Exhibit 10.1
SUNTRUST EQUIPMENT FINANCE & LEASING CORP.
 
EQUIPMENT LEASE AGREEMENT NO. 07073
     THIS EQUIPMENT LEASE AGREEMENT (this “Lease”) is made as of
                          , 2008, by and between SUNTRUST EQUIPMENT FINANCE &
LEASING CORP., its present and future affiliates and their successors and
assigns (“Lessor”) and POWERSECURE, INC., its successors and permitted assigns
(“Lessee”).
     Lessee desires to lease from Lessor the equipment and other property (the
“Equipment”) described in each Equipment Schedule executed pursuant to this
Lease (each, a “Schedule”) incorporating by reference the terms and conditions
of this Lease (the term “Lease” shall also include any Riders or Amendments to
this Lease entered into with respect to either the Lease or any Schedule).
Certain definitions and construction of certain terms used in this Lease are
provided in Section 19.
     For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Lease agree as follows:
1. AGREEMENT TO LEASE; TERM. This Lease is effective as of the date specified
above. By entering into a Schedule, Lessor leases the Equipment described
therein to Lessee, and Lessee leases such Equipment from Lessor, in each case,
subject to the terms and conditions in this Lease and such Schedule and all of
the other documents and agreements executed in connection herewith
(collectively, the “Lease Documents”). Each Schedule, incorporating the terms
and conditions of this Lease, will constitute a separate instrument of lease.
The term of lease with respect to each item of Equipment leased under a Schedule
shall commence on the date that an Acceptance Certificate is executed for such
item (each, an “Acceptance Certificate”) and continue for the term provided in
that Schedule.
2. RENT. Lessee shall pay Lessor (a) the rental installments (“Basic Rent”) as
and when specified in each Schedule, without demand, and
(b) all of the other amounts payable in accordance with this Lease, such
Schedule and/or any of the other Lease Documents (collectively, the “Rent”).
Upon Lessee’s execution of an Acceptance Certificate, the related Schedule shall
constitute a non-cancelable net lease, and Lessee’s obligation to pay Rent, and
otherwise to perform its obligations under or with respect to such Schedule and
all of the other Lease Documents, are and shall be absolute and unconditional
and shall not be affected by any circumstances whatsoever, including any right
of setoff, counterclaim, recoupment, deduction, defense or other right which
Lessee may have against Lessor, the manufacturer, manufacturers representative
or vendor of the Equipment (the “Suppliers”), or anyone else, for any reason
whatsoever (each, an “Abatement”). Lessee agrees that all Rent shall be paid,
without the need for further demand, in accordance with Lessor’s or Assignee’s
written direction which may from time to time be modified, amended or changed by
Lessor or Lessor’s Assignee. Time is of the essence. If any Rent is not paid on
the due date as set forth in the respective Schedule or other written
instructions received from the Lessor or Lessor’s Assignee, Lessor may collect,
and Lessee agrees to pay, interest (accruing at the “Late Charge Rate” specified
in the related Schedule) with respect to the amount in arrears (the “Late
Charge”). If any such payment is not accepted or returned (“Returned Item”),
Lessee shall make the payment by mail, wire transfer or such other method
directed by Lessor, together with a return fee for any such Returned Item, in
the amount specified in each Equipment Schedule (“Returned Fee”).
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE. Lessee represents,
warrants and agrees that, as of the effective date of this Lease and of the
Acceptance Certificate delivered with respect to each Schedule: (a) Lessee has
the form of business organization indicated, and is and will remain duly
organized and existing in good standing under the laws of the state specified
under Lessee’s signature and is duly qualified to do business wherever necessary
to perform its obligations under the Lease Documents, including each
jurisdiction in which the Equipment is or will be located. Lessee’s legal name
is as shown in the preamble of this Lease; and Lessee’s Federal Employer
Identification Number, and organizational number are all as respectively set
forth under Lessee’s signature. Within the previous six (6) years, Lessee has
not changed its name, done business under any other name, or merged or been the
surviving entity of any merger, except as disclosed to Lessor in writing.
(b) The Lease Documents (i) have been duly authorized by all necessary action
consistent with Lessee’s form of organization, (ii) do not require the approval
of, or giving notice to, any governmental authority, (iii) do not contravene or
constitute a default under any applicable law, Lessee’s organizational
documents, or any agreement, indenture, or other instrument to which Lessee is a
party or by which it may be bound, and (iv) constitute legal, valid and binding
obligations of Lessee enforceable against Lessee, in accordance with the terms
thereof.
(c) There are no pending actions or proceedings to which Lessee is a party, and
there are no other pending or threatened actions or proceedings of which Lessee
has knowledge, before any court, arbitrator or administrative agency, which,
either individually or in the aggregate, would have a Material Adverse Effect.
As used herein, “Material Adverse Effect” shall mean (i) a materially adverse
effect on the business, condition (financial or otherwise), operations,
performance or properties of Lessee (taken as a whole), or (ii) a material
impairment of the ability of Lessee to perform its obligations under or remain
in compliance with such Schedule or any of the other Lease Documents. Further,
Lessee is not in default under any financial or other material agreement that,
either individually, or in the aggregate, would have the same such effect.
(d) All of the Equipment covered by such Schedule is located solely in the
jurisdiction(s) specified in such Schedule.
(e) Under the applicable laws of each such jurisdiction, such Equipment consists
(and shall continue to consist) solely of personal property and not fixtures.
Such Equipment is removable from and is not essential to the premises at which
it is located.
(f) With respect to any Collateral, Lessee has good title to, rights in, and/or
power to transfer all of the same.

