Document:

Exhibit
10.30

 

Credit and
Security Agreement

(Ex-Im Subfacility)

 

 

TABLE OF
CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  AMOUNT AND TERMS OF THE
  LINE OF CREDIT

  	
  1

  
	
   

  	
  1.1 

  	
  Line of Credit;
  Limitations on Borrowings; Termination Date; Use of Proceeds 

  	
  1 

  
	
   

  	
  1.2

  	
  Borrowing Base; Mandatory
  Prepayment

  	
  2

  
	
   

  	
  1.3

  	
  Procedures for Line of
  Credit Advances

  	
  2

  
	
   

  	
  1.4

  	
  Collection of Accounts and
  Application to Revolving Notes

  	
  4

  
	
   

  	
  1.5

  	
  Interest and Interest
  Related Matters

  	
  5

  
	
   

  	
  1.6

  	
  Fees

  	
  7

  
	
   

  	
  1.7

  	
  Interest Accrual;
  Principal and Interest Payments; Computation

  	
  8

  
	
   

  	
  1.8 

  	
  Termination, Reduction or
  Non-Renewal of Line of Credit by Company; Notice 

  	
  9 

  
	
   

  	
  1.9

  	
  Facility Subject to Ex-Im
  Bank Rules

  	
  9

  
	
  2.

  	
  SECURITY INTEREST AND
  OCCUPANCY OF COMPANY’S PREMISES

  	
  10

  
	
   

  	
  2.1

  	
  Grant of Security Interest

  	
  10

  
	
   

  	
  2.2

  	
  Notifying Account Debtors
  and Other Obligors; Collection of Collateral

  	
  10

  
	
   

  	
  2.3

  	
  Assignment of Insurance

  	
  10

  
	
   

  	
  2.4

  	
  Company’s Premises

  	
  11

  
	
   

  	
  2.5

  	
  License

  	
  11

  
	
   

  	
  2.6

  	
  Financing Statements

  	
  11

  
	
   

  	
  2.7

  	
  Setoff

  	
  12

  
	
   

  	
  2.8

  	
  Collateral Related Matters

  	
  12

  
	
   

  	
  2.9

  	
  Notices Regarding
  Disposition of Collateral

  	
  12

  
	
  3.

  	
  CONDITIONS PRECEDENT

  	
  12

  
	
   

  	
  3.1

  	
  Conditions Precedent to
  Initial Advance

  	
  12

  
	
   

  	
  3.2

  	
  Additional Conditions
  Precedent to All Advances

  	
  13

  
	
  4.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
  13

  
	
  5.

  	
  COVENANTS

  	
  13

  
	
   

  	
  5.1

  	
  Reporting Requirements

  	
  13

  
	
   

  	
  5.2

  	
  Financial Covenants

  	
  16

  
	
   

  	
  5.3

  	
  Other Liens and Permitted
  Liens

  	
  17

  

 

i

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  5.4

  	
  Indebtedness

  	
  18

  
	
   

  	
  5.5

  	
  Guaranties

  	
  18

  
	
   

  	
  5.6

  	
  Investments and
  Subsidiaries

  	
  19

  
	
   

  	
  5.7

  	
  Dividends and Distributions

  	
  19

  
	
   

  	
  5.8

  	
  Salaries

  	
  19

  
	
   

  	
  5.9

  	
  Books and Records;
  Collateral Examination; Inspection and Appraisals

  	
  19

  
	
   

  	
  5.10

  	
  Account Verification;
  Payment of Permitted Liens

  	
  20

  
	
   

  	
  5.11

  	
  Compliance with Laws

  	
  20

  
	
   

  	
  5.12

  	
  Payment of Taxes and Other
  Claims

  	
  20

  
	
   

  	
  5.13

  	
  Maintenance of Collateral
  and Properties

  	
  21

  
	
   

  	
  5.14

  	
  Insurance

  	
  21

  
	
   

  	
  5.15

  	
  Preservation of Existence

  	
  21

  
	
   

  	
  5.16

  	
  Delivery of Instruments,
  etc.

  	
  21

  
	
   

  	
  5.17

  	
  Sale or Transfer of
  Assets; Suspension of Business Operations

  	
  21

  
	
   

  	
  5.18

  	
  Consolidation and Merger;
  Asset Acquisitions

  	
  22

  
	
   

  	
  5.19

  	
  Sale and Leaseback

  	
  22

  
	
   

  	
  5.20

  	
  Restrictions on Nature of
  Business

  	
  22

  
	
   

  	
  5.21

  	
  Accounting

  	
  22

  
	
   

  	
  5.22

  	
  Discounts, etc.

  	
  22

  
	
   

  	
  5.23

  	
  Pension Plans

  	
  22

  
	
   

  	
  5.24

  	
  Place of Business; Name

  	
  22

  
	
   

  	
  5.25

  	
  Constituent Documents

  	
  23

  
	
   

  	
  5.26

  	
  Performance by Wells Fargo

  	
  23

  
	
   

  	
  5.27

  	
  Wells Fargo Appointed as
  Company’s Attorney in Fact

  	
  23

  
	
  6.

  	
  EVENTS OF DEFAULT AND
  REMEDIES

  	
  23

  
	
   

  	
  6.1

  	
  Events of Default

  	
  23

  
	
   

  	
  6.2

  	
  Rights and Remedies

  	
  25

  
	
   

  	
  6.3

  	
  Immediate Default and
  Acceleration

  	
  26

  
	
  7.

  	
  MISCELLANEOUS

  	
  26

  
	
   

  	
  7.1

  	
  No Waiver; Cumulative
  Remedies

  	
  26

  

 

ii

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Amendment; Consents and
  Waivers; Authentication

  	
  27

  
	
   

  	
  7.3

  	
  Execution in Counterparts;
  Delivery of Counterparts

  	
  27

  
	
   

  	
  7.4

  	
  Notices, Requests, and
  Communications; Confidentiality

  	
  27

  
	
   

  	
  7.5

  	
  Company Information
  Reporting; Confidentiality

  	
  28

  
	
   

  	
  7.6

  	
  Further Documents

  	
  29

  
	
   

  	
  7.7

  	
  Costs and Expenses

  	
  29

  
	
   

  	
  7.8

  	
  Indemnity

  	
  29

  
	
   

  	
  7.9

  	
  Retention of Company’s
  Records

  	
  30

  
	
   

  	
  7.10

  	
  Binding Effect;
  Assignment; Complete Agreement

  	
  30

  
	
   

  	
  7.11

  	
  Sharing of Information

  	
  31

  
	
   

  	
  7.12

  	
  Severability of Provisions

  	
  31

  
	
   

  	
  7.13

  	
  Headings

  	
  31

  
	
   

  	
  7.14

  	
  Governing Law;
  Jurisdiction; Venue

  	
  31

  
	
   

  	
  7.15

  	
  Incorporation of Borrower
  Agreement by Reference

  	
  31

  

 

iii

 

Credit and Security Agreement

(Ex-Im Subfacility)

 

This
Credit and Security Agreement (Ex-Im Subfacility) (the “Agreement”) is dated February 9,2009,
and is entered into between Capstone Turbine Corporation, a Delaware
corporation (“Company”), and Wells Fargo Bank, National Association (as more
fully defined in Exhibit A, “Wells Fargo”), acting through its
Wells Fargo Business Credit operating division.

 

RECITALS

 

Company has asked Wells Fargo to provide it with a $7,000,000 revolving
line of credit (the “Line of Credit”) for working capital purposes, with such
Line of Credit constituting a subfacility within the Domestic Facility
Agreement (defined below). Wells Fargo is agreeable to meeting Company’s
request, provided that Company agrees to the terms and conditions of this Agreement.

 

For
purposes of this Agreement, capitalized terms not otherwise defined in the
Agreement shall have the meaning given them in Exhibit A.

 

1.                                      AMOUNT AND TERMS OF THE LINE OF CREDIT

 

1.1                               Line of
Credit; Limitations on Borrowings; Termination Date; Use of Proceeds.

 

(a)                                 Line of Credit
and Limitations on Borrowing. Wells Fargo shall make
Advances to Company under the Line of Credit that do not exceed in the
aggregate the lesser of (i) $7,000,000 (the “Maximum Line Amount”), and (ii) the
Borrowing Base limitations described in Section 1.2. Within these
limits, Company may periodically borrow, prepay in whole or in part, and
reborrow. Wells Fargo has no obligation to make an Advance during a Default
Period or at any time Wells Fargo believes that an Advance would result in an
Event of Default. The Line of Credit provided for in this Agreement is subject
to the limitations set forth in the Domestic Facility Agreement and is deemed
to be a subfacility within the “Line of Credit” provided for in the Domestic Facility
Agreement as set forth therein.

 

(b)                                Maturity and
Termination Dates. Company may request Advances from the date that
the conditions set forth in Section 3 are satisfied until the
earlier of: (i) February 9, 2012 (the “Maturity Date”), (ii) the
date Company terminates the Line of Credit, (iii) the date Wells Fargo
terminates the Line of Credit following an Event of Default, or (iv) the
date the Domestic Facility Agreement is terminated (the earliest of such dates,
the “Termination Date”)

 

(c)                                 Use of Line of
Credit Proceeds. Company shall use the proceeds of each Advance to
provide working capital to fulfill written export orders or contracts from
customers outside the United States to purchase goods or services from Company.

 

(d)                                Revolving Notes. Company’s
obligation to repay Line of Credit Advances, regardless of how initiated under Section 1.3,
shall be evidenced by one or more revolving promissory notes (as renewed,
amended or replaced from time to time, the “Revolving Notes”).

 

1

 

1.2                               Borrowing
Base; Mandatory Prepayment.

 

(a)                                  Borrowing Base. The borrowing
base (the “Borrowing Base”) is an amount equal to:

 

(i)                                   85% or such
lesser percentage of Eligible Accounts as Wells Fargo in its sole discretion may
deem appropriate; provided that this rate may be reduced at any time by Wells
Fargo’s in its sole discretion by one percent (l%) for each percentage point by
which Dilution on the date of determination is in excess of five percent
(5.0%), plus

 

(ii)                                the lesser of (i) 50%
or such lesser percentage of Eligible Inventory as Wells Fargo in its sole
discretion may deem appropriate or (ii) $2,000,000, less

 

(iii)                             the Borrowing
Base Reserve, less

 

(iv)                            Indebtedness
that Company owes Wells Fargo that has not been advanced on the Revolving Notes
(other than Indebtedness constituting “Advances” under the Domestic Facility
Agreement), less

 

(v)                               Indebtedness
that is not otherwise described in Section 1, including
Indebtedness that Wells Fargo in its sole discretion finds on the date of
determination to be equal to Wells Fargo’s net credit exposure with respect to
any swap, derivative, foreign exchange, hedge, deposit, treasury management or
similar transaction or arrangement extended to Company by Wells Fargo and any Indebtedness
owed by Company to Wells Fargo Merchant Services, L.L.C.

 

(b)                                 Mandatory
Prepayment; Overadvances. If unreimbursed Line of Credit Advances
evidenced by the Revolving Notes exceed the lesser of the Borrowing Base, or
the Maximum Line Amount at any time, then Company shall immediately prepay the
Revolving Notes in an amount sufficient to eliminate the excess, unless Wells
Fargo has delivered to Company an Authenticated Record consenting to the
Overadvance prior to its occurrence, in which event the Overadvance
shall be temporarily permitted on such terms and conditions as Wells Fargo in
its sole discretion may deem appropriate, including the payment of additional
fees or interest, or both.

 

1.3                               Procedures
for Line of Credit Advances.

 

(a)                                  Advances to
Operating Account. Advances shall be credited to Company’s demand
deposit account maintained with Wells Fargo (the “Operating Account”), unless
the parties agree in a Record Authenticated by both of them to disburse to
another account.

 

(i)                                    Advances upon
Company’s Request. Line of Credit Advances may be funded upon
Company’s request. No request will be deemed received until Wells Fargo
acknowledges receipt, and Company, if requested by Wells Fargo, confirms the
request in an Authenticated Record. Company shall repay all Advances, even if
the Person requesting the Advance on behalf of Company lacked authorization.

 

2

 

(A)                           Floating Rate
Advances. If Company wants a Floating Rate Advance, it shall
make the request no later than 9:00 a.m. Pasadena, California Time on the
Business Day on which it wants the Floating Rate Advance to be funded, which
request shall specify the principal Advance amount being requested.

 

(B)                             LIBOR Advances. If Company
wants a LIBOR Advance, it shall make the request no later than 9:00 a.m.
Pasadena, California Time three (3) Business Days prior to the Business
Day on which it wants the LIBOR Advance to be funded, which request shall
specify both the principal Advance amount and Interest Period being requested.
No more than five (5) separate LIBOR Advance Interest Periods may be
outstanding at any time under this Agreement and the Ex-Im Credit Agreement, on
a combined basis. Each LIBOR Advance shall be in multiples of $500,000 and in
the minimum amount of at least $500,000. LIBOR Advances are not available for
Advances made through the Loan Manager Service, and shall not be available
during Default Periods.

 

(ii)                                Advances
through Loan Manager. If Wells Fargo has separately agreed that Company
may use the Wells Fargo Loan Manager service (“Loan Manager”), Line of Credit
Advances will be initiated by Wells Fargo and credited to the Operating Account
as Floating Rate Advances as of the end of each Business Day in an amount
sufficient to maintain an agreed upon ledger balance in the Operating Account,
subject only to Line of Credit availability as provided in Section 1.1(a). If Wells
Fargo terminates Company’s access to Loan Manager, Company may continue to
request Line of Credit Advances as provided in Section 1.3(a)(i).
Wells Fargo shall have no obligation to make an Advance through Loan Manager
during a Default Period, or in an amount in excess of Line of Credit
availability, and may terminate Loan Manager at any time in its sole
discretion.

 

(b)                                 Protective
Advances; Advances to Pay Indebtedness Due. Wells Fargo may initiate a
Floating Rate Advance on the Line of Credit in its sole discretion for any
reason at any time, without Company’s compliance with any of the conditions of
this Agreement, and (i) disburse the proceeds directly to third Persons in
order to protect Wells Fargo’s interest in Collateral or to perform any of
Company’s obligations under this Agreement, or (ii) apply the proceeds to
the amount of any Indebtedness then due and payable to Wells Fargo.

 

(c)                                  LIBOR Advances.

 

(i)                                    Funding Line of
Credit Advances as LIBOR Advances for Fixed Interest Periods. Subject to
the other terms and conditions of this Agreement, Company may request a Line of
Credit Advance as a LIBOR Advance for one, three, or six month periods (each
period, an “Interest Period”, as more fully defined in Exhibit A).

 

(ii)                                Procedure for
Converting Floating Rate Advances to LIBOR Advances. Company may
request that all or any part of an outstanding Floating Rate Advance be
converted to a LIBOR Advance, provided that no Default Period is in effect, and
that Wells Fargo receives the request no later than 9:00 a.m. Pasadena,
California Time three (3) Business Days prior to the Business Day on which
Company wishes the conversion to become effective. Each request shall (i) specify
the principal amount of the Floating Rate Advance to be converted, (ii) the
Business Day of conversion, and (iii) the Interest Period desired. The
request shall be

 

3

 

confirmed in an Authenticated Record if requested by Wells Fargo. Each
conversion to a LIBOR Advance shall be in multiples of $500,000 and in the
minimum amount of at least $500,000.

 

(iii)                             Expiring LIBOR
Advance Interest Periods. Unless Company requests a new LIBOR
Advance, or prepays an outstanding LIBOR Advance at the expiration of an
Interest Period, Wells Fargo shall convert each LIBOR Advance to a Floating
Rate Advance on the last day of the expiring Interest Period. If no Default Period
is in effect, Company may request that all or part of any expiring LIBOR
Advance be renewed as a new LIBOR Advance, provided that Wells Fargo receives
the request no later than 9:00 a.m. Pasadena, California Time three (3) Business
Days prior to the Business Day that constitutes the first day of the new
Interest Period. Each request shall specify the principal amount of the
expiring LIBOR Advance to be continued and Interest Period desired, and shall
be confirmed in an Authenticated Record if requested by Wells Fargo. Each
renewal of a LIBOR Advance shall be in multiples of $500,000 and in the minimum
amount of at least $500,000.

 

(iv)                            Quotation of
LIBOR Advance Interest Rates. Wells Fargo shall, with
respect to any request for a new or renewal LIBOR Advance, or the conversion of
a Floating Rate Advance to a LIBOR Advance, provide Company with a LIBOR quote
for each Interest Period identified by Company on the Business Day on which the
request was made, if the request is received by Wells Fargo no later than 9:00
a.m. Pasadena, California Time three (3) Business Days prior to the
Business Day on which Company has requested that the LIBOR Advance be made
effective. If Company does not immediately accept a LIBOR quote, the quoted
rate shall expire and any subsequent request for a LIBOR quote shall be subject
to redetermination by Wells Fargo.

 

(v)                               Taxes and
Regulatory Costs. Company shall also pay Wells Fargo with respect to
any LIBOR Advance all (i) withholdings, interest equalization taxes, stamp
taxes or other taxes (except income and franchise taxes) imposed by any
domestic or foreign governmental authority that are related to LIBOR, and (ii) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage, the
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar costs imposed by any domestic or foreign governmental authority or
resulting from compliance by Wells Fargo with any request or directive (whether
or not having the force of law) from any central bank or other governmental
authority that are related to LIBOR but not otherwise included in the
calculation of LIBOR. In determining which of these amounts are attributable to
an existing LIBOR Advance, any reasonable allocation made by Wells Fargo among
its operations shall be deemed conclusive and binding.

 

1.4                               Collection
of Accounts and Application to Revolving Notes.

 

(a)                                 The Collection
Account. Company has granted a security interest to Wells Fargo in the
Collateral, including all Accounts. Except as otherwise agreed by both parties
in an Authenticated Record, all Proceeds of Accounts and other Collateral, upon
receipt or collection, shall be deposited each Business Day into the Collection
Account. Funds so deposited (“Account Funds”) are the property of Wells Fargo,
and may only be withdrawn from the Collection

 

4

 

Account
by Wells Fargo for application in accordance with Section 1.4(c) or
as otherwise provided in the Loan Documents or by applicable law.

 

(b)                                Payment of
Accounts by Company’s Account Debtors. Company shall instruct all
account debtors to make payments either directly to the Lockbox for deposit by
Wells Fargo directly to the Collection Account, or instruct them to deliver
such payments to Wells Fargo by wire transfer, ACH, or other means as Wells
Fargo may direct for deposit to the Collection Account or for direct
application to the Line of Credit. If Company receives a payment or the
Proceeds of Collateral directly, Company will promptly deposit the payment or
Proceeds into the Collection Account. Until deposited, it will hold all such
payments and Proceeds in trust for Wells Fargo without commingling with other
funds or property. All deposits held in the Collection Account shall constitute
Proceeds of Collateral and shall not constitute the payment of Indebtedness.

 

(c)                                 Application of
Payments to Revolving Notes. Wells Fargo will withdraw
Account Funds deposited to the Collection Account and pay down borrowings on
the Line of Credit by applying them to the Revolving Notes on a pro rata basis
on the first Business Day following the Business Day of deposit to the
Collection Account, or, if payments are received by Wells Fargo that are not
first deposited to the Collection Account pursuant to any treasury management
service provided to Company by Wells Fargo, such payments shall be applied to
the Revolving Notes as provided in the Master Agreement for Treasury Management
Services and the relevant service description.

 

1.5                               Interest
and Interest Related Matters.

 

(a)                                 Interest Rates
Applicable to Line of Credit. Except as otherwise
provided in this Agreement, the unpaid principal amount of each Line of Credit
Advance evidenced by the Revolving Notes shall accrue interest at an annual
interest rate calculated as follows:

 

The
“Floating Rate” for Line of Credit Advances = the greater of (i) the
Prime Rate plus the applicable Margin, or (ii) five percent (5.0%), plus
the applicable Margin, which interest rate shall change whenever the Prime Rate
changes, subject to the minimum interest rate floor;

 

Or

 

LIBOR
Advance Rate pricing for one, three, or six month fixed rate Interest Periods;
the “LIBOR Advance Rate” for Line of Credit Advances = LIBOR
applicable to the selected Interest Period plus the applicable Margin;

 

Multiple
Advances under the Line of Credit may simultaneously accrue interest at both
the Floating Rate and at the LIBOR Advance Rate, subject to the limitations of Section 1.3(a)(i)

 

If
Borrower’s Net Income for the most recently completed fiscal year is less than
$1.00 for such year, the Margins for the immediately succeeding fiscal year
shall be two and one-half percent (2.5%) per annum for Floating Rate Advances,
and three and one-half percent (3.5%) per annum

 

5

 

for LIBOR Advances. If Borrower’s Net Income for the most recently
completed fiscal year equals or exceeds $1.00 for such year, the Margins for
the immediately succeeding fiscal year shall be two percent (2.0%) per annum
for Floating Rate Advances, and three percent (3.0%) per annum for LIBOR
Advances.

 

Each Margin change shall become effective on the first calendar day of
the month following the month of receipt by Wells Fargo of the audited annual
financial statements. If Company fails to timely deliver audited annual
financial statements as agreed, the Margins shall be at the highest level set
forth above and Wells Fargo may notify Company that an Event of Default has
occurred and impose the Default Rate.

 

If
amended or restated financial statements would change previously calculated
Margins, or if Wells Fargo determines that any financial statements have
materially misstated Company’s financial condition, then Wells Fargo may, using
the most accurate information available to it, recalculate the financial test
or tests governing the Margins and retroactively reduce or increase the Margins
from the date of receipt of such amended or restated financial statements and
charge Company additional interest (such that Wells Fargo receives the interest
that it should have received under this Agreement if the Company’s financial
condition had been properly reported), which may be imposed on them from the
beginning of the appropriate month to which the previous change has been made
or to the beginning of the month in which any Event of Default has occurred, as
Wells Fargo in its sole discretion deems appropriate.

 

(b)                                Minimum
Interest Charge. [Intentionally Omitted].

 

(c)                                 Default
Interest Rate. Commencing on the day an Event of Default occurs,
through and including the date identified by Wells Fargo in a Record as the
date that the Event of Default has been cured or waived (each such period a
“Default Period”), or during a time period specified in Section 1.8,
or at any time following the Termination Date, in Wells Fargo’s sole discretion
and without waiving any of its other rights or remedies, the principal amount
of the Revolving Notes shall bear interest at a rate that is three percent
(3.0%) above the contractual rate set forth in Section 1.5(a) (the
“Default Rate”), or any lesser rate that Wells Fargo may deem appropriate,
starting on the first day of the month in which the Default Period begins
through the last day of that Default Period, or any shorter time period to
which Wells Fargo may agree in an Authenticated Record.

 

(d)                                Interest
Accrual on Payments Applied to Revolving Notes. Payments received by Wells
Fargo shall be applied to the Revolving Notes as provided in Section 1.4(c),
but the principal amount paid down shall continue to accrue interest through
the end of the first Business Day following the Business Day that the payment
was applied to the Revolving Notes.

 

(e)                                Usury. No interest
rate shall be effective which would result in a rate greater than the highest
rate permitted by law. Payments in the nature of interest and other charges
made under any Loan Documents or any other document or agreement described in
or related to this Agreement that are later determined to be in excess of the
limits imposed by applicable usury law will be deemed to be a payment of
principal, and the Indebtedness shall be reduced by that amount so that such
payments will not be deemed usurious.

 

6

 

1.6                               Fees.

 

(a)                                Origination Fee.
[Intentionally Omitted].

 

(b)                               Unused Line Fee.
[Intentionally Omitted].

 

(c)                                Facility Fees. On each
anniversary date of this Agreement of this Agreement, Company shall pay Wells
Fargo a facility fee equal to 1.5% of the Maximum Line Amount, which fee when
paid shall be deemed fully earned and non-refundable as of each such
anniversary date under all circumstances.

 

(d)                                Collateral Exam
Fees. Company shall pay Wells Fargo fees in connection with any collateral
exams, audits or inspections conducted by or on behalf of Wells Fargo at the
current rates established from time to time by Wells Fargo as its collateral
exam fees (which fees are currently $125.00 per hour per collateral examiner),
together with all actual out-of-pocket costs and expenses incurred in
conducting any collateral examination or inspection.

 

(e)                                 Collateral
Monitoring Fees. Company shall pay Wells Fargo a fee rates
established from time to time by Wells Fargo as its Collateral monitoring fees
(which fees include an initial fee of $2,000 and monthly fees which are
currently $600 per month), due and payable monthly in advance on the first day
of the month and on the Termination Date.

 

(f)                                    Line of Credit
Termination and/or Reduction Fees. [Intentionally Omitted].

 

(g)                                Overadvance
Fees. Company shall pay a $500 Overadvance fee for each day that an
Overadvance exists which was not agreed to by Wells Fargo in an Authenticated
Record prior to its occurrence; provided that Wells Fargo’s acceptance of the
payment of such fees shall not constitute either consent to the Overadvance or
waiver of the resulting Event of Default. Company shall pay additional
Overadvance fees and interest in such amounts and on such terms as Wells Fargo
in its sole discretion may consider appropriate for any Overadvance to which
Wells Fargo has specifically consented in an Authenticated Record prior to its
occurrence.

 

(h)                                Treasury
Management Fees. Company will pay service fees to Wells Fargo for
treasury management services provided pursuant to the Master Agreement for
Treasury Management Services or any other agreement entered into by the
parties, in the amount prescribed in Wells Fargo’s current service fee
schedule.

 

(i)                                    Other Fees and
Charges. Wells Fargo may impose additional fees and charges during a Default
Period for (i) waiving an Event of Default, or (ii) the
administration of Collateral by Wells Fargo. All such fees and charges shall be
imposed at Wells Fargo’s sole discretion following oral notice to Company on
either an hourly, periodic, or flat fee basis, and in lieu of or in addition to
imposing interest at the Default Rate, and Company’s request for an Advance
following such notice shall constitute Company’s agreement to pay such fees and
charges.

 

(j)                                    LIBOR Advance
Breakage Fees. Company may prepay any LIBOR Advance at any time
in any amount, whether voluntarily or by acceleration; provided, however,

 

7

 

that
if the LIBOR Advance is prepaid, Company shall pay Wells Fargo upon demand a
LIBOR Advance breakage fee equal to the sum of the discounted monthly
differences for each month from the month of prepayment through the month in
which such Interest Period matures, calculated as follows for each such month:

 

(i)                                   Determine the amount of
interest which would have accrued each month on the amount prepaid at the
interest rate applicable to such amount had it remained outstanding until the
last day of the applicable Interest Period.

 

(ii)                                Subtract from the
amount determined in (i) above the amount of interest which would have
accrued for the same month on the amount prepaid for the remaining term of such
Interest Period at LIBOR in effect on the date of prepayment for new loans made
for such term in a principal amount equal to the amount prepaid.

 

(iii)                             If the result
obtained in (ii) for any month is greater than zero, discount that
difference by LIBOR used in (ii) above.

 

Company
acknowledges that prepayment of the Revolving Notes may result in Wells Fargo
incurring additional costs, expenses or liabilities, and that it is difficult
to ascertain the full extent of such costs, expenses or liabilities. Company
agrees to pay the above-described LIBOR Advance breakage fee and agrees that
this amount represents a reasonable estimate of the LIBOR Advance breakage
costs, expenses and/or liabilities of Wells Fargo.

 

1.7                               Interest
Accrual; Principal and Interest Payments; Computation.

 

(a)                                 Interest
Payments and Interest Accrual. Accrued and unpaid
interest under the Revolving Notes on Floating Rate Advances shall be due and
payable on the first day of each month (each an “Interest Payment Date”) and on
the Termination Date, and shall be paid in the manner provided in Section 1.4(c).
Interest shall accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of Advance to the Interest
Payment Date. Interest accruing on any LIBOR Advance shall
be due and payable on the last day of the applicable Interest Period and on the
Termination Date; provided, however, for Interest Periods in excess of one
month, interest shall nevertheless be due and payable monthly on the last day
of each month, and on the last day of the Interest Period.

 

(b)                               Payment of
Revolving Notes Principal. The principal amount of the Revolving Notes
shall be paid from time to time as provided in this Agreement, and shall be
fully due and payable on the Termination Date.

 

(c)                                 Payments Due on
Non-Business Days. If an Interest Payment Date or the Termination
Date falls on a day which is not a Business Day, payment shall be made on the
next Business Day, and interest shall continue to accrue during that time
period.

 

(d)                                Computation of
Interest and Fees. Interest accruing on the unpaid principal amount
of the Revolving Notes and fees payable under this Agreement shall be computed
on the basis of the actual number of days elapsed in a year of 360 days.

 

8

 

(e)                                 Liability
Records. Wells Fargo shall maintain accounting and bookkeeping records of all
Advances and payments under the Line of Credit and all other Indebtedness due
to Wells Fargo in such form and content as Wells Fargo in its sole discretion
deems appropriate. Wells Fargo’s calculation of current Indebtedness shall be
presumed correct unless proven otherwise by Company. Upon Wells Fargo’s
request, Company will admit and certify in a Record the exact principal balance
of the Indebtedness that Company then believes to be outstanding. Any billing
statement or accounting provided by Wells Fargo shall be conclusive and binding
unless Company notifies Wells Fargo in a detailed Record of its intention to
dispute the billing statement or accounting within 30 days of receipt.

 

(f)                                   Pro Rata
Application. All payments or other sums received by
Wells Fargo and applied to the Revolving Notes shall be applied on a pro rata
basis.

 

1.8                               Termination, Reduction or Non-Renewal of Line of Credit by Company; Notice.

 

(a)                                 Termination or
Reduction by Company after Advance Notice. Company may terminate or
reduce the Line of Credit at any time prior to the Maturity Date, if it (i) delivers
an Authenticated Record notifying Wells Fargo of its intentions at least sixty
(60) days prior to the proposed Termination Date, (ii) pays Wells Fargo
the termination or reduction fee set forth in Section 1.6(f), and (iii) pays
the Indebtedness in full or down to the reduced Maximum Line Amount. Any
reduction in the Maximum Line Amount shall be in multiples of $500,000, with a
minimum reduction of at least $500,000.

