LOAN AND SECURITY MODIFICATION AGREEMENT

This Loan and Security Modification Agreement is entered into as of May 20, 2013
by and between Quantum Fuel Systems Technologies Worldwide, Inc. (the
“Borrower”) and Bridge Bank, National Association (“Bank”).

1.DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Loan and Security Agreement, dated as of May 7, 2012 by and between
Borrower and Bank, as may be amended from time to time (the “Loan and Security
Agreement”). Capitalized terms used without definition herein shall have the
meanings assigned to them in the Loan and Security Agreement.

Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness" and the Loan and Security Agreement and any and all other
documents executed by Borrower in favor of Bank shall be referred to as the
“Existing Documents.”

2.WAIVER. Borrower acknowledges that there are existing and uncured Events of
Default arising from Borrower’s failure to comply with Section 6.9(b) for
quarters ended June 30, 2012, September 30, 2012, December 31, 2012 and March
31, 2013 and with Section 6.9(a) for quarter ended March 31, 2013 (collectively,
the “Covenant Defaults”). Subject to the conditions contained herein, Bank
waives the Covenant Defaults. Bank does not waive Borrower’s obligations under
such section after the date hereof and as amended hereby, and Bank does not
waive any other failure by Borrower to perform its Obligations under the
Existing Documents.

3.
DESCRIPTION OF CHANGE IN TERMS.

A.
Modification(s) to Loan and Security Agreement:

1.The following definitions in Section 1.1 are added or amended in their
entirety to read as follows:
“Borrowing Base” means an amount equal to (i) eighty percent (80%) of Eligible
Accounts, as determined by Bank with reference to the most recent Borrowing Base
Certificate delivered by Borrower plus (ii) 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.
“First Amendment Date” means May 20, 2013.
“Revolving Line” means a credit extension of up to Five Million Dollars
($5,000,000).
2.    Clause (j) in the defined term “Eligible Accounts” set forth in Section
1.1 is amended and restated in its entirety to read as follows:
(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;

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3.    Section 2.5(a) is amended and restated in its entirety to read as follows:
(a)    Facility Fee. On the Closing Date, a facility fee equal to $100,000, on
the First Amendment Date a fee equal to $20,000, and on the first anniversary of
the Closing Date, an renewal fee equal to $50,000, each of which shall be fully
earned and nonrefundable; and
4.    Section 2.3(a) is amended and restated in its entirety to read as follows:
(a)     Interest Rates. 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; provided however that if Borrower’s
Asset Coverage Ratio measured as of the end of any particular month is less than
1.35:1.00, then the applicable rate for the subsequent month(s) shall be two and
one half percent (2.5%) above the Prime Rate.
5.    Section 6.3(a) is amended and restated in its entirety to read as follows:
(a) within 5 days of the 15th and 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;
6.    Section 6.9 is amended and restated in its entirety to read as follows:
6.9    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.
7.    Exhibits C and D are replaced in their entirety with Exhibits C and D
attached hereto.
8.    Notwithstanding anything in the Existing Documents to the contrary,
Eligible Accounts shall not include any Accounts with respect to which the
account debtor is Fisker Automotive; and Eligible Inventory shall not include
any Inventory from Fisker Automotive, until such time as Bank approves such
inclusion in its sole discretion.
9.    The address for the Borrower in Section 10 is amended to read 25242 Arctic
Ocean Drive, Lake Forest, CA 92630, Attn: Brad Timon, Chief Financial Officer,
Fax: (949) 399-4567.

1.    CONSISTENT CHANGES. The Existing Documents are each hereby amended
wherever necessary to reflect the changes described above.
2.    NO DEFENSES OF BORROWER/GENERAL RELEASE. Borrower agrees that, as of this
date, it has no defenses against the obligations to pay any amounts under the
Indebtedness. Each of Borrower and its affiliates (each, a “Releasing Party”)
acknowledges that Bank would not enter into this Loan and Security Modification
Agreement without Releasing Party’s assurance that it has no claims against Bank
or any of Bank’s officers, directors, employees or agents. Except for the
obligations arising hereafter under this Loan and Security Modification
Agreement, each Releasing Party releases Bank, and each of Bank’s and entity’s
officers, directors and employees from any known or unknown claims that
Releasing Party now has against

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Bank of any nature, including any claims that Releasing Party, its successors,
counsel, and advisors may in the future discover they would have now had if they
had known facts not now known to them, whether founded in contract, in tort or
pursuant to any other theory of liability, including but not limited to any
claims arising out of or related to the Agreement or the transactions
contemplated thereby. Releasing Party waives the provisions of California Civil
Code section 1542, which states:

