Exhibit 10.3

QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.

BRIDGE BANK, NATIONAL ASSOCIATION

LOAN AND SECURITY AGREEMENT

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This LOAN AND SECURITY AGREEMENT is entered into as of May 7, 2012, by and
between BRIDGE BANK, NATIONAL ASSOCIATION (“Bank”) and QUANTUM FUEL SYSTEMS
TECHNOLOGIES WORLDWIDE, INC. (“Borrower”).

RECITALS

Borrower wishes to obtain credit from time to time from Bank, and Bank desires
to extend credit to Borrower. This Agreement sets forth the terms on which Bank
will advance credit to Borrower, and Borrower will repay the amounts owing to
Bank.

AGREEMENT

The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. As used in this Agreement, the following terms shall have the
following definitions:

“Accounts” means all presently existing and hereafter arising accounts, contract
rights, payment intangibles, and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods (including, without
limitation, the licensing of software and other technology) or the rendering of
services by Borrower, whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower and Borrower’s Books relating
to any of the foregoing.

“Advance” or “Advances” means a cash advance or cash advances under the
Revolving Facility.

“Affiliate” means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person’s senior
executive officers, directors, and partners.

“Bank Expenses” means all: reasonable costs or expenses (including reasonable
attorneys’ fees and expenses) incurred in connection with the preparation,
negotiation, administration, and enforcement of the Loan Documents; reasonable
Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses
incurred in amending, enforcing or defending the Loan Documents (including fees
and expenses of appeal), incurred before, during and after an Insolvency
Proceeding, whether or not suit is brought.

“Borrower’s Books” means all of Borrower’s books and records including: ledgers;
records concerning Borrower’s assets or liabilities, the Collateral, business
operations or financial condition; and all computer programs, or tape files, and
the equipment, containing such information.

“Borrowing Base” means an amount equal to eighty percent (80%) of Eligible
Accounts, as determined by Bank with reference to the most recent Borrowing Base
Certificate delivered by Borrower; provided however, as long as the Asset
Coverage Ratio is at least 1.50 to 1.00, the “Borrowing Base” shall also include
an amount equal to fifty percent (50%) of Eligible Inventory (which shall not
exceed forty percent (40%) of the outstanding Advances at any time), as
determined by Bank with reference to the most recent Borrowing Base Certificate
delivered by Borrower.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks in the State of California are authorized or required to close.

“Cash Management Sublimit” means a sublimit for cash management transactions
under the Revolving Line not to exceed $100,000 less any amounts outstanding
under the International Sublimit, subject to availability under the Borrowing
Base.

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“Change in Control” shall mean a transaction in which any “person” or “group”
(within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of a sufficient number
of shares of all classes of stock then outstanding of Borrower ordinarily
entitled to vote in the election of directors, empowering such “person” or
“group” to elect a majority of the Board of Directors of Borrower, who did not
have such power before such transaction.

“Closing Date” means the date of this Agreement.

“Code” means the California Uniform Commercial Code.

“Collateral” means the property described on Exhibit A attached hereto.

“Collections” means all payments from or on behalf of an account debtor with
respect to any Accounts.

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another;
(ii) any obligations with respect to undrawn letters of credit, corporate credit
cards, or merchant services issued or provided for the account of that Person;
and (iii) all obligations arising under any agreement or arrangement designed to
protect such Person against fluctuation in interest rates, currency exchange
rates or commodity prices; provided, however, that the term “Contingent
Obligation” shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by Bank in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.

“Copyrights” means any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof.

“Credit Extension” means each Advance, Letter of Credit, use of foreign exchange
services, use of Cash Management Services, or any other extension of credit by
Bank for the benefit of Borrower hereunder.

“Daily Balance” means the amount of the Obligations owed at the end of a given
day.

“Eligible Accounts” means those Accounts that arise in the ordinary course of
Borrower’s business that comply with all of Borrower’s representations and
warranties to Bank set forth in Section 5.4; provided, that standards of
eligibility may be fixed and revised from time to time by Bank in Bank’s
reasonable judgment and upon notification thereof to Borrower in accordance with
the provisions hereof. Notwithstanding the following, the specific account
receivable owing from Fisker Automotive that is, as of the Closing Date, on a
payment plan as previously disclosed to Bank shall constitute an “Eligible
Account”. Unless otherwise agreed to by Bank, Eligible Accounts shall not
include the following:

(a) Accounts that the account debtor has failed to pay within ninety (90) days
of invoice date;

(b) Accounts with respect to an account debtor, thirty-five percent (35%) of
whose Accounts the account debtor has failed to pay within ninety (90) days of
invoice date;

(c) Accounts with respect to which the account debtor is an officer, employee,
or agent of Borrower;

(d) Accounts with respect to which goods are placed on consignment, guaranteed
sale, sale or return, sale on approval, bill and hold, or other terms by reason
of which the payment by the account debtor may be conditional;

 

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(e) Prebillings, prepaid deposits, retention billings, or progress billings;

(f) Accounts with respect to which the account debtor is an Affiliate of
Borrower;

(g) Accounts with respect to which the account debtor does not have its
principal place of business in the United States or Canada, except for Eligible
Foreign Accounts;

(h) Accounts with respect to which the account debtor is the United States or
any department, agency, or instrumentality of the United States;

(i) Accounts with respect to which Borrower is liable to the account debtor for
goods sold or services rendered by the account debtor to Borrower or for
deposits or other property of the account debtor held by Borrower, but only to
the extent of any amounts owing to the account debtor against amounts owed to
Borrower;

(j) Accounts with respect to an account debtor, including Subsidiaries and
Affiliates, whose total obligations to Borrower exceed forty percent (40%) of
all Accounts (the “Concentration Limit”), to the extent such obligations exceed
the aforementioned percentage, except as approved in writing by Bank and except
that the Concentration Limit for Accounts with respect to which the account
debtor is Fisker Automotive shall be sixty percent (60%); provided that Bank
may, in its sole discretion, reduce the foregoing Concentration Limit at any
time, with 30 days prior notice to Borrower;

(k) Accounts with respect to which the account debtor disputes liability or
makes any claim with respect thereto as to which Bank believes, in its sole, but
reasonable, discretion, that there may be a basis for dispute (but only to the
extent of the amount subject to such dispute or claim), or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business; and

(l) Accounts the collection of which Bank reasonably determines to be doubtful.

“Eligible Foreign Accounts” means Accounts with respect to which the account
debtor does not have its principal place of business in the United States or
Canada and that (i) are supported by one or more letters of credit in an amount
and of a tenor, and issued by a financial institution, acceptable to Bank,
(ii) the account debtor is Daimler AG, BMW Group or Adam Opel (a subsidiary of
General Motors, Inc.), or (iii) that Bank approves on a case-by-case basis.

“Eligible Inventory” means finished goods Inventory that meets the requirements
set forth in Borrower’s representations and warranties in Section 5.5 and
nonobsolete raw materials, measured at Borrower’s cost, as each shall be
acceptable to Bank in all respects. Unless otherwise agreed to by Bank, the
following shall not be Eligible Inventory:

(a) Consigned Inventory;

(b) Perishable goods;

(c) Returned, obsolete and defective goods;

(d) Any Inventory subject to non-compliance with the Fair Labor Standards Act;
Supplies, shipping material, packaging, custom packaging, customized Inventory
with narrow distribution channels;

(e) Work in progress; and

(f) Other Inventory that Bank reasonably determines from time to time to be
ineligible based on age, type, category, quality or quantity, or based on its
relation to undesirable industries.

“Equipment” means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.

“Excluded Subsidiary” means Tecstar Automotive Group, Inc., f/k/a Starcraft
Corporation, an Indiana corporation.

“Event of Default” has the meaning assigned in Article 8.

“Fisker Automotive” means Fisker Automotive Holdings, Inc., a Delaware
corporation, and its successors and assigns.

“GAAP” means generally accepted accounting principles as in effect from time to
time.

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.

“Insolvency Proceeding” means any proceeding commenced by or against any person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“Intellectual Property” means all of Borrower’s right, title, and interest in
and to the following: Copyrights, Trademarks and Patents; all trade secrets, all
design rights, claims for damages by way of past, present and future
infringement of any of the rights included above, all licenses or other rights
to use any of the Copyrights, Patents or Trademarks, and all license fees and
royalties arising from such use to the extent permitted by such license or
rights; all amendments, renewals and extensions of any of the Copyrights,
Trademarks or Patents; and all proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.

“Inventory” means all inventory in which Borrower has or acquires any interest,
including work in process and finished products intended for sale or lease or to
be furnished under a contract of service, of every kind and description now or
at any time hereafter owned by or in the custody or possession, actual or
constructive, of Borrower, including such inventory as is temporarily out of its
custody or possession or in transit and including any returns upon any accounts
or other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing and any documents of title representing any
of the above, and Borrower’s Books relating to any of the foregoing.

