction Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction. At the Holder’s request, any successor to the Company or surviving
corporation or other entity in such Fundamental Transaction shall issue to the Holder a new Warrant
consistent with the foregoing provisions and evidencing the Holder’s right to purchase the
Transaction Consideration for the aggregate Exercise Price upon exercise
thereof. Notwithstanding
the foregoing provisions of this Section 8(b), in the event of a Fundamental Transaction
other than a Fundamental Transaction in which the successor corporation or other entity is a
publicly traded corporation or other entity whose common stock or other common equity is quoted or
listed for trading on a Trading Market and which assumes this Warrant such that this Warrant or any
warrant issued in substitution herefor shall be exercisable for the publicly traded common stock or
other common equity of such successor corporation or other entity, then the Company or any
successor corporation or other entity shall pay at the Holder’s option (the “Cash-Out Option”),
exercisable at any time
10
concurrently with or within 30 days after the consummation of the Fundamental Transaction, an
amount of cash equal (the “Cash-Out Amount”) to the value of this Warrant as determined in
accordance with the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
L.P. using (i) a price per share of Common Stock equal to the VWAP (as defined below) 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 100 day volatility
obtained from the “HVT” function on Bloomberg L.P. determined as of the Trading Day immediately
following the public announcement of the applicable Fundamental Transaction. If the Holder
exercises the Cash-Out Option, then the Holder shall surrender this Warrant to the Company for
cancellation and the Company or any successor corporation or other entity shall pay the Cash-Out
Amount by wire transfer to the Holder (if the Holder shall have provided wire transfer instructions
to the Company) or by check mailed to the address of the Holder as shown on the Company’s transfer
books for this Warrant, such payment to be made not later than the last to occur of (i) three
Business Days after the surrender of this Warrant to the Company or such successor or (ii) the
consummation of the applicable Fundamental Transaction. The provisions of this Section
8(b) shall similarly apply to successive Fundamental Transactions if this Warrant is then
outstanding. For purposes of this Warrant “VWAP” means for any date, the price determined by the
first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the volume weighted average of the prices per share of the Common Stock traded on
such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 A.M. New York City
time to 4:00 P.M. New York City time); (b) if the Common Stock is not then listed or quoted on a
Trading Market and if prices for the Common Stock are then quoted on the Bulletin Board, the volume
weighted average of the prices per share of the Common Stock traded on such date (or the nearest
preceding date) on the Bulletin Board; (c) if the Common Stock is not then listed or quoted on a
Trading Market or the Bulletin Board and if prices for the Common Stock are then reported in the
Pink Sheets published by Pink Sheets LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the last bid price per share of the Common Stock so reported on
such date (or the most recent bid price if none is reported for such date); or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Board.
(c) If the Company, at any time while this Warrant is outstanding, distributes to all holders
of Common Stock for no consideration (i) evidences of its indebtedness, (ii) any security (other
than a distribution of Common Stock covered by Section 8(a)), (iii) rights or warrants to
subscribe for or purchase any security (other than as specified in Section 8(f)), (iv) cash
(other than cash dividends or cash distributions payable out of consolidated earnings or earned
surplus) or (v) any other asset (in each case, “Distributed Property”), then, upon any exercise of
this Warrant that occurs after the record date fixed for determination of stockholders entitled to
receive such distribution, the Holder shall be entitled to receive, in addition to the Warrant
Shares otherwise issuable upon such exercise, the Distributed Property that such Holder would have
been entitled to receive in respect of such number of Warrant Shares had the Holder been the record
holder of such Warrant Shares immediately prior to such record date.
