Document:

MAKE GOOD ESCROW
AGREEMENT

     

    THIS MAKE
GOOD ESCROW AGREEMENT (the “Agreement”), dated as
of _______, 2009, is entered into by and among Lihua International, Inc., a
Delaware corporation (the “Company”), Maxim
Group LLC (“Maxim”), Magnify Wealth Enterprise Limited, a company organized in
the British Virgin Islands (“Magnify Wealth”), the
original controlling stockholders of the Company as set forth on Exhibit “A”
attached hereto (the “Original
Stockholders” and together with Magnify Wealth, the “Pledgors”), and
Corporate Stock Transfer, Inc., as escrow agent (the “Escrow
Agent”).

    

    WITNESSETH:

    

    

    WHEREAS, the Company has
engaged Maxim to be its [lead] underwriter in a public offering (the “Offering”) of units
(the “Units”),
each consisting of one share of the Company’s common stock, par value $0.001 per
share (the “Common
Stock”), and one-quarter (1/4) of one warrant, and concurrent with the
execution of this Agreement is completing the Offering;

    

    WHEREAS, as an inducement to
the purchasers of the Units in the Offering (individually, a “Purchaser”, and
collectively, the “Purchasers”), the
Pledgors have agreed to deposit an aggregate of ______shares of Common Stock
(the “Offering Escrow
Shares”) into an escrow account to be held as security for the
achievement by the Company of [EBITDA, or net income] that equals or exceeds
$___________ (the “Offering Performance
Threshold”), as reported in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2009 (the “2009 Financial
Statements”), which shall be filed with the Securities and Exchange
Commission (the “SEC”) no later than
March 31, 2010 (the “Determination Date”),
it being understood that the Determination Date shall be adjusted for an
additional 15 days, in the event the Company files a Notification of Late Filing
on Form 12b-25.

     

    WHEREAS, the Company, the
Pledgors and Maxim have requested that the Escrow Agent hold the Offering Escrow
Shares on the terms and conditions set forth in this Agreement and the Escrow
Agent has agreed to act as escrow agent pursuant to the terms and conditions of
this Agreement.

     

    NOW, THEREFORE, in
consideration of the covenants and mutual promises contained herein and other
good and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged and intending to be legally bound hereby, the parties agree
as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
I

    TERMS OF
THE ESCROW

     

    1.1. The
parties hereby agree to establish an escrow account (the “Escrow Account”) with
the Escrow Agent whereby the Escrow Agent shall hold the Offering Escrow Shares
as contemplated by this Agreement.

     

    1.2. Upon
the execution of this Agreement:

    

    (i)  Magnify Wealth and the
Original Stockholders shall deliver stock certificates to the Escrow Agent
consisting of _____ and ______shares of Common Stock respectively, and the
Additional Escrow Shares (as defined in Section 1.4 below), along with updated
stock powers executed in blank, signature medallion guaranteed or in other form
and substance acceptable for transfer; and

    

    (ii)  Maxim shall deliver to
the Escrow Agent a list of the Purchasers in the Offering.  If the
underwriter’s over-allotment option relating to the Offering (the “Over-allotment
Option”) is exercised, then Maxim shall supplement such list of
Purchasers at the closing of the Over-allotment Option by delivering to the
Escrow Agent a list of additional Purchasers who bought Units in the
Over-allotment Option.

    

    1.3. The
parties hereby agree that the Offering Escrow Shares and the Additional Escrow
Shares shall be distributed based on and subject to the achievement of the
Offering Performance Threshold as set forth below:

     

    (i) If the Company achieves at
least 95% of the Offering Performance Threshold, the Offering Escrow Shares
and the Additional Escrow Shares shall be released to Magnify Wealth and the
Original Stockholders in the same proportion in which they deposited such shares
into the Escrow Account.  Within five (5) business days of Maxim’s
receipt of the 2009 Financial Statements, Maxim shall provide sole written
instructions to the Escrow Agent instructing the Escrow Agent to issue and
deliver the Offering Escrow Shares and the Additional Escrow Shares to the
Pledgors.

     

    (ii)           If
the Company achieves at least [50%] but less than 95% of the Offering
Performance Threshold, the Escrow Agent shall deliver to each Purchaser in the
Offering who holds shares of Common Stock, or shares of Common Stock underlying
Units as of the Determination Date Offering, Escrow Shares in accordance with
the calculation below.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

     

    
      
        
          
            
              
                	 
      	
                        (a)

                      	
                        A =
      X/Y

                      
	 	 	 
	 
      	
                        (b)

                      	
                        B =
      2*(A*Z)

                      
	 
      	 
      	 
      
	 
      	
                        Where:

                      	
                        A =
      such Purchaser’s percentage ownership of Offering Escrow
      Shares

                      
	 	 	 
	 
      	 
      	
                        B =
      the number of Offering Escrow Shares to be distributed to such
      Purchaser

                      
	 	 	 
	 
      	 
      	
                        X =
      the aggregate number of shares of Common Stock or shares of Common
      Stock underlying Units owned by such Purchaser on the Determination Date,
      provided however that such number shall not exceed the number of Units
      bought by such Purchaser in the Offering

                      
	 	 	 
	 
      	 
      	
                        Y =
      the number of Units issued upon the consummation of this Offering
      (including any Units issued in the Over-allotment
  Option)

                      
	 	 	 
	 
      	 
      	
                        Z =
      the Offering Escrow Shares multiplied by the percentage by which the
      Offering Performance Threshold was not
achieved

                      

              

            

          

        

      

    

    

     

    Within
five (5) business days of Maxim’s receipt of the 2009 Financial Statements,
Maxim shall provide sole written instructions to the Escrow Agent instructing
the Escrow Agent to issue and deliver the Offering Escrow Shares to the
Purchasers in accordance with the calculation above. Only those Purchasers who
continue to own shares of Common Stock or shares of Common Stock underlying
Units on the Determination Date shall be entitled to receive Offering Escrow
Shares calculated based on their ownership interest in shares of Common Stock or
shares of Common Stock underlying Units on the Determination
Date.  Any Offering Escrow Shares remaining after disbursement to such
Purchasers and the Additional Escrow Shares shall be returned to Magnify Wealth
and the Original Stockholders in the same respective proportion as their initial
deposit of the Offering Escrow Shares and Additional Escrow Shares.

     

    (iii) If
the Company achieves less than [50%] of the Offering Performance Thresholds,
then the Escrow Agent shall deliver to each Purchaser of Units in the
Offering, Offering Escrow Shares in accordance with the calculation
below:

     

    
      
        
          
            
              
                	 
      	
                        (a)

                      	
                        A =
      X/Y

                      
	 	 	 
	 
      	
                        (b)

                      	
                        B =
      (A*Z)

                      
	 
      	 
      	 
      
	 
      	
                        Where:

                      	
                        A =
      such Purchaser’s percentage ownership of Offering Escrow
      Shares

                      
	 	 	 
	 
      	 
      	
                        B =
      the number of Offering Escrow Shares to be distributed to such
      Purchaser

                      
	 	 	 
	 
      	 
      	
                        X =
      the number of Units bought by such Purchaser in this
    Offering

                      
	 	 	 
	 
      	 
      	
                        Y =
      number of Units issued upon the consummation of this Offering (including
      any Units issued in the Over-allotment Option)

                      
	 	 	 
	 
      	 
      	
                        Z =
      the Offering Escrow
Shares

                      

              

            

          

        

      

    

     

    
 

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    Within
five business days of the underwriter’s receipt of the 2009 Financial
Statements, Maxim shall provide sole written instructions to the Escrow Agent
instructing the Escrow Agent to:  (i) issue and deliver the Offering
Escrow Shares to the Purchasers in accordance with the calculation above, and
(ii) issue and deliver to the Purchasers a specific number of the Additional
Escrow Shares required as a result of the rounding up of fractional shares as
discussed in Section 1.4.  Any Additional Escrow Shares remaining
after disbursement to such Purchasers shall be returned to Magnify Wealth and
the Original Stockholders in the same respective proportion as their initial
deposit of the Additional Escrow Shares

     

    1.4.  No fractional shares shall
be delivered to the Purchasers under the calculations set forth in Section
1.3.  If, upon calculation of the Offering Escrow Shares to be
delivered to the purchasers pursuant to these calculations, a purchaser would be
entitled to receive a fractional interest in a share, such number of shares
shall be rounded up or down to the nearest whole number of shares of Common
Stock to be delivered to such Purchaser.  In addition to the Offering
Escrow Shares, Magnify Wealth and the Original Stockholders shall deposit
_________ and __________ shares, respectively (the “Additional Escrow
Shares”), with Corporate Stock Transfer, Inc. in accordance with Section
1.2, solely to cover any shares required to be delivered to the Purchasers in
excess of the Offering Escrow Shares as a result of the rounding up of
fractional shares under the calculations set forth in Section 1.3.

    

    1.5. If the Company does not
achieve at least 95% of the Offering Performance Threshold, the Company shall
use reasonable best efforts to promptly cause the Offering Escrow Shares, and,
if necessary, the Additional Escrow Shares, to be delivered to the Purchasers as
discussed in Section 1.3, including causing its transfer agent to promptly, but
in no event longer than five (5) business days, transfer the certificates into
the names of the Purchaser as discussed in Section 1.3, and causing its
securities counsel to provide any written instruction required by the Escrow
Agent in a timely manner so that the issuances and delivery contemplated above
can be achieved.

     

    1.7. The
Company will provide Maxim with the Company’s 2009 Financial Statements,
prepared in accordance with US GAAP, no later than the Determination Date to
allow Maxim the opportunity to evaluate whether the Offering Performance
Threshold was achieved.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
 

    ARTICLE
II

    REPRESENTATIONS
OF THE PLEDGORS

     

    2.1. The
Pledgors hereby represent and warrant to the Company and the Purchaser
Representative as follows:

     

    (i) The
Pledgors are the record and beneficial owner of the Offering Escrow Shares
placed into escrow pursuant to this Agreement and own such Offering Escrow
Shares free and clear of all pledges, liens, claims and encumbrances, except
encumbrances created by this Agreement. There are no restrictions on the ability
of the Pledgors to transfer the Offering Escrow Shares placed into escrow
pursuant to this Agreement or to enter into this Agreement other than transfer
restrictions under applicable federal and state securities laws.

    

    (ii) The
performance of this Agreement and compliance with the provisions hereof will not
violate any provision of any law applicable to the Pledgors and will not
conflict with or result in any material breach of any of the terms, conditions
or provisions of, or constitute a default under the terms of the certificate of
incorporation or by-laws of the Pledgors, or any indenture, mortgage, deed of
trust or other agreement or instrument binding upon the Pledgors or affecting
the Offering Escrow Shares or result in the creation or imposition of any lien,
charge or encumbrance upon, any of the properties or assets of the Pledgors, the
creation of which would have a material adverse effect on the business and
operations of the Pledgors.  No notice to, filing with, or
authorization, registration, consent or approval of any governmental authority
or other person is necessary for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby by the
Pledgors, other than those already obtained.

     

    ARTICLE
III

    MISCELLANEOUS

     

    3.1. The
Company, at the time of the completion of the Offering, will pay Escrow Agent a
total of $_____ for all services rendered by Escrow Agent
hereunder.

     

    3.2. No
waiver of, or  any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.

     

    3.3. All
notices, demands, consents, requests, instructions and other communications to
be given or delivered or permitted under or by reason of the provisions of this
Agreement or in connection with the transactions contemplated hereby shall be in
writing and shall be deemed to be delivered and received by the intended
recipient as follows: (i) if personally delivered, on the business day of such
delivery (as evidenced by the receipt of the personal delivery service), (ii) if
mailed certified or registered mail return receipt requested, two (2) business
days after being mailed, (iii) if delivered by overnight courier (with all
charges having been prepaid), on the business day of such delivery (as evidenced
by the receipt of the overnight courier service of recognized standing), or (iv)
if delivered by facsimile transmission, on the business day of such delivery if
sent by 6:00 p.m. in the time zone of the recipient, or if sent after that time,
on the next succeeding business day (as evidenced by the printed confirmation of
delivery generated by the sending party’s telecopier machine). If any notice,
demand, consent, request, instruction or other communication cannot be delivered
because of a changed address of which no notice was given (in accordance with
this Section 3.3), or the refusal to accept same, the notice, demand, consent,
request, instruction or other communication shall be deemed received on the
third business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile numbers as
applicable.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
 

    
      	
              If
      to Escrow Agent: 

            	
              Corporate
      Stock Transfer, Inc.

            

    

    3200 Cherry Creek South Drive, Suite
430

    Denver, Colorado 
80209

    Telephone: (303) 282-4800

    Fax: (303) 282-5800

    

    If to the
Company or Magnify Wealth:

    

    Lihua
International, Inc.

    c/o Lihua
Holdings Limited,

    Houxiang
Five Star Industry District

    Danyang
City, Jiangsu Province, PRC

    Attention:
Mr. Zhu Jianhua  

    Tel. No.:
86 -511-8631-7399

    Fax No.:
86-511-8631-2040

     

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

    Loeb
& Loeb LLP

    345 Park
Avenue

    New York,
NY 10154

    Attention:
Mitchell S. Nussbaum, Esq.

