CAPSTONE TURBINE CORPORATION SECURITIES LITIGATION

Case No.: CV 15-08914-DMG (RAOx)

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Frequently Asked Questions

  1. Why did I get the postcard notice?

    The Court directed that the Postcard Notice be mailed to you because you or someone in your family or an investment account for which you serve as a custodian may have purchased or otherwise acquired one or more of the Capstone common stock during the Settlement Class Period. The Court also directed that this Notice be posted online at www.CapstoneTurbineSecuritiesLitigation.com and mailed to you upon request to the Claims Administrator. The Court has directed us to disseminate these notices because, as a potential Settlement Class Member, you have a right to know about your options before the Court rules on the proposed Settlement. Additionally, you have the right to understand how this class action lawsuit may generally affect your legal rights. If the Court approves the Settlement, and the Plan of Allocation (or some other plan of allocation), the claims administrator selected by Plaintiffs and approved by the Court will make payments pursuant to the Settlement after any objections and appeals are resolved.

    The purpose of this Notice is to inform you of the existence of this case, that it is a class action, how you might be affected, and how to exclude yourself from the Settlement Class if you wish to do so. It is also being sent to inform you of the terms of the proposed Settlement, and of a hearing to be held by the Court to consider the fairness, reasonableness, and adequacy of the Settlement, the proposed Plan of Allocation and the motion by Lead Counsel for an award of attorneys' fees and reimbursement of Litigation Expenses (the "Settlement Hearing"). See paragraph 78 in the Notice for details about the Settlement Hearing, including the date and location of the hearing.

    The issuance of the Notice is not an expression of any opinion by the Court concerning the merits of any claim in the Action, and the Court still has to decide whether to approve the Settlement. If the Court approves the Settlement and a plan of allocation, then payments to Authorized Claimants will be made after any appeals are resolved and after the completion of all claims processing. Please be patient, as this process can take some time to complete.

  2. What is this case about?

    This litigation stems from Plaintiffs' allegations that Defendants made misstatements and omissions regarding Capstone's backlog orders and accounts receivable.

    The class action complaint in this Action was filed in the United States District Court for the Central District of California, which by Order dated February 29, 2016, consolidated the action with a related case, recaptioned the action as In re Capstone Turbine Corp. Securities Litigation, CV 15-08914- DMG (RAOx), and appointed Lead Plaintiffs and Lead Counsel.

    On May 6, 2016, Plaintiffs filed and served their Consolidated Class Action Complaint (the "Consolidated Complaint") asserting claims against all Defendants under Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, and against the Individual Defendants under Section 20(a) of the Exchange Act. Among other things, the Consolidated Complaint alleged that Defendants made materially false and misleading statements about the company's backlog orders and accounts receivable. The Consolidated Complaint further alleged that the prices of Capstone publicly-traded securities were artificially inflated as a result of Defendants' allegedly false and misleading statements, and declined when the alleged truth was revealed.

    On June 17, 2016, Defendants moved to dismiss the Consolidated Complaint.

    On July 12, 2016, the parties filed a Joint Stipulation of Dismissal of Claims against Edward I. Reich, due to the fact that Mr. Reich died after the case was initiated, and on July 13, 2016, the Court entered an Order dismissing the claims against Mr. Reich without prejudice.

    On March 10, 2017, the Court granted Defendants' motion to dismiss with leave to amend.

    On April 28, 2017, Plaintiffs filed and served the Consolidated Second Amended Class Action Complaint for Violations of the Federal Securities Laws (the "Amended Complaint"). The Amended Complaint, like the Consolidated Complaint, asserted claims against Defendants Capstone, Jamison, and Brooks under Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and against Individual Defendants Jamison and Brooks under Section 20(a) of the Exchange Act. The Amended Complaint alleged claims substantially similar to those alleged in the Consolidated Complaint.

    On June 2, 2017, Defendants filed and served a motion to dismiss the Amended Complaint. The motion was fully briefed. On February 9, 2018, the Court entered an order denying Defendants' motion.

    On March 30, 2018, Defendants filed and served an answer to the Amended Complaint

    Plaintiffs continued their investigation into the claims asserted but they also recognized that the Court's decision on the motion to dismiss underscored the risks attendant to this litigation. While the Parties believe in the merits of their respective positions, they recognized the benefits that would accrue if they could reach an agreement to resolve the Action. They began to discuss the possibility of exploring whether a settlement could be reached through mediation. The Parties selected former federal district court Judge Layn Phillips as mediator and scheduled a mediation session for September 24, 2018.

    In advance of the mediation, Defendants produced relevant documents relating to Capstone's accounts receivables and backlog. Defendants' substantial production was reviewed and analyzed by Lead Counsel. Following Defendants' production, the Parties exchanged detailed mediation statements and exhibits that addressed the issues of liability, loss causation and damages. Thereafter, each Party provided rebuttal statements and exhibits. Both the opening and rebuttal mediation statements and exhibits were submitted to Judge Phillips in advance of a full-day mediation session that occurred on September 24, 2018. The session, which the Lead Plaintiffs attended in person, ended without any settlement agreement being reached.

    Over the course of the next several weeks, Judge Phillips conducted further discussions with the Parties which culminated in Judge Phillips issuing a mediator's proposal to settle this Action. The Parties ultimately agreed to Judge Phillips' mediator's proposal to settle the Action for $5,550,000.

    Based on the investigation, drafting of two substantial complaints, briefing on two motions to dismiss, documents produced by Defendants, mediation of the case and Plaintiffs' direct oversight of the prosecution of this matter and with the advice of their counsel, each of the Plaintiffs has agreed to settle and release the claims raised in the Action pursuant to the terms and provisions of the Stipulation, after considering, among other things, (a) the substantial financial benefit that Plaintiffs and the other members of the Settlement Class will receive under the proposed Settlement; and (b) the significant risks and costs of continued litigation and trial.