11
(d) Except as provided in Section 8(e), if and whenever the Company shall issue or
sell, or is, in accordance with any of Sections 8(d)(1) — (7), deemed to have issued or
sold, any shares of Common Stock for no consideration or for a consideration per share less than
the Exercise Price in effect immediately prior to the time of such issue or sale, then and in each
such case (a “Trigger Issuance”) the then-existing Exercise Price, shall be reduced, as of the
close of business on the effective date of the Trigger Issuance, to a price determined as follows:
Adjusted Exercise Price =
|
(A x B) + D | |
| A+C |
where
“A” equals the number of shares of Common Stock outstanding, including Additional Shares of
Common Stock (as defined below) deemed to be issued hereunder, immediately preceding such Trigger
Issuance;
“B” equals the Exercise Price in effect immediately preceding such Trigger Issuance;
“C” equals the number of Additional Shares of Common Stock issued or deemed issued hereunder
as a result of the Trigger Issuance; and
“D” equals the aggregate consideration, if any, received or deemed to be received by the
Company upon such Trigger Issuance;
provided, however, that in no event shall the Exercise Price after giving effect to
such Trigger Issuance be greater than the Exercise Price in effect prior to such Trigger Issuance.
For purposes of this Section 8(d), “Additional Shares of Common Stock” means all
shares of Common Stock issued by the Company or deemed to be issued pursuant to this Section
8(d), other than Excluded Issuances (as defined in Section 8(e)).
For purposes of this Section 8(d), the following Sections 8(d)(1) — (d)(7)
shall also be applicable:
(1) Issuance of Rights or Options. In case at any time the Company
shall in any manner grant (directly and not by assumption in a merger or otherwise)
any warrants or other rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called “Options” and such
convertible or exchangeable stock or securities being called “Convertible
Securities”) whether or not such Options or the right to convert or exchange any
such Convertible Securities are immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by dividing (i)
the sum (which sum shall constitute the aggregate consideration) of (x) the total
amount, if any, received or receivable by the Company as consideration for the
granting of such Options, plus (y) the aggregate amount of additional consideration
payable to the Company upon the exercise of
12
all such Options, plus (z), in the case of such Options which relate to
Convertible Securities, the aggregate amount of additional consideration, if any,
payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon the conversion or exchange
of all such Convertible Securities, as the case may be, issuable upon the exercise
of such Options) is less than the Exercise Price in effect immediately prior to the
time of the granting of such Options, then the maximum number of shares of Common
Stock issuable upon the exercise of such Options or upon conversion or exchange of
the maximum amount of such Convertible Securities issuable upon the exercise of such
Options shall be deemed to have been issued for the price per share determined
pursuant to this Section 8(d)(1) as of the date of granting of such Options
or the issuance of such Convertible Securities and thereafter shall be deemed to be
outstanding for purposes of adjusting the Exercise Price. Except as otherwise
provided in Section 8(d)(3), no adjustment of the Exercise Price shall be
made upon the actual issue of such Common Stock or of such Convertible Securities
upon exercise of such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(2) Issuance of Convertible Securities. In case the Company shall in
any manner issue (directly and not by assumption in a merger or otherwise) or sell
any Convertible Securities, whether or not the rights to exchange or convert any
such Convertible Securities are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined by
dividing (i) the sum (which sum shall constitute the aggregate consideration) of (x)
the total amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus (y) the aggregate amount of
additional consideration, if any, payable to the Company upon the conversion or
exchange thereof, by (ii) the maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities) shall be less than
the Exercise Price in effect immediately prior to the time of such issue or sale,
then the maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed to have been issued for
such price per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding for purposes of
adjusting the Exercise Price, provided that (a) except as otherwise provided in
Section 8(d)(3), no adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock upon conversion or exchange of such Convertible
Securities and (b) no further adjustment of the Exercise Price shall be made by
reason of the issue or sale of Convertible Securities upon exercise of any Options
to purchase any such Convertible Securities for which adjustments of the Exercise
Price have been made pursuant to the other provisions of Section 8(d).
