Exhibit 10.2
 
 
TERM CREDIT AGREEMENT
Dated as of January 17, 2008

among
POWERSECURE INTERNATIONAL, INC.,
as the Borrower,
CITIBANK, N.A.,
as Administrative Agent,

and
The Other Lenders Party Hereto
 
 

 

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TABLE OF CONTENTS

         
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
    1            
Section 1.01. Defined Terms
    1  
Section 1.02. Other Interpretive Provisions
    23  
Section 1.03. Accounting Terms
    24  
Section 1.04. Rounding
    25  
Section 1.05. Times of Day
    25  
Section 1.06. References to Agreements and Laws
    25  
 
       
ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS
    25  
 
       
Section 2.01. Term Loans
    25  
Section 2.02. Term Borrowings, Conversions and Continuations of Term Loans
    25  
Section 2.03. Prepayments
    27  
Section 2.04. Repayment of Term Loans
    27  
Section 2.05. Interest
    28  
Section 2.06. Computation of Interest and Fees
    28  
Section 2.07. Evidence of Debt
    29  
Section 2.08. Payments Generally
    29  
Section 2.09. Sharing of Payments
    31  
 
       
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
    31  
 
       
Section 3.01. Taxes
    31  
Section 3.02. Illegality
    33  
Section 3.03. Inability to Determine Rates
    34  
Section 3.04. Increased Costs; Reserves on Eurodollar Rate Loans
    34  
Section 3.05. Compensation For Losses
    35  
Section 3.06. Mitigation Obligations; Replacement of Lenders
    36  
Section 3.07. Survival
    36  
 
       
ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
    37  
 
       
Section 4.01. Conditions of Initial Credit Extension
    37  
Section 4.02. Conditions to all Credit Extensions
    39  
 
       
ARTICLE V. REPRESENTATIONS AND WARRANTIES
    39  
 
       
Section 5.01. Existence, Qualification and Power; Compliance with Laws
    39  
Section 5.02. Authorization; No Contravention
    40  
Section 5.03. Governmental Authorization; Other Consents
    40  
Section 5.04. Binding Effect
    40  
Section 5.05. Financial Statements; No Material Adverse Effect
    40  
Section 5.06. Litigation
    41  
Section 5.07. No Default
    41  
Section 5.08. Ownership of Property; Liens
    41  
Section 5.09. Hazardous Materials
    41  
Section 5.10. Insurance
    42  

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Section 5.11. Taxes
    42  
Section 5.12. ERISA Compliance
    42  
Section 5.13. Subsidiaries
    43  
Section 5.14. Margin Regulations; Investment Company Act
    43  
Section 5.15. Disclosure
    43  
Section 5.16. Compliance with Laws
    43  
Section 5.17. Intellectual Property; Licenses, Etc.
    44  
Section 5.18. Businesses
    44  
Section 5.19. Common Enterprise
    44  
Section 5.20. Solvent
    44  
Section 5.21. Taxpayer Identification Number
    44  
Section 5.22. Employment and Labor Agreements
    44  
Section 5.23. Labor Matters
    45  
 
       
ARTICLE VI. AFFIRMATIVE COVENANTS
    45  
 
       
Section 6.01. Financial Statements
    45  
Section 6.02. Certificates; Other Information
    46  
Section 6.03. Notices
    47  
Section 6.04. Payment of Obligations
    48  
Section 6.05. Preservation of Existence, Etc.
    48  
Section 6.06. Maintenance of Properties
    48  
Section 6.07. Maintenance of Insurance
    48  
Section 6.08. Compliance with Laws
    49  
Section 6.09. Books and Records
    49  
Section 6.10. Inspection Rights
    49  
Section 6.11. Compliance with ERISA
    49  
Section 6.12. Use of Proceeds
    49  
Section 6.13. Further Assurances
    49  
Section 6.14. Subsidiaries and Other Assets
    49  
Section 6.15. Post-Closing Deliveries
    50  
 
       
ARTICLE VII. NEGATIVE COVENANTS
    50  
 
       
Section 7.01. Liens
    50  
Section 7.02. Investments
    52  
Section 7.03. Indebtedness
    53  
Section 7.04. Fundamental Changes
    54  
Section 7.05. Dispositions
    54  
Section 7.06. Restricted Payments
    55  
Section 7.07. ERISA
    55  
Section 7.08. Change in Nature of Business
    55  
Section 7.09. Transactions with Affiliates
    56  
Section 7.10. Burdensome Agreements
    56  
Section 7.11. Use of Proceeds
    56  
Section 7.12. Financial Covenants
    56  
Section 7.13. Capital Expenditures
    56  
Section 7.14. Fiscal Year and Accounting Methods
    56  
Section 7.15. Limitation on Restrictive Agreements
    56  

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Section 7.16. Issuance of Equity Interests
    56  
 
       
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
    57  
 
       
Section 8.01. Events of Default
    57  
Section 8.02. Remedies Upon Event of Default
    59  
Section 8.03. Application of Funds
    60  
 
       
ARTICLE IX. ADMINISTRATIVE AGENT
    61  
 
       
Section 9.01. Appointment and Authority
    61  
Section 9.02. Rights as a Lender
    61  
Section 9.03. Exculpatory Provisions
    61  
Section 9.04. Reliance by Administrative Agent
    62  
Section 9.05. Delegation of Duties
    62  
Section 9.06. Resignation of Administrative Agent
    62  
Section 9.07. Non-Reliance on Administrative Agent and Other Lenders
    63  
Section 9.08. Administrative Agent May File Proofs of Claim
    63  
Section 9.09. Collateral and Guaranty Matters
    64  
 
       
ARTICLE X. MISCELLANEOUS
    65  
 
       
Section 10.01. Amendments, Etc.
    65  
Section 10.02. Notices; Effectiveness; Electronic Communication
    66  
Section 10.03. No Waiver; Cumulative Remedies
    67  
Section 10.04. Expenses; Indemnity; Damage Waiver
    68  
Section 10.05. Payments Set Aside
    69  
Section 10.06. Successors and Assigns
    70  
Section 10.07. Treatment of Certain Information; Confidentiality
    73  
Section 10.08. Set-off
    73  
Section 10.09. Interest Rate Limitation
    74  
Section 10.10. Counterparts; Integration; Effectiveness
    74  
Section 10.11. Survival of Representations and Warranties
    74  
Section 10.12. Severability
    74  
Section 10.13. Replacement of Lenders
    75  
Section 10.14. Exceptions to Covenants
    75  
Section 10.15. Governing Law; Jurisdiction; Etc.
    75  
Section 10.16. Waiver of Right to Trial by Jury
    76  
Section 10.17. USA PATRIOT Act Notice
    77  
Section 10.18. Time of the Essence
    77  
Section 10.19. Existing Credit Agreement
    77  
Section 10.20. ENTIRE AGREEMENT
    77  

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SCHEDULES

     
1.01
  Inactive Subsidiaries
2.01
  Term Commitments and Term Pro Rata Shares
5.05
  Supplement to Interim Financial Statements
5.08
  Fee Property
5.09
  Environmental Matters
5.13
  Subsidiaries and Other Equity Investments
5.22
  Labor Agreements
5.23
  Labor Matters
7.01
  Existing Liens
7.02
  Existing Investments
7.03
  Existing Indebtedness
10.02
  Administrative Agent’s Office, Certain Addresses for Notices

EXHIBITS

     
 
  Form of
 
   
A
  Term Loan Notice
B
  Note
C
  Compliance Certificate
D
  Assignment and Assumption
E
  Guaranty
F
  Deed of Trust

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TERM CREDIT AGREEMENT
     This TERM CREDIT AGREEMENT (this “Agreement”) is entered into as of
January 17, 2008, among POWERSECURE INTERNATIONAL, INC., a Delaware corporation
(the “Borrower”), each lender from time to time party hereto (collectively, the
“Lenders” and individually, a “Lender”), and CITIBANK, N.A., as Administrative
Agent.
     The Borrower has requested that the Lenders provide a term credit facility,
and the Lenders are willing to do so on the terms and conditions set forth
herein.
     In consideration of the mutual covenants and agreements herein contained,
the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
     Section 1.01. Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:
     “Account” has the meaning set forth in the UCC.
     “Acquisition” means the acquisition by any Person of (a) a majority of the
Equity Interests of another Person, (b) all or substantially all of the assets
of another Person or any operating division of another Person or (c) all or
substantially all of a line of business of another Person, in each case whether
or not involving a merger or consolidation with such other Person.
     “Acquisition Consideration” means the consideration given by the Borrower
or any of its Subsidiaries for an Acquisition, including but not limited to the
sum of (without duplication) (a) the fair market value of any cash, property
(including Equity Interests issued in respect of such Acquisition) or services
given, plus (b) the amount of any Indebtedness assumed, incurred or guaranteed
(to the extent not otherwise included) in connection with such Acquisition by
the Borrower or any of its Subsidiaries.
     “Act” has the meaning specified in Section 10.17.
     “Administrative Agent” means Citibank in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent,
and may include any Affiliate of Citibank that performs administrative functions
with respect to fundings and notices and similar matters under the Loan
Documents.
     “Administrative Agent’s Office” means the Administrative Agent’s address
and, as appropriate, account as set forth on Schedule 10.02, or such other
address or account as the Administrative Agent may from time to time notify the
Borrower and the Lenders.
     “Administrative Questionnaire” means an Administrative Questionnaire in a
form supplied by the Administrative Agent.

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     “Affiliate” means, with respect to any Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. Without
limiting the generality of the foregoing, a Person shall be deemed to be
Controlled by another Person if such other Person possesses, directly or
indirectly, power to vote twenty percent (20%) or more of the Equity Interests
having ordinary voting power for the election of directors, managing general
partners or the equivalent.
     “Agent Parties” has the meaning specified in Section 10.02(c).
     “Aggregate Term Commitments” means the Term Commitments of all Lenders.
     “Alternate Base Rate” means for any day a fluctuating rate per annum equal
to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of
interest in effect for such day as publicly announced from time to time by
Citibank. as its “prime rate.” The “prime rate” is a rate set by Citibank based
upon various factors including Citibank’s costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced rate.
Any change in such rate announced by Citibank shall take effect at the opening
of business on the day specified in the public announcement of such change.
     “Alternate Base Rate Loan” means a Term Loan that bears interest based on
the Alternate Base Rate.
     “April 8-K” means the Form 8-K of the Borrower filed with the SEC on
April 20, 2007.
     “Applicable Law” means (a) in respect of any Person, all provisions of Laws
applicable to such Person, and all orders and decrees of all courts and
determinations of arbitrators applicable to such Person and (b) in respect of
contracts made or performed in the State of New York, “Applicable Law” shall
also mean the Laws of the United States of America, including, without
limitation in addition to the foregoing, 12 USC Sections 85 and 86, as amended
to the date hereof and as the same may be amended at any time and from time to
time hereafter, and any other statute of the United States of America now or at
any time hereafter prescribing the maximum rates of interest on loans and
extensions of credit, and the Laws of the State of New York.
     “Applicable Rate” means the following percentages per annum, based upon the
Leverage Ratio as set forth in the most recent Compliance Certificate received
by the Administrative Agent pursuant to Section 6.02(a):

                                      Alternate Base Pricing       Eurodollar
Rate   Rate for Term Level   Leverage Ratio   for Term Loans   Loans
I
  Less than 1.25 to 1.00     1.250       (0.250 )
II
  Greater than or equal to 1.25 to 1.00 but less than 1.75 to 1.00     1.500    
  0.000  

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                                      Alternate Base Pricing       Eurodollar
Rate   Rate for Term Level   Leverage Ratio   for Term Loans   Loans
III
  Greater than or equal to 1.75 to 1.00 but less than 2.25 to 1.00     1.750    
  0.250  
IV
  Greater than or equal to 2.25 to 1.00     2.000       0.500  

     Any increase or decrease in the Applicable Rate resulting from a change in
the Leverage Ratio shall become effective as of the first Business Day
immediately following the date a Compliance Certificate is delivered for any
Fiscal Quarter pursuant to Section 6.02(a); provided, however, that if a
Compliance Certificate is not delivered when due in accordance with such
Section 6.02(a), then Pricing Level IV shall apply as of the first Business Day
after the date on which such Compliance Certificate was required to have been
delivered and shall remain in effect until the first Business Day immediately
following the date such Compliance Certificate is actually delivered to the
Administrative Agent. Notwithstanding the foregoing, the Applicable Rate in
effect from and after the Closing Date through and including the date the
Compliance Certificate is delivered pursuant to Section 6.02(a) for the Fiscal
Quarter ending March 31, 2007 shall be Level 1.
     In the event that any financial statement delivered pursuant to
Section 6.01(a) or 6.01(b) or any Compliance Certificate delivered pursuant to
Section 6.02(a) is shown to be inaccurate (regardless of whether this Agreement
or the Commitments are in effect when such inaccuracy is discovered), and such
inaccuracy, if corrected, would have lead to a higher Applicable Rate for any
period (an “Applicable Period”) than the Applicable Rate applied for such
Applicable Period, then (i) the Borrower shall immediately deliver to the
Administrative Agent a correct Compliance Certificate for such Applicable
Period, (ii) the Applicable Rate shall be determined using the Pricing Level
applicable for such Applicable Period based upon the corrected Compliance
Certificate, and (iii) the Borrower shall immediately pay to the Administrative
Agent the accrued additional interest and fees owing as a result of such
increased Applicable Rate for such Applicable Period, which payment shall be
promptly applied by the Administrative Agent in accordance with the terms
hereof. This paragraph shall not limit the rights of the Administrative Agent
and the Lenders under Section 2.05 and Article VIII and other provisions of this
Agreement. The obligations of the Borrower under this paragraph shall survive
termination of the Commitments and the repayment of all other Obligations
hereunder.
     “Approved Fund” means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
     “Asset Coverage Ratio”, as of any date of determination, for the Borrower
and its Subsidiaries, on a consolidated basis in accordance with GAAP, the ratio
of (a) the sum of (i) 80% of Book Value of Accounts as of such date, (ii) 60% of
Book Value of Inventory as of such date and (iii) 50% of Book Value of Net Fixed
Assets as of such date to (b) the sum of (i) Consolidated Funded Indebtedness as
of such date minus (ii) any outstanding Term Loans on such date.

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     “Assignment and Assumption” means an assignment and assumption entered into
by a Lender and an Eligible Assignee (with the consent of any party whose
consent is required by Section 10.06(b)), and accepted by the Administrative
Agent, in substantially the form of Exhibit D or any other form approved by the
Administrative Agent.
     “Attorney Costs” means and includes all reasonable fees, expenses and
disbursements of any external counsel.
     “Attributable Indebtedness” means, on any date, (a) in respect of any
Capital Lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a Capital Lease; provided, however,
Attributable Indebtedness shall not include any vehicle lease, whether accounted
for as a Capital Lease or an operating lease.
     “Audited Financial Statements” means the audited consolidated balance sheet
of the Borrower and its Subsidiaries for the Fiscal Year ended December 31,
2006, and the related audited consolidated statements of income or operations,
shareholders’ equity and cash flows for such Fiscal Year, including the notes
thereto.
     “Borrower” has the meaning specified in the introductory paragraph hereto.
     “Borrower Materials” means material and/or information provided by or on
behalf of the Borrower hereunder or under any other Loan Document.
     “Business Day” means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office is located and, if
such day relates to any Eurodollar Rate Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in the London
interbank eurodollar market.
     “Capital Expenditures” means, for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a Capital Lease) of fixed or capital assets
that are required to be capitalized under GAAP on a consolidated balance sheet
of such Person and its Subsidiaries, excluding, without duplication, any such
expenditures to the extent constituting (a) expenditures of insurance proceeds
to acquire or repair any asset, (b) leasehold improvement expenditures for which
the Borrower or a Subsidiary is reimbursed by the lessor, sublessor or
sublessee, (c) vehicle leases, or (d) PowerSecure Shared Savings Projects.
     “Capital Lease” means, as of any date, any lease of property, real or
personal, the obligations of lessee in respect of which are required in
accordance with GAAP to be capitalized on the balance sheet of the lessee.
     “Cash and Cash Equivalents” means (a) cash; (b) marketable obligations
issued or unconditionally guaranteed by the U.S. Government or issued by any of
its agencies and backed

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by the full faith and credit of the U.S., in each case maturing within one year
from the date of acquisition (and investments in mutual funds investing
primarily in those obligations); (c) short-term investment grade domestic and
eurodollar certificates of deposit or time deposits that are fully insured by
the Federal Deposit Insurance Corporation or are issued by commercial banks
having combined capital, surplus, and undivided profits of not less than
$500,000,000 (as shown on its most recently published statement of condition);
(d) commercial paper and similar obligations rated “P-1” by Moody’s or “A-1” by
S&P; (e) readily marketable tax-free municipal bounds of a domestic issuer rated
“Aaa” by Moody’s, or “AAA” by S&P, and maturing within one year from the date of
issuance (and investments in mutual funds investing primarily in those bonds);
(f) demand deposit accounts maintained in the ordinary course of business; and
(g) money market mutual funds at least 95% of the assets of which constitute the
items described in clauses (a) through (f) of this definition or a money market
fund or a qualified investment fund given one of the two highest-long-term
ratings available from S&P or Moody’s.
     “Cash Management Document” means any agreement between or among the
Borrower or any Affiliate of Borrower and any Lender or, with the Borrower’s
consent, any Affiliate of such Lender related to treasury management, deposit
accounts, cash management, custodial services, automated clearinghouse or funds
transfer services or arrangements or similar services or arrangement or
otherwise related to or evidencing any Cash Management Obligations.
     “Cash Management Obligations” means all obligations and liabilities of the
Borrower or any of its Subsidiaries owed to any Lender or any Affiliate thereof
arising under or in connection with any Cash Management Document.
     “Change in Law” means the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or taking effect of any Law, rule,
regulation or treaty, (b) any change in any Law, rule, regulation or treaty or
in the administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of Law) by any Governmental Authority.
     “Change of Control” means, with respect to any Person, an event or series
of events by which:
     (a) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act, but excluding any employee benefit plan of such
person or its subsidiaries, and any person or entity acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan), other than
the Equity Investors, becomes the “beneficial owner” (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire (such right, an “option right”), whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 50% or more of the Voting Equity Interests of such Person (and
taking into account all such securities that such person or group has the right
to acquire pursuant to any option right); or
     (b) during any period of 12 consecutive months, a majority of the members
of the board of directors or other equivalent governing body of such Person
ceases to be

