EX-10.8






Exhibit 10.8




FIFTH AMENDMENT TO CREDIT AGREEMENT



 


 









 








 

 






FIFTH AMENDMENT TO

CREDIT AGREEMENT




Dated as of January 14, 2011



among



POWERSECURE INTERNATIONAL, INC.,

as the Borrower,



CITIBANK, N.A.,

as Administrative Agent and Co-Syndication Agent



BRANCH BANKING AND TRUST COMPANY,

as Documentation Agent



and



The Other Lenders Party Hereto



CITIBANK, N.A.

Sole Bookrunner



 

 







 


 









 














FIFTH AMENDMENT TO CREDIT AGREEMENT




THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Fifth Amendment”), dated as of January
14, 2011, among POWERSECURE INTERNATIONAL, INC., a Delaware corporation (the “Borrower”),
the lenders as identified as Lenders on the signature pages hereof (collectively, the
“Lenders”) and CITIBANK, N.A., in its capacity as Administrative Agent (the
“Administrative Agent”).



BACKGROUND




The Borrower, the Lenders, SunTrust Bank and the Administrative Agent are parties to that
certain Credit Agreement, dated as of August 23, 2007, as amended by that certain First Amendment
to Credit Agreement, dated as of January 17, 2008, that certain Second Amendment to Credit
Agreement, dated as of April 18, 2008, that certain Third Amendment to Credit Agreement, dated as
of November 12, 2008, and that certain Fourth Amendment to Credit Agreement, dated as of November
9, 2010 (said Credit Agreement, as amended, the “Credit Agreement”; the terms defined in
the Credit Agreement and not otherwise defined herein shall be used herein as defined in the Credit
Agreement).



The Borrower, the Lenders and the Administrative Agent desire to amend the Credit Agreement
to, among other things, (i) remove SunTrust Bank (the “Exiting Lender”) as a lender under
the Credit Agreement and (ii) decrease the Aggregate Revolving Commitments to $25,000,000.



NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set
forth, and for other good and valuable consideration, the receipt and adequacy of which are all
hereby acknowledged, the parties hereto covenant and agree as follows:



AMENDMENTS.



Section 1.01 of the Credit Agreement is hereby amended by adding the defined terms
“Cash Reserve”, “Fifth Amendment Effective Date”, and “Southern Flow
Disposition” thereto in proper alphabetical order:




“Cash Reserve” means Cash and Cash Equivalents on deposit with, or in
possession of, the Administrative Agent and not subject to any Lien or restriction other
than a Lien in favor of the Administrative Agent.




“Fifth Amendment Effective Date” means the date that all conditions of
effectiveness set forth in Section 3 of the Fifth Amendment to Credit Agreement,
dated as of January 14, 2011, among the Borrower, the Lenders party thereto and the
Administrative Agent are satisfied.




“Southern Flow Disposition” means the sale by the Borrower of 100% of the
outstanding Equity Interests of Southern Flow Companies, Inc., a Delaware corporation
(“Southern Flow”), pursuant to that certain Purchase and Sale Agreement, dated as of
December 30, 2010, among Zedi USA Inc., a Delaware corporation, Zedi Inc., a
Canadian corporation, Southern Flow and the Borrower for an aggregate consideration of not less
than $15,500,000, subject to the “Working Capital Adjustment” as provided for and defined in
the Purchase and Sale Agreement.



 


 









 







The definition of “Aggregate Revolving Commitments” set forth in Section 1.01
of the Credit Agreement is hereby amended to read as follows:





“Aggregate Revolving Commitments” means the Revolving Commitments of all
Lenders, which, as of the Fifth Amendment Effective Date, are $25,000,000.



Section 4.02 of the Credit Agreement is hereby amended by adding a new subsection (e)
thereto to read as follows:




(e) After giving effect to any proposed Credit Extension prior to April 1, 2012, the
Cash Reserve shall not be less than 65% of the Total Revolving Outstandings.