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(g) The financial statements of Lessee (copies of which have been furnished to
Lessor, or made publicly available in accordance with Section 4(a), below) have
been prepared in accordance with generally accepted accounting principles
consistently applied (“GAAP”), and fairly present Lessee’s financial condition
and the results of its operations as of the date of and for the period covered
by such statements, and since the date of such statements there has been no
material adverse change in such conditions or operations.
4. FURTHER ASSURANCES AND OTHER COVENANTS. Lessee agrees as follows: (a) Lessee
will furnish, at Lessee’s sole cost, Lessor with (i) Lessee’s balance sheet,
consolidated statements of income, statements of cash flows, to the extent
applicable statutory statements and statements of equity together with all notes
to consolidated financial statements (in addition to the balance sheet),
prepared in accordance with GAAP, certified by a recognized firm of certified
public accountants, within one hundred twenty (120) days of the close of each
fiscal year of Lessee, (ii) Lessee’s quarterly financial report certified by the
chief financial officer of Lessee, within sixty (60) days of the close of each
fiscal quarter of Lessee, and (iii) all of Lessee’s Forms 10-K and 10-Q, if any,
filed with the Securities and Exchange Commission (“SEC”) within thirty
(30) days after the date on which they are filed (by furnishing these SEC forms,
or making them publicly available in electronic form, Lessee shall be deemed to
have satisfied the requirements of clauses (i), (ii) and (iii)).
(b) Lessee shall obtain and deliver to Lessor and/or promptly execute or
otherwise authenticate any documents, filings, waivers (including any landlord
and mortgagee waivers), releases and other records, and will take such further
action as Lessor may reasonably request in furtherance of Lessor’s rights under
any of the Lease Documents. Lessee irrevocably authorizes Lessor to file UCC
financing statements (“UCCs”), and other filings with respect to the Equipment
or any Collateral, without any additional written authorization from Lessee.
Lessee agrees not to file any corrective or termination statements or partial
releases with respect to any UCCs filed by Lessor pursuant to this Lease.
(c) Lessee shall provide written notice to Lessor: (i) thirty (30) days prior to
any change in Lessee’s name or jurisdiction or form of organization;
(ii) promptly upon the occurrence of any Event of Default (as defined in
Section 15) or event which, with the lapse of time or the giving of notice, or
both, would become an Event of Default (a “Default”); and (iii) promptly upon
Lessee becoming aware of any material violation of applicable law relating to
the Equipment or this Lease.
5. CONDITIONS PRECEDENT. Lessor’s agreement to purchase and lease any Equipment
under a Schedule, is conditioned upon Lessor’s determination that all of the
following have been satisfied: (a) Lessor having received the following, in form
and substance reasonably satisfactory to Lessor: (i) evidence as to due
compliance with the insurance provisions of Section 11; (ii) if requested, lien
searches in the jurisdiction of Lessee’s organization, and wherever else Lessor
deems appropriate; (iii) UCCs, real property waivers and all other filings
required by Lessor; (iv) a certificate of an appropriate officer of Lessee
certifying: (A) resolutions duly authorizing the transactions contemplated in
the applicable Lease Documents, (B) the incumbency and signature of the officers
of Lessee authorized to execute such documents; and (C) if requested by Lessor,
the accuracy and completeness of the attached copies of Lessee’s organizational
documents; (v) if requested by Lessor, an opinion of counsel for Lessee as to
each of the matters set forth in sub-parts (a) through (c) of Section 3;
(vi) the only manually executed original of the Schedule and the Acceptance
Certificate, and counterpart originals of all other Lease Documents; (vii) all
purchase documents pertaining to the Equipment (collectively, the “Supply
Contract”); (viii) if requested by Lessor, good standing certificates from the
jurisdiction of Lessee’s organization and the location of the Equipment, and
evidence of Lessee’s organizational number; and (ix) such other documents,
agreements, instruments, certificates, opinions, and assurances, as Lessor
reasonably may require.
(b) All representations and warranties provided by Lessee in favor of Lessor in
any of the Lease Documents shall be true and correct on the effective date of
the related Acceptance Certificate (Lessee’s execution and delivery of the
Acceptance Certificate shall constitute Lessee’s acknowledgment of the same).
(c) There shall be no Default or Event of Default under the Schedule or any
other Lease Documents. The Equipment shall have been delivered to and accepted
by Lessee, as evidenced by the Acceptance Certificate, and shall be in the
condition and repair required hereby; and on the effective date of such
Acceptance Certificate Lessor shall have received good title to the Equipment
described therein, free and clear of any claims, liens, attachments, rights of
others and legal processes (“Liens”).
6. ACCEPTANCE UNDER LEASE. Lessor hereby appoints Lessee as Lessor’s agent for
the sole purpose of accepting delivery of the Equipment from the Supplier. Upon
delivery, Lessee shall inspect and, if conforming to the condition required by
the applicable Supply Contract, accept the Equipment and execute and deliver to
Lessor an Acceptance Certificate describing such Equipment. The Acceptance
Certificate will evidence Lessee’s unconditional and irrevocable acceptance
under the Schedule of the Equipment described therein. However, if Lessee fails
to accept delivery of any item of the Equipment, or accepts such Equipment but
fails to satisfy any or all of the other conditions set forth in Section 5,
Lessor shall have no obligation to purchase or lease such Equipment. In such
event, Lessor’s rights shall include, among other things, the right to demand
that Lessee (a) fully assume all obligations as purchaser of the Equipment, with
the effect of causing Lessor to be released from any liability relating thereto,
(b) immediately remit to Lessor an amount sufficient to reimburse it for all
advance payments, costs, taxes or other charges paid or incurred with respect to
the Equipment (including any of such amounts paid by Lessor to Supplier under
the Supply Contract or as a reimbursement to Lessee), together with interest at
the Late Charge Rate accruing from the date or dates such amounts were paid by
Lessor until indefeasibly repaid by Lessee in full, and
(c) take all other actions necessary to accomplish such assumption.
7. USE AND MAINTENANCE. (a) Lessee shall (i) use the Equipment solely in the
continental United States and in the conduct of its business, for the purpose
for which the Equipment was designed, in a careful and proper manner, and shall
not permanently discontinue use of the Equipment; (ii) operate, maintain,
service and repair the Equipment, and maintain all records and other materials
relating thereto, (A) in accordance and consistent with (1) the Supplier’s
recommendations and all maintenance and operating manuals or service agreements,
whenever furnished or entered into, including any subsequent amendments or
replacements thereof, issued by the Supplier or service provider, (2) the
requirements of all applicable insurance policies, (3) the Supply Contract, so
as to preserve all of Lessee’s and Lessor’s rights thereunder, including all
rights to any warranties, indemnities or other rights or remedies, (4) all
applicable laws, and (5) the prudent practice of other similar companies in the
same business as Lessee, but in any event, to no lesser standard than that
employed by Lessee for comparable equipment owned or leased by it; and
(B) without limiting the foregoing, so as to cause the Equipment to be in good
repair and operating condition and in at least the same condition as when
delivered to Lessee hereunder, except for ordinary wear and tear resulting
despite Lessee’s full compliance with the terms hereof; (iii) not change the
location of any Equipment as specified in the Schedule without the prior written
consent of Lessor which shall not be unreasonably withheld. To the extent such
Equipment constitutes rolling stock,