    Tel. No.:
(212) 407-4000

    Fax No.:
(212) 407-4990

     

    If to
Maxim: 

    Maxim
Group LLC

    405
Lexington Avenue

    New York,
NY 10174

    Attention:
Clifford Teller

    Tel: (212) 895-3500

    Fax: (212) 895-3555

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
 

    If to the
Original Shareholders, at the address specified on Exhibit “A” attached
hereto.

    

    or to
such other address and to the attention of such other person as any of the above
may have furnished to the other parties in writing and delivered in accordance
with the provisions set forth above.

     

    3.4. This
Escrow Agreement shall be binding upon and shall inure to the benefit of the
permitted successors and permitted assigns of the parties hereto.

     

    3.5. This
Escrow Agreement is the final expression of, and contains the entire agreement
between, the parties with respect to the subject matter hereof and supersedes
all prior understandings with respect thereto. This Escrow Agreement may not be
modified, changed, supplemented or terminated, nor may any obligations hereunder
be waived, except by written instrument signed by the parties to be charged or
by its agent duly authorized in writing or as otherwise expressly permitted
herein.

     

    3.6. Whenever
required by the context of this Escrow Agreement, the singular shall include the
plural and masculine shall include the feminine. This Escrow Agreement shall not
be construed as if it had been prepared by one of the parties, but rather as if
all parties had prepared the same.

     

    3.7. The
parties hereto expressly agree that this Escrow Agreement shall be governed by,
interpreted under and construed and enforced in accordance with the laws of the
State of New York, without regard to conflicts of law principles that would
result in the application of the substantive laws of another jurisdiction. Any
action to enforce, arising out of, or relating in any way to, any provisions of
this Escrow Agreement shall only be brought in a state or Federal court sitting
in New York City, Borough of Manhattan.

     

    3.8. The
Escrow Agent’s duties hereunder may be altered, amended, modified or revoked
only by a writing signed by the Company, the Pledgors, the Purchaser
Representative and the Escrow Agent.

     

    3.9. The
Escrow Agent shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by the Escrow Agent
to be genuine and to have been signed or presented by the proper party or
parties. The Escrow Agent shall not be personally liable for any act the Escrow
Agent may do or omit to do hereunder as the Escrow Agent while acting in good
faith and in the absence of gross negligence, fraud or willful misconduct, and
any act done or omitted by the Escrow Agent pursuant to the advice of the Escrow
Agent’s attorneys-at-law shall be conclusive evidence of such good faith, in the
absence of gross negligence, fraud or willful misconduct.

     

    3.10. The
Escrow Agent is hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and is hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case the Escrow Agent obeys or complies with any such order, judgment or decree,
the Escrow Agent shall not be liable to any of the parties hereto or to any
other person, firm or corporation by reason of such decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    3.11. The
Escrow Agent shall not be liable in any respect on account of the identity,
authorization or rights of the parties executing or delivering or purporting to
execute or deliver any documents or papers deposited or called for thereunder in
the absence of gross negligence, fraud or willful misconduct.

     

    3.12. The
Escrow Agent shall be entitled to employ such legal counsel and other experts as
the Escrow Agent may deem necessary to properly advise the Escrow Agent in
connection with the Escrow Agent’s duties hereunder, may rely upon the advice of
such counsel, and may pay such counsel reasonable compensation therefor which
shall be paid by the Escrow Agent.

     

    3.13. The
Escrow Agent’s responsibilities as escrow agent hereunder shall terminate if the
Escrow Agent shall resign by giving written notice to the Company and the
Purchaser Representative. In the event of any such resignation, the Purchaser
Representative and the Company shall appoint a successor Escrow Agent and the
Escrow Agent shall deliver to such successor Escrow Agent any escrow funds and
other documents held by the Escrow Agent.

     

    3.14. If
the Escrow Agent reasonably requires other or further instruments in connection
with this Escrow Agreement or obligations in respect hereto, the necessary
parties hereto shall use its best efforts to join in furnishing such
instruments.

     

    3.15. It
is understood and agreed that should any dispute arise with respect to the
delivery and/or ownership or right of possession of the documents or the
Offering Escrow Shares held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed in the Escrow Agent’s sole discretion (1) to retain in
the Escrow Agent’s possession without liability to anyone all or any part of
said documents or the Offering Escrow Shares until such disputes shall have been
settled either by mutual written agreement of the parties concerned by a final
order, decree or judgment or a court of competent jurisdiction after the time
for appeal has expired and no appeal has been perfected, but the Escrow Agent
shall be under no duty whatsoever to institute or defend any such proceedings or
(2) to deliver the Offering Escrow Shares and any other property and documents
held by the Escrow Agent hereunder to a state or Federal court having competent
subject matter jurisdiction and located in the City of New York, Borough of
Manhattan, in accordance with the applicable procedure therefor.

     

    3.16. The
Company agrees to indemnify and hold harmless the Escrow Agent and its partners,
employees, agents and representatives from any and all claims, liabilities,
costs or expenses in any way arising from or relating to the duties or
performance of the Escrow Agent hereunder or the transactions contemplated
hereby other than any such claim, liability, cost or expense to the extent the
same shall have been determined by final, unappealable judgment of a court of
competent jurisdiction to have resulted from the gross negligence, fraud or
willful misconduct of the Escrow Agent.

     

    [Signature
Page Follows]

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    [SIGNATURE
PAGE TO MAKE GOOD ESCROW AGREEMENT]

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of this ___
day of _____, 2009.

     

    LIHUA
INTERNATIONAL, INC.

    

    
      	
              By:

            	 
      	 
      

    

    Name: Zhu
Jianhua

    Title:
Chief Executive Officer and President

     

    PURCHASER
REPRESENTATIVE:

     

    Maxim
Group LLC

    

    
      	
              By:

            	 
      	 
      

    

    Name:

    Title:
Authorized Signatory

     

    ESCROW
AGENT:

     

    Corporate
Stock Transfer, Inc.

    

    
      	
              By:

            	 
      	 
      

    

    Name:

    Title:

    

    PLEDGORS

    

    Magnify
Wealth Enterprise Limited

    

    
      	
              By:

            	 
      	 
      

    

    Name:
Magnify Wealth Enterprise Limited

    Authorized
Signatory: Zhu Jianhua

    

    Original
Stockholders

    

    
      	
              By:

            	 
      	 
      

    

    Name:

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    
 

    EXHIBIT
“A”

     

    ORIGINAL
STOCKHOLDERS

     

    The
following are the Original Stockholders of the Company who are all employees of
Broadband Capital Management LLC, which has its business address
at:

     

    Broadband
Capital Management, LLC

    712
Fifth Avenue

    New
York, NY 10019

    

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                 Philip
      Wagenheim

                              
	 
	
                                 Michael
      Rapp

                              
	 
	
                                 Clifford
      Chapman

                              
	 
	
                                 Penumbra
      Worldwide LTD

                              
	 
	
                                 Gerald
      Scott Klayman

                              
	 
	
                                 Charles
      W. Allen

                              
	 
	
                                 Ari
      Raskas

                              
	 
	
                                 Jeff
      Appel

                              
	 
	
                                 Corby
      T. Hocker

                              
	 
	
                                 David
      Prince

                              

                      

                    

                  

                

              

            

          

        

      

    

    

     

    
      
         

      

      
        10Exhibit
10.1

    

    LOAN
AGREEMENT

    

    This Loan Agreement ("Agreement") is entered into as
of July13, 2009, but effective as of the Effective Date (as defined herein), by
and among UMPQUA BANK, an Oregon corporation ("Bank") and PREMIER POWER
RENEWABLE ENERGY, INC., a Delaware corporation (“Borrower”), with reference to
the following facts:

    

    RECITALS

    

    A.                      Borrower
has applied to Bank for a revolving line of credit to finance working capital
and general corporate purposes of Borrower and to support the issuance of
letters of credit, and for an Advised Guidance Line pursuant to which the Loan
Amount may be increased to accommodate Borrower’s need for additional working
capital following acquisitions, subject to the terms and conditions set forth in
this Agreement. Subject to the terms and conditions as set forth in this
Agreement, Bank has agreed to make provide a revolving line of credit to
Borrower to finance working capital, and to provide the Advised Guidance
Line.

    

    AGREEMENT

    

    NOW, THEREFORE in
consideration of the foregoing and for other valuable consideration, the receipt
of and sufficiency of which are hereby acknowledged, Bank and Borrower hereby
agree as follows:

    

    1            DEFINITIONS.  Capitalized
terms not otherwise defined in this Agreement shall have the meaning as defined
in Exhibit A which is
attached hereto and incorporated herein by this reference. Terms not otherwise
defined in this Agreement and the Loan Documents shall have the meanings
attributed to such terms in the Uniform Commercial Code. The defined terms in
this Agreement shall apply equally to both the singular and the plural forms of
the defined term.  Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

    

    2       
     LINE OF
CREDIT.  Subject to the terms and conditions contained herein,
Bank agrees to make Advances under the Line of Credit, under the following terms
and conditions:

    

    2.1                      Commitment.   Subject to
the terms and conditions hereof and in reliance upon the warranties of the
Borrower herein, Bank agrees to make Advances under the Line of Credit from time
to time, at the request of Borrower, from the Effective Date until the Maturity
Date, during which period the Borrower may repay and reborrow in accordance with
the provisions hereof; provided that the Principal Amount of all outstanding
Advances shall not at any time exceed the Maximum Borrowing
Availability.  The Line of Credit shall be evidenced by, among other
documents, the Note.

    

    2.2                      Purpose.   Advances
under the Line of Credit shall be used to finance working capital and short-term
capital expenditure needs of the Borrower, prior to and following any
acquisitions approved by Bank, and to support the issuance of letters of
credit.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2.3                      Maximum
Line Amount.   The
aggregate Principal Amount of Advances outstanding under the Line of Credit,
together with the Aggregate Letter of Credit Exposure, shall not at any time
exceed the Maximum Line Amount.

    

    2.4                      Maturity
Date.  Unless declared
to be due and payable sooner pursuant to Section 11 of this
Agreement, all principal, interest and other amounts owing under the Line of
Credit shall be due and payable in full on the Maturity Date.

    

    2.5                      Limitation
on Advances.  Notwithstanding
any provision of this Agreement to the contrary, Bank shall be under no
obligation to make any Advance under the Line of Credit:

    

    2.5.1                   if
the requested Advance would cause the Principal Amount outstanding under the
Line of Credit to exceed the Maximum Borrowing Availability; or

    

    
      	
              2.5.2

            	
              if
      an Event of Default has occurred and is continuing or an event or
      circumstance has occurred that with the giving of notice or the passage of
      time would constitute an Event of Default;
or

            

    

    

    
      	
              2.5.3

            	
              if
      Borrower engages in an Acquisition that is not approved by Bank under the
      standards set forth in Section 3.1.3,
      whether or not a Guidance Line Increase is requested in connection with
      that Acquisition. Without limiting the generality of the foregoing, Bank
      is not obligated to fund the Initial Line of Credit Advance, or any other
      Advance, unless and until it has approved the acquisition by Borrower of
      the prospective Italian subsidiary known as “Arco Energy”;
    or

            

    

    

    
      	
              2.5.4 

            	
              after
      the Maturity Date.

            

    

    

    2.6                      Interest.  Subject
to the provisions of Section 2.11 below,
interest shall accrue on the principal amount outstanding under the Note at the
Prime Rate(as that rate changes from time to time); provided, however, that in
no event may the interest rate being charged on the principal amount outstanding
be less than five Percent (5.00%) per annum. Interest shall accrue daily on the
outstanding principal balance on the basis of a 360 day year for the actual
number of days elapsed on which any sums are outstanding hereunder.

    

    2.7                      Monthly
Interest Payments.  Interest on the
principal amount outstanding under the Line of Credit Note shall be payable
monthly in arrears commencing on August 1, 2009 and on the first day of each
month thereafter, until all principal, interest and other amounts owing under
the Line of Credit Note have been paid in full.

    

    2.8                      Mandatory
Principal Payments.  At any time that the principal amount
outstanding under the Line of Credit, plus the Aggregate Letter of Credit
exposure, exceeds the Borrowing Base as of the date of the most recent Borrowing
Base Certificate, Borrower shall immediately, and without demand by Bank to do
so, pay down the principal amount of the Line of Credit to an amount less than
or equal to the Borrowing Base. Failure to pay down the principal amount of the
Line of Credit to an amount less than or equal to the Borrowing Base, shall be
an Event of Default.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    2.9           
            Maturity
Date. All
principal, interest and other amounts owing under the Line of Credit shall be
due and payable in full on July 13, 2011(the “Maturity Date”).

    

    2.10                      Collateral.   The
Line of Credit shall be secured by the collateral described in Section 4 of this
Agreement.