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composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and (ii)
above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or
     (c) any Person or two or more Persons acting in concert shall have acquired
by contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation thereof, will result in its or their acquisition of the
power to exercise, directly or indirectly, a controlling influence over the
management or policies of the Borrower, or control over the Voting Equity
Interests of the Borrower on a fully-diluted basis (and taking into account all
such Interests that such Person or group has the right to acquire pursuant to
any option right) representing 50% or more of the combined voting power of such
Interests.
     “Citibank” means Citibank, N.A., and its successors and assigns.
     “Closing Date” means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 4.01 (or, in the
case of Section 4.01(b), waived by the Person entitled to receive the applicable
payment).
     “Code” means the Internal Revenue Code of 1986.
     “Collateral” means any collateral in which a Lien is granted by any Person
to the Administrative Agent to secure the Secured Obligations pursuant to the
Collateral Documents.
     “Collateral Documents” means the Deed of Trust and any document related
thereto.
     “Compliance Certificate” means a certificate substantially in the form of
Exhibit C, with such changes, or in such other form, as agreed to by the
Administrative Agent.
     “Consolidated EBITDA” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the sum of
(a) Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount
of taxes, based on or measured by income, deducted in determining such
Consolidated Net Income, (d) the amount of depreciation and amortization expense
deducted in determining such Consolidated Net Income, (e) all non-cash charges
or losses which do not represent a cash charge or loss in such period or in a
future period, and (f) without duplication, non-recurring charges consisting of
Founders Severance Payments and relocation expenses not to exceed $14,200,000 in
aggregate amount (in each case with respect to the items set forth in
clauses (b) through (f) above, only to the extent included in

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calculating such Consolidated Net Income and without duplication), minus the
following to the extent included in calculating such Consolidated Net Income:
(a) Federal, state, local and foreign income tax credits of the Borrower and its
Subsidiaries for such period, (b) Consolidated Interest Income, and (c) all
non-cash items increasing Consolidated Net Income for such period.
     “Consolidated Funded Indebtedness” means, on any date of determination, the
outstanding principal amount of all Indebtedness of the Borrower and its
Subsidiaries of the type described in clauses (a), (b), (d), (e) and (f) of the
definition of “Indebtedness”, and, without duplication, any Guarantees of the
foregoing, in each case, determined on a consolidated basis in accordance with
GAAP.
     “Consolidated Interest Charges” means, with respect to any period, total
interest expense, whether paid or accrued (including the interest component of
Capital Leases), of the Borrower and Subsidiaries, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and net costs under interest rate contracts and
foreign exchange contracts.
     “Consolidated Interest Income” means, with respect to any period, total
interest income of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period.
     “Consolidated Net Income” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries (excluding extraordinary gains and extraordinary losses) for that
period in accordance with GAAP, provided that there shall be excluded (a) the
income (or loss) of any Person (other than a Subsidiary of the Borrower whose
net income is consolidated into the net income of the Borrower in accordance
with GAAP) in which the Borrower or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of dividends or similar distributions,
and (b) the net income of any Subsidiary of the Borrower to the extent that the
declaration or payment of Dividends or similar distributions by such Subsidiary
is at the time restricted or not permitted by the terms of any Contractual
Obligation (other than under any Loan Document) or requirement of Law applicable
to such Subsidiary.
     “Consolidated Lease Expense” means, for any period, the aggregate amount of
fixed and contingent rentals payable by the Borrower and its Subsidiaries for
such period with respect to lease of real and personal property, determined on a
consolidated basis in accordance with GAAP.
     “Contractual Obligation” means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

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     “Credit Extension” means a Term Borrowing.
     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and
all other liquidation, conservatorship, bankruptcy, assignment for the benefit
of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
     “Deed of Trust” means the fee deed of trust executed by PowerSecure,
substantially in the form of Exhibit F.
     “Default” means any event or condition that constitutes an Event of Default
or that, with the giving of any notice, the passage of time, or both, would be
an Event of Default.
     “Default Rate” means an interest rate per annum equal to the lesser of
(a) the Highest Lawful Rate and (b) the sum of (i) the Alternate Base Rate plus
(ii) the Applicable Rate, if any, applicable to Alternate Base Rate Loans plus
(c) 2% per annum; provided, however, that with respect to a Eurodollar Rate
Loan, the Default Rate shall be an interest rate per annum equal to the lesser
of (a) the Highest Lawful Rate and (b) the sum of (i) the interest rate
(including any Applicable Rate) otherwise applicable to such Loan plus (ii) 2%
per annum.
     “Defaulting Lender” means any Lender that (a) has failed to fund any
portion of the Term Loans required to be funded by it hereunder within one
Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender any
other amount required to be paid by it hereunder within one Business Day of the
date when due, unless the subject of a good faith dispute, or (c) has been
deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.
     “Disposition” or “Dispose” means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any property
by any Person, including any sale, assignment, transfer or other disposal, with
or without recourse, of any notes or accounts receivable or any rights and
claims associated therewith.
     “Disqualified Equity Interests” means any Equity Interests of the Borrower
or any of its Subsidiaries that, either by their terms or by the terms of any
security into which they are convertible or for which they are exchangeable, or
upon the happening of any event or condition (including the passage of time),
(a) matures or is mandatorily redeemable (other than solely for Qualified Equity
Interests), pursuant to a sinking fund obligation or otherwise (except as a
result of a change of control or asset sale so long as any rights of the holders
thereof upon the occurrence of a change of control or asset sale event shall be
subject to the prior repayment in full of the Term Loans and all other
Obligations that are accrued and payable and the termination of the
Commitments), (b) is redeemable at the option of the holder thereof (other than
solely for Qualified Equity Interests), in whole or in part, (c) provides for
the scheduled payments of dividends in cash, or (d) is or becomes convertible
into or exchangeable for Indebtedness, or any other Equity Interests that would
constitute Disqualified Equity Interests, in each case, prior to the date which
is six months after the Term Maturity Date.

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     “Dividends” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of the Borrower or any Subsidiary.
     “Dollar” and “$” mean Lawful money of the United States.
     “Domestic Subsidiary” means any Subsidiary that is organized under the Laws
of any political subdivision of the United States.
     “Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender;
(c) an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent, and (ii) unless an Event of Default
has occurred and is continuing, the Borrower (each such approval not to be
unreasonably withheld or delayed); provided that notwithstanding the foregoing,
“Eligible Assignee” shall not include any Loan Party, the Sponsor or any of
their respective Affiliates or Subsidiaries.
     “Environmental Complaint” has the meaning specified in Section 5.09.
     “Environmental Laws” means any and all Federal, state, local, and foreign
statutes, Laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, licenses, agreements with any Governmental Authority or governmental
restrictions relating to pollution and the protection of the environment or the
release of any Hazardous Materials into the environment.
     “Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.
     “Equity Issuance” means the sale or issuance by the Borrower or any of its
Subsidiaries of any of its Equity Interests in a public offering or in a private
placement or sale.
     “ERISA” means the Employee Retirement Income Security Act of 1974.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan;
(b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any

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ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Sections 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.
     “Eurodollar Rate” means, for any Interest Period with respect to a
Eurodollar Rate Loan, the rate per annum equal to the British Bankers
Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other
commercially available source providing quotations of BBA LIBOR as designated by
the Administrative Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for
Dollar deposits (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period. If such rate is not available at such
time for any reason, then the “Eurodollar Rate” for such Interest Period shall
be the rate per annum determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the first day of such Interest Period
in same day funds in the approximate amount of the Eurodollar Rate Loan being
made, continued or converted by Citibank, N.A. and with a term equivalent to
such Interest Period would be offered by Citibank, N.A.’s London Branch to major
banks in the London interbank eurodollar market at their request at
approximately 4:00 p.m. (London time) two Business Days prior to the
commencement of such Interest Period.
     “Eurodollar Rate Loan” means a Term Loan that bears interest at a rate
based on the Eurodollar Rate.
     “Event of Default” has the meaning specified in Section 8.01.
     “Exchange Act” means the Securities Exchange Act of 1934.
     “Excluded Taxes” means, with respect to the Administrative Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in
lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the Laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
the Borrower is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 10.13), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party hereto (or designates a new Lending
Office) or is attributable to such Foreign Lender’s failure or inability (other
than as a result of a Change in Law) to comply with Section 3.01(e), except to
the extent that such Foreign Lender (or its assignor, if any) was entitled, at
the time of designation of a new Lending Office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 3.01(a).

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     “Existing Credit Agreement” means that certain Credit Agreement, dated as
of August 23, 2007, among the Borrower, Citibank, as administrative agent, and
the lenders party thereto.
     “Existing Credit Agreement Collateral Documents” means the Collateral
Documents as defined in the Existing Credit Agreement.
     “Existing Credit Agreement Obligations” has the meaning specified in
Section 10.19.
     “Extraordinary Receipt” means any cash received by or paid to or for the
account of any Person not in the ordinary course of business, including tax
refunds, pension plan reversions, proceeds of insurance (other than proceeds of
business interruption insurance to the extent such proceeds constitute
compensation for lost earnings), condemnation awards (and payments in lieu
thereof), indemnity payments and any purchase price adjustments; provided,
however, that an Extraordinary Receipt shall not include cash receipts from
proceeds of insurance, condemnation awards (or payments in lieu thereof) or
indemnity payments to the extent that such proceeds, awards or payments (a) in
respect of loss or damage to equipment, fixed assets or real property are
applied (or in respect of which expenditures were previously incurred) to
replace or repair the equipment, fixed assets or real property in respect of
which such proceeds were received in accordance with the terms of
Section 2.03(f) or (b) are received by any Person in respect of any third party
claim against such Person and applied to pay (or to reimburse such Person for
its prior payment of) such claim and the costs and expenses of such Person with
respect thereto.
     “Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Citibank on such
day on such transactions as determined by the Administrative Agent.
     “Fiscal Quarter(s)” means the three-calendar-month periods ending on
March 31, June 30, September 30, and December 31 of each calendar year.
     “Fiscal Year” means the twelve-calendar-month period beginning January 1 of
each year and ending December 31 of each year.
     “Fixed Charge Coverage Ratio” means, as of the date of determination, for
the Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP, the ratio of (a) the sum of (i) Consolidated EBITDA, plus
(ii) Consolidated Lease Expense minus (iii) cash Taxes to (b) the sum of
(i) Consolidated Interest Charges, (ii) scheduled payments of principal of
Consolidated Funded Indebtedness, (iii) Consolidated Lease Expense, and
(iv) Restricted Payments, in each case for the period of four consecutive Fiscal
Quarters ending on such date.

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     “Foreign Lender” means any Lender that is organized under the Laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
For purposes of this definition, the United States, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
     “Foreign Subsidiary” means each Subsidiary of the Borrower that is not a
Domestic Subsidiary
     “Founders Severance Payments” means the payments to be made to W. Phillip
Marcum and A. Bradly Gabbard pursuant to the Separation Agreement and Release
and Employment Agreements.
     “FRB” means the Board of Governors of the Federal Reserve System of the
United States.
     “Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
     “GAAP” means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.
     “Governmental Authority” means the government of the United States or any
other nation, or of any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).
     “Guarantee” means, as to any Person, any (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether

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or not such Indebtedness or other obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain any
such Lien). The amount of any Guarantee shall be deemed to be an amount equal to
the stated or determinable amount of the related primary obligation, or portion
thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term “Guarantee” as a
verb has a corresponding meaning.
     “Guarantors” means each Domestic Subsidiary other than any Inactive
Subsidiary.
     “Guaranty” means any Guaranty executed by any Guarantor in favor of the
Administrative Agent, substantially in the form of Exhibit E.
     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
     “Highest Lawful Rate” means at the particular time in question the maximum
rate of interest which, under Applicable Law, any Lender is then permitted to
charge on the Obligations. If the maximum rate of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligations shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, from time to time as of the effective time of each
change in the Highest Lawful Rate without notice to the Borrower.
     “Inactive Subsidiaries” means those Subsidiaries of the Borrower listed on
Schedule 1.01.
     “Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
     (a) all obligations of such Person for borrowed money and all obligations
of such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;
     (b) all direct or contingent obligations of such Person arising under
letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;
     (c) net obligations of such Person under any Swap Contract;
     (d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);
     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under

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conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;
     (f) Attributable Indebtedness in respect of Capital Leases and Synthetic
Lease Obligations;
     (g) Disqualified Equity Interests;
     (h) Founders Severance Payments; and
     (i) all Guarantees of such Person in respect of any of the foregoing.
     For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person. The amount of any net obligation under any Swap
Contract on any date shall be deemed to be the Swap Termination Value thereof as
of such date.
     “Indemnified Taxes” means Taxes other than Excluded Taxes.
     “Information” has the meaning specified in Section 10.07.
     “Interest Payment Date” means, (a) as to any Term Loan other than a
Alternate Base Rate Loan, the last day of each Interest Period applicable to
such Loan and the Term Maturity Date; provided, however, that if any Interest
Period for a Eurodollar Rate Loan exceeds three months, the respective dates
that fall every three months after the beginning of such Interest Period shall
also be Interest Payment Dates; and (b) as to any Alternate Base Rate Loan, the
last Business Day of each March, June, September and December and the Term
Maturity Date.
     “Interest Period” means, as to each Eurodollar Rate Loan, the period
commencing on the date such Eurodollar Rate Loan is disbursed or converted to or
continued as a Eurodollar Rate Loan and ending on the date one, two, three or
six (or nine or twelve, if consented to by all Lenders) months thereafter, as
selected by the Borrower in its Term Loan Notice; provided that:
     (a) any Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day;
     (b) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and
     (c) no Interest Period shall extend beyond the Term Maturity Date.
     “Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of capital stock or other

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securities of another Person, (b) a loan, advance or capital contribution to,
Guarantee or assumption of debt of, or purchase or other acquisition of any
other debt or equity participation or interest in, another Person, including any
partnership or joint venture interest in such other Person and any arrangement
pursuant to which the investor guarantees Indebtedness of such other Person, or
(c) the purchase or other acquisition (in one transaction or a series of
transactions) of assets of another Person that constitute a business unit. For
purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.
     “IP Rights” has the meaning specified in Section 5.17.
     “IRS” means the United States Internal Revenue Service.
     “Laws” means, collectively, all international, foreign, federal, state and
local statutes, treaties, rules, regulations, ordinances, codes and applicable
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed and enforceable duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority.
     “Lender” has the meaning specified in the introductory paragraph hereto.
     “Lending Office” means, as to any Lender, the office or offices of such
Lender described as such in such Lender’s Administrative Questionnaire, or such
other office or offices as a Lender may from time to time notify the Borrower
and the Administrative Agent.
     “Leverage Ratio” means, as of the date of determination, for the Borrower
and its Subsidiaries on a consolidated basis in accordance with GAAP, the ratio
of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated
EBITDA for the period of four consecutive Fiscal Quarters ending on such date.
For purposes of calculating the Leverage Ratio as at any date, Consolidated
EBITDA shall be calculated on a pro forma basis (as certified by the Borrower to
the Administrative Agent and as approved by an Administrative Agent) assuming
that all Acquisitions and Dispositions completed during the period of four
consecutive Fiscal Quarters ending on such date had been made on the first day
of such period.
     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing).
     “Litigation” means any proceeding, claim, lawsuit, arbitration and/or
investigation by or before any Governmental Authority or arbitrator, including,
without limitation, proceedings, claims, lawsuits, and/or such investigations
conducted by or before any Governmental Authority or arbitrator or pursuant to
any environmental, occupational, safety and health, antitrust, unfair
competition, securities, tax or other Law, or under or pursuant to any contract,
agreement or other instrument.