 

(b)                                Termination or
Reduction by Company without Advance Notice. If Company fails to
deliver Wells Fargo timely notice of its intention to terminate the Line of
Credit or reduce the Maximum Line Amount as provided in Section 1.8(a),
Company may nevertheless terminate the Line of Credit or reduce the Maximum
Line Amount and pay the Indebtedness in full or down to the reduced Maximum
Line Amount if it pays additional interest for each day that the notice was
short of the required sixty (60) days notice, which interest shall be in an amount
that is equal to the interest calculated at the Default Rate based on the
Borrower’s average borrowings under the Line of Credit for the two months prior
to the date that Wells Fargo receives delivery of an Authenticated Record
giving it actual notice of Company’s intention to terminate or reduce the Line
of Credit.

 

(c)                                 Non-Renewal by
Company; Notice. If Company does not wish Wells Fargo to consider
renewal of the Line of Credit on the next Maturity Date, Company shall deliver
an Authenticated Record to Wells Fargo at least sixty (60) days prior to the
Maturity Date notifying Wells Fargo of its intention not to renew. If Company
fails to deliver to Wells Fargo such timely notice, then the Revolving Note
shall accrue interest at the Default Rate commencing on the sixtieth (60th) day prior to the Maturity
Date and continuing through the date that Wells Fargo receives delivery of an
Authenticated Record giving it actual notice of Company’s intention not to
renew.

 

1.9                               Facility
Subject to Ex-Im Bank Rules.  Company
acknowledges that Wells Fargo is willing to make the Ex-Im Subfacility
available to Company because the Ex-Im Bank  is willing to guaranty
payment of a significant portion of the Indebtedness pursuant to the Master

 

9

 

Guarantee
Agreement (as defined in the Borrower Agreement). Accordingly, in the event of
any inconsistency between this Agreement and the Master Guarantee Agreement or
the Borrower Agreement, the provision that is the more stringent on Company
shall control with respect to Advances under this Agreement and procedures
related thereto. This Agreement is supplemental to the Borrower Agreement.

 

2.                                     SECURITY
INTEREST AND OCCUPANCY OF COMPANY’S PREMISES

 

2.1                            Grant of Security Interest. Company hereby pledges,
assigns and grants to Wells Fargo, for the benefit of Wells Fargo and as agent
for Wells Fargo Merchant Services, L.L.C., a Lien and security interest
(collectively referred to as the “Security Interest”) in the Collateral, as
security for the payment and performance of all Indebtedness. Following request
by Wells Fargo, Company shall grant Wells Fargo, for the benefit of Wells Fargo
and as agent for Wells Fargo Merchant Services, L.L.C., a Lien and security
interest in all commercial tort claims that it may have against any Person.

 

2.2                             Notifying
Account Debtors and Other Obligors; Collection of Collateral. Wells Fargo may
at any time (whether or not a Default Period then exists) deliver a Record
giving an account debtor or other Person obligated to pay an Account, a General
Intangible, or other amount due, notice that the Account, General Intangible,
or other amount due has been assigned to Wells Fargo for security and must be
paid directly to Wells Fargo. Company shall join in giving such notice and
shall Authenticate any Record giving such notice upon Wells Fargo’s request.
After Company or Wells Fargo gives such notice, Wells Fargo may, but need not,
in Wells Fargo’s or in Company’s name, demand, sue for, collect or receive any
money or property at any time payable or receivable on account of, or securing,
such Account, General Intangible, or other amount due, or grant any extension
to, make any compromise or settlement with or otherwise agree to waive, modify,
amend or change the obligations (including collateral obligations) of any
account debtor or other obligor. Wells Fargo may, in Wells Fargo’s name or in
Company’s name, as Company’s agent and attorney-in-fact, notify the United
States Postal Service to change the address for delivery of Company’s mail to
any address designated by Wells Fargo, otherwise intercept Company’s mail, and
receive, open and dispose of Company’s mail, applying all Collateral as
permitted under this Agreement and holding all other mail for Company’s account
or forwarding such mail to Company’s last known address.

 

2.3                            Assignment of Insurance. As additional security for
the Indebtedness, Company hereby assigns to Wells Fargo and to Wells Fargo
Merchant Services, L.L.C., all rights of Company under every policy of
insurance covering the Collateral and all business records and other documents
relating to it, and all monies (including proceeds and refunds) that may be
payable under any policy, and Company hereby directs the issuer of each policy
to pay all such monies directly to Wells Fargo. At any time, whether or not a
Default Period then exists, Wells Fargo may (but need not), in Wells Fargo’s or
Company’s name, execute and deliver proofs of claim, receive payment of
proceeds and endorse checks and other instruments representing payment of the
policy of insurance, and adjust, litigate, compromise or release claims against
the issuer of any policy. Any monies received under any insurance policy
assigned to Wells Fargo, other than liability insurance policies, or received
as payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid to Wells Fargo and, as determined by Wells Fargo in its
sole discretion, either be applied to prepayment of the Indebtedness or

 

10

 

disbursed
to Company under staged payment terms reasonably satisfactory to Wells Fargo
for application to the cost of repairs, replacements, or restorations which
shall be effected with reasonable promptness and shall be of a value at least
equal to the value of the items or property destroyed.

 

2.4                            Company’s Premises.

 

(a)                                 Wells Fargo’s
Right to Occupy Company’s Premises. Company hereby grants to
Wells Fargo the right, at any time during a Default Period and without notice
or consent, to take exclusive possession of all locations where Company
conducts its business or has any rights of possession, including the locations
described on Exhibit B (the
“Premises”), until the earlier of (i) payment in full and discharge of all
Indebtedness and termination of the Line of Credit, or (ii) final sale or
disposition of all items constituting Collateral and delivery of those items to
purchasers.

 

(b)                               Wells Fargo’s
Use of Company’s Premises. Wells Fargo may use the Premises to store,
process, manufacture, sell, use, and liquidate or otherwise dispose of items
that are Collateral, and for any other incidental purposes deemed appropriate
by Wells Fargo in good faith.

 

(c)                                 Company’s
Obligation to Reimburse Wells Fargo. Wells Fargo shall not be
obligated to pay the Company rent or other compensation for the possession or
use of any Premises, but if Wells Fargo elects to pay rent or other
compensation to the owner of any Premises in order to have access to the
Premises, then Company shall promptly reimburse Wells Fargo all such amounts,
as well as all taxes, fees, charges and other expenses at any time payable by
Wells Fargo with respect to the Premises by reason of the execution, delivery,
recordation, performance or enforcement of any terms of this Agreement.

 

2.5                              License. Without
limiting the generality of any other Security Document, Company hereby grants
to Wells Fargo a non-exclusive, worldwide and royalty-free license to use or
otherwise exploit all Intellectual Property Rights of Company for the purpose
of: (a) completing the manufacture of any in-process materials during any
Default Period so that such materials become saleable Inventory, all in
accordance with the same quality standards previously adopted by Company for
its own manufacturing and subject to Company’s reasonable exercise of quality
control; and (b) selling, leasing or otherwise disposing of any or all
Collateral during any Default Period.

 

2.6                              Financing
Statements.

 

(a)                                Authorization
to File. Company authorizes Wells Fargo to file financing statements
describing Collateral to perfect Wells Fargo’s Security Interest in the
Collateral, and Wells Fargo may describe the Collateral as “all personal
property” or “all assets” or describe specific items of Collateral including
commercial tort claims as Wells Fargo may consider necessary or useful to
perfect the Security Interest. All financing statements filed before the date
of this Agreement to perfect the Security Interest were authorized by Company
and are hereby re-authorized. Following the termination of the Line of Credit
and payment of all Indebtedness,

 

11

 

Wells
Fargo shall, at Company’s expense and within the time periods required under
applicable law, release or terminate any filings or other agreements that
perfect the Security Interest.

 

(b)                               Termination. Wells Fargo
shall, at Company’s expense, release or terminate any filings or other
agreements that perfect the Security Interest, provided that there are no
suits, actions, proceedings or claims pending or threatened against any
Indemnitee under this Agreement with respect to any Indemnified Liabilities,
upon Wells Fargo’s receipt of the following, in form and content satisfactory
to Wells Fargo: (i) cash payment in full of all Indebtedness and a
completed performance by Company with respect to its other obligations under
this Agreement, (ii) evidence that the commitment of Wells Fargo to make
Advances under the Line of Credit or under any other facility with Company has
been terminated, (iii) a release of all claims against Wells Fargo by
Company relating to Wells Fargo’s performance and obligations under the Loan
Documents, and (iv) an agreement by Company, any Guarantor, and any new
lender to Company to indemnify Wells Fargo for any payments received by Wells
Fargo that are applied to the Indebtedness as a final payoff that may
subsequently be returned or otherwise not paid for any reason.

 

2.7                              Setoff. Wells Fargo may at any time, in its sole discretion
and without demand or notice to anyone, setoff any liability owed to Company by
Wells Fargo against any Indebtedness, whether or not due.

 

2.8                              Collateral
Related Matters. This Agreement does not contemplate a sale of
Accounts or chattel paper, and, as provided by law, Company is entitled to any
surplus and shall remain liable for any deficiency. Wells Fargo’s duty of care
with respect to Collateral in its possession (as imposed by law) will be deemed
fulfilled if it exercises reasonable care in physically keeping such Collateral,
or in the case of Collateral in the custody or possession of a bailee or other
third Person, exercises reasonable care in the selection of the bailee or third
Person, and Wells Fargo need not otherwise preserve, protect, insure or care
for such Collateral. Wells Fargo shall not be obligated to preserve rights
Company may have against prior parties, to liquidate the Collateral at all or
in any particular manner or order or apply the Proceeds of the Collateral in
any particular order of application. Wells Fargo has no obligation to clean-up
or prepare Collateral for sale. Company waives any right it may have to require
Wells Fargo to pursue any third Person for any of the Indebtedness.

 

2.9                              Notices
Regarding Disposition of Collateral. If notice to Company of any
intended disposition of Collateral or any other intended action is required by
applicable law in a particular situation, such notice will be deemed
commercially reasonable if given in the manner specified in Section 7.4
at least ten calendar days before the date of intended disposition or other
action.

 

3.                                      CONDITIONS PRECEDENT

 

3.1                               Conditions
Precedent to Initial Advance. Wells Fargo’s obligation to
make the initial Advance shall be subject to the condition that Wells Fargo
shall have received this Agreement and each of the Loan Documents, and any
document, agreement, or other item described in or related to this Agreement,
and all fees and information described in Exhibit C, executed and
in form and content satisfactory to Wells Fargo.

 

12

 

3.2                              Additional Conditions Precedent to All Advances. Wells Fargo’s
obligation to make any Advance (including the initial Advance) shall be subject
to the further additional conditions: (a) that the representations and warranties
described in Exhibit D are correct on the date of the Advance, except to
the extent that such representations and warranties relate solely to an earlier
date; and (b) that no event has occurred and is continuing, or would
result from the requested Advance that would result in an Event of Default.

 

4.                                      REPRESENTATIONS AND WARRANTIES

 

To
induce Wells Fargo to enter into this Agreement, Company makes the
representations and warranties described in Exhibit D. Any request for
an Advance will be deemed a representation by Company that all representations
and warranties described in Exhibit D are true, correct, and
complete as of the time of the request, unless they relate exclusively to an
earlier date. Company shall promptly deliver a Record notifying Wells Fargo of
any change in circumstance that would affect the accuracy of any representation
or warranty, unless the representation and warranty specifically relates to an
earlier date.

 

5.                                       COVENANTS

 

So
long as the Indebtedness remains unpaid, or the Line of Credit has not been
terminated, Company shall comply with each of the following covenants, unless
Wells Fargo shall consent otherwise in an Authenticated Record delivered to
Company.

 

5.1                              Reporting Requirements. Company shall deliver to
Wells Fargo the following information, compiled where applicable using GAAP
consistently applied, in form and content acceptable to Wells Fargo:

 

(a)                                 Annual
Financial Statements. As soon as available and in any event within
ninety (90) days after Company’s fiscal year end, Company’s audited financial
statements prepared by an independent certified public accountant acceptable to
Wells Fargo, which shall include Company’s balance sheet, income statement, and
statement of retained earnings and cash flows prepared, if requested by Wells
Fargo, on a consolidated and consolidating basis to include Company’s
Subsidiaries. The annual financial statements shall be accompanied by a
certificate (the “Compliance Certificate”) in the form of Exhibit E
that is signed by Company’s chief financial officer. Each Compliance
Certificate that accompanies an annual financial statement shall also be
accompanied by (i) copies of all management letters prepared by Company’s
accountants; and (ii) a report signed by the accountant stating that in
making the investigations necessary to render the opinion, the accountant
obtained no knowledge, except as specifically stated, of any Event of Default
under the Agreement, and a detailed statement, including computations,
demonstrating whether or not Company is in compliance with the financial
covenants of this Agreement.

 

(b)                                10-Q Financial
Reports. As soon as available and in any event within forty-five (45) days after the
end of each fiscal quarter of Company, Company’s 10-Q financial reports filed
with the Securities and Exchange Commission. This requirement may be satisfied
by Company by posting a link to the filing on the Company’s publicly-accessible
website.

 

13

 

(c)                                 Monthly
Financial Statements. As soon as available and in any event within
thirty (30) days after the end of each month, a Company prepared balance sheet,
income statement, and statement of retained earnings prepared for that month
and for the year-to-date period then ended, prepared, if requested by Wells
Fargo, on a consolidated and consolidating basis to include Company’s
Subsidiaries, and stating in comparative form the figures for the corresponding
date and periods in the prior fiscal year, subject to year-end adjustments. The
financial statements shall be accompanied by a Compliance Certificate in the
form of Exhibit E that is signed by Company’s chief financial
officer.

 

(d)                                Collateral
Reports. No later than 20 days after each month end (or more frequently if
Wells Fargo shall request it), (i) detailed agings of Company’s accounts
receivable and accounts payable, an accounts receivable reconciliation report
and a calculation of Company’s Accounts, including an accounts receivable
ineligibility report, Eligible Accounts, Inventory and Eligible Inventory as of
the end of that month or shorter time period requested by Wells Fargo, and (ii) Company
shall deliver to Wells Fargo a current Borrowing Base Certificate for Ex-Im
Bank Guaranteed Line, the form of which is attached hereto as Exhibit G.

 

(e)                                Projections. No later than
sixty (60) days prior to each fiscal year end, Company’s projected balance
sheet and income statement and statement of retained earnings and cash flows
for each month of the next fiscal year, certified as accurate by Company’s
chief financial officer and accompanied by a statement of assumptions and
supporting schedules and information. Wells Fargo acknowledges that such
projections are estimates only and not promises of performance.

 

(f)                                  Supplemental
Reports. Weekly, or more frequently if Wells Fargo requests, Wells Fargo’s
standard form of “daily collateral report”, together with receivables
schedules, collection reports, credit memos, sales reports, adjustments to
accounts receivable and copies of invoices in excess of $100,000, shipment
documents and delivery receipts for goods sold to account debtors in excess of
$100,000.

 

(g)                               Customer Lists. On January 1
and July 1 of each calendar year, an updated customer listing (with
contact names and addresses).

 

(h)                               Litigation. No later than
three (3) Business Days after discovery, a Record notifying Wells Fargo of
any litigation or other proceeding before any court or governmental agency
which seeks a monetary recovery against Company in excess of $100,000.

 

(i)                                   Intellectual
Property. (i) No later than 30 Business Days after it
acquires material Intellectual Property Rights, a Record notifying Wells Fargo
of Company’s acquisition of such rights; (ii) except for transfers
permitted under Section 5.17, no later than 15 Business Days before
it disposes of material Intellectual Property Rights, a Record notifying Wells
Fargo of Company’s intention to dispose of such rights, along with copies of
all proposed documents and agreements concerning the disposal of such rights as
requested by Wells Fargo; (iii) promptly upon discovery, a Record
notifying Wells Fargo of (A) any Infringement of Company’s Intellectual
Property Rights by any Person, (B) claims that Company is Infringing
another Person’s Intellectual Property Rights and (C) any threatened
cancellation, termination or

 

14

 

material limitation of
Company’s Intellectual Property Rights; and (iv) promptly upon receipt,
copies of all registrations and filings with respect to Company’s Intellectual
Property Rights.

 

(j)                                   Defaults. No later than
three days after learning of the probable occurrence of any Event of Default, a
Record notifying Wells Fargo of the Event of Default and the steps being taken
by Company to cure the Event of Default.

 

(k)                                 Disputes. Promptly upon
discovery, a Record notifying Wells Fargo of (i) any disputes or claims by
Company’s customers exceeding $20,000 individually or $75,000 in the aggregate
during any fiscal year; (ii) credit memos not previously reported in Section 5.l(f);
and (iii) any goods returned to or recovered by Company outside of the
ordinary course of business or in the ordinary course of business but with a
value in an amount in excess of $50,000.

 

(1)                                 Changes in
Officers and Directors. Promptly following occurrence, a Record
notifying Wells Fargo of any change in the persons constituting Company’s
Officers and Directors.

 

(m)                              Collateral. Promptly upon
discovery, a Record notifying Wells Fargo of any loss of or material damage to
any Collateral having a fair market value, individually or in the aggregate, of
$50,000 or more, or of any substantial adverse change in (i) any
Collateral having a fair market value, individually or in the aggregate, of
$50,000 or more, or (ii) the prospect of such Collateral’s payment.

 

(n)                                Commercial Tort
Claims. Promptly upon discovery, a Record notifying Wells Fargo of any
commercial tort claims in excess of $50,000 individually or $100,000 in the
aggregate brought by Company against any Person, including the name and address
of each defendant, a summary of the facts, an estimate of Company’s damages,
copies of any complaint or demand letter submitted by Company, and such other
information as Wells Fargo may reasonably request.

 

(o)                                Reports to
Owners. Promptly upon distribution, copies of all financial statements,
reports and proxy statements which Company shall have sent to its Owners. This
requirement may be satisfied by Company by posting a link to the filings
attaching such documents on the Company’s publicly-accessible website.

 

(p)                                Tax Returns of
Company. No later than 15 Business Days after they are required to be filed,
copies of Company’s signed and dated state and federal income tax returns and
all related schedules, and copies of any extension requests.

 

(q)                                Violations of
Law. No later than three (3) Business Days after discovery of any
violation, a Record notifying Wells Fargo of Company’s violation of any law, rule or
regulation, the non-compliance with which could have a Material Adverse Effect
on Company.

 

(r)                                   Pension Plans. (i) Promptly
upon discovery, and in any event within 30 days after Company knows or has
reason to know that any Reportable Event with respect to any Pension Plan has
occurred, a Record authenticated by Company’s chief financial officer notifying
Wells Fargo of the Reportable Event in detail and the actions which Company
proposes 

 

15

 

to take to correct the
deficiency, together with a copy of any related notice sent to the Pension
Benefit Guaranty Corporation; (ii) promptly upon discovery, and in any
event within 10 days after Company fails to make a required quarterly Pension
Plan contribution under Section 412(m) of the IRC, a Record
authenticated by Company’s chief financial officer notifying Wells Fargo of the
failure in detail and the actions that Company will take to cure the failure,
together with a copy of any related notice sent to the Pension Benefit Guaranty
Corporation; and (iii) promptly upon discovery, and in any event within 10
days after Company knows or has reason to know that it may be liable or may be
reasonably expected to have liability for any withdrawal, partial withdrawal,
reorganization or other event under any Multiemployer Plan under Sections 4201
or 4243 of ERISA, a Record authenticated by Company’s chief financial officer
notifying Wells Fargo of the details of the event and the actions that Company
proposes to take in response.

 

(s)                                 Other Reports. From time to
time, with reasonable promptness, all customer lists, receivables schedules,
inventory reports, collection reports, deposit records, equipment schedules,
invoices to account debtors, shipment documents and delivery receipts for goods
sold, and such other materials, reports, records or information as Wells Fargo
may request.

 

5.2                              Financial Covenants. Company agrees to comply
with the financial covenants described below, which shall be calculated using
GAAP consistently applied, except as they may be otherwise modified by the
following capitalized definitions:

 

(a)                                 Minimum Book
Net Worth. Company shall maintain a Book Net Worth,
determined as of the following test dates, in an amount not less than the
amount set forth for each such test date (numbers appearing between “< >” are negative):

 

	
  Test Date

  	
   

  	
  Minimum Book Net Worth

  	
   

  
	
  December 31,2008

  	
   

  	
  $

  	
  61,000,000

  	
   

  
	
  January 31, 2009

  	
   

  	
  $

  	
  57,000,000

  	
   

  
	
  February 28, 2009

  	
   

  	
  $

  	
  52,700,000

  	
   

  
	
  March 31,2009

  	
   

  	
  $

  	
  51,000,000

  	
   

  
	
  April 30, 2009

  	
   

  	
  $

  	
  48,150,000

  	
   

  
	
  May 31, 2009

  	
   

  	
  $

  	
  45,300,000

  	
   

  
	
  June 30,2009

  	
   

  	
  $

  	
  46,000,000

  	
   

  
	
  July 31, 2009

  	
   

  	
  $

  	
  43,900,000

  	
   

  
	
  August 31, 2009

  	
   

  	
  $

  	
  41,300,000

  	
   

  
	
  September 30,2009

  	
   

  	
  $

  	
  44,450,000

  	
   

  
	
  October 31,2009

  	
   

  	
  $

  	
  42,100,000

  	
   

  
	
  November 30, 2009

  	
   

  	
  $

  	
  39,850,000

  	
   

  
	
  December 31,2009

  	
   

  	
  $

  	
  44,600,000

  	
   

  
	
  January 31, 2010

  	
   

  	
  $

  	
  42,250,000

  	
   

  
	
  February 28, 2010

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  45,150,000

  	
   

  

 

16

 

(b)                                 Minimum Net
Income. Company shall achieve Net Income, measured on each of the following
test dates described below, for the quarter period ending on each such test
date, Net Income of not less than the amount set forth opposite each such test
date (numbers appearing between “< >” are negative):

 

	
  Test Date

  	
   

  	
  Minimum Net Income

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  <10,800,000>

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  <11,000,000>

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  <5,750,000>

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  <3,200,000>

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  <1,000,000>

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  <500,000>

  	
   

  

 

(c)                                 Minimum Cash to
Unreimbursed Line of Credit Advances Coverage Ratio. At all times,
the sum of the outstanding “Advances” plus the “L/C Amount” under the Domestic
Facility Agreement plus the outstanding “Advances” under the Revolving Notes
shall not exceed eighty percent (80%) of cash and Cash Equivalents of Company
in which Wells Fargo has a perfected first priority security interest. Compliance
with the foregoing covenant shall be reported as Wells Fargo shall request from
time to time in its sole discretion.

 

(d)                                Capital
Expenditures. Company shall not incur or contract to incur
Capital Expenditures of more than (i) $7,500,000 in the aggregate during
Company’s fiscal year ending March 31, 2009, (ii) $10,000,000 in the
aggregate during Company’s fiscal year ending March 31, 2010, and (iii) 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.

 

5.3                              Other Liens and Permitted Liens.

 

(a)                                 Other Liens;
Permitted Liens. Company shall not create, incur or suffer to exist
any Lien upon any of its assets, now owned or later acquired, as security for
any indebtedness, with the exception of the following (each a “Permitted Lien”;
collectively, “Permitted Liens”): (i) In the case of real property,
covenants, restrictions, rights, easements and minor irregularities in title
which do not materially interfere with Company’s business or operations as
presently conducted; (ii) Liens in existence on the date of this Agreement
that are described in Exhibit F and secure indebtedness for
borrowed money permitted under Section 5.3(b) (iii) The
Security Interest and Liens created by the Security Documents; (iv) Purchase
money Liens relating to the acquisition of Equipment not exceeding the lesser
of cost or fair market value, not exceeding $3,000,000 for any one purchase or
$7,000,000 in the aggregate during the fiscal year ending March 31, 2009,
and $10,000,000 in the aggregate during the fiscal year ending March 31, 2010,
and so long as no Default Period is then in existence and none would exist
because of any such acquisition; (v) liens for taxes not yet due or that
are being contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on the books of the
Company, in conformity with GAAP; (vi) carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s or other like liens arising in the
ordinary course of business that are being contested in good faith by
appropriate proceedings;

 

17

 

(vii) pledges
or deposits in connection with workers’ compensation, unemployment insurance
and other social security legislation; (viii) deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business; (ix) liens
securing Indebtedness of Company incurred to finance capital expenditures
otherwise permitted hereunder (and, without limitation, subject to Section 5.2(d) of
this Agreement), provided that (a) such liens shall be created
concurrently or within 90 Business Days after the acquisition of the property
being financed, (b) such liens do not at any time encumber any property
other than the property financed by such Indebtedness, and (c) Indebtedness
secured by such liens does not cause or result in an Event of Default; (x) any
interest or title of a lessor under any lease entered into by the Company or
any other Subsidiary in the ordinary course of its business and covering only
the assets so leased; and (xi) liens that are junior in priority to Wells
Fargo’s liens on the Collateral that arise from judgments and attachments in
connection with court proceedings provided that the attachment or enforcement
of such liens would not result in an Event of Default hereunder and such liens
are being contested in good faith by appropriate proceedings, adequate reserves
have been set aside and no material Collateral is subject to a material risk of
loss or forfeiture and the claims in respect of such liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect.

 

(b)                                Financing
Statements. Company shall not authorize the filing of any
financing statement by any Person as Secured Party with respect to any of
Company’s assets, other than (i) filings by Wells Fargo and (ii) filings
in connection with Permitted Liens. Company shall not amend any financing
statement filed by Wells Fargo as Secured Party except as permitted by law.

 

5.4                              Indebtedness.
Company shall not incur, create, assume or permit to exist any
indebtedness or liability on account of deposits or letters of credit issued on
Company’s behalf, or advances or any indebtedness for borrowed money of any
kind, whether or not evidenced by an instrument, except: (a) Indebtedness
described in this Agreement and the Ex-Im Credit Agreement; (b) indebtedness
of Company described in Exhibit F, and extensions and refinancings
thereof (so long as the principal amount thereof is not increased, the maturity
date is not shortened, the average life is not shortened, no additional
mandatory prepayments or sinking fund payments are required and the cash
payment portion of the interest due on any such Indebtedness is not increased);
(c) indebtedness secured by Permitted Liens; (d) Indebtedness constitution
guaranties permitted by Section 5.5 hereof; and (e) Indebtedness
constituting Subordinated Debt not to exceed $7,500,000 in the aggregate
outstanding at any time.

 

5.5                              Guaranties. Company shall not assume, guarantee, endorse or
otherwise become directly or contingently liable for the obligations of any
Person (collectively, “Guarantee Obligations”), except: (a) the
endorsement of negotiable instruments by Company for deposit or collection or
similar transactions in the ordinary course of business; (b) guaranties,
endorsements and other direct or contingent liabilities in connection with the
obligations of other Persons in existence on the date of this Agreement and
described in Exhibit F; (c) Guarantee
Obligations in respect of performance bonds, surety bonds, appeal bonds or
custom bonds required in the ordinary course of business or in connection with
the enforcement of rights or claims of Company or in connection with judgments
that do not result in an Event of Default; and

 

18

 

(d) Guarantee
Obligations in the form of endorsements in the ordinary course of business of
negotiable instruments for deposit or collection.

 

5.6                              Investments and Subsidiaries. Company shall not make or
permit to exist any loans or advances to, or make any investment or acquire any
interest whatsoever in, any Person or Affiliate, including any partnership or
joint venture, nor purchase or hold beneficially any stock or other securities
or evidence of indebtedness of any Person or Affiliate, except:

 

(a)                                 Investments in
direct obligations of the United States of America or any of its political
subdivisions whose obligations constitute the full faith and credit obligations
of the United States of America and have a maturity of one year or less,
commercial paper issued by U.S. corporations rated “A-1” or “A-2” by Standard &  Poor’s Ratings
Services or “P-1” or “P-2” by Moody’s Investors Service or certificates of
deposit or bankers’ acceptances having a maturity of one year or less issued by
members of the Federal Reserve System having deposits in excess of $100,000,000
(which certificates of deposit or bankers’ acceptances are fully insured by the
Federal Deposit Insurance Corporation);

 

(b)                                Travel advances
or loans to Company’s Officers and employees not exceeding at any one time an
aggregate of $25,000;

 

(c)                                 Prepaid rent
not exceeding one month or security deposits; and

 

(d)                                Current
investments in those Subsidiaries in existence on the date of this Agreement
which are identified on Exhibit D.

 

5.7                              Dividends
and Distributions. Company shall not declare or pay any dividends
(other than dividends payable solely in stock of Company) on any class of its
stock, or make any payment on account of the purchase, redemption or retirement
of any shares of its stock, or other securities or evidence of its indebtedness
or make any distribution regarding its stock, either directly or indirectly.

 

5.8                              Salaries. [INTENTIONALLY OMITTED].

 

5.9                              Books and Records; Collateral Examination; Inspection and Appraisals.

 

(a)                                 Books and
Records; Inspection. Company shall keep complete and accurate books and
records with respect to the Collateral and Company’s business and financial
condition and any other matters that Wells Fargo may reasonably request, in
accordance with GAAP. Company shall permit any employee, attorney, accountant
or other agent of Wells Fargo to audit, review, make extracts from and copy any
of its books and records at any time during ordinary business hours, and to
discuss Company’s affairs with any of its Directors, Officers, employees,
Owners or agents.

 

(b)                               Authorization
to Company’s Agents to Make Disclosures to Wells Fargo. Company
authorizes all accountants and other Persons acting as its agent to disclose
and deliver to Wells Fargo’s employees, accountants, attorneys and other
Persons acting as its agent, at Company’s expense, all financial information,
books and records, work papers, management reports and other information in
their possession regarding Company.

 

19

 

(c)                                 Collateral
Exams and Inspections. Company shall permit Wells Fargo’s
employees, accountants, attorneys or other Persons acting as its agent, to
examine and inspect any Collateral or any other property of Company at any time
during ordinary business hours.

 

(d)                                Collateral
Appraisals. Wells Fargo may also obtain, from time to time, at
Company’s expense, an appraisal of Company’s Collateral, by an appraiser
acceptable to Wells Fargo in its sole discretion.

 

5.10                        Account Verification; Payment of Permitted Liens.

 

(a)                                  Account
Verification. Wells Fargo or its agents may (i) contact
account debtors and other obligors at any time to verify Company’s Accounts;
and (ii) require Company to send requests for verification of Accounts or
send notices of assignment of Accounts to account debtors and other obligors.

 

(b)                                Covenant to Pay
Permitted Liens. Company shall pay when due, subject to applicable
cure periods, each account payable due to any Person holding a Permitted Lien
(as a result of such payable) on any Collateral.