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, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.
The provisions, waivers and releases set forth in this section are binding upon
each Releasing Party and its shareholders, agents, employees, assigns and
successors in interest. The provisions, waivers and releases of this section
shall inure to the benefit of Bank and its agents, employees, officers,
directors, assigns and successors in interest. The provisions of this section
shall survive payment in full of the Obligations, full performance of all the
terms of this Loan and Security Modification Agreement and the Loan and Security
Agreement, and/or Bank’s actions to exercise any remedy available under the Loan
and Security Agreement or otherwise.
3.    CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Documents. Borrower
represents and warrants that the representations and warranties contained in the
Loan and Security Agreement are true and correct as of the date of this Loan and
Security Modification Agreement, except for those representations and warranties
that were as of a specific date which remain true and correct as of such earlier
date, and that no Event of Default has occurred and is continuing, except for
the Covenant Defaults. Except as expressly modified pursuant to this Loan and
Security Modification Agreement, the terms of the Existing Documents remain
unchanged and in full force and effect. Bank's agreement to modifications to the
existing Indebtedness pursuant to this Loan and Security Modification Agreement
in no way shall obligate Bank to make any future modifications to the
Indebtedness. Nothing in this Loan and Security Modification Agreement shall
constitute a satisfaction of the Indebtedness. It is the intention of Bank and
Borrower to retain as liable parties all makers and endorsers of Existing
Documents, unless the party is expressly released by Bank in writing. No maker,
endorser, or guarantor will be released by virtue of this Loan and Security
Modification Agreement. The terms of this paragraph apply not only to this Loan
and Security Modification Agreement, but also to any subsequent loan and
security modification agreements.
4.    REFERENCE PROVISION.
(a)    In the event the jury trial waiver set forth in Section 11 of the Loan
and Security Agreement is not enforceable, the parties elect to proceed under
this judicial reference provision.

(b)    With the exception of the items specified in subsection (c) below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Loan and Security Modification Agreement, the Loan and
Security Agreement, or any other document, instrument or agreement existing or
hereinafter entered into by the undersigned parties (collectively in this
Section, the “Loan Documents”), will 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”).

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(c)    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.

(d)    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).

(e)    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.

(f)    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.

(g)    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.

(h)    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

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for a new trial or a different judgment, which new trial, if granted, is also to
be a reference proceeding under this provision.

(i)    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.

(j)    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 LOAN AND SECURITY MODIFICATION AGREEMENT OR THE
OTHER LOAN DOCUMENTS.

5.    CONDITIONS. As a condition to the effectiveness of this Loan and Security
Modification Agreement, Bank shall have received, in form and substance
satisfactory to Bank, the following:
(a)    the fee payable pursuant to Section 2.5, plus an amount equal to all Bank
Expenses incurred through the date hereof;
(b)    a warrant to purchase up to 100,000 shares of the Common Stock of
Borrower, Quantum Fuel Systems Technologies Worldwide, Inc. in the form attached
hereto as Exhibit 1;
(c)    evidence of Borrower’s receipt of at least $2,500,000 in cash proceeds
from the sale and issuance of its equity securities;
(d)    corporate resolutions and incumbency certificate; and
(e)    such other documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate.
[SIGNATURE PAGE FOLLOWS]

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6.    COUNTERSIGNATURE. This Loan and Security Modification Agreement shall
become effective only when executed by Bank and Borrower.
BORROWER:                    BANK:

QUANTUM FUEL SYSTEMS TECHNOLOGIES     BRIDGE BANK, NATIONAL ASSOCIATION
WORDLWIDE, INC.            

By: _/s/ Bradley Timon_______________        By: /s/ Dan
Pistone___________________

Name: _Bradley Timon_________________        Name: _Dan
Pistone____________________

Title: _CFO__________________________        Title: _Senior Vice
President_____________

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EXHIBIT C
BORROWING BASE CERTIFICATE
BRIDGE BANK
55 Almaden Boulevard, San Jose, CA 95113
 
 
 
 
 
 
 
COMPANY: QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.
 
 
 
 
 
 
 
ACCOUNTS RECEIVABLE BORROWING BASE CALCULATION:
 
As of Date:
 
 
 
 
 
 
 
 
1.
Add: Accounts Receivable Aged Current to 30 Days
 
 
 
$
0
 
 
2.
Add: Accounts Receivable Aged 31 to 60 Days
 
 
 
$
0
 
 
3.
Add: Accounts Receivable Aged 61 to 90 Days
 
 
 
$
0
 
 
4.
Add: Accounts Receivable Aged 91 Days and Over
 
 
 
$
0
 
 
 
 
 
 
 
 
 
5.
GROSS ACCOUNTS RECEIVABLE
 
 
 
 
$
0
 
 
 
 
 
 
 
 
6.
Less: Accounts Receivable Aged over
90
 
days
 
$
0
 
 
7.
Less: Foreign Receivables (Net of > 90s)
 
 
 
$
0
 
 
8.
Less: U.S. Government Receivables (Net of > 90s)
 
 
 
$
0
 
 
9.
Less: Affiliate or Related Accounts Receivables (Net of > 90s)
 
 
 
$
0
 
 
10.
Less: Account concentration in excess of
40
%
$
0
 
 
$
0
 
 
11.
Less: Cross Aging
35
%
 
 
$
0
 
 
12.
Less: Contra Accounts
 
 
 
$
0
 
 
13.
Less: Over 90 day A/R credits
 
 
 
$
0
 
 
14.
Less: Other Ineligible Accounts (prebillings, progress billings, retention
billings, bill & hold, Fisker Automotive, etc.)
 