“Investment” means any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

“Loan Documents” means, collectively, this Agreement, any note or notes executed
by Borrower, and any other agreement entered into in connection with this
Agreement, all as amended or extended from time to time.

“Material Adverse Effect” means a material adverse effect on (i) the business
operations, condition (financial or otherwise) of Borrower and its Subsidiaries
taken as a whole or (ii) the ability of Borrower to repay the Obligations or
otherwise perform its obligations under the Loan Documents or (iii) the value or
priority of Bank’s security interests in the Collateral.

“Negotiable Collateral” means all letters of credit of which Borrower is a
beneficiary, notes, drafts, instruments, securities, documents of title, and
chattel paper, and Borrower’s Books relating to any of the foregoing.

 

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“Obligations” means all debt, principal, interest, Bank Expenses and other
amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

“Periodic Payments” means all installments or similar recurring payments that
Borrower may now or hereafter become obligated to pay to Bank pursuant to the
terms and provisions of any instrument, or agreement now or hereafter in
existence between Borrower and Bank.

“Permitted Indebtedness” means:

(a) Indebtedness of Borrower in favor of Bank arising under this Agreement or
any other Loan Document;

(b) Indebtedness to trade creditors incurred in the ordinary course of business;

(c) Indebtedness existing on the Closing Date and disclosed in the Schedule;

(d) Indebtedness secured by a lien described in clause (o) of the defined term
“Permitted Liens,” provided (i) such Indebtedness does not exceed the lesser of
the cost or fair market value of the equipment financed with such Indebtedness
and (ii) such Indebtedness does not exceed $1,000,000 in the aggregate at any
given time; and

(e) Subordinated Debt.

“Permitted Investment” means:

(a) Investments existing on the Closing Date disclosed in the Schedule;

(b) Investments consisting of cash-in-advance payments and other deposits or
credit obligations required by and to suppliers, vendors and service providers
who are not Affiliates of Borrower, in the ordinary course of business, provided
that this clause (b) shall not apply to Investments of Borrower in any
Subsidiary; and

(c) (i) marketable direct obligations issued or unconditionally guaranteed by
the United States of America or any agency or any State thereof maturing within
one (1) year from the date of acquisition thereof, (ii) commercial paper
maturing no more than one (1) year from the date of creation thereof and
currently having rating of at least A-2 or P-2 from either Standard & Poor’s
Corporation or Moody’s Investors Service, (iii) certificates of deposit maturing
no more than one (1) year from the date of investment therein issued by Bank and
(iv) Bank’s money market accounts.

“Permitted Liens” means the following:

(a) Any Liens existing on the Closing Date and disclosed in the Schedule or
arising under this Agreement or the other Loan Documents;

(b) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings, provided the same have no priority over any of Bank’s security
interests;

(c) (i) Liens (a) upon or in any equipment which was not financed by Bank
acquired or held by Borrower or any of its Subsidiaries to secure the purchase
price of such equipment or indebtedness

 

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incurred solely for the purpose of financing the acquisition of such equipment,
or (b) existing on such equipment at the time of its acquisition, provided that
the Lien is confined solely to the property so acquired and improvements
thereon, and the proceeds of such equipment, or (ii) liens or rights of a lessor
under a capital lease; and

(d) Liens incurred in connection with the extension, renewal or refinancing of
the indebtedness secured by Liens of the type described in clauses (a) through
(c) above, provided that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness being extended, renewed or refinanced does not increase.

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.

“Prime Rate” means the greater of three and one quarter percent (3.25%) per
year, or the variable rate of interest, per annum, most recently announced by
Bank, as its “prime rate”, whether or not such announced rate is the lowest rate
available from Bank.

“Responsible Officer” means each of the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer and the Controller of Borrower.

“Revolving Facility” means the facility under which Borrower may request Bank to
issue Advances, as specified in Section 2.1(a) hereof.

“Revolving Line” means a credit extension of up to Ten Million Dollars
($10,000,000).

“Revolving Maturity Date” means the second anniversary of the Closing Date.

“Schedule” means the schedule of exceptions attached hereto and approved by
Bank, if any.

“Shares” means (i) one hundred percent (100%) of the issued and outstanding
capital stock, membership units or other securities owned or held of record by
Borrower or any Subsidiary of Borrower, in any direct or indirect Subsidiary,
and (ii) all of the capital stock of Fisker Automotive owned or held of record
by Borrower.

“Subordinated Debt” means any debt incurred by Borrower that is subordinated to
the debt owing by Borrower to Bank on terms acceptable to Bank (and identified
as being such by Borrower and Bank).

“Subsidiary” means any corporation, company or partnership in which (i) any
general partnership interest or (ii) more than 50% of the stock or other units
of ownership which by the terms thereof has the ordinary voting power to elect
the Board of Directors, managers or trustees of the entity, at the time as of
which any determination is being made, is owned by Borrower, either directly or
through an Affiliate.

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP and all calculations made hereunder shall
be made in accordance with GAAP. When used herein, the terms “financial
statements” shall include the notes and schedules thereto.

2. LOAN AND TERMS OF PAYMENT.

2.1 Credit Extensions.

Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, the aggregate unpaid principal amount of all Credit
Extensions made by Bank to Borrower hereunder. Borrower shall also pay interest
on the unpaid principal amount of such Credit Extensions at rates in accordance
with the terms hereof.

 

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(a) Revolving Advances.

(i) Subject to and upon the terms and conditions of this Agreement, Borrower may
request Advances and Bank will make Advances in an aggregate outstanding amount
not to exceed the lesser of (i) the Revolving Line or (ii) the Borrowing Base,
minus, in each case, the amount reserved under the Cash Management Sublimit and
the aggregate amounts outstanding under the International Sublimit. Subject to
the terms and conditions of this Agreement, amounts borrowed pursuant to this
Section 2.1(a) may be repaid and reborrowed at any time prior to the Revolving
Maturity Date, at which time all Advances under this Section 2.1(a) shall be
immediately due and payable. Borrower may prepay any Advances without penalty or
premium.

(ii) Whenever Borrower desires an Advance, Borrower will notify Bank by
facsimile transmission or telephone no later than 3:00 p.m. Pacific time, on the
Business Day that the Advance is to be made. Each such notification shall be
promptly confirmed by a Revolving Advance Request Form in substantially the form
of Exhibit B hereto, and accompanied by a completed Borrowing Base Certificate.
For any Advance request based on a Borrowing Base that includes Eligible
Inventory, Borrower shall also provide Bank with an inventory report with copies
of purchase orders or executed agreements with Borrower’s customers or contract
manufacturers, if requested by Bank, in form and substance satisfactory to Bank.
Documents received by 11:00 a.m. California time on accounts or inventory
acceptable to Bank will be processed on the following Business Day. Bank is
authorized to make Advances under this Agreement, based upon instructions
received from a Responsible Officer or a designee of a Responsible Officer, or
without instructions if in Bank’s discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank shall be entitled to
rely on any telephonic notice given by a person who Bank reasonably believes to
be a Responsible Officer or a designee thereof, and Borrower shall indemnify and
hold Bank harmless for any damages or loss suffered by Bank as a result of such
reliance. Bank will credit the amount of Advances made under this Section 2.1(a)
to Borrower’s deposit account.

(b) International Sublimit.

(i) Letters of Credit. Subject to the terms and conditions of this Agreement, at
any time prior to the Revolving Maturity Date, Bank agrees to issue letters of
credit for the account of Borrower (each, a “Letter of Credit” and collectively,
the “Letters of Credit”) in an aggregate outstanding face amount not to exceed
the International Sublimit less any FX Amount outstanding. All Letters of Credit
shall be, in form and substance, acceptable to Bank in its sole discretion and
shall be subject to the terms and conditions of Bank’s form of standard
application and letter of credit agreement (the “Application”), which Borrower
hereby agrees to execute. On any drawn but unreimbursed Letter of Credit, the
unreimbursed amount shall be deemed an Advance under Section 2.1(a). The
obligation of Borrower to reimburse Bank for drawings made under Letters of
Credit shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement, the Application, and
such Letters of Credit, under all circumstances whatsoever. Borrower shall
indemnify, defend, protect, and hold Bank harmless from any loss, cost, expense
or liability, including, without limitation, reasonable attorneys’ fees, arising
out of or in connection with any Letters of Credit, except for expenses caused
by Bank’s gross negligence or willful misconduct.