 

5.11                        Compliance with Laws.

 

(a)                                  General
Compliance with Applicable Law; Use of Collateral. Company shall
(i) comply, and cause each Subsidiary to comply, with the requirements of
applicable laws and regulations, the non-compliance with which would have a
Material Adverse Effect on its business or its financial condition and (ii) use
and keep the Collateral, and require that others use and keep the Collateral,
only for lawful purposes, without violation of any federal, state or local law,
statute or ordinance.

 

(b)                                 Compliance with
Federal Regulatory Laws. Company shall (i) prohibit, and cause
each Subsidiary to prohibit, any Person that is an Owner or Officer from being
listed on the Specially Designated Nationals and Blocked Person List or other
similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the
Department of the Treasury or included in any Executive Orders, (ii) not
permit the proceeds of the Line of Credit or any other financial accommodation
extended by Wells Fargo to be used in any way that violates any foreign asset
control regulations of OFAC or other applicable law, (iii) comply, and
cause each Subsidiary to comply, with all applicable Bank Secrecy Act laws and
regulations, as amended from time to time, and (iv) otherwise comply with
the USA Patriot Act and Wells Fargo’s related policies and procedures.

 

(c)                                Compliance with
Environmental Laws. Company shall (i) comply, and cause each
Subsidiary to comply, with the requirements of applicable Environmental Laws
and obtain and comply with all permits, licenses and similar approvals required
by them, and (ii) not generate, use, transport, treat, store or dispose of
any Hazardous Substances in such a manner as to create any material liability
or obligation under the common law of any jurisdiction or any Environmental
Law.

 

5.12                       Payment of Taxes and Other Claims. Company shall pay or
discharge, when due, and cause each Subsidiary to pay or discharge, when due, (a) all
taxes, assessments and

 

20

 

governmental
charges levied or imposed upon it or upon its income or profits, upon any
properties belonging to it (including the Collateral) or upon or against the
creation, perfection or continuance of the Security Interest, prior to the date
on which penalties attach, (b) all federal, state and local taxes required
to be withheld by it, and (c) all lawful claims for labor, materials and
supplies which, if unpaid, might by law become a Lien upon any properties of
Company, although Company shall not be required to pay any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which proper
reserves have been made.

 

5.13                        Maintenance of Collateral and Properties.

 

(a)                                  Company shall
keep and maintain the Collateral and all of its other properties necessary or
useful in its business in good condition, repair and working order (normal wear
and tear excepted) and will from time to time replace or repair any worn,
defective or broken parts, although Company may discontinue the operation and
maintenance of any properties if Company believes that such discontinuance is
desirable to the conduct of its business and not disadvantageous in any
material respect to Wells Fargo. Company shall take all commercially reasonable
steps necessary to protect and maintain its Intellectual Property Rights.

 

(b)                               Company shall
defend the Collateral against all Liens, claims and demands of all third Persons
claiming any interest in the Collateral, other than Permitted Liens. Company
shall keep all Collateral free and clear of all Liens except Permitted Liens.
Company shall take all commercially reasonable steps necessary to prosecute any
Person Infringing its Intellectual Property Rights and to defend itself against
any Person accusing it of Infringing any Person’s Intellectual Property Rights.

 

5.14                       Insurance. Company shall at all times maintain insurance with
insurers acceptable to Wells Fargo, in such amounts and on such terms
(including deductibles) as Wells Fargo in its sole discretion may require and
including, as applicable and without limitation, business interruption
insurance (including force majeure coverage), hazard coverage on an “all risks”
basis for all tangible Collateral, and theft and physical damage coverage for
Collateral consisting of motor vehicles. All insurance policies must contain an
appropriate lender’s interest endorsement or clause, and name Wells Fargo as an
additional insured.

 

5.15                      Preservation of Existence. Company shall preserve and
maintain its existence and all of its rights, privileges and franchises
necessary or desirable in the normal conduct of its business and shall conduct
its business in an orderly, efficient and regular manner.

 

5.16                      Delivery of Instruments, etc. Upon request by Wells Fargo,
Company shall promptly deliver to Wells Fargo in pledge all instruments,
documents and chattel paper in excess of $50,000 individually and $75,000 in
the aggregate and constituting Collateral, endorsed or assigned by Company.

 

5.17                      Sale or Transfer of Assets; Suspension of Business Operations. Company shall
not sell, lease, assign, transfer or otherwise dispose of (a) the stock of
any Subsidiary, (b) all or a substantial part of its assets, or (c) any
Collateral or any interest in Collateral (whether in one transaction or in a
series of transactions) to any other Person other than the sale of

 

21

 

Inventory in the ordinary course of business, the disposition of
Collateral no longer useful in its business, and other Collateral having a fair
market value not in excess of $100,000 in the aggregate for each fiscal year
and shall not liquidate, dissolve or suspend business operations. Company shall
not transfer any part of its ownership interest in any Intellectual Property
Rights and shall not permit its rights as licensee of Licensed Intellectual
Property to lapse, except that Company may transfer such rights or permit them
to lapse if it has reasonably determined that such Intellectual Property Rights
are no longer useful in its business. If Company transfers any Intellectual
Property Rights for value, Company shall pay the Proceeds to Wells Fargo for
application to the Indebtedness. Company shall not license any other Person to
use any of Company’s Intellectual Property Rights, except that Company may
grant licenses in the ordinary course of its business in connection with sales
of Inventory or the provision of services to its customers.

 

5.18                       Consolidation and Merger; Asset Acquisitions. Company shall
not consolidate with or merge into any other entity, or permit any other entity
to merge into it, or acquire (in a transaction analogous in purpose or effect
to a consolidation or merger) all or substantially all of the assets of any
other entity.

 

5.19                       Sale and Leaseback. Company shall not enter into
any arrangement, directly or indirectly, with any other Person pursuant to
which Company shall sell or transfer any real or personal property, whether
owned now or acquired in the future, and then rent or lease all or part of such
property or any other property which Company intends to use for substantially
the same purpose or purposes as the property being sold or transferred.

 

5.20                       Restrictions on Nature of Business. Company will not engage in
any line of business materially different from that presently engaged in by
Company, and will not purchase, lease or otherwise acquire assets not related
to its business.

 

5.21                       Accounting. Company will not adopt any material change in
accounting principles except as required by GAAP, consistently applied. Company
will not change its fiscal year.

 

5.22                       Discounts, etc. During a Default Period and after notice from
Wells Fargo, (i) Company will not grant any discount, credit or allowance
to any customer of Company or accept any return of goods sold, and (ii) Company
will not modify, amend, subordinate, cancel or terminate any Account.

 

5.23                      Pension Plans. Except as disclosed to Wells Fargo in a
Record prior to the date of this Agreement, neither Company nor any ERISA
Affiliate will (a) adopt, create, assume or become party to any Pension
Plan, (b) become obligated to contribute to any Multiemployer Plan, (c) incur
any obligation to provide post-retirement medical or insurance benefits with
respect to employees or former employees (other than benefits required by law)
or (d) amend any Plan in a manner that would materially increase its
funding obligations.

 

5.24                       Place of Business; Name. Company will not transfer
its chief executive office or principal place of business, or move, relocate,
close or sell any business Premises without providing 30 days advance written
notice to Wells Fargo. Company will not permit any tangible

 

22

 

Collateral
or any records relating to the Collateral to be located in any state or area in
which, in the event of such location, a financing statement covering such
Collateral would be required to be, but has not in fact been, filed in order to
perfect the Security Interest. Company will not change its name or jurisdiction
of organization.

 

5.25                       Constituent Documents. Company will not amend its
Constituent Documents in any manner that is materially adverse to Wells Fargo
(as determined by Wells Fargo in Wells Fargo’s reasonable discretion). No later
than 10 days after any change to Company’s Constituent Documents, Company shall
(i) notify Wells Fargo in writing of such change, and (ii) provide
copies of such changes to Wells Fargo.

 

5.26                        Performance
by Wells Fargo. If Company fails to perform or observe any of its obligations
under this Agreement at any time, Wells Fargo may, but need not, perform or
observe them on behalf of Company and may, but need not, take any other actions
which Wells Fargo may reasonably deem necessary to cure or correct this
failure; and Company shall pay Wells Fargo upon demand the amount of all costs
and expenses (including reasonable attorneys’ fees and legal expense) incurred
by Wells Fargo in performing these obligations, together with interest on these
amounts at the Default Rate.

 

5.27                       Wells Fargo
Appointed as Company’s Attorney in Fact. To facilitate Wells Fargo’s
performance or observance of Company’s obligations under this Agreement,
Company hereby irrevocably appoints Wells Fargo and Wells Fargo’s agents, as
Company’s attorney in fact (which appointment is coupled with an interest) with
the right (but not the duty) to create, prepare, complete, execute, deliver,
endorse or file on behalf of Company any instruments, documents, assignments,
security agreements, financing statements, applications for insurance and any
other agreements or any Record required to be obtained, executed, delivered or
endorsed by Company in accordance with the terms of this Agreement.

 

6.                                      EVENTS OF DEFAULT AND REMEDIES

 

6.1                               Events of Default. An  “Event of Default” means any
of the following:

 

(a)                                 Company fails
to pay any the amount of any Indebtedness on the date that it becomes due and
payable;

 

(b)                                Company fails
to observe or perform any covenant or agreement of Company set forth in this
Agreement, or in any of the Loan Documents, or in any other document or
agreement described in or related to this Agreement or to any Indebtedness, or
any covenant in Section 5.2 becomes inapplicable due to the lapse
of time, and Company and Wells Fargo fail to come to an agreement, acceptable
to Wells Fargo in its sole discretion, to amend the covenant to apply to future
periods;

 

(c)                                 An Overadvance
arises as the result of any reduction in the Borrowing Base, or arises in any
manner or on terms not otherwise approved of in advance by Wells Fargo in a
Record that it has Authenticated;

 

23

 

(d)                                An event of
default or termination event (however defined) occurs under any swap,
derivative, foreign exchange, hedge or any similar transaction or arrangement
entered into between Company and Wells Fargo;

 

(e)                                 A Change of
Control or Material Adverse Effect shall occur;

 

(f)                                   Company or any
Guarantor becomes insolvent or admits in a Record an inability to pay debts as
they mature, or Company or any Guarantor makes an assignment for the benefit of
creditors; or Company or any Guarantor applies for or consents to the
appointment of any receiver, trustee, or similar officer for the benefit of
Company or any Guarantor, or for any of their properties; or any receiver,
trustee or similar officer is appointed without the application or consent of
Company or such Guarantor; or any judgment, writ, warrant of attachment or
execution or similar process is issued or levied against a substantial part of
the property of Company or any Guarantor;

 

(g)                                Company or any
Guarantor files a petition under any chapter of the United States Bankruptcy
Code or under the laws of any other jurisdiction naming Company or such
Guarantor as debtor; or any such petition is instituted against Company or any
such Guarantor; or Company or any Guarantor institutes (by petition,
application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, debt arrangement, dissolution, liquidation or similar
proceeding under the laws of any jurisdiction; or any such proceeding is
instituted (by petition, application or otherwise) against Company or any such
Guarantor;

 

(h)                                Any
representation or warranty made by Company in this Agreement or by any
Guarantor in any Guaranty, or by Company (or any of its Officers) or any
Guarantor in any agreement, certificate, instrument or financial statement or
other statement delivered to Wells Fargo in connection with this Agreement or
pursuant to such Guaranty is untrue or misleading in any material respect when
delivered to Wells Fargo;

 

(i)                                    A final,
non-appealable arbitration award, judgment, or decree or order for the payment
of money in an amount in excess of $50,000 which is not insured or subject to
indemnity, is entered against Company which is not immediately stayed or
appealed;

 

(j)                                    Company is in
default with respect to any bond, debenture, note or other evidence of material
indebtedness issued by Company that is held by any third Person other than
Wells Fargo, or under any instrument under which any such evidence of
indebtedness has been issued or by which it is governed, or under any material
lease or other contract, and the applicable grace period, if any, has expired,
regardless of whether such default has been waived by the holder of such
indebtedness;

 

(k)                                 Company
liquidates, dissolves, terminates or suspends its business operations or
otherwise fails to operate its business in the ordinary course, or merges with
another Person; or sells or attempts to sell all or substantially all of its
assets;

 

(l)                                    Company fails
to pay any indebtedness or obligation owed to Wells Fargo which is unrelated to
the Line of Credit or this Agreement as it becomes due and payable;

 

24

 

(m)                              Any Guarantor
repudiates or purports to revoke the Guarantor’s Guaranty, or fails to perform
any obligation under such Guaranty, or any individual Guarantor dies or becomes
incapacitated, or any other Guarantor ceases to exist for any reason;

 

(n)                                Company engages
in any act prohibited by any Subordination Agreement, or makes any payment on
Subordinated Indebtedness (as defined in the Subordination Agreement) that the
Subordinated Creditor was not contractually entitled to receive;

 

(o)                                Any event or
circumstance occurs that Wells Fargo in good faith believes may impair the
prospect of payment of all or part of the Indebtedness, or Company’s ability to
perform any of its material obligations under any of the Loan Documents, or any
other document or agreement described in or related to this Agreement, or there
occurs any material adverse change in the business or financial condition of
Company;

 

(p)                                (i) Company hires
an Officer or appoints a Director who has been convicted of any felony offense
under state or federal law, or (ii) any Director, Officer, or Designated
Person is indicted for a felony offence under state or federal law if, with
respect to this clause (ii), (x) such indictment has not been dismissed within
15 days of the indictment of such Director, Officer, or Designated Person, or (y) such
Director, Officer, or Designated Person has not been relieved of his or her
duties as a Director, Officer, or Designated Officer, as applicable, within 15
days of such indictment;

 

(q)                                Any Reportable
Event, which Wells Fargo in good faith believes to constitute sufficient
grounds for termination of any Pension Plan or for the appointment of a trustee
to administer any Pension Plan, has occurred and is continuing 30 days after
Company gives Wells Fargo a Record notifying it of the Reportable Event; or a
trustee is appointed by an appropriate court to administer any Pension Plan; or
the Pension Benefit Guaranty Corporation institutes proceedings to terminate or
appoint a trustee to administer any Pension Plan; or Company or any ERISA
Affiliate files for a distress termination of any Pension Plan under Title IV
of ERISA; or Company or any ERISA Affiliate fails to make any quarterly Pension
Plan contribution required under Section 412 (m) of the IRC, which
Wells Fargo in good faith believes may, either by itself or in combination with
other failures, result in the imposition of a Lien on Company’s assets in favor
of the Pension Plan; or any withdrawal, partial withdrawal, reorganization or
other event occurs with respect to a Multiemployer Plan which could reasonably
be expected to result in a material liability by Company to the Multiemployer
Plan under Title IV of ERISA; or

 

(r)                                   Any “Event of
Default” occurs under any of the Domestic Loan Documents.

 

6.2                               Rights and Remedies. During any Default Period,
Wells Fargo may in its discretion exercise any or all of the following rights
and remedies:

 

(a)                                  Wells Fargo may
terminate the Line of Credit and decline to make Advances, and terminate any
services extended to Company under the Master Agreement for Treasury Management
Services;

 

25

 

(b)                                Wells Fargo may
declare the Indebtedness to be immediately due and payable and accelerate
payment of the Revolving Notes, and all Indebtedness shall immediately become
due and payable, without presentment, notice of dishonor, protest or further
notice of any kind, all of which Company hereby expressly waives;

 

(c)                                 Wells Fargo
may, without notice to Company, apply any money owing by Wells Fargo to Company
to payment of the Indebtedness;

 

(d)                                Wells Fargo may
exercise and enforce any rights and remedies available upon default to a
secured party under the UCC, including the right to take possession of
Collateral, proceeding with or without judicial process (without a prior
hearing or notice of hearing, which Company hereby expressly waives) and sell,
lease or otherwise dispose of Collateral for cash or on credit (with or without
giving warranties as to condition, fitness, merchantability or title to
Collateral, and in the event of a credit sale, Indebtedness shall be reduced
only to the extent that payments are actually received), and Company will upon
Wells Fargo’s demand assemble the Collateral and make it available to Wells
Fargo at any place designated by Wells Fargo which is reasonably convenient to
both parties;

 

(e)                                 Wells Fargo may
exercise and enforce its rights and remedies under any of the Loan Documents
and any other document or agreement described in or related to this Agreement;

 

(f)                                   Wells Fargo may
for any reason apply for the appointment of a receiver of the Collateral, to
which appointment Company hereby consents; and

 

(g)                                Wells Fargo may
exercise any other rights and remedies available to it by law or agreement.

 

6.3                              Immediate Default and Acceleration. Following the occurrence of
an Event of Default described in Section 6.1(f) or (g),
the Line of Credit shall immediately terminate and all of Company’s
Indebtedness shall immediately become due and payable without presentment,
demand, protest or notice of any kind.

 

7.                                      MISCELLANEOUS

 

7.1                               No Waiver; Cumulative Remedies. No delay or any single or partial
exercise by Wells Fargo of any right, power or remedy under the Loan Documents,
or under any other document or agreement described in or related to this
Agreement, shall constitute a waiver of any other right, power or remedy under
the Loan Documents or granted by Company to Wells Fargo under other agreements
or documents that are unrelated to the Loan Documents. No notice to or demand
on Company in any circumstance shall entitle Company to any additional notice
or demand in any other circumstances. The remedies provided in the Loan
Documents or in any other document or agreement described in or related to this
Agreement are cumulative and not exclusive of any remedies provided by law.
Wells Fargo may comply with applicable law in connection with a disposition of
Collateral, and such compliance will not be considered to adversely affect the
commercial reasonableness of any sale of the Collateral.

 

26

 

7.2                             Amendment; Consents and Waivers; Authentication. No amendment or
modification of any Loan Documents, or any other document or agreement
described in or related to this Agreement, or consent to or waiver of any Event
of Default, or consent to or waiver of the application of any covenant or
representation set forth in any of the Loan Documents, or any other document or
agreement described in or related to this Agreement, or any release of Wells
Fargo’s Security Interest in any Collateral, shall be effective unless it has
been agreed to by Wells Fargo and memorialized in a Record that: (a) specifically
states that it is intended to amend or modify specific Loan Documents, or any
other document or agreement described in or related to this Agreement, or waive
any Event of Default or the application of any covenant or representation of
any terms of specific Loan Documents, or any other document or agreement
described in or related to this Agreement, or is intended to release Wells
Fargo’s Security Interest in specific Collateral; and (b) is Authenticated
by the signature of an authorized employee of both parties, or by an authorized
employee of Wells Fargo with respect to a consent or waiver. The terms of an
amendment, consent or waiver memorialized in any Record shall be effective only
to the extent, and in the specific instance, and for the limited purpose to
which Wells Fargo has agreed.

 

7.3                             Execution in Counterparts; Delivery of Counterparts. This Agreement
and all other Loan Documents, or any other document or agreement described in
or related to this Agreement, and any amendment or modification to them may be
Authenticated by the parties in any number of counterparts, each of which, once
authenticated and delivered in accordance with the terms of this Section 7.3,  will be deemed an
original, and all such counterparts, taken together, shall constitute one and
the same instrument. Delivery by fax or by encrypted e-mail or e-mail file
attachment of any counterpart to any Loan Document Authenticated by an
authorized signature will be deemed the equivalent of the delivery of the
original Authenticated instrument. Company shall send the original
Authenticated counterpart to Wells Fargo by first class U.S. mail or by
overnight courier, but Company’s failure to deliver a Record in this form shall
not affect the validity, enforceability, and binding effect of this Agreement
or the other Loan Documents, or any other document or agreement described in or
related to this Agreement.

 

7.4                              Notices, Requests, and Communications; Confidentiality. Except as
otherwise expressly provided in this Agreement:

 

(a)                                 Delivery of
Notices, Requests and Communications. Any notice, request,
demand, or other communication by either party that is required under the Loan
Documents, or any other document or agreement described in or related to this Agreement,
to be in the form of a Record (but excluding any Record containing information
Company must report to Wells Fargo under Section 5.1) may be
delivered (i) in person, (ii) by first class U.S. mail, (iii) by
overnight courier of national reputation, or (iv) by fax, or the Record
may be sent as an Electronic Record and delivered (v) by an encrypted
e-mail, or (vi) through Wells Fargo’s Commercial Electronic Office®
(“CEO”) portal or other secure electronic channel to which the parties have
agreed.

 

(b)                                Addresses for
Delivery. Delivery of any Record under this Section 7.4
shall be made to the appropriate address set forth on the last page of
this Agreement (which either party may modify by a Record sent to the other
party), or through Wells Fargo’s CEO portal or other secure electronic channel
to which the parties have agreed.

 

27

 

(c)                                Date of Receipt. Each Record
sent pursuant to the terms of this Section 7.4 will be deemed to
have been received on (i) the date of delivery if delivered in person, (ii) the
date deposited in the mail if sent by mail, (iii) the date delivered to
the courier if sent by overnight courier, (iv) the date of transmission if
sent by fax, or (v) the date of transmission, if sent as an Electronic
Record by electronic mail or through Wells Fargo’s CEO portal or similar secure
electronic channel to which the parties have agreed; except that any
request for an Advance or any other notice, request, demand or other
communication from Company required under Section 1, and any
request for an accounting under Section 9-210 of the UCC,
will not be deemed to have been received until actual receipt by Wells Fargo on
a Business Day by an authorized employee of Wells Fargo.

 

(d)                                Confidentiality
of Unencrypted E-mail. Company acknowledges that if it sends or
receives an Electronic Record to or from Wells Fargo without encryption by
e-mail or as an e-mail file attachment, there is a risk that the Electronic
Record may be received by unauthorized Persons, and that by so doing it will be
deemed to have accepted this risk and the consequences of any such unauthorized
disclosure.

 

7.5                              Company Information Reporting; Confidentiality. Except as
otherwise expressly provided in this Agreement:

 

(a)                                 Delivery of
Company Information Records. Any information that
Company is required to deliver under Section 5.1 in the form of a
Record may be delivered to Wells Fargo (i) in person, or by (ii) first
class U.S. mail, (iii) overnight courier of national reputation, or (iv) fax,
or the Record may be sent as an Electronic Record (v) by encrypted e-mail,
or (vi) through the file upload service of Wells Fargo’s CEO portal or
other secure electronic channel to which the parties have agreed.

 

(b)                                Addresses for
Delivery. Delivery of any Record to Wells Fargo under this Section 7.5
shall be made to the appropriate address set forth on the last page of
this Agreement (which Wells Fargo may modify by a Record sent to Company), or
through Wells Fargo’s CEO portal or other secure electronic channel to which
the parties have agreed.

 

(c)                                 Date of Receipt. Each Record
sent pursuant to this Section will be deemed to have been received on (i) the
date of delivery to an authorized employee of Wells Fargo, if delivered in
person, or by U.S. mail, overnight courier, fax, or e-mail; or (ii) the
date of transmission, if sent as an Electronic Record through Wells Fargo’s CEO
portal or similar secure electronic channel to which the parties have agreed.

 

(d)                                Authentication
of Company Information Records. Company shall Authenticate
any Record delivered (i) in person, or by U.S. mail, overnight courier, or
fax, by the signature of the Officer or employee of Company who prepared the
Record; (ii) as an Electronic Record sent via encrypted e-mail, by the
signature of the Officer or employee of Company who prepared the Record by any
file format signature that is acceptable to Wells Fargo, or by a separate
certification signed and sent by fax; or (iii) as an Electronic Record via
the file upload service of Wells Fargo’s CEO portal or similar secure
electronic channel to which the parties have agreed, through such credentialing
process as Wells Fargo and Company may agree to under the CEO agreement.

 

28

 

(e)                                 Certification
of Company Information Records. Any Record (including any
Electronic Record) Authenticated and delivered to Wells Fargo under this Section 7.5  will be deemed
to have been certified as materially true, correct, and complete by Company and
each Officer or employee of Company who prepared and Authenticated the Record
on behalf of Company, and may be legally relied upon by Wells Fargo without
regard to method of delivery or transmission.

 

(f)                                   Confidentiality
of Company Information Records Sent by Unencrypted E-mail. Company
acknowledges that if it sends an Electronic Record to Wells Fargo without
encryption by e-mail or as an e-mail file attachment, there is a risk that the
Electronic Record may be received by unauthorized Persons, and that by so doing
it will be deemed to have accepted this risk and the consequences of any such
unauthorized disclosure. Company acknowledges that it may deliver Electronic
Records containing Company information to Wells Fargo by e-mail pursuant to any
encryption tool acceptable to Wells Fargo and Company, or through Wells Fargo’s
CEO portal file upload service without risk of unauthorized disclosure.

 

7.6                              Further Documents. Company will from time to time execute,
deliver, endorse and authorize the filing of any instruments, documents,
conveyances, assignments, security agreements, financing statements, control
agreements and other agreements that Wells Fargo may reasonably request in
order to secure, protect, perfect or enforce the Security Interest or Wells
Fargo’s rights under the Loan Documents, or any other document or agreement
described in or related to this Agreement (but any failure to request or assure
that Company executes, delivers, endorses or authorizes the filing of any such
item shall not affect or impair the validity, sufficiency or enforceability of
the Loan Documents, or any other document or agreement described in or related
to this Agreement, and the Security Interest, regardless of whether any such
item was or was not executed, delivered or endorsed in a similar context or on
a prior occasion).

 

7.7                              Costs and Expenses. Company shall pay on demand
all costs and expenses, including reasonable attorneys’ fees, incurred by Wells
Fargo in connection with the Indebtedness, this Agreement, the Loan Documents,
or any other document or agreement described in or related to this Agreement,
and the transactions contemplated by this Agreement, including all such costs,
expenses and fees incurred in connection with the negotiation, preparation,
execution, delivery, amendment, administration, performance, collection and
enforcement of the Indebtedness and all such documents and agreements and the
creation, perfection, protection, satisfaction, foreclosure or enforcement of
the Security Interest.

 

7.8                              Indemnity. In addition to its obligation to pay Wells Fargo’s
expenses under the terms of this Agreement, Company shall indemnify, defend and
hold harmless Wells Fargo, its parent Wells Fargo &  Company, and
any of its affiliates and successors, and all of their present and future
Officers, Directors, employees, attorneys and agents (each an “Indemnitee”) from
and against any of the following (collectively, “Indemnified Liabilities”):

 

(a)                                 Any and all
transfer taxes, documentary taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of the Loan Documents, or any
other document or agreement described in or related to this Agreement or the
making of the Advances;

 

29

 

(b)                               Any claims,
loss or damage to which any Indemnitee may be subjected if any representation
or warranty contained in Exhibit D proves to be incorrect in any
respect or as a result of any violation of the covenants contained in Section 5.11; and

 

(c)                                Any and all
other liabilities, losses, damages, penalties, judgments, suits, claims, costs
and expenses of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel) in connection with this Agreement and any other
investigative, administrative or judicial proceedings, whether or not such
Indemnitee shall be designated a party to such proceedings, which may be
imposed on, incurred by or asserted against any such Indemnitee, in any manner
related to or arising out of or in connection with the making of the Advances
and the Loan Documents, or any other document or agreement described in or
related to this Agreement, or the use or intended use of the proceeds of the
Advances, with the exception of any Indemnified Liability caused by the gross negligence
or willful misconduct of an Indemnitee.

 

If
any investigative, judicial or administrative proceeding described in this Section is
brought against any Indemnitee, upon the Indemnitee’s request, Company, or
counsel designated by Company and satisfactory to the Indemnitee, will resist
and defend the action, suit or proceeding to the extent and in the manner
directed by the Indemnitee, at Company’s sole cost and expense. Each Indemnitee
will use its best efforts to cooperate in the defense of any such action, suit
or proceeding. If this agreement to indemnify is held to be unenforceable
because it violates any law or public policy, Company shall nevertheless make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities to the extent permissible under applicable law.
Company’s obligations under this Section shall survive the termination of
this Agreement and the discharge of Company’s other obligations under this
Agreement.

 

7.9                             Retention of Company’s Records. Wells Fargo shall have no
obligation to maintain Electronic Records or retain any documents, schedules,
invoices, agings, or other Records delivered to Wells Fargo by Company in
connection with the Loan Documents, or any other document or agreement
described in or related to this Agreement for more than 30 days after receipt
by Wells Fargo. If there is a special need to retain specific Records, Company
must notify Wells Fargo of its need to retain or return such Records with
particularity, which notice must be delivered to Wells Fargo in accordance with
the terms of this Agreement at the time of the initial delivery of the Record
to Wells Fargo.

 

7.10                      Binding Effect; Assignment; Complete Agreement. The Loan
Documents, or any other document or agreement described in or related to this
Agreement, shall be binding upon and inure to the benefit of Company and Wells
Fargo and their respective successors and assigns, except that Company shall
not have the right to assign its rights under this Agreement or any interest in
this Agreement without Wells Fargo’s prior consent, which must be confirmed in
a Record Authenticated by Wells Fargo. To the extent permitted by law, Company
waives and will not assert against any assignee any claims, defenses or
set-offs which Company could assert against Wells Fargo. This Agreement shall
also bind all Persons who become a party to this Agreement as a borrower. This
Agreement, together with the Loan Documents, or any other document or agreement
described in or related to this Agreement, comprises the complete and
integrated agreement of the parties on the subject matter of this Agreement and
supersedes all prior agreements, whether oral or evidenced in a Record. To the
extent that any provision of this

 

30

 

Agreement contradicts other provisions of the Loan Documents other than
this Agreement, or any other document or agreement described in or related to
this Agreement, this Agreement shall control.

 

7.11                     Sharing of Information. Wells Fargo may share any
Confidential Information that it may have regarding Company and its Affiliates
with its accountants, lawyers, and other advisors, with Ex-Im Bank, and with
each business unit and line of business within Wells Fargo and each direct and
indirect subsidiary of Wells Fargo &  Company; provided that Wells
Fargo shall advise such accountants, lawyers, other advisors, business units,
line of business, and subsidiaries of the confidential nature of such
Confidential Information and that all such Confidential Information is subject
to the terms of this Agreement (including this Section 7.11).

 

7.12                      Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining terms of this Agreement.

 

7.13                     Headings. Section and subsection headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

 

7.14                      Governing Law; Jurisdiction; Venue. The Loan Documents (other
than real estate related documents, if any) shall be governed by and construed
in accordance with the substantive laws (other than conflict laws) of the State
of California. The parties to this Agreement (a) consent to the personal
jurisdiction of the state and federal courts located in the State of California
in connection with any controversy related to this Agreement; (b) waive
any argument that venue in any such forum is not convenient; (c) agree
that any litigation initiated by Wells Fargo or Company in connection with this
Agreement or the other Loan Documents may be venued in either the state or
federal courts located in the City of Los Angeles, County of Los Angeles, State
of California; and (d) agree that a final judgment in any such suit,
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.

