Exhibit 10.1

 

CREDIT AGREEMENT

 

Dated as of October 14, 2014

 

among

 

RETAIL ENERGY HOLDINGS L.L.C., a Minnesota limited liability company

TOWN SQUARE ENERGY, LLC, a Delaware limited liability company

DISCOUNT ENERGY GROUP, LLC, a Delaware limited liability company

as Borrowers,

 

and

 

MAPLE BANK GMBH, acting through its Maple Bank Toronto Branch

as Lender

 

 

 

 

TABLE OF CONTENTS

 

Section   Page       ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS 1 1.01. Defined
Terms 1 1.02. Other Interpretive Provisions 15 1.03. Accounting Terms 16 1.04.
Rounding 16 1.05. Times of Day 16 1.06. Borrower Representative 16 ARTICLE II.
THE REVOLVING LOANS 16 2.01. Committed Loans 16 2.02. Borrowings of Revolving
Loans 16 2.03. Procedures for Borrowings 17 2.04. Optional Prepayments 17 2.05.
Mandatory Prepayments 17 2.06. Repayment of the Revolving Loans 17 2.07. Funding
of Collection Accounts and Concentration Account 18 2.08. Interest 19 2.09. Fees
19 2.10. Termination of Commitment; Prepayment Premium 20 2.11. Computation of
Interest and Fees 20 2.12. Evidence of Debt 20 2.13. Payments Generally 20
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY 21 3.01. Taxes 21 3.02.
Illegality 22 3.03. Inability to Determine Rates 23 3.04. Increased Costs;
Reserves on LIBOR Rate Loans 23 3.05. Survival 24 ARTICLE IV. CONDITIONS
PRECEDENT TO BORROWINGS 24 4.01. Conditions of the Initial Revolving Loan 24
4.02. Conditions to all Borrowings 25

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ARTICLE V. REPRESENTATIONS AND WARRANTIES 26 5.01. Existence, Qualification and
Power 26 5.02. Authorization; No Contravention 26 5.03. Governmental
Authorization; Other Consents 26 5.04. Binding Effect 27 5.05. Financial
Statements; No Material Adverse Effect 27 5.06. Litigation 27 5.07. No Default
27 5.08. Ownership of Property; Liens 27 5.09. Environmental Compliance 28 5.10.
Insurance 28 5.11. Taxes 28 5.12. ERISA Compliance 28 5.13. Subsidiaries; Equity
Interests 29 5.14. Margin Regulations; Investment Company Act 29 5.15.
Disclosure 29 5.16. Compliance with Laws 29 5.17. Taxpayer Identification Number
29 5.18. Intellectual Property; Licenses, Etc 29 5.19. OFAC 30 5.20. Solvency of
the Loan Parties 30 5.21. Management Services Agreement 30 ARTICLE VI.
AFFIRMATIVE COVENANTS 30 6.01. Financial Reporting 30 6.02. Notices 31 6.03.
Payment of Material Obligations 31 6.04. Preservation of Existence, Etc 32 6.05.
Maintenance of Properties 32 6.06. Maintenance of Insurance 32 6.07. Compliance
with Laws 32 6.08. Books and Records 32 6.09. Inspection Rights 32 6.10. Use of
Proceeds 33 6.11. Approvals and Authorizations 33 6.12. Additional Borrowers 33
6.13. Energy Regulatory Compliance 33

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6.14. Industry Standards 33 6.15. Account Monitoring 33 6.16. Additional
Documents and Further Actions 33 6.17. Depository Relationship 33 6.18. Credit
and Risk Management Policy 34 6.19. Excess Availability 34 6.20. Addition of New
Utility Obligors 34 ARTICLE VII. NEGATIVE COVENANTS 34 7.01. Liens 34 7.02.
Investments 35 7.03. Indebtedness 36 7.04. Fundamental Changes 36 7.05.
Dispositions 37 7.06. Restricted Payments 37 7.07. Change in Nature of Business
38 7.08. Transactions with Affiliates 38 7.09. Burdensome Agreements 38 7.10.
Use of Proceeds 38 7.11. Reserved 38 7.12. Sanctions 39 7.13. Third Party
Arrangement 39 ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES; ADJUSTMENTS TO THE
BORROWING BASE 39 8.01. Events of Default 40 8.02. Remedies Upon Event of
Default 41 8.03. Application of Funds 42 8.04. Adjustments to the Borrowing Base
42 ARTICLE IX. CROSS-GUARANTY 42 9.01. The Cross-Guaranty 42 9.02. Bankruptcy 43
9.03. Nature of Liability 43 9.04. Independent Obligation 43 9.05. Authorization
43 9.06. Reliance 43 9.07. Waiver; Subrogation 43

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9.08. Books and Records 44 ARTICLE X. MISCELLANEOUS 45 10.01. Amendments, Etc 45
10.02. Notices; Effectiveness; Electronic Communication 45 10.03. No Waiver;
Cumulative Remedies; Enforcement 45 10.04. Expenses; Indemnity; Damage Waiver 46
10.05. Payments Set Aside 47 10.06. Successors and Assigns 47 10.07. Treatment
of Certain Information; Confidentiality 47 10.08. Right of Setoff 48 10.09.
Interest Rate Limitation 48 10.10. Counterparts; Integration; Effectiveness 48
10.11. Survival of Representations and Warranties 48 10.12. Severability 49
10.13. Governing Law; Jurisdiction; Etc 49 10.14. Waiver of Jury Trial 50 10.15.
No Advisory or Fiduciary Responsibility 50 10.16. USA PATRIOT Act 50 10.17.
Termination of Loan Documents 51

 

 

SCHEDULES

 

  1.01 Utility Obligors; Applicable Margin   5.06 Litigation   5.13
Subsidiaries; Other Equity Investments   7.01 Existing Liens   7.03 Existing
Indebtedness   10.02 Certain Addresses for Notices                

 

EXHIBITS

    Form of   A Borrowing Base Certificate   B Committed Loan Notice   C Payment
Direction Letter

 

 

     

 

 

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CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is entered into as of October 14, 2014,
among RETAIL ENERGY HOLDINGS L.L.C., a Minnesota limited liability company
(“REH”), TOWN SQUARE ENERGY, LLC, a Delaware limited liability company (“TSE”),
DISCOUNT ENERGY GROUP, LLC, a Delaware limited liability company (“DEG”; and
together with REH and TSE, each a “Borrower” and collectively, the “Borrowers”),
jointly and severally, and certain Affiliates from time to time party hereto,
and MAPLE BANK GMBH, acting through its Maple Bank Toronto Branch (together with
its successors and assigns, the “Lender”).

 

Borrowers have requested that Lender provide certain financial accommodations to
Borrowers, and Lender is 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

 

1.01. Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

 

“Account” as defined in the Uniform Commercial Code.

 

“Account Debtor” as defined in the Uniform Commercial Code.

 

“Affiliate” means, with respect to a specified 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. Unless
otherwise specified, any reference to an Affiliate or Affiliates herein shall
mean and refer to an Affiliate or Affiliates of the Borrowers.

 

“Agreement” means this Credit Agreement.

 

“Applicable Margin” means Six percent (6.00%) per annum, subject to adjustment
by Lender in its reasonable discretion in connection with any adverse change in
the ratings of any Utility Obligor.

 

“Assignment Agreements” means, collectively, each collateral assignment of
Purchase of Receivables Agreement by and among the applicable Borrower, Lender
and the applicable Utility Obligor.

 

“Audited Financial Statements” means the audited balance sheets of the Guarantor
and segment information for the Borrowers for the fiscal year ended December 31,
2013, and the related statements of income or operations, shareholders’ equity
and cash flows for such fiscal year of the Guarantor, including any notes
thereto.

 

“Availability Period” means the period from and including the Closing Date to
the earlier of (a) Maturity Date, and (b) the date of termination of the
Commitment pursuant to Section 2.10 or Section 8.02.

 

“Billed Receivables” means Eligible Receivables specifically arising from the
sale of electric generation by a Borrower to end users, which sales have been
reflected in an energy meter and have been entered on consolidated and/or dual
bills delivered to such end users.

 

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“Blocked Account Agreement” means a deposit account control agreement among one
or more Borrowers, the depository institution with whom a Borrower account is
established (which may or may not be Lender), and Lender, whereby the applicable
Borrower(s) grant(s) Lender exclusive dominion and control over such account.

 

“Borrower” and “Borrowers” have the respective meanings specified in the
introductory paragraph hereto.

 

“Borrowing” means a borrowing of Revolving Loan proceeds by any Borrower under
Article II of this Agreement.

 

“Borrowing Base” means, as of any date, the sum of (a) up to ninety-two percent
(92%) of Billed Receivables, and (b) seventy-five percent (75%) of Unbilled
Receivables, in each case, as set forth in the most recent Borrowing Base
Certificate delivered to Lender in accordance with Section 2.02 or Section
6.01(h), less such other reserves as Lender may establish from time to time in
its sole discretion, and subject to any adjustments to the advance rates and any
limits on advances to be made against the receivables of any particular Utility
Obligor made by Lender in accordance with this Agreement or any other Loan
Document.

 

“Borrowing Base Certificate” means a certificate in substantially the form of
Exhibit A hereto, or in another form acceptable to Lender, which is to be
delivered to Lender in accordance with Sections 2.02 or 6.01(h) hereof, and
which in each case shall be signed by a Responsible Officer that is a party to
the Validity Guaranty.

 

“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 Province of Ontario.

 

“Capital Expenditures” means, with respect to any Person for any period, any
expenditure that, in conformity with GAAP, is required to be capitalized and
reflected in the property, plant and equipment or similar fixed or capital asset
on the consolidated balance sheet of the Borrowers (excluding normal
replacements and maintenance which are properly charged to current operations).

 

“Cash Equivalents” means any of the following types of Investments, to the
extent owned by any Borrower free and clear of all Liens (other than Permitted
Liens):

 

(a) readily marketable obligations issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
having maturities of not more than 365 days from the date of acquisition
thereof; provided that the full faith and credit of the United States of America
is pledged in support thereof;

 

(b) time deposits and demand deposits with, or insured certificates of deposit
or bankers’ acceptances or notes of, any commercial bank that (i) is organized
under the laws of the United States of America, any state thereof or the
District of Columbia or is the principal banking subsidiary of a bank holding
company organized under the laws of the United States of America, any state
thereof or the District of Columbia, (ii) issues (or the parent of which issues)
commercial paper rated as described in clause (c) of this definition and (iii)
has combined capital and surplus of at least $200,000,000, in each case with
maturities of not more than 360 days from the date of acquisition thereof;

 

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(c) commercial paper, demand notes, master notes, promissory notes or other
short-term debt obligations issued by any Person organized under the laws of any
state of the United States of America and rated at least “Prime-1” (or the then
equivalent grade) by Moody’s Investors Service, Inc. and any successor thereto
(“Moody’s”) or at least “A-1” (or the then equivalent grade) by Standard &
Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc.
and any successor thereto (“S&P”), in each case with maturities of not more than
360 days from the date of acquisition thereof; and

 

(d) Investments, classified in accordance with GAAP as current assets of any
Borrower in money market investment programs which are administered by financial
institutions that have the highest rating obtainable from either Moody’s or S&P,
and the portfolios of which are limited solely to Investments of the character,
quality and maturity described in clauses (a), (b) and (c) of this definition.

 

“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, implementation or application thereof by any
Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and
all requests, rules, guidelines or directives thereunder or issued in connection
therewith and (y) all requests, rules, guidelines or directives promulgated by
the Bank for International Settlements, the Basel Committee on Banking
Supervision (or any successor or similar authority) or the United States or
foreign regulatory authorities, in each case pursuant to Basel III, shall in
each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued.

 

“Change of Control” means an event or series of events by which any of the
following occurs: (i) Guarantor ceases to own and control one hundred percent
(100%) of the Equity Interest of REH or (ii) REH ceases to own and control one
hundred percent (100%) of the Equity Interests of TSE and DEG.

 

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” has the meaning set forth in the Security Agreement.

 

“Collection Account” means each of the deposit accounts established at the
Collection Account Bank pursuant to Section 4.01(a)(iii) for purposes of
receiving the proceeds of all Receivables, including, without limitation, all
Eligible Receivables, which deposit accounts shall be in the name of one or more
Borrowers, but subject to the dominion and control of Lender pursuant to a
Blocked Account Agreement.

 

“Collection Account Bank” means, Wells Fargo Bank N.A.

 

“Commitment” means, Lender’s obligation to make Revolving Loans to the Borrowers
pursuant to Section 2.01, in an aggregate principal amount not to exceed the
Revolving Commitment Amount.

 

“Committed Loan Notice” means a notice of a Borrowing which shall be
substantially in the form of Exhibit B attached hereto.

 

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“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. Sec. 1 et
seq.), as amended from time to time, and any successor statute.

 

“Concentration Account” means and refers to the account from time to time
specified by Lender (by five days’ prior written notice thereof to Borrower) as
the account into which all transfers are to be made from the Collection Accounts
in accordance with Section 2.07.

 

“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.

 

“Control Agreement” means each deposit account control agreement among one or
more Borrowers, the depository institution with whom a Borrower deposit account
is established (which may or may not be Lender), and Lender, whereby the
applicable Borrower(s) grant(s) Lender dominion and control over such account
upon the occurrence of an Event of Default and notice thereof to such depository
institution.

 

“Credit and Risk Management Policy” means one or more duly adopted policies of
the Borrowers that (a) restricts enrollment of retail end-use customers that do
not qualify for participation in the Purchase of Receivables Agreement and
related applicable program of any Utility Obligor; (b) requires the Borrowers’
commodity risk be hedged with a portfolio of short and long-term supply
contracts, swap and derivative products designed to minimize commodity risk to
the extent possible; and (c) restricts the Borrowers from entering into
speculative, unhedged or otherwise risky wholesale commodity swaps and
derivatives transactions.

 

“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 all regulations promulgated
thereunder.

 

“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 equal to (a) the LIBOR Rate plus (b) the
Applicable Margin, plus (c) 3% per annum.

 

“Designated Jurisdiction” means any country or territory to the extent that such
country or territory itself is the subject of any Sanction.

 

“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.

 

“Dollar” and “$” mean lawful money of the United States.

 

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“Eligible Receivables” means all Accounts due exclusively from an
investment-grade Utility Obligor to a Borrower pursuant to a Purchase of
Receivables Agreement that: (i) are generated and held by such Borrower in the
ordinary course of its business, (ii) are not the subject of any dispute with
respect to the Accounts or the delivery of energy giving rise to such Accounts,
(iii) are free from any Liens, (iv) have not previously been pledged, sold,
assigned, transferred or encumbered to any Person, (v) have been acknowledged in
writing by the Utility Obligor obligated on each such Account, (vi) are not
subject to any discounts, rebates, offsets, or adjustments (other than Permitted
Charge-Offs), (vii) are not owed by a Utility Obligor that is insolvent or is
the subject of a proceeding under any Debtor Relief Law, (viii) are not five (5)
or more days past-due; (ix) do not represent amounts owing from the Utility
Obligor’s end-user that are (a) more than 90 days past due with respect Billed
Receivables, or (b) arose more than 60 days after the end user’s last meter
reading with respect to Unbilled Receivables, and (xii) Lender has not
determined are otherwise ineligible.