(ii) Foreign Exchange. Subject to and upon the terms and conditions of this
Agreement and any other agreement that Borrower may enter into with the Bank in
connection with foreign exchange transactions (“FX Contracts”), Borrower may
request Bank to enter into FX Contracts with Borrower due not later than the
Revolving Maturity Date. Borrower shall pay any standard issuance and other fees
that Bank notifies Borrower will be charged for issuing and processing FX
Contracts for Borrower. The FX Amount shall at all times be equal to or less
than the amount of the International Sublimit less the face amount of all
outstanding Letters of Credit. The “FX Amount” shall equal the amount determined
by multiplying (A) the aggregate amount, in United States Dollars, of FX
Contracts between Borrower and Bank remaining outstanding as of any date of
determination by (B) the applicable Foreign Exchange Reserve Percentage as of
such date. The “Foreign Exchange Reserve Percentage” shall be a percentage as
determined by Bank, in its sole discretion from time to time The initial Foreign
Exchange Reserve Percentage shall be ten percent (10%).

 

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(iii) The International Sublimit shall not in the aggregate exceed the lesser of
(i) the Revolving Line or the Borrowing Base minus, in each case, the aggregate
amount of the outstanding Advances, or (ii) $1,000,000.

(c) Cash Management Sublimit. Subject to the terms and conditions of this
Agreement, Borrowers may request cash management services (“Cash Management
Services”), including, without limitation, Automated Clearing House
transactions, corporate credit card services in an aggregate amount not to
exceed $100,000 outstanding at any one time, or other cash management services,
by delivering to Bank a duly executed application on Bank’s standard form;
provided, however, that the total amount of the processing reserves, including
without limitation the aggregate limit of any corporate credit cards issued by
Bank on behalf of Borrowers, shall not exceed the lesser of (i) the Revolving
Line or the Borrowing Base minus the aggregate amount of the outstanding
Advances or (ii) $100,000, and provided further, that availability under the
Revolving Line shall be reduced by the amount reserved under the Cash Management
Sublimit. In addition, Bank may, in its sole discretion, charge as Advances any
amounts that become due or owing to Bank in connection with the Cash Management
Services.

(d) Collateralization of Obligations Extending Beyond Maturity. If Borrower has
not secured to Bank’s satisfaction its obligations with respect to any ongoing
Cash Management Services, Letters of Credit, and the FX Amount by the Revolving
Maturity Date or earlier termination of the Revolving Line, then, effective as
of such date, the balance in any deposit accounts held by Bank and the
certificates of deposit or time deposit accounts issued by Bank in Borrower’s
name (and any interest paid thereon or proceeds thereof, including any amounts
payable upon the maturity or liquidation of such certificates or accounts),
shall automatically secure such obligations to the extent of the then continuing
or outstanding Cash Management Services, Letters of Credit, and the FX Amount.
If at such time there are insufficient balances in Borrower’s accounts held with
Bank, Borrower shall immediately deposit funds with Bank to equal at least 100%
of the Cash Management Services, Letters of Credit, and the FX Amount then
outstanding. Borrower grants Bank a security interest in and authorizes Bank to
hold such balances in pledge and to decline to honor any drafts thereon or any
requests by Borrower or any other Person to pay or otherwise transfer any part
of such balances for so long as Cash Management Services, Letters of Credit, and
the FX Amounts are outstanding or continue.

2.2 Overadvances. If (i) the aggregate amount of the outstanding Advances plus
the amount reserved under the Cash Management Sublimit plus the aggregate
amounts outstanding under the International Sublimit exceeds the lesser of the
Revolving Line or the Borrowing Base at any time, (ii) the aggregate amount
outstanding under the Cash Management Sublimit exceeds $100,000, or (iii) the
aggregate amount outstanding under the International Sublimit exceeds
$1,000,000, Borrower shall immediately pay to Bank, in cash, the amount of such
excess.

2.3 Interest Rates, Payments, and Calculations.

(a) Interest Rates.

(i) Advances. Except as set forth in Section 2.3(b), the Advances shall bear
interest, on the outstanding Daily Balance thereof, at a rate equal to two
percent (2.0%) above the Prime Rate.

(b) Late Fee; Default Rate. If any payment is not made within ten (10) days
after the date such payment is due, Borrower shall pay Bank a late fee equal to
the lesser of (i) five percent (5%) of the amount of such unpaid amount or
(ii) the maximum amount permitted to be charged under applicable law, not in any
case to be less than $25.00. All Obligations shall bear interest, from and after
the occurrence and during the continuance of an Event of Default, at a rate
equal to five (5) percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default.

(c) Payments. Interest hereunder shall be due and payable on the tenth calendar
day of each month during the term hereof. Bank shall, at its option, charge such
interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s
deposit accounts or against the Revolving Line, in which case those amounts
shall thereafter accrue interest at the rate then applicable hereunder. Any
interest not paid when due shall be compounded by becoming a part of the
Obligations, and such interest shall thereafter accrue interest at the rate

 

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then applicable hereunder. All payments shall be free and clear of any taxes,
withholdings, duties, impositions or other charges, to the end that Bank will
receive the entire amount of any Obligations payable hereunder, regardless of
source of payment.

(d) Computation. In the event the Prime Rate is changed from time to time
hereafter, the applicable rate of interest hereunder shall be increased or
decreased, effective as of the day the Prime Rate is changed, by an amount equal
to such change in the Prime Rate. All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day year
for the actual number of days elapsed.

2.4 Crediting Payments. Prior to the occurrence of an Event of Default, Bank
shall credit a wire transfer of funds, check or other item of payment to such
deposit account or Obligation as Borrower specifies. After the occurrence of an
Event of Default, the receipt by Bank of any wire transfer of funds, check, or
other item of payment shall be immediately applied to conditionally reduce
Obligations, but shall not be considered a payment on account unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment received
by Bank after 12:00 noon Pacific time shall be deemed to have been received by
Bank as of the opening of business on the immediately following Business Day.
Whenever any payment to Bank under the Loan Documents would otherwise be due
(except by reason of acceleration) on a date that is not a Business Day, such
payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such
extension.

2.5 Fees. Borrower shall pay to Bank the following:

(a) Facility Fee. On each of the Closing Date and the first anniversary of the
Closing Date, a facility fee equal to $100,000, each of which shall be fully
earned and nonrefundable; and

(b) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the
Closing Date, including reasonable attorneys’ fees and expenses and, after the
Closing Date, all Bank Expenses, including reasonable attorneys’ fees and
expenses, as and when they are incurred by Bank. Bank acknowledges receipt of a
$15,000 deposit previously paid by Borrower that will be applied against the
Bank Expenses.

2.6 Term. This Agreement shall become effective on the Closing Date and, subject
to Section 13.7, shall continue in full force and effect for so long as any
Obligations remain outstanding or Bank has any obligation to make Credit
Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have
the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default. Notwithstanding termination, Bank’s Lien on
the Collateral shall remain in effect for so long as any Obligations are
outstanding.

3. CONDITIONS OF LOANs.

3.1 Conditions Precedent to Initial Credit Extension. The obligation of Bank to
make the initial Credit Extension is subject to the condition precedent that
Bank shall have received, in form and substance satisfactory to Bank, the
following:

(a) this Agreement;

(b) a certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Agreement;

(c) UCC National Form Financing Statement;

(d) Borrower’s delivery of a warrant to purchase up to 917,839 shares of
Borrower’s common stock at $2.124 per share with an expiration date of the first
anniversary of the Closing Date;

(e) Borrower’s delivery of a seven year warrant to purchase up to 555,556 shares
of Borrower’s common stock at an exercise price of $0.90 per share;

 

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(f) agreement to provide insurance and insurance certificates;

(g) execution of the Lockbox Agreements;

(h) delivery of the share certificates representing the Shares held by Borrower,
together with and stock powers executed in blank;

(i) subordination agreements with Borrower’s noteholders;

(j) fully executed documents with General Motors Holdings LLC with respect to
certain subordination matters;

(k) consents duly executed by the landlords/owners of Borrower’s locations in
Lake Forest, California and Irvine, California;

(l) evidence of full payment of all obligations owing to, and termination of
lien in favor of, WB QT, LLC;

(m) side letter executed by Fisker Automotive;

(n) payment of the fees and Bank Expenses then due specified in Section 2.5
hereof;

(o) current financial statements of Borrower; and

(p) such other documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate.

3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to
make each Credit Extension, including the initial Credit Extension, is further
subject to the following conditions:

(a) timely receipt by Bank of the Revolving Advance Request Form as provided in
Section 2.1; and

(b) the representations and warranties contained in Section 5 shall be true and
correct in all material respects on and as of the date of such Revolving Advance
Request Form and on the effective date of each Credit Extension as though made
at and as of each such date, and no Event of Default shall have occurred and be
continuing, or would exist after giving effect to such Credit Extension. The
making of each Credit Extension shall be deemed to be a representation and
warranty by Borrower on the date of such Credit Extension as to the accuracy of
the facts referred to in this Section 3.2.