 

7.15                      Incorporation of Borrower Agreement by Reference. This Agreement shall constitute the “Loan Agreement”
under the Borrower Agreement, and the Line of Credit shall constitute the “Loan
Facility” under the Borrower Agreement. The terms of the Borrower Agreement are
hereby incorporated herein by this reference. In the event that any provision
of this Agreement conflicts with or is inconsistent with any provision of the
Borrower Agreement, the provision that is more burdensome or restrictive as to
Company shall control.

 

[signatures on the following page]

 

31

 

COMPANY AND WELLS FARGO have executed this Agreement
through their authorized officers as of the date set forth above.

 

 

	
  WELLS
  FARGO BANK, 

  	
  CAPSTONE
  TURBINE CORPORATION 

  
	
  NATIONAL
  ASSOCIATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  John Curry

  	
   

  	
  By:

  	
  /s/
  Darren Jamison

  
	
  Name:

  	
  John
  Curry

  	
   

  	
  Name:

  	
  Darren
  Jamison

  
	
  Its:

  	
  Vice
  President

  	
   

  	
  Its:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
  Wells
  Fargo Bank, National Association

  	
  Capstone
  Turbine Corporation

  
	
  245 S. Los Robles Avenue, Suite 700

  	
  21211 Nordhoff
  Street

  
	
  Pasadena, CA 91101 

  	
  Chatsworth, California 91311 

  
	
  Fax: 626.844.9063 

  	
  Fax: 818.734.5380 

  
	
  Attention: Capstone
  Turbine Account Officer

  	
  Attention:

  
	
  email:  curry.john@wellsfargo.com

  	
  e-mail:

  
	
   

  	
  Federal Employer
  Identification No.

  
	
   

  	
   

  
	
   

  	
  Organizational
  Identification No.

  

 

S-1

 

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

 

DEFINITIONS

 

“Account
Funds” is defined in Section 1.4(a).

 

“Accounts”
shall have the meaning given it under the UCC.

 

“Advance”
and “Advances” means an advance or advances under the Line of Credit.

 

“Affiliate”
or “Affiliates” means Capstone Turbine International, Inc. and any other
Person controlled by, controlling or under common control with Company,
including any Subsidiary of Company. For purposes of this definition,
“control,” when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.

 

“Agreement”
means this Credit and Security Agreement.

 

“Authenticated”
means (a) to have signed; or (b) to have executed or to have
otherwise adopted a symbol, or have encrypted or similarly processed a Record
in whole or in part, with the present intent of the authenticating Person to
identify the Person and adopt or accept a Record.

 

“Book
Net Worth” means the aggregate of the common and preferred shareholder’s equity
in Company, determined in accordance with GAAP, and calculated without regard
to (a) any change in the valuation of goodwill made in accordance with
FASB Accounting Standard 142, and (b) any non-cash effects of accounting
for stock based compensation in accordance with FASB pronouncement SFAS 123(r).

 

“Borrower
Agreement” means the Borrower Agreement, dated on or about the date hereof,
made by Company in favor of Ex-Im Bank and Wells Fargo, as the same may
hereafter be amended, modified, supplemented or restated from time to time.

 

“Borrowing
Base” is defined in Section 1.2(a).

 

“Borrowing
Base Reserve” means, as of any date of determination, an amount or a percent of
a specified category or item that Wells Fargo establishes in its sole
discretion from time to time to reduce availability under the Borrowing Base (a) to
reflect events, conditions, contingencies or risks which affect the assets,
business or prospects of Company, or the Collateral or its value, or the
enforceability, perfection or priority of Wells Fargo’s Security Interest in
the Collateral, as the term “Collateral” is defined in this Agreement, or (b) to
reflect Wells Fargo’s judgment that any collateral report or financial
information relating to Company and furnished to Wells Fargo may be incomplete,
inaccurate or misleading in any material respect.

 

A-1

 

“Business
Day” means a day on which the Federal Reserve Bank of New York is open for
business and, if such day relates to a LIBOR Advance, a day on which dealings
are carried on in the London interbank eurodollar market.

 

“Buyer”
shall have the meaning provided for such term in the Borrower Agreement.

 

“Capital Expenditures” means for a period, any expenditure of money
during such period for the lease, purchase or other acquisition of any capital
asset, or for the lease of any other asset whether payable currently or in the
future.

 

“Cash
Equivalents” means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
eurodollar certificates of deposit and time deposits, bankers’ acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies, the long-term
indebtedness of which institution at the time of acquisition is rated A- (or
better) by S&P or A3 (or better) by Moody’s, and which certificates of
deposit and time deposits are fully protected against currency fluctuations for
any such deposits with a term of more than ninety (90) days; (iii) shares
of money market, mutual or similar funds having assets in excess of
$100,000,000 and the investments of which are limited to (a) investment
grade securities (i.e., securities rated at least Baa by Moody’s or at least BBB by S&P) and
(b) commercial paper of United States and foreign banks and bank holding
companies and their subsidiaries and United States and foreign finance,
commercial industrial or utility companies which, at the time of acquisition,
are rated A-1 (or better) by S&P or P-1 (or better) by Moody’s (all such
institutions being, “Qualified Institutions”); and (iv) commercial paper
of Qualified Institutions; provided that the maturities of such Cash
Equivalents shall not exceed three hundred sixty-five (365) days from the date
of acquisition thereof.

 

“CEO”
is defined in Section 7.4(a).

 

“Change
of Control” means the occurrence of any of the following events:

 

(a)                                 Any Person or
“group” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) who does not have an ownership interest in
Company on the date of the initial Advance is or becomes the “beneficial owner”
(as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of
1934, except that any such Person, entity or group will be deemed to have
“beneficial ownership” of all securities that such Person, entity or group has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than twenty percent
(20%) of the voting power of all classes of ownership of Company;

 

(b)                                During any
consecutive two-year period, individuals who at the beginning of such period
constituted the board of Directors of Company (together with any new Directors
whose election to such board of Directors, or whose nomination for election by
the Owners of Company, was approved by a vote of two thirds of the Directors
then still in office who were either Directors at the beginning of such period
or whose election or nomination for election was

 

A-2

 

previously
so approved) cease for any reason to constitute a majority of the board of
Directors of Company then in office.

 

“Collateral”
means all of Company’s Accounts, chattel paper and electronic chattel paper,
deposit accounts, documents, Equipment, General Intangibles, goods,
instruments, Inventory, Investment Property, letter-of-credit rights, letters
of credit, all sums on deposit in any Collection Account, and any items in any
Lockbox; together with (a) all substitutions and replacements for and
products of such property; (b) in the case of all goods, all accessions; (c) all
accessories, attachments, parts, Equipment and repairs now or subsequently attached
or affixed to or used in connection with any goods; (d) all warehouse
receipts, bills of lading and other documents of title that cover such goods
now or in the future; (e) all collateral subject to the Lien of any of the
Security Documents; (f) any money, or other assets of Company that come
into the possession, custody, or control of Wells Fargo now or in the future; (g) Proceeds
of any of the above Collateral; (h) books and records of Company,
including all mail or e-mail addressed to Company; and (i) all of the
above Collateral, whether now owned or existing or acquired now or in the
future or in which Company has rights now or in the future.

 

“Collateral Pledge Agreement” means each Collateral Pledge Agreement
entered into between Company and Wells Fargo.

 

“Collection Account” means “Collection Account” as defined in the
Master Agreement for Treasury Management Services and related Lockbox and
Collection Account Service Description or Collection Account Service
Description, whichever is applicable..

 

“Compliance
Certificate” is defined in Section 5.1(a) and is in the form
of Exhibit E.

 

“Company”
is defined in the Recitals.

 

“Constituent
Documents” means with respect to any Person, as applicable, that Person’s certificate
of incorporation, articles of incorporation, by-laws, certificate of formation,
articles of organization, limited liability company agreement, management
agreement, operating agreement, shareholder agreement, partnership agreement or
similar document or agreement governing such Person’s existence, organization
or management or concerning disposition of ownership interests of such Person
or voting rights among such Person’s owners.

 

“Country Limitation Schedule” shall have the meaning provided for such
term in the Borrower Agreement.

 

“Debt” means of a Person as of a given date, all items of indebtedness
or liability which in accordance with GAAP would be included in determining
total liabilities as shown on the liabilities side of a balance sheet for such
Person and shall also include the aggregate payments required to be made by
such Person at any time under any lease that is considered a capitalized lease
under GAAP.

 

“Default
Period” is defined in Section 1.5(c).

 

“Default
Rate” is defined in Section 1.5(c).

 

A-3

 

“Designated
Person” means any of Darren R. Jamison or Edward I. Reich.

 

“Dilution”
means, as of any date of determination, a percentage, based upon the prior six (6) months,
which is the result of dividing (a) actual bad debt write-downs,
discounts, advertising allowances, credits, and any other items with respect to
the Accounts determined to be dilutive by Wells Fargo in its sole discretion
during this period, by (b) Company’s net sales during such period
(excluding extraordinary items) plus the amount of clause (a).

 

“Director” means a director if Company is a corporation, or a governor
or manager if Company is a limited liability company.

 

“Dollars”
or “$” shall mean the lawful currency of the United States.

 

“Domestic Facility Agreement” means the Credit and Security Agreement,
dated as of February 9, 2009, between Company and Wells Fargo.

 

“Domestic Loan Documents” means the “Loan Documents” as defined in the
Domestic Facility Agreement.

 

“Electronic Record” means a Record that is created, generated, sent,
communicated, received, or stored by electronic means, but does not
include any Record that is sent, communicated, or received by fax.

 

“Eligible
Accounts” means all unpaid Accounts of Company owing by account debtors located
outside of the United States of America arising from the sale or lease of goods
or the performance of services, net of any credits, but excluding any Accounts
having any of the following characteristics:

 

(a)                                  that does not
arise from the sale of Items in the ordinary course of business;

 

(b)                                 that is not
subject to a valid, perfected first priority Lien in favor of Wells Fargo;

 

(c)                                  as to which any
covenant, representation or warranty contained in the Loan Documents with
respect to such Account has been breached;

 

(d)                                that is not
owned by a Company or that is subject to any right, claim or interest of
another Person other than the Lien in favor of Wells Fargo;

 

(e)                                  with respect to
which an invoice has not been sent;

 

(f)                                    that arises
from the sale of defense articles or defense services;

 

(g)                                 that is due and
payable from a Buyer located in a country with which Ex-Im Bank is prohibited
from doing business as designated in the Country Limitation Schedule;

 

(h)                                 that does not
comply with the requirements of the Country Limitation Schedule;

 

(i)                                     that is not
paid within ninety (90) days from the invoice date; provided that, in the case
of [Banking Production Centre], Accounts owed by [Banking Production Centre]
that are

 

A-4

 

not paid within one hundred
fifty (150) days from the invoice date shall not be Eligible Accounts;

 

(j)                                     that arises
from a sale of goods to or performance of services for an employee of Company,
a stockholder of Company, a subsidiary of Company, a Person with a controlling
interest in Company or a Person which shares common controlling ownership with
Company;

 

(k)                                  that is backed
by a letter of credit unless the Items covered by the subject letter of credit
have been shipped;

 

(1)                                  that Wells
Fargo or Ex-Im Bank, in its reasonable judgment, deems uncollectible for any
reason;

 

(m)                               that is due and
payable in a currency other than Dollars, except as may be approved in writing
by Ex-Im Bank;

 

(n)                                 that is due and
payable from a military Buyer, except as may be approved in writing by Ex-Im
Bank;

 

(o)                                 that does not
comply with the terms of sale set forth in Section 7 of the Loan
Authorization Notice;

 

(p)                                 that is due and
payable from a Buyer who (A) applies for, suffers, or consents to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property or
calls a meeting of its creditors, (B) admits in writing its inability, or
is generally unable, to pay its debts as they become due or ceases operations
of its present business, (C) makes a general assignment for the benefit of
creditors, (D) commences a voluntary case under any state or federal
bankruptcy laws (as now or hereafter in effect), (E) is adjudicated as
bankrupt or insolvent, (F) files a petition seeking to take advantage of
any other law providing for the relief of debtors, (G) acquiesces to, or
fails to have dismissed, any petition which is filed against it in any
involuntary case under such bankruptcy laws, or (H) takes any action for
the purpose of effecting any of the foregoing;

 

(q)                                 that arises
from a bill-and-hold, guaranteed sale, sale-and-return, sale on approval,
consignment or any other repurchase or return basis or is evidenced by chattel
paper;

 

(r)                                    for which the
Items giving rise to such Account have not been shipped and delivered and
accepted by the Buyer or the services giving rise to such Account have not been
performed by Company and accepted by the Buyer or the Account otherwise does
not represent a final sale;

 

(s)                                  that portion of
the Account that is subject to any offset, deduction, defense, dispute, or
counterclaim or where the Buyer is also a creditor or supplier of Company or
that portion of the Account that is contingent in any respect or for any reason
unless Wells Fargo has received a satisfactory non-offset letter;

 

(t)                                    for which
Company has made any agreement with the Buyer for any deduction therefrom,
except for discounts or allowances made in the ordinary course of business for
prompt

 

A-5

 

payment, all of which
discounts or allowances are reflected in the calculation of the face value of
each respective invoice related thereto;

 

(u)                                 for which any
of the Items giving rise to such Account have been returned, rejected or
repossessed;

 

(v)                                 to the extent
it includes any finance charges, service charges, taxes, discounts, credits,
allowances and Retainages;

 

(w)                               that arises
from the sale of Items containing less than fifty one percent (51%) U.S. Content;

 

(x)                                   that arises
from the sale of Items containing any Foreign Content not incorporated into
such Items in the United States;

 

(y)                                 that arises
from the sale of any Items to be used in the construction, alteration,
operation or maintenance of nuclear power, enrichment, reprocessing, research
or heavy water production facilities;

 

(z)                                   that does not
meet the requirements set forth in the definition of “Eligible-Related Accounts
Receivable” in the Borrower Agreement;

 

(aa)                            that is not
subject to a duly perfected security interest in Wells Fargo’s favor or which
are subject to any Lien in favor of any Person other than Wells Fargo;

 

(bb)                          that has been
restructured, extended, amended or modified;

 

(cc)                            that is owing
by an account debtor, regardless of whether otherwise eligible, to the extent
that the balance of such Accounts exceeds fifteen (15%) of the aggregate amount
of all Eligible Accounts;

 

(dd)                          that is owed by
an account debtor, regardless of whether otherwise eligible, if twenty-five
percent (25%) or more of the total amount due under Accounts from such debtor
is ineligible under clauses (i), (s), or (bb) above;

 

(ee)                            that is
included as an “Eligible Account” under the Domestic Facility Agreement;

 

(ff)                                Accounts
arising from the sale of warranty or service contracts, maintenance service,
warranty service or replacement parts;

 

(gg)                          that portion of
Accounts constituting (i) Proceeds of copyrightable material unless such
copyrightable material shall have been registered with the United States
Copyright Office, or (ii) Proceeds of patentable inventions unless such
patentable inventions have been registered with the United States Patent and
Trademark Office; and

 

(hh)                          that are
otherwise deemed ineligible for any reason by Wells Fargo or Ex-Im Bank in their
sole discretion.

 

A-6

 

For sake of clarity, any Accounts that are deemed to be “Eligible
Accounts” under the Domestic Facility Agreement shall not be Eligible Accounts
under this Agreement, and any Eligible Accounts under this Agreement shall not
be deemed to be “Eligible Accounts” under the Domestic Facility Agreement.

 

“Eligible Inventory” means all export-related Inventory of Company,
valued at the lower of cost or market in accordance with GAAP; but excluding
Inventory having any of the following characteristics:

 

(a)                                  Inventory that
is: in-transit; located at any warehouse, job site or other premises not
approved by Wells Fargo in an Authenticated Record delivered to Company; not
subject to a perfected first priority Lien in Wells Fargo’s favor; covered by
any negotiable or non-negotiable warehouse receipt, bill of lading or other
document of title; on consignment from any consignor; or on consignment to any
consignee or subject to any bailment unless the consignee or bailee has
executed an agreement with Wells Fargo;

 

(b)                                 Supplies,
packaging, maintenance parts or sample Inventory, or customer supplied parts or
Inventory;

 

(c)                                  Work-in-process
Inventory;

 

(d)                                 Finished goods
Inventory;

 

(e)                                  Inventory that
is damaged, defective, obsolete, slow moving or not currently saleable in the
normal course of Company’s operations, or the amount of such Inventory that has
been reduced by shrinkage;

 

(f)                                    Inventory that
Company has returned, has attempted to return, is in the process of returning
or intends to return to the vendor of the Inventory;

 

(g)                                 Inventory that
is perishable or live;

 

(h)                                 Inventory
manufactured by Company pursuant to a license unless the applicable licensor
has agreed in a Record that has been Authenticated by licensor to permit Wells
Fargo to exercise its rights and remedies against such Inventory;

 

(i)                                     Inventory that
is subject to a Lien in favor of any Person other than Wells Fargo;

 

(j)                                     Inventory
stored at locations holding less than 10% of the aggregate value of Company’s
Inventory;

 

(k)                                  Inventory that
is deemed to be “Eligible Inventory” under the Domestic Facility Agreement;

 

(1)                                  Inventory
containing less than fifty-one percent (51%) U.S. Content;

 

A-7

 

(m)          Inventory containing
any Foreign Content not incorporated into such Inventory in the United States;

 

(n)           Inventory that was
previously exported;

 

(o)           Inventory that
consists of proprietary software;

 

(p)           Inventory consisting
of defense articles or goods; and

 

(q)           Inventory otherwise
deemed ineligible by Wells Fargo or Ex-Im Bank in their sole discretion.

 

For
sake of clarity, any Inventory that is deemed to be “Eligible Inventory” under
the Domestic Facility Agreement shall not be Eligible Inventory under this
Agreement, and any Eligible Inventory under this Agreement shall not be deemed
to be “Eligible Inventory” under the Domestic Facility Agreement.

 

“Environmental
Law” means any federal, state, local or other governmental statute, regulation,
law or ordinance dealing with the protection of human health and the
environment.

 

“Equipment”
shall have the meaning given it under the Uniform Commercial Code in effect in
the state whose laws govern this Agreement.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.

 

“ERISA
Affiliate” means any trade or business (whether or not incorporated) that is a
member of a group which includes Company and which is treated as a single
employer under Section 414 of the IRC.

 

“Event
of Default” is defined in Section 6.1.

 

“Ex-Im
Bank” means the Export-Import Bank of the United States, and its successors and
assigns.

 

“Ex-Im
Bank Guaranty” means that certain Master Guarantee Agreement between Wells
Fargo and the Export-Import Bank of the United States, as the same may
hereafter be amended, modified, supplemented or restated from time to time.

 

“Export
Order” means a written export order or contract for the purchase by the Buyer
from the Company of any of the Items.

 

“Floating
Rate” is defined in Section 1.5(a).

 

“Floating
Rate Advance” means an Advance bearing interest at the Floating Rate.

 

A-8

 

“Foreign
Content” means, with respect to any Item, all of the labor, materials and services
which are not of United States origin or manufacture, or which are not
incorporated into such Item in the United States.

 

“GAAP”
means generally accepted accounting principles, applied on a basis consistent
with the accounting practices applied in the financial statements described on Exhibit D.

 

“General
Intangibles” shall have the meaning given it under the UCC.

 

“Guarantor”
means Capstone Turbine International, Inc., and any other Person now or in
the future guaranteeing any Indebtedness through the issuance of a Guaranty.

 

“Guaranty”
means an unconditional continuing guaranty executed by a Guarantor in favor of
Wells Fargo (if more than one, the “Guaranties”).

 

“Hazardous
Substances” means pollutants, contaminants, hazardous substances, hazardous wastes,
petroleum and fractions thereof, and all other chemicals, wastes, substances
and materials listed in, regulated by or identified in any Environmental Law.

 

“Indebtedness”
is used in its most comprehensive sense and means any debts, obligations and liabilities
of Company to Wells Fargo, whether incurred in the past, present or future,
whether voluntary or involuntary, and however arising, and whether due or not
due, absolute or contingent, liquidated or unliquidated, determined or
undetermined, and including without limitation all obligations arising under
any swap, derivative, foreign exchange, hedge, deposit, treasury management or
similar transaction or arrangement however described or defined that Company
may enter into at any time with Wells Fargo or with Wells Fargo Merchant
Services, L.L.C., whether or not Company may be liable individually or jointly
with others, or whether recovery upon such Indebtedness may subsequently become
unenforceable.

 

“Indemnified
Liabilities” is defined in Section 7.8.

 

“Indemnitee”
is defined in Section 7.8.

 

“Infringement”
or “Infringing” when used with respect to Intellectual Property Rights means
any infringement or other violation of Intellectual Property Rights.

 

“Intellectual
Property Rights” means all actual or prospective rights arising in connection
with any intellectual property or other proprietary rights, including all
rights arising in connection with copyrights, patents, service marks, trade
dress, trade secrets, trademarks, trade names or mask works.

 

“Interest
Payment Date” is defined in Section 1.7(a).

 

“Interest
Period” means the period that commences on (and includes) the Business Day on
which either a LIBOR Advance is made or continued or on which a Floating Rate
Advance is converted to a LIBOR Advance, and ending on (but excluding) the
Business Day numerically corresponding to that date that falls the number of
months afterward as selected by Company

 

A-9

 

pursuant
to Section 1.3(c), during which period the
outstanding principal amount of the LIBOR Advance shall bear interest at the
LIBOR Advance Rate; provided, however, that:

 

(a)             If an Interest
Period would otherwise end on a day which is not a Business Day, then it shall
end on the next Business Day, unless that day is the first Business Day of a
month, in which case the Interest Period shall end on the last Business Day of
the preceding month;

 

(b)             No Interest Period
applicable to an Advance may end later than the Maturity Date; and

 

(c)             In no event shall
Company select Interest Periods with respect to LIBOR Advances which would
result in the payment of a LIBOR Advance breakage fee under this Agreement in
order to make required principal payments.

 

“Inventory”
shall have the meaning given it under the UCC.

 

“Investment
Property” shall have the meaning given it under the UCC.

 

“Items”
means the finished goods or services which are intended for export from the
United States, as specified in Section 4(A) of the Loan Authorization
Notice.

 

“Joint
Application” means the Joint Application for Working Capital Guarantee made by
Company and Wells Fargo to Ex-Im Bank in connection with this Agreement.

 

“LIBOR” means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/8th of one percent (1%)) determined pursuant to
the following formula:

 

	
  LIBOR =

  	
  Base LIBOR

  	
   

  
	
   

  	
  100% - LIBOR Reserve Percentage

  	
   

  

 

(a)           “Base LIBOR” means
the rate per annum for United States dollar deposits quoted by Wells Fargo as
the Inter-Bank Market Offered Rate, with the understanding that such rate is
quoted by Wells Fargo for the purpose of calculating effective rates of
interest for loans making reference to it, on the first day of an Interest
Period for delivery of funds on that date for a period of time approximately
equal to the number of days in that Interest Period and in an amount
approximately equal to the principal amount to which that Interest Period
applies. Company understands and agrees that Wells Fargo may base its quotation
of the Inter-Bank Market Offered Rate upon such offers or other market
indicators of the Inter-Bank Market as Wells Fargo in its discretion deems
appropriate including the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.

 

(b)           “LIBOR Reserve
Percentage” means the reserve percentage prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities”
(as defined in Regulation D of the Federal Reserve Board, as amended), adjusted
by Wells Fargo for expected changes in such reserve percentage during the
applicable Interest Period.

 

A-10

 

“LIBOR
Advance” means an Advance bearing interest at the LIBOR Advance Rate. 

 

“LIBOR
Advance Rate” is defined in Section 1.5(a).

 

“Licensed
Intellectual Property” is defined in Exhibit D.

 

“Lien”
means any security interest, mortgage, deed of trust, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device,
including the interest of each lessor under any capitalized lease and the
interest of any bondsman under any payment or performance bond, in, of or on
any assets or properties of a Person, whether now owned or subsequently
acquired and whether arising by agreement or operation of law.

 

“Line
of Credit” is defined in the Recitals.

 

“Loan
Authorization Notice” means the Loan Authorization Notice executed and
delivered in connection with this Agreement.

 

“Loan
Documents” means this Agreement, the Revolving Notes, the Domestic Facility
Agreement, the Ex-Im Bank Guaranty, the Borrower Agreement, the Joint
Application, the Loan Authorization Notice, the Master Agreement for Treasury
Management Services, each Guaranty, each Subordination Agreement, each Patent
and Trademark Security Agreement, and the Security Documents, together with
every other agreement, note, document, contract or instrument to which Company
now or in the future may be a party and which may be required by Wells Fargo in
connection with, or as a condition to, the execution of this Agreement. Any
documents or other agreements entered into between Company and Wells Fargo that
relate to any swap, derivative, foreign exchange, hedge, or similar product or
transaction, or which are entered into with an operating division of Wells
Fargo other than Wells Fargo Business Credit, shall not be included in this
definition.

 

“Loan
Manager” means the treasury management service defined in the Master Agreement
for Treasury Management Services and related Loan Manager Service Description.

 

“Lockbox”
means “Lockbox” as defined in the Master Agreement for Treasury Management
Services and related Lockbox and Collection Account Service Description.

 

“Margin”
means a rate per annum, expressed as a percentage, as more fully described in Section 1.5(a).

 

“Master
Agreement for Treasury Management Services” means the Master Agreement for
Treasury Management Services, the related Acceptance of Services, and the
Service Description governing each treasury management service used by Company.

 

“Material
Adverse Effect” means any of the following:

 

(r)                                    A material
adverse effect on the business, operations, results of operations,  assets,
liabilities or financial condition of Company;

 

A-11

 

(s)             A material adverse
effect on the ability of Company to perform its obligations under the Loan
Documents, or any other document or agreement related to this Agreement;

 

(t)              A material
adverse effect on the ability of Wells Fargo to enforce the Indebtedness or to
realize the intended benefits of the Security Documents, including a material
adverse effect on the validity or enforceability of any Loan Document or of any
rights against any Guarantor, or on the status, existence, perfection, priority
(subject to Permitted Liens) or enforceability of any Lien securing payment or
performance of the Indebtedness; or

 

(u)             Any claim against
Company or threat of litigation which if determined adversely to Company would
cause Company to be liable to pay an amount exceeding $500,000 or would result
in the occurrence of an event described in clauses (a), (b) and (c) above.

 

“Maturity
Date” is defined in Section 1.1(b).

 

“Maximum
Line Amount” is defined in Section 1.1(a).

 

“Multiemployer
Plan” means a multiemployer plan (as defined in Section 4001(a)(3) of
ERISA) to which Company or any ERISA Affiliate contributes or is obligated to
contribute.

 

“Net
Income” means fiscal year-to-date after-tax net income from continuing
operations, including extraordinary losses but excluding extraordinary gains,
all as determined in accordance with GAAP.

 

“OFAC”
is defined in Section 5.11(b).

 

“Officer”
means with respect to Company, an officer if Company is a corporation, a
manager if Company is a limited liability company, or a partner if Company is a
partnership.

 

“Operating
Account” is defined in Section 1.3(a), and maintained in accordance with the
terms of Wells Fargo’s Commercial Account Agreement in effect for demand
deposit accounts.

 

“Overadvance”
means the amount, if any, by which the unpaid principal amount of the Revolving
Note is in excess of the then-existing Borrowing Base.

 

“Owned
Intellectual Property” is defined in Exhibit D.

 

“Owner”
means with respect to Company, each Person having legal or beneficial title to
an ownership interest in Company or a right to acquire such an interest.

 

“Patent
and Trademark Security Agreement” means each Patent and Trademark Security
Agreement entered into between Company and Wells Fargo.

 

“Pension
Plan” means a pension plan (as defined in Section 3(2) of ERISA)
maintained for employees of Company or any ERISA Affiliate and covered by Title
IV of ERISA.

 

“Permitted
Lien” and “Permitted Liens” are defined in Section 5.3(a)

 

A-12

 

“Person”
means any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision of a
governmental entity.

 

“Plan”
means an employee benefit plan (as defined in Section 3(3) of ERISA)
maintained for employees of Company or any ERISA Affiliate.

 

“Premises”
is defined in Section 2.4(a).

 

“Prime
Rate” means at any time the rate of interest most recently announced by Wells
Fargo at its principal office as its Prime Rate, with the understanding that
the Prime Rate is one of Wells Fargo’s base rates, and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference to it, and is evidenced by its recording in such internal publication
or publications as Wells Fargo may designate. Each change in the rate of
interest shall become effective on the date each Prime Rate change is announced
by Wells Fargo.

 

“Proceeds”
shall have the meaning given it under the UCC.

 

“Record”
means information that is inscribed on a tangible medium or that is stored in
an electronic or other medium and is retrievable in perceivable form, and
includes all information that is required to be reported by Company to Wells
Fargo pursuant to Section 5.1.

 

“Reportable
Event” means a reportable event (as defined in Section 4043 of ERISA),
other than an event for which the 30-day notice requirement under ERISA has
been waived in regulations issued by the Pension Benefit Guaranty Corporation.

 

“Retainage”
shall mean that portion of the purchase price of an Export Order that a Buyer
is not obligated to pay until the end of a specified period of time following
the satisfactory performance under such Export Order.

 

“Revolving
Notes” is defined in Section 1.1(d).

 

“Security
Documents” means this Agreement, the Collateral Pledge Agreement, the Patent
and Trademark Security Agreement(s), the Domestic Facility Agreement, the
Borrower Agreement, and any other document delivered to Wells Fargo from time
to time to secure the Indebtedness.

 

“Security
Interest” is defined in Section 2.1.

 

“Subordinated
Creditor(s)” means any Person now or in the future subordinating indebtedness
of Company held by that Person to the payment of the Indebtedness.

 

“Subordinated
Debt” means any Debt, contingent equity, earnout or other obligations of
Company that is unsecured and has subordination terms, covenants, pricing and
other terms which have been approved in an Authenticated Record from Wells
Fargo and with respect to which the holder thereof has executed and delivered
to Wells Fargo a Subordination Agreement.