    Defendants are entering into the Stipulation solely to eliminate the uncertainty, burden and expense of further protracted litigation. Defendants, individually and collectively, have denied and continue to deny that they have violated the federal securities laws and maintain that their conduct was at all times proper and in compliance with all applicable provisions of the law. Defendants have denied and continue to deny specifically each and all of the claims and contentions of wrongful conduct alleged in the Action, along with all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Action. Defendants also have denied and continue to deny, inter alia, the allegations that they knowingly or otherwise, made any material misstatements or omissions, that the price of Capstone common stock was artificially inflated by reason of any alleged misrepresentation or otherwise, or that any member of the Settlement Class or any Capstone investor was harmed by the conduct alleged in the Action or that could have been alleged as part of the Action. In addition, the Defendants maintain they have meritorious defenses to all claims alleged in the Action. The Stipulation shall in no event be construed or deemed to be evidence of or an admission or concession on the part of any of the Defendants, or any other of the Defendants' Releasees (defined in ¶ 37 below), with respect to any claim or allegation of any fault or liability or wrongdoing or damage whatsoever, or any infirmity in the defenses that the Defendants have, or could have, asserted.

    Similarly, the Stipulation shall in no event be construed or deemed to be evidence of or an admission or concession on the part of any plaintiff of any infirmity in any of the claims asserted in the Action, or an admission or concession that any of the Defendants' defenses to liability had any merit.

    On May 17, 2019, the Court preliminarily approved the Settlement, authorized the Postcard Notice to be mailed to potential Settlement Class Members and this Notice to be posted online and mailed to potential Settlement Class Members upon request, and scheduled the Settlement Hearing to consider whether to grant final approval to the Settlement.

  3. How do I know if I am affected by the settlement? Who is included in the settlement class?

    If you are a member of the Settlement Class, you are subject to the Settlement, unless you timely request to be excluded. The Settlement Class consists of:

    all persons and entities who or which purchased or otherwise acquired Capstone common stock between June 12, 2014 and November 5, 2015, inclusive (the "Settlement Class Period") and were damaged thereby.

    Excluded from the Settlement Class are Defendants; members of the Immediate Family of each of the Individual Defendants; the Officers and/or directors of Capstone; any person, firm, trust, corporation, Officer, director or other individual or entity which is related to or affiliated with any of the Defendants; and the legal representatives, agents, affiliates, heirs, successors-in-interest or assigns of any such excluded party. Also excluded from the Settlement Class are any persons or entities who or which exclude themselves by submitting a request for exclusion in accordance with the requirements set forth in this Notice. See "What If I Do Not Want To Be A Member Of The Settlement Class? How Do I Exclude Myself," on page 25 in the Notice.

    PLEASE NOTE: RECEIPT OF THE POSTCARD NOTICE DOES NOT MEAN THAT YOU ARE A SETTLEMENT CLASS MEMBER OR THAT YOU WILL BE ENTITLED TO RECEIVE PROCEEDS FROM THE SETTLEMENT.

    If you are a Settlement Class Member and you wish to be eligible to participate in the distribution of proceeds from the Settlement, you are required to submit the Claim Form that is available online at www.CapstoneTurbineSecuritiesLitigation.com or which can be mailed to you upon request to the Claims Administrator, and the required supporting documentation as set forth therein, postmarked no later than October 15, 2019.

  4. What are plaintiffs' reasons for the settlement?

    Plaintiffs and Lead Counsel believe that the claims asserted against Defendants have merit. They recognize, however, the expense and length of continued proceedings necessary to pursue their claims against the remaining Defendants through trial and appeals, as well as the very substantial risks they would face in establishing liability and damages. Plaintiffs and Lead Counsel recognized that Defendants had numerous avenues of attack that could preclude recovery. For example, Defendants asserted that their statements were not materially false or misleading, and that even Plaintiffs could prove a materially false or misleading statement, Defendants did not make any statements with the requisite state of mind to support the securities fraud claim alleged. Even if the hurdles to establishing liability were overcome, the amount of damages that could be attributed to the allegedly false statement would be hotly contested because other material disclosures concerning Capstone's financial condition were made at the time of the alleged disclosure of the alleged fraud. Plaintiffs would have to prevail at several stages – motions for summary judgment, trial, and if they prevailed on those, on the appeals that were likely to follow. Thus, there were very significant risks attendant to the continued prosecution of the Action.

    In light of these risks, the amount of the Settlement and the immediacy of recovery to the Settlement Class, Plaintiffs and Lead Counsel believe that the proposed Settlement is fair, reasonable and adequate, and in the best interests of the Settlement Class. Plaintiffs and Lead Counsel believe that the Settlement provides a substantial benefit to the Settlement Class, namely $5,550,000 in cash (less the various deductions described in this Notice), as compared to the risk that the claims in the Action would produce a smaller, or no recovery after summary judgment, trial and appeals, possibly years in the future.

    Defendants have denied the claims asserted against them in the Action and deny having engaged in any wrongdoing or violation of law of any kind whatsoever. The Defendants assert, among other things, that they did not violate any federal securities laws and that Capstone's investors were not damaged. Defendants have agreed to the Settlement solely to eliminate the burden, uncertainty, and expense of continued litigation. Accordingly, the Settlement may not be construed as an admission of any wrongdoing by Defendants.

  5. What might happen if there were no settlement?

    If there were no Settlement and Plaintiffs failed to establish any essential legal or factual element of their claims against Defendants, neither Plaintiffs nor the other members of the Settlement Class would recover anything from Defendants. Also, if Defendants were successful in proving any of their defenses, either at summary judgment, at trial or on appeal, the Settlement Class could recover substantially less than the amount provided in the Settlement, or nothing at all.

  6. How are settlement class members affected by the action and the settlement?

    As a Settlement Class Member, you are represented by Plaintiffs and Lead Counsel, unless you enter an appearance through counsel of your own choice at your own expense. You are not required to retain your own counsel, but if you choose to do so, such counsel must file a notice of appearance on your behalf and must serve copies of his or her appearance on the attorneys listed in the section entitled, "When And Where Will The Court Decide Whether To Approve The Settlement?," on page 26 in the Notice.

    If you are a Settlement Class Member and do not wish to remain a Settlement Class Member, you may exclude yourself from the Settlement Class by following the instructions in the section entitled, "What If I Do Not Want To Be A Member Of The Settlement Class? How Do I Exclude Myself?," on page 25 below.