Section 5.13 of the Credit Agreement is hereby amended by amending the first sentence
thereof to read as follows:




As of the Fifth Amendment Effective Date, the Borrower has no Subsidiaries other than
those specifically disclosed in Part (a) of Schedule 5.13, and all of the
outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid
and non-assessable and are owned by a Loan Party in the amounts specified in Part (a) of
Schedule 5.13.



Section 7.12(a) of the Credit Agreement is hereby amended to read as follows:




(a) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio as of
the end of any Fiscal Quarter of the Borrower commencing on and after March 31, 2012 to be
less than 1.25 to 1.00.



Section 7.12(b) of the Credit Agreement is hereby amended to read as follows:





(b) Leverage Ratio. Permit the Leverage Ratio as of the end of any Fiscal
Quarter commencing on and after March 31, 2012 to exceed 3.25 to 1.00.



Section 7.12(d) of the Credit Agreement is hereby amended to read as follows:




(d) Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth as
of the end of any Fiscal Quarter after December 31, 2010 to be less than the sum of (i)
$62,000,000, plus (ii) an amount equal to 50% of Consolidated Net Income earned in each
Fiscal Year ending after December 31, 2010 (with no reduction for any net loss in any such
Fiscal Year), which shall be added after the completion of each Fiscal Year, plus (iii) an
amount equal to 100% of the aggregate increases in Shareholders’ Equity of the Borrower and
its Subsidiaries after December 31, 2009 by reason of the issuance and sale of Equity
Interests of the Borrower or any Subsidiary (other than issuances to the Borrower or a
wholly-owned Subsidiary), including upon any conversion of debt securities
of the Borrower into such Equity Interests, minus (iv) the
amount of any
non-cash charges or losses after December 31, 2009 which do not subsequently represent a
cash charge or loss, which shall be deducted as of the Fiscal Quarter in which they are
incurred.



 


2









 








Section 7.12 of the Credit Agreement is hereby amended by adding a new subsection (f)
thereto to read as follows:




(f) Liquidity. Permit the Cash Reserve at any time prior to April 1, 2012 to
be less than 65% of the Total Revolving Outstandings.



Schedule 2.01 to the Credit Agreement is hereby amended to be in the form of
Schedule 2.01 to this Fifth Amendment and the Revolving Commitment and Revolving Pro Rata
Share of each Lender after giving effect to this Fifth Amendment is set forth on Schedule
2.01.



Schedule 5.13 to the Credit Agreement is hereby amended to be in the form of
Schedule 5.13 to this Fifth Amendment.



The Compliance Certificate is hereby amended to be in the form of Exhibit E attached
to this Fifth Amendment.



REPRESENTATIONS AND WARRANTIES. By its execution and delivery hereof, the Borrower
represents and warrants that, as of the Fifth Amendment Effective Date:



the representations and warranties contained in the Credit Agreement and the other Loan
Documents are true and correct on and as of the Fifth Amendment Closing Date as made on and as of
such date, except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date, and except that the
representations contained in subsections (a) and (b) of Section 5.05 of the Credit
Agreement shall be deemed to refer to the most recent statements furnish pursuant to subsections
(a) and (b), respectively, of Section 6.01 of the Credit Agreement;



no event has occurred and is continuing which constitutes a Default or an Event of Default;



(i) the Borrower has full power and authority to execute and deliver this Fifth Amendment, the
replacement Revolving Loan Note payable to the order of Citibank in the amount of its Revolving
Commitment as amended hereby and the replacement Revolving Loan Notes payable to the order of
Branch Banking and Trust Company (collectively, the “New Notes”), (ii) this Fifth Amendment
and the New Notes have been duly executed and delivered by the Borrower, and (iii) this Fifth
Amendment, the New Notes and the Credit Agreement, as amended hereby, constitute the legal, valid
and binding obligations of the Borrower, enforceable in accordance with their respective terms,
except as enforceability may be limited by applicable Debtor Relief Laws and by general principles
of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and
except as rights to indemnity may be limited by federal or state securities laws;


 


3









 





neither the execution, delivery and performance of this Fifth Amendment, the New Notes or the
Credit Agreement, as amended hereby, nor the consummation of any transactions contemplated herein
or therein, will violate any Law or conflict with any Organization Documents of the Borrower, or
any indenture, agreement or other instrument to which the Borrower or any of it property is
subject; and



no authorization, approval, consent, or other action by, notice to, or filing with, any
Governmental Authority or other Person not previously obtained is required for (i) the execution,
delivery or performance by the Borrower, of this Fifth Amendment or the New Notes or (ii) the
acknowledgement by each Guarantor of this Fifth Amendment.