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Lessee shall provide written notice only to the extent the location of the
principal garage or jurisdiction of titling of any Equipment is changed.
(iv) not attach or incorporate the Equipment to or in any other property in such
a manner that the Equipment may be deemed to have become an accession to or a
part of such other property; and (v) if requested by Lessor, cause each
principal item of the Equipment to be continually marked, in a plain and
distinct manner, with the name of Lessor followed by the words “Owner and
Lessor,” or other appropriate words designated by Lessor on labels furnished by
Lessor.
(b) Within a reasonable time, Lessee will replace any parts of the Equipment
which become worn out, lost, destroyed, damaged beyond repair or otherwise unfit
for use, by new or reconditioned replacement parts which are free and clear of
all Liens and have a value, utility and remaining useful life at least equal to
the parts replaced (assuming that they were in the condition required by this
Lease). Any modification or addition to the Equipment that is required by this
Lease shall be made by Lessee. Title to all such parts, modifications and
additions to the Equipment shall immediately vest in Lessor, without any further
action by Lessor or any other person, and they shall be deemed incorporated in
the Equipment for all purposes of the related Schedule. Unless replaced in
accordance with this Section, Lessee shall not remove any parts originally
installed with the Equipment or from time to time attached to the Equipment, if
such parts are essential to the operation of the Equipment, are required by any
other provision of this Lease, or cannot be detached from the Equipment without
materially interfering with the operation of the Equipment or adversely
affecting the value, utility and remaining useful life which the Equipment would
have had with or without the addition of such parts. Except as permitted in this
Section, Lessee shall not make any material alterations to the Equipment without
the prior written consent of Lessor, except to improve the performance of the
equipment, or compensate or correct for any deficiencies in the equipment
causing performance issues.
(c) Upon three business day’s notice, Lessee shall afford Lessor and/or its
designated representatives access to the premises where the Equipment is located
for the purpose of inspecting such Equipment and all applicable maintenance or
other records relating thereto at any reasonable time during normal business
hours; provided, however, if a Default or Event of Default shall have occurred
and then be continuing, no notice of any inspection by Lessor shall be required.
8. DISCLAIMER; QUIET ENJOYMENT. THE EQUIPMENT IS LEASED HEREUNDER “AS IS, WHERE
IS”. LESSOR SHALL NOT BE DEEMED TO HAVE MADE, AND HEREBY DISCLAIMS, ANY
REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE EQUIPMENT,
INCLUDING ANY PART, OR ANY MATTER WHATSOEVER, INCLUDING, AS TO EACH ITEM OF
EQUIPMENT, ITS DESIGN, CONDITION, MERCHANTABILITY, FITNESS FOR ANY PARTICULAR
PURPOSE, TITLE, ABSENCE OF ANY PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT OR
LATENT DEFECT (WHETHER OR NOT DISCOVERABLE BY LESSEE), COMPLIANCE OF SUCH ITEM
WITH ANY APPLICABLE LAW, CONFORMITY OF SUCH ITEM TO THE PROVISIONS AND
SPECIFICATIONS OF ANY PURCHASE DOCUMENT OR TO THE DESCRIPTION SET FORTH IN THE
RELATED SCHEDULE OR ANY OF THE OTHER LEASE DOCUMENTS, OR ANY INTERFERENCE OR
INFRINGEMENT, (EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION , OR ARISING FROM
ANY COURSE OF DEALING OR USAGE OF TRADE, NOR SHALL LESSOR BE LIABLE, FOR ANY
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR STRICT OR ABSOLUTE
LIABILITY IN TORT; AND LESSEE HEREBY WAIVES ANY CLAIMS ARISING OUT OF ANY OF THE
FOREGOING. Without limiting the foregoing, Lessor will not be responsible to
Lessee or any other person with respect to, and Lessee agrees to bear sole
responsibility for, any risk or other matter that is the subject of Lessor’s
disclaimer; and Lessor’s agreement to enter into this Lease and any Schedule is
in reliance upon the freedom from and complete negation of liability or
responsibility for the matters so waived or disclaimed herein or covered by the
indemnity in this Lease. So long as no Event of Default has occurred, Lessee may
exercise Lessor’s rights, if any, under any warranty of Supplier with respect to
the Equipment. Lessee’s exercise of such rights shall be at its sole risk, shall
not result in any prejudice to Lessor, and may be exercised only during the term
of the related Schedule. Lessee shall not attempt to enforce any such warranty
by legal proceeding without Lessor’s prior written approval, which shall not be
unreasonably withheld. Lessor warrants that during the term of each Schedule, so
long as no Event of Default has occurred, Lessee’s possession and use of the
Equipment leased thereunder shall not be interfered with by Lessor or anyone
rightfully claiming an interest through Lessor. THE PRECEDING WARRANTY IS IN
LIEU OF ALL OTHER WARRANTIES BY LESSOR, WHETHER WRITTEN, ORAL OR IMPLIED, WITH
RESPECT TO THIS LEASE OR THE EQUIPMENT. ANY ACTUAL OR PURPORTED BREACH OF THIS
WARRANTY SHALL NOT GIVE RISE TO ANY ABATEMENT, BUT LESSEE MAY BRING A DIRECT
CAUSE OF ACTION AGAINST LESSOR FOR ANY ACTUAL DAMAGES DIRECTLY RESULTING FROM
ANY SUCH BREACH.
9. FEES AND TAXES. Lessee agrees : (a) (i) unless not permitted by law, Lessor
shall file directly with all appropriate taxing authorities all declarations,
returns, inventories and other documentation with respect to any personal
property taxes (or any other taxes in the nature of or imposed in lieu of
property taxes) due or to become due with respect to the Equipment or this
Lease, and (ii) if not so permitted by law, to promptly notify Lessor and
provide it with all information required in order for Lessor to timely file all
such declarations, returns, inventories, or other documentation, and (iii) to
pay on or before the date when due all such taxes assessed, billed or otherwise
payable with respect to the Equipment directly to the appropriate taxing
authorities,
(b) (i) to pay when due and to defend and (ii) indemnify Lessor, on a net
after-tax basis, against liability for all license and/or registration fees,
assessments, and sales, use, property, excise, privilege, value added and other
taxes or other charges or fees now or hereafter imposed by any governmental body
or agency upon the Equipment or with respect to manufacturing, ordering,
shipment, purchase, ownership, delivery, installation, leasing, operation,
possession, use, return, or other disposition thereof or the rentals hereunder
(other than taxes on or measured solely by the net income of Lessor). Lessor
agrees to cooperate fully with Lessee in any such contest challenge or appeal,
and Lessee agrees to promptly indemnify Lessor for all reasonable expenses
incurred by Lessor in the course of such cooperation,
(c) to indemnify Lessor against any penalties, charges, interest or costs
imposed with respect to any items referred to in (a) and (b) above (the items
referred to in (a), (b), and (c) above being referred to herein as
“Impositions”). Any Impositions which are not paid when due and which are paid
by Lessor shall, at Lessor’s option, become immediately due from Lessee to
Lessor. If Lessee fails to pay any such charges when due, except any Imposition
being contested in good faith by appropriate proceedings as provided for above,
Lessor may, at its option, make such payment, in which event the amount so paid
(including any penalty or interest incurred as a result of Lessee’s failure),
plus interest thereon at the Late Charge Rate, shall be paid by Lessee to Lessor
with the next periodic payment of Rent. In addition, Lessee shall pay, indemnify
Lessor for, and hold Lessor harmless on a net after-tax basis from and against,
any Imposition on or measured by the net income of Lessor imposed against Lessor
by any local or foreign government or other local or foreign taxing authority if
and to the extent that Lessor would not have incurred such Imposition but for
the operation or presence of the Equipment within the jurisdiction imposing it.
Lessee’s obligations under this Section shall survive any expiration,
cancellation or other termination of this Lease, and

