EXHIBIT 3.2

                          FORM OF AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                          CAPSTONE TURBINE CORPORATION

              CAPSTONE TURBINE CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify:

              FIRST: The name of the Corporation is Capstone Turbine Corporation
and the date of filing of the original Certificate of Incorporation of the
Corporation with the Secretary of State of the State of Delaware is March 9,
2000.

              SECOND: Pursuant to Section 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
amends and restates the provisions of the Certificate of Incorporation of the
Corporation. This Amended and Restated Certificate of Incorporation was duly
approved by the Corporation's Board of Directors and was duly approved by the
holders of the requisite number of shares of the Corporation in accordance with
Sections 242 and 245 of the General Corporation Law of the State of Delaware and
was consented to writing by the written consent of stockholders of the
Corporation in accordance with Section 228 of the General Corporation Law of the
State of Delaware. The number of shares voting in favor of such amendment and
restatement equaled or exceeded the vote required, such required vote being a
majority of the outstanding shares of Common Stock.

              THIRD: The text of the Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety as follows:

                                   ARTICLE I.

              The name of the corporation is Capstone Turbine Corporation (the
"Corporation").

                                   ARTICLE II.

              The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.

                                  ARTICLE III.

        (a) The Corporation is authorized to issue two classes of shares to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation shall have authority to issue is five-hundred
forty-five million (545,000,000) shares. The total number of shares of Common
Stock which the Corporation shall have authority to issue is four-hundred
fifteen million (415,000,000) shares, and the par value of each share of Common
Stock is one-tenth of one cent ($0.001). The total number of shares of Preferred
Stock which the



Corporation shall have authority to issue is one-hundred thirty million
(130,000,000) shares, and the par value of each share of Preferred Stock is
one-tenth of one cent ($0.001). The Preferred Stock may be issued from time to
time, in one or more series, each series to be appropriately designated by a
distinguishing letter or title, prior to the issue of any shares thereof.

        (b) The Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions, if any), the redemption
price or prices, the liquidation preferences, any other designations,
preferences and relative, participating, optional or other special rights, and
any qualifications, limitations or restrictions thereof, of any wholly unissued
series of Preferred Stock, and the number of shares constituting any such
unissued series and the designation thereof, or any of them; and to increase or
decrease the number of shares of any series subsequent to the issue of shares of
that series, but not below the number of shares of such series then outstanding.

                                   ARTICLE IV.

              Six Million Seven Hundred Thousand (6,700,000) shares of the
Preferred Stock are hereby designated as Convertible Preferred Stock, Series A
("Series A Preferred Stock"). Three Million Three Hundred Thirty Three Thousand
Three Hundred and Thirty Four (3,333,334) shares of the Preferred Stock are
hereby designated as Convertible Preferred Stock, Series B ("Series B Preferred
Stock"). Eight Million Eight Hundred Thousand (8,800,000) shares of the
Preferred Stock are hereby designated as Convertible Preferred Stock, Series C
("Series C Preferred Stock"). Three Million One Hundred Twenty Five Thousand
(3,125,000) shares of the Preferred Stock are hereby designated as Convertible
Preferred Stock, Series D ("Series D Preferred Stock"). Ten Million Seven
Hundred Thousand (10,700,000) shares of the Preferred Stock are hereby
designated as Convertible Preferred Stock, Series E ("Series E Preferred
Stock"). Eleven Million Five Hundred Thousand (11,500,000) shares of Preferred
Stock are hereby designated as Senior Convertible Preferred Stock, Series F
("Series F Preferred Stock"). Thirty-Seven Million Five Hundred Thousand
(37,500,000) shares of the Preferred Stock are hereby designated as Senior
Convertible Preferred Stock, Series G ("Series G Preferred Stock"). The relative
preferences, powers, rights, qualifications, limitations and restrictions in
respect of the Common Stock, Series A Preferred Stock, the Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, the Series F Preferred Stock and the Series G Preferred Stock, are as
follows:

        (a) Voting Rights.

              (i) Each holder of record of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock and Series G Preferred Stock
shall be entitled to vote on all matters on which shareholders are entitled to
vote and, except as otherwise expressly provided herein, shall be entitled to
the number of votes equal to the largest whole number of shares of Common Stock
into which such shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock or Series G



                                       2

Preferred Stock, as applicable, could be converted, pursuant to the provisions
of subparagraph (d) hereof, on the record date for the determination of the
shareholders entitled to vote on such matters or, if no such record date is
established, in accordance with the General Corporation Law of the State of
Delaware.

              (ii) Each holder of record of shares of Common Stock shall be
entitled to one vote for each share thereof held. Except as otherwise expressly
provided herein or as required by law, the holders of Series A Preferred Stock,
the holders of Series B Preferred Stock, the holders of Series C Preferred
Stock, the holders of Series D Preferred Stock, the holders of the Series E
Preferred Stock, the holders of the Series F Preferred Stock, the holders of
Series G Preferred Stock and the holders of Common Stock shall vote together and
not as separate classes.

              (iii) The Corporation shall not create a new series or class of
shares having rights, preferences or privileges prior to the shares of the
Series G Preferred Stock, or increase the rights, preferences or privileges of
any series or class having rights, preferences or privileges prior the shares of
the Series G Preferred Stock, without the approval of holders of a majority of
the outstanding shares of the Series G Preferred Stock.

        (b) Dividend Rights.

              (i) Each issued and outstanding share of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock and Series G Preferred Stock
shall entitle the holder of record thereof to receive, when, as and if declared
by the Board of Directors, out of any funds legally available therefor,
dividends in cash at the annual rate per share of Ten Cents ($.10), Fifteen
Cents ($.15), Twenty Cents ($.20), Forty Cents ($.40), Sixty Cents ($.60),
Twenty Cents ($.20) and Forty Cents ($.40), respectively (or such greater amount
per share as such Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock or Series G Preferred Stock would be entitled if such Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or Series G
Preferred Stock were converted into Common Stock), as adjusted for stock splits,
stock dividends, recapitalizations, reclassifications and similar events
(together herein referred to as "Recapitalization Events"), payable quarterly or
otherwise as the Board of Directors may from time to time determine. Dividends
and distributions (other than those solely in Common Stock) may be paid, or
declared and set aside for payment, upon shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock in any calendar year only if dividends shall have been
paid, or declared and set aside for payment on account of all shares of Series F
Preferred Stock and Series G Preferred Stock then issued and outstanding, at the
aforesaid applicable rate for such calendar year. Dividends and distributions
(other than those solely in Common Stock) may be paid, or declared and set aside
for payment, upon shares of Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock in any calendar year only
if dividends shall have been paid, or declared and set aside for payment on
account of all shares of Series A Preferred Stock then issued and outstanding,
at the aforesaid applicable rate for such calendar year. Dividends and
distributions



                                       3

(other than those payable solely in Common Stock) may be paid, or declared and
set aside for payment, upon shares of Common Stock in any calendar year only if
dividends shall have been paid, or declared and set apart for payment (subject
to the rights of any other Series of Preferred Stock which has dividend rights
senior to the Common Stock, if any), on account of all shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series G
Preferred Stock then issued and outstanding, at the aforesaid rates for such
calendar year. Except as hereinafter set forth, the Board of Directors of the
Corporation is under no obligation to pay dividends and the dividend preference
granted herein to shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock and Series G Preferred Stock shall apply only at such
time as the Board of Directors may in its discretion decide to pay or declare
and set aside for payment any dividends on any shares of Common Stock of the
Corporation. The dividend preference granted herein to shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series G
Preferred Stock is subject to any prior payments of dividends required to be
made to any senior shares of preferred stock, if any, which may be issued from
time to time by the Corporation.

              (ii) Until April 1, 1998 with respect to the Series A Preferred
Stock, July 30, 2000, with respect to the Series B Preferred Stock, July 30,
2001 with respect to the Series C Preferred Stock, December 31, 2001 with
respect to the Series D Preferred Stock, August 30, 2002 with respect to the
Series E Preferred Stock, February 26, 2004 with respect to the Series F
Preferred Stock and March 31, 2005 with respect to the Series G Preferred Stock,
the right to dividends upon the issued and outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series G
Preferred Stock shall be non-cumulative and shall not be deemed to accrue,
whether dividends are earned or whether there be funds legally available
therefor, unless and until said dividends shall have been declared by the Board
of Directors.