 

A-13

 

“Subordination
Agreement” means any agreement between Wells Fargo and the holder(s) of
Subordinated Debt pursuant to which such Subordinated Debt is subordinated in
right of payment, liens, security and remedies to all of the Indebtedness and
all of Wells Fargo’s rights, liens and remedies, in form and substance
satisfactory to Wells Fargo (if more than one, the “Subordination Agreements”).

 

“Subsidiary”
means any Person of which more than 50% of the outstanding ownership interests
having general voting power under ordinary circumstances to elect a majority of
the board of directors or the equivalent of such Person, irrespective of
whether or not at the time ownership interests of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency, is at the time directly or indirectly owned by Company, by Company
and one or more other Subsidiaries, or by one or more other Subsidiaries.

 

“Termination
Date” is defined in Section 1.1(b).

 

“UCC”
means the Uniform Commercial Code in effect in the state designated in this
Agreement as the state whose laws shall govern this Agreement, or in any other
state whose laws are held to govern this Agreement or any portion of this
Agreement.

 

“Unused
Amount” is defined in Section 1.6(b).

 

“U.S.
Content” means, with respect to any Item, all of the labor, materials and
services which are of United States origin or manufacture, and which are
incorporated into such Item in the United States.

 

“Wells
Fargo” means Wells Fargo Bank, National Association in its broadest and most
comprehensive sense as a legal entity, and is not limited in its meaning to the
Wells Fargo Business Credit operating division, or to any other operating
division of Wells Fargo.

 

A-14

 

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

PREMISES 

 

The
Premises referred to in the Credit and Security Agreement have an address of:

 

21211
Nordhoff Street, Chatsworth, CA 91311

16640
Stagg Street, Van Nuys, CA 91406

10101-C
Avenue D, Brooklyn, NY 11236

495
Boulevard #3, Elmwood Park, NJ 07407

 

B-1

 

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

 

Conditions Precedent

 

Wells
Fargo’s obligation to make an initial Advance shall be subject to the condition
that Wells Fargo shall have received the following, executed and in form and
content satisfactory to Wells Fargo. The following descriptions are limited
descriptions for reference purposes only and should not be construed as
limiting in any way the subject matter that Wells Fargo requires each document
to address.

 

A.                                   Loan Documents to be Executed by Company:

 

(1)                                 The Revolving
Notes.

 

(2)                                 The Credit and
Security Agreement.

 

(3)                                 The Master
Agreement for Treasury Management Services, the Acceptance of Services, and the
related Service Description for each deposit or treasury management related
product or service that Company will subscribe to, including without limitation
the Loan Manager Service Description and the Lockbox and Collection Account
Service Description.

 

(4)                                 The Collateral
Pledge Agreement, pursuant to which Company grants Wells Fargo a security
interest in the shares of stock more fully described in the Collateral Pledge
Agreement, together with the stock certificates and stock powers, as security
for the full and prompt payment of Company’s Indebtedness..

 

(5)                                 The Patent and Trademark
Security Agreement.

 

(6)                                 The Domestic
Facility Agreement and all related documents, agreements, and instruments.

 

(7)                                 The Borrower
Agreement and other related documents, instruments and certificates required by
Ex-Im Bank.

 

B.                                   Loan Documents to be Executed by Third Parties:

 

(1)                                 Certificates of
Insurance required under this Agreement, with all hazard insurance containing a
lender’s interest endorsement in Wells Fargo’s favor and with all liability
insurance naming Wells Fargo as additional insured.

 

(2)                                 Any documents,
agreements or instruments requiring the execution by a third party (including,
but not limited to, the Export-Import Bank of the United States).

 

C.                                    Documents Related to the Premises

 

(1)                                 Any leases
pursuant to which Company is leasing the Premises from a lessor.

 

C-1

 

D.                                   Federal Tax, State Tax, Judgment, UCC and Intellectual Property Lien
Searches

 

(1)                                 Current
searches of Company in appropriate filing offices showing that (i) no
Liens have been filed and remain in effect against Company and Collateral
except Permitted Liens or Liens held by Persons who have agreed in an
Authenticated Record that upon receipt of proceeds of the initial Advances,
they will satisfy, release or terminate such Liens in a manner satisfactory to
Wells Fargo, and (ii) Wells Fargo has filed all UCC financing statements
necessary to perfect the Security Interest, to the extent the Security Interest
is capable of being perfected by filing.

 

(2)                                 Current
searches of Third Persons in appropriate filing offices with respect to any of
the Collateral that is in the possession of a Person other than Company that is
held for resale, showing that (i) UCC financing statements sufficient to
protect Company’s and Wells Fargo’s interests in such Collateral have been
filed, and (ii) no other secured party has filed a financing statement
against such Person and covering property similar to Company’s, other than
Company, or if there exists any such secured party, evidence that each such
party has received notice from Company and Wells Fargo sufficient to protect
Company’s and Wells Fargo’s interests in Company’s goods from any claim by such
secured party.

 

E.                                      Constituent Documents:

 

(1)                                 The Certificate
of Authority of Company, which shall include as part of the Certificate or as
exhibits to the Certificate, (i) the Resolution of Company’s Directors
and, if required, Owners, authorizing the execution, delivery and performance
of those Loan Documents and other documents or agreements described in or
related to this Agreement to which Company is a party, (ii) an Incumbency
Certificate containing the signatures of Company’s Officers or agents
authorized to execute and deliver those instruments, agreements and
certificates referenced in (i) above, as well as Advance requests, on
Company’s behalf, (iii) Company’s Constituent Documents, (iv) a
current Certificate of Good Standing or Certificate of Status issued by the
secretary of state or other appropriate authority for Company’s state of organization,
certifying that Company is in good standing and in compliance with all
applicable organizational requirements of the state of organization, and
(v) a Secretary’s Certificate of Company’s secretary or assistant
secretary certifying that the Certificate of Authority of Company is true,
correct and complete.

 

(2)                                 The Certificate
of Authority of Corporate Guarantor, which shall include as part of the
Certificate or as exhibits to the Certificate, (i) the Resolution of
Guarantor’s Directors and, if required, Owners, authorizing the execution,
delivery and performance of the Guaranty of Corporation, (ii) an
Incumbency Certificate containing the signatures of Guarantor’s Officers or
agents authorized to execute and deliver the Guaranty by Corporation on
Guarantor’s behalf, (iii) Guarantor’s Constituent Documents, (iv) a
current Certificate of Good Standing or Certificate of Status issued by the
secretary of state or other appropriate authority for

 

C-2

 

Guarantor’s
state of organization, certifying that Guarantor is in good standing and in
compliance with all applicable organizational requirements of the state of
organization, and (v) a Secretary’s Certificate of Guarantor’s secretary
or assistant secretary certifying that the Certificate of Authority of
Corporate Guarantor and all attached exhibits are true, correct and complete.

 

(3)                                 Evidence that
Company is licensed or qualified to transact business in all jurisdictions
where the character of the property owned or leased or the nature of the
business transacted by it makes such licensing or qualification necessary.

 

(4)                                 An Officer’s
Certificate of an appropriate Officer of Company confirming, in his or her
capacity as an Officer, the representations and warranties set forth in this
Agreement.

 

(5)                                 A Customer
Identification Information Form and such other forms and verification as
Wells Fargo may need to comply with the U.S.A. Patriot Act.

 

F.                                     Miscellaneous Matters or Documents:

 

(1)                                 Final approval
of the Agreement by Ex-Im Bank.

 

(2)                                 Payment of fees
and reimbursable costs and expenses due under this Agreement through the date
of initial Advance, including all legal expenses incurred through the date of
the closing of this Agreement.

 

(3)                                 Evidence that
after making the initial Advance, establishing all reserves under the Borrowing
Base, paying all trade payables older than sixty (60) days from invoice date,
and paying all book overdrafts and closing costs and fees (including any fees
deemed paid), the combined availability under the Line of Credit under this
Agreement and the “Line of Credit” under the Domestic Facility Agreement is not
less than $750,000.

 

(4)                                 Any documents
or other agreements entered into by Company and Wells Fargo that relate to any
swap, derivative, foreign exchange, hedge, deposit, treasury management or
similar product or transaction extended to Company by Wells Fargo not already
provided pursuant to the requirements of (A) through (E) above.

 

(5)                                 Such other
documents as Wells Fargo in its sole discretion may require.

 

C-3

 

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

 

REPRESENTATIONS AND WARRANTIES

 

Company
represents and warrants to Wells Fargo as follows:

 

(a)                                 Existence and
Power; Name; Chief Executive Office; Inventory and Equipment Locations; Federal
Employer Identification Number and Organizational Identification Number. Company is a
corporation, organized, validly existing and in good standing under the laws of
the State of Delaware and is licensed or qualified to transact business in all
jurisdictions where the character of the property owned or leased or the nature
of the business transacted by it makes such licensing or qualification
necessary, except where failure to do so could not reasonably be expected to
have a Material Adverse Effect. Company has all  requisite power and
authority to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under, those Loan  Documents and
any other documents or agreements that it has entered into with Wells Fargo
related to this Agreement. During the last five (5) years of its  existence,
Company has done business solely under the names set forth below in addition to
its correct legal name. Company’s chief executive office and principal  place of
business is located at the address set forth below, and all of Company’s
records relating to its business or the Collateral are kept at that location.
All Inventory and Equipment is located at that location or at one of the other
locations  set forth below. Company’s name, Federal Employer Identification Number
and Organization Identification Number are correctly set forth at the end of
the Agreement next to Company’s signature.

 

Trade Names

 

Capstone

Capstone
Microturbine

 

Chief Executive Office / Principal Place of Business

 

21211
Nordhoff Street, Chatsworth, California 91311

 

Other Inventory and Equipment Locations

 

Aard
Stamping, 42075 Avenida Alvarado, Temecula, CA 92590

 

Accurate
Electronics, 20700 Lassen Street, Chatsworth, CA 91311

 

Alliance
Metal Products, 20620 Superior Street, Unit #4, Chatsworth, CA 91311

 

D-1

 

AMANET,
16525 Sherman Way#C-11, Van Nuys, CA 91406

 

American
Aikoku Alpha, Inc., 520 Lake Cook Rd, Ste. 180, Deerfield, IL 60015

 

Asigma,
2930 San Luis Rey Road, Oceanside CA 92054

 

Auer
Precision Co., 1050 W. Birchwood, Mesa, AZ 85210

 

Axiomtek,
18138 Rowland, City of Industry, CA 91748

 

Bebco Industries, 4725 Lawndale, Lamarque, TX
77568

 

Cliffdale
Mfg. Company, 20409 Prairie Street, Chatsworth, CA 91311

 

Delafield,
152 Flower Avenue, Duarte, CA 91010

 

Dry
Coolers, 3232 Adventure Ln., Oxford, MI 48371

 

Electro
Controls, Inc., 1625 Ferguson Ct., Sidney, OH 45365

 

Elgiloy
Specialty Metals, 1565 Fleetwood Drive, Elgin, IL 68123

 

EM
Corporation, 1 John Downey Drive, New Britain, CT 06051

 

Enercon
Engineering, Inc., No. 1 Altofrer Lane, East Peoria, IL 61611

 

Erico, Inc.,
34600 Solon Road, Solon, OH 44139

 

Frost
Magnatics, Inc., 49643 Hartwell Road, Oakhurst, CA 93644

 

Fuses
Unlimited, 9248 Eton Avenue, Chatsworth, CA 91311

 

Ovison
Manufacturing, 750 W. Southern Ave., Tempe, AZ 85282

 

Extrude
Hone, 8800 Somerset Blvd., Paramount, CA 90723

 

J&F
Machine, Inc., 10563 Progress Way, Cypress, CA 90630

 

Karel
Manufacturing, 280 Campillo Ave, Suite G, Calexico, CA 92231

 

Mc
Donald Packaging, 2601 Garnsey Street, Santa Ana, CA 92707-3338

 

Pacific
Transformer, 5399 E. Hunter Avenue, Anaheim, CA 92807

 

Parker
Energy Systems, 95 Edgewood Avenue, New Brittain, CT 06051

 

D-2

 

Polymax,
1224 W 130th St., Gardena, CA 90247

 

Precision
Resources, 13916 Cordary Avenue, Hawthorne, CA 90250

 

RND
Enterprises, 42122 8th Street East, Lancaster, CA 93535

 

Robinson
FIN Machines, 13670 Highway 68 South, Kenton, OH 43326

 

Schneider’s
Mfg. Co, Inc., 11122 Pernrose Street, Sun Valley, CA 91352

 

Semikron,
11 Executive Drive, Hudson, NH 03051

 

Sermatech
Int’l, 7615 Fairview, Houston, TX 77041

 

Sermatech
Int’l Tech, 24 Landry Street, Biddeford, ME 04005

 

T.H.T
Machining, Inc., 3617 West Cambridge Suite 1B, Phoenix, AZ 85009

 

Arbo
Box, Inc., 12468 Putnam Street, Whittier, CA 90602

 

Trend Technologies LLC, 4626 Eucalyptus Ave.,
Chino, CA 91710

 

Triumph
Components — Arizonia, 6733 Westhills Road, Chandler AZ 85226

 

Turbocam,
5 Faraday Drive, Dover NH 03820

 

CKE/Verdesis,
1000 Lucernce Road, Lucernemines, PA 15754

 

Victron,
6600 Stevenson Blvd., Fremont, CA 94538

 

Weldmac,
1533 North Johnson, El Cajon, CA 92020

 

Windings, Inc.,
208 North Valley Street, P.O. Box 566, New Ulm, MN 56073-0566

 

F
Building, 2-26-5 Nishihara, Shibuya-ku, Tokyo, JAPAN

 

1Room 1105,
No.317, Xian Xia Road, Far East Int’l Plaza, Changning District Shanghai, China
200051

 

Via
Fatebenefratelli 15, Milano, Italy 20121

 

Suite 4,
Floor 6, City Gate East, Toll House Hill, Nottingham, England NG1 5SF

 

Campos Eliseos 154-101, 11580 Polanco, Mexico

 

D-3

 

(b)                                Organization. The
Organizational Chart below shows the ownership structure of all Subsidiaries
of Company.

 

	
  Holder

  	
   

  	
  Type of

  Rights/Stock

  	
   

  	
  No. of Shares

  (after exercise of

  all rights to

  acquire shares)

  	
   

  	
  % Interest (on a

  fully diluted

  basis)

  	
   

  
	
  Capstone Turbine Corporation

  	
   

  	
  Common

  	
   

  	
  1000

  	
   

  	
  100

  	
  %

  

 

(c)                                 Authorization
of Borrowing; No Conflict as to Law or Agreements. The execution,
delivery and performance by Company of the Loan Documents and any other
documents or agreements described in or related to this Agreement, and all
borrowing under the Line of Credit have been authorized and do not
(i) require the consent or approval of Company’s Owners; (ii) require
the authorization, consent or approval by, or registration, declaration or
filing with (except for the filing of any financing statements or similar
documents), or notice to, any governmental agency or instrumentality, whether
domestic or foreign, or any other Person, except to the extent obtained,
accomplished or given prior to the date of this Agreement; (iii) violate
any provision of any law, rule or regulation (including Regulation X of
the Board of Governors of the Federal Reserve System) or of any order, writ,
injunction or decree presently in effect having applicability to Company or of
Company’s Constituent Documents; (iv) result in a breach of or constitute a
default or event of default under any indenture or loan or credit agreement or
any other material agreement, lease or instrument to which Company is a party
or by which it or its properties may be bound or affected; or (v) result
in, or require, the creation or imposition of any Lien (other than the Security
Interest) upon or with respect to any of the properties now owned or
subsequently acquired by Company.

 

(d)                                Legal
Agreements. This Agreement, the other Loan Documents,
and any other document or agreement described in or related to this Agreement,
will constitute the legal, valid and binding obligations of Company,
enforceable against Company in accordance with their respective terms.

 

(e)                                 Subsidiaries. Except as
disclosed below, Company has no Subsidiaries.

 

Subsidiaries

 

Capstone
Turbine International, Inc., a Delaware
corporation

 

(f)                                   Financial
Condition; No Adverse Change. Company has furnished to
Wells Fargo its audited financial statements
for its fiscal year ended March 31, 2008, and unaudited financial statements
for the fiscal-year-to-date period ended September 30, 2008, and those
statements fairly present Company’s financial

 

D-4

 

condition
as of those dates and the results of Company’s operations and cash flows for
the periods then ended and were prepared in accordance with GAAP. Since the
date of the most recent financial statements, there has been no Material
Adverse Effect.

 

(g)                                Litigation. Except as
disclosed below, there are no actions, suits or proceedings pending or, to
Company’s knowledge, threatened against or affecting Company or any of its
Affiliates or the properties of Company or any of its Affiliates before any
court or governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to Company or any of its
Affiliates, would have a Material Adverse Effect on the financial condition,
properties or operations of Company or any of its Affiliates.

 

Litigation

 

In
December 2001, a purported stockholder class action lawsuit was filed in
the United States District Court for the Southern District of New York (the
“District Court”) against the Company, two of its then officers, and the
underwriters of the Company’s initial public offering. The suit purports to be
a class action filed on behalf of purchasers of the Company’s common stock
during the period from June 28, 2000 to December 6, 2000. An amended
complaint was filed on  April 19, 2002. The Plaintiffs allege
that the underwriter defendants agreed to allocate stock in the Company’s
June 28, 2000 initial public offering and November 16, 2000 secondary
offering to certain investors in exchange for excessive and undisclosed
commissions and agreements by those investors to make additional purchases of
stock in the aftermarket at pre-determined prices. The Plaintiffs allege that
the prospectuses for these two public offerings were false and misleading in
violation of the securities laws because they did not disclose these
arrangements.

 

(h)                                Intellectual
Property Rights.

 

(i)                                    Owned
Intellectual Property. Set forth below is a
complete list of all patents, applications for patents, trademarks,
applications to register trademarks, service marks, applications to register
service marks, mask works, trade dress and copyrights for which Company is the
owner of record (the “Owned Intellectual Property”). Except as set forth below,
(A) Company owns the Owned Intellectual Property free and clear of all
restrictions (including covenants not to sue any Person), court orders,
injunctions, decrees, writs or Liens, whether by agreement memorialized in a
Record Authenticated by Company or otherwise, (B) no Person other than
Company owns or has been granted any right in the Owned Intellectual Property, (C) all
Owned Intellectual Property is valid, subsisting and enforceable, and
(D) Company has taken all commercially reasonable action necessary to
maintain and protect the Owned Intellectual Property.

 

D-5

 

(i)                                    Agreements with
Employees and Contractors. Company has entered into a legally
enforceable agreement with each Person that is an employee or subcontractor
obligating that Person to assign to Company, without additional compensation,
any Intellectual Property Rights created, discovered or invented by that Person
in the course of that Person’s employment or engagement with Company (except to
the extent prohibited by law), and further obligating that Person to cooperate
with Company, without additional compensation, to secure and enforce the
Intellectual Property Rights on behalf of Company, unless the job description
of the Person is such that it is not reasonably foreseeable that the employee
or subcontractor will create, discover, or invent Intellectual Property Rights.

 

(ii)                                 Intellectual
Property Rights Licensed from Others. Set forth below is a
complete list of all agreements under which Company has licensed Intellectual
Property Rights from another Person (“Licensed Intellectual Property”) other
than readily available, non-negotiated licenses of computer software and other
intellectual property used solely for performing accounting, word processing
and similar administrative tasks (“Off-the-shelf Software”) and a summary of
any ongoing payments Company is obligated to make with respect thereto. Except
as set forth below or in any other Record, copies of which have been given to
Wells Fargo, Company’s licenses to use the Licensed Intellectual Property are
free and clear of all restrictions, Liens, court orders, injunctions, decrees,
or writs, whether by agreed to in a Record Authenticated by Company or
otherwise. Except as disclosed below, Company is not contractually obligated to
make royalty payments of a material nature, or pay fees to any owner of,
licensor of, or other claimant to, any Licensed Intellectual Property Rights
(excluding Off-the-shelf Software”).

 

(iii)                              Other
Intellectual Property Needed for Business. Except for Off-the-shelf
Software and as disclosed below, the Owned Intellectual Property and the
Licensed Intellectual Property constitute all Intellectual Property Rights used
or necessary to conduct Company’s business as it is presently conducted or as
Company reasonably foresees conducting it.

 

(iv)                             Infringement. Except as
disclosed below, Company has no knowledge of, and has not received notice
either orally or in a Record alleging, any Infringement of another Person’s
Intellectual Property Rights (including any claim set forth in a Record that
Company must license or refrain from using the Intellectual Property Rights of
any Person) nor, to Company’s knowledge, is there any threatened claim or any
reasonable basis for any such claim.

 

D-6

 

PATENTS AND PATENT APPLICATIONS

 

1.                Capstone Issued U.S. Patents

 

	
  No

  	
   

  	
  Issue No.

  	
   

  	
  Description

  	
   

  	
  App. Ser. No.

  	
   

  	
  Filing Date

  	
   

  	
  Issue Date

  	
   

  
	
  1.

  	
   

  	
  D433,997

  	
   

  	
  Turbogenerator

  	
   

  	
  29/111,104

  	
   

  	
  9/20/99

  	
   

  	
  11/21/00

  	
   

  
	
  2.

  	
   

  	
  5,427,455

  	
   

  	
  Compliant Foil
  Hydrodynamic Fluid Film Radial Bearing

  	
   

  	
  229,205

  	
   

  	
  4/18/94

  	
   

  	
  6/27/95

  	
   

  
	
  3.

  	
   

  	
  5,497,615

  	
   

  	
  Gas Turbine Generator
  Set

  	
   

  	
  180,881

  	
   

  	
  3/21/94

  	
   

  	
  3/12/96

  	
   

  
	
  4.

  	
   

  	
  5,529,398

  	
   

  	
  Compliant Foil
  Hydrodynamic Fluid Film Thrust Bearing

  	
   

  	
  08/363,540

  	
   

  	
  12/23/94

  	
   

  	
  6/25/96

  	
   

  
	
  5.

  	
   

  	
  5,685,156

  	
   

  	
  Catalytic Combustion
  System

  	
   

  	
  650,625

  	
   

  	
  5/20/96

  	
   

  	
  11/11/97

  	
   

  
	
  6.

  	
   

  	
  5,697,848

  	
   

  	
  Compound Shaft with
  Flexible Disk Coupling

  	
   

  	
  440,541

  	
   

  	
  5/12/95

  	
   

  	
  12/16/97

  	
   

  
	
  7.

  	
   

  	
  5,752,380

  	
   

  	
  Liquid Fuel
  Pressurization and Control System

  	
   

  	
  730,941

  	
   

  	
  10/16/96

  	
   

  	
  5/19/98

  	
   

  
	
  8.

  	
   

  	
  5,791,868

  	
   

  	
  Thrust Load
  Compensating System for a Compliant Foil Hydrodynamic Fluid Film Thrust
  Bearing

  	
   

  	
  663,732

  	
   

  	
  6/14/96

  	
   

  	
  8/11/98

  	
   

  
	
  9.

  	
   

  	
  5,819,524

  	
   

  	
  Gaseous Fuel
  Compression and Control S&M

  	
   

  	
  730,945

  	
   

  	
  10/16/96

  	
   

  	
  10/13/98

  	
   

  
	
  10.

  	
   

  	
  5,827,040

  	
   

  	
  Hydrostatic
  Augmentation of a Compliant Foil Hydrodynamic Fluid Film Thrust Bearing

  	
   

  	
  662,250

  	
   

  	
  6/14/96

  	
   

  	
  10/27/98

  	
   

  
	
  11.

  	
   

  	
  5,850,732

  	
   

  	
  Low Emissions
  Combustion System for a Gas Turbine Engine

  	
   

  	
  855,210

  	
   

  	
  5/13/97

  	
   

  	
  12/22/98

  	
   

  
	
  12.

  	
   

  	
  5,850,733

  	
   

  	
  Gaseous Fuel
  Compression and Control S&M

  	
   

  	
  85,817

  	
   

  	
  5/27/98

  	
   

  	
  12/22/98

  	
   

  
	
  13.

  	
   

  	
  5,873,235

  	
   

  	
  Liquid Fuel
  Pressurization and Control Method

  	
   

  	
  990,467

  	
   

  	
  12/15/97

  	
   

  	
  2/23/99

  	
   

  
	
  14.

  	
   

  	
  5,894,720

  	
   

  	
  Low Emissions
  Combination System For A Gas Turbine Engine Employing Flame Stabilization
  Within The Injector Tube

  	
   

  	
  09/168,299

  	
   

  	
  10/7/98

  	
   

  	
  4/20/99

  	
   

  
	
  15.

  	
   

  	
  5,899,673

  	
   

  	
  Helical Flow
  Compressor/Turbine Permanent Magnet Motor/Generator

  	
   

  	
  08/730,946

  	
   

  	
  10/16/96

  	
   

  	
  5/4/99

  	
   

  
	
  16.

  	
   

  	
  5,903,116

  	
   

  	
  Turbogenerator/Motor
  Controller

  	
   

  	
  08/924,966

  	
   

  	
  9/8/97

  	
   

  	
  5/11/99

  	
   

  
	
  17.

  	
   

  	
  5,915,841

  See Re39190

  	
   

  	
  Compliant Foil Fluid
  Film Radial  Bearing

  	
   

  	
  09/002,690

  	
   

  	
  1/5/98

  	
   

  	
  6/29/99

  	
   

  
	
  18.

  	
   

  	
  5,918,985

  See Re38373

  	
   

  	
  Compliant Foil Fluid
  Thrust Film Bearing With a Tilting Pad Underspring

  	
   

  	
  08/933,695

  	
   

  	
  9/19/97

  	
   

  	
  7/6/99

  	
   

  
	
  19.

  	
   

  	
  5,964,663

  	
   

  	
  Double Diaphragm
  Compound Shaft

  	
   

  	
  08/934,430

  	
   

  	
  9/19/97

  	
   

  	
  10/12/99

  	
   

  
	
  20.

  	
   

  	
  5,966,926

  	
   

  	
  Liquid Fuel Injector
  Purge System

  	
   

  	
  08/864,279

  	
   

  	
  5/28/97

  	
   

  	
  10/19/99

  	
   

  
	
  21.

  	
   

  	
  6,016,658

  	
   

  	
  Low Emissions
  Combustion System

  	
   

  	
  09/182,966

  	
   

  	
  10/8/98

  	
   

  	
  1/25/00

  	
   

  
	
  22.

  	
   

  	
  6,020,713

  	
   

  	
  Turbogenerator/Motor
  Pulse Width Modulated Controller

  	
   

  	
  09/002,890

  	
   

  	
  1/5/98

  	
   

  	
  2/1/00

  	
   

  
	
  23.

  	
   

  	
  6,023,135

  	
   

  	
  Turbogenerator/Motor
  Control System

  	
   

  	
  09/080,892

  	
   

  	
  5/18/98

  	
   

  	
  2/8/00

  	
   

  
	
  24.

  	
   

  	
  6,031,294

  	
   

  	
  Turbogenerator/Motor
  Controller With Ancillary Energy Storage/Discharge

  	
   

  	
  09/003,078

  	
   

  	
  1/5/98

  	
   

  	
  2/29/00

  	
   

  
	
  25.

  	
   

  	
  6,037,687

  	
   

  	
  Double Diaphragm
  Compound Shaft

  	
   

  	
  09/224,208

  	
   

  	
  12/30/98

  	
   

  	
  3/14/00

  	
   

  
	
  26.

  	
   

  	
  6,049,195

  	
   

  	
  Split Generator Winding
  Inverter

  	
   

  	
  09/356,065

  	
   

  	
  7/19/99

  	
   

  	
  4/11/00

  	
   

  

 

D-7

 

	
  No

  	
   

  	
  Issue No.

  	
   

  	
  Description

  	
   

  	
  App. Ser. No.

  	
   

  	
  Filing Date

  	
   

  	
  Issue Date

  	
   

  
	
  27.

  	
   

  	
  6,062,016

  	
   

  	
  Gas Turbine Engine
  Fixed Speed Light-Off

  	
   

  	
  08/837,600

  	
   

  	
  4/21/97

  	
   

  	
  5/16/00

  	
   

  
	
  28.

  	
   

  	
  6,065,281

  	
   

  	
  Liquid Fuel Injector
  and Injector System

  	
   

  	
  09/357,523

  	
   

  	
  7/19/99

  	
   

  	
  5/23/00

  	
   

  
	
  29.

  	
   

  	
  6,070,404

  	
   

  	
  Gaseous Fuel
  Compression and Control
  Method

  	
   

  	
  09/086,615

  	
   

  	
  5/27/98

  	
   

  	
  7/6/00

  	
   

  
	
  30.

  	
   

  	
  6,082,112

  	
   

  	
  Liquid Fuel Injector

  	
   

  	
  09/357,519

  	
   

  	
  7/19/99

  	
   

  	
  7/4/00

  	
   

  
	
  31.

  	
   

  	
  6,093,975

  	
   

  	
  Turbogenerator/Motor
  Control

  	
   

  	
  09/181,388

  	
   

  	
  10/27/98

  	
   

  	
  7/25/00

  	
   

  
	
  32.

  	
   

  	
  6,094,799

  	
   

  	
  Method of Making Double Diaphragm Compound Shaft

  	
   

  	
  09/224,206

  	
   

  	
  12/30/98

  	
   

  	
  8/1/00

  	
   

  
	
  33.

  	
   

  	
  6,155,780

  	
   

  	
  Ceramic Radial Flow
  Turbine Heat Shield

  	
   

  	
  09/374,916

  	
   

  	
  8/13/99

  	
   

  	
  12/5/00

  	
   

  
	
  34.

  	
   

  	
  6,158,892

  	
   

  	
  Fluid Film Thrust
  Bearing Having Integral
  Compliant Foils

  	
   

  	
  09/383,067

  	
   

  	
  8/25/99

  	
   

  	
  12/12/00

  	
   

  
	
  35.

  	
   

  	
  6,169,334

  	
   

  	
  Command and Control
  S&M for Multiple
  Turbogenerators

  	
   

  	
  09/181,389

  	
   

  	
  10/27/98

  	
   

  	
  1/2/01

  	
   

  
	
  36.

  	
   

  	
  6,178,751

  	
   

  	
  Liquid Fuel Injector
  System

  	
   

  	
  09/356,479

  	
   

  	
  7/19/99

  	
   

  	
  1/30/01

  	
   

  
	
  37.

  	
   

  	
  6,190,048

  	
   

  	
  Compliant Foil Fluid
  Film Radial Bearing

  	
   

  	
  09/195,354

  	
   

  	
  11/18/98

  	
   

  	
  2/20/01

  	
   

  
	
  38.