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     “Loan Documents” means this Agreement, the Notes, the Guaranties, each
Request for Credit Extension, each Compliance Certificate, each Collateral
Document, and any other agreement executed, delivered or performable by any Loan
Party in connection herewith or as security for the Obligations, excluding any
Swap Contract.
     “Loan Parties” means, collectively, the Borrower and each Guarantor.
     “Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, liabilities,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries, taken as a whole; (b) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party; (c) a material adverse effect upon the
Collateral or upon the Liens granted in the Collateral; (d) a material adverse
effect on the ability of the Borrower or any other Loan Party to perform its
obligations under the Loan Documents; or (e) a material adverse effect on the
rights and remedies of the Administrative Agent or the Lenders under the Loan
Documents.
     “Moody’s” means Moody’s Investors Service, Inc., or any successor rating
agency.
     “Mortgaged Property” means the real property and improvements thereon
subject to the Deed of Trust.
     “Multiemployer Plan” means any employee benefit plan of the type described
in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.
     “Net Cash Proceeds” means, with respect to a Disposition or issuance of any
Indebtedness by any Person, the cash proceeds received by such Person in
connection with such transaction (including any cash received in respect of
non-cash proceeds, but only and as when received) after deducting therefrom the
aggregate, without duplication, of the following amounts to the extent properly
attributable to such transaction or to any asset that may be the subject
thereof: (a) all reasonable and customary legal, investment banking, brokerage
and accounting fees and expenses incurred in connection with such Disposition or
issuance, (b) all taxes paid or payable by such Person to be payable in cash in
connection with such Disposition or issuance, (c) payments made by such Person
to retire Indebtedness (other than the Credit Extensions) where payment of such
Indebtedness is required in connection with such Disposition or issuance,
(d) any amounts required to be deposited into escrow in connection with the
closing of such Disposition or issuance (until any such amounts are released
therefrom to such Person) and (e) the amount of any reserve for adjustments in
respect of the sale price of such asset or assets established in accordance with
GAAP (until any such reserve is reversed).
     “Net Equity Proceeds” means, with respect to the sale or issuance after the
Closing Date by the Borrower or any of its Subsidiaries of any of its Equity
Interests, the excess of: (a) the gross cash proceeds received by the Borrower
or such other entity from such sale, exercise or issuance over (b) all
reasonable and customary underwriting commissions and legal, investment

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banking, brokerage and accounting and other professional fees, sales commissions
and disbursements actually incurred in connection with such sale, issuance or
exercise.
     “Net Fixed Assets” means, as of any date of determination, the cost of
fixed assets of the Borrower and its Subsidiaries minus depreciation expense
incurred with respect thereto as of such date of determination, determined on a
consolidated basis in accordance with GAAP.
     “Net Recovery Proceeds” means, with respect to any Recovery Event or
Extraordinary Receipts, the gross cash proceeds (net of reasonable fees, costs
and taxes actually incurred and paid in connection with such Recovery Event or
Extraordinary Receipt and any required permanent payment of Indebtedness (other
than Indebtedness secured pursuant to the Collateral Documents) which is secured
by the property that is the subject of such Recovery Event) received by the
respective Person in connection with such Recovery Event or Extraordinary
Receipt.
     “Note” means a promissory note made by the Borrower in favor of a Lender
evidencing Term Loans made by such Lender, substantially in the form of
Exhibit B.
     “Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, under any treasury management arrangements
with any Lender, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against any Loan Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.
     “Off-Balance Sheet Liabilities” means with respect to any Person as of any
date of determination thereof, without duplication and to the extent not
included as a liability on the consolidated balance sheet of such Person and its
Subsidiaries in accordance with GAAP: (a) with respect to any asset
securitization transaction (including any accounts receivable purchase facility)
(i) the unrecovered investment of purchasers or transferees of assets so
transferred, and (ii) any other payment, recourse, repurchase, hold harmless,
indemnity or similar obligation of such Person or any of its Subsidiaries in
respect of assets transferred or payments made in respect thereof, other than
limited recourse provisions that are customary for transactions of such type and
that neither (x) have the effect of limiting the loss or credit risk of such
purchasers or transferees with respect to payment or performance by the obligors
of the assets so transferred nor (y) impair the characterization of the
transaction as a true sale under applicable Laws (including Debtor Relief Laws);
(b) the monetary obligations under any financing lease or so-called “synthetic,”
tax retention or off-balance sheet lease transaction which, upon the application
of any Debtor Relief Law to such Person or any of its Subsidiaries, would be
characterized as indebtedness; (c) any other monetary obligation arising with
respect to any other transaction which (i) upon the application of any Debtor
Relief Law to such Person or any of its Subsidiaries, would be characterized as
indebtedness or (ii) is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the consolidated balance
sheet of such Person and its Subsidiaries (for purposes of this clause (c), any
transaction

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structured to provide tax deductibility as interest expense of any dividend,
coupon or other periodic payment will be deemed to be the functional equivalent
of a borrowing).
     “Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable certificate or agreement of
formation or organization and any agreement, instrument, filing or notice with
respect thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.
     “Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.
     “Participant” has the meaning specified in Section 10.06(d).
     “PBGC” means the Pension Benefit Guaranty Corporation.
     “Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.
     “Permitted Acquisition” means any Acquisition that satisfied each of the
following requirements:
     (a) both before and after giving effect to such Acquisition and any
financing requested to be made in connection therewith, no Default exists or
will exist or would result therefrom;
     (b) such Acquisition shall not be opposed by the board of directors or
governing body of the Person or assets being acquired;
     (c) no Loan Party shall, as a result of or in connection with any such
acquisition, assume or incur any direct or contingent liabilities (whether
relating to environmental, tax, litigation, or other matters) that could
reasonably be expected, as of the date of such acquisition, to result in the
existence or occurrence of a Material Adverse Effect;
     (d) the applicable requirements set forth in Section 6.14 are satisfied
within the time required therein; and

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     (e) the Person or assets subject to such Acquisition is or are (i) in the
same or related line of business as that conducted by the Borrower and its
Subsidiaries on the date hereof or (ii) in a business that is ancillary and in
furtherance of the line of business as that conducted by the Borrower and its
Subsidiaries on the date hereof.
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
     “Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.
     “Post-Closing Letter” means that certain letter agreement of even date
herewith, executed by Borrower and Administrative Agent, and setting forth the
required time of delivery of certain items otherwise required under Section 4.01
to be delivered to the Administrative Agent on the Closing Date.
     “PowerSecure” means PowerSecure, Inc., a Delaware corporation and
wholly-owned Subsidiary of the Borrower.
     “PowerSecure Shared Savings Projects” means projects whereby PowerSecure
builds and provides on-site power units and equipment on property of its
customers, and PowerSecure retains ownership of such units and equipment, which
projects shall be approved by the Required Lenders (such approval not to be
unreasonably withheld or delayed).
     “Premises” has the meaning set forth in Section 5.09.
     “Property” means the real property to be purchased by PowerSecure located
at 1609 Heritage Commerce Court, Wake Forest, Wake County, North Carolina, the
commercial building located thereon, together with all fixtures and other
improvements located thereon.
     “Qualified Equity Interests” means any Equity Interests that are not
Disqualified Equity Interests.
     “Recovery Event” means any settlement of or payment in respect of any
property insurance or casualty insurance claim or any condemnation proceeding in
or deed in lieu thereof relating to any Collateral.
     “Register” has the meaning specified in Section 10.06(c).
     “Related Parties” means, with respect to any Person, such Person’s
Affiliates and the partners, directors, officers, employees, agents and advisors
of such Person and of such Person’s Affiliates.
     “Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

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     “Request for Credit Extension” means with respect to the Term Borrowing or
a conversion or continuation of Term Loans, a Term Loan Notice.
     “Required Lenders” means, as of any date of determination, (a) when there
is only one Lender, Citibank or its successor and assigns, and (b) where there
is more than one Lender, two or more Lenders having at least 66-2/3% of the
Aggregate Term Commitments or, if the commitment of each Lender to make Term
Loans have been terminated pursuant to Section 8.02 or otherwise, Lenders
holding in the aggregate more than 66-2/3% of the Total Outstandings; provided
that the Term Commitment of, and the portion of the Total Outstandings held or
deemed held by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders.
     “Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer or controller of the Borrower
and, solely for purposes of notices given pursuant to Article II, any other
officer or employee of the Borrower so designated by any of the foregoing
officers in a notice to the Administrative Agent. Any document delivered
hereunder that is signed by a Responsible Officer of the Borrower shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of the Borrower and such Responsible
Officer shall be conclusively presumed to have acted on behalf of the Borrower.
     “Restricted Payment” means, collectively, (a) Dividends, (b) any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest or on account of any return of capital to the Borrower’s
stockholders, partners or members (or the equivalent Person thereof), and
(c) any payment of principal, interest, premium or penalty on any Indebtedness
or any defeasance, redemption, purchase, repurchase, or other acquisition or
retirement for value, in whole or in part, of any Indebtedness (including,
without limitation, the setting aside of assets or the deposit of funds
therefor).
     “S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill,
Inc., or any successor rating agency.
     “SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
     “Secured Creditor” means any of (a) Secured Party, (b) Administrative
Agent, (c) Lenders, (d) any Lender or Affiliate of any Lender that is a party to
any Swap Contract (provided that such Lender was a Lender at the time such Swap
Contract was entered into) with Borrower or any Affiliate of Borrower, (e) any
Lender or Affiliate of any Lender that is owed any Cash Management Obligation
(provided that such Lender was a Lender at the time such Cash Management
Obligation arose), and (f) the beneficiaries of each indemnification obligation
undertaken by any Loan Party under any Loan Document.
     “Secured Obligations” means, collectively, (a) the Obligations, (b) all
Swap Obligations owed to any Lender or an Affiliate of such Lender (provided at
the time of execution of the Swap

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Contract related to such Swap Obligations or prior thereto such Lender is a
party to the Credit Agreement), (c) all Cash Management Obligations, (d) any and
all out-of-pocket expenses (including, without limitation, expenses and
reasonable counsel fees and expenses of any Secured Creditor) incurred by any
Secured Creditor in enforcing its rights under this Agreement or under any other
Loan Document, and (e) all present and future amounts in respect of the
foregoing that would become due but for the operation of any provision of Debtor
Relief Laws, and all present and future accrued and unpaid interest, including,
without limitation, post-petition interest if any Loan Party voluntarily or
involuntarily becomes subject to any Debtor Relief Laws.
     “Securities Act” means the Securities Act of 1933.
     “Solvent” means, with respect to any Person, as of any date of
determination, that the fair value of the assets (tangible and intangible) of
such Person (at fair valuation) is, on the date of determination, greater than
the total amount of liabilities (including contingent and unliquidated
liabilities) of such Person as of such date, that the present fair saleable
value of such assets of such Person will, as of such date, be greater than the
amount that will be required to pay the probable liability of such Person on its
debts as such debts become absolute and matured considering all financing
alternatives and potential asset sales reasonably available to such Person, and
that, as of such date, such Person will be able to pay all liabilities of such
Person as such liabilities mature and such Person does not have unreasonably
small capital with which to carry on its business. In computing the amount of
contingent or unliquidated liabilities at any time, such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability discounted to present value at rates
believed to be reasonable by such Person.
     “Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
Voting Equity Interests (other than securities or interests having such power
only by reason of the happening of a contingency) are at the time beneficially
owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person. Unless
otherwise specified, all references herein to a “Subsidiary” or to
“Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower;
provided, however, for purposes hereof, the Trust shall not be a Subsidiary.
     “Subsidiary Loan Party” means any Loan Party that is a Subsidiary.
     “Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and

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(b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a
“Master Agreement”), including any such obligations or liabilities under any
Master Agreement.
     “Swap Obligations” means any and all obligations under or in connection
with or otherwise owed by the Borrower to any Lender or any Affiliate of a
Lender in respect of a Swap Contract.
     “Swap Termination Value” means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in subsection (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).
     “Synthetic Lease Obligation” means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
     “Taxes” means all present or future taxes, levies, imposts, duties,
deductions, withholdings, assessments, fees or other charges imposed by any
Governmental Authority, including any interest, additions to tax or penalties
applicable thereto.
     “Term Borrowing” means a borrowing by the Borrower consisting of Term Loans
of the same Type and having the same Interest Period made by each of the Lenders
pursuant to Section 2.01.
     “Term Commitment” means, as to each Lender, its obligation to make a Term
Loan to the Borrower pursuant to Section 2.01, in aggregate principal amount not
to exceed the amount set forth opposite such Lender’s name on Schedule 2.01, as
such amount may be adjusted from time to time in accordance with this Agreement.
     “Term Loan” has the meaning specified in Section 2.01.
     “Term Loan Notice” means a notice of (a) the Term Borrowing, (b) a
conversion of Term Loans from one Type to the other, or (c) a continuation of
Term Loans as the same Type, pursuant to Section 2.02(a), which, if in writing,
shall be substantially in the form of Exhibit A.
     “Term Maturity Date” means (a) January 16, 2015, or (b) such earlier date
as (i) the Obligations become due and payable pursuant to this Agreement
(whether by acceleration,

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prepayment in full, scheduled reduction or otherwise) or (ii) there shall exist
an Event of Default under Section 8.01(f).
     “Term Pro Rata Share” means, with respect to each Lender at any time, a
fraction (expressed as a percentage, carried out to the ninth decimal place),
the numerator of which is the amount of the Term Commitment of such Lender at
such time and the denominator of which is the amount of the Aggregate Term
Commitments at such time; provided that if the commitment of each Lender to make
Term Loans have been terminated pursuant to Section 8.02 or otherwise, then the
Term Pro Rata Share of each Lender shall be a fraction (expressed as a
percentage, carried out to the ninth decimal place), the numerator of which is
the Total Outstandings owed to such Lender and the denominator of which is the
Total Outstandings owed to all Lenders. The initial Term Pro Rata Share of each
Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable.
     “Total Outstandings” means, with respect to the Term Loans on any date, the
aggregate outstanding principal amount of all Term Loans after giving effect to
any prepayments or repayments of Term Loans occurring on such date.
     “Trust” means Marcum Midstream 1995-2 Business Trust, a Delaware statutory
trust.
     “Type” means, with respect to a Term Loan, its character as a Alternate
Base Rate Loan or a Eurodollar Rate Loan.
     “UCC” means the Uniform Commercial Code of Texas or, where applicable to
specific Collateral, any other relevant state.
     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
     “United States” and “U.S.” mean the United States of America.
     “Voting Equity Interests” of any Person means Equity Interests of any class
or classes having ordinary voting power for the election of at least a majority
of the members of the board of directors, managing general partners or the
equivalent governing body of such Person, irrespective of whether, at the time,
Equity Interests of any other class or classes or such entity shall have or
might have voting power by reason of the happening of any contingency.
     Section 1.02. Other Interpretive Provisions. With reference to this
Agreement and each other Loan Document, unless otherwise specified herein or in
such other Loan Document:
     (a) The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context

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requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (iii) the words
“herein,” “hereof” and “hereunder” and words of similar import when used in any
Loan Document, shall be construed to refer to such Loan Document in its entirety
and not to any particular provision thereof, (iv) all references in a Loan
Document to Articles, Sections, Exhibits and Schedules shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to, the Loan
Document in which such references appear, (v) any reference to any Law shall
include all statutory and regulatory provisions consolidating, amending
replacing or interpreting such Law and any reference to any Law or regulation
shall, unless otherwise specified, refer to such Law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.
     (b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”
     (c) Section headings herein and in the other Loan Documents are included
for convenience of reference only and shall not affect the interpretation of
this Agreement or any other Loan Document.
     (d) For purposes of Section 8.01, a breach of a financial covenant
contained in Section 7.12 shall be deemed to have occurred as of any date of
determination thereof by the Administrative Agent or as of the last date of any
specified measuring period, regardless of when the financial statements or the
Compliance Certificate reflecting such breach are delivered to the
Administrative Agent and the Lenders.
     Section 1.03. Accounting Terms.
     (a) All accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.
     (b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Required Lenders shall so request, the Administrative Agent, the
Lenders and the Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP

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prior to such change therein and (ii) the Borrower shall provide to the
Administrative Agent and the Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting forth
a reconciliation between calculations of such ratio or requirement made before
and after giving effect to such change in GAAP.
     Section 1.04. Rounding. Any financial ratios required to be maintained by
the Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).
     Section 1.05. Times of Day. Unless otherwise specified, all references
herein to times of day shall be references to Central time (daylight or
standard, as applicable).
     Section 1.06. References to Agreements and Laws. Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions and rulings consolidating, amending, replacing,
supplementing or interpreting such Law.
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
     Section 2.01. Term Loans. Subject to the terms and conditions herein, each
Lender severally agrees to make a term loan (each such loan, a “Term Loan”) to
the Borrower on the Closing Date in the amount of its Term Commitment. Term
Loans may not be repaid and then reborrowed.
     Section 2.02. Term Borrowings, Conversions and Continuations of Term Loans.
     (a) The Term Borrowing, each conversion of Term Loans from one Type to the
other, and each continuation of Eurodollar Rate Loans shall be made upon the
Borrower’s irrevocable notice to the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Administrative Agent not
later than 11:00 a.m. (i) three Business Days prior to the requested date of any
Term Borrowing of, conversion to or from, or continuation of, Eurodollar Rate
Loans, and (ii) on the requested date of any Term Borrowing of Alternate Base
Rate Loans. Each telephonic notice by the Borrower pursuant to this
Section 2.02(a) must be confirmed promptly by delivery to the Administrative
Agent of a written Term Loan Notice, appropriately completed and signed by a
Responsible Officer of the Borrower. Each conversion to or continuation of
Eurodollar Rate Loans shall be in a principal amount of $500,000 or a whole
multiple of $50,000 in excess thereof. Each conversion to Alternate Base Rate
Loans shall be in a principal amount of $100,000 or a whole multiple of $50,000
in excess thereof. Each Term Loan Notice (whether telephonic or written), shall
specify (i) whether the Borrower

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is requesting the Term Borrowing, a conversion of Term Loans from one Type to
the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date
of the Term Borrowing, conversion or continuation (which shall be a Business
Day), (iii) the principal amount of Term Loans to be borrowed, converted or
continued, (iv) the Type of Term Loans to be borrowed or to which existing Term
Loans are to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto. If the Borrower fails to specify a Type of Term
Loan in a Term Loan Notice, or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Term Loans shall be
made as, or converted to, Alternate Base Rate Loans. Any such automatic
conversion to Alternate Base Rate Loans shall be effective as of the last day of
the Interest Period then in effect with respect to the applicable Eurodollar
Rate Loans. If the Borrower requests the Term Borrowing of, conversion to, or
continuation of Eurodollar Rate Loans in any such Term Loan Notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month.
     (b) Following receipt of a Term Loan Notice, the Administrative Agent shall
promptly notify each Lender of the amount of its Term Pro Rata Share of the Term
Loans, and if no timely notice of a conversion or continuation is provided by
the Borrower, the Administrative Agent shall notify each Lender of the details
of any automatic conversion to Alternate Base Rate Loans described in the
preceding subsection. In the case of the Term Borrowing, each Lender shall make
the amount of its Term Loan available to the Administrative Agent in immediately
available funds at the Administrative Agent’s Office not later than 1:00 p.m. on
the Business Day specified in the Term Loan Notice. Upon satisfaction of the
applicable conditions set forth in Section 4.02 (and, if such Term Borrowing is
the initial Credit Extension, Section 4.01), the Administrative Agent shall make
all funds so received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of Citibank with the amount of such funds or (ii) wire transfer of such
funds, in each case in accordance with instructions provided to (and reasonably
acceptable to) the Administrative Agent by the Borrower.
     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be
continued or converted only on the last day of an Interest Period for such
Eurodollar Rate Loan. During the existence of a Default, no Term Loans may be
converted to or continued as Eurodollar Rate Loans without the consent of the
Required Lenders.
     (d) The Administrative Agent shall promptly notify the Borrower and the
Lenders of the interest rate applicable to any Interest Period for Eurodollar
Rate Loans upon determination of such interest rate. The determination of the
Eurodollar Rate by the Administrative Agent shall be conclusive in the absence
of manifest error. At any time that Alternate Base Rate Loans are outstanding,
the Administrative Agent shall notify the Borrower and the Lenders of any change
in Citibank’s prime rate used in determining the Alternate Base Rate promptly
following the public announcement of such change.
     (e) After giving effect to all Term Borrowings, all conversions of Term
Loans from one Type to the other, and all continuations of Term Loans as the
same Type, there shall not be more than five Interest Periods in effect at any
one time with respect to all Term Loans.

