Document:

Exhibit 10.29

 

TENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENTS

 

THIS TENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENTS (the “Amendment”), dated as of June 12, 2012, is entered into by and between CAPSTONE TURBINE CORPORATION, a Delaware corporation (“Company”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), acting through its Wells Fargo Business Credit operating division.

 

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”), and that certain Ninth Amendment to Credit and Security Agreements and Waiver of Default, dated February 7, 2012 (“Ninth 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, and the Ninth 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 certain amendments be made to the Credit Agreements, and Wells Fargo is willing to agree to such amendments pursuant to the terms and conditions set forth herein.

 

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 Net Income.  Company shall achieve Net Income, 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 Net Income
    
	
Fiscal Year to Date Period ending June 30, 2012
    	
 
    	
$<10,634,000>
    
	
Fiscal Year to Date Period ending September 30, 2012
    	
 
    	
$<16,450,000>
    
	
Fiscal Year to Date Period ending December 31, 2012
    	
 
    	
$<20,781,000>
    
	
Fiscal Year to Date Period ending March 31, 2013
    	
 
    	
$<22,669,000>
    

 

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

 

“(c)                            Minimum Cash to Unreimbursed Line of Credit Advances Coverage Ratio.  At all times during which this Section 5.2(c) shall be in effect, the ratio of (i) the sum of the outstanding Advances under the Revolving Note plus the L/C Amount plus the outstanding “Advances” under the Ex-Im Credit Agreement to (ii) cash and Cash Equivalents of Company in which Wells Fargo has a perfected first priority security interest, shall not exceed the Required Coverage Ratio (as defined below).  Compliance with the foregoing covenant shall be reported as Wells Fargo shall request from time to time in its sole discretion.  “Required Coverage Ratio” shall mean:  (i) 80%, unless one of the following clauses applies; (ii) 100%, if Company’s Gross Profit Margin for the fiscal year ending March 31, 2013 equals or exceeds 15% (as determined based on Company’s CPA-audited financial statements for such fiscal year); (iii) 150%, if Company’s Adjusted EBITDA for any fiscal year equals or exceeds $2,000,000 (as determined based on Company’s CPA-audited financial statements for such fiscal year); or (iv) no requirement (i.e., this Section 5.2(c) shall not apply), if Company’s Adjusted Net Income for any fiscal year equals or exceeds $-0- (as determined based on Company’s CPA-audited financial statements for such fiscal year); provided that (A) if Company satisfies both clauses (iii) and (iv) of this paragraph, this Section 5.2(c) shall not apply, and (B) any change in the Required Coverage Ratio shall begin to apply as of the first day of the first calendar month after receipt by Wells Fargo of Company’s relevant CPA-audited financial statements.”

 

1.3                               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, 2013, 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.”

 

2.                                      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.

 

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3.                                      Accommodation Fee.  [Intentionally Omitted].

 

4.                                      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:

 

4.1                               A Certificate of the Secretary of Company certifying as to (i) the resolutions of the board of directors of Company approving the execution and delivery of this Amendment, (ii) the fact that the certificate of incorporation and bylaws of Company, which were certified and delivered to Wells Fargo pursuant to the Certificate of Authority of Company’s secretary or assistant secretary dated February 9, 2009, continue in full force and effect and have not been amended or otherwise modified except as set forth in the Certificate to be delivered, and (iii) the fact that the officers and agents of Company who have been certified to Wells Fargo, pursuant to the Certificate of Authority of Company’s secretary or assistant secretary dated February 9, 2009, as being authorized to sign and to act on behalf of Company continue to be so authorized;

 

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

 

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

 

4.4                               Such other matters as Wells Fargo may require.

 

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

 

5.1                               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.

 

5.2                               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.

 

5.3                               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).

 

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6.                                      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.

 

7.                                      No Waiver.  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.

 

8.                                      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 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.”

 

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.

 

9.                                      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.

 

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10.                               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/Michael   White
    
	
 
    	
Print   Name: Michael White
    
	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CAPSTONE   TURBINE CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/Edward   I. Reich
    
	
 
    	
Print   Name: Edward I. Reich
    
	
 
    	
Its:   Executive Vice President and CFO
    

 

S-1

 

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”), acting through its Wells Fargo Business Credit operating division, pursuant to the separate Guaranty dated February 9, 2009 (“Guaranty”), hereby (i) acknowledges receipt of the foregoing Tenth Amendment to Credit and Security Agreements (“Amendment”); (ii) consents and agrees to the terms (including, without limitation, the release set forth in Section 8 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/   Edward I. Reich
    
	
 
    	
Print   Name:
    	
Edward   I. Reich
    
	
 
    	
Title:
    	
Executive   Vice President and CFO
    
						

 

1Exhibit 10.40

 

AMENDED AND RESTATED

CHANGE OF CONTROL SEVERANCE AGREEMENT

 

THIS AMENDED AND RESTATED CHANGE OF CONTROL SEVERANCE AGREEMENT (the “Agreement”) is made and entered into between Capstone Turbine Corporation (the “Company”) and Darren R. Jamison (the “Executive”) to be effective June 14, 2012.