 

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Borrower directly or indirectly resulting from
or based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of or other ownership or profit interests (other than royalty and
similar profit interests 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 (other than
royalty and similar 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 Pledge Agreement” means that certain Equity Pledge Agreement of even
date herewith among the Guarantor, Borrowers and Lender, whereby Guarantor and
REH each pledge to Lender as additional collateral for the payment and
performance of the Obligations, all of the Guarantor’s Equity Interests in REH
and all of REH’s Equity Interests in TSE and DEG, which Equity Interests in the
aggregate, shall constitute one hundred percent (100%) of the issued and
outstanding Equity Interests of the Borrowers on a fully-diluted basis.

 

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

 

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“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with any 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)
the withdrawal of any Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which such entity 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 any Borrower or any 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 Pension Plan amendment as a termination under Section 4041 or
4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a
Pension Plan; (f) any event or condition which allows under Section 4042 of
ERISA for the institution of proceedings to terminate, or for the appointment of
a trustee to administer, any Pension Plan; (g) the determination that any
Pension Plan is considered an at-risk plan or a plan in endangered or critical
status within the meaning of Sections 430, 431 and 432 of the Code or Sections
303, 304 and 305 of ERISA; or (h) the imposition of any liability for failure to
comply with Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA
Affiliate.

 

“Event of Default” has the meaning specified in Section 8.01.

 

“Excess Availability” means, as of any date of determination, the difference
between (a) the lesser of (i) the Borrowing Base (as determined by the most
recent Borrowing Base Certificate delivered to and approved by Lender), and (ii)
the Revolving Commitment Amount, minus (b) the aggregate outstanding principal
balance of the Revolving Loans as of such date.

 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
any Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, imposed as a result of
such Recipient being organized under the laws of, or having its principal office
located in the jurisdiction imposing such Tax (or any political subdivision
thereof) or (b) in the case of Lender, U.S. federal withholding Taxes imposed on
amounts payable to or for the account of Lender with respect to a Revolving Loan
or Commitment pursuant to a law in effect on the date hereof, or with respect to
any assignees of Lender, on the date on which such assignee becomes a Lender
hereunder, and (c) any U.S. federal withholding Taxes imposed pursuant to FATCA.

 

“Facility Termination Date” means the date as of which all of the following
shall have occurred: (a) Lender’s Commitment has terminated, and (b) all
Obligations have been paid in full (other than contingent indemnification and
contingent expense obligations for which no claim has been asserted).

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471 (b) (1) of the Code.

 

“Floor Amount” means Five Thousand and 00/100 Dollars ($5,000.00).

 

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

 

“FERC” has the meaning specified in Section 4.01(a)(vii).

 

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“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.

 

“Guarantee” means, as to any Person, (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 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.

 

“Guaranty” means, that certain guaranty of payment of even date herewith given
by Guarantor in favor of Lender, in its original form and as amended, restated
or reaffirmed from time to time.

 

“Guarantor” means Twin Cities Power Holdings, LLC, a Minnesota limited liability
company.

 

“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.

 

“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;

 

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(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 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) capital leases and Synthetic Lease Obligations;

 

(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends, other than any obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any Equity Interest
in such Person in connection with any compensation plan provided to employees,
officers, directors or other service providers; and

 

(h) 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 (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless and to the extent 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 (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of any
Borrower under any Loan Document and (b) to the extent not otherwise described
in clause (a), Other Taxes.

 

“Indemnitees” has the meaning specified in Section 10.04(b).

 

“Information” has the meaning specified in Section 10.07.

 

“Interest Period” means, the three-month period commencing on the first (1st)
day of each January, April, July and October; provided that the initial Interest
Period hereunder shall be the period from the Closing Date until December 31,
2014.

 

8

 

 

 

“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 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 of a portfolio of customer contracts. 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.

 

“IRS” means the United States Internal Revenue Service.

 

“ISO” has the meaning specified in Section 4.01(a)(vii).

 

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
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 duties, requests, licenses, tariffs,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

“Lender” has the meaning specified in the introductory paragraph hereto.

 

“LIBOR Rate” means, for each Interest Period, the rate per annum equal to (i)
the interest rate for deposits in U.S. Dollars for such Interest Period, as it
appears on the Wall Street Journal Money Rates page (currently available at
http://online.wsj.com/mdc/public/page/2_3020-libor.html) (or any successor or
substitute page thereof, or any successor to or substitute for such publication,
as reasonably determined by Lender from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, on the last Business
Day prior to the commencement of such Interest Period, or (ii) if such rate is
not available at such time for any reason, the rate per annum reasonably
determined by Lender 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 applicable LIBOR Rate Loan and with term equal to the Interest
Period would be offered to major banks in the London interbank LIBOR market at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period; provided that, in no event shall the LIBOR
Rate be less than one-half of one percent (0.50%).

 

“LIBOR Rate Loan” means and refers to any Revolving Loan that bears interest at
a rate based on the LIBOR Rate.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or preferential arrangement in the nature of a security interest
(including any conditional sale or other title retention agreement, any
easement, right of way or other encumbrance on title to real property, and any
financing lease having substantially the same economic effect as any of the
foregoing).

 

“Loan Documents” means this Agreement, the Note, the Equity Pledge Agreement,
the Security Agreement, the Guaranty, each Blocked Account Agreement, each
Control Agreement, the Assignment Agreements and all other documents given to
evidence, secure or guaranty the Revolving Loans.

 

“Loan Parties” means, collectively, each Borrower and Guarantor.

 

9

 

 

 

“Management Services Agreement” means, that certain Management and Services
Agreement, dated as of March 30, 2012 but effective as of January 1, 2012, by
and among Guarantor and certain Subsidiaries of Guarantor, as amended by that
certain Amendment No. 1 to Management and Services Agreement dated as of October
23, 2013, by and between Guarantor and a Subsidiary of Guarantor, as further
amended by that certain Amendment No. 1 to Management and Services Agreement
dated as of October 25, 2013, by and between Guarantor and REH.

 

“Material Adverse Effect” mean (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent), condition (financial or otherwise) of any Borrower, and; (b) a
material impairment of the rights and remedies of Lender under any loan
documentation, or of the ability of the Loan Parties, taken as a whole, to
perform their respective obligations under any Loan Document to which they are a
party; or (c) 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.

 

“Material Contracts” means, collectively, each Purchase of Receivables
Agreement, each Supply Agreement and each contract for the purchase of
electricity and each other agreement to which any Borrower is a party and which,
if breached or terminated, could reasonably be expected to result in a Material
Adverse Effect.

 

“Maturity Date” means, October 31, 2016; provided, however, that if such date is
not a Business Day, the Maturity Date shall be the next succeeding Business Day.

 

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any 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.

 

“Multiple Employer Plan” means a Plan which has two or more contributing
sponsors (including any Borrower or any ERISA Affiliate) at least two of whom
are not under common control, as such a plan is described in Section 4064 of
ERISA.

 

“Net Cash Proceeds” means, with respect to any Disposition, the aggregate cash
payments received by the applicable Borrower from such Disposition, net of: (i)
direct expenses of such Disposition reasonably acceptable to Lender, (ii) Taxes
paid or payable in cash as a result of such Disposition (which for purposes
hereof shall be assumed to be the then-highest capital gains rate applicable to
such Borrower), and (iii) escrowed cash amounts (provided that such escrowed
cash amounts shall, to the extent later released to a Borrower, be immediately
paid over to Lender and applied towards the Obligations).

 

“Note” has the meaning set forth in Section 2.12.

 

“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 Revolving Loan, in each case 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.

 

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

 

10

 

 

 

“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 (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable 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 (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction).

 

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document.

 

“Out-of-Formula Advances” means, on any day, the amount by which (i) the
outstanding principal balance of all Revolving Loans exceeds (ii) the lesser of
(A) the Borrowing Base and (B) the Revolving Commitment Amount.

 

“Participant” has the meaning specified in Section 10.06(b).

 

“Payment Direction Letter” means a letter agreement from a Borrower to, and
acknowledged by, a Utility Obligor, in substantially the form of Exhibit C
hereto, or in another form acceptable to Lender in its sole discretion.

 

“PBGC” means the Pension Benefit Guaranty Corporation. “Pension Act” means the
Pension Protection Act of 2006.

 

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension
Plans and set forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each
as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431,
432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

 

“Pension Plan” means any employee pension benefit plan (including a Multiple
Employer Plan but excluding any Multiemployer Plan) that is maintained or is
contributed to by any Borrower and any ERISA Affiliate and is either covered by
Title IV of ERISA or is subject to the minimum funding standards under Section
412 of the Code.

 

“Permitted Acquisitions” has the meaning specified in Section 7.02(i).

 

“Permitted Charge-Offs” means discounts charged on purchases of Accounts and
other specific offsets permitted under a Purchase of Receivables Agreement.

 

“Permitted Liens” has the meaning set forth in Section 7.01.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

11

 

 

 

“Plan” means any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Plan but excluding any Multiemployer Plan),
maintained for employees of any Borrower or any ERISA Affiliate or any such Plan
to which any Borrower or any ERISA Affiliate is required to contribute on behalf
of any of its employees.

 

“Purchase of Receivables Agreement” means each agreement providing for the
consolidated or dual billing and purchase of receivables between a Borrower and
a Utility Obligor, which agreement shall be in form and substance acceptable to
Lender in its sole discretion, including written agreements and/or tariff
arrangements in which Borrower is entitled to purchase receivables services from
a Utility Obligor by enrolling for such services.

 

“Receivables” means all Accounts owed to a Borrower from a Utility Obligor
pursuant to a Purchase of Receivables Agreement, or otherwise, including,
without limitation, all Eligible Receivables.

 

“Recipient” means Lender, or any other recipient of any payment to be made by or
on account of any obligation of any Loan Party hereunder.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees,
administrators, managers, advisors and representatives 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.

 

“Responsible Officer” means the chief executive officer, president, vice
president, chief financial officer, treasurer, assistant treasurer, controller,
director or manager of a Loan Party and solely for purposes of the delivery of
incumbency certificates pursuant to Section 4.01, the secretary, any assistant
secretary or any director of a Loan Party. Any document delivered hereunder that
is signed by a Responsible Officer of a Loan Party shall be conclusively
presumed to have been authorized by all necessary corporate, partnership and/or
other action on the part of such Loan Party and such Responsible Officer shall
be conclusively presumed to have acted on behalf of such Loan Party.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Borrower, or 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 any Borrower’s stockholders, partners or members (or the equivalent
Persons thereof).

 

“Revolving Loan” means any advance or other extension of credit by Lender to or
on behalf of any Borrower in accordance with Article 2 of this Agreement.

 

“Revolving Commitment Amount” means Five Million and 00/100 Dollars
($5,000,000.00).

 

“Sanction(s)” means any international economic sanction administered or enforced
by the United States Government (including without limitation, OFAC) or other
relevant sanctions authority.

 

“Security Agreement” means that certain Security Agreement of even date
herewith, made by the Borrowers in favor of Lender.

 

12

 

 

 

“Settlement Date” means, the second (2nd) Business Day of each calendar month,
commencing on November 2, 2014, and continuing through and including the month
in which the Maturity Date occurs, and the Maturity Date.

 

“Solvent” means, with respect to any Person on any date of determination, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay such debts and liabilities as they mature,
(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s property would
constitute an unreasonably small capital, and (e) such Person is able to pay its
debts and liabilities, contingent obligations and other commitments as they
mature in the ordinary course of business. The amount of contingent liabilities
at any time shall be computed as the amount that, in the 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.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (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 the
Subsidiaries of the Borrowers (or if applicable, a particular Borrower).

 

“Supply Agreement” means an agreement by and between a Borrower, on the one
hand, and a Utility Obligor on the other hand, setting forth the terms and
conditions under which such Borrower may act as a competitive retail supplier of
electricity transmitted and/or distributed by such Utility Obligor.

 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity futures,
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 (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 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 clause (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).

 

13

 

 

 

“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 (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

 

“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect from time to time in the State of New York; provided, however, that if a
term is defined in Article 9 of the Uniform Commercial Code differently than in
another Article thereof, the term shall have the meaning set forth in Article 9;
provided further that, if by reason of mandatory provisions of law, perfection,
or the effect of perfection or non-perfection, or priority of a security
interest in any Collateral or the availability of any remedy hereunder is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “Uniform Commercial Code” means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection, or priority, or availability of such remedy, as the case may be.

 

“United States” and “U.S.” mean the United States of America.

 

“Unbilled Receivables” means Eligible Receivables arising from the sale of
electric generation by a Borrower to end users, for which Borrowers deliver
evidence satisfactory to Lender that such electric generation has been delivered
to the applicable end user). For the avoidance of doubt, when an Eligible
Receivable is included on a consolidated and/or dual bill delivered to an end
user, such Eligible Receivable shall become a Billed Receivable and shall no
longer be considered an Unbilled Receivable.

 

“Utility Obligor” means the host utility that is billing a Borrower’s customers
in its service territory and has purchased such Borrower’s receivables pursuant
to a Purchase of Receivables Agreement, and that is designated as such on
Schedule 1.01, as such schedule is amended from time to time in accordance with
Section 10.01.

 

“Validity Guaranty” means that certain Validity Guaranty of even date herewith,
made by certain Responsible Officers of the Borrowers, as such guaranty may be
amended, restated or reaffirmed from time to time.

 

“Variation” means, for any given period of measurement, (a) with respect to the
conversion of Unbilled Receivables to Billed Receivables, the amount, expressed
as a percentage, by which Unbilled Receivables for any Utility Obligor during
such period, when converted to Billed Receivables, exceeds such Billed
Receivables, and (b) with respect to Billed Receivables that are ultimately
collected by the Utility Obligor, the amount, expressed as a percentage, by
which (i) Billed Receivables plus any associated ESCO Fees for any Utility
Obligor during such period, exceeds (ii) amounts collected by the applicable
Utility Obligor on the Accounts that give rise to such Billed Receivables.

 

14

 

 

 

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 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 “hereto,” “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 or regulation herein
shall include all statutory and regulatory provisions consolidating, amending,
replacing or interpreting such law, and shall, unless otherwise specified, refer
to such law or regulation as amended, modified or supplemented from time to
time, and, unless the context requires otherwise, shall include without
limitation, any applicable decision of any competent court or other judicial
body, 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.

 

15

 

 

 

(b) The “winding-up,” “dissolution,” “bankruptcy” or “administration” of a
person shall be construed so as to include the seeking of liquidation,
winding-up, bankruptcy, reorganization, dissolution, administration, adjustment,
protection from creditors or relief of debtors or any proceedings equivalent or
analogous to any of the foregoing under the law of the jurisdiction in which
such person is incorporated or resides, as applicable, or any jurisdiction in
which such person carries on business.

 

(c) 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.”

 

(d) 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.

 

1.03. Accounting Terms.

 

(a) Generally. 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. Notwithstanding the foregoing, for
purposes of determining compliance with any covenant (including the computation
of any financial covenant) contained herein, Indebtedness of the Borrowers shall
be deemed to be carried at 100% of the outstanding principal amount thereof.

 

(b) Changes in GAAP. If at any time any change in GAAP (including the adoption
of IFRS) would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and either any Borrower or Lender shall so request,
Lender and the Borrowers 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 Lender’s approval); provided that, until so amended, (A) such
ratio or requirement shall continue to be computed in accordance with GAAP prior
to such change therein and (B) Borrowers shall (C) provide to Lender 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.