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     Section 2.03. Prepayments.
     (a) The Borrower may, upon notice to the Administrative Agent, at any time
or from time to time voluntarily prepay Term Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by the
Administrative Agent not later than 12:00 noon (A) three Business Days prior to
any date of prepayment of Eurodollar Rate Loans and (B) on the date of
prepayment of Alternate Base Rate Loans; (ii) any prepayment of Eurodollar Rate
Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000
in excess thereof; and (iii) any prepayment of Alternate Base Rate Loans shall
be in a principal amount of $300,000 or a whole multiple of $100,000 in excess
thereof or, in each case, if less, the entire principal amount thereof then
outstanding. Each such notice shall specify the date and amount of such
prepayment and the Type(s) of Term Loans to be prepaid. The Administrative Agent
will promptly notify each Lender of its receipt of each such notice, and of the
amount of such Lender’s Term Pro Rata Share of such prepayment. If such notice
is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein. Each such prepayment shall be applied to the Term Loans of
the Lenders in accordance with their respective Term Pro Rata Shares of such
Loan. Any voluntary prepayments of the Term Loans shall be made and applied as
provided in Section 2.03(f).
     (b) Concurrently with the receipt of Net Cash Proceeds from the Disposition
by (i) PowerSecure of the Property or (ii) the Borrower of the Equity Interests
of PowerSecure, the Borrower shall prepay the Term Loans in an aggregate
principal amount equal to 100% of such Net Cash Proceeds or Net Equity
Interests, as applicable, together with all other outstanding amount of the
Obligations hereunder. Such mandatory prepayment shall be made and applied as
provided in Section 2.03(d).
     (c) The Borrower shall make mandatory prepayments of the Term Loans in an
amount equal to 100% of the Net Recovery Proceeds of any Recovery Event or
Extraordinary Receipt in respect of the Property; provided, however, in the
event the Borrower or one of its Subsidiaries receives Net Recovery Proceeds on
account of a Recovery Event in respect of the Property, the Borrower or such
Subsidiary may apply such proceeds to the purchase price of replacement property
in respect of the Property within 120 days of such Recovery Event to the extent
required pursuant to Section 7.05(g). Each such mandatory prepayment shall be
made and applied as provided in Section 2.03(d).
     (d) Any mandatory prepayment required pursuant to Section 2.03(b) or (c)
and any voluntary prepayment of Term Loans made pursuant to Section 2.03(a)
shall (i) in addition include any additional amounts required pursuant to
Section 3.05, (ii) not be subject to any notice and minimum payment provisions,
and (iii) be applied (A) pro rata, in the case of a voluntary prepayment
pursuant to Section 2.03(a), to all of the unpaid scheduled installments and
(B) in the inverse order of maturity, in the case of any mandatory prepayment
pursuant to Section 2.03(b) or (c).
     Section 2.04. Repayment of Term Loans. To the extent not otherwise required
to be paid earlier as provided herein, the Borrower shall repay the principal of
the Term Loans (a) on the last Business Day of each calendar quarter, commencing
March 31, 2008, in the installment

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amount of $32,300, and (b) on the Term Maturity Date, in the amount of the
outstanding aggregate principal amount of the Term Loans.
     Section 2.05. Interest.
     (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar
Rate Loan shall bear interest on the outstanding principal amount thereof for
each Interest Period at a rate per annum equal to the lesser of (y) the Highest
Lawful Rate and (z) the Eurodollar Rate for such Interest Period plus the
Applicable Rate for Eurodollar Rate Loans; and (ii) each Alternate Base Rate
Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the lesser of (y) the
Highest Lawful Rate and (z) the Alternate Base Rate plus the Applicable Rate for
Alternate Base Rate Loans.
(b) (i) If any amount of principal of any Term Loan is not paid when due
(without regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the lesser of (y) the
Default Rate and (z) the Highest Lawful Rate, to the fullest extent permitted by
Applicable Laws.
     (ii) If any amount (other than principal of any Term Loan) payable by the
Borrower under any Loan Document is not paid when due (after giving effect to
any applicable grace periods), whether at stated maturity, by acceleration or
otherwise, then upon the request of the Required Lenders, such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the lesser of (y) the Default Rate and (z) the Highest Lawful Rate, to
the fullest extent permitted by Applicable Laws.
     (iii) Upon the request of the Required Lenders, while any Event of Default
exists, the Borrower shall pay interest on the principal amount of all
outstanding Term Loans at a fluctuating interest rate per annum at all times
equal to the lesser of (y) the Default Rate and (z) the Highest Lawful Rate, to
the fullest extent permitted by Applicable Laws.
     (iv) Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.
     (c) Interest on each Term Loan shall be due and payable in arrears on each
Interest Payment Date applicable thereto and at such other times as may be
specified herein. Interest hereunder shall be due and payable in accordance with
the terms hereof before and after judgment, and before and after the
commencement of any proceeding under any Debtor Relief Law.
     Section 2.06. Computation of Interest and Fees. All computations of
interest for Alternate Base Rate Loans when the Alternate Base Rate is
determined by Citibank’s “prime rate” shall be made on the basis of a year of
365 or 366 days, and actual days elapsed. Subject to Section 10.09, all other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more fees or interest, as applicable,
being paid than if computed on the basis of a 365-day year). Interest shall
accrue on the Term Loan for the day on which the Term Loan is made, and shall
not accrue on the Term Loan, or any portion

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thereof, for the day on which the Term Loan or such portion is paid. Each
determination by the Administrative Agent of an interest rate or fee hereunder
shall be conclusive and binding for all purposes, absent manifest error.
     Section 2.07. Evidence of Debt. The Credit Extensions made by each Lender
shall be evidenced by one or more accounts or records maintained by such Lender
and by the Administrative Agent in the ordinary course of business. The accounts
or records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by
the Lenders to the Borrower and the interest and payments thereon. Any failure
to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrower hereunder to pay any amount owing with
respect to the Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Borrower shall
execute and deliver to such Lender (through the Administrative Agent) a Note
which shall evidence such Lender’s Term Loans in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Term Loan and payments
with respect thereto.
     Section 2.08. Payments Generally.
     (a) General. All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent’s
Office in Dollars and in immediately available funds not later than 2:00 p.m. on
the date specified herein. The Administrative Agent will promptly distribute to
each Lender its Term Pro Rata Share (or other applicable share as provided
herein) of such payment in like funds as received by wire transfer to such
Lender’s Lending Office. All payments received by the Administrative Agent after
2:00 p.m. shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue. If any payment to be made
by the Borrower shall come due on a day other than a Business Day, payment shall
be made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees.
(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Term Borrowing of Eurodollar Rate Loans (or, in case of any
Term Borrowing of Alternate Base Rate Loans, prior to 12:00 noon on the date of
such Term Borrowing) that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.02 (or, in the case of a Borrowing of Alternate Base
Rate Loans, that such Lender has made such share available in accordance with
and at the time required by Section 2.02) and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the Term Borrowing
available to the

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Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the Administrative Agent forthwith on demand such corresponding
amount in immediately available funds with interest thereon, for each day from
and including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (A) in the case of
a payment to be made by such Lender, the greater of the Federal Funds Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation and (B) in the case of a payment to be made by
the Borrower, the interest rate applicable to Alternate Base Rate Loans. If the
Borrower and such Lender shall pay such interest to the Administrative Agent for
the same or an overlapping period, the Administrative Agent shall promptly remit
to the Borrower the amount of such interest paid by the Borrower for such
period. If such Lender pays its share of the Term Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s
Term Loan included in such Term Borrowing. Any payment by the Borrower shall be
without prejudice to any claim the Borrower may have against a Lender that shall
have failed to make such payment to the Administrative Agent.
     (ii) Payments by Borrower; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders hereunder that the Borrower will not make such payment, the
Administrative Agent may assume that the Borrower has made such payment on such
date in accordance herewith and may, in reliance upon such assumption,
distribute to the Lenders the amount due. In such event, if the Borrower has not
in fact made such payment, then each of the Lenders severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender, in immediately available funds with interest thereon, for each day from
and including the date such amount is distributed to it to but excluding the
date of payment to the Administrative Agent, at the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation.
     A notice of the Administrative Agent to any Lender or the Borrower with
respect to any amount owing under this subsection (b) shall be conclusive,
absent manifest error.
     (c) Failure to Satisfy Conditions Precedent. If any Lender makes available
to the Administrative Agent funds for any Term Loan to be made by such Lender as
provided in the foregoing provisions of this Article II, and such funds are not
made available to the Borrower by the Administrative Agent because the
conditions to the Credit Extension set forth in Article IV are not satisfied or
waived in accordance with the terms hereof, the Administrative Agent shall
return such funds (in like funds as received from such Lender) to such Lender,
without interest.
     (d) Obligations of Lenders Several. The obligations of the Lenders
hereunder to make Term Loans, and to make payments pursuant to Section 10.04(c)
are several and not joint. The failure of any Lender to make any Term Loan or to
make any payment under Section 10.04(c) on any date required hereunder shall not
relieve any other Lender of its corresponding obligation to do so on such date,
and no Lender shall be responsible for the failure of any other Lender to so
make its Term Loan or to make its payment under Section 10.04(c).

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     (e) Funding Source. Nothing herein shall be deemed to obligate any Lender
to obtain the funds for any Term Loan in any particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for any Term Loan in any particular place or manner.
     Section 2.09. Sharing of Payments. If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on the Term Loan made by it resulting in such Lender’s
receiving payment of a proportion of the aggregate amount of such Term Loan and
accrued interest thereon greater than its Term Pro Rata Share thereof as
provided herein, then the Lender receiving such greater proportion shall
(a) notify the Administrative Agent of such fact, and (b) purchase (for cash at
face value) participations in the Term Loans of the other Lenders, or make such
other adjustments as shall be equitable, so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective Term Loans and
other amounts owing them, provided that:
     (a) if any such participations or subparticipations are purchased and all
or any portion of the payment giving rise thereto is recovered, such
participations or subparticipations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest; and
     (b) the provisions of this Section shall not be construed to apply to
(x) any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in its Term Loan
to any assignee or participant, other than to the Borrower or any Subsidiary
thereof (as to which the provisions of this Section shall apply).
     Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under Applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
     Section 3.01. Taxes.
     (a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes, provided that if the Borrower shall be required by
Applicable Law to deduct any Indemnified Taxes (including any Other Taxes) from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or the
Lender, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall timely pay the

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full amount deducted to the relevant Governmental Authority in accordance with
Applicable Law.
     (b) Payment of Other Taxes by the Borrower. Without limiting the provisions
of subsection (a) above, the Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with Applicable Law.
     (c) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent and each Lender, within 10 days after demand therefor, for
the full amount of any Indemnified Taxes or Other Taxes (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) paid by the Administrative Agent or such Lender, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority, except to
the extent that such penalties, interest or expenses are determined by a court
of competent jurisdiction by final judgment to have resulted from the
Administrative Agent’s or such Lender’s gross negligence or willful misconduct.
A certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
     (d) Evidence of Payment. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
     (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the Law of the jurisdiction in which
the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrower (with a copy to the Administrative
Agent), at the time or times prescribed by Applicable Law or reasonably
requested by the Borrower or the Administrative Agent, such properly completed
and executed documentation prescribed by Applicable Law as will permit such
payments to be made without withholding or at a reduced rate of withholding. In
addition, any Lender, if requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by Applicable Law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such Lender
is subject to backup withholding or information reporting requirements.
     Without limiting the generality of the foregoing, in the event that the
Borrower is resident for tax purposes in the United States, any Foreign Lender
shall deliver to the Borrower and the Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Administrative Agent, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:

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     (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party,
     (ii) duly completed copies of Internal Revenue Service Form W-8ECI,
     (iii) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank” within
the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder”
of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in section 881(c)(3)(C) of the Code
and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or
     (iv) any other form prescribed by Applicable Law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
Applicable Law to permit the Borrower to determine the withholding or deduction
required to be made.
     (f) Treatment of Certain Refunds. If the Administrative Agent or any Lender
determines, in its reasonable discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this
Section, it shall pay to the Borrower an amount equal to such refund (but only
to the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of the Administrative Agent
or such Lender, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund), provided that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This subsection shall not be construed to require the Administrative Agent or
any Lender to make available its tax returns (or any other information relating
to its taxes that it deems confidential) to the Borrower or any other Person.
     Section 3.02. Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, any obligation of such Lender
to make or continue Eurodollar Rate Loans or to convert Alternate Base Rate
Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower shall,
upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if

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applicable, convert all Eurodollar Rate Loans of such Lender to Alternate Base
Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may Lawfully continue to maintain such Eurodollar Rate Loans to such day,
or immediately, if such Lender may not Lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted.
     Section 3.03. Inability to Determine Rates. If the Required Lenders
reasonably determine that for any reason in connection with any request for a
Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar
deposits are not being offered to banks in the London interbank Eurodollar
market for the applicable amount and Interest Period of such Eurodollar Rate
Loan, (b) adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan, or (c) the Eurodollar Rate for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan does not adequately and
fairly reflect the cost to such Lenders of funding such Loan, the Administrative
Agent will promptly so notify the Borrower and each Lender. Thereafter, the
obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be
suspended until the Administrative Agent (upon the instruction of the Required
Lenders) revokes such notice. Upon receipt of such notice, the Borrower may
revoke any pending request for a Term Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Term Borrowing of Alternate Base
Rate Loans in the amount specified therein.
     Section 3.04. Increased Costs; Reserves on Eurodollar Rate Loans.
     (a) Increased Costs Generally. If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against assets of,
deposits with or for the account of, or credit extended or participated in by,
any Lender (except any reserve requirement contemplated by Section 3.04(e));
     (ii) subject any Lender to any tax of any kind whatsoever with respect to
this Agreement or any Eurodollar Rate Loan made by it hereunder, or change the
basis of taxation of payments to such Lender in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of,
or any change in the rate of, any Excluded Tax payable by such Lender); or
     (iii) impose on any Lender or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Rate Loans
made by such Lender hereunder;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Rate Loan hereunder (or of
maintaining its obligation to make any such Term Loan), or to reduce the amount
of any sum received or receivable by such Lender hereunder (whether of
principal, interest or any other amount) then, upon request of such Lender, the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.

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     (b) Capital Requirements. If any Lender determines that any Change in Law
affecting such Lender or any Lending Office of such Lender or such Lender’s
holding company, if any, regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s capital or on the capital
of such Lender’s holding company, if any, as a consequence of this Agreement,
the Term Commitments of such Lender or the Term Loans made by such Lender to a
level below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s
policies and the policies of such Lender’s holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered.
     (c) Certificate for Reimbursement. A certificate of a Lender setting forth
the amount or amounts necessary to compensate such Lender or its holding
company, as specified in subsection (a) or (b) of this Section and delivered to
the Borrower shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 30 days after
receipt thereof.
     (d) Delay in Request. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Lender’s right to demand such compensation, provided
that the Borrower shall not be required to compensate a Lender pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine months prior to the date that such Lender,
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the nine-month period referred to above shall be
extended to include the period of retroactive effect thereof).
     (e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to each
Lender, as long as such Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency funds
or deposits (currently known as “Eurocurrency liabilities”), additional interest
on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual
costs of such reserves allocated to such Term Loan by such Lender (as determined
by such Lender in good faith, which determination shall be conclusive), which
shall be due and payable on each date on which interest is payable on such Loan,
provided the Borrower shall have received at least 10 days’ prior notice (with a
copy to the Administrative Agent) of such additional interest from such Lender.
If a Lender fails to give notice 10 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 10 days from receipt of
such notice.
     Section 3.05. Compensation For Losses. Upon demand of any Lender (with a
copy to the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

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     (a) any continuation, conversion, payment or prepayment of any Eurodollar
Rate Loan on a day other than the last day of the Interest Period for such Loan
(whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise);
     (b) any failure by the Borrower (for a reason other than the failure of
such Lender to make a Term Loan) to prepay, borrow, continue or convert any
Eurodollar Rate Loan on the date or in the amount notified by the Borrower; or
     (c) any assignment of a Eurodollar Rate Loan on a day other than the last
day of the Interest Period therefor as a result of a request by the Borrower
pursuant to Section 10.13;
including any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Term Loan or from fees payable to
terminate the deposits from which such funds were obtained. The Borrower shall
also pay any customary administrative fees charged by such Lender in connection
with the foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Rate for such Term Loan by a matching
deposit or other borrowing in the London interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such Eurodollar
Rate Loan was in fact so funded.
     Section 3.06. Mitigation Obligations; Replacement of Lenders.
     (a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to
Section 3.02, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Term Loan hereunder or to
assign its rights and obligations hereunder to another of its offices, branches
or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Section 3.01 or 3.04, in the future, or eliminate the need for the notice
pursuant to Section 3.02, as applicable, and (ii) in each case, would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
     (b) Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, the Borrower may replace such Lender in accordance with
Section 10.13.
     Section 3.07. Survival. All of the Borrower’s obligations under this
Article III shall survive termination of the Aggregate Term Commitments and
repayment of all other Obligations hereunder.