    If you are a Settlement Class Member and you wish to object to the Settlement, the Plan of Allocation, or Lead Counsel's application for attorneys' fees and reimbursement of Litigation Expenses, and if you do not exclude yourself from the Settlement Class, you may present your objections by following the instructions in the section entitled, "When And Where Will The Court Decide Whether To Approve The Settlement?," on page 26 in the Notice.

    If you are a Settlement Class Member and you do not exclude yourself from the Settlement Class, you will be bound by any orders issued by the Court. If the Settlement is approved, the Court will enter a judgment (the "Judgment"). The Judgment will dismiss with prejudice the claims against Defendants and will provide that, upon the Effective Date of the Settlement, Plaintiffs and each of the other Settlement Class Members, on behalf of themselves, and their respective heirs, executors, administrators, predecessors, successors, and assigns in their capacities as such, will have fully, finally and forever compromised, settled, released, resolved, relinquished, waived and discharged each and every Released Plaintiffs' Claim (as defined in ¶ 36 in the Notice) (including, without limitation, Unknown Claims) against the Defendants and the other Defendants' Releasees (as defined in ¶ 37 in the Notice) (whether or not such Settlement Class Member executes and delivers a Proof of Claim form or obtains a distribution from the Net Settlement Fund). The Judgment will also provide that, upon the Effective Date, Plaintiffs and each of the Settlement Class Members and anyone claiming through or on behalf of them, shall be permanently barred and enjoined from (i) the commencement, assertion, institution, maintenance, prosecution, or enforcement against any Defendant or any other Defendants' Releasee of any action or other proceeding in any court of law or equity, arbitration, tribunal, administrative forum, or forum of any kind, asserting any of Plaintiffs' Released Claims (including, without limitation, Unknown Claims), and/or (ii) appealing any prior rulings in this case.

    "Released Plaintiffs' Claims" means all claims, demands, rights, causes of action or liabilities of every nature and description whatsoever (including, but not limited to, any claims for damages, interest, attorneys' fees, expert or consulting fees, and other costs, expenses or liabilities whatsoever), whether known claims or Unknown Claims, whether arising under federal, state, common or foreign law or any other law, rule, ordinance, administrative provision or regulation, whether class or individual in nature, whether fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity, matured, unmatured, concealed or hidden, suspected or unsuspected, which now exist or heretofore have existed, that Plaintiffs or any other member of the Settlement Class: (i) asserted in the Amended Complaint or prior complaints in this Action; or (ii) could have asserted in any forum that arise out of or are based upon the allegations, transactions, public filings, statements, facts, matters or occurrences, representations or omissions involved, set forth, or referred to in the Amended Complaint and that relate to the purchase, acquisition, holding, disposition, or sale of Capstone common stock during the Settlement Class Period. Released Plaintiffs' Claims do not include: (i) any claims relating to the enforcement of the Settlement; (ii) any claims of any person or entity who or which submits a request for exclusion that is accepted by the Court; (iii) claims of FiveT Investment Management LTD and Deep Field Fund Spc Ltd Open Cluster Segregated Portfolio brought by them in the action styled FiveT Investment Management LTD, et al., v. Jamison, et al., Case No. CV-18-03512-DMG-RAOx (C.D. Cal.); and (iv) claims brought derivatively in the following actions: Stesiak v. Jamison, et al., No. BC610782 (Los Angeles County); Kilpatrick v. Simon, et al., No. BC623167 (Los Angeles County); Haber v. Jamison, et al., No. CV16-01569-DMG-RAOx (C.D. Cal.); Tuttle v. Atkinson, et al., No. CV 16-05127-DMG-RAOx (C.D. Cal.); and Boll v. Jamison, et al., No. CV16-05282-DMG-RAOx (C.D. Cal.).

    "Defendants' Releasees" means Defendants and their current and former officers, directors, partners, insurers, co-insurers, reinsurers, principals, controlling shareholders, attorneys, accountants, auditors, investment advisors, personal or legal representatives, agents, parents, affiliates, subsidiaries, successors, predecessors, divisions, joint ventures, assigns, assignees, spouses, heirs, estates, related or affiliated entities, employees, any entity in which Defendants have a controlling interest, any members of the Individual Defendants' Immediate Family, any trust of which an Individual Defendant is the settlor or which is for the benefit of an Individual Defendant and/or any member of an Individual Defendant's Immediate Family, and any entity in which a Defendant and/or any member of an Individual Defendant's Immediate Family has or have a controlling interest (directly or indirectly).

    "Unknown Claims" means any Released Plaintiffs' Claims which any plaintiff or any other Settlement Class Member does not know or suspect to exist in his, her or its favor at the time of the release of such claims, and any Released Defendants' Claims which any Defendant or any other Defendants' Releasee does not know or suspect to exist in his, her, or its favor at the time of the release of such claims, which, if known by him, her or it, might have affected his, her or its decision(s) with respect to this Settlement, including his, her or its decision(s) not to object to the Settlement or to seek exclusion from the Settlement Class. With respect to any and all Released Claims, the Parties stipulate and agree that, upon the Effective Date of the Settlement, Plaintiffs and Defendants shall expressly waive, and each of the other Settlement Class Members and each of the other Defendants' Releases shall be deemed to have waived, and by operation of the Judgment, shall have expressly waived the provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law or foreign law, which is similar, comparable, or equivalent to California Civil Code §1542, which provides:

    A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

    Plaintiffs, any Settlement Class Member, Defendants, and their respective Releasees, may hereafter discover facts in addition to or different from those which he, she, or it now knows or believes to be true with respect to the subject matter of the Released Claims, but the Parties stipulate and agree that, upon the Effective Date of the Settlement, Plaintiffs and each of the Defendants shall expressly waive, and each of the other Settlement Class Members and Releasees shall be deemed to have waived, and by operation of the Judgment, shall have expressly waived any and all Released Claims without regard to the subsequent discovery or existence of such different or additional facts. Plaintiffs and Defendants acknowledge, and each of the other Settlement Class Members and each of the other Defendants' Releasees shall be deemed by operation of law to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the Settlement.