 

1.04. Rounding. Any ratios or percentages to be determined 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 or percentage is expressed herein and rounding the result up or
down to the nearest number (with a rounding-up if there is no nearest number).

 

1.05. Times of Day. Unless otherwise specified, all references herein to times
of day shall be references to Eastern Time (daylight or standard, as
applicable).

 

1.06. Borrower Representative. Each Borrower hereby designates REH as its
representative and agent on its behalf (in such capacity, the “Borrower
Representative”) for the purposes of selecting giving Committed Loan Notices and
giving and receiving all other notices and consents hereunder or under any of
the other Loan Documents and taking all other actions (including in respect of
compliance with covenants) on behalf of any Borrower or Borrowers under the Loan
Documents. REH hereby accepts such appointment. Lender may regard any notice or
other communication pursuant to any Loan Document from the Borrower
Representative as a notice or communication from all Borrowers, and may give any
notice or communication required or permitted to be given to any Borrower or all
Borrowers hereunder to the Borrower Representative on behalf of such Borrower or
all Borrowers. Each Borrower agrees that each notice, election, representation
and warranty, covenant, agreement and undertaking made on its behalf by the
Borrower Representative shall be deemed for all purposes to have been made by
such Borrower and shall be binding upon and enforceable against such Borrower to
the same extent as if the same had been made directly by such Borrower.

 

ARTICLE II. THE REVOLVING LOANS

 

2.01. Committed Loans. Subject to the terms and conditions set forth herein,
Lender agrees to make loans (each such loan, a “Revolving Loan”) to the
Borrowers (jointly and severally) from time to time, on any Business Day during
the Availability Period, in an aggregate amount not to exceed the lesser of (a)
the Revolving Commitment and (b) the Borrowing Base. Amounts borrowed under this
Section 2.01 and repaid under Section 2.04 or Section 2.06(b) or (c) may be
re-borrowed during the Availability Period.

 

2.02. Borrowings of Revolving Loans. Each Borrowing (other than a Borrowing made
pursuant to the last paragraph of Section 2.06(c)) shall be made upon a
Borrower’s irrevocable notice to Lender in the form of a Committed Loan Notice.
Each such notice must be received by Lender not later than 12:00 pm, two (2)
Business Days prior to the requested date of any Borrowing. Each Committed Loan
Notice shall be accompanied by a completed Borrowing Base Certificate, duly
executed by a Responsible Officer that is a party to the Validity Guaranty, and
shall specify (i) the requested date of the Borrowing (which shall be a Business
Day), and (ii) the principal amount of the Borrowing being requested, and shall
be accompanied by supporting information reasonably acceptable to Lender.

 

16

 

 

 

2.03. Procedures for Borrowings. Each Committed Loan Notice delivered to Lender
in accordance with Section 2.02 shall be deemed a representation by the
Borrowers that the conditions specified in Article IV have been and will
continue to be satisfied. Upon receipt of a Committed Loan Notice, and provided
that all conditions precedent to a Borrowing hereunder have been satisfied,
Lender will make the requested Revolving Loan(s) available to the Borrowers by
disbursing such amounts to the account or accounts specified in the
corresponding Committed Loan Notice, no later than 3:00 pm on the date of the
requested Borrowing.

 

2.04. Optional Prepayments. The Borrowers may voluntarily prepay all or any
portion of the Revolving Loans at any time or from time to time (without
terminating or reducing the Commitment), without premium or penalty therefor.

 

2.05. Mandatory Prepayments. The Borrowers shall prepay the principal amount of
the Revolving Loans from time to time outstanding (without a corresponding
reduction in the Commitment, but subject to the Prepayment Premiums set forth in
Section 2.10) in an amount equal to:

 

(a) at the election of Lender upon the occurrence of an Event of Default, the
entire unpaid principal amount of all Revolving Loans; and

 

(b) one hundred percent (100%) of the Net Cash Proceeds received by any Borrower
in connection with any Disposition of its property (other than Dispositions
permitted under Section 7.05); provided that, the acceptance of such Net Cash
Proceeds shall not be construed as a waiver of or election of remedies with
respect to any Default or Event of Default arising as a result of such
Disposition.

 

All prepayments made pursuant to this Section 2.05 shall be accompanied by all
accrued and unpaid interest on the amount being prepaid, and all other fees and
expenses then due and payable to Lender hereunder.

 

2.06. Repayment of the Revolving Loans.

 

(a) Repayment of Out-of-Formula Advances. If any Out-of-Formula Advance shall
exist at any time for any reason (including, without limitation, as a result of
any Eligible Receivable becoming ineligible), then the Borrowers, jointly and
severally, shall immediately repay to Lender a portion of the principal of the
Revolving Loans then-outstanding equal to the amount of such Out-of-Formula
Advance, together with all accrued and unpaid interest thereon. Borrower hereby
authorizes Lender, at Lender’s election, to withdraw any such amounts from the
Concentration Account.

 

(b) Regular Payments from the Concentration Account. Provided that no Default or
Event of Default has occurred and is continuing, on each Business Day (other
than the Settlement Dates), all available funds on deposit in the Concentration
Account in excess of the Floor Amount shall be applied by Lender as follows:

 

(i) First, to Lender, as a reduction of the principal balance of the Revolving
Loans then outstanding;

 

(ii) Second, to Lender, for the payment of accrued and unpaid fees and expenses
in connection with the maintenance of the Concentration Account and any other
expenses of Lender payable by any Borrower hereunder;

 

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(iii) Third, to Lender to pay all accrued and unpaid interest on the Revolving
Loans; and

 

(iv) Last, to an account in the name of a Borrower, or otherwise as directed by
the Borrowers in a written notice delivered to Lender.

 

(c) Repayment of the Revolving Loans on each Settlement Date. Borrowers shall,
jointly and severally, pay to Lender, commencing on the first Settlement Date,
and continuing on each Settlement Date thereafter, through and including the
Maturity Date, and provided that no Default or Event of Default has occurred and
is continuing, all available funds on deposit in the Concentration Account,
which shall be applied by Lender as follows:

 

(i) First, to Lender to pay the accrued and unpaid fees and expenses due in
connection with the maintenance of the Concentration Account and any other
expenses of the Lender payable by any Borrower hereunder;

 

(ii) Second, to Lender to pay all accrued and unpaid interest then-due and
payable with respect to the Revolving Loans;

 

(iii) Third, to Lender, as a reduction of the principal balance of the Revolving
Loans then outstanding;

 

(iv) Fourth, to an account in the name of a Borrower, or otherwise as directed
by the Borrowers in writing not less than two (2) Business Days prior to such
Settlement Date.

 

To the extent that there are insufficient funds on deposit in the Concentration
Account on any given Settlement Date to pay all amounts due on such date under
clauses (i) and (ii) of this Section 2.06(c), Borrower hereby authorizes Lender
(at Lender’s sole discretion), to make a Revolving Loan in an amount sufficient
to pay such amounts; provided that, Lender shall have no obligation to make any
such Revolving Loan and Lender’s making of any such Revolving Loan shall not
constitute a waiver of any Event of Default arising out of any Borrower’s
failure to make any payments due pursuant to this Section 2.06(c).

 

(d) Payments During Existence of Default or Event of Default. At any time during
the existence of a Default or Event of Default, amounts on deposit in the
Concentration Account may ( at Lender’s discretion) be applied towards the
Obligations or kept in such account as security for the Obligations. Any such
amounts applied towards the payment of the Obligations shall be applied in such
manner as Lender may determine it is sole discretion.

 

(e) Payment at Maturity. On the Maturity Date, Borrowers shall pay to Lender the
unpaid principal balance of all Revolving Loans, together with all accrued and
unpaid interest thereon, and all other Obligations payable hereunder.

 

2.07. Funding of Collection Accounts and Concentration Account. The Borrowers
shall procure a Payment Direction Letter from each Utility Obligor identified on
Schedule 1.01, and pursuant to such letters, shall cause all Utility Obligors to
make all payments on account of all Receivables, and otherwise under the
applicable Purchase of Receivables Agreement, directly to the applicable
Borrower’s Collection Account. To the extent any Borrower receives any proceeds
of Receivables directly, or otherwise under any Purchase of Receivables
Agreement, such Borrower shall hold the same in trust for Lender and shall
promptly (and in any event not more than two (2) Business Days after receipt
thereof), deposit such proceeds into such Borrower’s Collection Account. The
Borrowers shall cause the Collection Account Bank to, on each Business Day,
transfer all available funds on deposit in the Collection Accounts to the
Concentration Account.

 

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2.08. Interest.

 

(a) Subject to the provisions of subsection (b) below, each Revolving Loan shall
bear interest on the outstanding principal amount thereof at a rate per annum
equal to the LIBOR Rate plus the Applicable Margin.

 

(b) If any amount of principal of any Revolving Loan is not paid when due,
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 Default Rate to the fullest extent permitted by applicable Laws.

 

(ii) If any amount (other than principal of any Loan) payable by any Borrower
under any Loan Document is not paid when due (after the lapse of any applicable
grace periods), whether at stated maturity, by acceleration or otherwise, then
at Lender’s election, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.

 

(iii) At Lender’s election while any Event of Default exists (other than as set
forth in clauses (b)(i) and (b)(ii) above), the Borrowers shall pay interest on
the principal amount of all outstanding Obligations under this Agreement at a
fluctuating interest rate per annum at all times equal to the Default 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 Revolving Loan shall be due and payable in arrears, for the
immediately preceding calendar month, on each Settlement Date, 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.

 

2.09. Fees. (a) Annual Fee. Borrowers shall pay to Lender an annual loan fee in
an amount equal to one percent (1.00%) of the Revolving Commitment Amount
(“Annual Fee”), which Annual Fee shall be deemed earned by Lender and due and
non-refundable from Borrower on the Closing Date and again on the first
anniversary of the Closing Date. The Annual Fee shall be payable by Borrowers to
Lender in equal monthly installments commencing on the Closing Date, and on each
Settlement Date thereafter until each Annual Fee (for each of the first two
years hereof) is paid in full, or earlier, if the Revolving Loans are
accelerated in accordance with the terms of this Agreement.

 

(b) Reserved.

 

(c) Unused Fee. Borrowers shall pay to Lender a monthly unused fee in an amount
equal to the product of (a) one percent (1.00%) (per annum) and (b) the amount
by which the Revolving Commitment Amount exceeds the average daily principal
balance of all Revolving Loans during such month (“Unused Fee”); provided that,
during the existence of any Out-of Formula Advance, the principal balance for
purposes of determining the Unused Fee shall not exceed the Revolving Commitment
Amount. The Unused Fee shall be due and payable, in arrears, by the Borrowers to
Lender on each Settlement Date, and shall be calculated based on the average
daily outstanding principal balance during the immediately preceding calendar
month.

 

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(d) Field Exam Fees. Subject to the limitations set forth in Section 6.09
hereof, the Borrowers shall pay to Lender, Lender’s usual and customary field
examination fees for all on-site examinations performed by or on behalf of
Lender.

 

(e) Other Fees. On or prior to the Closing Date, Borrowers shall have paid to
Lender all other out-of-pocket fees and expenses incurred by Lender in
connection with the negotiation, preparation and execution of this Agreement and
the other Loan Documents.

 

2.10. Termination of Commitment; Prepayment Premium. On or after the Closing
Date, the Borrowers may terminate the Commitment at any time by giving Lender
not less than ninety (90) days’ prior written notice thereof. On the effective
date of any such termination, the Borrowers shall pay to Lender the outstanding
principal amount of all Revolving Loans, all accrued and unpaid interest and all
other fees and expenses due to Lender under this Agreement or any of the other
Loan Documents, and (a) if such termination occurs on or prior to the first
anniversary of the Closing Date, a prepayment premium equal to Two Hundred
Thousand and 00/100 Dollars ($200,000.00), or (b) if such termination occurs
after the first anniversary of the Closing Date, a prepayment premium equal to
One Hundred Thousand and 00/100 Dollars ($100,000.00).

 

2.11. Computation of Interest and Fees. All computations of interest shall be
made on the basis of a 360-day year and actual number of 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 average daily
principal balance of each Revolving Loan, and shall accrue on the day on which
each Revolving Loan is made, but shall not accrue on a Revolving Loan, or any
portion thereof, for the day on which such Revolving Loan or portion thereof is
paid, provided that any Revolving Loan that is repaid on the same day on which
it is made shall bear interest for one day. Each determination by Lender of an
interest rate or fee hereunder shall be conclusive and binding for all purposes,
absent manifest error.

 

2.12. Evidence of Debt. The Revolving Loans made by Lender shall be evidenced by
one or more accounts or records maintained by Lender in the ordinary course of
business. The accounts or records maintained by Lender shall be conclusive,
absent manifest error, of the amount of the Revolving Loans made by Lender to
the Borrowers 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 any Loan Party to pay any amount owing with respect to the
Obligations under this Agreement or any of the other Loan Documents. The
Borrowers shall execute and deliver to Lender a promissory note payable, jointly
and severally, to Lender in an original principal amount equal to the Revolving
Commitment Amount to evidence the Revolving Loans (in its original form and as
amended, restated or replaced from time to time, the “Note”), which Note shall
evidence the Revolving Loans in addition to such accounts or records.

 

2.13. Payments Generally. All payments to be made by any Borrower shall be made
free and clear of and without condition or deduction for any counterclaim,
defense, recoupment or setoff. Except as otherwise expressly provided herein,
all payments by any Borrower hereunder shall be made to Lender, at the office of
Lender set forth on Schedule 10.02, in Dollars and in immediately available
funds not later than 2:00 p.m. on the date specified herein, and any such funds
received will be credited against the outstanding principal balance of the
Revolving Loans on the next Business Day. All payments received by Lender after
2:00 p.m. shall be deemed received on the next succeeding Business Day and the
Borrowing Base and any applicable interest or fees shall continue to accrue
accordingly. If any payment to be made by any 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, as the case may be. Borrowers shall ensure that there are sufficient funds
on deposit in the Concentration Account on any day (including, without
limitation, any Settlement Date) on which payments are to be made from such
accounts hereunder. In the event that there are insufficient funds on deposit in
the Concentration Accounts on the date of any such payment, Borrowers shall pay
to Lender on such date and from sources other than the proceeds of a Revolving
Loan, an amount equal to the difference between the payment amount then-due, and
the amount on deposit in the Concentration Account (after giving effect to all
disbursements to be made therefrom in accordance with Section 2.06(b) and (c)).

 

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ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01. Taxes.

 

(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes.

 

(i) Any and all payments by or on account of any obligation of any Loan Party
under any Loan Document shall be made without deduction or withholding for any
Taxes, except as required by applicable Laws.

 

(ii) If any Loan Party shall be required by the Code to withhold or deduct any
Taxes, including both United States Federal backup withholding and withholding
taxes, from any payment, then (A) such Loan Party shall withhold or make such
deductions as are determined by Lender to be required, (B) such Loan Party shall
timely pay the full amount withheld or deducted to the relevant Governmental
Authority in accordance with the Code, and (C) to the extent that the
withholding or deduction is made on account of Indemnified Taxes, the sum
payable by the applicable Loan Party shall be increased as necessary so that
after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section
3.01) Lender or the applicable Recipient receives an amount equal to the sum it
would have received had no such withholding or deduction been made.