13
(3) Change in Option Price or Conversion Rate. Upon the happening of
any of the following events, namely, if the purchase price provided for in any
Option referred to in Section 8(d)(l), the additional consideration, if any,
payable
upon the conversion or exchange of any Convertible Securities referred to in
Section 8(d)(1) or Section 8(d)(2), or the rate at which Convertible
Securities referred to in Section 8(d)(1) or Section 8(d)(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions designed to
protect against dilution), the Exercise Price in effect at the time of such event
shall forthwith be readjusted to the Exercise Price which would have been in effect
at such time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. Upon the termination of
any Option for which any adjustment was made pursuant to this Section 8(d)
or any right to convert or exchange Convertible Securities for which any adjustment
was made pursuant to this Section 8(d) (including without limitation upon
the redemption or purchase for consideration of such Convertible Securities by the
Company), the Exercise Price then in effect hereunder shall forthwith be changed to
the Exercise Price which would have been in effect at the time of such termination
had such Option or Convertible Securities, to the extent outstanding immediately
prior to such termination, never been issued.
(4) Stock Dividends. Subject to the provisions of this Section
8(d), in case the Company shall declare a dividend or make any other
distribution upon any stock of the Company (other than the Common Stock) payable in
Common Stock, Options or Convertible Securities, then any Common Stock, Options or
Convertible Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.
(5) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the gross amount received by
the Company therefor. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than cash, the amount
of the consideration other than cash received by the Company shall be deemed to be
the fair value of such consideration as determined in good faith by the Board. In
case any Options shall be issued in connection with the issue and sale of other
securities of the Company, together comprising one integral transaction in which no
specific consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued for such consideration as determined in
good faith by the Board. If Common Stock, Options or Convertible Securities shall
be issued or sold by the Company and, in connection therewith, other Options or
Convertible Securities (the “Additional Rights”) are issued, then the consideration
received or deemed to be received by the Company shall be reduced by the fair market
value of the Additional Rights (as determined using the Black-Scholes Option Pricing
Model or another method mutually agreed to by the Company and the Holder). The
Board shall respond promptly, in writing, to an inquiry by the Holder as to the fair
market value of the Additional Rights. If the Board and the Holder are unable to
agree upon the fair market value of the Additional Rights, the Company and the
Holder shall jointly select an appraiser
who is experienced in such matters to determine the fair market value thereof.
The decision of such appraiser shall be final and conclusive, and the cost of such
appraiser shall be borne evenly by the Company and the Holder.
14
(6) Nasdaq Limitation. Notwithstanding any other provision in
Section 8(d) to the contrary, if a reduction in the Exercise Price pursuant
to Section 8(d) (other than as set forth in this Section 8(d)(6))
would require the Company to obtain stockholder approval of the transactions
contemplated by the Subscription Agreement pursuant to Nasdaq Marketplace Rule
4350(i) and such stockholder approval has not been obtained, (i) the Exercise Price
shall be reduced to the maximum extent that would not require stockholder approval
under such Rule, and (ii) the Company shall use its commercially reasonable efforts
to obtain such stockholder approval as soon as reasonably practicable, including by
calling a special meeting of stockholders to vote on such Exercise Price adjustment.
(7) Adjustment to Warrant Shares. Simultaneously with any adjustment
to the Exercise Price pursuant to Section 8(d), the number of Warrant Shares
purchasable hereunder shall be adjusted by multiplying such number by a fraction,
the numerator of which shall be the Exercise Price in effect immediately prior to
such adjustment and the denominator of which shall be the Exercise Price in effect
immediately thereafter.
(e) Anything herein to the contrary notwithstanding, the Company shall not be required to make
any adjustment of the Exercise Price pursuant to Section 8(d) in the case of 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 Original Issue 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 Original Issue Date other than pursuant to the provisions of
such Options or Convertible Securities as they exist as of the Original Issue Date, (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 Company Warrants or the shares of Common Stock
issued upon exercise of this Warrant or the other Company Warrants, (D) shares of Common Stock,
Options or Convertible Securities issued or issuable by reason of a dividend, stock split or other
distribution on shares of Common Stock (but only to the extent that such a dividend, split or
distribution results in an adjustment in the Exercise Price pursuant to the provisions of
Sections 8(a), 8(b) or 8(c)) and (E) issuances of rights and other
securities pursuant to a Rights Plan as described in Section 8(f) (collectively, “Excluded
Issuances”).