              (iii) From and after April 1, 1998 with respect to the Series A
Preferred Stock, July 30, 2000 with respect to the Series B Preferred Stock,
July 30, 2001 with respect to Series C Preferred Stock December 31, 2001 with
respect to the Series D Preferred Stock, August 30, 2002 with respect to the
Series E Preferred Stock, February 26, 2004 with respect to the Series F
Preferred Stock and March 31, 2005 with respect to the Series G Preferred Stock,
the right to dividends upon the issued and outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series G
Preferred Stock, respectively, shall be cumulative so that such rights shall be
deemed to accrue from and after April 1, 1998 with respect to the Series A
Preferred Stock, July 30, 2000 with respect to the Series B Preferred Stock,
July 30, 2001 with respect to the Series C Preferred Stock December 31, 2001
with respect to the Series D Preferred Stock, August 30, 2002 with respect to
the Series E Preferred Stock, February 26, 2004 with respect to the Series F
Preferred Stock and March 31, 2005 with respect to the Series G Preferred Stock,
whether earned, or whether there be funds legally available therefor, or whether
said dividends shall have been declared; and if such dividends in respect of any
period beginning April 1, 1998 with respect to the Series A Preferred Stock,
July 30, 2000 with respect to the



                                       4

Series B Preferred Stock, July 30, 2001 with respect to the Series C Preferred
Stock, December 31, 2001 with respect to the Series D Preferred Stock, August
30, 2002 with respect to the Series E Preferred Stock, February 26, 2004 with
respect to the Series F Preferred Stock and March 31, 2005 with respect to the
Series G Preferred Stock, shall not have been declared and either paid or a sum
sufficient for the payment thereof set aside in full, the accumulated unpaid
dividends shall first be paid pro rata on the Series F Preferred Stock and the
Series G Preferred Stock with respect to their respective dividend rates, before
any dividend or other distribution (other than those payable solely in Common
Stock) may be paid, or declared and set apart for payment, to the holders of
shares of Series A Preferred Stock, Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock or
Common Stock, and shall, subject to the last sentence of this subparagraph
(iii), next be paid on the Series A Preferred Stock with respect to its dividend
rate, before any dividend or other distribution (other than those payable solely
in Common Stock) may be paid, or declared and set apart for payment, to the
holders of shares of Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock, the Series E Preferred Stock or Common Stock and shall
next be fully paid pro rata on the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, and the Series E Preferred Stock,
before any dividend or other distribution (other than those payable solely in
Common Stock) may be paid, or declared and set apart for payment, to the holders
of shares of the Common Stock, and shall in any event (except as set forth in
paragraph (d)(ii)(D) of this Article IV below) be paid upon conversion of the
Series A Preferred Stock, the Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock and Series G Preferred Stock, in cash or in Common Stock at its then fair
market value, as determined in good faith by the Board of Directors of the
Corporation, and the Board of Directors shall have the right to determine
whether said payment is made in cash or stock; provided, however, that at the
written request of the holders of a majority of the outstanding shares of Series
A Preferred Stock, a majority of the outstanding shares of Series B Preferred
Stock, a majority of the outstanding shares of the Series C Preferred Stock, a
majority of the outstanding shares of the Series D Preferred Stock, a majority
of the outstanding shares of the Series E Preferred Stock, a majority of the
outstanding shares of Series F Preferred Stock, and a majority of the
outstanding shares of Series G Preferred Stock, the determination of said fair
market value shall be made by an independent reputable investment banking firm
designated by such holders of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock and Series G Preferred Stock and payment for
such determination shall be made in a manner consistent with Article
IV(e)(ii)(A), (B) and (C) hereof. Any accumulation of dividends on the shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or
Series G Preferred Stock shall not bear interest. If all accrued dividends due
on the Series F Preferred Stock and the Series G Preferred Stock have been paid,
but there exists accrued but unpaid dividends due on the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock or Series E Preferred Stock, the accrued but unpaid dividends due to the
holders of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock shall be
paid before any further dividends are paid to the holders of the Series F
Preferred Stock and Series G Preferred Stock. If all accrued dividends due on
the Series A Preferred Stock have been paid, but there exists



                                       5

accrued but unpaid dividends due on the Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock or Series E Preferred Stock, the
accrued but unpaid dividends due to the holders of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock and Series E Preferred Stock
shall be paid before any further dividends are paid to the holders of the Series
A Preferred Stock. After the payment to the holders of Series A Preferred Stock
of any dividends accrued but unpaid for the period of April 1, 1998 to July 30,
2000, no payment of dividends may be paid to the holders of the Series A
Preferred Stock in any year unless all accrued dividends of the holders of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock in respect of prior years shall have been paid.

              (iv) The restrictions on dividends and distributions with respect
to shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock and Series G Preferred Stock set forth in paragraph (b)
hereof are in addition to, and not in derogation of, the other restrictions on
such dividends and distributions set forth herein.

              (v) All holders of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock and Series G Preferred Stock shall, at the time
of any declaration of a dividend or distribution with respect to shares of
Common Stock, be given notice of such declaration, including the amount and
record date for such dividend or distribution, which record date shall be not
less than ten (10) business days after such notice is given (in order to enable
such holders sufficient time to convert all or part of their shares to Common
Stock, if they so choose).

              (vi) In the event this Corporation shall declare a distribution
payable in securities of other persons, evidences of indebtedness issued by this
Corporation or other persons, assets (excluding cash dividends) or options or
rights to purchase any such securities or evidences of indebtedness, then, in
each such case the holders of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock and Series G Preferred Stock shall be entitled
to a proportionate share of any such distribution as though the holders of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and
Series G Preferred Stock were the holders of the number of shares of Common
Stock of the Corporation into which their respective shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or Series G
Preferred Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of the Corporation entitled to
receive such distribution.

        (c) Liquidation Rights.

              (i) Except as set forth below, in the event of a voluntary or
involuntary liquidation, dissolution, or winding up of the Corporation (a
"Liquidation"), the holders of record of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock and Series G Preferred



                                       6

Stock, on a pro rata basis, shall be entitled to receive, prior and in
preference to any distribution of any assets of the Corporation to the holders
of the Common Stock by reason of their ownership thereof, but subject to the
rights of any Series of preferred shares issued from time to time by the
Corporation that has rights senior to the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock on a
Liquidation, out of the assets of the Corporation legally available therefor,
One Dollar ($1.00) per share of Series A Preferred Stock (the "Original Series A
Issue Price"), One Dollar and Fifty Cents ($1.50) per share of Series B
Preferred Stock (the "Original Series B Issue Price"), Two Dollars ($2.00) per
share of Series C Preferred Stock (the "Original Series C Issue Price"), Four
Dollars ($4.00) per share of Series D Preferred Stock (the "Original Series D
Issue Price"), Six Dollars ($6.00) per share of Series E Preferred Stock (the
"Original Series E Issue Price"), Two Dollars ($2.00) per share of Series F
Preferred Stock (the "Original Series F Issue Price") and Four Dollars ($4.00)
per share of Series G Preferred Stock (the "Original Series G Issue Price") as
appropriately adjusted for Recapitalization Events, plus a further amount per
share equal to dividends, if any, (i) then declared and unpaid on account of
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock and Series G Preferred Stock, and (ii) whether or not declared, then
accrued in accordance with the provisions of subparagraph (b)(ii) hereof, before
any payment shall be made or any assets distributed to the holders of shares of
Common Stock. If, upon any Liquidation, the assets thus distributed among the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock and Series G Preferred Stock shall be insufficient to permit
payment to such holders of the full preferential amounts contemplated by this
subparagraph (i), then the entire assets of the Corporation to be distributed
shall be distributed first ratably among the holders of the Series F Preferred
Stock and the Series G Preferred Stock in accordance with their aggregate
liquidation preferences with any remainder then distributed ratably among the
holders of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock in
accordance with their aggregate liquidation preferences.