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(d) As used herein, the term “Lessor” shall mean and include Lessor and the
consolidated federal taxpayer group of which Lessor is a member.
10. TITLE; GRANTING CLAUSE. (a) Lessee and Lessor intend that (i) each Schedule,
incorporating by reference the terms of this Lease, constitutes a true “lease”
and a “finance lease” as such terms are defined in Article 2A and not a sale or
retention of a security interest; and (ii) Lessor is and shall remain the owner
of each item of Equipment (unless sold by Lessor pursuant to any Lease
Document), and Lessee shall not acquire any right, title or interest in or to
such Equipment except the right to use it in accordance with the terms of the
related Schedule; as such, throughout the term of this Lease, Lessee agrees to
report the transaction as a lease for federal income tax purpose.
(b) In order to secure the prompt payment of the Rent and all of the other
amounts from time to time outstanding with respect hereto and to each Schedule,
and the performance and observance by Lessee of all of the provisions hereof and
thereof and of all of the other Lease Documents, Lessee hereby collaterally
assigns, grants, and conveys to Lessor, a security interest in and lien on all
of Lessee’s right, title and interest in and to all of the following (whether
now existing or hereafter created, and including any other collateral described
on any rider hereto; the "Collateral”): (i) (if contrary to the parties’
intentions a court determines that such Schedule is not a true “lease” under the
UCC) the Equipment described in such Schedule or otherwise covered thereby, and
all additions, attachments, accessories and accessions thereto whether or not
furnished by the Supplier; (ii) all subleases, chattel paper, accounts, security
deposits, and general intangibles relating thereto, and any and all
substitutions, replacements or exchanges for any such item of Equipment or other
collateral, in each such case in which Lessee shall from time to time acquire an
interest; and (iii) any and all insurance and/or other proceeds of the property
and other collateral in and against which a security interest is granted
hereunder. The collateral assignment, security interest and lien granted herein
shall survive the termination, cancellation or expiration of each Schedule until
such time as Lessee’s obligations thereunder and under the other Lease Documents
are fully and indefeasibly discharged.
(c) If contrary to the parties’ intentions a court determines that any Schedule
is not a true “lease”, the parties agree that in such event Lessee agrees that:
(i) with respect to the Equipment, in addition to all of the other rights and
remedies available to Lessor hereunder upon the occurrence of a Default, Lessor
shall have all of the rights and remedies of a first priority secured party
under the UCC; and (ii) any obligation to pay Basic Rent or any Other Payment,
to the extent constituting the payment of interest, shall be at an interest rate
that is equal to the lesser of the maximum lawful rate permitted by applicable
law or the effective interest rate used by Lessor in calculating such amounts.
11. INSURANCE. Upon acceptance under a Schedule, until the Equipment is returned
to, and received and accepted by Lessor in accordance with this Lease, Lessee
shall maintain all-risk insurance coverage with respect to the Equipment
insuring against, among other things: (a) any casualty to the Equipment (or any
portion thereof), including, but not limited to, loss or damage due to fire and
all those risks normally included in extended coverage, malicious mischief and
vandalism, on an agreed-value basis for not less than the greater of (i) the
then Stipulated Loss Value (as determined pursuant to Section 12) or (ii) the
full replacement value of the Equipment; and
(b) any commercial liability, either alleged or actual, direct or vicarious,
arising out of or in connection with the use, possession, or ownership of the
Equipment, including, but not limited to, both bodily injury and property damage
with a combined single limit per occurrence of not less than the amount
specified in the Schedule. All insurance policies (including endorsements)
providing the insurance required herein shall (i) be in form and amount
reasonably satisfactory to Lessor, and written by insurers of recognized
reputation and responsibility satisfactory to Lessor (at a minimum such insurer
shall carry a current Financial Strength Rating by A.M. Best Company of at least
“A” for a general policyholder and a Financial Size Category financial rating as
determined by A.M. Best Company of “XI” or greater), (ii) be endorsed to name
Lessor as an additional insured for liability coverage and primary loss payee
for physical damage coverage (but without responsibility for premiums),
(iii) provide that any amount payable under the required casualty coverage shall
be paid directly to Lessor as sole loss payee, (iv) provide for thirty
(30) days’ written notice by such insurer of cancellation, material change, or
non-renewal, (v) include a severability of interest clause providing that such
policy shall operate in the same manner as if there were a separate policy
covering each insured, (vi) waive any right of set-off against Lessee or Lessor,
and any rights of subrogation against Lessor, (vii) provide that with respect to
the interests of Lessor in such policies, the insurance shall not be invalidated
by any action or inaction of Lessee or any other person operating or in
possession of the Equipment regardless of any breach or violation of any
warranties, declarations or conditions contained in such policies by or binding
upon Lessee or any other person operating or in possession of the Equipment, and
(viii) be primary with respect to any insurance maintained by Lessor, not
subject to any co-insurance clause and shall be without right of contribution
from any other insurance. All insurance proceeds payable under the requisite
policies shall be payable in U.S. Dollars, with a deductible, if applicable, in
an aggregate amount not greater than the amount set forth in the applicable
Schedule. Lessee shall cause to be provided to Lessor, not less than thirty
(30) days prior to the scheduled expiration or lapse of such insurance coverage,
evidence satisfactory to Lessor of renewal or replacement coverage. Lessee
agrees that it shall obtain and maintain such other coverages (including
pollution coverage), or cause adjustments to be made to the scope, amount or
other aspects of the existing coverages, promptly upon Lessor’s request, as and
when Lessor, in its sole discretion, deems such additional coverages or
modifications to be appropriate due to, among other things, any changes in
applicable law, prudent industry practices, Lessee’s anticipated use of the
Equipment or other circumstances deemed pertinent by Lessor. The proceeds of
such insurance payable as a result of loss of or damage to the Equipment shall
be applied as required by the provisions of Section 12 hereof.
(c) At all times during which insurance coverage is required under this Section
or applicable Schedule, Lessee shall provide to Lessor a valid Certificate of
Insurance which describes the Equipment insured, clearly evidences the insurance
coverage and policy limits required either by this Section and / or the
applicable Schedule.
12. LOSS AND DAMAGE. (a) At all times until the Equipment is returned to and
accepted by Lessor in accordance with this Lease, Lessee shall bear the risk of
loss, theft, confiscation, taking, unavailability, damage or partial destruction
of the Equipment and shall not be released from its obligations under any
Schedule or other Lease Document in any such event.
(b) Lessee shall provide prompt written notice to Lessor of any Total Loss or
any material damage to the Equipment. Any such notice must be provided together
with any damage reports provided to any governmental authority, the insurer or
Supplier, and any documents pertaining to the repair of such damage, including
copies of work orders, and all invoices for related charges.
(c) Without limiting any other provision hereof, Lessee shall repair all damage
to any item of Equipment from any and all causes, other than a Total Loss, so as
to cause it to be in the condition and repair required by this Lease.
(d) A “Total Loss” shall be deemed to have occurred to an item of Equipment
upon: (i) the actual or constructive total loss of any item of the Equipment,
(ii) the loss, disappearance, theft or destruction of any item of the Equipment,
or damage to

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any item of the Equipment that is uneconomical to repair or renders it unfit for
normal use, or (iii) the condemnation, confiscation, requisition, seizure,
forfeiture or other taking of title to or use of any item of the Equipment or
the imposition of any Lien thereon by any governmental authority.
(e) On the next rent payment date following a Total Loss (a “Loss Payment
Date”), Lessee shall pay to Lessor the Basic Rent due on that date plus the
Stipulated Loss Value of the item or items of the Equipment with respect to
which the Total Loss has occurred (the “Lost Equipment”), together with any
Other Payments due hereunder with respect to the Lost Equipment. Upon making
such payment, (i) Lessee’s obligation to pay future Basic Rent shall terminate
solely with respect to the items of Lost Equipment so paid for, but Lessee shall
remain liable for, and pay as and when due, all Other Payments, and (ii) Lessor
shall convey to Lessee all of Lessor’s right, title and interest in the Lost
Equipment, “AS IS WHERE IS”, but subject to the requirements of any third party
insurance carrier in order to settle an insurance claim. As used in this Lease,
“Stipulated Loss Value” shall mean the product of the Total Invoice Cost of the
Lost Equipment, times the percentage factor applicable to the Loss Payment Date,
as set forth on the schedule of Stipulated Loss Values attached to such
Schedule. After the final rent payment date of the original term or any renewal
term of a Schedule, the Stipulated Loss Value shall be determined as of the last
rent payment date during the applicable term of such Schedule, and the
applicable percentage factor shall be the last percentage factor set forth on
the schedule of Stipulated Loss Values attached to such Schedule.
(f) Lessor shall be under no duty to Lessee to pursue any claim against any
person in connection with a Total Loss or other loss or damage.
(g) If Lessor receives a payment under an insurance policy required under this
Lease in connection with any Total Loss or other loss of or damage to an item of
Equipment, and such payment is both unconditional and indefeasible, then
provided Lessee shall have complied with the applicable provisions of this
Section, Lessor shall either (i) if received pursuant to a Total Loss, remit
such proceeds to Lessee up to an amount equal to the amount paid by Lessee to
Lessor as the Stipulated Loss Value, or credit such proceeds against any amounts
owed by Lessee pursuant to Section 12(e), or (ii) if received with respect to
repairs made pursuant to Section 12(c), remit such proceeds to Lessee up to an
amount equal to the amount of the costs of repair actually incurred by Lessee,
as established to Lessor’s satisfaction. Any excess insurance proceeds shall be
returned to Lessee, so long as no Default has occurred and is continuing.
13. REDELIVERY. With respect to each Schedule, unless otherwise provided in this
Lease, Lessee agrees that (a) it shall provide Lessor with written notice of the
scheduled expiration of the then existing term of lease with respect to such
Schedule, and Lessee’s assurance that the Equipment leased thereunder shall be
redelivered to Lessor in accordance with the provisions of this Lease (including
any Rider) (the “Return Notice”);
(b) such Return Notice shall be delivered to Lessor at least one hundred eighty
(180) days, but no more than three hundred sixty (360) days, prior to such
expiration date; and
(c) if Lessee fails to deliver such Return Notice to Lessor, at Lessor’s sole
option, as evidenced by Lessor’s written acknowledgment thereof, Lessee shall be
deemed to have renewed such Schedule for a term of six (6) months commencing on
the day next succeeding such expiration date, with rentals payable in the same
amount and manner as is in the Basic Rent payable during the then expiring term;
provided, however that Lessor may elect to terminate such extension at any time
upon ten (10) days written notice to Lessee. During such extension period, the
terms and conditions of this Lease (including, without limitation, the
provisions of this Section) and the related Schedule shall continue to be
applicable. Solely for purposes of this Section 13, any such extension shall be
deemed a renewal of the term of such Schedule.
(d) Upon the expiration or earlier cancellation or termination of any Schedule,
Lessee shall return the Equipment to Lessor, (i) in the same condition as when
delivered to Lessee under the related Schedule, ordinary wear and tear resulting
from proper use excepted, (ii) in such operating condition as is capable of
performing its originally intended use, (iii) having been used, operated,
serviced and repaired in accordance and otherwise complying with Section 7
hereof, (iv) free and clear of all Liens whatsoever, and (v) to such place(s)
within the continental United States as Lessor shall specify.
(e) Lessee shall also deliver all related records and other data to Lessor,
including all records of maintenance, modifications, additions and major
repairs, and any maintenance and repair manuals (collectively, the “Records”).
All manuals or other documents delivered to Lessor that are subject to periodic
revision will be fully up-to-date and current to the latest revision standard of
any particular manual or document.
(f) In addition to Lessor’s other rights and remedies hereunder, if the
Equipment is not returned in a timely fashion, or if repairs are necessary to
place any item of Equipment in the condition required in this Section, Lessee
shall (i) continue to pay to Lessor per diem rent at the last prevailing lease
rate under the applicable Schedule with respect to such item of Equipment, for
the period of delay in redelivery, or for the period of time reasonably
necessary to accomplish such repairs, and (ii) pay to Lessor an amount equal to
the aggregate cost of any such repairs. Lessor’s acceptance of such rent on
account of such delay or repair does not constitute an extension or renewal of
the term of the related Schedule or a waiver of Lessor’s right to prompt return
of the Equipment in proper condition. Such amount shall be payable upon the
earlier of Lessor’s demand or the return of the Equipment in accordance with
this Lease.
(g) Not more than forty-five (45) days prior to the expiration of any Schedule,
upon the written request of Lessor, Lessee shall certify to Lessor that all of
the Equipment is in the condition required by this Lease, or indicate what
maintenance or repair is needed to bring the Equipment, or any item, to the
specified condition. Upon Lessor’s request, Lessee shall confirm to Lessor the
location of the Equipment and shall, at any reasonable time and from time to
time, upon reasonable prior written notice to Lessee, make the Equipment and/or
the Records available to Lessor for inspection. Lessee shall reimburse Lessor
for the cost of such inspection within ten (10) days of demand. If the results
of such inspection indicate that any item of Equipment has not been maintained
or returned in accordance with the provisions of this Lease, in addition to all
other Rent due under the Lease, Lessee shall pay to Lessor within ten (10) days
of demand, as liquidated damages, the estimated cost of servicing or repairing
any such non-complying item. Such amount shall be determined by Lessor’s
obtaining two quotes for such service or repair work and taking their average.
Lessee shall bear the cost, if any, incurred by Lessor in obtaining such quotes.
(h) Without limiting any other terms or conditions of this Lease, the provisions
of this Section are of the essence of each Schedule, and upon application to any
court of equity having jurisdiction, Lessor shall be entitled to a decree
against Lessee requiring Lessee’s specific performance of its agreements in this
Section.
14. INDEMNITY. Lessee shall indemnify, defend and keep harmless Lessor, and any
Assignee (as defined in Section 17), and their respective parent corporations,
affiliates, shareholders, officers, directors, administrators, managers, agents,
employees, servants successors and assigns (each, an “Indemnitee”), from and
against any and all Claims (other than such as may directly and proximately
result from the actual, but not imputed, gross negligence or willful misconduct
of such Indemnitee), by paying, on a net after-tax basis, or otherwise
discharging same, when and as such