    The Judgment will also provide that, upon the Effective Date of the Settlement, Defendants, on behalf of themselves, and their respective heirs, executors, administrators, predecessors, successors, and assigns in their capacities as such, will have fully, finally and forever compromised, settled, released, resolved, relinquished, waived and discharged each and every Released Defendants' Claim (as defined in ¶ 40 in the Notice) against Plaintiffs and the other Plaintiffs' Releasees (as defined in ¶ 41 in the Notice), and shall forever be barred and enjoined from prosecuting any or all of the Released Defendants' Claims against any of the Plaintiffs' Releasees.

    "Released Defendants' Claims" means all claims, demands, rights, causes of action or liabilities of every nature and description whatsoever (including, but not limited to, any claims for damages, interest, attorneys' fees, expert or consulting fees, and other costs, expenses or liabilities whatsoever), whether known claims or Unknown Claims, whether arising under federal, state, common or foreign law or any other law, rule, ordinance, administrative provision or regulation, whether class or individual in nature, whether fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity, matured, unmatured, concealed or hidden, suspected or unsuspected, which now exist or heretofore have existed, that arise out of or relate in any way to the institution, prosecution, or settlement of the claims asserted in the Action against the Defendants. Released Defendants' Claims do not include any claims relating to the enforcement of the Settlement or any claims against any person or entity who or which submits a request for exclusion from the Settlement Class that is accepted by the Court.

    "Plaintiffs' Releasees" means Plaintiffs, all other plaintiffs in the Action, their respective attorneys, and all other Settlement Class Members, and their respective current and former officers, directors, agents, parents, affiliates, subsidiaries, successors, predecessors, assigns, assignees, employees, and attorneys, any entity in which Plaintiffs have a controlling interest, any members of a Plaintiff's Immediate Family, any trust of which an Plaintiff is the settlor or which is for the benefit of a Plaintiff and/or any member of a Plaintiff's Immediate Family, and any entity in which a Plaintiff and/or any member of a Plaintiff's Immediate Family has or have a controlling interest (directly or indirectly).

  7. How do I participate in the settlement? What do I need to do?

    To be eligible for a payment from the proceeds of the Settlement, you must be a member of the Settlement Class and you must timely complete and return the Claim Form with adequate supporting documentation postmarked no later than October 15, 2019. A Claim Form is available on the website maintained by the Claims Administrator for the Settlement, www.CapstoneTurbineSecuritiesLitigation.com, or you may request that a Claim Form be emailed to you by contacting the Claims Administrator at Info@CapstoneTurbineSecuritiesLitigation.com. Please retain all records of your ownership of and transactions in Capstone common stock, as they may be needed to document your Claim. If you request exclusion from the Settlement Class or do not submit a timely and valid Claim Form, you will not be eligible to share in the Net Settlement Fund.

  8. How much will my payment be?

    At this time, it is not possible to make any determination as to how much any individual Settlement Class Member may receive from the Settlement.

    Pursuant to the Settlement, Defendants have agreed to pay or caused to be paid five million five hundred fifty thousand dollars ($5,550,000) in cash. The Settlement Amount will be deposited into an escrow account. The Settlement Amount plus any interest earned thereon after being transferred to the escrow account is referred to as the "Settlement Fund." If the Settlement is approved by the Court and the Effective Date occurs, the "Net Settlement Fund" (that is, the Settlement Fund less (a) all federal, state and/or local taxes on any income earned by the Settlement Fund and the reasonable costs incurred in connection with determining the amount of and paying taxes owed by the Settlement Fund (including, without limitation, reasonable expenses of tax attorneys and accountants), and all taxes imposed on payments by the Settlement Fund, including withholding taxes; (b) the costs and expenses incurred in connection with providing notice to Settlement Class Members and administering the Settlement on behalf of Settlement Class Members; and (c) any attorneys' fees and Litigation Expenses awarded by the Court) will be distributed to Settlement Class Members who submit valid Claim Forms, in accordance with the proposed Plan of Allocation or such other plan of allocation as the Court may approve.

    The Net Settlement Fund will not be distributed unless and until the Court has approved the Settlement and a plan of allocation, and the time for any petition for rehearing, appeal or review, whether by certiorari or otherwise, has expired.

    Neither Defendants nor any other person or entity that paid any portion of the Settlement Amount on their behalf are entitled to get back any portion of the Settlement Fund once the Court's order or judgment approving the Settlement becomes Final. Defendants and the other Defendants' Releasees shall not have any liability, obligation or responsibility for the administration of the Settlement, the disbursement of the Net Settlement Fund or the plan of allocation.

    Approval of the Settlement is independent from approval of a plan of allocation. Any determination with respect to a plan of allocation will not affect the Settlement, if approved.

    Unless the Court otherwise orders, any Settlement Class Member who fails to submit a Claim Form postmarked on or before October 15, 2019 shall be fully and forever barred from receiving payments pursuant to the Settlement but will in all other respects remain a Settlement Class Member and be subject to the provisions of the Stipulation, including the terms of any Judgment entered and the releases given. This means that each Settlement Class Member releases the Released Plaintiffs' Claims (as defined in ¶ 36 in the Notice) against Defendants and the other Defendants' Releasees (as defined in ¶ 37 in the Notice) and will be enjoined and prohibited from filing, prosecuting, or pursuing any of the Released Plaintiffs' Claims against any of the Defendants or the other Defendants' Releasees whether or not such Settlement Class Member submits a Claim Form.

    Participants in and beneficiaries of a plan covered by ERISA ("ERISA Plan") should NOT include any information relating to their transactions in Capstone common stock held through the ERISA Plan in any Claim Form that they may submit in this Action. They should include ONLY those shares that they purchased or acquired outside of the ERISA Plan. Claims based on any ERISA Plan's purchases or acquisitions of Capstone common stock during the Settlement Class Period may be made by the plan's trustees. To the extent any of the Defendants or any of the other persons or entities excluded from the Settlement Class are participants in the ERISA Plan, such persons or entities shall not receive, either directly or indirectly, any portion of the recovery that may be obtained from the Settlement by the ERISA Plan.

    The Court has reserved jurisdiction to allow, disallow, or adjust on equitable grounds the Claim of any Settlement Class Member.

    Each Claimant shall be deemed to have submitted to the jurisdiction of the Court with respect to his, her or its Claim Form.