CONDITIONS TO EFFECTIVENESS. All provisions of this Fifth Amendment shall be
effective upon satisfaction or completion of the following:



the Administrative Agent shall have received counterparts of this Fifth Amendment executed by
the Lenders and acknowledged by SunTrust Bank for the purposes of Section 5 of this Fifth Amendment
only;



the Administrative Agent shall have received counterparts of this Fifth Amendment executed by
the Borrower and acknowledged by each Guarantor;



the Administrative Agent shall have received an opinion of the Borrower’s counsel, in form and
substance satisfactory to the Administrative Agent, with respect to matters set forth in Sections
2(c), (d), and (e) of this Fifth Amendment;



the Administrative Agent shall have received the duly executed New Notes;



the Southern Flow Disposition shall have occurred;



SunTrust Bank shall have received payment in full in immediately available funds all amounts
due and owing to it under the Credit Agreement; and



the Administrative Agent shall have received, in form and substance satisfactory to the
Administrative Agent and its counsel, such other documents, certificates and instruments as the
Administrative Agent shall require.



EXITING LENDER. Upon satisfaction of the conditions of effectiveness set forth in
Section 3 of this Fifth Amendment, SunTrust Bank shall (a) not (i) be a Lender under the Credit
Agreement or (ii) have any rights or obligations with respect to being a Lender, except for those
that expressly survive termination of the Credit Agreement or termination of any Commitments
thereunder and (b) mark its Revolving Loan Note “PAID IN FULL”, and promptly return its Revolving
Loan Note to the Borrower.



PURCHASE BY LENDERS. Simultaneously with the satisfaction of conditions of
effectiveness set forth in Section 3 of this Fifth Amendment, to the extent necessary, each Lender
shall purchase or sell (as the case may be), without recourse, an amount of Revolving Loans and L/C
Obligations outstanding such that, after giving effect to this Fifth Amendment, the amount
of each Lender’s Revolving Commitment that has been utilized will be equal to its Revolving Pro
Rata Share as amended by this Fifth Amendment. If, as a result of such purchase, any Lender incurs
any funding loss in respect of a Eurodollar Rate Loan, the Borrower agrees to compensate such
Lender as provided in Section 3.05 of the Credit Agreement.



 


4









 






REFERENCE TO THE CREDIT AGREEMENT.



Upon the effectiveness of this Fifth Amendment, each reference in the Credit Agreement to
“this Agreement”, “hereunder”, or words of like import shall mean and be a reference to the Credit
Agreement, as affected and amended hereby.



The Credit Agreement, as amended by the amendments referred to above, shall remain in full
force and effect and is hereby ratified and confirmed.



COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand all costs and
expenses of the Administrative Agent in connection with the preparation, reproduction, execution
and delivery of this Fifth Amendment and the other instruments and documents to be delivered
hereunder (including the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent with respect thereto).



GUARANTOR’S ACKNOWLEDGMENT. By signing below, each Guarantor (a) acknowledges,
consents and agrees to the execution, delivery and performance by the Borrower of this Fifth
Amendment, (b) acknowledges and agrees that its obligations in respect of its Guaranty (i) are not
released, diminished, waived, modified, impaired or affected in any manner by this Fifth Amendment
or any of the provisions contemplated herein and (ii) cover the Aggregate Revolving Commitments as
increased by this Fifth Amendment, (c) ratifies and confirms its obligations under its Guaranty,
and (d) acknowledges and agrees that it has no claims or offsets against, or defenses or
counterclaims to, its Guaranty.