 

(iii) If any Loan Party shall be required by any applicable Laws other than the
Code to withhold or deduct any Taxes from any payment, then (A) such Loan Party
shall withhold or make such deductions as are determined by it to be required,
(B) such Loan Party shall timely pay the full amount withheld or deducted to the
relevant Governmental Authority in accordance with such Laws, and (C) to the
extent that the withholding or deduction is made on account of Indemnified
Taxes, the sum payable by the applicable Loan Party shall be increased as
necessary so that after any required withholding or the making of all required
deductions (including deductions applicable to additional sums payable under
this Section 3.01) the applicable Recipient receives an amount equal to the sum
it would have received had no such withholding or deduction been made.

 

(b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
Section 3.01(a) above, the Loan Parties shall timely pay to the relevant
Governmental Authority in accordance with applicable law, any Other Taxes.

 

(c) Tax Indemnifications. (i) Each of the Loan Parties shall, and does hereby,
jointly and severally indemnify each Recipient, and shall make payment in
respect thereof within ten (10) Business Days after demand therefor, for the
full amount of any Indemnified Taxes (including Indemnified Taxes imposed or
asserted on or attributable to amounts payable under this Section 3.01) payable
or paid by such Recipient or required to be withheld or deducted from a payment
to such Recipient, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Borrowers by Lender shall be conclusive absent manifest error.

 

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(d) Evidence of Payments. Upon request by any Borrower or Lender, as the case
may be, after any payment of Taxes by any Loan Party or by Lender to a
Governmental Authority as provided in this Section 3.01, the applicable Borrower
shall deliver to Lender, or Lender shall deliver to the applicable Borrower, as
the case may be, the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of any return required by
Laws to report such payment or other evidence of such payment reasonably
satisfactory to the applicable Borrower or Lender, as the case may be.

 

(e) Stamp Taxes. Borrowers shall pay and, within ten (10) Business Days of
demand, indemnify Lender against any cost, loss or liability incurred in
relation to all stamp duty, registration and other similar Taxes payable in
respect of this Agreement or any related agreement or document.

 

(f) Treatment of Certain Refunds. Unless required by applicable Laws, at no time
shall Lender have any obligation to file for or otherwise pursue any refund of
Taxes withheld or deducted from funds paid for the account of Lender. If any
Recipient determines, in its sole discretion exercised in good faith, that it
has received a refund or similar remission or repayment of any Tax (a “Tax
Benefit”) as a result of the Taxes as to which it has been indemnified by any
Loan Party or with respect to which any Loan Party has paid additional amounts
pursuant to this Section 3.01, it shall pay to the Loan Party an amount equal to
such Tax Benefit (but only to the extent of indemnity payments made, or
additional amounts paid, by a Loan Party under this Section 3.01 with respect to
the Taxes giving rise to such Tax Benefit), net of all out-of-pocket expenses
(including Taxes) incurred by such Recipient, and without interest (other than
any interest paid by the relevant Governmental Authority), provided that the
Loan Party, upon the request of the Recipient, agrees to repay the amount paid
over to the Loan Party (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Recipient in the event the Recipient
is required to repay such Tax Benefit to such Governmental Authority.
Notwithstanding anything to the contrary in this subsection, in no event will
the applicable Recipient be required to pay any amount to the Loan Party
pursuant to this subsection the payment of which would place the Recipient in a
less favorable net after-Tax position than such Recipient would have been in if
the Tax subject to indemnification and giving rise to such refund had not been
deducted, withheld or otherwise imposed and the indemnification payments or
additional amounts with respect to such Tax had never been paid. This Section
3.01(f) shall not be construed to require any Recipient to make available its
tax returns (or any other information relating to its taxes that it deems
confidential) to any Loan Party or any other Person.

 

(g) Survival. Each party’s obligations under this Section 3.01 shall survive the
Facility Termination Date.

 

3.02. Illegality. If Lender determines that any Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for Lender to
make, maintain or fund Revolving Loans whose interest is determined by reference
to the LIBOR Rate, or to determine or charge interest rates based upon the LIBOR
Rate, or any Governmental Authority has imposed material restrictions on the
authority of Lender to purchase or sell, or to take deposits of, Dollars or
Eurodollars in the London interbank market, then, on notice thereof by Lender to
the Borrowers, any obligation of Lender to make or continue to hold LIBOR Rate
Loans shall be suspended (including, without limitation, Lender’s obligation to
make Revolving Loans hereunder). Upon receipt of such notice, (x) Borrowers
shall, upon demand from Lender, prepay all LIBOR Rate Loans, if Lender may not
lawfully continue to maintain such LIBOR Rate Loans, or if Lender may continue
to maintain such LIBOR Rate Loans, then at such time as shall be necessary under
applicable Laws. Upon any such prepayment, Borrower shall also pay accrued
interest on the amount so prepaid.

 

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3.03. Inability to Determine Rates. If in connection with any request for a
LIBOR Rate Loan, (a) Lender determines that (i) Dollar deposits are not being
offered to banks in the London interbank market for the applicable amount and
Interest Period of such LIBOR Rate Loan, or (ii) adequate and reasonable means
do not exist for determining the LIBOR Rate for the applicable Interest Period
with respect to a proposed LIBOR Rate Loan (in each case with respect to clause
(a) above, “Impacted Loans”), or (b) Lender determines that for any reason the
LIBOR Rate with respect to a proposed LIBOR Rate Loan does not adequately and
fairly reflect the cost to Lender of funding such LIBOR Rate Loan, Lender will
promptly so notify the Borrowers. Thereafter, the obligation of Lender to make
or maintain LIBOR Rate Loans shall be suspended (to the extent of the affected
LIBOR Rate Loans) until Lender revokes such notice.

 

Notwithstanding the foregoing, if Lender has made the determination described in
clause (a) of the first sentence of this Section, Lender, in consultation with
the Borrowers, may establish an alternative interest rate for the Impacted
Loans, in which case, such alternative rate of interest shall apply with respect
to the Impacted Loans until (1) Lender revokes the notice delivered with respect
to the Impacted Loans under clause (a) of the first sentence of this Section,
(2) Lender notifies the Borrowers that such alternative interest rate does not
adequately and fairly reflect the cost to Lender of funding the Impacted Loans,
or (3) Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for Lender to make,
maintain or fund Revolving Loans whose interest is determined by reference to
such alternative rate of interest or to determine or charge interest rates based
upon such rate or any Governmental Authority has imposed material restrictions
on the authority of Lender to do any of the foregoing and provides Borrowers
written notice thereof.

 

3.04. Increased Costs; Reserves on LIBOR 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, Lender (except
any reserve requirement contemplated by Section 3.04(e));

 

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes and
(B) Taxes described in clauses (b) through (d) of the definition of Excluded
Taxes) on its loans, loan principal, letters of credit, commitments, or other
obligations, or its deposits, reserves, other liabilities or capital
attributable thereto; or

 

(iii) impose on Lender or the London interbank market any other condition, cost
or expense affecting this Agreement or LIBOR Rate Loans made by Lender;

 

and the result of any of the foregoing shall be to increase the cost to Lender
of making or maintaining any LIBOR Rate Loan (or of maintaining its obligation
to make any such loan), or to reduce the amount of any sum received or
receivable by Lender hereunder (whether of principal, interest or any other
amount) then, upon request of Lender, Borrower will pay to Lender such
additional amount or amounts as will compensate Lender for such additional costs
incurred or reduction suffered. Notwithstanding anything in this Section 3.04 to
the contrary, this Section 3.04 shall not apply to Taxes which shall be governed
exclusively by Section 3.01.

 

 

 

(b) Capital Requirements. If Lender, in good faith, determines that any Change
in Law affecting Lender or Lender’s holding company, if any, regarding capital
or liquidity requirements has or would have the effect of reducing the rate of
return on Lender’s capital or on the capital of Lender’s holding company, if
any, as a consequence of this Agreement, Revolving Loans made by Lender, to a
level below that which Lender or Lender’s holding company could have achieved
but for such Change in Law (taking into consideration Lender’s policies and the
policies of Lender’s holding company with respect to capital adequacy), then
from time to time upon written notice from Lender (such notice to set out the
basis for such reduction suffered and a summary calculation of such reduction
suffered), Borrowers, within ten (10) Business Days of receipt of such notice
will pay to Lender such additional amount or amounts as will compensate Lender
or Lender’s holding company for any such reduction suffered.

 

(c) Certificates for Reimbursement. A certificate of Lender setting forth the
amount or amounts necessary to compensate Lender or its holding company, as the
case may be, as specified in subsection (a) or (b) of this Section and delivered
to the Borrowers along with a summary calculation thereof, shall be conclusive
absent manifest error asserted by the Borrowers within ten (10) Business Days of
receipt. Borrowers shall pay Lender the amount shown as due on any such
certificate within ten (10) Business Days after receipt thereof.

 

(d) Delay in Requests. Failure or delay on the part of Lender to demand
compensation pursuant to the foregoing provisions of this Section 3.04 shall not
constitute a waiver of Lender’s right to demand such compensation, provided that
Borrowers shall not be required to compensate Lender pursuant to the foregoing
provisions of this Section for any increased costs incurred or reductions
suffered more than six (6) months prior to the date that Lender notifies the
Borrowers of the Change in Law giving rise to such increased costs or reductions
and of 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 six-month period referred to above shall be extended to include the
period of retroactive effect thereof).

 

(e) Additional Reserve Requirements. Borrowers shall pay to Lender, (i) as long
as 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 LIBOR Rate Loan equal to the actual costs of such
reserves allocated to such Loan by Lender (as determined by Lender in good
faith, which determination shall be conclusive absent manifest error), and (ii)
as long as Lender shall be required to comply with any reserve ratio requirement
or analogous requirement of any other central banking or financial regulatory
authority imposed in respect of the maintenance of the Commitment or the funding
of the LIBOR Rate Loans, such additional costs (expressed as a percentage per
annum and rounded upwards, if necessary, to the nearest five decimal places)
equal to the actual costs allocated to the applicable Commitment or Revolving
Loans by Lender (as determined by Lender in good faith, which determination
shall be conclusive absent manifest error), which in each case shall be due and
payable on each date on which interest is payable on such Revolving Loan,
provided Borrowers shall have received at least ten (10) Business Days’ prior
notice of such additional interest or costs from Lender, such notice to set out
the basis for such additional interest or cost incurred and a summary
calculation thereof. If Lender fails to give notice ten (10) Business Days prior
to the relevant Interest Payment Date, such additional interest or costs shall
be due and payable ten (10) Business Days from receipt of such notice.

 

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3.05. Survival. All of the Borrowers’ obligations under this Article III shall
survive the Facility Termination Date.

 

ARTICLE IV. CONDITIONS PRECEDENT TO BORROWINGS

 

4.01. Conditions of the Initial Revolving Loan. The obligation of Lender to make
the initial Revolving Loan hereunder is subject to satisfaction of the following
conditions precedent:

 

(a) Lender’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
as of the Closing Date (or, in the case of certificates of governmental
officials, a recent date before the Closing Date) and each in form and substance
satisfactory to Lender:

 

(i) executed counterparts of this Agreement, the Guaranty, the Equity Pledge
Agreement, the Security Agreement, the Note, the Validity Guaranty, Control
Agreements with respect to all of the Borrowers’ deposit accounts (other than
the Collection Account), and if requested by Lender, an Assignment Agreement
from each Utility Obligor, and the other Loan Documents, in each case,
sufficient in number for distribution to Lender and each Loan Party requesting
an original thereof;

 

(ii) a Committed Loan Notice, together with an initial Borrowing Base
Certificate, in accordance with Section 2.02;

 

(iii) evidence satisfactory to Lender that the Collection Accounts have been
established at the Collection Account Bank, and a Blocked Account Agreement for
each such deposit account, duly executed by the applicable Borrower and the
Collection Account Bank;

 

(iv) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of a Responsible Officer of each Borrower as Lender
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 Borrower is a party;

 

(v) such documents and certifications as Lender may reasonably require to
evidence that each Borrower is duly organized or formed, and that each Borrower
is validly existing, in good standing (with respect to jurisdictions in which
the concept of good standing exists), 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 pending litigation, judgment, tax lien and UCC search results for
each of the Loan Parties, in such jurisdictions as Lender may reasonably
require, and such other searches or due diligence regarding any Loan Party as
Lender may reasonably request in connection with the transactions contemplated
hereunder or under any of the other Loan Documents, including, without
limitation, Lender’s review and approval (in its sole discretion) of the
Purchase of Receivables Agreements;

 

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(vii) evidence satisfactory to Lender that each Borrower has (A) obtained all
necessary licenses to operate in each state in which such Borrower operates, and
evidence that each Borrower has obtained its approval to engage in wholesale
power transactions as a power marketer from the Federal Energy Regulatory
Commission or its successor (“FERC”), and evidence confirming that the Borrowers
are members in good standing in each regional transmission organization or
independent system operator (collectively, the “ISO”) for each relevant
jurisdiction into which Borrower will be serving as a third party supplier; and
(B) adopted a Credit and Risk Management Policy acceptable to Lender;

 

(viii) evidence satisfactory to Lender that each Borrower is authorized or
approved by the relevant Utility Obligors to operate as a third party supplier
and participate in the purchase of receivables program run by that Utility
Obligor;

 

(ix) a favorable opinion of counsel to the Loan Parties addressed to Lender;

 

(x) a certificate of a Responsible Officer of each Borrower either (A) attaching
copies of all consents, licenses and approvals required in connection with the
execution, delivery and performance by such Borrower 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;

 

(xi) a certificate signed by a Responsible Officer of each Borrower certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been
satisfied, and (B) that, to the knowledge of such 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;

 

(xii) evidence satisfactory to Lender that each Borrower is in compliance with
all applicable ISO credit requirements, including, without limitation, a
certificate or statement of good standing from each ISO;

 

(xiii) the passwords, authorizations and other access to the Borrower’s EDI
reporting as required under Section 6.15; and

 

(xiv) such other assurances, certificates, documents, consents or opinions as
Lender reasonably may require and as requested prior to the Closing Date.

 

(b) Any fees required to be paid on or before the Closing Date shall have been
paid.

 

(c) Unless waived by Lender, the Borrowers shall have paid all fees, charges and
disbursements of counsel to Lender (directly to such counsel if requested by
Lender) to the extent invoiced prior to or on the Closing Date and payable under
Section 10.04(a).

 

4.02. Conditions to all Borrowings. The obligation of Lender to make any
Revolving Loan is subject to the following conditions precedent:

 

(a) (i) The representations and warranties of the Borrowers contained in
Sections 5.01, 5.02, 5.03, 5.04, 5.05(c), and 5.14 are true and correct, and
(ii) all other representations and warranties of the Borrowers contained in
Article V and the other Loan Documents, or which are contained in any document
furnished in connection with a Committed Loan Notice or Borrowing Base
Certificate, are true and correct in all material respects (or, in the case of
any such other representation, warranty, certification or statement of fact
qualified by materiality, Material Adverse Effect or any similar concept,
incorrect or misleading in any respect), in each case on and as of the date of
such Borrowing, 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.

 

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(b) No Default or Event of Default shall exist, or would result from such
proposed Borrowing or from the application of the proceeds thereof.

 

(c) Lender shall have received a Committed Loan Notice in accordance with
Section 2.02.

 

(d) There shall be no impediment, restriction, limitation or prohibition imposed
under Law or by any Governmental Authority, as to the proposed financing under
this Agreement or the repayment thereof or as to rights created under the
Guaranty or as to application of the proceeds of the realization of any such
rights.