    Only Settlement Class Members, i.e., persons and entities who purchased or otherwise acquired Capstone common stock during the Settlement Class Period and were damaged as a result of such purchases or acquisitions will be eligible to share in the distribution of the Net Settlement Fund. Persons and entities that are excluded from the Settlement Class by definition or that exclude themselves from the Settlement Class pursuant to request will not be eligible to receive a distribution from the Net Settlement Fund and should not submit Claim Forms. The only securities that are included in the Settlement are Capstone common stock.

    PROPOSED PLAN OF ALLOCATION

    The objective of the Plan of Allocation is to equitably distribute the Settlement proceeds to those Settlement Class Members who suffered economic losses as a proximate result of the alleged wrongdoing. The Court has not made any findings that the Defendants are liable to the Settlement Class or that the Settlement Class has suffered any compensable damages, nor has the Court made any finding as to the measure of damages.

    The calculations made pursuant to the Plan of Allocation are not intended to be estimates of, nor indicative of, the amounts that Settlement Class Members might have been able to recover after a trial. Nor are the calculations pursuant to the Plan of Allocation intended to be estimates of the amounts that will be paid to Authorized Claimants pursuant to the Settlement. The computations under the Plan of Allocation are only a method to weigh the claims of Authorized Claimants against one another for the purposes of making pro rata allocations of the Net Settlement Fund.

    The Plan of Allocation generally measures the amount of loss that a Settlement Class Member can claim for purposes of making pro rata allocations of the cash in the Net Settlement Fund to Authorized Claimants. The Plan of Allocation is not a formal damage analysis. Recognized Loss Amounts are based primarily on the price declines observed over the period which Plaintiffs allege corrective information was entering the market place. In this case, Plaintiffs allege that Defendants made false statements and omitted material facts between June 12, 2014 and November 5, 2015, which had the effect of artificially inflating the prices of Capstone common stock.

    In order to have recoverable damages, the corrective disclosure of the allegedly misrepresented information must be the cause of the decline in the price or value of the Capstone stock. In this Action, Plaintiffs allege that Defendants made false statements and omitted material facts during the period between June 12, 2014 and November 5, 2015, inclusive, which had the effect of artificially inflating the prices of Capstone common stock. Plaintiffs further allege that corrective disclosures removed artificial inflation from the price of Capstone stock on August 7, 2014, June 15, 2015, October 1, 2015, and November 5, 2015. Thus, in order for a Settlement Class Member to have a "Recognized Loss Amount" under the Plan of Allocation, with respect to Capstone stock, the shares must have been purchased or acquired during the Settlement Class Period and held through at least one of these disclosure dates. Additionally, in order to have a Recognized Loss Amount, a Claimant must have suffered a loss on their transactions in Capstone common stock.

    To the extent a Claimant does not satisfy one of the conditions set forth in the preceding paragraph, his, her or its Recognized Loss Amount for those transactions will be zero.

    CALCULATION OF RECOGNIZED LOSS AMOUNTS

    Based on the formula set forth below, a "Recognized Loss Amount" shall be calculated for each purchase or acquisition of Capstone stock during the Settlement Class Period that is listed in the Proof of Claim Form and for which adequate documentation is provided. In the calculations below, if a Recognized Loss Amount calculates to a negative number, that Recognized Loss Amount shall be zero.

    For shares of common stock purchased or otherwise acquired between June 12, 2014 and November 5, 2015:

    1. For shares of Capstone common stock held at the end of trading on February 3, 2016, the Recognized Loss shall be that number of shares multiplied by the lesser of:
      1. the applicable purchase date artificial inflation per share figure, as found in Table A; or
      2. the difference between the purchase price per share and $1.55.3
    2. For shares of Capstone common stock sold between June 12, 2014 and November 5, 2015, the Recognized Loss shall be that number of shares multiplied by the lesser of:
      1. the applicable purchase date artificial inflation per share figure less the applicable sales date artificial inflation per share figure, as found in Table A; or
      2. the difference between the purchase price per share and the sales price per share.
    3. For shares of Capstone common stock sold between November 6, 2015 and February 3, 2016, the Recognized Loss shall be the lesser of:
      1. the applicable purchase date artificial inflation per share figure, as found in Table A; or
      2. the difference between the purchase price per share and the sales price per share; or
      3. the difference between the purchase price per share and the average closing price between November 6, 2015 and the date of sale, as found in Table B.4

    Table A

    Purchase or Sale Date Range Artificial Inflation Per Share
    06/12/2014 - 08/07/2014 $ 8.22
    08/08/2014 - 06/15/2015 $ 3.82
    06/16/2015 - 09/30/2105 $ 2.04
    10/01/2015 - 11/05/2015 $ 0.31

    Table B

    Date of Sale Average Closing Price Between 11/06/2015 and Per Share Date of Sale Average Closing Price Between 11/06/2015 and Per Share
    11/06/2015 $ 3.99 12/21/2015 $ 1.78
    11/09/2015 $ 3.52 12/22/2015 $ 1.76
    11/10/2015 $ 3.27 12/23/2015 $ 1.75
    11/11/2015 $ 3.00 12/24/2015 $ 1.74
    11/12/2015 $ 2.84 12/28/2015 $ 1.74
    11/13/2015 $2.75 12/29/2015 $1.73
    11/16/2015 $2.64 12/30/2015 $1.71
    11/17/2015 $2.56 12/31/2015 $1.71
    11/18/2015 $2.49 01/04/2016 $1.70
    11/19/2015 $2.43 01/05/2016 $1.69
    11/20/2015 $2.38 01/06/2016 $1.69
    11/23/2015 $2.33 01/07/2016 $1.68
    11/24/2015 $2.29 01/08/2016 $1.67
    11/25/2015 $2.25 01/11/2016 $1.66
    11/27/2015 $2.21 01/12/2016 $1.65
    11/30/2015 $2.17 01/13/2016 $1.64
    12/01/2015 $2.14 01/14/2016 $1.63
    12/02/2015 $2.11 01/15/2016 $1.62
    12/03/2015 $2.08 01/19/2016 $1.61
    12/04/2015 $2.05 01/20/2016 $1.60
    12/07/2015 $2.02 01/21/2016 $1.59
    12/08/2015 $1.99 01/22/2016 $1.59
    12/09/2015 $1.96 01/25/2016 $1.58
    12/10/2015 $1.94 01/26/2016 $1.57
    12/11/2015 $1.91 01/27/2016 $1.57
    12/14/2015 $1.88 01/28/2016 $1.57
    12/15/2015 $1.86 01/29/2016 $1.56
    12/16/2015 $1.84 02/01/2016 $1.56
    12/17/2015 $1.82 02/02/2016 $1.55
    12/18/2015 $1.80 02/03/2016 $1.55

    ADDITIONAL PROVISIONS

    The Net Settlement Fund will be allocated among all Authorized Claimants whose Distribution Amount (defined in paragraph 63 below) is $10.00 or greater.