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ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
     Section 4.01. Conditions of Initial Credit Extension. The obligation of
each Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions:
     (a) The Administrative Agent’s receipt of the following, each of which
shall be originals or telecopies (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of certificates
of governmental officials, a recent date before the Closing Date), unless
otherwise specified in the Post-Closing Letter, and each in form and substance
satisfactory to the Administrative Agent and each of the Lenders:
     (i) executed counterparts of this Agreement, each Guaranty and the Deed of
Trust, sufficient in number for distribution to the Administrative Agent, each
Lender and the Borrower;
     (ii) a Note executed by the Borrower in favor of the Lender, in a principal
amount equal to the Lender’s Term Commitment;
     (iii) certificates showing the existence of all insurance policies required
by Section 6.07, naming the Administrative Agent as loss payee and additional
insured.
     (iv) such certificates of resolutions or other similar action, incumbency
certificates and/or other certificates of Responsible Officers of each Loan
Party which is not a natural Person as the Administrative Agent may require
evidencing the identity, authority and capacity of each Responsible Officer
thereof authorized to act as a Responsible Officer in connection with this
Agreement and the other Loan Documents to which such Loan Party is a party;
     (v) such documents and certifications as the Administrative Agent may
require to evidence that each Loan Party is duly organized or formed, and that
each such Loan Party is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such qualification, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect;
     (vi) favorable opinions of counsel to the Loan Parties addressed to the
Administrative Agent and each Lender, as to such matters concerning the Loan
Parties and the Loan Documents as the Required Lenders may request;
     (vii) a certificate of a Responsible Officer or Secretary of each Loan
Party either (A) attaching copies of all consents, licenses and approvals
required in connection with the execution, delivery and performance by such Loan
Party and the validity against such Loan Party of the Loan Documents to which it
is a party, and such consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or approvals are so
required;

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     (viii) a certificate signed by a Responsible Officer of the Borrower
certifying that the conditions specified in Sections 4.02(a) and (b) have been
satisfied, and that to the knowledge of the Responsible Officer there has been
no event or circumstance since the date of the Audited Financial Statements that
has had or could be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect;
     (ix) a solvency certificate signed by the treasurer of the Borrower, in
form and substance satisfactory to the Administrative Agent;
     (x) an asset appraisal and environmental assessment report with respect to
the Mortgaged Property, in form and substance satisfactory to the Administrative
Agent, and in compliance with the requirements of any applicable Laws;
     (xi) a fully paid ALTA lender’s policy of title insurance in an amount
required by the Administrative Agent, showing no exceptions that would
materially impair the value of the Mortgaged Property, containing customary
endorsements and otherwise in form and substance satisfactory to the
Administrative Agent, insuring the Deed of Trust to be a valid, perfected, first
priority Lien on the Mortgaged Property, together with a current survey in form
and substance and containing a certification to the Administrative Agent
satisfactory to the Administrative Agent;
     (xii) amendments to the Existing Credit Agreement and the Existing Credit
Agreement Collateral Documents to permit the Indebtedness under this Credit
Agreement and to cause the Existing Credit Agreement Collateral Documents to
secure, pari passu, the Existing Credit Agreement Obligations and the Secured
Obligations; and
     (xiii) such other assurances, certificates, documents, consents or opinions
as the Administrative Agent or the Required Lenders reasonably may require.
     (b) The Administrative Agent shall have received on or before the Closing
Date a fee in the amount of the product of (A) 1.00% and (B) the Aggregate Term
Commitments. Any fees required to be paid on or before the Closing Date shall
have been paid.
     (c) Unless waived by the Administrative Agent, the Borrower shall have paid
all Attorney Costs of the Administrative Agent to the extent invoiced prior to
the Closing Date, plus such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be incurred
by it through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Borrower and the
Administrative Agent).
     (d) The Closing Date shall have occurred on or before January 31, 2008.
     Without limiting the generality of the provisions of Section 9.04, for
purposes of determining compliance with the conditions specified in this
Section 4.01, each Lender that has signed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by or acceptable
or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

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     Section 4.02. Conditions to all Credit Extensions. The obligation of each
Lender to honor any Request for Credit Extension is subject to the following
conditions precedent:
     (a) The representations and warranties of the Borrower and each other Loan
Party contained in Article V or any other Loan Document, or which are contained
in any document furnished at any time under or in connection herewith or
therewith that are subject to materiality or Material Adverse Effect
qualifications shall be true and correct in all respects and the representations
and warranties of the Borrower and each other Loan Party contained in Article V
or any other Loan Documents, or which are contained in any document furnished at
any time under or in connection herewith or therewith that are not subject to
materiality or Material Adverse Effect qualifications, shall be true and correct
in all material respects on and as of the date of such Credit Extension, except
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct in all material
respects as of such earlier date, and except that for purposes of this
Section 4.02, the representations and warranties contained in subsections (a)
and (b) of Section 5.05 shall be deemed to refer to the most recent statements
furnished pursuant to subsections (a) and (b), respectively, of Section 6.01.
     (b) No Default shall exist, or would result from such proposed Credit
Extension or from the application of the proceeds thereof.
     (c) The proposed Credit Extension will not violate any restriction on the
authority to incur such Indebtedness under the Borrower’s Organization Documents
and is permitted under the terms of the Borrower’s Organization Documents
pursuant to authority granted the manager of the Borrower with respect thereto
prior to the Closing Date.
     (d) The Administrative Agent shall have received a Request for Credit
Extension in accordance with the requirements hereof.
     Each Request for Credit Extension (other than a Term Loan Notice requesting
only a conversion of Loans to the other Type or a continuation of Eurodollar
Rate Loans) submitted by the Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
     The Borrower represents and warrants to the Administrative Agent and the
Lenders that:
     Section 5.01. Existence, Qualification and Power; Compliance with Laws.
Each Loan Party (a) is a corporation, partnership or limited liability company
duly organized or formed, validly existing and in good standing (to the extent
applicable) under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to own its assets
and carry on its business and execute, deliver and perform its obligations under
the Loan Documents to which it is a party, (c) is duly qualified and is licensed
and in good standing under the Laws of

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each jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license and (d) is in
compliance with all Laws; except in each case referred to in clause (c) or this
clause (d), to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect.
     Section 5.02. Authorization; No Contravention. The execution, delivery and
performance by each Loan Party of each Loan Document to which such Person is
party, have, to the extent applicable, been duly authorized by all necessary
corporate or other organizational action, and do not and will not (a) contravene
the terms of any of such Person’s Organization Documents; (b) conflict with or
result in any breach or contravention of, or the creation of any Lien under, or
require any payment to be made under (i) any Contractual Obligation to which
such Person is a party or affecting such Person or the properties of such Person
or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject; or (c) violate any Law; except in the case of clauses (b)
and (c) above to the extent that such conflict, breach, contravention, Lien,
payment or violation could not reasonably be expected to have a Material Adverse
Effect.
     Section 5.03. Governmental Authorization; Other Consents. No approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority or any other Person not already obtained is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, any Loan Party of this Agreement or any other Loan
Document other than (a) those necessary to perfect the Liens in the Collateral
for the benefit of the Lenders, (b) those otherwise obtained, taken, given or
made prior to or as of the Closing Date, and (c) filing of Form 8-K with the SEC
as required to disclose the existence and terms of this Agreement and the
transactions contemplated hereby.
     Section 5.04. Binding Effect. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of such Loan Party, enforceable against each Loan Party that
is party thereto in accordance with its terms, subject as to enforcement to any
Debtor Relief Laws and to general equitable principles.
     Section 5.05. Financial Statements; No Material Adverse Effect.
     (a) The Audited Financial Statements (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present in all material respects
the financial condition of the Borrower and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; and (iii) show all material
indebtedness and other liabilities, direct or contingent, of the Borrower and
its Subsidiaries as of the date thereof, including liabilities for taxes,
material commitments and Indebtedness, as and to the extent required to be
reported in connection with GAAP.
     (b) The unaudited quarterly consolidated balance sheet of the Borrower and
its Subsidiaries dated September 30, 2007, and the related statements of income
or operations,

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shareholders’ equity and cash flows for the period ended on that date (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein, and (ii) fairly
present in all material respects the financial condition of the Borrower and its
Subsidiaries) as of the date thereof and their results of operations for the
period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments. Schedule 5.05
sets forth all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries not disclosed on the financial
statements referred to in this subsection (b), including liabilities for taxes,
material commitments and indebtedness.
     (c) Since the date of the Audited Financial Statements, there has been no
event or circumstance, either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect, except as set
forth in the Borrower’s April 8-K.
     (d) The consolidated forecasted balance sheet and statements of income and
cash flows of the Borrower and its Subsidiaries previously delivered to the
Administrative Agent were prepared in good faith on the basis of the assumptions
stated therein, which assumptions were believed to be reasonable in light of the
conditions known to be existing at the time of delivery of such forecasts, and
represented, at the time of delivery, the Borrower’s good faith and reasonable
estimate of its future financial performance. The aforementioned forecast is not
a guaranty of future performance, and actual results may differ from those in
the forecast.
     (e) Neither the Borrower nor any other Loan Party has any Off-Balance Sheet
Liabilities.
     Section 5.06. Litigation. There is no Litigation pending or, to the
knowledge of the Borrower, threatened, at Law, in equity, in arbitration or
before any Governmental Authority, by or against the Borrower or any other Loan
Party or against any of their properties or revenues that (a) purport to affect
or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby, or (b) either individually or in the
aggregate, if determined adversely, could reasonably be expected to have a
Material Adverse Effect.
     Section 5.07. No Default. Neither the Borrower nor any Subsidiary is in
default under or with respect to any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default has occurred and is continuing or would result from
the consummation of the transactions contemplated by this Agreement or any other
Loan Document.
     Section 5.08. Ownership of Property; Liens. Except as provided in
Schedule 5.08, neither the Borrower nor any Subsidiary owns fee simple title to
any real property. The Borrower and each Subsidiary has valid leasehold
interests in all real property necessary or used in the ordinary conduct of its
business. The property of the Borrower and its Subsidiaries is subject to no
Liens, other than Liens permitted by Section 7.01.
     Section 5.09. Hazardous Materials. Neither the Borrower nor any of its
Subsidiaries has used Hazardous Materials on or affecting any premises at which
the Borrower or any of its Subsidiaries has a place of business (collectively
and singly the “Premises”) in any manner

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which violates any Environmental Laws governing the use, storage, treatment,
handling, manufacture, transportation or disposal of Hazardous Materials, which
violation could reasonably be expected to have a Material Adverse Effect. Except
as disclosed on Schedule 5.09, the Borrower has not received any notice of any
violations of Environmental Laws which could reasonably be expected to have a
Material Adverse Effect (“Environmental Complaint”) (and, within five (5) days
of receipt of any Environmental Complaint the Borrower shall give the
Administrative Agent a copy thereof), and to the best of Borrower’s knowledge,
after due inquiry, there have been no actions commenced or threatened by any
Person for non-compliance with any Environmental Laws which could reasonably be
expected to have a Material Adverse Effect.
     Section 5.10. Insurance. The properties and businesses of the Borrower and
its Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of the Borrower, in such amounts, with such deductibles
and covering such risks as are customarily carried by companies of similar size
engaged in similar businesses and owning similar properties in localities where
the Borrower or the applicable Subsidiary operates.
     Section 5.11. Taxes. The Borrower and its Subsidiaries have filed all
Federal, state and other material tax returns and reports required to be filed,
and have paid all Federal, state and other material taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves have been provided in accordance with GAAP. There is no
proposed tax assessment against the Borrower or any Subsidiary that would, if
made, have a Material Adverse Effect. Neither any Loan Party nor any Subsidiary
thereof is party to any tax sharing agreement.
     Section 5.12. ERISA Compliance.
     (a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required contributions to each Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
     (b) There are no pending or, to the best knowledge of the Borrower,
threatened claims, actions or other Litigation, or action by any Governmental
Authority, with respect to any Plan that could be reasonably be expected to have
a Material Adverse Effect. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that has resulted
or could reasonably be expected to result in a Material Adverse Effect.
     (c) (i) No ERISA Event has occurred or is reasonably expected to occur,
(ii) no Pension Plan has any Unfunded Pension Liability, (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with

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respect to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA), (iv) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan, and (v) neither the Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA.
     Section 5.13. Subsidiaries. As of the Closing Date, the Borrower has no
Subsidiaries other than those specifically disclosed in Part (a) of
Schedule 5.13, and all of the outstanding Equity Interests in such Subsidiaries
have been validly issued, are fully paid and nonassessable and are owned by a
Loan Party in the amounts specified on Part (a) of Schedule 5.13. The Borrower
has no equity investments in any other corporation or entity other than those
specifically disclosed in Part (b) of Schedule 5.13. All of the outstanding
Equity Interests in the Borrower have been validly issued and are fully paid and
nonassessable.
     Section 5.14. Margin Regulations; Investment Company Act.
     (a) The Borrower is not engaged and will not engage, principally or as one
of its important activities, in the business of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the FRB), or extending
credit for the purpose of purchasing or carrying margin stock.
     (b) None of the Borrower, any Person Controlling the Borrower, or any
Subsidiary is or is required to be registered as an “investment company” under
the Investment Company Act of 1940.
     Section 5.15. Disclosure. Other than as described in the April 8-K, the
Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. No report, financial statement, certificate or other
information furnished (whether in writing or orally) by or on behalf of any Loan
Party to the Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time in light
of the facts, circumstances and conditions then known to the Borrower, and are
not intended to be a guaranty of future financial performance.
     Section 5.16. Compliance with Laws. Each of the Borrower and each
Subsidiary is in compliance in all material respects with the requirements of
all Laws and all orders, writs, injunctions and decrees applicable to it or to
its properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply
therewith, either

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individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
     Section 5.17. Intellectual Property; Licenses, Etc. The Borrower and its
Subsidiaries own, or possess the right to use, all of the material trademarks,
service marks, trade names, copyrights, patents, patent rights, franchises,
licenses and other intellectual property rights (collectively, “IP Rights”) that
are necessary for the operation of their respective businesses, without conflict
with the rights of any other Person. To the best knowledge of the Borrower, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the Borrower
or any Subsidiary infringes upon any rights held by any other Person. No claim
or Litigation regarding any of the foregoing is pending or, to the best
knowledge of the Borrower, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
     Section 5.18. Businesses. The Borrower is presently engaged directly or
through wholly-owned Subsidiaries in the business of providing energy management
and conservation solutions through (a) the design and installation of power
generation systems and services that manage load curtailment and peak demand
conditions, enhance system reliability and provide customers with energy power
and (b) providing utilities with legal and regulatory consulting, energy system
engineering and construction, and energy conservation services.
     Section 5.19. Common Enterprise. The Borrower and its Subsidiaries are
engaged in the businesses set forth in Section 5.18 as of the Closing Date.
These operations require financing on a basis such that the credit supplied can
be made available from time to time to the Borrower and various of its
Subsidiaries, as required for the continued successful operation of the Borrower
and its Subsidiaries as a whole. The Borrower has requested the Lender to make
credit available hereunder primarily for the purposes set forth in Section 6.12
and generally for the purposes of financing the operations of the Borrower and
its Subsidiaries. The Borrower and each of its Subsidiaries expects to derive
benefit (and the Board of Directors (or other similar governing body) of the
Borrower and each of its Subsidiaries has determined that such Subsidiary may
reasonably be expected to derive benefit), directly or indirectly, from a
portion of the credit extended by the Lenders hereunder, both in its separate
capacity and as a member of the group of companies, since the successful
operation and condition of the Borrower and each of its Subsidiaries is
dependent on the continued successful performance of the functions of the group
as a whole. The Borrower acknowledges that, but for the agreement by each of the
Guarantors to execute and deliver the Guaranty, the Administrative Agent and the
Lenders would not have made available the credit facilities established hereby
on the terms set forth herein.
     Section 5.20. Solvent. The Borrower is, and the Borrower and its
Subsidiaries are on a consolidated basis, Solvent.
     Section 5.21. Taxpayer Identification Number. The Borrower’s true and
correct U.S. taxpayer identification number is set forth on Schedule 10.02.
     Section 5.22. Employment and Labor Agreements. Except as listed on
Schedule 5.22, there are no collective bargaining agreements covering any
employees of the Borrower or any of its Subsidiaries.