    

    2.11                      Interest
After Default.  If any Event of Default occurs which continues
after any applicable Cure Period, and while such Event of Default is continuing,
or after exercising the Acceleration Right, Bank, at Bank’s option, may increase
the interest rate under the Line of Credit Note to the Default
Rate.

    

    2.12                      Entity
Authorizations.  As a condition
precedent to any obligation of Bank to make any Advance under the Line of
Credit, Borrower shall have executed and delivered to Bank the Entity
Authorizations.

    

    2.13                      Non-Use
Fee.  For each calendar quarter during which the Principal
Balance outstanding under the Line of Credit is less than the Maximum Line
Amount, Borrower shall pay to Bank a per annum fee of one-quarter of one percent
(0.25%) of the average unused availability under the Line of
Credit.

    

    2.14                      Other
Documents.  As a condition precedent to any obligation of Bank
to make  any Advance under the Line of Credit, Borrower shall execute
and deliver to Bank such other documents as Bank may reasonably require to
evidence and effect the Line of Credit, each in form reasonably satisfactory to
Bank, including but not limited to the Line of Credit Disbursement
Authorization, the Insurance Agreement and the Notice of Insurance
Requirements.

    

    2.15                      Other
Terms and Conditions.  The Line of
Credit shall be subject to all other terms and conditions contained in the Loan
Documents, each of which is incorporated herein by this reference as if set
forth herein in full.  Except as otherwise provided herein, in the
event of any conflict between the terms and conditions of this Agreement, and
the terms and conditions of any of the other Loan Documents, the terms and
conditions of this Agreement shall prevail.

    

    2.16                      USA
Patriot Act Notice.  Bank hereby
notifies Borrower that pursuant to the requirements of the USA Patriot Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2003) (the “Act”), Bank is required to
obtain, verify and record information that identifies Borrower, which
information includes the name and address of Borrower and other information that
will allow Bank to identify Borrower in accordance with the Act.

    

    3           ADVISED GUIDANCE
LINE.  Borrower may request that the Maximum Line Amount be
increased from time to time, but no more often than twice prior to the Maturity
Date (each, a “Guidance Line
Increase”) in connection with the acquisition by Borrower of all of the
stock of or substantially all of the assets of another entity (each, an “Acquisition”), to finance
increased need for working capital following the Acquisition.  In no
event may any Guidance Line Increase cause the Maximum Line Amount to exceed
Twelve Million and 00/100 Dollars ($12,000,000.00).

    

    3.1                      Conditions Precedent to Guidance Line
Increases.  The following are conditions precedent to each
Guidance Line Increase:

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    
      	
              3.1.1

            	
              No
      Event of Default or Potential Default shall have occurred and be
      continuing.

            

    

    

    
      	
              3.1.2

            	
              Bank
      shall have been provided all documentation concerning the proposed
      Acquisition that Bank shall
require.

            

    

    

    
      	
              3.1.3

            	
              The
      Bank shall have approved the Acquisition and the corresponding Guidance
      Line Increase according to its normal credit quality standards, including
      but not limited to a determination by Bank that the Acquisition will not
      impair Borrower’s ability to pay or perform its obligations under the Loan
      Documents.

            

    

    

    
      	
              3.1.4

            	
              Bank
      shall have received the Guidance Line Increase Documents, fully executed
      by all parties thereto.

            

    

    

    
      	
              3.1.5

            	
              Borrower
      shall have paid Bank a fee of one-half of one percent (0.50%) of the
      amount of the Guidance Line
Increase.

            

    

    

    3.2                      Guidance Line Increase
Documents: Each Guidance Line Increase shall be evidenced by the
following:

    

    
      	
              3.2.1

            	
              A
      modification of the existing Note to increase the Principal Balance
      thereof to the new Maximum Line Amount, substantially in the form of Exhibit C attached
      hereto.

            

    

    

    
      	
              3.2.2

            	
              One
      or more amended and restated Security Agreements, or a modification of one
      or more of the Security Agreements, providing that, following the Guidance
      Line Increase, the Collateral will continue to secure the Indebtedness,
      including the Note in the new Maximum Line
  Amount.

            

    

    

    
      	
              3.2.3

            	
              If
      the Acquisition results in the creation of a new Subsidiary or Affiliate,
      a Security Agreement executed by the authorized officers of the new
      Subsidiary or Affiliate providing that all Personal Property Collateral of
      that Subsidiary or Affiliate will secure the Indebtedness, including the
      Note in the new Maximum Line
Amount.

            

    

    

    
      	
              3.2.4

            	
              Such
      other documentation as Bank may require in its sole discretion, including
      Entity Authorizations.

            

    

    

    4           COLLATERAL FOR LINE OF
CREDIT.  The Line of Credit shall be secured by the following
collateral (collectively, the “Collateral”):

    

    4.1                      Personal
Property Collateral.  The Line of
Credit shall be secured by a security interest in the Personal Property
Collateral, which shall be a first priority security interest. As a condition
precedent to any obligation of Bank to make the Initial Advance, the following
shall have occurred (the “Personal Property Collateral
Conditions”):

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    4.1.1                                Borrower
and the Subsidiaries shall have fully executed and delivered to Bank the
Security Agreements in substantially the form of Exhibits D, E, F and G,
respectively, attached hereto;

    

    4.1.2                                Bank
shall have received a commitment from the holders of all Prior Liens, if any,
that such holders will release or terminate their respective Prior Lien upon
payment of the Prior Lien Payoff Amount;

    

    4.1.3                                Borrower
and, to the extent required by Bank, each Subsidiary that is pledging Collateral
shall have executed and delivered the Insurance Agreement, and shall have
delivered, or caused to have delivered to Bank, all policies of insurance or
binders as required therein.

    

    4.1.4                                Bank
shall have filed UCC-1 financing statements in each of the jurisdictions in
which the Borrower and the Subsidiaries are located.

    

    4.2                      Personal Property Collateral of
Future Subsidiaries.  Each Subsidiary that is created or
acquired after the Effective Date shall be required to pledge its interest in
all Personal Property Collateral (except to the extent that Bank has agreed in
writing to exclude certain of that Subsidiary’s assets from Personal Property
Collateral) to secure Borrower’s obligations hereunder.

    

    5           LETTERS OF
CREDIT.  At the request of Borrower, and subject to the terms
and conditions set forth herein, Bank shall issue Letters of Credit in the
amounts and on such terms as Borrower may request, as follows:

    

    5.1                      Letter of
Credit Limitations.  Bank shall be under no obligation to issue
any Letter of Credit:

    

    
      	
              5.1.1

            	
              if
      the issuance of that Letter of Credit would cause the Aggregate Letter of
      Credit Exposure to exceed the Letter of Credit Sublimit of
      $5,000,000;

            

    

    

    
      	
              5.1.2

            	
              if
      the issuance of that Letter of Credit would cause the Aggregate Letter of
      Credit Exposure, plus the Principal Amount outstanding under the Line of
      Credit, to exceed the Maximum Borrowing Availability;
  or

            

    

    

    
      	
              5.1.3

            	
              if
      an Event of Default or Potential Default has occurred and is
      continuing.

            

    

    

    5.2                      Form of
Letter of Credit.  Any Letter of Credit issued pursuant to this
Agreement shall be in a form determined by Bank pursuant to Bank=s
standard practices for issuance of Letters of Credit.

    

    5.3                      Requirements
for Documents, Presentment and Other Terms.  The form of any
Documents to be presented, or the requirements for Presentation, and all other
terms and conditions precedent to any obligation of Bank to honor any Letter of
Credit issued pursuant to this Agreement, shall be determined pursuant to
Bank=s
standard practices for issuance of Letters of Credit.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    5.4                      Expiration
Date.  The expiration date of any Letter of Credit issued under
the Line of Credit shall not be any date later than the Maturity
Date.

    

    5.5                      Payment
Under Letter of Credit.  Bank shall,
without any further authorization from Borrower, make an Advance under the Line
of Credit to fund any payments made under any Letter of Credit issued pursuant
to this Agreement.

    

    5.6                      Other
Terms and Conditions.  The issuance of any Letter of Credit
pursuant to this Agreement shall also be subject to all other terms, conditions
and restrictions as may be required by Bank, pursuant to Bank=s
standard practices, policies and procedures with respect to Letters of Credit,
at the time such Letter of Credit is issued.

    

    5.7                      Fees and
Costs.  Borrower shall pay to Bank such fees and costs incurred
by Bank in the issuance, administration and payment of or under any Letter of
Credit issued pursuant to this Agreement, including, without limitation, a fee
of one and one-half percent (1.50%) per annum of the average aggregate face
amount of all Letters of Credit outstanding.

    

    6           CONDITIONS PRECEDENT TO
DISBURSEMENT.  Any obligation of Bank to make the Initial Line
of Credit Advance is conditioned up the satisfaction of the following conditions
(the "Conditions Precedent to
Disbursement"), all of which shall occur on or before August 15, 2009, or
such other date as the parties hereto shall mutually agree in
writing:

    

    6.1                      Execution
and Delivery of Loan Documents.  Borrower and each
of the other Loan Parties shall fully execute, and/or cause to be fully
executed, and deliver to Bank each of the Loan Documents required to be executed
and delivered by that Loan Party.

    

    6.2                      Satisfaction
of Personal Property Collateral Conditions.  Each of the
Personal Property Collateral Conditions, as set forth in Section 4.1above,
shall have been satisfied.

    

    6.3                      Payment
of Fees and Costs.  As a condition
precedent to the Effective Date and to any obligation of Bank to make the
Initial Line of Credit Advance, Borrower shall have paid to Bank (i) all
attorneys fees and costs incurred by Bank in connection with the negotiation,
drafting and preparation of this Agreement and the Loan Documents; (ii) all fees
and costs incurred by Bank in connection with any environmental reports,
appraisals and inspections made in connection with this Agreement (provided,
however, that Bank will pay the cost of the two collateral audits immediately
preceding the Effective Date); and (iii) all fees and costs incurred by Bank in
connection with this Agreement, including but not limited to, all costs of
recording or filing all of the documents which must be recorded or filed in the
Official Records of any county in which Borrower does or will do business, or
with the Secretary of State of the State of Delaware or of any state in which a
Subsidiary is located, pursuant to this Agreement.

    

    6.4                      Satisfaction
of Conditions Precedent.  Notwithstanding
any other provisions of this Agreement, Bank may, in its sole and absolute
discretion, make the Initial Line of Credit Advance, prior to satisfaction of
all of the Conditions Precedent to Disbursement, in which event, the failure to
satisfy, within any reasonable time period established in writing by Bank, those
Conditions Precedent to Disbursement which have not been satisfied, shall
constitute an Event of Default pursuant to Section 10 of this
Agreement.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    7           ADDITIONAL
WARRANTIES AND REPRESENTATIONS OF BORROWER.  Borrower
represents and warrants that:

    

    7.1                      Incorporation,
Good Standing, and Due Qualification. Borrower is a corporation
duly incorporated, validly existing, and in good standing under the laws of the
State of Delaware; has the corporate power and authority to own its assets and
to transact the business in which it is now engaged or proposed to be engaged
in; and is duly qualified as a foreign corporation and in good standing under
the laws of each other jurisdiction in which such qualification is
required.

    

    7.2                      Corporate
Power and Authority. The execution, delivery, and
performance by Borrower and the Subsidiaries of the Loan Documents have been
duly authorized by all necessary entity action and do not and will not (i)
require any consent or approval of the stockholders of such entity; (ii)
contravene such entity’s formation documents; (iii) violate any provision of any
law, rule, regulation (including, without limitation, Regulations U and X of the
Board of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination, or award presently in effect having
applicability to such entity; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease,
or instrument to which such corporation is a party or by which it or its
properties may be bound or affected; and (v) cause such entity to be in default
under any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award or any such indenture, agreement, lease, or
instrument.

    

    7.3                      Legally
Enforceable Agreement. This Agreement is, and each
of the other Loan Documents when delivered under this Agreement will be, legal,
valid, and binding obligations of the Borrowers and/or the other Loan Parties,
as the case may be, enforceable against the Borrower, and/or the other Loan
Parties, as the case may be, in accordance with their respective terms, except
to the extent that such enforcement may be limited by applicable bankruptcy,
insolvency, and other similar laws affecting creditors’ rights
generally.

    

    7.4                      Litigation.  Except for the
Pending Litigation, there is no litigation or other proceeding pending or
threatened against or affecting Borrower or any Affiliate, and neither Borrower
nor any Affiliate is in default with respect to any order, writ, injunction,
decree or demand of any court or other governmental or regulatory
authority.

    

    7.5                      Priority
of Security Interest.  For so long as
Borrower is indebted to Bank under the Line of Credit, or under any other
obligation to the Bank that is secured by the Security Interest, the Security
Interest shall be and is a first priority security interest not subject to any
prior liens, encumbrances or security interests.