              (ii) After payment to the holders of record of the shares of the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock, the Series D Preferred Stock, the Series E Preferred Stock, the Series F
Preferred Stock and the Series G Preferred Stock of the amounts set forth in the
preceding subparagraph (i) above, the remaining assets of the Corporation shall
be distributed in like amounts per share to the holders of record of the
Corporation's capital stock, with each share of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock being
treated as the number of shares of Common Stock (giving effect to fractional
shares) into which it could then be converted for such purpose; provided,
however, that if the assets and the funds thus distributed would be sufficient
to permit the payment to the holders of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock of an
amount in excess of Five Dollars ($5.00) per share of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock or Series G Preferred Stock
(as adjusted for



                                       7

Recapitalization Events), then the holders of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series G Preferred Stock shall be
entitled to the full amounts otherwise payable to them pursuant to the preceding
provisions, but shall not be entitled to share in the remaining assets and funds
of the Corporation in excess of Five Dollars ($5.00) per share of Series A
Preferred Stock, Series B Preferred Stock Series C Preferred Stock Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or Series G
Preferred Stock (as adjusted for Recapitalization Events), until such time as
the holders of Common Stock have received or been entitled to receive Five
Dollars ($5.00) per share of Common Stock held, after which payment, the
remaining assets of the Corporation shall be distributed in like amounts per
share to the holders of record of the Corporation's stock, each share of Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series G
Preferred Stock being treated as the number of shares of Common Stock (giving
effect to fractional shares) into which it could then be converted for such
purpose.

              (iii) A consolidation or merger of the Corporation with or into
any other corporation (other than a reincorporation merger) except where the
Corporation is the surviving entity and the shareholders prior to such
consolidation or merger own more than 50% of the capital stock of the surviving
entity generally in the same proportion to each other as existed prior to such
consolidation or merger, or a sale of all or substantially all of the assets of
the Corporation, shall each be deemed, unless holders of record of at least
sixty-seven percent (67%) of the outstanding shares of Preferred Stock vote
otherwise, to be a Liquidation within the meaning of this Paragraph (c) and
shall entitle the holders of the Corporation's Stock to receive at the closing
in cash, securities or other property, valued at the fair market value of such
securities or other property as determined in good faith by the Board of
Directors, amounts as specified in subparagraphs (c)(i) and (c)(ii) above.

        (d) Conversion Rights. The holders of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock and Series G Preferred Stock
shall have conversion rights (the "Conversion Rights") as follows:

              (i) Right to Convert. Each holder of record of shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or Series G
Preferred Stock may, at any time, upon surrender to the Corporation of the
certificates therefor at the principal office of the Corporation or at such
other place as the Corporation shall designate, convert all or any part of such
holder's shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock or Series G Preferred Stock into such number of fully paid and
nonassessable shares of Common Stock of the Corporation (as such Common Stock
shall then be constituted) equal to the product of (A) the number of shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or
Series G Preferred Stock which such holder shall then surrender to the
Corporation, multiplied by (B) the number determined by dividing: (1) in the
case of the Series A Preferred Stock, One Dollar ($1.00) by



                                       8

the Conversion Price (as hereinafter defined) per share for the Series A
Preferred Stock in effect at the time of conversion, (2), in the case of the
Series B Preferred Stock, One Dollar and Fifty Cents ($1.50) by the Conversion
Price per share for the Series B Preferred Stock in effect at the time of
conversion, (3), in the case of the Series C Preferred Stock, Two Dollars
($2.00) by the Conversion Price per share for the Series C Preferred Stock in
effect at the time of conversion, (4), in the case of the Series D Preferred
Stock, Four Dollars ($4.00) by the Conversion Price per share for the Series D
Preferred Stock in effect at the time of conversion, (5), in the case of the
Series E Preferred Stock, Six Dollars ($6.00) by the Conversion Price per share
for the Series E Preferred Stock in effect at the time of conversion, (6), in
the case of the Series F Preferred Stock, Two Dollars ($2.00) by the Conversion
Price per share for the Series F Preferred Stock in effect at the time of
conversion, (7), in the case of Series G Preferred Stock, Four Dollars ($4.00)
by the Conversion Price per share for the Series G Preferred Stock in effect at
the time of conversion. Promptly following surrender of such certificates, the
holder shall be entitled to receive certificates evidencing the number of shares
of Common Stock into which such shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series G Preferred Stock are
converted.

              (ii) Automatic Conversion.

                     (A) All outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock and Series G Preferred Stock
shall be deemed automatically converted into such number of shares of Common
Stock as are determined in accordance with subparagraph (d)(i) hereof upon (1)
the consummation of a firm commitment underwritten public offering of the
securities of the Corporation pursuant to a registration statement filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933,
as amended, where the aggregate gross proceeds to the Corporation resulting from
the sale of such securities (before deduction of underwriting discounts and
expenses of sale) is not less than $30,000,000 and the per share sales price of
such securities before such deductions is not less than Eight Dollars ($8.00),
as adjusted for Recapitalization Events, or (2) the affirmative vote of the
holders of record of at least fifty-one percent (51%) of the outstanding shares
of Preferred Stock voting as a class to that effect (either such event being
hereinafter referred to as an "Automatic Conversion Event"). The affirmative
vote of the holders of at least fifty-one percent (51%) of the Series B
Preferred Stock voting as a class to convert to Common Stock shall also result
in the conversion of all of the outstanding shares of Series B Preferred Stock
to Common Stock, at the Conversion Price set forth herein. The affirmative vote
of the holders of at least seventy-five percent (75%) of the Series C Preferred
Stock voting as a class to convert to Common Stock shall also result in the
conversion of all of the outstanding shares of Series C Preferred Stock to
Common Stock, at the Conversion Price for the Series C Preferred Stock set forth
herein. The affirmative vote of the holders of at least seventy-five percent
(75%) of the Series D Preferred Stock voting as a class to convert to Common
Stock shall also result in the conversion of all of the outstanding shares of
Series D Preferred Stock to Common Stock, at the Conversion Price for the Series
D Preferred Stock set forth herein. The affirmative vote of the holders of at
least seventy-five percent (75%) of the Series E Preferred Stock voting as a
class to convert to Common Stock shall also result in



                                       9

the conversion of all of the outstanding shares of Series E Preferred Stock to
Common Stock, at the Conversion Price for the Series E Preferred Stock set forth
herein. The affirmative vote of the holders of at least seventy-five percent
(75%) of the Series F Preferred Stock voting as a class to convert to Common
Stock shall also result in the conversion of all of the outstanding shares of
Series F Preferred Stock to Common Stock, at the Conversion Price for the Series
F Preferred Stock set forth herein. The affirmative vote of the holders of at
least seventy-five percent (75%) of the Series G Preferred Stock voting as a
class to convert to Common Stock shall also result in the conversion of all of
the outstanding shares of Series F Preferred Stock to Common Stock, at the
Conversion Price for the Series F Preferred Stock set forth herein. The
affirmative vote of the holders of at least seventy-five percent (75%) of the
Series G Preferred Stock voting as a class to convert to Common Stock shall also
result in the conversion of all of the outstanding shares of Series G Preferred
Stock to Common Stock, at the Conversion Price for the Series G Preferred Stock
set forth herein.