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     Section 5.23. Labor Matters. Except as disclosed on Schedule 5.23, there
are no strikes or other labor disputes against the Borrower or any of its
Subsidiaries or, to the best of Borrower’s knowledge, after due inquiry,
threatened against the Borrower or any of its Subsidiaries, which could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of the Borrower or, to the best of the Borrower’s
knowledge, after due inquiry, any of the Borrower’s Subsidiaries have not been
in violation of the Fair Labor Standards Act or any other applicable law dealing
with such matters which could reasonably be expected to have a Material Adverse
Effect. all payments due from the Borrower on account of employee health and
welfare insurance which could reasonably be expected to have a Material Adverse
Effect if not paid have been paid or, if not due, accrued as a liability on the
books of the Borrower.
ARTICLE VI.
AFFIRMATIVE COVENANTS
     So long as any Lender shall have any Commitment hereunder, any Term Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower
shall, and shall (except in the case of the covenants set forth in
Sections 6.01, 6.02, 6.03 and 6.11) cause each Subsidiary to:
     Section 6.01. Financial Statements. Deliver to the Administrative Agent, in
form and detail reasonably satisfactory to the Administrative Agent and the
Required Lenders:
     (a) as soon as available, but in any event within 90 days after the end of
each Fiscal Year of the Borrower (commencing with the Fiscal Year ended 2007), a
consolidated balance sheet of the Borrower and its Subsidiaries as at the end of
such Fiscal Year, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such Fiscal Year, setting
forth in the case in comparative form the figures for the previous Fiscal Year,
all in reasonable detail and prepared in accordance with GAAP, such consolidated
statements to be audited and accompanied by a report and opinion of an
independent certified public accountant of nationally recognized standing
reasonably acceptable to the Required Lenders (and the Lenders hereby confirm
that Hein & Associates LLP, the Borrower’s current independent certified public
accountant, is acceptable to the Required Lenders), which report and opinion
shall be prepared in accordance with generally accepted auditing standards and
shall not be subject to any “going concern” or like qualifications or exceptions
as to the scope of such audit or with respect to the absence of any material
misstatement;
     (b) as soon as available, but in any event within 45 days after the end of
the first three Fiscal Quarters of each Fiscal Year (and within 90 days after
the end of the fourth Fiscal Quarter of each Fiscal Year) of the Borrower
(commencing with the Fiscal Quarter ended December 31, 2007), a consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as at the end
of such Fiscal Quarter, and the related consolidated and consolidating
statements of income or operations, and consolidated cash flows for such Fiscal
Quarter (other than consolidated cash flows, which shall be on a year-to-date
basis) and for the portion of the Borrower’s Fiscal Year then ended, setting
forth, to the extent the information is available to the Borrower, in each case
in comparative form the figures for the corresponding Fiscal Quarter of

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the previous Fiscal Year and the corresponding portion of the previous Fiscal
Year, all in reasonable detail, such consolidated statements to be certified by
a Responsible Officer of the Borrower as fairly presenting the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes and such consolidating statements to be
certified by a Responsible Officer of the Borrower to the effect that such
statements are fairly stated in all material respects when considered in
relation to the consolidated financial statements of the Borrower and its
Subsidiaries;
     (c) as soon as available, and in any event within 45 days after the end of
each Fiscal Quarter of each Fiscal Year, a listing and aging of the Borrower’s
Accounts (other than unbilled Accounts) as of the end of such Fiscal Quarter,
with aging of Accounts on the basis of current, 30, 60 and over 90 days from the
due date thereof.
     (d) as soon as available, but in any event within 30 days after the end of
each Fiscal Year of the Borrower, forecasts prepared by management of the
Borrower, in form satisfactory to the Administrative Agent, of consolidated
balance sheets and statements of income or operations of the Borrower and its
Subsidiaries on a quarterly basis for the immediately following Fiscal Year
(including the Fiscal Year in which the Revolving Maturity Date and Term
Maturity Date occur).
     As to any information contained in materials furnished pursuant to
Section 6.02(d), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in clauses (a) and (b) above at the times specified therein.
     Section 6.02. Certificates; Other Information. Deliver to the
Administrative Agent, in form and detail satisfactory to the Administrative
Agent:
     (a) concurrently with the delivery of the financial statements referred to
in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of the Borrower;
     (b) promptly after any request by the Administrative Agent or any Lender,
copies of any detailed and final audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of the Borrower by independent accountants in connection
with the accounts or books of the Borrower or any Subsidiary, or any audit of
any of them;
     (c) promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the
stockholders of the Borrower, and copies of all annual, regular, periodic and
special reports and registration statements which the Borrower may file or be
required to file with the SEC under Section 13 or 15(d) of the Exchange Act, and
not otherwise required to be delivered to the Administrative Agent pursuant
hereto;

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     (d) promptly, and in any event within five Business Days after receipt
thereof by any Loan Party or any Subsidiary thereof, copies of each notice or
other correspondence received from the SEC (or comparable agency in any
applicable non-U.S. jurisdiction) concerning any investigation or possible
investigation or other inquiry by such agency regarding financial or other
operational results of any Loan Party or any Subsidiary thereof; and
     (e) promptly, such additional information regarding the business, financial
or corporate affairs of the Borrower or any Subsidiary, or compliance with the
terms of the Loan Documents, as the Administrative Agent, at the request of any
Lender, may from time to time reasonably request.
     Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(c) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule 10.02; or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet
or intranet website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third-party website or whether sponsored by
the Administrative Agent); provided that: (i) the Borrower shall deliver paper
copies of such documents to the Administrative Agent if it or any Lender
requests the Borrower to deliver such paper copies until a written request to
cease delivering paper copies is given by the Administrative Agent or such
Lender and (ii) the Borrower shall notify the Administrative Agent (by
telecopier or electronic mail) of the posting of any such documents and provide
to the Administrative Agent by electronic mail electronic versions (i.e., soft
copies) of such documents. Notwithstanding anything contained herein, in every
instance, the Borrower shall be required to provide paper copies of the
Compliance Certificates required by Section 6.02(a) to the Administrative Agent.
Except for such Compliance Certificates, the Administrative Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting from the Administrative Agent
delivery to it of such documents.
     Section 6.03. Notices. Notify the Administrative Agent and each Lender:
     (a) promptly of the occurrence of any Default;
     (b) promptly of any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect, including (i) any breach or
non-performance of, or any default under, a material Contractual Obligation of
the Borrower or any Subsidiary; (ii) any dispute, Litigation, or suspension
between the Borrower or any Subsidiary and any Governmental Authority; or
(iii) the commencement of, or any material development in, any Litigation
affecting the Borrower or any Subsidiary, including pursuant to any applicable
Environmental Laws;

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     (c) of the occurrence of any ERISA Event within 10 Business Days after the
Borrower or an ERISA Affiliate is notified or otherwise becomes aware of such
ERISA Event; and
     (d) promptly of any material change in accounting policies or financial
reporting practices by the Borrower or any Subsidiary.
     Each notice pursuant to this Section shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.
     Section 6.04. Payment of Obligations. Pay and discharge as the same shall
become due and payable, all its obligations and liabilities, including (a) all
tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary; (b) all
lawful claims which, if unpaid, would by Law become a Lien upon any material
portion of its property; and (c) all Indebtedness (other than Indebtedness,
individually or in the aggregate, not exceeding $200,000 in principal amount),
as and when due and payable, but subject to any applicable grace and/or cure
periods and further subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.
     Section 6.05. Preservation of Existence, Etc. (a) Preserve, renew and
maintain in full force and effect its legal existence and good standing under
the Laws of the jurisdiction of its organization except in a transaction
permitted by Section 7.04 or 7.05; (b) take all reasonable action to maintain
all rights, privileges, permits, licenses and franchises necessary in the normal
conduct of its business, except in a transaction permitted by Section 7.04 or
7.05; and (c) preserve or renew all of its registered patents, trademarks, trade
names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
     Section 6.06. Maintenance of Properties. (a) Maintain, preserve and protect
all of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
(b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) use the standard of care typical in the
industry in the operation and maintenance of its facilities.
     Section 6.07. Maintenance of Insurance. Maintain with financially sound and
reputable insurance companies not Affiliates of the Borrower, insurance with
respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons and as otherwise required pursuant to the
Collateral Documents, and providing for not less than 30 days’ prior notice to
the Administrative Agent of termination, lapse or cancellation of such
insurance.

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     Section 6.08. Compliance with Laws. Comply in all material respects with
the requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or a
bona fide dispute exists with respect thereto; or (b) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.
     Section 6.09. Books and Records. (a) Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Borrower or such Subsidiary, and
(b) maintain such books of record and account in material conformity with all
applicable material requirements of any Governmental Authority having regulatory
jurisdiction over the Borrower or such Subsidiary.
     Section 6.10. Inspection Rights. Permit representatives and independent
contractors of the Administrative Agent to, visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, at
the expense of the Borrower, and at such reasonable times during normal business
hours, upon no less than two Business Days advance notice to the Borrower;
provided, however, that when an Event of Default exists and while the same is
continuing the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at any
time during normal business hours and without advance notice.
     Section 6.11. Compliance with ERISA. Do, and cause each of its ERISA
Affiliates to do, each of the following: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other Federal or state Law; (b) cause each Plan which is qualified under
Section 401(a) of the Code to maintain such qualification; unless the failure to
maintain such qualification would not violate the applicable provisions of
ERISA, the Code and other Federal or state Law to the extent, individually or in
the aggregate, such violations could not reasonably be expected to have a
Material Adverse Effect, and (c) make all required contributions to any Plan
subject to Section 412 of the Code.
     Section 6.12. Use of Proceeds. Use the proceeds of the Credit Extensions to
acquire the Property.
     Section 6.13. Further Assurances. Within five Business Days of a request by
the Administrative Agent, the Borrower shall or shall cause any of the
Guarantors or other Subsidiaries whose Equity Interests are being pledged
hereunder to execute and deliver such further documents and do such other acts
and things as the Administrative Agent may reasonably request in order to effect
fully the purposes of this Agreement and the other Loan Documents and to provide
for payment of the Obligations in accordance with the terms of this Agreement
and the other Loan Documents.
     Section 6.14. Subsidiaries and Other Assets. Within ten Business Days after
the time that any Person becomes a Domestic Subsidiary as a result of an
Acquisition, the creation of such Subsidiary or otherwise, then, unless such
Domestic Subsidiary is merged into the

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Borrower or a Subsidiary Loan Party (with the Borrower or such Subsidiary Loan
Party being the surviving Person) prior to the expiration of such ten Business
Day period, (a) such Subsidiary shall execute a Guaranty of the Obligations, a
Security Agreement, and any related Collateral Documents reasonably required by
the Administrative Agent, to secure the Secured Obligations, and (b) 100% of
such Subsidiary’s Equity Interest shall be pledged to secure the Secured
Obligations, and (c) the Lenders shall receive such board resolutions, officer’s
certificates, corporate and other documents and opinions of counsel as the
Administrative Agent shall reasonably request in connection with the actions
described in subsections (a) and (b) above. Within thirty days after the time
that any Person becomes a Foreign Subsidiary as a result of the creation of such
Subsidiary or otherwise, (a) 65% of such Subsidiary’s Equity Interest shall be
pledged to secure the Obligations and (b) the Lenders shall receive such board
resolutions, officer’s certificates, corporate and other documents and opinions
of counsel as the Administrative Agent shall reasonably request in connection
with such pledge.
     Section 6.15. Post-Closing Deliveries. Without limiting the generality of
Section 6.13 of this Agreement, deliver to the Administrative Agent the items
described in the Post-Closing Letter on or before the applicable date set forth
in the Post-Closing Letter.
ARTICLE VII.
NEGATIVE COVENANTS
     So long as any Lender shall have any Commitment hereunder, any Term Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower
shall not, nor shall it permit any Subsidiary to, directly or indirectly,
without the prior written consent of the Required Lenders:
     Section 7.01. Liens. Create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, other than the following:
     (a) Liens pursuant to any Loan Document;
     (b) Liens existing on the date hereof and listed on Schedule 7.01 and any
renewals or extensions thereof, provided that (i) the property covered thereby
is not supplemented, (ii) the amount secured or benefited thereby is not
increased, and (iii) any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.03(b);
     (c) Liens for taxes not yet due and payable or which are being contested in
good faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;
     (d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than 30 days or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person;

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     (e) pledges or deposits in the ordinary course of business in connection
with workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;
     (f) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business;
     (g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;
     (h) judgment Liens which would not constitute an Event of Default;
     (i) Liens securing Indebtedness permitted under Section 7.03(e); provided
that (i) such Liens do not at any time encumber any property other than the
property financed by such Indebtedness and (ii) the Indebtedness secured thereby
does not exceed the cost or fair market value, whichever is lower, of the
property being acquired on the date of acquisition;
     (j) licenses (with respect to intellectual property Collateral and other
property), leases or subleases granted to third parties in accordance with any
applicable terms of the Loan Documents and not interfering in any material
respect with the ordinary conduct of the business of the Borrower or any of its
Subsidiaries or resulting in a material diminution in the value of any
Collateral as security for the Secured Obligations;
     (k) any (i) interest or title of a lessor or sublessor under any lease not
prohibited by this Agreement, (ii) Lien or restriction that the interest or
title of such lessor or sublessor may be subject to, or (iii) subordination of
the interest of the lessee or sublessee under such lease to any Lien or
restriction referred to in the preceding clause (ii), so long as the holder of
such Lien or restriction agrees to recognize the rights of such lessee or
sublessee under such lease;
     (l) Liens arising from filing UCC financing statements relating solely to
leases not prohibited by this Agreement;
     (m) any zoning or similar law or right reserved to or vested in any
Governmental Authority to control or regulate the use of any real property;
     (n) Liens arising out of conditional sale or title retention, consignment
or similar arrangements for the sale of good entered into by the Borrower or any
of its Subsidiaries in the ordinary course of business and not prohibited by
this Agreement;
     (o) Liens in favor of Caterpillar Financial Services Corporation related to
generators and related equipment for PowerSecure Shared Savings Projects and
sold to the Borrower or any of its Subsidiaries and any renewals and extensions
thereof, provided that the aggregate principal amount of Indebtedness secured
thereby does not exceed $7,500,000;

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     (p) Liens with respect to vehicle leases of the Borrower and its
Subsidiaries entered into in the ordinary course of business;
     (q) Liens with respect to operating leases of copiers, fax machines and
similar office equipment in the ordinary course of business; and
     (r) Liens granted pursuant to the Existing Credit Agreement Collateral
Documents.
     Section 7.02. Investments. Make any Investments, except:
     (a) Investments not otherwise permitted by subsections (b) through
(l) below existing on the date hereof and listed on Schedule 7.02;
     (b) Investments held by the Borrower or such Subsidiary in the form of Cash
and Cash Equivalents and Investments by the Borrower or such Subsidiary in
accounts at Citibank;
     (c) Investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes with,
customers and suppliers, in each case in the ordinary course of business;
     (d) Investments as Capital Expenditures;
     (e) Investments of any Subsidiary in the Borrower or any Subsidiary Loan
Party or Investments by the Borrower in any Subsidiary Loan Party;
     (f) Investments constituting (i) accounts receivable arising, (ii) trade
debt granted, or (iii) deposits made in connection with the purchase price of
goods or services, in each case, in the ordinary course of business;
     (g) Investments consisting of (i) any deferred portion of the sales price
or (ii) non-cash consideration, in each case, received by the Borrower or any
Subsidiary in connection with any Disposition permitted under Section 7.05;
     (h) Investments in respect of loans and advances made by the Borrower and
its Subsidiaries in the ordinary course of business to their respective
directors, officers and employees, so long as the aggregate principal amount
thereof at any one time outstanding does not exceed $50,000 in the aggregate for
all such Persons;
     (i) Investments pursuant to Swap Contracts permitted pursuant to
Section 7.03(d);
     (j) Investments in the ordinary course of business consisting of
endorsements for collection or deposit;
     (k) Investments in the form of Permitted Acquisitions; and
     (l) Investments not otherwise permitted pursuant to clauses (a) through
(k) above made by the Borrower and its Subsidiaries in an aggregate amount not
to exceed $100,000 at any time outstanding.

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     Section 7.03. Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:
     (a) Indebtedness under the Loan Documents;
     (b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03
and any refinancings, refundings, renewals or extensions thereof; provided that
the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder (each a “Permitted
Refinancing”);
     (c) Guarantees of the Borrower or any Subsidiary Loan Party in respect of
Indebtedness of the Borrower or any Subsidiary Loan Party otherwise permitted
hereunder;
     (d) obligations (contingent or otherwise) of the Borrower or any Subsidiary
existing or arising under any Swap Contract with any Lender (or Affiliate
thereof) for the purpose of directly mitigating risks associated with respect to
the Term Loans outstanding under this Agreement;
     (e) Indebtedness (i) evidencing the deferred purchase price of newly
acquired property or incurred to finance the acquisition of other assets of the
Borrower or its Subsidiaries (pursuant to purchase money mortgages or otherwise,
whether owed to the seller or a third party) used in the ordinary course of
business of the Borrower or its Subsidiaries and any Indebtedness assumed in
connection with such acquisition (provided that such Indebtedness is incurred
within 180 days of the acquisition of such property other assets) and contingent
obligations of the borrower and its Subsidiaries in respect of such
Indebtedness, (ii) in respect of Capital Leases and contingent obligations of
the Borrower and its Subsidiaries in respect of such Indebtedness and (iii) any
Permitted Refinancing of Indebtedness referred to in clauses (i) and (ii);
provided that the aggregate principal amount of all Indebtedness outstanding
pursuant to this Section 7.03(e) shall not at any time exceed $100,000;
     (f) Indebtedness of (i) the Borrower or any Subsidiary Loan Party owing to
the Borrower or any Subsidiary Loan Party and (ii) the Borrower or any of its
Subsidiaries owing to a Subsidiary which is not a Loan Party so long as the
repayment obligations of the Borrower or any Subsidiary Loan Party are
subordinated to the repayment in full of the Obligations on terms and conditions
that are reasonably satisfactory to the Administrative Agent;
     (g) the Founders Severance Payments;
     (h) other unsecured Indebtedness, either (i) the Net Cash Proceeds of which
are applied in accordance with Section 2.06(c) of the Existing Credit Agreement
or (ii) not otherwise permitted pursuant to clauses (a) through (g) above
incurred by the Borrower and its Subsidiaries not to exceed $100,000 in
aggregate amount at any time outstanding; and
     (i) Indebtedness in respect of the Existing Credit Agreement and any other
Loan Documents (as defined in the Existing Credit Agreement).

