Exhibit 10.32

 

FOURTEENTH AMENDMENT TO CREDIT AND SECURITY
AGREEMENTS, WAIVER OF DEFAULT, AND CONSENT

 

THIS FOURTEENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENTS, WAIVER OF DEFAULT,
AND CONSENT (the “Amendment”), dated as of June 10, 2015, is entered into by and
between CAPSTONE TURBINE CORPORATION, a Delaware corporation (“Company”), and
WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”).

 

RECITALS

 

A.                                    Company and Wells Fargo are parties to
(i) a Credit and Security Agreement dated February 9, 2009 (as amended by that
certain First Amendment to Credit and Security Agreements, dated June 9, 2009
(“First Amendment”), that certain Second Amendment to Credit and Security
Agreements and Waiver of Defaults, dated November 5, 2009 (“Second Amendment”),
that certain Third Amendment to Credit and Security Agreements and Waiver of
Default, dated June 11, 2010 (“Third Amendment”), that certain Fourth Amendment
to Credit and Security Agreements, dated June 29, 2010 (“Fourth Amendment”),
that certain Fifth Amendment to Credit and Security Agreements, dated
November 9, 2010 (“Fifth Amendment”), that certain Sixth Amendment to Credit and
Security Agreement and Waiver of Default, dated March 23, 2011 (“Sixth
Amendment”), that certain Seventh Amendment to Credit and Security Agreements
and Waiver of Default, dated June 2, 2011 (“Seventh Amendment”), that certain
Eighth Amendment to Credit and Security Agreements, dated September 27, 2011
(“Eighth Amendment”), that certain Ninth Amendment to Credit and Security
Agreements and Waiver of Default, dated February 7, 2012 (“Ninth Amendment”),
that certain Tenth Amendment to Credit and Security Agreement, dated June 11,
2012 (“Tenth Amendment”), that certain Eleventh Amendment to Credit and Security
Agreement, dated June 5, 2013 (“Eleventh Amendment”), that certain Twelfth
Amendment to Credit and Security Agreement, dated June 9, 2014 (“Twelfth
Amendment”), and that certain Thirteenth Amendment to Credit and Security
Agreement, dated November 3, 2014 (“Thirteenth Amendment”), and as further
amended from time to time, the “Domestic Credit Agreement”), and (ii) a Credit
and Security Agreement (Ex-Im Subfacility), dated February 9, 2009 (as amended
by the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment, the
Eighth Amendment, the Ninth Amendment, the Tenth Amendment, the Eleventh
Amendment, the Twelfth Amendment, and the Thirteenth Amendment, and as further
amended from time to time, the “Ex-Im Credit Agreement”; and together with the
Domestic Credit Agreement, the “Credit Agreements”).  Capitalized terms used in
these recitals have the meanings given to them in the Credit Agreements unless
otherwise specified.

 

B.                                    Company has requested that (i) certain
amendments be made to the Credit Agreements, (ii) an Event of Default be waived,
and (iii) Wells Fargo consent to the Company’s execution of a guaranty for a
real property lease to be entered into by Capstone Turbine International, Inc.,
all of which Wells Fargo is willing to agree to pursuant to the terms and
conditions set forth herein.

 

Fourteenth Amendment to Credit and Security Agreements
WFB/Capstone Turbine Corporation

 

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NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:

 

1.                                      Amendments to Credit Agreements.  The
Credit Agreements are amended as follows:

 

1.1                               Section 5.2(b) of the Credit Agreements. 
Section 5.2(b) of the Credit Agreements is amended to read in its entirety as
follows:

 

“(b)                           Minimum Adjusted EBITDA.  Company shall achieve
Adjusted EBITDA, measured on each of the following test dates described below,
for the periods specified below, of not less than the amount set forth opposite
each such test date and test period (numbers appearing between “< >“ are
negative):

 

Test Date and Test Period

 

Minimum Adjusted EBITDA

 

Fiscal Year to Date Period ending June 30, 2015

 