                     (B) In addition to the Automatic Conversion Events set
forth in subparagraph (A) above, if any holder of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock or Series G Preferred Stock
(by itself or together with affiliated persons or entities which affiliation
shall include (X) any venture fund related to a holder of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock or Series G Preferred
Stock by virtue of having at least two common individuals who are officers,
employees, directors or partners of the entities that are general partners or
managers of such venture funds or (Y) any partner of such venture fund; any such
person or entity, hereinafter an "Affiliate") fails to participate in any
particular financing by the Corporation, consisting of a bridge loan for a term
not in excess of one year or the offering of Convertible Securities (as
hereinafter defined) (an "Additional Offering") where a majority of the Board of
Directors has designated that such financing is subject to this paragraph, by
acquiring in such bridge loan financing or Additional Offering such portion of
the principal amount of the financing or such number of shares as shall equal
the product of (i) the principal amount of the bridge loan or the number of
shares to be offered in the Additional Offering, as the case may be, if any,
offered to all holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock and Series G Preferred Stock, as determined in good
faith by the Board of Directors, multiplied by (ii) a fraction: (a) the
numerator of which is the number of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock held by
such holder (by itself or together with any Affiliate) at the time of such
Additional Offering, and (b) the denominator of which is the total number of
shares of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock and Series G Preferred Stock then outstanding, in each case
determined on the basis of the number of shares of Common Stock into which such
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock or Series G Preferred Stock would be convertible at the Conversion Price
for Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock or Series G Preferred Stock



                                       10

that would be in effect immediately after the transaction, assuming all holders
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or
Series G Preferred Stock participated in the bridge loan financing or purchased
their respective pro rata shares in such Additional Offering (the "Pro Rata
Share"), then to the extent of the percentage of the Pro Rata Share not so
acquired by the holder of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock or Series G Preferred Stock (or by an Affiliate of such
holder) ("Refused Percentage") the number of outstanding shares of such holder's
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or
Series G Preferred Stock determined by multiplying the Refused Percentage by all
outstanding shares of such holder's Series A Preferred Stock Series B Preferred
Stock Series C Preferred Stock Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock or Series G Preferred Stock ("Converted
Percentage") shall be automatically converted into such number of fully paid and
non-assessable shares of Common Stock of the Corporation (as such Common Stock
shall then be constituted) equal to the product of (x) the Converted Percentage
multiplied by (y) the number determined by dividing, in the case of the Series A
Preferred Stock, One Dollar ($1.00) by the Conversion Price for the Series A
Preferred Stock, in the case of the Series B Preferred Stock, One Dollar and
Fifty Cents ($1.50) by the Conversion Price for the Series B Preferred Stock, in
the case of the Series C Preferred Stock, Two Dollars ($2.00) by the Conversion
Price for the Series C Preferred Stock, in the case of the Series D Preferred
Stock, Four Dollars ($4.00) by the Conversion Price for the Series D Preferred
Stock, in the case of the Series E Preferred Stock, Six Dollars ($6.00) by the
Conversion Price for the Series E Preferred Stock, in the case of the Series F
Preferred Stock, Two Dollars ($2.00) by the Conversion Price for the Series F
Preferred Stock and in the case of the Series G Preferred Stock, Four Dollars
($4.00) by the Conversion Price for the Series G Preferred Stock (in each case,
all such Conversion Prices to be as adjusted pursuant to subparagraphs
(d)(iv)(B)-(F), but without giving any effect to any prior or concurrent
adjustments to any Conversion Price pursuant to subparagraph (d)(iv)(A)) per
share for the Series A Preferred Stock, the Series B Preferred Stock, the Series
C Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock,
the Series F Preferred Stock or the Series G Preferred Stock (such event being
hereinafter referred to as an "Additional Automatic Conversion Event"), provided
that no event described in this sentence will be deemed to be an Additional
Automatic Conversion Event unless the portion of the bridge loan financing or
Additional Offering offered to the holders of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock is
offered to all of the holders of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock and
thereby subjects all such holders to the consequences of non-participation in
such bridge loan financing or Additional Offering.

                     (C) On or after the date of occurrence of an Automatic
Conversion Event or an Additional Automatic Conversion Event, and in any event
within 10 days after receipt of notice, by mail, postage prepaid from the
Corporation of the occurrence of such Event, each holder of record of shares of
Series A Preferred Stock, Series B Preferred Stock, Series C



                                       11

Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock or Series G Preferred Stock, as the case may be, shall surrender
such holder's certificates evidencing the Converted Percentage of such shares at
the principal office of the Corporation or at such other place as the
Corporation shall designate, and shall thereupon be entitled to receive
certificates evidencing the number of shares of Common Stock into which such
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock or Series G Preferred Stock are converted (plus additional certificates
representing shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock or Series G Preferred Stock not so converted, if any).
On the date of the occurrence of an Automatic Conversion Event or an Additional
Automatic Conversion Event, each holder of record of shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or Series G
Preferred Stock, as applicable, shall be deemed to be the holder of record of
the Common Stock issuable upon such conversion, notwithstanding that the
certificates representing such shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series G Preferred Stock shall not
have been surrendered at the office of the Corporation, that notice from the
Corporation shall not have been received by any holder of record of shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or
Series G Preferred Stock, or that the certificates evidencing such shares of
Common Stock shall not then be actually delivered to such holder.

                     (D) In the event of the conversion of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock or Series G Preferred
Stock upon the occurrence of an Automatic Conversion Event or an Additional
Automatic Conversion Event, the right to receive any declared or accrued and
unpaid dividends on the shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock or Series G Preferred Stock, as the case may be,
so converted shall be deemed waived by the holders of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock or Series G Preferred Stock
whose shares are being converted pursuant thereto.

              (iii) For purposes of this Amended and Restated Certificate of
Incorporation:

              "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to subparagraphs (d)(iv)(A), deemed to be
issued) by the Corporation, other than shares of Common Stock issued or
issuable:

                        (A) upon conversion of shares of Preferred Stock;



                                       12

                     (B) to officers, directors, or employees of, or consultants
to, the Corporation pursuant to a stock grant or sale or option plan or other
employee stock incentive program approved by the Board of Directors;

                     (C) as a dividend or distribution on Preferred Stock, or
Common Stock to the extent set forth in subparagraphs (d)(iv)(C) and (D) hereof;
and

                     (D) to equipment lessors, banks, lenders, customers or
vendors in connection with financings, sales, or incentive arrangements with
lessors, lenders, or customers.

              "California Series A Preferred Stock" shall include all shares of
Series A Preferred Stock issued by Capstone California.

              "California Series B Preferred Stock" shall include all shares of
Series B Preferred Stock issued by Capstone California.

              "California Series C Preferred Stock" shall include all shares of
Series C Preferred Stock issued by Capstone California.

              "California Series D Preferred Stock" shall include all shares of
Series D Preferred Stock issued by Capstone California.

              "California Series E Preferred Stock" shall include all shares of
Series E Preferred Stock issued by Capstone California.

              "California Series F Preferred Stock" shall include all shares of
Series F Preferred Stock issued by Capstone California.

              "California Series G Preferred Stock" shall include all shares of
Series G Preferred Stock issued by Capstone California.

              "Capstone California" shall mean Capstone Turbine Corporation, a
California corporation, which was merged with and into the Corporation.

              "Common Stock Outstanding" shall include all Common Stock issued
and outstanding and issuable upon exercise of all outstanding Options and
conversion of all outstanding Convertible Securities.

              "Conversion Price" shall mean the price at which shares of the
Common Stock shall be deliverable upon conversion of the Series A Preferred
Stock, the Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or Series G
Preferred Stock as adjusted from time to time as herein provided. The initial
Conversion Price per share for shares of Series A Preferred Stock shall be the
Original Series A Issue Price. The initial Conversion Price per share for shares
of Series B Preferred Stock shall be the Original Series B Issue Price. The
initial Conversion Price per share for shares of Series C Preferred Stock shall
be the Original Series C Issue Price. The initial Conversion Price per share for
shares of Series D Preferred Stock shall be the Original Series D Issue Price.



                                       13

The initial Conversion Price per share for shares of Series E Preferred Stock
shall be the Original Series E Issue Price. The initial Conversion Price per
share for shares of Series F Preferred Stock shall be the Original Series F
Issue Price. The initial Conversion Price per share for shares of Series G
Preferred Stock shall be the Original Series G Issue Price. The Conversion
Prices for the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred
Stock, the Series F Preferred Stock and the Series G Preferred Stock shall be
subject to adjustment as herein provided.

              "Conversion Shares Outstanding" shall include (i) all outstanding
shares of Common Stock previously issued upon conversion of Preferred Stock, and
(ii) all shares of Common Stock issuable upon conversion of outstanding shares
of Preferred Stock.

              "Convertible Securities" shall mean any evidences of indebtedness,
shares or securities, in each case convertible into or exchangeable for
Additional Shares of Common Stock.