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     Section 7.04. Fundamental Changes. Merge, dissolve, liquidate, consolidate
with or into another Person, or Dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to or in favor of any Person, except that, so long
as no Default exists or would result therefrom:
     (a) any Subsidiary may merge with (i) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) any one or more
other Subsidiaries, provided that when any Subsidiary Loan Party is merging with
another Subsidiary, the Subsidiary Loan Party shall be the continuing or
surviving Person; and
     (b) any Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or to another
Subsidiary; provided that if the transferor in such a transaction is a
Subsidiary Loan Party, then the transferee must either be the Borrower or a
Subsidiary Loan Party.
     Section 7.05. Dispositions. Make any Disposition or enter into any
agreement to make any Disposition, except:
     (a) Dispositions of inventory or obsolete, damaged, worn out or surplus
property in the ordinary course of business;
     (b) Dispositions by the Borrower or any Subsidiary to the Borrower or any
Subsidiary Loan Party (including any Disposition effected pursuant to a merger,
consolidation, liquidation or dissolution permitted under Section 7.04);
     (c) Dispositions to the extent constituting a Restricted Payment permitted
by Section 7.06;
     (d) Dispositions of overdue accounts receivable arising in the ordinary
course of business, but only in connection with the collection or compromise
thereof;
     (e) Dispositions of Cash and Cash Equivalents in the ordinary course of
business;
     (f) Dispositions not otherwise permitted in clauses (a) through (e) above,
provided, that (i) at the time of such Disposition no Default exists or would
result from such Disposition and (ii) the aggregate Book Value of all property
disposed of in reliance on this clause (f) in any Fiscal Year shall not exceed
$150,000;
     (g) so long as there exists no Default immediately before and after giving
effect to any such transaction, Dispositions not otherwise permitted in
clauses (a) through (f) above, the Net Cash Proceeds of which are used within
120 days of such Disposition to purchase assets useful in the business of the
Borrower and its Subsidiaries, provided that (i) the aggregate amount of Net
Cash Proceeds outstanding and pending reinvestment pursuant to this clause (g)
shall not exceed $50,000 and (ii) if such Net Cash Proceeds are not used within
such 120 days to purchase assets useful in the business of the Borrower and its
Subsidiaries, then such Net Cash Proceeds shall be applied in accordance with
Section 2.05(d) of the Existing Credit Agreement; and

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     (h) Disposition by the Borrower of assets and Equity Interests as disclosed
to the Administrative Agent in writing prior to the Closing Date;
provided, however, that any Disposition pursuant to clauses (a) through
(h) shall be for fair market value.
     Notwithstanding anything to the contrary herein, in no event should there
be any Disposition of the Mortgaged Property without the consent of each Lender.
     Section 7.06. Restricted Payments. Declare or make, directly or indirectly,
any Restricted Payment, or incur any obligation (contingent or otherwise) to do
so, except so long as no Default shall have occurred and be continuing at the
time of any action described below or would result therefrom:
     (a) each Subsidiary may declare and pay Dividends to the Borrower or any
Subsidiary Loan Party;
     (b) the Borrower and each Subsidiary may declare and make Dividends payable
solely in the common stock or other common Equity Interests of such Person;
     (c) the Borrower and each Subsidiary may purchase, redeem or otherwise
acquire Equity Interests issued by it with the proceeds received from the
substantially concurrent issue of new shares of its common stock or other common
Equity Interests;
     (d) the Borrower and each Subsidiary may make regularly scheduled payments
of principal and interest on Indebtedness;
     (e) the Borrower may declare and pay Dividends; and
     (f) the Borrower may repurchase its common Equity Interests pursuant to
stock option plans approved by its Board of Directors.
     Section 7.07. ERISA. At any time engage in a transaction which could be
subject to Section 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in
any non-exempt “prohibited transaction” (as defined in Section 4975 of the
Code); (b) fail to comply with ERISA or any other Applicable Laws; or (c) incur
any material “accumulated funding deficiency” (as defined in Section 302 of
ERISA), which, with respect to each event listed above, could be reasonably
expected to have a Material Adverse Effect.
     Section 7.08. Change in Nature of Business. Engage in any material line of
business substantially different from those lines of business conducted by the
Borrower and its Subsidiaries on the date hereof and business activities that
are ancillary or related thereto; provided that the Borrower shall not conduct
any business other than performance of its obligations under the Loan Documents
or own any material assets other than (a) Equity Interests in Subsidiaries,
(b) Cash and Cash Equivalents, and (c) other supplies, equipment and similar
assets not in excess of $250,000.

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     Section 7.09. Transactions with Affiliates. Enter into any transaction of
any kind with any Affiliate of the Borrower (other than a Subsidiary Loan
Party), other than arm’s-length transactions with Affiliates that are otherwise
permitted hereunder and which are on fair and reasonable terms substantially as
favorable to the Borrower or any Subsidiary as would be obtainable by the
Borrower or such Subsidiary in a comparable arm’s-length transaction with a
Person other than an Affiliate.
     Section 7.10. Burdensome Agreements. Enter into any Contractual Obligation
(other than this Agreement or any other Loan Document) that (a) limits the
ability (i) of any Subsidiary to make Restricted Payments to the Borrower or to
otherwise transfer property to the Borrower, (ii) of any Subsidiary to Guarantee
the Indebtedness of the Borrower, or (iii) of the Borrower or any Subsidiary to
create, incur, assume or suffer to exist Liens on property of such Person;
provided, however, that this clause (iii) shall not prohibit any negative pledge
incurred or provided in favor of any holder of Indebtedness permitted under
Section 7.03(e) solely to the extent any such negative pledge relates to the
property financed by or the subject of such Indebtedness; or (b) requires the
grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person.
     Section 7.11. Use of Proceeds. Use the proceeds of any Credit Extension,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of
Regulation U of the Board) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally
incurred for such purpose.
     Section 7.12. Financial Covenants.
     (a) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio as
of the end of any Fiscal Quarter of the Borrower to be less than 1.75 to 1.00.
     (b) Leverage Ratio. Permit the Leverage Ratio as of the end of any Fiscal
Quarter of the Borrower to exceed 2.75 to 1.00.
     (c) Asset Coverage Ratio. Permit the Asset Coverage Ratio at any time to be
less than 1.25 to 1.00.
     Section 7.13. Capital Expenditures. Make or become legally obligated to
make any Capital Expenditure in an aggregate amount during any Fiscal Year in
excess of $2,000,000.
     Section 7.14. Fiscal Year and Accounting Methods. Change its Fiscal Year or
its method of accounting other than (a) changes as required by GAAP or
(b) changes required by Applicable Law.
     Section 7.15. Limitation on Restrictive Agreements. Enter into any
agreement or instrument that prohibits the Borrower from entering into any
amendment, supplement, modification or restatement of this Agreement.
     Section 7.16. Issuance of Equity Interests. Make any Equity Issuance
except:

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     (a) Equity Interests in respect of any initial capitalization of a
Subsidiary;
     (b) Qualified Equity Interests of Subsidiaries issued to the Borrower and,
if required under this Agreement or any other Loan Document, pledged to the
Administrative Agent;
     (c) an Equity Issuance in which the Net Equity Proceeds thereof are applied
as required pursuant to Section 2.05(e) of the Existing Credit Agreement;
     (d) Equity Interests under the Borrower’s 1998 Stock Incentive Plan, as
amended and restated, including but not limited to granting stock options,
issuing restricted stock and restricted stock units, and issuing shares of
common Equity Interests underlying stock options and restricted stock units; and
     (e) shares of common Equity Interests underlying outstanding warrants.
     Notwithstanding anything in this Article VII or elsewhere in this Agreement
to the contrary, in no event shall the Borrower permit (a) any Inactive
Subsidiary to conduct any business and (b) the Inactive Subsidiaries to own
assets in excess of $100,000 in aggregate value.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
     Section 8.01. Events of Default. Any of the following shall constitute an
Event of Default:
     (a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when
due and payable and as required to be paid herein, any amount of principal of
any Term Loan, or (ii) within three Business Days after the same becomes due,
any interest on any Term Loan, or any commitment or other fee due hereunder, or
(iii) within five days after the Borrower receives written notice from the
Administrative Agent specifying the amount is due and payable, any other amount
payable hereunder or under any other Loan Document; or
     (b) Specific Covenants. Any Loan Party fails to perform or observe any
term, covenant or agreement contained in (i) any of Section 6.03(a), 6.10, 6.12,
or Article VII (other than Section 7.01) required to be performed or observed by
it or (ii) Section 7.01 required to be performed or observed by it, and, in the
case of clause (ii) only, such failure continues for 15 days after the earlier
of (A) the Borrower’s knowledge and (B) the Borrower receives written notice
thereof specifying such default from the Administrative Agent; or
     (c) Other Defaults. The Borrower or any other Loan Party fails to perform
or observe any other covenant or agreement (not specified in subsection (a) or
(b) above) contained in any Loan Document on its part to be performed or
observed and such failure continues for 30 days after the earlier of (i) the
Borrower’s knowledge and (ii) the Borrower receives written notice thereof
specifying the default from the Administrative Agent; or
     (d) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of the
Borrower or any other Loan Party

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herein, in any other Loan Document, or in any document delivered in connection
herewith or therewith shall be incorrect or misleading in any material respect
when made or deemed made; or
     (e) Cross-Default. (i) The Borrower or any other Loan Party (A) fails to
make any payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder, Indebtedness under Swap Contracts) having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $200,000 after the giving of any required notice and
the expiration of any applicable grace period, or (B) fails to observe or
perform any other agreement or condition relating to any such Indebtedness or
Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, in each case, the effect of which
default or other event is to cause, or to permit the holder or holders of such
Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, after the giving of any required notice and the expiration of any
applicable grace period, such Indebtedness to be demanded or to become due or to
be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or
an offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity, or such Guarantee to become payable or cash
collateral in respect thereof to be demanded; (ii) there occurs under any Swap
Contract an Early Termination Date (as defined in such Swap Contract) resulting
from (A) any event of default under such Swap Contract as to which the Borrower
or any other Loan Party is the Defaulting Party (as defined in such Swap
Contract) or (B) any Termination Event (as so defined) under such Swap Contract
as to which the Borrower or any Subsidiary is an Affected Party (as so defined)
and, in either event, the Swap Termination Value owed by the Borrower or such
other Loan Party as a result thereof is greater than $100,000 and the amount of
the Swap Termination Value remains unpaid for a period of 10 days; or (iii) the
Borrower or any other Loan Party shall default in the payment when due, or in
the performance or observance, of any material obligation or material condition
of any Contractual Obligation (other than any Indebtedness) the result of which
could reasonably be expected to have a Material Adverse Effect, unless, but only
as long as, the existence of any such default is being contested by the Borrower
or such other Loan Party in good faith by appropriate proceedings and adequate
reserves in respect thereof have been established on the books of the Borrower
or such other Loan Party to the extent required by GAAP; or
     (f) Insolvency Proceedings, Etc. The Borrower or any other Loan Party
institutes or consents to the institution of any proceeding under any Debtor
Relief Law in which such Person is the debtor, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar
officer for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of such Person and the appointment
continues undischarged or unstayed for 60 calendar days; or any proceeding under
any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

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     (g) Inability to Pay Debts; Attachment. (i) The Borrower or any other Loan
Party becomes unable or admits in writing its inability or fails generally to
pay its debts as they become due, or (ii) any writ or warrant of attachment or
execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within 30 days after its issue or levy; or
     (h) Judgments. There is entered against the Borrower or any other Loan
Party (i) a final judgment or order for the payment of money in an aggregate
amount exceeding $200,000 (to the extent not covered by independent third-party
insurance or surety bond as to which the insurer or surety does not dispute
coverage), or (ii) any one or more non-monetary final judgments that have, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or order or (B) such judgment or
order shall continue unsatisfied, undischarged and unstayed for a period of
30 days; or
     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC, or (ii) the Borrower or any ERISA Affiliate
fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$100,000; or
     (j) Invalidity of Loan Documents. Any material provision of any Loan
Document, at any time after its execution and delivery and for any reason other
than as expressly permitted hereunder or under such other Loan Documents or
satisfaction in full of all the Obligations, ceases to be in full force and
effect; or any Loan Party or any other Person contests in any manner the
validity or enforceability of any provision of any Loan Document; or any Loan
Party denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any provision of any Loan
Document other than in accordance with its terms;
     (k) Change of Control. There occurs any Change of Control; or
     (l) Existing Credit Agreement. An Event of Default (as defined in the
Existing Credit Agreement) shall occur.
     Section 8.02. Remedies Upon Event of Default. If any Event of Default
occurs and is continuing, the Administrative Agent shall, at the request of, or
may, with the consent of, the Required Lenders, take any or all of the following
actions:
     (a) declare the commitment of each Lender to make Term Loans to be
terminated, whereupon such commitments and obligation shall be terminated;
     (b) declare the unpaid principal amount of all outstanding Term Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and

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     (c) exercise on behalf of itself and the Lenders all rights and remedies
available to it, the Lender under the Loan Documents or Applicable Law;
provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Term Loans shall
automatically terminate, the unpaid principal amount of all outstanding Term
Loans and all interest and other amounts as aforesaid shall automatically become
due and payable, without further act of the Administrative Agent or any Lender.
     Section 8.03. Application of Funds. After the exercise of remedies provided
for in Section 8.02 (or after the Loans have automatically become immediately
due and payable as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order, subject to Section 10.19:
     First, to payment of that portion of the Secured Obligations constituting
fees, indemnities, expenses and other amounts (including Attorney Costs and
amounts payable under Article III) payable to the Administrative Agent in its
capacity as such;
     Second, to payment of that portion of the Secured Obligations constituting
fees, indemnities and other amounts (other than principal and interest) payable
to the Lenders (including Attorney Costs and amounts payable under Article III),
ratably among them in proportion to the amounts described in this clause Second
payable to them;
     Third, to payment of that portion of the Secured Obligations constituting
accrued and unpaid interest on the Loans, ratably among the Lenders in
proportion to the respective amounts described in this clause Third payable to
them;
     Fourth, to payment of that portion of the Secured Obligations constituting
unpaid principal of the Loans and Swap Obligations, ratably among the Guarantied
Parties (as defined in the Guaranties) and the Secured Creditors (as defined in
the Security Agreement) in proportion to the respective amounts described in
this clause Fourth held by them;
     Fifth, to payment of Cash Management Obligations, ratably among the
Guarantied Parties and the Secured Creditors in proportion to the respective
amounts described in this clause Fifth held by them;
     Sixth, to payment of any other Secured Obligations, ratably among the
Guarantied Parties and the Secured Creditors in proportion to the respective
amounts described in this clause Sixth held by them; and
     Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by Law.

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ARTICLE IX.
ADMINISTRATIVE AGENT
     Section 9.01. Appointment and Authority. Each of the Lenders hereby
irrevocably appoints Citibank to act on its behalf as the Administrative Agent
hereunder and under the other Loan Documents and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such actions and powers as are reasonably incidental thereto. The
provisions of this Article are solely for the benefit of the Administrative
Agent and the Lenders, and neither the Borrower nor any other Loan Party shall
have rights as a third party beneficiary of any of such provisions.
     Section 9.02. Rights as a Lender. The Person serving as the Administrative
Agent hereunder shall have the same rights and powers in its capacity as a
Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.
     Section 9.03. Exculpatory Provisions. The Administrative Agent shall not
have any duties or obligations except those expressly set forth herein and in
the other Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:
     (a) shall not be subject to any fiduciary or other implied duties,
regardless of whether a Default has occurred and is continuing;
     (b) shall not have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or Applicable Law; and
     (c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Affiliates that
is communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity.
     The Administrative Agent shall not be liable for any action taken or not
taken by it (i) with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in

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good faith shall be necessary, under the circumstances as provided in
Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or
willful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until notice describing such Default is
given to the Administrative Agent by the Borrower or a Lender.
     The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.
     Section 9.04. Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely upon, and shall not incur any liability for relying
upon, any notice, request, certificate, consent, statement, instrument, document
or other writing (including any electronic message, Internet or intranet website
posting or other distribution) believed by it to be genuine and to have been
signed, sent or otherwise authenticated by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition
hereunder to the making of a Term Loan that by its terms must be fulfilled to
the satisfaction of a Lender, the Administrative Agent may presume that such
condition is satisfactory to such Lender unless the Administrative Agent shall
have received notice to the contrary from such Lender prior to the making of
such Term Loan. The Administrative Agent may consult with legal counsel (who may
be counsel for the Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.
     Section 9.05. Delegation of Duties. The Administrative Agent may perform
any and all of its duties and exercise its rights and powers hereunder or under
any other Loan Document by or through any one or more sub-agents (which may be
other Affiliates of Citibank) appointed by the Administrative Agent. The
Administrative Agent and any such sub-agent may perform any and all of its
duties and exercise its rights and powers by or through their respective Related
Parties. The exculpatory provisions of this Article shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.
     Section 9.06. Resignation of Administrative Agent. The Administrative Agent
may at any time give notice of its resignation to the Lenders and the Borrower.
Upon receipt of any such notice of resignation, the Required Lenders shall have
the right, with approval of the Borrower so long as no Event of Default is in
existence (which approval shall not be unreasonably withheld or delayed), to
appoint a successor, which shall be a bank with an office

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in the United States, or an Affiliate of any such bank with an office in the
United States. If no such successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders and, so long as no Event of
Default is in existence, with approval of the Borrower (which approval shall not
be unreasonably withheld or delayed), appoint a successor Administrative Agent
meeting the qualifications set forth above; provided that if the Administrative
Agent shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any Collateral held by the
Administrative Agent on behalf of the Lenders under any of the Loan Documents,
the retiring Administrative Agent shall continue to hold such Collateral until
such time as a successor Administrative Agent is appointed) and (2) all
payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender
directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section. Upon the acceptance
of a successor’s appointment as Administrative Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Administrative Agent, and the retiring
Administrative Agent shall be discharged from all of its duties and obligations
hereunder or under the other Loan Documents (if not already discharged therefrom
as provided above in this Section). The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After the retiring Administrative Agent’s resignation hereunder and under the
other Loan Documents, the provisions of this Article and Section 10.04 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while the retiring Administrative Agent
was acting as Administrative Agent.
     Section 9.07. Non-Reliance on Administrative Agent and Other Lenders. Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or any related
agreement or any document furnished hereunder or thereunder.
     Section 9.08. Administrative Agent May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Term Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise

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     (a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Term Loans and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary
or advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under Section 10.04) allowed in such judicial proceeding;
and
     (b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 10.04.
     Nothing contained herein shall be deemed to authorize the Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender any
plan of reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative Agent
to vote in respect of the claim of any Lender in any such proceeding.
     Section 9.09. Collateral and Guaranty Matters. The Lenders irrevocably
authorize the Administrative Agent, at its option and in its discretion,
     (a) to release any Lien on any property granted to or held by the
Administrative Agent under any Loan Document (i) upon termination of the
Aggregate Term Commitments and payment in full of all Obligations (other than
contingent indemnification obligations), (ii) that is sold or to be sold as part
of or in connection with any sale permitted hereunder or under any other Loan
Document, or (iii) subject to Section 10.01, if approved, authorized or ratified
in writing by the Required Lenders;
     (b) to subordinate any Lien on any property granted to or held by the
Administrative Agent under any Loan Document to the holder of any Lien on such
property that is permitted by Section 7.01(i); and
     (c) to release on behalf of the Administrative Agent and the Lenders any
Guarantor from its obligations under its Guaranty and under the other Loan
Documents (i) upon termination of the Aggregate Term Commitments and payment in
full of all Secured Obligations (other than contingent indemnification
obligations) and the expiration or termination of all Letters of Credit, (ii) if
such Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder or (iii) subject to Section 10.01, if approved, authorized or ratified
in writing, by the Lenders required for such action.