4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing
security interest in all presently existing and hereafter acquired or arising
Collateral in order to secure prompt repayment of any and all Obligations and in
order to secure prompt performance by Borrower of each of its covenants and
duties under the Loan Documents. Except as set forth in the Schedule, such
security interest constitutes a valid, first priority security interest in the
presently existing Collateral, and will constitute a valid, first priority
security interest in Collateral acquired after the date hereof.

4.2 Delivery of Additional Documentation Required. Borrower shall from time to
time execute and deliver to Bank, at the request of Bank, all Negotiable
Collateral, all financing statements and other documents that Bank may
reasonably request, in form satisfactory to Bank, to perfect and continue the
perfection of Bank’s security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
Borrower from time to time may deposit with Bank specific time deposit accounts
to

 

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secure specific Obligations. Borrower authorizes Bank to hold such balances in
pledge and to decline to honor any drafts thereon or any request by Borrower or
any other Person to pay or otherwise transfer any part of such balances for so
long as the Obligations are outstanding.

4.3 Right to Inspect. Bank (through any of its officers, employees, or agents)
shall have the right, upon reasonable prior notice, from time to time during
Borrower’s usual business hours but no more than once a year (unless an Event of
Default has occurred and is continuing), to inspect Borrower’s Books and to make
copies thereof and to check, test, and appraise the Collateral in order to
verify Borrower’s financial condition or the amount, condition of, or any other
matter relating to, the Collateral. Absent an Event of Default having occurred
and continuing, in no event will Borrower be obligated to reimburse the bank
audit or inspection fees exceeding the lesser of the Bank’s actual out-of-pocket
costs or $1,250 per day.

4.4 Pledge of Shares. Borrower hereby pledges, assigns and grants to Bank, a
security interest in all the Shares, together with all proceeds and
substitutions thereof, all cash, stock and other moneys and property paid
thereon, all rights to subscribe for securities declared or granted in
connection therewith, and all other cash and noncash proceeds of the foregoing,
as security for the performance of the Obligations. On the Closing Date, or, to
the extent not certificated as of the Closing Date, within ten (10) days of the
certification of any Shares, the certificate or certificates for the Shares will
be delivered to Bank, accompanied by an instrument of assignment duly executed
in blank by Borrower. To the extent required by the terms and conditions
governing the Shares, Borrower shall cause the books of each entity whose Shares
are part of the Collateral and any transfer agent to reflect the pledge of the
Shares. Upon the occurrence of an Event of Default hereunder, Bank may effect
the transfer of any securities included in the Collateral (including but not
limited to the Shares) into the name of Bank and cause new (as applicable)
certificates representing such securities to be issued in the name of Bank or
its transferee. Borrower will execute and deliver such documents, and take or
cause to be taken such actions, as Bank may reasonably request to perfect or
continue the perfection of Bank’s security interest in the Shares. Unless an
Event of Default shall have occurred and be continuing, Borrower shall be
entitled to exercise any voting rights with respect to the Shares and to give
consents, waivers and ratifications in respect thereof, provided that no vote
shall be cast or consent, waiver or ratification given or action taken which
would be inconsistent with any of the terms of this Agreement or which would
constitute or create any violation of any of such terms. All such rights to vote
and give consents, waivers and ratifications shall terminate upon the occurrence
and continuance of an Event of Default. Notwithstanding anything contained
herein or elsewhere in this Agreement to the contrary or the Borrower’s delivery
of the certificate for the Shares of Fisker Automotive’s capital stock owned by
Borrower, Bank acknowledges that the Shares of Fisker Automotive’s capital stock
owned by Borrower are subject to a Stockholders’ Agreement by and among the
Borrower, Fisker Automotive and the other stockholders of Fisker Automotive (the
“Fisker Automotive Stockholders’ Agreement”) and Bank agrees that the pledge of
the Shares of Fisker Automotive’s capital stock owned by Borrower shall
automatically be effective on the earlier to occur of (a) Borrower obtaining the
requisite consent to the pledge from the other parties to the Fisker Automotive
Stockholder Agreement (it being expressly understood that Borrower is under no
obligation to obtain such consent), (b) the prohibition on the pledge of the
Shares of Fisker Automotive owned by Borrower that is contained in the Fisker
Automotive Stockholders’ Agreement is eliminated pursuant to a duly executed and
valid amendment to the Fisker Automotive Stockholders’ Agreement or other
instrument, (c) the termination of the Fisker Automotive Stockholders’
Agreement, or (d) a Qualified IPO (as defined in the Fisker Automotive
Stockholders’ Agreement (in the event that such Qualified IPO does not result in
the termination of the Fisker Automotive Stockholders’ Agreement).

5. REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants as follows:

5.1 Due Organization and Qualification. Borrower and each Subsidiary is a
corporation duly existing under the laws of its jurisdiction of incorporation
and qualified and licensed to do business in any jurisdiction in which the
conduct of its business or its ownership of property requires that it be so
qualified, except for the Excluded Subsidiary.

5.2 Due Authorization; No Conflict. The execution, delivery, and performance of
the Loan Documents are within Borrower’s powers, have been duly authorized, and
are not in conflict with nor constitute a

 

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breach of any provision contained in Borrower’s Articles of Incorporation or
Bylaws, nor will they constitute an event of default under any material
agreement to which Borrower is a party or by which Borrower is bound. Borrower
is not in default under any material agreement to which it is a party or by
which it is bound.

5.3 No Prior Encumbrances. Borrower has good and marketable title to its
property, free and clear of Liens, except for Permitted Liens.

5.4 Bona Fide Eligible Accounts. The Eligible Accounts are bona fide existing
obligations. The property and services giving rise to such Eligible Accounts has
been delivered or rendered to the account debtor or to the account debtor’s
agent for immediate and unconditional acceptance by the account debtor. Borrower
has not received notice of actual or imminent Insolvency Proceeding of any
account debtor that is included in any Borrowing Base Certificate as an Eligible
Account.

5.5 Merchantable Inventory. All Inventory is in all material respects of good
and marketable quality, free from all material defects, except for Inventory for
which adequate reserves have been made. For any item of Inventory consisting of
“Eligible Inventory” to be considered as part of the Borrowing Base, such
Inventory (a) consists of finished goods, in good, new, and salable condition,
which is not perishable, returned, consigned, obsolete, not sellable, damaged,
or defective, and is not comprised of demonstrative or custom inventory, works
in progress, packaging or shipping materials, or supplies; (b) has been
manufactured in compliance with the Fair Labor Standards Act and meets all
applicable governmental standards; (c) is not subject to any Liens, except the
first priority Liens granted in favor of Bank under this Agreement; and (d) is
located at Borrower’s headquarters or such other Borrower operated facility as
to which Bank has received a landlord waiver, inventory holder’s acknowledgment
or other waiver or written acknowledgment in form satisfactory to Bank.

5.6 Intellectual Property. Borrower is the sole owner of the Intellectual
Property, except for non-exclusive licenses granted by Borrower to its customers
in the ordinary course of business. Each of the Patents is valid and
enforceable, and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Intellectual Property violates the rights of any third party. Except as set
forth in the Schedule, Borrower’s rights as a licensee of intellectual property
do not give rise to more than five percent (5%) of its gross revenue in any
given month, including without limitation revenue derived from the sale,
licensing, rendering or disposition of any product or service. Except as set
forth in the Schedule, Borrower is not a party to, or bound by, any agreement
that restricts the grant by Borrower of a security interest in Borrower’s rights
under such agreement.

5.7 Name; Location of Chief Executive Office. Except as disclosed in the
Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof. All Borrower’s
Inventory and Equipment is located only at the location set forth in Section 10
hereof and any location set forth on the Schedule.

5.8 Litigation. Except as set forth in the Schedule, there are no actions or
proceedings pending by or against Borrower or any Subsidiary before any court or
administrative agency in which an adverse decision could have a Material Adverse
Effect, or a material adverse effect on Borrower’s interest or Bank’s security
interest in the Collateral.

5.9 No Material Adverse Change in Financial Statements. All consolidated and
consolidating financial statements related to Borrower and any Subsidiary that
Bank has received from Borrower fairly present in all material respects
Borrower’s financial condition as of the date thereof and Borrower’s
consolidated and consolidating results of operations for the period then ended.
There has not been a material adverse change in the consolidated or the
consolidating financial condition of Borrower since the date of the most recent
of such financial statements submitted to Bank.

5.10 Solvency, Payment of Debts. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.

5.11 Regulatory Compliance. Borrower and each Subsidiary have met the minimum
funding requirements of ERISA with respect to any employee benefit plans subject
to ERISA, and no event has occurred

 

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resulting from Borrower’s failure to comply with ERISA that could result in
Borrower’s incurring any material liability. Borrower is not an “investment
company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940. Borrower is not engaged principally, or
as one of the important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations T and U of the Board of Governors of the Federal Reserve System).
Borrower has complied with all the provisions of the Federal Fair Labor
Standards Act. Borrower has not violated any statutes, laws, ordinances or rules
applicable to it, violation of which could have a Material Adverse Effect.