              "Effective Price" of Additional Shares of Common Stock shall mean
the quotient determined by dividing the total number of Additional Shares of
Common Stock issued or sold, or deemed to have been issued or sold by the
Corporation under subparagraph (d)(iv)(A), into the aggregate consideration
received or deemed to have been received by the Corporation for such issue under
subparagraph (d)(iv)(A).

              "Issuance Date" shall mean the actual initial date of issuance by
Capstone California of California Series A Preferred Stock, California Series B
Preferred Stock, California Series C Preferred Stock, California Series D
Preferred Stock, California Series E Preferred Stock, California Series F
Preferred Stock or California Series G Preferred Stock, as applicable.

              "Options" shall mean rights, options or warrants to subscribe for
purchase or otherwise acquire Common Stock or Convertible Securities.

              "Reincorporation Merger" shall mean that certain transaction
whereby Capstone California was merged with and into the Corporation.

              (iv) Adjustments to Conversion Price for Diluting Issues.

                     (A) Sale of Shares Below Conversion Price:

                        (1) If at any time or from time to time after an
Issuance Date, the Corporation issues or sells, or is deemed by the express
provisions of this subparagraph (d)(iv)(A) to have issued or sold, Additional
Shares of Common Stock, for an Effective Price per share less than the
Conversion Price then in effect with respect to the series of Preferred Stock
first issued on such Issuance Date, then and in each such case the then existing
Conversion Price for the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock, the Series F Preferred Stock or the Series G Preferred Stock,
as applicable, shall be reduced, as of the opening of business on the date of
such issue or sale, to a price determined by multiplying the Conversion Price
for the Series A



                                       14

Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock,
Series D Preferred Stock, the Series E Preferred Stock, the Series F Preferred
Stock or the Series G Preferred Stock, as applicable, by a fraction (a) the
numerator of which shall be (A) the number of shares of Conversion Shares
Outstanding immediately prior to such issue or sale plus (B) the number of
shares of Common Stock which the aggregate consideration received (or by express
provision hereof deemed to have been received) by the Corporation for the total
number of Additional Shares of Common Stock so issued would purchase at such
Conversion Price for the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock, the Series F Preferred Stock or the Series G Preferred Stock,
as applicable, and (b) the denominator of which shall be (x) the number of
shares of Conversion Shares Outstanding immediately prior to such issue or sale
plus (y) the total number of Additional Shares of Common Stock issued in
connection with such issue or sale. The foregoing formula shall apply to, and
shall constitute the sole adjustment with respect to, any adjustment to any
Conversion Price to be made as a result of any issuance of Additional Shares of
Common Stock after any Issuance Date, regardless of whether occurring before or
after the filing of this amendment and restatement, and any prior formulas and
adjustments are hereby superseded.

                        (2) For the purpose of making any adjustment required
under this subparagraph (d)(iv)(A), the consideration received by the
Corporation for any issue or sale of securities shall (a) to the extent it
consists of cash be computed at the gross amount of cash received by the
Corporation before deduction of any expenses payable by the Corporation and any
underwriting or similar commissions, compensation or concessions paid or allowed
by the Corporation in connection with such issue or sale, (b) to the extent it
consists of property other than cash, be computed at the fair market value of
that property as determined in good faith by the Board of Directors and (c) if
Additional Shares of Common Stock, Convertible Securities rights or options to
purchase either Additional Shares of Common Stock or Convertible Securities are
issued or sold together with other stock or securities or other assets of the
Corporation for a consideration which covers both, be computed (as provided in
clauses (a) and (b) above) as the portion of the consideration so received that
may be reasonably determined in good faith by the Board of Directors to be
allocable to such Additional Shares of Common Stock, Convertible Securities or
rights or options. Without limiting the foregoing, for avoidance of doubt, the
Board may in its discretion treat any issuance of options, warrants or other
Convertible Securities together with any issuance of stock as one combined
issuance of Additional Shares of Common Stock in exchange for the aggregate
consideration received therefor. In addition, for the purpose of making any
adjustment required under this subparagraph (d)(iv)(A), if the Company issues or
sells Additional Shares of Common Stock in one or more transactions occurring
within any six month period on substantially similar terms, and the Board
determines in good faith that such transactions were part of a single plan of
financing, the Board may elect to make only a single Conversion Price adjustment
hereunder, treating all such transactions as one issuance of Additional Shares
of Common Stock in exchange for the aggregate consideration received therefor,
all occurring on the last date of such transactions.

                        (3) For the purpose of the adjustment required under
this subparagraph (d)(iv)(A), if at any time or from time to time after an
Issuance Date the



                                       15

Corporation issues or sells any Options or Convertible Securities (other than
options or rights exercisable for or convertible into shares of Common Stock
referred to in clause (B) of the definition of Additional Shares of Common
Stock), then in each case the Corporation shall be deemed to have issued at the
time of the issuance of such Options or Convertible Securities the maximum
number of Additional Shares of Common Stock (as set forth in the instruments
relating thereto, giving effect to any provision contained therein for a
subsequent adjustment of such number) issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such shares an
amount equal to the total amount of the consideration, if any, received by the
Corporation for the issuance of such Options or Convertible Securities plus, in
the case of such Options, the minimum amounts of consideration, if any (as set
forth in the instruments relating thereto, giving effect to any provision
contained therein for a subsequent adjustment of such consideration), payable to
the Corporation upon the exercise of such Options and, in the case of
Convertible Securities, the minimum amounts of consideration, if any, payable to
the Corporation (other than by cancellation of liabilities or obligations
evidenced by such Convertible Securities which were deemed to have been received
by the Corporation on issuance of such Convertible Securities). No further
adjustment of the Conversion Price for Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series G Preferred Stock, adjusted
upon the issuance of such Options or Convertible Securities, shall be made as a
result of the actual issuance of Additional Shares of Common Stock on the
exercise of any such Options or the conversion of any such Convertible
Securities; provided, however, that if any such Options or the conversion
privilege represented by any such Convertible Securities shall expire without
having been exercised, or are exercised for a lesser number of Additional Shares
of Common Stock or with a greater consideration paid to the Corporation than was
previously deemed to be issued or received by the Corporation, the Conversion
Price for Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock, or Series G Preferred Stock, as the case may be, adjusted upon the
issuance of such Options or Convertible Securities shall be readjusted to the
Conversion Price for Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock or Series G Preferred Stock, as the case may be, which would
have been in effect had an adjustment been made on the basis that the only
Additional Shares of Common Stock so issued were the Additional Shares of Common
Stock, if any, actually issued or sold on the exercise of such Options or rights
of conversion of such Convertible Securities, and such Additional Shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Corporation upon such exercise, plus the consideration, if any,
actually received by the Corporation for the granting of all such Options,
whether or not exercised, plus the consideration received for issuing or selling
the Convertible Securities actually converted plus the consideration, if any,
actually received by the Corporation (other than by cancellation of liabilities
or obligations evidenced by such Convertible Securities which were deemed to
have been received by the Corporation on issuance of such Convertible
Securities) on the conversion of such Convertible Securities.

                        (4) In each case of an adjustment or readjustment of the
Conversion Price for the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock, the Series F



                                       16

Preferred Stock or the Series G Preferred Stock or the number of shares of
Common Stock or other securities issuable upon conversion of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock, the Series E Preferred Stock, the Series F Preferred
Stock or the Series G Preferred Stock, the Corporation, at its expense, shall
cause the chief financial officer of the Corporation to compute such adjustment
or readjustment in accordance with the provisions hereof and prepare a
certificate showing such adjustment or readjustment, and shall mail such
certificate, by first class mail, postage prepaid, to each registered holder of
the Series A Preferred Stock, the Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock or Series G Preferred Stock at the holder's address as shown in the
Corporation's books. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based including a statement of (a) the consideration received or
deemed to be received by the Corporation for any Additional Shares of Common
Stock issued or sold or deemed to have been issued or sold, (b) the Conversion
Price for Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock, the
Series F Preferred Stock or the Series G Preferred Stock at the time in effect
(after giving effect to such adjustment or readjustment), (c) the number of
Additional Shares of Common Stock and (d) the type and amount, if any, of other
property which at the time would be received upon conversion of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock,
Series D Preferred Stock, the Series E Preferred Stock, the Series F Preferred
Stock or the Series G Preferred Stock.