 

(e) Each Committed Loan Notice submitted by the Borrowers 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 Borrowing.

 

ARTICLE V. REPRESENTATIONS AND WARRANTIES

 

The Borrowers, jointly and severally, represent and warrant to Lender that:

 

5.01. Existence, Qualification and Power. Each Loan Party (a) is duly organized
or formed, validly existing and, as applicable, in good standing (with respect
to jurisdictions in which the concept of good standing exists) 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 (i) own or lease its assets and carry on its business
and (ii) execute, deliver and perform its obligations under the Loan Documents
to which it is a party, and (c) is duly qualified, is licensed and, as
applicable, a member in good standing (with respect to jurisdictions in which
the concept of good standing exists) under the Laws of each jurisdiction where
its ownership, lease or operation of properties or the conduct of its business
requires such qualification, license or membership (including ISO membership and
tariff compliance); except in each case referred to in clause (b)(i) or (c), to
the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

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
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 (i) any material Contractual
Obligation to which such Person is a party or affecting such Person or the
properties of such Person or (ii) any material order, injunction, writ or decree
of any Governmental Authority or any material arbitral award to which such
Person or its property is subject; or (c) violate any material Law.

 

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 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.

 

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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, except as may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors rights generally.

 

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 Borrowers 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 material
liabilities of the Borrowers as of the date thereof to the extent required by
GAAP.

 

(b) The unaudited consolidated balance sheets of the Borrowers dated June 30,
2014, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for the fiscal quarter 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 the financial condition of the Borrowers 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.

 

(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.

 

5.06. Litigation. There are no actions, suits, proceedings, regulatory
investigations or inquiries, claims or disputes pending or, to the actual
knowledge of any Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, by or against any 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) except as specifically disclosed in Schedule 5.06,
either individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect.

 

5.07. No Default. No Loan Party is, or will be with the passage of time, 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.

 

5.08. Ownership of Property; Liens. Each Loan Party has good record and
marketable title in fee simple to, or valid leasehold interests in, all real
property necessary in the ordinary conduct of its business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The property of each Loan Party is
subject to no Liens, other than Permitted Liens. All properties of each Loan
Party are in good working order and condition.

 

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5.09. Environmental Compliance. (a) There exists no written claim alleging
potential liability or responsibility for violation of any Environmental Law on
the respective business of any Loan Party, and (b) there exists no violation of
an Environmental Law by any Loan Party, in the case of clauses (a) or (b), to
the extent such liability, responsibility or violation would reasonably be
expected to have a Material Adverse Effect.

 

5.10. Insurance. The properties of each Loan Party are insured with financially
sound and reputable insurance companies not Affiliates of any Borrower, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the applicable Loan Party operates.

 

5.11. Taxes. Each Loan Party has filed all Federal and state income and other
material tax returns and reports required to be filed, and has paid all Federal
and state income and all other material taxes, assessments, fees and other
governmental charges levied or imposed upon it or its 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 any Loan Party that would, if made, have a Material Adverse
Effect.

 

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 Pension Plan
that is intended to be a qualified plan under Section 401(a) of the Code is
subject to an Internal Revenue Service opinion letter, or has received a
favorable determination letter from the Internal Revenue Service to the effect
that the form of such Plan is qualified under Section 401(a) of the Code, or an
application for such a letter is currently being processed by the Internal
Revenue Service. To the best knowledge of each Borrower, nothing has occurred
that would prevent or cause the loss of such tax-qualified status.

 

(b) There are no pending or, to the best knowledge of any Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could 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) No ERISA Event has occurred, and neither any Borrower nor any ERISA
Affiliate is aware of any fact, event or circumstance that could reasonably be
expected to constitute or result in an ERISA Event with respect to any Pension
Plan; (ii) each Borrower and each ERISA Affiliate has met all applicable
requirements under the Pension Funding Rules in respect of each Pension Plan,
and no waiver of the minimum funding standards under the Pension Funding Rules
has been applied for or obtained; (iii) as of the most recent valuation date for
any Pension Plan, the funding target attainment percentage (as defined in
Section 430(d)(2) of the Code) is 60% or higher and neither any Borrower nor any
ERISA Affiliate knows of any facts or circumstances that could reasonably be
expected to cause the funding target attainment percentage for any such plan to
drop below 60% as of the most recent valuation date; neither any Borrower nor
any ERISA Affiliate has incurred any liability to the PBGC other than for the
payment of premiums, and there are no premium payments which have become due
that are unpaid; neither any Borrower nor any ERISA Affiliate has engaged in a
transaction that could reasonably be expected to be subject to Section 4069 or
Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the
plan administrator thereof nor by the PBGC, and no event or circumstance has
occurred or exists that could reasonably be expected to cause the PBGC to
institute proceedings under Title IV of ERISA to terminate any Pension Plan.

 

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5.13. Subsidiaries; Equity Interests. As of the Closing Date, no Borrower has
any 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
or will be validly issued, are fully paid and non-assessable and are owned by a
Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear
of all Liens, other than Permitted Liens. As of the Closing Date, no Loan Party
has any material 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 Borrowers have been validly issued and are
fully paid and non-assessable.

 

5.14. Margin Regulations; Investment Company Act.

 

(a) No Loan Party is engaged or will 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) Neither any Loan Party, nor any Person Controlling any Loan Party is or is
required to be registered as an “investment company” under the Investment
Company Act of 1940.

 

5.15. Disclosure. None of the reports, financial statements, certificates and
other written information (taken as a whole) furnished by or on behalf of any of
the Loan Parties to Lender in connection with the transactions contemplated
hereby and the negotiation of this Agreement or delivered hereunder or under any
other Loan Document contain, as the date such reports, financial statements,
certificates or other written information were furnished to Lender (in each
case, as may be later modified or supplemented by other information so
furnished), material misstatements of fact or omit to state material facts
necessary to make the statements therein, in the light of the circumstances
under which they were made and taken as a whole, not misleading; provided that,
with respect to projected financial information, if any, each Borrower
represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.

 

5.16. Compliance with Laws. Each Loan Party 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 individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

 

5.17. Taxpayer Identification Number. Each Borrower’s true and correct unique
identification number that has been issued by its jurisdiction of organization
and the name of such jurisdiction are set forth on Schedule 10.02.

 

5.18. Intellectual Property; Licenses, Etc. Each Loan Party owns, or possesses
the right to use, all of the trademarks, service marks, trade names, copyrights,
patents, patent rights, franchises, licenses and other intellectual property
rights (a) that are material to the operation of its respective businesses, and
(b) without conflict with the rights of any other Person, except in the case of
each of clauses (a) and (b), as could not reasonably be expected to have a
Material Adverse Effect. No Loan Party conducts its business in a manner that
infringes upon any rights held by any other Person, except where the effect
thereof could not reasonably be expected to have a Material Adverse Effect.

 

29

 

 

 

5.19. OFAC. No Loan Party, nor, to the knowledge of any Borrower, any director,
officer, employee or agent thereof, is an individual or entity currently the
subject of any Sanctions, nor is any Loan Party located, organized or resident
in a Designated Jurisdiction.

 

5.20. Solvency of the Loan Parties. Each Loan Party is, and after giving effect
to each of the Revolving Loans and other financial accommodations to be made in
accordance with this Agreement will be, Solvent with all applicable renewable
portfolio standards and any alternative compliance payment obligations in each
state or jurisdiction in which such Borrower operates.

 

5.21. Management Services Agreement. Borrowers have provided Lender with a
complete and true copy of the Management Services Agreement, to include any and
all amendments thereto in effect as of the date hereof,.

 

ARTICLE VI. AFFIRMATIVE COVENANTS

 

So long as Lender shall have any Commitment hereunder and until the Facility
Termination Date, the Borrowers shall (or each Borrower shall, as the context
requires) do the following:

 

6.01. Financial Reporting. Deliver to Lender, or in the case of Sections
6.01(e), 6.01(f) and 6.01(g), cause the Guarantor to deliver to Lender, in form
and detail reasonably satisfactory to Lender:

 

(a) as soon as available, but in any event within 120 days after the end of each
fiscal year of the Borrowers (commencing with the fiscal year ending December
31, 2014), consolidated and consolidating balance sheets for the Guarantor and
Borrowers as of the end of such fiscal year, and the related consolidated and
consolidating statements of income or operations, changes in shareholders’
equity, and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and prepared in accordance with GAAP, such consolidated and consolidating
statements to be reviewed and accompanied by a report of an independent
certified public accountant reasonably acceptable to Lender, which report shall
be indicate that such accountant is not aware of any material modifications that
should be made to the financial statements in order for them to be in conformity
with GAAP;

 

(b) as soon as available, but in any event within 30 days after the end of each
calendar month, (commencing with the calendar month preceding the month in which
the Closing Date occurs), consolidated and consolidating balance sheets for the
Borrowers as of the end of such calendar month, the related consolidated and
consolidating statements of income or operations for such calendar month and for
the portion of the Borrowers’ fiscal year then ended, and the related
consolidated and consolidating statements of changes in shareholders’ equity,
and cash flows for the portion of the Borrowers’ fiscal year then ended, in each
case setting forth in comparative form, as applicable, the figures for the
corresponding calendar month of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail, such consolidated
and consolidating statements to be certified by a Responsible Officer of the
Borrowers that is a party to the Validity Guaranty, as fairly presenting the
financial condition, results of operations, shareholders’ equity and cash flows
of the Borrowers in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes;

 

(c) Reserved.

 

(d) Reserved.

 

(e) Reserved.

 

30

 

 

 

(f) as soon as available, but in any event within 120 days of the end of each
fiscal year of the Guarantor, audited financial statements for Guarantor;

 

(g) as soon as available, but in any event within 7 days of the filing thereof,
copies of Guarantor’s filed federal income tax returns, together with all
supporting and related schedules thereto

 

(h) On Monday of each week (or if Monday is not a Business Day, then on the next
succeeding Business Day), and in addition to any that are required to be
delivered in connection with any new Borrowing, a Borrowing Base Certificate for
the Borrowers, duly executed by a Responsible Officer of the Borrowers that is a
party to the Validity Guaranty;

 

(i) no later than 9:00 am on each Business Day, a system generated EDI report
detailing the status of all Receivables as of the prior Business Day; and

 

(j) promptly, such additional information regarding the business, financial or
corporate affairs of any Borrower, or compliance with the terms of the Loan
Documents, as Lender may from time to time reasonably request.

 

6.02. Notices. Promptly notify Lender of any of the following occurrences of
which any Responsible Officer of Borrower has knowledge:

 

(a) the occurrence of any Default;

 

(b) any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect;

 

(c) the occurrence of any ERISA Event;

 

(d) any material change in accounting policies or financial reporting practices
by Borrower or any Subsidiary;

 

(e) any termination of any agreement with any Utility Obligor or discontinuance
or suspension of membership with any ISO; and

 

(f) the commencement of any investigation, enforcement proceeding or other
regulatory action initiated by any Governmental Authority with any Borrower and
any litigation matter with a claim against any Borrower, or each Borrower
singularly or in the aggregate, which is in excess of $10,0000 or any
non-collection related litigation initiated by any Borrower.

 

Each notice pursuant to this Section 6.02 shall be accompanied by a statement of
a Responsible Officer (and where applicable, a Responsible Officer that is also
party to the Validity Guaranty) of the applicable Borrower setting forth details
of the occurrence referred to therein and stating what action the Borrowers have
taken and propose to take with respect thereto. Each notice pursuant to Section
6.02(a) shall describe with particularity any and all provisions of this
Agreement and any other Loan Document that are known to have been breached.

 

6.03. Payment of Material Obligations. Pay and discharge as the same shall
become due and payable, all its material obligations and liabilities, including
(a) all material tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets; (b) all material lawful claims which, if
unpaid, would by law become a Lien upon its property (other than a Permitted
Lien); and (c) all material Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness, except in the case of clauses (a), (b) or (c), if
(i) 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 applicable Borrower, or (ii) the failure to make such payment
could not reasonably be expected to result in a Material Adverse Effect.

 

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6.04. Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing (with respect to
jurisdictions in which the concept of good standing exists) under the Laws of
the jurisdiction of its organization except in a transaction permitted by
Section 7.04 or Section 7.05; (b) take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or desirable in
the normal conduct of its business, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; 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.

 

6.05. Maintenance of Properties. Other than as permitted under Article VII
hereof, each Loan Party shall (a) maintain, preserve and protect all of its
properties and equipment necessary in the operation of its business in good
working order and condition, ordinary wear and tear excepted; and (b) make all
necessary repairs thereto and renewals and replacements thereof, except in the
case of clause (a) or (b), where the failure to do so could not reasonably be
expected to have a Material Adverse Effect.

 

6.06. Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies not Affiliates of 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; provided that Borrower shall not be required to obtain or carry
any other type of insurance not generally made available to retail energy
business companies.

 

6.07. 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 (b)
the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.

 

6.08. Books and Records. 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 such Borrower.

 

6.09. Inspection Rights. Permit representatives and independent contractors of
Lender 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, all at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the applicable Borrower; provided that, unless an Event of
Default shall exist, Lender shall not exercise such rights more than four (4)
times in any calendar year at the Borrowers’ expense; and provided further, that
when an Event of Default exists, Lender may do any of the foregoing at the
expense of the Borrowers at any time during normal business hours and without
advance notice.

 

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6.10. Use of Proceeds. Use the proceeds of the Borrowings to finance Capital
Expenditures, as working capital for general corporate purposes and to pay
certain fees and expenses associated with the closing of the transactions herein
contemplated.

 

6.11. Approvals and Authorizations. Maintain all authorizations, consents,
approvals and licenses from, exemptions of, and filings and registrations with,
each Governmental Authority, ISO and Utility Obligor, and obtain all approvals
and consents of each other Person in such jurisdiction, in each case that are
required in connection with the Loan Documents, if the failure to do so could
reasonably be expected to result in a Material Adverse Effect.

 

6.12. Additional Borrowers. Notify Lender at least thirty (30) days prior to the
date on which any Person becomes a Subsidiary of any Borrower after the Closing
Date, and prior to the date on which such Person becomes a Subsidiary, cause
such Person to (a) become a co-borrower by executing and delivering to Lender a
joinder to this Agreement and such other joinders or amendments to the other
Loan Documents as Lender determines is reasonably necessary, or such other
documents as Lender shall reasonably deem appropriate for such purpose, and (b)
deliver to Lender documents of the types referred to in Section 4.01(a),
including, without limitation, if required by Lender in its reasonable judgment,
favorable opinions of counsel to such Person (which shall cover, among other
things, the legality, validity, binding effect and enforceability of the
documentation referred to herein), all in form, content and scope reasonably
satisfactory to Lender.

 

6.13. Energy Regulatory Compliance. Comply in all material respects with each
Borrower’s applicable license, registration, approval, or authorization and the
requirements of the FERC, each state public utility commission, all applicable
tariffs and rules of the applicable ISOs and the tariffs and rules of each
Utility Obligor.

 

6.14. Industry Standards. Comply in all material respects with industry
standards applicable to competitive retail electric supply industry, including,
but not limited to applicable Laws relating to commodities, consumer protection,
securities, telemarketing and truth in advertising.