15
(f) If the Rights Agreement between the Company and Mellon Investor Services LLC, as Rights
Agent, dated as of July 7, 2005, as amended as of July 3, 2008, and as further amended or
supplemented from time to time, or any successor or similar rights plan (a “Rights Plan”) is in
effect upon the exercise of this Warrant, the Holder will receive, in addition
to the Warrant Shares issuable upon such exercise, the rights issuable under such Rights Plan
with respect to such Warrant Shares unless prior to such exercise the rights shall have separated
from the Common Stock and, pursuant to the terms of the Rights Plan, no additional rights may be
issued thereunder, in which case, such holder shall be entitled to receive, in addition to such
Warrant Shares, such number of equivalent rights that entitle the Holder to acquire shares of
capital stock, securities, indebtedness, cash or other assets on the same terms and conditions as
the rights issued under the Rights Plan; provided that (i) no such distribution of rights shall be
required if, at the time of such exercise, all of the rights issued under the Rights Plan shall
have expired or (subject to the next sentence) been redeemed or exchanged, or if the Rights Plan
shall have been terminated or expired and (ii) if so provided by the Rights Plan, such rights
shall be evidenced by the certificates evidencing such Warrant Shares and shall not be separable
from such Warrant Shares until the occurrence of events, if any, specified by such Rights Plan that
would cause the separation of the rights issued thereunder. If rights issued under the Rights Plan
are redeemed for shares of capital stock, securities, indebtedness, cash or other assets or
otherwise exchanged for shares of capital stock, securities, indebtedness, cash or other assets
prior to the exercise of this Warrant, then upon the exercise of this Warrant, the Holder will
receive, in addition to the Warrant Shares issuable upon such exercise, the appropriate number of
such shares of capital stock, securities, indebtedness, cash or other assets that such Holder would
have received had the rights that would have accompanied such Warrant Shares been issued to such
Holder.
(g) All adjustments under this Section 8 shall become effective immediately after the
payment date in the case of each dividend or distribution and immediately after the effective date
of each other event which requires an adjustment.
(h) In the event that, as a result of an adjustment made pursuant to this Section 8,
the Holder shall become entitled to receive any shares of capital stock of the Company other than
shares of Common Stock, the number of such other shares so receivable upon exercise of this Warrant
and the Exercise Price shall be subject thereafter to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions of this Section 8.
(i) All calculations under this Section 8 shall be made to the nearest cent or the
nearest 1/100th of a share, as applicable, with one-half of a cent or 5/1000th of a
share rounded upwards.
(j) For purposes of this Section 8, the number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account of the Company or
any of its wholly-owned subsidiaries, and the disposition of any such shares (other than the
cancellation or retirement thereof) shall be considered an issue or sale of Common Stock.
Section 9. Fractional Interest. The Company shall not be required to issue fractions
of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would,
except for the provisions of the first sentence of this Section 9, be deliverable upon such
exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising
Holder an amount in cash equal to the Market Price of such fractional share of Common Stock on the
date of exercise.
16
Section 10. Benefits. Except as provided in Section 14, nothing in this
Warrant shall be construed to give any person, firm or corporation (other than the Company and the
Holder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be
for the sole and exclusive benefit of the Company and the Holder.
Section 11. Notices to Holder.
(a) Upon the occurrence of each adjustment pursuant to Section 8, the Company at its
expense will promptly compute such adjustment in accordance with the terms of this Warrant and
prepare a certificate setting forth such adjustment, in good faith, including a statement of the
adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable
upon exercise of this Warrant (as applicable), describing the transactions giving rise to such
adjustments and showing in detail the facts upon which such adjustment is based. The Company will
promptly deliver a copy of each such certificate to the Holder and to the Company’s transfer agent.