                        (5) Except as expressly provided herein, no adjustment
in the Conversion Price of any share of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series G Preferred Stock shall be
made in respect of the issue of Additional Shares of Common Stock unless the
consideration per share for such Additional Shares of Common Stock issued or
deemed to be issued by the Corporation is less than the Conversion Price in
effect on the date of, and immediately prior to, such issue, for such share of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or
Series G Preferred Stock, respectively.

                     (B) Adjustment for Stock Splits and Combinations. If the
Corporation at any time or from time to time after an Issuance Date effects a
subdivision of the outstanding Common Stock, the Conversion Price for Series A
Preferred Stock, the Conversion Price for Series B Preferred Stock, the
Conversion Price for Series C Preferred Stock, the Conversion Price for Series D
Preferred Stock, the Conversion Price for the Series E Preferred Stock, the
Conversion Price for the Series F Preferred Stock and the Conversion Price for
Series G Preferred Stock then in effect immediately before that subdivision
shall be proportionately decreased, and conversely, if the Corporation at any
time or from time to time after an Issuance Date combines the outstanding shares
of Common Stock, the Conversion Price for Series A Preferred Stock, the
Conversion Price for Series B Preferred Stock, the Conversion Price for Series C
Preferred Stock, the Conversion Price for Series D Preferred Stock, the
Conversion Price for Series E Preferred Stock, the Conversion Price for Series F
Preferred Stock and the Conversion Price for Series G Preferred Stock then in
effect immediately before the combination



                                       17

shall be proportionately increased. Any adjustment under this subparagraph (B)
shall become effective at the close of business on the date the subdivision or
combination becomes effective.

                     (C) Adjustment for Certain Dividends and Distributions. In
the event the Corporation at any time, or from time to time after an Issuance
Date makes, or fixes a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
Additional Shares of Common Stock or any right to acquire Common Stock for no
consideration, then and in each such event the Conversion Price for Series A
Preferred Stock, the Conversion Price for Series B Preferred Stock, the
Conversion Price for Series C Preferred Stock, the Conversion Price for Series D
Preferred Stock, the Conversion Price for Series E Preferred Stock, the
Conversion Price for Series F Preferred Stock and the Conversion Price for
Series G Preferred Stock then in effect shall be decreased as of the time of
such issuance or, in the event such a record date is fixed, as of the close of
business on such record date, by multiplying the Conversion Price for such
Series of Preferred Stock then in effect by a fraction (a) the numerator of
which is the number of shares of Common Stock Outstanding immediately prior to
the time of such issuance or the close of business on such record date, and (b)
the denominator of which shall be the number of shares of Common Stock
Outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the total number of shares of Common Stock
issuable in payment of such dividend or distribution; provided, however, that if
such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Conversion Price
for Series A Preferred Stock, the Conversion Price for Series B Preferred Stock,
the Conversion Price for Series C Preferred, the Conversion Price for Series D
Preferred Stock, the Conversion Price for Series E Preferred Stock, the
Conversion Price for Series F Preferred Stock and the Conversion Price for
Series G Preferred Stock shall be recomputed accordingly as of the close of
business on such record date and thereafter the Conversion Price for Series A
Preferred Stock, the Conversion Price for Series B Preferred Stock, the
Conversion Price for Series C Preferred Stock, the Conversion Price for Series D
Preferred Stock, the Conversion Price for Series E Preferred Stock, the
Conversion Price for Series F Preferred Stock and the Conversion Price for
Series G Preferred Stock shall be adjusted pursuant to this subparagraph
(d)(iv)(C) as of the time of actual payment of such dividends or distributions.

                     (D) Adjustments for Other Dividends and Distributions. In
the event the Corporation at any time or from time to time after the Issuance
Date makes, or fixes a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then in each
such event provision shall be made so that the holders of Series A Preferred
Stock, the holders of Series B Preferred Stock, the holders of Series C
Preferred Stock, the holders of Series D Preferred Stock, the holders of Series
E Preferred Stock, the holders of Series F Preferred Stock and the holders of
Series G Preferred Stock shall receive upon conversion thereof, in addition to
the number of shares of Common Stock receivable thereupon, the amount of
securities of the Corporation which they would have received had their Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or Series G
Preferred Stock been converted into Common Stock on the date of such event and
had they thereafter, during the period from the date of such event to



                                       18

and including the date of conversion, retained such securities receivable by
them as aforesaid during such period, subject to all other adjustments called
for during such period under this paragraph (d) with respect to the rights of
the holders of the Series A Preferred Stock, the holders of Series B Preferred
Stock, the holders of Series C Preferred Stock, the holders of Series D
Preferred Stock, the holders of Series E Preferred Stock, the holders of Series
F Preferred Stock and the holders of Series G Preferred Stock, as the case may
be.

                     (E) Adjustment for Reclassification Exchange and
Substitution. If the Common Stock issuable upon the conversion of Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock, the Series E Preferred Stock, the Series F Preferred
Stock or the Series G Preferred Stock is changed into the same or a different
number of shares of any class or classes of stock, whether by recapitalization,
reclassification or otherwise (other than a subdivision or combination of
shares, a stock dividend or a reorganization, provided for elsewhere in this
paragraph (d)), then and in any such event each holder of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock and Series G Preferred
Stock shall have the right thereafter to convert such stock into the kind and
amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change, by holders of the number of
shares of Common Stock into which such shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock or Series G Preferred Stock
might have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided
herein.

                     (F) Reorganizations. If at any time or from time to time
there is a capital reorganization of the Common Stock (other than a
recapitalization, subdivision, combination, reclassification or exchange of
shares provided for elsewhere in this paragraph (d)), then, as a part of such
reorganization, provision shall be made so that the holders of Series A
Preferred Stock, the holders of the Series B Preferred Stock, the holders of the
Series C Preferred Stock, the holders of the Series D Preferred Stock, the
holders of the Series E Preferred Stock, the holders of the Series F Preferred
Stock and the holders of Series G Preferred Stock shall thereafter be entitled
to receive, upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock or Series G Preferred Stock, as applicable, the
number of shares of stock or cash or other securities or property of the
Corporation to which a holder of Common Stock deliverable upon conversion would
have been entitled on such capital reorganization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this paragraph
(d) with respect to the rights of holders of the Series A Preferred Stock, the
holders of the Series B Preferred Stock, the holders of the Series C Preferred
Stock, the holders of the Series D Preferred Stock, the holders of the Series E
Preferred Stock, the holders of the Series F Preferred Stock and the holders of
the Series G Preferred Stock after the reorganization to the end that the
provisions of this paragraph (d) (including adjustment of the Conversion Price
for Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock or Series G Preferred Stock then in effect and the number of shares
purchasable upon conversion of Series A Preferred Stock, the



                                       19

Series B Preferred Stock, the Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock or Series G Preferred
Stock) shall be applicable after that event and be as nearly equivalent to the
provisions hereof as may be practicable.

              (v) No Impairment. The Corporation will not, by amendment of this
Amended and Restated Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, other than as duly approved by a
majority in interest of the Common Stock and a majority in interest of the
Preferred Stock avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation but will at
all times in good faith assist in the carrying out of all the provisions of this
paragraph (d) and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock, the holders of the Series B Preferred Stock, the
holders of the Series C Preferred Stock, the holders of the Series D Preferred
Stock, the holders of the Series E Preferred Stock, the holders of the Series F
Preferred Stock and the holders of the Series G Preferred Stock against dilution
or other impairment. The Corporation shall at all times reserve and keep
available out of its authorized but unissued Common Stock the full number of
shares of Common Stock deliverable upon the conversion of all the then
outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock and Series G Preferred Stock and shall take all such action and
obtain all such pen-nits or orders as may be necessary to enable the Corporation
lawfully to issue such Common Stock upon the conversion of Series A Preferred
Stock, the Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or Series G
Preferred Stock.

              (vi) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Corporation shall mail to each
holder of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock and Series G Preferred Stock at least twenty (20) days prior to the date
specified herein, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.