    If a Settlement Class Member has more than one purchase/acquisition or sale of Capstone common stock, all purchases/acquisitions and sales of the like security shall be matched on a First In, First Out ("FIFO") basis. Settlement Class Period sales will be matched first against any holdings at the beginning of the Settlement Class Period, and then against purchases/acquisitions in chronological order, beginning with the earliest purchase/acquisition made during the Settlement Class Period.

    A Claimant's "Recognized Claim" under the Plan of Allocation shall be the sum of his, her or its Recognized Loss Amounts for all of the Capstone common stock.

    The Net Settlement Fund will be distributed to Authorized Claimants on a pro rata basis based on the relative size of their Recognized Claims. Specifically, a "Distribution Amount" will be calculated for each Authorized Claimant, which shall be the Authorized Claimant's Recognized Claim divided by the total Recognized Claims of all Authorized Claimants, multiplied by the total amount in the Net Settlement Fund. If any Authorized Claimant's Distribution Amount calculates to less than $10.00, it will not be included in the calculation and no distribution will be made to such Authorized Claimant.

    Purchases or acquisitions and sales of Capstone common stock shall be deemed to have occurred on the "contract" or "trade" date as opposed to the "settlement" or "payment" date. The receipt or grant by gift, inheritance or operation of law of Capstone common stock during the Settlement Class Period shall not be deemed a purchase, acquisition or sale of Capstone common stock for the calculation of an Authorized Claimant's Recognized Loss Amount, nor shall the receipt or grant be deemed an assignment of any claim relating to the purchase/acquisition of any Capstone stock unless (i) the donor or decedent purchased or otherwise acquired such Capstone stock during the Settlement Class Period; and (ii) no Claim Form was submitted by or on behalf of the donor, on behalf of the decedent, or by anyone else with respect to such Capstone stock.

    The date of covering a "short sale" is deemed to be the date of purchase or acquisition of the Capstone common stock. The date of a "short sale" is deemed to be the date of sale of the Capstone stock. Under the Plan of Allocation, however, the Recognized Loss Amount on "short sales" is zero. In the event that a Claimant has an opening short position in an Capstone stock, the earliest Settlement Class Period purchases or acquisitions of that security shall be matched against such opening short position, and not be entitled to a recovery, until that short position is fully covered.

    Option contracts are not securities eligible to participate in the Settlement. With respect to Capstone stock purchased or sold through the exercise of an option, the purchase/sale date of the Capstone stockis the exercise date of the option and the purchase/sale price of the Capstone stock is the exercise price of the option.

    To the extent a Claimant had a market gain with respect to his, her, or its overall transactions in Capstone common stock during the Settlement Class Period, the value of the Claimant's Recognized Claim shall be zero. Such Claimants shall in any event be bound by the Settlement. To the extent that a Claimant suffered an overall market loss with respect to his, her, or its overall transactions in Capstone stock during the Settlement Class Period, but that market loss was less than the total Recognized Claim calculated above, then the Claimant's Recognized Claim shall be limited to the amount of the actual market loss.

    For purposes of determining whether a Claimant had a market gain with respect to his, her, or its overall transactions in Capstone stock during the Settlement Class Period or suffered a market loss, the Claims Administrator shall determine the difference between (i) the Total Purchase Amount5 and (ii) the sum of the Total Sales Proceeds6 and Total Holding Value.7 This difference shall be deemed a Claimant's market gain or loss with respect to his, her, or its overall transactions in Capstone stock during the Settlement Class Period.

    After the initial distribution of the Net Settlement Fund, the Claims Administrator shall make reasonable and diligent efforts to have Authorized Claimants cash their distribution checks. To the extent any monies remain in the fund nine (9) months after the initial distribution, if Lead Counsel, in consultation with the Claims Administrator, determines that it is cost-effective to do so, the Claims Administrator shall conduct a re-distribution of the funds remaining after payment of any unpaid fees and expenses incurred in administering the Settlement, including for such re-distribution, to Authorized Claimants who have cashed their initial distributions and who would receive at least $10.00 from such re-distribution. Additional re-distributions to Authorized Claimants who have cashed their prior checks and who would receive at least $10.00 on such additional re-distributions may occur thereafter if Lead Counsel, in consultation with the Claims Administrator, determines that additional re-distributions, after the deduction of any additional fees and expenses incurred in administering the Settlement, including for such re-distributions, would be cost-effective. At such time as it is determined that the re-distribution of funds remaining in the Net Settlement Fund is not cost-effective, the remaining balance shall be contributed to non-sectarian, not-for-profit organization(s), to be recommended by Lead Counsel and approved by the Court.

    Payment pursuant to the Plan of Allocation, or such other plan of allocation as may be approved by the Court, shall be conclusive against all Authorized Claimants. No person shall have any claim against Plaintiffs, Lead Counsel, Plaintiffs' damages expert, Defendants, Defendants' Counsel, or any of the other Releasees, or the Claims Administrator or other agent designated by Lead Counsel arising from distributions made substantially in accordance with the Stipulation, the plan of allocation approved by the Court, or further Orders of the Court. Plaintiffs, Defendants and their respective counsel, and all other Defendants' Releasees, shall have no responsibility or liability whatsoever for the investment or distribution of the Settlement Fund, the Net Settlement Fund, the plan of allocation, or the determination, administration, calculation, or payment of any Claim Form or nonperformance of the Claims Administrator, the payment or withholding of taxes (including interest and penalties) owed by the Settlement Fund, or any losses incurred in connection therewith.