    

    7.6                      Financial
Condition. The
Financial Statements and all other statements and data submitted in writing by
Borrower to Bank in connection with Borrower’s request for credit under this
Agreement, are true and correct, and said Financial Statements accurately
present the projected financial condition of the Borrower and the Subsidiaries
as of the Closing Date.  Since that date of the preparation of
Financial Statements, there have been no material adverse changes in the
projected financial condition or business of Borrower.  Borrower has
no knowledge of any liabilities, contingent or otherwise, at the Closing Date
not reflected in said Financial Statements, and Borrower has not entered into
any special commitments or substantial contracts which are not reflected in said
Financial Statements, other than in the ordinary and normal course of Borrower’s
business, which may have a materially adverse effect upon the financial
condition of Borrower, or the operations or business to be conducted by
Borrower.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    7.7                      Title to
Assets.  Borrower has good
title to its assets, and the same are not subject to any liens or encumbrances
other than those previously disclosed to and approved by Bank.

    

    7.8                      Tax
Status.  Borrower has no
liability for any delinquent state, local or federal taxes, and, if Borrower has
contracted with any governmental agency, Borrower has no liability for
renegotiation of profits.

    

    7.9                      Trademarks,
Patents.  Borrower, as of
the date of this Agreement, possess, or will on the Closing Date possess, all
necessary trademarks, trade names, copyrights, patents, patent rights, and
licenses to conduct its business as now operated, without any known conflict
with the valid trademarks, trade names, copyrights, patents, and license rights
of others.

    

    7.10                    Regulation
U.  The
proceeds of the Line of Credit shall not be used to purchase or carry margin
stock (as defined within Regulation U of the Board of Governors of the Federal
Reserve system).

    

    7.11                    Labor
Disputes and Acts of God. Neither the business nor the
properties of Borrower are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act
of God or of the public enemy, or other casualty (whether or not covered by
insurance) materially and adversely affecting such business or properties or the
operation of the Borrower.

    

    7.12                    Other
Agreements.  Borrower is not a
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction
which could have a material adverse effect on the business, properties, assets,
operations, or conditions, financial or otherwise, of Borrower, or the ability
of Borrower to carry out its obligations under the Loan
Documents.  Borrower is not in default in any respect in the
performance, observance, or fulfillment of any of the obligations, covenants, or
conditions contained in any agreement or instrument material to Borrower’s
business to which it is a party.

    

    7.13                    ERISA. Borrower in compliance in
all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan; no notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated; no circumstances exist which constitute
grounds entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings;
the Subsidiaries, nor any Commonly Controlled Entity, has completely or
partially withdrawn from a Multiemployer Plan; each Subsidiary and each Commonly
Controlled Entity have met their minimum funding requirements under ERISA with
respect to all of their Plans, and the present value of all vested benefits
under each Plan does not exceed the fair market value of all Plan assets
allocable to such benefits, as determined on the most recent valuation date of
the Plan and in accordance with the provisions of ERISA; and neither any
Subsidiary nor any Commonly Controlled Entity has incurred any liability to the
PBGC under ERISA.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    7.14                    Other
Representations In Loan Documents.  All other
representations and warranties contained in this Agreement and the Loan
Documents are true and correct.

    

    7.15                    Nature of
Representations and Warranties.  Borrower
certifies to Bank that all representations and warranties made in this Agreement
and all other Loan Documents are true and correct in all material respects and
do not contain any untrue statement of a material fact or omit any material fact
necessary to make the representations and warranties not
misleading.  All representations and warranties will remain true and
correct in all material respects and will survive so long as any of Borrower's
obligations have not been satisfied or the Loan or any part of it remains
outstanding, and for any applicable statute of limitations
period.  Each representation and warranty made in this Agreement, in
any other Loan Documents, and in any other document delivered to Bank by
Borrower or any Loan Party, will be deemed to have been relied on by Bank,
regardless of any investigation, inspection, or inquiry made by Bank or any
related disbursement made by Bank.  The representations and warranties
that are made to the best knowledge of Borrower have been made after diligent
inquiry calculated to ascertain the truth and accuracy of the subject matter of
each representation and warranty.

    

    8           AFFIRMATIVE COVENANTS OF
BORROWER.  Borrower agrees that so long as Borrower is indebted
to Bank, Borrower will, unless Bank shall otherwise waive in
writing:

    

    8.1                      Inspections.  Allow Bank to
conduct inspections and examinations of accounts receivable and inventory at
such times and on such frequency as Bank deems necessary; provided, however,
that Bank shall in any case conduct an annual examination of accounts receivable
and inventory during such periods of time that the outstanding principal balance
of the Line of Credit exceeds $500,000.00. All such inspections may be performed
by outside consultants hired by Bank for such purposes and Borrower will, upon
demand by Bank, reimburse Bank for all such cost of inspection, including any
fees and costs incurred for the use of such outside consultants.

    

    8.2                      Additional
Assignments.  Execute and
deliver to Bank any documents reasonably requested by Bank to specifically
assign to Bank any contracts or proceeds from contracts arising out of or
evidencing any sale of Borrower’s inventory which are subject to Bank's Security
Interest.

    

    8.3                      Rights
and Facilities.  Maintain and
preserve all rights, franchises and other authority adequate for the conduct of
Borrower’s business; maintain Borrower’s properties, equipment and facilities in
good order and repair; conduct Borrower's business in an orderly manner without
voluntary interruption.

    

    8.4                      Insurance.  Maintain public
liability, property damage and workers' compensation insurance, and insurance on
all Borrower's insurable property against fire and other hazards with
responsible insurance carriers to the extent usually maintained by similar
businesses, as required by the Insurance Agreement, each identifying Bank as
Loss Payee.

    

    8.5                      Taxes and
Other Liabilities.  Pay and
discharge, before the same become delinquent and before penalties accrue
thereon, all taxes, assessments and governmental charges upon or against
Borrower or any of Borrower’s properties, and all Borrower’s other liabilities
at any time existing, except to the extent and so long as:

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    8.5.1                                The
same are being contested in good faith and by appropriate proceedings in such
manner as not to cause any materially adverse effect upon Borrower’s financial
condition or the loss of any right of redemption from any sale thereunder;
and

    

    8.5.2                                Borrower
shall have set aside on Borrower’s books reserves (aggregated to the extent
required by generally accepted accounting practice) deemed
by  Borrower adequate with respect thereto.

    

    8.6                      Financial
Covenants and Ratios.  Comply with the
following covenants and ratios, on a LIFO Inventory Basis, each of which shall
be measured on a consolidated basis with all Subsidiaries:

    

    8.6.1                                Maintain
a minimum Debt Service Coverage Ratio of not less than1.20 to 1:00, measured
annually as of the end of each of Borrower’s fiscal years, on a trailing twelve
month basis;

    

    8.6.2                                Maintain
a maximum Debt to Tangible Net Worth Ratio of 3:00 to 1:00, measured as of June
30, 2009 and as of the last day of each calendar quarter
thereafter;

    

    8.6.3                                Maintain
a minimum Current Ratio of 1.20 to 1:00, measured as of June 30, 2009 and as of
the last day of each calendar quarter thereafter;

    

    8.6.4                                Maintain
a minimum Tangible Net Worth of $6,000,000.00 as of the end of each fiscal
year.

    

    8.7                      Records
and Reports.
Maintain on a consistent basis a standard and modern system of accounting, in
accordance with GAAP, permit Bank's representatives to have access to, and to
examine Borrower's properties, books and records at all reasonable times, and to
furnish Bank:

    

    8.7.1                                As
soon as available, and in any event within forty-five (45) days after the close
of each calendar quarter commencing with the calendar quarter ending June 30,
2009, as of the last day of such quarter:

    

    8.7.1.1                                       a
consolidated balance sheet and profit and loss statement of the Borrower,
covering operations for the portion of the fiscal year ending on the last day of
such quarter, all in reasonable detail on a basis consistently maintained and
certified by Borrower to be true and correct, subject, however, to year-end
adjustments, except that for the last quarter of each fiscal year, said balance
sheet and profit and loss statement shall be due within one hundred twenty (120)
days after the close of that quarter;

    

    8.7.2                                Within
thirty (30) days after the end of each calendar month, as of the last day of the
month:

    

    8.7.2.1                                        a
Borrowing Base Certificate, in form reasonably satisfactory to Bank, certified
by Borrower to be true and correct.

    

    8.7.2.2                                        an
Accounts Receivable Aging, in form reasonably satisfactory to Bank, certified by
Borrower to be true and correct;

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    8.7.2.3                                           an
Accounts Payable Aging, in form reasonably satisfactory to Bank, certified by
Borrower to be true and correct;

    

    8.7.2.4                                           an
Inventory Report, in form reasonably satisfactory to Bank, certified by Borrower
to be true and correct; and

    

    8.7.2.5                                           a
work in progress schedule, in form reasonable satisfactory to Bank, certified by
Borrower to be true and correct.

    

    8.7.3                                As
soon as available, and in any event within forty-five (45) days after the close
of each calendar quarter commencing with the calendar quarter ending June 30,
2009, as of the last day of such quarter, and within one hundred twenty (120)
days after Borrower’s fiscal year end, a Certificate of Compliance, in form
satisfactory to Bank, signed by a corporate officer of Borrower:

    

    8.7.3.1                                                         showing
for each of the Financial Covenants and Ratios to be met by Borrower pursuant to
Section 8.6
above, calculating each Financial Covenant and Ratio as of that quarter end or
year end, as applicable, and certifying Borrower’s compliance, or
non-compliance, as the case may be with the same; and

    

    8.7.3.2                                                         certifying
Borrower’s compliance, in all material respects, if true, with all other terms
and conditions in this Agreement and the Loan Documents, and to the extent
Borrower is in material violation or in material non-compliance with any of the
terms and conditions of this Agreement or the Loan Documents, stating such
provisions and the nature and extent of such violation or
non-compliance.

    

    8.7.4                                As
soon as available, and in any event within one hundred twenty (120) days after
the close of each Borrower’s fiscal year commencing with the fiscal year ended
December 31, 2008, CPA audited consolidated financial statements of the
Borrower, as of the close of and for such fiscal year, in reasonable detail,
showing consolidating entries, with the opinion of accountants satisfactory to
Bank;

    

    8.7.5                                Promptly
upon receipt thereof, copies of any reports submitted to Borrower or any
Subsidiary by independent certified public accountants in connection with
examination of the financial statements of Borrower or any Subsidiary made by
such accountants.

    

    8.7.6                                Simultaneously
with the delivery of the annual financial statement referred to in Section 8.7.4, a
certificate of an officer of Borrower to the effect that Borrower has obtained
no knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof.

    

    8.7.7                                As
soon as possible, and in any event within thirty (30) days after Borrower or any
Subsidiary knows or has reason to know that any circumstances exist that
constitute grounds entitling the PBGC to institute proceedings to terminate a
Plan subject to ERISA with respect to Borrower or any Subsidiary, and promptly
but in any event within two (2) Business Days of receipt by Borrower or any
Subsidiary of notice that the PBGC intends to terminate a Plan or appoint a
trustee to administer the same, and promptly but in any event within five (5)
Business Days of the receipt of notice concerning the imposition of withdrawal
liability in excess of $10,000.00 with respect to Borrower or any Subsidiary,
the affected entity will deliver to the Bank a certificate of its chief
financial officer setting forth all relevant details and the action which the
Borrower proposes to take with respect thereto.

     

    
      
        
        

      

      
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    8.7.8                                Promptly
after the furnishing thereof, copies of any statement or report furnished to any
other party pursuant to the terms of any indenture, loan, credit, or similar
agreement and not otherwise required to be furnished to the Bank pursuant to any
other clause of this Section
8.7;

    

    8.7.9                                Such
other information relating to the affairs of Borrower or any Subsidiary as Bank
reasonably may request from time to time.

    

    8.8                      Notice of
Default.  Promptly, and in
any event within ten (10) days of the occurrence thereof, notify the Bank in
writing of the occurrence of any Event of Default under this Agreement or under
any of the Loan Documents or any event which upon notice and lapse of time would
be an Event of Default.

    

    8.9                      Litigation.  Promptly, and in
any event within ten (10) days of the occurrence thereof, notify Bank in writing
of any litigation commenced or threatened affecting Borrower, any Subsidiary, or
any of the Collateral securing the Loan, seeking damages in excess of
$25,000.

    

    8.10                    Primary
Banking Relationship.  Borrower shall
maintain its primary banking relationship with Bank.

    

    9           NEGATIVE
COVENANTS OF BORROWERS.  Borrower agrees
that so long as Borrower is indebted to Bank, Borrower will not, without Bank's
written consent, which will not be unreasonably withheld:

    

    9.1                      Outside
Indebtedness.  Create, incur, or
assume any indebtedness for borrowed moneys other than loans from Bank; or sell
or transfer, either with or without recourse, any accounts or notes receivable
or any moneys due; provided, however, that Borrower may finance accounts and
inventory of foreign subsidiaries so long as said accounts and inventory are not
considered “eligible” accounts or “eligible” inventory for purposes of
calculation of the Borrowing Base, and the borrowing structure has been
previously approved by Bank, which approval shall not be unreasonably
withheld.