 

6.15. Account Monitoring. At all times provide Lender with proper authorizations
and current passwords and other login information sufficient to grant Lender
direct online access to and reporting of all of the Borrowers’ accounts with the
Borrowers’ Electronic Data Interchange (“EDI”) providers, and only use such EDI
providers as are acceptable to Lender and that allow for third-party
verification of receivables. The Borrowers shall ensure that Lender, at all
times while any of the Obligations remain outstanding, has access to the EDI
reporting of all of the Borrowers’ accounts.

 

6.16. Additional Documents and Further Actions. Each Loan Party shall at its
expense, promptly do all such acts and execute and deliver all such documents as
Lender, may, from time to time, reasonably require in connection with the rights
and remedies of the Lender pursuant to this Agreement or any Loan Document,
including the Guaranty, to consummate the transactions contemplated herein or
therein.

 

6.17. Depository Relationship. Except as prohibited by or required under
applicable Laws, maintain all of its depository accounts and cash management
services with Lender or an Affiliate of Lender, or to the extent any such
depository accounts are not held with Lender, deliver to Lender a Control
Agreement in connection with each such account (unless waived by Lender in its
sole discretion).

 

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6.18. Credit and Risk Management Policy. Each Borrower shall comply with the
Credit and Risk Management Policy approved by the Lender and will not make any
material changes thereto without Lender’s prior written consent.

 

6.19. Excess Availability. The Borrowers shall maintain, at all times until the
Facility Termination Date, Excess Availability of not less than Two Hundred
Fifty Thousand and 00/100 Dollars ($250,000.00).

 

6.20. Addition of New Utility Obligors. Borrower may not add additional Utility
Obligors to Schedule 1.01 without Lender’s prior written consent, such consent
not to be unreasonably withheld. If Lender consents to the addition of any new
Utility Obligor, then as a condition precedent thereto, Borrower shall deliver
or cause to be delivered to Lender the following items with respect to each such
Utility Obligor (each of which shall be in form, substance and execution
acceptable to Lender):

 

(a) A copy of the Purchase of Receivables Agreement with such Utility Obligor;

 

(b) If requested by Lender, a collateral assignment of such Purchase of
Receivables Agreement together with a consent and acknowledgment thereof duly
executed by the Utility Obligor;

 

(c) A Payment Direction Letter duly executed by the Utility Obligor; and

 

(d) Such other documents, agreements and information pertaining to such Utility
Obligor as Lender may reasonably require.

 

ARTICLE VII. NEGATIVE COVENANTS

 

So long as Lender shall have any Commitment hereunder and until the Facility
Termination Date, the Borrowers shall not, nor shall any Borrower permit any
Subsidiary to, directly or indirectly, do any of the following:

 

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 (“Permitted Liens”):

 

(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 increased (unless such increase is itself a Permitted Lien), (ii) the
amount secured or benefited thereby is not increased except as contemplated by
Section 7.03(b), and (iii) any renewal or extension of the obligations secured
or benefited thereby is permitted by Section 7.03(b);

 

(c) Liens for taxes or other governmental charges or assessments not yet due 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 45 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 or
employee legislation, other than any Lien imposed by ERISA;

 

(f) pledges or deposits to secure the performance of bids, trade contracts,
government contracts and obligations, and leases (other than Indebtedness),
statutory obligations, surety and appeal bonds, performance bonds, and other
obligations of a like nature incurred in the ordinary course of business,
including obligations imposed by the applicable Laws of foreign jurisdictions;

 

(g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property interests 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) Liens securing judgments for the payment of money, or securing appeal or
other surety bonds related to such judgments, not constituting an Event of
Default under Section 8.01(h);

 

(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; and

 

(j) Liens arising by virtue of any contractual, statutory or common law
provision relating to banker’s liens, rights of setoff or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution.

 

7.02. Investments. Make any Investments, except:

 

(a) Investments held by any Borrower in the form of cash and Cash Equivalents;

 

(b) advances to officers, directors and employees of any Loan Party and its
Subsidiaries in an aggregate amount not to exceed $15,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;

 

(c) (i) Investments of any Borrower in any Subsidiary that has delivered the
documents required under Section 6.12; (ii) Investments of any such Subsidiary
in any Borrower; and (iii) Investments of any Borrower in a joint venture that
is otherwise a permitted Investment hereunder;

 

(d) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

 

(e) Guarantees permitted by Section 7.03;

 

(f) Investments under clause (c) of the definition thereof which individually or
in the aggregate (in any series of related transactions) have a transaction
value of less than $100,000;

 

(g) Investments resulting from pledges or deposits that are included as
Permitted Liens;

 

(h) Purchase or acquire additional assets in the form of new customers; and

 

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(i) Acquire by purchase of equity or merger, companies in the same business
segments as Borrower; provided Borrower complies with the conditions of Section
6.12 (“Permitted Acquisitions”).

 

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 (i)
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 and (ii) the terms relating to
principal amount, amortization, maturity, collateral (if any) and subordination
(if any), and other material terms taken as a whole, of any such refinancing,
refunding, renewing or extending Indebtedness, and of any agreement entered into
and of any instrument issued in connection therewith, are no less favorable in
any material respect to the Loan Parties or Lender than the terms of any
agreement or instrument governing the Indebtedness being refinanced, refunded,
renewed or extended and the interest rate applicable to any such refinancing,
refunding, renewing or extending Indebtedness does not exceed the
then-applicable market interest rate;

 

(c) Guarantees of any Loan Party in respect of Indebtedness otherwise permitted
hereunder of any Loan Party or any Subsidiary that is otherwise subject to the
covenants set forth in Articles VI and VII herein;

 

(d) obligations (contingent or otherwise) of any Borrower or any Subsidiary
existing or arising under any Swap Contract, provided that such obligations are
(or were) entered into by such Person in the ordinary course of business for the
purpose of directly mitigating risks associated with liabilities, commitments,
investments, assets, or property held or reasonably anticipated by such Person
(to include any reasonably anticipated risks based on the business as it exists
as well as the anticipated reasonable growth of the business), and not for
purposes of speculation;

 

(e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets within the limitations
set forth in Section 7.01(i); provided, however, that the aggregate amount of
all such Indebtedness incurred in any fiscal year of the Borrowers shall not
exceed $100,000;

 

(f) Indebtedness in respect of cash management operations, netting services,
cash pooling arrangements, automatic clearinghouse arrangements, daylight
overdraft protections, employee credit card programs and other cash management
and similar arrangements in the ordinary course of business, and any Guarantees
thereof; and

 

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 any Borrower; provided that Borrower shall be
the continuing or surviving Person;

 

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(b) any Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to any Borrower;

 

(c) any Subsidiary may merge with any other Subsidiary that has become a
co-Borrower under this Agreement pursuant to Section 6.12; and

 

(d) subject to Section 7.04(b), the existence (corporate or otherwise) of any
Subsidiary of any Borrower may be terminated or liquidated if such termination
or liquidation is determined by such Borrower to be in the best interest of such
Borrower and its Subsidiaries, taken as a whole, and such termination would not
reasonably be expected to result in a Material Adverse Effect.

 

The foregoing notwithstanding, no Borrower shall enter into any merger or
consolidation or permit any dissolution, liquidation or Disposition of all or
substantially all of its assets if such merger, consolidation, dissolution,
liquidation or Disposition would give rise to a default under any of such
Borrower’s Purchase of Receivables Agreements.

 

7.05. Dispositions. Make any Disposition of its property, except:

 

(a) Dispositions of obsolete, surplus or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;

 

(b) Dispositions of inventory in the ordinary course of business;

 

(c) (i) Dispositions of property to the extent that (A) such property is
exchanged for credit against the purchase price of similar replacement property,
(B) the proceeds of such Disposition are reasonably promptly applied to the
purchase price of such replacement property, or (C) such property is no longer
necessary to the continued operation of the business of any Loan Party or any
Subsidiary; and (ii) Dispositions of real property interests of any Loan Party
or any of its Subsidiaries; provided that such Disposition does not materially
adversely affect the business or operation of the Loan Parties and their
Subsidiaries, taken as a whole;

 

(d) Dispositions of property by any Borrower or any Subsidiary to a another
Borrower; provided that if the transferor of such property is a Borrower or a
Subsidiary that has become a co-Borrower under Section 6.12, the transferee
thereof must be Borrower or become a co-Borrower (in accordance with Section
6.12);

 

(e) Dispositions otherwise permitted under this Agreement; and

 

(f) Dispositions of accounts receivable (other than Eligible Receivables)
arising in the ordinary course of business which are overdue or payable by a
distressed company or individual in connection with the compromise or collection
thereof;

 

provided, however, that Borrowers shall give Lender prior written notice of any
Disposition pursuant to subsections (a) through (f) (other than clause (d)) if
the aggregate consideration received on account of such Disposition is in excess
of $100,000, and each such Disposition shall be for fair market value.

 

7.06. Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that:

 

(a) any Subsidiary may make Restricted Payments to any Borrower;

 

37

 

 

 

(b) any Borrower may declare and make dividend payments or other distributions
or payments payable solely in the common stock or other common Equity Interests
of such Borrower (to the extent the same would not result in a Change of
Control);

 

(c) so long as no Default shall have occurred and be continuing at the time of
any action described below or would result therefrom, any Borrower may make
Restricted Payments (including repurchases of Equity Interests) in connection
with any equity compensation plans provided to employees, officers, directors or
other service providers in an amount not to exceed $250,000 in any given
calendar year; and

 

(d) so long as no Default shall have occurred and be continuing at the time of
any action described below or would result therefrom, and upon Lender’s prior
written consent (such consent not to be unreasonably withheld), any Borrower may
make other Restricted Payments not otherwise described in this Section 7.06 to
any Person that owns an Equity Interest or capital stock in Borrower.

 

7.07. Change in Nature of Business. Engage in any line of business other than:
1) retail supply of electricity or natural gas in restructured markets; 2) the
sale or marketing of services such as home warranties and the like; or 3) the
sale or marketing of products intended to generate energy (such as solar panels)
or improve energy efficiency (such as “smart” thermostats).

 

7.08. Transactions with Affiliates. Enter into any transaction of any kind with
any Affiliate, whether or not in the ordinary course of business, other than on
fair and reasonable terms substantially as favorable to the applicable Borrower
as would be obtainable by such Borrower at the time in a comparable arm’s length
transaction with a Person other than an Affiliate, provided that the foregoing
restriction shall not apply to (a) transactions between or among Borrowers
and/or any Subsidiary that has become a co-Borrower under Section 6.12, and (b)
customary compensation and indemnification paid to officers, directors and
employees, and (c) transactions under the Management Services Agreement as in
effect as of the date hereof.

 

7.09. 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 any Borrower, or to otherwise
transfer property to any Borrower, (ii) of any Subsidiary to Guarantee the
Indebtedness of any Borrower or (iii) of 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 a Lien permitted under Sections 7.01,
solely to the extent any such negative pledge relates to the property that is
the subject of such Lien; 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; provided, however, that this Section 7.09 shall not prohibit any
such limitations or requirements that are binding on a Person at the time such
Person first became a Subsidiary, so long as all such limitations and
requirements were not entered into in contemplation of such Person becoming a
Subsidiary, together with any replacement agreement thereof so long as the terms
thereof are not materially less favorable to such Subsidiary.

 

7.10. Use of Proceeds. Use the proceeds of any Borrowing, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the FRB) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose in a manner which
violates, or would be inconsistent with, Regulation U of the FRB.

 

7.11. Reserved.

 

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7.12. Sanctions. Directly or indirectly, use the proceeds of any Borrowing, or
lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other individual or entity, to fund any activities of
or business with any individual or entity, or in any Designated Jurisdiction,
that, at the time of such funding, is the subject of Sanctions, or in any other
manner that will result in a violation by any individual or entity participating
in the transaction of Sanctions.

 

7.13. Third Party Arrangement. Enter into any contract or agreement with any
third party for any servicing or cross-selling arrangements with such third
party (other than approved EDI providers), without Lender’s prior written
consent thereto, or arrangements related to the description in Section 7.07.

 

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES; ADJUSTMENTS TO THE BORROWING BASE

 

8.01. Events of Default. Any of the following shall constitute an Event of
Default:

 

(a) Non-Payment. Any Borrower or any other Loan Party fails to pay (i) when and
as required to be paid herein, any regularly scheduled installment of principal
or interest on any Loan, or (ii) within five (5) days after the same becomes
due, any other amount payable hereunder or under any other Loan Document; or

 

(b) Specific Covenants. Any Borrower fails to perform or observe or cause any of
its Subsidiaries (as applicable) to observe or perform, any term, covenant or
agreement contained in any of Section 6.01, 6.02(a), 6.02(e), 6.04(a), 6.07,
6.09, 6.10, 6.11, 6.12, 6.13, 6.14, 6.18, or Article VII; or

 

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a), (b) or (o) of this
Section 8.01) 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)
knowledge by any Responsible Officer of any Borrower, or (ii) receipt by any
Borrower of written notice thereof from Lender; or

 

(d) Representations and Warranties. (i) Any representation or warranty made or
deemed made by or on behalf of any Borrower or any other Loan Party herein or in
any other Loan Document, shall be incorrect or misleading in any material
respect (or, in the case of any such other representation or warranty qualified
by materiality, Material Adverse Effect or any similar concept, shall be
incorrect or misleading in any respect) when made or deemed made; or

 

(e) Cross-Default. (i) any Borrower (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 and Indebtedness under Swap Contracts) having an aggregate principal
amount (including undrawn committed or available amounts) of more than $25,000,
or (B) fails to observe or perform any other agreement or condition relating to
any such Indebtedness or Guarantee described in clause (A) or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, 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, with the giving of notice
if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid (other than mandatory prepayments not due to a default
thereunder), defeased or redeemed (automatically or otherwise), or an offer to
repurchase, prepay (other than mandatory prepayments not due to a default
thereunder), 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 (but excluding pursuant to due-on-sale clauses of which
are not subject to or triggered by a breach or default); or (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 any Borrower or any of its Subsidiaries 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 any Borrower or any of its Subsidiaries is
an Affected Party (as so defined) and, in either event, the Swap Termination
Value owed by such Borrower or such Subsidiary as a result thereof is greater
than $25,000; or

 

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(f) Insolvency Proceedings, Etc. Any Loan Party or any of their respective
Subsidiaries institutes or consents to the institution of any proceeding for the
bankruptcy, winding-up, dissolution, administration, insolvency, reorganization
of or for any freeze order, moratorium or other similar proceeding under any
Debtor Relief Law, 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

 

(g) Inability to Pay Debts; Attachment. (i) any Borrower or any Subsidiary
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 any Borrower or any Subsidiary (i) one
or more final and unappealable judgments or orders for the payment of money in
an aggregate amount (as to all such judgments or orders) exceeding $100,000 (to
the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage, other than a customary reservation of rights
letter), 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) in the case of a
monetary judgment, such judgment remains unpaid there is a period of 45
consecutive days during which a stay of enforcement of such judgment, by reason
of a pending appeal or otherwise, is not in effect; 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 any Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC that could be reasonably likely to result in a
Material Adverse Effect, or (ii) any 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 that could be
reasonably likely to result in a Material Adverse Effect; 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 thereunder or upon the Facility Termination
Date, 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 material
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 material provision of any Loan Document; or

 

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(k) Default Under Other Loan Documents. If any default occurs and is continuing
(after giving effect to all applicable grace or cure periods, if any) under any
other Loan Document; or

 

(l) Collateral Impairment. If at any time Lender shall cease to have a valid and
perfected first-priority Lien on any of the Collateral, or any Lien in favor of
Lender in any of the Collateral is otherwise impaired; or

 

(m) Change of Control. There occurs any Change of Control; or

 

(n) Unlawfulness of Loan Documents. This Agreement or any Loan Document or the
performance hereof or thereof shall at any time and for any reason be declared
by a court of competent jurisdiction to be, or pursuant to any applicable Law
shall be, unlawful; or

 

(o) EDI Reporting; Access. (i) Lender is unable to obtain the information from
any EDI provider as required under Section 6.15, whether due to (A) any willful
act or intentional omission of Borrower or (B) any other failure of Borrower or
the EDI provider to provide Lender access to obtain such information, and such
failure remains uncured for a period of two (2) Business Days, (ii) Borrower
intentionally misstates any information reported in any Borrowing Base
Certificate or any financial report required to be delivered under Section 6.01,
or (iii) any EDI provider becomes the subject of any proceeding under a Debtor
Relief Law; or

 

(p) Default Under Material Contract; Material Adverse Effect. Any Borrower is in
default (and such default is not waived or cured within the applicable grace or
cure period provided thereunder) under any Material Contract, or any such
agreement is modified or interpreted in a manner which could reasonably be
expected to result in a Material Adverse Effect; or

 

(q) Compliance with Third Party Regulations and Requirements. Any Borrower fails
to meet the obligations of any Governmental Authority, ISO, Utility Obligor or
any other third party, which failure could reasonably be expected to result in a
Material Adverse Effect; or

 

(r) Any Responsible Officer or other senior officer of any Borrower is the
subject of a criminal indictment.