5.12 Environmental Condition. Except as disclosed in the Schedule, none of
Borrower’s or any Subsidiary’s properties or assets has ever been used by
Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous
owners or operators, in the disposal of, or to produce, store, handle, treat,
release, or transport, any hazardous waste or hazardous substance other than in
accordance with applicable law; to the best of Borrower’s knowledge, none of
Borrower’s properties or assets has ever been designated or identified in any
manner pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.

5.13 Taxes. Borrower and each Subsidiary have filed or caused to be filed all
tax returns required to be filed, and have paid, or have made adequate provision
for the payment of, all taxes reflected therein, except where the failure to
file, failure to pay or failure to make an adequate provision for payment would
not reasonably be expected to have Materially Adverse Effect on the Borrower.

5.14 Subsidiaries. Borrower does not own any stock, partnership interest or
other equity securities of any Person, except as set forth on the Schedule and
Permitted Investments.

5.15 Government Consents. Borrower and each Subsidiary have obtained all
material consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of Borrower’s business as currently
conducted.

5.16 Accounts. As of the Closing Date, none of Borrower’s nor any Subsidiary’s
property is maintained or invested with a Person other than Bank, except as set
forth on the Schedule. On and after the thirtieth (30th) day following the
Closing Date, all accounts set forth on the Schedule will have been closed and
none of Borrower’s nor any Subsidiary’s property is maintained or invested with
a Person other than Bank.

5.17 Shares. Except for the restrictions set forth in the Fisker Automotive
Stockholders’ Agreement, Borrower has full power and authority to create a first
lien on the Shares and no disability or contractual obligation exists that would
prohibit such Borrower from pledging the Shares pursuant to this Agreement. To
Borrowers’ knowledge, there are no subscriptions, warrants, rights of first
refusal or other restrictions on transfer relative to, or options exercisable
with respect to the Shares. The Shares have been and will be duly authorized and
validly issued, and are fully paid and non-assessable. To Borrowers’ knowledge,
the Shares are not the subject of any present or threatened suit, action,
arbitration, administrative or other proceeding, and Borrower knows of no
reasonable grounds for the institution of any such proceedings.

5.18 Full Disclosure. No representation, warranty or other statement made by
Borrower in any certificate or written statement furnished to Bank contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained in such certificates or statements not
misleading.

 

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6. AFFIRMATIVE COVENANTS.

Borrower shall do all of the following:

6.1 Good Standing. Borrower shall maintain its and each of its Subsidiaries’
corporate existence and good standing in its jurisdiction of incorporation and
maintain qualification in each jurisdiction in which it is required under
applicable law, except for the Excluded Subsidiary and except for the failure to
so qualify would not reasonably be expected to have a Material Adverse Effect.
Borrower shall maintain, and shall cause each of its Subsidiaries to maintain
(except for the Excluded Subsidiary), in force all licenses, approvals and
agreements, the loss of which could have a Material Adverse Effect.

6.2 Government Compliance. Borrower shall meet, and shall cause each Subsidiary
to meet, the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. Borrower shall comply, and shall cause each
Subsidiary to comply, with all statutes, laws, ordinances and government rules
and regulations to which it is subject, noncompliance with which could have a
Material Adverse Effect.

6.3 Financial Statements, Reports, Certificates. Borrower shall deliver the
following to Bank: (a) as soon as available, within thirty (30) days after the
last day of each month, a Borrowing Base Certificate signed by a Responsible
Officer in substantially the form of Exhibit C hereto, together with aged
listings of accounts receivable and accounts payable, and an Inventory listing;
(b) as soon as available but in any event within thirty (30) days after the end
of the first two calendar months of each calendar quarter, a company prepared
consolidated balance sheet, income statement, and cash flow statement covering
Borrower’s consolidated operations during such period, prepared in accordance
with GAAP (other than the lack of footnotes and the fact that such company
prepared financial statements will be subject to normal year end adjustments),
consistently applied, in a form acceptable to Bank and certified by a
Responsible Officer, together with a Compliance Certificate signed by a
Responsible Officer in substantially the form of Exhibit D hereto; (c) as soon
as available but in any event within forty five (45) days after the end of the
third calendar month of each calendar quarter, a company prepared consolidated
balance sheet, income statement, and cash flow statement covering Borrower’s
consolidated operations during such period, prepared in accordance with GAAP
(other than the lack of footnotes and the fact that such company prepared
financial statements will be subject to normal year end adjustments),
consistently applied, in a form acceptable to Bank and certified by a
Responsible Officer, together with a Compliance Certificate signed by a
Responsible Officer in substantially the form of Exhibit D hereto; (d) as soon
as available, but in any event within ninety five (95) days after the end of
Borrower’s fiscal year (beginning with fiscal year ended December 31, 2012),
audited consolidated financial statements of Borrower prepared in accordance
with GAAP, consistently applied, together with an unqualified opinion on such
financial statements of the Borrower’s current certified public accounting firm
or of an independent certified public accounting firm reasonably acceptable to
Bank; (d) as soon as available but no later than within 30 days of filing,
copies of Borrower’s federal tax returns prepared by the Borrower’s current
certified public accounting firm or of an independent certified public
accounting firm reasonably acceptable to Bank; (e) as soon as available, but in
any event no later than thirty (30) days prior to the beginning of Borrower’s
next fiscal year, annual operating projections (including income statements,
balance sheets and cash flow statements presented in a monthly format) for the
upcoming fiscal year, in form and substance reasonably satisfactory to Bank;
(f) copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders or to any holders of Subordinated
Debt and, if applicable, all reports on Forms 10-K and 10-Q filed with the
Securities and Exchange Commission, provided, that a statement, report or notice
filed by the Borrower with the U.S. Securities and Exchange Commission EDGAR
filing system will be deemed to have been delivered to the Bank for the purposes
of this Agreement; (g) promptly upon receipt of notice thereof, a report of any
legal actions pending or threatened against Borrower or any Subsidiary that
could reasonably be expected to result in damages or costs to Borrower or any
Subsidiary of One Hundred Thousand Dollars ($100,000) or more; and (h) such
budgets, sales projections, operating plans or other financial information as
Bank may reasonably request from time to time.

6.4 Audits. Bank shall have a right from time to time hereafter to audit
Borrower’s Accounts and appraise Collateral at Borrower’s expense provided,
however, that such audits or appraisals shall be conducted only once every six
(6) months and in no event will the Borrower be required to reimburse the Bank
in an amount exceeding the Bank’s actual out-of-pocket costs or an audit fee in
excess of $1,250 per day unless an Event of Default has occurred that is
continuing.

6.5 Inventory; Returns. Borrower shall keep all Inventory in good and marketable
condition, free from all material defects except for Inventory for which
adequate reserves have been made. Returns

 

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and allowances, if any, as between Borrower and its account debtors shall be on
the same basis and in accordance with the usual customary practices of Borrower,
as they exist at the time of the execution and delivery of this Agreement.
Borrower shall promptly notify Bank of all returns and recoveries and of all
disputes and claims, where the return, recovery, dispute or claim involves more
than One Hundred Thousand Dollars ($100,000).

6.6 Taxes. Borrower shall make, and shall cause each Subsidiary to make, due and
timely payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, and will execute and
deliver to Bank, on demand, appropriate certificates attesting to the payment or
deposit thereof; and Borrower will make, and will cause each Subsidiary to make,
timely payment or deposit of all material tax payments and withholding taxes
required of it by applicable laws, including, but not limited to, those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Bank with proof satisfactory to
Bank indicating that Borrower or a Subsidiary has made such payments or
deposits; provided that Borrower or a Subsidiary need not make any payment if
the amount or validity of such payment is contested in good faith by appropriate
proceedings and is reserved against (to the extent required by GAAP) by
Borrower.

6.7 Insurance.

(a) Borrower, at its expense, shall keep the Collateral insured against loss or
damage by fire, theft, explosion, sprinklers, and all other hazards and risks,
and in such amounts, as ordinarily insured against by other owners in similar
businesses conducted in the locations where Borrower’s business is conducted on
the date hereof. Borrower shall also maintain insurance relating to Borrower’s
business, ownership and use of the Collateral in amounts and of a type that are
customary to businesses similar to Borrower’s.

(b) All such policies of insurance shall be in such form, with such companies,
and in such amounts as are reasonably satisfactory to Bank. All such policies of
property insurance shall contain a lender’s loss payable endorsement, in a form
satisfactory to Bank, showing Bank as an additional loss payee thereof, and all
liability insurance policies shall show the Bank as an additional insured and
shall specify that the insurer must give at least twenty (20) days notice to
Bank before canceling its policy for any reason. Upon Bank’s request, Borrower
shall deliver to Bank certified copies of such policies of insurance and
evidence of the payments of all premiums therefor. All proceeds payable under
any such policy shall, at the option of Bank, be payable to Bank to be applied
on account of the Obligations.