    

    9.2                      Liens and
Encumbrances.
Create, incur, or assume any mortgage, pledge, encumbrance, lien or charge of
any kind (including the charge upon property at any time purchased or acquired
under conditional sale or other title retention agreement)  upon any
asset now owned, or hereafter acquired by either Borrower, other than liens for
taxes not delinquent and liens in Bank's favor.

    

    9.3                      Guaranties,
Etc.  Except in the
normal course of business with respect to the provision of goods and services to
customers, assume, guaranty, endorse, or otherwise be or become directly or
contingently responsible or liable, or permit any Subsidiary to assume,
guaranty, endorse, or otherwise be or become directly or contingently
responsible or liable (including, but not limited to, an agreement to purchase
any obligation, stock, assets, goods, or services, or to supply or advance any
funds, assets, goods, or services, or an agreement to maintain or cause such
Person to maintain a minimum working capital or net worth, or otherwise to
assure the creditors of any Person against loss) for obligations of any Person,
except guaranties by endorsement of negotiable instruments for deposits or
collection or similar transactions in the ordinary course of
business.

     

    
      
        
        

      

      
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    9.4                      Loans,
Investments, Secondary Liabilities.  Make any loans or
advances to any Person (including without limitation, any Subsidiary) other than
in the ordinary and normal course of Borrower’s business, or make any investment
in the securities of any Person other than the United States Government; or
guarantee or otherwise become liable upon the obligation of any Person, except
by endorsement of negotiable instruments for deposit or collection in the
ordinary and normal course of its business, unless previously approved by Bank
in writing, which approval shall not be unreasonably withheld.

    

    9.5                      Dividends. Pay any dividends on common
stock.

    

    9.6                      Transactions
With Affiliates.
Enter into any transaction, including, without limitation, the purchase,
sale, or exchange of property or the rendering of any service, with any
Affiliate, or permit any Subsidiary to enter into any transaction, including,
without limitation, the purchase, sale, or exchange of property or the rendering
of any service, with any Affiliate, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower’s or such Subsidiary’s
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than would obtain in a comparable arm’s-length transaction with
a Person not an Affiliate.

    

    9.7                      Continuity
of Operations.  Engage in any business activities substantially
different than Borrower’s existing business, or cease operations, liquidate,
merge, transfer, acquire or consolidate with any other entity, change ownership,
dissolve or transfer or sell any of the Personal Property Collateral outside of
the ordinary course of business, unless such merger, transfer, acquisition or
consolidation does not result in a Change of Control.

    

    9.8                      Project Financing.
Notwithstanding anything to the contrary herein, Subsidiaries located outside
the United States may engage in any of the activities listed in Sections 9.1, 9.2, 9.3 and 9.4 above in
connection with the financing of solar projects or the financing of
project-specific special purpose entities owned by Borrower or Subsidiaries
located outside the United States that have been created to hold such solar
projects so long as such project financing will not have recourse against the
Borrower

    

    10           EVENTS OF
DEFAULT.  The occurrence of
any one of the following events of default beyond any applicable Cure Period
(the "Events of
Default") shall, at Bank's option, terminate Bank's commitment to lend
under this Agreement and under the Loan Documents and make all principal,
interest and other amounts then owing under the Line of Credit and the Loan
Documents immediately due and payable, all without demand, presentment or
further notice, all of which are hereby expressly waived:

    

    10.1                      Failure
to Pay Notes.  Failure to pay
any payment of principal or interest on any Indebtedness of Borrower to Bank
when due.

    

    10.2                      Breach of
Covenant.  The breach by
Borrower of any covenant or condition under this Agreement or any of the Loan
Documents, or the failure of Borrower to perform any other term or condition of
this Agreement or any of the Loan Documents.

     

    
      
        
        

      

      
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      10.3                      Breach of
Warranty.  Any
representations or warranties made herein or in any of the Loan Documents, or
any statement or certificate at any time given in writing pursuant hereto or in
connection herewith, shall be false or misleading in any material respect, or
become false or misleading at any time.

    

    

    10.4                      Defective
Collateralization.  This Agreement or
any of the Loan Documents ceases to be in full force and effect (including
failure of the Security Documents to create a valid and perfected security
interests in first priority position, subject only to the Approved Prior Liens)
at any time and for any reason.

    

    10.5                      Insolvency;
Receiver or Trustee.  Borrower or any
Subsidiary shall become insolvent; or admit the inability to pay debts as they
mature; or make an assignment for the benefit of creditors; or apply for or
consent to the appointment of a receiver or trustee for a substantial part of
their property or business.

    

    10.6                      Judgments,
Attachments.  Any money
judgment, writ or warrant of attachment, or similar process shall be entered or
filed against Borrower or any Subsidiary’s assets and shall remain unvacated,
unbonded or unstayed for a period a ten (10) days after notice of entry or
notice of attachment, or in any event later than five days prior to the date of
any proposed sale thereunder.

    

    10.7                      Insolvency
Proceeding.  Any Insolvency
Proceeding shall be instituted by or against Borrower or any
Subsidiary.

    

    10.8                      Adverse
Change.  A material adverse change occurs (i) in Borrower or
any Subsidiary’s financial condition, or (ii) with respect to Borrower or any
Subsidiary which could reasonably be expected to result in the material
impairment of prospect of payment or performance of the Line of
Credit.  Without limiting the generality of the foregoing, an
Acquisition that is not approved by Bank may be deemed a material adverse change
if the Bank determines that the Acquisition could reasonably be expected to
result in the material impairment of prospect of payment or performance of the
Line of Credit.

    

    10.9                      Default
Under Other Obligations.  The occurrence of
any event of default beyond any applicable notice and cure period by Borrower or
any Subsidiary under any other obligation for borrowed money, to the extent such
event of default would allow the payee thereunder to accelerate payment of the
indebtedness.

    

    10.10                    Right to
Cure.  If any Event of Default is curable, and if Borrower has
not been given a notice of a similar default within the preceding twelve (12)
months, it may be cured (and no Event of Default will have occurred) if
Borrower, after receiving a Notice of Default, cures such default within the
Cure Period.

    

    11           RIGHTS
AND REMEDIES UPON DEFAULT.  If an Event of
Default occurs under this Agreement, at any time thereafter, Bank shall have and
may exercise any or all rights and remedies it may have available at law, in
equity, or in any of the Loan Documents, including with out limitation, all the
rights and remedies of a secured party under the Uniform Commercial Code, and
under each of the Loan Documents.  In addition and without limitation,
Bank may, without further notice, declare the entire Indebtedness, including any
prepayment penalty which Borrower would be required to pay, immediately due and
payable (the “Acceleration
Right”), and without further notice, may terminate any obligation under
this Agreement to make any further Advances under the Line of Credit or to issue
Letters of Credit.  All of Bank's rights and remedies, whether
evidenced by this Agreement or the Loan  Documents or by any other
writing, or at law or in equity, shall be cumulative and may be exercised
singularly or concurrently. The election by Bank to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of any Loan Party under any of the Loan
Documents, after the Loan Party’s failure to perform, shall not affect Bank's
right to declare a default and to exercise its remedies.

     

    
      
        
        

      

      
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    12           MISCELLANEOUS
PROVISIONS.

    

    12.1                      Notices.  Any notice to be
given or other document to be delivered by any party to the other or others
hereunder, may be delivered in person to an officer of any party, or may be
deposited in the United States first class mail, with postage prepaid, or by
Federal Express or other similar overnight delivery service, or by facsimile
machine or email if concurrently delivered by another permissible method set
forth in this Section, and addressed to the party for whom intended, as set
forth in Exhibit I which
is attached hereto and incorporated herein by this reference. Any party hereto
may from time to time, by written notice to the other, designate a different
address which shall be substituted for the one above specified.  Unless
otherwise specifically provided for herein, all notices, payments, demands or
other communications given hereunder shall be in writing and shall be deemed to
have been duly given and received (i) upon personal delivery, or (ii) as of the
third business day after mailing by United States first class mail, postage
prepaid, addressed as set forth above, (iii) the immediately succeeding Business
Day after deposit with Federal Express or other similar overnight delivery
system, or (iv) upon confirmation of receipt if delivered by facsimile machine
or email.

    

    12.2                      Survival.  All covenants,
representations, warranties and other agreements under this Agreement to be
performed or relating to the period shall survive the consummation of the
transactions contemplated by this Agreement.

    

    12.3                      Attorneys'
Fees.  Borrower agrees
to pay upon demand all of Bank's reasonable out-of-pocket expenses, including
reasonable attorneys' fees, incurred in connection with the preparation,
execution, enforcement and collection of this Agreement and the Loan Documents
or in connection with the loans made pursuant to this Agreement and the Loan
Documents, or in connection with any additional documents or agreements that may
be reasonably required in connection with this Agreement. Bank may pay someone
else to help collect the loans and to enforce this Agreement and the Loan
Documents, and Borrower will pay that amount, including, Bank's reasonable
attorneys' fees and Bank's legal expenses, including expert witness fees and
consultant fees, whether or not there is a lawsuit, including attorneys' fees,
expert witness fees and consultant fees for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services.  Borrower also will pay
court costs, in addition to all other sums provided by law.

    

    12.4                      Further
Assurances.  The parties
hereto hereby agree to execute such other documents and take such other action
as may be reasonably necessary to further the purposes of this Agreement and the
Loan Documents.

    

    12.5                      Time of
Essence.  Time is expressly
declared to be of the essence in this Agreement and of the Loan Documents and of
every provision hereof in which time is an element.

     

    
      
        
        

      

      
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    12.6                      Governing
Law; Venue.  This Agreement
has been negotiated and entered into in the State of California, and shall be
governed by, construed and enforced in accordance with the internal laws of the
State of California, applied to contracts made in California by California
domiciliaries to be wholly performed in California.  Venue for any
action to be filed in connection with this Agreement shall be in Sacramento
County, California.

    

    12.7                      Remedies
Are Cumulative.  All remedies
provided to Bank in this Agreement are cumulative and non-exclusive and shall be
in addition to any and all other rights and remedies provided by law or in
equity.

    

    12.8                      Waiver.  No breach of any
provision hereof can be waived unless in writing.  Waiver of any one
breach of any provision hereof shall not be deemed to be a waiver of any other
breach of the same or any other provision hereof.

    

    12.9                      Indemnity. Borrower hereby agrees to
defend, indemnify, and hold the Bank harmless from and against any and all
claims, damages, judgments, penalties, costs, and expenses (including attorney
fees and court costs now or hereafter arising from the aforesaid enforcement of
this clause) arising directly or indirectly from the activities of Borrower and
its Affiliates and Subsidiaries, their predecessors in interest, or third
parties with whom it has a contractual relationship, or arising directly or
indirectly from the violation of any environmental protection, health, or safety
law, whether such claims are asserted by any governmental agency or any other
person. This indemnity shall survive termination of this Agreement.

    

    12.10                    Assignment.  The terms of this
Agreement will be binding on and inure to the benefit of successors and assigns
of the parties.  Notwithstanding the foregoing, Borrower will not
assign Borrower’s rights under this Agreement, or under any of the Loan
Documents, without the prior written consent of Bank.  Bank may at any
time assign its rights under this Agreement, and its interest in any of the Loan
Documents, to any Person and the assignee will assume the obligations of Bank,
and Bank will have no further obligation of any nature.  In that case,
the provisions of this Agreement will continue to apply to the Line of Credit
and the assignee will be substituted in the place and stead of Bank, with all
rights, obligations, and remedies of Bank, including, without limitation, the
right to further assign its rights under this Agreement and its interest in any
of the Loan Documents.  In addition, Bank and any assignee of Bank,
may at any time assign a participation interest in the Line of Credit to any
other party without Borrower’s prior consent.

    

    12.11                    Captions
and Interpretations.  Titles or
captions contained herein are inserted as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this
Agreement or any provision hereof.  No provision in this Agreement is
to be interpreted for or against either party because that party or his legal
representative drafted such provision.

    

    12.12                    Incorporation
of Exhibits and Recitals.   All exhibits and
schedules attached to this Agreement are incorporated into this Agreement as
though fully set forth herein.  All recitals set forth in the Recital
section of this Agreement are incorporated herein and are deemed to be true and
correct as of the Effective Date.

     

    
      
        
        

      

      
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    12.13                    Failure
or Indulgence Not Waiver.  No failure or
delay on the part Bank or any holder of the Notes issued hereunder, in the
exercise of any power, right or privilege hereunder or under any of the Loan
Documents, shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.  All
rights and remedies existing under this Agreement or any of the Loan Documents,
are cumulative to, and not exclusive of, any rights or remedies otherwise
available.

    

    12.14                    Amendments.  This Agreement,
together with the Loan Documents, constitutes the entire understanding and
agreement of the parties as to the matters set forth in this
Agreement.  No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.

    

    12.15                    Information.  Borrower agrees
that Bank may provide any financial or other information, data or material in
Bank’s possession relating to Borrower, this Agreement and the Loan, or any
property securing the Loan, to Bank’s parent, affiliate, subsidiary,
participants or service providers, without further notice to
Borrower.