(b) If, while this Warrant is outstanding, the Company (i) declares a dividend or any other
distribution of cash, securities or other property in respect of its Common Stock, including
without limitation any granting of rights or warrants to subscribe for or purchase any capital
stock of the Company or any subsidiary of the Company, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii)
authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company,
then, except if such notice and the contents thereof shall be deemed to constitute material
non-public information, the Company shall deliver to the Holder a notice describing the material
terms and conditions of such transaction at least 10 Trading Days prior to the applicable record or
effective date on which a person or entity would need to hold Common Stock in order to participate
in or vote with respect to such transaction, and the Company will take all reasonable steps to give
the Holder the practical opportunity to exercise this Warrant prior to such time; provided,
however, that the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.
Section 12. Identity of Transfer Agent. The transfer agent for the Common Stock is
Mellon Investor Services LLC. Upon the appointment of any subsequent transfer agent for the Common
Stock or other shares of the Company’s capital stock issuable upon the exercise of this Warrant,
the Company will mail to the Holder a statement setting forth the name and address of such transfer
agent.
17
Section 13. Notices. Except as expressly provided herein, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed effectively given as
hereinafter described (i) if given by personal delivery, then such notice shall be deemed given
upon such delivery, (ii) if given by telex or facsimile, then such notice shall be deemed given
upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice
shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three
days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an
internationally recognized overnight air courier, then such notice shall be deemed given one
business day after delivery to such carrier. All notices shall be addressed as follows: (i) if to
the Holder, at its address as set forth in the Company’s books and records and (ii) if to the
Company, at the address as follows:
Capstone Turbine Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as the Company or the Holder may designate by ten days’ advance written
notice to the other in accordance with this Section 13.
Section 14. Successors. All the covenants and provisions hereof by or for the benefit
of the Holder shall bind and inure to the benefit of its respective successors and assigns
hereunder.
Section 15. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This
Warrant shall be governed by, and construed in accordance with, the internal laws of the State of
New York. To the maximum extent permitted under applicable law, the Company and, by accepting this
Warrant, the Holder, each (i) irrevocably submits to the exclusive jurisdiction of the courts of
the State of New York located in New York County and the United States District Court for the
Southern District of New York for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this Warrant and the transactions contemplated hereby, (ii) agrees that
service of process in connection with any such suit, action or proceeding may be served on it
anywhere in the world by the same methods as are specified for the giving of notices under this
Warrant, (iii) irrevocably consents to the jurisdiction of any such court in any such suit, action
or proceeding and to the laying of venue in such court and (iv) irrevocably waives any objection to
the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, EACH OF THE
COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY
JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.
Section 16. No Rights as Stockholder. Prior to the exercise of this Warrant, the
Holder shall not have or exercise any rights as a stockholder of the Company by virtue of its
ownership of this Warrant.
Section 17. Amendment; Waiver. Any term of this Warrant may be amended or waived
(including the adjustment provisions included in Section 8 of this Warrant) upon the
written consent of the Company and the Holder.
Section 18. Section Headings. The section headings in this Warrant are for the
convenience of the Company and the Holder and in no way alter, modify, amend, limit or restrict the
provisions hereof.
[Signature Page Follows]
18
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the
___day of September, 2008.
| CAPSTONE TURBINE CORPORATION |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
19
Appendix A
CAPSTONE TURBINE CORPORATION
NOTICE OF EXERCISE
NOTICE OF EXERCISE
Capstone Turbine Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
The undersigned hereby irrevocably elects under Section 3(a)(i) of Warrant No.___
issued by Capstone Turbine Corporation (the “Warrant”) to exercise the right of purchase
represented by the Warrant for, and to purchase thereunder by the payment of the Exercise Price,
shares of Common Stock (“Warrant Shares”) provided for therein,
and requests that the Warrant Shares be issued as follows:
| Name | ||
| Address | ||
| Federal Tax ID or Social Security No. |
and delivered by
|
o | certified mail to the above address | ||
| o | electronically (provide DWAC Instructions: | |||
| _________________) | ||||
| o | other___________________________(specify) | |||
If the undersigned is delivering the certificate evidencing the Warrant and if the number of
Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, a new
Warrant for the balance of the Warrant Shares purchasable upon exercise of the Warrant shall be
registered in the name of the undersigned Holder or the undersigned’s assignee as below indicated
and delivered to the address stated below.