  	
   

  	
  6,192,668

  	
   

  	
  M&A for Compressing
  Gaseous Fuel In
  a Turbine Engine

  	
   

  	
  09/420,494

  	
   

  	
  10/19/99

  	
   

  	
  2/27/01

  	
   

  
	
  39.

  	
   

  	
  6,194,794

  	
   

  	
  Integrated Reciprocating Engine Generator Set and Turbogenerator System and Method

  	
   

  	
  09/359,815

  	
   

  	
  7/23/99

  	
   

  	
  2/27/01

  	
   

  
	
  40.

  	
   

  	
  6,213,234

  	
   

  	
  Vehicle Powered by a
  Fuel Cell/Gas

  	
   

  	
  09/202,968

  	
   

  	
  —

  	
   

  	
  4/10/01

  	
   

  
	
  41.

  	
   

  	
  6,239,520

  	
   

  	
  Permanent Magnet Rotor
  Cooling S&M

  	
   

  	
  09/558,406

  	
   

  	
  4/24/00

  	
   

  	
  5/29/01

  	
   

  
	
  42.

  	
   

  	
  6,265,786

  	
   

  	
  Turbogenerator Power
  Control System

  	
   

  	
  09/181,213

  	
   

  	
  10/27/98

  	
   

  	
  7/24/01

  	
   

  
	
  43.

  	
   

  	
  6,274,945

  	
   

  	
  Combustion Control
  Method and System

  	
   

  	
  09/459,719

  	
   

  	
  12/13/99

  	
   

  	
  8/14/01

  	
   

  
	
  44.

  	
   

  	
  6,281,596

  	
   

  	
  Automatic
  Turbogenerator Restarting M&S

  	
   

  	
  09/444,487

  	
   

  	
  11/19/99

  	
   

  	
  8/28/01

  	
   

  
	
  45.

  	
   

  	
  6,281,601

  	
   

  	
  Turbogenerator Power
  Control S&M

  	
   

  	
  09/360,043

  	
   

  	
  7/23/99

  	
   

  	
  8/28/01

  	
   

  
	
  46.

  	
   

  	
  6,325,142

  	
   

  	
  Turbogenerator Power
  Control System

  	
   

  	
  09/316,896

  	
   

  	
  5/22/99

  	
   

  	
  12/4/01

  	
   

  
	
  47.

  	
   

  	
  6,361,271

  	
   

  	
  Crossing Spiral
  Compressor/Pump

  	
   

  	
  09/444,014

  	
   

  	
  11/19/99

  	
   

  	
  3/26/02

  	
   

  
	
  48.

  	
   

  	
  6,381,944

  	
   

  	
  M&A for Compressing
  Gaseous Fuel in
  a Turbine Engine

  	
   

  	
  09/772,537

  	
   

  	
  1/29/01

  	
   

  	
  5/7/02

  	
   

  
	
  49.

  	
   

  	
  6,405,522

  	
   

  	
  S&M for Modular
  Control of a Multi-Fuel
  Low Emissions Turbogenerator

  	
   

  	
  09/453,825

  	
   

  	
  12/1/99

  	
   

  	
  6/18/02

  	
   

  
	
  50.

  	
   

  	
  6,410,992

  	
   

  	
  S&M for Dual Mode
  Control of a Turbogenerator/Motor

  	
   

  	
  09/644,527

  	
   

  	
  8/23/00

  	
   

  	
  6/25/02

  	
   

  
	
  51.

  	
   

  	
  6,425,732

  	
   

  	
  Shrouded Rotary
  Compressor

  	
   

  	
  09/643,625

  	
   

  	
  8/22/00

  	
   

  	
  7/30/02

  	
   

  
	
  52.

  	
   

  	
  6,437,468

  	
   

  	
  Permanent Magnet Rotor
  Cooling System
  and Method

  	
   

  	
  09/829,778

  	
   

  	
  4/10/01

  	
   

  	
  8/20/02

  	
   

  
	
  53.

  	
   

  	
  6,438,937

  	
   

  	
  S&M for Modular
  Control of a Multi-Fuel
  Low Emissions 

  	
   

  	
  09/972,672

  	
   

  	
  10/5/01

  	
   

  	
  8/27/02

  	
   

  

 

D-8

 

	
  No

  	
   

  	
  Issue No.

  	
   

  	
  Description

  	
   

  	
  App. Ser. No.

  	
   

  	
  Filing Date

  	
   

  	
  Issue Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Turbogenerator

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  54.

  	
   

  	
  6,453,658

  	
   

  	
  Multi-Stage Multi-Plane
  Combustion System
  for a Gas Turbine Engine

  	
   

  	
  09/512,986

  	
   

  	
  2/24/00

  	
   

  	
  9/24/02

  	
   

  
	
  55.

  	
   

  	
  6,468,051

  	
   

  	
  Helical Flow Compressor/Turbine Permanent Magnet Motor/ Generator

  	
   

  	
  09/800,900

  	
   

  	
  3/7/01

  	
   

  	
  10/22/02

  	
   

  
	
  56.

  	
   

  	
  6,487,096

  	
   

  	
  Power Controller

  	
   

  	
  09/207,817

  	
   

  	
  12/8/98

  	
   

  	
  11/26/02

  	
   

  
	
  57.

  	
   

  	
  6,489,692

  	
   

  	
  Method and Apparatus for Controlling Rotation of A Magnetic Rotor

  	
   

  	
  09/459,426

  	
   

  	
  12/13/99

  	
   

  	
  12/3/02

  	
   

  
	
  58.

  	
   

  	
  6,495,929

  	
   

  	
  Turbogenerator Power
  Control System

  	
   

  	
  09/829,035

  	
   

  	
  4/9/01

  	
   

  	
  12/17/02

  	
   

  
	
  59.

  	
   

  	
  6,522,030

  	
   

  	
  Multiple Power Generator Connection Method and System

  	
   

  	
  09/624,315

  	
   

  	
  7/24/00

  	
   

  	
  2/18/03

  	
   

  
	
  60.

  	
   

  	
  6,539,720

  	
   

  	
  Generated System
  Bottoming Cycle

  	
   

  	
  09/985,789

  	
   

  	
  11/6/01

  	
   

  	
  4/1/03

  	
   

  
	
  61.

  	
   

  	
  6,552,440

  	
   

  	
  Automatic
  Turbogenerator Restarting Method &
  System

  	
   

  	
  09/900,246

  	
   

  	
  7/6/01

  	
   

  	
  4/22/03

  	
   

  
	
  62.

  	
   

  	
  6,612,112

  	
   

  	
  Transient Turbine
  Exhaust Temperature Control For A Turbogenerator

  	
   

  	
  10/012,770

  	
   

  	
  11/5/01

  	
   

  	
  9/2/03

  	
   

  
	
  63.

  	
   

  	
  6,629,064

  	
   

  	
  Apparatus and Method
  for Distortion Compensation

  	
   

  	
  09/265,729

  	
   

  	
  3/9/99

  	
   

  	
  9/30/03

  	
   

  
	
  64.

  	
   

  	
  6,634,176

  	
   

  	
  Turbine Exhaust Vortex
  Disrupter

  	
   

  	
  09/977,445

  	
   

  	
  10/15/01

  	
   

  	
  10/21/03

  	
   

  
	
  65.

  	
   

  	
  6,639,328

  	
   

  	
  Microturbine/Capacitor
  Power Distribution System

  	
   

  	
  10/033,826

  	
   

  	
  12/19/01

  	
   

  	
  10/28/03

  	
   

  
	
  66.

  	
   

  	
  6,657,332

  	
   

  	
  Turbogenerator Cooling
  System

  	
   

  	
  09/984,501

  	
   

  	
  10/30/01

  	
   

  	
  12/2/03

  	
   

  
	
  67.

  	
   

  	
  6,657,348

  	
   

  	
  Rotor Shield For
  Magnetic Rotary Machine

  	
   

  	
  09/985,439

  	
   

  	
  11/2/01

  	
   

  	
  12/2/03

  	
   

  
	
  68.

  	
   

  	
  6,664,653

  	
   

  	
  Command and Control
  System and Method for Controlling Operational Sequencing of Multiple Turbogenerators
  Using a Selected Control Mode

  	
   

  	
  09/689,577

  	
   

  	
  10/12/00

  	
   

  	
  12/16/03

  	
   

  
	
  69.

  	
   

  	
  6,664,654

  	
   

  	
  System and Method for
  Dual Mode Control of a Turbogenerator/Motor

  	
   

  	
  10/158,095

  	
   

  	
  5/29/02

  	
   

  	
  12/16/03

  	
   

  
	
  70.

  	
   

  	
  6,675,583

  	
   

  	
  Combustion Method

  	
   

  	
  09/969,491

  	
   

  	
  11/2/01

  	
   

  	
  1/13/04

  	
   

  
	
  71.

  	
   

  	
  6,683,389

  	
   

  	
  Hybrid Electric Vehicle
  DC Power Generation
  System

  	
   

  	
  09/938,101

  	
   

  	
  8/23/01

  	
   

  	
  1/27/04

  	
   

  
	
  72.

  	
   

  	
  6,684,642

  	
   

  	
  Gas Turbine Engine
  Having a Multi-Stage Multi-Plane Combustion System

  	
   

  	
  10/171,684

  	
   

  	
  6/17/02

  	
   

  	
  2/3/04

  	
   

  
	
  73.

  	
   

  	
  6,702,463

  	
   

  	
  Compliant Foil Thrust
  Bearing

  	
   

  	
  09/714,349

  	
   

  	
  11/15/00

  	
   

  	
  3/9/04

  	
   

  
	
  74.

  	
   

  	
  6,709,243

  	
   

  	
  Rotary Machine With
  Reduced Axial Thrust
  Loads

  	
   

  	
  09/696,316

  	
   

  	
  10/25/00

  	
   

  	
  3/23/04

  	
   

  
	
  75.

  	
   

  	
  6,713,892

  	
   

  	
  Automatic
  Turbogenerator Restarting Method
  and System

  	
   

  	
  09/900,635

  	
   

  	
  7/6/01

  	
   

  	
  3/30/04

  	
   

  
	
  76.

  	
   

  	
  6,720,685

  	
   

  	
  Turbogenerator Cooling
  System (Div Of 09/984,501)

  	
   

  	
  10/339,247

  	
   

  	
  1/9/03

  	
   

  	
  4/13/04

  	
   

  
	
  77.

  	
   

  	
  6,732,531

  	
   

  	
  Combustion System for a
  Gas Turbine Engine With Variable

  	
   

  	
  10/101,032

  	
   

  	
  3/18/02

  	
   

  	
  5/11/04

  	
   

  

 

D-9

 

	
  No

  	
   

  	
  Issue No.

  	
   

  	
  Description

  	
   

  	
  App. Ser. No.

  	
   

  	
  Filing Date

  	
   

  	
  Issue Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Airflow Pressure Actuated Premix Injector

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  78.

  	
   

  	
  6,747,372

  	
   

  	
  Distributed Control Method for Multiple Connected
  Generators

  	
   

  	
  10/007,219

  	
   

  	
  11/2/01

  	
   

  	
  6/8/04

  	
   

  
	
  79.

  	
   

  	
  6,748,742

  	
   

  	
  Power Offsetting Compressor System

  	
   

  	
  10/008,047

  	
   

  	
  11/7/01

  	
   

  	
  6/15/04

  	
   

  
	
  80.

  	
   

  	
  6,751,941

  	
   

  	
  Foil Bearing Rotary Flow Compressor With Control
  Valve

  	
   

  	
  10/080,179

  	
   

  	
  2/19/02

  	
   

  	
  6/22/04

  	
   

  
	
  81.

  	
   

  	
  6,784,565

  	
   

  	
  Turbogenerator With Electrical Brake

  	
   

  	
  10/077,121

  	
   

  	
  2/15/02

  	
   

  	
  8/31/04

  	
   

  
	
  82.

  	
   

  	
  6,787,933

  	
   

  	
  Power Generation System Having Transient Ride-Through/Load-Leveling
  Capabilities

  	
   

  	
  10/043,694

  	
   

  	
  1/10/2002

  	
   

  	
  9/7/2004

  	
   

  
	
  83.

  	
   

  	
  6,804,946

  	
   

  	
  Combustion System With Shutdown Fuel Purge

  	
   

  	
  10/720,145

  	
   

  	
  11/25/03

  	
   

  	
  10/19/04

  	
   

  
	
  84.

  	
   

  	
  6,812,586

  	
   

  	
  Distributed Power System

  	
   

  	
  10/066,349

  	
   

  	
  1/30/02

  	
   

  	
  11/2/04

  	
   

  
	
  85.

  	
   

  	
  6,812,587

  	
   

  	
  Continuous Power Supply With Back-Up Generation

  	
   

  	
  10/300,936

  	
   

  	
  11/21/02

  	
   

  	
  11/2/04

  	
   

  
	
  86.

  	
   

  	
  6,815,932

  	
   

  	
  Detection of Islanded Behavior and Anti-Islanding
  Protection of a Generator in Grid-Connected Mode

  	
   

  	
  09/975,148

  	
   

  	
  10/12/01

  	
   

  	
  11/9/04

  	
   

  
	
  87.

  	
   

  	
  6,864,595

  	
   

  	
  Detection of Islanded Behavior and Anti-Islanding
  Protection of a Generator in Grid-Connected Mode

  	
   

  	
  10/812,979

  	
   

  	
  3/31/04

  	
   

  	
  3/8/05

  	
   

  
	
  88.

  	
   

  	
  6,870,279

  	
   

  	
  Method And System For Control Of Turbogenerator
  Power And Temperature

  	
   

  	
  10/037,916

  	
   

  	
  1/2//02

  	
   

  	
  3/22/05

  	
   

  
	
  89.

  	
   

  	
  6,951,110

  	
   

  	
  Annular Recuperator Design

  	
   

  	
  09/966,514

  	
   

  	
  9/27/01

  	
   

  	
  10/4/05

  	
   

  
	
  90.

  	
   

  	
  6,958,550

  	
   

  	
  Method and System For Control of Turbogenerator
  Power and Temperature

  	
   

  	
  10/887,297

  	
   

  	
  7/9/04

  	
   

  	
  10/25/05

  	
   

  
	
  91.

  	
   

  	
  6,960,840

  	
   

  	
  Integrated Turbine Power Generation System With
  Catalytic Reactor

  	
   

  	
  10/706,070

  	
   

  	
  11/13/03

  	
   

  	
  11/1/05

  	
   

  
	
  92.

  	
   

  	
  7,065,873

  	
   

  	
  Recuperator Assembly and Procedures

  	
   

  	
  10/917,118

  	
   

  	
  8/12/04

  	
   

  	
  6/27/06

  	
   

  
	
  93.

  	
   

  	
  7,092,262

  	
   

  	
  Pre-charge Circuit and Method

  	
   

  	
  10/813,550

  	
   

  	
  3/31/04

  	
   

  	
  8/15/06

  	
   

  
	
  94.

  	
   

  	
  7,112,036

  	
   

  	
  Rotor and Bearing System For A Turbomachine

  	
   

  	
  10/862,136

  	
   

  	
  6/4/04

  	
   

  	
  9/26/06

  	
   

  
	
  95.

  	
   

  	
  7,147,050

  	
   

  	
  Recuperator Construction For a Gas Turbine Engine

  	
   

  	
  10/917,107

  	
   

  	
  8/12/04

  	
   

  	
  12/12/06

  	
   

  
	
  96.

  	
   

  	
  7,415,764

  	
   

  	
  Recuperator Assembly And Procedures

  	
   

  	
  11/336,718

  	
   

  	
  1/20/06

  	
   

  	
  8/26/08

  	
   

  
	
  97.

  	
   

  	
  RE38,373

  	
   

  	
  Compliant Foil Fluid Thrust Film Bearing With a
  Tilting Pad Underspring (Reissue of 5,918,985)

  	
   

  	
  09/900,775

  	
   

  	
  7/6/01

  	
   

  	
  12/30/03

  	
   

  
	
  98.

  	
   

  	
  RE39,190

  	
   

  	
  Compliant Foil Fluid Film Radial Bearing (Reissue of
  5,915,841.)

  	
   

  	
  09/895,568

  	
   

  	
  —

  	
   

  	
  7/18/06

  	
   

  

 

D-10

 

II.                        CAPSTONE PENDING U.S. PATENT
APPLICATIONS

 

	
  Description

  	
   

  	
  App. Ser. No.

  	
   

  	
  Filing Date

  	
   

  
	
  Turbgenerator/Motor
  Controller (Reissue)

  	
   

  	
  09/853,852

  	
   

  	
  5/11/01

  	
   

  
	
  Emergency
  Elevator System Interface Package

  	
   

  	
  11/517,957

  	
   

  	
  9/8/06

  	
   

  
	
  Compliant Foil
  Fluid Film Radial Bearing Or Seal

  	
   

  	
  11/740,798

  	
   

  	
  4/26/2007

  	
   

  

 

III.                    CAPSTONE ISSUED FOREIGN PATENTS

 

	
  Issue No.

  	
   

  	
  Description

  	
   

  	
  Country

  	
   

  	
  App. Ser. No.

  	
   

  
	
  0746680 

  	
   

  	
  Gas Turbine Engine Generator Set 

  	
   

  	
  Europe 

  	
   

  	
  95909213.1 

  	
   

  
	
  69527283.7 in DE

  	
   

  	
  (U.S. 5,497,615)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 799 388 

  	
   

  	
  Compliant Foil Hydrodynamic Fluid Film Thrust
  Bearing 

  	
   

  	
  Europe 

  	
   

  	
  95937420.8 

  	
   

  
	
  69519684.7 in DE

  	
   

  	
  (U.S. 5,529,398)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0 756 672 

  	
   

  	
  Compliant Foil Hydrodynamic Fluid Radial Bearing 

  	
   

  	
  Europe 

  	
   

  	
  95914005.4 

  	
   

  
	
  69522683.5 in DE

  	
   

  	
  (U.S. 5,427,455)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1001180 

  	
   

  	
  Compliant Foil Hydrodynamic Fluid Film Thrust
  Bearing (divisional)

  	
   

  	
  Europe 

  	
   

  	
  00200446.3 

  	
   

  
	
  69532538.8 in DE
  

  	
   

  	
  (U.S. 5,529,398)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3725548 

  	
   

  	
  Compliant Foil Hydrodynamic Fluid Film Thrust
  Bearing

  	
   

  	
  Japan

  	
   

  	
  0520429/96

  	
   

  
	
   

  	
   

  	
  (U.S. 5,529,398)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0903466 

  	
   

  	
  Double Diaphragm Compound Shaft 

  	
   

  	
  Europe 

  	
   

  	
  98307606.8 

  	
   

  
	
  69824801.5 in DE

  	
   

  	
  (U.S. 5,964,663)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0878665 

  	
   

  	
  Low Emissions Combustion System For a Gas Turbine
  Engine

  	
   

  	
  Europe

  	
   

  	
  98303693.0

  	
   

  
	
   

  	
   

  	
  (U.S. 5,850,732)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  122912 

  	
   

  	
  Low Emissions Combustion System For A Gas Turbine Engine
  

  	
   

  	
  Israel 

  	
   

  	
  122912 

  	
   

  
	
   

  	
   

  	
  (U.S. 5,850,732)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  112275 

  	
   

  	
  Gas Turbine Engine Generator Set 

  	
   

  	
  Israel 

  	
   

  	
  112275 

  	
   

  
	
   

  	
   

  	
  (U.S. 5,497,615)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  117546 

  	
   

  	
  Compliant Foil Hydrodynamic Fluid Film Thrust
  Bearing 

  	
   

  	
  Israel 

  	
   

  	
  117546 

  	
   

  
	
   

  	
   

  	
  (U.S. 5,529,398)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  113289 

  	
   

  	
  Compliant Foil Hydrodynamic Fluid Radial Bearing 

  	
   

  	
  Israel 

  	
   

  	
  113289 

  	
   

  
	
   

  	
   

  	
  (U.S. 5,427,455)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  118216

  	
   

  	
  Compound Shaft

  	
   

  	
  Israel

  	
   

  	
  118216

  	
   

  
	
   

  	
   

  	
  (U.S. 5,697,848)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  121531 

  	
   

  	
  Gaseous Fuel Compression And Control System 

  	
   

  	
  Israel 

  	
   

  	
  121531 

  	
   

  

 

D-11

 

	
  Issue No.

  	
   

  	
  Description

  	
   

  	
  Country

  	
   

  	
  App. Ser. No.

  	
   

  
	
   

  	
   

  	
  (U.S. 5,819,524)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  124664

  	
   

  	
  Compliant Foil Fluid Film Thrust Bearing

  (U.S. 5,918,985)

  	
   

  	
  Israel

  	
   

  	
  124664

  	
   

  
	
  125679

  	
   

  	
  Double Diaphragm Compound Shaft

  (U.S. 5,964,663)

  	
   

  	
  Israel

  	
   

  	
  125679

  	
   

  
	
  127021

  	
   

  	
  Compliant Foil Film Radial Bearing

  (U.S. 5,915,841)

  	
   

  	
  Israel

  	
   

  	
  127021

  	
   

  
	
  125905

  	
   

  	
  Turbogenerator/motor Controller With ancillary
  Energy Storage/Discharge (B2)

  (U.S. 6,031,294)

  	
   

  	
  Israel

  	
   

  	
  125905

  	
   

  
	
  137542

  	
   

  	
  Turbogenerator/motor Controller (B1)

  (U.S. 5,903,116)

  	
   

  	
  Israel

  	
   

  	
  137542

  	
   

  
	
  121532

  	
   

  	
  Helical Flow Compression Turbine With Permanent
  Magnet Motor/Generator

  (U.S. 5,899,673)

  	
   

  	
  Israel

  	
   

  	
  121532

  	
   

  
	
  3598437

  	
   

  	
  Compliant Foil Hydrodynamic Fluid Film Radial
  Bearing

  (U.S. 5,427,455)

  	
   

  	
  Japan

  	
   

  	
  7-526958

  	
   

  
	
  1075724

  	
   

  	
  Power Controller (B3)

  (U.S. 6,487,096)

  	
   

  	
  Europe

  	
   

  	
  98962993.6

  	
   

  
	
  0903510 GB and Fr.; 69830961.8-08 Germ.

  	
   

  	
  Compliant Foil Fluid Film Thrust Bearing with
  Tilting Pad Underspring

  (U.S. 5,918,985)

  	
   

  	
  Europe

  	
   

  	
  98307596.1

  	
   

  
	
  0927831 GB and Fr.; 69832579.6-08 Germ.

  	
   

  	
  Compliant Foil Fluid Film Radial Bearing

  (U.S. 5,915,841)

  	
   

  	
  Europe

  	
   

  	
  98310805.1

  	
   

  
	
  0901218 GB and Fr.; 69832860.4-08 Germ.

  	
   

  	
  Turbogenerator/Motor Controller (B1)

  (U.S. 5,903,116)

  	
   

  	
  Europe

  	
   

  	
  98307247.1

  	
   

  
	
  1130322 GB and FR; 60125441.4 Germany

  	
   

  	
  Multi-Stage Multi-Plane Combustion System for a Gas
  Turbine Engine

  (U.S. 6,453,658)

  	
   

  	
  Europe

  	
   

  	
  01301676.1

  	
   

  
	
  1337761 in GB, FR and IT;  60125583.6 in Germany

  	
   

  	
  Compliant Foil Thrust Bearing

  (U.S. 6,702,463)

  	
   

  	
  Europe

  	
   

  	
  01996693.6

  	
   

  
	
  2,242,947

  	
   

  	
  Double Diaphragm Compound Shaft

  (U.S. 5,964,663)

  	
   

  	
  Canada

  	
   

  	
  2,242,947

  	
   

  
	
  2,254,034

  	
   

  	
  Compliant Foil Fluid Film Radial Bearing

  	
   

  	
  Canada

  	
   

  	
  2,254,034

  	
   

  

 

D-12

 

	
  Issue No.

  	
   

  	
  Description

  	
   

  	
  Country

  	
   

  	
  App. Ser. No.

  	
   

  
	
   

  	
   

  	
  (U.S. 5,915,841)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0963035 Germany  69936424.8 

  	
   

  	
  Turbogenerator/Motor Control System 

  (U.S. 6,023,135)

  	
   

  	
  Europe

  	
   

  	
  99303642.5

  	
   

  
	
  2,238,356

  	
   

  	
  Compliant Foil Fluid Film Thrust Bearing with
  Tilting Pad Underspring

  (U.S. 5,918,985)

  	
   

  	
  Canada

  	
   

  	
  2,238,356

  	
   

  

 

IV.                      CAPSTONE
PENDING FOREIGN PATENT APPLICATIONS

 

	
  Description

  	
   

  	
  Country

  	
   

  	
  App. Ser. No.

  	
   

  	
  Filing Date

  	
   

  
	
  Command and Control System and Method For Multiple
  Turbogenerators

  (U.S. 6,169,334)

  	
   

  	
  Canada

  	
   

  	
  2,279,047

  	
   

  	
  7/29/99

  	
   

  
	
  Helical Flow Compressor/Turbine Permanent Magnet
  Motor/Generator

  (U.S. 6,468,051)

  	
   

  	
  Japan

  	
   

  	
  2000-117024

  	
   

  	
  4/19/99

  	
   

  
	
  Turbogenerator/Motor Controller (B1)

  (U.S. 5,903,116)

  	
   

  	
  Canada

  	
   

  	
  2,246,769

  	
   

  	
  9/8/98

  	
   

  
	
  Compliant Foil Fluid Film Thrust Bearing With a
  Tilting Pad Underspring

  (U.S. 5,918,985)

  	
   

  	
  Japan

  	
   

  	
  10-250675

  	
   

  	
  9/4/98

  	
   

  
	
  Compliant Foil Fluid Film Radial Bearing

  (U.S. 5,915,841)

  	
   

  	
  Japan

  	
   

  	
  10-347079

  	
   

  	
  12/7/98

  	
   

  
	
  Multi-Stage Multi-Plane Combustion System For a Gas
  Turbine Engine

  (U.S. 6,453,658)

  	
   

  	
  Japan

  	
   

  	
  2001-45027

  	
   

  	
  2/21/01

  	
   

  
	
  Multiple Power Generator Connection Method and
  System 

  (U.S. 6,522,030)

  	
   

  	
  Europe

  	
   

  	
  01923202.4

  	
   

  	
  4/6/01

  	
   

  
	
  Power Controller (B3) (Div. of #131)

  (U.S. 6,487,096)

  	
   

  	
  Europe

  	
   

  	
  05025283.2

  	
   

  	
  11/18/05

  	
   

  
	
  Compliant Foil Fluid Film Radial Bearing Or Seal

  	
   

  	
  PCT

  	
   

  	
  PCT/US08/57716

  	
   

  	
  3/20/2008

  	
   

  

 

TRADEMARK APPLICATIONS AND
REGISTRATIONS BY COUNTRY

 

	
  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Application

  Number

  	
   

  	
  Reg.

  Number

  	
   

  	
  Status

  	
   

  	
  Renewal Deadline

  	
   

  
	
  CAPSTONE

  	
   

  	
  Australia

  	
   

  	
  —

  	
   

  	
  755,739

  	
   

  	
  Registered

  	
   

  	
  February 23, 2018

  	
   

  

 

D-13

 

	
  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Application
  Number

  	
   

  	
  Reg.

  Number

  	
   

  	
  Status

  	
   

  	
  Renewal
  Deadline

  	
   

  
	
  

  	
   

  	
  Australia

  	
   

  	
  —

  	
   

  	
  755,737

  	
   

  	
  Registered

  	
   

  	
  February 23,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Brazil

  	
   

  	
  824/638,859

  	
   

  	
  824/638,859

  	
   

  	
  Registered

  	
   

  	
  November 20,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Bulgaria

  	
   

  	
  41,473

  	
   

  	
  37,397

  	
   

  	
  Registered

  	
   

  	
  July 28,
  2008(1)

  	
   

  
	
  CAPSTONE

  	
   

  	
  Bulgaria

  	
   

  	
  42,775

  	
   

  	
  34,967

  	
   

  	
  Registered

  	
   

  	
  July 28,
  2008

  	
   

  
	
  

  	
   

  	
  Bulgaria

  	
   

  	
  42,776

  	
   

  	
  34,968

  	
   

  	
  Registered

  	
   

  	
  July 28,
  2008

  	
   

  
	
  CAPSTONE

  	
   

  	
  Canada

  	
   

  	
  870,563

  	
   

  	
  TMA
  563,894

  	
   

  	
  Registered

  	
   

  	
  June 21,
  2017

  	
   

  
	
  

  	
   

  	
  Canada

  	
   

  	
  870,564

  	
   

  	
  TMA
  504,764

  	
   

  	
  Registered

  	
   

  	
  November 30,
  2013

  	
   

  
	
  CAPSTONE

  	
   

  	
  China
  (PRC)

  	
   

  	
  9,800,017,341

  	
   

  	
  1,291,874

  	
   

  	
  Registered

  	
   

  	
  July 06,
  2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  China
  (PRC)

  	
   

  	
  9,800,017,342

  	
   

  	
  1,284,494

  	
   

  	
  Registered

  	
   

  	
  June 13,
  2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  China
  (PRC)

  	
   

  	
  9,800,017,343

  	
   

  	
  1,299,981

  	
   

  	
  Registered

  	
   

  	
  July 27,
  2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  China
  (PRC)

  	
   

  	
  9,800,017,344

  	
   

  	
  1,301,274

  	
   

  	
  Registered

  	
   

  	
  August 06,
  2009

  	
   

  
	
  

  	
   

  	
  China
  (PRC)

  	
   

  	
  9,800,017,340

  	
   

  	
  1,284,495

  	
   

  	
  Registered

  	
   

  	
  June 13,
  2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  CTM

  	
   

  	
  637,082

  	
   

  	
  637,082

  	
   

  	
  Registered

  	
   

  	
  September 23,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  CTM

  	
   

  	
  745,109

  	
   

  	
  745,109

  	
   

  	
  Registered

  	
   

  	
  February 13,
  2018

  	
   

  

 

(1)        Bulgaria — Renewals have been issued for
these registrations.

 

D-14

 

	
  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Application

  Number

  	
   

  	
  Reg.