    

    12.16                    Jury
Trial Waiver   THE PARTIES ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN
CIRCUMSTANCES.  TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS
OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL
PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE INDEBTEDNESS, AND ANY OF THE LOAN
DOCUMENTS, OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE
UNDERSIGNED PARTIES.

    

    Initials:  __________ [Insert initials of
parties].

    

    12.17                    Judicial
Reference Provision.

    

    12.17.1                            In
the event the Jury Trial Waiver set forth in Section 12.16above is
not enforceable, the parties elect to proceed under this Judicial Reference
Provision.

    

    12.17.2                            With
the exception of the items specified in Section 12.17.3,
below, any controversy, dispute or claim (each, a “Claim”) between the parties
arising out of or relating to this Agreement, the Indebtedness, or any of the
Loan Documents, or any other document, instrument or agreement between the
undersigned parties (collectively in this Section, the “Bank Documents”), will be
resolved by a reference proceeding in California in accordance with the
provisions of Sections 638 et seq. of the California Code of Civil Procedure
(“CCP”), or their
successor sections, which shall constitute the exclusive remedy for the
resolution of any Claim, including whether the Claim is subject to the reference
proceeding. Except as otherwise provided in the Bank Documents, venue for the
reference proceeding will be in the state or federal court in the county or
district where the real property involved in the action, if any, is located or
in the state or federal court in the county or district where venue is otherwise
appropriate under applicable law (the “Court”).

     

    
      
        
        

      

      
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    12.17.3                            The
matters that shall not be subject to a reference are the following: (i)
nonjudicial foreclosure of any security interests in real or personal property,
(ii) exercise of self-help remedies (including, without limitation, set-off),
(iii) appointment of a receiver and (iv) temporary, provisional or ancillary
remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
reference provision does not limit the right of any party to exercise or oppose
any of the rights and remedies described in clauses (i) and (ii) or to seek or
oppose from a court of competent jurisdiction any of the items described in
clauses (iii) and (iv). The exercise of, or opposition to, any of those items
does not waive the right of any party to a reference pursuant to this reference
provision as provided herein.

    

    12.17.4                            The
referee shall be a retired judge or justice selected by mutual written agreement
of the parties. If the parties do not agree within ten (10) days of a written
request to do so by any party, then, upon request of any party, the referee
shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted.  Pursuant to CCP § 170.6,
each party shall have one peremptory challenge to the referee selected by the
Presiding Judge of the Court (or his or her representative).

    

    12.17.5                            The
parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause shown, to (i) set the matter
for a status and trial-setting conference within fifteen (15) days after the
date of selection of the referee, (ii) if practicable, try all issues of law or
fact within one hundred twenty (120) days after the date of the conference and
(iii) report a statement of decision within twenty (20) days after the matter
has been submitted for decision.

    

    12.17.6                            The
referee will have power to expand or limit the amount and duration of
discovery.  The referee may set or extend discovery deadlines or
cutoffs for good cause, including a party’s failure to provide requested
discovery for any reason whatsoever. Unless otherwise ordered based upon good
cause shown, no party shall be entitled to “priority” in conducting discovery,
depositions may be taken by either party upon seven (7) days written notice, and
all other discovery shall be responded to within fifteen (15) days after
service. All disputes relating to discovery which cannot be resolved by the
parties shall be submitted to the referee whose decision shall be final and
binding.

    

    12.17.7                            Except
as expressly set forth herein, the referee shall determine the manner in which
the reference proceeding is conducted including the time and place of hearings,
the order of presentation of evidence, and all other questions that arise with
respect to the course of the reference proceeding.  All proceedings
and hearings conducted before the referee, except for trial, shall be conducted
without a court reporter, except that when any party so requests, a court
reporter will be used at any hearing conducted before the referee, and the
referee will be provided a courtesy copy of the transcript. The party making
such a request shall have the obligation to arrange for and pay the court
reporter. Subject to the referee’s power to award costs to the prevailing party,
the parties will equally share the cost of the referee and the court reporter at
trial.

     

    
      
        
        

      

      
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    12.17.8                            The
referee shall be required to determine all issues in accordance with existing
case law and the statutory laws of the State of California. The rules of
evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject of
the reference.  Pursuant to CCP § 644, such decision shall be entered
by the Court as a judgment or an order in the same manner as if the action had
been tried by the Court and any such decision will be final, binding and
conclusive.  The parties reserve the right to appeal from the final
judgment or order or from any appealable decision or order entered by the
referee.  The parties reserve the right to findings of fact,
conclusions of laws, a written statement of decision, and the right to move for
a new trial or a different judgment, which new trial, if granted, is also to be
a reference proceeding under this provision.

    

    12.17.9                            If
the enabling legislation which provides for appointment of a referee is repealed
(and no successor statute is enacted), any dispute between the parties that
would otherwise be determined by reference procedure will be resolved and
determined by arbitration.   The arbitration will be conducted by
a retired judge or justice, in accordance with the California Arbitration Act
§1280 through §1294.2 of the CCP as amended from time to time. The limitations
with respect to discovery set forth above shall apply to any such arbitration
proceeding.

    

    12.17.10                          THE
PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED
UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.
AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS,
HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL
BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY
CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY
RELATED TO, THIS AGREEMENT, THE INDEBTEDNESS, THE LOAN DOCUMENTS, OR THE OTHER
BANK DOCUMENTS.

    

    12.18                    Counterparts.  This Agreement
may be executed in two or more counterparts, each of which shall be an original,
but all of which shall constitute one and the same instrument, with the same
effect as if all parties had signed the same signature page. The parties
authorize removal of the signature page of this Agreement from any counterpart
copy and the attachment of all signature pages to a single counterpart copy so
that the signatures of all those signing will be physically attached to the same
document.  Delivery of an executed counterpart of this Agreement by
facsimile or email shall be equally as effective as delivery of an originally
executed counterpart of this Agreement.  Any party delivering an
executed counterpart of this Agreement by facsimile or email shall also deliver
an originally executed counterpart of this Agreement, but failure to deliver an
originally executed counterpart shall not affect the validity, enforceability or
binding effect of this Agreement.

    

    [Signatures
begin on following page.]

    
      
         

      

      
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    This Loan Agreement is executed as of
date first state above but is effective on the Effective Date.

    

    
      	
              BORROWER:

            	
              PREMIER
      POWER RENEWABLE ENERGY, INC.,

            

    

    a Delaware corporation

     

    By:______________________________________

    Dean Marks

    President and Chief Executive
Officer

    

    
      	
              BANK:

            	
              UMPQUA
      BANK, an Oregon corporation

            

    

     

    By:______________________________________

    George

    Diesch

    Vice President

     

    
      
         

      

      
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    EXHIBIT
LIST

    

    
      	
              A.

            	
              Defined
      Terms

            

    

    
      	
              B.

            	
              Form
      of Note

            

    

    
      	
              C.

            	
              Form
      of Note Modification for Guidance Line
Increases

            

    

    
      	
              D.

            	
              Form
      of Security Agreement (Borrower)

            

    

    
      	
              E.

            	
              Form
      of Security Agreement (Bright
Futures)

            

    

    
      	
              F.

            	
              Form
      of Security Agreement (Premier Power
California)

            

    

    
      	
              G.

            	
              Form
      of Security Agreement (Premier Power
Spain)

            

    

    
      	
              H.

            	
              Pending
      Litigation

            

    

    
      	
              I.

            	
              Addresses
      for Notices

            

    

    
      	
              J.

            	
              Approved
      Prior Liens

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
A

    

    DEFINED
TERMS

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    EXHIBIT
A

    

    DEFINED
TERMS

    

    The
following words shall have the following meanings when used in this Loan
Agreement:

    

    Acceleration Right is defined
in Section 11
of the Agreement.

    

    Accounts Payable Aging means a
detailed listing, in form satisfactory to Bank, of all outstanding accounts
payable of Borrower as of the prior quarter end, with each invoice aged from
invoice date.

    

    Accounts Receivable Aging
means a detailed listing, in form satisfactory to Bank, of all outstanding
accounts receivable of Borrower as of the prior quarter end, with each invoice
aged from the date it became 90 days past due.

    

    
      Accounts Receivable Borrowing
Base means an amount equal to the sum of eighty percent (80%) of Ordinary
Eligible Accounts, eighty percent (80%) of Eligible Utility Rebate Accounts and
fifty percent (50% of Extended Eligible Utility Rebate Accounts, each as of the
measuring date.

    

    

    Act is defined in Section 2.14 of the
Agreement.

    

    Advance means a disbursement
of Loan Funds under the Line of Credit.

    

    Acquisition is defined in
Section 3 of
the Agreement.

    

    Affiliate means any Person (1)
which directly or indirectly controls, or is controlled by, or is under common
control with Borrower or a Subsidiary; (2) which directly or indirectly
beneficially owns or holds five percent (5%) or more of any class of voting
stock of Borrower or any Subsidiary; or (3) five percent (5%) or more of the
voting stock of which is directly or indirectly beneficially owned or held by
Borrower or a Subsidiary. The term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.

    

    Aggregate Letter of Credit
Exposure means the aggregate of the principal amounts (reduced by any
partial draws) of all Letters of Credit issued pursuant to this
Agreement.

    

    Agreement means this Loan
Agreement, as may be amended or modified from time to time, together with all
exhibits and schedules attached from time to time to this Loan
Agreement.

    

    Approved Prior Liens are those
liens listed on Exhibit J attached
hereto.

    

    Authorized Persons means the
following Persons who are authorized to request Advances under the Line of
Credit:

     

    
      Unlimited
authority: Any one of Dean Marks, Teresa Kelley or Miguel De
Anquin

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Authority of $50,000 or below: Any one
of Dean Marks, Teresa Kelley, Miguel De Anquin or Sarilee Marks

    

    Bank means UMPQUA BANK, and
its successors and assigns.

    

    Bank Documents is defined in
Section 12.17.2
of this Agreement.

    

    Borrower means PREMIER POWER
RENEWABLE ENERGY, INC., a Delaware corporation.

    

    Borrower Certificate of
Secretary means that certain Certificate of Secretary (Articles and
By-Laws) dated the same date as this Agreement, executed and delivered by the
corporate secretary of Borrower, in favor of Bank, attaching copies of the
Borrower Articles of Incorporation and Bylaws, and Statement of Information and
certifying those copies to be true and correct.

    

    Borrower Collateral means all
Personal Property Collateral of Borrower.

    

    Borrower Corporate Resolution
means a Certificate of Secretary of Borrower, dated as of the same date as this
Agreement, in form satisfactory to Bank, executed and delivered by the corporate
secretary of Borrower and the authorized officers of Borrower in favor of Bank,
documenting a meeting of the Board of Directors of Borrower authorizing Borrower
to enter into this Agreement, execute the Loan Documents, and pledge collateral
to secure the Indebtedness.

    

    Borrower Financing Statement
means a UCC-1 financing statement showing Borrower, as debtor, and Bank, as
secured party, describing as collateral the Borrower Collateral, filed with the
Delaware Secretary of State.

    

    Borrower Security Agreement
means that certain Commercial Security Agreement , in substantially the form of
Exhibit D attached
hereto, to be executed by Borrower, as grantor, in favor of Bank, as secured
party, granting to Bank a Security Interest in the Borrower Personal Property
Collateral to secure the Indebtedness.

    

    Borrower Security Interest
means the security interests in the Borrower Personal Property Collateral
granted to Bank by Borrower pursuant to the Borrower Security
Agreement.

    

    Borrower’s Books means and
includes, with respect to Borrower (as the context requires) all of books and
records including but not limited to minute books of Borrower; ledgers; records
indicating, summarizing or evidencing Borrower’s assets, (including, without
limitation, the Accounts) liabilities, business operations or financial
condition, and all information relating thereto, computer programs; computer
disk or tape files; computer printouts; computer runs; and other computer
prepared information and equipment of any kind.

    

    Borrowing Base means the
Accounts Receivable Borrowing Base plus the Inventory Borrowing
Base.

    

    Borrowing Base Certificate
means a certificate, prepared by Borrower, in form satisfactory to Bank,
calculating the Borrowing Base as of the end of business on the Borrowing Base
Date, and certified by Borrower as being true and correct.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Borrowing Base Date means the
date as of which the Borrowing Base is calculated, which date shall be the last
day of each calendar month.

    

    Bright Futures means BRIGHT
FUTURES TECHNOLOGIES, LLC, a Nevada limited liability company, qualified to do
business in California.

    

    Bright Futures Authorizations
means the Certificate of Limited Liability Authorization to Grant Security,
executed by the authorized agent(s) of Bright Futures.

    

    Bright Futures Collateral
means all Personal Property Collateral of Bright Futures.

    

    Bright Futures Financing
Statement means a UCC-1 financing statement showing Bright Futures, as
debtor, and Bank, as secured party, describing as collateral the Bright Futures
Collateral, filed with the Nevada Secretary of State.