 

RECITALS:

 

WHEREAS, effective December 18, 2006, the Executive became the Company’s president and chief executive officer pursuant to the terms of a letter agreement dated December 1, 2006, (the “Letter Agreement”) which included certain benefits and payments upon the severance of the Executive following a change in control of the Company;

 

WHEREAS, in connection therewith, the Executive was made eligible for participation in the Capstone Turbine Corporation Change in Control Severance Plan (the “Plan”), which provides a portion of the severance benefits described in the Letter Agreement; and

 

WHEREAS, the parties entered into a Change of Control Severance Agreement (the “Original Agreement”) to provide the severance benefits described in the Letter Agreement that are not provided through the Plan; and

 

WHEREAS, the parties amended and restated the Original Agreement effective April 8, 2009 (the “April 2009 Agreement”); and

 

WHEREAS, the parties desire to amend and extend the April 2009 Agreement as more specifically provided herein.

 

NOW, THEREFORE, the parties do hereby agree to the following terms and conditions regarding severance payable to Executive in the events described herein:

 

Section 1.                                          Termination of Employment Without Cause

 

In the event that Executive’s employment is terminated by the Company for reasons other than Misconduct (as defined herein), the Executive will receive continuation of payments in the amount of his base salary then in effect for a period of one year following termination of employment; provided, however, that the provisions of this Section 1 will not apply in the event that Executive is entitled to payments provided in Section 2 hereof. “Misconduct” shall mean the commission of any act of fraud, embezzlement, theft or dishonesty by Executive, any unauthorized use or disclosure by Executive of confidential information or trade secrets of the Company (or any parent or subsidiary thereof), or any other intentional misconduct by Executive adversely affecting the business or affairs of the Company (or any parent or subsidiary) in a material manner.

 

The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Company (or any parent or subsidiary) may consider as grounds for the termination of the employment of the Executive. Except as provided herein, Executive will not be entitled to severance under this Agreement upon a termination of employment.

 

 

Section 2.                                          Termination Upon a Change in Control

 

In the event that Executive is Involuntarily Terminated within 12 months of a Change of Control or within the Trial Period, Executive shall be entitled to receive from the Company an amount equal to the base salary that would be payable to the Executive for a period of 18 months. The payment shall be made in one lump sum on the date of termination of employment. Notwithstanding anything herein to the contrary, the amount payable under this Section 2 shall be reduced by the amount of the cash severance amount payable to Executive under the Plan.

 

Section 3.                                          General Terms

 

Except as otherwise provided herein, the capitalized terms used in this agreement shall have the meanings ascribed thereto in the Plan. The benefits provided through this Agreement and through the Plan are intended by the parties to be granted in fulfillment of the Company’s obligations regarding cash severance payments pursuant to the Letter Agreement; the terms of this Agreement and the Plan completely replace and supersede the terms addressing the subject matter contained in the Letter Agreement.

 

Section 4.                                          Term of Agreement

 

The provisions of this Agreement shall apply in the event of the termination of the employment of the Executive or a Change in Control that occurs during the period between June 14, 2012 and June 14, 2015.

 

Section 5.                                          Commencement of Deferred Compensation Payments

 

Notwithstanding anything herein to the contrary, any payments to Executive that would be subject to an additional tax described in section 409A of the Internal Revenue Code shall commence six months following Executive’s separation from service or, if sooner, upon the death of the Executive.

 

Section 6.                                          Amendment or Termination

 

The Company may amend this Agreement in its sole discretion at any time, provided that any amendment that would diminish the rights of the Executive is subject to Executive’s express written consent.

 

Section 7.                                          Successors

 

This Agreement shall be binding upon and accrue to the benefit of any successors and assigns of the Company.

 

Section 8.                                          Construction

 

This Agreement shall be construed under and enforced in accordance with the laws of the State of California.

 

[Next page is Signature Page]

 

 

IN WITNESS WHEREOF, the Company, acting through the undersigned authorized representative, has executed this instrument and the Executive has set his hand hereto on this the 14th day of June, 2012, but to be effective on the date first written above.

 

 

	
DARREN   R. JAMISON
    	
 
    	
CAPSTONE   TURBINE CORPORATION
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Darren R. Jamison
    	
 
    	
By:
    	
/s/   Edward I. Reich
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Its:
    	
EVP   & CFO

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