$

<7,500,000>

 

Fiscal Year to Date Period ending September 30, 2015

 

$

<10,750,000>

 

Fiscal Year to Date Period ending December 31, 2015

 

$

<13,300,000>

 

Fiscal Year to Date Period ending March 31, 2016

 

$

<14,900,000>

 

 

1.2                               Section 5.2(c) of the Domestic Credit
Agreement.  Section 5.2(c) of the Domestic Credit Agreement is amended to read
in its entirety as follows:

 

“(c)                            Minimum Cash to Covenant Indebtedness Ratio.  At
all times, Company shall maintain a ratio of (i) cash and Cash Equivalents of
Company in which Wells Fargo has a perfected first priority security interest,
to (ii) the aggregate amount of outstanding Covenant Indebtedness (as defined
below), that is not less than 85%.  By way of example, if there is $10 of
Covenant Indebtedness, there must be at least $8.50 of cash and Cash Equivalents
in which Wells Fargo has a perfected first priority security interest.  For
purposes of this paragraph, “Covenant Indebtedness” shall mean, as of any date
that this minimum cash to Covenant Indebtedness ratio is determined, the then
outstanding debts (consisting of the outstanding unreimbursed line balance plus
unpaid accrued interest, fees, costs, and expenses), obligations and liabilities
of Company to Wells Fargo under this Agreement, the other Loan Documents, and
the Ex-Im Documents (including, without limitation and duplication, the L/C
Amount).”

 

1.3                               Section 5.2(c) of the Ex-Im Credit Agreement. 
Section 5.2(c) of the Ex-Im Credit Agreement is amended to read in its entirety
as follows:

 

“(c)                            Minimum Cash to Covenant Indebtedness Ratio.  At
all times, Company shall maintain a ratio of (i) cash and Cash Equivalents of
Company in which Wells Fargo has a perfected first priority security interest,
to (ii) the aggregate amount of outstanding Covenant Indebtedness (as defined
below), that is not less than 85%.  By way of

 

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example, if there is $10 of Covenant Indebtedness, there must be at least $8.50
of cash and Cash Equivalents in which Wells Fargo has a perfected first priority
security interest.  For purposes of this paragraph, “Covenant Indebtedness”
shall mean, as of any date that this minimum cash to Covenant Indebtedness ratio
is determined, the then outstanding debts (consisting of the outstanding
unreimbursed line balance plus unpaid accrued interest, fees, costs, and
expenses), obligations and liabilities of Company to Wells Fargo under this
Agreement, the other Loan Documents, and the Domestic Loan Documents (including,
without limitation and duplication, the L/C Amount under the Domestic Facility
Agreement).”

 

1.4                               Section 5.2(d) of the Credit Agreements. 
Section 5.2(d) of the Credit Agreements is amended to read in its entirety as
follows:

 

“(d)                           Capital Expenditures.  Company shall not incur or
contract to incur Capital Expenditures of more than (i) $2,500,000 in the
aggregate during Company’s fiscal year ending March 31, 2016, and (ii) zero for
each subsequent year until Company and Wells Fargo agree on limits on Capital
Expenditures for subsequent periods based on Company’s projections for such
periods.”

 

1.5                               Section 5.28 of the Credit Agreement. 
Section 5.28 of the Credit Agreements is hereby amended to read in its entirety
as follows:

 