    

    Bright Futures Security
Agreement means that certain Commercial Security Agreement , in
substantially the form of Exhibit E attached hereto, to
be executed by Bright Futures, as grantor, in favor of Bank, as secured party,
granting to Bank a Security Interest in the Bright Futures Personal Property
Collateral to secure the Indebtedness.

    

    Bright Futures Security
Interest means the security interests in the Bright Futures Personal
Property Collateral granted to Bank by Bright Futures pursuant to the Bright
Futures Security Agreement.

    

    Business Day means any day
other than Saturday, Sunday, or public holiday or the equivalent for banks
generally under the laws of California. Whenever any payment to be made or
notice to be given under this Agreement or any of the Loan Documents is stated
to be due on a day other than a Business Day, that payment or notice may be made
or given on the next succeeding Business Day, and that extension of time will,
in the case of payment, be included in the computation of payment of interest.
However, if the extension would cause the payment to be made in a new calendar
month, that payment will be made on the next preceding Business Day, and
interest will be payable for the shorter period.

    

    Capital Lease means all leases
which have been or should be capitalized on the books of the lessee in
accordance with GAAP.

    

    Cash Flow means the sum of Net
Profits, Non-Cash Stock Based Compensation Expense, depreciation, depletion and
amortization expense, interest expense and any other Bank-approved non-cash
expense, nonrecurring or other expense, minus distributions, withdrawals and
dividends made during the measurement period.

    

    CCP is defined in Section 12.17.3 of
this Agreement.

    

    Certificate of Secretary means
that certain Certificate of Secretary (Articles and By-Laws) dated the same date
as this Agreement, executed and delivered by the corporate secretary of any Loan
Party that is a corporation, in favor of Bank, attaching copies of that Loan
Party’s Articles of Incorporation and By-Laws, and Statement of Information and
certifying those copies to be true and correct.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              .

            	
              Change in Control means
      a transfer of the direct or indirect power to vote thirty percent (30%) or
      more of any class of the voting securities issued by the Borrower to any
      single transferee, together with the removal or resignation of Dean Marks
      and Miguel Deanquin from the Board of Directors of
    Borrower.

            

    

    

    Claim is defined in Section 12.17.2 of
this Agreement.

    

    Closing Date means the date on
which Bank makes the Initial Line of Credit Advance.

    

    Code means the Internal
Revenue Code of 1986, as amended from time to time, and the regulations and
published interpretations thereof.

    

    Collateral means all
collateral for the Loan, as set forth in Section 4 of this
Agreement.

    

    Commonly Controlled Entity
means an entity, whether or not incorporated, which is under common control with
Borrower or any Subsidiary within the meaning of Section 414(b) or 414(c) of the
Code.

    

    Compliance Certificate means a
certificate, executed by an authorized officer of the Borrower tendering such
certificate, in form satisfactory to Bank, stating that the Borrower is in
compliance with all terms and conditions of this Agreement and the Loan
Documents.

    

    Conditions Precedent to
Disbursement means all conditions precedent to any obligation of Bank to
make the Loan Disbursement, as set forth in Section 6 of this
Agreement.

    

    Corporate Resolution means a
Certificate of Secretary of a Loan Party that is a corporation, dated as of the
same date as this Agreement, in form satisfactory to Bank, executed and
delivered by the appropriate officers of that Loan Party in favor of Bank,
documenting a meeting of the Board of Directors of Borrower authorizing Borrower
to enter into this Agreement, execute the Loan Documents, and/or pledge
collateral to secure the Line of Credit.

    

    Court is defined in Section 12.17.2 of
this Agreement.

    

    Cure Period means (i) for an
Event of Default under Section 10.1 of the
Agreement, a period of five (5) Business Days after receipt of a Notice of
Default; or (ii) for an Event of Default that is not an Event of Default under
Section 10.1 of
the Agreement, a period of fifteen (15) Business Days after receipt of a Notice
of Default; or (iii) for an Event of Default that is not an Event of Default
under Section
10.1 or a violation of any of the Financial Covenants and Ratios, and the
Event of Default reasonably requires more than fifteen (15) Business Days to
cure, such additional time as may be reasonable and necessary to effect such
cure, provided that Borrower immediately initiates steps which Bank deems, in
Bank’s sole discretion, to be sufficient to cure the Event of Default and
thereafter continues and completes all reasonable necessary steps sufficient to
produce compliance as soon as reasonably practical.

    

    Current Assets shall have the
meaning defined under GAAP.

    

    Current Liabilities shall have
the meaning defined under GAAP, plus the long-term portion of any revolving
lines of credit.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Current Ratio means that ratio
the numerator of which is Borrower’s Current Assets as of the measuring date,
and the denominator of which is Borrower’s Current Liabilities as of the
measuring date.

    

    Debt means, as of any
applicable date of determination, all items of indebtedness, obligation or
liability of Borrower and the Subsidiaries, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, joint or
several, that should be classified as liabilities in accordance with GAAP. In
the case of Borrower, the term "Debt" shall include, without limitation, the
Indebtedness.

    

    Debt Service means all
regularly scheduled payments of or principal on all long-term debt, plus
interest expense, plus debt service on all other obligations of the Borrower and
the Subsidiaries, measured at the end of each fiscal year on a
twelve-trailing-month basis.

    

    Debt Service Coverage Ratio
means a ratio, expressed as a fraction, the numerator of which is Cash Flow, and
the denominator of which is Debt Service.

    

    Debt to Tangible Net Worth
Ratio means that ratio of which the numerator is Debt, as of the
measuring date, and the denominator is Tangible Net Worth as of the measuring
date.

    Default means any event or
occurrence that, with the giving of notice or the passage of time, would be an
Event of Default.

    

    Default Provisions. The term
“Default Provisions” means the provisions set forth in Section 10 of this
Agreement.

    

    Default Rate means the
interest rate per annum which is five percent (5.00%) above the interest
otherwise to be charged under the Note.

    

    EBITDA means the consolidated
earnings of Borrower and the Subsidiaries before interest, taxes, depreciation
and amortization, which shall be calculated as follows: the consolidated Net
Profit of Borrower and the Subsidiaries for the measuring period, plus interest,
taxes, and depreciation and amortization expensed for that period, all on a
consolidated basis.

    

    Effective Date means the
Closing Date.

    

    Eligible Utility Rebate
Accounts means accounts that are less than 90 days past the date of the
original invoice therefor, with respect to which funds for the payment therefor
have been reserved by the issuing authority, and that have been assigned by
Borrower’s customer to Borrower pursuant to documentation provided to and
approved by Bank.

    

    Entity Authorizations means
the LLC Authorizations, the Certificates of Secretary, and the Corporate
Resolutions.

    

    ERISA means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
regulations and published interpretations thereof.

    

    Event of Default. The term
“Event of Default” means any of the Events of Default set forth in Section 10 of this
Agreement.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      Extended Eligible Utility Rebate
Accounts means accounts that are more than 90 but less than 180 days past
the date of the original invoice therefor, with respect to which funds for the
payment therefor have been reserved by the issuing authority, and that have been
assigned by Borrower’s customer to Borrower pursuant to documentation provided
to and approved by Bank.

    

    

    Financial Covenants and Ratios
means those certain affirmative financial covenants and ratios of Borrower as
set forth in Section
8.6 of this Agreement.

    

    Financial Statements means any
and all balance sheets of Borrower and statements of income and expenses from
the operation of the Borrower, and all statements of changes of financial
position of Borrower, and all other financial information provided to Bank by
Borrower regarding the financial condition of Borrower.

    

    Financing Statement means a
UCC-1 financing statement showing Borrower, as debtor, and Bank, as secured
party, describing as collateral the Personal Property Collateral, filed with the
California Secretary of State.

    

    GAAP means, as of any
applicable period, generally accepted accounting principles in effect during
such period.

    

    Guidance Line Increase is
defined at Section
3 of this Agreement.

    

    Guidance Line Increase
Documents is defined at Section 3 of this
Agreement.

    

    Indebtedness means the
indebtedness evidenced by the Line of Credit issued pursuant to this Agreement,
including all principal and interest, together with all other indebtedness and
costs and expenses for which Borrower is responsible under this Agreement or
under any of the Loan Documents. The word “Indebtedness” also includes all other
obligations, debts and liabilities, plus interest thereon, of Borrower to Bank,
as well as all claims by Bank against Borrower, whether existing now or later;
whether they are voluntary or involuntary, due or not due, direct or indirect,
absolute or contingent, liquidated or unliquidated; whether Borrower may be
liable individually of jointly with others; whether Borrower may be obligated as
guarantor, surety, accommodation party or otherwise; whether recovery upon such
indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such indebtedness may be or hereafter may become
otherwise unenforceable.

    

    Initial Line of Credit Advance
means the first disbursement under the Line of Credit, and shall include, at a
minimum, amounts sufficient to satisfy and discharge all Prior Liens other than
the Approved Prior Liens.

    

    Insolvency Proceeding means
and includes any proceeding or case under any provisions of the United States
Bankruptcy Code, as amended, or any other bankruptcy or insolvency law,
including, but not limited to assignments for the benefit of creditors, formal
or informal moratoriums, composition or extensions with some or all creditors,
any proceeding seeking a reorganization, arrangement or any other relief under
the United States Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Insurance Agreement means an
Agreement to Provide Insurance, in form satisfactory to Bank, to be executed and
delivered by Borrower (and, if required by Bank, each Subsidiary that is
pledging Collateral to secure the obligations of Borrower), whereby Borrower
agrees to maintain insurance satisfactory to Bank, and provide proof of
insurance, satisfactory to Bank, in connection with the Personal Property
Collateral, and naming Bank as loss payee.

    

    Insurance Policies means those
insurance policies and binders as may be required pursuant to the Insurance
Agreement.

    

    Intangible Assets shall have
the meaning defined under GAAP.

    

    Intervening Lien means a Lien
which arises after the Effective Date, or which arose prior to the Effective
Date and which was not disclosed to Bank, and which attaches or may attach to
the Personal Property Collateral, and which has or may create an interest in the
Personal Property Collateral that is or may be senior in priority to the Bank’s
Security Interest.

    

    Inventory Borrowing Base means
an amount equal to fifty percent (50%) of Ordinary Eligible Inventory and
sixty-five percent (65%) of Non-Speculative Inventory, each as of the measuring
date.

    

    Inventory Report means a
listing of Borrower’s inventory, in form satisfactory to Bank, as of the last
day of each calendar quarter.

    

    Landlord’s Release and Waiver
means, individually and collectively, certificates in form and substance
satisfactory to Bank, executed by the landlord under each lease pursuant to
which Borrower now or in the future occupies premises, including but not limited
to the following:

    

    
      	
               
      

            	
              (A)

            	
              a
      certificate executed by 33 Partners, Inc., with respect to the premises
      located at 2555 Townsgate Road, Second Floor, Thousand Oaks,
      California

            

    

    

    
      	
               
      

            	
              (B)

            	
              a
      certificate executed by MKJ - McCalla Investments, ,LLC, with respect to
      the premises located at 1020 Nevada Street, Unit 201, Redlands,
      California

            

    

    

    
      	
               
      

            	
              (C)

            	
              a
      certificate executed by the Wagner Family LP, with respect to the premises
      located at 4961 Windplay Drive, Suite 100, El Dorado Hills,
      California

            

    

    .

    Letter of Credit Sublimit
means the maximum Aggregate Letter of Credit Exposure, which shall not at any
time exceed $5,000,000.00.

    

    Letters of Credit shall have
the meaning ascribed at Section 5 hereof
(each, a “Letter of
Credit”).

    

    Lien means any security
interest, mortgage, pledge, lien, hypothecation, judgment lien or similar legal
process, charge, encumbrance, title retention agreement or analogous instrument
or device (including the interest of the lessors under Capitalized Leases and
the interest of a vendor under any conditional sale or other title retention
agreement).

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    LIFO Inventory Basis means a
method of accounting for inventory on a last in, first out basis in accordance
with GAAP.

    

    Line of Credit means the
revolving line of credit loan to be made to Borrower pursuant to the terms of
this Agreement, and which is more particularly described in Section 2 of this
Agreement.

    

    LLC Authorizations means, as
to each Subsidiary that is a limited liability company, a Certificate of Limited
Liability Authorization to Grant Security, executed by the authorized agent(s)
of that limited liability company, including but not limited to the Bright
Futures Authorization.

    

    Loan Documents means all
documents and agreements executed in connection with the Loan, each as it may be
extended, amended, modified, superseded, extended or replaced from time to
time.

    

    Loan Parties means the
Borrower and the Subsidiaries (each a “Loan Party”).

    

    Maturity Date is defined in
Section 2.9 of
this Agreement and is the dated on which any obligation of the Bank to make
Advances under the Line of Credit or to issue Letters of Credit terminates and
on which date all principal, interest and other amounts owing under the Line of
Credit shall be due and payable in full.

    

    Maximum Borrowing Availability
means the lesser of (i) the Maximum Line Amount, or (ii) the Borrowing Base, as
of the measuring date.