 

8.02. Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, Lender may take any or all of the following actions:

 

(a) declare the Commitment to be terminated;

 

(b) declare the unpaid principal amount of all outstanding Revolving 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 Borrowers; provided, however, that upon the
occurrence of an actual or deemed entry of an order for relief with respect to
any Borrower or any Subsidiary that has become a co-Borrower pursuant to Section
6.12 under the Bankruptcy Code of the United States, the obligation of Lender to
make Revolving Loans shall automatically terminate, the unpaid principal amount
of all outstanding Revolving Loans and all interest and other amounts as
aforesaid shall automatically become due and payable without further act of
Lender;

 

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(c) exercise all rights and remedies available to it under the Loan Documents,
at law or in equity; and

 

(d) upon the occurrence of any Event of Default under Section 8.01(q), Lender
may take any and all actions necessary to cure the applicable Borrower’s default
or satisfy the applicable Borrower’s obligations with respect to such
Governmental Authority, ISO, Utility Obligor or other third party, and each
Borrower hereby appoints Lender as such Borrower’s attorney-in-fact for the
limited purpose of performing such cure or satisfying such obligation (which
appointment is coupled with an interest and is irrevocable). All amounts
advanced or incurred by Lender under this Section 8.02(d) shall be additional
Obligations owing by the Borrowers to Lender, upon demand.

 

8.03. Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Revolving 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 Lender in such order
as Lender may determine in its sole and absolute discretion.

 

8.04. Adjustments to the Borrowing Base. Lender may reduce or make other
adjustments to the advance rates used to determine the Borrowing Base (a) in its
sole discretion after the occurrence and during the existence of a Default or an
Event of Default, (b) in its sole discretion if the Variation for any Borrower
for any applicable period exceeds (i) fifteen percent (15%) with respect to the
conversion of Billed Receivables to Unbilled Receivables or (ii) two percent
(2%) with respect to the collection of Accounts giving rise to Billed
Receivables, and (c) as Lender otherwise determines in its exercise of prudent
business judgment and standards of commercial reasonableness.

 

ARTICLE IX. CROSS-GUARANTY

 

9.01. The Cross-Guaranty. In order to induce Lender to enter into this Agreement
and to make the Revolving Loans hereunder and in recognition of the direct
benefits to be received by each Borrower from the Loan hereunder and from the
other Loan Documents, each Borrower hereby unconditionally and irrevocably,
jointly and severally, guarantees as primary obligor and not merely as surety
(each Borrower, in such capacity, a “Cross-Guarantor” and collectively, the
“Cross-Guarantors” for purposes of this Article IX) the full and prompt payment
when due, whether upon maturity, by acceleration or otherwise, of any and all
Obligations of each other Borrower to Lender under this Agreement, the Note or
any other Loan Document. If any or all of the indebtedness of any Borrower to
Lender becomes due and payable hereunder or under the Note or any other Loan
Documents, each Cross-Guarantor unconditionally promises to pay such
indebtedness to Lender, or order, ON DEMAND, together with any and all
reasonable expenses which may be incurred by or on behalf of the Lender in
collecting any of the indebtedness, including, without limitation, such expenses
described in Section 10.04. The word “indebtedness” is used in this Article IX
in its most comprehensive sense and includes any and all Obligations of any
Borrower arising in connection with this Agreement, the Note or any of the other
Loan Documents in each case, heretofore, now or hereafter made, incurred or
created, whether voluntarily, involuntarily, absolute or contingent, liquidated
or unliquidated, determined or undetermined, whether or not such indebtedness is
from time to time reduced, or extinguished and thereafter increased or incurred,
whether any Borrower may be liable individually or jointly with others, whether
or not recovery upon such indebtedness may be or hereafter becomes barred by any
statute of limitations, and whether or not such indebtedness may be or hereafter
becomes unenforceable. Notwithstanding any provision to the contrary contained
herein or in any of the other Loan Documents, to the extent the obligations of
any Cross-Guarantor shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
obligations of such Cross-Guarantor hereunder shall be enforced to the maximum
amount that is permissible under applicable law (whether federal or state, and
including, without limitation, any Debtor Relief Laws).

 

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9.02. Bankruptcy. Each Cross-Guarantor unconditionally and irrevocably
guarantees, jointly and severally, the payment of any and all Obligations of the
Borrowers to the Lender under this Agreement, the Note and any other Loan
Document whether or not due or payable upon the occurrence of any of the events
specified in Sections 8.01(f) or (g), and unconditionally promises to pay such
Obligations to Lender, or order, ON DEMAND, in lawful money of the United
States. Each Cross-Guarantor further agrees that to the extent that any Borrower
shall make a payment or a transfer of an interest in any property to Lender,
which payment or transfer or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, or otherwise is avoided, and /or
required to be repaid to any Borrower, the estate of any Borrower, a trustee,
receiver or any other party under any Debtor Relief Law, state or federal law,
common law or equitable cause, then to the extent of such avoidance or
repayment, the Obligation or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment had not been
made.

 

9.03. Nature of Liability. The liability of each Cross-Guarantor hereunder is
exclusive and independent of any security for or other guaranty of the
indebtedness of any Borrower whether executed by such Cross-Guarantor, any other
guarantor or by any other party, and such Cross-Guarantor’s liability hereunder
shall not be affected or impaired by (a) any direction as to the application of
payment by any Borrower or by any other party, or (b) any other continuing or
other guaranty, undertaking or maximum liability of a guarantor or of any other
party as to the indebtedness of any Borrower, or (c) any payment on or reduction
of any such other guaranty or undertaking, or (d) any dissolution, termination
or increase, decrease or change in personnel by any Borrower, or (e) any payment
made to Lender on the Obligations which Lender repays to any Borrower pursuant
to a court order in any Bankruptcy, reorganization, arrangement, moratorium or
other debtor relief proceeding, and each Cross-Guarantor waives any right to the
deferral or modification of its obligations hereunder by reason of any such
proceeding.

 

9.04. Independent Obligation. The obligations of each Cross-Guarantor hereunder
are independent of the obligations of each Borrower, and a separate action or
actions may be brought and prosecuted against each Cross-Guarantor whether or
not action is brought against any Borrower and whether or not any Borrower is
joined in any such action or actions.

 

9.05. Authorization. Each Cross-Guarantor authorizes Lender, without notice or
demand (except as shall be required by applicable statute and cannot be waived),
and without affecting or impairing its liability hereunder, from time to time to
(a) renew, compromise, extend, increase, accelerate or otherwise change the time
or manner of payment of, or otherwise change the terms of the indebtedness or
any part thereof in accordance with this Agreement, including any increase or
decrease of the rate of interest thereon, (b) take and hold security from each
Cross-Guarantor or any other party for the payment of this Cross-Guaranty or the
Obligations and exchange, enforce, waive and release any such security, (c)
apply such security and direct the order or manner of sale thereof as Lender in
its sole and absolute discretion may determine and (d) release or substitute any
one or more endorsers, guarantors, any Borrower or other obligors or any
security for the Obligations.

 

9.06. Reliance. It is not necessary for Lender to inquire into the capacity or
powers of any Borrower or the officers, director, partners or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

 

9.07. Waiver; Subrogation.

 

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(a) Each Cross-Guarantor waives any right (except as shall be required by
applicable statute and cannot be waived) to require Lender to (i) proceed
against any Borrower or any other party, (ii) proceed against or exhaust any
security held from any Borrower or any other party or (iii) pursue any other
remedy in Lender’s power whatsoever. Each Cross-Guarantor waives any defense
based on or arising out of any defense of any Borrower or any other party other
than payment in full of the indebtedness, including, without limitation, any
defense based on or arising out of the disability of any Borrower or any other
party, or the unenforceability of the Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any Borrower other
than payment in full of the indebtedness. Lender may, at its election, foreclose
on any security held by it by one or more judicial or non-judicial sales,
whether or not every aspect of any such sale is commercially reasonable (to the
extent such sale is permitted by applicable law), or exercise any other right or
remedy the Lender may have against any Borrower or any other party, or any
security, without affecting or impairing in any way the liability of any
Cross-Guarantor hereunder except to the extent the indebtedness has been paid.
Each Cross-Guarantor waives any defense arising out of any such election by
Lender, even though such election operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of such Cross-Guarantor
against any Borrower or any other party or any security.

 

(b) Each Cross-Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notice of protest, notices of dishonor, notices of acceptance of this
Cross-Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Cross-Guarantor assumes all responsibility for
being and keeping itself informed of each Borrower’s financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the indebtedness and the nature, scope and extent of the risks which such
Cross-Guarantor assumes and incurs hereunder, and agrees that Lender shall have
no duty to advise such Cross-Guarantor of information known to it regarding such
circumstances or risks.

 

(c) Each Cross-Guarantor hereby agrees that it will not exercise any rights of
subrogation that it may at any time have as a result of this Cross-Guaranty, or
otherwise (whether contractual, under Section 509 of the U.S. Bankruptcy Code,
or otherwise) to the claims of Lender against any Borrower, and all contractual,
statutory or common law rights of reimbursement, contribution or indemnity from
any other party which it may at any time otherwise have as a result of this
Cross-Guaranty until such time as the Revolving Loans and all other Obligations
hereunder and under each Loan Document shall have been fully paid and performed
and Lender’s commitment to make Revolving Loans hereunder has been terminated.
Each Cross-Guarantor hereby further agrees not to exercise any right to enforce
any other remedy which Lender now has or may hereafter have against any other
party, any endorser or any other guarantor of all or any part of the
indebtedness of any Borrower and any benefit of, and any right to participate
in, any security or collateral given to of for the benefit of Lender to secure
payment of the Obligations of any Borrower until such time as the Revolving
Loans and all other Obligations are paid in full, Lenders commitment to make
Revolving Loans hereunder is terminated and all other Obligations hereunder and
under the other Loan Documents are performed in full.

 

(d) Any and all present and future debts and obligations of each Borrower to any
Cross-Guarantor is hereby postponed in favor of, and subordinated until the
payment and performance of, any and all present and future debts and obligations
of each Borrower to Lender, including, without limitation, all of the
Obligations under this Agreement, the Note and the other Loan Documents.

 

9.08. Books and Records. The Lender’s books and records showing the accounts
between Lender and each Borrower, respectively, shall be admissible in evidence
in an action or proceeding and shall be binding upon each Cross-Guarantor for
the purpose of establishing the items therein set forth and shall constitute
prima facie proof thereof.

 

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ARTICLE X. MISCELLANEOUS

 

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 any
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by Lender and the Borrowers or the applicable Loan Party, as the case may
be, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

 

10.02. Notices; Effectiveness; Electronic Communication.

 

(a) Notices Generally. 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 facsimile to the address, facsimile number or
electronic mail address specified for such Person on Schedule 10.02. Notices and
other communications sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices and other communications sent by facsimile 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 and other communications 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 Lender
hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by
Lender, provided that approval of such procedures may be limited to particular
notices or communications. Unless Lender otherwise prescribes, 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 email is not sent during the
normal business hours of the recipient, such notice, email or communication
shall be deemed to have been sent at the opening of business on the next
business day for the recipient.

 

(c) Change of Address, Etc. Each Borrower and Lender may change its address,
facsimile or telephone number for notices and other communications hereunder by
notice to the other parties hereto.

 

(d) Reliance by Lender. Lender shall be entitled to rely and act upon any
notices (including electronic Committed Loan Notices) purportedly given by or on
behalf of any 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. Each Borrower shall indemnify
Lender and the Related Parties of Lender from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of any Borrower. All telephonic notices to and
other telephonic communications with Lender may be recorded by Lender, and each
of the parties hereto hereby consents to such recording.

 

10.03. No Waiver; Cumulative Remedies; Enforcement. No failure by Lender to
exercise, and no delay by Lender in exercising, any right, remedy, power or
privilege hereunder or under any other Loan Document 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, and provided under each other Loan
Document, are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.

 

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10.04. Expenses; Indemnity; Damage Waiver.

 

(a) Costs and Expenses. The Borrowers shall, jointly and severally, pay (i) all
reasonable out-of-pocket expenses incurred by Lender (including the reasonable
fees, charges and disbursements of counsel for Lender), in connection with 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 Lender (including the fees, charges and disbursements of
any counsel for 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 Revolving
Loans made hereunder, including all such out-of-pocket expenses incurred during
any workout, restructuring or negotiations in respect of such Revolving Loans.

 

(b) Indemnification by the Borrowers. The Borrowers shall, jointly and
severally, indemnify Lender and each Related Party of Lender (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 Person (including any Borrower or any other Loan Party) other than such
Indemnitee and its Related Parties 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,
(ii) any actual or alleged presence or release of Hazardous Materials on or from
any property owned or operated by any Borrower or any of its Subsidiaries, or
any Environmental Liability related in any way to any Borrower or any of its
Subsidiaries, or (iii) 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 any
Borrower or any other Loan Party, and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to 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 and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (y) result from a claim brought by any
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
such Borrower or such Loan Party has obtained a final and nonappealable judgment
in its favor on such claim as determined by a court of competent jurisdiction.
Without limiting the provisions of Section 3.01(c), this Section 10.4(b) shall
not apply with respect to Taxes other than any Taxes that represent losses,
claims, damages, etc. arising from any non-Tax claim.

 

(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, no Borrower shall assert, and each Borrower hereby waives, and
acknowledges that no other Person shall have, 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 Loan or the use of the proceeds thereof.

 

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(d) Payments. All amounts due under this Section shall be payable not later than
ten (10) Business Days after demand therefor.

 

(e) Survival. The agreements in this Section shall survive the Facility
Termination Date.

 

10.05. Payments Set Aside. To the extent that any payment by or on behalf of any
Borrower is made to Lender, or Lender exercises its right of setoff, and such
payment or the proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by 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 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.