“5.28                  Cash Collateral.  Company shall establish and maintain a
pledge of cash collateral in the amount of $5,000,000 (the “Cash Collateral”),
subject to the following terms and conditions:  (i) the Cash Collateral shall be
held in a deposit account or securities account maintained at Wells Fargo Bank,
National Association or an affiliate of Wells Fargo (the “Cash Collateral
Account”); (ii) to secure the Indebtedness, Company hereby grants to Wells Fargo
a security interest in all of Company’s right, title, and interest in and to the
Cash Collateral, the Cash Collateral Account, all interest that accrues (if any)
on the Cash Collateral, and all products and proceeds thereof, in each case
whether now existing or hereafter arising; (iii) Company shall have no access to
the Cash Collateral or the Cash Collateral Account (i.e., the Cash Collateral
Account shall be deemed “blocked”), until this Agreement has been terminated and
all Indebtedness has been paid in full or except as provided below; (iv) any
interest (if any) that may accrue on the Cash Collateral shall be held in the
Cash Collateral Account, and shall itself be deemed to be Cash Collateral;
(v) during any Default Period, Wells Fargo may, in Wells Fargo’s sole
discretion, apply all or any portion of the Cash Collateral to the Indebtedness
(in any order selected by Wells Fargo); (vi) the Cash Collateral, Cash
Collateral Account, all interest that accrues (if any) on the Cash Collateral,
and all products and proceeds thereof shall be deemed to be “Collateral” under
this Agreement and the other Loan Documents; (vii) except as provided below,
Company shall not have any right to access the foregoing collateral so long as
this Agreement is in effect or any Indebtedness remains outstanding, Company
shall not transfer (or attempt to transfer) any such collateral to any Person,
and Company shall keep such collateral free and clear of all Liens (except in
favor Wells Fargo); and (viii) Company shall execute and/or deliver any
instruments, documents, assignments, security agreements, control agreements,
financing statements, and any other agreement that Wells Fargo may reasonably
request to

 

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evidence, maintain, perfect, and/or ensure the first priority of Wells Fargo’s
security interest in the foregoing collateral; provided that failure to execute
or deliver any such items shall not affect the foregoing grant of the security
interest in the foregoing collateral, and Wells Fargo shall be deemed to have a
duly perfected and first priority security interest in all such collateral at
all times.  Notwithstanding any provision to the contrary herein, the Cash
Collateral shall be released to Company subject to the following terms
(including upon satisfaction of the following conditions precedent): 
(a) Company shall deliver an Authenticated Record to Wells Fargo each time
Company requests a release of the Cash Collateral, which Authenticated Record
shall specify the amount of Cash Collateral to be released and the date of such
release of Cash Collateral (provided that such release date shall be at least
three (3) Business Days after receipt by Wells Fargo of the Authenticated Record
requesting such release of Cash Collateral and not more than 10 days after
receipt by Wells Fargo of the Authenticated Record); (b) no Default Period shall
be existing as of the date of any release of the Cash Collateral; (c) the Cash
Collateral shall be released in two tranches:  (x) the initial release of Cash
Collateral shall not exceed $2,500,000, and (y) the second release of Cash
Collateral shall be the remaining balance of the Cash Collateral; (d) prior to
the initial release of the Cash Collateral (in an amount of up to $2,500,000 as
requested by Company), Wells Fargo shall have received Company’s Quarterly
Report on Form 10-Q filed with the United States Securities and Exchange
Commission for two consecutive quarters ending on or after September 30, 2015,
and such reports shall demonstrate that (x) Company remained in compliance with
the financial covenants set forth in Section 5.2 of this Agreement at all times,
and (y) Company’s Adjusted EBITDA for each such quarter was equal to or greater
than $1.00; and (e) the second release of Cash Collateral (for the remaining
balance of the Cash Collateral) shall occur on or after December 31, 2015, and
only after each of the foregoing conditions precedent have been satisfied and,
in addition, receipt by Wells Fargo of the audited financial statements of
Company for a fiscal year ending on or after December 31, 2015, and confirmation
by Wells Fargo that Company (x) remained in compliance with the financial
covenants set forth in Section 5.2 of this Agreement at all times, and
(y) Company’s Adjusted EBITDA for any such fiscal year was equal to or greater
than $1.00.”