EXECUTION IN COUNTERPARTS. This Fifth Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which when taken together shall
constitute but one and the same instrument. For purposes of this Fifth Amendment, a counterpart
hereof (or signature page thereto) signed and transmitted by any Person party hereto to the
Administrative Agent (or its counsel) by facsimile machine, telecopier or electronic mail is to be
treated as an original. The signature of such Person thereon, for purposes hereof, is to be
considered as an original signature, and the counterpart (or signature page thereto) so transmitted
is to be considered to have the same binding effect as an original signature on an original
document.



GOVERNING LAW; BINDING EFFECT. This Fifth Amendment shall be governed by and
construed in accordance with the laws of the State of New York applicable to agreements made and to
be performed entirely within such state, provided that each party shall retain all rights arising
under federal law, and shall be binding upon the parties hereto and their respective successors and
assigns; provided, however, that the Borrower may not assign any of its rights
arising from this Fifth Amendment or any other Loan Document, and any prohibited assignment
shall be null and void.



 


5









 





HEADINGS. Section headings in this Fifth Amendment are included herein for
convenience of reference only and shall not constitute a part of this Fifth Amendment for any other
purpose.



ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIFTH AMENDMENT, AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



REMAINDER OF PAGE LEFT INTENTIONALLY BLANK



 


6









 








IN WITNESS WHEREOF, the parties hereto have executed this Fifth Amendment as of the date
first above written.




	 	 	 	 	 
	 	POWERSECURE INTERNATIONAL, INC.

 	 
	 	By:  	/s/ Christopher T. Hutter
 	 
	 	 	Christopher T. Hutter 	 
	 	 	Executive Vice President, Chief Financial

Officer and Assistant Secretary 	 
	 



Signature Page



 


 









 








	 	 	 	 	 
	 	



CITIBANK, N.A., as Administrative Agent and Lender

 	 
	 	By:  	/s/ Gary D. Pitcock
 	 
	 	 	Gary D. Pitcock 	 
	 	 	Vice President 	 
	 



Signature Page



 


 









 








	 	 	 	 	 
	 	



BRANCH BANKING AND TRUST 
COMPANY, as Lender

 	 
	 	By:  	/s/ Stephen G. Bullard
 	 
	 	 	Name:  	Stephen G. Bullard 	 
	 	 	Title:  	SVP 	 
	 



Signature Page



 


 









 








	 	 	 	 	 
	ACKNOWLEDGED AND AGREED FOR

PURPOSES OF SECTION 4 ONLY:

SUNTRUST BANK

 	 	 
	By:  	/s/ J. Lance Walton
 	 	 
	 	Name:  	J. Lance Walton 	 	 
	 	Title:  	Senior Vice President 	 	 
	 



Signature Page




 


 









 








ACKNOWLEDGED AND AGREED:




POWERSECURE, INC.

POWERSERVICES, INC.

ENERGYLITE, INC.

UTILITYENGINEERING, INC.




UTILITYDESIGN, INC.

WATERSECURE HOLDINGS, INC. (f/k/a Marcum Gas Transmission, Inc.)




REID’S TRAILER, INC.

EFFICIENTLIGHTS, LLC




POWERPACKAGES, LLC

MARCUM GAS METERING, INC. (f/k/a Metretek, Incorporated)




INNOVATIVE ELECTRONIC SOLUTIONS LIGHTING, LLC

POWERSECURE HAITI USA, INC.




	 	 	 	 	 
	 	 	 
	By:  	                    /s/ Christopher T. Hutter
 	 	 
	 	Christopher T. Hutter 	 	 
	 	Chief Financial Officer for all 	 	 
	 



Signature Page






 


 









 








SCHEDULE 2.01




REVOLVING COMMITMENTS

AND REVOLVING PRO RATA SHARES




	 	 	 	 	 	 	 	 	 
	 	 	Revolving	 	 	Revolving	 
	Lender	 	Commitment	 	 	Pro Rata Share	 
	Citibank, N.A.
	 	$	16,250,000	 	 	 	65.00	%
	Branch Banking and Trust Company
	 	$	8,750,000	 	 	 	35.00	%
	 