6.8 Accounts. On and after the thirtieth (30th) day following the Closing Date,
Borrower shall maintain and shall cause each of its Subsidiaries to maintain its
depository, operating, and investment accounts with Bank. Borrower shall utilize
Bank and Bank’s international services group for all of its foreign exchange,
hedging and letter of credit needs.

6.9 Financial Covenants.

(a) Asset Coverage Ratio. Borrower shall maintain at all times a ratio of
unrestricted cash and cash equivalents maintained at Bank plus Eligible Accounts
to all Obligations owing to Bank (the “Asset Coverage Ratio”) of at least 1.25
to 1.00, measured on a monthly basis.

(b) Performance to Plan. Each of Borrower’s quarterly revenue and operating loss
shall not negatively deviate more than 20% from Borrower’s operating projections
for 2012 and beyond, as such projections are approved by Borrower’s Board of
Directors, reasonably acceptable to Bank, and delivered to Bank in accordance
with Section 6.3(e).

6.10 Intellectual Property Rights.

(a) Borrower shall promptly give Bank written notice of any applications or
registrations of intellectual property rights filed with the United States
Patent and Trademark Office, including the date of such filing and the
registration or application numbers, if any. Borrower shall (i) give Bank not
less than 30 days prior written notice of the filing of any applications or
registrations with the United States Copyright Office, including the title of
such intellectual property rights to be registered, as such title will appear on
such applications

 

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or registrations, and the date such applications or registrations will be filed,
and (ii) prior to the filing of any such applications or registrations, shall
execute such documents as Bank may reasonably request for Bank to maintain its
perfection in such intellectual property rights to be registered by Borrower,
and upon the request of Bank, shall file such documents simultaneously with the
filing of any such applications or registrations. Upon filing any such
applications or registrations with the United States Copyright Office, Borrower
shall promptly provide Bank with (i) a copy of such applications or
registrations, without the exhibits, if any, thereto, (ii) evidence of the
filing of any documents requested by Bank to be filed for Bank to maintain the
perfection and priority of its security interest in such intellectual property
rights, and (iii) the date of such filing.

(b) Bank may audit Borrower’s Intellectual Property to confirm compliance with
this Section, provided such audit may not occur more often than once per year,
unless an Event of Default has occurred and is continuing. Bank shall have the
right, but not the obligation, to take, at Borrower’s sole expense, any actions
that Borrower is required under this Section to take but which Borrower fails to
take, after 15 days’ notice to Borrower. Borrower shall reimburse and indemnify
Bank for all reasonable costs and reasonable expenses incurred in the reasonable
exercise of its rights under this Section.

6.11 Lockbox and Cash Collateral Account. On or prior to the Closing Date,
Borrower shall enter into a collection services agreement acceptable to Bank
along with such other agreements and documents as Bank may reasonably request
from time to time (the “Lockbox Agreements”). As soon as possible, but no later
than the sixtieth (60th) day following the Closing Date, all proceeds of
Accounts shall be deposited into a lockbox or dominion account (the “Cash
Collateral Account”) with Bank. Bank shall have the exclusive right to receive
all Collections on all Accounts. Borrower shall (i) immediately notify, transfer
and deliver to Bank all Collections that Borrower receives, and (ii) deliver to
Bank a detailed cash receipts journal on Friday of each week until the lockbox
and Cash Collateral Account are operational. Borrower shall use the lockbox
address as the remit to and payment address for all proceeds of Accounts. If
Borrower receives any amount despite such instructions, Borrower shall
immediately deliver such payment to Bank in the form received, except for an
endorsement to the order of Bank and, pending such delivery, shall hold such
payment in trust for Bank. Within three business days of the date received, Bank
shall credit all amounts paid into the Cash Collateral Account to Borrower’s
operating account maintained at Bank; provided that upon the occurrence and
during the continuance of any Event of Default, Bank may apply all Collections
to the Obligations in such order and manner as Bank may determine. Bank may, in
its sole discretion, send requests for verification of Accounts or notify
Borrower’s account debtors of the assignment of such Accounts to Bank, and take
such other actions as set forth in the Lockbox Agreements.

6.12 Shares. In the event that Fisker Automotive conducts a Qualified IPO (as
defined in the Fisker Automotive Stockholders’ Agreement), then Borrower shall
use commercially reasonable efforts to cause the Shares of the capital stock of
Fisker Automotive owned or held of record by Borrower to be registered and
unrestricted promptly following such Qualified IPO and the expiration of any
applicable lock-up period.

6.13 Further Assurances. At any time and from time to time Borrower shall
execute and deliver such further instruments and take such further action as may
reasonably be requested by Bank to effect the purposes of this Agreement.

7. NEGATIVE COVENANTS.

Borrower will not do any of the following:

7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of
(collectively, a “Transfer”), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, other than: (i) Transfers of Inventory
in the ordinary course of business; (ii) Transfers of non-exclusive licenses and
similar arrangements for the use of the property of Borrower or its Subsidiaries
in the ordinary course of business; (iii) Transfers of worn-out or obsolete
Equipment which was not financed by Bank, (iv) Transfer of Equipment no longer
used in Borrower’s business with a value of not more than $100,000 in the
aggregate during the term of this Agreement; or (v) Transfers of the assets of
Excluded Subsidiary to Borrower.

7.2 Change in Business; Change in Control or Executive Office. Engage in any
business, or permit any of its Subsidiaries to engage in any business, other
than the businesses currently engaged in by

 

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Borrower and any business substantially similar or related thereto (or
incidental thereto); or cease to conduct business in the manner conducted by
Borrower as of the Closing Date; or suffer or permit a Change in Control; or
without thirty (30) days prior written notification to Bank, relocate its chief
executive office or state of incorporation or change its legal name; or without
Bank’s prior written consent, change the date on which its fiscal year ends.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person.

7.4 Indebtedness. Create, incur, assume or be or remain liable with respect to
any Indebtedness, or permit any Subsidiary so to do, other than Permitted
Indebtedness.

7.5 Encumbrances. Create, incur, assume or suffer to exist any Lien with respect
to any of its property, (including without limitation, its Intellectual
Property) or assign or otherwise convey any right to receive income, including
the sale of any Accounts, or permit any of its Subsidiaries so to do, except for
Permitted Liens, or agree with any Person other than Bank not to grant a
security interest in, or otherwise encumber, any of its property, (including
without limitation, its Intellectual Property) or permit any Subsidiary to do
so.

7.6 Distributions. Pay any dividends or make any other distribution or payment
on account of or in redemption, retirement or purchase of any capital stock, or
permit any of its Subsidiaries to do so, except that (a) Borrower may (i) make
redemptions not to exceed two hundred thousand dollars ($200,000) in the
aggregate of certain common stock purchase warrant(s) as described in the
Schedule, or (ii) repurchase the stock of former employees pursuant to stock
repurchase agreements as long as an Event of Default does not exist prior to
such repurchase or would not exist after giving effect to such repurchase and
(b) a Subsidiary may pay a dividend or make a distribution to Borrower or
another Subsidiary of Borrower.

7.7 Investments. Directly or indirectly acquire or own, or make any Investment
in or to any Person, or permit any of its Subsidiaries so to do, other than
Permitted Investments; or maintain or invest any of its property with a Person
other than Bank (other than as permitted under Section 6.8) or permit any of its
Subsidiaries to do so unless such Person has entered into an account control
agreement with Bank in form and substance satisfactory to Bank; or suffer or
permit any Subsidiary to be a party to, or be bound by, an agreement that
restricts such Subsidiary from paying dividends or otherwise distributing
property to Borrower.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less favorable to Borrower than would be
obtained in an arm’s length transaction with a non-affiliated Person.

7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt, or
permit any of its Subsidiaries to make any such payment, except in compliance
with the terms of such Subordinated Debt, or amend any provision contained in
any documentation relating to the Subordinated Debt without Bank’s prior written
consent.

7.10 Inventory and Equipment. Store the Inventory or the Equipment with a
bailee, warehouseman, or other third party unless the third party has been
notified of Bank’s security interest and Bank (a) has received an acknowledgment
from the third party that it is holding or will hold the Inventory or Equipment
for Bank’s benefit or (b) is in pledge possession of the warehouse receipt,
where negotiable, covering such Inventory or Equipment. Store or maintain any
Equipment or Inventory at a location other than the location set forth in
Section 10 of this Agreement.

7.11 Compliance. Become an “investment company” or be controlled by an
“investment company,” within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose. Fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail
to comply with the Federal Fair Labor Standards Act or violate any law or
regulation, which violation could have a Material Adverse Effect, or a material
adverse effect on the Collateral or the priority of Bank’s Lien on the
Collateral, or permit any of its Subsidiaries to do any of the foregoing.