 

1.6                               Section 5.29 of the Credit Agreements.  The
following new Section 5.29 is hereby added to the Credit Agreements immediately
after Section 5.28 of the Credit Agreements:

 

“5.29                 Control Agreements.  Except with respect to “Excluded
Accounts” (as defined below), Company shall obtain, and maintain at all times, a
Control Agreement, from each bank (other than Wells Fargo), securities
intermediary, and commodities intermediary maintaining a deposit account,
securities account, or commodities account for Company or holding any financial
assets or commodities for Company.  For purposes of this paragraph, “Excluded
Accounts” means:  (i) deposit accounts and/or securities accounts of the Company
that at any time have an aggregate balance of not more than $100,000, and
(ii) amounts deposited into deposit accounts expressly identified by Company to
Wells Fargo that are specially and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the employees of Company.

 

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1.7                               Exhibit A to Credit Agreements.

 

(a)                                 The following defined term is hereby added
to Exhibit A to the Credit Agreements in the appropriate alphabetical position:

 

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Wells Fargo, executed and delivered by Company, Wells Fargo, and
the applicable securities intermediary (with respect to a securities account),
commodities intermediary (with respect to a commodities account), or bank (with
respect to a deposit account).

 

(b)                                 The following defined terms that appear in
Exhibit A to the Credit Agreements are amended to read in their entirety as
follows:

 

“Adjusted EBITDA” means, for any period of determination, Company’s Adjusted Net
Income, calculated before (in each case, to the extent included in determining
net income), without duplication, (i) Interest Expense, (ii) provision for
income taxes, (iii) depreciation and amortization expense, (iv) any
extraordinary gains or extraordinary non-cash losses, (v) changes resulting from
the valuation of goodwill and intangible assets made in accordance with FASB
Accounting Standard 142, and (vi) noncash changes resulting from foreign
exchange adjustments arising from a revaluation of assets subject to foreign
currency revaluation.

 

“Adjusted Net Income” means, for any period of determination, the sum of
(i) Company’ s Net Income, plus (ii) to the extent deducted in determining Net
Income, non-cash warrant and stock-based compensation expenses, minus (iii) to
the extent included in determining Net Income, non-cash warrant and stock-based
compensation income.

 

1.8                               Exhibit E to the Domestic Credit Agreement. 
Exhibit E to the Domestic Credit Agreement is hereby deleted and replaced with
Exhibit E-1 attached to this Amendment.

 

1.9                               Exhibit E to the Ex-Im Credit Agreement. 
Exhibit E to the Ex-Im Credit Agreement is hereby deleted and replaced with
Exhibit E-2 attached to this Amendment.

 

2.                                      Waiver of Default.  Company is in
default of the following provision of the Credit Agreements (the “Existing
Default”):

 

Section/Covenant

 

Description

Section 5.2(b)
(Minimum Adjusted Net Income)

 

Company breached the minimum Adjusted Net Income covenant for the fiscal year to
date period ending March 31, 2015.

 

Upon the terms and subject to the conditions set forth in this Amendment
(including, but not limited to, the effectiveness of this Amendment in
accordance with Section 6 of this Amendment), Wells Fargo hereby waives the
Existing Default.  This waiver shall be effective only in this specific instance
and for the specific purpose for which it is given, and this waiver shall not
entitle Company to any other or further waiver in any similar or other
circumstances.

 

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3.                                      Consent.  Capstone Turbine
International, Inc. and Company may enter into that certain Lease with Pavilion
Property Trustees Limited with respect to the lease of real property  located at
Unit 800, Fareham Reach, 154-156 Fareham Road, Gosport, Hampshire (the “Lease”),
under which Company will need to guarantee the obligations of Capstone Turbine
International, Inc. under such Lease (the “Lease Guaranty”).  Upon the terms and
subject to the conditions set forth in this Amendment (including, but not
limited to, the effectiveness of this Amendment in accordance with Section 6 of
this Amendment), Wells Fargo hereby consents to the Lease Guaranty,
notwithstanding any provision of the Credit Agreements to the contrary.

 

4.                                      No Other Changes.  Except as explicitly
amended by this Amendment, all of the terms and conditions of the Credit
Agreements and the other Loan Documents shall remain in full force and effect
and shall apply to any advance or letter of credit thereunder.