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Claims shall become due. Lessee agrees that the indemnity provided for in this
Section includes the agreement by Lessee to indemnify each Indemnitee from the
consequences of each Indemnitee’s own simple negligence, whether that negligence
is the sole or concurring cause of the Claims, and to further indemnify each
such Indemnitee with respect to Claims for which such Indemnitee is strictly
liable. Lessor shall give Lessee prompt notice of any Claim hereby indemnified
against and Lessee shall be entitled to control the defense of and/or to settle
any Claim, in each case, so long as (i) no Default or Event of Default has
occurred and is then continuing, and no action or inaction by Lessee has
occurred which will result in a Default or Event of Default with the passage of
time, (ii) Lessee confirms, in writing, its unconditional and irrevocable
commitment to defend, fully indemnify and hold harmless each Indemnitee with
respect to such Claim, (iii) Lessee is financially capable of satisfying its
obligations under this Section, (iv) Lessee agrees to reimburse Lessor for all
legal expenses paid for or incurred by Lessor related to any given Claim, and
(v) Lessee agrees in writing to provide status reports regarding the Claim to
Lessor, Lessor’s counsel and Lessor’s insurance adjuster as requested by Lessor,
until such time as the Claim has been fully resolved or Lessor has been
dismissed from the Claim with prejudice. The term “Claims”, as used herein,
shall mean all claims, allegations, harms, judgments, settlements, suits,
actions, debts, obligations, damages (whether incidental, consequential or
direct), demands (for compensation, indemnification, reimbursement or
otherwise), losses, penalties, fines, liabilities (including strict liability),
charges that Lessor has incurred or for which it is responsible, in the nature
of interest, Liens, and costs (including attorneys’ fees and disbursements and
any other legal or non-legal expenses of investigation or defense of any Claim,
whether or not such Claim is ultimately defeated or enforcing the rights,
remedies or indemnities provided for hereunder, or otherwise available at law or
equity to Lessor), of whatever kind or nature, contingent or otherwise, matured
or unmatured, foreseeable or unforeseeable, by or against any person, arising on
account of (a) any Lease Document, including the performance, breach (including
any Default or Event of Default) or enforcement of any of the terms thereof, or
(b) the Equipment, or any part or other contents thereof, any substance at any
time contained therein or emitted therefrom, including any hazardous substances,
or the premises at which the Equipment may be located from time to time, or
(c) the ordering, acquisition, delivery, installation or rejection of the
Equipment, the possession of any property to which it may be attached from time
to time, maintenance, use, condition, ownership or operation of any item of
Equipment, and by whomsoever owned, used, possessed or operated, during the term
of any Schedule with respect to that item of Equipment, the existence of latent
and other defects (whether or not discoverable by Lessor or Lessee) any claim in
tort for negligence or strict liability, and any claim for patent, trademark or
copyright infringement, or the loss, damage, destruction, theft, removal,
return, surrender, sale or other disposition of the Equipment, or any item
thereof, including, Claims involving or alleging environmental damage, or any
criminal or terrorist act, or for whatever other reason whatsoever. If any Claim
is made against Lessee or an Indemnitee, the party receiving notice of such
Claim shall promptly notify the other, but the failure of the party receiving
notice to so notify the other shall not relieve Lessee of any obligation
hereunder. Lessee acknowledges and agrees that any resolution of any Claim shall
include a complete written release of all Indemnitees from any and all liability
arising from or as a result of said Claim.
15. DEFAULT. A default shall be deemed to have occurred hereunder and under a
Schedule upon the occurrence of any of the following (each, an “Event of
Default”): (a) Lessee shall fail to make any payment of Rent hereunder or under
an Equipment Schedule within ten (10) days after the same shall have become due
(in good, collected and indefeasible funds);
(b) failure to maintain, use or operate the Equipment in compliance with
applicable law;
(c) failure to obtain, maintain and comply with all of the insurance coverages
required under this Lease;
(d) any transfer or encumbrance, or the existence of any Lien, that is
prohibited by this Lease;
(e) failure to return the Equipment to Lessor on the date and in the manner
required by this Lease;
(f) a payment or other uncured default, after any applicable grace period, by
Lessee under any loan, lease, guaranty or other financial obligation to Lessor
or its affiliates, including but not limited to SunTrust Bank, which default
entitles the other party to exercise remedies;
(g) a payment default by Lessee under any material loan, lease, guaranty or
other material financial obligation in excess of $5,000,000.00 to any third
party which default entitles the other party to such obligation to exercise
remedies;
(h) a material inaccuracy in any representation or breach of warranty by Lessee
(including any false or misleading representation or warranty) in any financial
statement or Lease Document, including any omission of any substantial
contingent or unliquidated material liability or material Claim against Lessee;
(i) the commencement of any bankruptcy, insolvency, receivership or similar
proceeding by or against Lessee or any of its properties or business (unless, if
involuntary, the proceeding is dismissed within sixty (60) days of the filing
thereof) or the rejection of this Lease or any other Lease Document in any such
proceeding;
(j) the failure by Lessee generally to pay its debts as they become due or its
admission in writing of its inability to pay the same;
(k) Lessee shall (i) enter into any transaction of merger or consolidation,
unless Lessee shall be the surviving corporation; (such actions being referred
to as an “Event”), and the surviving entity is organized and existing under the
laws of the United States or any state, and not less than sixty (60) days prior
to such Event: (A) the surviving corporation executes and delivers to Lessor
(1) an agreement satisfactory to Lessor, in its sole discretion, containing such
surviving corporation’s full and total assumption, and its agreement to pay,
perform, comply with and otherwise be liable for, pursuant to the terms and
conditions of the Lease, all of Lessee’s obligations having previously arisen,
or then or thereafter arising, under any and all of the Lease Documents, and (2)
any and all other documents, agreements, instruments, certificates, opinions and
filings requested by Lessor; and (B) Lessor, in its sole descretion, is
satisfied as to the creditworthiness of such surviving corporation , and as to
such surviving corporation’s conformance to the other standard criteria then
used by Lessor when approving transactions similar to the transactions
contemplated in this Lease; (ii) cease to do business as a going concern,
liquidate, or dissolve; (iii) sell, transfer, or otherwise dispose of all or
substantially all of its assets or property, or enter into a leveraged buyout of
all or substantially all of its assets or property; (iv) change the form of
organization of its business; (v) if privately owned, permit any substantial
change in the ownership or control of its capital stock or membership interests
such that less than 50% of such equity interest remain with the holder(s) of
such equity interests as of the date of this Lease; or (vi) make any change,
without the prior written consent of the Lessor, such that PowerSecure
International, Inc. is no longer subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended, or no longer registered under
Section 12 of the Securities Act of 1933, as amended, if it was so subject or
registered as of the date of this Lease, unless after giving effect to such
change, PowerSecure International, Inc.’s consolidated Debt to Tangible Net
Worth does not equal or exceeds twice the ratio of PowerSecure International,
Inc.’s Debt to Tangible Net Worth as of the date of this Lease. As used herein,
“Debt” shall mean Lessee’s total liabilities which, in accordance with GAAP,
would be included in the liability side of a balance sheet; and "Tangible Net
Worth” shall mean Shareholders’ Equity of PowerSecure International, Inc. minus
Intangible Assets of PowerSecure International, Inc. “Intangible Assets” means
assets that are considered to be intangible assets under GAAP, including