 

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 any Borrower nor
any other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of Lender. Lender may,
without the consent of any Borrower (however, Borrower at no time shall be
responsible for any fees or expenses of Lender related to any such assignment),
assign or otherwise transfer all or any of its rights or obligations hereunder.

 

(b) Participations. Lender may at any time, without the consent of, or notice to
any Borrower (however, Borrower at no time shall be responsible for any fees or
expenses of Lender related to the sale of any such participation), sell
participations to any Person (each, a “Participant”) in all or a portion of
Lender’s rights and/or obligations under this Agreement and the other Loan
Documents (including, without limitation, all or any portion of its Commitment
and/or the Revolving Loans).

 

(c) Certain Pledges. Lender or any assignee thereof may at any time, without the
consent of or notice to, any Borrower, pledge or assign a security interest in
all or any portion of its rights under this Agreement or any of the other Loan
Documents (including, without limitation, under the Note).

 

10.07. Treatment of Certain Information; Confidentiality. 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 Related Parties
(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 required or requested by any
regulatory authority purporting to have jurisdiction over such Person or its
Related Parties (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 and obligations under this Agreement or (ii) any actual or prospective
party (or its Related Parties) to any swap, derivative or other transaction
under which payments are to be made by reference to any Borrower and its
obligations, this Agreement or payments hereunder, (g) with the consent of the
applicable 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 Lender or any of its Affiliates on a nonconfidential basis from a
source other than a Borrower. For purposes of this Section, “Information” means
all information received from any Borrower or any Subsidiary relating to any
Borrower or any Subsidiary or any of their respective businesses, other than any
such information that is available to Lender on a nonconfidential basis prior to
disclosure by such Borrower or such Subsidiary. 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.

 

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10.08. Right of Setoff. If an Event of Default shall have occurred and be
continuing, Lender and each of its Affiliates is hereby authorized at any time
and from time to time, 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 Lender or any such
Affiliate to or for the credit or the account of any Borrower against any and
all of the obligations of any Borrower now or hereafter existing under this
Agreement or any other Loan Document to Lender or such Affiliate, irrespective
of whether or not Lender or such Affiliate shall have made any demand under this
Agreement or any other Loan Document and although such obligations of such
Borrower may be contingent or unmatured or are owed to a branch, office or
Affiliate of Lender different from the branch, office or Affiliate holding such
deposit or obligated on such indebtedness. The rights of Lender and its
Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) that Lender or its Affiliates may have.
Lender agrees to notify the applicable Borrowers 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.

 

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 maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess interest shall
be applied to the principal of the Revolving Loans in such order as Lender
determines in its sole discretion, or, if it exceeds such unpaid principal,
refunded to the Borrowers. In determining whether the interest contracted for,
charged, or received by Lender exceeds the Maximum Rate, such Lender 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 under the Loan Documents.

 

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. This Agreement shall become
effective when it shall have been executed by Lender and each Borrower and when
Lender 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 facsimile or other
electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of
a manually executed counterpart of this Agreement.

 

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 Lender,
regardless of any investigation made by Lender or on its behalf and
notwithstanding that Lender may have had notice or knowledge of any Default at
the time of any Borrowing, and shall continue in full force and effect until the
Facility Termination Date.

 

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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.

 

10.13. Governing Law; Jurisdiction; Etc.

 

(a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS,
CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR
OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH
THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS CONFLICTS OF LAW PRINCIPLES.

 

(b) SUBMISSION TO JURISDICTION. EACH BORROWER IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY
KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR
OTHERWISE, AGAINST LENDER, OR ANY RELATED PARTY OF LENDER IN ANY WAY RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR
THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN
NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT
OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH
COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION 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, LITIGATION 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 LENDER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.

 

(c) WAIVER OF VENUE. EACH BORROWER 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.

 

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(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

10.14. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.15. No Advisory or Fiduciary Responsibility. In connection with all aspects
of each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
each Borrower acknowledges and agrees, and acknowledges its Affiliates’
understanding, that: (i) (A) the services provided by Lender hereunder are
arm’s-length commercial transactions between such Borrower, on the one hand, and
Lender, on the other hand, (B) such Borrower has consulted its own legal,
accounting, regulatory and tax advisors to the extent it has deemed appropriate,
and (C) such Borrower is capable of evaluating, and understands and accepts, the
terms, risks and conditions of the transactions contemplated hereby and by the
other Loan Documents; (ii) (A) Lender is and has been acting solely as a
principal and, except as expressly agreed in writing by the relevant parties,
has not been, is not, and will not be acting as an advisor, agent or fiduciary
for any Borrower or any of their respective Affiliates, or any other Person and
(B) Lender does not have any obligation to any Borrower or any of their
Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; and
(iii) Lender and its Affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of the Borrowers and their
Affiliates, and Lender does not have any obligation to disclose any of such
interests to any Borrower or any of their Affiliates. To the fullest extent
permitted by law, each Borrower hereby waives and releases any claims that it
may have against Lender with respect to any breach or alleged breach of agency
or fiduciary duty in connection with any aspect of any transaction contemplated
hereby.

 

10.16. USA PATRIOT Act. Lender hereby notifies each 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 each Borrower, which information includes the
name and address of each Borrower and other information that will allow Lender
to identify each Borrower in accordance with the Act. Each Borrower shall,
promptly following a request by Lender, provide all documentation and other
information that Lender requests in order to comply with its ongoing obligations
under applicable “know your customer” and anti-money laundering rules and
regulations, including the Act.

 

50

 

 

 

10.17. Termination of Loan Documents. This Agreement and the other Loan
Documents shall terminate upon the Facility Termination Date.

 

[Signature pages follow.]

 

 

 

 

51

 

 

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

 

 

RETAIL ENERGY HOLDINGS L.L.C.,
as a Borrower                 By: /s/ Timothy S. Krieger     Name: Timothy S.
Krieger     Title: President and Chief Executive Officer                 TOWN
SQUARE ENERGY, LLC,
as a Borrower                 By: /s/ Timothy S. Krieger     Name: Timothy S.
Krieger     Title: Chief Executive Officer                 DISCOUNT ENERGY
GROUP, LLC,
as a Borrower                 By: /s/ Timothy S. Krieger     Name: Timothy S.
Krieger     Title: Chief Executive Officer              

 

 

 

 

 

 

 

 

 

[Counterpart Signature Page to Credit Agreement]

 

 

 

  MAPLE BANK GMBH,
as Lender                 By: /s/ Linda Lai     Name: Linda Lai     Title: Chief
Financial Officer                 By: /s/ Paul Lishman     Name: Paul Lishman  
  Title: General Manager                  

 

 

 

[Counterpart Signature Page to Credit Agreement]

 

 

 

 

EXHIBIT A

“Form of Borrowing Base Certificate”

A Form of Borrowing Base Certificate is attached hereto.

 

 

 

 

Exhibit A – Page 1

 

 

 

 

 

[ex1001_image1.jpg]

Exhibit A – Page 2

 

 

 

 

 

 [ex1001_image2.jpg]

 

Exhibit A – Page 3

 

 

 

 

 

 

EXHIBIT B

“Form of Committed Loan Notice”

Loan Number:  

COMMITTED LOAN NOTICE
(Revolving Loan)

Date: _________________

  To: Maple Bank         Ladies and Gentlemen:    

Reference is made to that certain Credit Agreement dated as of October __, 2014
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement”) among RETAIL ENERGY HOLDINGS L.L.C., a
Minnesota limited liability company, TOWN SQUARE ENERGY, LLC, a Delaware limited
liability company and DISCOUNT ENERGY GROUP, LLC, a Delaware limited liability
company (each, a “Borrower” and collectively, the “Borrowers”), and MAPLE BANK
GMBH, acting through its Maple Bank Toronto Branch, as Lender. Capitalized terms
used but not defined herein shall have the meaning set forth in the Agreement.

The undersigned hereby requests a Revolving Loan to be advanced by Lender on
_____________, 20_____, in the principal amount of $___________________. As of
the date hereof, all conditions precedent to the making of the borrowing herein
requested, as set forth in the Agreement, have been satisfied.

Attached hereto are (i) a completed Borrowing Base Certificate, duly executed by
a Responsible Officer of Borrower that is a party to the Validity Guaranty, (ii)
[other supporting documentation, if specifically requested by Maple Bank].

  BORROWER REPRESENTATIVE:           RETAIL ENERGY HOLDINGS L.L.C.,
a Minnesota limited liability company                 By:       Name:       Its:
           

 

Exhibit B – Page 1

 

 

 

 

 

EXHIBIT C

“Form of Payment Direction Letter”

A Form of Payment Direction Letter is attached hereto.

 

 

 

 

 

 

 

 

Exhibit C – Page 1

 

 

 

[October 10, 2014]

[Utility Obligor]

[Utility Obligor Address]

[Utility Obligor Address]

Attn: [______________]

 

Re:Payment Direction Under [Purchase of Receivables Agreement]

Dear [____________]:

In connection with that certain [Purchase of Receivables Agreement] dated
[____________________] between Retail Energy Holdings L.L.C. (“REH”) and
[Utility Obligor] (“___________________”), REH hereby assigns to Maple Bank
GMBH, acting through its Maple Bank Toronto branch (“Maple Bank”), all of REH’s
right, title and interest in and to all monies now or hereafter due to REH by
[Utility Obligor] under [Utility Obligor’s] [Purchase of Receivables Agreement]
dated [_____________] (“Purchase of Receivables Agreement”), with [Utility
Obligor]; and REH hereby irrevocably directs and authorizes [Utility Obligor] to
forward all monies due to REH related to the Purchase of Receivables Agreement
or otherwise, to the following account (which account is under the exclusive
control of Maple Bank):

  Bank Name:     Bank Address:           Account No.:     ABA No.:    
Beneficiary:        

This authorization is effective commencing with the [_____________, 2014]
payment due from [Utility Obligor] to REH under the Purchase of Receivables
Agreement, and may only be changed or revoked with the express written consent
of the duly authorized representatives of Maple Bank.

Pursuant to the agreement[s] mentioned above, this letter shall serve notice for
the “assignment” of certain attributes of such agreement[s], namely, the
instructions for [Utility Obligor’s] payments to REH under the Purchase of
Receivables Agreement.

If there is a dispute in the future between REH and Maple Bank as to where any
funds due REH should be remitted pursuant to the Purchase of Receivables
Agreement, [Utility Obligor] shall continue to pay Maple Bank using the above
account information (or as otherwise directed by Maple Bank) until the dispute
is resolved. So long as this payment direction is followed by [Utility Obligor],
REH and Maple Bank hereby agree not to initiate any legal proceedings of any
nature against [Utility Obligor] relating to such payment or such dispute and
agree to indemnify, defend and hold [Utility Obligor] harmless from and against
any claims or liability resulting from the same (except any such claims or
liability which arose due to the gross negligence or willful misconduct of
[Utility Obligor]).

Exhibit C – Page 2

 

 

 

This letter agreement may not be amended and no provision hereof may be waived
without the prior written consent of [Utility Obligor] and Maple Bank. This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of New York.

Please confirm your agreement with this direction to pay by executing this
letter where indicated below, and returning a copy to the undersigned at the
address set forth below.

If you have any questions or concerns, please contact the undersigned at [(____)
_____-_____].

 

 

Sincerely,

 

RETAIL ENERGY HOLDINGS L.L.C.

 

Signature:____________

 

Name:_______________

 

Title:________________

     

 

MAPLE BANK GMBH,     acting through its Maple Bank Toronto branch   [Utility
Obligor]       Signature:__________   Signature:__________       Name:__________
  Name:__________       Title:__________   Title:__________

 

Exhibit C – Page 3

 

 

 

SCHEDULE 1.01

“Utility Obligors”

REH
Entity
State
Utility TSE CT The Connecticut Light and Power Company TSE CT The United
Illuminating Company DEG MD Baltimore Gas and Electric Company DEG MD Delmarva
Power & Light Company DEG NJ Atlantic City Electric Company DEG NJ Jersey
Central Power & Light Company DEG NJ Public Service Gas and Electric Company DEG
OH Duke Energy Ohio, Inc. DEG PA Duquesne Light Company DEG PA PECO Energy
Company

 

Schedule 1.01 - Page 1

 

 

 

 

SCHEDULE 5.06

“Litigation”

None

 

 

 

Schedule 5.06 - Page 1

 

 

 

SCHEDULE 5.13

“Subsidiaries and Equity Interests”

Subsidiaries of Retail Energy Holdings L.L.C. (a “Borrower”)
At August 31, 2014

Company Name   Jurisdiction of Organization  
Status  
Tier Town Square Energy, LLC   Delaware   Active   First Discount Energy Group,
LLC   Delaware   Active   First

 

Subsidiaries of Town Square Energy, LLC (a “Borrower”)
At August 31, 2014

Company Name   Jurisdiction of
Organization  
Status  
Tier None            

 

Subsidiaries of Discount Energy Group, LLC (a “Borrower”)
At August 31, 2014

Company Name   Jurisdiction of
Organization  
Status  
Tier None            

 

 

 

Schedule 5.13 - Page 1

 

 

 

 

SCHEDULE 7.01

“Liens”

None.

 

 

Schedule 7.01 - Page 1

 

 

 

 

SCHEDULE 7.03

“Indebtedness”

None.

 

 

Schedule 7.03 - Page 1

 

 

 

 

SCHEDULE 10.02

“Certain Addresses for Notices”

LENDER:

 

Maple Bank GmbH, acting through its Maple Bank Toronto Branch

79 Wellington Street West, Suite 3500

Toronto, Ontario, M5K 1K7

Attn:  General Manager Toronto Branch

 

With a copy to (which copy shall not constitute notice):

 

Holland & Knight LLP

31 West 52nd Street

New York, NY 10019

Attn:  Marc Reisler

marc.reisler@hklaw.com

 

and

 

131 S. Dearborn Street, 30th Floor

Chicago, Illinois 60603

Attn:  Joshua M. Spencer

joshua.spencer@hklaw.com

 

 

[Rest of Page Intentionally Left Blank; Borrower Notice Information on Next
Page]

 

Schedule 10.02 – Page 1

 

 

 

BORROWERS:

 

RETAIL ENERGY HOLDINGS L.L.C.

16233 Kenyon Avenue

Suite 210

Lakeville MN 55044

Attn:  Timothy S. Krieger

Attn:  Wiley H. Sharp

tkrieger@twincitiespower.com

wsharp@twincitiespower.com

 

TOWN SQUARE ENERGY, LLC

16233 Kenyon Avenue

Suite 210

Lakeville MN 55044

Attn:  Timothy S. Krieger

Attn:  Wiley H. Sharp

tkrieger@twincitiespower.com

wsharp@twincitiespower.com

 

DISCOUNT ENERGY GROUP, LLC

16233 Kenyon Avenue

Suite 210

Lakeville MN 55044

Attn:  Timothy S. Krieger

Attn:  Wiley H. Sharp

tkrieger@twincitiespower.com

wsharp@twincitiespower.com

 

With a copy to (which copy shall not constitute notice):

 

Stinson Leonard Street LLP

150 South Fifth Street, Suite 2300

Minneapolis, MN 55331

Attn:  Mark Weitz

Mark.weitz@stinsonleonard.com

 

 

Schedule 10.02 – Page 2