 

5.                                      Accommodation Fee. [Intentionally
omitted].

 

6.                                      Conditions Precedent.  This Amendment
shall be effective when Wells Fargo shall have received an executed original of
this Amendment, together with each of the following, each in substance and form
acceptable to Wells Fargo in its sole discretion:

 

6.1                               A Certificate of Authority from the Company’s
corporate secretary;

 

6.2                               Payment of the Accommodation Fee described in
Section 5 of this Amendment;

 

6.3                               Consent and approval of this Amendment by the
Export Import Bank of the United States, if required by Wells Fargo;

 

6.4                               The Acknowledgement and Agreement of Guarantor
set forth at the end of this Amendment, duly executed by Guarantor;

 

6.5                               A new securities account control agreement
with respect to all accounts maintained by Company at Wells Fargo Securities,
LLC, duly executed by all parties thereto, and termination of any prior
securities account control agreement among Wells Fargo, Company, and Wells Fargo
Institutional Securities, LLC; and

 

6.6                               Such other matters as Wells Fargo may require.

 

7.                                      Representations and Warranties.  Company
hereby represents and warrants to Wells Fargo as follows:

 

7.1                               Company has all requisite power and authority
to execute this Amendment and any other agreements or instruments required
hereunder and to perform all of its obligations hereunder, and this Amendment
and all such other agreements and instruments have been duly executed and
delivered by Company and constitute the legal, valid and binding obligation of
Company, enforceable in accordance with their terms.

 

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7.2                               The execution, delivery and performance by
Company of this Amendment and any other agreements or instruments required
hereunder have been duly authorized by all necessary corporate action and do not
(i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation or of any
order, writ, injunction or decree presently in effect, having applicability to
Company, or the certificate of incorporation or bylaws of Company, or
(iii) result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which Company
is a party or by which it or its properties may be bound or affected.

 

7.3                               After giving effect to this Amendment, all of
the representations and warranties contained in Section 4 of, and Exhibit D to,
the Credit Agreements are true and correct in all material respects on and as of
the date hereof as though made on and as of such date, except to the extent that
such representations and warranties relate solely to an earlier date (in which
case they shall continue to be true and correct as of such earlier date),
provided that the Existing Default has occurred.

 

8.                                      References.  All references in the
Credit Agreements to “this Agreement” shall be deemed to refer to the relevant
Credit Agreement as amended hereby; and any and all references in the Security
Documents to the Credit Agreements shall be deemed to refer to the relevant
Credit Agreement as amended hereby.

 

9.                                      No Waiver.  Except as expressly provided
in Section 2 of this Amendment, the execution of this Amendment and the
acceptance of all other agreements and instruments related hereto shall not be
deemed to be a waiver of any Default or Event of Default under the Credit
Agreements or a waiver of any breach, default or event of default under any
Security Document or other document held by Wells Fargo, whether or not known to
Wells Fargo and whether or not existing on the date of this Amendment.

 

10.                               Release.  Company and the Guarantor signing
the Acknowledgment and Agreement of Guarantor set forth below hereby absolutely
and unconditionally release and forever discharge Wells Fargo, and any and all
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents, attorneys, and
employees of any of the foregoing, from any and all claims, demands or causes of
action of any kind, nature or description, whether arising in law or equity or
upon contract or tort or under any state or federal law or otherwise, which
either Company or Guarantor has had, now has or has made claim to have against
any such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
Amendment, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.  It is the intention of the Company and Guarantor
in executing this release that the same shall be effective as a bar to each and
every claim, demand and cause of action specified and in furtherance of this
intention the Company and Guarantor each waives and relinquishes all rights and
benefits under Section 1542 of the Civil Code of the State of California, which
provides:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MIGHT HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”

 

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The parties acknowledge that each may hereafter discover facts different from or
in addition to those now known or believed to be true with respect to such
claims, demands, or causes of action and agree that this instrument shall be and
remain effective in all respects notwithstanding any such differences or
additional facts.