	 	 	 	 	 	 	 	 
	Total
	 	$	25,000,000	 	 	 	100.00	%






Schedule 2.01





 


 









 








SCHEDULE 5.13




SUBSIDIARIES AND OTHER EQUITY INVESTMENTS




Part (a): Subsidiaries




	 	 	 	 	 	 	 	 	 

	PowerSecure, Inc.
	 	 	—	 	 	100% owned
	UtilityEngineering, Inc.
	 	 	—	 	 	100% owned
	PowerServices, Inc.
	 	 	—	 	 	100% owned
	EnergyLite, Inc.
	 	 	—	 	 	100% owned
	Reid’s Trailer, Inc.
	 	 	—	 	 	100% owned
	UtilityDesign, Inc.
	 	 	—	 	 	100% owned
	EfficientLights, LLC
	 	 	—	 	 	100% owned
	PowerPackages, LLC
	 	 	—	 	 	100% owned
	Innovative Electronic Solutions Lighting, LLC
	 	 	—	 	 	66.7% owned
	PowerSecure Haiti USA, Inc.
	 	 	—	 	 	100% owned
	 
	 	 	 	 	 	 	 	 
	Marcum Gas Metering, Inc. (f/k/a Metretek, Incorporated)
	 	 	—	 	 	100% owned
	 
	 	 	 	 	 	 	 	 
	Marcum Gas Transmission, Inc.
	 	 	—	 	 	100% owned






Note: Does not include Inactive Subsidiaries listed on Schedule 1.01




Part (b): Other Equity Investments




Marcum Midstream 1995-2 Business Trust




Schedule 5.13




 


 











 





EXHIBIT E




FORM OF COMPLIANCE CERTIFICATE




Financial Statement Date:_____________





	To:  	 	Citibank, N.A., as Administrative Agent under the Agreement defined below






Ladies and Gentlemen:




Reference is made to that certain Credit Agreement, dated as of August 23, 2007 (as amended,
extended, supplemented or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among PowerSecure International,
Inc. (the “Borrower”), the Lenders from time to time party thereto, and Citibank, N.A., as
Administrative Agent.




The undersigned Responsible Officer hereby certifies as of
the date hereof that he/she is the               
               
                
            of
the Borrower, that, as such, he/she is authorized to execute and deliver this Certificate to the
Administrative Agent on the behalf of the Borrower, and that:




[Use following for Fiscal Year-end financial statements]




1. Attached hereto as Schedule 1 are the Fiscal Year end audited financial statements
required by Section 6.01(a) of the Agreement for the Fiscal Year of the Borrower ended as
of the date set forth above as the Financial Statement Date, together with the report and opinion
of an independent certified public accountant required by such section. Such financial statements
fairly present in all material respects when considered in relation to the consolidated financial
statements of the Borrower and its Subsidiaries.




[Use following for Fiscal Quarter-end financial statements]




1. Attached hereto as Schedule 1 are the unaudited financial statements required by
Section 6.01(b) of the Agreement for the Fiscal Quarter of the Borrower ended as of the
date set forth above as the Financial Statement Date. Such financial statements fairly present in
all material respects when considered in relation to the consolidated financial statements of the
Borrower and its Subsidiaries.




2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or
has caused to be made under his/her supervision, a detailed review of the transactions and
condition (financial or otherwise) of the Borrower during the accounting period covered by the
attached financial statements.






 


Exhibit  E - Page 1









 







3. A review of the activities of the Borrower during such fiscal period has been made under the
supervision of the undersigned with a view to determining whether during such fiscal period the
Borrower performed and observed all its Obligations under the Loan Documents [add, if applicable:
except as hereinafter listed], and to the best knowledge of the undersigned as of the
date hereof no Default or Event of Default under the Agreement has occurred and is continuing
as of
the date hereof [add, if applicable: except the following list of each Default or Event of Default
under the Agreement, and its nature and status, that has occurred and is continuing as of the date
of this Certificate.]




4. The financial covenant analyses and information set forth on Schedule 2 attached hereto
are true and accurate on and as of the date set forth above as the Financial Statement Date.