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customer lists, goodwill, computer software, copyrights, trade names,
trademarks, patents, franchises, licenses, unamortized deferred charges,
unamortized debt discount and capitalized research and development costs;
provided, however, Intangible Assets shall not include deferred income taxes,
prepaid expenses and PowerSecure International, Inc.’s investment in
unconsolidated Affiliates. Accounting terms used herein shall be as defined, and
all calculations hereunder shall be made, in accordance with GAAP.
(l) failure to satisfy the requirements of any financial covenants set forth
herein, or in any Rider to this Lease or any Schedule;
(m) failure by Lessee to notify Lessor of any Default or Event of Default within
ten (10) business days of its occurrence; or
(n) breach by Lessee of any other covenant, condition or agreement (other than
those in items (a)-(n) under this Lease or any of the other Lease Documents that
continues for thirty (30) days after Lessor’s written notice to Lessee (but such
notice and cure period will not be applicable unless such breach is curable by
practical means within such notice period).
16. REMEDIES. (a) If an Event of Default occurs with respect to any Schedule,
the Lessor thereunder may (in its sole discretion) declare this Lease and any
Schedule to be in default and exercise any one or more of the following remedies
with respect to such Schedule and any or all other Schedules to which such
Lessee is then a party: (i) proceed at law or in equity, to enforce specifically
Lessee’s performance or to recover damages; (ii) declare each such Schedule in
default, and cancel each such Schedule or otherwise terminate Lessee’s right to
use the Equipment and Lessee’s other rights, but not its obligations, thereunder
and Lessee shall immediately assemble, make available and, if Lessor requests,
return the Equipment to Lessor in accordance with the terms of this Lease;
(iii) enter any premises where any item of Equipment is located and take
immediate possession of and remove (or disable in place) such item (and/or any
unattached parts) by self-help, summary proceedings or otherwise, without
liability; (iv) use Lessee’s premises for storage without liability or cost;
(v) sell, re-lease or otherwise dispose of any or all of the Equipment, whether
or not in Lessor’s possession, at public or private sale, with or without notice
to Lessee, and apply or retain the net proceeds of such disposition, with Lessee
remaining liable for any deficiency and with any excess being retained by
Lessor; (vi) enforce any or all of the preceding remedies with respect to any
related Collateral, and apply any deposit or other cash collateral, or any
proceeds of any such Collateral, at any time to reduce any amounts due to
Lessor; (vii) demand and recover from Lessee all Liquidated Damages and all
other payments whenever the same shall be due; and (viii) exercise any and all
other remedies allowed by applicable law, including the UCC.
     (b) “Liquidated Damages” shall mean the liquidated damages (all of which,
Lessee hereby acknowledges, are damages to be paid in lieu of future Basic Rent
and are reasonable in light of the anticipated harm arising by reason of an
Event of Default, and are not a penalty) described in parts (i) or (ii) below,
depending upon the recovery and disposition of the Equipment leased under the
applicable Schedule.
          (i) If Lessor recovers the Equipment and disposes of it by a lease or
elects not to dispose of the Equipment, an amount equal to the sum of (A) any
accrued and unpaid Rent as of the date Lessor recovers possession of the
Equipment, plus (B) the present value as of such date of the total Basic Rent
for the then remaining term of such Schedule, minus (C) either, as applicable,
(1) the present value, as of the commencement date of any substantially similar
re-lease of the Equipment, of the re-lease rent payable for that period,
commencing on such date, which is comparable to the then remaining term of such
Schedule or (2) the present value, as of that certain date which may be
determined by taking into account Lessor’s having a reasonable opportunity to
remarket the Equipment, of the “market rent” for such Equipment (as computed
pursuant to Article 2A) in the continental United States on that date, computed
for that period, commencing on such date, which is comparable to the then
remaining term of such Schedule; provided, however, Lessee acknowledges that if
Lessor is unable after reasonable effort to dispose of the Equipment at a
reasonable price and pursuant to other reasonable terms, or the circumstances
reasonably indicate that such an effort will be unavailing, the “market rent” in
such event will be deemed to be $0.00, but in the event that Lessor does
eventually re-lease or otherwise dispose of the Equipment, it will apply the net
proceeds of such disposition, to the extent received in good and indefeasible
funds, as a credit or reimbursement, as applicable, in a manner consistent with
the applicable provisions of Article 2A. Any amounts discounted to present
value, shall be discounted at the Federal Reserve H.15 Statistical Release
interpolated to the nearest month and proximate closest to the term of the
Lease, that was in effect on the Commencement Date.
          (ii) If Lessee fails to return the Equipment in the manner and
condition required by this Lease, or Lessor recovers and sells the Equipment, an
amount calculated as the sum of the greater of either (A) the Stipulated Loss
Value of the Equipment (determined as of the next rent payment date after the
date of the occurrence of the subject Event of Default), together with all other
Rent due with respect to the related Schedule as of such determination date,
less a credit for any net disposition proceeds, if applicable pursuant to the
application provisions in the next sentence, or (B) all sums due and to become
due under such Equipment Schedule for the full term there of (including any tax
indemnities becoming due as a result of the Default, and any mandatory purchase
or renewal options which Lessee has contracted to pay) (provided that all sums
becoming due after the occurrence of such Default shall be discounted to present
value as of the date of payment by Lessee). If Lessor demands the liquidated
damages under this part (ii), and recovers and sells the Equipment, any proceeds
received in good and indefeasible funds shall be applied by Lessor, with respect
to the related Schedule, first, to pay all Enforcement Costs (defined in
Section 16(c)), second, to pay to Lessor an amount equal to any unpaid Rent due
and payable, together with the liquidated damage amounts specified in this part
(ii), to the extent not previously paid, third, to pay to Lessor any interest
accruing on the amounts covered by the preceding clauses, at the Late Charge
Rate, from and after the date the same becomes due, through the date of payment,
and fourth, (1) if the Lessor under such Schedule is also the Lessor under any
other Schedules (whether by retaining the same, or as Assignee), to satisfy any
remaining obligations under any or all such other Schedules, or (2) if such
Lessor is not the Lessor under any other Schedule, or if Lessee’s obligations to
such Lessor under such other Schedules have been fully and indefeasibly
satisfied, to reimburse Lessee for such amounts to the extent paid by Lessee as
liquidated damages pursuant to this part (ii).
     (c) A cancellation of any Schedule shall occur only upon written notice by
Lessor to Lessee. Unless already specifically provided for in Section 16(b),
Lessee shall also be liable for all of the following (“Enforcement Costs”):
(i) all unpaid Rent due before, during or after exercise of any of the foregoing
remedies, and (ii) all reasonable legal fees (including consultation, drafting
notices or other documents, expert witness fees, sending notices or instituting,
prosecuting or defending litigation or arbitration) and other enforcement costs
and expenses incurred by reason of any Default or Event of Default or the
exercise of Lessor’s rights or remedies, including all reasonable expenses
incurred in connection with the return or other recovery of any Equipment in
accordance with the terms of this Lease or in placing