  Number

  	
   

  	
  Status

  	
   

  	
  Renewal Deadline

  	
   

  
	
  

  	
   

  	
  CTM

  	
   

  	
  524,306

  	
   

  	
  524,306

  	
   

  	
  Registered

  	
   

  	
  April 29,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Czech
  Republic

  	
   

  	
  128,183

  	
   

  	
  212,315

  	
   

  	
  Registered

  	
   

  	
  December 05,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Czech
  Republic

  	
   

  	
  128,352

  	
   

  	
  218,818

  	
   

  	
  Registered

  	
   

  	
  December 11, 2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Czech
  Republic

  	
   

  	
  128,353

  	
   

  	
  218,819

  	
   

  	
  Registered

  	
   

  	
  December 11,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Czech
  Republic

  	
   

  	
  130,446

  	
   

  	
  228,042

  	
   

  	
  Registered

  	
   

  	
  February 25,
  2018

  	
   

  
	
  

  	
   

  	
  Czech
  Republic

  	
   

  	
  130,447

  	
   

  	
  228,043

  	
   

  	
  Registered

  	
   

  	
  February 25,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Estonia

  	
   

  	
  9,800,433

  	
   

  	
  29,393

  	
   

  	
  Registered

  	
   

  	
  September 03,
  2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  Estonia

  	
   

  	
  EE9,702,761

  	
   

  	
  28,852

  	
   

  	
  Registered

  	
   

  	
  May 26,
  2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  Estonia

  	
   

  	
  EE9,702,762

  	
   

  	
  28,853

  	
   

  	
  Registered

  	
   

  	
  May 26,
  2009

  	
   

  
	
  

  	
   

  	
  Estonia

  	
   

  	
  9,800,434

  	
   

  	
  29,394

  	
   

  	
  Registered

  	
   

  	
  September 03,
  2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  Hungary

  	
   

  	
  M9,704,089

  	
   

  	
  157,005

  	
   

  	
  Registered

  	
   

  	
  November 06,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Hungary

  	
   

  	
  M9,800,530

  	
   

  	
  155,108

  	
   

  	
  Registered

  	
   

  	
  February 16,
  2018

  	
   

  
	
  

  	
   

  	
  Hungary

  	
   

  	
  M9,800,529

  	
   

  	
  155,107

  	
   

  	
  Registered

  	
   

  	
  February 16,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  India

  	
   

  	
  769,311

  	
   

  	
  769,311

  	
   

  	
  Registered

  	
   

  	
  September 23,
  2017

  	
   

  
	
  

  	
   

  	
  India

  	
   

  	
  769,314

  	
   

  	
  769,314

  	
   

  	
  Registered

  	
   

  	
  September 23,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Indonesia

  	
   

  	
  D00.2002.142

  59.14414

  	
   

  	
  543,704

  	
   

  	
  Registered

  	
   

  	
  July 04,
  2012

  	
   

  
	
  CAPSTONE

  	
   

  	
  Israel

  	
   

  	
  115,027

  	
   

  	
  115,027

  	
   

  	
  Registered

  	
   

  	
  September 23,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Israel

  	
   

  	
  115,028

  	
   

  	
  115,028

  	
   

  	
  Registered

  	
   

  	
  September 23, 2018

  	
   

  

 

D-15

 

	
  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Application

  Number

  	
   

  	
  Reg.

  Number

  	
   

  	
  Status

  	
   

  	
  Renewal Deadline

  	
   

  
	
  CAPSTONE

  	
   

  	
  Israel

  	
   

  	
  115,029

  	
   

  	
  115,029

  	
   

  	
  Registered

  	
   

  	
  September 23, 2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Israel

  	
   

  	
  117,832

  	
   

  	
  117,832

  	
   

  	
  Registered

  	
   

  	
  February 15, 2019

  	
   

  
	
  

  	
   

  	
  Israel

  	
   

  	
  112,062

  	
   

  	
  112,062

  	
   

  	
  Registered

  	
   

  	
  April 30, 2018

  	
   

  
	
  

  	
   

  	
  Israel

  	
   

  	
  112,063

  	
   

  	
  112,063

  	
   

  	
  Registered

  	
   

  	
  April 30, 2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Japan

  	
   

  	
  05-077077

  	
   

  	
  3,179,900

  	
   

  	
  Registered

  	
   

  	
  July 31, 2016

  	
   

  
	
  CAPSTONE

  	
   

  	
  Japan

  	
   

  	
  10-017382

  	
   

  	
  4,414,046

  	
   

  	
  Registered

  	
   

  	
  September 01, 2010

  	
   

  
	
  CAPSTONE

  	
   

  	
  Japan

  	
   

  	
  9-174425

  	
   

  	
  4,413,826

  	
   

  	
  Registered

  	
   

  	
  September 01, 2010

  	
   

  
	
  CAPSTONE (in Katakana) 

  	
   

  	
  Japan

  	
   

  	
  62-4732

  	
   

  	
  2,221,178

  	
   

  	
  Registered

  	
   

  	
  April 23, 2010

  	
   

  
	
  

  	
   

  	
  Japan

  	
   

  	
  9-112736

  	
   

  	
  4,378,971

  	
   

  	
  Registered

  	
   

  	
  April 21, 2010

  	
   

  
	
  CAPSTONE

  	
   

  	
  Malaysia

  	
   

  	
  98/02655

  	
   

  	
  9,802,655

  	
   

  	
  Registered

  	
   

  	
  September 16, 2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Malaysia

  	
   

  	
  98/02658

  	
   

  	
  9,802,658

  	
   

  	
  Registered

  	
   

  	
  March 04, 2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Malaysia

  	
   

  	
  98/02659

  	
   

  	
  9,802,659

  	
   

  	
  Registered

  	
   

  	
  September 04, 2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Malaysia

  	
   

  	
  98/02660

  	
   

  	
  9,802,660

  	
   

  	
  Registered

  	
   

  	
  March 04, 2018

  	
   

  
	
  

  	
   

  	
  Malaysia

  	
   

  	
  98/02656

  	
   

  	
  9,802,656

  	
   

  	
  Registered

  	
   

  	
  March 04, 2018

  	
   

  

 

D-16

 

	
  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Application

  Number

  	
   

  	
  Reg.

  Number

  	
   

  	
  Status

  	
   

  	
  Renewal Deadline

  	
   

  
	
  

  	
   

  	
  Malaysia

  	
   

  	
  98/02657

  	
   

  	
  9,802,657

  	
   

  	
  Registered

  	
   

  	
  March 04, 2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Mexico

  	
   

  	
  324,506

  	
   

  	
  576,585

  	
   

  	
  Registered

  	
   

  	
  March 04, 2008(2)

  	
   

  
	
  CAPSTONE

  	
   

  	
  Mexico

  	
   

  	
  324,507

  	
   

  	
  579,612

  	
   

  	
  Registered

  	
   

  	
  March 04, 2008

  	
   

  
	
  CAPSTONE

  	
   

  	
  Mexico

  	
   

  	
  324,508

  	
   

  	
  577,332

  	
   

  	
  Registered

  	
   

  	
  March 04, 2008

  	
   

  
	
  CAPSTONE

  	
   

  	
  Mexico

  	
   

  	
  324,509

  	
   

  	
  582,024

  	
   

  	
  Registered

  	
   

  	
  March 04, 2008

  	
   

  
	
  

  	
   

  	
  Mexico

  	
   

  	
  324,510

  	
   

  	
  578,232

  	
   

  	
  Registered

  	
   

  	
  March 04, 2008

  	
   

  
	
  

  	
   

  	
  Mexico

  	
   

  	
  324,512

  	
   

  	
  582,025

  	
   

  	
  Registered

  	
   

  	
  March 04, 2008

  	
   

  
	
  CAPSTONE

  	
   

  	
  New Zealand

  	
   

  	
  289,011

  	
   

  	
  289,011

  	
   

  	
  Registered

  	
   

  	
  February 26, 2015

  	
   

  
	
  CAPSTONE

  	
   

  	
  New Zealand

  	
   

  	
  289,012

  	
   

  	
  289,012

  	
   

  	
  Registered

  	
   

  	
  February 26, 2015

  	
   

  
	
  CAPSTONE

  	
   

  	
  New Zealand

  	
   

  	
  289,013

  	
   

  	
  289,013

  	
   

  	
  Registered

  	
   

  	
  September 04, 2014

  	
   

  
	
  CAPSTONE

  	
   

  	
  New Zealand

  	
   

  	
  289,014

  	
   

  	
  289,014

  	
   

  	
  Registered

  	
   

  	
  September 16, 2014

  	
   

  
	
  CAPSTONE

  	
   

  	
  New Zealand

  	
   

  	
  311,548

  	
   

  	
  311,548

  	
   

  	
  Registered

  	
   

  	
  June 24, 2016

  	
   

  
	
  

  	
   

  	
  New Zealand

  	
   

  	
  289,015

  	
   

  	
  289,015

  	
   

  	
  Registered

  	
   

  	
  February 26, 2015

  	
   

  
	
  

  	
   

  	
  New Zealand

  	
   

  	
  289,016

  	
   

  	
  289,016

  	
   

  	
  Registered

  	
   

  	
  February 26, 2015

  	
   

  
	
  CAPSTONE

  	
   

  	
  Nigeria

  	
   

  	
  84672/04

  	
   

  	
  RTM 66760

  	
   

  	
  Registered

  	
   

  	
  February 04, 2011

  	
   

  
	
  CAPSTONE

  	
   

  	
  Nigeria

  	
   

  	
  84673/04

  	
   

  	
  RTM 66750

  	
   

  	
  Registered

  	
   

  	
  February 04, 2011

  	
   

  

 

	
  (2)

  	
   

  	
  Mexico — Renewal petitions and change of legal address have been filed
  with the Mexican Intellectual Property Office.

  

 

D-17

 

	
  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Application

  Number

  	
   

  	
  Reg.

  Number

  	
   

  	
  Status

  	
   

  	
  Renewal Deadline

  	
   

  
	
  

  	
   

  	
  Nigeria

  	
   

  	
  84670/04

  	
   

  	
  RTM 66752

  	
   

  	
  Registered

  	
   

  	
  February 04, 2011

  	
   

  
	
  

  	
   

  	
  Nigeria

  	
   

  	
  84671/04

  	
   

  	
  RTM 66761

  	
   

  	
  Registered

  	
   

  	
  February 04, 2011

  	
   

  
	
  CAPSTONE

  	
   

  	
  Poland

  	
   

  	
  Z-180,350

  	
   

  	
  125,456

  	
   

  	
  Registered

  	
   

  	
  November 20, 2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Poland

  	
   

  	
  Z-184,099

  	
   

  	
  128,663

  	
   

  	
  Registered

  	
   

  	
  March 02, 2018

  	
   

  
	
  

  	
   

  	
  Poland

  	
   

  	
  Z-183,816

  	
   

  	
  130,098

  	
   

  	
  Registered

  	
   

  	
  February 24, 2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Republic of Korea

  	
   

  	
  97/52389

  	
   

  	
  430,990

  	
   

  	
  Registered

  	
   

  	
  November 25, 2008(3)

  	
   

  
	
  CAPSTONE

  	
   

  	
  Republic of Korea

  	
   

  	
  97/52390

  	
   

  	
  438,925

  	
   

  	
  Registered

  	
   

  	
  January 22, 2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  Republic of Korea

  	
   

  	
  98/1917

  	
   

  	
  54,995

  	
   

  	
  Registered

  	
   

  	
  May 17, 2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  Republic of Korea

  	
   

  	
  98/9567

  	
   

  	
  59,573

  	
   

  	
  Registered

  	
   

  	
  February 15, 2010

  	
   

  
	
  

  	
   

  	
  Republic of Korea

  	
   

  	
  97/45930

  	
   

  	
  427,401

  	
   

  	
  Registered

  	
   

  	
  October 28, 2008

  	
   

  
	
  

  	
   

  	
  Republic of Korea

  	
   

  	
  97/45931

  	
   

  	
  430,962

  	
   

  	
  Registered

  	
   

  	
  November 25, 2008

  	
   

  
	
  CAPSTONE

  	
   

  	
  Romania

  	
   

  	
  47,388

  	
   

  	
  34,319

  	
   

  	
  Registered

  	
   

  	
  December 09, 2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Romania

  	
   

  	
  50,051

  	
   

  	
  35,291

  	
   

  	
  Registered

  	
   

  	
  March 16, 2018

  	
   

  

 

	
  (3)

  	
   

  	
  Republic of Korea  — Renewal applications have been filed
  for the two pertinent registrations in the Republic of Korea. Delay has been
  caused due to Korea’s change of classification of goods into a separate
  international class number. Waller Lansden Dortch & Davis is
  awaiting renewal certificates and next renewal deadlines from local counsel.

  

 

D-18

 

	
  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Application

  Number

  	
   

  	
  Reg.

  Number

  	
   

  	
  Status

  	
   

  	
  Renewal Deadline

  	
   

  
	
  

  	
   

  	
  Romania

  	
   

  	
  50,052

  	
   

  	
  35,292

  	
   

  	
  Registered

  	
   

  	
  March 16,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Russian
  Federation

  	
   

  	
  97,718,654

  	
   

  	
  174,403

  	
   

  	
  Registered

  	
   

  	
  December 05,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Russian
  Federation

  	
   

  	
  97,718,655

  	
   

  	
  173,434

  	
   

  	
  Registered

  	
   

  	
  December 05,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Russian
  Federation

  	
   

  	
  97,718,656

  	
   

  	
  173,435

  	
   

  	
  Registered

  	
   

  	
  December 05,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Russian
  Federation

  	
   

  	
  98,702,564

  	
   

  	
  176,654

  	
   

  	
  Registered

  	
   

  	
  February 18,
  2018

  	
   

  
	
  

  	
   

  	
  Russian
  Federation

  	
   

  	
  98,702,573

  	
   

  	
  176,655

  	
   

  	
  Registered

  	
   

  	
  February 18,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Slovak
  Republic

  	
   

  	
  0499-98

  	
   

  	
  191,841

  	
   

  	
  Registered

  	
   

  	
  February 27,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Slovak
  Republic

  	
   

  	
  3643-97

  	
   

  	
  189,134

  	
   

  	
  Registered

  	
   

  	
  December 11,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Slovak
  Republic

  	
   

  	
  3655-97

  	
   

  	
  188,650

  	
   

  	
  Registered

  	
   

  	
  December 11,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Slovak
  Republic

  	
   

  	
  3656-97

  	
   

  	
  188,651

  	
   

  	
  Registered

  	
   

  	
  December 11,
  2017

  	
   

  
	
  

  	
   

  	
  Slovak
  Republic

  	
   

  	
  0500-98

  	
   

  	
  191,068

  	
   

  	
  Registered

  	
   

  	
  February 27,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Slovenia

  	
   

  	
  Z-9771850

  	
   

  	
  9,771,850

  	
   

  	
  Registered

  	
   

  	
  December 11,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  Slovenia

  	
   

  	
  Z-9870250

  	
   

  	
  9,870,250

  	
   

  	
  Registered

  	
   

  	
  February 26,
  2018

  	
   

  
	
  

  	
   

  	
  Slovenia

  	
   

  	
  Z-9870249

  	
   

  	
  9,870,249

  	
   

  	
  Registered

  	
   

  	
  February 26,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  South
  Africa

  	
   

  	
  98/02522

  	
   

  	
  98/02522

  	
   

  	
  Registered

  	
   

  	
  February 20,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  South
  Africa

  	
   

  	
  98/02523

  	
   

  	
  98/02523

  	
   

  	
  Registered

  	
   

  	
  February 20,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  South
  Africa

  	
   

  	
  98/02524

  	
   

  	
  98/02524

  	
   

  	
  Registered

  	
   

  	
  February 20,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  South
  Africa

  	
   

  	
  98/02525

  	
   

  	
  98/02525

  	
   

  	
  Registered

  	
   

  	
  February 20,
  2018

  	
   

  

 

D-19

 

	
  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Application

  Number

  	
   

  	
  Reg.

  Number

  	
   

  	
  Status

  	
   

  	
  Renewal Deadline

  	
   

  
	
  

  	
   

  	
  South
  Africa

  	
   

  	
  2004/03561

  	
   

  	
  2004/03561

  	
   

  	
  Registered

  	
   

  	
  March 08,
  2014

  	
   

  
	
  

  	
   

  	
  South
  Africa

  	
   

  	
  98/02526

  	
   

  	
  98/02526

  	
   

  	
  Registered

  	
   

  	
  February 20,
  2018

  	
   

  
	
  

  	
   

  	
  South
  Africa

  	
   

  	
  98/02527

  	
   

  	
  98/02527

  	
   

  	
  Registered

  	
   

  	
  February 20,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  Switzerland

  	
   

  	
  04728/2002

  	
   

  	
  502,265

  	
   

  	
  Registered

  	
   

  	
  May 27,
  2012

  	
   

  
	
  CAPSTONE

  	
   

  	
  Ukraine

  	
   

  	
  98/020713

  	
   

  	
  20,994

  	
   

  	
  Registered

  	
   

  	
  February 23,
  2018

  	
   

  
	
  

  	
   

  	
  Ukraine

  	
   

  	
  98/020714

  	
   

  	
  20,655

  	
   

  	
  Registered

  	
   

  	
  February 23,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  USA

  	
   

  	
  74/732,798

  	
   

  	
  2,058,307

  	
   

  	
  Registered

  	
   

  	
  April 29,
  2017

  	
   

  
	
  CAPSTONE

  	
   

  	
  USA

  	
   

  	
  75/306,958

  	
   

  	
  2,248,687

  	
   

  	
  Registered

  	
   

  	
  June 01,
  2009

  	
   

  
	
  CAPSTONE

  	
   

  	
  USA

  	
   

  	
  75/351,980

  	
   

  	
  2,201,317

  	
   

  	
  Registered

  	
   

  	
  November 03,
  2018

  	
   

  
	
  CAPSTONE

  	
   

  	
  USA

  	
   

  	
  75/357,665

  	
   

  	
  2,487,869

  	
   

  	
  Registered

  	
   

  	
  September 11,
  2011

  	
   

  
	
  

  	
   

  	
  USA

  	
   

  	
  78/166,520

  	
   

  	
  2,993,044

  	
   

  	
  Registered

  	
   

  	
  September 06,
  2015

  	
   

  
	
  

  	
   

  	
  USA

  	
   

  	
  78/975,666

  	
   

  	
  2,940,243

  	
   

  	
  Registered

  	
   

  	
  April 12,
  2015

  	
   

  
	
  CAPSTONE MICROTURBINE

  	
   

  	
  USA

  	
   

  	
  78/166,522

  	
   

  	
  2,956,871

  	
   

  	
  Registered

  	
   

  	
  May 31,
  2015

  	
   

  
	
  

  	
   

  	
  USA

  	
   

  	
  78/970,583

  	
   

  	
  —

  	
   

  	
  Pending

  	
   

  	
  —

  	
   

  
	
  

  	
   

  	
  USA

  	
   

  	
  75/191,384

  	
   

  	
  2,144,240

  	
   

  	
  Registered

  	
   

  	
  March 17,
  2018

  	
   

  

 

D-20

 

	
  Trademark

  	
   

  	
  Jurisdiction

  	
   

  	
  Application

  Number

  	
   

  	
  Reg.

  Number

  	
   

  	
  Status

  	
   

  	
  Renewal Deadline

  	
   

  
	
  SAFE RETURN SYSTEM

  	
   

  	
  USA

  	
   

  	
  78/947,172

  	
   

  	
  —

  	
   

  	
  Pending

  	
   

  	
  —

  	
   

  
	
  SRS

  	
   

  	
  USA

  	
   

  	
  78/947,412

  	
   

  	
  —

  	
   

  	
  Pending

  	
   

  	
  —

  	
   

  

 

INTELLECTUAL
PROPERTY RIGHTS LICENSED FROM THIRD PARTIES

 

1.               Licensing Agreement, dated
as of April 14, 2008, between the Company and United Technologies
Corporation, Pratt & Whitney, which grants the Company a
non-exclusive, non-transferable license, without the right to sub-license, to
use the patents and/or technical information related to material and material
properties listed on Exhibit A attached thereto and the related Technical
Support (as defined therein) for the design of the C200, as agreed upon in that
certain Development and License Agreement, dated as of September 7, 2007,
between the parties thereto. All fees for such license have been paid in full
in advance.

 

2.               Amended and Restated License
Agreement, dated as of August 2, 2000 (“Solar License Agreement”), between
the Company and Solar Turbines Incorporated (“Solar”), which grants the Company
a non-exclusive, non-transferable license, without the right to sub-license to
use the Solar Intellectual Property (as defined therein) as set forth therein.
The Company pays to Solar a royalty for each Licensed Product (as defined in
the Solar License Agreement) manufactured by the Company in accordance with the
Solar License Agreement pursuant to the following schedule:

 

	
  -

  	
   

  	
  0-100kW:

  	
   

  	
  $

  	
  100.00

  	
   

  
	
  -

  	
   

  	
  101kW-200kW:

  	
   

  	
  $

  	
  200.00

  	
   

  
	
  -

  	
   

  	
  201kW-300kW:

  	
   

  	
  $

  	
  300.00

  	
   

  
	
  -

  	
   

  	
  301kW-400kW:

  	
   

  	
  $

  	
  400.00

  	
   

  
	
  -

  	
   

  	
  401kW-500kW:

  	
   

  	
  $

  	
  500.00

  	
   

  

 

i                                             Bulgaria —  Renewals have been issued
for these registrations.

ii                                          Mexico — Renewal
petitions and change of legal address have been filed with the Mexican
Intellectual Property Office.

iii                                       Republic of Korea — Renewal
applications have been filed for the two pertinent registrations in the
Republic of Korea. Delay has been caused due to Korea’s change of
classification of goods into a separate international class number. Waller
Lansden Dortch & Davis is awaiting renewal certificates and next
renewal deadlines from local counsel.

 

	
   

  	
  (j)

  	
  Taxes. Company and its Affiliates have paid or caused to be paid to the
  proper authorities when due all federal, state and local taxes required to be
  withheld by each of them except for those taxes being contested in good faith
  by appropriate

  

 

D-21

 

proceedings and for which
appropriate reserves have been maintained under GAAP. Company and its
Affiliates have filed all federal, state and local tax returns which to the
knowledge of the Officers of Company or any Affiliate, as the case may be, are
required to be filed, and Company and its Affiliates have paid or caused to be
paid to the respective taxing authorities all taxes as shown on these returns
or on any assessment received by any of them to the extent such taxes have
become due except for those taxes being contested in good faith by appropriate
proceedings and for which appropriate reserves have been maintained under GAAP.

 

(k)                                  Titles and
Liens. Company has good and absolute title to all Collateral free and clear
of all Liens other than Permitted Liens. No financing statement naming Company
as debtor is on file in any office except to perfect only Permitted Liens.

 

(1)                                  No Defaults. Company is in
compliance with all provisions of all agreements, instruments, decrees and
orders to which it is a party or by which it or its property is bound or
affected, the breach or default of which could have a Material Adverse Effect.

 

(m)                               Submissions to
Wells Fargo. All financial and other information provided
to Wells Fargo by or on behalf of Company in connection with Company’s request
for the credit facilities contemplated hereby is (i) true and correct in
all material respects, (ii) does not omit any material fact that would
cause such information to be misleading, and (iii) as to projections,
valuations or proforma financial statements, present a good faith opinion as to
such projections, valuations and proforma condition and results.

 

(n)                                 Financing Statements. Company has
previously authorized the filing of financing statements sufficient when filed
to perfect the Security Interest and other Liens created by the Security
Documents. When such financing statements are filed, Wells Fargo will have a
valid and perfected security interest in all Collateral capable of being
perfected by the filing of financing statements. None of the Collateral is or
will become a fixture on real estate, unless a sufficient fixture filing has
been filed with respect to such Collateral.

 

(o)                                 Rights to
Payment. Each right to payment and each instrument, document, chattel paper and
other agreement constituting or evidencing Collateral is (or, in the case of
all future Collateral, will be when arising or issued) the valid, genuine and
legally enforceable obligation, subject to no defense, setoff or counterclaim
of the account debtor or other obligor named in that instrument.

 

(p)                                 Employee
Benefit Plans.

 

(i)                                      Maintenance and
Contributions to Plans. Except as disclosed below, neither
Company nor any ERISA Affiliate (A) maintains or has maintained any
Pension Plan, (B) contributes or has contributed to any Multiemployer
Plan, or (C) provides or has provided post-retirement

 

D-22

 

medical or insurance
benefits to employees or former employees (other than benefits required under Section 601
of ERISA, Section 4980B of the IRC, or applicable state law).

 

(ii)                                  Knowledge of
Plan Noncompliance with Applicable Law. Except as disclosed below,
neither Company nor any ERISA Affiliate has (A) knowledge that Company or
the ERISA Affiliate is not in full compliance with the requirements of ERISA,
the IRC, or applicable state law with respect to any Plan, (B) knowledge
that a Reportable Event occurred or continues to exist in connection with any
Pension Plan, or (C) sponsored a Plan that it intends to maintain as
qualified under the IRC that is not so qualified, and no fact or circumstance
exists which may have a material adverse effect on such Plan’s tax-qualified
status.

 

(iii)                               Funding
Deficiencies and Other Liabilities. Neither Company nor any
ERISA Affiliate has liability for any (A) accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the IRC) under
any Plan, whether or not waived, (B) withdrawal, partial withdrawal,
reorganization or other event under any Multiemployer Plan under Section 4201
or 4243 of ERISA, or (C) event or circumstance which could result in
financial obligation to the Pension Benefit Guaranty Corporation, the Internal
Revenue Service, the Department of Labor or any participant in connection with
any Plan (other than routine claims for benefits under the Plan).

 

Employee Benefit Plans

 

None.

 

(q)                                 Environmental
Matters.

 

(i)                                     Hazardous
Substances on Premises. Except as disclosed below,
there are not present in, on or under the Premises any Hazardous Substances in
such form or quantity as to create any material liability or obligation for
either Company or Wells Fargo under the common law of any jurisdiction or under
any Environmental Law, and no Hazardous Substances have ever been stored,
buried, spilled, leaked, discharged, emitted or released in, on or under the
Premises in such a way as to create a liability which would have a Material
Adverse Effect.

 

(ii)                                  Disposal of
Hazardous Substances. Except as disclosed below, Company has not
disposed of Hazardous Substances in such a manner as to create any liability
under any Environmental Law which would have a Material Adverse Effect.

 

D-23

 

(iii)          Claims and Proceedings with
Respect to Environmental Law Compliance. Except as disclosed below,
there have not existed in the past, nor are there any threatened or impending
requests, claims, notices, investigations, demands, administrative proceedings,
hearings or litigation relating in any way to the Premises or Company, alleging
material liability under, violation of, or noncompliance with any Environmental
Law or any license, permit or other authorization issued pursuant thereto.

 

(iv)          Compliance with
Environmental Law; Permits and Authorizations. Except as disclosed below,
Company (A) conducts its business at all times in compliance with applicable
Environmental Law where the failure to be so in compliance could reasonably be
expected to have a Material Adverse Effect, (B) possesses valid licenses,
permits and other authorizations required under applicable Environmental Law
for the lawful and efficient operation of its business, none of which are
scheduled to expire, or withdrawal, or material limitation within the next 12
months, and (C) has not been denied insurance on grounds related to potential
environmental liability.

 

(v)           Status of Premises. Except as
disclosed below, the Premises are not and never have been listed on the
National Priorities List, the Comprehensive Environmental Response,
Compensation and Liability Information System or any similar federal, state or
local list, schedule, log, inventory or database.

 

(vi)          Environmental Audits,
Reports, Permits and Licenses. Company has delivered to
Wells Fargo all environmental assessments, audits, reports, permits, licenses
and other documents describing or relating in any way to the Premises or
Company’s businesses.

 

Environmental Matters

 

Environmental Reports

 

Review of Site Conditions,
dated February 11, 2005 for 16640 Stagg Street, Van Nuys, California, by
TRC

 

Environmental Site
Assessment Report, dated February 27, 2006 for 16640 Stagg Street, Van
Nuys, California, by TRC

 

Indoor Air Quality
Investigation, dated April 17, 2006 for 16640 Stagg Street, Van Nuys,
California, by Environmics Southwest, LLC

 

Personal Breathing Zone
Sampling, dated July 25, 2006 for 16640 Stagg Street, Van Nuys,
California, by Environmics Southwest, LLC

 

D-24

 

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

COMPLIANCE CERTIFICATE

 

	
  To:

  	
  Wells Fargo Bank, National
  Association

  
	
  Date:

  	
  [                                     ,
  200    ]

  
	
  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.

 

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)

 

o            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.

 

o            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: o was consented to in advance
by Wells Fargo in an Authenticated Record, and/or o is more fully
described in the statement of facts attached to this Certificate.

 

C.            Events of Default. I certify that:

 

(Check
one)

 

o            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.

 

o            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.

 

E-1

 

D.            Litigation Matters. I certify that:

 

(Check
one)

 

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

 

o            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 Book Net Worth. Pursuant to Section 5.2(a)
of the Credit Agreement, as of the Reporting Date, Company’s Book Net Worth was
$[                       ],
which o satisfies o does not
satisfy the requirement that such amount be not less than the applicable amount
set forth in the table below (numbers appearing between “< >” are
negative) on the Reporting Date:

 

	
  Test Date

  	
   

  	
  Minimum Book Net Worth

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  61,000,000

  	
   

  
	
  January 31, 2009

  	
   

  	
  $

  	
  57,000,000

  	
   

  
	
  February 28, 2009

  	
   

  	
  $

  	
  52,700,000

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  51,000,000

  	
   

  
	
  April 30, 2009

  	
   

  	
  $

  	
  48,150,000

  	
   

  
	
  May 31, 2009

  	
   

  	
  $

  	
  45,300,000

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  46,500,000

  	
   

  
	
  July 31, 2009

  	
   

  	
  $

  	
  43,900,000

  	
   

  
	
  August 31, 2009

  	
   

  	
  $

  	
  41,300,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  44,450,000

  	
   

  
	
  October 31, 2009

  	
   

  	
  $

  	
  42,100,000

  	
   

  
	
  November 30, 2009

  	
   

  	
  $

  	
  39,850,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  44,600,000

  	
   

  
	
  January 31, 2010

  	
   

  	
  $

  	
  42,250,000

  	
   

  
	
  February 28, 2010

  	
   

  	
  $

  	
  40,000,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  45,150,000

  	
   

  

 

2.             Minimum Net Income. Pursuant to Section 5.2(b)
of the Credit Agreement, as of the Reporting Date, Company’s Net Income was [$                 ],
which o satisfies o does not
satisfy the requirement that Net Income be not less than the amount set forth
in the table below (numbers appearing between “< >” are negative) on the
Reporting Date:

 

	
  Test
  Date

  	
   

  	
  Minimum
  Net Income

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  <10,800,000

  	
  > 

  
					

 

E-2

 

	
  Test
  Date

  	
   

  	
  Minimum
  Net Income

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  <11,000,000

  	
  > 

  
	
  June 30, 2009

  	
   

  	
  $

  	
  <5,750,000

  	
  > 

  
	
  September 30, 2009

  	
   

  	
  $

  	
  <3,200,000

  	
  > 

  
	
  December 31, 2009

  	
   

  	
  $

  	
  <1,000,000

  	
  > 

  
	
  March 31, 2010

  	
   

  	
  $

  	
  <500,000

  	
  > 

  

 

3.             Minimum Cash to Unreimbursed Line of Credit Advances
Coverage Ratio. Pursuant to Section 5.2(c) of the Credit
Agreement, as of the Reporting Date, at all times, Company has o has not o been in compliance with the
requirement that the percentage of the unreimbursed “Advances” plus the “L/C
Amount” under the Domestic Facility Agreement plus outstanding Advances under
the Revolving Notes to the amount of cash plus Cash Equivalents of Company in
which Wells Fargo has a perfected first priority security interest be not
greater than 80%.