        (e) Redemption. The Series A Preferred Stock, the Series B Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock, the Series F Preferred Stock and the Series G Preferred Stock
shall, at the election of the holders of the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock, the Series E Preferred Stock, the Series F Preferred Stock and the Series
G Preferred Stock, as the case may be, be redeemed by the Corporation in two
equal installments in accordance with the following provisions:

              (i) Election to Redeem. The Corporation shall redeem the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock, the Series E Preferred Stock, the Series F Preferred
Stock and the Series G Preferred Stock at the



                                       20

times, and pursuant to the terms, set forth below, if the Corporation receives
written certification (the "Redemption Certificate") that holders of no less
than seventy-five percent (75%) of the then outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock and
the Series G Preferred Stock (the "Electing Holders") voting together as a class
have elected in favor of redemption (the "Redemption Election"). The Redemption
Certificate shall be signed by the Electing Holders and shall be delivered to
the Corporation at its principal office, on or before August 30, 2002.

              (ii) Redemption Price. The Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the
Series E Preferred Stock, the Series F Preferred Stock and the Series G
Preferred Stock shall be redeemed by the Corporation paying in cash, out of
funds legally available therefor, an amount equal to (A) the greater of (1) One
Dollar ($1.00) per share in the case of the Series A Preferred Stock, One Dollar
Fifty Cents ($1.50) per share in the case of the Series B Preferred Stock, Two
Dollars ($2.00) per share in the case of the Series C Preferred Stock, Four
Dollars ($4.00) per share in the case of the Series D Preferred Stock, Six
Dollars ($6.00) per share in the case of the Series E Preferred Stock, Two
Dollars ($2.00) per share in the case of the Series F Preferred Stock and Four
Dollars ($4.00) per share in the case of the Series G Preferred Stock (adjusted
for any Recapitalization Events with respect to such shares) or (2) the fair
market value per share (exclusive of the value of any declared or accrued but
unpaid dividends) as of a date within forty-five (45) days after receipt by the
Corporation of the Redemption Certificate, determined as set forth below, plus
(B) a further amount per share equal to dividends, if any, (1) then declared and
unpaid on account of such Series of Preferred Stock and (2) whether or not
declared, then accrued in accordance with the provisions of subparagraph
(b)(iii) hereof to and including the date fixed for redemption (the "Redemption
Price"). The fair market value of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the
Series E Preferred Stock, the Series F Preferred Stock and the Series G
Preferred Stock shall be determined as follows: the Board of Directors shall
determine the fair market value of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the
Series E Preferred Stock, the Series F Preferred Stock and the Series G
Preferred Stock; provided, however, that (A) if the Board of Directors
determines that the fair market value of each share of Series A Preferred Stock
is greater than One Dollar ($1.00), that the fair market value of each share of
the Series B Preferred Stock is greater than One Dollar and Fifty Cents ($1.50),
that the fair market value of each share of the Series C Preferred Stock is
greater than Two Dollars ($2.00), that the fair market value of each share of
the Series D Preferred Stock is greater than Four Dollars ($4.00), that the fair
market value of each share of the Series E Preferred Stock is greater than Six
Dollars ($6.00), that the fair market value of each share of the Series F
Preferred Stock is greater than Two Dollars ($2.00) or that the fair market
value of each share of the Series G Preferred Stock is greater than Four Dollars
($4.00) (adjusted for any Recapitalization Events with respect to such shares),
the Corporation shall promptly give the shareholders notice thereof and the
holders of a majority of the Corporation's then outstanding Common Stock shall
have the right to contest such determination by giving notice thereof to the
Corporation within fifteen (15) days of the receipt of the Corporation's notice,
and in such event the fair market value of the Series A Preferred



                                       21

Stock, the Series B Preferred Stock, the Series C Preferred Stock, Series D
Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock or
the Series G Preferred Stock, as the case may be, shall be determined by an
independent appraiser paid by the Corporation and mutually acceptable to the
Corporation, the holders of a majority of the Common Stock and the holders of a
majority of the ten outstanding Preferred Stock or (B) if the holders of a
majority of the then outstanding Series A Preferred Stock or (B) if the holders
of a majority of the then outstanding Series A Preferred Stock, the Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series G Preferred Stock contest
the determination of the Board of Directors, then the fair market value of the
Series A Preferred Stock, the Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock or Series G Preferred Stock, as the case may be, shall be determined by an
independent appraiser mutually acceptable to the Corporation and the holders of
a majority of the then outstanding Series A Preferred Stock, the Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series G Preferred Stock. In the
event that the holders of a majority of the Series A Preferred Stock, the Series
B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock,
the Series E Preferred Stock, the Series F Preferred Stock or the Series G
Preferred Stock contest the Board of Director's fair market value determination
with respect to such series of Preferred Stock, the cost of appraisal shall be
borne as follows:

                     (A) if the fair market value determined by the independent
appraiser is less than or equal to ninety percent (90%) of the fair market value
as determined by the Board of Directors, then cost of appraisal shall be borne
by the holders of such Series of Preferred Stock pro rata based on the number of
shares held;

                     (B) if the fair market value determined by the appraiser is
equal to or greater than one-hundred and ten percent (110%) of the fair market
value as determined by the Board of Directors, then the cost of appraisal shall
be borne by the Corporation;

                     (C) if the fair market value of such Series of Preferred
Stock as determined by the independent appraiser is between ninety and
one-hundred and ten percent (90-110%) of the fair market value as determined by
the Board of Directors, then the cost of appraisal shall be borne 50% by the
Corporation and 50% by the holders of such Series of Preferred Stock, with each
such holder paying a pro rata portion of such cost based on the number of shares
held.

              (iii) Mandatory Redemption: Two Installments. The Redemption
Election constitutes an election in favor of a mandatory redemption of all
shares of such Series of Preferred Stock. Such Series of Preferred Stock shall
be redeemed in two equal installments, with the Corporation redeeming 50% of
each holder's Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock or Series G Preferred Stock, as the case may be, in the first
installment and the remaining Series A Preferred Stock, Series B Preferred Stock
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock or Series G Preferred Stock being redeemed in the
second installment. Subject to the Corporation having funds legally available
therefor, the closing of the first installment shall occur on or about



                                       22

January 1, 2003 (the "First Redemption Date") and the closing of the second
installment shall take place on or about January 1, 2004 (the "Second Redemption
Date"). If the Corporation shall not have sufficient funds legally available for
redeeming all Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F
Preferred Stock and Series G Preferred Stock at the First Redemption Date or the
Second Redemption Date, respectively, the Corporation shall, (i) subject to the
rights of any Series of Preferred Stock that has redemption rights senior or
equal to the Series F Preferred Stock or the Series G Preferred Stock, first
redeem all shares of Series F Preferred Stock and Series G Preferred Stock (or,
in the absence of funds legally sufficient therefor, a pro rata share in
accordance with their respective aggregate number of shares), and (ii) with any
remainder funds, subject to the rights of any Series of Preferred Stock that has
redemption rights senior or equal to the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock, then redeem a pro rata portion of each holder's shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock in accordance with their
respective aggregate number of shares. The Corporation shall make such
redemption payments out of funds legally available therefor and shall redeem the
remaining shares to have been redeemed in such installment as soon as
practicable after the Corporation has funds legally available therefor.

              (iv) Redemption Notice. If the Redemption Election has been
received, the Corporation shall mail, postage prepaid, not less than thirty (30)
days nor more than sixty (60) days prior to the First and Second Redemption
Dates, written notice thereof (the "Redemption Notice"), to each holder of
record of the Series of Preferred Stock as to which the Redemption Election has
been exercised with a copy thereof to each other holder of Preferred Stock, in
each case at its post office address last shown on the records of the
Corporation. Each such Redemption Notice shall state:

                     (A) The number of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock or Series G Preferred Stock
held by the holder that the Corporation shall redeem on the Redemption Date
specified in the Redemption Notice;

                     (B) The Redemption Date and Redemption Price;

                     (C) The date upon which the holder's conversion rights (as
set forth in paragraph (d) above) as to such shares terminate, which termination
shall be five days before the Redemption Date; and

                     (D) That the holder is to surrender to the Corporation, in
the manner and at the place designated, its certificate or certificates
representing the shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock or Series G Preferred Stock to be redeemed.