 


Exhibit  E - Page 2









 








IN WITNESS WHEREOF, the undersigned has executed this Certificate as of                     ,                .




	 	 	 	 	 
	 	



POWERSECURE INTERNATIONAL, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 


 


Exhibit  E - Page 3









 






	 	 	 	 	 



For the Fiscal Quarter/Year ended __________________(“Financial Statement Date”)

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)




	 	 	 	 	 	 	 	 	 	 	 

	I.	 	Section 7.12(a) — Fixed Charge Coverage Ratio [To be calculated for each Fiscal Quarter commencing on and after March 31, 2012].
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	A.	 	Consolidated EBITDA:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	1.	 	 	Consolidated Net Income for Subject Period:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	2.	 	 	To the extent involved in calculating such Consolidated
Net Income and without duplication, Consolidated Interest
Charges:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	3.	 	 	To the extent included in calculating such Consolidated
Net Income and without duplication, amount of taxes,
based on or measured by income, deducted in determining
such Consolidated Net Income for Subject Period:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	4.	 	 	To the extent included in calculating such Consolidated
Net Income and without duplication, depreciation and
amortization expense deducted in determining such
Consolidated Net Income for Subject Period:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	5.	 	 	To the extent included in calculating such Consolidated
Net Income and without duplication, all non-cash charges
or losses which do not represent a cash charge or loss
for Subject Period or in a future period:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	6.	 	 	To the extent included in calculating such Consolidated
Net Income and without duplication, non-recurring charges
consisting of Founders Severance Payments and relocation
expenses of not to exceed $14,200,000 in aggregate
amount:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	7.	 	 	To the extent included in calculating such Consolidated
Net Income, Federal, state, local and foreign income tax
credits of the Borrower and its Subsidiaries for Subject
Period:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	8.	 	 	To the extent included in calculating such Consolidated
Net Income, Consolidated Interest Income for Subject
Period:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	9.	 	 	To the extent included in calculating such Consolidated
Net Income, all non-cash items increasing Consolidated
Net Income for Subject Period:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	10.	 	 	Consolidated EBITDA (Lines I.A.1. + 2. + 3. + 4. + 5. +
6. - 7. - 8. - 9.):
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	B.	 	Consolidated Lease Expense for Subject Period:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	C.	 	Taxes based on income and paid in cash (net of tax refunds) for Subject Period:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	D.	 	Consolidated Interest Charges (excluding, to the extent included in Consolidated Lease Expense, the interest
component of Capital Leases) for Subject Period:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	E.	 	Scheduled payments of principal of Consolidated Funded Indebtedness (excluding, to the extent included in
 Consolidated Lease Expense, the principal component of Capital Leases) for Subject Period:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	F.	 	
Consolidated Lease Expense for Subject Period:	 	$___________





 


 









 






	 	 	 	 	 	 	 	 	 	 	 

	 	 	G.	 	Restricted Payments for Subject Period:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	H.	 	During Revolving Availability Period, an amount equal to the product of (x) 0.20 and (y) the amount by which
Total Revolving Outstandings exceeds $15,000,000 on the Financial Statement Date:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	I.	 	Fixed Charge Coverage Ratio ((Line I.A.10. + I.B. - I.C.)  ̧ (Lines I.D. + I.E. + I.F. + I.G. + I.H., if
applicable)):	 	_____ to 1.00
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Minimum permitted — See Section 7.12(a) of the Agreement	 1.25 to 1.00
	 