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such Equipment in the condition required hereby, or the sale, re-lease or other
disposition (including but not limited to costs of transportation, possession,
storage, insurance, taxes, lien removal, repair, refurbishing, advertising and
brokers’ fees), and all other pre-judgment and post-judgment enforcement related
actions taken by Lessor or any actions taken by Lessor in any bankruptcy case
involving Lessee, the Equipment, or any other person. Late Charges shall accrue
with respect to any amounts payable under this Section for as long as such
amounts remain outstanding, and shall be paid by Lessee upon demand. No right or
remedy is exclusive and each may be used successively and cumulatively. Any
failure to exercise the rights granted hereunder upon any Default or Event of
Default shall not constitute a waiver of any such right. The execution of a
Schedule shall not constitute a waiver by Lessor of any pre-existing Default or
Event of Default. With respect to any disposition of any Equipment or Collateral
pursuant to this Section, (i) Lessor shall have no obligation, subject to the
requirements of commercial reasonableness, to clean-up or otherwise prepare the
same for disposition, (ii) Lessor may comply with any applicable law in
connection with any such disposition, and any actions taken in connection
therewith shall not be deemed to have adversely affected the commercial
reasonableness of any disposition thereof, (iii) Lessor may disclaim any title
or other warranties in connection with any such disposition, (iv) if Lessor
purchases any of the Equipment or Collateral at a public or private sale
pursuant hereto, Lessor may pay for the same by crediting some or all of
Lessee’s obligations under any Schedule, and (v) Lessee shall remain responsible
for any deficiency remaining after Lessor and application of any funds or
credits against Lessee’s obligations under any Schedule, and Lessor shall retain
any excess after such application.
17. ASSIGNMENT. (a) WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (WHICH SHALL NOT
UNREASONABLY BE WITHHELD), LESSEE SHALL NOT ASSIGN, DELEGATE, TRANSFER OR
ENCUMBER ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER OR UNDER ANY SCHEDULE, OR
ITS LEASEHOLD INTEREST OR ANY COLLATERAL, SUBLET THE EQUIPMENT OR OTHERWISE
PERMIT THE EQUIPMENT TO BE OPERATED OR USED BY, OR TO COME INTO OR REMAIN IN THE
POSSESSION OF, ANYONE BUT LESSEE. Without limiting the foregoing, (i) Lessee may
not attempt to dispose of any of the Equipment, and (ii) Lessee shall
(A) maintain the Equipment free from all Liens, other than Permitted Liens,
(B) notify Lessor immediately upon receipt of notice of any Lien affecting the
Equipment, and (C) defend Lessor’s title to the Equipment. A “Permitted Lien”
shall mean any Lien for Impositions, Liens of mechanics, materialmen, or
suppliers and similar Liens arising by operation of law, provided that any such
Lien is incurred by Lessee in the ordinary course of business, for sums that are
not yet delinquent or are being contested in good faith and with due diligence,
by negotiations or by appropriate proceedings which suspend the collection
thereof and, in Lessor’s sole discretion, (i) do not involve any substantial
danger of the sale, forfeiture or loss of the Equipment or any interest therein,
and (ii) for the payment of which adequate assurances or security have been
provided to Lessor. No disposition referred to in this Section shall relieve
Lessee of its obligations, and Lessee shall remain primarily liable under each
Schedule and all of the other Lease Documents.
(b) Lessor may, with written consent of Lessee which shall not be unreasonably
withheld, grant a security interest in, sell, assign, delegate or otherwise
transfer (an “Assignment”) all or any part of its interest in the Equipment,
this Lease or any Schedule and any related Lease Documents or any Rent
thereunder, or the right to enter into any Schedule, and Lessee shall perform
all of its obligations thereunder, to the extent so transferred, for the benefit
of the beneficiary of such Assignment (such beneficiary, including any
successors and assigns, an “Assignee”). Lessee agrees not to assert against any
Assignee any Abatement (without limiting the provisions of Section 2) or Claim
that Lessee may have against Lessor, and Assignee shall not be bound by, or
otherwise required to perform any of Lessor’s obligations, unless expressly
assumed by such Assignee. Lessor shall be relieved of any such assumed
obligations. If so directed in writing, Lessee shall pay all Rent and all other
sums that become due under the assigned Schedule and other Lease Documents
directly to the Assignee or any other party designated in writing by Lessor or
such Assignee. Lessee acknowledges that Lessor’s right to enter into an
Assignment is essential to Lessor and, accordingly, waives any restrictions
under applicable law with respect to an Assignment and any related remedies.
Upon the request of Lessor or any Assignee, Lessee also agrees (i) to promptly
execute and deliver to Lessor or to such Assignee an acknowledgment of the
Assignment in form and substance satisfactory to the requesting party, an
insurance certificate and such other documents and assurances reasonably
requested by Lessor or Assignee, and (ii) to comply with all other reasonable
requirements of any such Assignee in connection with any such Assignment. Upon
such Assignment and except as may otherwise be provided herein, all references
in this Lease to “Lessor” shall include such Assignee.
(c) Subject always to the foregoing, this Lease and each Schedule shall inure to
the benefit of, and are binding upon, Lessee’s and Lessor’s respective
successors and assigns.
18. MISCELLANEOUS. (a) This Lease, each Schedule, any Riders hereto or thereto
and any commitment letter between the parties, constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
shall not be amended or modified in any manner except by a document in writing
executed by both parties.
(b) Any provision of this Lease that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
(c) The representations, warranties and agreements of Lessee herein shall be
deemed to be continuing and to survive the execution and delivery of this Lease,
each Schedule and any other Lease Documents. With respect to each Schedule, the
obligations of Lessee under Sections 8, 9, 10, 12, 13 and 14 hereof, together
with any of Lessee’s obligations under the other provisions of this Lease (as
incorporated therein) which have accrued but not been fully satisfied, performed
or complied with prior to the expiration or earlier cancellation or termination
of such Schedule, shall survive the expiration or earlier cancellation or
termination thereof.
(d) All of Lessee’s obligations hereunder and under any Schedule shall be
performed at Lessee’s sole expense. Lessee shall reimburse Lessor promptly upon
demand for all expenses incurred by Lessor in connection with (i) any action
taken by Lessor at Lessee’s request, or in connection with any option, (ii) the
filing or recording of real property waivers and UCCs, (iii) any Enforcement
Costs not recovered pursuant to Section 16, (iv) all inspections, (v) all lien
search reports (and copies of filings) requested by Lessor, and (vi) upon
entering into each Schedule, pay to Lessor documentation fees in the amount as
set forth in Section 3 of such Schedule. If Lessee fails to perform any of its
obligations with respect to a Schedule, Lessor shall have the right, but shall
not be obligated, to affect such performance, and Lessee shall reimburse Lessor,
upon demand, for all expenses incurred by Lessor in connection with such
performance. Lessor’s effecting such compliance shall not be a waiver of
Lessee’s default. All amounts payable under this Section, if not paid when due,
shall be paid to Lessor together with interest thereon at the Late Charge Rate.
(e) Lessee irrevocably appoints Lessor as Lessee’s attorney-in-fact (which power
shall be deemed coupled with an interest) to execute, endorse and deliver any
documents and checks or drafts relating to or received in payment for any