 

11.                               Costs and Expenses.  Company hereby reaffirms
its agreement under the Credit Agreements to pay or reimburse Wells Fargo on
demand for all costs and expenses incurred by Wells Fargo in connection with the
Loan Documents, including, without limitation, all reasonable fees and
disbursements of legal counsel.  Without limiting the generality of the
foregoing, Company specifically agrees to pay all reasonable fees and
disbursements of counsel to Wells Fargo for the services performed by such
counsel in connection with the preparation of this Amendment and the documents
and instruments incidental hereto.  Company hereby agrees that Wells Fargo may,
at any time or from time to time in its sole discretion and without further
authorization by Company, make a loan to Company under the Credit Agreements, or
apply the proceeds of any loan, for the purpose of paying any such reasonable
fees, disbursements, costs and expenses.

 

12.                               Miscellaneous.  This Amendment and the
Acknowledgment and Agreement of Guarantor may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.  Transmission by facsimile or “pdf” file of an executed
counterpart of this Amendment shall be deemed to constitute due and sufficient
delivery of such counterpart.  Any party hereto may request an original
counterpart of any party delivering such electronic counterpart.  This Amendment
and the rights and obligations of the parties hereto shall be construed in
accordance with, and governed by, the laws of the State of California.  In the
event of any conflict between this Amendment and the Credit Agreements, the
terms of this Amendment shall govern.  The Export-Import Bank of the United
States shall be an express intended beneficiary of this Amendment.

 

[Signatures on next page]

 

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

 

 

WELLS FARGO BANK,

 

NATIONAL ASSOCIATION

 

 

 

 

 

 

By:

/s/ Josephine Camalian

 

Print Name: Josephine Camalian

 

Title: Authorized Signatory

 

 

 

 

 

CAPSTONE TURBINE CORPORATION

 

 

 

 

By:

/s/ Jayme Brooks

 

Print Name: Jayme Brooks

 

Its: Chief Financial Officer & Chief Accounting Officer

 

S-1

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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR

 

The undersigned, a guarantor of the indebtedness of Capstone Turbine Corporation
(“Company”) to Wells Fargo Bank, National Association (as more fully defined in
the Amendment, “Wells Fargo”), pursuant to the separate Guaranty dated
February 9, 2009 (“Guaranty”), hereby (i) acknowledges receipt of the foregoing
Fourteenth Amendment to Credit and Security Agreements, Waiver of Default, and
Consent (“Amendment”); (ii) consents and agrees to the terms (including, without
limitation, the release set forth in Section 10 of the Amendment) and execution
and performance thereof; (iii) reaffirms all obligations to Wells Fargo pursuant
to the terms of the Guaranty; and (iv) acknowledges that Wells Fargo may amend,
restate, extend, renew or otherwise modify the Credit Agreements and any
indebtedness or agreement of the Company, or enter into any agreement or extend
additional or other credit accommodations, without notifying or obtaining the
consent of the undersigned and without impairing the liability of the
undersigned under the Guaranty for all of the Company’s present and future
indebtedness to Wells Fargo.

 

 

 

CAPSTONE TURBINE INTERNATIONAL, INC.

 

 

 

 

By:

/s/ Jayme Brooks

 

Print Name: Jayme Brooks

 

Title: Chief Financial Officer & Chief Accounting Officer

 

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Exhibit E-1

 

Exhibit E to Credit and Security Agreement

 

COMPLIANCE CERTIFICATE

 

To:

Wells Fargo Bank, National Association (“Wells Fargo”)

Date:

[                  , 20  ]

Subject:

Financial Statements

 

In accordance with our Credit and Security Agreement dated February 9, 2009 (as
amended from time to time, the “Credit Agreement”), attached are the financial
statements of Capstone Turbine Corporation (the “Company”) dated
[              , 200 ] (the “Reporting Date”) and the year-to-date period then
ended (the “Current Financials”).  All terms used in this certificate have the
meanings given in the Credit Agreement.