              (v) Surrender of Certificates: Payment. On or before each
Redemption Date, each holder of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or Series G



                                       23

Preferred Stock to be redeemed on such Redemption Date, unless such holder has
exercised its right to convert the shares as provided in paragraph (d) hereof,
shall surrender the certificate or certificates representing such shares to the
Corporation, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Price for such shares shall be payable to the order
of the person whose name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be cancelled and retired.
In the event that fewer than all of the shares represented by such certificate
are redeemed, a new certificate representing the unredeemed shares shall be
issued forthwith.

              (vi) Rights Subsequent to Redemption. If the Redemption Notice
shall have been duly given, and if on each Redemption Date the Redemption Price
therefor is either paid or made available for payment through the deposit
arrangement specified in subparagraph (e)(vii) below, then notwithstanding that
the certificates evidencing any of the shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock or Series G Preferred Stock
so called for redemption shall not have been surrendered, the dividends with
respect to such shares shall cease to accrue after the applicable Redemption
Date and all rights with respect to such shares shall forthwith terminate after
such Redemption Date, except only the right of the holders to receive the
Redemption Price without interest upon surrender of their certificate or
certificates therefor.

              (vii) Deposit of Funds. On or prior to each Redemption Date, the
Corporation shall deposit as a trust fund with any bank or trust company, having
a capital and surplus of at least $100,000,000, a sum equal to the aggregate
Redemption Price of all shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, Series F Preferred Stock and Series G Preferred Stock called for
redemption on such Redemption Date and not yet redeemed or converted, with
irrevocable instructions and authority to the bank or trust company to pay, on
and after each such Redemption Date, the Redemption Price to the respective
holders upon the surrender of their stock certificates. From and after the date
of such deposit (but not prior to each Redemption Date), the shares so called
for redemption on such Redemption Date shall be deemed to have been redeemed.
The deposit shall constitute full payment of the shares to their holders, and
from and after each Redemption Date the shares redeemed on such Redemption Date
shall be deemed to be no longer outstanding, and the holders thereof shall cease
to be shareholders with respect to such shares and shall have no rights with
respect thereto except the rights to receive, from the bank or trust company,
payment of the Redemption Price of the shares, without interest, upon surrender
of their certificates therefor. Any funds so deposited and unclaimed at the end
of one year from the Second Redemption Date shall be released or repaid to the
Corporation, after which the holders of shares called for redemption shall be
entitled to receive payment of the Redemption Price only from the Corporation.

        (f) Status of Converted Shares. In the event any shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, or Series G
Preferred Stock shall be converted pursuant to this Article IV hereof, the
shares so converted shall be canceled, and shall not be issuable by this
Corporation.



                                       24

        (g) Restated Certificate of Incorporation. Upon the conversion of all
outstanding shares of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, and Series G Preferred Stock, this Article IV (the
"Deleted Provisions") shall be of no further force or effect.

        (h) For purposes of this Article IV, all references to "the
Corporation," and other defined terms, including, without limitation, "Effective
Price," "Additional Shares of Common Stock," "Convertible Securities," "Common
Stock Outstanding," "Conversion Shares Outstanding," "Issuance Date," "Preferred
Stock," "Options" or "Conversion Price," shall take into account any issuances
of securities, payment or accrual of dividends, distributions, adjustments,
reorganizations and any other acts by or relating to Capstone California, to the
extent necessary in order that the rights, privileges, or preferences of holders
of Preferred Stock or Convertible Securities after the Reincorporation Merger be
no different than rights, privileges, or preferences such holders would have had
if the Reincorporation Merger had not been consummated and such holder still
held securities of Capstone California rather than of the Corporation.

                                   ARTICLE V.

              In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend and rescind the bylaws of the Corporation.

                                   ARTICLE VI.

              Notwithstanding Article V hereof, the bylaws may be rescinded,
altered, amended or repealed in any respect by the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding voting stock of the Corporation, voting together as a single class.

                                  ARTICLE VII.

              The Board of Directors shall have that number of Directors set out
in the bylaws of the Corporation as adopted or as set from time to time by a
duly adopted amendment thereto by the Board of Directors or stockholders of the
Corporation acting in accordance with Article VI.

                                  ARTICLE VIII.

              In the event of any increase or decrease in the number of
directors each director then serving as such shall nevertheless continue as a
director until the expiration of his or her current term, or his or her prior
death, retirement, resignation or removal.

              Notwithstanding any of the foregoing provisions of this Article
VIII, each director shall serve until his successor is elected and qualified or
until his death, retirement, resignation or removal. Should a vacancy occur or
be created, the remaining directors (even though less than a quorum) may fill
the vacancy for the remaining term of the occurring or created vacancy.



                                       25

                                   ARTICLE IX.

              Elections of directors at an annual or special meeting of
stockholders need not be by written ballot unless the bylaws of the Corporation
shall so provide.

                                   ARTICLE X.

              No action shall be taken by the stockholders except at a duly
convened annual or special meeting of stockholders. The stockholders may not
take action by written consent.

                                   ARTICLE XI.

              Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by the Chairman of the Board of
Directors, or by a majority of the members of the Board of Directors, or by a
committee of the Board of Directors which has been duly designated by the Board
of Directors and whose powers and authority, as provided in a resolution of the
Board of Directors or in the Bylaws of the Corporation, include the power to
call such meetings, but such special meetings may not be called by any other
person or persons; provided, however, that if and to the extent that any special
meeting of stockholders may be called by any other person or persons specified
in any certificate filed under Section 151(g) of the Delaware General
Corporation Law, then such special meeting may also be called by the person or
persons, in the manner, at the times and for the purposes so specified.

                                  ARTICLE XII.

              The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this reservation;
provided, however, that no amendment, alteration, change or repeal may be made
to Article VI, VII, VIII, X, XI or this Article XII without the affirmative vote
of the holders of at least sixty-six and two-thirds percent (66%) of the
outstanding voting stock of the Corporation, voting together as a single class.

                                  ARTICLE XIII.

              Each reference in this Amended and Restated Certificate of
Incorporation to any provision of the Delaware General Corporation Law refers to
the specified provision of the General Corporation Law of the State of Delaware,
as the same now exists or as it may hereafter be amended or superseded.

                                  ARTICLE XIV.

              To the fullest extent permitted by the Delaware General
Corporation Law, the Corporation shall indemnify and advance indemnification
expenses on behalf of all directors and officers of the Corporation. The
Corporation shall indemnify such other persons as may be required by statute or
by the bylaws of the Corporation. The Corporation may, to the fullest



                                       26

extent permitted by the Delaware General Corporation Law, purchase and maintain
insurance on behalf of any director or officer, or such other person as may be
permitted by statute or the bylaws of the Corporation, against any liability
which may be asserted against any director, officer or such other person and may
enter into contracts providing for the indemnification of any director, officer
or such other person to the fullest extent permitted by the Delaware General
Corporation Law. The liability of directors of the Corporation (for actions or
inactions taken by them as directors) for monetary damages shall be eliminated
to the fullest extent permitted by the Delaware General Corporation Law.

              If the Delaware General Corporation Law is hereafter amended to
authorize corporate action further limiting or eliminating the personal
liability of directors, then the liability of the director to the Corporation
shall be limited or eliminated to the fullest extent permitted by the Delaware
General Corporation Law, as so amended from time to time. Any repeal or
modification of this Article XIV by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation on the personal
liability of a director of the Corporation existing at the time of such repeal
or modification.

              FOURTH: Thereafter, pursuant to a resolution of the Board of
Directors, this Amended and Restated Certificate of Incorporation was duly
approved by the holders of the necessary number of shares of the Company's
voting securities in accordance with the provisions of Section 228, 242 and 245
of the Delaware General Corporation Law.

                            (Signature Page Follows)



                                       27

              IN WITNESS WHEREOF, Capstone Turbine Corporation has caused this
certificate to be signed by its duly authorized officer this day of ___________,
2000.

                                       CAPSTONE TURBINE CORPORATION

                                       By:
                                          ------------------------------------
                                          Ake Almgren, President and
                                          Executive Officer

Attest:


- ----------------------------------
Jeff Watts,  Secretary



                                       28