    The Plan of Allocation set forth herein is the plan that is being proposed to the Court for its approval by Plaintiffs after consultation with their damages expert. The Court may approve this plan as proposed or it may modify the Plan of Allocation without further notice to the Settlement Class. Any Orders regarding any modification of the Plan of Allocation will be posted on the settlement website, www.CapstoneTurbineSecuritiesLitigation.com.

  9. What payment are the attorneys for the settlement class seeking? How will the lawyers be paid?

    Lead Counsel have not received any payment for their services in pursuing claims against the Defendants on behalf of the Settlement Class, nor have Lead Counsel been reimbursed for their out-of-pocket expenses. Before final approval of the Settlement, Lead Counsel will apply to the Court for an award of attorneys' fees for all Plaintiffs' Counsel in an amount not to exceed 30% of the Settlement Fund. At the same time, Lead Counsel also intends to apply for reimbursement of Litigation Expenses in an amount not to exceed $140,000, which may include an application for reimbursement of the reasonable costs and expenses incurred by Plaintiffs directly related to their representation of the Settlement Class. The Court will determine the amount of any award of attorneys' fees or reimbursement of Litigation Expenses. Such sums as may be approved by the Court will be paid from the Settlement Fund. Settlement Class Members are not personally liable for any such fees or expenses.

  10. What if i do not want to be a member of the settlement class? How do I exclude myself?

    Each Settlement Class Member will be bound by all determinations and judgments in this lawsuit, whether favorable or unfavorable, unless such person or entity mails or delivers a written Request for Exclusion from the Settlement Class, addressed to CLASS ACTION OPT-OUT, ATTN: In re Capstone Turbine Corporation Securities Litigation, P.O. Box 58220, 1500 John F Kennedy Blvd, Suite C31, Philadelphia, PA 19102. The exclusion request must be received by, or postmarked no later than, October 15, 2019. You will not be able to exclude yourself from the Settlement Class after that date. Each Request for Exclusion must: (a) state the name, address and telephone number of the person or entity requesting exclusion, and in the case of entities the name and telephone number of the appropriate contact person; (b) state that such person or entity "requests exclusion from the Settlement Class in In re Capstone Turbine Corporation Securities Litigation, Lead Case No. CV 15-08914-DMG (RAOx)"; (c) identify and state the number of Capstone shares that the person or entity requesting exclusion purchased/acquired and/or sold during the Settlement Class Period (i.e., between June 12, 2014 and November 5, 2015, inclusive), as well as the dates and prices of each such purchase/acquisition and sale; and (d) be signed by the person or entity requesting exclusion or an authorized representative. A Request for Exclusion shall not be valid and effective unless it provides all the information called for in this paragraph and is received or postmarked within the time stated above, or is otherwise accepted by the Court.

    If you do not want to be part of the Settlement Class, you must follow these instructions for exclusion even if you have pending, or later file, another lawsuit, arbitration, or other proceeding relating to any Released Plaintiffs' Claim against any of the Defendants or the other Defendants' Releasees.

    If you ask to be excluded from the Settlement Class, you will not be eligible to receive any payment out of the Net Settlement Fund.

    Defendants have the right to terminate the Settlement if valid requests for exclusion are received from persons and entities entitled to be members of the Settlement Class in an amount that exceeds an amount agreed to by Plaintiffs and Defendants.

  11. When and where will the court decide whether to approve the settlement? Do I have to come to the hearing? May I speak at the hearing if I don't like the settlement?

    Settlement Class Members do not need to attend the Settlement Hearing. The Court will consider any submission made in accordance with the provisions below even if a Settlement Class Member does not attend the hearing. You can participate in the Settlement without attending the Settlement Hearing.

    The Settlement Hearing will be held on November 15, 2019 at 10:00 a.m., before the Honorable Dolly M. Gee at the United States District Court for the Central District of California, United States Courthouse, 350 West 1st Street, Los Angeles, CA, 90012, Courtroom 8C, 8th Floor. The Court reserves the right to approve the Settlement, the Plan of Allocation, Lead Counsel's motion for an award of attorneys' fees and reimbursement of Litigation Expenses and/or any other matter related to the Settlement at or after the Settlement Hearing without further notice to the members of the Settlement Class.

    Any Settlement Class Member who or which does not request exclusion may object to the Settlement, the proposed Plan of Allocation or Lead Counsel's motion for an award of attorneys' fees and reimbursement of Litigation Expenses. Objections must be in writing. You must submit any written objection, together with copies of all other papers and briefs supporting the objection, with the Claims Administrator at the address below. You must also serve the papers on Lead Counsel and on Defendants' Counsel at the addresses set forth below so that the papers are received by, or postmarked no later than, October 15, 2019.

    Claims Administrator
    Class Action Objection
    Attn: Capstone Turbine Securities Litigation Settlement
    P.O. Box 58220
    1500 John F. Kennedy Blvd, Suite C31
    Philadelphia, PA 19102

    Lead Counsel
    Glancy Prongay & Murray LLP
    Casey E. Sadler, Esq.
    1925 Century Park East, Suite 2100
    Los Angeles, CA 90067

    Defendant's Counsel
    Wilson Sonsini Goodrich & Rosait
    Nina Locker, Esq.
    650 Page Mill Road
    Palo Alto, CA 94304-1050

    Any objection: (a) must state the name, address and telephone number of the person or entity objecting and must be signed by the objector; (b) must contain a statement of the Settlement Class Member's objection or objections, and the specific reasons for each objection, including any legal and evidentiary support the Settlement Class Member wishes to bring to the Court's attention; and (c) must include documents sufficient to prove membership in the Settlement Class, including the number of shares of Capstone common stock that the objecting Settlement Class Member purchased/acquired and/or sold during the Settlement Class Period (i.e., between June 12, 2014 and November 5, 2015, inclusive), as well as the dates and prices of each such purchase/acquisition and sale. You may not object to the Settlement, the Plan of Allocation or Lead Counsel's motion for attorneys' fees and reimbursement of Litigation Expenses if you exclude yourself from the Settlement Class or if you are not a member of the Settlement Class.

    You may submit a written objection without having to appear at the Settlement Hearing. You may not, however, appear at the Settlement Hearing to present your objection unless you first submit and serve a written objection in accordance with the procedures described above, unless the Court orders otherwise.