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loss or damage under the policies of insurance required by this Lease, but only
to the extent that the same relates to the Equipment.
(f) LESSOR AND LESSEE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
WHICH LESSEE AND/OR LESSOR MAY BE PARTIES ARISING OUT OF OR IN ANY WAY
PERTAINING TO THIS LEASE.
(g) All notices (excluding billings and communications in the ordinary course of
business) hereunder shall be in writing, personally delivered, delivered by
overnight courier service, sent by facsimile transmission (with confirmation of
receipt), or sent by certified mail, return receipt requested, addressed to the
other party at its respective address stated below the signature of such party
or at such other address as such party shall from time to time designate in
writing to the other party; and shall be effective from the date of receipt.
(h) This Lease and all of the other Lease Documents shall not be effective
unless and until accepted by execution by an officer of Lessor at the address,
in the State of Maryland (the "State”), as set forth below the signature of
Lessor. THIS LEASE AND ALL OF THE OTHER LEASE DOCUMENTS, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF THE STATE), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF
THE EQUIPMENT. The parties agree that any action or proceeding arising out of or
relating to this Lease may be commenced in any state or Federal court in the
State, and agree that a summons and complaint commencing an action or proceeding
in any such court shall be properly served and shall confer personal
jurisdiction if served personally or by certified mail to it at the mailing
address below Lessee’s signature, or as it may provide in writing from time to
time, or as otherwise provided under the laws of the State.
(i) This Lease and all of the other Lease Documents may be executed in
counterparts. The transfer or possession of the “Original” of this Lease shall
be irrelevant to the full or collateral assignment of, or grant of security
interest in, any Schedule; provided, however, no security interest in any
Schedule may be created through the transfer, possession or control, as
applicable, of any counterpart of such Schedule other than the original thereof,
which shall be identified as the document or record (as applicable) marked
“Original” and all other counterparts shall be marked "Duplicate”.
(j) If Lessor is required by the terms hereof to pay to or for the benefit of
Lessee any amount received as a refund of an Imposition or as insurance
proceeds, Lessor shall not be required to pay such amount, if any Default has
occurred and not been cured or any Event of Default shall have occurred and not
been waived by Lessor. In addition, if Lessor is required by the terms hereof to
cooperate with Lessee in connection with certain matters, such cooperation shall
not be required if a Default or Event of Default has then occurred and is
continuing.
(k) To the extent Lessor is required to give its consent or approval with
respect to any matter, the reasonableness of Lessor’s withholding of such
consent shall be determined based on the then existing circumstances; provided,
that Lessor’s withholding of its consent shall be deemed reasonable for all
purposes if (i) the taking of the action that is the subject of such request,
might result (in Lessor’s discretion), in (A) an impairment of Lessor’s rights,
title or interests hereunder or under any Schedule or other Lease Document, or
to the Equipment, or (B) expose Lessor to any Claims or Impositions, or
(ii) Lessee fails to provide promptly to Lessor any filings, certificates,
opinions or indemnities required by Lessor as a condition to such consent.
19. DEFINITIONS AND RULES OF CONSTRUCTION. (a) The following terms when used in
this Lease or in any of the Schedules have the following meanings: (1)
“applicable law” or “law”: any law, rule, regulation, ordinance, order, code,
common law, interpretation, judgment, directive, decree, treaty, injunction,
writ, determination, award, permit or similar norm or decision of any
governmental authority; (2) “business day”: any day, other than a Saturday,
Sunday, or legal holiday for commercial banks under the laws of the state of the
Lessor’s notice address; (3) “UCC” or “Uniform Commercial Code”: the Uniform
Commercial Code as in effect in the State or in any other applicable
jurisdiction; and any reference to an article (including Article 2A) or section
thereof shall mean the corresponding article or section (however termed) of any
such applicable version of the Uniform Commercial Code; (4) “governmental
authority”: any federal, state, county, municipal, regional or other
governmental authority, agency, board, body, instrumentality or court, in each
case, whether domestic or foreign; (5) “person”: any individual, corporation,
partnership, joint venture, or other legal entity or a governmental authority,
whether employed, hired, affiliated, owned, contracted with, or otherwise
related or unrelated to Lessee or Lessor; and (6) “AS IS, WHERE IS”: AS IS,
WHERE IS, without warranty, express or implied, with respect to any matter
whatsoever,.
(b) The following terms when used herein or in any of the Schedules shall be
construed as follows: (1) “herein,” “hereof,” “hereunder,” etc.: in, of, under,
etc. this Lease or such other Lease Document in which such term appears (and not
merely in, of, under, etc. the section or provision where the reference occurs);
(2) “including”: means including without limitation unless such term is followed
by the words “and limited to,” or similar words; and (3) “or”: at least one, but
not necessarily only one, of the alternatives enumerated. Any defined term used
in the singular preceded by “any” indicates any number of the members of the
relevant class. Any Lease Document or other agreement or instrument referred to
herein means such agreement or instrument as supplemented and amended from time
to time. Any reference to Lessor or Lessee shall include their permitted
successors and assigns. Any reference to an applicable law shall also mean such
law as amended, superseded or replaced from time to time.
20. USA PATRIOT ACT COMPLIANCE NOTIFICATION. Along with all other U.S. Financial
institutions, we began complying with Section 326 of the USA Patriot Act
effective October 1, 2003. Designed to assist the government in preventing the
funding of terrorist and money laundering activities, this section of the Act
requires us to know the business entities that are new to SUNTRUST EQUIPMENT
FINANCE & LEASING CORP.. To accomplish this we will obtain, verify and record
information that identifies business entities that open new accounts with us.
What this means to you: when you open your account with us for your business, we
will ask you for business name, physical address, taxpayer identification number
and other information that will allow us to verify your company’s identity. The
information requested may include documents, such as Articles of Incorporation
or a Partnership Agreement which will verify the identifying information you are
giving us.
[SIGNATURES ON NEXT PAGE]

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     IN WITNESS WHEREOF, the parties hereto have caused this Equipment Lease
Agreement to be duly executed, under seal, as of the day and year first above
set forth.

                      SUNTRUST EQUIPMENT FINANCE & LEASING CORP.   POWERSECURE,
INC.
Lessor
      Lessee    
 
                   
By:
  [SEAL]
 
  By:   [SEAL]
 
 
 
Name:             Name:      
 
  Title:             Title:      
 
  Address:   300 East Joppa Road       Address:    
 
      7th Floor            
 
      Towson, Maryland 21286            
 
                   
 
  Attn:   President       Attn:      
 
  Fax:           Fax:      
 
                                    Form of Organization:
 
                Jurisdiction of Organization:
 
                Organizational No.
 
                Federal Employer Identification No.
 

THE ONE AND ONLY ORIGINAL OF THIS EQUIPMENT LEASE AGREEMENT IS MARKED “ORIGINAL”
AT THE TOP OF THE PAGE AND SHALL CONSTITUTE THE ONLY CHATTEL PAPER ORIGINAL FOR
THE PURPOSES OF ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE. EACH OTHER SIGNED
VERSION IS MARKED “DUPLICATE”.