 

A.            Preparation and Accuracy of Financial Statements.  I certify that
the Current Financials have been prepared in accordance with GAAP, subject to
year-end audit adjustments, and fairly present Company’s financial condition as
of the Reporting Date.

 

B.            Name of Company; Merger and Consolidation.  I certify that:

 

(Check one)

 

¨                                    Company has not, since the date of the
Credit Agreement, changed its name or jurisdiction of organization, nor has it
consolidated or merged with another Person.

 

¨                                    Company has, since the date of the Credit
Agreement, either changed its name or jurisdiction of organization, or both, or
has consolidated or merged with another Person, which change, consolidation or
merger: ¨ was consented to in advance by Wells Fargo in an Authenticated Record,
and/or ¨ is more fully described in the statement of facts attached to this
Certificate.

 

C.            Events of Default.  I certify that:

 

(Check one)

 

¨                                    I have no knowledge of the occurrence of an
Event of Default under the Credit Agreement, except as previously reported to
Wells Fargo in a Record.

 

¨                                    I have knowledge of an Event of Default
under the Credit Agreement not previously reported to Wells Fargo in a Record,
as more fully described in the statement of facts attached to this Certificate,
and further, I acknowledge that Wells Fargo may under the terms of the Credit
Agreement impose the Default Rate at any time during the resulting Default
Period.

 

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D.            Litigation Matters.  I certify that:

 

(Check one)

 

¨                                    I have no knowledge of any material adverse
change to the litigation exposure of Company or any of its Affiliates or of any
Guarantor.

 

¨                                    I have knowledge of material adverse
changes to the litigation exposure of Company or any of its Affiliates or of any
Guarantor not previously disclosed in Exhibit D, as more fully described in the
statement of facts attached to this Certificate.

 

E.            Financial Covenants.  I further certify that:

 

(Check and complete each of the following)

 

1.             Minimum Adjusted EBITDA.  Pursuant to Section 5.2(b) of the
Credit Agreement, as of the Reporting Date for the period               to
           , Company’s Adjusted EBITDA was $[          ], which ¨
satisfies ¨ does not satisfy the requirement that Adjusted EBITDA be not less
than the amount required in such Section 5.2(b) of the Credit Agreement (numbers
appearing between “< >“ are negative) on the Reporting Date for such period.

 

2.             Minimum Cash to Covenant Indebtedness.  Pursuant to
Section 5.2(c) of the Credit Agreement, at all times, Company has ¨ has not
¨ been in compliance with the requirement that the ratio of (i) cash and Cash
Equivalents of Company in which Wells Fargo has a perfected first priority
security interest, to (ii) the aggregate amount of outstanding Covenant
Indebtedness (as defined in the Credit Agreement), is not less than 85%.

 

3.             Capital Expenditures.  Pursuant to Section 5.2(d) of the Credit
Agreement, for the year-to-date period ending on the Reporting Date, Company has
expended or contracted to expend during the fiscal year ended                ,
20   , for Capital Expenditures, $                 in the aggregate, which ¨
satisfies ¨ does not satisfy the requirement that such expenditures not exceed
$2,500,000 in the aggregate during the fiscal year ended March 31, 20   , and
zero for each subsequent fiscal year.

 

Attached are statements of all relevant facts and computations in reasonable
detail sufficient to evidence Company’s compliance with the financial covenants
referred to above, which computations were made in accordance with GAAP.