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     Upon request by the Administrative Agent at any time, the Required Lenders
will confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to release
any Guarantor from its obligations under its Guaranty pursuant to this
Section 9.09.
ARTICLE X.
MISCELLANEOUS
     Section 10.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent to any departure by
the Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan
Party, and acknowledged by the Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:
     (a) waive any condition set forth in Section 4.01(a) without the written
consent of each Lender;
     (b) extend or increase the Commitment of any Lender (or reinstate any
Commitment terminated pursuant to Section 8.02) without the written consent of
such Lender;
     (c) postpone any date fixed by this Agreement or any other Loan Document
for any payment (excluding mandatory prepayments) of principal, interest, fees
or other amounts due to the Lenders (or any of them) hereunder or under any
other Loan Document without the written consent of each Lender directly affected
thereby;
     (d) reduce the principal of, or the rate of interest specified herein on,
any Term Loan, or (subject to clause (iv) of the second proviso to this
Section 10.01) any fees or other amounts payable hereunder or under any other
Loan Document without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of the Required Lenders shall
be necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrower to pay interest at the Default Rate or (ii) to amend
the Leverage Ratio (or any defined term used therein) even if the effect of such
amendment would be to reduce the rate of interest on any Term Loan or to reduce
any fee payable hereunder;
     (e) change Section 2.[___] or Section 8.03 in a manner that would alter the
pro rata sharing of payments required thereby without the written consent of
each Lender directly affected thereby;
     (f) change any provision of this Section, the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender;
     (g) release any Guarantor from its Guaranty without the written consent of
each Lender, unless otherwise permitted pursuant to clause (i) or (ii) of
Section 9.09(c); or

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     (h) release all or substantially all of the Collateral without the written
consent of each Lender, unless otherwise permitted by Section 9.09(a);
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders
required above, affect the rights or duties of the Administrative Agent under
this Agreement or any other Loan Document. Notwithstanding anything to the
contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.
     Section 10.02. Notices; Effectiveness; Electronic Communication.
     (a) Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other communications provided
for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier as
follows, and all notices and other communications expressly permitted hereunder
to be given by telephone shall be made to the applicable telephone number, as
follows:
     (i) if to the Borrower or the Administrative Agent to the address,
telecopier number, electronic mail address or telephone number specified for
such Person on Schedule 10.02; and
     (ii) if to any other Lender, to the address, telecopier number, electronic
mail address or telephone number specified in its Administrative Questionnaire;
and
Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).
     (b) Electronic Communications. Notices and other communications to the
Lenders hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by the Administrative Agent, provided that the foregoing shall not
apply to notices to any Lender pursuant to Article II if such Lender has
notified the Administrative Agent that it is incapable of receiving notices
under such Article by electronic communication. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that approval of such procedures may be
limited to particular notices or communications.
     Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such

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notice or other communication is not sent during the normal business hours of
the recipient, such notice or communication shall be deemed to have been sent at
the opening of business on the next Business Day for the recipient, and
(ii) notices or communications posted to an Internet or intranet website shall
be deemed received upon the deemed receipt by the intended recipient at its
e-mail address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.
     (c) In no event shall the Administrative Agent or any of its Related
Parties (collectively, the “Agent Parties”) have any liability to the Borrower,
any Lender or any other Person for losses, claims, damages, liabilities or
expenses of any kind (whether in tort, contract or otherwise) arising out of the
Borrower’s or the Administrative Agent’s transmission of Borrower Materials
through the Internet, except to the extent that such losses, claims, damages,
liabilities or expenses are determined by a court of competent jurisdiction by a
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Agent Party; provided, however, that in no event
shall any Agent Party have any liability to the Borrower, any Lender or any
other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).
     (d) Change of Address, Etc. Each of the Borrower and the Administrative
Agent may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the other parties hereto. Each other
Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the Borrower and the Administrative
Agent. In addition, each Lender agrees to notify the Administrative Agent from
time to time to ensure that the Administrative Agent has on record (i) an
effective address, contact name, telephone number, telecopier number and
electronic mail address to which notices and other communications may be sent
and (ii) accurate wire instructions for such Lender.
     (e) Reliance by Administrative Agent and Lenders. The Administrative Agent
and the Lenders shall be entitled to rely and act upon any notices (including
telephonic Term Loan Notices) purportedly given by or on behalf of the Borrower
even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient,
varied from any confirmation thereof. The Borrower shall indemnify the
Administrative Agent, each Lender and the Related Parties of each of them from
all losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of the Borrower. All
telephonic notices to and other telephonic communications with the
Administrative Agent may be recorded by the Administrative Agent, and each of
the parties hereto hereby consents to such recording.
     Section 10.03. No Waiver; Cumulative Remedies. No failure by any Lender or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by Law.

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     Section 10.04. Expenses; Indemnity; Damage Waiver.
     (a) Costs and Expenses. The Borrower shall pay within 30 days after demand
thereof (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates (including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent), in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses
incurred by the Administrative Agent or any Lender (including the reasonable
fees, charges and disbursements of any counsel for the Administrative Agent or
any Lender), in connection with the enforcement or protection of its rights
(A) in connection with this Agreement and the other Loan Documents, including
its rights under this Section or (B) in connection with the Term Loans made,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Term Loans.
     (b) INDEMNIFICATION BY THE BORROWER. THE BORROWER SHALL INDEMNIFY THE
ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), EACH LENDER, AND EACH RELATED
PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN
“INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL
LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES (INCLUDING THE
REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE),
INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY THIRD PARTY
OR BY THE BORROWER OR ANY OTHER LOAN PARTY ARISING OUT OF, IN CONNECTION WITH,
OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE
PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR
THEREUNDER, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
OR, IN THE CASE OF THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF) AND ITS
RELATED PARTIES ONLY, THE ADMINISTRATION OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, (II) ANY TERM LOAN OR THE USE OR PROPOSED USE OF THE PROCEEDS
THEREFROM, (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS
MATERIALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY THE BORROWER OR ANY OF
ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE
BORROWER OR ANY OF ITS SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD
PARTY OR BY THE BORROWER OR ANY OTHER LOAN PARTY, AND REGARDLESS OF WHETHER ANY
INDEMNITEE IS A PARTY THERETO, IN ALL CASES, WHETHER OR NOT CAUSED BY OR
ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE
NEGLIGENCE OF THE INDEMNITEE; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO

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ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM BROUGHT BY THE
BORROWER OR ANY OTHER LOAN PARTY AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH
OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF
THE BORROWER OR SUCH LOAN PARTY HAS OBTAINED A FINAL JUDGMENT IN ITS FAVOR ON
SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.
     (c) Reimbursement by Lenders. To the extent that the Borrower for any
reason fails to indefeasibly pay any amount required under subsection (a) or (b)
of this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof) or any Related Party of the Administrative Agent, each Lender severally
agrees to pay to the Administrative Agent (or any such sub-agent), or such
Related Party, such Lender’s applicable Term Pro Rata Share (determined as of
the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, was incurred by
or asserted against the Administrative Agent (or any such sub-agent) in its
capacity as such, or against any Related Party of the Administrative Agent
acting for the Administrative Agent (or any such sub-agent) in connection with
such capacity. The obligations of the Lenders under this subsection (c) are
subject to the provisions of Section 2.08(d).
     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted
by Applicable Law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Term Loan or the use of the
proceeds thereof. No Indemnitee referred to in subsection (b) above shall be
liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Loan Documents or the transactions contemplated hereby or
thereby unless such damages are determined by a court of competent jurisdiction
by final judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.
     (e) Payments. All amounts due under this Section shall be payable not later
than 30 days after demand therefor.
     (f) Survival. The agreements in this Section shall survive the resignation
of the Administrative Agent, the replacement of any Lender, the termination of
the Aggregate Term Commitments and the repayment, satisfaction or discharge of
all the other Obligations.
     Section 10.05. Payments Set Aside. To the extent that any payment by or on
behalf of the Borrower is made to the Administrative Agent or any Lender, or the
Administrative Agent or any Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any

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part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Administrative Agent or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
severally agrees to pay to the Administrative Agent upon demand its applicable
share (without duplication) of any amount so recovered from or repaid by the
Administrative Agent, plus interest thereon from the date of such demand to the
date such payment is made at a rate per annum equal to the Federal Funds Rate
from time to time in effect. The obligations of the Lenders under clause (b) of
the preceding sentence shall survive the payment in full of the Obligations and
the termination of this Agreement.
     Section 10.06. Successors and Assigns.
     (a) Successors and Assigns Generally. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that neither the
Borrower nor any other Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder or under any other Loan Document (except as
expressly contemplated by Section 7.04) without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an Eligible
Assignee in accordance with the provisions of subsection (b) of this Section,
(ii) by way of participation in accordance with the provisions of subsection (d)
of this Section, or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of subsection (f) of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants to the extent provided in subsection (d)
of this Section and, to the extent expressly contemplated hereby, the Related
Parties of each of the Administrative Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
     (b) Assignments by Lenders. Any Lender may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Term Loan
at the time owing to it); provided that
     (i) except in the case of an assignment of the entire remaining amount of
the assigning Lender’s Commitment and the Term Loan at the time owing to it or
in the case of an assignment to a Lender or an Affiliate of a Lender or an
Approved Fund with respect to a Lender, the aggregate amount of the Commitment
(which for this purpose includes the Term Loan outstanding thereunder) or, if
the Commitment is not then in effect, the principal outstanding balance of the
Term Loan of the assigning Lender subject to each such assignment, determined as
of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date, shall not be less than $500,000
unless each of the Administrative Agent and, so long as

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no Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed);
     (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations with
respect to its Term Loan;
     (iii) any assignment of a Commitment must be approved by the Administrative
Agent unless the Person that is the proposed assignee is itself a Lender
(whether or not the proposed assignee would otherwise qualify as an Eligible
Assignee); and
     (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500 (which fee shall not be reimburseable by any Loan
Party), and the Eligible Assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire.
Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment). Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.
     (c) Register. The Administrative Agent, acting solely for this purpose as
an agent of the Borrower, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amount of the Term Loan owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower at any reasonable time and from time to time upon
reasonable prior notice. In addition, at any time that a request for a consent
for a material or substantive change to the Loan Documents is pending, any
Lender wishing to consult with other Lenders in connection therewith may request
and receive from the Administrative Agent a copy of the Register.

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     (d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Term Loan owing to it); provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations and (iii) the Borrower, the Administrative
Agent and the Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement.
     Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that directly affects such Participant. Subject to subsection (e)
of this Section, the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by Law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.09 as though it were a
Lender.
     (e) Limitations upon Participant Rights. A Participant shall not be
entitled to receive any greater payment under Section 3.01 or 3.04 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 3.01 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 3.01(e) as though it were a
Lender.
     (f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
     (g) Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, to the extent and as provided for in any Applicable Law,
including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar
state Laws based on the Uniform Electronic Transactions Act.

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     Section 10.07. Treatment of Certain Information; Confidentiality. Each of
the Administrative Agent and the Lender agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its Affiliates’ and to its Affiliates’ respective partners, directors,
officers, employees, agents, advisors and representatives who are, or are
expected to be, engaged in evaluating, approving, structuring or administering
the credit facility provided herein (it being understood that the Persons to
whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by
Applicable Laws or regulations or by any subpoena or similar legal process,
(d) to any other party hereto, (e) in connection with the exercise of any
remedies hereunder or under any other Loan Document or any action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrower and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to the
Administrative Agent, any Lender, or any of their respective Affiliates on a
nonconfidential basis from a source other than the Borrower.
     For purposes of this Section, “Information” means all information received
from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary
or any of their respective businesses, other than any such information that is
available to the Administrative Agent or any Lender on a nonconfidential basis
prior to disclosure by the Borrower or any Subsidiary, provided that, in the
case of information received from the Borrower or any Subsidiary after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
     Section 10.08. Set-off. If an Event of Default shall have occurred and be
continuing, each Lender and each of their Affiliates is hereby authorized at any
time and from time to time, without prior notice to the Borrower or any other
Loan Party, to the fullest extent permitted by Applicable Law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final, in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Lender or any such Affiliate to or for the
credit or the account of the Borrower or any other Loan Party against any and
all of the obligations of the Borrower or such Loan Party now or hereafter
existing under this Agreement or any other Loan Document to such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement or any other Loan Document and although such obligations of the
Borrower or such Loan Party may be contingent or unmatured or are owed to a
branch or office of such Lender different from the branch or office holding such
deposit or obligated on such indebtedness. The rights of each Lender and their
Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender or their Affiliates

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may have. Each Lender agrees to notify the Borrower and the Administrative Agent
promptly after any such setoff and application, provided that the failure to
give such notice shall not affect the validity of such setoff and application.
     Section 10.09. Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the Highest Lawful Rate. If the
Administrative Agent or any Lender shall receive interest in an amount that
exceeds the Highest Lawful Rate, the excess interest shall be applied to the
principal of the Loans or, if it exceeds such unpaid principal, refunded to the
Borrower. In determining whether the interest contracted for, charged, or
received by the Administrative Agent or a Lender exceeds the Highest Lawful
Rate, such Person may, to the extent permitted by Applicable Law,
(a) characterize any payment that is not principal as an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal
parts the total amount of interest throughout the contemplated term of the
Obligations hereunder.
     Section 10.10. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
     Section 10.11. Survival of Representations and Warranties. All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Term Loan or any other Obligation hereunder
shall remain unpaid or unsatisfied.
     Section 10.12. Severability. If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

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     Section 10.13. Replacement of Lenders. If any Lender requests compensation
under Section 3.04, or if the Borrower is required to pay any additional amount
to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 3.01, if any Lender is a Defaulting Lender or if any other
circumstance exists hereunder that gives the Borrower the right to replace a
Lender as a party hereto, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 10.06), all of its
interests, rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment), provided that:
     (a) the Borrower shall have paid to the Administrative Agent the assignment
fee specified in Section 10.06(b), unless the assignment is to replace a
Defaulting Lender;
     (b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Term Loan, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 3.05) from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts);
     (c) in the case of any such assignment resulting from a claim for
compensation under Section 3.04 or payments required to be made pursuant to
Section 3.01, such assignment will result in a reduction in such compensation or
payments thereafter; and
     (d) such assignment does not conflict with Applicable Laws.
     A Lender shall not be required to make any such assignment or delegation
if, prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.
     Section 10.14. Exceptions to Covenants. Neither the Borrower nor any
Subsidiary shall be deemed to be permitted to take any action or fail to take
any action which is permitted as an exception to any of the covenants contained
herein or which is within the permissible limits of any of the covenants
contained herein if such action or omission would result in the breach of any
other covenant contained herein.
     Section 10.15. Governing Law; Jurisdiction; Etc.
     (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH PARTY HERETO SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
     (b) THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK, NEW YORK AND OF THE UNITED
STATES DISTRICT

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COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE
TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE
COURTS OF ANY JURISDICTION.
     (c) THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
     (d) THE PARTIES HERETO AND EACH OTHER LOAN PARTY AGREE THAT N.Y. GEN.
OBLIG. LAWS §5-1401 AND §5-1402 SHALL APPLY TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
     Section 10.16. Waiver of Right to Trial by Jury. EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.

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     Section 10.17. USA PATRIOT Act Notice. Each Lender that is subject to the
Act (as hereinafter defined) and the Administrative Agent (for itself and not on
behalf of any Lender) hereby notifies the Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
Law October 26, 2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender or
the Administrative Agent, as applicable, to identify the Borrower in accordance
with the Act.
     Section 10.18. Time of the Essence. Time is of the essence of the Loan
Documents.
     Section 10.19. Existing Credit Agreement. The parties hereto acknowledge
that the Liens now or hereafter granted pursuant to the Collateral Documents and
the Secured Obligations with respect to this Agreement and the other Loan
Documents and the Liens (as defined in the Existing Credit Agreement) and the
Secured Obligations (as defined in the Existing Credit Agreement and defined
herein as the “Existing Credit Agreement Obligations”) are pari passu and of
equal ranking, and notwithstanding anything herein (including Section 8.03) or
in the Existing Credit Agreement to the contrary, and proceeds received from the
Collateral and the Guaranties (as defined in each of this Agreement and the
Existing Credit Agreement) shall be applied to the Secured Obligations and the
Existing Credit Agreement Obligations pro rata in proportion to the respective
outstanding amounts of the Secured Obligations and the Existing Credit Agreement
Obligations.
     Section 10.20. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

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

            POWERSECURE INTERNATIONAL, INC.
      By:    /s/ Christopher T. Hutter        Christopher T. Hutter        Chief
Financial Officer     

Signature Page

 

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            CITIBANK, N.A., as Administrative Agent
      By:    /s/ Gary D. Pitcock        Gary D. Pitcock        Vice President   
    CITIBANK, N.A., as a Lender
      By:    /s/ Gary D. Pitcock        Gary D. Pitcock        Vice President   
 

Signature Page

 

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SCHEDULE 2.01
TERM COMMITMENTS
AND TERM PRO RATA SHARES

                      Term   Term                          Lender   Commitment  
Pro Rata Share  
Citibank, N.A.
  $ 2,584,000       100.000000000 %
Total
  $ 2,584,000       100.000000000 %

Schedule 2.01