	 	 	 	 	 	 	 	 	 	 
	II.	 	Section 7.12(b) — Leverage Ratio [To be calculated for each Fiscal Quarter commencing on and after March 31, 2012].
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	A.	 	Consolidated Funded Indebtedness at Financial Statement Date:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	1.	 	 	all obligations for borrowed money and all obligations
evidenced by bonds, debentures, notes, loan agreements or
other similar instruments:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	2.	 	 	Non-contingent obligations outstanding in respect of
letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds or
other similar instruments:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	3.	 	 	all obligations to pay the deferred purchase price of
property or services (other than trade accounts payable
in the ordinary course of business):
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	4.	 	 	indebtedness (excluding prepaid interest thereon) secured
by a Lien on property owned or being purchased (including
indebtedness arising under conditional sales or other
title retention agreements), whether or not such
indebtedness shall have been assumed or is limited in
recourse:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	5.	 	 	Attributable Indebtedness in respect of Capital Leases
and Synthetic Lease Obligations:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	6.	 	 	Guarantees of Indebtedness of types specified in Lines
II.A.1., II.A.2., II.A.3., II.A.4. and II.A.5. above:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	7.	 	 	Consolidated Funded Indebtedness
(Lines II.A.1. + 2. + 3. + 4. + 5. + 6.):
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	B.	 	Consolidated EBITDA for Subject Period:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	1.	 	 	Consolidated EBITDA for Subject Period (See Line I.A.10.):
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	C.	 	Leverage Ratio (Line II.A.7.  ̧ Line II.B.1.):	 	_____ to 1.00
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Maximum permitted — See Section 7.12(b) of the Agreement	3.25 to 1.00
	 
	 	 	 	 	 	 	 	 	 	 
	III.	 	Section 7.12(c) — Asset Coverage Ratio.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	A.	 	80% of Book Value of Accounts on the determination date:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	B.	 	60% of Book Value of Inventory on the determination date:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	C.	 	50% of Book Value of Net Fixed Assets on the determination date:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	D.	 	Consolidated Funded Indebtedness (See Line II.A.7.):	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	E.	 	Outstanding Term Loans on the determination date:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	F.	 	Minimum Asset Coverage Ratio (Lines III.A. + III.B. + III.C.)  ̧ (Lines III.D. - III.E.):	 	_____ to 1.00





 


 









 






	 	 	 	 	 	 	 	 	 	 	 

	 	 	Minimum required — See Section 7.12(c) of the Agreement 	1.25 to 1.00
	 
	 	 	 	 	 	 	 	 	 	 
	IV.	 	Section 7.12(d) — Consolidated Tangible Net Worth.






	 	 	 	 	 	 	 	 	 	 	 

	 	 	A.	 	Consolidated Tangible Net Worth:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	B.	 	Minimum Consolidated Tangible Net Worth:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	1.	 	 	$62,000,000:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	2.	 	 	50% of Consolidated Net Income for each Fiscal Year beginning with each Fiscal Year
after December 31, 2010 (with no reduction for any net loss in any such Fiscal Year):
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	3.	 	 	100% of the aggregate increases in Shareholders’ Equity after December 31, 2009 by
reason of issuance and sale of Equity Interests of the Borrower or any Subsidiary
(other than issuances to the Borrower or a wholly-owned Subsidiary):
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	4.	 	 	Non-cash charges or losses after December 31, 2009 which do not subsequently
represent a cash charge or loss:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	5.	 	 	Minimum Consolidated Tangible Net Worth (Lines IV.B.1. + 2. + 3. - 4.:
	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	V.	 	Section 7.12(e) — Debt to Worth Ratio.
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	A.	 	Total Liabilities at Financial Statement Date:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	B.	 	Consolidated Tangible Net Worth at Financial Statement Date	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	C.	 	Debt to Worth Ratio (Line V.A. ÷ Line V.B.):	 	_____ to 1.00
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Maximum permitted — See Section 7.12(e) of the Agreement 1.50 to 1.00
	 
	 	 	 	 	 	 	 	 	 	 
	VI.	 	Section 7.12(f) — Liquidity [In effect prior to April 1, 2012].
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	A.	 	Cash Reserve at Financial Statement Date:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	B.	 	Total Revolving Outstandings at Financial Statement Date:	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	C.	 	Liquidity Ratio: (Line VI.A. ÷ Line VI.B):	 	$___________
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Minimum permitted — see Section 7.12(f) of the Agreement: 	65%
	 
	 	 	 	 	 	 	 	 	 	 
	For purposes hereof, “Subject Period” is the period of four consecutive Fiscal Quarters ending on the Financial Statement Date.