Notwithstanding anything to the contrary contained herein, this Exercise Notice shall constitute a
representation by the Holder of the Warrant submitting this Exercise Notice that, after giving
effect to the exercise provided for in this Exercise Notice, such Holder will not have beneficial
ownership of a number of shares of Common Stock which exceeds 9.999% of the total outstanding
shares of Common Stock as determined pursuant to the provisions of Section 3(f) of the Warrant,
unless such provisions have been waived by such Holder in accordance with the provisions of such
section. In determining whether the Holder will not have beneficial ownership of a number of
shares of Common Stock which exceeds 9.999%, the Company may rely on the above representation and
warranty of the Holder. Capitalized terms used herein and not otherwise defined herein have the
specific meanings set forth in the Warrant.
A-1
Dated:________________, ________
Signature:___________________________
Note: The signature must correspond with the
name of the Holder as written on the first page
of the Warrant being exercised in every
particular, without alteration or enlargement or
any change whatever, unless this Warrant has
been assigned.
name of the Holder as written on the first page
of the Warrant being exercised in every
particular, without alteration or enlargement or
any change whatever, unless this Warrant has
been assigned.
| Name (please print) | ||
| Address | ||
| Federal Identification or | ||
| Social Security No. | ||
| Assignee: | ||
A-2
Appendix B
CAPSTONE TURBINE CORPORATION
NOTICE OF EXERCISE
NOTICE OF EXERCISE
Capstone Turbine Corporation
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Attention: Chief Financial Officer
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Attention: Chief Financial Officer
The undersigned hereby irrevocably elects under Section 3(a)(ii) of Warrant No.___
issued by Capstone Turbine Corporation (the “Warrant”) to exercise the right of purchase
represented by the Warrant for, and to purchase thereunder by cashless exercise of this Warrant,
shares of Common Stock (“Warrant Shares”) provided for therein, and
requests that the Warrant Shares be issued as follows:
| Name | ||
| Address | ||
| Federal Tax ID or Social Security No. |
and delivered by
|
o | certified mail to the above address, or | ||
| o | electronically (provide DWAC Instructions: | |||
| _________________), or | ||||
| o | other___________________________ (specify) | |||
If the undersigned is delivering the certificate evidencing the Warrant and if the number of
Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, a new
Warrant for the balance of the Warrant Shares purchasable upon exercise of the Warrant shall be
registered in the name of the undersigned Holder or the undersigned’s assignee as below indicated
and delivered to the address stated below.
Notwithstanding anything to the contrary contained herein, this Exercise Notice shall constitute a
representation by the Holder of the Warrant submitting this Exercise Notice that, after giving
effect to the exercise provided for in this Exercise Notice, such Holder will not have beneficial
ownership of a number of shares of Common Stock which exceeds 9.999% of the total outstanding
shares of Common Stock as determined pursuant to the provisions of Section 3(f) of the Warrant,
unless such provisions have been waived by such Holder in accordance with the provisions of such
section. In determining whether the Holder will not have beneficial ownership of a number of
shares of Common Stock which exceeds 9.999%, the Company may rely on the above representation and
warranty of the Holder. Capitalized terms used herein and not otherwise defined herein have the
specific meanings set forth in the Warrant.
B-1
Dated:________________, ________
Signature:___________________________
Note: The signature must correspond with the
name of the Holder as written on the first page
of the Warrant being exercised in every
particular, without alteration or enlargement or
any change whatever, unless this Warrant has
been assigned.
name of the Holder as written on the first page
of the Warrant being exercised in every
particular, without alteration or enlargement or
any change whatever, unless this Warrant has
been assigned.
| Name (please print) | ||
| Address | ||
| Federal Identification or | ||
| Social Security No. | ||
| Assignee: | ||
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