    

    Maximum Line Amount means,
initially, Seven Million and 00/100 Dollars ($7,000,000.00), subject to increase
as Guidance Line Increases occur; provided, however that in no event shall the
Maximum Line Amount exceed Twelve Million and 00/100 Dollars
($12,000,000.00).

    

    Multiemployer Plan means a
Plan described in Section 4001(a)(3) of ERISA.

    

    Net Profits means the
consolidated net income (or loss) of Borrower and the Subsidiaries for any
period of determination, determined in accordance with GAAP but excluding in any
event:

    

    a.           any
gains or losses on the sale or other disposition, not in the ordinary course of
business, of investments or fixed or capital assets, and any taxes on the
excluded gains and any tax deductions or credits on account on any excluded
losses; and

    

    b.           in
the case of Borrower, net earnings of any Person (other than a Subsidiary) in
which Borrower has an ownership interest, unless such net earnings shall have
actually been received by Borrower in the form of cash
distributions.

    

    Non-Cash Stock Based Compensation
Expense means expenses for non-cash stock based compensation paid to
Borrower’s personnel.

    

    Non-Speculative Inventory
means specific inventory held for delivery or installation under fully-executed
and enforceable agreements with Borrower or a Subsidiary.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Note means that certain
Promissory Note in the principal amount of Seven Million and No/100 Dollars
($7,000,000.00), in substantially the form of Exhibit B attached hereto, to
be executed and delivered by Borrower, in favor of Bank, and dated the same date
as this Agreement, together with all other renewals, extensions, modifications,
refinancings, consolidations, and substitutions thereof.

    

    Notice of Default means a
written notice to be provided by Bank to Borrower of the occurrence of one or
more Events of Default and demanding cure of the specified
defaults.

    

    Notice of Insurance
Requirements means a Notice of Insurance Requirements, to be executed and
delivered by Borrower, addressed to the insurance agent of Borrower, notifying
said agents insurance requirements as set forth in the Insurance
Agreement.

    

    Ordinary Eligible Accounts
means and includes those Accounts of Borrower which are due and payable within
sixty (60) days, or less, from the date of invoice, including Accounts
representing progress payments, and which have been validly assigned to Bank and
strictly comply with all of Borrower’s warranties and representations to Bank
with respect to Accounts as set forth in the Personal Property Security
Agreement; provide that Eligible Accounts Receivable shall not include those
accounts of Borrower with respect to which: a) the account debtor is an officer,
employee, partner, joint venturer, Affiliate or agent of Borrower; (b) goods are
placed on consignment, guaranteed sale or other terms by reason of which the
payment by the account debtor may be conditional; (c) the account debtor is not
a resident of the United States, unless insured or guarantied in a manner
acceptable to and approved by Bank; (d) other than franchisees, the account
debtor is a subsidiary of, related to, affiliated or has common shareholders,
officers or directors with Borrower; (e) Borrower is liable to the account
debtor for goods sold or services rendered by the account debtor to Borrower or
for which the account debtor has prepaid for future purchases, to the extent of
such liability or prepayment; (f) the account is not paid by an account debtor
within ninety (90) days from the due date (provided, however, that the exclusion
from Ordinary Eligible Accounts shall apply only to that portion of an account
that is over 90 days past due, unless the portion over 90 days past due is 25%
or more of the entire account, in which case Bank may in its reasonable
discretion exclude the entire account from Ordinary Eligible Accounts; (g) the
account debtors dispute liability or make any claim, or have any defense,
crossclaim, counterclaim, or offset, but only to the extent of the amount in
dispute; (h) any Insolvency Proceeding is filed by or against the account
debtor, or if an account debtor becomes insolvent, fails or goes out of
business; provided, however, that Bank may in its reasonable discretion exclude
from Ordinary Eligible Accounts any Accounts pursuant to which the same account
debtor is liable that exceed, in the aggregate, 25% of all Ordinary Eligible
Accounts, to the extent of the amount of over 25% of all Ordinary Eligible
Accounts.

    

    Ordinary Eligible Inventory
means all Borrower inventory, other than Non-Speculative Inventory, obsolete or
damaged goods, items on consignment or not owned by Borrower, items subject to
any lien of any supplier, and items located outside the United
States.

    

    PBGC means the Pension Benefit
Guaranty Corporation or any entity succeeding to any or all of its functions
under ERISA.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Pending Litigation means those
pending or threatened lawsuits or other proceedings described in Exhibit H of this
Agreement.

    

    Person means an individual,
partnership, corporation, limited liability company, business trust, joint stock
company, trust, unincorporated association, joint venture, governmental
authority, or other entity of whatever nature.

    

    Personal Property Collateral
means the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located: All personal
and fixture property of every kind and nature including without limitation all
Goods (including Inventory, Equipment and any accessions thereto), Instruments
(including promissory notes), Documents, Accounts, Chattel Paper (whether
tangible or electronic), Deposit Accounts, Letter-of-Credit Rights (whether or
not the letter of credit is evidenced by a writing), Investment Property
(including securities) and all Supporting Obligations and proceeds, and all
General Intangibles (including Payment Intangibles).

    

    In
addition, the term “Personal
Property Collateral” includes all the following, whether now owned or
hereafter acquired, whether now existing or hereafter arising, and wherever
located:

    

    (a)
          All attachments,
accessions, accessories, tools, parts, supplies, increases, and additions to and
all replacements of and substitutions for any property described
above.

    

    (b)           All
products and produce of any of the property described in this Personal Property
Collateral definition.

    

    (c)           All
accounts, general intangibles, instruments, rents, monies, payments, and all
other rights, arising out of a sale, lease, or other disposition of any of the
properly described in this Personal Property Collateral definition.

    

    (d)           All
proceeds (including insurance proceeds) from the sale, destruction, loss, or
other disposition of any of the property described in this Personal Property
Collateral definition.

    

    (e)           All
records and data relating to any of the property described in this Personal
Property Collateral definition, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of grantor’s
right, title, and interest in and to all computer software required to utilize,
create, maintain, and process any such records or data on electronic
media.

    

    Personal Property Collateral
Conditions shall have the meaning ascribed in Section 4.1 of this
Agreement.

    

    Plan means any pension plan
that is covered by Title IV of ERISA and in respect of which a Borrower or a
Commonly Controlled Entity is an “employer” as defined in Section 3(5) of
ERISA.

    

    Potential Default means an
event or circumstance that, with the giving of notice or the passage of time,
would constitute an Event of Default.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    Premier Power California means
PREMIER POWER RENEWABLE ENERGY, INC., a California corporation.

    

    Premier Power California Certificate
of Secretary means that certain Certificate of Secretary (Articles and
By-Laws) dated the same date as this Agreement, executed and delivered by the
corporate secretary of Premier Power California, in favor of Bank, attaching
copies of the Premier Power California Articles of Incorporation and Bylaws, and
Statement of Information and certifying those copies to be true and
correct.

    

    Premier Power California
Collateral means all Personal Property Collateral of Premier Power
California.

    

    Premier Power California Corporate
Resolution means a Certificate of Secretary of Premier Power California,
dated as of the same date as this Agreement, in form satisfactory to Bank,
executed and delivered by the corporate secretary of Premier Power California
and the authorized officers of Premier Power California in favor of Bank,
documenting a meeting of the Board of Directors of Premier Power California
authorizing Premier Power California to pledge collateral to secure the
Indebtedness.

    

    Premier Power California Financing
Statement means a UCC-1 financing statement showing Premier Power
California, as debtor, and Bank, as secured party, describing as collateral the
Premier Power California Collateral, filed with the California Secretary of
State.

    

    Premier Power California Security
Agreement means that certain Commercial Security Agreement , in
substantially the form of Exhibit F attached hereto, to
be executed by Premier Power California, as grantor, in favor of Bank, as
secured party, granting to Bank a Security Interest in the Premier Power
California Personal Property Collateral to secure the Indebtedness.

    

    Premier Power California Security
Interest means the security interests in the Premier Power California
Personal Property Collateral granted to Bank by Premier Power California
pursuant to the Premier Power California Security Agreement.

    

    Premier Power Spain means
PREMIER POWER SOCIEDAD LIMITATA.

    

    Premier Power Spain Certificate of
Secretary means that certain Certificate of Secretary (Articles and
By-Laws) dated the same date as this Agreement, executed and delivered by the
corporate secretary of Premier Power Spain, in favor of Bank, attaching copies
of the Premier Power Spain Articles of Incorporation and Bylaws, and Statement
of Information and certifying those copies to be true and correct.

    

    Premier Power Spain Collateral
means all Personal Property Collateral of Premier Power Spain.

    

    Premier Power Spain Corporate
Resolution means a Certificate of Secretary of Premier Power Spain, dated
as of the same date as this Agreement, in form satisfactory to Bank, executed
and delivered by the corporate secretary of Premier Power Spain and the
authorized officers of Premier Power Spain in favor of Bank, documenting a
meeting of the Board of Directors of Premier Power Spain authorizing Premier
Power Spain to pledge collateral to secure the Indebtedness.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    Premier Power Spain Security
Agreement means that certain Commercial Security Agreement , in
substantially the form of Exhibit G attached hereto, to
be executed by Premier Power Spain, as grantor, in favor of Bank, as secured
party, granting to Bank a Security Interest in the Premier Power Spain Personal
Property Collateral to secure the Indebtedness.

    

    Premier Power Spain Security
Interest means the security interests in the Premier Power Spain Personal
Property Collateral granted to Bank by Premier Power Spain pursuant to the
Premier Power Spain Security Agreement.

    

    Prime Rate means the prime
rate set forth in the Wall Street Journal, as it may change from time to
time.

    

    Prior Liens means any liens on
any Collateral that exist as of the Closing Date, unless such Prior Liens have
been approved in writing by Bank.

    

    Prior Lien Payoff Amount means
the amount required by the holder of any Prior Lien to release and discharge the
Prior Lien and all obligations secured thereby.

    

    Principal Balance means the
unpaid principal amount outstanding under the Line of Credit on the date of
determination.

    

    Prohibited Transaction means
any transaction set forth in Section 406 of ERISA or Section 4975 of the
Code.

    

    Reportable Event means any of
the events set forth in Section 4043 of ERISA.

    

    Security Agreements means the
Borrower Security Agreement, the Premier Power California Security Agreement,
the Bright Futures Security Agreement and the Premier Power Spain Security
Agreement, together with such other security agreements as may be required by
Bank from time to time to secure the Indebtedness.

    

    Security Documents means the
Security Agreements, the Financing Statement and all other documents now or
later securing any part of the payment of the Indebtedness.

    

    Security Interest means the
security interest in the Personal Property Collateral granted to Bank by
Borrower and the Subsidiaries pursuant to the Security Agreements.

    

    Subsidiary means, as to
Borrower, a corporation or other entity of which shares of stock having ordinary
voting power (other than stock having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation are at the time owned, or the management of which
is otherwise controlled directly, or indirectly through one or more
intermediaries, or both, by the Borrower, including but not limited to Premier
Power California, Bright Futures and Premier Power Spain, and further including
any Subsidiary created or acquired through an Acquisition (collectively, the
“Subsidiaries”).

    

    Tangible Net Worth means, as
to the Borrower and the Subsidiaries, the net book value of all assets,
exclusive of patents, trademarks, licenses, goodwill and other intangibles and
of loans to and notes and receivables from Borrower, officers, employees,
directors and shareholders of Borrower or any Affiliate, less total
Debt.

     

    Uniform Commercial Code means
the California Uniform Commercial Code, as from time to time
amended.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Exhibit
B

    

    Form of
Note

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    
 

    Exhibit
C

    

    Form of
Note Modification

    for
Guidance Line Increases

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    Exhibit
D

    

    Form of
Security Agreement (Borrower)

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    Exhibit
E

    

    Form of
Security Agreement (Bright Futures)

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    Exhibit
F

    

    Form of
Security Agreement

    (Premier
Power California)

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    Exhibit
G

    

    Form of
Security Agreement

    (Premier
Power Spain)

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Exhibit
H

    

    Pending
Litigation

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    Exhibit
I

    

    Addresses
for Notices

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    If to
Bank:

    

    Umpqua
Bank

    Attn:
George Diesch

    2998
Douglas Blvd., Suite 100

    Roseville,
CA 95661

    Telephone:
(916) 677-1136

    Fax:
(916) 284-0354

    E-mail:
georgediesch@umpquabank.com

    

    with a
copy to:

    

    Kraft
Opich, LLP

    Attn:
Martha Evensen Opich

    7509
Madison Ave., Suite 111

    Citrus
Heights, CA 95610

    Telephone:
(916) 880-3040

    Fax:
(916) 880-3045

    E-mail:
mopich@kraftopich.com

    

    If to
Borrower:

    

    Premier
Power Renewable Energy, Inc.

    Attn:
Dean Marks

    4961
Windplay Drive, Suite 100,

    El Dorado
Hills, CA 95762

    Telephone:
_____________

    Fax:
________________

    E-mail:
______________

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    Exhibit
J

    

    Approved
Prior Liens

     

    
      
        
        

      

      
        22

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