 
 
$
0
 
 
15.
Add: Lines 6 through 14 - Total Ineligible Accounts
 
 
 
$
0
 
 
16.
NET ELIGIBLE ACCOUNTS RECEIVABLE
 
 
 
 
$
0
 
17.
Account Receivable Advance Rate
 
 
 
 
80
%
18.
ELIGIBLE ACCOUNTS RECEIVABLE BORROWING BASE
 
 
 
 
$
0
 
19.
TOTAL INVENTORY
 
 
 
$
0
 
 
20.
Less: Ineligible Inventory (including Fisker Automotive)
 
 
 
$
0
 
 
21.
Net Eligible Inventory
 
 
 
 
$
0
 
22.
Eligible Inventory Advance Rate
50%
 
 
 
 
23.
The lesser of 50% of Eligible Inventory or 40% of #22
 
 
 
$
0
 
 
24.
MAXIMUM AVAILABLE LINE OF CREDIT
 
$
5,000,000
 
 
 
 
25.
TOTAL FUNDS AVAILABLE (the lesser of #18 + #23 or #24)
 
 
 
 
$
0
 
26.
Less: Outstanding Loan Balance
 
 
 
 
$
0
 
27.
Less: International Sublimit Amounts
 
 
 
 
$
0
 
28.
Less: Cash Management Services Amounts
 
 
 
 
$
0
 
29.
AVAILABLE FOR DRAW/NEED TO PAY
 
 
 
 
$
0
 
 
 
 
 
 
 
 
If line #29 is a negative number, this amount must be remitted to the Bank
immediately to bring loan balance into compliance. By signing this form you
authorize the bank to deduct any advance amounts directly from the company's
checking account at Bridge Bank in the event there is an Overadvance.
 
 
 
 
 
 
 
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement between the undersigned and Bridge Bank, National
Association.
 
 
 
 
 
 
Date:
 
 
 
 
 
Prepared By:
 
 
 
 
 
 
 
 
 
Date:
 
 
 
 
 
Bank Reviewed:
 
 
 
 
 
 

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EXHIBIT D
COMPLIANCE CERTIFICATE
TO:
BRIDGE BANK, NATIONAL ASSOCIATION

FROM:
QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.

The undersigned authorized officer of Quantum Fuel Systems Technologies
Worldwide, Inc. hereby certifies that in accordance with the terms and
conditions of the Loan and Security Agreement between Borrower and Bank (the
“Agreement”), (i) Borrower is in complete compliance for the period ending
_______________ with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof. Attached herewith are the required documents
supporting the above certification. The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.
Please indicate compliance status by circling Yes/No under “Complies” column.

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Reporting Covenant
Required
Complies
 
 
 
 
Annual financial statements (CPA Audited)
FYE within 95 days
Yes
No
Monthly financial statements and Compliance Certificate
Monthly within 30 days of first 2 months of each quarter
Yes
No
Monthly financial statements and Compliance Certificate
Monthly within 45 days of the third month of each quarter
Yes
No
Federal Tax Returns (CPA prepared)
Within 30 days of filing
 
 
Annual operating budget, sales projections and operating plans approved by board
of directors
Annually no later than 30 days prior to the beginning of each fiscal year
Yes
No
A/R & A/P Agings, Inventory Listing, and Borrowing Base Certificate
Within 5 days of the 15th and last day of each month
Yes
No
A/R Audit
Initial and Semi-Annual
Yes
No
10K and 10Q
(as applicable)
Yes
No
 
 
 
 
Deposit balances with Bank
$ ___________________
 
 
Deposit balance outside Bank (including all petty cash accounts)
$ ___________________
 
 
 
 
 
 
Financial Covenant
Required
Actual
Complies
 
 
 
 
 
Minimum Asset Coverage Ratio
1.25 : 1.00
_____:1.00
Yes
No
 
 
 
 
 
Comments Regarding Exceptions: See Attached.
BANK USE ONLY
 
 
 
Received by:    
Sincerely,
AUTHORIZED SIGNER
 
 
 
Date:    
 
 
 
 
___________________________________________
Verified:    
SIGNATURE
AUTHORIZED SIGNER
 
 
___________________________________________
Date:    
TITLE
 
 
Compliance Status
Yes No
___________________________________________
 
DATE
 

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EXHIBIT 1

FORM OF WARRANT