    If you wish to be heard orally at the hearing in opposition to the approval of the Settlement, the Plan of Allocation or Lead Counsel's motion for an award of attorneys' fees and reimbursement of Litigation Expenses, and if you timely file and serve a written objection as described above, you must also file a notice of appearance with the Clerk's Office and serve it on Lead Counsel and Defendants' Counsel at the addresses set forth above so that it is received on or before October 25, 2019. Persons who intend to object and desire to present evidence at the Settlement Hearing must include in their written objection or notice of appearance the identity of any witnesses they may call to testify and exhibits they intend to introduce into evidence at the hearing. Such persons may be heard orally at the discretion of the Court.

    You are not required to hire an attorney to represent you in making written objections or in appearing at the Settlement Hearing. However, if you decide to hire an attorney, it will be at your own expense, and that attorney must file a notice of appearance with the Court and serve it on Lead Counsel and Defendants' Counsel at the addresses set forth in ¶ 79 in the Notice so that the notice is received on or before October 25, 2019.

    The Settlement Hearing may be adjourned by the Court without further written notice to the Settlement Class. If you intend to attend the Settlement Hearing, you should confirm the date and time with Lead Counsel.

    Unless the Court orders otherwise, any Settlement Class Member who does not object in the manner described above will be deemed to have waived any objection and shall be forever foreclosed from making any objection to the proposed Settlement, the proposed Plan of Allocation or Lead Counsel's motion for an award of attorneys' fees and reimbursement of Litigation Expenses. Settlement Class Members do not need to appear at the Settlement Hearing or take any other action to indicate their approval.

  12. What if I bought shares on someone else's behalf?

    If you purchased or otherwise acquired Capstone common stock between June 12, 2014 and November 5, 2015, inclusive, for the beneficial interest of persons or organizations other than yourself, you must either: (a) within seven (7) calendar days of receipt of the Postcard Notice, request from the Claims Administrator sufficient copies of the Postcard Notice to forward to all such beneficial owners and within seven (7) calendar days of receipt of those Postcard Notices forward them to all such beneficial owners; or (b) within seven (7) calendar days of receipt of the Postcard Notice, provide a list of the names and addresses of all such beneficial owners to In re Capstone Turbine Corporation Securities Litigation, c/o Claims Administrator, 1650 Arch Street, Suite 2210, Philadelphia, PA 19103. If you choose the second option, the Claims Administrator will send a copy of the Postcard Notice to the beneficial owners. Upon full compliance with these directions, such nominees may seek reimbursement of their reasonable expenses actually incurred, up to a maximum of $0.50 per notice, by providing the Claims Administrator with proper documentation supporting the expenses for which reimbursement is sought. Any dispute concerning the reasonableness of reimbursement costs shall be resolved by the Court. Copies of this Notice and the Claim Form may be obtained from the website maintained by the Claims Administrator, www.CapstoneTurbineSecuritiesLitigation.com, or by calling the Claims Administrator toll-free at 1-855-637-1041.

  13. Can I see the court file? Whom should I contact if I have questions?

    This Notice contains only a summary of the terms of the proposed Settlement. For more detailed information about the matters involved in this Action, you are referred to the papers on file in the Action, including the Stipulation, which may be inspected during regular office hours at the Office of the Clerk, United States District Court for the Central District of California, United States Courthouse, 350 West 1st Street, Los Angeles, CA, 90012, Courtroom 8C, 8th Floor. Additionally, copies of the Stipulation and any related orders entered by the Court will be posted on the website maintained by the Claims Administrator, www.CapstoneTurbineSecuritiesLitigation.com.

    All inquiries concerning this Notice and the Claim Form should be directed to the Claims Administrator or Lead Counsel at:

    In re Capstone Turbine Corporation Securities Litigation
    c/o Claims Administrator
    1650 Arch Street, Suite 2210
    Philadelphia, PA 19103
    1-855-637-1041
    Info@CapstoneTurbineSecuritiesLitigation.com

    and/or

    GLANCY PRONGAY & MURRAY LLP
    Casey E. Sadler, Esq.
    1925 Century Park East, Suite 2100
    Los Angeles, CA 90067
    (888) 773-9224
    settlements@glancylaw.com

    DO NOT CALL OR WRITE THE COURT, THE OFFICE OF THE CLERK OF THE COURT, DEFENDANTS OR THEIR COUNSEL REGARDING THE NOTICE.

3 Pursuant to Section 21(D)(e)(1) of the Private Securities Litigation Reform Act of 1995, "in any private action arising under this title in which the plaintiff seeks to establish damages by reference to the market price of a security, the award of damages to the plaintiff shall not exceed the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff for the subject security and the mean trading price of that security during the 90 day period beginning on the date on which the information correcting the misstatement or omission that is the basis for the action is disseminated." The mean (average) closing price of Capstone Turbine common stock during the 90 day period beginning on November 6, 2015 and ending on February 3, 2016 was $1.55 per share.

4 Pursuant to Section 21(D)(e)(2) of the Private Securities Litigation Reform Act of 1995, "in any private action arising under this title in which the plaintiff seeks to establish damages by reference to the market price of a security, if the plaintiff sells or repurchases the subject security prior to the expiration of the 90-day period described in paragraph (1), the plaintiff's damages shall not exceed the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff for the security and the mean trading price of the security during the period beginning immediately after dissemination of information correcting the misstatement or omission and ending on the date on which the plaintiff sells or repurchases the security."

5 The "Total Purchase Amount" is the total amount the Claimant paid (excluding commissions and other charges) for all Capstone stock purchased or acquired during the Settlement Class Period.

6 The Claims Administrator shall match any sales of Capstone common stock during the Settlement Class Period, first against the Claimant's opening position in the like security (the proceeds of those sales will not be considered for purposes of calculating market gains or losses). The total amount received (excluding commissions and other charges) for the remaining sales of Capstone common stock sold during the Settlement Class Period shall be the "Total Sales Proceeds."

7 The Claims Administrator shall ascribe a holding value to Capstone stock purchased or acquired during the Settlement Class Period and still held as of the close of trading on November 5, 2015, which shall be the November 5, 2015 closing price.