 

4.             Capital Expenditures. Pursuant to Section 5.2(d)
of the Credit Agreement, for the year-to-date period ending on the Reporting
Date, Companies have expended or contracted to expend during the fiscal year
ended                    ,
200      , for Capital Expenditures, $                     in
the aggregate, which o satisfies o does not satisfy the requirement
that such expenditures not exceed $7,500,000 in the aggregate during the fiscal
year ended March 31, 2009, $10,000,000 in the aggregate during the fiscal
year ended March 31, 2010, 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

  

 

E-3

 

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

 

PERMITTED LIENS

 

	
  Creditor

  	
   

  	
  Collateral

  	
   

  	
  Jurisdiction

  	
   

  	
  Filing
  Date

  	
   

  	
  Filing
  No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GE Business Credit
  Corporation

  	
   

  	
  Various equipment

  	
   

  	
  Delaware

  	
   

  	
  Original Filing Date:
  8/13/01

  Continuation Filing Date: 2/15/06

  	
   

  	
  10826789

  
	
  GE Business Credit
  Corporation

  	
   

  	
  Various equipment

  	
   

  	
  Delaware

  	
   

  	
  Original Filing Date: 8/13/01

  Continuation Filing Date: 2/15/06

  	
   

  	
  10826805

  
	
  GE Business Credit
  Corporation

  	
   

  	
  Various equipment

  	
   

  	
  Delaware

  	
   

  	
  Original Filing Date:
  8/13/01

  Continuation Filing Date: 2/15/06

  	
   

  	
  10826953

  
	
  GE Business Credit
  Corporation

  	
   

  	
  Various equipment

  	
   

  	
  Delaware

  	
   

  	
  Original Filing Date:
  8/13/01

  Continuation Filing Date: 2/15/06

  	
   

  	
  10826979

  
	
  GE Business Credit
  Corporation

  	
   

  	
  Various equipment

  	
   

  	
  Delaware

  	
   

  	
  Original Filing Date:
  8/13/01

  Continuation Filing Date: 2/15/06

  	
   

  	
  10827001

  
	
  GE Business Credit
  Corporation

  	
   

  	
  Various equipment

  	
   

  	
  Delaware

  	
   

  	
  Original Filing Date:
  8/13/01

  Continuation Filing Date: 2/15/06

  	
   

  	
  10827035

  
	
  Crown Credit Company

  	
   

  	
  Daewoo Lift Truck,
  G25P-186, SN: DZ-00140

  	
   

  	
  Delaware

  	
   

  	
  7/28/03

  	
   

  	
  31940421

  

 

F-1

 

	
  Creditor

  	
   

  	
  Collateral

  	
   

  	
  Jurisdiction

  	
   

  	
  Filing Date

  	
   

  	
  Filing No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General Electric Capital
  Corporation

  	
   

  	
  Various equipment

  	
   

  	
  Delaware

  	
   

  	
  1/11/06

  	
   

  	
  60109413

  

 

INDEBTEDNESS

 

None.

 

GUARANTIES

 

None.

 

F-2

 

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

 

Borrowing
Base Certificate for Ex-Im Guaranteed Line

 

(See
attached form)

 

 

BORROWING
BASE CERTIFICATE (“BBC”) FOR EXPORT LINE

Exhibit B
to Ex-Im Working Capital Guarantee Credit Agreement

 

To:
John Curry, VP, Wells Fargo Business Credit

Tel: 
626-685-9918   Fax:
626-844-9063   curry.john@wellsfargo.com

To:
Edmund Catolico, VP, Wells Fargo HSBC Trade Bank

Tel: 
415-396-6166   Fax:
415-975-6558  
edmund.catolico@wellsfargo.com

 

	
  As of Date (“Reporting
  Date”):

  	
   

  

 

Borrower: Capstone Turbine Corporation

 

In
accordance with the Ex-Im Working Capital Guarantee Credit Agreement dated as of
December XX, 2008 (the “Credit Agreement”) and subsequent Amendment, set
forth below is the calculation of the Borrowing Base and Availability as of the
date shown above (the “Reporting Date”). 
All terms used in this certificate have the meanings given to them in
the Credit Agreement.  Unless otherwise
indicated, all amounts are as of the Reporting Date.

 

Per
Section 2.04 of the Ex-Im Borrower Agreement, the Borrowing Base
Certificate must be supported by Export Orders from Borrower’s Buyers.  This can be submitted monthly in summary form
per tab 2 below or by submitting written export orders.

 

At
the end of each calendar quarter, Borrower is to submit with this Borrowing
Base Certificate copies of invoices and corresponding export orders that
represent at least 10% of the total number of invoices and export orders and at
least 10% of the dollar amount of total export-related A/R.  These copies should be faxed or e-mailed in
PDF format to Edmund Catolico at 415.975.6558 or
edmund.catolico@wellsfargo.com.

 

	
   

  	
   

  	
  Amount

  
	
  A.    Eligible
  Export-Related Accounts Receivable

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A.
  Beginning Gross Export A/R from prior month

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  a. Add
  Export Sales: enter positive figure

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  b.
  Less Export Payments received: enter positive figure

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  c.     Less Credit
  memos or other adjustments: enter positive figure

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total
  of Control Balance = A + a - b - c

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  G/L
  Balance

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A/R
  Aging Balance

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.
  Export A/R Beginning Balance (Use lower of Control, G/L or A/R Aging
  balance).

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2.
  Ineligible Export-Related Accounts Receivable

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  aa.
  That is due and payable more than ninety (90) days from the earlier of the
  invoice or shipment date (i.e. selling terms)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ab.
  For Accounts owed by Banking Production Center (“BPC”) with selling terms of
  90 day or less, that is not paid within one hundred twenty (120) calendar
  days from invoice date;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ac.
  Accounts owed by an account debtor, regardless of whether otherwise eligible,
  to the extent that the balance of such Accounts exceeds fifteen percent (15%) of the aggregate amount of all
  Eligible Export-Related and Domestic Accounts;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ad.
  Accounts owned by an account debtor, regardless of whether otherwise
  eligible, if 25% or more of the total amount due under Accounts from such
  debtor is ineligible under clauses (aa), (ab) or (ac) above (cross aging);

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  b.
  That portion of Accounts that is subject to any offset, deduction, defense,
  dispute, or counterclaim or the Buyer is also a creditor or supplier of the
  Borrower or the Account Receivable is contingent in any respect or for any
  reason;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  c.
  That portion of Accounts that have not been shipped to the Buyer or when the
  Items are services, such services have not been performed or when the Export
  Order specifies a timing for invoicing the Items other than shipment or
  performance and the Items have not been invoiced in accordance with such
  terms of the Export Order, or the Accounts Receivable otherwise do not
  represent a final sale;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  d.
  That portion of Accounts for which an invoice has not been sent to the
  applicable account debtor

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  e.
  That portion of Accounts that is disputed or subject to a claim of offset or
  a contra account or credit memos for amounts previously billed and collected;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  f.
  Any Account that is due and payable from a Buyer who (A) applies for,
  suffers, or consents to the appointment of, or the taking of possession by, a
  receiver, custodian, trustee or liquidator of itself or of all or a
  substantial part of its property or calls a meeting of its creditors, (B) admits
  in writing its inability, or is generally unable, to pay its debts as they
  become due or ceases operations of its present business, (C) makes a
  general assignment for the benefit of creditors, (D) commences a
  voluntary case under any state or federal bankruptcy laws (as now or
  hereafter in effect), (E) is adjudicated as bankrupt or insolvent,
  (F) files a petition seeking to take advantage of any other law
  providing for the relief of debtors, (G) acquiesces to, or fails to have
  dismissed, any petition which is filed against it in any involuntary case
  under such bankruptcy laws, or (H) takes any action for the purpose of
  effecting any of the foregoing;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  g.
  Any Account owed by an Owner, Subsidiary, Affiliate, Officer or employee of
  the Borrower

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  h.
  Any Account not subject to a valid, perfected first priority security
  interest in the Lender’s favor

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  i.
  That portion of Accounts that has been restructured, extended, amended or
  modified

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  j.
  That portion of Accounts that constitutes adverstising, finance charges,
  service charges or sales or excise taxes

  	
   

  	
   

  

 

 

	
  k.
  Accounts that are due and payable from a Buyer located in a country with
  which Ex-Im Bank is prohibited from doing business as designated in the
  Country Limitation Schedule which can be viewed on the website at exim.gov
  under “Apply”. Those countries with an “X” for financing under one year are
  ineligible.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  l.
  Accounts that do not comply with the requirements of the Country Limitation
  Schedule (“CLS”). Some countries which are open for short-term Ex-Im support
  have restrictions outlined in the footnotes which may make these receivables
  ineligible.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  m.
  Accounts that arise from the sale of Items containing less than fifty percent
  (50%) US Content;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  n.
  Accounts that the Lender or Ex-Im Bank deems uncollectible or unacceptable
  for any reason

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  o.
  Accounts denominated in any currency other than United States dollars, unless
  otherwise approved in writing by Ex-Im Bank

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  p.
  Accounts with respect to which the Borrower has not instructed the Account
  debtor to pay the Account to the Borrower’s Account

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  q.
  Accounts owed by debtors located in countries not acceptable to the Lender or
  Ex-Im Bank in their sole discretion

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  r.
  Accounts which are not otherwise “Eligible Export-Related Accounts
  Receivable”, as such term is defined in the Borrower Agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  s.
  Any Account that does not arise from the sale of Items in the ordinary course
  of the Borrower’s business

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  t.
  Any Account as to which any covenant, representation or warranty contained in
  the Loan Documents with respect to such Account Receivable has been breached;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  u.
  Any Account that is not owned by the Borrower or is subject to any right,
  claim or interest of another Person other than the Liens in favor of the
  Lender;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  v.
  Any Account that arises from the sale of defense articles or defense
  services;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  w.
  Any Account that is backed by a letter of credit unless the Items covered by
  the subject letter of credit have been shipped or if a service milestone, the
  service has been performed in accordance with the terms of the letter of
  credit;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  x.
  Any Account that is due and payable from a military Buyer, except as may be
  approved in writing by Ex-Im Bank

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  y.
  Any Account that does not comply with the terms of sale set forth in
  Section 7 of the Loan Authorization Agreement

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  z.
  Any Account that arises from a bill and hold, guaranteed sale, sale and
  return, sale on approval, consignment or any other repurchase or return basis
  or is evidenced by chattel paper

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  za.
  Any Account for which the Borrower has made any agreement with the Buyer for
  any deduction therefrom, except for discounts or allowances made in the
  ordinary course of business for prompt payment, all of which discounts or
  allowances are reflected in the calculation of the face value of each
  respective invoice related thereto

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  zb.
  Any Account for which any of the Items giving rise to such Account Receivable
  have been returned, rejected or repossessed;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  zc.
  Any Account arising from retainage, i.e. where the retention payment is
  subject to further performance.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  zd.
  Accounts otherwise deemed unacceptable to the Lender and Ex-Im Bank in their
  sole discretion (under 20k invoices and down payments)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ze.
  Total ineligibles (sum of 2.a through 2.ze)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3.
  Total Eligible Export-Related Accounts Receivable (line 1 less line 2.ze)

  	
   

  	
   

  

 

	
   

  	
   

  	
  Amount

  
	
  B.    Eligible Total Inventory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.
  Total raw materials at the lower of cost or market value as determined in
  accordance with GAAP.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.a
  Total Work-In-Process inventory at the lower of cost or market value as
  determined in accordance with GAAP.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.b.
  Total Finished Goods inventory at the lower of cost or market value as
  determined in accordance with GAAP.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.c.
  Total eligible inventory, or total raw materials

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5.
  Ineligible Inventory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (i) that
  is not subject to a valid, perfected first priority Lien in favor of the
  Lender or is subject to a security interest in favor of any Person other than
  the Lender;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (ii) that
  is located at an address that has not been approved by the Lender in writing;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (iii) that
  is placed by the Borrower on consignment or held by the Borrower on
  consignment from another Person;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (iv) that
  is in-transit, covered by any negotiable or non-negotiable warehouse receipt,
  bill of lading or other document of title; in the possession of a processor
  or bailee, or located on premises leased or subleased to the Borrower, or on
  premises subject to a mortgage in favor of a Person other than the Lender,
  unless such processor or bailee or mortgagee or the lessor or sublessor of
  such premises, as the case may be, has executed and delivered all
  documentation which the Lender shall require to evidence the subordination or
  other limitation or extinguishment of such Person’s rights with respect to
  such Inventory and the Lender’s fight to gain access thereto;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (v) that
  is produced in violation of the Fair Labor Standards Act or subject to the
  “hot goods” provisions contained in 29 U.S.C. § 215 or any successor
  statute or section;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (vi) as
  to which any covenant, representation or warranty with respect to such
  Inventory contained in the Loan Documents has been breached;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (vii) that
  is not located in the United States;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (viii) that
  is sample or demonstration Inventory; that is packaging, labels, or office
  supplies

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (ix) that
  consists of proprietary software (i.e. software designed solely for the
  Borrower’s internal use and not intended for resale);

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (x) that
  is damaged, slow moving, obsolete, returned, defective, recalled or unfit for
  further processing or not currently saleable in the normal course of the
  Borrower’s operations;

  	
   

  	
   

  

 

 

	
  (xi)
  that the Borrower has returned, has attempted to return, is in the process of
  returning or intends to return to the vendor thereof;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (xii)
  Inventory otherwise deemed ineligible by the Lender in its discretion.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (xiii)
  Total inventory ineligibles

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5.a
  Total Eligible Inventory (line 5 minus line 5.xiii)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5.b
  Export Sales Percentage calculated on a rolling twelve month basis, updated
  quarterly and calculated on the tab below. Note: export sales do not include
  sales to “foreign” companies located in the U.S.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5.c
  Export Sales Percentage times Total Eligible Inventory derives Export-Related
  Inventory before deducting specific ineligibles relating to export inventory.
  (5.a times 5.b)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  5.d.
  Ineligible Export-Related Inventory

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (i).
  that has been previously exported from the United States

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (ii).
  that is not supported by an Export Order

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (iii).
  that is to be incorporated into Items destined for shipment to a country as
  to which Ex-Im Bank is prohibited
  from doing business as designated in the Country Limitation Schedule or that
  the Borrower has knowledge will be re-exported by a foreign Buyer to a
  country in which Ex-Im Bank is prohibited from doing business

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (iv) that
  is to be incorporated into Items destined for shipment to a Buyer located in
  a country in which Ex-Im Bank coverage is not available for commercial
  reasons as designated in the Country Limitation Schedule, unless and only to
  the extent that such Items are to be sold to such country on terms of a
  letter of credit confirmed by a bank acceptable to Ex-Im Bank

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (v) that
  is to be incorporated into Items whose sale would result in an Account which
  would not be an Eligible Export-Related Account

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (vi) that
  contains less than fifty percent (50%) of U.S. Content

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (vii) that
  constitues nuclear articles or defense articles/services or is destined to be
  sold to a military buyer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (viii) Total
  ineligibles (sum of 5.d.i through 5.d.vii)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  6.
  Total Eligible Export-Related Inventory (line 5.c less line 5.d.vii)

  	
   

  	
   

  

 

	
   

  	
   

  	
  Amount

  
	
  D. Borrowing Base (“BB”)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  7.
  Export Collateral Base: The sum of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (a) 85%
  of Eligible Export Accounts Receivable from line 3.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (b) 50%
  of Eligible Export-Related Inventory from line 6

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (c) The
  lesser of 7.b or $2,000,000 is the inventory figure in the BB

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  8.
  Total Export Collateral Base  (lines
  7.a plus 7.c)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Amount

  
	
  E. Availability

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  9.
  Final Export Collateral Base

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  10.
  Outstanding Principal Balance

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  11.
  Availability: line 9 less line 10

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  12.
  Maximum Line Amount

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  13.
  Maximum Line Amount less sum of Advances

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  14.
  The lesser of lines 11 and 13 is Export Availability. A negative figure
  indicates that additional collateral be supplied or outstanding Advances be
  reduced.

  	
   

  	
   

  

 

The Borrower represents and warrants that this Borrowing Base
Certificate and related schedules are a true and correct statement regarding
the status of the matters set forth herein. The Borrower further represents and
warrants that no Default or Event of Default has occurred and is continuing.
The Borrower acknowledges that any Ex-Im Advances made to the Borrower under
the Credit Agreement will be based upon the Lender’s reliance on the
information contained herein.

 

	
  Capstone
  Turbine Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed
  by:

  	
   

  	
  Date
  Signed & Submitted:

  
	
   

  	
   

  	
   

  
	
  Title
  of Signer:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Note:
  Ex-Im Bank prohibits or restricts its support of short-term transactions for
  various countries shown in its Country Limitation Schedule (“CLS”). The most
  current CLS can be viewed on Ex-Im Bank’s website at www.exim.gov under
  Apply.Exhibit 10.31

 

FIRST AMENDMENT TO CREDIT
AND SECURITY AGREEMENTS

 

THIS FIRST AMENDMENT TO CREDIT AND SECURITY
AGREEMENTS (the “Amendment”), dated June 9, 2009, 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 from time to time, the “Domestic Credit Agreement”),
and (ii) a Credit and Security Agreement (Ex-Im Subfacility), dated February 9,
2009 (as 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, which Wells
Fargo is willing to make 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.                                     Section 5.2(a) of the Credit
Agreements.  Section 5.2(a) of the Credit
Agreements is hereby deleted in its entirety and replaced with the following:

 

“(a)                            Minimum Book
Net Worth.  Company
shall maintain a Book Net Worth, determined as of the following test dates, in
an amount not less than the amount set forth for each such test date (numbers
appearing between “< >” are negative):

 

	
  Test Date

  	
   

  	
  Minimum Book Net Worth

  	
   

  
	
  April 30, 2009

  	
   

  	
  $

  	
  45,791,000

  	
   

  
	
  May 31, 2009

  	
   

  	
  $

  	
  53,826,000

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  53,336,000

  	
   

  
	
  July 31, 2009

  	
   

  	
  $

  	
  50,504,000

  	
   

  
	
  August 31, 2009

  	
   

  	
  $

  	
  47,727,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  48,709,000

  	
   

  
	
  October 31, 2009

  	
   

  	
  $

  	
  46,045,000

  	
   

  
	
  November 30, 2009

  	
   

  	
  $

  	
  43,460,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  46,259,000

  	
   

  
	
  January 31, 2010

  	
   

  	
  $

  	
  43,763,000

  	
   

  
	
  February 28, 2010

  	
   

  	
  $

  	
  41,149,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  45,294,000

  	
   

  

 

 

2.                                     Section 5.2(b) of the Credit
Agreements.  Section 5.2(b) of the Credit
Agreements is hereby deleted in its entirety and replaced with the following:

 

“(a)                            Minimum Net
Income.  Company shall achieve Net
Income, measured on each of the following test dates described below, for the
quarter period ending on each such test date, Net Income of not less than the
amount set forth opposite each such test date (numbers appearing between “<
>” are negative):

 

	
  Test Date

  	
   

  	
  Minimum Net Income

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  <9,226,000

  	
  > 

  
	
  September 30, 2009

  	
   

  	
  $

  	
  <7,003,000

  	
  > 

  
	
  December 31, 2009

  	
   

  	
  $

  	
  <4,826,000

  	
  > 

  
	
  March 31, 2010

  	
   

  	
  $

  	
  <3,341,000

  	
  > 

  

 

3.                                     Section 5.2(e) of the Credit
Agreements.  The following paragraph is added as a new Section 5.2(e) to
the Credit Agreements:

 

“(e)                            Maximum Annual
Loss.  During the fiscal year ending March 31,
2010, Company shall not suffer an Annual Loss in excess of $20,000,000.

 

4.                                     Exhibit A to the Credit Agreements. 
The following defined term is hereby added to Exhibit A to the
Credit Agreements in the appropriate alphabetical order:

 

““Annual Loss” means, as of each fiscal year end,
the after-tax net loss from continuing operations during such fiscal year,
including extraordinary losses but excluding extraordinary gains, as determined
in accordance with GAAP.”

 

5.                                     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.

 

6.                                     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.

 

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

 

8.                                     Accommodation Fee. 
Company shall pay Wells Fargo as of the date hereof a fully earned,
non-refundable fee in the amount of $20,000 in consideration of Wells Fargo’s
execution and delivery of this Amendment (the “Accommodation Fee”).

 

9.                                     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:

 

 

9.1                                 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;

 

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

 

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

 

9.4                                 Payment of the Accommodation Fee
described in Section 8 of this Amendment; and

 

9.5                                 Such other matters as Wells Fargo may
require.

 

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

 

10.1                           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.

 

10.2                           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.

 

10.3                           All of the representations and warranties
contained in Section 4 of, and Exhibit D to, the Credit
Agreements are true and correct 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.

 

11.                               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.

 

 

12.                               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.

 

13.                               Release.  Company and
the Guarantor signing the Acknowledgment and Agreement of Guarantors 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 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 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 FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MIGHT HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.”

 

14.                               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 fees and disbursements of legal counsel. 
Without limiting the generality of the foregoing, Company specifically
agrees to pay all 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 fees,
disbursements, costs and expenses and the fee set forth in Section 8 of
this Amendment.

 

15.                               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]

 

 

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/
  JOHN CURRY

  
	
   

  	
  Print
  Name:

  	
  John
  Curry

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAPSTONE
  TURBINE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ EDWARD REICH

  
	
   

  	
  Print Name:

  	
  Edward 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
Amendment; (ii) consents to the terms (including without limitation the
release set forth in Section 13 of the Amendment) and execution
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:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

1

 

Exhibit E-1

 

Exhibit E to Credit and
Security Agreement

 

COMPLIANCE
CERTIFICATE

 

To:                                                      Wells Fargo
Bank, National Association

Date:                                            [                                    ,
200  ]

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)

 

o                                    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.

 

o                                    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: o was
consented to in advance by Wells Fargo in an Authenticated Record, and/or o is more
fully described in the statement of facts attached to this Certificate.

 

C.                                    Events of Default.  I
certify that:

 

(Check one)

 

o                                    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.

 

o                                    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.

 

E-1-1

 

D.                                    Litigation Matters. 
I certify that:

 

(Check
one)

 

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

 

o                                    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 Book Net Worth. 
Pursuant to Section 5.2(a) of the Credit Agreement, as
of the Reporting Date, Company’s Book Net Worth was
$[                        ],
which o satisfies o does not satisfy the requirement that such
amount be not less than the applicable amount set forth in the table below
(numbers appearing between “< >” are negative) on the Reporting Date:

 

	
  Test Date

  	
   

  	
  Minimum Book Net Worth

  	
   

  
	
  April 30, 2009

  	
   

  	
  $

  	
  45,791,000

  	
   

  
	
  May 31, 2009

  	
   

  	
  $

  	
  53,826,000

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  53,336,000

  	
   

  
	
  July 31, 2009

  	
   

  	
  $

  	
  50,504,000

  	
   

  
	
  August 31, 2009

  	
   

  	
  $

  	
  47,727,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  48,709,000

  	
   

  
	
  October 31, 2009

  	
   

  	
  $

  	
  46,045,000

  	
   

  
	
  November 30, 2009

  	
   

  	
  $

  	
  43,460,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  46,259,000

  	
   

  
	
  January 31, 2010

  	
   

  	
  $

  	
  43,763,000

  	
   

  
	
  February 28, 2010

  	
   

  	
  $

  	
  41,149,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  45,294,000

  	
   

  

 

2.                                       Minimum Net Income. 
Pursuant to Section 5.2(b) of the Credit Agreement, as
of the Reporting Date, Company’s Net Income was
[$                    ],
which o satisfies o does not satisfy the requirement that Net Income
be not less than the amount set forth in the table below (numbers appearing
between “< >” are negative) on the Reporting Date:

 

	
  Test Date

  	
   

  	
  Minimum Net Income

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  <9,226,000

  	
  > 

  
	
  September 30, 2009

  	
   

  	
  $

  	
  <7,003,000

  	
  > 

  
	
  December 31, 2009

  	
   

  	
  $

  	
  <4,826,000

  	
  > 

  
	
  March 31, 2010

  	
   

  	
  $

  	
  <3,341,000

  	
  > 

  

 

E-1-2

 

3.                                       Minimum Cash to Unreimbursed Line
of Credit Advances Coverage Ratio.  Pursuant to Section 5.2(c) of
the Credit Agreement, as of the Reporting Date, at all times, Company has o has not o been
in compliance with the requirement that the percentage of the unreimbursed Line
of Credit Advances under the Revolving Note plus the L/C Amount plus
outstanding “Advances” under the Ex-Im Credit Agreement to the amount of cash
plus Cash Equivalents of Company in which Wells Fargo has a perfected first
priority security interest be not greater than 80%.

 

4.                                       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
                              ,
200      , for Capital Expenditures,
$                                
in the aggregate, which o satisfies o does
not satisfy the requirement that such expenditures not exceed $7,500,000 in the
aggregate during the fiscal year ended March 31, 2009, $10,000,000 in the
aggregate during the fiscal year ended March 31, 2010, and zero for each
subsequent fiscal year.

 

5.                                       Maximum Annual Loss. 
Pursuant to Section 5.2(e) of the Credit Agreement,
during the fiscal year ending March 31, 2010, Company has suffered an
Annual Loss of
$                                      ,
which o satisfies o does
not satisfy the requirement that Company not suffer an Annual Loss in excess of
$20,000,000.

 

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

  

 

E-1-3

 

Exhibit E-2

 

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

COMPLIANCE CERTIFICATE

 

To:                                                      Wells Fargo
Bank, National Association

Date:                                            [                                    ,
200  ]

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)

 

o                                    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.

 

o                                    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: o was
consented to in advance by Wells Fargo in an Authenticated Record, and/or o is more
fully described in the statement of facts attached to this Certificate.

 

H.                                    Events of Default. 
I certify that:

 

(Check one)

 

o                                    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.

 

o                                    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.

 

E-2-1

 

I.                                         Litigation Matters. 
I certify that:

 

(Check
one)

 

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

 

o                                    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 Book Net Worth. 
Pursuant to Section 5.2(a) of the Credit Agreement, as
of the Reporting Date, Company’s Book Net Worth was
$[                        ],
which o satisfies o does not satisfy the requirement
that such amount be not less than the applicable amount set forth in the table
below (numbers appearing between “< >” are negative) on the Reporting
Date:

 

	
  Test Date

  	
   

  	
  Minimum Book Net Worth

  	
   

  
	
  April 30, 2009

  	
   

  	
  $

  	
  45,791,000

  	
   

  
	
  May 31, 2009

  	
   

  	
  $

  	
  53,826,000

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  53,336,000

  	
   

  
	
  July 31, 2009

  	
   

  	
  $

  	
  50,504,000

  	
   

  
	
  August 31, 2009

  	
   

  	
  $

  	
  47,727,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  48,709,000

  	
   

  
	
  October 31, 2009

  	
   

  	
  $

  	
  46,045,000

  	
   

  
	
  November 30, 2009

  	
   

  	
  $

  	
  43,460,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  46,259,000

  	
   

  
	
  January 31, 2010

  	
   

  	
  $

  	
  43,763,000

  	
   

  
	
  February 28, 2010

  	
   

  	
  $

  	
  41,149,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  45,294,000

  	
   

  

 

2.                                       Minimum Net Income. 
Pursuant to Section 5.2(b) of the Credit Agreement, as
of the Reporting Date, Company’s Net Income was
[$                    ],
which o satisfies o does not satisfy the requirement
that Net Income be not less than the amount set forth in the table below
(numbers appearing between “< >” are negative) on the Reporting
Date:

 

	
  Test Date

  	
   

  	
  Minimum Net Income

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  <9,226,000

  	
  > 

  
	
  September 30, 2009

  	
   

  	
  $

  	
  <7,003,000

  	
  > 

  
	
  December 31, 2009

  	
   

  	
  $

  	
  <4,826,000

  	
  > 

  
	
  March 31, 2010

  	
   

  	
  $

  	
  <3,341,000

  	
  > 

  

 

E-2-2

 

3.                                       Minimum Cash to Unreimbursed Line
of Credit Advances Coverage Ratio.  Pursuant to Section 5.2(c) of
the Credit Agreement, as of the Reporting Date, at all times, Company has o has not o been
in compliance with the requirement that the percentage of the unreimbursed “Advances”
plus the L/C Amount under the Domestic Facility Agreement plus outstanding “Advances”
under the Domestic Facility Agreement to the amount of cash plus Cash
Equivalents of Company in which Wells Fargo has a perfected first priority
security interest be not greater than 80%.

 

4.                                       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
                              ,
200      , for Capital Expenditures,
$                                
in the aggregate, which o satisfies o does
not satisfy the requirement that such expenditures not exceed $7,500,000 in the
aggregate during the fiscal year ended March 31, 2009, $10,000,000 in the
aggregate during the fiscal year ended March 31, 2010, and zero for each
subsequent fiscal year.

 

5.                                       Maximum Annual Loss. 
Pursuant to Section 5.2(e) of the Credit Agreement,
during the fiscal year ending March 31, 2010, Company has suffered an
Annual Loss of
$                                      ,
which o satisfies o does
not satisfy the requirement that Company not suffer an Annual Loss in excess of
$20,000,000.

 

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

  

 

E-2-3

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