 

 

Capstone Turbine Corporation

 

 

 

By:

 

 

 

Its: Chief Financial Officer

 

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Exhibit E-2

 

Exhibit E to Credit and Security Agreement (Ex-Im Subfacility)

 

COMPLIANCE CERTIFICATE

 

To:

Wells Fargo Bank, National Association (“Wells Fargo”)

Date:

[                  , 20  ]

Subject:

Financial Statements

 

In accordance with our Credit and Security Agreement (Ex-Im Subfacility) dated
February 9, 2009 (as amended from time to time, the “Credit Agreement”),
attached are the financial statements of Capstone Turbine Corporation (the
“Company”) dated [              , 200 ] (the “Reporting Date”) and the
year-to-date period then ended (the “Current Financials”).  All terms used in
this certificate have the meanings given in the Credit Agreement.

 

F.            Preparation and Accuracy of Financial Statements.  I certify that
the Current Financials have been prepared in accordance with GAAP, subject to
year-end audit adjustments, and fairly present Company’s financial condition as
of the Reporting Date.

 

G.            Name of Company; Merger and Consolidation.  I certify that:

 

(Check one)

 

¨                                    Company has not, since the date of the
Credit Agreement, changed its name or jurisdiction of organization, nor has it
consolidated or merged with another Person.

 

¨                                    Company has, since the date of the Credit
Agreement, either changed its name or jurisdiction of organization, or both, or
has consolidated or merged with another Person, which change, consolidation or
merger: ¨ was consented to in advance by Wells Fargo in an Authenticated Record,
and/or ¨ is more fully described in the statement of facts attached to this
Certificate.

 

H.            Events of Default.  I certify that:

 

(Check one)

 

¨                                    I have no knowledge of the occurrence of an
Event of Default under the Credit Agreement, except as previously reported to
Wells Fargo in a Record.

 

¨                                    I have knowledge of an Event of Default
under the Credit Agreement not previously reported to Wells Fargo in a Record,
as more fully described in the statement of facts attached to this Certificate,
and further, I acknowledge that Wells Fargo may under the terms of the Credit
Agreement impose the Default Rate at any time during the resulting Default
Period.

 

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I.             Litigation Matters.  I certify that:

 

(Check one)

 

¨                                    I have no knowledge of any material adverse
change to the litigation exposure of Company or any of its Affiliates or of any
Guarantor.

 

¨                                    I have knowledge of material adverse
changes to the litigation exposure of Company or any of its Affiliates or of any
Guarantor not previously disclosed in Exhibit D, as more fully described in the
statement of facts attached to this Certificate.

 

J.             Financial Covenants.  I further certify that:

 

(Check and complete each of the following)

 

1.             Minimum Adjusted EBITDA.  Pursuant to Section 5.2(b) of the
Credit Agreement, as of the Reporting Date for the period               to
           , Company’s Adjusted EBITDA was $[          ], which ¨
satisfies ¨ does not satisfy the requirement that Adjusted EBITDA be not less
than the amount required in such Section 5.2(b) of the Credit Agreement (numbers
appearing between “< >“ are negative) on the Reporting Date for such period.

 

2.             Minimum Cash to Covenant Indebtedness Ratio.  Pursuant to
Section 5.2(c) of the Credit Agreement, at all times, Company has ¨ has not
¨ been in compliance with the requirement that the ratio of (i) cash and Cash
Equivalents of Company in which Wells Fargo has a perfected first priority
security interest, to (ii) the aggregate amount of outstanding Covenant
Indebtedness (as defined in the Credit Agreement), is not less than 85%.

 

3.             Capital Expenditures.  Pursuant to Section 5.2(d) of the Credit
Agreement, for the year-to-date period ending on the Reporting Date, Company has
expended or contracted to expend during the fiscal year ended                ,
20   , for Capital Expenditures, $                 in the aggregate, which ¨
satisfies ¨ does not satisfy the requirement that such expenditures not exceed
$2,500,000 in the aggregate during the fiscal year ended March 31, 20   , and
zero for each subsequent fiscal year.

 

Attached are statements of all relevant facts and computations in reasonable
detail sufficient to evidence Company’s compliance with the financial covenants
referred to above, which computations were made in accordance with GAAP.

 

 

Capstone Turbine Corporation

 

 

 

 

By:

 

 

 

Its: Chief Financial Officer

 

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