 

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8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:

8.1 Payment Default. If Borrower fails to pay, when due, any of the Obligations;

8.2 Covenant Default.

(a) If Borrower fails to perform any obligation under Article 6 or violates any
of the covenants contained in Article 7 of this Agreement; or

(b) If Borrower fails or neglects to perform or observe any other material term,
provision, condition, covenant contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between Borrower and Bank
and as to any default under such other term, provision, condition or covenant
that can be cured, has failed to cure such default within ten days after
Borrower receives notice thereof or any officer of Borrower becomes aware
thereof; provided, however, that if the default cannot by its nature be cured
within the ten day period or cannot after diligent attempts by Borrower be cured
within such ten day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed 30 days) to attempt to cure such default, and
within such reasonable time period the failure to have cured such default shall
not be deemed an Event of Default but no Credit Extensions will be made.

8.3 Material Adverse Effect. If there occurs any circumstance or circumstances
that could reasonably be expected to have a Material Adverse Effect;

8.4 Attachment. If any portion of Borrower’s assets is attached, seized,
subjected to a writ or distress warrant, or is levied upon, or comes into the
possession of any trustee, receiver or person acting in a similar capacity and
such attachment, seizure, writ or distress warrant or levy has not been removed,
discharged or rescinded within ten (10) days, or if Borrower is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs, or if a judgment or other
claim becomes a lien or encumbrance upon any material portion of Borrower’s
assets, or if a notice of lien, levy, or assessment is filed of record with
respect to any of Borrower’s assets by the United States Government, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Credit Extensions will be required to be made during such cure period);

8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is
commenced by Borrower, or if an Insolvency Proceeding is commenced against
Borrower and is not dismissed or stayed within thirty (30) days (provided that
no Credit Extensions will be made prior to the dismissal of such Insolvency
Proceeding);

8.6 Other Agreements. If there is a default or other failure to perform in any
agreement to which Borrower is a party or by which it is bound resulting in a
right by a third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or which could have a Material Adverse Effect;

8.7 Judgments. If a judgment or judgments for the payment of money in an amount,
individually or in the aggregate, of at least One Hundred Thousand Dollars
($100,000) shall be rendered against Borrower and shall remain unsatisfied and
unstayed for a period of ten (10) days (provided that no Credit Extensions will
be made prior to the satisfaction or stay of such judgment); or

 

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8.8 Misrepresentations. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement or to induce Bank to enter into this Agreement or any
other Loan Document.

9. BANK’S RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence and during the continuance of an
Event of Default, Bank may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:

(a) Declare all Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise, immediately due and payable (provided that
upon the occurrence of an Event of Default described in Section 8.5, all
Obligations shall become immediately due and payable without any action by
Bank);

(b) Cease advancing money or extending credit to or for the benefit of Borrower
under this Agreement or under any other agreement between Borrower and Bank;

(c) Settle or adjust disputes and claims directly with account debtors for
amounts, upon terms and in whatever order that Bank reasonably considers
advisable;

(d) Make such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral. Borrower agrees
to assemble the Collateral if Bank so requires, and to make the Collateral
available to Bank as Bank may designate. Borrower authorizes Bank to enter the
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Bank’s determination appears to be prior
or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of Borrower’s owned premises, Borrower
hereby grants Bank a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise any of Bank’s rights or
remedies provided herein, at law, in equity, or otherwise;

(e) Set off and apply to the Obligations any and all (i) balances and deposits
of Borrower held by Bank, or (ii) indebtedness at any time owing to or for the
credit or the account of Borrower held by Bank;

(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Collateral.
Bank is hereby granted a license or other right, solely pursuant to the
provisions of this Section 9.1, to use, without charge, Borrower’s labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section 9.1, Borrower’s rights under all
licenses and all franchise agreements shall inure to Bank’s benefit;

(g) Dispose of the Collateral by way of one or more contracts or transactions,
for cash or on terms, in such manner and at such places (including Borrower’s
premises) as Bank determines is commercially reasonable, and apply any proceeds
to the Obligations in whatever manner or order Bank deems appropriate;

(h) Bank may credit bid and purchase at any public sale; and

(i) Any deficiency that exists after disposition of the Collateral as provided
above will be paid immediately by Borrower.

9.2 Power of Attorney. Effective only upon the occurrence and during the
continuance of an Event of Default, Borrower hereby irrevocably appoints Bank
(and any of Bank’s designated officers, or

 

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employees) as Borrower’s true and lawful attorney to: (a) send requests for
verification of Accounts or notify account debtors of Bank’s security interest
in the Accounts; (b) endorse Borrower’s name on any checks or other forms of
payment or security that may come into Bank’s possession; (c) sign Borrower’s
name on any invoice or bill of lading relating to any Account, drafts against
account debtors, schedules and assignments of Accounts, verifications of
Accounts, and notices to account debtors; (d) dispose of any Collateral;
(e) make, settle, and adjust all claims under and decisions with respect to
Borrower’s policies of insurance; (f) settle and adjust disputes and claims
respecting the accounts directly with account debtors, for amounts and upon
terms which Bank determines to be reasonable; and (g) to file, in its sole
discretion, one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral. The appointment of Bank as
Borrower’s attorney in fact, and each and every one of Bank’s rights and powers,
being coupled with an interest, is irrevocable until all of the Obligations have
been fully repaid and performed and Bank’s obligation to provide Credit
Extensions hereunder is terminated.

9.3 Accounts Collection. At any time after the occurrence and during the
continuation of an Event of Default, Bank may notify any Person owing funds to
Borrower of Bank’s security interest in such funds and verify the amount of such
Account. Borrower shall collect all amounts owing to Borrower for Bank, receive
in trust all payments as Bank’s trustee, and immediately deliver such payments
to Bank in their original form as received from the account debtor, with proper
endorsements for deposit.

9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required
proof of payment due to third persons or entities, as required under the terms
of this Agreement, then Bank may do any or all of the following after reasonable
notice to Borrower: (a) make payment of the same or any part thereof; (b) set up
such reserves under a loan facility in Section 2.1 as Bank deems necessary to
protect Bank from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type discussed in Section 6.7 of this
Agreement, and take any action with respect to such policies as Bank deems
prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.

9.5 Bank’s Liability for Collateral. So long as Bank complies with reasonable
banking practices, Bank shall not in any way or manner be liable or responsible
for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto
occurring or arising in any manner or fashion from any cause; (c) any diminution
in the value thereof; or (d) any act or default of any carrier, warehouseman,
bailee, forwarding agency, or other person whomsoever. All risk of loss, damage
or destruction of the Collateral shall be borne by Borrower.

9.6 Shares. Borrowers recognize that Bank may be unable to effect a public sale
of any or all the Shares, by reason of certain prohibitions contained in federal
securities laws and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. Borrowers acknowledge and agree that any such
private sale may result in prices and other terms less favorable than if such
sale were a public sale and, notwithstanding such circumstances, agrees that any
such private sale shall be deemed to have been made in a commercially reasonable
manner. Bank shall be under no obligation to delay a sale of any of the Shares
for the period of time necessary to permit the issuer thereof to register such
securities for public sale under federal securities laws or under applicable
state securities laws, even if such issuer would agree to do so. Upon the
occurrence of an Event of Default which continues, Bank shall have the right to
exercise all such rights as a secured party under the California Uniform
Commercial Code as it, in its sole judgment, shall deem necessary or
appropriate, including without limitation the right to liquidate the Shares and
apply the proceeds thereof to reduce the Obligations. Effective only upon the
occurrence and during the continuance of an Event of Default, each Borrower
hereby irrevocably appoints Bank (and any of Bank’s designated officers, or
employees) as such Borrower’s true and lawful attorney to enforce such
Borrower’s rights against any Subsidiary, including the right to compel any
Subsidiary to make payments or distributions owing to such Borrower.

9.7 Remedies Cumulative. Bank’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements shall be cumulative. Bank shall have
all other rights and remedies not

 

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inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by Bank of one right or remedy shall be deemed an election, and no
waiver by Bank of any Event of Default on Borrower’s part shall be deemed a
continuing waiver. No delay by Bank shall constitute a waiver, election, or
acquiescence by it. No waiver by Bank shall be effective unless made in a
written document signed on behalf of Bank and then shall be effective only in
the specific instance and for the specific purpose for which it was given.

9.8 Demand; Protest. Borrower waives demand, protest, notice of protest, notice
of default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guarantees at any time
held by Bank on which Borrower may in any way be liable.

10. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by
telefacsimile to Borrower or to Bank, as the case may be, at its addresses set
forth below:

 

If to Borrower:    Quantum Fuel Systems Technologies Worldwide, Inc.    17872
Cartwright Road    Irvine, CA 92614    Attn: William B. Olson, Chief Financial
Officer    FAX: (949) 399-4600 If to Bank:    Bridge Bank, National Association
   55 Almaden Blvd.    San Jose, CA 95113    Attn: Kevin McBride and Note
Department    FAX: (408) 282-1681

The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.

11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of California, without regard to principles of
conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

12. JUDICIAL REFERENCE PROVISION.

12.1 In the event the jury trial waiver set forth above is not enforceable, the
parties elect to proceed under this Judicial Reference Provision.

12.2 With the exception of the items specified in Section 12.3, below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Agreement or any other Loan Document, will

 

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be resolved by a reference proceeding in California in accordance with the
provisions of Sections 638 et seq. of the California Code of Civil Procedure
(“CCP”), or their successor sections, which shall constitute the exclusive
remedy for the resolution of any Claim, including whether the Claim is subject
to the reference proceeding. Except as otherwise provided in the Loan Documents,
venue for the reference proceeding will be in the state or federal court in the
county or district where the real property involved in the action, if any, is
located or in the state or federal court in the county or district where venue
is otherwise appropriate under applicable law (the “Court”).

12.3 The matters that shall not be subject to a reference are the following:
(i) nonjudicial foreclosure of any security interests in real or personal
property, (ii) exercise of self-help remedies (including, without limitation,
set-off), (iii) appointment of a receiver and (iv) temporary, provisional or
ancillary remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
reference provision does not limit the right of any party to exercise or oppose
any of the rights and remedies described in clauses (i) and (ii) or to seek or
oppose from a court of competent jurisdiction any of the items described in
clauses (iii) and (iv). The exercise of, or opposition to, any of those items
does not waive the right of any party to a reference pursuant to this reference
provision as provided herein.

12.4 The referee shall be a retired judge or justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days of a
written request to do so by any party, then, upon request of any party, the
referee shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted. Pursuant to CCP § 170.6, each party
shall have one peremptory challenge to the referee selected by the Presiding
Judge of the Court (or his or her representative).

12.5 The parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (i) set the matter
for a status and trial-setting conference within fifteen (15) days after the
date of selection of the referee, (ii) if practicable, try all issues of law or
fact within one hundred twenty (120) days after the date of the conference and
(iii) report a statement of decision within twenty (20) days after the matter
has been submitted for decision.

12.6 The referee will have power to expand or limit the amount and duration of
discovery. The referee may set or extend discovery deadlines or cutoffs for good
cause, including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered based upon good cause shown, no party shall
be entitled to “priority” in conducting discovery, depositions may be taken by
either party upon seven (7) days written notice, and all other discovery shall
be responded to within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding.

12.7 Except as expressly set forth herein, the referee shall determine the
manner in which the reference proceeding is conducted including the time and
place of hearings, the order of presentation of evidence, and all other
questions that arise with respect to the course of the reference proceeding. All
proceedings and hearings conducted before the referee, except for trial, shall
be conducted without a court reporter, except that when any party so requests, a
court reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making
such a request shall have the obligation to arrange for and pay the court
reporter. Subject to the referee’s power to award costs to the prevailing party,
the parties will equally share the cost of the referee and the court reporter at
trial.

12.8 The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the State of California. The rules
of evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject of
the reference. Pursuant to CCP § 644, such decision shall be entered by the
Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any such decision will be final, binding and conclusive.
The parties reserve the right to appeal from the final judgment or order or from
any appealable decision or order entered by the referee. The parties reserve the
right to findings of fact, conclusions of laws, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this provision.

 

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12.9 If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or justice, in accordance with the California Arbitration Act §1280 through
§1294.2 of the CCP as amended from time to time. The limitations with respect to
discovery set forth above shall apply to any such arbitration proceeding.

12.10 THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND
CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND
NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND
FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL
APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF
OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

13. GENERAL PROVISIONS.

13.1 Successors and Assigns. This Agreement shall bind and inure to the benefit
of the respective successors and permitted assigns of each of the parties;
provided, however, that neither this Agreement nor any rights hereunder may be
assigned by Borrower without Bank’s prior written consent, which consent may be
granted or withheld in Bank’s sole discretion. Bank shall have the right without
the consent of or notice to Borrower to sell, transfer, negotiate, or grant
participation in all or any part of, or any interest in, Bank’s obligations,
rights and benefits hereunder.

13.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank
and its officers, employees, and agents against: (a) all obligations, demands,
claims, and liabilities claimed or asserted by any other party in connection
with the transactions contemplated by this Agreement; and (b) all losses or Bank
Expenses in any way suffered, incurred, or paid by Bank as a result of or in any
way arising out of, following, or consequential to transactions between Bank and
Borrower whether under this Agreement, or otherwise (including without
limitation reasonable attorneys’ fees and expenses), except for losses caused by
Bank’s gross negligence or willful misconduct.

13.3 Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.

13.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

13.5 Amendments in Writing, Integration. Neither this Agreement nor the Loan
Documents can be amended or terminated orally. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties hereto with respect to the subject matter of this Agreement and the Loan
Documents, if any, are merged into this Agreement and the Loan Documents.

13.6 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.

13.7 Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
remain outstanding or Bank has any obligation to make Credit Extensions to
Borrower. The obligations of Borrower to indemnify Bank with respect to the
expenses, damages, losses, costs and liabilities described in Section 13.2 shall
survive until all applicable statute of limitations periods with respect to
actions that may be brought against Bank have run.

13.8 Confidentiality. In handling any confidential information Bank and all
employees and agents of Bank, including but not limited to accountants, shall
exercise the same degree of care that it exercises with respect to

 

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its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of Bank in connection with their
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Credit Extensions, provided
that they have entered into a comparable confidentiality agreement in favor of
Borrower and have delivered a copy to Borrower, (iii) as required by law,
regulations, rule or order, subpoena, judicial order or similar order, (iv) as
may be required in connection with the examination, audit or similar
investigation of Bank and (v) as Bank may determine in connection with the
enforcement of any remedies hereunder. Confidential information hereunder shall
not include information that either: (a) is in the public domain or in the
knowledge or possession of Bank when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank through no fault of Bank; or (b) is
disclosed to Bank by a third party, provided Bank does not have actual knowledge
that such third party is prohibited from disclosing such information.

13.9 Patriot Act. To help the government fight the funding of terrorism and
money laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person who opens an
account. WHAT THIS MEANS FOR YOU: when you open an account, we will ask your
name, address, date of birth, and other information that will allow us to
identify you. We may also ask to see your driver’s license or other identifying
documents.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

BORROWER: QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC. By:  

/s/ W. Brian Olson

Title:  

Chief Financial Officer

BANK: BRIDGE BANK, NATIONAL ASSOCIATION By:  

/s/ Kevin McBride

Title:  

Vice President

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EXHIBIT A

 

DEBTOR:    QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC. SECURED PARTY:   
BRIDGE BANK, NATIONAL ASSOCIATION

COLLATERAL DESCRIPTION ATTACHMENT

TO LOAN AND SECURITY AGREEMENT

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

(a) all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), commercial tort claims,
deposit accounts, documents (including negotiable documents), equipment
(including all accessions and additions thereto), general intangibles (including
payment intangibles and software), goods (including fixtures), instruments
(including promissory notes), inventory (including all goods held for sale or
lease or to be furnished under a contract of service, and including returns and
repossessions), investment property, securities and securities entitlements
(including without limitation, the shares of Fisker Automotive Holdings, Inc.
owned by Borrower), letter of credit rights, money, and all of Debtor’s books
and records with respect to any of the foregoing, and the computers and
equipment containing said books and records;

(b) any and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment. All terms
above have the meanings given to them in the California Uniform Commercial Code,
as amended or supplemented from time to time.

Notwithstanding the foregoing, the Collateral shall not include any copyrights,
patents, trademarks, servicemarks and applications therefor, now owned or
hereafter acquired, or any claims for damages by way of any past, present and
future infringement of any of the foregoing (collectively, the “Intellectual
Property”); provided, however, that the Collateral shall include all accounts
and general intangibles that consist of rights to payment and proceeds from the
sale, licensing or disposition of all or any part, or rights in, the foregoing
(the “Rights to Payment”). Notwithstanding the foregoing, if a judicial
authority (including a U.S. Bankruptcy Court) holds that a security interest in
the underlying Intellectual Property is necessary to have a security interest in
the Rights to Payment, then the Collateral shall automatically, and effective as
of the Closing Date, include the Intellectual Property to the extent necessary
to permit perfection of Bank’s security interest in the Rights to Payment.

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EXHIBIT B

REVOLVING ADVANCE REQUEST

 

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EXHIBIT C

BORROWING BASE CERTIFICATE

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Exhibit D

COMPLIANCE CERTIFICATE

 

2